EXHIBIT 10.1


 


Ethanol Purchase and


Marketing Agreement


 


This
Agreement is entered into as of this 2nd day of September 2009, by and
between Heron Lake BioEnergy, LLC and C&N Ethanol Marketing Corporation.


 


	
  Seller:

  	
  Heron
  Lake BioEnergy, LLC

  
	
   

  	
  91246
  390th Avenue

  
	
   

  	
  Heron
  Lake, MN 56137-3175

  
	
   

  	
   

  
	
  Buyer:

  	
  C&N
  Ethanol Marketing Corporation (“C&N”)

  
	
   

  	
  8011-34th Avenue South, Suite 147

  
	
   

  	
  Bloomington,
  MN 55425

  



 


W I T N E S S E T H:


A.            Heron Lake BioEnergy is a
manufacturer of Ethanol and C&N intends to purchase the ethanol from Heron
Lake BioEnergy for the purposes of reselling the ethanol on the open market and
under the terms and conditions of this Agreement


 


B.            In consideration of the mutual
covenants contained herein and for other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:


 


	
  Product:

  	
  Fuel
  grade ethanol

  
	
   

  	
   

  
	
  Quality:

  	
  Meets
  ASTM - D4806 specifications for denatured fuel ethanol and as may be more
  fully described on Exhibit A. During the term of this agreement, Heron
  Lake BioEnergy agrees to collect samples for each shipment and retain them
  for a three-month period. Each product sample will be labeled to include the
  customer order number, production date and any other applicable information.

  
	
   

  	
   

  
	
  Term:

  	
  The
  agreement will begin with the commencement of ethanol production at Heron
  Lake BioEnergy for an initial three-year period. The agreement will
  automatically renew for subsequent year terms unless either party terminates
  the agreement 60 days before the end of the term.

  
	
   

  	
   

  
	
  Termination:

  	
  The
  agreement may be terminated if either party engages in an uncured breach.
  After receiving written notice, the breaching party will have 30 days to cure
  the breach. If the breaching party does not cure the breach in the required
  time, the agreement will terminate 30 days later.

  



 


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  Volume:

  	
  Heron
  Lake BioEnergy’s entire production estimated to be approximately 4,500,000
  per month. Heron Lake BioEnergy will provide C&N with a forecast of
  production on or before the 15th of each month for the future month.

  
	
   

  	
   

  
	
  Measurement:

  	
  Net
  gallons temperature compensated to 60 degrees Fahrenheit

  
	
   

  	
   

  
	
  Title:

  	
  Title
  transfers from seller to buyer at inlet flange of receiving tank

  
	
   

  	
   

  
	
  Price:

  	
  C&N
  will pay Heron Lake BioEnergy the gross sales price to the customer less
  expenses and a 1% marketing fee after expenses. Expenses may include, but are
  not limited to: truck, rail and terminal fees

  
	
   

  	
   

  
	
  Payment
  Terms:

  	
  C&N
  will provide Heron Lake BioEnergy with a remittance by Wednesday of every
  week for shipments the previous week. Heron Lake BioEnergy will receive an
  electronic transfer of funds for that remittance the following Wednesday.

  
	
   

  	
   

  
	
  Audit
  of Records:

  	
  During
  the term of this agreement, Heron Lake BioEnergy may request a spot invoice
  audit or a complete audit. Heron Lake BioEnergy will be responsible for any
  fees incurred during such audits.

  
	
   

  	
   

  
	
  Indemnity:

  	
  Each
  party shall indemnify and hold the other harmless from any and all loss,
  damage, or expense (including reasonable attorneys’ fees) which the other
  party may incur or suffer as a result of any claim of any kind whatsoever
  arising out of any breach of Contractor’s representations in this Agreement
  and arising out of any other acts or omissions of either party in the course
  of performance of this Agreement.

  
	
   

  	
   

  
	
  Amendment/Waiver:

  	
   

  
	
   

  	
   

  
	
   

  	
  This Agreement
  may not be modified, amended or waived in any manner except by an instrument
  in writing signed by both parties hereto. The waiver by either party of compliance
  with any provision of this Agreement by the other party shall not operate or
  be construed as a waiver of any other provision of this Agreement, or of any
  subsequent breach by such party of a provision of this Agreement.

  



 


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  Supersedes Previous Agreements

  
	
   

  	
   

  
	
   

  	
  This
  Agreement supersedes all prior or contemporaneous negotiations, commitments,
  agreements (written or oral) and writings between the parties with respect to
  the subject matter hereof. All such other negotiations, commitments,
  agreements and writings will have no further force or effect, and the parties
  to any such other negotiation, commitment, agreement or writing will have no
  further rights or obligations thereunder.

  
	
   

  	
   

  
	
  Governing Law/Compliance:

  
	
   

  	
   

  
	
   

  	
  All
  matters affecting this Agreement, including the validity thereof, are to be
  governed by, interpreted and construed in accordance with the laws of the
  United States and the State of Minnesota.

  
	
   

  	
   

  
	
  Disputes:

  	
  Any
  disputes that arise between the parties with respect to the performance of
  this Agreement shall be submitted to binding arbitration by the American
  Arbitration Association, to be determined and resolved by said Association
  under its rules and procedures in effect at the time of submission and
  the parties hereby agree to share equally in the costs of said arbitration.

  
	
   

  	
   

  
	
  Notices:

  	
  Any
  notice hereunder by either party to the other shall be given in writing by
  personal delivery, by telecopy (with confirmation of transmission) or by
  certified mail, return receipt requested. A notice shall be deemed given, if
  by personal delivery or by telecopy, on the date of such delivery or, if by
  certified mail, on the date shown on the applicable return receipt.

  
	
   

  	
   

  
	
  Headings:

  	
  The
  headings of Sections and paragraphs herein are included solely for
  convenience of reference and shall not control the meaning or interpretation
  of any of the provisions of this Agreement.

  
	
   

  	
   

  
	
  Other:

  	
  Notwithstanding
  any other provision of the agreement, where not in conflict with the
  foregoing, all other terms and conditions shall be in accordance with
  standard industry practice.

  



 


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In
witness whereof, the parties hereto have executed this Agreement on the date
indicated below.


 


	
  Heron
  Lake BioEnergy, LLC.

  	
   

  	
  C&N
  Ethanol Marketing Corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Robert Ferguson

  	
   

  	
  By:

  	
  /s/
  Jon Bjornstad

  
	
  Robert
  Ferguson, CEO

  	
   

  	
  Jon
  Bjornstad, President

  
	
   

  	
   

  	
   

  
	
  Date:
  September 2, 2009

  	
   

  	
  Date:
  September 2, 2009

  
					



 


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Exhibit A


Specifications


 


Fuel
Ethanol meets the ASTM D4806-99 “ Standard Specification for Denatured Fuel
Ethanol for Blending with Gasolines for Use as Automotive Spark-Ignition Engine
Fuel.” The ASTM specification is as follows:


 


	
  Ethanol,
  volume %, min

  	
   

  	
  92.1

  	
  ASTM
  D5501

  
	
   

  	
   

  	
   

  	
   

  
	
  Methanol,
  volume %, max

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Existent
  Gum, (solvent washed) mg/100ml., max

  	
   

  	
  5.0

  	
  ASTM
  D381

  
	
   

  	
   

  	
   

  	
   

  
	
  Water
  Content, volume %, max

  	
   

  	
  1.0

  	
  ASTM
  D203

  
	
   

  	
   

  	
   

  	
   

  
	
  Denaturant
  content, volume %,

  	
  min

  	
   

  	
  1.96

  	
   

  
	
   

  	
  max

  	
   

  	
  2.49

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chloride
  Ion Content, mass ppm, max

  	
   

  	
  40

  	
  ASTM
  D512

  
	
   

  	
   

  	
   

  	
   

  
	
  Copper
  Content, mg/kg, max

  	
   

  	
  0.1

  	
  ASTM
  D1688

  
	
   

  	
   

  	
   

  	
   

  
	
  Acidity
  (as acetic acid), mass %, max

  	
   

  	
  0.007

  	
  ASTM
  D 6423

  
	
   

  	
   

  	
   

  	
   

  
	
  pHe

  	
   

  	
  6.5
  to 9.0

  	
  ASTM
  D6423

  
	
   

  	
   

  	
   

  
	
  Appearance

  	
   

  	
  Visibly
  free of suspended or precipitated contaminants, clear and bright

  
						



 


Additional CA Specifications (to comply with
California Air Recourses Board specs):


 


	
  Sulfur,
  ppm, max

  	
   

  	
  10

  	
  ASTM
  D5453

  
	
   

  	
   

  	
   

  	
   

  
	
  Benzene,
  volume %, max

  	
   

  	
  0.06

  	
  ASTM
  D5580

  
	
   

  	
   

  	
   

  	
   

  
	
  Aromatics,
  volume %, max

  	
   

  	
  1.7

  	
  ASTM
  D5580

  
	
   

  	
   

  	
   

  	
   

  
	
  Olefins,
  volume %, max

  	
   

  	
  0.5

  	
  ASTM
  D319

  



 


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