EXHIBIT 10.8
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Parrish & Heimbecker, Limited
Grain Merchants
Mississauga Winnipeg Lethbridge Vancouver Montreal
Mr. Gord Laschinger
Chief Executive Officer
Northern Ethanol Inc
Suite 300
193 King Street East
Toronto, Ontario.
M5A 1J5
August 18, 2006
Mr. Gord Laschinger;
Re: Agreement for Procurement and Merchandizing Services for Northern Ethanol
In order for Parrish & Heimbecker Ltd and Northern Ethanol Inc. to adequately
prepare their workforces and infrastructure for the opening of this new ethanol
enterprise, this agreement is to formalize our discussion of the past several
months and to confirm the brokerage proposal made by Parrish & Heimbecker to
Northern Ethanol Inc. on March 31, 2006.
In order to help enhance Northern Ethanol's business, Parrish & Heimbecker Ltd
will construct and maintain a complete commodity and currency hedging system in
order to protect Northern Ethanol from the risks associated with a
multi-currency business unit, and to provide price assurance on the raw
commodities required by this ethanol manufacturing process.
Our extensive grain origination and co-product merchandizing units will be
employed to source all of the corn required for the operation of the Barrie and
Sarnia ethanol plants at the best possible prices and in a pattern that meets
the individual plant's processing requirements. Parrish & Heimbecker Ltd will
develop an origination program based on a mixture of truck, rail, and vessel
deliveries in order to ensure a timely and cost effective flow of commodity
inputs, and to consider storage requirements in order to limit interruptions in
product flow.
Through our existing feed business and our current feed ingredient trading
operations, Parrish & Heimbecker Ltd. will utilize existing markets and develop
new markets for the dried distiller's grains that will be produced at the Barrie
and Sarnia ethanol plants. Market development will be required both within the
domestic livestock feed industry as well as in the north eastern United States
and Europe in order to effectively create solid demand for dried distiller's
grains. The co-products of ethanol manufacturing are an emerging market in world
commodities, and Parrish & Heimbecker Ltd will be a leader in this field.
Parrish & Heimbecker Ltd believes in having an open flow of information between
its' merchandizing operations and the management team at Northern Ethanol. In
this arrangement between a supplier and a customer, there is a requirement for
price transparency in order to build trust and to enable the management of
Northern Ethanol to make informed decisions about the market which they are
participating in. Parrish & Heimbecker limited will design and operate the risk
management hedging system, originate the raw corn and merchandize the dried
distiller's grains for a flat fee of $1.00 Canadian per metric tonne on the corn
origination and the dried distiller's grain marketing. This fee will be
calculated monthly, and will be due on the 15th day of the month following the
execution of the shipments. Northern Ethanol would supply the working capital,
hold the contracts with suppliers and customers and therefore have a open view
of it's commodity transactions. Parrish & Heimbecker Ltd.'s roll will be to
supply knowledge, expertise, and personnel to Northern Ethanol in order to
source corn, merchandize co-products, organize logistics, and manage market risk
as part of Northern Ethanol's management team.
This agreement is to be in effect for a period beginning immediately and will be
in effect for five years after the opening of Northern Ethanol's first facility.
This brokerage contract shall be renewable at the end of this term based on the
mutual agreement of both parties.
Parrish & Heimbecker Ltd. Handles supply chain management for a number of
millers, elevators, and feed manufacturers. Our principal goal is to ensure that
our customers succeed.
Stephen Kell Gord Laschinger
s/Stephen Kell s/Gord Laschinger
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Stephen Kell Gord Laschinger
Parrish & Heimbecker Ltd Northern Ethanol Inc.
Suite 308 Suite 300. 193 King Street East
6733 Mississauga Road Toronto. Ontario.
Mississauga, Ontario. M5A 1J5