Document:

ex10-9.htm

Exhibit 10.9

 

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is between Bazi, Inc. (the “Company”) and Debbie K. Wildrick (“Employee”), and is executed on December 14, 2010 (the “Executed Date”) to be effective on January 1, 2011 (the “Effective Date”) in connection with and consideration of employment of Employee by the Company, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged..

 

1. Services to be Rendered by Employee.  The Company hereby employs, engages and hires Employee in the capacity of Executive Vice President of Sales and Marketing, and Employee hereby accepts and agrees to such hiring, engagement and employment.  Employee agrees to perform any and all duties and to assume any and all responsibilities that may be assigned from time to time by the Company or its authorized agents.  Employee will devote her full-time, energy and skill to the performance of these duties and for the benefit of the Company.  Employee shall also exercise due diligence and care in the performance of all duties performed for the Company under this Agreement.

 

2. Term; Termination.

 

A. Term.  Subject to the terms and conditions of this Agreement, the Company will employ Employee, and Employee will serve the Company, for one years from the effective date of this Agreement.  Upon the expiration of the initial term, this Agreement will automatically renew for successive periods of one year each, unless the Company provides written notice to Employee of its intention not to renew the Agreement at least 90 days prior to the expiration of the then-current term in accordance with Section 2(B)(ii) below.

 

B. Termination by the Company.  Employee’s employment may be terminated by the Company during the term of this Agreement only as follows:

 

i. At any time without cause upon 90 days prior written notice to Employee;

 

ii. In connection with the expiration of the then-current term of this Agreement with written notice to Employee at least 90 days prior to such expiration date; and

 

iii. At any time without prior written notice to Employee for “Cause”. Termination for Cause shall be defined as any of the following from and after the Effective Date:

 

                (a) Any willful breach of any material written policy of the Company that results in material and demonstrable liability or loss to the Company or that continues after written notice;

 

                (b) Willful failure to perform or gross negligence in connection with the performance of Employee’s duties;

 

                (c) The engaging by Employee in conduct involving moral turpitude that causes material and demonstrable injury, monetarily or otherwise, to the Company, including, but not limited to, misappropriation or conversion of assets of the Company (other than immaterial assets);

 

                (d) Conviction of or entry of a plea of nolo contendere to a felony;

 

                (e) A material breach of this Agreement, including by engaging in action in violation of the restrictive covenants in this Agreement;

 

  

  

  

   

                (f) Any other conduct or activity that the Chief Executive Officer determines in good faith jeopardizes the proper conduct of the Company’s operations if such conduct or activity continues to occur after written notice; or

 

                (g) Death or inability to perform substantially all of the duties of the position due to illness or disability, if such inability lasts longer than ninety (90) days and cannot be alleviated by reasonable accommodation.

 

           No act or failure to act by the Employee shall be deemed “willful” if done, or omitted to be done, by him in good faith and with the reasonable belief that her action or omission was in the best interest of the Company.

 

C. Termination by Employee.  Employee may terminate her employment by the Company at any time by giving notice thereof to the Company.

 

D. Effect of Termination.

 

i.           Termination Payment.  If Employee’s employment by the Company is terminated by Employee or by the Company, all compensation under Section 3 of this Agreement that has accrued in favor of Employee as of the date of such termination, to the extent unpaid or undelivered, will be paid or delivered to Employee on the effective date of termination.  If Employee’s employment is terminated pursuant to Section 2(B)(i) of this Agreement, the Company will continue to pay to Employee her annual salary (at the rate in effect at the time of termination of her employment) as and when the same would otherwise be due in accordance with this Agreement for three (3) months from the effective date of such termination (the “Termination Payment”), less any applicable withholding, in lieu of all other amounts and in settlement and complete release of all claims the Employee may have against the Company (as set forth in a valid release of the Company and its agents and affiliates signed by the Employee).

 

ii.           Termination of Obligations of Company.  Upon termination of Employee’s employment pursuant to Section 2(B) or Section 2(C), and payment of the Termination Payment set forth in Section 2(D)(i), if applicable, the Company's obligations under this Agreement will terminate.

 

iii.           No Termination Payment.  Employee shall not be entitled to the Termination Payment in the event that the Company terminates Employee’s employment in connection with the expiration of the then-current term of this Agreement pursuant to Section 2(B)(ii) above or for Cause pursuant to Section 2(B)(iii) above, or if the Employee terminates the employment pursuant to Section 2(C) above.

 

iv.           Effect of Termination on Vesting of Stock Options.  In the event that Employee’s employment is terminated by the Company pursuant to Section 2(B)(i) above, all unvested options owned by Employee to purchase common stock of Bazi International, Inc. shall vest as of the effective date of such termination.  In the event that Employee’s employment is terminated by the Company in connection with the expiration of the then-current term of this Agreement pursuant to Section 2(B)(ii) above, Employee may exercise vested options in accordance with the terms of the Bazi International, Inc. 2003 Stock Incentive Plan (the “Plan”).  In the event that Employee’s employment is terminated for Cause pursuant to Section 2(B)(iii) above, Employee will forfeit all unvested options.  Employee may exercise vested options in accordance with the terms of the Plan.

3. Compensation; Benefits.

 

A. Base Salary.  During the term of this Agreement, the Company will pay to Employee base salary (“Base Salary”) at the initial rate of $175,000 (One Hundred Seventy Five Thousand and No/100 dollars) per annum.

  

  

  

B. Stock Options.

 

i. Base Options.  The Company will grant to Employee options to purchase 275,000 (Two Hundred and Seventy Five Thousand) shares of the common stock of Bazi International, Inc. in accordance with the Bazi International, Inc. 2003 Stock Incentive Plan at an exercise price equal to the fair market value of such stock at the time of the option grant.  Such grant shall be made on the Effective Date of this contract with an exercise price based on the closing price of the stock on the effective date.  The options will vest ratably over a four year period.

 

ii. Performance-Based Options.  The Company will also grant to Employee options to purchase 275,000 (Two Hundred and Seventy Five Thousand) shares of the common stock of Bazi International, Inc., in accordance with the Bazi International, Inc. 2003 Stock Incentive Plan at an exercise price equal to the fair market value of such stock at the time of the option grant, such grant shall be made on the Effective Date of this contract with an exercise price based on the closing price of the stock on the effective date.  The options will vest in four equal amounts on the achievement of the following quarterly revenue targets, as reported, of $2,000,000 (Two million), $4,000,000 (Four million), $6,000,000 (Six million) and $8,000,000 (Eight million).

C. Sales Incentive. The Company will establish a Sales Incentive program, commencing on January 1, 2011, whereby Employee will be eligible to earn a Sales Incentive in the amount of 35% of her Base Salary. Sales incentive is payable at achievement of 95% of financial goal, with the bonus calculated using the percentage of goal achieved with a floor of 95% and up to a maximum of 150%. For example, should the actual results be 120% of the goal amount, the Incentive would be 120% of 35% or 42% of Employee’s Base Salary ($73,500).  The goal for each year will be established by mutual agreement of the Employee and Company by January 31 of each plan year.

 

D. Moving Allowance. The Company will pay the Employee the amount of $15,000 (Ten Thousand Dollar) as a moving allowance, such amount will be paid in the month that the Employee relocates from her current residence in Florida to a permanent residence in Denver, Colorado.

 

E. Benefit Plans.  Employee will be entitled to participate in all formal retirement, insurance, hospitalization, disability and other employee benefit plans that are in existence or may be adopted by the Company or in which employees of the Company are eligible to participate, provided that Employee is eligible by the terms thereof and applicable law to participate therein.

 

F. General.  All payments under this Agreement will be subject to applicable withholding and similar taxes and will, if applicable, be prorated for the applicable period.  Employee’s Base Salary and other compensation will be paid to Employee in accordance with the Company’s regular policy.  The Compensation Committee will, in its sole discretion, periodically review Employee’s Base Salary and other compensation.

 

  

  

  

4. Protection of Trade Secrets and Confidential Information.

 

A. Definition of “Confidential Information.  “Confidential Information” means all nonpublic information concerning or arising from the Company’s business, including particularly but not by way of limitation trade secrets used, developed or acquired by the Company in connection with its business; information concerning the manner and details of the Company’s operation, organization and management; financial information and/or documents and nonpublic policies, procedures and other printed or written material generated or used in connection with the Company’s business; the Company’s business plans and strategies; the identities of the Company’s customers and the specific individual customer representatives with whom the Company works; the details of the Company’s relationship with such customers and customer representatives; the identities of distributors, contractors and vendors utilized in the Company’s business; the details of the Company’s relationship with such distributors, contractors and vendors; the nature of fees and charges made to the Company’s customers; nonpublic forms, contracts and other documents used in the Company’s business; the nature and content of computer software used in the Company’s business, whether proprietary to the Company or used by the Company under license from a third party; and all other information concerning the Company’s concepts, prospects, customers, employees, contractors, earnings, products, services, equipment, systems and/or prospective and executed contracts and other business arrangements.

 

B. Employee’s Use of Confidential Information.  Except in connection with and in furtherance of Employee’s work on the Company’s behalf, Employee shall not, without the Company’s prior written consent, at any time, directly or indirectly, use, disclose or otherwise communicate any Confidential Information to any person or entity.

 

C. Acknowledgments.  Employee acknowledges that during the term of his employment, Employee will have access to Confidential Information, all of which shall be made accessible to Employee only in strict confidence; that unauthorized disclosure of Confidential Information will damage the Company’s business; that Confidential Information would be susceptible to immediate competitive application by a competitor of the Company; that the Company’s business is substantially dependent on access to and the continuing secrecy of Confidential Information; that Confidential Information is unique to the Company and known only to Employee, the Company and certain key employees and contractors of the Company; that the Company shall at all times retain ownership and control of all Confidential Information; and that the restrictions contained in this paragraph are reasonable and necessary for the protection of the Company’s business.

 

D. Records Containing Confidential Information.  All documents or other records containing or reflecting Confidential Information (“Confidential Documents”) prepared by or provided to Employee are and shall remain the Company’s property.  Except with the Company’s prior written consent, Employee shall not copy or use any Confidential Document for any purpose not relating directly to Employee’s work on the Company’s behalf, or use, disclose or sell any Confidential Document to any party.  Upon the termination of Employee’s employment or upon the Company’s request, Employee shall immediately deliver to the Company or its designee (and shall not keep in Employee’s possession or deliver to anyone else) all Confidential Documents and all other property belonging to the Company.  This paragraph shall not bar Employee from complying with any subpoena or court order, provided that Employee shall at the earliest practicable date provide a copy of the subpoena or court order to the Chief Executive Officer of the Company.

 

E. Employee’s Former Employers’ Confidential Information.  Employee shall not, during Employee’s employment with the Company, improperly use or disclose to the Company any proprietary information or trade secrets belonging to any former employer or any third party as to whom Employee owes a duty of nondisclosure.

 

5. Non-Solicitation.  During the term of Employee’s employment and for a period of twelve (12) months after termination of Employee’s employment or the expiration of the then-current term of this Agreement, Employee shall not, without the Company’s prior written consent, directly or indirectly:

  

  

  

A. Cause or attempt to cause any employee, agent, distributor, endorser or contractor of the Company to terminate her or her employment, agency, distributor, endorser or contractor relationship with the Company; interfere or attempt to interfere with the relationship between the Company and any employee, agent, distributor, endorser or contractor of the Company or hire or attempt to hire any employee, agent, distributor, endorser or contractor of the Company; or

 

B. Solicit business from any customer or client served by the Company at any point during the term of Employee’s employment; or interfere or attempt to interfere with any transaction, agreement or business relationship in which the Company was involved at any point during the term of Employee’s employment.

 

6. Inventions.

 

A. Disclosure.  Upon the Company’s request, Employee shall promptly disclose to the Company, in a manner specified by the Company in its sole discretion, all ideas (including new products), processes, trademarks and service marks, inventions, discoveries and improvements to any of the foregoing, that Employee learns of, conceives, develops or creates alone or with others during the term of Employee’s employment (whether or not conceived, developed or created during working hours) that directly or indirectly arises from or relates to: (i) the Company’s business; (ii) work performed for the Company by Employee or any other Company employee; (iii) the use of the Company’s property or time; or (iv) access to the Company’s Confidential Information and/or Confidential Documents.

 

B. Assignment.  Employee assigns to the Company, without further consideration, Employee’s entire right to any concept, idea or invention described in the preceding paragraph, which shall be the sole and exclusive property of the Company whether or not subject to patent, copyright, trademark or trade secret protection under applicable law.  Employee also acknowledges that all original works of authorship that are made by Employee (solely or jointly with others), within the scope of Employee’s employment, and that are protectable by copyright, are “works made for hire,” as that term is defined in the United States Copyright Act (17 U.S.C. § 101).  To the extent that any such works, by operation of law, cannot be “works made for hire,” Employee assigns to the Company all right, title and interest in and to such works and to any related copyrights.

 

C. Additional Instruments.  Employee shall promptly execute, acknowledge and deliver to the Company all additional instruments or documents deemed at any time by the Company in its sole discretion to be necessary to carry out the intentions of this paragraph.

 

7. Survival.  Employee’s obligations under this Agreement shall survive the termination of Employee’s employment and shall thereafter be enforceable whether or not such termination is later claimed or found to be wrongful or to constitute or result in a breach of any contract or of any other duty owed or claimed to be owed by the Company to Employee.

 

8. Remedies.  Employee acknowledges that upon a breach of any obligation under this Agreement, the Company will suffer immediate and irreparable harm and damage for which money alone cannot fully compensate the Company.  Employee therefore agrees that upon such breach or threat of imminent breach of any obligation under this Agreement, the Company shall be entitled to, and Employee shall not oppose entry of, a temporary restraining order, preliminary injunction, permanent injunction or other injunctive relief, without posting any bond or other security, barring Employee from violating any such provision. This paragraph shall not be construed as an election of any remedy, or as a waiver of any right available to the Company under this Agreement or the law, including the right to seek damages from Employee for a breach of any provision of this Agreement, nor shall this paragraph be construed to limit the rights or remedies available under Colorado law for any violation of any provision of this Agreement.

 

9. Miscellaneous.

 

A. Entire Agreement.  This Agreement constitutes the entire agreement between the Company and Employee and supersedes all prior oral or written agreements and understandings with respect to the subject matter hereof.

  

  

  

B. Heirs and Assigns.  This Agreement shall be binding upon Employee’s heirs, executors, administrators or other legal representatives, shall inure to the benefit of the Company, its successors or assigns, and shall be freely assignable by the Company, but not by Employee.

 

C. Governing Law.  This Agreement and all other disputes or issues arising from or relating in any way to the Company’s relationship with Employee, shall be governed by the internal laws of the State of Colorado, irrespective of the choice of law rules of any jurisdiction.

 

D. Severability.  If any court of competent jurisdiction declares any provision of this Agreement invalid or unenforceable, the remainder of the Agreement shall remain fully enforceable.  To the extent that any court concludes that any provision of this Agreement is void or voidable, the court shall reform such provision(s) to render the provision(s) enforceable, but only to the extent absolutely necessary to render the provision(s) enforceable and only in view of the parties’ express desire that the Company be protected to the greatest extent possible under applicable law from improper competition and/or the misuse or disclosure of trade secrets, Confidential Documents and/or Confidential Information.

 

E. Disputes.  Any action arising from or relating any way to this Agreement, or otherwise arising from or relating to Employee’s employment with the Company, shall be tried only in the state or federal courts situated in Denver, Colorado.  The parties consent to jurisdiction and venue in those courts to the greatest extent possible under law.  The prevailing party in any action to enforce any provision of this Agreement shall recover all costs and attorneys’ fees incurred in connection with the action.

 

IN WITNESS WHEREOF, the undersigned has executed this Employment Agreement to be effective as of the date set forth below.

EXECUTED this 14 day of December, 2010.

EMPLOYEE:                                                                                     COMPANY:

                            BAZI, INC.

By:                      /s/ Deborah K Wildrick                                                                By:           /s/ Kevin Sherman

Name:                      Deborah K. Wildrick                                                                           Name:           Kevin Sherman

Title:                        Executive Vice President                                                                    Title:             Chief Executive Officer and

                      Presidentex10-14.htm

Exhibit 10.14

 

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MATERIAL BELOW MARKED BY AN “X” HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.  THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

**************************************************

KMTEX

TOLLING AGREEMENT

This Agreement effective July 1, 2009, is between KMCO Port Arthur, Inc. dba KMTEX, a Texas Corporation, having an office at 333 North Sam Houston Parkway, East, Suite 1250, Houston, Texas  77060 (hereafter called MANUFACTURER) and Vertex Energy, Inc., a Texas Corporation having an office at 200 Atlantic Pipeline Road, Baytown, TX 77520 (hereafter called CUSTOMER); also collectively referred to as the “Parties”.

RECITALS

MANUFACTURER and CUSTOMER hereby desire to establish a relationship whereby MANUFACTURER shall provide certain Services for CUSTOMER in exchange for a fee from CUSTOMER in accordance with the terms and conditions set forth below.

AGREEMENT

The Parties, in consideration of the premises and the agreement contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, agree as follows:

ARTICLE I

DEFINITIONS

	
Section 1.1

	
“Agreement” in this Tolling Agreement, and shall have the meaning ascribed to it in the preamble.

	
Section 1.2

	
“CUSTOMER” shall have the meaning ascribed to it in the preamble.

 

	
Section 1.3

	
“CUSTOMER Raw Materials” (aka Feed) means the Raw Materials specified in Attachment-A as supplied to MANUFACTURER by CUSTOMER.

	
Section 1.4

	
“Effective Date” shall mean the date in the Preamble.

	
Section 1.5

	
“Feed” means any and all products as listed in Attachment-A to be supplied by CUSTOMER in accordance with the specifications set forth in said attachment.

  

  

  

	
Section 1.6

	
“Fees” shall mean all compensation for the Toll manufacture of the Finished Products including without limitation any and all costs related to (i) quality control, picking up, transporting and handling of the Raw Materials, (ii) conversion of Feed into Finished Product and, (iii) quality control, warehouse and handling of the Finished Products, under the schedule of fees shown in Attachment-D.

 

	
Section 1.7

	
“Finished Products” means any and all products as listed in Attachment-B to be produced by MANUFACTURER in accordance with the specifications set forth in said attachment.

	
Section 1.8

	
“HSE” or “SHE” means health, safety, and environment.

	
Section 1.9

	
“Intermediates” shall mean the materials that are in the state of being processed by MANUFACTURER into Finished Products.

	
Section 1.10

	
“Laws” means federal, state, and local rules, orders, laws, ordinances, and regulations applicable to any activities carried out under or incidental to the provisions of this Agreement and/or any amendments to it.

	
Section 1.11

	
“MANUFACTURER” shall have the meaning ascribed to it in the preamble.

	
Section 1.12

	
“MANUFACTURER’S Facility” means the MANUFACTURER’S facility located at 2450 S. Gulfway Dr, Port Arthur, Texas, which is to be utilized for the performance of Services hereunder.

	
Section 1.13

	
“MSDS” means Material Safety Data Sheet.

	
Section 1.14

	
“Manufacturer Supplied Materials” shall mean those materials supplied by MANUFACTURER as identified in Attachment A, Materials.

	
Section 1.15

	“Parties” shall have the meaning ascribed to it in the preamble.

 

	
Section 1.16

	
“Reporting Procedures” means those procedures set out in Attachment-F.

	
Section 1.17

	
“Services” shall mean the services MANUFACTURER provides or performs pursuant to this Agreement.

	
Section 1.18

	
“Specification(s)” means the specifications for each Product covered in this Agreement.  Specifications for CUSTOMER’S and MANUFACTURER’S Feed(s) is located in Attachment A.  Specifications for Finished Product(s) is located in Attachment B.

	
Section 1.19

	
“Terminalling” means handling and storage of Raw Materials, Intermediates, and/or Finished Products.

	
Section 1.20

	
“Toll” or “Tolling” means to convert/process Raw Materials into Finished Products.

  

  

  

	
Section 1.21

	
“Tolling Waste(s)” (aka Waste(s)) means any waste, as that term is defined under applicable Laws, resulting from the Tolling of CUSTOMERS Raw Materials into Finished Products under the Tolling Agreement.

	
Section 1.22

	
Attachments:

	
Attachment-A

	
Raw Materials

	
Attachment-B

	
Finished Product

	
Attachment-C

	
Yields

	
Attachment-D

	
Fees & Quantities

	
Attachment-E

	
Energy Surcharge

	
Attachment-F

	
Reporting Procedures

ARTICLE II

TERM and TERMINATION

	
Section 2.1

	
This agreement commences on the Effective Date and its Initial Term shall expire on June 30, 2010, subject to the other provisions in this Agreement, or as otherwise agreed to by the Parties.

	
Section 2.2

	
Each Party has the right to terminate this Agreement upon sixty (60) days prior written notice to the other Party.  After termination or expiration, CUSTOMER’s sole obligation shall be to purchase Finished Products which MANUFACTURER has completed for CUSTOMER and to pay for the return to CUSTOMER of CUSTOMER’s Raw Materials in MANUFACTURER’s possession.  In no event shall either Party claim or receive actual, special, consequential or punitive damages, or anticipated profits for work not performed.

	
Section 2.3

	
Each Party has the right to terminate this Agreement immediately (or suspend its performance) if either Party materially breaches a provision of this Agreement.

	
Section 2.4

	
Upon the expiration date of the Initial Term, as described above, of this Agreement, the Agreement may be renewed and continue in full force and effect for an additional one (3) year period if both parties agree in writing.

 

	
ARTICLE III

	
QUANTITY

	
Section 3.1

	
MANUFACTURER agrees to Toll Raw Materials specified in Attachment-A, “Raw Materials”, to the specified Finished Product specifications in Attachment-B, “Finished Product”, up to the projected annual quantities estimated during the term of this contract as specified in Attachment-D, “Fees & Quantities”.

  

  

  

	
Section 3.2

	
Estimated annual volumes of Finished Products specified in Attachment-D, “Fees & Quantities”, were used to develop the terms and conditions of this Agreement.  Rules governing these volumes are as follows and shall be considered binding:

 

	
(i)  

	
Annual volumes will not exceed 200% of estimated pounds without prior written approval from both Parties.

 

	
(ii)  

	
Annual volumes shall not fall short of estimated volumes by more than 25% without prior written approval by both Parties.

 

	
(iii)  

	
The activation of either (i) or (ii) will be sufficient cause for MANUFACTURER to review utilization of MANUFACTURER’s Facilities and to adjust Fees as necessary for remainder of Agreement period.  CUSTOMER shall have the right to accept or reject adjusted Fees.  Should CUSTOMER reject adjusted Fees, MANUFACTURER has the right to cancel the remaining period of the Agreement upon 90 day written notice to CUSTOMER.  The Fees at the time of the notice of cancellation shall apply for the remainder of the 90 day notice period.

 

	
ARTICLE IV

	
CUSTOMER RAW MATERIALS

	
 Section 4.1

	
CUSTOMER shall, from time to time, furnish for its own account, quantities of one or more CUSTOMER Raw Materials specified in Attachment-A, “Raw Materials”.  MANUFACTURER will use these materials exclusively to manufacture Finished Product(s) for CUSTOMER.

	
Section 4.2

	
CUSTOMER Raw Materials shall be delivered to MANUFACTURER by rail, barge, drum, or truck at CUSTOMER’S expense.  The Parties shall mutually agree on delivery dates for delivery of CUSTOMER Raw Materials to MANUFACTURER’s Facility.  MANUFACTURER shall be deemed to have custody and responsibility (but not title) of CUSTOMER Raw Materials as follows:

 

	
(i)  

	
When arriving by truck, commencing at the time MANUFACTURER accepts receipt of CUSTOMER Raw Materials by signing a receipt for same.

 

	
(ii)  

	
When arriving by rail, commencing when MANUFACTURER breaks the seal of the rail car for unloading purposes.

 

	
(iii)  

	
When shipped by rail, terminating when MANUFACTURER seals the rail car.

 

	
(iv)  

	
When shipped by carrier other than rail, terminating when CUSTOMER’s customer or carrier signs a shipment receipt at MANUFACTURER’s Facility or signs an acceptance receipt at CUSTOMER’s facility, whichever occurs first.

	
Section 4.3

	
For CUSTOMER Raw Material arriving by rail, MANUFACTURER agrees to inspect such rail upon arrival at MANUFACTURER’s Facility to determine whether or not the seals are broken and for other signs of vandalism or theft.  If any such vandalism or theft has occurred, MANUFACTURER shall promptly notify CUSTOMER.

  

  

  

	
Section 4.4

	
A Certificate of Analysis (C of A) shall accompany all Raw Materials provided by CUSTOMER.  If such C of A’s do not conform with said specifications, MANUFACTURER shall notify CUSTOMER of such nonconformity and MANUFACTURER shall not receive nor use such nonconforming Raw Materials in performance of this Agreement unless CUSTOMER gives written notice that it waives the nonconformity.  If CUSTOMER notifies MANUFACTURER in writing that it waives the nonconformity as to the particular lot of nonconforming Raw Material, MANUFACTURER shall not be liable for failure of the Finished Product produced from such particular lot to meet Finished Product specifications set forth in Attachment-B, provided that such failure results solely from the failure of such particular lot of nonconforming Raw Material to meet Raw Material specifications.  Any waiver of or failure to meet Raw Material specifications shall be singular in nature and shall not imply that a similar failure in a subsequent lot will be waived.

	
Section 4.5

	
Upon receipt of CUSTOMER Raw Materials at MANUFACTURER’s Facility, MANUFACTURER will be solely responsible for the receiving, handling, storing, and safekeeping of such materials.

	
Section 4.6

	
Sole right and title to CUSTOMER’s Raw Materials hereunder shall remain in CUSTOMER at all times until it becomes part of Finished Product(s).  MANUFACTURER shall not sell, transfer, grant any security interest in, encumber or otherwise dispose of any interest of CUSTOMER in the CUSTOMER Raw Materials.

	
Section 4.7

	
Except for provisions included in other sections of this Agreement, MANUFACTURER agrees to pay and satisfy any and all reasonable claims for labor, equipment and material employed or used in any way by it in connection with the storage and handling of CUSTOMER’s Raw Material and (except for CUSTOMER’s non-payments) to permit no liens of any kind to be fixed upon or against CUSTOMER’s Raw Materials.

	
Section 4.8

	
Raw Materials not directly provided by CUSTOMER will be purchased using CUSTOMER’s Raw Material Specifications detailed in Attachment-A, “Raw Materials”.

 

	
ARTICLE V

	
WAREHOUSING/STORAGE

	
Section 5.1

	
To the extent that CUSTOMER Raw Materials and Finished Products are stored at MANUFACTURER’s Facility, MANUFACTURER shall provide sufficient and appropriate facilities for such storage taking into account segregation by hazardous type.

  

  

  

	
Section 5.2

	
Fees, charges and other applicable compensation to MANUFACTURER for services covered in Section 5.1 above shall be specified in Attachment-D, “Fees & Quantities”.

 

	
ARTICLE VI

	
CONVERSION RATIOS and INVENTORY IMBALANCES

	
Section 6.1

	
MANUFACTURER shall Toll CUSTOMER Raw Materials into Finished Products solely for the account of CUSTOMER.

	
Section 6.2

	
Sole right and title to Finished Products hereunder shall remain in CUSTOMER at all times.  MANUFACTURER shall not sell, transfer, grant any security interest in, encumber or otherwise dispose of any interest of CUSTOMER in the Finished Product, unless CUSTOMER is in default of payment or breach of this Agreement.

	
Section 6.3

	
At least annually, MANUFACTURER will permit CUSTOMER or an independent inspector to inspect MANUFACTURER’s inventories and records to certify to CUSTOMER the inventory quantities of the CUSTOMER Raw Materials and Finished Products as of the date of certification.  CUSTOMER and MANUFACTURER will reconcile in writing any differences as to the exact quantities available as of the date of such certification.

	
Section 6.4

	
MANUFACTURER shall meet or exceed the Yield Targets defined in Attachment-C, “Yields”, of the Agreement.

	
Section 6.5

	
MANUFACTURER shall be liable to CUSTOMER for any CUSTOMER Raw Material net shortage imbalance incurred in MANUFACTURER’s control and possession.  The rules/procedures for determining and resolving MANUFACTURER’s liability to CUSTOMER for such inventory imbalances are detailed in Attachment-C, “Yields”.

 

	
ARTICLE VII

	
CONVERSION CHARGES and INVOICING

	
Section 7.1

	
MANUFACTURER shall invoice CUSTOMER for “processing/converting, storage, transportation and handling of Finished Products” in accordance with the schedule of fees in Attachment-D, “Fees & Quantities”.

	
Section 7.2

	
When applicable, MANUFACTURER shall invoice CUSTOMER for “all other items and special requests not included in Section 7.1” in accordance with the schedule of fees in Attachment-D, “Fees & Quantities”.

	
Section 7.3

	
Energy Surcharges will be calculated and invoiced in accordance to Attachment-E, “Energy Surcharge”.

  

  

  

	
Section 7.4

	
Demurrage charges that result from the actions of the MANUFACTURER shall be paid by the MANUFACTURER.  Demurrage charges that result from the actions of the CUSTOMER shall be paid by the CUSTOMER.

	
Section 7.5

	
All fees under this agreement include all applicable taxes, costs, and expenses unless noted otherwise.

	
Section 7.6

	
Any tax or other government levy, charge, fee or increase in same, hereafter becoming effective, which increases CUSTOMER’s cost to manufacture, waste storage, treatment and/or disposal, or sale covered by this Agreement may, at CUSTOMER’s option be added to the price of Finished Product shipped under this agreement upon thirty (30) days’ prior written notice to CUSTOMER unless such tax, levy charge, fee or increase is the result of a penalty incurred by the MANUFACTURER as a result of its negligence or its failure to comply with applicable laws and regulations or governmental orders or decrees.  Finally, nothing in this Article 7 will cause the CUSTOMER to be responsible for any of the aforementioned taxes and/or charges to the extent that MANUFACTURER has received or is eligible to receive, credit for the payments of these taxes/charges by normal and/or proper filing of documents with the relevant government authority.

	
Section 7.7

	
The terms of payment for any monies owed by CUSTOMER to MANUFACTURER under this Agreement shall be thirty (30) days from the date of MANUFACTURER’s invoice to CUSTOMER.

	
Section 7.8

	
If, in the opinion of MANUFACTURER, the financial status of CUSTOMER shall, at any time become impaired, MANUFACTURER will notify CUSTOMER in writing and allow CUSTOMER ten (10) days to respond prior to making the decision to restrict or cease providing services to MANUFACTURER under this Agreement except upon receipt of cash or security satisfactory to MANUFACTURER.

ARTICLE VIII

QUALITY and MANAGEMENT OF CHANGE

	
Section 8.1

	
Finished Product(s) produced by conversion of Raw Materials will be in accordance with CUSTOMER’s Manufacturing and Product Specifications as indicated in Attachment-B, “Finished Product”.

	
Section 8.2

	
MANUFACTURER shall test or cause to be tested each “lot” of Finished Product as specified in Attachment-B, “Finished Product”, for compliance with specifications before shipment to CUSTOMER or its designee.  MANUFACTURER shall retain a sample of each “lot” tested for a period of six (6) months.  For each “lot” shipped, MANUFACTURER shall prepare a certificate of analysis setting forth the items tested, the specifications and test results and forward the certificates to CUSTOMER or its designee at the time the Finished Product is shipped.

  

  

  

	
Section 8.3

	
MANUFACTURER will be responsible for the handling, storage, and security of the Finished Product(s) while at MANUFACTURER’s Facility.

	
Section 8.4

	
Changes in Raw Material specifications and/or Finished Product specifications as described in Attachments-A, “Raw Materials”, & -B, “Finished Product”, will only be by mutual agreement, and will be reflected in modified versions of Attachments-A, “Raw Materials” & -B, “Finished Product”.  If more than sixty (60) days pass following the receipt of CUSTOMER’s request and MANUFACTURER and CUSTOMER have not agreed upon mutually acceptable terms and conditions associated with CUSTOMER’s request, then either Party, may, at any time thereafter, terminate this agreement or cancel its remaining purchase obligations with respect to such Finished Product(s) by sending ninety (90) days written notice and meeting the requirements of the conditions in the Rights After Termination section of this Agreement.

	
Section 8.5

	
In the event it is anticipated by either Party that a change to the Raw Material specifications, Finished Product specifications, or to any other specification and/or process will result in a change in the Fee as specified in Attachment-D “Fees & Quantities”, the Parties shall, upon mutual written agreement adjust the Fee(s) set forth in this Agreement.  If agreement cannot be reached as to the adjusted price, then the existing Fee will continue to apply for Finished Product(s) manufactured to the specifications currently in this Agreement for the succeeding ninety (90) day period.  In the event agreement cannot be reached during that period, either Party may upon further ninety (90) days written notice, cancel this Agreement without penalty one to the other and meeting the requirements of the conditions in the Rights After Termination section of this Agreement.

	
Section 8.6

	
MANUFACTURER shall allow CUSTOMER to conduct reviews on a regular basis to determine the extent MANUFACTURER is satisfying the CUSTOMERS requirements as defined in this Agreement.

	
Section 8.7

	
Any Finished Product(s) that fails to meet the specifications set forth in Attachment-B “Finished Product”, of this Agreement due to MANUFACTURER’s error shall be deemed Non-Conforming, except to the extent CUSTOMER agrees to accept any portion of such Non-Conforming Finished Product that has been reworked to meet specifications.

 

	
ARTICLE IX

	
MEASUREMENTS

Section 9.1                     In-Bound Feed Material-

 

	
a.  

	
If Feed material is delivered to MANUFACTURER’s facility by truck, the weight of Feed as determined from CUSTOMER’s scale or meter at the time of shipment shall be the applicable weight or gallonage, subject to random confirmation upon arrival at MANUFACTURER’s facility.  Such confirmation shall occur no more than one time per day and shall be relaxed as agreed to between MANUFACTURER and CUSTOMER.

  

  

  

	
b.  

	
If Feed material is delivered to MANUFACTURER’s facility by rail, the calculated weight of the Feed material as measured by the rail car strapping charts at the time of shipment shall be the applicable weight.  If that weight is not provided, MANUFACTURER will strap the rail car and calculate the weight of the Feed.

	
c.  

	
If Feed material is delivered to MANUFACTURER’s facility by barge, the calculated weight of the Feed material as measured by the barge surveyor at the time of discharge shall be the applicable weight.  CUSTOMER is responsible for all costs associated with inspector/surveyor and tankerman.  Barge unloading/loading must begin during daylight hours.

Section 9.2                     Out-Bound Finished Product-

 

	
  

	
a.

	
If the Finished Product is shipped from MANUFACTURER’s facility to CUSTOMER or CUSTOMER’s designee by truck, the weight of the Finished Product as determined from MANUFACTURER’s scale at the time of shipment shall be the applicable weight, subject to random confirmation upon arrival at CUSTOMER’s designated destination.

	
b.  

	
If the Finished Product is shipped from MANUFACTURER’s facility to CUSTOMER or CUSTOMER’s designee by rail, the calculated weight of the Finished Product as measured by the rail strapping charts at the time of shipment shall be the applicable weight.

	
c.  

	
If the Finished Product is shipped from MANUFACTURER’s facility to CUSTOMER or CUSTOMER’s designee by barge, the calculated weight of the Finished Product as measured by the barge surveyor at the time of discharge shall be the applicable weight.  CUSTOMER is responsible for all costs associated with inspector/surveyor and tankerman.  Barge unloading/loading must begin during daylight hours.

 

	
ARTICLE X

	
RISK OF LOSS

	
Section 10.1

	
Risk of loss for all CUSTOMER Raw Materials shall pass to MANUFACTURER upon receipt of such materials at MANUFACTURER’s Facility as defined in Section 4.2 of this Agreement.  In the event of any loss of CUSTOMER Raw Materials while in the possession of MANUFACTURER other than consumption of the CUSTOMER Raw Materials in the production of Finished Products meeting the CUSTOMER specifications in this Agreement, MANUFACTURER shall either: (i) reimburse CUSTOMER for the cost of replacing such CUSTOMER Raw Materials or (ii) replace the lost CUSTOMER Raw Materials with raw materials meeting the specifications of Attachment-A.  The monetary value of CUSTOMER Raw Materials will be valued per instructions set forth in Attachment-A, “Raw Materials”.

  

  

  

	
Section 10.2

	
Risk of loss for all Finished Product produced by MANUFACTURER shall pass to MANUFACTURER upon the completion of production of such Finished Products until delivered to CUSTOMER.  Delivery of Finished Product to CUSTOMER occurs as follows at which time risk of loss passes from MANUFACTURER to CUSTOMER:

 

	
(i)  

	
As shipped by rail, when MANUFACTURER secures seal to rail car.

	
(ii)  

	
As shipped by carrier other than rail, when CUSTOMER, or the carrier assigned by CUSTOMER, signs for receipt of load at MANUFACTURER’s facility.

	
Section 10.3

	
MANUFACTURER’s risk of loss is limited to the CUSTOMER Raw Material costs and freight costs; specifically MANUFACTURER is not responsible for replacement, alternative supply costs, expediting costs, special, indirect, incidental, punitive, exemplary, consequential damages, or loss including but limited to lost profits, loss of business opportunity, or other similar damages.

ARTICLE XI

MANUFACTURER WARRANTIES

	
Section 11.1

	
Acknowledge and agrees that it is solely responsible for and in control of operations at MANUFACTURER’s Facility and for any leaks, spill, discharge, release emission or other disposal which may occur in connection with the performance of this Agreement, except those that are due to CUSTOMER’s negligence.

	
Section 11.2

	
Warrants that, at the time of delivery, any Finished Product supplied by MANUFACTURER shall (i) meet the Specifications for such Finished Product as defined in Attachment-B. “Finished Product” of this Agreement, and (ii) be conveyed with good title, free from any lawful security interest, lien or encumbrance, unless CUSTOMER is in default of payment or breach of this Agreement.

	
Section 11.3

	
Represent and agree that it has knowledge of and expertise as to the Raw Materials used, waste generated, procedures and processes employed and/or Finished Products manufactured hereunder, including without limitation, that is has trained its employees in the safe handling of all materials, that it has implemented every reasonable precaution to minimize any hazard in the performance of this Agreement and that it has protected its employees from such hazard.

  

  

  

	
Section 11.4

	
Prepare Finished Products for shipment and loading shipping containers in accordance with specifications or instructions provided by CUSTOMER, or industry practice when not specified by CUSTOMER and making products available to a common carrier.

	
Section 11.5

	
MANUFACTURER has sole responsibility for compliance with all applicable laws, rules and regulations in connection with manufacture and storage of Raw Materials and Finished Product(s) and the generation, storage, transportation, and disposal of all waste, including by-products, arising out of the manufacturing and packaging of Finished Product(s) hereunder, including the cleaning of manufacturing equipment.

	
Section 11.6

	
Maintain production, raw materials, product inventory, product quality control and raw material control records, tracking or lot assignment numbers and retain samples of all production lots for a period of one (1) year from date of production and report the same to CUSTOMER in writing if requested.

ARTICLE XII

CUSTOMER WARRANTIES

	
Section 12.1

	
Provide to MANUFACTURER technical information relating to the Raw Materials and Finished Products including procedures for manufacturing the Finished Product(s), quality control and test specifications, labeling instructions, MSDS’s and such other information as may be required to enable MANUFACTURER to manufacture Finished Product(s) during the term of this Agreement.

	
Section 12.2

	
Provide the identified Raw Materials per Attachment-A that meets   CUSTOMER’s specifications, also found in Attachment-A, at no cost to MANUFACTURER, with delivery at such times as to allow MANUFACTURER to perform the manufacture of Finished Products under the terms of this Agreement.

	
Section 12.3

	
Provide MANUFACTURER with projections on a quarterly basis or when requested by MANUFACTURER of the product mix to be manufactured for CUSTOMER that is mutually agreed on by both Parties.

	
Section 12.4

	
Issue orders based on specified lead-times for Finished Product with delivery dates that specify the quantity, time, and place for delivery of Finished Product.  MANUFACTURER will in a timely manner, confirm availability to manufacture and deliver Finished Product as directed in CUSTOMER’s orders for Finished Product.  Finished Product will be shipped in mutually acceptable types and sizes of tank trucks or trailers or other acceptable means of transportation.

	
Section 12.5

	
Provide to MANUFACTURER at no cost to MANUFACTURER, technical assistance to affect the efficient transfer of Finished Product manufacturing and quality control expertise, test specifications, labeling instructions, Material Safety Data Sheets and provide subsequent technical assistance as MANUFACTURER may reasonable require throughout the term of this Agreement.

  

  

  

	
Section 12.6

	
Provide technical information, including but not limited to the list in Attachment-A, “Raw Materials”, and Attachment-B, “Finished Product”, which documents the exact chemical identity of all Raw Materials, intermediates, components in Finished Product and Finished Product itself, the process to be performed, the amount and composition of wastes and emissions, a process flow diagram and similar information and provide appropriate information to MANUFACTURER which identifies potential environmental, health and safety hazards associated with the process and all chemicals related thereto, including the Finished Product, and means of minimizing these risks.

	
Section 12.7

	
Provide documentation relative to the Toxic Substances Control Act (TSCA) and, if Finished Product is to be exported, similar foreign chemical control laws including but not limited to documentation relevant to compliance with the TSCA Chemical Substances Inventory for all raw materials, intermediates, and components in Finished Product and the Finished Product itself.  Such documentation will be subject to the approval and acceptance by MANUFACTURER.

 

	
ARTICLE XIII

	
DISCLAIMER OF WARRANTIES

	
Section 13.1

	
There are no warranties which extend beyond the face hereof, and with the exception of the warranties expressed in this agreement, neither party makes any other warranty, express or implied, statutory or otherwise, concerning either the Raw Materials or the Finished Product(s), including without limitation, any warranty of fitness for a particular purpose, warranty of merchantability or warranty against infringement of patent.

 

	
ARTICLE XIV

	
CLAIMS

	
Section 14.1

	
CUSTOMER shall test or cause to be tested all Finished Product processed by MANUFACTURER hereunder promptly upon receipt thereof.  All claims pertaining to product quality (“Claims”) of CUSTOMER shall be deemed waived and forever barred unless CUSTOMER notifies MANUFACTURER of the nature and details of the Claim in writing within Thirty (30) days after delivery of the Finished Product to the CUSTOMER or CUSTOMER’s designee.

 

  

  

  

	
ARTICLE XV

	
INDEMNIFICATION

	
Section 15.1

	
To the fullest extent permitted by applicable law, MANUFACTURER shall defend, indemnify and hold harmless CUSTOMER, its parents, subsidiaries and affiliates, and each of its respective agents, servants, employees, officers and directors (“Indemnified Parties”) from and against any and all liability, suits, losses, demands, causes of action, fines, penalties, damages, and claims of any kind or nature, including reasonable attorney’s fees and costs (collectively “Claims”) which CUSTOMER may hereafter incur, pay out or become responsible for as a result of death or bodily injury to any person (including employees of MANUFACTURER), destruction or damage to property, contamination of, adverse effects on, or imminent or substantial endangerment of, or release or threat of release into the environment, or any threatened or actual release of hazardous substance, or any violation or alleged violation of or liability under any governmental laws, regulations, rules or orders to the extent caused by, arising out of or in any manner connected with MANUFACTURER’s acts, omissions, breaches of this Agreement, or failure to comply with applicable laws in the performance of its obligations hereunder.

	
Section 15.2

	
To the fullest extent permitted by applicable law, CUSTOMER shall defend, indemnify and hold harmless MANUFACTURER, its parents, subsidiaries and affiliates, and each of its respective agents, servants, employees, officers and directors (“Indemnified Parties”) from and against any and all liability, suits, losses, demands, causes of action, fines, penalties, damages, and claims of any kind or nature, including reasonable attorney’s fees and costs (collectively “Claims”) which MANUFACTURER may hereafter incur, pay out or become responsible for as a result of death or bodily injury to any person (including employees of CUSTOMER), destruction or damage to property, contamination of, adverse effects on, or imminent or substantial endangerment of, or release or threat of release into the environment, or any threatened or actual release of hazardous substance, or any violation or alleged violation of or liability under any governmental laws, regulations, rules or orders to the extent caused by, arising out of or in any manner connected with CUSTOMER’s acts, omissions, breaches of this Agreement, or failure to comply with applicable laws in the performance of its obligations hereunder.

	
Section 15.3

	
The indemnification obligations contained in this section shall specifically survive termination of this Agreement.

	
Section 15.4

	
Indemnified Parties shall have the right to select counsel and control any claims or obligations arising hereunder.

	
Section 15.5

	
IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL DAMAGES OR LOSS INCLUDING, LOST PROFITS, LOSS OF BUSINESS OPPORTUNITY OR OTHER SIMILAR DAMAGES.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, NO LIMITATION OR DISCLAIMER OF LIABILITY SHALL APPLY TO CLAIMS OR LIABILITIES BASED UPON ACTUAL DAMAGES RELATED TO DAMAGES SUFFERED OR INCURED BY A THIRD PARTY FOR WHICH A PARTY TO THIS AGREEMENT IS ENTITLED TO INDEMNIFICATION UNDER THIS PARAGRAPH.

  

  

  

	
ARTICLE XVI

	
INSURANCE

MANUFACTURER shall maintain, at its sole cost, at all times while performing work hereunder, the insurance coverage set forth below with companies satisfactory to CUSTOMER with full policy limits applying.

	
a.  

	
Workers Compensation Insurance covering all employees in accordance with the statutory requirements of the State of Texas in which the services hereunder are rendered.

	
b.  

	
Employer’s Liability Insurance in an amount not less than $100,000 for each accident.

	
c.  

	
Comprehensive General Liability Insurance, including Property Liability, completed operations, blanket contractual , MANUFACTURER’S protective in the following amounts:

  

	
Bodily Injury

	
$3,000,000 each occurrence

	  	
$3,000,000 aggregate

	  	  
	
Property Damage

	
$3,000,000 each occurrence

	  	
$3,000,000 aggregate

	  	  
	
Pollution & Environmental Impairment Insurance

	  
	  	
$1,000,000 per occurrence

	  	
$2,000,000 aggregate

	  	
$5,000,000 umbrella

 

	
d.  

	
All Risk Property Insurance in sufficient amounts to cover the loss of CUSTOMER’s property in MANUFACTURER’s care, custody, and control.

Nothing contained in these provisions relating to coverage and amounts set out herein shall operate as a limitation of MANUFACTURER’s liability in tort or contracted for under terms of this Agreement.

 

	
ARTICLE XVII

	
TAXES

	
Section 17.1

	
CUSTOMER will either pay directly all sales and use taxes properly levied by any properly constituted governmental authority upon the Services by MANUFACTURER under this Agreement or reimburse MANUFACTURER therefore if paid by MANUFACTURER at the written direction of CUSTOMER.

  

  

  

	
Section 17.2

	
CUSTOMER shall be responsible for taxes imposed on the inventories on CUSTOMER Supplied Materials stored at MANUFACTURER’s facilities.

	
Section 17.3

	
MANUFACTURER shall assume full responsibility for the payment of employer’s share of all federal social security taxes and all federal and state unemployment compensation taxes for all employees engaged by MANUFACTURER in performing Services under this Agreement and for the payment of all federal and state taxes of whatever sort, including gross receipts taxes, franchise taxes, and all other taxes or charges applicable to MANUFACTURER’s actions, employees, facilities and materials used for performing Services under this Agreement or applicable MANUFACTURER’s income under this Agreement.

 

	
ARTICLE XVIII

	
OVERTIME CHARGES

	
Section 18.1

	
Upon receipt of an authorization from CUSTOMER to perform services outside of MANUFACTURER’s normal hours of operation as specified in Article 12 hereof, MANUFACTURER shall charge CUSTOMER $XXXX per hour with a four (4) hour minimum for overtime services.

 

	
ARTICLE XIX

	
HOURS OF OPERATION

	
Section 19.1

	
MANUFACTURER requires an appointment for all inbound and outbound shipments.  MANUFACTURER's hours of operation for shipping product are 7:00 AM through 5:00 PM, Monday through Friday.  MANUFACTURER's hours of operation for receiving materials are 24 hours per day, Monday through Friday, and processing are 24 hours per day, Monday through Sunday.  

 

	
ARTICLE XX

	
DRUG & ALCOHOL POLICY

	
Section 20.1

	
MANUFACTURER shall enforce its drug and alcohol policy at all times, which includes but is not limited to the following:

	
Section 20.2 

	
MANUFACTURER shall ensure that its employees and agents do not perform any service for CUSTOMER while under the influence of alcohol or any controlled substance.  Employees and agents shall not use, possess, distribute or sell alcoholic beverages, controlled drugs or drug paraphernalia or misuse uncontrolled drugs while performing services for CUSTOMER.

  

  

  

	
ARTICLE XXI

	
FORCE MAJEURE

The obligation of the parties pursuant to this Agreement may be suspended by either party without liability hereunder due to:

	
a.  

	
fire, explosion, floods, storms, earthquakes, tidal waves, war, military operations, national emergency, acts of terrorism, civil commotions, strikes, or differences with workmen or unions, or any delay or failure in delivery or receipt of Feed or Finished Product hereunder when supplies of CUSTOMER or MANUFACTURER , or the facilities of production, manufacture, transportation, or distribution of CUSTOMER or MANUFACTURER are impaired by causes beyond CUSTOMER’s or MANUFACTURER’s control or,

	
b.  

	
the order, requisition, request, or recommendation of any governmental agency or acting governmental authority or court order, or CUSTOMER’s, or MANUFACTURER’s compliance therewith or,

	
c.  

	
by governmental authority, or CUSTOMER’s or MANUFACTURER’s compliance therewith, or by governmental proration, regulation, or priority or,

	
d.  

	
the inability of CUSTOMER or MANUFACTURER to obtain on terms deemed by MANUFACTURER to be commercially practicable, any raw material (including energy sources) or,

	
e.  

	
any other delay or failure due to any cause beyond the control of the party suffering the Force Majeure, similar or dissimilar to any such causes.

When such cause or causes exist, the party affected shall have the right in its sole discretion to restrict or cease deliveries or acceptance of Feed or Finished Product hereunder; provided, however, that in any event, CUSTOMER shall accept the return or delivery of any affected Raw Material and Finished Product.

 

	
ARTICLE XXII

	
EARLY TERMINATIONS

	
Section 22.1

	
If either Party fails to perform any of its obligations under this Agreement, the other Party may eliminate shipments or receipt of deliveries until such default is cured.

	
Section 22.2

	
Either Party may terminate this Agreement at any time, without further liability, by providing the other Party with (30) day’s written notice upon the occurrence of any of the following events:

 

	
a.  

	
The filing of bankruptcy for or on the part of the other Party (or its parent or affiliate organization).

 

 

  

  

  

	
b.  

	
The appointment of a receiver, trustee or liquidator for all or substantially all of the assets of the other Party (or its parent or affiliate organization).

	
c.  

	
An assignment by the other Party (or its parent or affiliate organization) for the benefit of its creditors.

	
d.  

	
The filing of any petition by or against the other Party (or its parent or affiliate organization) asking for a reorganization under any state insolvency laws or under the Federal Bankruptcy Act.

	
e.  

	
Written notice by the party not affected by a Force Majeure Event to the party affected by the Force Majeure Event if a Force Majeure Event lasts for more than thirty (30) days.

	
f.  

	
If CUSTOMER determines, in its sole discretion, to exit the business of producing or selling Finished Product, then CUSTOMER may terminate this Agreement upon providing MANUFACTURER ninety (90) days written notice.  CUSTOMER shall purchase all remaining Raw Materials supplied by MANUFACTURER dedicated to the manufacturing/processing of Finished Products covered in this Agreement and all Finished Product inventories from MANUFACTURER per pricing in Schedule D, “Fees & Quantities”.

	
g.  

	
If MANUFACTURER determines, in its sole discretion, to exit the business of producing Finished Product, then MANUFACTURER may terminate this Agreement upon providing CUSTOMER ninety (90) days written notice.  CUSTOMER will not be under any obligation to purchase any remaining Raw Materials supplied by MANUFACTURER.

ARTICLE XXIII

RIGHTS AFTER TERMINATION

	
Section 23.1

	
Upon termination of this agreement, all obligations of each Party shall cease except as stated herein and except that all warranties and all limitations of liabilities shall continue to be of full force and effect.

	
Section 23.2

	
Such termination shall not relieve the parties of any liability accrued prior to the effective date of such termination; and

	
Section 23.3

	
Such termination shall not affect the continued operation of enforcement of any provision of this Agreement which survives the termination of this Agreement.

	
Section 23.4

	
Upon termination of this Agreement, MANUFACTURER shall promptly return all CUSTOMER supplied Feed to CUSTOMER at (i) CUSTOMER’s cost if CUSTOMER exits the business or (ii) at MANUFACTURER’s cost if MANUFACTURER exits the business.  CUSTOMER will be allowed to remain in MANUFACTURER’s storage for a minimum of sixty (60) days at contracted storage rates to allow ample time for materials to move out.

  

  

  

ARTICLE XXIV

ASSIGNMENT

This Agreement shall not be assigned, transferred, or delegated by either Party without the prior written consent of the other Party to this Agreement.

ARTICLE XXV

NOTICES

Any notice to be given under this Agreement shall be in writing and shall be delivered personally, by certified mail (return receipt delivered), by courier or overnight delivery service, or by facsimile.  Any notice shall be effective only if and when it is received by the addressee.  For the purposes hereof, the addresses and facsimile numbers of MANUFACTURER and CUSTOMER are as follows:

If to MANUFACTURER:                    Mr. Will Baker

333 North Sam Houston Parkway, E

Suite 1250

Houston, TEXAS  77060

Phone-  (281) 272-4107

Fax- (281) 272-4103

E-Mail-  willb@kmcoinc.com

If to CUSTOMER:                                Greg Wallace

200 Atlantic Pipeline Road

Baytown, TX  77520

Phone- (281) 383-5050

E-Mail- gregw@vertexenergy.com

ARTICLE XXVI

PLANT VISITS

	
Section 26.1

	
Upon reasonable notice, which shall be no less than forty-eight (48) hours’ notice and no act of Force Majeure is occurring at MANUFACTURER’s facility, MANUFACTURER shall allow CUSTOMER and/or its designated representative’s access to inspect the following:

	
a.  

	
All records, including, but not limited to, financial and accounting records, which pertain direct and specifically to this Agreement and MANUFACTURER’s performance hereunder; and

	
b.  

	
MANUFACTURER’s facilities at which the materials (Raw Material and Finished Product) covered by this Agreement are produced and or stored.

  

  

  

ARTICLE XXVII

INDEPENDENT CONTRACTOR

	
Section 27.1

	
MANUFACTURER is, and shall perform this Agreement as an independent contractor.  As such, it shall have and maintain sole control over all of its employees, agents and operations.  Neither MANUFACTURER nor anyone employed by it shall be, represent, act and/or purport to act, or be deemed to be the agent, representative, employee or servant of CUSTOMER.

	
Section 27.2

	
Nothing contained herein shall create the relationship of joint ventures, principal and agent, or master and servant between CUSTOMER and MANUFACTURER.

ARTICLE XXIII

CONFIDENTIALITY

	
Section 28.1

	
MANUFACTURER agrees that all specifications, formulations, recommended manufacturing procedures, including rework procedures, pertaining to the Product(s) and related data and information supplied to it by CUSTOMER or acquired by it from CUSTOMER under the Confidentiality Agreement mentioned in Section 22.1 or this Agreement shall be deemed information as that term is defined in the Confidentiality Agreement and shall be treated in accordance with the terms and conditions thereof except that MANUFACTURER’s obligations of secrecy there under and hereunder shall last five (5) years from the date of termination of this Agreement.

	
Section 28.2

	
MANUFACTURER shall have the right to use information in order to perform its obligations under this Agreement or as required by law.

	
Section 28.3

	
MANUFACTURER’s obligation under this secrecy provision shall not apply, however, to Confidential Information when, after, and to the extent that the Confidential Information either:

 

	
a.  

	
is known to the public, including legal proceedings, through no fault or participation of MANUFACTURER or its employees or agents; or

	
b.  

	
was known to MANUFACTURER prior to the first disclosure to MANUFACTURER by or on behalf of CUSTOMER and MANUFACTURER can establish fact by reasonably convincing evidence; or

	
c.  

	
is received by MANUFACTURER in good faith from third party, which is not subject to a secrecy obligation with respect to such information.

  

  

  

	
ARTICLE XXIX

	
SEVERABLE PROVISIONS

	
Section 29.1

	
Should any provision of this Agreement be or become invalid, void or otherwise unenforceable, the remainder of this Agreement shall continue to be binding on and inure to the benefit of both Parties.  The Parties will sever any such invalid, void or unenforceable provision from this Agreement and, if necessary, use their best efforts to agree upon any changes in the Agreement which are required in order to achieve the same effect as the invalid, void or unenforceable provisions.

 

ARTICLE XXX

WAIVER OF BREACH

	
Section 30.1

	
A failure by one of the Parties to this Agreement to assert its rights upon any breach of a covenant or condition of this Agreement shall not be deemed to be a waiver of such rights, nor shall any waiver be implied from acceptance of any payment or benefit.  No such failure or waiver in writing by any one of the Parties hereto with respect to any such rights shall extend to or affect any subsequent breach or impair any right consequent thereto.

	
Section 30.2

	
Binding Agreement:  Subject to the Force Majeure Section of this Agreement, the terms hereof shall be binding upon and inure to the benefit of CUSTOMER’s and MANUFACTURER’s successors and assigns.

 

	
ARTICLE XXXI

	
GOVERNING LAW

	
Section 31.1

	
This Agreement is to be construed in accordance with the laws of the State of Texas, without giving effect to the principles of conflict of laws.  In the event that the Parties are unable to resolve such dispute prior to the initiation of legal action, both CUSTOMER and MANUFACTURER submit to jurisdiction and venue in the state or federal courts of Texas.

 

	
ARTICLE XXXII

	
CAPTIONS

	
Section 32.1

	
The captions of this Agreement are for reference purposes only and shall not affect the meaning of any provision of this Agreement.

 

  

  

  

	
ARTICLE XXXIII

	
ENTIRE AGREEMENT

	
Section 33.1

	
This Agreement reflects the entire agreement between the parties with respect to the matters set forth herein and shall supersede any prior agreements or understandings, whether oral or in writing, except that this Agreement shall not supersede the Confidentiality Agreement signed by both Parties in anticipation of entering into this Agreement.  Said additional agreement is expressly ratified and incorporated by reference herein.  This Agreement may not be modified or amended in any manner, including prior or current course of dealing between the Parties or usage of trade, except by a writing executed by the Parties hereto.  No purchase order or other form from CUSTOMER will modify, supersede, add to or in any way vary the terms of this Agreement.  Any acknowledgement by an employee or agent of MANUFACTURER of such form shall be solely for informational purposes.

	
  

	
Executed June 25, 2009 (“Effective Date”) at Houston, Texas

 

	
 CUSTOMER

	
MANUFACTURER

	  	  
	
By:/s/ Gregory Wallace

	
By:/s/ Will Baker

	  	  
	
Printed Name: Gregory Wallace 

	
Printed Name: Will Baker

	  	  
	
Title: VP

	
Title: Sales – Custom Processing

 

 

 

 

 

  

  

  

 

  

	
Attachment-A

	
Raw Materials

	
Material

	
Supplier

	
Petroleum Distillates

	
(BP Range 90F – 690F)

	
CUSTOMER

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

	
Attachment-B

	
Finished Product

Pygas, Gasoline blend stock and Cutter Stock processed to CUSTOMER’s Specifications.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

Attachment-C

Yields

KMTEX’s production yield shall account for at least XX% of all feed provided by CUSTOMER to KMTEX.  Such accounting shall be provided to CUSTOMER on a Quarterly basis.  If production yield is below XX%, KMTEX will reimburse CUSTOMER for the value of the feed ($/lb) multiplied by the pounds short of the XX% target.  The value of the feed in this calculation is the current documented value of the effected feed from CUSTOMER based on the posting that the feed is purchased from delivered to KMTEX.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

Attachment-D - Fees & Quantities

	
·  

	
KMTEX will terminal, accumulate and blend materials and charge for tank rental and handling.

	
o  

	
Tank rental and handling rates as follows:

	
§  

	
$ XXXX/month for XXXX barrel tank to accumulate additional feed

	
§  

	
$ XXXX /month for XXXX gallons of storage for VSR feed.  Tank Rental for VSR Feed will be reduced to $ XXXX in the months that VSR Feed is processed.

	
o  

	
In and out charges for additional terminalled product as follows:

	
§  

	
$ XXXX per tank truck of incoming unprocessed material

	
§  

	
$ XXXX per railcar unloaded of unprocessed material

	
·  

	
Wet, low flash fuel: Either KMTEX (at a cost plus basis) or CUSTOMER will handle the proper disposal of the water co-product from this processing.

	
·  

	
Processing fee

	
o  

	
$ XXXX per pound of material processed.  In the event that the processing rates of a feed material are significantly reduced due to a change in composition that directly effects processing, KMTEX reserves the right to renegotiate the processing fee of that particular feed material.

	
o  

	
Includes a dedicated XXXX barrel tank for Pygas feed, a XXXX barrel tank for overheads, and a XXXX barrel tank for MDO bottoms products.  These tanks will be provided at no charge as long as a minimum cumulative throughput of XXXX barrels of material is processed quarterly.  In the event the throughput falls below target, KMTEX reserves the right to charge tank rental or designate the tanks for other service.

	
o  

	
Tank rental rates as follows

	
§  

	
$ XXXX /month ($XXXX /day) for an 11,000 barrel tank

	
§  

	
$ XXXX /month ($XXXX /day) for a 7,300 barrel tank

	
§  

	
$ XXXX /month ($XXXX /day) for a 5,900 barrel tank

	
§  

	
$ XXXX /month ($XXXX /day) for  a 110,000 gallon tank

	
§  

	
$ XXXX /month ($XXXX /day) for a 72,000 gallon tank

	
·  

	
The expected rate of production for the terminalled and processed materials are as follows:

	
o  

	
XXXX - XXXX barrels per quarter of material to be terminalled

	
o  

	
XXXX - XXXX barrels per quarter of material to be processed

	
·  

	
Regarding Additives

	
o  

	
All additives being delivered to KMTEX will have to be scheduled with the KMTEX logistics department and an unloading time assigned.

	
o  

	
All additives will have to be labeled with COMPANY name on the side of the drum / tote.

	
o  

	
There will be a charge of XXXX per gallon for each additive administered with a minimum charge of $ XXXX for each additive.

	
o  

	
It will be the responsibility of the CUSTOMER for the disposal of their empty drums.  In the event that KMTEX has to dispose of any drums, there will be a charge of $ XXXX per drum.

	
·  

	
Anytime CUSTOMER requests a nitrogen roll on a take there will be a charge of $ XXXX per hour.

 

  

  

  

Attachment-E

Energy Surcharge

	
·  

	
Energy surcharge fee as follows:  When the natural gas rate for MMBTU billed to KMTEX from the gas company is greater than $ XXXX /MMBTU

	
o  

	
Variable Surcharge=(Natural Gas Price - $ XXXX) x (Natural Gas Factor) x (Pounds of Feed Processed)

	
o  

	
The Natural gas Factor is XXXX BTU for Pound of Feed Processed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

	
Attachment-F

	
Reporting Procedures

	
·  

	
Upon completion of the processing, CUSTOMER will be provided a spreadsheet detailing the material balance

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