Exhibit 10.1


 






* MATERIAL
HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND SUCH
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.  AN ASTERISK WITHIN BRACKETS
DENOTES OMISSIONS.


 


ETHANOL PRODUCT
OFF-TAKE AGREEMENT

BY AND AMONG

HEARTLAND GRAIN FUELS, LP AND

CONAGRA TRADE GROUP, INC.


 


This Ethanol Product Off-Take Agreement (the “Agreement”) is
made effective as of this 1st day of June, 2008 (the “Effective
Date”), by and among HEARTLAND GRAIN
FUELS, LP, a Delaware limited partnership (“Producer”), and CONAGRA TRADE GROUP, INC., a Delaware
corporation (“CTG”).


 


RECITALS


 


(a)           Producer will produce Ethanol
(also referred to herein as the “Product”) at facilities located in
Aberdeen and Huron, South Dakota (the “Plants”), with name plate
capacities of approximately fifty five (55) million gallons and thirty two (32)
million gallons, respectively, of Ethanol per Contract Year;


 


(b)           CTG is in the business of
purchasing Product and marketing and reselling such Product to third-parties;
and


 


(c)           Producer desires to deliver and
sell to CTG, and CTG desires to purchase and take from Producer, the Product
output of the Plants specified herein and CTG desires to provide certain
related services to Producer on the terms and subject to the conditions
contained in this Agreement.


 


AGREEMENT


 


NOW THEREFORE, in consideration of the above Recitals, which are
incorporated herein and made a part hereof, and the mutual promises and
covenants set forth herein, and intending to be legally bound, CTG and Producer
mutually agree as follows:


 


Article 1


DEFINITIONS


 


1.1                                “Acceptance
Deadline”  has the meaning
provided for in Section 6.2.1.


 


1.2                                “Actually
Placed” or “Actual Placement” means that such railcars have been
delivered to and received by Producer at the Plants.


 


1.3                                “Agreement” means this Ethanol Product Off-Take
Agreement and any exhibits or schedules attached hereto as the same may be
amended from time to time.


 


1.4                                “Annual
Forecast” has the meaning provided for in Section 4.1.1.


 


1.5                                “Bankruptcy”
has the meaning provided for in Section 13.1.6.


 


1.6                                “Bid”
has the meaning provided for in Section 6.2.1.


 

















 


1.7           “Business Day or Business Days”
means the hours from 8:00 a.m. to 5:00 p.m. Central Time excluding
Saturdays, Sundays, and scheduled holidays observed by the Chicago Board of
Trade, Chicago, Illinois, USA.


 


1.8           “Central Time” means the local
time in Omaha, Nebraska at any relevant time, taking into account daylight
savings time, if applicable.


 


1.9           “Commencement Date” means June 1,
2008.


 


1.10         “Confidential Information” has
the meaning provided for in Section 10.1.


 


1.11         “Confirmation” has the meaning
provided for in Section 6.2.1.


 


1.12         “Confirmed Price” has the
meaning provided for in Section 6.2.1.


 


1.13         “Constructively Placed” or “Constructive Placement” means either: (i) with respect to a
loaded shipment of Product by railcars, that such railcars are located at the
Delivery Point in such condition ready for shipment to or if the Producer’s
Constructively Placed designation is unavailable, then at such nearby location
as determined by the railroad, or (ii) with respect to receipt of railcars
for Product loading, that such railcars are located at the Delivery Point or if
the Producer’s Constructively Placed designation is unavailable, then at such
nearby location as determined by the railroad and within the operating hours
specified, in such condition ready for Producer’s use in fulfilling its
obligations hereunder.


 


1.14         “Contract Year” means a period
of twelve (12) consecutive months with the first Contract Year to begin on the Commencement
Date.


 


1.15         “Cross Default” has the meaning
provided for in Section 13.4.


 


1.16         This section intentionally deleted.


 


1.17         “CTG Service Fee” has the
meaning provided for in Section 6.5.


 


1.18         “Damages” has the meaning
provided for in Section 12.1.


 


1.19         “Delivery” means the Product has
crossed the point between the Terminal output apparatus and the intake
apparatus of the respective Transport Carrier.


 


1.20         “Delivery Point” means for
Transport Carriers the locations at the applicable Terminal or Plant where
Transport Carriers are received for loading of Product on the respective
Transport Carriers, as follows:


 


1.20.1                                          The Delivery Point for rail car
shipments is the railway’s “Constructively Placed” or “Actually
Placed” designation; and


 


1.20.2                                          The Delivery Point for trucks is
the point that the Products are loaded into the truck from the respective
Plant’s loading facility.


 


1.21         “Delivery Schedule” has the
meaning provided for in Section 5.3.


 


1.22         “Demurrage” means all costs,
damages, penalties and charges resulting from any delay in loading and/or
unloading of Product shipments, including, without limitation, any delay
related to any Transport Carrier, as applicable: (i) being incapable of timely
loading any shipment of Product due to mechanical failure or for other reasons,
or (ii) delivering any shipment of Product to an incorrect Delivery Point.


 


2

















 


1.23         “Designated Logistics Individual”  has the meaning provided for in
Section 5.2.


 


1.24         “Designated Pricing Individual”
has the meaning provided for in Section 6.1.


 


1.25         “DOT” means the United States
Department of Transportation.


 


1.26         “Effective Date” has the meaning
provided in the introductory paragraph.


 


1.27         “Ethanol”
means the product meeting the Specifications set forth in Exhibit “A”
attached hereto and incorporated herein by this reference.


 


1.28         “Event of Default” has the
meaning provided for in Section 13.1.


 


1.29         “Favorable Terms” has the
meaning provided for in Section 6.2.4.


 


1.30         “Force Majeure” has the meaning
provided for in Section 11.2.


 


1.31         “Forward
Market Services” has the meaning provided for in Section 9.1.


 


1.32         “Governing Body” means the
American Arbitration Association.


 


1.33         “Governing Body Arbitration Rules”
means the commercial arbitration rules of the Governing Body.


 


1.34         “Index Price” has the meaning
provided for in Section 6.2.


 


1.35         “Industrial Product” has the
meaning provided for in Section 6.4.


 


1.36         “Initial Term” has the meaning
provided for in Section 2.1.


 


1.37         “Invoice” has the meaning provided for in
Section 6.7.1.


 


1.38         “Invoice
Date” has the meaning provided
for in Section 6.7.1.


 


1.39         “Logistics” means activities
related to or connected with either (i) transporting, storing and
otherwise handling Product after Delivery to CTG hereunder, or
(ii) delivery of Transport Carriers to the Delivery Point for Product
loading.


 


1.40         “Nonconforming Product” has the
meaning provided for in Section 4.3.


 


1.41         “Party” shall mean either
Producer or CTG, as the context requires, and “Parties” shall mean both
Producer and CTG.


 


1.42         “Plants” has the meaning
provided for in the Recitals.


 


1.43         “Product” has the meaning provided for in the
Recitals and shall include Industrial Product.


 


1.44         “Production Forecast” has the
meaning provided in Section 4.1.2.


 


1.45         “Purchase Price” has the meaning
provided for in Section 6.2.1.


 


1.46         “Renewal Term” has the meaning
provided for in Section 2.2.


 


1.47         “Specifications” has the meaning
provided in Section 4.2.


 


3

















 


1.48         “Storage Costs” means direct or
indirect costs incurred by CTG or charged by a third-party for storing Product together
with insurance and all other charges incurred to third-parties in connection
with such storage, without markup by CTG.


 


1.49         “Taxes” has the meaning provided
for in Section 6.6.


 


1.50         “Term” has the meaning provided
for in Section 2.2.


 


1.51         “Terminal” means the site and
facilities of the applicable terminal operator serving the operations of the
respective Plant.


 


1.52         “Transaction Document” means any
and all other agreements entered into between the Parties concerning the
subject matter of this Agreement.


 


1.53         “Transport Carrier” means
railcars or trucks.


 


1.54         “Units” means gallons.


 


Article 2


TERM


 


2.1           Initial
Term.  Unless terminated
earlier according to its terms, this Agreement shall be in effect from and
after the Effective Date for one (1) year beginning on the Commencement
Date (the “Initial Term”).


 


2.2           Renewal
Term.  The Initial Term
may be extended for additional three (3) one year periods (each, a “Renewal
Term”) upon mutual written consent of the Parties executed at least [*]
prior to the end of the Initial Term or any Renewal Term (or shorter period to
which the Parties may mutually agree in a writing executed by the
Parties).  Collectively, the Initial Term
and any Renewal Term are referred to herein as the “Term”,


 


Article 3


PRODUCT PURCHASE


 


3.1           Sale/Purchase.
 Subject to Confirmations and
third-party sales referenced in Section 6.2 and the other terms and
conditions herein, on the Commencement Date and during each Contract Year
thereafter, Producer shall sell and make available for Delivery to CTG, and CTG
shall purchase and take Delivery of, one hundred percent (100%) of the Product
produced at the Plants, less an estimated up to 2,000,000 gallons annually of
Product which Producer is targeting for use in production of biodiesel, for
local sales promotions, and/or E-85 sales (hereinafter the “Retained Product”).  For clarification purposes, the Retained
Product shall be exempt from the foregoing Plant production output obligations
to CTG.  Producer estimates its output
production to be approximately eighty seven (87) million gallons of Ethanol for
each Contract Year.  All Product produced
at the Plants shall be subject to the terms of this Agreement.  Producer hereby represents and warrants that
it has no obligation or commitment to any third party with respect to the
delivery or sale of any ethanol to be produced at the Plant, and that any and
all such obligations and commitments that existed prior to the date hereof
(including with respect to Aventine Renewable Energy, Inc.) have been
terminated or otherwise fulfilled without liability to any Party hereto as of
the Commencement Date.


 


Article 4


PRODUCT QUANTITY AND
QUALITY


 


4.1           Quantity.  Except as otherwise stated in this Agreement
and except for the Retained Product, Producer shall sell its entire output of
Product produced at the Plants to CTG.   


 


4

















 


For Product sales and purchase
planning purposes, Producer shall provide to CTG, in form and substance
acceptable to CTG, its monthly production targets reflected in the then current
Annual Forecast and the Production Forecast (as those terms are defined below)
in accordance with the following:


 


	
  4.1.1

  	
   

  	
  Promptly after the Effective Date,
  Producer’s monthly Product production output forecast for the Plants for the
  Initial Term (the “Annual Forecast”);

  
	
   

  	
   

  	
   

  
	
  4.1.2

  	
   

  	
  Within ten (10) days prior to the
  first day of each calendar month during the Term, a written update of the
  Annual Forecast (collectively, the “Production Forecast”). The
  Production Forecast shall be prepared on a rolling twelve (12) month basis in
  the event the Initial Term is extended pursuant to Section 2.2. The
  Production Forecast shall be the best estimate by Producer of the Plants’
  Product production for the respective forecast periods. Producer shall have
  the right at any time on at least three (3) business days’ prior written
  notice to CTG to adjust the Production Forecast in its sole and absolute
  discretion, subject to the terms of this Agreement; provided, however, if any
  adjustment to Producer’s Production Forecast results in increased costs to
  CTG for replacement Product purchased from a third party or increased
  demurrage charges in respect of CTG’s confirmed orders, then Producer shall
  reimburse CTG for such costs limited to the actual increase in the cost of
  replacement product over the price of Product that is the subject of the
  confirmed order (including the net difference in shipping charges to the
  location specified in the Confirmed Order) and the actual increased demurrage
  charges associated with such Product. CTG agrees to use its commercially
  reasonable efforts to limit any such costs associated with schedule changes
  resulting from Producer’s adjustment of its Production Forecast.

  
	
   

  	
   

  	
   

  
	
  4.1.3

  	
   

  	
  On or before the first day of each calendar
  month during the Term, monthly written updates in writing or electronically
  concerning operations of the Plants and activities that relate to the output
  of Product;

  
	
   

  	
   

  	
   

  
	
  4.1.4

  	
   

  	
  On or prior to 8:30 a.m. Central Time
  of each day of operation, the estimated daily Product inventory balances of
  each Plant, Product production status and Product shipment information in
  writing or electronically;

  
	
   

  	
   

  	
   

  
	
  4.1.5

  	
   

  	
  Promptly after the Effective Date, and at
  least forty five (45) days prior to the beginning of each calendar year
  during the Term, written notice of any then-scheduled Plant shutdowns;

  
	
   

  	
   

  	
   

  
	
  4.1.6

  	
   

  	
  Prompt written notice, within twenty four
  (24) hours, of any event that has resulted or could reasonably be expected to
  result in an unscheduled Plant shut down, suspension or significant decrease
  in the Plants’ production of Product that was not reported or anticipated in
  the Production Forecasts provided for herein; and

  
	
   

  	
   

  	
   

  
	
  4.1.7

  	
   

  	
  Immediately upon request, such other
  information reasonably requested by CTG.

  



 


The quantity
of each Delivery of Product to CTG shall be established by origin weight or
origin metered volume prior to shipment and certified by Producer as of the
time of such weighing or metering. 
Producer shall measure either the weight or the volume of the shipments
on scales or metering equipment calibrated at least once yearly beginning on
the Commencement Date during the Term of this Agreement in accordance with the
USDA Grain Inspection, Packers & Stockyard’s Administration’s
applicable standards and which provide both gross and net 60° 


 


5

















 


Fahrenheit
temperature compensated gallons.  In the
event that the scale or metering equipment at the Plants is deemed faulty or
inoperable, then the quantity of Product shall be established by a replacement
scale or replacement metering system(s) which is/are certified as of the
time of such weighing or metering and which comply with the terms and
conditions of this Agreement and all applicable laws, rules and
regulations.


 


4.2           Quality.  Unless otherwise agreed by CTG in writing,
Producer represents and warrants that the Product produced at the Plants and
delivered to CTG (i) shall be free and clear of all liens and
encumbrances, (ii) shall comply in all material respects with any
applicable federal, state, and local laws, regulations and requirements governing
quality, naming, and labeling of Product, and (iii) except for any
Industrial Product (as defined herein) which may be as much as 9,000,000
gallons annually and produced at the Aberdeen I Plant, the specifications of
which shall be determined by Producer in its sole discretion, shall conform to
the specifications set forth in Exhibit “A” attached hereto (the “Specifications”).  The Specifications shall be deemed modified
upon mutual agreement or, without any further action by either of the Parties
hereto, from time to time to conform with legally mandated standards currently
in existence or as modified or amended.


 


	
  4.2.1

  	
   

  	
  Producer shall provide to CTG, on or prior
  to Delivery of any Product to CTG, a certificate representing an analysis of
  the Product to be sold to CTG, certifying and evidencing to the reasonable
  satisfaction of CTG that such Product (i) is free and clear of all liens
  and encumbrances, (ii) complies in all material respects with any applicable
  federal, state, and local laws, regulations and requirements governing
  quality, naming, and labeling of Product, and (iii) conforms to the
  Specifications. Producer, at its sole cost and expense, shall provide or
  cause to be provided all testing and related test equipment, which shall be
  calibrated at least once every six (6) months during the Term of this
  Agreement, at or in the vicinity of the Plants to determine, to CTG’s
  satisfaction, that the Product is compliant with the Specifications. CTG or
  CTG’s representative shall have the right to perform, at any time and at
  CTG’s sole expense, tests to determine whether or not the Product is in
  compliance with the Specifications. If the Product so tested does not conform
  to the Specifications, Producer shall reimburse CTG its actual costs in
  conducting such tests.

  
	
   

  	
   

  	
   

  
	
  4.2.2

  	
   

  	
  If Producer knows or reasonably suspects
  that any of the Product produced at the Plants are adulterated or misbranded,
  or do not conform to any warranty or Specification, Producer shall promptly
  notify CTG to such effect so that such Product can be tested before entering
  interstate commerce. If CTG knows or reasonably suspects that any of the
  Products produced by Producer at the Plants are adulterated, misbranded or
  non-conforming to the Specifications, then CTG may obtain independent
  laboratory tests of the Product in question. If such Product is tested and
  found to comply with all warranties and the Specifications made by Producer
  herein, then CTG shall be responsible for all applicable testing costs; and
  if the Product is found not to conform with such warranties and the
  Specifications, Producer shall be responsible for all applicable testing
  costs.

  
	
   

  	
   

  	
   

  
	
  4.2.3

  	
   

  	
  CTG’s payment for the Product, whether or
  not in conformance with this Agreement or any applicable Confirmation, does
  not constitute a waiver by CTG of CTG’s rights in the event the Product does
  not comply with the terms of this Agreement.

  
	
   

  	
   

  	
   

  
	
  4.2.4

  	
   

  	
  Producer shall, using standard sampling
  methodology, take an origin sample of the Product from each Transport Carrier
  before such shipment of the 

  



 


6

















 


	
   

  	
   

  	
  Product leaves each Plant. Producer shall
  label such samples to indicate the date of shipment and the Transport Carrier
  number involved. Unless the Parties agree otherwise, Producer shall store
  such samples at the Plants for testing by CTG, at CTG’s sole discretion, for
  a period of six (6) months, at which time Producer may include the
  sample Product in future shipments to CTG.

  
	
   

  	
   

  	
   

  
	
  4.2.5

  	
   

  	
  If requested by CTG, Producer shall provide
  all information to CTG pursuant to this Section 4.2 in electronic form.

  



 


4.3           Nonconforming
Product.  In the event the
Product delivered to CTG is determined to be nonconforming to the
Specifications or otherwise nonconforming in any material respect to any other
representation or warranty made by Producer herein (the “Nonconforming
Product”), CTG shall notify Producer of CTG’s rejection of such
Nonconforming Product in writing within two (2) Business Days of determining
that such Product is a Nonconforming Product. 
CTG shall provide a copy of the certified laboratory report(s) evidencing
the nonconformity.  Producer will then
direct CTG to either (i) sell the Nonconforming Product at a discounted
price, or (ii) return the Nonconforming Product to Producer, each at
Producer’s sole cost and expense. 
Producer shall replace the Nonconforming Product with an acceptable type
and/or quality of Product within two (2) Business Days of receipt of
written notice that the delivered Product is nonconforming.  In the event Producer is unable to replace
the Nonconforming Product within said two (2) day period, CTG shall have
the option in CTG’s sole, absolute and unreviewable discretion to return the
Nonconforming Product, withhold payment therefor and purchase replacement
Product.  Producer will be responsible
for the difference in cost between the higher cost replacement Product and the
cost of Producer’s Product which is the subject of the confirmed order, and the
costs of returning or disposing of any such Nonconforming Product.  Such costs may include, without limitation,
reasonably incurred Storage Costs or costs reasonably incurred by CTG to return
such Nonconforming Product to Producer. 
If such Nonconforming Product is sold by CTG at a discount, the Purchase
Price payable by CTG may be reasonably adjusted by CTG by the amount of such
discount and payment shall be made according to this Agreement.


 


Article 5


DELIVERY, SCHEDULING
AND LOGISTICS


 


5.1           Delivery.  Delivery of Product hereunder shall take
place at the applicable Delivery Point for Product and in accordance with the
applicable Confirmation.


 


5.2           Designated
Logistics Individual.  At
all times from the Commencement Date until the expiration of the Term, Producer
shall designate (and may re-designate from time to time) in writing to CTG, a
qualified, full-time, individual for daily operational and Logistics issues who
shall interact directly with CTG relating to such matters and shall have full,
binding authority on behalf of Producer for all operational and Logistics
matters with respect to the transactions contemplated herein (the “Designated
Logistics Individual”).


 


5.3           Delivery
Schedule.  The
Parties shall jointly develop a delivery schedule (the “Delivery Schedule”),
the format of which will be mutually agreed upon by the Parties, which will
serve as the formal planning tool for Logistics purposes for each calendar
quarter and each month of the calendar quarter. 
The initial draft of each Delivery Schedule shall be submitted by
Producer to CTG no later than ten (10) Business Days prior to the end of
each calendar quarter.  The Delivery
Schedule shall pertain to the second calendar quarter following the calendar
quarter in which the Delivery Schedule is submitted to CTG and shall reflect
Product delivery requirements (e.g., the Delivery Schedule submitted prior to
the end of the quarter ending December 31 will cover the quarter beginning
April 1 and ending June 30). 
The use of the Delivery Schedule shall commence for the first calendar
quarter in which Product production at 


 


7

















 


the Plants is forecasted.  The initial draft of the Delivery Schedule
shall reflect a three (3) month daily forecast and shall include:


 


	
  5.3.1

  	
   

  	
  Submission date;

  
	
   

  	
   

  	
   

  
	
  5.3.2

  	
   

  	
  Production plan with estimated production
  quantities of Product;

  
	
   

  	
   

  	
   

  
	
  5.3.3

  	
   

  	
  Estimated start-of-quarter inventory of
  Product by and in Units;

  
	
   

  	
   

  	
   

  
	
  5.3.4

  	
   

  	
  Comments regarding operations, scheduled
  shutdowns, and other comments relating to market, Logistics, and inventory
  management; and

  
	
   

  	
   

  	
   

  
	
  5.3.5

  	
   

  	
  Should any changes from the Delivery
  Schedule be anticipated for the subsequent three (3) calendar quarters,
  Producer shall communicate such changes in writing together with the above information.
  Such changes could include: production rates per month, quantities of Product
  to be produced and a list of special operational and delivery considerations.

  



 


5.4           CTG’s
Covenants.  CTG
shall be responsible for the coordination and management of Logistics which
arise after Delivery and for delivery of Transport Carriers to the Delivery
Point for Product loading, except as otherwise stated herein, CTG covenants and
agrees to:


 


	
  5.4.1

  	
   

  	
  Secure and maintain all necessary
  agreements, licenses, documents and contracts related to the transport of the
  Product from the Delivery Point;

  
	
   

  	
   

  	
   

  
	
  5.4.2

  	
   

  	
  Establish, monitor and communicate
  Logistics-related data to Producer as reasonable to ensure the shipment of
  Product in accordance with the applicable Delivery Schedule;

  
	
   

  	
   

  	
   

  
	
  5.4.3

  	
   

  	
  Provide Producer with estimated annual
  Product requirements and delivery schedules to assist Producer in preparing
  the Delivery Schedule;

  
	
   

  	
   

  	
   

  
	
  5.4.4

  	
   

  	
  Except as otherwise expressly provided
  herein, secure and supply to Producer in connection with Delivery of Products
  herein all Transport Carriers (the owner or lessee of which shall be CTG and
  not Producer), and bear all costs relating to same, and advise Producer on
  tracking Transport Carriers and applicable respective estimated times of arrival
  therefore in an effort to reduce Demurrage and other costs; and

  
	
   

  	
   

  	
   

  
	
  5.4.5

  	
   

  	
  Schedule the loading and shipping of all
  outbound Product purchased hereunder and shipped by Transport Carrier.

  
	
   

  	
   

  	
   

  
	
  5.4.6

  	
   

  	
  Comply in all material respects with all
  applicable federal, state, and local laws, regulations and requirements
  regarding the shipment of Product from the Plants including, but not limited
  to, all DOT requirements relating to the shipment of hazardous materials or
  otherwise applicable to the shipment of the Product (e.g. proper paperwork,
  rail cars meeting DOT requirements, etc.);

  



 


5.5           Producer’s
Covenants. 
Producer shall be responsible for the coordination and management of
transporting, storing and otherwise handling Product up through completion of
Delivery of the Product to CTG and, except as otherwise stated herein, Producer
covenants and agrees to:


 


8

















 


	
  5.5.1

  	
   

  	
  Provide a qualified, full-time, designated
  individual for daily shipping, storage, and such matters up through Delivery;

  
	
   

  	
   

  	
   

  
	
  5.5.2

  	
   

  	
  Comply in all material respects with all
  applicable federal, state, and local laws, regulations and requirements
  regarding the labeling and shipment of Product applicable to Producer in
  connection with Delivery of Product at the Plants including, but not limited
  to, all DOT requirements relating to the labeling and shipment of hazardous
  materials or otherwise applicable to the labeling and shipment of the Product
  (e.g. proper paperwork, rail cars meeting DOT requirements, etc.);

  
	
   

  	
   

  	
   

  
	
  5.5.3

  	
   

  	
  Provide to CTG and CTG’s representatives
  access to the Plants in a manner and at all times reasonably necessary and
  convenient for CTG to take Delivery of the Product;

  
	
   

  	
   

  	
   

  
	
  5.5.4

  	
   

  	
  Provide all labor, facilities and equipment
  necessary to load the Transport Carriers and consummate Delivery of the
  Product at no charge to CTG;

  
	
   

  	
   

  	
   

  
	
  5.5.5

  	
   

  	
  Handle the Product in a good and
  workmanlike manner in accordance with CTG’s requirements, all governmental
  regulations and in accordance with normal industry practice;

  
	
   

  	
   

  	
   

  
	
  5.5.6

  	
   

  	
  Maintain all loading facilities at the
  respective Terminal and Delivery Point in a safe operating condition in
  accordance with normal industry standards;

  
	
   

  	
   

  	
   

  
	
  5.5.7

  	
   

  	
  Prior to Delivery, inspect all applicable
  Transport Carriers in accordance with industry standards to ensure that the
  same are free of debris and foreign material that are prohibited under
  applicable laws or industry standards, free of odor and visually
  ascertainable contamination, and free of leaks from the Transport Carrier
  valves, and immediately notify CTG upon the discovery of or suspicion of the
  presence of such items to allow the Parties to coordinate the removal of such
  contaminants or arrange for substitute transportation equipment;

  
	
   

  	
   

  	
   

  
	
  5.5.8

  	
   

  	
  Use commercially reasonable efforts to load
  all Transport Carriers to full capacity at the Delivery Point. In the event
  that a Transport Carrier is not loaded to full capacity due to Producer’s
  failure to use such commercially reasonable efforts, Producer shall pay that
  portion of freight charges allocable to the unused capacity of the applicable
  Transport Carrier and shall notify CTG within one (1) Business Day of
  the occurrence of such partial load;

  
	
   

  	
   

  	
   

  
	
  5.5.9

  	
   

  	
  Provide, at Producer’s sole cost and
  expense, storage capacity for a minimum of three (3) calendar days
  production of Product at the Plants, in accordance with industry standard and
  all applicable state and federal regulations; and

  
	
   

  	
   

  	
   

  
	
  5.5.10

  	
   

  	
  Provide CTG with such accounting, financial
  and other information as may be requested in order for CTG to monitor and
  assess Producer’s credit status during the Term.

  



 


5.6           Producer’s
Demurrage Obligations. 
Producer shall be responsible for Demurrage and other applicable freight
and storage penalties which may accrue during the period commencing after the
Transport Carriers are received by Producer for loading of Product on the
respective Transport Carriers and ending when Transport Carriers are loaded and
ready for shipment at the Delivery Point, but only to the extent that such
penalties arise as a result of Producer’s conduct in its performance under this
Agreement.


 


9

















 


5.7           Notification of Problems
with Delivery.


 


	
  5.7.1

  	
   

  	
  CTG shall inform Producer of any problem
  regarding any Delivery or shipment of Product within one (1) Business Day by
  facsimile or email, and telephone, after CTG becomes aware of any such
  problem. An example of such problem(s) includes, but is not limited to,
  a difference in the quantity of the Delivery of Product from that quantity
  set out in the applicable Confirmation.

  
	
   

  	
   

  	
   

  
	
  5.7.2

  	
   

  	
  Producer shall inform CTG of any problem
  regarding any Delivery or shipment of Product within one (1) Business Day by
  facsimile or email, and telephone, after Producer becomes aware of any such
  problem. An example of such problem(s) includes, but is not limited to,
  Product having a different quantity than originally set out in the
  Confirmation.

  



 


Article 6


PRICING AND PAYMENTS


 


6.1           Designated
Pricing Individual.  At
all times from the Commencement Date until the expiration of the Term, Producer
shall designate (and may re-designate from time to time) in writing to CTG a
qualified, full-time individual to interact directly with CTG for all pricing
and payment matters who shall have full, binding authority on behalf of
Producer for all pricing, billing, and payment matters with respect to the
transactions contemplated herein (the “Designated Pricing Individual”).  The Designated Logistics Individual and the
Designated Pricing Individual may be the same individual.


 


6.2           Confirmation Process.


 


	
  6.2.1

  	
   

  	
  CTG shall
  bid to Producer for the purchase of Product produced at the Plants either
  orally, in writing, or electronically (the “Bid”). CTG shall include
  in the Bid the quantity, shipment period and the price for such Product.
  Producer shall communicate in writing or electronically, its acceptance or
  rejection of the Bid prior to 5:00 p.m. Central Time on the day CTG
  provides the bid to Producer (the “Acceptance Deadline”), at which
  time such Bid shall automatically expire and no longer be of any effect.
  Notwithstanding the foregoing, prior to Producer’s acceptance of the Bid, CTG
  reserves the right in CTG’s sole, absolute and unreviewable discretion, to
  modify or withdraw the Bid and communicate in writing or electronically, such
  modification or withdrawal to Producer. In the event Producer fails to accept
  or reject a Bid prior to the Acceptance Deadline, such Bid shall be deemed
  rejected. Upon the acceptance of a Bid, and in any event not later than one
  business day after acceptance of the Bid, CTG shall deliver to Producer by
  facsimile (fax), electronic communication (email), or other means of
  delivery, a written Confirmation of Purchase and Sale Transaction
  substantially in the form attached hereto as Exhibit “B” and
  incorporated herein by this reference (the “Confirmation”). The
  Confirmation shall include the type and quantity of Product to be purchased
  by CTG and the firm purchase price in U.S. dollars/Unit for such Product (the
  “Confirmed Price”). The Confirmed Price less the CTG Service Fees (as
  defined below) is referred to herein as the “Purchase Price” payable
  by CTG for the Product.

  
	
   

  	
   

  	
   

  
	
  6.2.2

  	
   

  	
  As an
  alternative to Bid pricing, Producer may sell Product based on the index
  pricing set forth on Exhibit “C”

  (the “Index Price”). Product to be sold and purchased using the Index
  Price shall be memorialized using Confirmations, with the actual Confirmed
  Price and Purchase Price to be determined one (1) week prior to
  shipment.

  



 


10

















 


	
  6.2.3

  	
   

  	
  Producer
  shall have the right to establish “flat pricing” of Product for up to ninety
  (90) days forward. It is understood that the tenor of any financial contracts
  and any flat pricing beyond ninety (90) days, will be analyzed on a
  case-by-case basis commensurate with Producer’s financial and credit status
  as determined by CTG in its sole discretion.

  
	
   

  	
   

  	
   

  
	
  6.2.4

  	
   

  	
  [*].

  



 


6.3           This Section Intentionally
Deleted.


 


6.4           Industrial
Product.  Except as
otherwise expressly provided herein, Industrial Product shall be considered
Product hereunder and shall be subject to all of the terms and conditions
herein.  Notwithstanding any provision
herein to the contrary: (i) Industrial Product shall be subject to a CTG
Service Fee equal to [*] per Unit (not [*] per Unit as per Section 6.5); (ii) Industrial
Product shall not be subject to the [*] provisions set forth in Section 6.2.4
above; and (iii) CTG shall bear all costs of Logistics pertaining to
Industrial Product Delivered to CTG hereunder. 
“Industrial Product” means ethanol produced by Producer which is
intended for use other than as a fuel or fuel additive, including without
limitation use as a food or food ingredient.


 


6.5           CTG
Service Fees.  In
consideration for CTG’s agreement to purchase Product hereunder, and other
obligations contained herein, CTG shall deduct from the Confirmed Price for all
Product sold to CTG under this Agreement, a service fee equal to [*] per Unit
(the “CTG Service Fee”).


 


6.6           Taxes.  Producer shall pay or cause to be paid all
valid levies, assessments, duties, rates and taxes (together “Taxes”) on
Product sold to CTG hereunder that arise prior to, or at the time and as a
result of, the sale of such Product to CTG. 
CTG shall pay or cause to be paid all Taxes, including fuel or excise
Taxes, on Product that arise after the sale of Product by Producer to CTG
hereunder.  Any and all state or federal
tax, production, investor, or U.S. excise credits, any and all emissions
credits, other government incentives or credits or benefits relating to the
production of Product or the sale thereof to CTG, shall inure solely to the
benefit of Producer.


 


6.7           Billing and Payment.


 


	
  6.7.1

  	
   

  	
  Invoice. Within one business day of
  Delivery of Product to CTG (each an “Invoice Date”), Producer will
  provide an invoice to CTG, in writing or electronically, setting forth the
  amounts due from CTG with respect to such Delivery of Product (the “Invoice”).

  
	
   

  	
   

  	
   

  
	
  6.7.2

  	
   

  	
  Payment Due. CTG shall issue payment to
  Producer by electronic or wire transfer within [*] business days after
  Delivery of the Product referenced on the applicable Invoice.

  



 


Article 7


REPRESENTATIONS AND
WARRANTIES


 


7.1           Representations,
Warranties and Covenants. 
Producer and CTG each represent, warrant and covenant to the other that:


 


	
  7.1.1

  	
   

  	
  Such Party
  is duly organized, validly existing, and in good standing under the laws of
  the state of its formation, has registered as a foreign entity in those
  jurisdictions where such registration is required, and has the power and authority
  to own and operate its properties and to carry on its business as now being
  conducted;

  



 


11
















 


7.1.2              Such
Party is duly authorized to execute and deliver this Agreement and any
Confirmations, perform the covenants contained herein and therein, to
consummate the transactions contemplated hereby, and to execute, deliver and
perform all documents and instruments to be executed and delivered by such
Party pursuant hereto, and all required action in respect to the foregoing has
been taken by such Party;


 


7.1.3              When
executed and delivered, this Agreement, any Confirmations, and all of the
documents and instruments described herein and therein, will constitute valid
and binding obligations of the Parties thereto, enforceable against the
Parties, in accordance with their respective terms;


 


7.1.4              The
execution and delivery of this Agreement and any Confirmations, and the
performance of or compliance with the terms and provisions of this Agreement
and any Confirmations will not conflict with, or result in a breach of, a
default under, or accelerate any agreement, lease, license, undertaking or any
other instrument or obligation of any kind or character to which such Party is
a party or by which such Party or the Product may be bound, and will not
constitute a default thereunder or result in the declaration or imposition of
any lien, charge or encumbrance of any nature whatsoever upon any of the
Product;


 


7.1.5              Except
as set forth in 15.2, it (i) has not assigned, transferred, created or
permitted to exist any lien or other encumbrance on, or otherwise disposed of,
or purported to assign, transfer, create or permit to exist any lien or other
encumbrance on, or otherwise dispose of any of its rights to any amounts that
may be owed to it under this Agreement to any third-party, and (ii) covenants
that, so long as this Agreement is in effect, it will not assign, transfer,
create or permit to exist any lien or other encumbrance on, or otherwise
dispose of or purport to assign, transfer, create or permit to exist any lien
or other encumbrance on, or otherwise dispose of any of its rights to any
amounts that may be owed to it under this Agreement, to any third-party;


 


7.1.6              It
is not relying upon any representations of the other Party, other than those
expressly set forth in this Agreement or any Confirmation issued pursuant
thereto; and


 


7.1.7              It
has entered into this Agreement with a full understanding of the material terms
and risks of the same, and it is capable of assuming those risks.


 


Article 8

POSSESSION AND TITLE


 


8.1           Title;
Risk of Loss.  The Product
to be sold by Producer shall be delivered FOB the Delivery Point; provided that
title to, possession of, and risk of loss of or damage to the Product meeting
the Specifications and delivered according to this Agreement shall transfer
from Producer to CTG at Delivery of the Product.  Until such time, Producer shall be deemed to
be in control of and in possession of and shall have title to and risk of loss
of and in the Product.  Notwithstanding
anything herein to the contrary, in the case of Product rejected as
Nonconforming and returned to Producer pursuant to Section 4.3 by CTG, the
title and risk of loss to such Product shall pass to Producer promptly upon the
written notice of rejection thereof by CTG provided to, and received by,
Producer.


 


8.2           Responsibility
for Product.  CTG shall
have no responsibility or liability with respect to any Product delivered under
this Agreement until Delivery.  Without
prejudice to CTG’s right to reject Nonconforming Product as set forth in Section 4.3
and without affecting 


 


12

















 


Producer’s liability for the
Delivery of Nonconforming Product, Producer shall have no responsibility or
liability with respect to the Product after Delivery or on account of anything
which may be done or happen to arise with respect to such Product after such Delivery
except as otherwise expressly provided for herein.


 


Article 9

FORWARD MARKET SERVICES


 


9.1           Services.  During the Term and for no additional cost to
the Producer, CTG will (i) review Product positions and current market
conditions relating to purchases of Product, (ii) provide basis quotes,
index quotes and price quotes for nearby and forward markets on an as needed
and requested by Producer basis if available in the market, and (iii) provide
Producer with daily mark-to-market position reporting for all fixed price and
open positions for the activities at the Plants, each for the purpose of
supporting Producer’s risk management policies 
(the “Forward Market Services”).


 


9.2           No
Liability.  CTG and
Producer acknowledge that Product markets are volatile and subject to events
over which neither CTG nor Producer have any control.  Producer acknowledges that (i) any
provision of Forward Market Services by CTG is provided as a courtesy to
Producer at no charge and is for informational purposes only and (ii) any
decisions concerning Producer’s risk management strategies and the
implementation of such strategies by it, are and will be made solely by
Producer and are the sole responsibility of Producer.  CTG is not responsible for any losses,
liabilities, costs, or expenses incurred by Producer or entitled to any gains
of Producer, resulting from any Forward Market Services supplied by CTG.   IN NO EVENT SHALL CTG OR PRODUCER BE LIABLE
TO THE OTHER PARTY FOR ANY DAMAGES OF ANY NATURE, INCLUDING BUT NOT LIMITED TO,
INDIRECT, CONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES, LOSS OF BUSINESS
EXPECTATIONS OR PROFITS OR BUSINESS INTERRUPTIONS, ARISING IN ANY WAY OUT OF
THE PROVISION OF THE FORWARD MARKET SERVICES.


 


Article 10

CONFIDENTIALITY


 


10.1         Confidential
Information.  For purposes
of this Agreement, the term “Confidential Information” shall mean any
information which is disclosed by one Party to the other pursuant to this
Agreement and which is oral, written, graphic, machine readable or other
tangible form, whether or not marked or identified as confidential or
proprietary.  Confidential Information
shall not include any information which is (a) already known to the
recipient, (b) already in the public domain, (c) lawfully disclosed
to it by a third party, or (d) legally required to be disclosed by the
recipient.


 


10.2         Producer
Nondisclosure.  Producer
acknowledges that, by reason of this Agreement, it may become privy to
Confidential Information belonging to CTG. 
With the exception of its investors, legal advisors, financial advisors,
accountants and/or lenders, their agents, representatives, or employees
(hereinafter “Producer’s Parties”), Producer shall not, without the prior
written consent of CTG, and except as otherwise required by law, disclose to
any third parties or use for Producer’s own benefit any CTG Confidential
Information, except for the intended use pursuant to this Agreement.  Producer shall inform any of Producer’s
Parties and any consented-to third parties to whom Producer intends to disclose
Confidential Information of the confidential nature of such Confidential
Information and shall ensure that such persons are bound by confidentiality
obligations similar to those set forth herein. 
The confidentiality obligations hereunder shall survive any expiration
or termination of this Agreement and any Transaction Document for a period of
two (2) years.  Notwithstanding the
foregoing, Producer may disclose the provisions of this Agreement to Producer’s
Parties


 


13

















 


provided such parties have
agreed in writing to be bound by the confidentiality obligations of this Article 10.


 


10.3         CTG
Nondisclosure.  CTG
acknowledges that, by reason of this Agreement, it may become privy to
Confidential Information belonging to Producer. 
CTG shall not, without the prior written consent of Producer, disclose
to any third parties any such Confidential Information.  The confidentiality obligations hereunder
shall survive any expiration or termination of this Agreement for a period of
two (2) years.


 


10.4         Term of
Confidentiality Agreement. 
The Parties hereby agree that the term of any Confidentiality Agreement
by and between the Parties, or by the Producer for the benefit of CTG, is
hereby extended, and shall remain the binding obligation of Producer until the
later of (i) the expiration of such Confidentiality Agreement in
accordance with its terms, or (ii) two (2) years following the
expiration of the Term of this Agreement, and further agree that the provisions
of this Article 10 shall supersede over any conflicting provisions
contained in such Confidentiality Agreement(s).


 


Article 11

FORCE MAJEURE


 


11.1         Force
Majeure.  In the event either Party hereto is
rendered unable by reason of Force Majeure to carry out its obligations under
this Agreement, upon such Party giving written notice of such Force Majeure to
the other Party as soon as possible after the occurrence of the cause relied
on, the obligations of the Party giving such notice, so far as they are
affected by Force Majeure, shall (except as otherwise provided in Article 13)
be suspended during the continuance of any inability so caused, but for no
longer period, and such cause shall, so far as reasonably possible, be remedied
with all reasonable dispatch.


 


11.2         Definition
of Force Majeure.  The
term “Force Majeure,” as used in this Agreement, shall mean any cause
not reasonably within the control of the Party claiming suspension and which,
by the exercise of commercially reasonable efforts, such Party is unable to
prevent or overcome.  Such term shall
include, but not be limited to: acts of God, acts of the public enemy
(including terrorism), wars, blockades, insurrections, riots, epidemics,
landslides, lightning, earthquakes, fires, floods, storms, washouts or other
inclement weather resulting in a delay of the movement, loading or off-loading
of Transport Carriers, or the inability of Producer or CTG to sell or resell
the Product due to governmental action or embargo, all of which shall be beyond
the reasonable control of the Party claiming Force Majeure.  In no event shall Force Majeure include any
economic or commercial changes or events affecting the purchase, sale,
transport or production of Product, except to the extent that such economic or
commercial changes or events result from any of the foregoing Force Majeure
causes.


 


11.3         Sale of
Product Upon CTG Claim of Force Majeure.  If CTG is the Party claiming Force Majeure,
Producer may, upon written notice to CTG, sell the Product to third-parties
during the duration of the Force Majeure event, but only to the extent of CTG’s
inability to perform or CTG’s delay in performance of this Agreement.


 


Article 12

INDEMNITY AND LIMITATIONS ON LIABILITY


 


12.1         Indemnification
by Producer.  Except as
may be otherwise provided in this Agreement, and subject to the limitations in Section 12.3
herein, Producer shall indemnify, defend and hold harmless CTG, its affiliates
and their respective officers, directors, employees, agents, members, managers,
shareholders and representatives from and against any and all claims,
liabilities, actions, losses, damages, fines, penalties, costs and expenses
(including reasonable attorneys fees) (collectively “Damages”) actually
suffered by CTG resulting from or


 


14

















 


arising in connection with
claims (x) for personal injury or tangible or real property damage, or (y) by
third parties, in either case to the extent arising out of (a) any
negligence or willful misconduct of Producer or any of its officers, directors,
employees, agents, representatives and contractors hereunder; or (b) any
material breach of this Agreement or any Transaction Document by Producer.


 


12.2         Indemnification
by CTG.  Except as may be
otherwise provided in this Agreement, CTG shall indemnify, defend and hold
harmless Producer, its affiliates and their respective officers, directors,
employees, agents, members, managers, shareholders and representatives from and
against any and all Damages actually suffered by Producer resulting from or arising
in connection with claims (x) for personal injury or tangible or real
property damages, or (y) by third parties, in either case to the extent
arising out of (a) any gross negligence or willful misconduct of CTG or
any of its officers, directors, employees, agents, representatives and
contractors hereunder; or (b) any material breach of this Agreement by
CTG.


 


12.3         Limitation
of Liability.  IN NO EVENT
SHALL PRODUCER OR CTG BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT,
CONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES, LOSS OF BUSINESS EXPECTATIONS OR
PROFITS OR BUSINESS INTERRUPTIONS ARISING IN ANY WAY OUT OF THIS AGREEMENT, ANY
OF THE TRANSACTION DOCUMENTS, OR ANY BREACH OF THIS AGREEMENT OR ANY OF THE
TRANSACTION DOCUMENTS.


 


Article 13

DEFAULT AND TERMINATION


 


13.1                           Event of Default.  An “Event of Default” shall mean, in
addition to the other matters described in this Article 13, with respect
to a Party, the occurrence of any of the following events:


 


13.1.1                The
failure to make, when due, any payment required pursuant to this Agreement or
any Transaction Document;


 


13.1.2                Any
representation or warranty made by such Party herein or any Transaction
Document is false or misleading in any material respect when made or when
deemed made;


 


13.1.3                The
failure to perform any material covenant, condition, or obligation set forth in
this Agreement or any Transaction Document;


 


13.1.4                This
section intentionally deleted;


 


13.1.5                Either
party directly or indirectly, including by operation of law, transfers,
assigns, sells, or disposes of all or substantially all of its assets or any
rights or obligations under this Agreement, without the prior written consent
of the other party, which shall not be unreasonably withheld, except to the
extent such transfer, assignment, sale or disposition is otherwise specifically
permitted by clause (iii) of Section 15.2 of this Agreement; or


 


13.1.6                Any
Party herein shall become insolvent, or shall suffer or consent to or apply for
the appointment of a receiver, trustee, custodian or liquidator of itself or
any of its property, or shall generally fail to pay its debts as they become
due, or shall make a general assignment for the benefit of creditors; any Party
hereunder shall file a voluntary petition in bankruptcy, or seek
reorganization, in order to effect a plan or other arrangement with creditors
or any other relief


 


15

















 


under the
Bankruptcy Code, Title 11 of the United States Code, as amended or recodified
from time to time, or under any state or federal law granting relief to debtors
(collectively “Bankruptcy”).


 


13.2         Right to
Cure.  If an Event of
Default is not cured within fifteen (15) days (or two (2) business days
with respect to clause 13.1.1) after receipt of a notice thereof from the non-defaulting
Party, the non-defaulting Party may, at any time after the applicable cure
period, terminate this Agreement by written notice.  Notwithstanding the foregoing provision, no
cure period shall apply to Bankruptcy and Producer or CTG may, upon the
occurrence of any of the above regarding the other party, immediately suspend
further performance under this Agreement or any Transaction Document, with or
without giving notice of such default or notice of termination.


 


13.3         Non-Waiver
of Future Default.  No
waiver by either Party of any Event of Default by the other Party in the
performance of any of the provisions of this Agreement or any Transaction
Document will operate or be construed as a waiver of any other or future
default or defaults, whether of a like or of a different character.


 


13.4         Cross
Default.  The occurrence
and continuance of an Event of Default under this Agreement or any Transaction
Document, now existing or entered into hereafter, shall constitute, at the
election of the non-defaulting Party, in its sole, absolute and unreviewable
discretion, an Event of Default under this Agreement or any such Transaction
Document, or combination of such agreements (together the “Cross Default”).  A waiver of a Cross Default by the
non-defaulting Party pursuant to this Section 13.4 shall not operate or be
construed as a waiver of any other Event of Default or Cross Default.


 


13.5         Termination
by Mutual Agreement.  This
Agreement may be terminated upon mutual written agreement between the Parties.


 


13.6         Termination
By Either Party.  Either
Party may for any reason terminate this Agreement by providing written notice
thereof at least [*] prior to termination.


 


13.7         This section
intentionally deleted.


 


13.8         Termination
for Force Majeure.  In the
event that Force Majeure shall continue for a period of ninety (90) days from
the date the Party claiming relief due to Force Majeure gives the other Party
notice thereof, the Party not claiming such relief shall have the right to
terminate this Agreement by furnishing written notice to the Party claiming
Force Majeure relief, with termination effective upon the expiration date of
such ninety (90) day period.  Upon such
termination, each Party shall be relieved from its respective obligations,
except for obligations for payment of monetary sums which arose prior to the
event of Force Majeure and obligations pursuant to Article 10 and Section 13.9
herein.


 


13.9         Rights
and Obligations on Termination or Default.  Upon termination of, or default under, this
Agreement, whether contained in this Article 13 or otherwise contained in
this Agreement:


 


13.9.1      Any rights of CTG or Producer to payments accrued
through termination of this Agreement shall remain in effect and, unless
otherwise specified herein, all payments and monetary obligations of the
respective Parties required pursuant to this Agreement and any Transaction
Document shall be made pursuant to this Agreement.


 


13.9.2      In addition to other remedies available, if
Producer defaults in Producer’s obligation to deliver Product under Confirmed
Orders, then CTG may, but shall


 


16

















 


not be
obligated to, “cover” by purchasing Product from third parties.  Producer shall pay to CTG the amount, if any,
by which (i) the cost of such third-party Product, including all
reasonable costs and expenses associated with the purchase of Product from
third parties, plus a CTG Service Fee for such amounts of Product purchased,
exceeds (ii) the Confirmed Price of Product.  Payments due and owing under this Section 13.9.2
shall be made pursuant to this Agreement.


 


13.9.3      In
addition to other remedies available, if CTG defaults in CTG’s obligation to
purchase Product under Confirmed Orders, Producer may, but shall not be
obligated to, “cover” by selling its Product to third parties.  CTG shall pay to Producer the amount, if any,
by which (i) the Confirmed Price of such Product, less the related CTG
Service Fee, plus other reasonable costs and expenses associated with Producer’s
sale of Product to third parties, exceeds (ii) the net price to such third
party.  Payments due and owing under this
Section 13.9.3 shall be made pursuant to this Agreement. In the event that
CTG fails to purchase all of the Product included in the Production Forecast or
otherwise actually produced by Producer, then Producer may sell such Product
not purchased by CTG to third-parties but only to the extent of CTG’s failure
to purchase such Product and without any liability to CTG hereunder.


 


13.9.4      This section intentionally deleted.


 


13.10       Cumulative
Rights and Remedies.  The
rights and remedies under this Article 13 are cumulative and not
exclusive.  Upon default (whether or not
an Event of Default) or termination, the non-defaulting Party shall
additionally have such other and further rights as may be provided at law or in
equity, including all rights of set-off as contained in this Agreement, and
such rights may be exercised in such order and combination as the
non-defaulting Party may determine.


 


Article 14

INSURANCE


 


14.1         Insurance
Requirements.  Producer
and CTG shall be required to purchase, maintain and provide proof (via
Certificate of Insurance) of the insurance set forth on Exhibit “D”.


 


Article 15

MISCELLANEOUS


 


15.1         No Press
Releases or Public Announcements.  Except as otherwise mandated by applicable
law, no Party may issue, or otherwise permit to be issued, any press release or
other public announcement relating to the subject matter or existence of this
Agreement without the prior written approval of the other Party, which approval
may be withheld in such Party’s sole discretion.  Additionally, the Parties acknowledge that a
Confidentiality Agreement, as describe in Section 10.4 above, may have
been entered into between the Parties relating to the transactions contemplated
herein.  For purposes hereof, the Parties
agree and acknowledge that the mere existence of this Agreement shall be deemed
confidential information, without regard to whether such a Confidentiality
Agreement has been entered into, and shall not be disclosed, except as
otherwise specifically permitted hereunder, without the prior written consent
of CTG or Producer, which consent shall not be unreasonably withheld.


 


15.2         Assignment.  Neither Party may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
Party, not to be unreasonably withheld. 
A change in fifty percent (50%) or more in the ownership of Producer or
CTG shall be construed to be an assignment for purposes of this Section;
provided, however, either Party may, without


 


17

















 


the need for consent from the
other: (i) transfer, sell, pledge, encumber or assign this Agreement
including the revenues or proceeds hereof, in connection with any financing or
other financial arrangements; (ii) transfer or assign this Agreement to an
affiliate as long as the affiliate is at least as creditworthy as the assigning
Party; or (iii) transfer or assign this Agreement to an entity succeeding
to all or substantially all of the assets or operations of the assigning Party
by way of  merger, reorganization or
otherwise; provided, further, that no such assignment shall in any way relieve
the assigning Party from liability for full performance hereunder or result in a
change in any rights or obligations of the other Party under this
Agreement.  In the event one or both of
the Plants are sold by Producer, CTG shall have the right to terminate this
Agreement and the Transaction Documents on [*] prior written notice to Producer.  CTG agrees to execute a consent to assignment
for the benefit of Producer’s lenders in substantially the form furnished by
counsel for Producer’s lenders on May 30, 2008.


 


15.3         Records.  Producer and CTG will each establish and
maintain at all times, true and accurate books, records and accounts relating
to their own transactions under this Agreement in accordance with generally
accepted accounting principles applied consistently from year to year in
accordance with good industry practices.


 


15.4         Audit of
Records.  During normal
business hours, each Party or its designated auditor has the right to inspect
or audit the books, records and accounts of the other relating solely to the
transactions in this Agreement, provided the right to inspect or audit shall be
limited to two (2) calendar years following the completion of any delivery
of Product.


 


15.5         Dispute
Resolution.


 


15.5.1              Dispute Notice.  The Parties shall make a diligent, good faith
attempt to resolve all disputes before either Party commences arbitration with
respect to the subject matter of any dispute. 
If the representatives of the Parties are unable to resolve a dispute
within forty five (45) days after either Party gives written notice to the
other of a dispute, either Party may, by sending a dispute notice to the other
Party, submit the dispute to binding arbitration in accordance with the
Governing Body Arbitration Rules, except as such Governing Body Arbitration Rules may
be modified by this Agreement.


 


15.5.2              Appointment of Arbitrators.  A sole arbitrator shall be appointed
pursuant to the Governing Body Arbitration Rules.


 


15.5.3              Location.  The site of the arbitration shall be
determined by the Governing Body, unless otherwise agreed by the Parties.


 


15.5.4              Diligence; Remedies.  The Parties shall diligently and
expeditiously proceed with arbitration. 
The arbitrators shall decide the dispute by majority of the
arbitrators.  The arbitrators shall be
instructed to render a written decision within forty five (45) days after the
conclusion of the hearing or the filing of such briefs as may be authorized by
the arbitrators, subject to any reasonable delay due to unforeseen
circumstances.  Except to the extent the
Parties’ remedies may be limited by the terms of this Agreement, the arbitrators
shall be empowered to award any remedy available under the laws of the State of
Delaware including, but not limited to, monetary damages and specific
performance.  The arbitrators shall not
have the power to amend or add to this Agreement.  The award of the arbitrators shall be in
writing with reasons for such award and signed by the arbitrators.  Any award rendered shall be final and
binding.  Judgment rendered by the
arbitrators may be entered in any court having jurisdiction thereof.


 


18

















 


15.5.5              Waiver of Appellate
Review; Enforcement.  The
Parties hereby waive any rights to appeal or to the review of such award by any
court or tribunal.  The Parties further
undertake to carry out without delay the provisions of any arbitral award or
decision, and each agrees that any such award or decision may be enforced by
any competent tribunal.


 


15.5.6              Costs of Arbitration.  The costs of such arbitration shall be
determined by and allocated between the Parties by the arbitral tribunal in its
award.


 


15.5.7              Independent Agreement.  This Section 15.5 constitutes an
independent contract between the Parties to, pursuant to the Governing Body
Arbitration Rules (except as said Governing Body Arbitration Rules are
modified by the express terms of this Agreement), arbitrate all disputes
between the Parties related to this Agreement, including, without limitation,
disputes regarding the formation of contract(s) and whether either Party
is entitled to quasi-contractual or quantum merit recovery from the other
Party.


 


15.5.8              Continuation of
Performance.  Unless
otherwise agreed in writing or as set forth in Article 13, the Parties
shall each continue to perform their respective obligations hereunder during
any proceeding by the Parties in accordance with this Section 15.5.


 


15.6         Inurement.  This Agreement will inure to the benefit of
and be binding upon the respective successors and permitted assigns of the
Parties, and Producer shall cause the same to be assumed by and to be binding upon
any successor owner or operator of the Plants.


 


15.7         Entire
Agreement.  This Agreement
together with the agreements referred to herein as executed pursuant hereto,
including the Transaction Documents and any 
confidentiality or nondisclosure agreements previously executed by the
Parties in connection herewith, constitutes the entire Agreement between the
Parties with respect to the subject matter contained herein and any and all
previous agreements, written or oral, express or implied, between the Parties
or on their behalf relating to the matters contained herein shall be given no
effect.


 


15.8         Amendments.  There will be no modification of the terms
and provisions hereof except by the mutual agreement in writing signed by the
Parties.  Any attempt to so modify this
Agreement in the absence of such writing signed by the Parties shall be
considered void and of no effect.


 


15.9         Governing
Law.  The Agreement will
be interpreted, construed and enforced in accordance with the procedural,
substantive and other laws of the State of Delaware without giving effect to
principles and provisions thereof relating to conflict or choice of law even
though one or more of the Parties is now or may do business in or become a
resident of a different state.


 


15.10       Compliance
with Laws.  This Agreement
and the respective obligations of the Parties hereunder are subject to present
and future valid laws and valid orders, rules and regulations of duly
constituted authorities having jurisdiction.


 


15.11       Furnishing
of Information and Further Action.  The Parties will, upon request, provide such
additional information and take or obtain such further action as may be
reasonably required to allow the Parties to efficiently and effectively carry
out their respective obligations hereunder and to determine and enforce
individual or collective rights under this Agreement, including but not limited
to the execution of a contract for arbitration with the Governing Body.


 


19
















 


15.12       Faithful
Performance and Good Faith. 
The Parties shall faithfully perform and discharge their respective
obligations in this Agreement and endeavor in good faith to negotiate and
settle all matters arising during the performance of this Agreement for which
are not specifically provided for herein.


 


15.13       Relationship.
The relationship of CTG and Producer established by this Agreement is that of
independent contractors, and nothing contained in this Agreement shall be
construed to give either Party the power to unilaterally direct and control the
day-to-day activities of the other or to be considered an agent of the other;
to constitute the Parties as partners, joint ventures, co-owners or otherwise;
or to allow either Party to create or assume any obligation on behalf of the
other Party for any purpose whatsoever. 
Except as otherwise provided herein, nothing contained in this Agreement
shall be construed as conferring any right or benefit on a person not a Party
to this Agreement.


 


15.14       Notice
Addresses.  Except as
specifically otherwise provided herein, any notice or other written matter
required or permitted to be given hereunder by one Party to the other Party
pursuant to the terms and conditions of this Agreement, shall be deemed to be
sufficiently given if delivered by hand or sent by certified mail, nationally
recognized delivery service or by fax, and addressed as follows:


 


	
  If to CTG:

  	
   

  	
  ConAgra
  Trade Group, Inc.

  
	
   

  	
   

  	
  Eleven
  ConAgra Drive

  
	
   

  	
   

  	
  Omaha, NE
  68102-5011

  
	
   

  	
   

  	
  Attn:

  	
  Director -
  Renewable Fuels 

  
	
   

  	
   

  	
  Fax:

  	
  (402)
  595-7804

  
	
   

  	
   

  	
  Phone:

  	
  (402)
  595-5300

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  ConAgra
  Trade Group, Inc.

  
	
   

  	
   

  	
  Eleven
  ConAgra Drive, STE 11-160

  
	
   

  	
   

  	
  Omaha, NE
  68102

  
	
   

  	
   

  	
  Fax: (402)
  997-8851

  
	
   

  	
   

  	
  Attn:
  Manager of Commodity Contracts

  
	
   

  	
   

  	
   

  
	
  If to Producer:

  	
   

  	
  Heartland
  Grain Fuels, LP

  
	
   

  	
   

  	
  c/o Advanced BioEnergy,
  LLC  

  
	
   

  	
   

  	
  10201 Wayzata Blvd,
  Suite 250  

  
	
   

  	
   

  	
  Minneapolis, MN 55305

  
	
   

  	
   

  	
  Attn:

  	
  Revis L.
  Stephenson III 

  
	
   

  	
   

  	
  Fax:

  	
  (763)
  226-2725 

  
	
   

  	
   

  	
  Phone:

  	
  (763)
  226-2701

  



 


Where this Agreement indicates
that notice or information may be provided electronically or by email, such
notice or information shall be deemed provided if sent to the email address, of
such Party indicated above and shall be effective as of the date sent if sent
prior to 5:00 p.m. Central Time on a Business Day, otherwise effective as
of the next Business Day.  Either Party
may give notice to the other Party (in the manner herein provided) of a change
in its address for notice.  Any notice or
other written matter shall be deemed to have been given and received: if
delivered by hand, certified mail or delivery service on the date of delivery
or the date delivery is refused; and, if sent by fax before or during normal
business hours, on the Business Day of the sending of the notice and the
machine-generated evidence of receipt or if after normal business hours, on the
Business Day following the sending of the notice and the machine generated
evidence of receipt.


 


20

















 


15.15                     Costs to be Borne by Each Party.  Producer and CTG shall each pay their own
costs and expenses incurred in the negotiation, preparation and execution of
this Agreement and of all documents referred to herein.


 


15.16                     Counterparts.  This Agreement may be executed in any number
of counterparts with the same effect as if Producer and CTG had signed the same
document and all counterparts will be construed together and constituted as one
and the same instrument.  Each
counterpart signature may be executed and delivered to the other Party by
facsimile machine or electronic transfer, and the signature as so transmitted
shall be as binding upon the executing Party as its original signature, without
the necessity of the recipient Party to establish original execution or the
existence of such original signature or the document to which affixed, all of
which shall be deemed waived.


 


15.17                     Severability.  Any provision of this Agreement which is or
becomes prohibited or unenforceable in any jurisdiction shall not invalidate or
impair the remaining provisions of this Agreement, and the remaining terms of
this Agreement shall be amended so as to most closely conform to the original
intent of the Agreement without the offending provision, and as so amended
shall continue in full force and effect.


 


15.18                     Headings.  The article and section headings used
herein are for convenience and are not for interpretation.


 


15.19                     Waiver. 
No delay or omission in the exercise of any right, power or remedy
hereunder shall impair such right, power or remedy or be construed to be a
waiver of any default or acquiescence therein.


 


15.20                     Interpretation.  This Agreement shall not be interpreted
against the Party drafting or causing the drafting of this Agreement.  All Parties hereto have participated in the
preparation of this Agreement.  In the
event of an inconsistency between or among the following documents entered into
by the Parties, the following order of precedent shall govern:


 


15.20.1           This Agreement; and


 


15.20.2           A Confirmation, confirmation of purchase and
sale transaction, or other document used for the purposes of a Confirmation,
including but not limited to, any general terms contained therein.


 


15.21                     Incorporation of Exhibits/Schedules.  The exhibits and schedules attached hereto
form an integral part of this Agreement and are hereby incorporated herein by
reference.


 


IN WITNESS
WHEREOF the Parties have executed this Agreement by their respective proper
signing officers as of the Effective Date.


 


	
   

  	
  CONAGRA TRADE GROUP, INC., a Delaware

  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Tom Kelly

  
	
   

  	
  Its:

  	
    V.P. Strategic Development

  
	
   

  	
  Date:

  	
    6/3/2008

  
					



 


21

















 


	
   

  	
  HEARTLAND GRAIN FUELS, LP, a Delaware

  limited partnership

  By: Dakota
  Fuels, Inc., a Delaware corporation

  Its: General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Revis L. Stephenson III

  
	
   

  	
  Its:

  	
    Chairman

  
	
   

  	
  Date:

  	
    6/5/08

  
					



 


22

















 


EXHIBIT “A”



ETHANOL SPECIFICATIONS


 


	
  Property

  	
   

  	
  Specification

  	
   

  	
  A.S.T.M. Test Method

  
	
  Ethanol volume %, Min

  	
   

  	
  92.1

  	
   

  	
  D5501

  
	
  Methanol, volume %, max

  	
   

  	
  0.5

  	
   

  	
   

  
	
  Solvent-washed gum, mg/100
  ml max

  	
   

  	
  5.0

  	
   

  	
  D381

  
	
  Water content, volume %,
  max

  	
   

  	
  1.0

  	
   

  	
  E203

  
	
  Denaturant content, volume
  %, min

  	
   

  	
  1.96

  	
   

  	
   

  
	
  Denaturant content, volume
  %, max

  	
   

  	
  4.76

  	
   

  	
   

  
	
  Inorganic Chloride content, mass ppm (mgIL) max

  	
   

  	
  40

  	
   

  	
  D512

  
	
  Copper content, mg/kg, max

  	
   

  	
  0.1

  	
   

  	
  Dl688

  
	
  Acidity (as acetic acid CH2COOH), mass percent (mg/L), max

  	
   

  	
  0.007

  	
   

  	
  Dl613

  
	
  pH

  	
   

  	
  6.5 – 9.0

  	
   

  	
  D6423

  
	
  Appearance

  	
   

  	
  Visibly free of suspended
  or precipitated contaminants (clear & bright)

  	
   

  	
   

  
	
  Sulfur, ppm max

  	
   

  	
  10

  	
   

  	
  D5453

  
	
  Benzene, vol % max

  	
   

  	
  0.06

  	
   

  	
  D5580

  
	
  Olefins, vol % max

  	
   

  	
  0.5

  	
   

  	
  D6550

  
	
  Aromatics, vol % max

  	
   

  	
  1.7

  	
   

  	
  D5580

  



 


23

















 


EXHIBIT “B”



CONFIRMATION


 


CONFIRMATION OF PURCHASE AND SALE TRANSACTION


 


	
  [ADDRESS]

  	
   

  	
  [DATE]

  



 


This letter
shall confirm the agreement reached on [                        ],
200[    ] between, ConAgra Trade Group, Inc. (“CTG”)
and [                                                  ]
(“Counterparty”) regarding the sale and purchase of                               
under the terms and conditions as follows:


 


	
  SELLER:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BUYER:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COMMODITY:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TYPE / QUALITY:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CONTRACT QUANTITY:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CONTRACT PRICE:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DELIVERY POINT(S):

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PERIOD OF DELIVERY:

  	
   

  	
   

  	
  To

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OTHER TERMS:

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


This Confirmation
is being provided pursuant to and in accordance with the Ethanol Product
Off-Take Agreement dated as of [                            ],
200[    ] (the “Master Agreement”) between
CTG and Counterparty, and constitutes part of and is subject to all of the
terms and provisions of such Master Agreement. 
Terms used but not herein defined shall have the meanings ascribed to
them in the Master Agreement.


 


Please confirm
that the terms stated herein accurately reflect the agreement between you and
CTG by returning an executed copy of this Confirmation by facsimile to
CTG.  If you do not execute and return
this Confirmation by 5:00 p.m. Central Standard (or Daylight) Time on the
second (2nd) Business Day following your receipt hereof, you will
have accepted and agreed to all of the terms included herein, including the
terms and provisions of the Agreement.


 


	
  “CTG”

  	
   

  	
  “Counterparty”

  
	
  CONAGRA
  TRADE GROUP, INC.

  	
   

  	
  [                                                                                             ]

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
									



 


24

















 


EXHIBIT “C”



[PRICING*]


 


25

















 


EXHIBIT “D”



INSURANCE COVERAGES


 


Commercial General Liability Insurance
- $2,000,000


 


Policy shall include coverage for liability resulting from
Premises/Operations, Products and Completed Operations, Blanket and Contractual
Liability.  Policy shall also include
coverage for Broad Form Property Damage, including explosion, collapse and
underground hazards.  Such insurance
shall be on an occurrence basis.


 


Environmental Pollution
Liability Insurance  - $2,000,000


 


Policy shall include coverage for bodily injury or property damage
arising from the handling, storage, processing, discharge or dispersion of
pollutants on or about the Producer’s premises. 
Such insurance may be on an occurrence basis or claims-made basis.


 


Prior to the initial sale of
Ethanol and at all times during the Term of the Agreement, Producer and CTG shall
carry and maintain product liability insurance with minimum limits of
$2,000,000 for Ethanol per accident or occurrence.  The provisions for product liability and
general insurance may be satisfied by issuance of separate policies, or
included under the commercial general liability policies, or a combination of
general commercial liability policies with umbrella/excess liability policies.


 


Producer and CTG shall also
carry excess or umbrella liability insurance with limits of at least $4,000,000
per occurrence for bodily injury or property damage in excess of the limits
afforded for general liability and automobile liability provided above.


 


Producer shall notify CTG at
least thirty (30) days prior to the effective date of any cancellation or
material change of such policies.  The
designated limits of insurance for all policies required in this Exhibit D
are understood to apply on a per occurrence and annual aggregate basis, with
the exception of pollution liability which may include an aggregate limit for a
policy term of more than one year.


 


26