Contract Pricing and Transaction Procedures Analysis

Contract Pricing and Commission Adjustments

• Contract 12,500 MT: $525 reduced to $515.
• Contract 50,000 MT: $525 reduced to $515 (4x the quantity at the same price). This is the first time I have seen this!

Spot Market Analysis

• Spot 12,500 MT: $550 reduced to $540 (Loss of $25).
• Spot 12,500 MT: $535 reduced to $525 ($10 commission). If he accepts a contract, he will lose $10.
• Total Loss: -$15, totaling -$187,500.00 (one hundred eighty-seven thousand five hundred dollars).

Long-Term Contract Projections

• Contract 50,000 MT/Month (1 Year): Instead of $10 back, we will receive $9 back for commissions.
• Mr. Frank: +$50,000 per month, totaling +$600,000.00 (six hundred thousand dollars). This is 3x more than what he is losing on the spot market ($187,500.00 to $600,000.00).

Transaction Procedures

1. Letter of invitation to the Brazilian Embassy in Qatar, with a copy to us.
2. Mr. Frank sends a new FCO for the 12,500 metric tons for the first spot.
3. Mr. Kamal signs the FCO.
4. Mr. Frank sends the draft contract.
5. Mr. Kamal reviews, amends (if necessary), and returns the draft contract with the Memorandum of Understanding (MoU).
6. Mr. Frank reviews both documents and sends a copy of the final draft contract and the reviewed MoU.
7. Mr. Kamal reviews and returns the final MoU.
8. Visit to Brazil: We all travel to Brazil to visit the seller facilitators and inspect the product. Sign the contract and MoU.
9. Deal proceeds according to contract procedures; the first shipment is delivered successfully ($10 back for commission).
10. New contract is signed for 50,000 MT/month for a 1-year term.
11. After payment of each shipment, $9 back for commission.

Projected Outcomes

If this proceeds, I can assure you that Mr. Frank will have:

• A spot of 12,500 metric tons sold.
• 50,000 MT/month for 1 year (600,000 metric tons total) sold.
• Mr. Mostafa will sign a contract of 100,000 metric tons for Qatar.