CARBON DIOXIDE SUPPLY AGREEMENT
Exhibit 99.1
This CARBON DIOXIDE SUPPLY AGREEMENT (this “Agreement”) is entered into June 27, 2008
(“Effective Date”), by and between Airgas Carbonic, Inc., a Delaware corporation
(“Buyer”), and Southwest Georgia Ethanol, LLC, a Georgia limited liability company
(“Seller”).
A. Seller intends, at its sole expense and cost, to construct, maintain, and operate an
ethanol plant, with an initial capacity of at least one hundred million (100,000,000) gallons per
year, at 0000 Xxxx Xxxx Xxxx, Xxxxxx, Xxxxxxx (“Seller’s Facility”).
B. Seller desires to lease to Buyer, on terms set forth herein, Buyer’s Plant Land Area (as
hereinafter defined).
C. Buyer intends, at Buyer’s sole expense and cost, to construct, maintain, and operate a
carbon dioxide facility on Buyer’s Plant Land Area, to purify, liquefy, refine, and store the LCO2
by-product from Seller’s ethanol production.
D. Seller’s Facility will have a minimum nameplate Carbon Dioxide Gas production capacity of
seven hundred fifty (750) Tons per Day.
E. Buyer desires to purchase Carbon Dioxide Gas from Seller and Seller desires to sell Carbon
Dioxide Gas to Buyer pursuant to the terms of this Agreement
NOW, THEREFORE, for and in consideration of mutual promises and covenants hereinafter set
forth, and intending to be legally bound hereby, Buyer and Seller agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall have the
meanings set forth below:
1.1. Buyer’s Plant: The building(s) and processing apparatus to be constructed and
operated by Buyer, for producing LCO2, on Buyer’s Plant Land Area, which shall have a nameplate
LCO2 capacity of four hundred fifty (450) Tons per Day.
1.2. Buyer’s Plant Land Area: Approximately four (4) acres of land at Seller’s
Facility, the exact location to be determined by Seller and Buyer subsequent to the Effective Date,
in the general location set forth on Exhibit A, which land Seller represents is suitable
for construction of Buyer’s Plant and Buyer’s operations as set forth in this Agreement. Upon
agreement of the exact location of Buyer’s Plant Land Area, a revised Exhibit A, showing
such exact location, shall be attached to this Agreement in place of the initial Exhibit A.
Seller and Buyer agree to use reasonable efforts to agree on the exact location of Buyer’s Plant
Land Area and, if Seller and Buyer fail to so agree by May 31, 2008, despite such reasonable
efforts, either Seller or Buyer may terminate this Agreement.
1.3. Carbon Dioxide Gas. The crude carbon dioxide by-product gas produced by Seller
during the manufacture of ethanol at Seller’s Facility, the chemical formula of which is CO2. For purposes of this Agreement, Carbon Dioxide Gas shall be measured in
accordance with Section 10.
1.4. Carbon Dioxide Gas Pipeline: The pipeline to be constructed by Buyer from the
Transfer Point to Buyer’s Plant, as provided in Section 3.3.1.
1.5. Contract Year: A period commencing on the Purchase Commencement Date and
extending for twelve (12) consecutive months thereafter, and each succeeding period of twelve (12)
consecutive months thereafter.
1.6. Currency: All reference to currency is in U.S. Dollars.
1.7. Day: A period during the Term of twenty-four (24) hours commencing at 12:00 a.m.
and extending until 11:59 p.m. The date of a Day herein shall be that calendar date in effect at
the beginning of such Day.
1.8. Dry Ice: Solid carbon dioxide.
1.9. Environmental Law: Any one or more of all Federal, state, and local
environmental protection, occupational, health, safety, and similar laws, ordinances, restrictions,
licenses, and regulations, including, without limitation the Federal Water Pollution Control Act
(33 U.S.C. Sec. 1251, et seq.), Resource Conservation and Recovery Act (42 U.S.C.
6991, et seq.), Safe Drinking Water Act (42 U.S.C. Sec. 300f, et
seq.), Toxic Substances Control Act (15 U.S.C. Sec. 2601, et seq.), Clean
Air Act (42 U.S.C. Sec. 7401, et seq.), Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Sec. 9601, et seq.), Hazardous Materials
Transportation Act (49 U.S.C. Section 1802, et seq.), and other similar Federal,
state, and local laws, statutes, ordinances, orders, decrees, rules, and/or regulations,
regulating, relating to, or imposing liability or standards of conduct concerning any hazardous,
toxic or dangerous waste, substance, or material as now or at any time hereafter in effect.
1.10. LCO2: Liquid carbon dioxide, produced by purifying and liquefying Carbon
Dioxide Gas at Buyer’s Plant.
1.11. Pricing Region: The State of Georgia, those counties in Florida that are east
of Xxxxxx and north of the line formed by Hillsborough, Polk, and Orange, inclusive, and those
counties in Alabama that are south and east of the line formed by Lee, Macon, Montgomery, Crenshaw,
and Xxxxxxxxx, inclusive.
1.12. Purchase Commencement Date: The latest to occur of (i) first Day of the seventh
month immediately following the Sample Receipt Date (as defined in Section 8.4) and (ii)
the first day of the eleventh month immediately following the date that Buyer receives the last of
Buyer’s Permits (as defined in Section 3.4.3).
1.13. Seller’s Plant: The ethanol plant owned by Seller and located at 0000 Xxxx Xxxx
Xxxx, Xxxxxx, Xxxxxxx, as more specifically set forth on Exhibit A, attached hereto.
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1.14. Term: The term of this Agreement shall commence on the Effective Date and shall
continue until terminated in accordance with the terms of this Agreement.
1.15. Ton: Two thousand (2,000) pounds.
1.16. Transfer Point: For Carbon Dioxide Gas delivered to Buyer’s Plant, the flange
connection of the Carbon Dioxide Gas Pipeline that is located at the point shown on Exhibit
A as the “transfer point,” which flange connection shall be between Seller’s Carbon Dioxide Gas
scrubber and the Blower (as defined in Section 3.3.2).
2. Operation of Buyer’s Plant.
2.1. Operation. Buyer shall operate Buyer’s Plant in accordance with industry
standards and otherwise in compliance with this Agreement.
2.2. Risk and Liability. Buyer shall comply with all Federal, state, and local laws,
rules, regulations, and ordinances, including (without limitation) Environmental Laws, applicable
to the Buyer’s Plant Land Area and Buyer’s Plant. Seller shall comply with all Federal, state, and
local laws, rules, regulations, and ordinances, including (without limitation) Environmental Laws,
applicable to Seller’s Facility. In the event that either party is not in compliance with all
Federal, state, and local laws, rules, regulations, and ordinances, including (without limitation)
Environmental Laws, then, subject to the limitation provided in Section 15.2, the party out
of compliance will take any and all actions to correct such violations at such party’s own expense
and will indemnify the other party for any liability incurred by such other party as a result of
these violations.
2.3. Production Scheduling and Operating Costs. Subject to Section 3.4, Buyer
shall operate Buyer’s Plant to produce LCO2 at times and in quantities determined by Buyer, in
Buyer’s sole discretion. The operation of Buyer’s Plant shall be at Buyer’s sole expense, including
(without limitation), costs of labor, maintenance, supplies, contractors, and utilities (excluding
any real estate taxes applicable to Buyer’s Plant Land Area, and any and all other taxes related to
Seller’s operations and Seller’s Facility). Seller shall pay all real property taxes, assessments,
impositions, and all other claims or charges respecting Seller’s Facility and Buyer’s Plant Land
Area before the same shall become delinquent.
| 3. | Use of Buyer’s Plant Land Area, Lease Provisions, Buyer’s Plant Construction and
Easements. |
3.1. Lease and Easements.
3.1.1. Buyer’s Plant Land Area Site and Easements.
3.1.1.1. Seller hereby leases to Buyer the Buyer’s Plant Land Area, and hereby grants to
Buyer easements, at all times of each Day during the Term, over Seller’s Facility, all as set forth
on Exhibit A, for Buyer and Buyer’s agents, employees, and contractors to enter and exit
Buyer’s Plant Land Area, to park vehicles at Seller’s Facility, to bring supplies to Buyer’s Plant
Land Area, to remove items from Buyer’s Plant Land Area, to load and unload vehicles and
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railcars, to construct a rail spur to operate railcars thereon (and Seller shall reasonably
cooperate with Buyer in connection with the construction, connection, and operation of such rail
spur), and for the installation and maintenance of Buyer’s Plant and the pipelines, the Blower, and
equipment as set forth in Section 3.3. If Buyer’s construction or use of a rail spur
interferes with Seller’s unloading of unit train cars at Seller’s Facility, Buyer shall not have an
easement to construct or use such rail spur.
3.1.1.2. Seller represents and warrants to Buyer that (i) the present use of Buyer’s Plant
Land Area and Seller’s Facility is in compliance with all applicable laws, rules, regulations, and
ordinances (including all Environmental Laws); (ii) there does not exist any notice of an
uncorrected violation of building, safety, or fire ordinances or regulations respecting Buyer’s
Plant Land Area or Seller’s Facility; (iii) there are no unpaid taxes or assessments for the
installation of any sewer and water lines serving Buyer’s Plant Land Area or Seller’s Facility or
charges for making connection thereto or for street paving or curbing, or for any other public
improvements, nor has Seller received any notice from appropriate governmental authorities of
intention to make any public improvements; and (iv) Seller has good and marketable title or fee
simple to Seller’s Facility and Buyer’s Plant Land Area, free from all liens, restrictions, and
encumbrances, except as are otherwise expressly permitted herein.
3.1.2. Environmental Liabilities and Indemnification.
3.1.2.1. Seller represents and warrants that: (i) no portion of Buyer’s Plant Land Area
constitutes a wetland or other “water of the United States” for purposes of Section 404 of the
Federal Clean Water Act, 33 U.S.C. Section 1344, or any similar area regulated under any state law,
and (ii) Seller is not aware of any underground storage tanks being present at Seller’s Facility.
3.1.2.2. Seller hereby indemnifies, agrees to defend, and shall hold harmless Buyer from and
against all liability, loss, claims, damage, and expense, including (without limitation) reasonable
attorneys’ and experts’ fees, clean-up or other remediation costs and fees, and governmental fines
(“Costs”), arising out of or in connection with the existence of any toxic or hazardous
materials, pollutants, contaminants, or hazardous wastes existing on Seller’s Facility and Buyer’s
Plant Land Area in violation of any Environmental Law, as of the Effective Date, or which come onto
Seller’s Facility or Buyer’s Plant Land Area during the Term, except to the extent such violation
is caused by Buyer (including, without limitation, any Costs associated with the removal of any
underground storage tanks at Seller’s Facility and any Costs of remediation associated therewith).
3.1.2.3. Buyer hereby indemnifies, agrees to defend, and shall hold harmless Seller from and
against all Costs arising out of or in connection with the existence of any toxic or hazardous
materials, pollutants, contaminants or hazardous wastes introduced to Seller’s Facility and Buyer’s
Plant Land Area by Buyer or its agents in violation of any Environmental Law from and after the
Effective Date and through and until the date on which Buyer vacates Buyer’s Plant Land Area.
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3.1.3. Buyer’s Plant Land Area Rights. Buyer may occupy Buyer’s Plant Land Area
during the entire Term. Seller may modify Buyer’s use of the easements granted pursuant to this
Section 3, upon prior written notice to Buyer, only if and to the extent that Seller
reasonably, in good faith, determines that such modifications are necessary, provided that such
modifications do not materially reduce Buyer’s rights under this Agreement or materially increase
Buyer’s obligations under this Agreement.
3.1.4. Personal Property of Buyer. Buyer’s Plant is not intended to be or to become a
fixture or otherwise part of Seller’s Facility, notwithstanding the manner in which it, or any part
of it, is installed or affixed, and Buyer’s Plant, and the equipment and fixtures thereon, is and
at all times during the Term shall remain and continue to be the personal property of Buyer.
3.1.5. Annual Lease Payment. As consideration for the lease and easements set forth
herein for the entire Term and any renewal or extension thereof, Buyer shall pay to Seller the sum
of one hundred dollars ($100) annually, such payment being due on or before the twenty-fifth
(25th) Day of the first month of each Contract Year.
3.1.6. Signs. Subject to Seller’s approval of location, construction, and appearance,
which approval shall not be unreasonably withheld, delayed, or conditioned, Buyer shall be entitled
to place a five (5) foot by ten (10) foot identification sign at the main entrance to Seller’s
Facility, at Buyer’s cost.
3.2. Plant Construction. Buyer shall be responsible for constructing Buyer’s Plant
within Buyer’s Plant Land Area at Buyer’s own cost and expense. Buyer may expand or modify Buyer’s
Plant, within Buyer’s Plant Land Area, at any time during the Term. Seller shall cooperate with
Buyer in connection with scheduling the construction and installation of Buyer’s Plant, but, except
as resulting from Seller’s negligence or willful misconduct or as otherwise set forth in this
Agreement, Seller shall have no liability in connection therewith. Buyer shall comply with
reasonable rules of Xxxxx Construction Company which are provided to Buyer in writing with
reasonable advance notice, in connection with the construction of Buyer’s Plant.
3.3. Pipeline and Equipment.
3.3.1. CO2 Pipeline and Equipment Ownership. Subject to prior approval by Xxxxx
Construction Company, ICM Engineering, and Seller’s lender’s independent engineer, Buyer will
install the Carbon Dioxide Gas Pipeline and equipment to deliver Carbon Dioxide Gas from the
Transfer Point to Buyer’s Plant. Title to the Carbon Dioxide Gas Pipeline shall automatically be
transferred to Seller at the termination of this Agreement. Seller shall not disturb the Carbon
Dioxide Gas Pipeline without the prior written consent of Buyer, except to the extent required to
address an emergency, in which case Seller shall notify Buyer thereof immediately thereafter.
3.3.2. Other Pipelines and Blower. Subject to prior approval by Xxxxx Construction
Company, ICM Engineering, and Seller’s lender’s independent engineer, Buyer will install and
maintain pipelines to connect to Seller’s potable water, effluent and process water, and sanitary
sewer (“Other Pipelines”) and a blower of approximately 600 horsepower (the
“Blower”), at Seller’s Plant near its fermenter, to convey the Carbon Dioxide Gas through
the Carbon Dioxide Gas Pipeline; provided, however, that if such approval is not granted, Buyer may
terminate this Agreement by notice to Seller. Connections will be made at points mutually
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agreed to by Seller and Buyer, provided that Seller and Buyer shall use reasonable, good faith
efforts to agree on mutually-satisfactory points. Title to the Other Pipelines shall automatically
be transferred to Seller at the termination of this Agreement. Buyer shall retain title to the
Blower and will be responsible for maintenance of the Blower. Should Buyer desire to fill railcars
directly, Buyer, at Buyer’s sole expense, may install and maintain a pipeline, in a location
mutually acceptable to Seller and Buyer from Buyer’s Plant to a rail spur at Seller’s Facility.
3.3.3. Pipeline Access. Seller grants to Buyer, for the entire Term, a license for
Buyer and Buyer’s agents, employees, and contractors, over and across Seller’s Facility for access
to the Carbon Dioxide Gas Pipeline and Other Pipelines in locations and at times which are not
unreasonably objectionable to Seller, to the extent reasonably necessary to enable Buyer to perform
Buyer’s obligations under this Agreement.
3.4. Permits and Licenses.
3.4.1. THIS AGREEMENT WILL AUTOMATICALLY TERMINATE AND SHALL BE DEEMED NULL AND VOID IN THE
EVENT THAT SELLER, IN ITS REASONABLE DISCRETION DETERMINES THAT THAT BUYER OR THE BUYER’S PLANT
WOULD CAUSE SELLER TO BE IN VIOLATION OF ITS AIR QUALITY PERMIT, WASTE WATER PERMIT, GROUND WATER
WITHDRAWAL PERMIT, POTABLE WATER PERMIT OR ITS STORM WATER PERMIT AND SELLER SHALL HAVE NO FURTHER
DUTIES TO BUYER; PROVIDED, HOWEVER, THAT THIS AGREEMENT WILL NOT SO TERMINATE IF, WITHIN THREE (3)
BUSINESS DAYS AFTER SELLER NOTIFIES BUYER THEREOF, BUYER PROVIDES TO SELLER A DETAILED PLAN IN
WHICH BUYER WILL TAKE ACTIONS THAT WILL RESULT IN SELLER NOT BEING IN VIOLATION OF SUCH PERMITS AND
THEREAFTER DILIGENTLY IMPLEMENTS SUCH ACTIONS.
3.4.2. Further, upon receipt of such notice, Buyer shall cease production of LCO2 and Dry Ice
at Buyer’s Plant if such production causes such violation, until such time as such operation of
Buyer’s Plant will not result in a violation of such permits.
3.4.3. Buyer shall, without cost to Seller, use commercially reasonable efforts to obtain all
permits and licenses required by law for the construction, installation, and operation of Buyer’s
Plant and construction of the Carbon Dioxide Gas Pipeline, including, without limitation, a NPDES
permit for the discharge of effluent and process water produced at Buyer’s Plant (collectively,
“Buyer’s Permits”). If Buyer is unable to obtain all of Buyer’s Permits within three months
of the Effective Date, Buyer or Seller may terminate this Agreement upon notice to the other.
Seller shall obtain all permits which are required by applicable laws, ordinances, rules, and
regulations regarding emissions resulting from the production of Carbon Dioxide Gas and LCO2 at
Seller’s Facility and Buyer’s Plant.
3.5. Liens. Buyer shall not, at any time, permit the attachment to Seller’s Facility
or Buyer’s Plant Land Area of any lien for work done or materials furnished by or at the direction
of Buyer in connection with the construction of Buyer’s Plant by Buyer.
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3.6. Access. Seller shall have access to Buyer’s Plant during an emergency which
threatens Buyer’s Plant or Seller’s Facility, provided that Seller only acts as reasonably
necessary to address such emergency and that Seller notifies Buyer thereof immediately thereafter.
Buyer shall have access to Seller’s Facility during an emergency which threatens Buyer’s Plant or
Seller’s Facility, provided that Buyer only acts as reasonably necessary to address such emergency
and that Buyer notifies Seller thereof immediately thereafter. This Section 3.6 shall not
be deemed to provide an affirmative duty on either Buyer or Seller to act.
3.7. Memorandum of Lease. Seller agrees that, upon request from Buyer, Seller will
promptly execute and deliver to Buyer a memorandum of lease in a form reasonably agreeable to both
parties, prepared by Buyer, to be recorded in the public office in which records relating to
Buyer’s Plant Land Area are kept and take such other and further action as may be necessary to give
all persons now or hereafter interested in title to Buyer’s Plant Land Area notice of the existence
of the provisions of Section 3 and such other portions of this Agreement as relate to the
easements set forth herein and Buyer’s leasehold interest in Buyer’s Plant Land Area, including
such terms and provisions as Buyer deems appropriate, provided, however, that no copy of this
Agreement or other instrument shall be filed for record which sets forth the pricing provisions
contained herein.
3.8. Quiet Enjoyment. Seller agrees that Buyer, having performed all of Buyer’s
obligations contained in this Agreement, shall and may peaceably and quietly have, hold, and enjoy
Buyer’s Plant Land Area during the Term.
3.9. Underground Storage Tanks. Buyer shall not install any underground storage tanks
of any kind on Buyer’s Plant Land Area.
4. Operation, Inspection, and Maintenance. Buyer shall be responsible for the operation,
maintenance, and inspection of all equipment installed by Buyer at Buyer’s Plant Land Area and
Buyer shall arrange and coordinate any routine or emergency maintenance with personnel at Seller’s
Facility upon reasonable request. In no event shall Seller be responsible for the operation,
maintenance, or inspection of Buyer’s equipment.
5. Services to be Provided By Seller to Buyer.
5.1. Electrical Power Lines and Telephone Lines. Seller shall cooperate with Buyer in
the connection of electrical and telephone lines to Buyer’s Plant and the Blower and shall, at
Seller’s cost and expense, make available to Buyer transformer capacity of up to 5.5 megawatts of
electricity at 4,160 volts or less. Buyer shall arrange to have electricity delivered pursuant to
such electrical power lines billed directly to Buyer and Buyer shall pay for such electricity. In
addition to the foregoing, at all times, at Seller’s cost and expense, Seller shall provide 316
kilowatts of electricity to the Blower.
5.2. Cooling Water. Seller shall have no obligation to provide cooling water to Buyer
5.3. Process Water. Seller shall provide up to 150 gallons per minute of process
water to Buyer, at no cost to Buyer.
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5.4. Potable Water. Seller will provide sufficient potable water for lavatory,
drinking water, and an emergency eyewash at Buyer’s Plant, at no cost to Buyer.
5.5. Return of Process Water. Following Buyer’s receipt of a NPDES permit for the
discharge of effluent and process water produced at Buyer’s Plant, Buyer may use Seller’s
wastewater pipeline, to dispose of effluent and process water produced at Buyer’s Plant. Buyer
shall not include any hazardous materials in effluent or process water that is discharged into
Seller’s wastewater pipeline. Buyer will monitor its effluent and process water prior to releasing
effluent and process water into Seller’s wastewater pipeline and will immediately notify Seller if
Buyer’s effluent or process water contains hazardous materials which would put Seller’s NPDES
permit in jeopardy.
5.6. Sewer. Buyer may utilize Seller’s sanitary sewage disposal system for disposal
of Buyer’s sanitary sewage, at no charge. Buyer shall not include any hazardous materials in
Buyer’s sanitary sewage that is discharged through Seller’s sanitary sewage disposal system which
would put Seller’s applicable permit for Seller’s sanitary sewage disposal system in jeopardy.
6. Insurance.
6.1. Automobile Liability Insurance. During the Term, Buyer shall, at Buyer’s
expense, maintain automobile liability insurance, with policy limits of not less than two million
dollars ($2,000,000) combined single limit for bodily injury and property damage, each occurrence,
covering all of Buyer’s vehicles whether owned, non-owned or hired, used in connection with Buyer’s
activities at Seller’s Facility and Buyer’s Plant Land Area. Insurance broker and carriers are of
Buyer’s choice.
6.2. Commercial General Liability Insurance. During the Term, Seller shall, at
Seller’s expense, maintain commercial general liability insurance covering Seller’s operations and
activities at Seller’s Facility, with policy limits of not less than two million dollars
($2,000,000) combined single limit for bodily injury property damage, each occurrence. Said policy
shall include Buyer as an additional insured, up to the policy limits specified above, but only
with respect to those matters for which Seller is obligated to indemnify Buyer under the terms of
this Agreement and only to the extent of Seller’s said indemnification obligations. Said policy
shall also provide for not less than thirty (30) days’ written notice prior to any cancellation or
material adverse amendment thereof. During the Term, Buyer shall, at Buyer’s expense, maintain
commercial general liability insurance covering Buyer’s activities at Buyer’s Plant Land Area, with
policy limits of not less than two million dollars ($2,000,000) combined single limit for bodily
injury and property damage each occurrence, up to the policy limits specified above, but only with
respect to those matters for which Buyer is obligated to indemnify Seller under the terms of this
Agreement and only to the extent of Buyer’s said indemnification obligations. Said policy shall
also provide for not less than thirty (30) days’ written notice prior to any cancellation or
material adverse amendment thereof.
6.3. Self Insurance. Should Buyer desire to carry all or part of the insurance
coverage to be carried by Buyer pursuant to this Agreement through self-insurance and/or under a
“blanket” policy or policies covering other properties of Buyer, or Buyer’s parent corporation, subsidiaries, or controlling or affiliated entities, such methods of insurance shall be deemed
in compliance with Buyer’s obligations under this Agreement, as to both original coverage and
renewals.
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7. Safety Rules and Policies. Upon written notice thereof to Buyer, Buyer shall comply
with Seller’s reasonable safety rules and policies applicable to Seller’s Facility, which Seller
establishes from time to time, provided that such safety rules and policies do not materially
increase the obligations or decrease the rights of Buyer hereunder. Upon written notice thereof to
Seller, Seller shall comply with Buyer’s reasonable safety rules and policies applicable to Buyer’s
Plant Land Area, which Buyer establishes from time to time, provided that such safety rules and
policies do not materially increase the obligations or decrease the rights of Seller hereunder.
8. Supply and Quality of Carbon Dioxide.
8.1. Availability. During the Term, Seller shall make available to Buyer, through the
Carbon Dioxide Gas Pipeline to Buyer’s Plant, at least the first five hundred (500) Tons per Day of
Carbon Dioxide Gas, which expects will conform to the specifications set forth on Exhibit
B, attached hereto (as amended pursuant to Section 8.4), produced at Seller’s Facility
(“Minimum Volume”). Should any Carbon Dioxide Gas made available to Buyer hereunder fail to
so conform, Buyer may, but shall have no obligation to, elect to purchase such non-conforming
Carbon Dioxide Gas from Seller. Seller shall not sell Carbon Dioxide Gas, LCO2, or Dry Ice from
Seller’s Facility to any person or entity, other than Buyer, for the first three Contract Years
(“Buyer Exclusive Period”).
8.2. Option to Acquire Additional Carbon Dioxide Gas. At any time within the Buyer
Exclusive Period, Buyer may pay $100,000 to Seller to reserve all Carbon Dioxide Gas produced at
Seller’s Facility. If Buyer exercises such option, Buyer may notify (the “Increase Notice”)
Seller that Buyer wishes to increase the Minimum Volume to seven hundred fifty (750) Tons per Day
of Carbon Dioxide Gas. Following Buyer giving the Increase Notice to Seller and continuing through
the Term, (i) the Minimum Volume for the remainder of the Term shall be seven hundred fifty (750)
Tons per Day of Carbon Dioxide Gas, (ii) Seller shall not sell Carbon Dioxide Gas, LCO2, or Dry Ice
from Seller’s Facility to any person or entity, other than Buyer, and (iii) the Minimum Take shall
be increased to one hundred forty thousand (140,000) Tons of Carbon Dioxide Gas per Contract Year.
If Buyer does not so give the Increase Notice to Seller during the Buyer Exclusive Period, and
Seller thereafter desires to sell Carbon Dioxide Gas, LCO2, or Dry Ice from Seller’s Facility to
any person or entity, other than Buyer, prior to selling to such other person or entity, Seller
shall notify Buyer thereof and of the amount offered and the purchase price therefor (“Offered
Price”). If, within thirty (30) days of Buyer’s receipt of such notice, Buyer notifies Seller
that Buyer would like to purchase all or a portion of any such Carbon Dioxide Gas, LCO2, or Dry
Ice, Seller shall sell the same to Buyer at the Offered Price and, other than the price for such
additional Carbon Dioxide Gas, LCO2, or Dry Ice, all terms of this Agreement shall apply to such
purchase.
8.3. Guaranteed Minimum Take. Subject to Seller producing an adequate amount of
Carbon Dioxide Gas which conforms to the specifications set forth on Exhibit B, Buyer shall
take, or pay for if not taken, a minimum of one hundred thousand (100,000) Tons of Carbon Dioxide
Gas produced by Seller at Seller’s Facility in each Contract Year (“Minimum Take”).
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The Minimum Take shall be reduced on a Ton-for-Ton basis for each Ton of Carbon Dioxide Gas,
which conforms to the specifications set forth on Exhibit B, less than five hundred (500)
(which amount shall be increased to seven hundred fifty (750) following Buyer giving the Increase
Notice to Seller) that Seller makes available through the Carbon Dioxide Gas Pipeline for three
hundred forty (340) Days in each Contract Year. All Carbon Dioxide Gas shall be measured in
accordance with Section 10. To the extent that Buyer makes payments for Carbon Dioxide Gas
as the result of the Minimum Take for any Contract Year, but does not actually take such amount of
Carbon Dioxide Gas in such Contract Year, should Buyer take more Carbon Dioxide Gas than the
Minimum Take in one (1) or more subsequent Contract Years, such payments shall apply to such
subsequently taken Carbon Dioxide Gas. In the event a competing liquid CO2 plant is built within
250 miles of Camilla, Georgia, the Minimum Take shall be eighty thousand (80,000) Tons of Carbon
Dioxide Gas per Contract Year.
8.4. Carbon Dioxide Specifications. Within thirty (30) Days after Seller’s Facility
produces Carbon Dioxide Gas as by-product from Seller’s ethanol production at Seller’s Facility, at
ninety percent (90%) of the minimum nameplate ethanol production capacity of Seller’s Plant for ten
(10) consecutive Days, Buyer and Seller shall test such Carbon Dioxide Gas for the amounts of
impurities for each component impurity set forth on Exhibit B by taking one (1) sample per
week for three (3) consecutive weeks. Such tests shall be conducted by an independent outside
laboratory, mutually satisfactory to Buyer and Seller, and the cost of such test shall be borne
equally by Buyer and Seller. Immediately following the receipt of all such test results by Buyer
and Seller (the “Sample Receipt Date”), as to each component (e.g., Air, Ethanol, Methanol)
set forth on Exhibit B that any such sample indicates is present in a higher level than as
set forth on Exhibit B, Exhibit B shall be revised so that it reflects the highest
level shown on any such test (e.g., if the results of such tests indicate that the samples had 100,
110, and 105 ppm of Ethanol, respectively, “110” shall be inserted into the Ethanol line of
Exhibit B in place of “100”).
9. Supply Charge.
9.1. Invoicing Period. Beginning with the month that follows the Purchase
Commencement Date, Seller shall invoice Buyer monthly for the number of Tons of Carbon Dioxide Gas,
as measured in accordance with Section 10, which was provided to Buyer’s Plant through the
Carbon Dioxide Gas Pipeline and which was converted into LCO2 and shipped from Buyer’s Plant,
during the month preceding the invoice date. Buyer agrees to provide to Seller monthly statements
of dates and quantities of Carbon Dioxide Gas which is converted into LCO2 and shipped from Buyer’s
Plant.
9.2. Payment Terms. Buyer shall pay invoices net fifteen (15) days from receipt of
invoice.
9.3. Product Price. During the first Contract Year and prior to the Purchase
Commencement Date, the price per Ton of Carbon Dioxide Gas delivered to Buyer’s Plant is thirteen
dollars ($13.00) for the first one hundred thousand (100,000) Tons taken by Buyer (“First Tier
Pricing”) and seven dollars ($7.00) for any amount of Carbon Dioxide Gas taken by Buyer which
exceeds one hundred thousand (100,000) Tons in such Contract Year (“Second Tier Pricing”). Beginning with the second Contract Year and subsequent Contract Years
during the Term, the prior Contract Year’s price will be subject to adjustment as set forth in
Section 9.4.
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9.4. Price Adjustment Formula. At the end of the first Contract Year, and at the end
of each succeeding Contract Year, the price per Ton of Carbon Dioxide Gas shall be adjusted by the
actual percentage change in Buyer’s selling price of LCO2 to all of Buyer’s customers in the
Pricing Region, excluding sales to Buyer and Buyer’s affiliates, sales where customers pick up LCO2
at one of Seller’s locations, F.O.B. customers, and sales made in connection with rail shipment.
9.5. Five Year Price Adjustment. If, within ninety (90) days after the end of the
fifth Contract Year, either party notifies the other that such party believes that the market price
for Carbon Dioxide Gas is materially different than that being paid by Buyer pursuant to this
Agreement, Buyer and Seller shall, in good faith, negotiate the then-current Second Tier Pricing to
reflect current market rates, taking into consideration all relevant factors including, without
limitation, the fact that Buyer pays a higher than market price (i.e., First Tier Pricing) for the
first one hundred thousand (100,000) Tons of Carbon Dioxide Gas taken by Buyer and that Second Tier
Pricing is designed to bring the total pricing in line with market price, market indices,
distribution costs, the amortized cost of Buyer’s Plant, and the cost of operating Buyer’s Plant.
9.6. Records and Audits. Buyer shall keep pricing and measurement records of
production and shipments regarding Buyer’s Plant, such as meter and scale tickets, for the
then-current Contract Year and the preceding Contract Year. Should Seller challenge the accuracy of
Buyer’s price calculation of the current Contract Year price, an independent auditor, appointed by
Seller, may audit the records of Buyer, only to the extent necessary to substantiate such
calculations. Such auditor shall maintain all information concerning Buyer’s selling prices and
customers in confidence and only report on the accuracy of Buyer’s calculations. The cost of such
audit shall be borne by Seller, unless Buyer’s calculations were in error, in Buyer’s favor, of
greater than ten percent (10%), in which case the reasonable cost thereof shall be borne by Buyer.
Seller can challenge Buyer’s calculations for the then-current Contract Year and/or the previous
Contract Year during the then-current Contract Year, but only one (1) time during any Contract
Year. Any record shall be final between Seller and Buyer unless challenged within one (1) year of
the date of delivery of the applicable Carbon Dioxide Gas. Buyer shall, within ninety (90) days of
the end of each Contract Year, provide to Seller data used by Buyer in determining the amount of
the annual price adjustment, which was calculated in accordance with Section 9.4.
10. Measurement.
10.1. Truck and Load Cell Measurement. Unless otherwise specified, all measurements
of Carbon Dioxide Gas are determined under this Section 10. The quantity of Carbon Dioxide
Gas used by Buyer to manufacture LCO2 and shipped by truck or into a tank equipped with load cells
shall be determined by Buyer by weighing the LCO2 produced from such Carbon Dioxide Gas on State of
Georgia certified scales. Buyer shall maintain said measuring devices in good operating condition
to an accuracy of plus or minus two percent (2%). At any time during the Term, Seller may request
that the scale be verified for weighing accuracy. If such verification shows that a scale is not
accurate by greater than two percent (2%), Buyer, shall at Buyer’s cost, promptly recalibrate such
scale and shall pay for such verification testing. If any such test proves
11
the scales are not accurate by greater than two percent (2%), appropriate billing adjustments
shall be made for the period of inaccuracy, which, in the absence of direct evidence of the
contrary, or other agreement between Seller and Buyer, shall be assumed to be thirty (30) days.
Buyer shall notify Seller of any calibrations of such scales and will provide to Seller the results
of any such calibrations.
10.2. Railcar Measurement. The quantity of Carbon Dioxide Gas used by Buyer to
manufacture LCO2 and shipped by tank railcars shall be determined by using the designated standard
volume of liquid product containment capacity of the railcar, as designated by the railcar
manufacturer, when filled to the ninety-five percent (95%) try cock designation less a heel
adjustment factor of three and four tenths percent (3.4%) (“Heel Adjustment”). This Heel
Adjustment reflects the amount of LCO2 that remains in the tank of the railcar and cannot be pumped
off.
11. Production Estimates.
11.1. Production Forecasts. Seller shall provide to Buyer reasonable advance notice
of any expected downtime at Seller’s Facility. Seller anticipates that Seller’s Facility will be
down for approximately fifteen (15) Days each Contract Year. Seller warrants to Buyer that Seller
will not operate Seller’s Plant on an interruptible power supply.
11.2. Cooperation in Repairs. Seller shall keep Buyer informed as to the extent of
any reduction in the quantity of Carbon Dioxide Gas available to Buyer and any power outages,
together with a reasonable estimate of when any repairs to Seller’s Facility will occur. Seller
shall use commercially reasonable efforts to expedite repairs to Seller’s Facility.
12. Right to Terminate; Condemnation.
12.1. Buyer’s Right to Terminate. In the event Seller is unable to make available to
Buyer at least fifty thousand (50,000) Tons of Carbon Dioxide Gas during any period, following the
Purchase Commencement Date, of one hundred eighty (180) consecutive Days, (including any scheduled
downtimes of Seller’s Facility, such as those specified in Section 11.1 and Section
16.3), Buyer shall have the right to terminate this Agreement without further cost or
obligation, by providing Seller written notice. For purposes of this Section 12.1, any
amount of Carbon Dioxide Gas, that Seller makes available to Buyer on any Day, which is in excess
of [four hundred fifty (450)] Tons, shall not be deemed to have been made available to Buyer.
12.2. Condemnation. All damages and amounts awarded for taking by condemnation or
right of eminent domain, whether for the whole or a part of Buyer’s Plant Land Area, shall belong
to and be the sole property of Seller (whether such damages or amounts shall be awarded as
compensation for taking of or diminution in value of the leasehold or the fee of Buyer’s Plant Land
Area); provided, however, that Buyer shall be entitled to receive and retain any amount which may
be specifically awarded to Buyer in such proceedings for business interruption and/or relocation
costs or loss of Buyer’s Plant and Buyer’s trade fixtures or other personal property belonging to
Buyer on Buyer’s Plant Land Area.
12
13. Term of Agreement.
13.1. Term of Agreement. The initial Term shall be fifteen (15) Contract Years. The
Term shall be automatically renewed for additional terms of two (2) Contract Years thereafter,
unless either party hereto gives the other written notice of termination, at least twelve (12)
months prior to the expiration of the initial Term or any renewal Term.
13.2. Removal of Buyer’s Plant. At the expiration of the Term, upon Buyer’s request,
Buyer shall maintain the leasehold and easement rights granted herein for up to three hundred
sixty-five (365) Days following the expiration of the Term to deconstruct and remove Buyer’s Plant
from Buyer’s Plant Land Area. Buyer will leave Buyer’s Plant Land Area free from all trash and
debris, removing any above-grade obstacles from Buyer’s Plant Land Area, and repairing or sealing,
as appropriate, any interconnection between Buyer’s Plant and Seller’s Facility.
14. Delivery; Title. Delivery of Carbon Dioxide Gas to Buyer’s Plant shall be effective at
the time that the Carbon Dioxide Gas crosses the Transfer Point.
15. Liability and Indemnity.
15.1. Indemnity.
15.1.1 Buyer’s Indemnity. Buyer hereby indemnifies, agrees to defend, and holds
harmless Seller from each and every loss, cost, damage, and expense arising out of any accident or
other occurrence at Buyer’s Plant Land Area or Seller’s Facility during the Term, to the extent
caused by the gross negligence or willful misconduct of Buyer, its agents, servants, or employees,
which causes injury to or death of persons, or damage to property.
15.1.2 Seller’s Indemnity. Seller hereby indemnifies, agrees to defend, and holds
harmless Buyer from each and every loss, cost, damage, and expense arising out of any accident or
other occurrence at Buyer’s Plant Land Area or Seller’s Facility during the Term, to the extent
caused by the gross negligence or willful misconduct of Seller, its agents, servants, or employees,
which causes injury to or death of persons, or damage to property.
15.2. Limitation of Liability. Neither party shall be liable to the other for
consequential, indirect, special, or punitive damages.
16. Force Majeure.
16.1. Description. If either Buyer or Seller is rendered unable, wholly or in part,
by Force Majeure to carry out its obligations under this Agreement, then the obligations of such
party, insofar as they are affected by such Force Majeure, shall be suspended during the
continuance of inability so caused, but for no longer period, and such cause shall be remedied so
far as practical with reasonable dispatch. The term “Force Majeure” as employed herein shall
include, but not to be limited to, acts of God, acts of the public enemy, wars, blockades,
insurrections, strikes or differences with workers, riots, epidemics, landslides, lightning,
earthquakes, fires, storms, floods, washouts, civil disturbances, interference by civil or military
authorities (legal or de facto, whether purporting to act under some constitution, decree, law or
otherwise), governmental regulation, rail derailment, or any other cause beyond the reasonable control of either party. It is understood and agreed that the settlement of strikes or
differences with workers shall be entirely within the discretion of the party having the
difficulty.
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16.2. Notification of Force Majeure. A party experiencing a Force Majeure event will
promptly notify the other of the cause, expected duration, and cessation of such event, and shall
take reasonable efforts to mitigate the effects of a Force Majeure event.
16.3. Shut Downs. It is understood that Seller will shut down operations at Seller’s
Facility from time to time for unscheduled repairs and scheduled maintenance. Such periods of
interruption of supply shall not be deemed a breach of contract on the part of Seller. Seller shall
give Buyer reasonable advance notice of any such shutdown, when circumstances permit.
17. Choice of Law. This Agreement shall be interpreted and enforced in accordance with the
internal laws of the State of Georgia, without regard to its conflicts of law principles. Buyer and
Seller consent and agree to subject themselves to the venue and jurisdiction of Xxxxxxxx County,
Georgia, or the Federal courts of the Middle District of Georgia.
18. Modifications of Agreement. The provisions of this Agreement constitute the entire
agreement between Seller and Buyer relating to the matters covered by this Agreement. No
modifications or waiver of any of said provisions shall be binding upon either party unless set
forth in writing and signed by a duly authorized representative of such party.
19. Confidentiality. All information disclosed in connection with this Agreement shall be
deemed “Confidential Information”. Each party shall disclose information concerning the subject of
this Agreement solely to those employees and advisors who need to know such information in order
for the Agreement to be properly conducted and will not disclose to any third party unless
permission is given in writing by the other party to this Agreement or unless required by law,
legal process, or pursuant to filings required by the New York Stock Exchange or the United States
Securities and Exchange Commission, or to a corporate parent, affiliate or subsidiary without such
consent being required. This Section 19 is subject to Section 3.7.
20. Non-Assignability. This Agreement shall not be assigned by either party without the
prior written consent of the other party; provided, however, that such consent shall not be
unreasonably withheld, delayed, or conditioned; and provided further that either party may assign
this Agreement to a successor of all or substantially all of its business to which it relates or to
a corporate parent, an affiliate, or a subsidiary, without such consent being required, upon notice
to the other party. This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their successors and assigns.
21. Notices.
21.1. Notices and Payments to Seller. Payments to Seller shall be made to the address
below. Any and all notices provided for herein shall be in writing and shall be deemed to have been
properly given to Seller, effective upon personal delivery or delivery as confirmed by return
receipt or in writing by the receiving party, if the same shall have been mailed by registered or
certified mail, postage prepaid:
| To Seller: | X.X. Xxx 000 | |||
| Xxxxxxx, XX 00000 | ||||
| Attention: Chief Executive Officer |
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21.2. Notices to Buyer. Notices to Buyer shall be made to the address below. Any and
all notices provided for herein shall be in writing and shall be deemed to have been properly given
to Buyer, effective upon personal delivery or delivery as confirmed by return receipt or in writing
by the receiving party, if the same shall have been mailed by registered or certified mail, postage
prepaid:
| To Buyer: | Airgas Carbonic, Inc. | |||
| 0000 Xxxxxxxxx Xxxxxxx | ||||
| Xxxxx 000 | ||||
| Xxxxxx, XX 00000 | ||||
| Attention: President | ||||
| With a copy to: | Airgas, Inc. | |||
| 000 Xxxxx Xxxxxx-Xxxxxxx Xxxx, Xxxxx 000 | ||||
| Xxxxxx, XX 00000 | ||||
| Attention: General Counsel |
21.3. Address Changes. Either party may hereafter change its address by designating a
different address and/or office in a notice in writing to the other party.
22. Captions. The captions of the various paragraphs of this Agreement are inserted only
as a matter of convenience and for reference and in no way define, limit or describe the scope or
intent of this Agreement nor in any way affect this Agreement.
15
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed as of the day
and year first written below.
| Southwest Georgia Ethanol, LLC | Airgas Carbonic, Inc. | |||||
By:
|
/s/ Xxxxxx Xxxxxxxx | By: | /s/ Xxxx Xxxxx | |||
Name:
|
Xxxxxx Xxxxxxxx | Name: | Xxxx Xxxxx | |||
Title:
|
Authorized Person | Title: | President | |||
| 7/2/08 | ||||||
16
EXHIBIT A
SELLER’S FACILITY, SELLER’S PLANT, BUYER’S PLANT LAND AREA,
EASEMENT LOCATIONS, CARBON DIOXIDE GAS PIPELINE LOCATION,
AND TRANSFER POINT LOCATION
SELLER’S FACILITY, SELLER’S PLANT, BUYER’S PLANT LAND AREA,
EASEMENT LOCATIONS, CARBON DIOXIDE GAS PIPELINE LOCATION,
AND TRANSFER POINT LOCATION
All that tract or parcel of land situated, lying, and being in Land Lot No. 311 in the 10th Land
District of Xxxxxxxx County, Georgia, containing 6.98 acres, more or less, and being more
particularly described as follows:
Begin at an iron pin set, which iron pin set is north 07 degrees 13 minutes 57 seconds west 2248.98
feet from the intersection of the northern edge of the right of way of Fairway Road with the
western edge of the right of way of Back Nine Road, and with said iron pin set as the Point of
Beginning, go thence north 89 degrees 37 minutes 49 seconds west 1096.54 feet to an iron pin set;
from thence go a chord direction of north 25 degrees 54 minutes 05 seconds west a chord distance of
30.46 feet (an arc distance of 37.78 feet) to an iron pin set; from thence go a chord direction of
north 68 degrees 14 minutes 40 seconds east a chord distance of 778.57 feet (an arc distance of
876.09 feet) to an iron pin set; from thence go south 64 degrees 06 minutes 50 seconds east 123.31
feet to an iron pin set; from thence go south 57 degrees 36 minutes 06 seconds east 354.25 feet to
an iron pin set; from thence go a chord direction of south 16 degrees 23 minutes 02 seconds west a
chord distance of 82.76 feet (an arc distance of 111.19 feet) to the iron pin set which marks the
Point of Beginning.
Said tract of land is more particularly described on that certain Plat of Survey prepared by Xxxxx
X. Xxxxxx, Georgia Registered Land Surveyor No. 1649, entitled “SOUTHWEST GEORGIA ETHANOL, LLC”,
Survey Date: January 10, 2008, Plat Date: January 12, 2008, copy of which is recorded in Plat Book
32, page 192, in the Office of the Clerk of the Superior Court of Xxxxxxxx County, Georgia, to
which reference is hereby particularly made.
[TO BE COMPLETED TO SHOW THE LOCATION OF EACH OF THE APPLICABLE ITEMS — THERE NEEDS TO BE A SITE
PLAN]
Exhibit A
EXHIBIT B
PRODUCT SPECIFICATION
PRODUCT SPECIFICATION
| Component | Composition by Volume (maximum or minimum) | |||||
CO2 |
99.0 | % | Min | |||
Air |
.8 | % | Max | |||
Ethanol |
100 ppm | Max | ||||
Methanol |
100 ppm | Max | ||||
Other Alcohols |
10 ppm | Max | ||||
Acetaldehyde |
100 ppm | Max | ||||
Ethyl Acetate |
80 ppm | Max | ||||
Acetic Acid |
10 ppm | Max | ||||
Nox |
2 ppm | Max | ||||
NO2 |
2 ppm | Max | ||||
H2S |
15 ppm | Max | ||||
Other Sulfurs |
2 ppm | Max | ||||
Methane |
20 ppm | Max | ||||
Acetone |
20 ppm | Max | ||||
Others |
none | |||||
Temperature |
90 degrees F | Xxx | ||||
Xxxxxxxx |
.5 psia | Min | ||||
ppm = parts per million
Exhibit B
