EXHIBIT 10.5


 


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


 


Corn Protein Concentrate MARKETING
AGREEMENT


 


THIS CORN PROTEIN CONCENTRATE (“CPC”)
MARKETING AGREEMENT (the “Agreement”) is made and entered into as of the 23rd
day of June, 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 CPC under its brand name
Solarisä, produced by suppliers including but not limited
to BSE;


 


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


 


WHEREAS, QTI may choose to market CPC
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, market, and QTI hereby agrees to purchase and market, 100% of
BSE’s production and output of CPC 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 that QTI will be the exclusive purchaser
and marketer of that CPC 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.


 


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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 such 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.  1) QTI shall pay BSE for its CPC in
accordance with the formula set forth in Exhibit A; 2)  BSE shall pay QTI for sales, marketing
and logistical expenses in accordance with the scale set forth in Exhibit B.  All schedules are attached hereto and
incorporated herein by reference.


 


5.                                      PAYMENT
DATES.  QTI shall pay BSE for CPC in
accordance with the formula set forth in Exhibit A. QTI shall pay BSE for
the CPC invoiced by BSE from the first day on the month to the 15th day of the
month (an “Invoice Period”) on the 20th day of the month or in the event such
day is not a business day, the next immediate business day thereafter. QTI
shall pay BSE for the CPC invoiced by BSE from the 16th day of the month to the
last day of the month (an “Invoice Period”) on the 5th day of the following
month or in the event such day is not a business day, the next immediate business
day thereafter. This Invoice Period 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.


 


BSE shall pay QTI in a similar fashion (or
other payment method acceptable to each party) in accordance with the formula
set forth in Exhibit B, Sales, Marketing & Logistical Expenses,
by ACH (or other payment method acceptable to each party) on the 5th day of each month for the
preceding months activity or, in the event such day is not a business day, the
next immediate business day thereafter.


 


6.                                      COSTS.  BSE’s CPC 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, as further described in Exhibit A (See
also Exhibit E).


 


7.                                      TRANSPORTATION; LOGISTICS.  QTI and BSE shall perform the logistics
functions in Exhibit E. QTI shall determine the method of transporting the
CPC to its customers in a manner that will insure that BSE’s inventory level of
CPC does not


 


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exceed
[********] at any time.  Title and risk
of loss shall transfer from BSE to QTI as stated in Exhibit E.


 


8.                                      QUALITY


 


8.1                               CPC Specifications. In accordance with Wisconsin State
Regulations, BSE shall attach the Bill of Lading to the CPC feed label. The
feed label contains the guarantee of minimum protein, minimum fat, and maximum
fiber. At no time will BSE be held to any standard that will conflict with Section 13
of this agreement.


 


BSE shall
produce CPC and warrant that it meets the specifications (“Specifications”) set
forth in Exhibit C, 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.


 


8.2                               Samples,
Preservation, and Claims.  BSE shall
take original, sealed, and numbered samples of the CPC prior to loading at the
Delivery Point per unit of loading (to be
discussed in Exhibit E).  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 CPC 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 20.


 


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


 










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


 


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and make available to QTI
[********] of CPC per month (“Base Volume”), plus or minus ten percent (10%)
for the Monroe Wisconsin facility as it comes on line for continuous
production.  If BSE can not guarantee
quantities of CPC, then a default provision will be agreed upon which allows
QTI to forward sell CPC to customers with adjustment for delivery shortfalls
backed by BSE.  On the first business day
of each month, BSE shall notify QTI of its scheduled production of CPC for the
upcoming three (3) month period.


 


9.1                               Date
of First Delivery.  BSE expects to
make the first delivery of CPC 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 CPC using the same standards it uses to market any CPC it sells (a) to
optimize the CPC 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 CPC 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 CPC so long as QTI’s
inventory of Uninvoiced CPC does not exceed 20,000 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 CPC 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 or other selected
audit firm mutually agreeable to the Parties at QTI’s expense to verify that QTI
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 CPC producers in the Marketing


 










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


 


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Program or any customer of QTI,
or (b) the details of any calculations involving BSE shall not be made
available to other CPC producers or to the public.


 


Noncompliance 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 CPC 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 CPC 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.


 


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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) 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

  



 


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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.


 


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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

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BADGER STATE ETHANOL, LLC:

  
	
   

  	
   

  
	
  By:

  	
  /s/ Gary L.
  Kramer

  	
   

  
	
  Its:

  	
  President

  	
   

  
				



 


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EXHIBITS
OMITTED


 


9