Exhibit 10.7
GRAIN ORIGINATION CONTRACT
Red Trail Energy LLC from Richardton, North Dakota (hereafter called "LLC") is
in the process of raising equity to build an ethanol production plant in
Richardton, North Dakota.
Effective 1 day of April 2004, LLC has retained New Vision Coop, Worthington,
Minnesota (hereafter called "NVC") to provide grain origination and other
services described within this Grain Origination Contract (hereafter called
"Contract"). LLC will administer and direct all NVC's work effort described in
this contract. NVC shall communicate exclusively with LLC unless instructed by
LLC to do otherwise.
LLC understands that NVC will provide information and perform its duties with
the best interests of Red Trail Energy LLC stockholders.
NVC RESPONSIBILITIES
Construction. NVC will assist in the design of grain receiving, load out,
storage and plant track layout.
Rail Rates & Service. NVC will assist in the negotiation of rail rates and
service
Origination: NVC will establish a grain bid structure for the purpose of
purchasing grain for delivery to the Richardton site. NVC will purchase all rail
grain for delivery to the Richardton site. NVC will manage rail logistics to
accommodate plant usage. NVC will provide origination programs and contracts for
the Richardton site.
Risk Management. NVC will assist LLC in hedging commodities for LLC. NVC will
assist LLC in minimizing corn procurement costs.
LLC RESPONSIBILITIES
LLC will direct NVC's work effort in an efficient manner.
LLC will be responsible for all legal review of all programs and documents
submitted by NVC.
NVC LIMITATIONS
NVC cannot enter any contracts or agreements, either written or verbal on behalf
of LLC EXCEPT cash, rail grain contracts.
P 2 GRAIN ORIGINATION CONTRACT
TERM
This contract shall terminate three years from its start date unless extended
through an amendment.
CANCELLATION
Either party may cancel this contract by providing sixty (60) days written
notice to the other party.
FEES
Development Fee: When the plant construction announcement is made, LLC shall pay
NVC $ 25,000.00.
Operation Fee: LLC shall pay NVC one half cent ($ .005) per bushel for all rail
grain delivered to Richardton. No fee will be assessed on truck grain delivered
to the plant.
Incentive Fee: LLC shall pay NVC 10% of profit earned by minimizing corn
procurement costs.
It is proposed that Red Trail Energy LLC maintain two commodity futures
accounts. One would be used for hedging purposes (Hedge Account) and one would
be used to minimize corn procurement costs (Trade Account). The incentive would
apply to all profits earned on closed trades in the "Trade Account".
Hedge Account: This account would be used exclusively to offset cash corn
purchased or cash product sold (DDG or ethanol). Gains or losses generated
in account would be applied to the respective commodity.
Trade Account: This account would be used to purchase corn futures or call
options or sell put options. Its primary function is to protect the plant
from rising corn costs. The firm handling the transactions calculates gains
or losses in this account. Gains or losses would be accounted for according
to LLC's board and management team. Profits in this account would be split
10% to NVC and the balance to LLC. Losses would remain the responsibility
of LLC. Reconciliation for the incentive shall coincide with LLC's fiscal
year
All fees shall be due and payable upon receipt of an invoice from NVC.
GENERAL
Amendments. No amendment or modification of this Contract is acceptable unless
it is in writing and signed by both parties.
Independent Contractor. NVC shall be an Independent Contractor and nothing in
this Contract shall be deemed to place the parties in the relationship of
employer-employee, principal-agent, partners or joint ventures.
P 3 GRAIN ORIGINATION CONTRACT
GENERAL
Assignment. Neither party may assign this Contract without written authorization
by both parties.
Severability. Should any provision of this Contract be deemed invalid the
remaining provisions of this Contract shall not be affected and shall continue
in effect.
Attorney's Fees and Legal Costs. In an any dispute, the prevailing party shall
be reimbursed for reasonable attorney's fees and legal costs by the other party.
Governing Law. The State laws of North Dakota shall govern this Contract.
Notices. All notices for NVC shall be sent to:
Xxxxx XxXxxxxx
New Vision Coop
XX Xxx 000
0000 Xxxxxx Xxxx 0
Xxxxxxxxxxx, XX 00000
Ph. 000-000-0000 xxx 00
FAX: 000-000-0000
E-mail: xxxxxxxxx@xxxxxxxxx.xxxx
Notices: All notices for LLC shall be sent to:
Xxxxxxx Xxxx, President
Red Trail Energy LLC
XX Xxx 00
00 Xxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Ph.000-000-0000
FAX: _______________
E-mail: xxxxx@xxxxxxxxxxxxxx.xxx
In witness whereof, the parties hereto have executed this Contract as of the
date first written above.
Red Trail Energy LLC (LLC) New Vision Coop (NVC)
By: /s/ Xxxxxxx Xxxx By: /s/ Xxxxx XxXxxxxx
--------------------------------- ------------------------------------
Xxxxxxx Xxxx, Board President Xxxxx XxXxxxxx, General Mgr.
April 1, 2004 April 1, 2004
