EXHIBIT 10.6


 


[********] Material has been omitted pursuant to request for confidential
treatment and such material has been filed separately with the Securities and
Exchange Commission.


 


CORN GERM MARKETING AGREEMENT


 


THIS CORN GERM (“CG”) MARKETING AGREEMENT
(the “Agreement”) is made and entered into as of the 7th day of
July, 2005, by and between QUALITY TECHNOLOGY INTERNATIONAL, INC. (“QTI”) and
BADGER STATE ETHANOL, LLC (“BSE”), collectively referred to hereinafter as “Parties”
or individually as a “Party”.


 


R E C I T A L S


 


WHEREAS, QTI markets CG under its brand name
Solarisä, produced by suppliers including but not limited
to BSE;


 


WHEREAS, BSE produces CG in Monroe,
Wisconsin; and


 


WHEREAS, BSE and QTI desire to have the terms
of this agreement conform to the National Grain and Feed Association (“NGFA”)
Feed Trade Rules that are currently in effect and as amended from time to
time, and


 


WHEREAS, QTI desires to market BSE’s CG along
with CG from other third Parties (“QTI CG Marketing Program”) to improve the
efficiencies of marketing and distribution of CG as more fully detailed in this
agreement; and


 


WHEREAS, QTI may choose to market CG produced
by third Parties in the future as more fully set forth in this and like
agreements.


 


NOW, THEREFORE, in consideration of the
foregoing, the mutual promises herein contained and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, QTI and BSE
agree as follows:


 


A G R E E M E N T


 


1.                                      PURCHASE
AND MARKETING.  BSE hereby engages QTI
to purchase and market, and QTI hereby agrees to purchase and market, 100% of
BSE’s production and output of CG from its initial 50,000,000 gallon per year
ethanol nameplate capacity plant located in Monroe, Wisconsin subject to the
terms of this agreement. BSE agrees to sell 100% of BSE’s production to QTI and
agrees that QTI will be the exclusive purchaser and marketer of that CG output.


 


2.                                      TERM
OF THIS AGREEMENT.  This Agreement
will be effective upon the date set forth above and have an initial term ending
5 years after the date of first commercial production, estimated to be January 2006.


 


3.                                      TERMINATION.  This
Agreement may be terminated under the circumstances set out below.


 





















 


3.1                                 Termination for Intentional Misconduct.  If either party engages in intentional
misconduct reasonably likely to result in significant adverse consequences to
the other Party, the Party harmed or likely to be harmed by the intentional
misconduct may terminate this Agreement immediately, upon written notice to the
party engaging in the intentional misconduct.


 


3.2                                 Termination for an Uncured Breach.  If one of the parties breaches the terms of
this Agreement, the other party may give the breaching party notice in writing
which specifically sets out the nature and extent of the breach, and the steps
that must be taken to cure the breach. 
After receiving the written notice, the breaching party will then have
five (5) days to cure the breach, if the breach does not involve a
failure to make any payments, which are required by this Agreement.


 


3.3                                 Termination by Mutual Written Agreement. This Agreement may also be
terminated upon any terms and under any conditions, which are mutually agreed
upon in writing by the parties.


 


4.  PAYMENT.   QTI shall pay BSE for its CG in accordance
with the formula set forth in Exhibit A.


 


5.  PAYMENT DATES. QTI shall pay BSE for the
CG invoiced by QTI twenty (20) days after price is established. This Payment
shall be made through Automatic Check-Clearing House, commonly known as the ACH
system (or other payment method acceptable to each party), for immediately
available funds.


 


6.  COSTS. 
BSE’s CG will be loaded FOB, sellers place of business, Monroe
Wisconsin and shipped per QTI’s instructions. All costs, after loading and sealing, that are associated with shipping and other charges
shall be for the account of QTI and its customer. (See Exhibit D)


 


7.  TRANSPORTATION;
LOGISTICS.  QTI and BSE shall
perform the logistics functions in Exhibit D. QTI shall determine the
method of transporting the CG to its customers in a manner that will insure
that BSE’s inventory level of CG does not exceed [********] at any time.  Title and risk of loss shall transfer from
BSE to QTI as stated in Exhibit D.


 


8.                                      QUALITY


 


8.1
CG Specifications. In accordance with Wisconsin
State Regulations, BSE shall attach the Bill of Lading to the CG label. The CG
label contains the guarantee of maximum moisture and minimum fat. At


 










[********] Material has been
omitted pursuant to request for confidential treatment and such material has
been filed separately with the Securities and Exchange Commission.


 





















 


no
time will BSE be held to any standard that will conflict with Section 13
of this agreement.


 


BSE shall produce CG and warrant that it meets the specifications (“Specifications”)
set forth in Exhibit B, which is attached hereto and incorporated herein
by reference (the “Specification Warranty”). 
This warranty is transferable to QTI’s customers.  Final quality specifications will be
consistent with those agreed upon between BSE and Corn Value Products, LLC and
may be amended once a final customer is selected based on the specifications of
this customer.


 


8.2
Samples, Preservation, and Claims.  BSE shall take original, sealed, and numbered
samples of the CG prior to loading at the Delivery Point per unit of loading (to be discussed in Exhibit C).  QTI shall be entitled to witness the taking
of samples at QTI’s expense. BSE will label these samples to indicate date of
delivery and the container, truck, or rail car number. BSE will retain these
samples for 90 days and shall send one sample to QTI or a testing laboratory
named by QTI immediately upon QTI’s request. QTI shall have the right to test
each shipment of CG at its own cost to ascertain that the Specifications are
being met under the testing procedures set forth in Exhibit D. BSE may
request that the QTI test results be provided to it at any time after the tests
are completed, using the delivery mechanisms described in Section 19.


 


8.3
Quality Disputes.  If QTI’s
customer’s own analysis indicates quality
deficiencies, then that customer will submit the analysis and claim in writing
to QTI who will in turn forward to BSE. 
Within fifteen (15) business days after the receipt of the claim, BSE
will accept claim or forward an eight (8) ounce portion of the retained
sample to a mutually agreeable Official Referee Laboratory and notify QTI of
such action who in turn will notify their buyer.  The results of this Official Referee Analysis
will be binding upon both parties for final claim settlement and the expense of
the analysis will be borne by BSE if a claim is due and by the customer if no
claim is due.  In no event shall BSE be
liable for duplicate claim liabilities under the Specifications Warranty.


 


8.4 No Further Representation and Warranty.  Except for the Specifications Warranty, BSE
makes no representation and warranty hereunder and disclaims any warranty of
merchantability or fitness for any particular purpose.


 


9.                                      QUANTITY.  Subject to the provisions herein, BSE will
use commercially reasonable efforts to ensure that the BSE production facility
shall


 





















 


produce and make available to
QTI [********] of CG per month (“Base Volume”), plus or minus ten percent (10%)
for the Monroe Wisconsin facility as it comes on line for continuous
production.  QTI will obtain BSE’s
advance approval of any third-party purchase agreement for BSE’s Corn Germ
prior to acceptance.  On the first
business day of each month, BSE shall notify QTI of its scheduled production of
CG for the upcoming three (3) month period.


 


9.1
Date of First Delivery.  BSE expects
to make the first delivery of CG to QTI 9 months after construction on the
[********] build out with AMG/GCI, LLC commences currently estimated to be on January 15th,
2005 (“Projected Date of First Delivery”). 
BSE shall notify QTI by September 15th, 2005 of any
revisions to the Projected Date of First Delivery.  Thirty (30) days prior to the revised
Projected Date of First Delivery, BSE shall notify QTI of any changes to the
revised Projected Date of First Delivery.


 


10.                               MARKETING
EFFICIENCIES.  QTI agrees to market
BSE’s CG using the same standards it uses to market any CG it sells (a) to
optimize the CG price to both QTI and BSE and (b) to achieve the highest
return to BSE and QTI.  QTI shall market
in accordance with all applicable laws. BSE acknowledges that QTI agrees QTI
will use its reasonable judgment in making decisions related to the quantity or
price of CG marketed under this Agreement. QTI will consult, coordinate and
communicate with BSE on marketing and hedging decisions and strategies;
provided, however, that QTI shall have the authority to make final reasonable
determinations with respect to such decisions and strategies and BSE agrees to
accept such reasonable determinations for the sale of its CG so long as QTI’s
inventory of Uninvoiced CG does not exceed 1000 tons. QTI further agrees to
utilize its risk management strategies (or those of its related corporations/
organizations) to minimize any market condition that may adversely affect the
market prices for all CG sold to QTI by BSE. 
Indirect strategies such as hedging when brought to market will be
factored into the Gross Proceeds QTI payment calculation.


 


11.                                                                               ANNUAL
AUDITS.  QTI shall arrange for an
annual audit of its records by Crowe Chizek and Company LLC or other selected
audit firm mutually agreeable to the Parties at QTI’s expense to verify that it
has followed its pricing formulas, obligations and other standards set forth in
this Agreement (the “QTI Pricing Standards”). The audit report will be sent to
BSE within 10 days of its completion by private mail courier with tracking
capability. In the event of a non-compliance that results in an incorrect
payment to either Party, each Party will reimburse the other Party by the last
business day of the month following the receipt of the audit report, provided
however, that both Parties have agreed on the results of the audit report.  BSE acknowledges that the audit will not
disclose (a) any specific information on any other participating CG
producers in the Marketing Program or any customer of QTI, or (b) the
details of any calculations involving BSE shall not be made available to other
CG producers or to the public.


 










[********] Material has been
omitted pursuant to request for confidential treatment and such material has
been filed separately with the Securities and Exchange Commission.


 





















 


Noncomplaince by QTI with the QTI Pricing
Standards due to gross negligence shall constitute an incurable breach of this
Agreement and BSE may terminate this Agreement upon notice to QTI.


 


Such calculations shall not be made available
to other CG producers or to the public. The report will include the overall
results of the total program although other participants will not be named.


 


12.                               CONFIDENTIALITY.  The terms of this Agreement and the
information exchanged pursuant hereto are confidential and, except as required
by law, shall not be disclosed by either Party without the prior written
consent of the other Party, which shall not be unreasonably withheld; provided,
however, that either Party may disclose the terms of this Agreement to its
lenders, accountants, legal counsel, and/or potential investors (other than QTI’s
Competitors in the CG or corn milling business) so long as the disclosing Party
provides written notice to the other Party and the receiving Party signs a
confidentiality agreement prohibiting further disclosure and limiting use of
the information disclosed to the evaluation of the transaction contemplated in
this Agreement.


 


13.                               MUTUAL
INDEMNIFICATION; DAMAGES.  Each Party
will indemnify, defend and hold harmless the other Party, its officers,
directors, managers, employees, shareholders, members, agents and its
successors and assigns, against any and all losses, damages, demands, and
claims (including reasonable accounting and attorneys’ fees) arising out of, or
incident to, its breach of this Agreement or any fraud, negligent acts or
omissions, or willful misconduct by such Party in connection with performance
of this Agreement. Prompt written notice of any claimed indemnification
obligation by each Party shall be given hereunder.


 


14.                               LAW
GOVERNING.  This Agreement shall be
governed in all respects by the laws of the State of Illinois.  The Parties shall be subject to all laws in
effect from time to time and any regulations, orders, permits, licenses and
authorizations of any governmental authority having jurisdiction of the
Parties.


 


15.                               ENTIRE
AGREEMENT; AMENDMENT; WAIVER.  This
Agreement, including all written appendices and/or amendments and/or
modifications, and/or additions, and/or writings which are signed by both of
the Parties hereto and relate to the subject matter of this Agreement shall as
a whole constitute the entire agreement between the Parties with respect to the
subject matter hereof, and shall supercede and replace all prior and
contemporaneous understandings and/or agreements, written or oral, regarding
the subject matter of this Agreement. No appendices, amendments, modifications,
additions, or writings of any kind relating to this Agreement will be binding
unless in writing and signed by a duly authorized officer of both Parties. The
waiver or failure of either Party to exercise any right provided for herein
will not be deemed a waiver of any further right hereunder.


 


16.                               COUNTERPARTS.  This Agreement may be signed in
counterparts, all of which together will constitute one and the same
instrument.


 





















 


17.                               INDEPENDENT
CONTRACTORS.   This Agreement creates
no relationship of joint-venture, partnership, or agency between the Parties,
and the Parties acknowledge and agree that no other facts or relationships
exist that would expressly or impliedly create any such relationship.  The relationship between the Parties under
this Agreement shall at all times be that of independent contractors, vendor
and vendee.  Neither Party shall be
construed as, nor shall either Party represent itself or hold itself out as, an
agent, partner, or representative of the other Party.


 


18.                               ASSIGNMENT.  No Party may assign their rights or obligations
under the Agreement to another party without the written consent of the other
Party, such consent shall not be unreasonably withheld


 


19.                               FORCE
MAJEURE.  Non-performance by either
Party shall be excused to the extent that performance is rendered impossible or
impracticable by any Act of God, Act of War, Act of Terrorism, detonation of an
explosive device, mob action, interruption of utilities, strike, fire, flood, government acts,
orders or restrictions, labor shortages or any other reason where failure to
perform is beyond the reasonable control of the non-performing Party
(collectively, “Force Majeure Event).


 


If a Force Majeure Event prevents either
Party from performing for thirty (30) consecutive days, the other Party shall
have the right to terminate this Agreement upon five (5) business days written notice to the other Party.  Such termination shall not relieve each Party
from the performance of its obligations prior to the commencement of the Force
Majeure Event.


 


20.                               NOTICES.  Any notice, demand or communication
required, permitted or desired hereunder shall be deemed effectively given when
personally delivered, when mailed postage prepaid return receipt requested, and
when delivered by facsimile, or courier where actual receipt can be independently
verified when addressed as follows:


 


	
  To Quality
  Technology International, Inc. (QTI):

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Daniel J. Hammes

  
	
  Address:

  	
   

  	
  2250 Point Blvd. Suite 322

  
	
   

  	
   

  	
  Elgin,
  Illinois 60123

  
	
  Telephone:

  	
   

  	
  (847) 649-9300

  
	
  Facsimile:

  	
   

  	
  (847) 649-9309

  
	
   

  	
   

  	
   

  
	
  To Badger State
  Ethanol, LLC (BSE):

  
	
   

  
	
  Name:

  	
   

  	
  Dr. Gary Kramer

  
	
  Address:

  	
   

  	
  820 W. 17th Street, PO Box 317

  
	
   

  	
   

  	
  Monroe,
  Wisconsin 53566-0317

  
	
  Telephone:

  	
   

  	
  (608) 329-3900

  
	
  Facsimile:

  	
   

  	
  (608) 329-3866

  



 





















 


21                                  LIMITATION
ON DAMAGES.  Notwithstanding anything
to the contrary herein, neither Party shall be liable for any
special, indirect, exemplary, punitive or consequential damages of any
kind related to its performance of this Agreement.


 


22.                               DISPUTE RESOLUTION. BSE and QTI will
individually join the National Grain and Feed Association (“NGFA”). NGFA Feed
Trade Rules are to apply in all dispute resolutions.  BSE and QTI agree that any arbitration
hereunder will be joined with any arbitration proceeding involving a customer
in a single hearing, provided that such customer has also agreed to arbitration
under NGFA Feed Trade Rules.


 


23.                               Trademark.  BSE and QTI agree and acknowledge that
Solaris is a trademark of QTI.


 





















 


IN WITNESS WHEREOF, each of the Parties
hereto has caused this Agreement To be executed by its
respective duly authorized representative as of the day and year first above
written.


 


	
  QUALITY TECHNOLOGY INTERNATIONAL,
  INCORPORATED:

  
	
   

  	
   

  
	
  By:

  	
  /s/ Daniel J. Hammes

  	
   

  
	
  Its:

  	
  President & CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BADGER STATE ETHANOL, LLC:

  
	
   

  	
   

  
	
  By:

  	
  /s/ Gary J. Kramer

  	
   

  
	
  Its:

  	
  President

  	
   

  



 





















 


EXHIBITS
OMITTED