Exhibit
10.3


 


RPMG


Renewable Products
Marketing Group


 


 


ETHANOL FUEL MARKETING AGREEMENT


 


 


ETHANOL FUEL MARKETING AGREEMENT


 

















 


THIS
ETHANOL FUEL MARKETING AGREEMENT (the “Agreement”),
entered into this 1st day of April, 2004, (the “Effective Date”) by
and between RENEWABLE PRODUCTS MARKETING G GROUP, L.L.C., hereinafter referred
to as “RENEWABLE PRODUCTS”; and GOLDEN GRAIN ENERGY, LLC, an Iowa Limited
Liability Company, hereinafter referred to as “GOLDEN GRAIN.”


 


WITNESSETH:


 


WHEREAS, RENEWABLE PRODUCTS is a Minnesota limited liability company
formed for the purpose of marketing ethanol for its members and others, and,


 


WHEREAS, GOLDEN GRAIN is an Iowa limited liability company formed for
the purpose of constructing a plant in Mason City, Iowa for the production of
fuel grade ethanol, and,


 


WHEREAS, the parties believe that it would be in their mutual best
interests for RENEWABLE PRODUCTS to market, sell and distribute all of the
ethanol produced by GOLDEN GRAIN; and


 


WHEREAS, the parties desire to enter into this Agreement, for purposes
of setting out the terms and conditions of the business arrangement;


 


NOW, THEREFORE, In consideration of the mutual covenants and promises
herein contained, the parties hereto agree as follows:


 


1.                                       Exclusive
Marketing Representative. That if GOLDEN GRAIN constructs a facility for
the production of fuel grade ethanol, RENEWABLE PRODUCTS shall be the sole
ethanol marketing representative for the entire ethanol production of said
facility subject to all the terms and conditions of this Agreement.


 


2.                                       Rail
and Truck Loading Facilities. That the facility to be constructed and
operated by GOLDEN GRAIN, as aforesaid, shall include reasonable and convenient
railcar and tank truck access at the facility of a size and design appropriate
to handle production of approximately 40 million gallons of ethanol per
year.  All such railcar and tank truck
loading facilities shall meet all industry and governmental safety standards
and shall be capable of delivering a minimum of 400 gallons of product per
minute to railcars and/or tank trucks. 
GOLDEN GRAIN will be solely responsible for all demurrage charges for
railcars in service for its use. GOLDEN GRAIN shall provide personnel
reasonably needed to load trucks or rail cars at its facility in a timely
manner.


 


3.                                       Storage
Capacity. That the facility to be constructed and operated by GOLDEN GRAIN
as aforesaid shall have sufficient storage capacity for not less than 10 days
ethanol production.


 


4.                                       Best
Efforts to Market. That since RENEWABLE PRODUCTS shall have the exclusive
right to market all the fuel grade ethanol produced by GOLDEN GRAIN during the
term of this Agreement, RENEWABLE PRODUCTS promises and agrees to use its best
efforts and good faith to market all such fuel grade ethanol; provided,
however, that RENEWABLE PRODUCTS’


 


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obligation hereunder shall be excused in case of fire, flood, other
natural calamity, labor dispute or any adverse governmental statute,
regulations or decree (including any court order or decree).


 


5.                                       Risk
of Loss. That RENEWABLE PRODUCTS shall be responsible for the marketing
(subject to the terms of this Agreement) of all such fuel grade ethanol
produced by GOLDEN GRAIN, from the time the common carrier receives the product
at the GOLDEN GRAIN facility in either a railcar and/or tank truck. In
addition, RENEWABLE PRODUCTS shall bear the risk of loss for all such product
that has been accepted for shipment by the common carrier.


 


6.                                       Specific
Marketing Tasks. RENEWABLE PRODUCTS shall be totally responsible for the
marketing, sale and delivery of all the production from the GOLDEN GRAIN
facility during the term of this Agreement, including, but not limited to:


 


Obtaining sufficient railcar, tank trucks and other transport as may be
needed to handle said production;


Negotiating the rates and tariffs to be charged for delivery of such
production to the customer;


Promoting and advertising the sale of fuel grade ethanol as
appropriate; Ascertaining that such production is delivered where contracted
and intended;


Handling all purchase agreements with consumers and any complaints in
connection therewith; and


Collecting all accounts and undertaking any legal collection procedures
as may be necessary.


 


7.                                       Negotiation
of Ethanol Price. That RENEWABLE PRODUCTS will use its best efforts to
obtain the best price for all fuel grade ethanol sold by it pursuant to the
terms of this Agreement. Within six (6) months prior to anticipated start-up
operations, GOLDEN GRAIN shall inform RENEWABLE PRODUCTS whether its ethanol
will be marketed under the pooling or non-pooling ethanol marketing arrangement
described in this Agreement. Upon expiration of the Initial Term of this
Agreement and in the event the Agreement is renewed, RENEWABLE PRODUCTS shall
consult with GOLDEN GRAIN to compare and discuss the ethanol marketing results
produced by the pooling or non-pooling arrangement selected by GOLDEN GRAIN
prior to commencement of operations and GOLDEN GRAIN shall elect whether to
begin or continue using either the pooling or non-pooling ethanol marketing
arrangement for the duration of the Renewal Term.


 


8.                                       Ethanol
Marketing Under Pooling Arrangement. Notwithstanding that GOLDEN GRAIN is not
currently a member of RENEWABLE PRODUCTS, at the direction of GOLDEN GRAIN,
RENEWABLE PRODUCTS shall market the ethanol production of GOLDEN GRAIN under
the pooling arrangement maintained by the members of RENEWABLE PRODUCTS. Under
such pooling arrangement, GOLDEN GRAIN will pay RENEWABLE PRODUCTS $.O1 (one cent)
per gallon for each gallon of ethanol sold by RENEWABLE PRODUCTS to the pool
for the account of GOLDEN GRAIN. Payment of the ethanol selling price shall be
made by RENEWABLE PRODUCTS to GOLDEN GRAIN as follows:


 


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(a)                                  THE
ACTUAL PRICE FOR ETHANOL SOLD TO RENEWABLE PRODUCTS BY GOLDEN GRAIN. RENEWABLE
PRODUCTS agrees to pay GOLDEN GRAIN a price for all ethanol sold to RENEWABLE
PRODUCTS by GOLDEN GRAIN under this Agreement that is equal to the “Actual
Pooled Netback Ethanol Selling Price,” as defined in this Section 8. For
purposes of this Agreement, the Actual Pooled Netback Ethanol Selling Price
will be calculated as follows:


 


(i)  The Estimated Delivered Ethanol Selling Price.
Each week,
RENEWABLE PRODUCTS shall calculate the estimated delivered ethanol selling
price per gallon of all of the GOLDEN GRAIN ethanol that RENEWABLE PRODUCTS
sells to its customers through operation of the ethanol pool.  This amount will hereinafter be referred to
as the “Estimated Delivered Ethanol Selling Price.”


 


(ii)                                The
Pooled Average Delivered Ethanol Selling Price. Based upon the Estimated
Delivered Ethanol Selling Price calculated for each pool participant, RENEWABLE
PRODUCTS shall calculate the Pooled Average Delivered Ethanol Selling Price
which shall be a weighted average of each pool participant’s Estimated
Delivered Ethanol Selling Price averaged in direct proportion to the volume of
ethanol supplied to the pool by each pool participant for the week in which the
estimate is calculated.


 


(iii)                            The
Deduction for Estimated Direct Ethanol Distribution Expense. Each week,
RENEWABLE PRODUCTS shall calculate the estimated distribution expenses directly
incurred in connection with distributing the ethanol sold under this Agreement
for the account of GOLDEN GRAIN (the “Estimated Direct Ethanol Distribution
Expense”). The Estimated Direct Ethanol Distribution Expense will include, but
not necessarily be limited to, all of RENEWABLE PRODUCTS’ transportation costs, rail car
costs, throughput costs, storage costs, inventory costs and other distribution
costs directly incurred in connection with distributing the ethanol sold under
this Agreement for the account of GOLDEN GRAIN.


 


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


 


(v)                                   The
Estimated Pooled Netback Ethanol Selling Price. The difference between the
Pooled Average Estimated Delivered Ethanol Selling Price, and the Pooled
Average Direct Ethanol Distribution Expense shall be the Estimated Pooled
Netback Ethanol Selling Price to be paid to GOLDEN GRAIN by RENEWABLE PRODUCTS
for the applicable week.


 


(b)                                  THE
ACTUAL POOLED NETBACK ETHANOL SELLING PRICE FOR ETHANOL SOLD TO RENEWABLE
PRODUCTS BY GOLDEN GRAIN.


 


(i)                                    The
Actual Pooled Netback Ethanol Selling Price. The Actual Pooled Netback Ethanol
Selling Price cannot be determined before GOLDEN GRAIN sells ethanol to
RENEWABLE PRODUCTS under this Agreement, because the Actual Pooled Netback
Ethanol


 


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Selling Price is
based upon the estimated delivery price and estimated distribution expense for
the ethanol supplied by each pool participant. Because of that, RENEWABLE
PRODUCTS will establish an estimated delivered price and estimated distribution
expense for GOLDEN GRAIN’S ethanol for each week during the term of this
Agreement, in order to establish an estimated delivered price and estimated
distribution expense for GOLDEN GRAIN’S ethanol which will be sold and marketed
by RENEWABLE PRODUCTS. RENEWABLE PRODUCTS shall reconcile the estimates with
actual selling prices and distribution expenses as provided in subparagraph
(iii) below.


 


(ii)                                Invoices
and Payments Between GOLDEN GRAIN and RENEWABLE PRODUCTS. GOLDEN GRAIN will
invoice RENEWABLE PRODUCTS, upon shipment, at the applicable Estimated Pooled
Netback Ethanol Selling Price for all ethanol sold to RENEWABLE PRODUCTS by
GOLDEN GRAIN under this Agreement. RENEWABLE PRODUCTS will pay GOLDEN GRAIN for
all such ethanol within 7 to 10 business days from the date of delivery.


 


(iii)                            Calculation
of Actual Selling Prices After Each Month. At the end of each month, promptly
after the information necessary to calculate the Actual Pooled Netback Ethanol
Selling Price becomes available, RENEWABLE PRODUCTS will calculate the Actual
Pooled Netback Ethanol Selling Price for the preceding month. RENEWABLE PRODUCTS
will provide that Actual Pooled Netback Ethanol Selling Price to GOLDEN GRAIN,
along with a summary of the calculations used by RENEWABLE PRODUCTS to arrive
at the Actual Pooled Netback Ethanol Selling Price.


 


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


 


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


 


(c)                                  Most
Favorable Terms. If RENEWABLE PRODUCTS enters into any ethanol marketing
agreement with any current or future ethanol pool participant, RENEWABLE
PRODUCTS shall provide to GOLDEN GRAIN a copy of such agreement and GOLDEN
GRAIN shall have the opportunity to receive the same rights and benefits
conferred under such


 


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other agreement. In
no event shall RENEWABLE PRODUCTS enter into any pooling agreement, without
GOLDEN GRAIN’S consent, which shall adversely affect or reduce the rights or
increase the obligations of GOLDEN GRAIN with respect to this Agreement.


 


9.                                       Non-Pooling
Marketing Arrangement.  For any and all ethanol produced by
GOLDEN GRAIN and marketed by RENEWABLE PRODUCTS using the non-pooling marketing
arrangement, RENEWABLE PRODUCTS shall pay to GOLDEN GRAIN the net proceeds of
sale based upon the price per gallon of ethanol paid by the customer to
RENEWABLE PRODUCTS. Such payment shall be made from RENEWABLE PRODUCTS to
GOLDEN GRAIN within ten (10) days of the date on which the ethanol is shipped
for delivery to such customer from GOLDEN GRAIN as evidenced by the issuance
date on the bill of lading. The net proceeds of sale will be the gross price
minus freight costs. Payment shall generally be made by wire transfer or by
other electronic transfer, directly to the account of GOLDEN GRAIN, as GOLDEN
GRAIN shall direct. Profits realized by RENEWABLE PRODUCTS from exchanges made
on behalf of GOLDEN GRAIN will be paid to GOLDEN GRAIN, unless GOLDEN GRAIN has
entered the pooling arrangement set forth in paragraph 8 herein.


 


10.                                 Accounts
Receivable.  It will be the responsibility of RENEWABLE
PRODUCTS to do all billing in regard to the sale of ethanol, to collect all
receivables and to be responsible for any bad accounts. All risks associated
with accounts receivables shall be borne by RENEWABLE PRODUCTS.


 


11.                                 Rail Car
Leases.  RENEWABLE PRODUCTS will lease approximately 75
railcars to be used by GOLDEN GRAIN and will bill GOLDEN GRAIN for the lease
payments at cost, which payments shall be due within two (2) days of receipt of
the bill. RENEWABLE PRODUCTS, may at its discretion deduct said amounts from
any payments due GOLDEN GRAIN as described in paragraphs 8 and 9. If this
contract is terminated, by non-renewal or otherwise, the lease for the rail
cars leased by RENEWABLE PRODUCTS for the transport of GOLDEN GRAIN’S ethanol
will be assigned to GOLDEN GRAIN, who will be obligated to the terms and
conditions of said lease. RENEWABLE PRODUCTS shall provide GOLDEN GRAIN the
opportunity to review and approve of the terms and conditions of any such rail
car lease as well as the terms and conditions of any amendments or
modifications to any such rail car lease before RENEWABLE PRODUCTS first
executes the same. The parties understand that the assignment of the lease is
subject to the approval of the lessor of the rail cars.


 


12.                                 No “Take
or Pay.”  The parties agree that this is not a “take or pay
contract” and that RENEWABLE PRODUCTS’ liability is limited to ethanol passing
custody at GOLDEN GRAIN’S facility.


 


13.                                 Term.The
term of this agreement shall commence on the first day of the month that GOLDEN
GRAIN initially ships ethanol and shall continue for a period of 12 months
thereafter (the “Initial Term”). Unless this Agreement is terminated in the
manner described below in Section 14, this Agreement will automatically
renew for successive additional terms of one year each. These additional terms
will each be referred to hereafter as a “Renewal Term.”


 


14.                                Termination.This Agreement may be terminated under the circumstances set out below.


 


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


 


(b)                                 Termination
for Uncured Breach.                  If
one of the parties breaches the terms of this Agreement, the other party may
give the breaching party a 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
thirty (30) days to cure the breach, if the breach does not involve a failure
to make any payments which are required by this Agreement.


 


If the breach does involve a failure to make any payments which are
required by this Agreement, then the breaching party will have five (5) days
after receiving the written notice to cure the breach. If the breaching party
does not cure any breach within the applicable cure period, then the
non-breaching party will have the right to terminate this Agreement
immediately.   .


 


(c)                                  Termination
at the End of the Initial Term or Any Renewal Term. Either party may terminate
this Agreement at the end of the Initial Term, or at the end of any Renewal
Term, by providing the other party with a written notice of intent to
terminate. Such a written notice of intent to terminate must specify the
proposed termination date, and must be received by the nonterminating party at
least three (3) months before the proposed termination date.


 


(d)                                 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.


 


15.                                 Representations
And Warranties of GOLDEN GRAIN. In connection with the marketing of GOLDEN
GRAIN’s ethanol by RENEWABLE PRODUCTS under this Agreement, GOLDEN GRAIN makes
the following representations and warranties, for the benefit of RENEWABLE
PRODUCTS:


 


(a)                                  Existence
and Good Standing. GOLDEN GRAIN is a limited liability company validly existing
and in good standing under the laws of the State of Iowa.


 


(b)                                 Authority
and Company Approval. GOLDEN GRAIN has the power and the authority to enter
into this Agreement. Further, GOLDEN GRAIN has taken all company action
necessary to authorize it to execute, become bound by, and perform its duties
and obligations under this Agreement.


 


(c)                                  No
Conflicts as to Law or Agreements. The execution of this Agreement by GOLDEN
GRAIN and the taking of all actions by GOLDEN GRAIN under this Agreement do not
require the consent of any person, entity, or agency; do not violate any law.
rule, or regulation; and do not breach or violate any contract or agreement to
which GOLDEN GRAIN is a party, or by which GOLDEN GRAIN is bound,


 


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(d)                                 Compliance
with Laws. GOLDEN GRAIN is now in compliance, and during the entire term of
this Agreement will remain in compliance, with all applicable federal, state,
local, and foreign laws, ordinances, orders, rules, and regulations (“Laws”),
other than Laws where neither the costs or potential costs of failing to
comply, nor the costs or potential costs of causing compliance, would be material
to GOLDEN GRAIN or its business or assets. The definition of Laws set out above
includes, but is not limited to, the Toxic Substances Control Act (“TOSCA”),
and all other laws related to the protection of the environment (“Environmental
Laws”).


 


(e)                                  Good
Title. GOLDEN GRAIN will have good and marketable title to all of the ethanol
marketed by RENEWABLE PRODUCTS under this Agreement, free and clear of all
liens and encumbrances.


 


(f)                                    Licenses
and Permits. GOLDEN GRAIN now has, and will have at all times during the term
of this Agreement, all of the licenses and permits necessary to operate the
GOLDEN GRAIN facility.


 


(g)                                 Plant
Construction/Ethanol Specifications. GOLDEN GRAIN promises and agrees to
proceed, with due diligence, toward the planning, financing and construction of
a facility for the production of fuel grade ethanol with a capacity of
approximately 40 million gallons per year, which fuel grade ethanol will be at
least 199.50 proof (undenatured anhydrous), and conform to the specifications described
in A.S.T.M. 4806 and such other specifications that may be, from time-to-time,
promulgated by the industry for E-Grade denatured fuel ethanol. GOLDEN GRAIN
contemplates and will make every good faith effort to begin production at said
facility on or before March 1, ?005; provided, however, that this date is
an estimated date of completion and may be delayed due to a variety of factors
outside of GOLDEN GRAIN’s control.


 


(h)                                 Insurance.
During the entire term of this Agreement, GOLDEN GRAIN will maintain insurance
coverage that is standard, in the reasonable opinion of RENEWABLE PRODUCTS, for
a company of its type and size that is engaged in the production and selling of
ethanol. At a minimum, GOLDEN GRAIN’S insurance coverage must include:


 


(i.)                                  Comprehensive general
product and public liability insurance, naming RENEWABLE PRODUCTS as an
additional named insured, with liability limits of at least $5 million in the
aggregate.


 


(ii.) Property and casualty insurance
adequately insuring its production facilities and its other assets against
theft, damage and destruction on a replacement cost basis.


 


(iii.)                            RENEWABLE PRODUCTS as a
named insured under the comprehensive general product and public liability
insurance policy and the property and casualty insurance policy.


 


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


 


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GOLDEN GRAIN will not change its insurance coverage during the term of
this Agreement, except to increase it or enhance it, without the prior written
consent of RENEWABLE PRODUCTS.


 


16.                                 Representations
And Warranties of RENEWABLE PRODUCTS. In connection with providing the
services on behalf of GOLDEN GRAIN which are described in this Agreement,
RENEWABLE PRODUCTS makes the following representations and warranties, for the
benefit of GOLDEN GRAIN:


 


(a)                                  Existence
and Good Standing. RENEWABLE PRODUCTS is a limited liability company validly
existing and in good standing under the laws of the State of Minnesota.


 


(b)                                 Authority
and Company Approval. RENEWABLE PRODUCTS has the power and the authority to
enter into this Agreement. Further, RENEWABLE PRODUCTS has taken all company
action necessary to authorize it to execute, become bound by, and perform its
duties and obligations under this Agreement.


 


(c)                                  No
Conflicts as to Law or Agreements. The execution of this Agreement by RENEWABLE
PRODUCTS, the marketing of GOLDEN GRAIN’S ethanol by RENEWABLE PRODUCTS, and
the taking of all actions by RENEWABLE PRODUCTS under this Agreement do not
require the consent of any person, entity, or agency; do not violate any law,
rule, or regulation; and do not breach or violate any contract or agreement to
which RENEWABLE PRODUCTS is a party, or by which RENEWABLE PRODUCTS is bound.


 


(d)                                 Compliance
with Laws. RENEWABLE PRODUCTS is now in compliance, and during the entire term
of this Agreement will remain in compliance, with all applicable federal,
state, local, and foreign laws, ordinances, orders, rules, and regulations
(“Laws”), other than Laws where neither the costs or potential costs of failing
to comply, nor the costs or potential costs of causing compliance, would be
material to RENEWABLE PRODUCTS or its business or assets. The definition of
Laws set out above includes, but is not limited to, the Toxic Substances
Control Act (“TOSCA”), and all other laws related to the protection of the
environment (“Environmental Laws”).


 


(e)                                  Licenses
and Permits. RENEWABLE PRODUCTS now has, and will have at all times during the
term of this Agreement, all of the licenses and permits necessary to perform
its obligations under this Agreement.


 


(f)                                    Product
Quality. All of the ethanol marketed by RENEWABLE PRODUCTS and sold to its
customers will be of merchantable quality and will be fit for its intended
purpose. All such fuel grade ethanol will be at least 199.50 proof (undenatured
anhydrous), and conform to the specifications described in A.S.T.M. 4806 and
such other specifications that may be, from time-to-time, promulgated by the
industry for E-Grade denatured fuel ethanol.


 


17.                                 Expected
Volume.  During the term of this Agreement, or any renewals thereof,
GOLDEN GRAIN agrees to have RENEWABLE PRODUCTS market all of the ethanol
produced by GOLDEN GRAIN at its production facility. The average monthly volume
of ethanol produced by GOLDEN GRAIN is estimated to be approximately 3,333,333
gallons.


 


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18.                                 Estimated
12-Month Volume.                                      As
of the Effective Date of this Agreement, GOLDEN GRAIN will provide RENEWABLE
PRODUCTS with GOLDEN GRAIN’S best estimate of its anticipated monthly ethanol
production for the next twelve (12) months, to assist RENEWABLE PRODUCTS in
developing appropriate marketing strategies for the ethanol to be produced by
GOLDEN GRAIN.


 


19.                                 Updated
Monthly Volume Estimates. On or before the first day of each month, GOLDEN
GRAIN will provide RENEWABLE PRODUCTS with its updated best estimate of GOLDEN
GRAIN’S anticipated monthly ethanol production for the next twelve (12) months,
so that RENEWABLE PRODUCTS will have ethanol production estimates from GOLDEN
GRAIN twelve (12) months into the future during the entire time that this
Agreement is in effect.


 


20.                                 Establishment
of Price and Other Sale Terms. When RENEWABLE PRODUCTS sells the ethanol
marketed pursuant to the terms of this Agreement to its customers, the parties
understand and agree that the ethanol sales prices and all other terms and
conditions of ethanol sales to customers under this Agreement will be
established by RENEWABLE PRODUCTS. RENEWABLE PRODUCTS may make these decisions,
without the need of obtaining consent from GOLDEN GRAIN. Notwithstanding the
foregoing, RENEWABLE PRODUCTS agrees to use its best efforts to communicate
with GOLDEN GRAIN the terms and conditions of ethanol sales and shall implement
either the pooling,,or non-pooling marketing arrangement at the sole direction
of GOLDEN GRAIN, as described in Section 7 herein.


 


21.                                 Independent
Contractor. Nothing contained in this Agreement will make RENEWABLE
PRODUCTS the agent of GOLDEN GRAIN for any purpose whatsoever. RENEWABLE
PRODUCTS and its employees shall be deemed to be independent contractors, with
full control over the manner and method of performance of the services they
will be providing on behalf of GOLDEN GRAIN under this Agreement.


 


22.                                 Separate
Entities. The parties hereto are separate entities and nothing in this
agreement or otherwise shall be construed to create any rights or liabilities
of either party to this agreement with regard to any rights, privileges, duties
or liabilities of any other party to this Agreement.


 


23.                                 Working
Relationship. Because the parties hereto have not done business together in
the past in the manner described in this Agreement, they have not yet attempted
to develop efficient and effective procedures related to ordering, delivering
ethanol and shipping ethanol and, therefore, agree to work together promptly
and in good faith to develop effective and efficient policies and procedures to
cover these matters.


 


24.                                 Ethanol
Shortage/Open Market Purchase. If GOLDEN GRAIN is unable to deliver its
estimated monthly ethanol production because actual ethanol production is 20%
or more below its estimated monthly ethanol production and if as a consequence
of the non-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 such
reasonable price and in such reasonable quantity as is required to meet its
delivery obligations. If it does so, and as a result thereof incurs a financial
loss, GOLDEN GRAIN will reimburse RENEWABLE PRODUCTS for any such loss. Under
such


 


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circumstances, if RENEWABLE PRODUCTS realizes a financial gain, it will
pay such gain to GOLDEN GRAIN.


 


25.                                 Testing
of Samples. At the request of RENEWABLE PRODUCTS, GOLDEN GRAIN agrees to
provide RENEWABLE PRODUCTS with samples of the ethanol produced at its
production facility so that it may be tested for product quality on a regular
basis.


 


26.                                 Audit
Right. The parties hereto agree that, upon request in writing, either party
may require the other to make available its books and records, at reasonable
intervals, in order to audit those books and records and to account for all
dealings, transactions and sums relevant to this Agreement. Any such
independent public accountants hired by either party will be subject to the
same confidentiality obligations that the parties are subject to under
Section 27 of this Agreement. Each party agrees to inform its accountants
of those confidentiality obligations.


 


27.                                 Handling
of Confidential Information. The parties acknowledge that they will be
exchanging information about their businesses under this Agreement which is
confidential and proprietary, and the parties agree to handle that confidential
and proprietary information in the manner described in this Section 27.


 


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


 


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


 


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


 


(iii)                               The information must
have been protected and safeguarded by the party claiming it is confidential by
measures that were reasonable under the circumstances before the information
was disclosed to the other party.


 


(iv)                              The disclosure of the
information to third parties must be likely to result in adverse consequences
to the party claiming it is confidential.


 


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


 


(vi)                              Verbal Confidential
Information which is disclosed to the other party must be summarized in
writing, designated in writing as “CONFIDENTIAL INFORMATION,” and transmitted
to the other party within ten (10) days of the verbal disclosure.


 


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(b)                                 Limitations
on the Use of Confidential Information. Each party agrees that it will not use
any Confidential 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 parties agree that they will
not disclose any Confidential Information about each other to any person or organization,
other than their respective legal counsel and accountants, without first
getting written consent to do so from the other party. This will be the case
both while this Agreement is in effect and for a period of five (5) years after
it has been terminated.


 


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


 


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


 


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


 


28.                                 Indemnifications
and Hold Harmless-GOLDEN GRAIN. If a third party  makes a claim against
RENEWABLE PRODUCTS or any person or organization related to it as the result of
the actions or omissions of GOLDEN GRAIN or any person or organization related
to GOLDEN GRAIN including, but not limited to, claims relating to the quality
of ethanol produced by GOLDEN GRAIN, then GOLDEN GRAIN agrees to indemnify
RENEWABLE PRODUCTS and its related persons and organizations and to hold them
harmless from any liabilities, damages, costs and/or expenses, including costs
of litigation and reasonable attorneys fees which they incur as a result of any
claims, arising solely from the marketing of GOLDEN GRAIN ethanol under this
Agreement, made against them by third parties.


 


29. Indemnifications and Hold Harmless-RENEWABLE PRODUCTS. The
indemnification obligations of the parties under this agreement will be mutual
and RENEWABLE PRODUCTS, therefore, makes the same commitment to indemnify
GOLDEN GRAIN and its related persons or organizations that GOLDEN GRAIN has
made to RENEWABLE PRODUCTS in the preceding paragraph.


 


30.                                 Survival
of Terms/Dispute Resolution.  All representations, warranties and
agreements made in connection with this Agreement will survive the termination
of this Agreement. The parties will, therefore, be able to pursue claims
related to those representations, warranties and agreements after the
termination of this Agreement, unless those claims are bared by the applicable
statute of limitations. Similarly, any claims that the parties have against
each other that arise out of actions or omissions that take place while this
Agreement is in effect will


 


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survive the termination of this Agreement. This means that the parties
may pursue those claims even after the termination of this Agreement, unless applicable
statutes of limitation bar those claims. The parties agree that, should a
dispute between them arise in connection with this Agreement, the parties will
complete, in good faith, a mediation session prior to the filing of any action
in any court. Such mediation session shall occur at a place that is mutually
agreeable, and shall be conducted by a mediator to be selected by mutual
agreement of the parties.


 


31.                                 Choice
of Law. The parties agree that this Agreement will be governed by,
interpreted under and enforced in accordance with Iowa law.


 


32.                                 Assignment.
Neither party may assign its rights or obligations under this Agreement without
the written consent of the other party, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, RENEWABLE PRODUCTS consents to any
assignment of this Agreement by GOLDEN GRAIN to a lender in connection with
GOLDEN GRAIN securing the debt financing necessary to fund construction of the
plant.


 


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


 


34.                                 Execution
of Counterparts. This Agreement may be executed by the parties on any
number of separate counterparts, and by each party on separate counterparts,
each of such counterparts being deemed by the parties to be an original
instrument; and all of such counterparts, taken together, shall be deemed to constitute
one and the same instrument.


 


35. Duplicate Counterpart Includes Facsimile. The parties
specifically agree and acknowledge that a duplicate hereof shall include, but
not be limited to, a counterpart produced by virtue of a facsimile (“fax”)
machine.


 


36.                                 Binding
Effect. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and there respective heirs, personal
representatives, successors and assigns.


 


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


 


TO:                            Renewable
Products Marketing Group, L.L.C.


P.O. Box A


Winthrop, MN 55396


 


TO:                            GOLDEN
GRAIN ENERGY, LLC


951 N. Linn Avenue


P.O. Box 435


 


New Hampton, IA 50659


 


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with a copy to:


 


William E. Hanigan, Esq.


Brown, Winick, Graves, et al.


666 Grand Ave., Suite 2000


Des Moines, 1A 50309


 


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


 


 


	
   

  	
  RENEWAL PRODUCTS MARKETING

  GROUP, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Steve Bleyl

  	
   

  
	
   

  	
  Its

  	
  CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GOLDEN GRAIN ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Walter Wendland

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  



 


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