Exhibit 10.1
 
*PORTIONS OF THIS ETHANOL PURCHASE AGREEMENT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
 
ETHANOL PURCHASE AGREEMENT
 
THIS ETHANOL PURCHASE AGREEMENT (this “Agreement”) is made and entered into as
of January 1, 2012 by and between Southwest Iowa Renewable Energy, LLC, an Iowa
limited liability company (“Producer”), and Bunge North America, Inc., a New
York corporation (“Bunge”) (each of Producer and Bunge, a “Party” and
collectively, the “Parties”).
 
RECITALS
 
A.           Producer owns and operates an ethanol plant located near Council
Bluffs, Iowa (the “Facility”).
 
B.           Bunge is regularly engaged in the business of marketing ethanol,
grain and feed products throughout the world.
 
C.           As of the date of this Agreement, Bunge is a Member of Producer
pursuant to the Third Amended and Restated Operating Agreement of Producer dated
July 17, 2009 (“Operating Agreement”).
 
D.           Producer desires to sell and Bunge desires to purchase all ethanol
produced by the Facility (“Ethanol”).
 
E.           The Parties desire to agree in advance of such sale and purchase to
the price formula, payment, delivery and other terms thereof in consideration of
the mutually promised performance of the other.
 
AGREEMENT
 
Therefore, the Parties agree:
 
1.           Ethanol Purchase/Sale.
 
1.1           Exclusive Purchaser.   Subject to the terms of this Agreement
(including, but not limited to, Section 1.2 hereof), Producer agrees to sell to
Bunge all Ethanol produced during the Term (as defined in Section 6.1 hereof) by
the Facility.   Bunge agrees that it will be obligated to purchase all Ethanol
produced by the Facility during the Term under the conditions herein set forth.
 
1.2           Title.  Title, risk of loss and full shipping responsibility shall
pass to Bunge upon Producer loading the Ethanol into trucks, rail cars or
pipeline at the Delivery Location (as defined below) and delivery to Bunge of a
bill of lading for each shipment.  Bunge and Producer shall agree upon
documented inspection, loading and sealing procedures.
 

 
 

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1.3           Location.  The place of delivery by Producer for all Ethanol sold
to Bunge pursuant to this Agreement shall be the Facility or as otherwise agreed
by the Parties (the “Delivery Location”).  Bunge will provide loading
instructions to Producer designating the shipment date and amount of Ethanol to
be shipped with enough advance notice such that Producer can direct the loading
of all Ethanol delivered hereunder in a commercially reasonable
manner.   Producer shall give Bunge and Bunge’s agents access to the Facility,
in such a manner and at all times as shall be commercially reasonably necessary
and convenient, in order for Bunge or Bunge’s agents and/or designees to take
delivery as provided herein.   To the extent that Bunge has provided Producer
with loading instructions, such instructions are subject to change at the
discretion of Bunge upon reasonable notice to Producer.   If Producer has
delivered Ethanol prior to such notice, Producer will not be responsible for any
failure of such Ethanol to comply with the changed instructions and Bunge will
incur the cost, if any associated with the change of instructions.
 
1.4           Ethanol Marketing Policy.   Producer and Bunge will jointly
establish an Ethanol marketing policy with respect to Contracts (as defined in
Section 2.1(b)) setting forth how far in advance such Contracts may provide for
the sale of Ethanol, referred to as forward contracting limits (the “Ethanol
Marketing Policy”).   Without limitation, subject to Section 2.2, the Ethanol
Marketing Policy shall also include obligations of Producer to deliver to Bunge
written estimates of Ethanol production at the Facility a reasonable period of
time prior to such production.  The Ethanol Marketing Policy is subject to
approval and modification from time-to-time jointly by Bunge and Producer’s risk
management committee and/or Board of Managers and may be developed in connection
with a comprehensive risk management policy for the marketing of all products
produced by the Facility.  The Ethanol Marketing Policy will be updated by the
Parties as necessary.  Bunge shall promptly make Producer aware if the Ethanol
Marketing Policy is reasonably believed to be limiting Bunge’s ability to market
Ethanol in accordance with this Agreement.
 
2.           Obligations of the Parties; Quantity and Weights.
 
2.1           Bunge’s Obligations.
 
(a)           Market Information.  Bunge will provide Producer with relevant and
transparent market information, including bid/ask sheets for Ethanol produced at
the Facility.
 
(b)           Ethanol Contracts.  Bunge will negotiate and execute contracts,
arrangements and agreements on its own behalf for the resale by Bunge of Ethanol
(“Contracts”), and provide Producer with copies of such Contracts upon
request.  Bunge will also provide Producer with, or make available to Producer,
consolidated daily position reports of delivery dates, volumes and pricing under
all open Contracts.
 
(c)           Bunge Re-Sale Efforts.  Bunge agrees to use commercially
reasonable efforts to market the Ethanol to maximize the sale price and minimize
related costs, subject to prevailing market conditions; provided that Bunge will
have no obligation to enter into any long-term sale agreement with terms outside
of the Policy (even if requested to do so by Producer) to the extent that Bunge
determines, in its sole discretion, that there is a risk that a sufficient
quantity of appropriate Ethanol may not be available to satisfy all of Bunge’s
obligations under
 

 
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such sale agreement.  Producer acknowledges that Bunge will use its reasonable
judgment in making such marketing decisions (due, among other things, to varying
freight and other costs).
 
(d)           Shipping Charges.  Bunge will schedule and arrange, in conjunction
with Producer’s general manager or designee, the loading, shipping and delivery
of all Ethanol bought by Bunge pursuant to this Agreement.  All freight and
delivery charges after delivery of the Ethanol by Producer to the Delivery
Location will be the responsibility of Bunge or the purchasers of Ethanol from
Bunge, and will be included in the calculation of Purchase Price to the extent
set forth Section 5.1.  With respect to rail freight service to the Facility,
Bunge shall be responsible for negotiating with the rail service provider the
rates and service levels for shipments of Ethanol from the Facility.  Bunge
shall disclose to Producer any discussions, negotiations, proposals and
agreements involving such rail service and rail rates for the Facility and, upon
termination of the Agreement, Bunge shall assign rights to such rail service and
rates to Producer, as agreed by the rail carrier.  Producer shall buy or lease,
and shall maintain and be responsible for, the rail cars which will be used for
the loading, shipping and delivery of all Ethanol bought by Bunge pursuant to
this Agreement.
 
(e)           Ethanol Marketing Policy; Directions Given by Producer.  Subject
to the provisions of this Agreement, Bunge will abide by any terms of the
Ethanol Marketing Policy applicable to Bunge and neither Bunge nor its
Affiliates shall be in breach of this Agreement or liable to Producer under this
Agreement to the extent Bunge acts in accordance with the Ethanol Marketing
Policy or in accordance with directions given by Producer’s Board or general
manager.
 
(f)           Other Activities of Bunge.  Producer understands that Bunge is in
the business of marketing ethanol for itself and for other third parties outside
the terms of this Agreement and that Bunge may sell and market Ethanol into the
same markets where Bunge sells other parties’ ethanol.  If Bunge determines to
accept, for its own account and at its risk, contracts with terms that are
outside the parameters of the Ethanol Marketing Policy, Bunge will promptly
offer Producer the opportunity to waive or amend the Ethanol Marketing Policy
and authorize Bunge to enter into such contract as a Contract subject to this
Agreement.  If Producer elects to accept the contract, the waiver or amendment
must be made promptly.  If Producer elects not to accept the contract, then
Producer understands that Bunge may fulfill the contract with spot market
purchases from Producer and such spot market purchases shall fulfill Bunge’s
obligations to maximize the sale price pursuant to Section 2.1(c).  Producer and
Bunge may, from time to time, mutually agree that Bunge will purchase certain
quantities of Ethanol for its own account for resale to third parties in
contracts which are not Contracts subject to this Agreement and Bunge will pay
to Producer the current fair market value of such Ethanol as determined by the
Parties.
 
2.2           Producer’s Obligations.
 
(a)           Production Estimates.  On or before the first day of each month,
Producer will provide Bunge with its updated best estimate of Producer’s
anticipated monthly Ethanol production for the next twelve months, so that Bunge
will have Ethanol production estimates from Producer twelve months into the
future during the Term (each such monthly anticipated
 

 
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amount, a “Monthly Estimate”).  If Producer fails to timely provide a written
estimate for a month as required by this Section 2.2, then the Monthly Estimate
for such month will be deemed to be the average amount of monthly production of
Ethanol over the two months immediately preceding the month in
question.  Producer will notify Bunge of anticipated production downtime or
disruption in Ethanol availability at least three months in advance of such
outage.  In addition to the Monthly Estimates, Producer will provide a written
estimate to Bunge of the quantity of Ethanol to be produced and delivered by
Producer in each given week (each such weekly anticipated amount, a “Weekly
Estimate”) during the Term at least five days prior to the beginning of such
week.  Each Weekly Estimate will (a) include a statement of the amount of
Ethanol in storage as of such date, and (b) be consistent with the applicable
Monthly Estimate.
 
(b)           Failure to Produce and Changes to Estimates.  Bunge is entitled to
rely on Monthly Estimates and Weekly Estimates in marketing Ethanol and in
entering into Contracts.  Producer will immediately notify Bunge of any
revisions to such estimates; provided, that, to the extent Bunge has relied upon
such estimates, such estimates may not be revised and shall be deemed fixed in
determining any amounts payable by Producer in this Section.  Bunge will utilize
commercially reasonable efforts to adjust its Ethanol marketing and sales
strategy according to any such revised estimates; provided that Producer will
bear all costs incurred by Bunge to attempt to meet such revised quantities.  To
the extent that Bunge is able to obtain Substitute Ethanol to meet such revised
quantities and the price paid by Bunge to procure the Substitute Ethanol
(including transportation, handling, or other charges related to the procurement
and/or delivery of the Substitute Ethanol) was less than the price at which
Bunge sold ethanol in such sale commitments, then Bunge shall retain the Cover
Amount.  To the extent that Bunge is able to obtain Substitute Ethanol to meet
such revised quantities and the price paid by Bunge to procure the Substitute
Ethanol (including transportation, handling, or other charges related to the
procurement and/or delivery of the Substitute Ethanol) was greater than the
price at which Bunge sold ethanol in such sale commitments, then Producer will
pay to Bunge an amount equal to (i) the Cover Amount for the Substitute Ethanol,
plus (ii) Bunge’s Marketing Fee on the Substitute Ethanol.  The “Substitute
Ethanol” means the volume of ethanol procured by Bunge to meet ethanol sale
commitments due to Producer’s failure to supply the amount of Ethanol in the
applicable Monthly Estimate or Weekly Estimate.  The “Cover Amount” is the
difference between the price paid by Bunge to procure the Substitute Ethanol
(including transportation, handling, or other charges related to the procurement
and/or delivery of the Substitute Ethanol) and the price at which Bunge sold
ethanol in such sale commitments.
 
(c)           Excess Ethanol Production.  If Producer produces Ethanol in excess
of the Monthly Estimate for a given month or Weekly Estimate for a given week,
then Producer acknowledges that any sale by Bunge of such excess volume of
Ethanol on the spot market will fulfill Bunge’s obligation in Section 2.1(c) to
maximize the sale price that it receives for such excess volume of Ethanol.
 
(d)           Handling and Shipping.  In connection with this Agreement,
Producer will:
 
 
(i)
Determine the weight of all Ethanol delivered to Bunge as provided in Section 3;

 

 
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(ii)
Load the Ethanol for shipment in accordance with the loading instructions from
Section 1.3 to trucks, rail cars or pipeline with Ethanol in a timely manner,
which shall include supplying adequate labor and equipment necessary for such
loading;

 
 
(iii)
Handle Ethanol in a good and workmanlike manner;

 
 
(iv)
Maintain the truck/rail/pipeline loading facilities in safe operating condition;

 
 
(v)
Supply all product description tags, certificates of analysis, bills of lading
and/or material safety data sheets applicable to Ethanol shipments;

 
 
(vi)
Comply with all federal, state and local rules, regulations regarding the
shipment of Ethanol from the Facility, including but not limited to all U.S.
Department of Transportation requirements relating to shipment of hazardous
materials; and

 
 
(vii)
Abide by the Ethanol Marketing Policy.

 
(e)           Storage.  Storage space for not less than 3 million gallons of
Ethanol shall be reserved by Producer at the Facility, which shall be
continuously available for storage of Ethanol to be purchased by Bunge from
Producer.
 
(f)           Storage Purchase.  Bunge may from time to time notify Producer (a
“Storage Notice”) that Bunge proposes to place a certain quantity of Ethanol in
storage at a location away from the Facility for some period of time before
purchase by Bunge for resale to end customers.  Unless Producer notifies Bunge
within 24 hours after receiving a Storage Notice that Producer agrees to the
storage proposal, then Producer shall be deemed to have rejected such proposal
and Bunge will not place Ethanol in storage pursuant to the Storage Notice.  If
Producer accepts such storage proposal, then Producer will bear the cost related
to such storage.
 
2.3           Contract Commitments.
 
(a)           Subject to the provisions of Sections 2.1(c) and(f), all Contracts
negotiated by Bunge shall be consistent with the Ethanol Marketing Policy unless
the general manager of the Facility, or his designee, approves in advance any
Contract terms inconsistent with the Ethanol Marketing Policy.
 
(b)           Producer will not be a party to, or have any liability or
obligation to any purchaser or to Bunge under Contracts except as provided in
this Section 2.  Producer acknowledges that in order to maximize the total
revenue to be generated through the sale of the Ethanol, Bunge may take
positions by selling Ethanol in anticipation of Producer providing the Ethanol,
subject to the terms of the Ethanol Marketing Policy.  Notwithstanding the fact
that Producer’s obligation is to provide Bunge with the Ethanol output of the
Facility, the Parties acknowledge that Bunge may suffer losses as a result of
positions taken by Bunge if Producer discontinues operations for any reason
whatsoever including Force Majeure.  Producer shall
 

 
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indemnify, defend and hold Bunge and its Affiliates (as defined below) harmless
from all liabilities, costs and expenses (including, without limitation,
attorney’s fees) that Bunge or its Affiliates may suffer, sustain or become
subject to as a result of any sale or purchase of Ethanol taken by Bunge which
is consistent with the Ethanol Marketing Policy in anticipation of Producer
delivering the Ethanol hereunder, provided Bunge has taken commercially
reasonable steps to avoid the loss.  Bunge will indemnify, defend and hold
harmless Producer and its Affiliates, employees and agents from and against any
and all liabilities, costs and expenses (including, without limitation,
attorney’s fees) arising out of, relating to or resulting from any failure of
Ethanol to comply with the Production Standards or degrading the quality of
Ethanol which results from causes or conditions arising after title passes to
Bunge, except to the extent such liabilities, costs and expenses arise out of
the gross negligence or intentional misconduct of Producer or a breach of this
Agreement by Producer.
 
3.           Quantity and Weights.
 
3.1           Meters.  Producer will determine the quantity of Ethanol
(expressed in both gross and net 60° Fahrenheit temperature compensated gallons)
delivered to Bunge from the Facility using meters at the Facility.  Producer
will maintain (at its expense) the accuracy of such meters and ensure that they
are inspected and certified as required by applicable law.  Upon Bunge’s
request, Producer will promptly provide Bunge with copies of all meter
certifications.  Bunge may, at its sole expense, test the accuracy of such
meters.  Producer will maintain all meter certificates for at least two years
after their creation and provide copies of such meter certificates to Bunge upon
request.  If the meters are found to be inaccurate, the Parties will negotiate
in good faith a reasonable adjustment for Ethanol sales reasonably believed to
have been affected.
 
3.2           Meter Certificates.  The net 60° Fahrenheit temperature
compensated gallon volumes of Ethanol recorded on outbound meter certificates
generated pursuant to Section 3.1 will determine the quantity of Ethanol for
which Bunge is obligated to pay pursuant to Section 5.1, in the absence of
manifest error (greater than 0.5% variation).  Producer will provide a copy of
each such meter certificate to Bunge at the same time that a truck, rail car or
pipeline is loaded and a certificate is produced for such loading.
 
4.           Quality; Sampling; Rejection; Disposition.
 
4.1           Quality.  Producer agrees and warrants that the Ethanol produced
at the Facility and delivered to Bunge at the Delivery Location shall meet the
minimum quality standards outlined in Exhibit A hereto and such other quality
standards set forth in this Agreement (the “Production Standards”).  Producer
will not be responsible for any failure of Ethanol to comply with the Production
Standards or degrading the quality of Ethanol which results from causes or
conditions arising after title passes to Bunge.  Producer will provide a
certificate of analysis to Bunge for each shipment of Ethanol under this
Agreement, and Bunge will have the right (but not the obligation) to test each
such shipment to determine whether the Production Standards are being met.  In
addition, from time to time as requested by Bunge, Producer will provide Bunge
samples of Ethanol for Bunge to test.
 
4.2           Non-Conforming Ethanol.  If any Ethanol does not conform to the
Production Standards when crossing the Delivery Location, or when unloaded at an
end customer’s facility
 

 
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(other than due to actions or inactions by Bunge), Bunge may, in its sole
discretion, reject such Ethanol and require Producer to promptly replace such
non-conforming Ethanol with Ethanol that complies with the Production
Standards.  In addition to other obligations under this Agreement or at law,
Producer will promptly reimburse Bunge for all out-of-pocket costs reasonably
incurred by Bunge in storing, transporting, returning and disposing of rejected
ethanol in accordance with this Agreement.
 
4.3           Samples.  Producer will take and analyze representative (a) origin
samples of Ethanol before loading it into any truck, rail car or pipeline and
(b) samples of Ethanol after it is loaded into each truck, rail car or pipeline
before it leaves the Facility (any sample under this Section 4.3, a “Sample”),
and Bunge will have the right to witness the taking of the Samples.  Each Sample
will be no less than 250 milliliters in amount.  Producer will label each Sample
to indicate the (i) date of shipment, (ii) truck, rail car or pipeline from
which the Sample was taken or into which the Ethanol was loaded, and (iii)
order/shipment number.  Producer will retain such Samples for not less than 60
days in a manner that preserves the integrity of each Sample, and will send any
Sample to Bunge immediately upon Bunge’s request.  Producer will prepare a
certificate of analysis in accordance with industry standards for every truck,
rail car or pipeline loaded at the Facility.
 
5.           Price/Payment.
 
5.1           Purchase Price.
 
(a)           Bunge will pay the Purchase Price to Producer for all Ethanol
purchased hereunder within 13 days after the date that (i) meter certificates
for all properly loaded Ethanol are delivered by Producer to Bunge in accordance
with this Agreement or (ii) Bunge invoices end customers for ethanol that has
been placed in storage pursuant to Section 2.2(f).  In either case, Bunge will
retain the applicable Marketing Fee and Transportation Costs for such Ethanol.
 
(b)           The following definitions shall apply to any given gallon of
Ethanol:
 
 
(i)
The “Purchase Price” shall be equal to the Sale Price minus the applicable
Marketing Fee and Transportation Costs (if any).

 
 
(ii)
The “Sale Price” shall be equal to: (A) with respect to Ethanol that Bunge
purchases to fulfill its commitments to third party purchasers under agreements
consistent with this Agreement, the sale price received by Bunge from such
purchasers; and (b) with respect to Ethanol purchased by Bunge on the spot
market, the spot price for such Ethanol agreed upon by Bunge and Producer.

 
 
(iii)
The “Marketing Fee” shall be equal to * % of the Net Sales Price, but not to
exceed $* per gallon of Ethanol.

 
*OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 

 
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(iv)
The "Net Sales Price" will be equal to the Sales Price minus all Transportation
Costs.

 
 
(v)
“Transportation Costs” shall be equal to: (A) with respect to Ethanol delivered
via rail, all rail freight charges, rail and fuel surcharges, switching charges,
and any other accessorial charges applicable to delivery of the Ethanol; and (B)
with respect to Ethanol delivered via truck, pipeline or other conveyance, all
freight charges, fuel surcharges, and any other accessorial charges applicable
to delivery of the Ethanol.  There are no Transportation Costs for any Ethanol
picked up at the Facility by purchasers.  For Ethanol placed in storage under
Section 2.2(d), accessorial charges will include all charges related to such
storage.  For purposes of this Section, assessorial charges include all charges
related to the movement, offloading and storage of Ethanol.

 
(c)           Payment.  Bunge will pay the Purchase Price by wire
transfer.  Interest will accrue on amounts past due at a rate per annum equal to
the lesser of (a) the prime rate, as reported from time to time by the Wall
Street Journal plus 2%, and (b) the highest rate permitted by law.  Bunge will
provide Purchaser with a copy of an invoice supporting the Sale Price for such
Sale upon request.
 
(d)           Annual Minimum Payments.  Subject to Section 9 hereof, if on each
anniversary of the Effective Date, the total amount of the Marketing Fee
retained by Bunge during the immediately preceding 12-month period (a “Total Fee
Amount”) is less than $750,000 (“Annual Minimum Amount”), then within 15 days
after such anniversary, Producer will pay to Bunge an amount equal to the Annual
Minimum Amount minus the Total Fee Amount.
 
5.2           Adjustments.  Beginning on the third anniversary of the Effective
Date of this Agreement and on each anniversary thereafter, the Annual Minimum
Amount will be increased (or decreased) by an amount equal to the product of:
(i) the Annual Minimum Amount for the immediately preceding 12-month period,
multiplied by (ii) the percentage increase (or decrease) for such 12-month
period in the Employment Cost Index; Not Seasonally Adjusted; Total
Compensation; Private Industry; twelve-month percent change; Midwest Workers,
published by the Bureau of Labor Statistics, U.S. Department of Labor.
 
5.3           Tax.  For purposes of personal property taxation and/or assessment
or other taxation, if any, any tax assessed on Ethanol produced under this
Agreement will be the responsibility of Producer, and at no time will Bunge be
responsible for the payment of any such tax.
 
6.           Term and Termination.
 
6.1           Term.  The initial term of this Agreement will begin on the
Effective Date, and, unless earlier terminated in accordance with the terms
hereof, will expire on August 31, 2014.  Unless earlier terminated in accordance
with this Agreement, this Agreement will automatically renew for successive
three-year terms thereafter unless either Party gives written notice to the
other Party of its election not to renew, no later than 180 days prior to the
expiration of the initial
 

 
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term or the then current renewal term, as applicable.  The “Term” will be the
total of the initial term of this Agreement and any renewal terms.  The
“Effective Date” will be January 1, 2012.
 
6.2           Termination Rights.
 
(a)           Either Party may terminate this Agreement immediately upon notice
to the other Party if such other Party has (i) materially breached any
representation, warranty, or obligation under this Agreement, and (ii) failed to
remedy such breach within 30 days after the terminating Party has given notice
of such breach, or if such breach cannot reasonably be cured within such 30-day
period, such other Party has failed to commence and diligently pursue remedy of
the breach and failed to remedy such breach not later than 120 days after the
terminating Party has given notice of such breach.
 
(b)           Producer may terminate this Agreement immediately upon notice to
Bunge if Bunge fails to pay any amount due under this Agreement within 15 days
after Producer gives Bunge notice of such nonpayment.
 
(c)           Bunge may terminate this Agreement immediately upon notice to
Producer upon the occurrence of a Dissolution Event (as defined in Article X the
Operating Agreement).
 
(d)           Either Party may terminate this Agreement immediately upon notice
to the other Party if (i) such other Party files a petition for adjudication as
a bankrupt, for reorganization or for an arrangement under any bankruptcy or
insolvency law; (ii) an involuntary petition under such law is filed against
such other Party and is not dismissed, vacated or stayed within 60 days
thereafter; or (iii) such other Party makes an assignment of all or
substantially all of its assets for the benefit of its creditors.
 
(e)           Bunge may terminate this Agreement immediately upon notice to
Producer if there is a Change in Control of Producer.  A “Change of Control”
occurs upon any of: (i) a sale of all or substantially all of the assets of
Producer; (ii) a merger or consolidation involving Producer, excluding a merger
or consolidation after which 50% or more of the outstanding equity interests of
Producer continue to be held by the same holders that held 50% of more of the
outstanding equity interests of Producer immediately before such merger or
consolidation, or (iii) any issuance and/or acquisition of equity interests of
Producer that results in a person or entity holding 50% or more of the
outstanding equity interests of Producer, excluding any persons or entities that
held 50% or more of the outstanding equity interests of Producer immediately
before such acquisition and, with respect to Producer, excluding Bunge.
 
(f)           Either Party may terminate this Agreement in accordance with
Section 11.3 hereof.
 
(g)           Producer may terminate this Agreement immediately upon notice to
Bunge if there is a Change in Control of Producer upon payment to Bunge of an
amount equal to $750,000.
 

 
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6.3           Survival.  The provisions of this Agreement which expressly or by
their nature survive expiration or termination of this Agreement, including, but
not limited to, Sections 2.1(d), 2.3(b), 4, 5.1, 5.3, 6.2, 6.3, 9, 10, 14, 15
and 16, will remain in effect after the expiration or termination of this
Agreement.
 
7.           Covenants of Producer.  Producer covenants to Bunge that it will
use commercially reasonable efforts to ensure that the Facility will be fully
operational no later than July 15, 2009.
 
8.           Representations and Warranties.  The parties make the following
warranties, representations or guarantees as described below:
 
(a)           Bunge represents and warrants to Producer that Bunge, either
through its own management or through lawful contracts entered into with third
parties, currently has and shall maintain or cause to be maintained such
licenses, permits and/or authorities as may be required to lawfully engage in
the purchase and sale of Ethanol.
 
(b)           Bunge represents and warrants to Producer that: all necessary
corporate action has been taken to authorize the execution, delivery and
performance of this Agreement; the execution, delivery and performance of this
Agreement by Bunge does not, and will not, violate or constitute a breach of or
default under any Governmental Requirement (as defined in Section 16.5) or any
indenture, contract or other instrument to which its assets are bound or to
which the representing party’s business is subject.
 
(c)           Producer represents and warrants to Bunge that: all necessary
corporate action has been taken to authorize the execution, delivery and
performance of this Agreement; the execution, delivery and performance of this
Agreement by Producer does not, and will not, violate or constitute a breach of
or default under any Governmental Requirement or any indenture, contract or
other instrument to which Producer or its assets are bound or to which
Producer’s business is subject.
 
(d)           Producer warrants that at the time of loading at the Delivery
Location the Ethanol will be of merchantable quality, and will be fit for its
intended purpose.  All Ethanol must meet all applicable ASTM Standards.
 
(e)           Producer warrants that the Ethanol delivered to Bunge shall be
free and clear of liens and encumbrances.
 
9.           Limitation of Liability.
 
9.1           General Disclaimer.  EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, PRODUCER MAKES NO STATUTORY, WRITTEN, ORAL, EXPRESSED OR IMPLIED
WARRANTIES, REPRESENTATIONS OR GUARANTEES OF ANY KIND CONCERNING THE ETHANOL
SOLD UNDER THIS AGREEMENT, OR ITS QUALITY SOURCE, OR CHARACTERISTICS, INCLUDING
WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE.  EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, BUNGE MAKES NO
STATUTORY, WRITTEN, ORAL, EXPRESSED OR IMPLIED WARRANTIES, REPRESENTATIONS OR
GUARANTEES OF ANY KIND CONCERNING THE SERVICES
 

 
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PROVIDED UNDER THIS AGREEMENT OR THE FAILURE TO PROVIDE SERVICES UNDER THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE.
 
9.2           IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER OR ANY OTHER
PERSON OR ENTITY FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES UNDER ANY
CIRCUMSTANCES.
 
10.           Remedies.
 
10.1           Suspend Performance.  Producer may suspend its performance under
this Agreement until Bunge has paid all amounts due under this Agreement if
Bunge fails to pay any amount within 15 days after the date when such amount is
due and uncured under this Agreement.
 
10.2           Specific Enforcement.  The Parties shall have the right and
remedy to seek to have the provisions of this Agreement specifically enforced by
any court having equity jurisdiction without the necessity of posting any bond,
it being acknowledged and agreed by the parties that the scope of the provisions
of this Agreement are reasonable under the circumstances.
 
10.3           Rights Not Exclusive.  No right, power or remedy conferred by
this Agreement will be exclusive of any other right, power or remedy now or
hereafter available to a Party at law, in equity, by statute or otherwise.
 
11.           Force Majeure.
 
11.1           Definition of Force Majeure Event.  Each Party is excused from
performing its obligations under this Agreement to the extent that such
performance is prevented by an act or event (a “Force Majeure Event”) whether or
not foreseen, that: (i) is beyond the reasonable control of, and is not due to
the fault or negligence of, such Party, and (ii) could not have been avoided by
such Party’s exercise of due diligence, including, but not limited to, a labor
controversy, strike, lockout, boycott, transportation stoppage, action of a
court or public authority, fire, flood, earthquake, storm, war, civil strife,
terrorist action, epidemic, or act of God; provided that a Force Majeure Event
will not include economic hardship, changes in market conditions, or
insufficiency of funds.  Notwithstanding the foregoing sentence, a Force Majeure
Event does not excuse any obligation to make any payment required by this
Agreement (including without limitation Section 5.1(d) and will not affect
Bunge’s right to terminate this Agreement pursuant to Section 6.2(c)(i).
 
11.2           Conditions Regarding Force Majeure Event.  A Party claiming a
Force Majeure Event must: (i) use commercially reasonable efforts to cure,
mitigate, or remedy the effects of its nonperformance; provided that neither
Party will have any obligation hereunder to settle a strike or labor dispute;
(ii) bear the burden of demonstrating its existence; and (iii) notify the other
Party of the occurrence of the Force Majeure Event as quickly as reasonably
possible, but no later than five business days after learning of the occurrence
of the Force Majeure Event.  Any Party that fails to notify the other Party of
the occurrence of a Force Majeure Event as required
 

 
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by this Section 11 will forfeit its right to excuse performance of its
obligations due to such Force Majeure Event.  When a Party claiming a Force
Majeure Event is able to resume performance of its obligations under this
Agreement, it will immediately give the other Party notice to that effect and
resume performance.
 
11.3           Third Parties; Termination.  During any period that a Party
claiming a Force Majeure Event is excused from performance under this Agreement,
the other Party may accept performance from other parties as it may reasonably
determine under the circumstances. If a Party has not performed under this
Agreement due to a Force Majeure Event for twelve consecutive months or more,
the other Party may terminate this Agreement immediately upon notice to the
non-performing Party.
 
12.           Insurance.
 
12.1           Other Required Coverage.
 
(a)           Each Party will maintain automobile liability insurance covering
owned, hired, and non-owned vehicles against claims for bodily injury, death and
property damage, with a combined single limit of not less than $1,000,000, or
equivalent coverage using split limits.  Such insurance will name the other
Party, its parents, subsidiaries and Affiliates as additional insureds
thereunder, and will be primary to any other insurance available to such other
Party, its parents, subsidiaries and Affiliates as insureds or otherwise.
 
(b)           Each Party will maintain commercial general liability insurance
(including, without limitation, coverage for Contractual Liability and
Products/Completed Operations) against claims for bodily injury, death and
property damage, with limits of not less than $1,000,000 for each occurrence and
$1,000,000 in the General and Products/Completed Operations Aggregate.  Such
insurance will name the other Party, its parents, subsidiaries and Affiliates as
additional insureds there under, and will be primary and non-contributory to any
other insurance available to such other Party, its parents, subsidiaries and
Affiliates as insureds or otherwise.
 
(c)           An excess or umbrella liability policy with a limit of not less
than $2,000,000 per occurrence and $2,000,000 aggregate.  Such excess or
umbrella liability policy shall follow form with the primary liability policies,
and contain a drop-down provision in case of impairment of underlying limits.
 
(d)           Notwithstanding the provisions of Section 12.1(b) and (c), each
Party’s total coverage under both its commercial general liability insurance in
Section 12.1(b) and excess or umbrella liability policy in Section 12.1(c) must
have combined limits together totaling $4,000,000 for each occurrence and
$4,000,000 aggregate.
 
(e)           Worker’s Compensation insurance providing statutory benefits for
injury or disease in the state(s) of operation of the Parties, and Employer’s
Liability with limits of at least $500,000 for individual injury or disease,
with an aggregate of $500,000 for disease.
 
(f)           Each Party waives all rights against the other Party and its
employees and agents for all losses and damages caused by, arising out of or
resulting from any of the perils or
 

 
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causes of loss of the Party covered by the policies contemplated by Section 12.1
and any other property insurance covering the Party applicable to the Facility.
 
12.2           Insurance Policy Requirements.  All insurance policies required
by this Agreement will (a) provide coverage on an “occurrence” basis; (b)
provide that no cancellation or non-renewal will be effected without giving the
other Party at least thirty (30) days prior written notice, except ten (10)
days’ notice for non-payment of premium; and (c) be valid and enforceable
policies issued by insurers of recognized responsibility, properly licensed in
the State where the Facility is located, with an A.M. Best’s Rating of A- or
better and Class VII or better.  General Liability and Excess/Umbrella Liability
policies will not contain a cross-liability exclusion, or an exclusion for
punitive or exemplary damages where insurable under law.  Prior to the Effective
Date and, thereafter, within five business days of renewal, certificates and
endorsements of such insurance will be delivered to the other Party, as
appropriate, as evidence of the specified insurance coverage.  From time to
time, upon a Party’s request, the other Party will provide the requesting Party,
within five business days, a certified duplicate original of any policy required
to be maintained hereunder.  Each Party will provide the other Party at least
thirty (30) days prior written notice of any material change or amendment to a
Party’s insurance policy.
 
13.           Relationship of Parties.  This Agreement creates no relationship
other than those of producer/seller and purchaser between the Parties
hereto.  Except as expressly provided herein, there is no partnership, joint
venture or other joint or mutual enterprise or undertaking created hereby and
neither Party, or any of such Party’s representatives, agents or employees, will
be deemed to be the representative or employee of the other Party.  Except as
expressly provided herein or as otherwise specifically agreed in writing,
neither Party will have authority to act on behalf of or bind the other Party.
 
14.           Confidentiality.
 
14.1           Definition of Confidential Information.  The term “Confidential
Information” means all material or information relating to a Party’s business
operations and affairs (including trade secrets) that such Party treats as
confidential.  Without limiting the generality of the foregoing, all information
regarding quantities of Ethanol produced and any pricing matter under this
Agreement will be deemed to be Confidential Information of the appropriate
Party; provided, however, that quantities of Ethanol produced and sold, the
price at which the Ethanol is sold, and aggregate fees paid to Bunge, on a
quarterly and annual basis, shall not be deemed “Confidential Information.”
 
14.2           Use of Confidential Information.  During the Term and for three
years thereafter, neither Party will (a) use any Confidential Information of the
other Party for any purpose other than in accordance with this Agreement or for
its and its Affiliates internal business purposes, or (b) disclose Confidential
Information to any Person, except to its personnel who are subject to
nondisclosure obligations comparable in scope to this Section 14 and who have a
need to know such Confidential Information in order to perform under this
Agreement.  Notwithstanding the foregoing, the Parties acknowledge that Bunge
and/or its Affiliates may perform services for other third parties similar to
the services provided to Producer hereunder and that the use by Bunge and/or its
Affiliates of any Confidential Information regarding the services provided
 

 
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under this Agreement in the course of the provision of such services to other
third parties and for Bunge’s and its Affiliates’ internal business purposes
shall not be considered a violation of this Section 14; provided, that such use
of Producer’s Confidential Information may not be to the competitive
disadvantage of Producer.
 
14.3           Disclosure of Confidential Information.  Notwithstanding Section
14.2, either Party may use for any purpose or disclose any material or
information that it can demonstrate (i) is or becomes publicly known through no
act or fault of such Party; (ii) is developed independently by such Party
without reference to the other Party’s Confidential Information; (iii) is known
by such Party when disclosed by the other Party, and such Party does not then
have a duty to maintain its confidentiality; or (iv) is rightfully obtained by
such Party from a third party not obligated to preserve its confidentiality who
did not receive the material or information directly or indirectly from the
other Party.  A Party also may disclose the other Party’s Confidential
Information to the extent required by a court, law, legal or administrative
process or by other governmental authority, provided that the disclosing Party
(a) gives the other Party advance written notice of the disclosure, (b) uses
reasonable efforts to resist disclosing the Confidential Information, (c)
cooperates with the other Party on request to obtain a protective order or
otherwise limit the disclosure, and (d) as soon as reasonably possible, provides
a letter from its counsel confirming that such Confidential Information is, in
fact, required to be disclosed.
 
14.4           Injunctive Relief.  Each Party acknowledges and agrees that its
breach or threatened breach of any provision of this Section 14 would cause the
other Party irreparable injury for which it would not have an adequate remedy at
law.  In the event of a breach or threatened breach, the non-breaching Party
will be entitled to injunctive relief in addition to all other remedies it may
have at law or in equity.
 
15.           Governing Law; Disputes.
 
15.1           Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Iowa, excluding any applicable
conflicts-of-law rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another state.
 
15.2           Notice of Dispute.  If any dispute shall arise under or in
connection with this Agreement, the Parties hereto agree to follow the
procedures set forth in this Section 15.2 in an effort to resolve the dispute
prior to the commencement of any formal proceedings; provided, however, that
either Party may institute judicial proceedings seeking equitable relief or
remedies without following the procedures set forth herein.  The Parties shall
attempt in good faith to resolve any dispute arising out of or relating to this
Agreement, the breach, termination, or validity hereof, or the transactions
contemplated herein promptly by negotiation between representatives who have
authority to settle the controversy.  Any Party may give the other Party written
notice that a dispute exists (a “Notice of Dispute”) setting forth a statement
of such Party’s position.  Within twenty (20) business days of the delivery of
the Notice of Dispute, representatives of the Parties shall meet at a mutually
acceptable time and place, and thereafter as long as they both reasonably deem
necessary, to exchange relevant information and attempt to resolve the
dispute.  If the matter has not been resolved within thirty (30) days of the
disputing
 

 
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party’s delivering its Notice of Dispute, the dispute shall be referred to the
Boards of Directors or Managers of Producer and Bunge who shall within twenty
(20) additional days meet to attempt in good faith to resolve the dispute.
 
15.3           Mediation.  If the matter still has not been resolved within
sixty (60) days of the delivery of the Notice of Dispute, then any Party may
seek to resolve the dispute through mediation administered by the Commercial
Mediation Rules of the American Arbitration Association.  If the Parties fail to
resolve the dispute within twenty-one (21) days after starting mediation, then
either Party may initiate appropriate proceedings to obtain a judicial
resolution of the dispute.
 
15.4           Negotiations; Jurisdictional Matters.  If a representative of any
Party intends to be accompanied at a meeting by an attorney, the other
negotiator shall be given at least three (3) business days’ notice of such
intention and may also be accompanied by an attorney.  All negotiations pursuant
to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence and
similar state rules of evidence.  Any proceeding initiated by either Party
hereto shall be commenced and prosecuted in the United States District Courts
for the Eastern District of Missouri or the Western District of Iowa or the
state courts in St. Louis County, Missouri or Des Moines, Iowa and any courts to
which an appeal may be taken, and each Party hereby consents to and submits to
the personal jurisdiction of each of such courts.
 
15.5           Waiver of Jury Trial.  EACH PARTY IRREVOCABLY WAIVES ANY AND ALL
RIGHTS TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
16.           Indemnification.
 
16.1           Indemnification by Producer.   Producer agrees to indemnify and
hold Bunge harmless from any Loss suffered or incurred by Bunge arising out of,
or in any way relating to:
 
(a)           Producer’s use or possession or operations on or at, or any action
or failure to act at, the Facility;
 
(b)           any personal injury or property damage related to the use,
possession, condition of, disposal of, physical contact with or exposure to any
products manufactured at the Facility;
 
(c)           injuries or alleged injuries suffered by Producer’s employees
whether at the Facility or elsewhere and whether or not under the direction of
Bunge and/or the Producer;
 
(d)           any violation or alleged violation of any Governmental Requirement
by Producer,
 
unless and to the extent such Loss was directly caused by Bunge’s gross
negligence or willful misconduct and in each case only to the extent Bunge is
not otherwise compensated for such Loss by applicable insurance (to the extent
actually paid).
 

 
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16.2           Indemnification by Bunge.  Bunge agrees to indemnify and hold
Producer harmless from any Loss suffered or incurred by Producer arising out of,
or in any way relating to:
 
(a)           injuries or alleged injuries suffered by Bunge’s employees, or
leased or subcontracted by Bunge, whether at the Facility or elsewhere;
 
(b)           any violation or alleged violation of any Governmental Requirement
by Bunge;
 
unless and to the extent such Loss was directly caused by Producer’s gross
negligence or willful misconduct and in each case only to the extent Producer is
not otherwise compensated for such Loss by applicable insurance (to the extent
actually paid).
 
16.3           Mutual Indemnification.  Each Party shall indemnify, defend and
hold the other Party harmless from all liabilities, costs and expenses
(including, without limitation, attorney’s fees) that such Party may suffer,
sustain or become subject to as a result any misrepresentation or breach of
warranty, covenant or agreement of the indemnifying Party contained herein or
the indemnifying Party’s gross negligence or willful misconduct in performance
of its obligations under this Agreement.
 
16.4           Employees, Affiliates, Etc.  A party’s indemnification of the
other party pursuant to this Section 16 will also run in favor of such
indemnified party’s officers, directors, employees, agents and representatives,
and indemnification claims may be made hereunder by any of such parties or by
the indemnified party on such third parties’ behalf.
 
16.5           Definitions.  For purposes of this Agreement:
 
(a)           “Governmental Requirement” means all laws, statutes, codes,
ordinances and governmental rules, regulations and requirements of any
governmental authority that are applicable to the Parties, the property of the
Parties or activities described in or contemplated by this Agreement.
 
(b)           “Loss” means any claim, loss, cost, expense, liability, fine,
penalty, interest, payment or damage, including but not limited to reasonable
attorneys’ fees, accountants’ fees and any cost and expense of litigation,
negotiation, settlement or appeal.
 
(c)           “Affiliate” means a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the party specified, with “control” or “controlled” meaning the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities or voting interests, by contract or otherwise.
 
(d)           “Person” means any individual, general partnership, limited
partnership, limited liability company, joint venture, trust, business trust,
cooperative, association or other entity of whatever nature.
 
17.           Notices.  All notices required or permitted under this Agreement
will be in writing and will be deemed given and made: (i) if by personal
delivery, on the date of such delivery, (ii) if by
 

 
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facsimile, on the date sent (as evidenced by confirmation of transmission by the
transmitting equipment), (iii) if by nationally recognized overnight courier, on
the next business day following deposit, and (iv) if by certified mail, return
receipt requested, postage prepaid, on the third business day following such
mailing; in each case addressed to the address or facsimile number shown below
for such Party, or such other address or facsimile number as such Party may give
to the other Party by notice:
 
If to Bunge:

Bunge North America, Inc.
11720 Borman Drive
St. Louis, Missouri 63146
Attn: Senior Vice President - Bunge Grain
Facsimile: 314-292-2110

with copy to:

Bunge North America, Inc.
11720 Borman Drive
St. Louis, Missouri 63146
Attn: General Counsel
Facsimile: (314) 292-2521

If to Producer:

Southwest Iowa Renewable Energy, LLC
10868 189th Street
Council Bluffs, Iowa 51503
Attn: General Manager
Facsimile: (712) 366-0394

with copy to:

David E. Gardels, Esq.
Husch Blackwell LLP
1620 Dodge Street, Suite 2100
Omaha, NE 68102
Facsimile: (402) 964-5050

18.           Entire Agreement; No Third Party Beneficiaries.  This Agreement
constitutes the entire agreement between the Parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between the Parties with respect to the subject matter
hereof.  This Agreement does not, and is not intended to, confer any rights or
remedies upon any person other than the Parties.
 
19.           Amendments; Waiver.  The Parties may amend this Agreement only by
a written agreement of the Parties.  No provision of this Agreement may be
waived, except as expressly
 

 
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provided herein or pursuant to a writing signed by the Party against whom the
waiver is sought to be enforced.  No failure or delay in exercising any right or
remedy or requiring the satisfaction of any condition under this Agreement, and
no “course of dealing” between the Parties, operates as a waiver or estoppel of
any right, remedy or condition.  A waiver made in writing on one occasion is
effective only in that instance and only for the purpose that it is given and is
not to be construed as a waiver on any future occasion or against any other
person.
 
20.           Assignment.  No Party may assign this Agreement, or assign or
delegate any of its rights, interests, or obligations under this Agreement,
voluntarily or involuntarily, whether by merger, consolidation, dissolution,
operation of law, or any other manner, without the prior written consent of the
other Party, and any purported assignment or delegation without such consent
will be void.  Despite the prior sentence, Bunge may assign this Agreement, or
assign or delegate any of its rights, interests, or obligations under this
Agreement, to any of its Affiliates without Producer’s prior written
consent.  Subject to the preceding sentences in this Section 20, this Agreement
binds and benefits the Parties and their respective permitted successors and
assigns.
 
21.           Severability.  If a court or arbitrator with proper jurisdiction
determines that any provision of this Agreement is illegal, invalid, or
unenforceable, the remaining provisions of this Agreement remain in full
force.  The Parties will negotiate in good faith to replace such illegal,
invalid, or unenforceable provision with a legal, valid, and enforceable
provision that carries out the Parties’ intentions to the greatest lawful extent
under this Agreement.
 
22.           Interpretation.  Each Party has been represented by counsel during
the negotiation of this Agreement and agrees that any ambiguity in this
Agreement will not be construed against one of the Parties.
 
23.           Further Assurances.  Each Party will execute and cause to be
delivered to the other Party such instruments and other documents, and will take
such other actions, as the other Party may reasonably request for the purpose of
carrying out or evidencing any of the transactions contemplated by this
Agreement.
 
24.           Counterparts.  This Agreement may be executed by the Parties by
facsimile and in separate counterparts, each of which when so executed will be
deemed to be an original and all of which together will constitute one and the
same agreement.
 
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed the
day and year first above written.
 
 

      SOUTHWEST IOWA RENEWABLE   BUNGE NORTH AMERICA, INC.     ENERGY, LLC      
        By: /s/ Eric Hakmiller   By: /s/ Brian T. Cahill               Name:
Eric Hakmiller   Name: Brian T. Cahill               Title: Vice-President  
Title: CEO and General Manager     Bunge Biofuels        

 
 
 
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EXHIBIT A
Production Standards

The Parties agree that the Production Standards shall be all of the standards
and requirements set forth in the current (as of the time of delivery of Ethanol
under this agreement) ASTM standard specifications for denatured fuel ethanol
for blending with gasolines for use as automotive spark ignition engine fuel.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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