Exhibit 10.21
Confidential Treatment Requested.
Confidential portions of this document have been redacted and have
been separately filed with the Commission.
MEMBER
ETHANOL FUEL MARKETING AGREEMENT
THIS AGREEMENT,
entered into as of this
22 nd
day of April , 2010, (“Effective
Date”) by and between RPMG, Inc., a Minnesota
corporation, hereinafter referred to as “RPMG”); and
Golden Grain Energy, a LLC , hereinafter referred to
as (“Member”).
WITNESSETH:
WHEREAS, RPMG is a Minnesota corporation engaged in the
business of marketing fuel grade ethanol for the members of
Renewable Products Marketing Group, LLC (“LLC”) and
others, and
WHEREAS, Member is the operator of a plant in Mason
City, IA for the production of ethanol (the
“Facility”) and is a member of LLC, and
WHEREAS, as a condition to its membership in LLC, Member
has agreed to market all of the fuel grade ethanol produced by
Member at the Facility through RPMG and RPMG has agreed to market
such ethanol production; and
WHEREAS, the parties desire to enter into this Agreement,
for purposes of setting out the terms and conditions of the
marketing arrangement;
NOW THEREFORE,
in consideration of the mutual
covenants and promises herein contained, the parties hereto agree
as follows:
1.
Exclusive Marketing Representative. RPMG shall,
subject to the terms and conditions of this Agreement, be the sole
marketing representative for the entire fuel grade ethanol
production of Member at the Facility during the term of this
Agreement.*
2.
Ethanol Specifications. All of the ethanol produced
by Member at the Facility for marketing by RPMG will, when
delivered to a common carrier by Member, be fuel grade ethanol 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 (herein referred to as “fuel grade
ethanol” or “ethanol”).
3.
Purchaser/Seller.
Member shall sell to RPMG and RPMG shall purchase all fuel
grade ethanol produced by Member at the Facility during the term of
this Agreement. Delivery by Member to RPMG of all such ethanol
shall be made at the time the product crosses the loading flange,
provided that delivery by Member to RPMG for ethanol shipped by
unit train shall be made when RPMG receives the shipping
documentation for the unit train and the unit train is completed
and ready to be released to the railroad. The ethanol will be
marketed by RPMG on a collective basis with other producers under
contract with RPMG.
* insert any exceptions i.e. alcohol sold
for human consumption, limited sale of E85.
4.
Risk of Loss. RPMG shall be responsible for and shall
bear the risk of loss of (subject to the terms of this Agreement)
all ethanol marketed for Member by RPMG from the from the time the
product crosses the loading flange the Facility in either a railcar
and/or tank track, provided that RPMG shall be responsible for and
shall bear the risk of loss for ethanol shipped by unit train from
the time that RPMG receives the shipping documentation for the unit
train and the unit train is completed and ready to be released to
the railroad.
5.
Specific Marketing Tasks. RPMG shall be responsible
for and shall have complete discretion in the marketing, sale and
delivery of all fuel grade ethanol produced by the Facility during
the term of this Agreement, including, but not limited
to:
·
Scheduling sufficient railcar, tank
trucks and other transport;
·
Negotiating the rates and tariffs to
be charged for delivery of production to the customer;
·
Promoting and advertising the sale
of ethanol;
·
Tracking delivery;
·
Negotiation of all purchase
agreements with consumers and any complaints in connection
therewith;
·
Accounting for all sales and related
expenses and collection of accounts, including any legal collection
procedures as may be necessary; and
·
Hedging long and short ethanol
positions for the benefit of all member participants and non-member
participants in the Corridor Marketing Model
6.
Negotiation of Ethanol Price. RPMG will use
commercially reasonable efforts to obtain the best price for all
ethanol sold by it subject to the terms of this Agreement, but
shall have complete discretion to fix the price, terms and
conditions of the sale of Member’s ethanol
production.
7.
Ethanol Marketing. RPMG shall market the ethanol
production of Member under the Corridor Netback Model arrangement
maintained by RPMG for some of its LLC members and other non-member
participants. Under such arrangement, RPMG will market the
aggregate production of the LLC member participants and other
contracting non-member participants in the Corridor Netback Model
to customers. Member shall furnish estimates of production to RPMG
as hereinafter provided and based on such estimates and the
estimated production of all other participants, RPMG shall contract
for the sale of such estimated production. Determination of
Member’s share of net revenue, allocation of expenses and
payment to Member shall be made by RPMG according to the Corridor
Netback Model as described below.
(a) Corridor Netback
Model. Attached hereto as Appendix 1 is a model (the
“Corridor Netback Model”) of the netback formula to be
used in calculating netback payments to Member and other LLC
members and non-member participants in the Corridor Netback Model
for all ethanol sold by RPMG on behalf of Member, all other LLC
member participants and non-member participants in the Corridor
Netback Model (the “Netback Price”). The Corridor
Netback Model includes components that will be fixed on a quarterly
basis and are shaded in yellow in Appendix 1 (the “Fixed
Components”) and components that will vary through the
quarter and are shaded in green in Appendix 1 (the “Variable
Components”). Changes to the Corridor Netback Model to
reflect changing economic circumstances may be made by management
of RPMG and Appendix 1 attached hereto shall be updated and revised
accordingly.
(b)
Quarter Model. The Fixed Components and Variable
Components of the Corridor Netback Model shall be reviewed and
updated quarterly by RPMG management with changes made based upon
the prevailing and expected market conditions (the “Quarter
Model”). RPMG management shall present the Quarter Model to
all LLC member participants and non-member participants in the
Corridor Netback Model prior to the beginning of each fiscal
quarter. Except as provided below, the Quarter Model shall be final
and binding on all LLC member participants and non-member
participants in the Corridor Netback Model. The Variable Components
of the Quarter Model shall be adjusted by RPMG management monthly
throughout the quarter to reflect updated estimates and actual
inputs for such Variable Components in order to arrive at the
Estimated Netback Price and Actual Netback Price as defined
below.
(c)
The Corridor Committee. If Member disagrees with a
decision of RPMG management, the Corridor Netback Model or the
Quarter Model presented by RPMG management, it may within fifteen
(15) days after the effective date of the Quarter Model, appeal by
written notice the decision to the Corridor Committee who shall
approve or modify the decision of RPMG management or approve or
modify the Corridor Netback Model or Quarter Model by a majority
vote of all the members of the Corridor Committee, which shall be
delivered in a written response to Member within fifteen (15) days
of the written notice of appeal. The Corridor Committee shall
consist of at least one representative from each of the primary
corridor markets as determined based on delivery destination in the
Corridor Netback Model. The members of the LLC of each of the
primary corridor markets as determined based on delivery
destination in the Corridor Netback Model shall elect a Corridor
Committee member representative annually, provided that if a
Corridor Committee member is no longer a member of the primary
corridor market in which he or she was elected to represent he or
she shall no longer serve as a Corridor Committee member and the
representatives of such primary corridor market shall elect a new
Corridor Committee member representative. Any modification in the
Corridor Netback Model or Quarter Model approved by the Corridor
Committee shall be promptly presented to all LLC member
participants and non-member participants in the Corridor Netback
Model.
(d)
Appeal. If Member disagrees with a decision of the
Corridor Committee, it may within fifteen (15) days after the
decision of the Corridor Committee, appeal the decision by written
notice to the LLC Board of Governors who shall approve or modify
the decision of the Corridor Committee by a majority vote of all
the members of the Board that represent LLC members participating
in the Corridor Netback Model. The decision of the Board of
Governors shall be final and binding and shall be retroactive to
the first day of the fiscal quarter that is the subject of the
appeal.
(e)
Payment of the Estimated Netback Price. Each calendar
month, RPMG shall estimate for Member (in good faith) the Netback
Price per gallon of all ethanol that RPMG has committed to sell to
its customers through operation of the Quarter Model by making
adjustments to the Variable Components of the Quarter Model to
reflect anticipated market conditions and expenses in the upcoming
month (the “Estimated Netback Price”). RPMG, on a
weekly basis, will calculate and pay Member on an average net
10-day basis (e.g. payment on Wednesday shall be for ethanol
delivered during the seven-day period ending on the previous
Wednesday) an amount equal to the Estimated Netback
Price
for the preceding week multiplied by
the number of gallons of ethanol delivered by Member to RPMG for
the period, provided that payments to Member for ethanol shipped by
unit train shall be made within two (2) business days of the
unit train being completed and ready to be released to the
railroad.
(f)
Reconciliation to the Actual Netback Price. At the
end of each calendar month, promptly after the information
necessary to calculate the Netback Price becomes available, RPMG
will calculate the actual Netback Price for the preceding month
under the Quarter Model by adjusting the Variable Components to
reflect the actual selling price for all ethanol sold during the
month and the actual expenses incurred during the period (the
“Actual Netback Price”). Within fifteen days after the
end of each month, RPMG shall furnish to Member a reconciliation of
the Estimated Netback Price to the Actual Netback Price for the
preceding month. If the Estimated Netback Price paid to Member
exceeded the Actual Netback Price, Member will refund to RPMG the
overpayment within ten (10) days after receipt of the
reconciliation. On the other hand, if the Estimated Netback Price
paid was less than the Actual Netback Price owed to Member, then
RPMG will pay Member the additional amount owed to Member within
ten (10) days after the completion of the reconciliation. In
lieu of Member directly refunding any amounts to RPMG by separate
payment, and RPMG directly refunding any amounts to Member by
separate payment, under this Section 7 the parties may offset
or apply the such amounts to subsequent payments.
(g)
Adjustments Outside of Corridor Netback Model. Member shall
be charged monthly directly through a reduction in the Netback
Price for any demurrage charges incurred by RPMG for railcars
located at Member’s Facility and other direct distribution
expenses that result from actions taken by Member and that are not
reflected in the Quarter Model.
(h)
Audit. Within ninety (90) days following the end of
RPMG’s fiscal year end, Member shall have the right to
inspect the books and records of RPMG for the purpose of auditing
calculations of the aggregate netback paid to member participants
and non-member participants in the Corridor Netback Model for the
preceding year. Member shall give written notice to RPMG of its
desire to conduct an audit and RPMG shall provide reasonable access
to all financial information necessary to complete such audit. The
audit shall be conducted by an accounting firm agreeable to both
parties and shall be completed within 45 days after the completion
of RPMG’s annual audit, but no later than 150 days following
RPMG’s fiscal year. The cost of the audit shall be the
responsibility of Member unless the auditor determines that RPMG
underpaid Member by more than 3% for the period audited, in which
case RPMG shall pay the cost of the audit. If the auditor
determines that RPMG underpaid Member, RPMG shall promptly pay such
underpayment to Member and if the auditor determines that RPMG
overpaid Member, Member shall promptly pay the overpayment to RPMG.
The determination of the auditor shall be final
and
