Exhibit 10.4
ETHANOL MARKETING AND SERVICES AGREEMENT
This Agreement is made and entered into this 18th day of December, 2000 by
and between Great Plains Ethanol, LLC (hereinafter referred to as Owner), and
Ethanol Products, LLC having an address of 000 X. Xxxxxx, Xxxxxxx, Xxxxxx
00000 (hereinafter referred to as Marketer).
RECITALS:
A) The Owner would like to utilize the services of an Ethanol
Marketer to market fuel grade ethanol (hereinafter referred to
as Ethanol) from its plant to be sited in Xxxxxx County, South
Dakota.
B) Marketer is in the business of marketing Ethanol in the United
States.
C) The parties desire to enter into and execute this Agreement
for the purpose of setting forth agreed upon terms and
conditions.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein, the parties agree as follows:
1. MARKETING RIGHTS. Owner gives Marketer exclusive rights to
market all Ethanol produced from its Ethanol Plant to be sited
in South Dakota.
2. TERM OF AGREEMENT. The term of this agreement shall continue
for the length of the original primary debt financing for
plant construction. This Agreement renews automatically for
additional three (3) year periods, at the end of each three
(3) year period, unless terminated by either party. After the
initial three (3) years, either party may terminate this
agreement by giving ninety (90) days notice of termination
prior to the end of any three (3) year period to the other
party. Within fifteen (15) days of receipt of written notice
of termination by Owner, Marketer will provide Owner with a
quantity per month of Ethanol for up to one (1) year from
termination that will be needed to fulfill sales contracts in
existence at the time of termination. Owner agrees that all
existing contracts disclosed in the fifteen (15) day period
will be fulfilled, and that the terms of this Agreement will
remain in effect for all such Ethanol.
3. MARKETING SERVICES PROVIDED. Marketer will provide to Owner
the following marketing services:
a. MARKETING. Marketer will affect the sale of Owner's
Ethanol at available market prices.
b. SCHEDULING AND DISTRIBUTION. Marketer will be
responsible for scheduling all shipments of Owner's
Ethanol. Marketer will provide to Owner a shipping
order, and Owner will provide a combined shipping
schedule as stated in Section 8 below.
c. LEASED STORAGE. If it is deemed necessary by Marketer
to market Owner's Ethanol through storage facilities
such as Xxxxxxxx or Xxxxx pipeline terminals, Owner
will pay all lease and throughput cost associated
with such leases.
d. FREIGHT. When necessary to Market Owner's Ethanol,
Marketer will arrange freight for shipment of Owner's
Ethanol. Owner will pay all freight costs.
e. CUSTOMER CREDITWORTHINESS. Marketer will make
reasonable efforts to review the creditworthiness of
Owner's Ethanol customers. As deemed necessary at
Marketer's discretion, Marketer will obtain at its
expense Credit Bureau reports or Xxxx and Bradstreet
reports for customers of Owner. Marketer will then
recommend to Owner which, if any, accounts Marketer
believes should be rejected. Owner will have the
right to request and review the rejection
recommendations and/or reports and notify Marketer in
writing of any customers in addition to the
recommendations of Marketer that should be rejected
or accepted by Owner. Marketer will not sell Ethanol
to any customer rejected by Owner or Marketer.
f. ACCOUNTS RECEIVABLE. Marketer will make reasonable
efforts to collect any past due accounts. However,
Marketer shall not be required to initiate litigation
to collect delinquent accounts. Marketer is
authorized to turn over to collection agencies a
delinquent account unless Owner determines that it
will assume responsibility for collecting the
account. Any collection agency fees resulting from
the collections process will be borne by Owner. All
accounts receivable losses arising from the marketing
of Ethanol are the sole responsibility of Owner.
g. TITLE TO AND RISK OF LOSS. Title to and risk of loss
shall pass from Owner directly to Owner's customer
according to the provisions of each sales
transaction.
h. TRANSACTION PROCESSING. Marketer will be responsible
for invoicing all Ethanol marketed, receiving
payments from customers, and paying freight and/or
storage when necessary. Owner will be responsible for
furnishing Marketer a report by 10:00 AM each
workday of the previous day's shipments. Marketer
will send to the customers invoices the same day as
the report is received.
i. REMITTANCE OF PAYMENT. Each Thursday a payment will
be made to Owner for all Ethanol invoiced thirteen to
nineteen (13-19) days prior to said date that has
been paid by Owner's customers. This payment will be
adjusted for freight and storage cost as described
above in this Section and the Marketing Fee stated in
Section 5 of this Agreement, Administrative Services
Fee stated in Section 6, and when applicable, an
adjustment for value-added as stated in Section 7
below.
4. MARKETER'S PURCHASE OF ETHANOL. Marketer may purchase for its
own account all or a portion of Owner's Ethanol at a price to
be agreed upon by the parties at the time of the purchase.
5. MARKETING FEE. The Marketing Fee will be $0.0040/gallon of
Ethanol as produced by the Ethanol Plant to be sited in Xxxxxx
County, South Dakota.
6. ADMINISTRATIVE SERVICES PROVIDED. Marketer will provide to
Owner the following Administrative Services:
a. DISTRIBUTION SERVICES. Marketer will be responsible
for an on-going program to conduct carrier audits and
will be responsible for carrier selection and
dispatching, freight rate bundling and distribution
optimization.
b. TRANSACTION PROCESSING. Marketer will be responsible
for ethanol licensing, monitoring and state
compliance reporting, state surety bonding, tax
collection, remittance and reporting, purchase and
sales acknowledgments, late payment collections, and
electronic funds transfer services.
c. INVENTORY MANAGEMENT. Marketer will be responsible
for monitoring future ethanol stock levels projected
for Owner's plant to facilitate the marketing program
established by Marketer.
d. PROPRIETARY SOFTWARE. Marketer will install and
maintain a proprietary software system to handle
linked transaction processing and necessary data
access to ethanol marketing and sales information.
The administrative services fee will be $0.0025/gallon of
Ethanol as produced by the Ethanol Plant to be sited in Xxxxxx
County, South Dakota.
7. VALUE-ADDED OPPORTUNITIES. Marketer and Owner mutually
recognize that on occasion Marketer will be able to develop a
sale opportunity for Owner's ethanol that is above the market
value for sales typically completed on a spot market or
contract rollover basis (a "value-added transaction").
Examples of value-added transactions include the building of
new markets, time exchanges, location exchanges, rack pricing,
and negotiation of spread differentials. The parties
acknowledge that new value-added opportunities not yet known
to the parties are expected to be developed by Marketer in the
future.
Owner and Marketer acknowledge that for value-added
opportunities, the Marketing Fee is insufficient to compensate
Marketer for additional income and profits generated for
Owner. In order to facilitate the completion of value-added
opportunities which occur and disappear quickly within the
market, Owner agrees to identify representatives of Owner with
authority to approve value-added transactions. Marketer will
upon identification of a value-added opportunity present to
any one of Owner's representatives the value-added opportunity
for consideration. Marketer will explain to Owner's
representative the value-added opportunity and a proposed
compensation arrangement for Marketer. Owner has complete and
sole discretion to accept or reject the value-added
opportunity and fee proposal. If agreed upon by Owner's
representative, Marketer will confirm in writing to Owner's
representative the agreement of the parties regarding the
value-added opportunity. In this case, Marketer shall complete
the value-added transaction in accordance with the agreement
of the parties. If Owner's representative declines to
participate in the value-added opportunity, then Marketer will
not complete the value-added opportunity for Owner's account.
8. REPORTING. Marketer will provide Owner with the following
reports on a schedule described below during the term of this
Agreement:
Shipping Orders- Daily
Market Information- Weekly
Sales Summary- Monthly
Owner will provide Marketer with the following reports on a
scheduled described below during the term of this Agreement:
Daily Production- Daily
Combined Shipping Schedule- Daily
In addition to the aforementioned reports, Owner will timely
inform Marketer of daily inventories, plant shutdowns, daily
production projections, and any other information requested by
Marketer in which to perform under this Agreement.
9. DISCONTINUATION OF PRODUCTION. In the event that Owner wishes
to discontinue or reduce the production of Ethanol, Owner will
notify Marketer one (1) year in advance of Owner's decision so
that all contract commitments made by Marketer for Owner may
be met. If less than one (1) year notice of discontinuance or
reduction of production is provided to Marketer, or if
unforeseen circumstances cause Owner to cease or reduce
production at its plant, Owner grants to Marketer the power to
buy in Ethanol short falls for the account of the Owner on any
unfilled contracts, and that any associated losses will be
reimbursed by Owner to Marketer.
10. LIABILITY. Any and all liability related to the Ethanol,
including but not limited to Ethanol quality and the handling,
transportation and storage of Ethanol, shall remain the sole
responsibility of Owner.
11. INSURANCE. Marketer will furnish Owner with an insurance
certificate verifying that Marketer has liability insurance.
12. ENTIRE AGREEMENT AND AMENDMENT. This Agreement contains the
entire Ethanol Marketing Agreement between the parties. No
oral statements, representations or prior written matter not
contained in this Agreement shall have any effect regarding
products marketing. This Agreement shall not be amended or
modified in any manner except by a writing executed by both
parties.
13. INDEMNIFICATION OF MARKETER. Owner shall indemnify, hold
harmless and defend Marketer, and its officers, directors,
employees and agents from and against any and all claims,
actions, damages, liabilities and expenses, including but not
limited to, attorney's and other professional fees, in
connection with loss of life, personal injury and/or damage to
property of third parties, arising from or out of Marketer's
services provided under the terms and conditions of this
Agreement, and for Owner's breach of this Agreement, except
that Owner shall not indemnify, hold harmless and defend
Marketer from (i) the negligent or intentional acts of
Marketer and its officers, directors, employees and agents,
(ii) any act beyond the scope of the Marketer's services to be
rendered under the terms and conditions of
this Agreement,(iii) any violation of laws, regulations,
ordinances and/or court orders by Marketer.
14. INDEMNIFICATION OF OWNER. Marketer shall indemnify, hold
harmless and defend Owner, and its officers, employees and
agents from and against any and all claims, actions, damages,
liabilities and expenses, including, but not limited to,
attorneys' and other professional fees, in connection with
Marketer's breach of this agreement and, in connection with
loss of life, personal injury and/or damage to property of
third parties arising from or out of (i) the negligent or
intentional acts of Marketer and its officers, directors,
employees and agents, (ii) any act beyond the scope of
Marketer's services to be rendered under the terms and
conditions of this Agreement, and (iii) any violation of laws,
regulations, ordinances and/or court orders by Marketer.
15. CONFIDENTIAL NATURE OF AGREEMENT. Marketer and Owner agree to
keep all sales, prices, inventory positions, and the details
of this Agreement strictly confidential.
16. ASSIGNMENT. This Agreement shall not be assigned by either
party, except to an affiliate controlled by or in control of
said party, without the written consent of the other party.
17. GOVERNING LAW. This Agreement shall be governed, construed and
enforced under the laws of the State of South Dakota.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date and year first above written.
Great Plains Ethanol, LLC (Owner)
By /s/ Xxxxxx Xxxxx
------------------------------------------
Its Pres
Ethanol Products, LLC (Marketer)
By /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Its President
