Unassociated Document



CONFIDENTIAL TREATMENT







Exhibit 10.5







Product Supply Agreement












Between:


Valero Marketing and Supply Company


US Federal Tax Id # ****












And







Mission NewEnergy Limited


ACN 117 065 719






















Date: 8 December 2009






















**** INDICATES CONFIDENTIAL MATERIAL OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION SEPARATELY WITH A REQUEST FOR CONFIDENTIAL TREATMENT.































	
Mission NewEnergy Limited

	
Valero Marketing and Supply Company


	
Unit 217, Scarborough Breach Road

	
One Valero Way


	
Osborne Park, WA 6018

	
San Antonio, TX 78249 - 1616


	
Australia


 

	
United States of America


		















 



TABLE OF CONTENTS 


















  





1











  






 



CONFIDENTIAL TREATMENT


 







	
1

	
INTERPRETATIONS

	
4


	 	 	 
	
2

	
PRODUCT

	
7


	 	 	 
	
3

	
QUANTITY

	
7


	 	 	 
	
4

	
TERM

	
9


	 	 	 
	
5

	
PRICE

	
10


	 	 	 
	
6

	
CONFIRMATION

	
13


	 	 	 
	
7

	
DELIVERY

	
13


	 	 	 
	
8

	
PAYMENT

	
14


	 	 	 
	
9

	
FINANCIAL CONDITION OF THE BUYER

	
16


	 	 	 
	
10

	
NOMINATION OF VESSELS

	
16


	 	 	 
	
11

	
QUALITY, QUANTITY AND INSPECTION

	
17


	 	 	 
	
12

	
LAYTIME

	
18


	 	 	 
	
13

	
DEMURRAGE

	
19


	 	 	 
	
14

	
TAXES

	
19


	 	 	 
	
15

	
TITLE, RISK OF LOSS AND IMPORTER OF RECORD

	
20


	 	 	 
	
16

	
SIGNIFICANT CHANGES IN LEGISLATION

	
20


	 	 	 
	
17

	
DEFAULT

	
20


	 	 	 
	
18

	
INSURANCE

	
21


	 	 	 
	
19

	
INDEMNITY

	
21


	 	 	 
	
20

	
ISPS COMPLIANCE

	
21


	 	 	 
	
21

	
COMPLIANCE WITH LAWS

	
22


	 	 	 
	
22

	
LAW AND ARBITRATION

	
22


	 	 	 
	
23

	
CLAIMS

	
22


	 	 	 
	
24

	
FORCE MAJEURE

	
23


	 	 	 
	
25

	
LIMITATION OF LIABILITY

	
23


	 	 	 
	
26

	
RIGHT TO AUDIT

	
23


	 	 	 
	
27

	
ASSIGNABILITY

	
24


	 	 	 
	
28

	
WARRANTIES

	
24


	 	 	 
	
29

	
NOTIFICATIONS

	
24


	 	 	 
	
30

	
OTHER

	
25


	 	 	 
	
31

	
CONDITIONS PRECEDENT

	
25


	 	 	 
	
32

	
CONFIDENTIALITY

	
25


	 	 	 
	
33

	
ENTIRE AGREEMENT

	
26







 




  





2











  






 



CONFIDENTIAL TREATMENT




 



	
34

	
NO WAIVER

	
26


	 	 	 
	
35

	
SEVERABILITY

	
26


	 	 	 
	
36

	
COUNTERPARTS.

	
26


	  	  	  
	
APPENDICES

	
29











 




  





3











  






 



CONFIDENTIAL TREATMENT









This Product Supply Agreement (the “Agreement”) is dated 8 December, 2009 and is made between:







Mission NewEnergy ACN 117 065 719, the “Seller” or “Mission”; and







Valero Marketing and Supply Company, US Federal Tax Id # ****, the “Buyer” or “VMSC







Each a “Party” and together the “Parties”.







It is agreed as follows:








	
1

	
Interpretations







 



	
1.1

	
Definitions.







 



	
  

	
(a)

	
“Additional Quantity” has the meaning specified in Section 3.2.







 



	
  

	
(b)

	
“Additional Quantity Extension” has the meaning specified in Section 4.3.







 



	
  

	
(c)

	
“API” means the American Petroleum Institute.







 



	
  

	
(d)

	
“Applicable Law” means (i) any law, statute, regulation, code, ordinance, license, order, writ, injunction, decision, directive, judgment, policy, decree and any judicial or administrative interpretations thereof, (ii) any agreement, concession or arrangement with any governmental authority, and (iii) any license, permit or compliance requirement, including under any environmental law, in each case as may be applicable to either Party or either Party’s performance under this Agreement.







 



	
  

	
(e)

	
“Argus” means the various daily reports published by Argus Media including the U.S. Products Report.







 



	
  

	
(f)

	
“Argus ULSD” means the Argus US Gulf Coast Pipeline Mean Price for Ultra Low Sulphur Diesel per US Gallon as quoted by Argus.







 



	
  

	
(g)

	
“ASTM” means the American Society of Testing Materials.







 



	
  

	
(h)

	
“Base Quantity” has the meaning specified in Section 3.1.







 



	
  

	
(i)

	
“Bill of Lading” means the document of title evidencing the receipt of Products for shipment issued by such person or persons engaged to transport or forward such Products on a Vessel pursuant to this Agreement.







 



	
  

	
(j)

	
"Biodiesel Blender Excise Tax Credit" or "BBETC" means the "biodiesel mixture credit" provided for in section 6426 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), which allows as a credit against the excise taxes imposed by section 4081 of the Code, as in effect on the Date of Arrival, together with any successor provisions thereto that provide for a similar credit.







 



	
  

	
(k)

	
“CIF” or “Cost Insurance and Freight” shall have the meanings ascribed to it in Incoterms - 2000 edition, except as otherwise provided in this Agreement.







 




  





4











  






 



CONFIDENTIAL TREATMENT




 



	
  

	
(l)

	
“Cargo” means a shipment of Products.







 



	
  

	
(m)

	
“Charter Party Agreement”  means the charter, lease or other agreement that Seller as the charterer, enters into with the owner of the Vessel for transporting a Cargo of the Product under the terms of this Agreement.







 



	
  

	
(n)

	
“CJO” means Crude Jatropha Oil conforming to the specifications set forth on Appendix 1A to be agreed upon by both Parties and attached to the Agreement at least 30 days prior to the first Shipment Date of CJO.







 



	
  

	
(o)

	
“Confirmation” means a written communication from Seller confirming the economic and other terms of sale between Seller and Buyer, as may be amended by the Parties’ mutual written agreement.







 



	
  

	
(p)

	
“Confirmation Acknowledgement” has the meaning specified in Section 6.3.







 



	
  

	
(q)

	
“CPO” means the symbol used for palm oil as quoted on the MDEX or MBOP.







 



	
  

	
(r)

	
“Delivery Port” means the location specified for delivery of the Products in a Confirmation or a timely delivered Confirmation Acknowledgement, which, unless otherwise mutually agreed or except as changed pursuant to the terms of this Agreement, shall be the Port of Houston.







 



	
  

	
(s)

	
“Date of Arrival” means the arrival of each Cargo of Products at the Delivery Port and no later than 48 hours after the tender of the applicable NOR.







 



	
  

	
(t)

	
“EI” means the Energy Institute, incorporated by Royal Charter in the United Kingdom.







 



	
  

	
(u)

	
“Extension Term” has the meaning specified in Section 4.2.







 



	
  

	
(v)

	
“Final Invoice” has the meaning specified in Section 8.1(b).







 



	
  

	
(w)

	
“Final Settlement” has the meaning specified in Section 8.1(e)







 



	
  

	
(x)

	
“Gallon” means a U.S. gallon of 231 cubic inches at 60 degrees Fahrenheit (60°F).







 



	
  

	
(y)

	
“Initial Invoice” has the meaning specified in Section 8.1(a).







 



	
  

	
(z)

	
“Initial Term” has the meaning specified in Section 4.1.







 



	
  

	
(aa)

	
“JME” means Jatropha Methyl Ester conforming to industry standard specifications of ASTM D6751 including the additional specifications outlined for JME on Appendix 1 attached hereto and incorporated herein for all purposes.







 



	
  

	
(bb)

	
“Independent Inspector” means a duly licensed person or firm, appointed as agreed by Buyer and Seller, that performs a quantity or quality determination with respect to the Product received or delivered hereunder.







 



	
  

	
(cc)

	
“Interest Rate” means a rate per annum which shall be equal to the sum of LIBOR plus **** percent (****).







 




  





5











  






 



CONFIDENTIAL TREATMENT




 



	
  

	
(dd)

	
“LIBOR” shall mean, as of any date of determination, the three-month London Interbank Offered Rate for U.S. dollars, determined at 11:00 a.m. London time, on the first day of the calendar month in which the date of determination occurs (or, if the first day of such calendar month is not a London Banking Day, the immediately preceding London Banking Day) offered by the National Westminster Bank or any successor thereto.  For purposes of this definition, a "London Banking Day" is a day on which dealings in deposits in U.S. dollars are transacted on the London interbank market.







 



	
  

	
(ee)

	
“Load Port” means the terminal or other location at which the Products to be delivered hereunder are or will be loaded;







 



	
  

	
(ff)

	
“MDEX” means the Bursa Malaysia Exchange.







 



	
  

	
(gg)

	
“Methyl Ester” or “ME”  means 100% Fatty Acid Methyl Ester (other than JME) conforming to industry standard specifications of ASTM D6751 including the additional specifications outlined for ME on Appendix 1 attached hereto and incorporated herein for all purposes.







 



	
  

	
(hh)

	
“Mission Cost Basis” has the meaning specified in Section 5.2.







 



	
  

	
(ii)

	
“OBQ” means onboard quantity.







 



	
  

	
(jj)

	
“OPIS” means Oil Price Information Service.







 



	
  

	
(kk)

	
“Price” has the meaning specified in Section 5.1.







 



	
  

	
(ll)

	
“Pricing Formula” has the meaning specified in Section 5.1.







 



	
  

	
(mm)

	
“Products” mean ME, JME and CJO collectively and “Product” means any one of the Products.







 



	
  

	
(nn)

	
“Shipment Date” means the date the Vessel leaves its berth at the Load Port with Cargo of Products.







 



	
  

	
(oo)

	
"Shipping and Transport Cost" means the actual contracted shipping cost of each and every individual Cargo, as referenced in the Charter Party Agreement and transport costs including insurance and other ancillary transportation cost including but not limited to nitrogen blanketing and other additives if required for transportation, as evidenced by actual third party invoices.







 



	
  

	
(pp)

	
“Tariff Factor” means the number determined by the following formula: (1/(1+ the US Import Tariff then in effect)).







 



	
  

	
(qq)

	
“Taxes” means any and all foreign, federal, state and local taxes, duties, fees and charges of every description, including all motor fuel, excise, gasoline, aviation fuel, special fuel, diesel, environmental, spill, gross earnings or gross receipts and sales and use taxes, however designated, paid or incurred with respect to the purchase, storage, exchange, use, transportation, resale, importation, exportation or handling of the Products; provided, however, that “Taxes” does not include: (i) any tax imposed on or measured by net profits, gross or net income, or gross receipts (excluding, for the avoidance of doubt, any transaction taxes such as
sales, use, gross earnings or gross receipts or similar taxes that are based upon gross receipts, gross earnings or gross revenues received only from the sale of petroleum products); (ii) any tax measured by capital value or net worth, whether denominated as franchise taxes, doing business taxes, capital stock taxes or the like; (iii) business license or franchise taxes or registration fees; or (iv) any ad valorem or personal property taxes.







 




  





6











  







 


CONFIDENTIAL TREATMENT




 



	
  

	
(rr)

	
“Term” has the meaning specified in Section 4.3.







 



	
  

	
(ss)

	
“****” means the ****







 



	
  

	
(tt)

	
“VEF” means Vessel experience factor, always qualified and consistent with current API standards.







 



	
  

	
(uu)

	
“Vessel” means a tanker or other marine vessel employed or chartered for the purpose of transporting the Products from the Load Port to the Delivery Port.







 



	
1.2

	
Interpretation.  All headings in this Agreement are intended solely for convenience of reference and shall not affect the meaning or interpretation of this Agreement.  Unless expressly provided otherwise, (i) all references to sections and provisions in this Agreement are to the sections and provisions of this Agreement, (ii) the word “including” shall be read to be followed by the words “without limitation,” (iii) the words “other” and “otherwise” shall not be construed as being limited by the context in which they appear or the words that precede them, (iv) references to “consent” mean the prior written consent of the relevant Party, which shall
not be unreasonably withheld, delayed or conditioned, (v) when a Party’s response is required pursuant to this Agreement within a specific time period following receipt of notice or documentation, as applicable, the day of receipt thereof by such Party shall be considered day zero, (vi) each reference to a “day” or a “month” means a calendar day or a calendar month, respectively, (vii) all terms defined in the singular have the same meanings when used in the plural and vice versa, and (viii) all references to Applicable Law are as such Applicable Law may be enacted or amended from time to time.














	
2

	
Product







 





	
2.1

	
Subject to the terms and conditions of this Agreement, Mission shall sell and supply to VMSC and VMSC shall purchase from Mission ME, JME and CJO in the quantities set forth herein.  Mission represents that the Product shall meet the applicable specifications set forth on Appendix 1 and Appendix 1A (when provided).







 




	
3

	
Quantity







 





	
3.1

	
Base Quantity:







 



	
  

	
(a)

	
During the Term of this Agreement, Mission agrees to supply VMSC up to a maximum quantity of sixty million (60,000,000) Gallons per annum of ME and JME (the “Base Quantity”), which will be allocated as follows:







 




	 	
(i)

	
Year 2010 – Mission may supply VMSC with such quantities of ME up to the Base Quantity as it may elect;









 




  





7











  






 



CONFIDENTIAL TREATMENT




 




	 	
(ii)

	
Year 2011 – Mission may supply VMSC with such quantities of ME, as it may elect and shall supply VMSC with its entire production of JME, up to the Base Quantity in the aggregate (it is anticipated that Mission will be capable of supplying **** gallons of JME during the period); and







 






	 	
(iii)

	
Year 2012 through the end of the Initial Term and the Extension Term – Mission shall supply VMSC with its entire production of JME (it is anticipated that Mission will be capable of supplying 60,000,000 gallons of JME during this period).







 





	
  

	
(b)

	
The Parties hereby acknowledge that Mission is still transitioning into the production of Jatropha and until such time as Mission’s production of Jatropha yields producible quantities of JME, Mission shall be under no obligation to supply VMSC with any JME; provided that if and when Mission has producible quantities of JME, it will supply 100% of its production exclusively to VMSC up to the Base Quantity. Mission shall use its commercially reasonable efforts to commence production of JME by 1 January 2011 and continue to use its commercially reasonable efforts to increase production of JME with a goal of being capable of supplying JME at the Base Quantity per year beginning on 1 January 2012.







 


Until 31 December 2012, Mission shall in its sole discretion have the right to substitute any shortfalls in JME with ME up to the Base Quantity per annum.  Mission shall use commercially reasonable efforts to makeup the aggregated shortfall in JME quantity anticipated to be delivered by 31 December 2012 per Section 3.1(a) prior to the end of the Initial Term.


 


If Mission has not increased production to supply JME at a rate of **** gallons per year by 31 December 2012, Mission shall have the right to supply VMSC with ME up to the Base Quantity per annum (or Additional Quantity per annum if VMSC shall have so elected pursuant to Section 3.2) at the price set forth in Section 5.1(d) for the remainder of the Term.  Mission shall provide VMSC with written notice on or before 31 December 2012 of its election in the preceding sentence. If Mission does not elect to supply VMSC with ME at the price set forth in Section 5.1(d), VMSC shall have the right to terminate this Agreement by providing written notice to Mission.


 



	
  

	
(c)

	
VMSC to have the right to inspect Mission’s Jatropha production logs, per written request with 30 days notice at a maximum frequency of once every twelve (12) months.







 



	
  

	
(d)

	
VMSC may request at maximum frequency every twelve (12) months an affidavit from a key Mission manager attesting to the supply of Mission’s entire production of JME up to the maximum Base Quantity.







 



	
  

	
(e)

	
The Base Quantity may be adjusted upon mutual agreement of the Parties.







 



	
3.2

	
Additional Quantity:







 



	
  

	
(a)

	
In addition to the Base Quantity and subject to the conditions set forth in Section 3.2(b) hereof, on or before 31 July 2011, VMSC may elect to purchase from Mission up to an additional sixty million gallons per annum of either JME or CJO or both (provided the quantity of JME and CJO does not exceed 60 million gallons per annum in the aggregate) (collectively the “Additional Quantity”) by providing written notice to Mission of its election along with the desired quantities to be purchased. The purchase of Additional Quantity shall be on the same terms and conditions as specified in Section 3.1(a) above with delivery to commence 31 July 2012.  As soon as reasonably possible following VMSC’s election but in no
event later than 30 days, Mission shall send VMSC a written acknowledgement memorializing the terms of the sale for the Additional Quantity.  After an election is made, the Additional Quantity may be adjusted upon mutual agreement of the Parties.







 




  





8











  







 


CONFIDENTIAL TREATMENT




 



	
  

	
(b)

	
Mission's obligation to supply Additional Quantities of JME or CJO shall be contingent upon Mission having or obtaining sufficient:







 




	 	
(i)

	
Product volume;









 




	 	
(ii)

	
Product Manufacturing capacity; and









 




	 	
(iii)

	
Mission not committing additional volumes of JME or CJO to other third parties, prior to receipt of VMSC's notice exercising its election to purchase Additional Quantity of Product.









 




	
4

	
Term







 





	
4.1

	
Initial Term: The initial term of this Agreement (the “Initial Term”) shall be five (5) years from the date of first delivery of first Cargo of Products.  The first Shipment Date is anticipated to be by 31 March 2010 and may be earlier upon the mutual agreement of the Parties. If due to reasons other than Force Majeure or an event of default by Mission under the terms of this Agreement VMSC is unable or unwilling to accept delivery of the first Cargo of Product on the Shipment Date (provided that the first Shipment Date is not before 31 March 2010), VMSC shall pay Mission monthly each and every month thereafter, for a quantity based on a monthly pro
rata of Base Quantity of ME, at a purchase price for such Cargo in accordance with Section 5 until VMSC is able or willing to accept delivery of the first Cargo of Products.







 



	
4.2

	
Extension Term:  VMSC shall have the option to extend the Initial Term for five (5) years (the “Extension Term”) by providing written notice to Mission no later than 12 months prior to the completion of the Initial Term.







 



	
4.3

	
Initial Term and Extension of Term for Additional Quantity:  In the event VMSC has timely made an election to receive Additional Quantity of JME or CJO, VMSC shall have the right to extend the Extension Term for an additional two (2) years (the “Additional Quantity Extension”) by providing written notice to Mission no later than 12 months prior to the completion of the Extension Term for the sole purpose of purchasing the Additional Quantity.  During the Additional Quantity Extension VMSC shall not be obligated to purchase and Mission shall not be obligated to sell the Base Quantity.  The Initial Term, together with any subsequent
extension terms (if any), shall be referred to as the “Term”).







 




  





9











  






 



CONFIDENTIAL TREATMENT




 




	
5

	
Price







 





	
5.1

	
Product Pricing Formula: The price for the Products shall be determined by the formulas outlined in this Section 5.1(the “Pricing Formula”).  Once determined, the price for the sale and purchase of the Products shall be referred to as the “Price”:







 



	
  

	
(a)

	
The Pricing Formula for ME per US Gallon shall be the Mission Cost Basis subject to:







 



	
  

	
(i)

	
Minimum Price per Cargo: Argus ULSD, ****  (i.e.(Argus ULSD **** = Minimum Price for ME),







 



	
  

	
(ii)

	
Maximum Price per Cargo: Argus ULSD, **** (i.e. (Argus ULSD **** = Maximum Price for ME).







 



	
  

	
(b)

	
The Pricing Formula for JME per US Gallon shall be:







 



	
  

	
(i)

	
Argus ULSD, **** (i.e. (Argus ULSD ****) **** = JME Price), where:







 



	
  

	
(A)

	
If the scheduled delivery date is prior to the 15th of a calendar month, Argus ULSD price shall be determined on the date of Confirmation based on NYMEX Gulf Coast Ultra Low Sulphur Diesel (ULSD) Swap (Argus) final settlement price for the scheduled month of delivery; and







 



	
  

	
(B)

	
If the scheduled delivery date is on or after the 15th of a calendar month, Argus ULSD price shall be determined on the date of Confirmation based on NYMEX Gulf Coast Ultra Low Sulphur Diesel (ULSD) Swap (Argus) final settlement price for the month following the scheduled month of delivery.







 



	
  

	
(c)

	
The Pricing Formula for CJO per US Gallon shall be:







 



	
  

	
(i)

	
Argus ULSD, **** (i.e. (Argus ULSD ****) **** = CJO Price)., where:







 



	
  

	
(A)

	
If the scheduled delivery date is prior to the 15th of a calendar month, Argus ULSD price shall be determined on the date of Confirmation based on NYMEX Gulf Coast Ultra Low Sulphur Diesel (ULSD) Swap (Argus) final settlement price for the scheduled month of delivery; and







 



	
  

	
(B)

	
If the scheduled delivery date is on or after the 15th of a calendar month, Argus ULSD price shall be determined on the date of Confirmation based on NYMEX Gulf Coast Ultra Low Sulphur Diesel (ULSD) Swap (Argus) final settlement price for the month following the scheduled month of delivery.







 



	
  

	
(d)

	
Notwithstanding the provisions of Section 5.1(a), if Mission makes the election provided in Section 3.1(b), the Pricing Formula for ME per US Gallon shall be:







 



	
  

	
(i)

	
Argus ULSD, **** (i.e.(Argus ULSD ****) **** = Minimum Price for ME).







 



	
5.2

	
“Mission Cost Basis” shall be the aggregate of:







 




  





10











  






 



CONFIDENTIAL TREATMENT




 



	
  

	
(a)

	
Palm Oil “CPO”, as determined in accordance with Section 5.3; plus







 



	
  

	
(b)

	
Mission Production Cost of US$****; plus







 



	
  

	
(c)

	
Shipping and Transport Cost ****; plus







 



	
  

	
(d)

	
Mission Margin and Contribution to Fixed Costs of US$****.







 



	
5.3

	
Pricing and market references:







 


As to ME sold hereunder, Mission shall have the option to elect within each and every Confirmation a "Floating Price Forward" or a "Fixed Price Forward" on the date of Confirmation, where:


 



	
  

	
(a)

	
"Floating Price Forward" is a forward commitment for volume where prices shall be based on the price per the Pricing Formula on the Shipment Date, where;







 



	
  

	
(i)

	
At Mission’s option, CPO shall be based on either the MPOB **** or on MDEX (FCPO) futures contract as follows:







 



	
  

	
(A)

	
MPOB **** or MPOB ****; or







 



	
  

	
(B)

	
the **** MDEX (FCPO) futures contracts ****, or **** MDEX (FCPO) futures contracts ****.







 



	
  

	
(C)

	
Referenced by: MPOB Crude Palm Oil Pen. Malaysia ****: http://econ.mpob.gov.my/economy/EID_web.htm

	
 







 



	
  

	
(D)

	
As quoted by: http://econ.mpob.gov.my/economy/EID_web.htm







 



	
  

	
(E)

	
Referenced by: MDEX FCPO http://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-fcpo.html







 



	
  

	
(F)

	
As quoted by: MDEX FCPO







 


http://www.klse.com.my/website/bm/market_information/prices/derivatives.jsp


 



	
  

	
(ii)

	
ULSD is based on NYMEX Gulf Coast Ultra Low Sulphur Diesel (ULSD) Swap (Argus) ****,







 



	
  

	
(A)

	
Referenced by: http://www.argusmedia.com Argus US products







 



	
  

	
(B)

	
As quoted by: http://www.argusmedia.com.







 



	
  

	
(iii)

	
RIN: as published in OPIS Biofuels Update ****. In the event that the **** the RIN value shall be ****:







 



	
  

	
(A)

	
The published in OPIS Biofuels Update RIN value, ****; or







 



	
  

	
(B)

	
The published in OPIS Biofuels Update RIN value, ****.







 



	
  

	
(iv)

	
****: The published **** as at the Date of Delivery.







 




  





11











  






 



CONFIDENTIAL TREATMENT




 



	
  

	
(v)

	
MYR/USD Foreign Exchange Rate: The month average exchange rate that matches the relevant CPO averaging month using the Association of Banks in Singapore’s 11:00 am (Singapore time) MYR/USD spot price.







 



	
  

	
(vi)

	
If there is a change to the **** from the Confirmation to the Shipment Date of any or all confirmed Cargo, Mission shall have the option to cancel all or part of the Confirmation.







 



	
  

	
(b)

	
"Fixed Price Forward" is a commitment for both price and volume where prices shall be based on the price per the Pricing Formula on the date of Confirmation, where:







(i)



	
  

	
(A)

	
at Mission’s option, CPO shall be based on the **** MDEX (FCPO) future contracts **** MDEX (FCPO) futures contracts ****.







 



	
  

	
(B)

	
Referenced by:







 


a.         Instrument: Applicable **** MDEX Futures Contract or if not quoted then the nearest quoted ****: http://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-fcpo.html


 


b.         As quoted by: http://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-fcpo.html


 



	
  

	
(ii)

	
ULSD is based on the **** of Gulf Coast Ultra Low Sulphur Diesel (ULSD) Swap (Argus) price for the **** (i.e. **** ULSD ****).







 



	
  

	
(A)

	
Referenced by:







 


a.         Instrument: ULSD (Argus) US Gulf Coast Swap: http://www.argusmedia.com Argus US Products


 


b.         As quoted by: http://www.argusmedia.com


 



	
  

	
(iii)

	
RIN: as published in OPIS Biofuels Update ****.  In the event that the **** the RIN value shall be ****:







 



	
  

	
(A)

	
The published in OPIS Biofuels Update RIN value, ****; or







 



	
  

	
(B)

	
The published in OPIS Biofuels Update RIN value, ****.







 



	
  

	
(iv)

	
****: The published **** as at the Date of Delivery.







 



	
  

	
(v)

	
MYR/USD Foreign Exchange Rate: The quoted Bloomberg midpoint MYR/USD forward rate which matches the relevant CPO pricing month.







 



	
5.4

	
The final Price shall be expressed to four (4) decimal places per US Gallon and the invoice quantity will equal the Bill of Lading quantity.







 




  





12











  







 


CONFIDENTIAL TREATMENT




 




	
6

	
Confirmation







 





	
6.1

	
Beginning on the Effective Date of this Agreement and on the 15th day of each month, thereafter, Seller shall provide VMSC with a six (6) month rolling good faith forecast (the “Forecast”) of its anticipated production and delivery schedule (the “Delivery Schedule”) for each of the Products.  Within ten days following its receipt of the Forecast, VMSC shall have the right to object to the quantity of Products in the Delivery Schedule if such quantity exceeds the quantity of Products to be delivered pursuant to Section 3 of this Agreement. If VMSC fails to provide notice
of its objection within the required time period, VMSC shall be deemed to have accepted the Delivery Schedule. If VMSC objects to the Delivery Schedule or should a change be required in the Forecast or the Delivery Schedule, VMSC and Mission will work together to reach an agreement.







 



	
6.2

	
On any given working day, Mission shall send VMSC a Confirmation in the form attached hereto as Appendix 2 setting out specific quantities of Products and prices for delivery into the future. Each Confirmation may provide for one Cargo on one Vessel or a series of Cargos on one or more Vessels.  The Confirmation shall memorialize the binding terms of the sale of Products to VMSC by Mission.  Each Confirmation will include:







 



	
  

	
(a)

	
Anticipated delivery date(s) and exact Volume(s) for specific and distinct Cargo(s):







 



	
  

	
(i)

	
subject to no individual delivery exceeding six million, three hundred thousand (6,300,000) US Gallons unless mutually agreed otherwise;







 



	
  

	
(ii)

	
delivery frequency, to  be capped at a maximum of 60,000,000 gallon divided by the cargo size and translated to number of calendar days e.g. for a maximum cargo of 6.3mn gallons 365 / (60/6.3) = 38 days or 9.52 cargos pa.  This frequency may be changed from cargo to cargo, but subject on a pro rata basis that at no given time VMSC to have more than 6,300,000 in a rolling 38 days.







 



	
  

	
(b)

	
The Pricing Formula elected pursuant to Section 5







 



	
6.3

	
Within forty eight hours (48) hours of receiving the Confirmation, VMSC will issue an acknowledgement of the Confirmation (a “Confirmation Acknowledgement”).  Each Confirmation shall be immediately binding and shall survive this Agreement in any and all respects regardless of whether or not a Confirmation Acknowledgement is issued or whether or not a Confirmation Acknowledgement purports to vary any terms other than the Delivery Port.







 



	
6.4

	
VMSC may, at its cost, elect to advise Mission of an amendment to the Delivery Port.  For the avoidance of doubt, no other amendments except for errors in calculation or quotation shall be accepted in the Confirmation Acknowledgement.







 




	
7

	
Delivery







 





	
7.1

	
Except as otherwise expressly agreed by the Parties, Mission shall deliver all Cargos of Products to VMSC on a CIF basis.  Mission shall arrange and pay for transportation of the Products sold hereunder.  For the avoidance of doubt, Mission shall pay all Shipping and Transport Costs which are to be covered within the Pricing Formula per Section 5,







 



	
7.2

	
JME and CJO shall be delivered as separately identified Cargos.







 




  





13











  






 



CONFIDENTIAL TREATMENT




 



	
7.3

	
VMSC shall exercise reasonable diligence to provide a safe, deepwater, readily accessible berth at the Delivery Port; provided, however, that Buyer shall not be deemed to have warranted the safety of any such berth or terminal and shall be under no liability in respect thereof, except for loss or damage caused by the terminal operator’s failure to exercise reasonable care as herein provided and which could not have been avoided by the exercise of due care by one or more of the owner, operator, master, officers and crew of the Vessel, the Vessel’s agent or Seller.   Buyer shall not be deemed to warrant the safety of any channel, fairway, anchorage, or other waterway used in approaching or departing
from the Delivery Port designated by Buyer.







 



	
7.4

	
VMSC shall designate the appropriate Delivery Port in the Delivery Schedule.  VMSC may change the Delivery Port specified in its sole discretion by providing Seller notice of change prior to the transfer of title to the Products.  The Buyer will bear all associated costs of any such change in the Delivery Port following the issuance of the Confirmation or Confirmation Acknowledgement and such costs shall be reflected in the Final Invoice.







 



	
7.5

	
Product shall be discharged at the Delivery Port at a berth suitable for the discharge of the Product or if practicable and mutually agreed by the Parties and provided the Vessel is willing to and can safely berth, at Buyer’s own or appointed premises within the harbour limits.







 



	
7.6

	
All applicable governmental, local and port authority rules and regulations, and terminal rules and regulations in force at the Delivery Port shall apply to Seller’s Vessel. Notwithstanding anything to the contrary contained in this Section, if any Vessel nominated by Seller does not comply with the foregoing provisions or any of them, Buyer or Buyer’s agents may refuse to berth, discharge, or continue to discharge the Vessel in question.







 



	
7.7

	
VMSC shall be responsible for offloading the Cargos of Products received hereunder.







 



	
  

	
(a)

	
VMSC will unload each Cargo within the laytime stipulated in the Charter Party Agreement allocated for unloading where laytime commences 6 hours after notice of readiness (“NOR”) has been tendered or when the Vessel is all fast alongside berth whichever is earlier;







 



	
  

	
(b)

	
VMSC shall take delivery with customary quick despatch after the NOR has been given by the shipowner or representative(s) in accordance with the Charter Party Agreement.







 



	
7.8

	
Should Mission advise VMSC that it wishes to deliver product via onshore means, the Parties shall in good faith work together to develop a method to deliver Products via onshore means.  In the event that such a mutually agreeable method is developed, Mission shall thereafter have the option to require VMSC to accept delivery of Products via such onshore means.







 




	
8

	
Payment







 





	
8.1

	
VMSC to make payment for the Products as per each Confirmation Acknowledgment  in two stages:







 



	
  

	
(a)

	
On the Shipment Date of each Cargo of Products, fifty percent (50%) of the Price of such Products according to the Confirmation shall be paid by Buyer to Seller within three (3) New York banking days by wire transfer subject to receipt of the following supporting documents:







 




  





14











  






 



CONFIDENTIAL TREATMENT




 



	
  

	
(i)

	
Mission’s invoice for fifty percent (50%) of the Price of the Products to be delivered in accordance with a Confirmation (the “Initial Invoice”) (facsimile and emailed copies acceptable).  The Parties acknowledge that as to ME which prices in accordance with Section 5.3 hereof, the Initial Invoice will be an estimate which takes into account the prevailing commodity prices at the time of Shipment according to Section 5.3.







 



	
  

	
(ii)

	
Certificate of quality and or Independent Inspectors quality report at the Load Port (facsimile and emailed copies acceptable);







 



	
  

	
(iii)

	
Certificate of quantity and or Independent Inspectors quantity report at the Load Port (facsimile and emailed copies acceptable);







 



	
  

	
(iv)

	
Full set of original Bills of Lading properly issued or endorsed to Buyer without restriction or qualification of any kind or 2/3 original Bills of Lading and master’s or owner’s or agent’s receipt for 1/3 Bill of Lading and other usual shipping documents.







 



	
  

	
(b)

	
Upon arrival of each Cargo of Products at the Delivery Port and no later than 48 hours after the tender of the applicable NOR, the remaining fifty percent (50%) of the Price of the Products applicable to such Confirmation shall be paid by VMSC to Seller within three (3) New York banking days by wire transfer subject to receipt of the following supporting documents:







 



	
  

	
(i)

	
Receipt of Mission’s Final Invoice for the remaining 50% percent of the Price of such Products applicable to such Confirmation and any other costs incurred by VMSC and payable hereunder with respect to such Confirmation (the “Final Invoice”).  The Parties acknowledge that as to ME which may price in accordance with Section 5.3 hereof, the Final Invoice may be subject to a true-up and Final Settlement in accordance with Section 8.1(e); and







 



	
  

	
(ii)

	
Any documents under Section 8.1(a) which were not previously delivered.







Original documents shall subsequently be couriered in timely fashion.



	
  

	
(c)

	
Demurrage charges will be billed separately with supporting documents and such charges shall be paid within seven (7) days of receipt of invoice.







 



	
  

	
(d)

	
Any Shipping and Transport Costs associated with changes to the Delivery Port shall be billed under the Final Invoices as separate line items.







 



	
  

	
(e)

	
Seller’s invoices for the Price of ME may use **** per Section 5.3 on a provisional basis. Upon the final monthly average settlement of the relevant ****, per Section 5.3 Mission will calculate the final Price for such Products to true-up in a Final Settlement (the “Final Settlement”), deliver a certificate of such adjustments and Final Settlement to VMSC and, subject to VMSC reasonable concurrence, any adjustments and Final Settlement shall be paid by the relevant party within three (3) New York banking days.







 




  





15











  






 



CONFIDENTIAL TREATMENT




 



	
8.2

	
Mission nominated bank account details to be confirmed in each invoice.







 



	
8.3

	
All payments to be made hereunder shall be made in United States Dollars.







 



	
8.4

	
If payment falls due on a Saturday or New York bank holiday other than a Monday, payment shall be made on the first proceeding New York banking day.  If payment falls on a Sunday or a Monday New York bank holiday, then payment shall be made on the first following new York banking holiday







 



	
8.5

	
Any amount payable by Buyer to Seller hereunder shall, if not paid within two New York banking days following its due date, bear interest from the due date until the date payment is received by Seller at the Interest Rate.  Buyer shall pay such interest immediately to Seller without demand.







 



	
8.6

	
If VMSC, in good faith, disputes the accuracy of the amount invoiced for the Products, VMSC shall pay such amount as it in good faith believes to be correct and provide written notice stating the reasons why the remaining disputed amount is incorrect, along with supporting documentation acceptable in industry practice.  In the event the Parties are unable to resolve such dispute, either Party may pursue any remedy available at law or in equity to enforce its rights hereunder.  In the event that it is determined or agreed that VMSC must or will pay the disputed amount, then VMSC shall pay interest from and including the original payment due date until, but excluding, the date the disputed amount is received by Seller, at the Interest Rate.







 




	
9

	
Financial Condition of the Buyer







 





	
9.1

	
If at any time (i) VMSC fails to make any undisputed payment required to be made by it hereunder when and as the same shall become due and payable, following the expiration of the applicable notice and cure period, or (ii) VMSC’s financial condition becomes substantially impaired or VMSC is not able to perform its obligations under this Agreement, then Seller at its option may require VMSC to provide: (a) an irrevocable stand-by letter of credit from a bank reasonably acceptable to Seller, with terms reasonably acceptable to Seller, and in an amount reasonably acceptable to Seller; (b) a parent guaranty with terms reasonably acceptable to Seller; or (c) prepayment for each Cargo of Products prior to the Shipment Date.  If Seller requires VMSC to provide adequate assurance,
Seller will provide VMSC with notice.  If VMSC fails to provide the required adequate assurance within fifteen (15) days of its receipt of such notice from Seller, Seller shall have the option to suspend its performance under this Agreement until VMSC provides such adequate assurance.







 




	
10

	
Nomination of Vessels







 





	
10.1

	
Unless otherwise agreed, at any time as such information is known to Seller and in any event no later than ten (10) calendar days before the first day of the loading date range, Seller shall notify Buyer of:







 



	
  

	
(a)

	
the name of vessel,







 



	
  

	
(b)

	
the grade and approximate quantity of the Products to be loaded, and







 




  





16











  






 



CONFIDENTIAL TREATMENT




 



	
  

	
(c)

	
the estimated time of arrival at the Load Port.







 



	
10.2

	
Buyer shall give notice within 24 hours accepting or rejecting the Vessel after recept of such nomination, and shall not unreasonably reject any nomination.  As soon as possible after the Vessel’s departure from the Load Port, Seller shall provide Buyer with written notice of the following:







 



	
  

	
(a)

	
the name of the Vessel,







 



	
  

	
(b)

	
the quantity of Product loaded,







 



	
  

	
(c)

	
the estimated date of arrival at the Delivery Port within a five (5) day range, and







 



	
  

	
(d)

	
the name of the Vessel’s agent at the Delivery Port.







 



	
10.3

	
Despite any prior acceptance, Buyer shall have the right to revoke its acceptance of Seller's Vessel nomination at any time after Buyer’s initial acceptance (but not later than nine days prior to the first day of loading Products onto such Vessel) on any reasonable, documented, objectively verifiable ground, including but not limited to, if such Vessel is involved in any incident or if more recent information regarding such Vessel becomes available to Buyer at any time after such prior acceptance.  In case of rejection, Seller shall promptly nominate a Vessel acceptable to Buyer.







 



	
10.4

	
Seller warrants that any vessel nominated or substituted shall be owned or demised chartered by a member of the International Tankers Owners Pollution Federation Ltd. (ITOPF).  Seller further warrants that it shall ensure that the vessel nominated or substituted carries on board a certificate of insurance as described in the Civil Liability Convention for Product Pollution Damage and that the vessel has in place insurance cover for Product pollution no less in scope and amounts than is available under the rules of Protection and Indemnity Clubs entered into among the International Group of P and I Clubs.  Seller shall endeavour to ensure that any vessel nominated shall comply with the International Safety Management (ISM) Code which came into effect on July 1, 1998, and
any amendments thereto.







 




	
11

	
Quality, Quantity and Inspection







 





	
11.1

	
Inspection.  The quantity and quality of the Product sold hereunder shall be determined by an Independent Inspector, whose determinations shall be conclusive and binding upon both Parties, absent fraud or manifest error.  The cost of the Independent Inspector’s services shall be shared equally between the Parties.  Seller and Buyer may have a representative present at the time of title transfer and Seller and Buyer shall always provide the other Party with free access to ship and shore facilities.  All measurements and tests for quantity and quality shall be made in accordance with the most current API, EI and ASTM standards and guidelines.   If applicable, the Net
Standard Volume (NSV) shall be calculated using the “Official Analyses”, as stated below.   All quantities of delivered Product shall be corrected for temperature to sixty degrees Fahrenheit (60 °F) in accordance with API Chapter 11.5 March 2009 ASTM D-1250-08, Table 6A or 6B, as applicable (in each case, as revised at the time of measurement). All Product delivered by Seller shall conform to the applicable Product specifications.







 




  





17











  






 



CONFIDENTIAL TREATMENT




 



	
11.2

	
Official Quantity. In order of preference, the Official Quantity of Product sold hereunder will be determined by:







 



	
  

	
(a)

	
Meters – which have been proven and certified per API/EI procedures and properly working.







 



	
  

	
(b)

	
Static Tank Gauges - If meters are not proven and certified per API/EI procedures, or not properly working, then the Official Quantity shall be determined by static shore tank measurements as determined by a mutually agreed Independent Inspector. If shore tanks are active, in unsuitable condition for custody transfer, or if any other condition exists which may affect the accuracy of measurements (including but not limited to the following: tanks that have been stripped empty, liquid level in the bottom (critical) zone or floating-roof in the critical zone, liquid levels below datum plate, excessive water, snow or product on the floating roof, non-perforated standpipe per API/EI standards, tank leaning or bulging, solidified material, incrustation, or other unsuitable conditions) then vessel
measurements will prevail as the Official Quantity as outlined below.







 



	
  

	
(c)

	
Vessel – The Vessel volume,(with free water deducted), with applicable VEF will apply. An applicable Load VEF will apply when vessel receives and an applicable Discharge VEF will apply when vessel delivers. If the vessel delivered / received volume is less than 75% of vessel’s capacity, the then vessel volume without VEF will apply (unless a valid partial VEF is available and proven).







 



	
11.3

	
Lightering.  If the custody transfer occurs at a lightering, then the Official Quantity shall be calculated using daughter vessel measurements (as measured alongside a stationary berth) less OBQ and adjusted for an applicable VEF.







 



	
11.4

	
Line Verification.  Line verification shall be performed in accordance with API/EI guidelines and witnessed by the Independent Inspector. Any volume variances less than API measurement tolerances (i.e. +/- one quarter of an inch measurement of all involved vessel and shore tanks) shall be deemed as measurement tolerance and shall not be added back to the line verification volume. If no line verification is performed, then the official volumes will revert to vessel measurements as outlined in Section 10.2(c) above.







 



	
11.5

	
Official Analyses.  The quality of Products hereunder shall be determined by a volumetric composite of the static shore tanks before loading. For Lightering, a volumetric composite of the daughter vessel shall be used for the Official Quality.







 




	
12

	
Laytime







 





	
12.1

	
The allowed laytime for any Vessel nominated under this Agreement shall be 36 hours, with a minimum of fifty percent of such allocated laytime allocated for unloading the Cargo at the Delivery Port.  If VMSC's volume of Cargo is less than the total volume of cargo carried on such Vessel, allowed laytime shall be allocated pro rata by dividing the volume of VMSC's Cargo by the total volume of cargo carried in such Vessel, which shall be determined by the Bill of Lading).  Laytime shall commence 6 hours after NOR has been tendered or when the Vessel is all fast alongside berth, whichever is occurs first and laytime shall cease when hoses are disconnected as per the Charter Party Agreement.







 




  





18











  






 



CONFIDENTIAL TREATMENT




 



	
12.2

	
In the event of ship to ship (“STS”) operation undertaken at the request of Buyer, all time used in connection with STS operations (such time shall commence 6 hours after NOR has been tendered or when the Vessel is moored to the STS Vessel, whichever is earlier and shall end when the Vessel is unmoored from the last Cargo receiving Vessel) shall count as used laytime, or, if the Vessel is on demurrage, as time on demurrage all time to count weather permitting OR not.







 




	
13

	
Demurrage







 





	
13.1

	
VMSC is responsible for exercising reasonable diligence in procuring a safe berth(s) at the Delivery Point/facility reachable on arrival and always accessible to which the Vessel can proceed, at which it may lie and from which it may depart, always safely afloat and free of all wharfage and dockage dues and fees.  VMSC shall arrange for berthing of the Vessel in accordance with the Cargo delivery window and estimated time of arrival of the Vessel and as determined by the time the NOR has been tendered.







 



	
13.2

	
VMSC shall pay Delivery Point demurrage to Mission in accordance with the following provisions:







 



	
  

	
(a)

	
Demurrage, whether caused by delays in unloading Cargo caused by VMSC, an occupied berth or otherwise, shall be payable at the Vessel charter party rate (Mission to advise VMSC of charter party rate when the Vessel is nominated). No other terms of the charter party are incorporated into this Agreement unless expressly provided.  If the Vessel is on time charter, the applicable daily rate will be the daily hire.  In no event shall Buyer be liable for payment of demurrage hereunder in excess of that amount actually paid to the Vessel by Seller for demurrage related to the Cargo received by Buyer. All claims for demurrage must be made within 90 days from the date of the completion of discharge or the claim shall be deemed to have been waived.







 



	
  

	
(b)

	
Demurrage shall be paid by Buyer to Seller within 30 days from receipt of Seller’s documented claim, which shall include:







 



	
  

	
(i)

	
NOR of performing Vessel signed by Master “SOF” and, if possible, by VMSC and Mission or their agents / representative,







 



	
  

	
(ii)

	
Evidence of charter party rate or time charter daily hire,







 



	
  

	
(iii)

	
Laytime / demurrage calculation, and







 



	
  

	
(iv)

	
Any other document VMSC reasonably considers relevant to the laytime / demurrage calculation







 




	
14

	
Taxes







 





	
14.1

	
Except as provided in Section 13.2 and Section 14.2, all Taxes shall be borne by Seller, including (i) such Taxes the taxable incident of which is the transfer of title or risk of loss; (ii) incurred or imposed on the possession, manufacture, sale, exportation, transportation, or handling of the Products or (iii) any port charges, port dues and other Taxes assessed against the Vessel (other than those being for the Vessel owner’s account).  If Buyer is required by law to pay any of such Taxes which are Seller’ obligation hereunder (other than Taxes incurred as a result of Buyer's negligence or breach of a representation or warranty hereunder), Seller shall promptly reimburse Buyer for them.







 




  





19











  






 



CONFIDENTIAL TREATMENT




 



	
14.2

	
Buyer shall be responsible for any Taxes which are imposed, assessed or incurred with respect to the possession, re-sale, blending, and transportation of the Products following the importation of such Products into the United States.  Buyer shall furnish Seller with satisfactory tax exemption certificates where exemption is claimed.







 




	
15

	
Title, Risk of Loss and Importer of Record







 





	
15.1

	
Title to and risk of loss for each Cargo of Product delivered hereunder shall pass from Mission to VMSC when it passes the permanent flange connection of the Vessel at the Load Port.  In the event of loss of a Cargo following transfer of title, Buyer shall pay to Seller all remaining amounts due with respect to such Cargo pursuant to the terms of this Agreement but shall be entitled all insurance proceeds and other recoveries in respect of such Cargo.







 



	
15.2

	
Buyer shall be the importer of record into the country of destination for the Products delivered hereunder.  As such, Buyer shall be responsible for all import arrangements and customs requirements, including all duties, fees and related costs in respect of importing and unloading the Cargo at the Delivery Port.  Buyer shall be responsible for all Taxes arising from or imposed upon importation of the Cargo.  Unless otherwise agreed, the importer of record shall be entitled to any duty drawback rights.







 



	
15.3

	
Mission shall provide VMSC with a Biodiesel producers certificate, with each and every Cargo, as required per Form Certificate O per Appendix 3.







 




	
16

	
Significant Changes in Legislation







 





	
16.1

	
Significant changes in United States legislation including but not limited to:







 



	
  

	
(a)

	
Change in the Renewable Fuels Standard (RFSII) that materially and negatively alters VMSC’s requirement to blend Biodiesel or Mission’s ability to supply product that is eligible for RIN credits; or







 



	
  

	
(b)

	
Change in the United States Biodiesel Blenders Excise Tax Credit in a manner that materially and negatively alters the economics of this Agreement







 


shall result in re-negotiation of this Agreement.


 



	
16.2

	
Actions, policy or material economic hardship implement by a non-United States Government of which materially impedes on either Mission’s ability to perform under this Agreement or materially changes the economics shall result in re-negotiation of this Agreement.







 



	
16.3

	
Should the Parties fail to renegotiate this Agreement or are unable to reach an agreement within 60 days following an event giving rise to such re-negotiation, either Party may upon 30 days notice to the other Party terminate this Agreement.







 




	
17

	
Default







 





	
17.1

	
In the event that either Party is in default of any provision hereof, including, but not limited to, failure to pay any sums due under Section 8 above, the non-defaulting Party shall notify the defaulting Party of such default.  If said default is not cured, in full, within thirty (30) days of the date of such notice, the non-defaulting Party shall be entitled to declare a material default under the terms of this Agreement, cease performance, terminate this Agreement, and/or pursue any and all such further remedies as are provided for under Applicable Law.







 




  





20











  






 



CONFIDENTIAL TREATMENT




 




	
18

	
Insurance







 





	
18.1

	
Seller shall obtain cargo insurance at its own expense such that the Buyer, or any other party having an insurable interest in the Cargo, shall be entitled to claim directly from the insurer and Seller shall provide Buyer with the insurance policy or other evidence of insurance cover.  Unless otherwise agreed, the minimum insurance shall cover 110 percent of the CIF value of the Cargo.  The insurance shall cover all risks of contamination and all risks of physical loss or damage to the Cargo from any external cause as per Institute Cargo Clauses A (Institute of London Institute Underwriters), including shortage and/or leakage in excess of 0.50 percent of the Bill of Lading quantity, to the extent covered in Clauses A.  If required by Buyer, Seller shall provide
at Buyer’s expense war, strikes, riots and civil commissions risk insurances, if procurable.  The insurance shall cover the period of time from when risk passes at the Load Port until the Products pass the Vessel's permanent hose connection at the Delivery Port.  If, and so long as, voyages to any of the ports of loading or discharge under the Agreement, or any sea areas through which the Vessel has to travel incur additional insurance or war risk insurance premiums (if applicable) in excess of those prevailing on the date of the Agreement for vessel's hull and machinery or cargo, or both, the cost of such additional insurance shall be paid by Seller in addition to the price stipulated in the Agreement.







 




	
19

	
Indemnity







 





	
19.1

	
Each Party (the “Indemnifying Party”) agrees to protect, defend, indemnify and hold the other Party  (the “Indemnified Party”) harmless from and against any and all claims, demands, suits, losses, expenses (including reasonable attorneys’ fees), damages, fines, penalties, causes of action and liabilities of every type and character, including personal injury or death to any person or loss or damage to any personal or real property, caused by, arising out of or resulting from (a) the negligence (whether by action or omission) or wilful misconduct of such Indemnifying Party, its officers or employees with respect to the purchase and sale of
Product hereunder, or (b) a breach of such Indemnifying Party’s warranties under this Agreement or its failure to comply with Applicable Laws.  In the event the Parties are jointly or concurrently negligent, each Party shall indemnify the other Party to the extent of its negligent acts or omissions or wilful misconduct.







 




	
20

	
ISPS Compliance







 





	
20.1

	
Seller warrants that the Vessel complies with the requirements of the International Code for the Security of Ships and of Port Facilities and the relevant amendments to Chapter XI of SOLAS (the “ISPS Code”) and the U.S. Maritime Transportation Security Act of 2002 (“MTSA”).  Buyer warrants that the Delivery Port and discharge terminal are in compliance with the ISPS Code and the MTSA.







 



	
20.2

	
In all cases, a Party that breaches any warranty set forth in this Section 19 shall indemnify the other Party against any resulting delays, demurrage, expenses, fines, penalties or other costs (excluding any consequential or indirect damages).  If delays, demurrage, expenses, fines, penalties or other costs are incurred for any reason attributable to security regulations other than those stipulated in Section 19.1, such costs shall be shared equally by the Parties.







 




  





21











  






 



CONFIDENTIAL TREATMENT




 




	
21

	
Compliance with Laws







 





	
21.1

	
Each Party shall comply with all Applicable Laws, including any U.S. laws, regulations and administrative requirements applicable to this Agreement concerning the importation of the Products.







 



	
21.2

	
Seller shall furnish Buyer with Material Safety Data Sheets that provide warnings and safety and health information concerning the Products.







 




	
22

	
Law and Arbitration







 





	
22.1

	
This Agreement, and all disputes and controversies arising in connection therewith, shall be governed and construed in accordance with the laws of the State of New York without regard to principles of conflict of laws that would apply any other law.







 



	
22.2

	
Any dispute which arises between the parties out of or in connection with this Agreement, including but not limited to any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association, which rules are deemed to be incorporated.







 



	
22.3

	
The place of the arbitration shall be New York City, New York unless otherwise agreed to by the Parties.  The language of the arbitration shall be English.  The tribunal shall consist of a single arbitrator unless the amount in controversy exceeds $1,000,000, in which case either party may demand that the matter be heard by a panel of three arbitrators, one to be nominated by each Party and the third by the two so nominated.  All arbitrators shall be attorneys licensed in the State of New York with over twenty (20) years experience in international commercial agreements and the interpretation thereof.  The arbitration shall be scheduled to be completed no later than ninety (90) days after arbitration is commenced to the extent practicable.







 



	
22.4

	
Any award rendered in such arbitration shall be final and binding upon the Parties hereto and judgment may be entered thereon of any order of enforcement obtained in any courts having jurisdiction.  The decision of the arbitrator, or a majority of the arbitrators, shall be reduced to writing and shall be delivered to the Parties no later than thirty (30) days following the arbitration hearing.  Each Party shall bear the Party's own attorneys' fees and other costs and expenses incurred in connection with the arbitration. The parties shall share the arbitrators' fees and any fees charged by the sponsoring arbitration service equally. The arbitrator or arbitrators shall not add any interest factor to an award
except as specifically provided in this Agreement and shall not award punitive or exemplary damages, whether or not such punitive or exemplary damages would be permissible under applicable law.







 



	
22.5

	
Arbitration shall not be applicable to Confirmations or any equitable relief sought under this Agreement.







 




	
23

	
Claims







 





	
23.1

	
If any quality or quantity claims arise under or in connection with this Agreement, the claiming Party shall notify the other Party of its claim in writing within three (3) months from the date of the completion of loading of each Cargo, failing which the claim shall be deemed waived and absolutely barred, absent fraud.







 




  





22











  






 



CONFIDENTIAL TREATMENT




 




	
24

	
Force Majeure







 





	
24.1

	
If either Party is rendered unable to perform fully or in part any obligation under this Agreement, except in relation to obligations to make payments due under this Agreement (including demurrage), then to the extent that such inability arises from a Force Majeure and upon such Party promptly giving written notice to the other Party of such cause(s), neither Party shall be liable to the other in damages or otherwise and the time for performance of the affected obligation shall be extended during and for the period of inability so caused, up to a maximum of sixty (60) calendar days.







 



	
24.2

	
Should such period of inability continue in excess of thirty (30) calendar days, either Party shall have the right to terminate this Agreement by written notice to the other Party, in which case neither Party shall be responsible for further performance nor liable in any way to each other.







 



	
24.3

	
Should a particular delivery (or deliveries) be cancelled due to an event of Force Majeure, neither Seller nor Buyer shall be relieved from their obligations under this Agreement in respect to further deliveries not affected by the force majeure.







 



	
24.4

	
The term “Force Majeure” shall any cause or event reasonably beyond the control of a Party, including (but without limiting the generality of such term): act(s) of god, perils of the sea, fire, delay of the performing vessel arising from breakdown or adverse weather, accidents at, closing of, or restrictions upon the use of mooring facilities, docks, ports, pipelines, harbors, or other navigational or transportation mechanisms, war (declared or undeclared), military operations, blockade, revolution, disruption or breakdown of or explosions or accidents to wells, storage plants, refineries, terminals, machinery or other facilities, trade restriction, requests, orders or actions of any government, or by any person purporting
to represent a government, or any other cause of a similar nature as described herein not reasonably within the control of the respective parties.  The Parties acknowledge and agree that an event of Force Majeure at one of Buyer’s Affiliate’s Refinery which is receiving Product under this Agreement shall constitute an event of Force Majeure under this Agreement







 




	
25

	
Limitation of Liability







 





	
25.1

	
Notwithstanding anything in this Agreement to the contrary, neither the Seller nor the Buyer shall be liable for consequential, indirect, special, punitive, or exemplary losses or damages of any kind arising out of or in any way connected with the performance of or failure to perform this Agreement.







 




	
26

	
Right to Audit







 





	
26.1

	
Each Party and its authorized representative shall have access to the books and records of the other Party relating to performance of this Agreement (other than with respect to Seller’s actual production costs, feedstock costs, costs of consumables employee compensation or other proprietary information unrelated to the performance of this Agreement).  Each Party shall have the right to audit those records at any reasonable time, but not more than two times per year.  The audited Party shall fully cooperate with the auditing Party to accomplish the audit as expeditiously as possible.  Either Party may retain outside auditors or inspectors whose costs and fees shall be borne by the Party employing the outside auditor or inspector.  Each Party
agrees to be bound and shall cause any independent auditors or inspectors to be bound by the confidentiality obligations contained herein.  Either Party may witness any inspection at its own expense.







 




  





23











  






 



CONFIDENTIAL TREATMENT




 




	
27

	
Assignability







 





	
27.1

	
A Party may assign this Agreement to any Affiliate without the consent of the other Party so long as such Party expressly remains jointly and severally responsible for the obligation so assigned with the Affiliate assignee.  Further, a Party may assign this Agreement without the consent of the other Party if such assignment is by way of a merger, consolidation, scheme of arrangement or similar transaction or in connection with the sale, transfer or conveyance by VMSC or Seller of all or substantially all of its assets, or in the case of VMSC the sale, transfer or conveyance, whether directly or indirectly, of Buyer’s Affiliate’s refinery which is receiving Products under this Agreement, provided that any such assignee shall expressly assume the obligations of such
Party under this Agreement, represent that the assignment and assumption of this Agreement.  In the event consent is not required as set forth in this Section, prior written notice of such assignment shall be provided to the other Party.  The term “Affiliate” means, in relation to any party, any entity controlled, directly or indirectly, by such Party, any entity that controls, directly or indirectly, such Party, or any entity directly or indirectly under common control with such Party. For this purpose, "control" of any entity or Party means ownership of a majority of the issued shares or voting power or control in fact of the entity or Party.  In addition, either Party may collaterally assign this Agreement as security in connection with any financing obtained by such Party, so long as such Party remains responsible for all obligations of such
Party hereunder, and in such event the other Party hereto shall cooperate with any reasonable request of the assigning party in connection therewith provided that the other Party shall not be obligated to incur any additional cost or assume any additional liability.







 




	
28

	
Warranties







 





	
28.1

	
Mission warrants that at the time of delivery of the Products hereunder, it will convey full legal title to the Products, free and clear of all liens, claims or encumbrances, to the Buyer pursuant to the terms and conditions of this Agreement.







 




	
29

	
Notifications







 





	
29.1

	
Any contractual, operational, financial, or pricing notification from between the Buyer and Seller to be made to the following contacts or other such contacts as mutually agreed:







 


Mission Contact



	
Name:


Phone:


Cell:


Email:


Fax:

	
Mr James Garton


+61 8 9443 9512


+61 438 657 057


james@missionnewenergy.com


+61 8 9201 1958












VMSC Contact



	
Name:


Phone:


Cell:


Email:


Fax:

	
****


****


****


****


****







 




  





24











  








CONFIDENTIAL TREATMENT




 


Except as otherwise provided, all notices, consents, and other communications under this Agreement required to be in writing shall be deemed to have been duly given when (i) when delivered in person, (ii) when received by fax (with acknowledgement of receipt), (iii) when received by the addressee if sent by express mail, Federal Express, or other express delivery service receipt requested), (iv) by email only in instances specifically provided for herein shall be deemed duly given immediately (with receipt confirmed) or (v) by any other means as the parties may agree from time to time, in each case to the appropriate address as designated by the parties.


All notices and communications from Seller to Buyer and from Buyer to Seller arising out of or in connection with this Agreement must be received by Buyer within office hours (0830 to 1730) in the relevant time zone and sent in accordance with the notifications provisions herein.  Any notice or communication addressed to someone other than the buyer’s representative(s) named herein shall be deemed to have not been received and shall have no legal or contractual force or effect.  Any notice or communications received outside of office hours (as described above) shall be deemed to have been received on the next working day.


 




	
30

	
Other







 





	
30.1

	
The United Nations convention on contracts for the international sale of goods shall not apply to this contract.







 




	
31

	
Conditions Precedent







 





	
31.1

	
This Agreement is made expressly condition on the execution, and approval by Mission's shareholders, of a Subscription Agreement dated of even date herewith between Mission and Valero Mission Company LLC, an affiliate of VMSC (the “Subscription Agreement”) whereby Mission has agreed to provide Valero Energy Corporation the option to purchase 25% of Mission common equity on a fully diluted basis via the issuance of warrants on the terms set forth in the Subscription Agreement.







 




	
32

	
Confidentiality







 





	
32.1

	
The terms and conditions of this Agreement are confidential and neither Party shall disclose them to any third party except (i) as may be required by court order, Applicable Law or a governmental authority (including, if required, to comply with the disclosure requirements of the Securities and Exchange Commission, the New York Stock Exchange, ASX or any self-regulatory organization) or (ii) to such Party’s or its Affiliates’ employees, auditors, consultants, banks, financial advisors and legal advisors.  The confidentiality obligations under this Agreement shall survive termination or expiration of this Agreement for a period of one (1) year.  In the case of disclosure covered by subclause (i) of this Section_32.1, and if the disclosing Party’s counsel
advises that it is permissible to do so, the disclosing Party shall notify the other Party in writing of any proceeding of which it is aware which may result in disclosure, and use reasonable efforts to prevent or limit such disclosure.  The Parties may exercise all remedies available at law or in equity to enforce or seek relief in connection with the confidentiality obligations set forth herein.  Notwithstanding the foregoing, the Parties and their respective employees, representatives and other agents may disclose to any person (except where confidentiality is reasonably necessary to comply with Applicable Law) the structure and tax aspects of any transaction under this Agreement as necessary to describe or support any tax benefits that may result from such transaction and any materials relating to such structure and tax aspects.







 




  





25











  






 



CONFIDENTIAL TREATMENT




 




	
33

	
Entire Agreement







 





	
33.1

	
This Agreement contains the entire agreement of the Parties and it cannot be modified unless in writing and agreed by the Parties.







 




	
34

	
No Waiver







 





	
34.1

	
No waiver of any right under this Agreement at any time will serve to waive of the same right at any future date.







 




	
35

	
Severability







 





	
35.1

	
If a provision of this Agreement is unenforceable under any Applicable Law, that provision will be enforced to the maximum extent permitted by Applicable Law. The remaining provisions of this Agreement will continue in full force and effect.







 




	
36

	
Counterparts.







 





	
36.1

	
This Agreement may be executed in one or more counterparts, each of which will be deemed an original and part of one and the same document.







 




  





26











  








 


In Witness whereof, the Parties hereto have caused their duly authorised representative to execute this Agreement as of 8 December 2009.


 



	
Mission NewEnergy Limited:

	  	
Witness:


	
 


 


By: /s/ Nathan Mahalingam

	  	
 


By: /s/ Guy Ralph Burnett


	
Name: Nathan Mahalingam

	  	
Name: Guy Ralph Burnett


	
Date: 8 December 2009

	  	
Date: 8 December 2009


	  	  	  
	
 


 


Valero Marketing and Supply Company:

	  	  
	
 


 


By: /s/ Joseph W. Gorder

	  	  
	
Name: Joseph W. Gorder

	  	  
	
Title: EVP, Marketing and Supply

	  	  
	
Date: 8 December 2009

	  	  





 




  





27











  






 


Appendix 1 – Fatty Acid Methyl Ester Specifications


 


Additional Specifications Register:


 



	
Parameter

	
Test Method

	
Specification


	 	 	 
	
Mono Glycerite Content

	
D 6584

	
0.5 % max


	 	 	 
	
Ester Content

	
EN14103

	
96.5 % min


	 	 	 
	
Water Content (Karl Fischer)

	
D 6304

	
500 ppm max


	 	 	 
	
Cloud Point

	
D 2500

	
15 C max












 




  





28











  






 



CONFIDENTIAL TREATMENT




ASTM D6751Specifications


 





 




  





29











  






 



CONFIDENTIAL TREATMENT




 





 




  





30











  






 


CONFIDENTIAL TREATMENT


 





 




 





31











 






 


CONFIDENTIAL TREATMENT


 





 




 





32











 






 



CONFIDENTIAL TREATMENT


 





 




  





33











  






 


CONFIDENTIAL TREATMENT




 





 




  





34











  






 



CONFIDENTIAL TREATMENT




 





 




  





35











  






 



CONFIDENTIAL TREATMENT




 





 




  





36











  







 


CONFIDENTIAL TREATMENT


 





 




 





37











 






 




CONFIDENTIAL TREATMENT


 





 




 





38











 






 



CONFIDENTIAL TREATMENT


 





 




  





39











  








 



CONFIDENTIAL TREATMENT






 


Appendix 1A – CJO Specifications







To be added as required.












 


 


 


 


 


 


 




 




  





40











  












CONFIDENTIAL TREATMENT












 


Appendix 2 – Confirmation Form


 



SUPPLY CONFIRMATION – Fixed Price Froward 











Confirmation Date: INSERT


Time Stamp: INSERT US Central Time




 





	
FIXED PRICE FORWARD
















INPUTS 











Delivery Schedule:








	
Cargo Reference

	
Shipment Month

	
ME Volume


(Gallons)

	
JME Volume


(Gallons)

	
CJO Volume


(Gallons)

	
ETA

	
Quote


Price


(high)

	
Reference


	  	  	  	  	  	  	  	  
	  	
June

	
11,000

	
0

	  	
July

	
7000

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  










Foreign Exchange                                          RIN Value                          Freight Rate








	
Shipment Month

	
FX Rate

	
Reference

	  	
Shipment Month

	
RIN Price

	
Reference

	  	
Shipment Month

	
Freight

	
Reference


	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  











PRICING 












	
Shipment Month

	
ME Volume


(Gallons)

	
JME Volume


(Gallons)

	
Pricing Region


(R,Y,G)

	
Invoice Price


	
 

	  	  	  	  
	
June

	
11,000

	
0

	  	  
	  	  	  	  	  
	  	  	  	  	  





 




  





41











  








CONFIDENTIAL TREATMENT




Total Confirmation Value: INSERT


Confirmation Date: INSERT


Time Stamp: INSERT US Central Time


 





	
FLOATINGPRICE FORWARD









 


INPUTS 











Delivery Schedule:








	
Cargo Reference

	
Shipment Month

	
ME Volume


(Gallons)

	
JME Volume


(Gallons)

	
CJO Volume


(Gallons)

	
ETA

	
Reference


	  	  	  	  	  	  	  
	  	
June

	
11,000

	
0

	  	
July

	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  










RIN Value                      Freight Rate








	
Shipment Month

	
RIN Price

	
Reference

	  	
Shipment Month

	
Freight

	
Reference


	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	  	  	  










 




  





42











  








CONFIDENTIAL TREATMENT




Appendix 3 – Certificate O


 





 




  





43