Exhibit 10.11
(RPMG LOGO)
RENEWABLE PRODUCTS MARKETING GROUP
ETHANOL FUEL
MARKETING AGREEMENT
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RPMG SIGNED
CONTRACT 8-18-05
ETHANOL FUEL MARKETING AGREEMENT
THIS AGREEMENT, entered into this 18 day of August, 2005, by and between
RENEWABLE PRODUCTS MARKETING GROUP, L.L.C., hereinafter referred to as
"RENEWABLE PRODUCTS"; and RED TRAIL ENERGY, LLC, a North Dakota Limited
Liability Corporation, hereinafter referred to as "RED TRAIL ENERGY."
WITNESSETH:
WHEREAS, Renewable Products is a limited liability company formed for the
purpose of marketing ethanol for its members and others, and,
WHEREAS, RED TRAIL ENERGY is an L.L.C., intending to construct a plant in
Richardton, North Dakota for the production of fuel grade ethanol, and,
WHEREAS, the parties have agreed that, for the duration of this marketing
agreement, the sale and marketing of all of the ethanol produced by RED TRAIL
ENERGY should be undertaken by Renewable Products.
NOW, THEREFORE, In consideration of the mutual covenants and promises
herein contained, the parties hereto agree as follows:
1. Exclusive Marketing Representative. That if RED TRAIL ENERGY constructs
a facility for the production of fuel grade ethanol, Renewable Products shall be
the sole marketing representative for the entire production of said facility
subject to all the terms and conditions of this agreement.
2. Plant Construction/Ethanol Specifications. That RED TRAIL ENERGY
promises and agrees to proceed, with due diligence, toward the planning,
financing and construction of a facility for the production of fuel grade
ethanol with a capacity of approximately 50 million gallons per year, which fuel
grade ethanol will be at least 200 proof (denatured), and conform to the
specifications described in A.S.T.M. 4806 and such other specifications that may
be, from time-to-time, promulgated by the industry for E-Grade denatured fuel
ethanol. RED TRAIL ENERGY contemplates that said facility is anticipated to be
in production by January, 2007, and will make every good faith effort to begin
production by that time.
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3. Rail and Truck Loading Facilities. That the facility to be constructed
and operated by RED TRAIL ENERGY, as aforesaid, shall include reasonable and
convenient railcar and tank truck access at the facility of a size and design
appropriate to handle production of approximately 50 million gallons of ethanol
per year. All such railcar and tank truck loading facilities shall meet all
industry and governmental safety standards and shall be capable of delivering a
minimum of 800 gallons of product per minute to railcars and/or tank trucks. RED
TRAIL ENERGY will be solely responsible for all demurrage charges for railcars
in service for its use. RED TRAIL ENERGY shall provide personnel reasonably
needed to load trucks or rail cars at its facility in a timely manner.
4. Storage Capacity. That the facility to be constructed and operated by
RED TRAIL ENERGY as aforesaid shall have sufficient storage capacity for not
less than 10 days ethanol production.
5. Best Efforts to Market. That since Renewable Products shall have the
exclusive right to market all the fuel grade ethanol produced by RED TRAIL
ENERGY during the term of this agreement, Renewable Products promises and agrees
to use its best good faith efforts to market all such fuel grade ethanol;
provided, however, that Renewable Products' obligation hereunder shall be
excused in case of fire, flood, other natural calamity, labor dispute or any
adverse governmental statute, regulations or decree (including any court order
or decree).
6. Risk of Loss. That Renewable Products will be responsible for the
marketing (subject to the terms of this agreement) of all such fuel grade
ethanol produced by RED TRAIL ENERGY, from the time the common carrier accepts
responsibility for the product at RED TRAIL ENERGY's facility in either a
railcar and/or tank truck. In addition, Renewable Products shall bear the risk
of loss for all such product that has been accepted for shipment by the common
carrier.
7. Specific Marketing Tasks. Renewable Products shall be totally
responsible for the marketing, sale and delivery of all the production from RED
TRAIL ENERGY's facility during the term of this agreement, including, but not
limited to:
- Obtaining sufficient railcar, tank trucks and other transport as
may be needed to handle said production;
- Negotiating the rates and tariffs to be charged for delivery of
such production to the customer;
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- Promoting and advertising the sale of fuel grade ethanol as
appropriate;
- Ascertaining that such production is delivered where contracted
and intended;
- Handling all purchase agreements with consumers and any
complaints in connection therewith; and
- Collecting all accounts and undertaking any legal collection
procedures as may be necessary.
8. Negotiation of Ethanol Price. That Renewable Products will use its best
efforts to obtain the best price for all fuel grade ethanol sold by it pursuant
to the terms of this agreement.
9. Compensation/Pooling.
RED TRAIL ENERGY will pay Renewable Products $.01 (one cent) per gallon for
each gallon of ethanol sold by Renewable Products for the account of RED TRAIL
ENERGY. Renewable Products shall have the right to deduct this fee from payments
due RED TRAIL ENERGY as described in paragraph 10. The members of Renewable
Products market their ethanol as a pool. It is the intent of Renewable Products
to treat the production of RED TRAIL ENERGY in a similar manner in the future.
The parties hereto agree that, upon request in writing, either party may require
the other to make available its books and records, at reasonable intervals, in
order to audit those books and records and to account for all dealings,
transactions and sums relevant to this Agreement.
10. Accounts Receivable/Rail Car Leases/Termination of Contract. It will be
the responsibility of Renewable Products to do all billing in regard to the sale
of ethanol, to collect all receivables and to be responsible for any bad
accounts. RENEWABLE PRODUCTS shall make payment to RED TRAIL ENERGY within 10
days after taking delivery of product into common carrier track or into railcar.
All risks associated with accounts receivables shall be borne by Renewable
Products. Renewable Products will lease approximately 125 railcars to be used by
RED TRAIL ENERGY. A separate payment for leased railcars is not applicable as
RED TRAIL ENERGY's production of fuel grade is part of the RENEWABLE PRODUCTS
marketing pool. If this contract is terminated, by non-renewal or otherwise, the
lease for the rail cars leased by Renewable Products for the transport of RED
TRAIL ENERGY's ethanol will be assigned to RED TRAIL ENERGY, who will be
obligated to the terms and conditions of said lease. Renewable Products shall
provide RED TRAIL ENERGY the opportunity to review and approve of the terms and
conditions of any such rail car lease before Renewable
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Products first executes the same. The parties understand that the assignment of
the lease is subject to the approval of the lessor of the rail cars.
11. No "Take or Pay." The parties agree that this is not a "take or pay
contract" and that Renewable Products' liability is limited to ethanol passing
custody at RED TRAIL ENERGY'S facility.
12. Term. The term of this agreement shall commence on the first day of the
month that RED TRAIL ENERGY initially ships ethanol and shall continue for a
period of 12 months thereafter. At the termination of the initial 12-month term,
the parties shall be at liberty to negotiate an extension of the contract.
13. Licenses and Permits. At all times from the commencement of this
contract, RED TRAIL ENERGY will have all of the licenses and permits necessary
to operate its production facilities.
14. Expected Volume. During the term of this agreement, or any renewals
thereof, RED TRAIL ENERGY agrees to have Renewable Products market all of the
ethanol produced by RED TRAIL ENERGY it at its production facility. The average
monthly volume of ethanol produced by RED TRAIL ENERGY is estimated to be
approximately 4,000,000 gallons.
15. Estimated 12-Month Volume. As of the effective date of this agreement,
RED TRAIL ENERGY will provide Renewable Products with RED TRAIL ENERGY'S best
estimate of its anticipated monthly ethanol production for the next twelve (12)
months, to assist Renewable Products in developing appropriate marketing
strategies for the ethanol to be produced by RED TRAIL ENERGY.
16. Updated Monthly Volume Estimates. On or before the first day of each
month, RED TRAIL ENERGY will provide Renewable Products with its updated best
estimate of RED TRAIL ENERGY'S anticipated monthly ethanol production for the
next twelve (12) months, so that Renewable Products will have ethanol production
estimates from RED TRAIL ENERGY twelve (12) months into the future during the
entire time that this agreement is in effect.
17. Good and Marketable Title. RED TRAIL ENERGY represents that it will
have good and marketable title to all of the ethanol marketed for it by
Renewable Products and that said ethanol will be free and clear of all liens and
encumbrances.
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18. Establishment of Price and Other Sale Terms. When Renewable Products
sells the ethanol marketed pursuant to the terms of this agreement to its
customers, the parties understand and agree that the ethanol sales prices and
all other terms and conditions of ethanol sales to customers under this
agreement will be established by Renewable Products. Renewable Products may make
these decisions, without the need of obtaining consent from RED TRAIL ENERGY.
Notwithstanding the foregoing, Renewable Products agrees to use its best efforts
to communicate with RED TRAIL ENERGY the terms and conditions of ethanol sales.
19. Independent Contractor. Nothing contained in this agreement will make
Renewable Products the agent of RED TRAIL ENERGY for any purpose whatsoever.
Renewable Products and its employees shall be deemed to be independent
contractors, with full control over the manner and method of performance of the
services they will be providing on behalf of RED TRAIL ENERGY under this
agreement.
20. Separate Entities. The parties hereto are separate entities and nothing
in this agreement or otherwise shall be construed to create any rights or
liabilities of either party to this agreement with regard to any rights,
privileges, duties or liabilities of any other party to this agreement.
21. Working Relationship. Because the parties hereto have not done business
together in the past in the manner described in this agreement, they have not
yet attempted to develop efficient and effective procedures related to ordering,
delivering ethanol and shipping ethanol and, therefore, agree to work together
promptly and in good faith to develop effective and efficient policies and
procedures to cover these matters.
22. Ethanol Shortage/Open Market Purchase. If RED TRAIL ENERGY is unable to
deliver its estimated monthly ethanol production and if as a consequence of the
non-delivery and in order to meet its sale obligation to third parties,
Renewable Products may purchase ethanol in the market place to meet its delivery
obligations. If it does so, and as a result thereof incurs a financial loss, RED
TRAIL ENERGY will reimburse Renewable Products for any such loss. Under such
circumstances, if Renewable Products realizes a financial gain, it will pay such
gain to RED TRAIL ENERGY.
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23. Testing of Samples. At the request of Renewable Products, RED TRAIL
ENERGY agrees to provide Renewable Products with samples of its ethanol produced
at its production facility so that it may be tested for product quality on a
regular basis.
24. Insurance. During the entire term of this agreement, RED TRAIL ENERGY
will maintain insurance coverage that is standard, in the reasonable opinion of
Renewable Products, for a company of its type and size that is engaged in the
production and selling of ethanol. At a minimum, RED TRAIL ENERGY'S insurance
coverage must include:
A. Comprehensive general product and public liability insurance,
naming Renewable Products as an additional named insured, with
liability limits of at least $5 million in the aggregate.
B. Property and casualty insurance adequately insuring its
production facilities and its other assets against theft, damage
and destruction on a replacement cost basis.
C. Renewable Products as a named insured under the comprehensive
general product and public liability insurance policy and the
property and casualty insurance policy.
D. Workers' compensation insurance to the extent required by law.
RED TRAIL ENERGY will not change its insurance coverage during the term of
this agreement, except to increase it or enhance it, without the prior written
consent of Renewable Products.
25. Indemnifications and Hold Harmless-- RED TRAIL ENERGY. If a third party
makes a claim against Renewable Products or any person or organization related
to it as the result of the actions or omissions of RED TRAIL ENERGY or any
person or organization related to RED TRAIL ENERGY including, but not limited
to, claims relating to the quality of ethanol produced by RED TRAIL ENERGY, then
RED TRAIL ENERGY agrees to indemnify Renewable Products and its related persons
and organizations and to hold them harmless from any liabilities, damages, costs
and/or expenses, including costs of litigation and reasonable attorneys fees
which they incur as a result of any claims, arising solely from the marketing of
RED TRAIL ENERGY'S ethanol under this Agreement, made against them by third
parties.
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26. Indemnifications and Hold Harmless--Renewable Products. The
indemnification obligations of the parties under this agreement will be mutual
and Renewable Products, therefore, makes the same commitment to indemnify RED
TRAIL ENERGY and its related persons or organizations that RED TRAIL ENERGY has
made to Renewable Products in the preceding paragraph,
27. Survival of Terms/Dispute Resolution. All representations, warranties
and agreements made in connection with this agreement will survive the
termination of this agreement. The parties will, therefore, be able to pursue
claims related to those representations, warranties and agreements after the
termination of this agreement, unless those claims are barred by the applicable
statute of limitations. Similarly, any claims that the parties have against each
other that arise out of actions or omissions that take place while this
agreement is in effect will survive the termination of this agreement. This
means that the parties may pursue those claims even after the termination of
this agreement, unless applicable statutes of limitation bar those claims. The
parties agree that, should a dispute between them arise in connection with this
agreement, the parties will complete, in good faith, a mediation session prior
to the filing of any action in any court. Such mediation session shall occur at
a place that is mutually agreeable, and shall be conducted by a mediator to be
selected by mutual agreement of the parties.
28. Choice of Law. The parties agree that this agreement will be governed
by, interpreted under and enforced in accordance with North Dakota law.
29. Assignment. Neither party may assign its rights or obligations under
this agreement without the written consent of the other party, which consent
will not be unreasonably withheld.
30. Entire Agreement. This Agreement constitutes the entire agreement
between the parties covering everything agreed upon or understood in the
transaction. There are no oral promises, conditions, representations,
understandings, interpretations, or terms of any kind as conditions or
inducements to the execution hereof or in effect between Buyer and Seller,
except as expressed in this Agreement. No change or addition shall be made to
this Agreement except by a written document signed by all parties hereto.
31. Execution of Counterparts. This Agreement may be executed by the
parties on any number of separate counterparts, and by each party on separate
counterparts, each of such counterparts being deemed by the parties to be an
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original instrument; and all of such counterparts, taken together, shall be
deemed to constitute one and the same instrument.
32. Duplicate Counterpart Includes Facsimile. The parties specifically
agree and acknowledge that a duplicate hereof shall include, but not be limited
to, a counterpart produced by virtue of a facsimile ("fax") machine.
33. Binding Effect. This Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto and there respective heirs, personal
representatives, successors and assigns.
34. Termination. The agreement may be terminated if either party engages in
an uncured breach. After receiving written notice, the breaching party will have
30 days to cure the breach. If the breaching party does not cure the breach in
the required time, the agreement will terminate 30 days later.
35. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be considered delivered in all respects
when it has been delivered by hand or mailed by first class mail postage
prepaid, addressed as follows:
TO: Renewable Products Marketing Group, L.L.C.
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TO: RED TRAIL ENERGY, LLC
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IN WITNESS WHEREOF, the parties hereto have set their hands the day and year
first written above.
RENEWABLE PRODUCTS MARKETING GROUP, LLC
By /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇
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C. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its CEO
RED TRAIL ENERGY, LLC
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its President
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