Exhibit 10.16

 

FUEL PURCHASE AGREEMENT

 

THIS FUEL PURCHASE AGREEMENT (this “Agreement”) is entered into as of this 11th
day of January, 2013, by and between Environmental Alternative Fuels, LLC, a
Delaware limited liability company (“Company”), and Sheehy Mail Contractors,
Inc., a Wisconsin corporation (“Customer”).

 

BACKGROUND

 

Company is in the business of developing, owning and operating compressed
natural gas (“CNG”) fueling stations. Company is currently in the process of
developing and constructing such a fueling station on the property located at
7155 S. 1st St., Oak Creek, WI (the “Station”). Customer owns and operates a
trucking company and desires to assure itself of a supply of compressed natural
gas to its fleet.

 

DEFINITIONS

 

Gasoline Gallon Equivalent (GGE): The volume of natural gas needed to produce
the same amount of energy contained in one regular gallon of unleaded gasoline.
This is deemed to be 125,000 BTUs per gallon.

 

Diesel Gallon Equivalent (DGE): The volume of natural gas needed to produce the
same amount of energy as one gallon diesel fuel. This is deemed to be 138,000
BTUs per gallon.

 

DGE to GGE Conversion: The conversion necessary to calculate the number of GGEs
in DGE. For the purposes of this document it is deemed that there are 1.104 GGEs
in 1 DGE. The process for converting DGE to GGE is to multiply the DGE volume by
1.104. For example to convert 10 DGEs to GGEs the equation would be
10*1.104=11.104

 

WEIGHTS AND MEASURES

 

The United States Office of Weights and Measures currently uses GGE for all CNG
gas station regulation. Therefore, all contracts, statements, receipts, etc
regarding the volume of fuel sold, to be sold, will be shown in GGE.

 

AGREEMENT

 

1.Purchase of CNG.

 

a.Purchase and Sale of CNG. From and after the Start Date (as defined in Section
2.b below), subject to the terms and conditions of this Agreement, Company shall
supply to Customer at the Station(s), and Customer shall purchase from Company
at the Station(s), CNG for fueling of motor vehicles.

 

b.Minimum Purchase Requirement. During each contract year during the term of
this Agreement, with the first such period beginning on the Start Date and each
subsequent period beginning on the annual anniversary of the Start Date (each
such period a :Contract Year”), Customer shall purchase the following minimum
volume of CNG from the Station(s).

 

 

 

 

i.During the first such Contract Year - at least 500,000 gge of CNG from Company
at the Station(s); and

 

ii.provided, however, that such minimum purchase requirement during any
particular Contract Year shall be reduced ratably for each day or any portion of
any day during such Contract Year on which the Station(s) is(are) incapable of
providing CNG to Customer for more than six (6) hours between 1:00 a.m. local
time and 7:00 a.m. local time, unless such incapacity is caused by or relates to
any action or omission, or circumstances caused by, Customer and/or its
associated Users (as defined in Section 2.a below).

 

iii.The minimum volume requirement is subject to truck availabilty and volume
estimates as defined in Exhibit C.

 

c.Pricing and Payment.

 

i.Price. The purchase price for CNG purchased by Customer pursuant to this
Agreement shall be determined in accordance with the “Ordinary Purchase” formula
set forth in Exhibit A. If Customer fails to purchase the minimum volume of CNG
during any applicable Contract Year as set forth in Section 1.b, then Customer
shall pay Company an amount determined in accordance with the “Minimum
Requirement True-Up” formula set forth in Exhibit A.

 

ii.Invoicing.

 

    a. Invoices for Ordinary CNG Purchases. By the tenth (10’) day of each
calendar month during the term of this Agreement, Company will deliver an
invoice to Customer reflecting the amount owing from Customer for its purchases
during the preceding calendar month.

 

    b. Invoices for Minimum Purchase Requirements. If Customer fails to purchase
the minimum volume of CNG during any applicable Contract Year as set forth in
Section 1.b, then within fifteen (15) days following the end of such period,
Company will deliver an invoice to Customer reflecting the amount owing from
Customer for its failure to purchase such minimum volume.

 

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iii.Payment. Customer shall pay company the amounts shown on the face of each
invoice within fifteen (15) calendar days after the date of the applicable
invoice. Payments shall be made in lawful U.S. currency. Customer shall pay
interest on all past due payments calculated at a rate of ten percent (10%) per
annum from the due date until paid.

 

d.Taxes. Any and all federal, state and local fuel use taxes, sales taxes,
excise taxes, value-added taxes, duties, customs, inspection or testing fees,
and all other taxes, fees, interest and charges of any nature whatsoever imposed
on or measured by the transactions between Company and Customer under this
Agreement shall be paid by Customer as part of the prices determined in
accordance with Exhibit A. In the event that (i) any such taxes, fees, interest
and charges are not included in the prices determined in accordance with Exhibit
A and (ii) Company is required to pay the same, Customer shall reimburse Company
therefore upon demand.

 

2.Fueling Procedures.

 

a.Customer’s Employees and Independent Contractors. Customer’s employees and/or
independent contractors identified in advance in writing to Company (each, a
“User”) shall, subject to Section 2.b, be entitled to purchase CNG at the
Station(s) on Customer’s behalf under this Agreement.

 

b.Training and Customer Cards. Prior to Customer purchasing any CNG, including
through any of its User, each User shall satisfactorily complete, as determined
by Company, Company’s fueling and safety training. Upon each User completing
such fueling and safety training, Company will issue to such User a
non-transferable customer card and PIN to be used for the purchase of CNG. The
date on which Company issues the first customer card to a Customer’s user shall
be the “Start Date”; provided, however, that in no event shall the Start Date be
a date before the development and construction of the Station(s) is (are)
completed and the Station(s) is (are) operational and prepared to sell CNG, in
each case as determined by Company.

 

c.Fueling Procedures. Each User shall perform all fueling acts necessary to
purchase CNG in accordance with Company’s procedures and training, and in no
event shall Company have any obligation whatsoever to assist Customer or any
User with any fueling acts. Each User’s purchase of CNG will be tracked by such
User’s customer card.

 

d.Customer Liability for Purchases. Customer shall be responsible for any and
all purchases of CNG by any and all Users, and for any purchases of CNG
otherwise associated with any and all customer cards associated with Customer;
provided, however, that if Customer has notified Company in writing (i) not to
accept a particular customer card or (ii) that a particular customer card has
been lost or stolen, in the case of each of (i) and (ii), as identified by the
card number and PIN, then Customer shall have no liability for any purchases of
CNG associated with such customer card following Company’s receipt of such
notice. Any disputes as to whether Customer is liable for any purchases of CNG
will be resolved by Company in its good faith reliance on the tracked customer
cards.

 

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3.Warranty; Limitations on Liability

 

a.Warranty. Company hereby represents and warrants that the CNG sold to Customer
pursuant to this Agreement shall conform to the specifications set forth on
Exhibit B, if any (the “Specifications”). The foregoing such warranty is the
sole and exclusive warranty of Company with respect to any and all CNG sold to
Customer pursuant to this Agreement. COMPANY HEREBY DISCLAIMS ANY AND ALL
WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCDLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE AND
ANY WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE, AND CUSTOMER
HEREBY ACKNOWLEDGES THE FOREGOING DISCLAIMER.

 

b.Exclusive Remedy. Company’s sole obligation and Customer’s exclusive remedy
for any failure of CNG to conform to Company’s warranty set forth in Section 3.a
shall be to refund to Customer the purchase price actually paid by Customer for
such non-conforming CNG.

 

c.Limitation of Liability. COMPANY SHALL NOT BE LIABLE FOR (I) ANY OBLIGATIONS
WHATSOEVER ARISING FROM TORT CLAIMS (INCLUDING WITHOUT LIMITATION SUCH CLAIMS
BASED UPON NEGLIGENCE OR STRICT LIABILITY), OR (II) ANY CONSEQUENTIAL,
INCIDENTAL, INDIRECT, EXEMPLARY, PUNITIVE, STATUTORY OR CONTINGENT DAMAGES
WHATSOEVER, WHETHER BASED ON BREACH OF CONTRACT, WARRANTY, TORT OR ANY OTHER
LEGAL OR EQUITABLE THEORY. COMPANY HEREBY DISCLAIMS THE OBLIGATIONS AND DAMAGES
DESCRIBED IN CLAUSES (I) AND (II), REGARDLESS OF WHETHER COMPANY HAS BEEN GIVEN
NOTICE OF THE POSSIBILITY OF SUCH OBLIGATIONS OR DAMAGES. Without limiting the
generality of the foregoing, Company specifically disclaims any liability for
(x) special punitive damages, penalties, damages for lost profits or revenues,
loss of use of trucks or trailers or other equipment or systems, cost of
capital, cost of substitute products or trucks or trailers or other equipment or
systems, delay in Customer’s performance, downtime, or shutdown or slowdown
costs; (y) any other types of economic loss; and (z) claims of Customer’s
customers or any other third party for any such damages, losses, costs or
liabilities. Company’s maximum aggregate liability under this Agreement shall
not exceed the payments made by Customer for the purchase of CNG.

 

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4.Indemnification and Insurance. Customer shall indemnify and hold harmless
Company and its officers, directors, managers, affiliates, employees,
representatives and agents from and against any and all losses, liabilities,
damages and expenses (including but not limited to attorneys’ fees and other
costs of defense) that Company or any of them may incur as a result of (i) any
third party claims for death, bodily injury, property damages or environmental
liabilities arising out of, relating to or resulting from Customer’s acts or
omissions, including but not limited to any such claim based upon the negligence
of Customer or its affiliates, employees, representatives or agents. Customer
shall obtain the insurance policies and coverages listed in Exhibit D and shall
name Company as an additional insured for those policies and coverages.

 

5.Term and Termination.

 

a.Term. This Agreement shall be effective as of the date first written above
and, unless earlier terminated, as provided for herein, shall continue in full
force and effect through (and including) the fourth anniversary of the Start
Date.

 

b.Automatic Renewal. Provided that Customer is not in violation of any of the
terms and conditions herein, this Agreement shall automatically renew for the
term of one year, and shall continue to renew for a term of one year in
perpetuity unless either Customer or Company notifies the other party in writing
of its intention to not renew this Agreement, which notification must be
delivered no later than thirty (30) days prior to the expiration of the then
current term of the Agreement.

 

c.Early Termination by Company. This Agreement and/or any use of any customer
cards may be terminated by Company immediately upon written notice if Customer:
(a) fails to make any payment hereunder as and when due; (b) by act or omission
breaches or defaults on any material term or condition of this Agreement other
than the obligation to make payments as and when due and Customer fails to cure
such breach or default within thirty (30) calendar days after written notice
from Company; or (c) becomes insolvent, makes an assignment for the benefit of
creditors, has a receiver appointed over all or any portion of its property,
becomes the subject of an “order for relief” as that term is used in the U.S.
Bankruptcy Code, or is liquidated or dissolved or its affairs are wound up.

 

d.Early Termination by Customer. This Agreement may be terminated by Customer
immediately upon written notice if Company: (a) by act or omission breaches or
defaults on any material term or condition of this Agreement and Company fails
to cure such breach or default within thirty (30) calendar days after written
notice from Customer; or (b) becomes insolvent; makes an assignment for the
benefit of creditors, has a receiver appointed over all or any portion of its
property, becomes the subject of an “order for relief” as that term is used in
the U.S. Bankruptcy Code, or is liquidated or dissolved or its affairs are wound
up.

 

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e.Effect of Termination. Neither expiration nor termination of this Agreement
shall affect the rights or responsibilities of the parties hereunder that
accrued prior to expiration or termination. Sections 3.b and c, 4, 5.e, and 6
shall survive expiration or termination.

 

6.Miscellaneous.

 

a.Notice. All notices, requests, demands and other communications under this
Agreement shall be given in writing and shall be personally delivered; sent by
electronic mail or facsimile transmission; or sent to the applicable parties at
their respective addresses indicated in this Section 6.a by registered or
certified U.S. mail, return receipt requested and postage prepaid; or by private
overnight mail courier service, as follows:

 

If to Company, to:

Environmental Alternative Fuels, LLC

9899 W. Roosevelt Street

Tolleson, AZ 85353

Facsimile: 623.907.6401

 

If to Customer, to:

Sheehy Mail Contractors, Inc.

P.O. Box 35

Waterloo, WI 53594

Attention: John Sheehy

Facsimile: 920-478-3898

 

or to such other person or address as either party shall have specified by
notice in writing to the other party. If personally delivered, such
communication shall be deemed delivered upon actual receipt; if sent by
electronic mail, such communication shall be deemed delivered upon the
recipient’s confirmation of receipt (it being understood that an automatic
response to such electronic mail shall not be deemed confirmation of receipt);
if sent by facsimile transmission, such communication shall be deemed delivered
the day of the transmission, or if the transmission is not made on a business
day, the first business day after the transmission (and sender shall bear the
burden of proof of delivery); if sent by overnight courier, such communication
shall be deemed delivered upon receipt; and if sent by U.S. mail, such
communication shall be deemed delivered as of the date of delivery indicated on
the receipt issued by the relevant postal service or, if the addressee fails or
refuses to accept delivery, as of the date of such failure or refusal.

 

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b.Assignment; No Third-party Beneficiaries. Neither party may assign this
Agreement or its rights or obligations hereunder, in whole or in part,
voluntarily or by operation of law, without the prior written consent of the
other party which may not be unreasonably withheld delayed or conditioned, and
any attempted assignment without such consent shall be null and void and without
legal effect. Notwithstanding the foregoing, Company may assign this Agreement
or its rights or obligations hereunder, in whole or in part, to any of its
affiliates or to any person or entity that purchases all or any substantial
portion of its assets, without Customer’s consent. This Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective permitted successors and permitted assigns. Nothing contained
in this Agreement shall be deemed to confer upon any person or entity any right
or remedy under or by reason of this Agreement.

 

c.Severability. If a court of competent jurisdiction determines any provision(s)
of this Agreement to be illegal or excessively broad, then this Agreement shall
be construed so that the remaining provisions shall not be affected but shall
remain in full force and effect and any such illegal or excessively broad
provision(s) shall be deemed, without further action on the part of any person,
to be modified, amended and/or limited to the extent necessary to render the
same valid and enforceable in such jurisdiction.

 

d.Amendment and Waiver. No provisions of this Agreement may be modified, waived
or discharged unless such modification, waiver or discharged unless such
modification, waiver or discharge is agreed to in a writing executed by Customer
and Company. No action taken pursuant to this Agreement shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this
Agreement. No waiver by either party at any time of any breach by the other
party of, or compliance with, any provision of the Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions at
the same or at any prior or subsequent time.

 

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e.Entire Agreement. This Agreement (including the exhibits attached hereto)
supersedes all prior agreements, whether oral or in writing, between the parties
with respect to its subject matter and constitutes the complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. There have been and are no conditions, agreements,
representations or warranties between the parties with respect to the subject
matter of this Agreement other than those set forth or provided for in this
Agreement.

 

f.Counterparts; Facsimile Signatures. This Agreement may be executed by
facsimile signature pages and in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same document.

 

g.Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ARIZONA,
EXCLUDING ANY CHOICE-OF-LAW RULES THAT MAY DIRECT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION. Each party stipulates that any dispute or disagreement
between the parties as to the interpretation of any provision of, or the
performance of obligations under, this Agreement shall be commenced and
prosecuted in its entirety in, and consents to the exclusive jurisdiction and
proper venue of, the federal or state courts located in the State of Arizona,
and each party consents to personal and subject matted jurisdiction and venue in
such courts and waives and relinquishes all right to attack the suitability or
convenience of such venue or forum by reason of such party’s present or future
domiciles or by any other reason. The parties acknowledge that all directions
issued by the forum court, including, without limitation, all injunctions and
other decrees, will be binding and enforceable in all jurisdictions and
countries. EACH PARTY WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY SUCH
DISPUTE OR DISAGREEMENT.

 

[The next page is the signature page]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized representatives, effective as of the date first above
set forth.

 

SHEEHY MAIL CONTRACTORS, INC.

 

ENVIRONMENTAL ALTERNATIVE FUELS, LLC

          By: /s/ John P. Sheehy   By: /s/ Danny Cuzick Name: John P. Sheehy  
Name: Danny Cuzick Title: President   Title: President

 

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Exhibit A

 

Ordinary Purchase, Minimum Requirement and Excess Volume Rebate Formulas

 

Ordinary Purchase

 

1.Fuel Price to Customer for all gallons pumped including the minimum purchase
requirement, or otherwise shall be $1.811 per GGE. This Fuel Price is subject to
the following conditions:

 

a.The State of Wisconsin currently charges a privilege tax equal to $.223 per
GGE which is included in the Fuel Price. Company will charge Customer this tax
at the pump. Should the State of Wisconsin change the tax rate on the sale of
CNG, such tax rate changes shall be passed on to Customer. The Company reserves
the right to include any county or municipality tax, if applicable.

 

b.Federal tax is included in the above Fuel Price at a rate of $.181 per GGE.
Should the federal tax rate adjust during the term of the agreement, any
adjustment shall be passed on to Customer.

 

c.As of the date of this agreement, natural gas futures traded on the New York
Mercantile Exchange (NYMEX) closed at the rate of $____ per MMBTU. The Fuel
Price to Customer shall fluctuate at the rate of $.0125 per GGE for every change
in price of $.10 per MMBTU traded on the NYMEX. Price fluctuation shall be
calculated on a daily basis and based on the closing rate of the previous day.
For CNG that is pumped on any day that the NYMEX is not trading natural gas
futures, the price fluctuation shall be calculated based on the closing rate of
the last day that natural gas futures were traded.

 

d.Notwithstanding Article 1.c above, Customer shall have the opportunity to
control price fluctuation by instructing Company to lock in the price of natural
gas futures for a determined period of time at which point the price per GGE
would be fixed for that period of time subject to articles 1.a and l.b above.
All terms and conditions related to locking in the price shall be contained in a
separate agreement to be mutually agreed upon and executed by Customer and
Company at the time Customer wishes to lock in price.

 

Minimum Requirement True-up:

 

For any Contract Year following the Start Date in which Customer does not
purchase the minimum volume of CNG as required by Section l.b, Customer shall
pay to Company an amount equal to the product of: (i) the minimum GGE volume
stated in l.b.i. of the Agreement minus the actual GGE volume purchased for the
year, multiplied by (ii) the average annual price of fuel per ggg, excluding
state and local taxes.

 

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Exhibit B

 

Specifications

 

None

 

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Exhibit C

 

The truck availability and minimum volume requirements stated in 1.b.iii of the
Agreement are subject to the following:

 

1.The customer agrees to purchase ___ 20 ___ CNG powered vehicles for delivery
on or near the date that the CNG fueling station is in operation.

 

2.The estimated annual volume per vehicle is ______ 25,000 ______ gge.

 

3.The minimum annual volume is pro-rated based on the numbers indicated in 1 and
2 above based on vehicle receipt from the truck dealer.

 

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Exhibit D

 

Required Insurance Coverages

 

1.Broad Form Comprehensive General Liability including Contractual Liability
naming Company as an Additional Insured.

 

2.Commercial Automobile Bodily Injury and Property Damage Liability Insurance
naming Company as an Additional Insured.

 

3.Minimum Limit of Liability for 1 and 2 above is $1,000,000.

 

 

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