**Exhibit 10.1**

 

***RPMG***

***RenewableProducts Marketing Group***

 

 

**ETHANOL FUEL**

**MARKETING AGREEMENT**

 

 

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# ***ETHANOLFUEL MARKETING AGREEMENT***

#  

**THIS AGREEMENT,** entered intothis 25th day of August, 2004, by and between RENEWABLE PRODUCTS MARKETINGGROUP, LLC, a Minnesota limited liability company, hereinafter referred to as “RENEWABLEPRODUCTS”; and UNITED WISCONSIN GRAIN PRODUCERS, LLC, a Wisconsin limitedliability company, hereinafter referred to as “UWGP.”

 

**WITNESSETH:**

 

**WHEREAS,** RENEWABLEPRODUCTS is a Minnesota limited liability company formed for the purpose ofmarketing ethanol for its members and others, and,

 

**WHEREAS,****UWGP** is a Wisconsinlimited liability company formed for the purpose of constructing a plant inFriesland, Wisconsin for the production of fuel grade ethanol, and,

 

**WHEREAS,** the partiesbelieve that it would be in their mutual best interests for RENEWABLE PRODUCTSto market, sell and distribute all of the ethanol produced by UWGP at its plantin Friesland, Wisconsin; and

 

**WHEREAS,** the partiesdesire to enter into this Agreement, for purposes of setting out the terms andconditions of the business arrangement;

 

**NOW, THEREFORE,** Inconsideration of the mutual covenants and promises herein contained, theparties hereto agree as follows:

 

1.                                       ExclusiveMarketing Representative. That if UWGP constructs afacility for the production of fuel grade ethanol, RENEWABLE PRODUCTS shall,subject to the terms and conditions of this Agreement, be the sole marketingrepresentative for the entire production of said facility. Notwithstanding theforegoing, any ethanol production resulting from future expansion at UWGP’sethanol facility in Friesland, Wisconsin or resulting from UWGP’s direct orindirect ownership or operation of other ethanol facilities shall not besubject to this Agreement.

 

2.                                       PlantConstruction/Ethanol Specifications. That UWGP promises and agrees to proceed, with due diligence, toward theplanning, financing and construction of a facility for the production of fuelgrade ethanol with a capacity of approximately 40 million gallons per year, ,and conforming to the specifications described in A.S.T.M. 4806 and such otherspecifications that may be, from time-to-time, promulgated by the industry forE-Grade denatured fuel ethanol. UWGPcontemplates that said facility will be in production by March 2005,and will make every good faith effort to begin production by that time. All ofthe ethanol marketed by RENEWABLE PRODUCTS and sold to its customers will be ofmerchantable quality and will be fit for its intended purpose. All such fuelgrade ethanol will conform to the specifications described in A.S.T.M. 4806 andsuch other specifications that may be, from time to time, promulgated by theindustry for E-Grade denatured fuel ethanol.

 

3.                                       Rail and TruckLoading Facilities. That the facility to be constructed and operatedby UWGP, as aforesaid,shall include reasonable and convenient railcar and tank truck

 

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accessat the facility of a size and design appropriate to handle production ofapproximately 40 million gallons of ethanol per year. All such railcar and tanktruck loading facilities shall meet all industry and governmental safetystandards and shall be capable of delivering a minimum design capacity of 400gallons of product per minute to railcars and/or tank trucks**.****UWGP** will be solelyresponsible for all demurrage charges for railcars incurred on its site and fordemurrage charges on railcars unable to be delivered at UWGP’s ethanol facilitydue to insufficient railcar siding capacity. **UWGP** shall providepersonnel reasonably needed to load trucks or rail cars at its facility in atimely manner. Demurrage charged to trucks or railcars resulting fromoperations beyond the control of UWGP and incurred off-site will not be chargeddirectly to UWGP.

 

4.                                       StorageCapacity. That the facility to be constructed and operatedby UWGP as aforesaid shall havesufficient storage capacity for not less than 10 days ethanol production.

 

5.                                       Best Efforts toMarket. That since RENEWABLE PRODUCTS shall have the exclusive right tomarket all the fuel grade ethanol produced by UWGPduring the term of this agreement as described in Section 1herein, RENEWABLE PRODUCTS promises and agrees to use its best efforts and goodfaith to market all such fuel grade ethanol; provided, however, that RENEWABLEPRODUCTS’ obligation hereunder shall be excused in case of fire, flood, othernatural calamity, labor dispute or any adverse governmental statute,regulations or decree (including any court order or decree), directly affectingRenewable Products ability to market products.

 

6.                                       Risk of Loss. ThatRENEWABLE PRODUCTS will be responsible for the marketing (subject to the termsof this agreement) of all such fuel grade ethanol produced by **UWGP**as described in Section 1 herein, from the time the commoncarrier or customer takes custody of the product at UWGP’s facility ineither a railcar and/or tank truck. In addition, RENEWABLE PRODUCTS shall bearthe risk of loss for all such product that has been accepted for shipment bythe common carrier.

 

7.                                       SpecificMarketing Tasks. RENEWABLE PRODUCTS shall be totally responsiblefor the marketing, sale and delivery of all the production from UWGP’s facility during the term of this agreement, including, but notlimited to:

 

•                  Obtainingsufficient railcar, tank trucks and other transport as may be needed to handlesaid production;

•                  Negotiating therates and tariffs to be charged for delivery of such production to thecustomer;

•                  Promoting andadvertising the sale of fuel grade ethanol as appropriate;

•                  Ascertainingthat such production is delivered where contracted and intended;

•                  Handling allpurchase agreements with consumers and any complaints in connection therewith;and

•                  Collecting allaccounts and undertaking any legal collection procedures as may be necessary.

 

8.                                       Negotiation ofEthanol Price. That RENEWABLE PRODUCTS will use itsbest efforts to obtain the best price for all fuel grade ethanol sold by itpursuant to the terms of this Agreement. Within six (6) months of anticipatedstart-up operations, UWGP shallinform RENEWABLE PRODUCTS whether its ethanol will be marketed underthe pooling or non-pooling

 

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ethanolmarketing arrangement described in this Agreement. Upon expiration of theInitial Term of this Agreement and in the event the Agreement is renewed,RENEWABLE PRODUCTS shall consult with UWGP to compare and discuss the ethanolmarketing results produced by the pooling or non-pooling arrangement selectedby UWGP prior to commencement of operations and UWGP shall elect whether tobegin or continue using either the pooling or non-pooling ethanol marketingarrangement for the duration of the Renewal Term.

 

9.                                       EthanolMarketing Under Pooling Arrangement. Notwithstanding that UWGP is not currently a member of RENEWABLEPRODUCTS, at the direction of UWGP,RENEWABLE PRODUCTS shall market the ethanol production of UWGP under the pooling arrangementmaintained by the members of RENEWABLE PRODUCTS. Under such poolingarrangement**,**UWGP will pay RENEWABLEPRODUCTS $.0075 (3/4 of one cent) per gallon for each gallon of ethanol sold by RENEWABLEPRODUCTS to the pool for the account of UWGP.Payment of the ethanol selling price shall be made by RENEWABLEPRODUCTS to UWGP as follows:

 

(a)                                  The ActualPrice for Ethanol Sold to RENEWABLE PRODUCTS by UWGP. RENEWABLE PRODUCTS agrees to pay UWGP a price for all ethanol sold to RENEWABLE PRODUCTS by UWGP under this Agreement that isequal to the “Actual Pooled Netback Ethanol Selling Price,” as defined in this Section 9.For purposes of this Agreement, the Actual Pooled Netback Ethanol Selling Pricewill be calculated as follows:

 

(i)                                     The EstimatedDelivered Ethanol Selling Price. Each week, RENEWABLE PRODUCTS shall calculatethe estimated delivered ethanol selling price per gallon of all of the UWGP ethanol that RENEWABLE PRODUCTSsells to its customers through operation of the ethanol pool. This amount willhereinafter be referred to as the “Estimated Delivered Ethanol Selling Price.”

 

(ii)                                  The PooledAverage Delivered Ethanol Selling Price. Based upon the Estimated DeliveredEthanol Selling Price calculated for each pool participant, RENEWABLE PRODUCTSshall calculate the Pooled Average Delivered Ethanol Selling Price which shallbe a weighted average of each pool participant’s Estimated Delivered EthanolSelling Price averaged in direct proportion to the volume of ethanol suppliedto the pool by each pool participant for the week in which the estimate iscalculated.

 

(iii)                               The Deductionfor Estimated Direct Ethanol Distribution Expense. Each week, RENEWABLEPRODUCTS shall calculate the estimated distribution expenses directly incurredin connection with distributing the ethanol sold under this Agreement for theaccount of UWGP (the “EstimatedDirect Ethanol Distribution Expense”). The Estimated Direct EthanolDistribution Expense will include, but not necessarily be limited to, all ofRENEWABLE PRODUCTS’ transportation costs, rail car costs, throughput costs,storage costs, demurrage at unloading locations, inventory costs and otherdistribution costs directly incurred in connection with distributing theethanol sold under this Agreement for the account of UWGP.

 

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(iv)                              The PooledAverage Direct Ethanol Distribution Expense. Based upon the Estimated DirectEthanol Distribution Expense calculated for each pool participant, RENWABLEPRODUCTS shall calculate the Pooled Average Direct Ethanol Distribution Expensewhich shall be a weighted average of each pool participant’s Estimated DirectEthanol Distribution Expense averaged in direct proportion to the volume ofethanol supplied to the pool by each pool participant for the week in which theestimate is calculated.

 

(v)                                 The EstimatedPooled Netback Ethanol Selling Price. The difference between the Pooled AverageEstimated Delivered Ethanol Selling Price, and the Pooled Average DirectEthanol Distribution Expense shall be the Estimated Pooled Netback EthanolSelling Price to be paid to UWGPby RENEWABLE PRODUCTS for the applicable week.

 

(b)                                 The ActualPooled Netback Ethanol Selling Price for Ethanol Sold to Renewable Products by UWGP.

 

(i)                                     The ActualPooled Netback Ethanol Selling Price. The Actual Pooled Netback Ethanol SellingPrice cannot be determined before UWGPsells ethanol to RENEWABLE PRODUCTS under this Agreement, because the ActualPooled Netback Ethanol Selling Price is based upon the estimated delivery priceand estimated distribution expense for the ethanol supplied by each poolparticipant. Because of that, RENEWABLE PRODUCTS will establish an estimateddelivered price and estimated distribution expense for UWGP’S ethanol for each week during the term of this Agreement, inorder to establish an estimated delivered price and estimated distributionexpense for UWGP’S ethanol whichwill be sold and marketed by RENEWABLE PRODUCTS. RENEWABLE PRODUCTS shallreconcile the estimates with actual selling prices and distribution expenses asprovided in subparagraph (iii) below.

 

(ii)                                  Invoices andPayments Between UWGP andRENEWABLE PRODUCTS. UWGP willinvoice RENEWABLE PRODUCTS, upon shipment, at the applicable Estimated PooledNetback Ethanol Selling Price for all ethanol sold to RENEWABLE PRODUCTS by UWGP under this Agreement. RENEWABLEPRODUCTS will pay UWGP for allsuch ethanol within 7 to 10 business days from the date of delivery, withdelivery occurring at the time the common carrier takes possession of theethanol.

 

(iii)                               Calculation ofActual Selling Prices After Each Month. At the end of each month, promptlyafter the information necessary to calculate the Actual Pooled Netback EthanolSelling Price becomes available, RENEWABLE PRODUCTS will calculate the ActualPooled Netback Ethanol Selling Price for the preceding month. RENEWABLEPRODUCTS will provide that Actual Pooled Netback Ethanol Selling Price to UWGP, along with a summary of thecalculations used by RENEWABLE PRODUCTS to arrive at the Actual Pooled NetbackEthanol Selling Price.

 

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(iv)                              Reconciliationof Estimated Selling Prices and Actual Selling Prices After Each Month. Withinten (10) days after RENEWABLE PRODUCTS provides UWGP with the Actual Pooled Netback Ethanol Selling Price for thepreceding month, the parties will reconcile the difference between theEstimated Pooled Netback Ethanol Selling Price and the Actual Pooled NetbackEthanol Selling Price for the preceding month. If the Estimated Pooled NetbackEthanol Selling Price exceeded the Actual Pooled Netback Ethanol Selling Price,then UWGP will refund toRENEWABLE PRODUCTS the overpayments that it previously received from RENEWABLEPRODUCTS, within ten (10) days after the completion of this actual andestimated selling price reconciliation. In lieu of UWGP directly refunding any amounts to RENEWABLE PRODUCTS byseparate payment, and RENEWABLE PRODUCTS directly refunding any amounts to UWGP by separate payment, under this Section 8,the parties may offset the required amounts on their next respective monthlypayments.

 

On the other hand, if the Estimated PooledNetback Ethanol Selling Price was less than the Actual Pooled Netback EthanolSelling Price, then RENEWABLE PRODUCTS will pay UWGP the additional amounts owed to UWGP, within ten (10) days after the completion of this actual andestimated selling price reconciliation.

 

(c)                                  Most FavorableTerms. If RENEWABLE PRODUCTS enters into any ethanol marketing agreement withany current or future ethanol pool participant, RENEWABLE PRODUCTS shallprovide to UWGP a copy of such agreement and UWGP shall have the opportunity toreceive the same rights and benefits conferred under such other agreement. Inno event shall RENEWABLE PRODUCTS enter into any pooling agreement, withoutUWGP’s consent, which shall adversely affect or reduce the rights or increasethe obligations of UWGP with respect to this Agreement.

 

10.                                 Non-PoolingMarketing Arrangement. For any and all ethanol produced by UWGP and marketed by RENEWABLEPRODUCTS using the non-pooling marketing arrangement, RENEWABLE PRODUCTS shallpay to UWGP the net proceeds ofsale based upon the price per gallon of ethanol paid by the customer toRENEWABLE PRODUCTS. Such payment shall be made from RENEWABLE PRODUCTS to UWGP within ten (10) days of the dateon which the ethanol is shipped for delivery to such customer from UWGP asevidenced by the issuance date on the bill of lading. The net proceeds of salewill be the gross price minus freight costs. Payment shall generally be made bywire transfer or by other electronic transfer, directly to the account of UWGP, as UWGP shall direct. Profits realized by RENEWABLE PRODUCTS fromexchanges made on behalf of UWGP willbe paid to UWGP, unless UWGP has entered the poolingarrangement set forth in paragraph 9 herein.

 

11.                                 Ownership inRENEWABLE PRODUCTS. At any time during the term of this Agreement,UWGP may elect to become a member of RENEWABLE PRODUCTS on the terms andconditions set forth in Exhibit A to this Agreement.

 

12.                                 AccountsReceivable/Rail Car Leases/Termination of Contract. It will bethe responsibility of RENEWABLE PRODUCTS to do all billing in regard to thesale of ethanol, to collect all receivables and to be responsible for any badaccounts. All risks associated with accounts receivables shall be borne byRENEWABLE PRODUCTS. RENEWABLE PRODUCTS will lease approximately 45 railcars tobe used by UWGP and will bill UWGP for

 

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thelease payments, which payments shall be due within two (2) business days ofreceipt of the bill. RENEWABLE PRODUCTS, may at its discretion deduct saidamounts from any payments due UWGP as describedin paragraphs 9 and 10. If this contract is terminated, by non-renewal orotherwise, the lease for the rail cars leased by RENEWABLE PRODUCTS for the transportof UWGP’s ethanol will be assigned to UWGP, who will beobligated to the terms and conditions of said lease. RENEWABLE PRODUCTS shallprovide UWGP the opportunity to review and approve of the termsand conditions of any such rail car lease as well as the terms and conditionsof any amendments or modifications to any such rail car lease before RENEWABLEPRODUCTS first executes the same. The parties understand that the assignment ofthe lease is subject to the approval of the lessor of the rail cars.

 

13.                                 No “Take or Pay.” The partiesagree that this is not a “take or pay contract” and that RENEWABLE PRODUCTS’liability is limited to ethanol passing custody at UWGP’s facility.

 

14.                                 Term. The term ofthis agreement shall commence on the first day of the month that UWGP initially ships ethanol and shallcontinue for a period of 12 months thereafter (the “Initial Term”). The partiesshall be at liberty to negotiate a renewal of this Agreement. Any such renewalshall be referred to hereafter as a “Renewal Term.” If the parties fail toagree to a Renewal Term within 45 days of expiration of the Initial Term, UWGPshall be released from any and all obligations hereunder and shall be free tonegotiate and engage any other ethanol marketing firm(s) to market any and allethanol produced by UWGP.

 

15.                                 Termination.This Agreement may beterminated under the circumstances set out below.

 

(a)                                  Termination forIntentional Misconduct. If either party engages in intentional misconductreasonably likely to result in significant adverse consequences to the otherparty, the party harmed or likely to be harmed by the intentional misconductmay terminate this Agreement immediately, upon written notice to the partyengaging in the intentional misconduct.

 

(b)                                 Termination forUncured Breach. If one of the parties breaches the terms of this Agreement, theother party may give the breaching party a notice in writing which specificallysets out the nature and extent of the breach, and the steps that must be takento cure the breach. After receiving the written notice, the breaching partywill then have thirty (30) days to cure the breach, if the breach does notinvolve a failure to market and distribute the ethanol as required by thisAgreement.

 

If the breach does involve afailure to market and distribute the ethanol as required by this Agreement,then the breaching party will have five (5) days after receiving the writtennotice to cure the breach. If the breaching party does not cure any breachwithin the applicable cure period, then the non-breaching party will have theright to terminate this Agreement immediately.

 

(c)                                  Termination atthe End of the Initial Term or Any Renewal Term. Either party may terminatethis Agreement at the end of the Initial Term, or at the end of any RenewalTerm, by providing the other party with a written notice of intent toterminate. Such a written notice of intent to terminate must specify theproposed termination date,

 

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and must be received by the non-terminatingparty at least three (3) months before the proposed termination date.

 

(d)                                 Termination by Mutual Written Agreement. ThisAgreement may also be terminated upon any terms and under any conditions whichare mutually agreed upon in writing by the parties.

 

15.                                 Licenses andPermits. At all times from the commencement of this contract, UWGPwill have all of thelicenses and permits necessary to operate its production facilities andRenewable Products has and will have at all times during the term of thisAgreement, all of the licenses and permits necessary to perform its obligationsunder this Agreement.

 

16.                                 Expected Volume. During theterm of this Agreement, or any renewals thereof, UWGP agrees to have RENEWABLE PRODUCTS market all of the ethanol produced by UWGP it at its production facility. The averagemonthly volume of ethanol produced by UWGP is estimated to be approximately 3,333,000 gallons.

 

17.                                 Estimated12-Month Volume. As of the effective date of this Agreement, UWGP will provide RENEWABLE PRODUCTS with UWGP’s best estimate of its anticipated monthlyethanol production for the next twelve (12) months, to assist RENEWABLEPRODUCTS in developing appropriate marketing strategies for the ethanol to beproduced by UWGP.

 

18.                                 Updated MonthlyVolume Estimates. On or before the first day of each month, UWGP will provide RENEWABLE PRODUCTS with itsupdated best estimate of UWGP’s anticipated monthly ethanol production for the next twelve (12)months, so that RENEWABLE PRODUCTS will have ethanol production estimates from UWGP twelve (12) months into the future duringthe entire time that this Agreement is in effect.

 

19.                                 Good andMarketable Title. UWGP represents that it will have good and marketable title to allof the ethanol marketed for it by RENEWABLE PRODUCTS and that said ethanol willbe free and clear of all liens and encumbrances.

 

20**.**                                 Establishmentof Price and Other Sale Terms. When RENEWABLE PRODUCTSsells the ethanol marketed pursuant to the terms of this agreement to itscustomers, the parties understand and agree that the ethanol sales prices andall other terms and conditions of ethanol sales to customers under thisagreement will be established by RENEWABLE PRODUCTS. RENEWABLE PRODUCTS maymake these decisions, without the need of obtaining consent from UWGP. Notwithstandingthe foregoing, RENEWABLE PRODUCTS agrees to use its best efforts to communicatewith UWGP the terms and conditions of ethanol sales and shallimplement either the pooling or non-pooling ethanol marketing arrangement atthe sole direction of UWGP as described in Section 8 herein.

 

21.                                 IndependentContractor. Nothing contained in this agreement will makeRENEWABLE PRODUCTS the agent of UWGP for anypurpose whatsoever. RENEWABLE PRODUCTS and its employees shall be deemed to beindependent contractors, with full control over the manner and method ofperformance of the services they will be providing on behalf of UWGP under thisagreement.

 

22.                                 SeparateEntities. The parties hereto are separate entities andnothing in this agreement or otherwise shall be construed to create any rightsor liabilities of either party to this

 

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agreementwith regard to any rights, privileges, duties or liabilities of any other partyto this agreement.

 

23.                                 WorkingRelationship. Because the parties hereto have not done businesstogether in the past in the manner described in this agreement, they have notyet attempted to develop efficient and effective procedures related toordering, delivering ethanol and shipping ethanol and, therefore, agree to worktogether promptly and in good faith to develop effective and efficient policiesand procedures to cover these matters.

 

24.                                 EthanolShortage/Open Market Purchase. If UWGP is unable to deliver its estimated monthlyethanol production because actual ethanol production is 20% or more below itsestimated monthly ethanol production, and if as a consequence of thenon-delivery and in order to meet its sale obligation to third parties,RENEWABLE PRODUCTS is required to purchase ethanol in the market place,RENEWABLE PRODUCTS shall purchase ethanol in the market place at suchreasonable price and in such reasonable quantity as is required to meet itsdelivery obligations; provided, however, that prior to making such purchases,RENEWABLE PRODUCTS shall communicate the terms and conditions of such purchasesto UWGP and shall obtain the consent of UWGP to such purchases which consentshall not be unreasonable withheld. If it does so, and as a result thereof incursa financial loss, UWGP will reimburse RENEWABLE PRODUCTS for any such loss. Under suchcircumstances, if RENEWABLE PRODUCTS realizes a financial gain, it will paysuch gain to UWGP.

 

25.                                 Testing ofSamples. At the request of RENEWABLE PRODUCTS, UWGP agrees toprovide RENEWABLE PRODUCTS with samples of its ethanol produced at itsproduction facility so that it may be tested for product quality on a regularbasis. Any and all costs of third party testing shall be paid for by RENEWABLEPRODUCTS.

 

26.                                 Insurance. During theentire term of this Agreement, UWGP will maintaininsurance coverage. At a minimum, UWGP’s insurancecoverage must include:

 

(a)                                  Comprehensivegeneral product and public liability insurance, naming RENEWABLE PRODUCTS as anadditional named insured, with liability limits of at least $5 million in theaggregate.

 

(b)                                 Property andcasualty insurance adequately insuring its production facilities and its otherassets against theft, damage and destruction on a replacement cost basis.

 

(c)                                  RENEWABLEPRODUCTS as a named insured under the comprehensive general product and publicliability insurance policy and the property and casualty insurance policy.

 

(d)                                 Workers’compensation insurance to the extent required by law.

 

UWGPwill not change its insurance coverage during the term of thisAgreement, if such change results in a failure to maintain the minimums set outabove.

 

27.                                 Audit Right. The partieshereto agree that, upon request in writing, either party may require the otherto make available its books and records, at reasonable intervals, in order to

 

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audit those books and records and to account for all dealings,transactions and sums relevant to this Agreement. Any such independent publicaccountants hired by either party will be subject to the same confidentialityobligations that the parties are subject to under Section 28 of thisAgreement. Each party agrees to inform its accountants of those confidentialityobligations.

 

28.                                 Handling ofConfidential Information. The parties acknowledge that they will beexchanging information about their businesses under this Agreement which isconfidential and proprietary, and the parties agree to handle that confidentialand proprietary information in the manner described in this Section 28.

 

(a)                                  Definition ofConfidential Information. For purposes of this Agreement, the term “ConfidentialInformation” will mean information related to the business operations of UWGPor RENEWABLE PRODUCTS that meets all of the following criteria:

 

(i)                                     The informationmust not be generally known to the public, and must not be a part of the publicdomain.

 

(ii)                                  The informationmust belong to the party claiming it is confidential, and must be in that party’spossession.

 

(iii)                               The informationmust have been protected and safeguarded by the party claiming it isconfidential by measures that were reasonable under the circumstances beforethe information was disclosed to the other party.

 

(iv)                              The disclosureof the information to third parties must be likely to result in adverseconsequences to the party claiming it is confidential.

 

(v)                                 Writteninformation must be clearly designated in writing as “CONFIDENTIAL INFORMATION”by the party claiming it is confidential before it is disclosed to the otherparty, except that all information about costs and prices will always beconsidered Confidential Information under this Agreement, without the need forspecifically designating it as such.

 

(vi)                              VerbalConfidential Information which is disclosed to the other party must besummarized in writing, designated in writing as “CONFIDENTIAL INFORMATION,” andtransmitted to the other party within ten (10) days of the verbal disclosure.

 

(b)                                 Limitations onthe Use of Confidential Information. Each party agrees that it will not use anyConfidential Information that it obtains about the other party for any purpose,other than to perform its obligations under this Agreement.

 

(c)                                  The Duty not to Disclose Confidential Information. The partiesagree that they will not disclose any Confidential Information about each otherto any person or organization, other than their respective legal counsel andaccountants, without first getting written consent to do so from the otherparty. Notwithstanding the foregoing, if a party or anyone to whom such partytransmits Confidential Information in accordance with this Agreement isrequested or required (by deposition, interrogatories, requests for

 

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information or documents in legalproceedings, subpoenas, civil investigative demand or similar process, SECfilings or administrative proceedings) in connection with any proceeding, todisclose any Confidential Information, such party will give the disclosingparty prompt written notice of such request or requirement so that thedisclosing party may seek an appropriate protective order or other remedyand/or waive compliance with the provisions of this Agreement, and thereceiving party will cooperate with the disclosing party to obtain suchprotective order. If such protective order or other remedy is not obtained orthe disclosing party waives compliance with the relevant provisions of thisAgreement, the receiving party (or such other persons to whom such request isdirected) will furnish only that portion of the Confidential Information which,in the opinion of legal counsel, is legally required to be disclosed, and uponthe disclosing party’s request, use commercially reasonable efforts to obtainassurances that the confidential treatment will be accorded to suchinformation. This will be the case both while this Agreement is in effect andfor a period of five (5) years after it has been terminated.

 

(d)                                 The Duty toNotify the Other Party in Cases of Improper Use or Disclosure. Each partyagrees to immediately notify the other party if either party becomes aware ofany improper use of or any improper disclosure of the Confidential Informationof the other party at any time while this Agreement is in effect, and for aperiod of five (5) years after it has been terminated.

 

(e)                                  Protection ofthe Confidential Information. Each party agrees to develop effective proceduresfor protecting the Confidential Information that it obtains from the otherparty, and to implement those procedures with the same degree of care that ituses in protecting its own Confidential Information.

 

(f)                                    Return of the Confidential Information. Immediatelyupon the termination of this Agreement, each party agrees to return to theother party all of the other party’s Confidential Information that is in its possession orunder its control.

 

29.                                 Indemnificationsand Hold Harmless - UWGP. If a third party makes a claim against RENEWABLE PRODUCTS or any personor organization related to it as the result of the actions or omissions of UWGP or any person or organization related to UWGP including, but not limited to, claimsrelating to the quality of ethanol produced by UWGP, then UWGP agrees to indemnify RENEWABLE PRODUCTS and its related persons andorganizations and to hold them harmless from any liabilities, damages, costsand/or expenses, including costs of litigation and reasonable attorneys feeswhich they incur as a result of any claims, arising solely from the marketingof UWGP’sethanol under this Agreement, made against them by third parties.

 

30.**                                **Indemnificationsand Hold Harmless—RENEWABLE PRODUCTS. The indemnificationobligations of the parties under this agreement will be mutual and RENEWABLEPRODUCTS, therefore, makes the same commitment to indemnify UWGP and itsrelated persons or organizations that UWGP has made toRENEWABLE PRODUCTS in the preceding paragraph.

 

31**.**                                 Survival ofTerms/Dispute Resolution. All representations, warranties andagreements made in connection with this agreement will survive the terminationof this agreement. The parties will, therefore, be able to pursue claims relatedto those representations,

 

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warrantiesand agreements after the termination of this agreement, unless those claims arebarred by the applicable statute of limitations. Similarly, any claims that theparties have against each other that arise out of actions or omissions thattake place while this agreement is in effect will survive the termination ofthis agreement. This means that the parties may pursue those claims even afterthe termination of this agreement, unless applicable statutes of limitation barthose claims. The parties agree that, should a dispute between them arise inconnection with this agreement, the parties will complete, in good faith, amediation session prior to the filing of any action in any court. Suchmediation session shall occur at a place that is mutually agreeable, and shallbe conducted by a mediator to be selected by mutual agreement of the parties.

 

32.                                 Choice of Law. The partiesagree that this agreement will be governed by, interpreted under and enforcedin accordance with Wisconsin law.

 

33.                                 Assignment. Neither partymay assign its rights or obligations under this agreement without the writtenconsent of the other party, which consent will not be unreasonably withheld. Notwithstandingthe foregoing, RENEWABLE PRODUCTS consents to any collateral assignment of thisAgreement by UWGP to a lender in connection with UWGP securing the debt financingnecessary to fund construction and start-up operations of the plant.

 

34.                                 EntireAgreement. This Agreement constitutes the entire agreementbetween the parties covering everything agreed upon or understood in thetransaction. There are no oral promises, conditions, representations,understandings, interpretations, or terms of any kind as conditions orinducements to the execution hereof or in effect between the parties , exceptas expressed in this Agreement. No change or addition shall be made to thisAgreement except by a written document signed by all parties hereto.

 

35.                                 Execution ofCounterparts. This Agreement may be executed by the parties onany number of separate counterparts, and by each party on separatecounterparts, each of such counterparts being deemed by the parties to be anoriginal instrument; and all of such counterparts, taken together, shall bedeemed to constitute one and the same instrument.

 

36.                                 DuplicateCounterpart Includes Facsimile. The parties specificallyagree and acknowledge that a duplicate hereof shall include, but not be limitedto, a counterpart produced by virtue of a facsimile (“fax”) machine.

 

37.                                 Binding Effect. ThisAgreement shall be binding upon, and shall inure to the benefit of, the partieshereto and there respective heirs, personal representatives, successors andassigns.

 

38.                                 Notices. Any notice orother communication required or permitted hereunder shall be in writing andshall be considered delivered in all respects when it has been delivered byhand or mailed by first class mail postage prepaid, addressed as follows:

 

TO:                            RENEWABLEPRODUCTS MARKETING GROUP, L.L.C.

809 East Main Street

Belle Plaine, MN 56011

 

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TO:                            UNITEDWISCONSIN GRAIN PRODUCERS, LLC

P.O. Box 247

Friesland, WI 53935

 

Physical address:

TO:                            UNITEDWISCONSIN GRAIN PRODUCERS, LLC

W1231 Tessman Rd.

Cambria, WI 53923

 

With a copy to:

 

William E. Hanigan, Esq.

Brown, Winick, Graves et al.

666 Grand Avenue, Suite 2000

Des Moines, IA 50309

 

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**IN WITNESS WHEREOF,** the parties hereto have settheir hands the day and year first written above.

 

 
|       | **RENEWAL PRODUCTS MARKETING**             |
|------------|--------------------------------------------|
| ** ** | **GROUP, L.L.C.**                          |
| ** ** | ** **                                 |
| ** ** | ** **                                 |
|       | By                                         | /s/C. Stephen Bleyl |   |
|       | Its                                        | CEO |   |
|       |                                       |
|       |                                       |
|       | **UNITED WISCONSIN GRAIN PRODUCERS,  LLC** |
|       |                                       |
|       |                                       |
|       | By                                         | /s/ Kevin Roche |   |
|       | Its                                        | President |   |

 

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##### EXHIBIT A

#####  

TERMS AND CONDITIONS OF OWNERSHIP IN RPMG

 

While UWGP may request to become an owner in RENEWABLEPRODUCTS at any time during the term of the Agreement, UWGP shall be eligiblefor ownership in RENEWABLE PRODUCTS no earlier than the last day of the ninth(9th) month of plant operations as measured from the first date onwhich UWGP delivers ethanol to RENEWABLE PRODUCTS for distribution. Theownership of UWGP in RENEWABLE PRODUCTS shall be subject to the approval ofeach then-current owner in RENEWABLE PRODUCTS.

 

If UWGP is accepted as an owner, UWGP shall be boundby all of the terms and conditions of the operating agreement of RENEWABLEPRODUCTS to the extent such terms and conditions do not contradict thefollowing terms and conditions of ownership as have been specificallynegotiated between UWGP and RENEWABLE PRODUCTS as of the date of thisAgreement:

 

(1)                                  Upon acceptanceof UWGP as an owner in of RENEWABLE PRODUCTS, UWGP shall make a capitalcontribution to RENEWABLE PRODUCTS consisting of the following two payments:

 

(a)      a lump sum payment of $105,000 shall be contributed toRENEWABLE PRODUCTS by UWGP immediately upon UWGP’s becoming an owner inRENEWABLE PRODUCTS;; and

 

(b)      a payment of $500,000 shall be contributed to RENEWABLEPRODUCTS by UWGP, which shall be contributed by one of the following three (3)methods:

 

(i)    as a lump sum payment;

 

(ii)   as a monthly offset against the aggregate pooling fee payable byUWGP to RENEWABLE PRODUCTS under this Agreement; or

 

(iii)  as any combination of both (i) and (ii) subject to the approval ofRENEWABLE PRODUCTS.

 

(2)                                  If UWGP electsto contribute the $500,000 as a monthly offset pursuant to subparagraph1(b)(ii) above, the monthly offset shall be calculated as follows:

 

(a)                   The partiesshall determine the total gallons of ethanol produced by UWGP for the currentmonth within 10 business days of the close of such month;

 

(b)                  The partiesshall then determine the difference between:

 

(i)    the per gallon pooling fee payable under Section 9 of thisAgreement ($0.0075); and

 

 

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(ii)   the per gallon operating expenses of RENEWABLE PRODUCTS’ measuredby the expenses incurred for the month in which production is being measured,which shall be determined within 10 business days of the close of such month;

 

(c)                   The partiesshall multiply the total monthly production of UWGP times the amount determinedin subparagraph 2(b) above.

 

(d)                  The calculationset forth in this subparagraph (2) can be illustrated by the following example:

 
| Total Monthly Ethanol  Production                            |   | 4,000,000 |  gallons |
|--------------------------------------------------------------|--------|-----------|---------------|
|                                                         |   |      |          |
| Pooling Fee                                                  |   | $         | 0.0075        |  per gallon |
|                                                         |   |      |          |
| Operating Expenses                                           |   | $         | 0.0025        |  per gallon |
|                                                         |   |      |          |
| Difference to be  multiplied times Monthly Production Amount |   | $         | 0.0050        |  per gallon |
|                                                         |   |      |          |
| Offset Amount (4,000,000 x  $0.0050)                         |   | $         | 20,000        |   |

 

(3)                                  The monthlyoffset shall be applied toward the $500,000 capital contribution amount and shallreduce the outstanding balance of same.

 

(4)                                  UWGP shall beeligible, at any time, to make lump sum payments of any amount to reduce theoutstanding balance of its capital contribution.

 

 

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