**Exhibit 10.2**

 

DISTILLER’S GRAIN MARKETING AGREEMENT

 

THISDISTILLER’S GRAIN MARKETING AGREEMENT (the “Agreement”), is entered intoeffective as of August 31, 2004, by United Wisconsin Grain Producers LLC,a Wisconsin Limited Liability Company (“Seller”), and Commodity SpecialistsCompany, a Delaware corporation (“Buyer”).

 

W I T N E S S E T H:

 

WHEREAS,Seller desires to sell and Buyer desires to purchase the Distiller’s DriedGrains with Solubles (“DDGS” or “Products”), output of the ethanol productionplant which Seller owns in Friesland, Wisconsin; and

 

WHEREAS,Seller and Buyer wish to agree in advance of such sale and purchase to theprice formula, payment, delivery and other terms thereof in consideration ofthe mutually promised performance of the other;

 

NOW,THEREFORE, in consideration of the promises and the mutual covenants andconditions herein contained, and for other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged by both parties, it ishereby agreed:

 

1.                                       BUYERPERFORMANCE.  Buyer agrees to performthe services that it provides for Seller in a professional and competentmanner.

 

2.                                       PURCHASEAND SALE. Seller agrees to sell to Buyer and Buyer agrees to purchase fromSeller the entire bulk feed grade DDGS output from Seller’s plant at Friesland,Wisconsin (hereinafter the “Plant”) that is shipped from Plant by rail, and somuch output that is shipped by truck that Seller in its discretion elects tosell to Buyer, subject to all terms and conditions set forth in thisAgreement.  Buyer shall label all Productthat is sold by Buyer and shall register all labels with the states where theProducts are sold.

 

3.                                       TRADERULES.  All purchases and sales madehereunder shall be governed by the Feed Trade Rules of the National Grain andFeed Association unless otherwise specified. Said Trade Rules, a copy of which is appended hereto as Exhibit A,shall, to the extent applicable, be a part of this Agreement as if fully setforth herein.

 

4.                                       TERM.  The term of this Agreement shall be for oneyear commencing as of completion and start-up of production of the Plant.  Start-up is anticipated to be February 15,2005.  Thereafter this agreement shallremain in effect until terminated by either party at its unqualified option byproviding the other party hereto not less than 90 days written notice of itselection to terminate this Agreement.

 

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5.                                       DELIVERYAND TITLE.

 

A.  The place of delivery for all the Productssold pursuant to this Agreement shall be FOB Plant.  Buyer and Buyer’s agents shall be givenaccess to Seller’s Plant in a manner and at all times reasonably necessary andconvenient for Buyer to take delivery as provided herein.  Buyer shall coordinate the loading andshipping of all outbound Products purchased hereunder which is shipped by truckor rail with Seller.  All labor andequipment necessary to load trucks or rail cars shall be supplied by Sellerwithout charge to Buyer.  Seller agreesto handle the Products in a good and workmanlike manner in accordance withBuyer’s reasonable requirements and in accordance with normal industrypractice.  Seller shall maintain thetruck and rail loading facilities in safe operating condition in accordancewith normal industry standards.

 

B.  Seller further warrants that storage spacefor not less than seven days production of DDGS shall be reserved for Buyer’suse at the Plant and shall be continuously available for storage of DDGSpurchased by Buyer hereunder at no charge to Buyer.  Seller shall be responsible at all times forthe quantity, quality and condition of any the Products in storage at thePlant. Seller shall not be responsible for the quantity, quality and conditionof any of the Products stored by Buyer at locations other than the Plant.

 

C.  Buyer shall give to Seller a schedule ofquantities of the Products to be removed by truck and rail with sufficientadvance notice reasonably to allow Seller to provide the requiredservices.  Seller shall provide thelabor, equipment and facilities necessary to meet Buyer’s loading schedule and,except for any consequential or indirect damages, shall be responsible forBuyer’s actual costs or damages resulting from Seller’s failure to do so.  Buyer shall order and supply trucks and railcars as scheduled for truck and rail shipments. All freight charges shall be the responsibility of Buyer and shall bebilled directly to Buyer.

 

D.  Buyer shall provide loading orders asnecessary to permit Seller to maintain Seller’s usual production schedule,provided, however, that Buyer shall not be responsible for failure to schedule removalof the Products unless Seller shall have provided to Buyer production schedulesas follows:  Five (5) days prior to thebeginning of each calendar month during the term hereof, Seller shall provideto Buyer a tentative schedule for production in the next calendarmonth.  Seller shall inform Buyer dailyof inventory and production status. For purposes of this paragraph,notification will be sufficient if made by e-mail or facsimile as follows:

 

If to Buyer, to the attention of Steve Markham,Facsimile number 612-330-9894 or e-mail to smarkham@csc-world.com, and

 

If to Seller, to the attention of Jeff Robertson ore-mail to jrobertson@uwgp.com. Or to such other representatives of Buyer andSeller as they may designate to the other in writing.

 

E.                                      Title,risk of loss and full shipping responsibility shall pass to Buyer upon loadingthe Products into trucks or rail cars and delivering to Buyer the bill oflading for each such shipment.

 

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6.                                       PRICEAND PAYMENT

 

A. Buyer agrees to paySeller as follows:  for all DDGS removedby Buyer from the Plant a price equal to ninety eight (98%) of the FOB Plantprice actually received by Buyer from its customers. For purposes of this provision,the FOB Plant price shall be the actual sale price, less all freight costsincurred by Buyer in delivering the Product to its customer.  Buyer agrees that it shall not sell Productfor delivery more than 90 days from the date of entering into a sale withoutthe consent of Seller.  Buyer agrees touse commercially reasonable efforts to achieve the highest resale priceavailable under prevailing market conditions. Seller’s sole and exclusive remedy for breach of Buyer’s obligationshereunder shall be to terminate this Agreement. Buyer shall collect allapplicable state tonnage taxes on Products sold by Buyer and shall remit to theappropriate governmental agency.

 

B.  Within three (3) business days followingreceipt of certified weight certificates, which certificates shall be presentedto Buyer each Thursday for all shipments during the preceding week, Buyer shallpay Seller the full price, determined pursuant to paragraph 6A above, for allproperly documented shipments.  Buyeragrees to maintain accurate sales records and to provide such records to Sellerupon request.  Seller shall have theoption to audit Buyer’s sales invoices at any time during normal business hoursand during the term of this Agreement. If any such audit shall reveal a deficiency in the payment due Seller,Buyer shall immediately pay Seller the amount of such deficiency together withinterest from the date that such payment should have been made at the primerate then in effect as reported in the Wall Street Journal.

 

7.                                       QUANTITYAND WEIGHTS.

 

A.   It is understood that the output of theProducts shall be determined by Seller’s production schedule and that nowarranty or representation has been made by Seller as to the exact quantitiesof Products to be sold pursuant to this Agreement.

 

B.  The quantityof Products delivered to Buyer from Seller’s Plant shall be established byweight certificates obtained from scale at the Plant which is certified as ofthe time of weighing and which complies with all applicable laws, rules andregulations or in the event that the scale at the Plant is inoperable then atother scales which are certified as of the time of weighing and which complywith all applicable laws, rules and regulations. The outbound weightcertificates shall be determinative of the quantity of the Products for whichBuyer is obligated to pay pursuant to Section 5.

 

8.                                       QUALITY.

 

A.  Seller understands that Buyer intends to sellthe Products purchased from Seller as a primary animal feed ingredient and thatsaid Products are subject to minimum quality standards for such use.  Seller agrees and warrants that the Productsproduced at its plant and delivered to Buyer shall be accepted in the feedtrade under current industry standards.

 

B.  Seller warrants that all Products, unless theparties agree otherwise, sold to

 

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Buyer hereunder shall, atthe time of delivery to Buyer, conform to the following minimum qualitystandard:

 
| ** ** | ** ** | **Protein** | ** ** | **Fat** | ** ** | **Fiber** | ** ** | **Moisture** | ** ** | **Ash** | ** ** |
|------------|------------|-------------|------------|---------|------------|-----------|------------|--------------|------------|---------|------------|
| ** ** | ** ** | **Min**     | ** ** | **Max** | ** ** | **Min**   | ** ** | **Max**      | ** ** | **Min** | ** ** | **Max** | ** ** | **Min** | ** ** | **Max** | ** ** | **Min** | ** ** | **Max** | ** ** |
| DDGS       |       | 25          |       |    |       | 10        |       |         |       |    |       | 15 |   |   |   | 12 |   |   |   | 6 |   |

 

The standard for DDGSwill be determined on an as is basis per original sample rather than a dryweight basis.

 

C.  Seller warrants that at the time of loading,the Products will not be adulterated or misbranded within the meaning of theFederal Food, Drug and Cosmetic Act and that each shipment may lawfully beintroduced into interstate commerce under said Act.  Payment of invoice does not waive Buyer’srights if goods do not comply with terms or specifications of thisAgreement.  Unless otherwise agreed betweenthe parties to this Agreement, and in addition to other remedies permitted bylaw, the Buyer may, without obligation to pay, reject either before or afterdelivery, any of the Products which when inspected or used fail in a materialway to conform to this Agreement.  Shouldany of the Products be seized or condemned by any federal or state departmentor agency for any reason except noncompliance by Buyer with applicable federalor state requirements, such seizure or condemnation shall operate as a rejectionby Buyer of the goods seized or condemned and Buyer shall not be obligated tooffer any defense in connection with the seizure or condemnation. Whenrejection occurs before or after delivery, at its option, Buyer may:

 

(1)Dispose of the rejected goods after first offering Seller a reasonableopportunity of examining and taking possession thereof, if the condition of thegoods reasonably appears to Buyer to permit such delay in making disposition;or

 

(2)Dispose of the rejected goods in any manner directed by Seller which Buyer canaccomplish without violation of applicable laws, rules, regulations or propertyrights; or

 

(3) IfBuyer has no available means of disposal of rejected goods and Seller fails todirect Buyer to dispose of it as provided herein, Buyer may return the rejectedgoods to Seller, upon which event Buyer’s obligations with respect to saidrejected goods shall be deemed fulfilled. Title and risk of loss shall pass to Seller promptly upon rejection byBuyer.

 

(4)Seller shall reimburse Buyer for all costs reasonably incurred by Buyer instoring, transporting, returning and disposing of the rejected goods. Buyershall have no obligation to pay Seller for rejected goods and may deductreasonable costs and expenses to be reimbursed by Seller from amounts otherwiseowed by Buyer to Seller.

 

(5) IfSeller produces Products which comply with the warranty in Section C

 

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above but which do notmeet applicable industry standards, Buyer agrees to purchase such Products forresale but makes no representation or warranty as to the price at which suchProduct can be sold.  If the Productsdeviate so severely from industry standard as to be unsalable, then it shall bedisposed of in the manner provided for rejected goods in Section C above.

 

D.  If Seller knows or reasonably suspects thatany of the Products produced at its Plant are adulterated or misbranded, oroutside of industry quality standards, Seller shall promptly so notify Buyer sothat such Product can be tested before entering interstate commerce.  If Buyer knows or reasonably suspects thatany of the Products produced by Seller at its Plant are adulterated, misbrandedor outside of industry quality standards, then Buyer may obtain independentlaboratory tests of the affected goods. If such goods are tested and found tocomply with all warranties made by Seller herein, then Buyer shall pay alltesting costs; and if the goods are found not to comply with such warranties,Seller will pay all testing costs.

 

9.                                       RETENTIONOF SAMPLES.  Seller will take anorigin sample of Products from each truck and rail car before it leaves thePlant using standard sampling methodology. Seller will label these samples to indicate the date of shipment and thetruck or railcar number involved.  Sellerwill also retain the samples and labeling information for no less than oneyear.

 

10.                                 INSURANCE.

 

A.  All UWGP employees engaged in the removal ofthe Products from Seller’s Plant shall be covered as required by law by worker’scompensation and unemployment compensation insurance.

 

B.  Seller agrees to maintain throughout everyterm of this Agreement commercial general liability insurance, includingproduct liability coverage, with combined single limits of not less than$2,000,000.  Seller’s policies ofcomprehensive general liability insurance shall be endorsed to require at leastthirty (30) days advance notice to Buyer prior to the effective date of anydecrease in or cancellation of coverage. Seller shall cause Buyer to be named as an additional insured on Seller’sinsurance policy and shall provide a certificate of insurance to Buyer toestablish the coverage maintained by Seller not later than fourteen (14) daysprior to completion and start-up of production of the Plant.

 

C.  Buyer agrees to carry such insurance on itsvehicles operating on Seller’s property as Seller reasonably deemsappropriate.  The parties acknowledgethat Buyer may elect to self insure its vehicles.  Upon request, Buyer shall provide certificateof insurance to Seller to establish the coverage maintained by Buyer.

 

D.  Notwithstanding theforegoing, nothing herein shall be construed to constitute a waiver by eitherparty of claims, causes of action or other rights which either party may haveor hereafter acquire against the other for damage or injury to its agents,employees, invitees, property, equipment or inventory, or third party claimsagainst the other for damage or injury to other persons or the property ofothers.

 

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11.                                 REPRESENTATIONSAND WARRANTIES

 

A.  Sellerrepresents and warrants that all of the Products delivered to Buyer shall notbe adulterated or misbranded within the meaning of the Federal Food, Drug andCosmetic Act and may lawfully be introduced into interstate commerce pursuantto the provisions of the Act.  Sellerfurther warrants that the Products shall fully comply with any applicable statelaws governing quality, naming and labeling of product.  Payment of invoice shall not constitute awaiver by Buyer of Buyer’s rights as to goods which do not comply with thisAgreement or with applicable laws and regulations.

 

B.  Seller represents and warrants that theProducts delivered to Buyer shall be free and clear of liens and encumbrances.

 

C.  **EXCEPT ASSPECIFICALLY STATED IN THIS AGREEMENT, SELLER MAKES NO WARRANTY OR REPRESENTATIONS,EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OFMERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE.**

 

12.                                 EVENTSOF DEFAULT.  The occurrence of any ofthe following shall be an event of default under this Agreement (“Event ofDefault”):  (1) failure of either partyto make payment to the other when due; (2) default by either party in theperformance of the covenants and agreements set forth in this Agreement; (3) ifeither party shall become insolvent, or make a general assignment for thebenefit of creditors or to an agent authorized to liquidate any substantialamount of its assets, or be adjudicated bankrupt, or file a petition inbankruptcy, or apply to a court for the appointment of a receiver for any ofits assets or properties with or without consent, and such receiver shall notbe discharged within sixty (60) days following appointment.

 

13.                                 REMEDIES.  Upon the happening of an Event of Default,the parties hereto shall have all remedies available under applicable law withrespect to an Event of Default by the other party.  Without limiting the foregoing, the partiesshall have the following remedies whether in addition to or as one of theremedies otherwise available to them; (1) to declare all amounts owedimmediately due and payable; and (2) immediately to terminate this Agreementeffective upon receipt by the party in default of the notice of termination,provided, however, the parties shall be allowed 10 days from the date ofreceipt of notice of default to cure any default. Notwithstanding any otherprovision of this Agreement, Buyer may offset against amounts otherwise owed toSeller the price of any product which fails to conform to any requirements ofthis Agreement.

 

14.                                 FORCEMAJEURE.  Neither Seller nor Buyerwill be liable to the other for any failure or delay in the performance of anyobligation under this Agreement due to events beyond its reasonable control,including, but not limited to, fire, storm, flood, earthquake, explosion, actof the public enemy, riots, civil disorders, sabotage, strikes, lockouts, labordisputes, labor shortages, war stoppages or slowdowns initiated by labor, transportationembargoes, failure or

 

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shortage of materials,acts of God, or acts or regulations or priorities of the federal, state orlocal government or branches or agencies thereof.

 

15.                                 INDEMNIFICATION.

 

A.                                   Sellershall indemnify, defend and hold Buyer and its officers, directors, employeesand agents harmless, from any and all losses, liabilities, damages, expenses(including reasonable attorneys’ fees), costs, claims, demands, that Buyer orits officers, directors, employees or agents may suffer, sustain or becomesubject to, or as a result of (i) any misrepresentation or breach of warranty,covenant or agreement of Seller contained herein or (ii) the Seller’snegligence or willful misconduct.

 

B.                                     Buyershall indemnify, defend and hold Seller and its officer, directors, employeesand agents harmless, from any and all losses, liabilities, damages, expenses(including reasonable attorneys’ fees), costs, claims, demands, that Seller orits officers, directors, employees or agents may suffer, sustain or becomesubject to, or as a result of (i) any misrepresentation or breach of warranty,covenant or agreement of Buyer contained herein or (ii) the Buyer’s negligenceor willful misconduct.

 

C.                                     Wheresuch personal injury, death or loss of or damage to property is the result ofnegligence on the part of both Seller and Buyer, each party’s duty ofindemnification shall be in proportion to the percentage of that party’snegligence or faults.

 

D.                                    Selleracknowledges that in order to maximize the total revenue to be generatedthrough the sale of the Products, Buyer may take positions by selling Productin anticipation of Seller providing the Products.  Notwithstanding the fact that Seller’sobligation is to provide Buyer with the output of the Plant the partiesacknowledge that Buyer may suffer losses as a result of positions taken byBuyer if Seller discontinues operations for any reason whatsoever includingForce Majeure.  Therefore, Seller shallindemnify, defend and hold Buyer and its officers, directors, employees andagents harmless from any and all losses, liabilities, damages, expenses (includingreasonable attorney’s fees), costs, claims, demands that Buyer or its officers,directors, employees, or agents may suffer, sustain or become subject to as aresult of any sale or purchase of product taken by Buyer in anticipation ofSeller delivering the Products hereunder, provided Buyer has taken commerciallyreasonable steps to avoid the loss. Notwithstanding the above, Seller shall not be liable for any lossresulting from Seller discontinuing operations related to a position taken byBuyer for delivery more than 90 days from the date of entering into a salewithout the consent of Seller nor shall Seller be liable to Buyer for anypositions taken by Buyer that result in Buyer being over contracted beyondSeller’s production capacity.

 

16.                                 GOVERNMENTALACTION.  The parties recognize thatthe value of the Products could change as a result of various governmentalprograms, be they foreign or domestic. In the event that a significant value change of the Products as a resultof any such governmental program, Buyer may request re-negotiation of thecontract price for the Products by providing written notice to Seller.  Buyer shall be required to demonstrate thatthe value of the

 

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Products hassignificantly changed in the market. Should such a change take place, the parties agree to negotiate, in goodfaith, a revised sale price for the Products. If, after a good faith effort, the parties are unable to agree on a newprice within the 90 day period immediately following notice to the other party,then in such event and notwithstanding the other provisions hereof, Buyer mayterminate this Agreement upon 90 days prior written notice.

 

17.                                 RELATIONSHIPOF PARTIES.  This Agreement createsno relationship other than that of buyer and seller between the partieshereto.  Specifically, there is no agency,partnership, joint venture or other joint or mutual enterprise or undertakingcreated hereby.  Nothing contained inthis Agreement authorizes one party to act for or on behalf of the other andneither party is entitled to commissions from the other.

 

18.                                 MISCELLANEOUS.

 

A.  This writing is intended by the parties as afinal expression of their agreement and a complete and exclusive statement ofthe terms thereof.

 

B.  No course of prior dealings between theparties and no usage of trade, except where expressly incorporated byreference, shall be relevant or admissible to supplement, explain, or vary anyof the terms of this Agreement.

 

C.  Acceptance of, or acquiescence in, a courseof performance rendered under this or any prior agreement shall not be relevantor admissible to determine the meaning of this Agreement even though theaccepting or acquiescing party has knowledge of the nature or the performanceand an opportunity to make objection.

 

D.  No representations, understandings oragreements have been made or relied upon in the making of this Agreement otherthan as specifically set forth herein.

 

E.  This Agreement can only be modified by awriting signed by all of the parties or their duly authorized agents.

 

F.  The paragraph headings herein are forreference purposes only and shall not in any way affect the meaning orinterpretation of this Agreement.

 

G.  This Agreement shall be construed andperformed in accordance with the laws of the State of  Iowa.

 

H.  The respective rights, obligations andliabilities of the parties under this Agreement are not assignable or delegablewithout the prior written consent of the other party.

 

I.   Noticeshall be deemed to have been given to the party to whom it is addressedninety-six (96) hours after it is deposited in certified U.S. mail, postageprepaid, return receipt requested, addressed as follows:

 

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| Buyer:  | Commodity Specialist Company           |
|---------|----------------------------------------|
|    | 310 Grain  Exchange Bldg.              |
|    | 400 South Fourth  Street,              |
|    | Minneapolis, MN  55415                 |
|    | ATTN: Steve J.  Markham                |
|    |                                   |
| Seller: | United Wisconsin  Grain Producers, LLC |
|    | P.O. Box 247                           |
|    | Friesland, WI  53935                   |
|    | ATTN: Jeff  Robertson                  |

 

INWITNESS THEREOF, the parties have caused this Agreement to be executed the dayand year first above written.

 
|   | COMMODITY  SPECIALISTS COMPANY        |
|--------|---------------------------------------|
|   |                                  |
|   | By                                    | /S/ Philip  Lindau |   |
|   | Its                                   | EVP |   |
|   |                                  |   |   |
|   | United Wisconsin  Grain Producers LLC |   |
|   |                                  |   |   |
|   | By                                    | /S/ Kevin Roche |   |
|   | Its                                   | President |   |

 

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