Document:

Exhibit 10.1

 

LANDFILL GAS PURCHASE AND SALE AGREEMENT

 

This
Landfill Gas Sales Agreement is made and entered into this 11th day of April,
2008, (“Effective Date”) by and between the City of Sioux Falls, South Dakota,
a municipality chartered under the laws of the State of South Dakota,
hereinafter “Seller” and Great Plains Ethanol, LLC, d/b/a POET
Biorefining—Chancellor, a limited liability corporation, duly organized and
validly existing under the laws of the state of South Dakota, hereinafter “Buyer”.

 

WHEREAS, Seller owns and operates the Sioux Falls
Regional Sanitary Landfill, hereinafter “Landfill,” located in Minnehaha,
Lincoln, and Turner Counties, in South Dakota as shown on Exhibit A
attached hereto; and

 

WHEREAS, Buyer owns and operates an ethanol
production facility, hereinafter the “Facility,” located in Turner County,
South Dakota, approximately ten miles from the Landfill; and

 

WHEREAS, the Landfill produces Landfill Gas,
hereinafter “LFG,” from the decomposition of solid waste brought to the Landfill
for disposal; and

 

WHEREAS, Seller desires to sell and deliver the LFG
directly to Buyer’s Facility and to construct a pipeline from the Landfill to a
designated location at or within the Facility for that purpose; and

 

WHEREAS, Buyer desires to purchase from Seller LFG
produced at the Landfill during the term of this Agreement; and

 

NOW,
THEREFORE, and based
upon the mutual agreements and covenants hereinafter set forth, the parties do
hereby agree as follows:

 

ARTICLE I—DEFINITIONS

 

Unless
otherwise required by the context in which any defined term appears, the
following terms shall have the meaning assigned to them in this Article for
all purposes including the recitals:

 

1.1                               BTU means British Thermal Units or the amount of
heat required to raise the temperature of one pound of water one (1) degree
Fahrenheit at sixty (60) degrees Fahrenheit and MMBTU means one
million BTU.

 

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1.2                               MMBTU Content shall be the MMBTU content of the LFG and
shall be calculated based on the following equation:

 

MMBTU Content = [% Methane Content] x [970
BTU/Standard Cubic Foot].

 

1.3                               Facility Flow Meter means the landfill gas flow meter purchased
and installed by Seller at the Facility which will be used to measure the quantity
of LFG purchased by Buyer under this Agreement.

 

1.4                               Landfill Flow Meter means the landfill gas flow meter purchased
and installed by Seller at the Landfill which will be used to measure the
quantity of LFG put into the pipeline at the Landfill.

 

1.5                               Landfill Methane Meter means the meter purchased and installed by
Seller at the Landfill which will be used to measure the percent methane
content of the LFG purchased by Buyer under this Agreement. The percent methane
will be used to calculate the MMBTU Content as shown in Section 1.2.

 

1.6                               Delivery Point means the location of the Facility Flow
Meter at the Facility as described in Section 1.3 above.

 

1.7                               Force Majeure means acts of God; explosions, strikes,
lockouts; acts of the public enemy, wars, blockades, insurrections, riots;
epidemics, landslides, lightning, earthquakes; damage to or destruction of
Seller’s landfill gas wells caused by third parties (except as otherwise
provided below); enactment of statutes, laws, orders, or regulations; the
binding order of any court or governmental authority which has been resisted in
good faith by all reasonable legal means, or any other cause, whether of the
kind herein enumerated, or otherwise, not within the control of the party
claiming suspension and which by the exercise of due diligence such party is
unable to prevent or overcome.

 

1.8                               Hazardous Materials means all materials which have been
determined to be hazardous to health or the environment by virtue of being
defined by the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, regulated by the Toxic
Substances Control Act, the Federal Insecticide, Fungicide, and Rodenticide
Act, or regulated by any other applicable federal, state, or local law.
Reference to specific statutes includes amendments as they are made from time
to time, as well as the regulations promulgated thereunder.

 

1.9                               Landfill Gas or LFG means any and all gases resulting from the
anaerobic decomposition of refuse material within the Landfill, consisting
principally of methane, carbon dioxide, and traces of other constituent gases.

 

1.10                        Scheduled Interruptions means an interruption resulting when all or a
portion of the respective systems owned by either Buyer or Seller is deliberately
taken out of service at a selected time for purposes of maintenance, repair, or
construction.

 

1.11                        Unscheduled Interruptions means an interruption resulting when all or a
portion of the respective systems owned by either Buyer or Seller is taken out
of 

 

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service at an unexpected time due to an outage caused by equipment
failure, human error, or other unexpected condition.

 

ARTICLE
II—CONSTRUCTION OF LANDFILL GAS EQUIPMENT AND FACILITIES

 

2.1                               Seller’s Equipment. Seller shall be solely responsible and
liable for designing, constructing, operating, maintaining, and repairing any
and all equipment and facilities located on its property and used to extract,
capture, handle, store, and/or transport the LFG from the Landfill to the Buyer’s
property. Seller shall be responsible for construction and operation of an
underground pipeline from the Landfill to the Facility Flow Meter along the
pipeline route shown in Exhibit A. The pipeline shall be used for transferring
LFG from the Landfill to the Delivery Point. Seller shall be solely responsible
for maintaining the pipeline during the term of this Agreement. Seller shall be
fully and solely responsible and liable for operating, maintaining, and
repairing Seller’s Equipment, and shall be deemed the operator of such pipeline
and equipment for purposes of the South Dakota One-Call (SDCL 49-7A).
Seller shall be responsible for obtaining all permits and other authorizations
relating to the construction and operation of Seller’s Equipment. Seller shall
indemnify and hold Buyer harmless from and against any and all claims, actions,
losses, damages, and expenses relating to or arising from Seller’s ownership,
use, operating, repair, and/or maintenance of Seller’s Equipment. Buyer shall
grant Seller an easement across its property from the point where the
underground pipeline enters the property to the Delivery Point. Buyer shall
reimburse Seller for all costs associated with the construction, maintenance,
and repair of that portion of the underground pipeline located upon Buyer’s
property in accordance with the following terms and conditions:

 

·                  The
construction cost will be based on the length of pipeline on the Buyer’s
property compared to the entire pipeline length.

 

·                  Annual
inspection and maintenance costs for the pipeline will be based on the length
of pipeline on the Buyer’s property compared to the entire pipeline length.

 

·                  Repairs
of the pipeline on the Buyer’s property will be paid for solely by the Buyer.

 

2.2                               Buyer’s Equipment. Buyer shall be solely responsible for any
retrofit of its equipment required for the ultimate use of the LFG.

 

2.3                               Mutual Support. Each  party shall
exercise reasonable efforts to support and assist the other party in the
acquisition of all permits and authorizations and in fulfilling the obligations
described above. Such support shall include participating in regulatory
proceedings and providing information concerning each party’s operations.

 

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ARTICLE III—SALE AND PURCHASE OF LANDFILL GAS

 

3.1                               Sale and Purchase:
Quantity—Except as provided in Section 3.2 below: Seller shall make available to Buyer for
purchase all of the LFG that Seller extracts from the Landfill. It is the
mutual expectation of Seller and Buyer that the Landfill will generate, and
Seller will make available to Buyer, those quantities of Landfill Gas as
described in Exhibit B attached hereto and incorporated herein. Seller
agrees to deliver and sell to Buyer and Buyer agrees to accept and purchase
from Seller all of its LFG up to those quantities shown in Exhibit B,
available for use by Buyer in Buyer’s Facility, starting on the date that LFG
is first delivered by Seller to the Delivery Point. Buyer will not be obligated
to pay Seller for any LFG requirements until the date that Seller begins
providing delivery of LFG to the Delivery Point. Any LFG produced by the Seller
in excess of the quantities shown in Exhibit B will be made available for
purchase by Buyer, but Buyer shall not be required to purchase such gas. Buyer
shall notify Seller for the subsequent quarter in writing no later than the
first day of the preceding quarter during the term of this Agreement whether it
intends to accept LFG in excess of the amounts shown in Exhibit B and the
amount it would accept if available for the succeeding quarter (for purposes of
clarity, Buyer shall give notice by January 1 for each quarter beginning April 1
of that calendar year, by April 1 for the quarter starting July 1 of
that calendar year, by July 1 for each quarter starting October 1 of
that calendar year, and by October 1 for each quarter starting January 1
of the following calendar year). Notwithstanding the twelve (12)-month
moratorium identified in Section 5.1, should Buyer fail to accept excess
LFG for three consecutive quarters, Seller shall no longer be required to make
such excess production available to Buyer as provided for herein. Once notice
is given as set forth above, the election shall be binding upon both Buyer and
Seller.

 

3.2                               Price. The price of LFG for the amounts identified
in Exhibit B and purchased by Buyer during the term of this Agreement
shall be $4.00 per MMBTU plus applicable taxes and fees. For any amounts of LFG
provided in excess of the amounts identified in Exhibit B, Buyer shall pay
Seller $2.50 per MMBTU plus applicable taxes and fees. If the Buyer extends the
term of this Agreement as provided for in Article 4.1 of this Agreement,
the price per MMBTU of all LFG sold under this Agreement during the extended
period after the initial ten (10)-year term of the Agreement, will vary monthly
based on the market price of natural gas. The price for LFG in each month
during the extended period after the initial ten (10)-year term of the
Agreement will be equal to 50 percent of the closing NYMEX® Henry Hub
Natural Gas price as of the close of trading on the last trading day prior to
each month. All LFG sold under this Agreement is subject to price adjustments
as provided for in Article 5.1 of this Agreement.

 

3.3                               Invoices, Payment. Seller shall electronically record the total
monthly LFG flow for the monthly period between the 26th day and the 25th day
of each monthly period from the Facility Flow Meter. Seller shall calculate
MMBTU Content based on the average methane content recorded electronically by
the Landfill Methane Meter over the monthly invoicing period. Seller shall
prepare and send to Buyer by the 15th day of each month an invoice which shall
be accompanied by a report showing amounts for monthly LFG volume, average
methane content, and 

 

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calculated
monthly MMBTUs. Buyer shall remit payment to Seller within thirty (30)
days following receipt of Seller’s invoices, which payment date shall be identified
on Seller’s invoices.

 

3.4                               Meter Tests. Seller shall maintain the meters used to
measure the LFG in good condition and repair, and shall have their respective
meter inspected periodically by a reputable third party, but at least once each
year. Copies of the inspection reports shall be made available to the other
party upon request.

 

3.5                               Meter Out-of-Service. If, for any reason, the Facility Flow Meter
is out-of-service or out-of-repair so that the amount of LFG delivered and used
by Buyer cannot be ascertained or determined from its readings, the volume
content of LFG delivered to Buyer during such period when the Facility Flow
Meter is out-of-service shall be determined by utilizing readings from the
Landfill Flow Meter installed by Seller at the Landfill taking into account any
recurring changes in volume between the Landfill Flow Meter and the Facility
Flow Meter.

 

3.6                               Errors in Billing. Should either party find at any time within
one (1) year after the date of any invoice rendered by Seller that there
has been an undercharge or an overcharge in the amount billed in the invoice,
the party finding the error shall promptly notify the other party in writing.
In the case of an undercharge, Seller shall submit a statement for such
undercharge, and Buyer, upon verifying the same, shall pay such an amount
within thirty (30) days after receipt of the statement but without interest. In
the case of an overcharge, Seller shall refund the amount of the overcharge to
Buyer within thirty (30) days of notification by Buyer, but without interest.
Neither Seller nor Buyer shall have any liability for any undercharge or
overcharge relating to invoices over one year old.

 

ARTICLE IV—TERM, TERMINATION, AND DEFAULTS

 

4.1                               Term. Subject to the other provisions contained
herein, this Agreement shall become effective on the date of execution and
shall continue in effect for a period of ten (10) years beginning on
the date of first delivery of LFG to the Facility. No later than 24 months
prior to expiration of this Agreement, the Buyer can give written notice to the
Seller that it wishes to extend the term of this Agreement for an additional
five (5) years beyond the initial ten (10)-year termination date.

 

4.2                               Seller’s Right to Terminate. Seller shall have the right to terminate this
Agreement by written notice to Buyer submitted not later than thirty
(30) days following the occurrence of any of the following:

 

(a)                                  Should Buyer commit a material breach of this
Agreement and such breach remains uncured for 30 days following written notice
of such breach from Seller.

 

(b)                                 Should Buyer fail to perform its obligations
under this Agreement due to an event of Force Majeure that lasts longer than
six (6) months.

 

(c)                                  Should any involuntary proceeding be
initiated against Buyer under the bankruptcy or insolvency laws, which
involuntary proceeding remains 

 

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undismissed for thirty (30) consecutive days, or in the event of the
initiation by the Buyer of a voluntary proceeding under the bankruptcy or
insolvency laws.

 

4.3                               Buyer’s Right to Terminate. Buyer shall have the right to terminate this
Agreement by written notice to Seller, submitted no later than thirty
(30) days following the occurrence of the following:

 

(a)                                  Should Seller commit a material breach of
this Agreement and such breach remains uncured for 30 days following written
notice of such breach from Buyer.

 

(b)                                 Should Seller fail to perform its obligations
under this Agreement due to an event of Force Majeure that lasts longer than six
(6) months.

 

(c)                                  Should any involuntary proceeding be
initiated against Seller under the bankruptcy or insolvency laws, which
involuntary proceeding remains undismissed for thirty (30) consecutive days, or
in the event of the initiation by Seller of a voluntary proceeding under the
bankruptcy or insolvency laws.

 

(d)                                 Buyer may terminate this Agreement for any
reason, provided that Buyer shall give Seller at least sixty (60) days written
notice prior to such termination.

 

4.4                               Buyer Termination Under 4.3(d). If Buyer terminates this Agreement under Section 4.3(d),
Buyer shall pay Seller a termination fee in accordance with the termination fee
schedule presented in Exhibit E, which termination fee shall be calculated
as of actual termination of the Agreement (from the end of the notice period
identified in Section 4.3(d)).

 

4.5                               Conditions of Termination. In the event this Agreement is terminated by
Seller under Section 4.2a or by Buyer under Section 4.3a, the  party invoking its right to terminate shall be entitled to
seek any available rights or remedies including, without limitation, the right
to specifically enforce the terms and provisions of this Agreement. In the
event this Agreement is terminated pursuant to Sections 4.2b, 4.2c, 4.3b,
or 4.3c, neither party shall have any further obligation to the other following
such termination. Notwithstanding such termination, Buyer shall remain
obligated to pay Seller for all LFG used by Buyer prior to termination.

 

ARTICLE V—LANDFILL GAS (LFG) STANDARDS

 

5.1                               Landfill Gas Standards. Seller makes warranties with respect to the
LFG to be delivered to Buyer under this Agreement as shown in Exhibit D.
If testing shows the LFG does not meet any of the criteria shown in Items 2
through 7 of Exhibit D to this Agreement, the price for LFG as provided
for in Article 3.2 will be discounted by fifty cents per MMBTU until such
time as a test of the LFG shows the LFG is again within tolerances listed in
Items 2 through 7 of Exhibit D. For the first twelve (12) months after two
consecutive LFG tests that such LFG does not meet the criteria for Items 2
through 7 of Exhibit D, Buyer will take as 

 

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much LFG as Buyer can utilize without violating Buyer’s environmental
air permits.

 

5.2                               Quantity Warranty and Remedy. While Buyer and Seller acknowledge that
Seller is not guaranteeing that any specific quantities of LFG will be
delivered to Buyer and that the quantities set forth in Exhibit B are
merely projections, Seller shall operate the Landfill and Seller’s Equipment in
a prudent and efficient manner in order to attempt to provide Buyer with the
projected daily MMBTU as set forth in Exhibit B.

 

5.3                               LFG Scrubbing. If Buyer wishes to install equipment to scrub
or clean the LFG prior to delivery to Buyer, Seller will grant Buyer an
easement to allow Buyer to install and operate LFG scrubbing at the Landfill.
Buyer will be responsible for design, installation, operation, and capital
costs of LFG scrubbing equipment. Buyer will deliver to Seller all nonhazardous
materials scrubbed from the LFG, and Seller will properly dispose of all such
materials at Seller’s sole expense.

 

(a)                                  Buyer shall remain the owner of any scrubbing
equipment that is installed by Buyer at the Landfill pursuant to Section 5.3.
Buyer will be free to remove any and all such scrubbing equipment at its sole
discretion.

 

5.4                               Landfill Gas Testing. Seller shall cause and pay for testing of the
LFG at least every six (6) months during the term of this Agreement.
Seller shall use a laboratory accredited by the National Environmental
Laboratory Accreditation Conference. Seller shall share results of tests with
Buyer as soon as results are available. Testing shall be done in accordance
with the testing requirements specified in Exhibit D to this Agreement. If
the results of any LFG test show that the LFG does not meet any of the criteria
listed in Items 2 through 7 in Exhibit D, testing of LFG will be
performed at least every three (3) months until a test shows the LFG again
meets all the criteria listed in Exhibit D.

 

ARTICLE VI—COORDINATION OF INTERRUPTIONS

 

6.1                               Scheduled Interruption. The Buyer and Seller shall coordinate timing
of any Scheduled Interruption of their respective systems in order to minimize
overall project downtime. Notice of a Scheduled Interruption by either
Buyer or Seller shall be given to the other party as soon as practicable and
not less than three (3) days prior to occurrence of the Scheduled
Interruption. Notice shall include the reason for and expected duration of the
Scheduled Interruption.

 

6.2                               Unscheduled Interruption. In the event that an Unscheduled
Interruption occurs on either the Buyer’s or Seller’s system, notice of the
Unscheduled Interruption including the cause and estimated duration of the
Unscheduled Interruption shall be given to the other party as soon as
practicable and not more than four (4) hours following the occurrence of
the Unscheduled Interruption. Notice shall also be given to the other party as
soon as the Unscheduled Interruption has been remedied and regular delivery of
LFG can resume. Should Buyer notify Seller of an unscheduled Interruption,
Seller agrees that it will keep the pressure in the pipeline within reasonable
limits.

 

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ARTICLE VII—TAXES

 

7.1                               Taxes. Buyer shall be responsible only for
applicable sales and use taxes and fees, if any, when billed for the handling
of the LFG delivered to the Facility.

 

ARTICLE VIII—REPRESENTATIONS AND
WARRANTIES

 

8.1                               Representations and Warranties of
Seller. Seller represents
and warrants that:

 

(a)                                  This Agreement has been duly authorized by
all necessary persons and bodies and Seller has full power and authority to
enter into this Agreement and perform its obligations hereunder.

 

(b)                                 Seller is not a party to any litigation, or
subject to any judgment, order, or decree, or party to any other contract,
which would materially affect its performance of its obligation under this
Agreement.

 

(c)                                  Seller has full and unqualified title and/or
authority to sell LFG to be delivered to Buyer hereunder, and all of the LFG
sold and delivered to Buyer is free from any and all liens, claims, and
encumbrances. Seller shall hold Buyer harmless from and against all claims,
suits, actions, damages, losses, costs, and expenses of every kind and
character arising from each and every claim of any and all persons against such
LFG prior to its delivery at the Delivery Point.

 

(d)                                 Seller will deliver the LFG to Buyer in
accordance with the Specifications, Items 2 through 7 set forth in Exhibit D.

 

8.2                               Representations and Warranties of
Buyer. Buyer represents and
warrants that:

 

(a)                                  Buyer is a duly organized and validly
existing corporation under the laws of the state of South Dakota, with full
power and authority to own the Facility and carry on its business in South
Dakota.

 

(b)                                 Buyer has done its due diligence and agrees
that the LFG delivered to Facility will be acceptable for use in its Facility,
so long as such LFG meets the standards set forth in Items 2 through 7 of Exhibit D.
Buyer shall be solely responsible for all EPA compliance issues after the LFG
is delivered to Buyer and shall hold Seller harmless from and against all
claims, suits, actions, damages, losses, costs, and expenses of every kind and
character arising from each and every claim of any and all persons against the
LFG after its delivery to the Delivery Point.

 

(c)                                  This Agreement has been duly authorized and
Buyer has full power and authority to enter into this Agreement and perform its
obligations hereunder.

 

(d)                                 Buyer is not a party to any litigation, or
subject to any judgment, order, or decree, or party to any other contract,
which would materially affect its performance of its obligations under this
Agreement.

 

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ARTICLE IX—FORCE MAJEURE

 

9.1                               Force Majeure. If either party is rendered unable, wholly
or in part, by a Force Majeure event to carry out its Obligations under
this Agreement, other than to make payment for amounts accrued, it is agreed
that upon such party giving notice and reasonably full particulars of such
Force Majeure event in writing to the other party as soon as possible after the
occurrence of the cause relied on, then the obligations of the Party giving
such notice, so far as they are affected by such Force Majeure event, shall be
suspended during the continuance of any inability so caused but for no longer
period and such cause shall, as far as possible, be remedied with all
reasonable dispatch.

 

9.2                               Strikes and Lockouts. It is understood and agreed that the
settlement of strikes or lockouts shall be entirely within the discretion of
the party experiencing the strike or lockout or having the difficulty, and that
the foregoing requirement that any Force Majeure shall be remedied with all
reasonable dispatch shall not require the settlement of strikes or lockouts by
acceding to the demands of the opposing party when such course is inadvisable
in the discretion of the party having the difficulty.

 

ARTICLE X—INDEMNITY

 

10.1                        Buyer’s Environmental Indemnity. Buyer agrees to indemnify and hold Seller,
its agents, contractors, subcontractors, employees, or invitees harmless from
any and all claims, damages, fines, judgments, penalties, costs, liabilities,
or losses arising from or due to the presence of Hazardous Materials on Buyer’s
property either existing at the time of or which may have been brought to its
property after the execution of this Agreement, provided that Buyer shall have
no obligation under this Article 10.1 for Hazardous Materials which are
introduced to or released on Buyer’s property by Seller, its agents,
contractors, subcontactors, employees, or invitees.

 

10.2                        Seller’s Environmental Indemnity. Seller agrees to indemnify and hold Buyer,
its agents, contractors, subcontractors, employees, or invitees harmless from
and against any and all claims, damages, fines, judgments, penalties, costs,
liabilities, or losses arising from or due to the presence of Hazardous
Materials in or on the Landfill or which may flow, diffuse, migrate, or percolate
into, onto, or under the Landfill from neighboring property, or from the
Landfill to neighboring property or groundwater after this Agreement commences.

 

10.3                        Seller’s Indemnity. Seller shall indemnify, defend, and hold
harmless Buyer from and against any claims, loss, damages, liabilities, fines,
penalties, cost, and expense, including court costs and reasonable attorneys’
fees incurred or suffered by Buyer:

 

(a)                                  To the extent relating to the LFG while in
Seller’s control and possession.

 

(b)                                 For personal injury, death, or property
damage caused by Seller or its agents’ negligent acts or omissions arising from
or relating to this Agreement.

 

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(c)                                  Arising from claims or liens for labor
performed or materials furnished for Seller’s Landfill or relating to Seller’s
Equipment.

 

10.4                        Buyer’s Indemnity. Buyer shall indemnify, defend, and hold
harmless Seller from and against any claims, loss, damage, liabilities, fines,
penalties, cost, and expense, including court costs and reasonable attorneys’
fees, incurred or suffered by Seller:

 

(a)                                  To the extent relating to the LFG while in
Buyer’s control or possession.

 

(b)                                 For personal injury, death, or property
damage caused by Buyer or its agents’ negligent acts or omissions arising from
or relating to this Agreement.

 

(c)                                  Arising from claims or liens for labor
performed or materials furnished for Buyer’s Facility or relating to Buyer’s
Equipment.

 

10.5                        Limitation of Liability. Notwithstanding any other term of this Agreement
to the contrary, in no event shall either party be liable to the other with
respect to any claim, whether based on contract, tort (including negligence),
warranty, strict liability, implied warranty, or otherwise, for any indirect,
special, incidental, or consequential loss or damage of any type, including,
but not limited to lost profits and damage to goodwill or reputation.

 

ARTICLE XI—INSURANCE

 

11.1.                     Seller shall bear full risk for all property
and casualty loss associated with the LFG up to and until the Delivery Point.
Buyer shall bear full risk for all property and casualty loss and damage
associated with the receipt of the LFG from the Delivery Point. Each party
shall insure against such loss with a policy or policies providing general liability
coverage in an amount of $5,000,000

 

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ARTICLE XII—MISCELLANEOUS
PROVISIONS

 

12.1                        Assignability. Except as otherwise provided, neither party
may at any time transfer, assign, or delegate its rights or duties under this
Agreement without the express prior written consent of the other party, which
shall not be unreasonably withheld; and the terms of this Agreement shall be
binding on and inure to the benefit of the successors and assigns of the
parties.

 

12.2                        Pipeline Construction
Commencement. Upon execution
of this Agreement, Buyer will diligently begin the permitting process for use
of the LFG having specifications as set forth in Items 2 through 7 in Exhibit D.
Seller agrees not to incur any costs associated with providing LFG to Buyer
until such permitting is approved, or upon written notice from Buyer, whichever
occurs first. However, if neither shall occur prior to December 31, 2008,
Seller shall have the right at its election to either declare this agreement
void and of no consequence or to create by notice to Buyer, a new date by which
permitting must be completed. Seller agrees that it will be ready to begin
supplying LFG to Buyer within eighteen (18) months of when (a) permitting
is approved, or (b) Seller receives written notice from Buyer to proceed
with incurring costs.

 

12.3                        Environmental Compliance
Incentives. The Buyer, at
its option, and for whatever time period(s) it may elect, has the right to
own, hold title to, take credit for, transfer, or sell in any manner it chooses
any credits, allocation, allowance, rebate, or like mechanism, arising out of
the reduction of any or all air emissions, including greenhouse gas and carbon
emissions, from LFG purchased and used by Buyer, that the Buyer is legally
entitled to, or that both the Buyer and Seller are legally entitled to. This
includes the right for Buyer to own, hold title to, take credit for, transfer
or sell in any manner it chooses any baseline emission level or allocation
(whether to Buyer or Seller, for any baseline period, and whether or not
under any existing or future federal, state, local, private or voluntary law,
regulation, rule, ordinance, or agreement), from which emissions are reduced
arising out of LFG purchased and used by the Buyer, that the Buyer is legally
entitled to, or that both the Buyer and Seller are legally entitled to. Any environmental credits or incentives that
the Buyer is legally entitled to, or that both the Buyer and Seller are legally
entitled to, sometimes referred to as voluntary or certified emissions
reduction credits, green tags, renewable energy credits, etc., arising out of
the purchase and use of the LFG by the Buyer and any indirect credits
and incentives or low carbon fuel certificates based on the life cycle analysis
of the Facility will belong to the Buyer. The Seller, at its option, and
for whatever period(s) it may elect, has the right to own, hold title to,
take credit for, transfer, or sell in any manner it chooses, credits,
allocation, allowance, rebate, or like mechanism, arising out of the reduction
of any or all air emissions, including greenhouse gas and carbon emissions,
from the LFG purchased and used by Buyer, that the Seller and not the Buyer is
legally entitled to. This includes the right for the Seller to own, hold title
to, take credit for, transfer, or sell in any manner it chooses any baseline
emission level or allocation (for any baseline period and whether or not under
any existing or future federal, state, local, private or voluntary law,
regulation, rule, ordinance, or agreement), from which emissions are reduced
arising out of LFG purchased and used by the Buyer, that the Seller, and not
the Buyer, is legally entitled to. 

 

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Any environmental credits or incentives that
the Seller, and not the Buyer, is legally entitled to, sometimes referred to as
voluntary or certified emissions reduction credits, green tags, renewable
energy credits, etc., arising out of the purchase and use of the LFG by the
Buyer and any indirect credits and incentives or low carbon fuel certificates
based on the life cycle analysis of the Facility will belong to Seller. For
purposes of this provision, environmental credits or incentives associated with
the installation of a voluntary landfill gas collection system and the
subsequent destruction of the methane content therein by a control system of
either Buyer or Seller shall be deemed to belong to the Seller, to the extent
such environmental credits or incentives are available to the Seller. For
purposes of this provision, environmental credits or incentives associated with
the displacement of fossil fuel at the Facility shall be deemed to belong
solely to the Buyer.

 

12.4                        Severability and Non-Waiver. In the event any sentence or section of this
Agreement is declared by a court of competent jurisdiction to be void, such
sentence or section shall be deemed severed from the remainder of this
Agreement, and the balance of this Agreement shall remain in effect. Either
party’s waiver of any breach, or failure to enforce any of the terms and
conditions of this Agreement, shall not in any way affect, limit, or waive such
party’s right thereafter to enforce and compel compliance with every term and
condition of this Agreement or to terminate this Agreement for breach.

 

12.5                        Rights and Remedies. In the event of a material breach of this
Agreement by either party, the nonbreaching party shall have all rights and
remedies available under the statutes of the state of South Dakota, including
the right to require that this agreement be performed in accordance with its
written terms and conditions.

 

12.6                        Notices. Any notice which is permitted or required
under this Agreement shall be duly given if in writing and either delivered personally
to the person whom it is required to be given or sent registered or certified
mail, return receipt requested, postage prepaid as follows:

 

	
  If to Buyer:

  	
   

  	
  POET
  Biorefining—Chancellor

  
	
   

  	
   

  	
  Attention:
  General Manager

  
	
   

  	
   

  	
  27716
  462nd Avenue

  
	
   

  	
   

  	
  Chancellor,
  SD 57015

  
	
   

  	
   

  	
   

  
	
  Copy to:

  	
   

  	
  POET,
  LLC

  
	
   

  	
   

  	
  Attention:
  Legal Department

  
	
   

  	
   

  	
  4615
  North Lewis Avenue

  
	
   

  	
   

  	
  Sioux
  Falls, SD 57104

  
	
   

  	
   

  	
   

  
	
  If to Seller:

  	
   

  	
  City
  of Sioux Falls

  
	
   

  	
   

  	
  Attention:
  Landfill Superintendent

  
	
   

  	
   

  	
  224
  West Ninth Street

  
	
   

  	
   

  	
  P.O. Box
  7402

  
	
   

  	
   

  	
  Sioux
  Falls, SD 55117

  
	
   

  	
   

  	
   

  
	
  Copy to:

  	
   

  	
  City
  of Sioux Falls

  
	
   

  	
   

  	
  Attention:
  City Attorney’s Office

  
	
   

  	
   

  	
  224
  West Ninth Street

  
	
   

  	
   

  	
  P.O. Box
  7402

  
	
   

  	
   

  	
  Sioux
  Falls, SD 55117

  

 

12

 

12.7                        Access. Upon reasonable advance notice not less than
24 hours, each party agrees to provide the other, and its agents,
representatives, and contractors with access to its property and equipment
during normal business hours (not including nights, weekends, and holidays) for
the purpose of inspection and carrying out its rights and obligations under
this Agreement. While on Buyer’s property, Seller, its agents, and contractors
shall at all times conduct themselves in a safe and prudent manner. While on
Seller’s property, Buyer, it agents, and contractors shall at all times conduct
themselves in a safe and prudent manner.

 

12.8                        Counterparts. The Agreement may be executed in several
counterparts, and as executed shall constitute one agreement binding on all of
the parties hereto.

 

12.9                        Captions. Captions in this Agreement are solely for
the convenience of the parties and are not part of the Agreement, and shall not
be used for the interpretation or determination of the validity of the
Agreement or any provision thereof.

 

12.10                 Entire Agreement. This Agreement constitutes the entire
understanding between the parties with respect to the subject thereof.

 

12.11                 Governing Law. This Agreement shall be governed by the
substantive laws of the state of South Dakota without reference to its
conflicts of law provisions.

 

12.12                 Amendments. The Agreement and any part thereof may be
amended at any time by mutual agreement of the parties. However, no
modifications, alteration, amendment, or revision of this Agreement shall be
binding upon either party unless executed in writing by the party to be bound.

 

12.13                 Independent Contractors. Seller and Buyer are independent
contractors. Neither party is or shall be deemed an agent, servant, or employee
of or a joint venture with the other party, and neither party shall have the
authority to incur debts or liabilities in the name of the other or otherwise
bind the other party to any contract, debt, or other obligation.

 

13

 

IN
WITNESS WHEREOF, the parties have executed this agreement the day and year
first above written.

 

	
  POET
  BIOREFINING—CHANCELLOR

  	
   

  	
  CITY
  OF SIOUX FALLS

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
  /s/
  Jeff Lautt

  	
   

  	
  By:
  

  	
  /s/
  Dave Munson

  
	
   

  	
   

  	
   

  
	
  Printed
  Name:

  	
  Jeff
  Lautt

  	
   

  	
  Printed
  Name:

  	
  Dave
  Munson

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Executive
  Vice President

  	
   

  	
  Title:

  	
  Mayor

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  City
  Clerk

  	
   

  	
   

  
									

 

14

 

List of Exhibits

 

	
  Exhibit A

  	
   

  	
  Map
  of Pipeline Route

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  MMBTU
  Annual Projections

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  (Blank)

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Landfill
  Gas Standards

  
	
   

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  Termination
  Fee Schedule

  

 

15

 

 

16

 

 

17

 

Exhibit C

 

Intentionally
Left Blank.

 

18

 

Exhibit D

 

Landfill Gas Standards

 

	
  1.

  	
   

  	
  Quantity—see Exhibit B.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Methane
  Content—450
  MMBTU/SCF or greater based on Higher Heating Value.

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Particulate
  Size—3 micron
  maximum.

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Pressure—minimum pressure of twenty (20) psi
  measured after the Facility Flow Meter (before the regulator).

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Moisture—maximum dew point of 39 degrees F.

  
	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Maximum
  Sulfur Content—500
  parts per million (by volume) (ASTM Method D5504).

  
	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Maximum
  Chloride Content—40
  parts per million (by volume) (EPA Method TO-15, Chloride compounds only).

  

 

19

 

Exhibit E

 

Termination Fee Schedule

 

	
  Termination Month Following Effective Date of Agreement

  	
   

  	
  Termination Fee

  	
   

  
	
  1-12

  	
   

  	
  $

  	
  8,000,000

  	
   

  
	
  13-24

  	
   

  	
  $

  	
  6,000,000

  	
   

  
	
  25-36

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  37-48

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
  49-60

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  61-72

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  73-84

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  85-96

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  97-108

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  109-120

  	
   

  	
  $

  	
  500,000

  	
   

  

 

20Exhibit 10.1

 

CONSENT AGREEMENT

 

This CONSENT AGREEMENT (this “Consent Agreement”) is entered into by
and between Skypostal, Inc., a corporation of the State of Delaware
(hereinafter “Skypostal”), and Albert P. Hernandez (hereinafter “APH”), an
individual as of the 26 day of March, 2008 (the “Effective Date”).

 

WHEREAS,
Skypostal previously entered into an employment agreement with APH dated as of August 1,
2006 (the “Employment Agreement”), whereby APH would agreed to  serve
as Skypostal’s Chief Executive Officer and President; and

 

WHEREAS,
pursuant to the Employment Agreement, Skypostal agreed to pay APH an annual
salary of $200,000 per year (the “Cash Compensation”); and

 

WHEREAS,
Skypostal has not paid APH the full Cash Compensation and, as of the March 31,
2008, Skypostal has accrued $180,667 in unpaid Cash Compensation due to APH
(the “Unpaid Cash Compensation”); and

 

WHEREAS,
pursuant to the Employment Agreement, Skypostal agreed to  issue to APH an
option to purchase 2,311,440 shares of the Company’s common stock at an
exercise price of $0.30 per share (the “Employment Options”); and

 

WHEREAS,
Skypostal is contemplating a reverse merger into a public-traded company (the “Merger”);
and

 

WHEREAS, in
connection with the Merger, Skypostal desires to eliminate the Employment
Options and the Unpaid Cash Compensation; and

 

 

WHEREAS,
Skypostal has discussed with APH converting the Employment Options and the
Unpaid Cash Compensation into shares of Skypostal’s common stock; and

 

WHEREAS, APH
has agreed to convert the Employment Options and the Unpaid Cash Compensation
into shares of the Company’s common stock; and

 

WHEREAS, the
parties wish to document their agreement regarding the conversion and issuance
of such shares.

 

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties hereby agree to the following terms and conditions.

 

TERMS AND CONDITIONS

 

1.                                       Upon execution of this Consent Agreement by
both parties, Skypostal shall cancel the Employment Options on its books and
shall issue to APH a total of 1,155,720 shares of the Company’s common stock
(the “Option Conversion Shares”).

 

2.                                       Upon execution of this Consent Agreement by
both parties, Skypostal shall issue to APH a total of 602,223 shares of the Company’s
common stock (the “Compensation Conversion Shares”).

 

3.                                       Notwithstanding anything to the contrary in
the Employment Agreement, upon issuance of the Option Conversion Shares and the
Compensation Conversion Shares, APH shall not have any options or warrants to
purchase any of the Company’s capital stock.

 

4.                                       Force of Employment Agreement. The parties agree that this Consent
Agreement is limited in scope to the conversion of the Unpaid Cash Compensation
and the Employment Options and that all other terms, conditions obligations and
rights contained in the Employment Agreement shall continue in full force and
effect.

 

2

 

5.                                       Further Documents. The parties agree to execute all further
documents necessary to accomplish the purposes of this Agreement either
simultaneously with the execution of this Agreement or upon reasonable request
thereafter.

 

6.                                       Binding on Successors. This Consent Agreement shall be binding
upon and inure to the benefit of the parties, and their successors, assignees
and transferees.

 

7.                                       Geographic Scope. The parties agree that this Consent
Agreement shall govern the parties throughout the world.

 

8.                                       Notices.    All notices, requests, demands, directions,
and other communications provided for hereunder shall be in writing and mailed,
or faxed, or delivered to the applicable party at the address of such party set
forth below (or such other address duly provided in writing to the other side).
Each such notice, request, demand, direction, or other communication shall be effective
upon delivery.

 

If to Skypostal:

 

Skypostal, Inc.

7805 NW 15th Street

Miami, Florida 33166

ATTN: Albert Hernandez

 

If to APH:

 

Albert P. Hernandez

 

 

 

9.                                       Severability. If any provision of this Consent Agreement
shall be held void or unenforceable by a court, such provision shall be
severable and shall not affect the validity or enforceability of any other
provision of this Consent Agreement.

 

3

 

10.                                 Facsimile Signatures. This Consent Agreement may be delivered to
each party by facsimile and such delivery shall be effective and binding. The
parties acknowledge and agree that after execution and delivery by facsimile,
additional copies of this Consent Agreement may be circulated for signature so
that each party will ultimately retain a fully-executed original. The
circulation of these additional copies for original signature shall in no way
affect or diminish the binding
effect of this Consent Agreement previously signed in counterparts and
delivered by facsimile.

 

11.                                 Complete Agreement. Each party hereto acknowledges that this
Consent Agreement represents the entire agreement between the parties with
respect to the subject matter addressed herein. All prior communications and negotiations
between the parties are merged into this document.

 

12.                                 Construction of Agreement. This Consent Agreement shall be governed by
the laws of the State of Florida, without regard to its conflict of laws rules.
This Consent Agreement shall be construed without regard to the party
responsible for the preparation of the same, and shall be deemed as prepared
jointly by the parties hereto. Any ambiguity or uncertainty existing herein
shall not be interpreted or construed against any party hereto by virtue of who
may have drafted such provision.

 

13.                                 Remedies. The parties hereby recognize that irreparable damage may result in
the event of breach of any of the covenants and assurances contained in this
Consent Agreement by either Party. As such, in the event of breach or
threatened breach of any of the covenants and assurances contained in this
Consent Agreement, the non-breaching party shall be entitled to enjoin and
restrain the breaching party from violation or continued violation of said
covenant or

 

4

 

assurance.
A defendant in an injunction action brought pursuant to this Paragraph hereby
waives any defense that there is an adequate remedy at law. Such remedies will
not be the exclusive remedies for any breach of this Consent Agreement, but
will be in addition to all other remedies available at law or equity to the
non-breaching party, including an action for damages.

 

14.                                 Amendment. This Consent Agreement may not  be altered, amended, modified, or
otherwise changed in any respect or particular whatsoever except by a writing
executed by an authorized representative of each party.

 

15.                                 No Waiver. The waiver by either party of a breach of any provision of this
Agreement or the failure by any party to exercise any right stated herein shall
not operate or be construed as a waiver of any subsequent breach of that right
or a waiver of any other right.

 

16.                                 Authority. Each party hereto represents and warrants that its execution of the
Agreement has been duly authorized by all necessary corporate action of either
party and that its representative has legal power and authority to enter this
Consent Agreement on its behalf.

 

IN WITNESS WHEREOF, the parties have caused this Consent Agreement to
be signed individually or by their duly authorized corporate officers as of the
date first written above.

 

	
   

  	
   

  	
   

  	
  SKYPOSTAL,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  March 26,
  2008

  	
   

  	
  /s/ A. J. Hernandez

  
	
   

  	
   

  	
   

  	
  Name:

  	
  A. J. Hernandez

  
	
   

  	
   

  	
   

  	
  Title

  	
  C.
  O. O.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ALBERT
  P. HERNANDEZ

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  March 26,
  2008

  	
   

  	
  /s/
  Albert P. Hernandez

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Albert
  P. Hernandez

  
						

 

5

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