Document:

Exhibit
10.1

 

***
Confidential material redacted and filed separately with the Commission.

 

CORN OIL MARKETING AGREEMENT

 

THIS
CORN OIL MARKETING AGREEMENT (the “Agreement”) is made and entered into as of
the 29th day of April, 2010 (the “Effective Date”) by and between RPMG,
INC., a Minnesota corporation (“RPMG”) and _Granite Falls Energy, a
Minnesota Limited Liability company (“Producer”), collectively referred
to hereinafter as “Parties” or individually as a “Party”.

 

RECITALS

 

A.            RPMG markets CORN OIL (as
hereinafter defined).

 

B.            Producer produces or shall produce
CORN OIL at Producer’s ethanol production facility located or to be located at
_14045 Hwy 23 SE, Granite Falls, Minnesota_ (the “Ethanol Facility”).

 

C.            The Parties do desire that RPMG
shall market CORN OIL produced at the Ethanol Facility.

 

NOW,
THEREFORE, in consideration of the foregoing, the mutual promises herein
contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows.

 

AGREEMENT

 

1.                                       Marketing
of Corn Oil. Producer shall sell to RPMG, and RPMG shall
purchase and market, all of Producer’s production, of corn oil produced at the
Ethanol Facility, including any expansion or increase in capacity at the Ethanol
Facility. RPMG shall be the exclusive marketer of corn oil and Producer shall
not, either itself or through any affiliate or any third party, market any corn
oil during the term of this Agreement. RPMG shall provide management resources
to market and sell corn oil, including the management of logistics and
collection.

 

2.                                      Payments
to Producer; Commissions; Audit Rights

 

(a)                                  Payments to
Producer. Subject to the other terms of this Agreement, RPMG
shall make payments for Producer’s corn oil in accordance with the terms set
forth in Exhibit A. RPMG shall use commercially reasonable efforts
to make such payments to Producer (which as used throughout this Agreement may
include payments to a Designee pursuant to Exhibit A) on an average
net ten (10) days.

 

(b)                                 RPMG Commission. Producer
shall pay RPMG commissions as follows: $*** for each pound of corn oil sold to
third party end purchasers (each, an “End Customer”). Parties shall from
time to time, but no more than once 

 

 

(c)                                  per year, or
upon the reasonable request of RPMG, negotiate in good faith adjustments to the
foregoing commissions to reflect prevailing commissions being paid to marketers
of corn oil produced by third parties in the United States.

 

(d)                                 Accessorial
Charges. As set forth on Exhibit A, RPMG shall be responsible for
payment of Accessorial Charges (as defined in Exhibit A) to third
parties; provided, however, that Producer agrees (i) to promptly reimburse
RPMG for such Accessorial Charges upon submission to Producer of an invoice
itemizing such Accessorial Charges, and (ii) that RPMG may deduct and
setoff the Accessorial Charges from and against payments due to Producer by
RPMG.

 

(e)                                  Late Payments. Overdue
amounts not disputed in good faith payable to either Party shall be subject to
late payment fees equal to interest accrued on such amounts at the maximum rate
permitted by applicable law.

 

(f)                                    No Warranty as
to Prices. RPMG shall market Producer’s corn oil using
commercially reasonable efforts and the same standards it uses to market the
corn oil production of third parties for whom RPMG provides corn oil marketing
services. RPMG shall endeavor to (i) maximize the corn oil price and
minimize freight and other costs relevant to corn oil sales and (ii) achieve
the best available return to Producer, subject to relevant market conditions.
PRODUCER ACKNOWLEDGES THAT RPMG MAKES NO REPRESENTATIONS, GUARANTEES OR
WARRANTIES OF ANY NATURE WHATSOEVER AS TO THE PRICES AT WHICH IT SHALL BE ABLE
TO SELL PRODUCER’S CORN OIL TO END CUSTOMERS.

 

(g)                                 Waiver of Certain
Claims. Producer acknowledges (i) that RPMG shall use its reasonable
judgment in making decisions related to the quantity and price of corn oil
marketed under this Agreement, in light of varying freight and other costs, and
(ii) that RPMG may sell and market corn oil of third parties into the same
markets where RPMG sells Producer’s corn oil. Producer waives any claim of
conflict of interest against RPMG or for failure by RPMG to maximize the
economic benefits of this Agreement for Producer in light of the foregoing.

 

(h)                                 Audit Rights. Within ninety
(90) days following the end of RPMG’s fiscal year end, Producer shall give
written notice to RPMG of its desire to conduct an audit of its corn oil
payments to Producer for the preceding fiscal year of RPMG and RPMG shall
provide reasonable access to all financial information necessary to complete
such audit. The audit shall be conducted by an accounting firm agreeable to
both Parties and shall be completed within forty-five (45) days after the
completion of RPMG’s annual audit, but no later than one hundred and fifty
(150) days following

 

 

RPMG’s fiscal year end. The cost of the audit shall be the
responsibility of Producer unless the auditor determines that RPMG underpaid
Producer by more than three percent (3%) for the period audited, in which case
RPMG shall pay the cost of the audit. If the auditor determines that RPMG
underpaid Producer, RPMG shall promptly pay such underpayment to Producer and
if the auditor determines that RPMG overpaid Producer, Producer shall promptly
pay the overpayment to RPMG. The determination of the auditor shall be final
and binding on both Parties. If Producer fails to exercise its right to audit
as provided in this Section 2(g) for any year, it shall be deemed to
have waived any rights to dispute payments made to Producer for that year.

 

3.             Scheduled Production

 

(a)                                  Notice of First
Delivery. RPMG may begin to market Producer’s corn oil upon
the Effective Date. If Producer is not producing corn oil as of the Effective
Date, Producer shall, on the Effective Date, provide RPMG with the projected
date on which Producer will first deliver corn oil produced at the Ethanol
Facility to RPMG (the “Projected Date of First Delivery”). Producer shall
notify RPMG as soon as possible of any revisions to the Projected Date of First
Delivery.

 

(b)                                 Notices of
Scheduled Production. Beginning on the Effective Date, and on the 1st
and 15th of each month thereafter, Producer shall provide to RPMG a rolling
best estimate of production and inventory by corn oil product for that month
and each of the following twelve (12) months. Beginning on the Effective Date
and each Wednesday thereafter, Producer shall provide to RPMG a best estimate
of production and inventory by corn oil product for that day and the next seven
days.

 

(c)                                  Additional
Production Notices. Producer shall notify RPMG of anticipated
production downtime or disruption in corn oil availability at least one (1) month
in advance of such outage. Producer shall timely inform RPMG of daily inventories,
plant shutdowns, daily production projections, and any other information (i) to
facilitate RPMG’s performance of the Agreement or (ii) that may have a
material adverse effect on RPMG’s ability to perform the Agreement.

 

(d)                                 RPMG Entitled
to Rely on Producer Estimates and Notices. RPMG, in marketing and
selling Producer’s corn oil, is entitled to rely upon the production estimates
and other notices provided by Producer, including without limitation those
described in Sections 3(a), (b), and (c). Producer’s failure to provide
accurate information to facilitate RPMG’s performance of the Agreement may
negatively impact RPMG’s ability to market and sell corn oil at prevailing
prices. Producer’s failure to provide accurate information to facilitate RPMG’s

 

 

performance of the Agreement may be deemed by RPMG, in its sole but
reasonable discretion, a material breach of the Agreement by Producer.

 

(e)                                  Sale
Commitments. From time to time during the term of this
Agreement and in order to maximize the sales price of corn oil, RPMG may enter
sales contracts or other agreements with End Customers for future delivery of
corn oil. In the event Producer fails to produce corn oil in accordance with
the information provided to RPMG under Sections 3(a), (b), or (c) above
for reasons other than Force Majeure (as defined in Section 10 herein),
and as a result RPMG is required to purchase corn oil from third parties to
meet previous corn oil sale commitments that are based upon such information,
RPMG may charge Producer the amount (if any) that the price of such replacement
corn oil exceeded the price that RPMG would have paid to Producer for the
applicable corn oil under this Agreement.

 

4.             Logistics and
Transportation

 

(a)                                  No Liens, Title
and Risk of Loss. Producer warrants that corn oil delivered to RPMG
hereunder shall be free and clear of all liens and encumbrances of any nature
whatsoever other than liens in favor of RPMG. Title to and risk of loss of each
load of corn oil shall pass to RPMG at the time such load passes across the
scale into rail cars or trucks at the Ethanol Facility (the “Title Transfer
Point”). Until such time, Producer shall be deemed to be in control of and
in possession of the corn oil.

 

(b)                                 Loading. RPMG shall
schedule the loading and shipping of all outbound corn oil purchased hereunder,
but all labor and equipment necessary to load trucks and rail cars and other
associated costs shall be supplied and borne by Producer without charge to
RPMG. Producer shall handle the corn oil in a good and workmanlike manner in
accordance with RPMG’s written requirements and normal industry practice.
Producer shall maintain the truck and rail loading facilities in safe operating
condition in accordance with normal industry standards and shall visually
inspect all trucks and rail cars to assure (i) cleanliness so as to avoid
contamination, and (ii) that such trucks and railcars are in a condition
suitable for transporting the corn oil. RPMG and RPMG’s agents shall have
adequate access to the Ethanol Facility to load Producer’s corn oil on an
industry standard basis that allows RPMG to economically market Producer’s corn
oil. RPMG’s employees shall follow all reasonable safety rules and
procedures promulgated by Producer and provided to RPMG reasonably in advance
and in writing. Producer shall supply product description tags, certificates of
analysis, bills of lading and/or material safety data sheets that are
applicable to all shipments. In the event that Producer fails to provide the
labor, equipment and facilities necessary to meet RPMG’s loading schedule,
Producer shall be responsible for all costs and expenses, including without
limitation actual demurrage and wait time, incurred by RPMG resulting from or
arising in 

 

 

connection with Producer’s
failure to do so.

 

(c)                                  Transportation
and Certain Transportation Costs. RPMG shall perform certain
logistics functions for Producer, including the arranging of rail and truck
freight, inventory management, contract management, bills of lading, and
scheduling pick-up appointments. RPMG shall determine the method of
transporting corn oil to End Customers. Notwithstanding any provision to the
contrary herein, Producer shall be solely responsible for any damage to any
trucks, railcars, equipment, or vessels caused by acts or omissions of Producer
and its consignees. All truck freight charges and rail tariff rate charges
shall be billed directly to RPMG and, as set forth in Exhibit A, be
recouped by RPMG from the proceeds of RPMG’s sales of corn oil to End
Customers. Notwithstanding the foregoing, rail cars required to transport the
corn oil will be leased directly by Producer. If requested in writing by
Producer, RPMG will make lease payments for such rail cars on behalf of
Producer, and in such event RPMG shall recoup lease payments from the proceeds
of RPMG’s sales of corn oil to End Customers.

 

(d)                                 Weight. The quantity
of corn oil delivered to RPMG at the Ethanol Facility shall be established by
weight certificates obtained from Producer’s scales or from such other scales
as the Parties shall mutually agree, which are certified as of the time of
weighing and which comply with all applicable laws, rules and regulations.
Producer shall provide RPMG with a fax/emailed copy of the outbound weight
certificates on a daily basis and, except as otherwise expressly agreed upon,
such outbound weight certificates shall be determinative of the quantity of
corn oil for which RPMG is obligated to pay Producer pursuant to this
Agreement.

 

(e)                                  Corn oil
Storage at Ethanol Facility. The estimated storage
capacity of the Ethanol Facility, is as follows:

 

Corn
Oil 24,600 gallons

 

5.             Specifications; Quality.

 

(a)                                  Corn oil
Specifications. Producer covenants that it shall produce corn oil
that, upon delivery to RPMG at the Ethanol Facility, meets the respective
specifications (“Specifications”) set forth in Exhibit B and such other
specifications that may be, from time-to-time, promulgated by the industry for
corn oil. RPMG shall have the right to test each shipment of corn oil to
ascertain that the Specifications are being met. If the corn oil provided by
Producer to RPMG is shown, by independent testing or analysis of a
representative sample or samples taken consistent with industry standards, to
not meet the Specifications through no fault of RPMG or any third party engaged
by RPMG, then RPMG may, in its sole discretion, (i) reject such corn 

 

 

oil and require Producer to promptly replace such non-conforming corn
oil with corn oil that complies with the Specifications, or (ii) accept
such corn oil for marketing and, if necessary, adjust the price to reflect the
inferior quality, as provided in Exhibit A. Payment and acceptance of
delivery by RPMG shall not waive RPMG’s rights if corn oil does not comply with
the terms of this Agreement, including the Specifications.

 

(b)                                 Trade Rules. This
Agreement shall be governed by the then-current Feed Trade Rules of the
National Grain and Feed Association (the “Trade Rules”), unless otherwise
specified. In the event the Trade Rules and the terms and conditions of
this Agreement conflict, this Agreement shall control.

 

(c)                                  Compliance With
FDA and Other Standards. Producer warrants that, unless caused by
the negligence or intentional misconduct of RPMG or a third party engaged by
RPMG, corn oil provided by Producer to RPMG (i) shall not be “adulterated”
or “misbranded” within the meaning of the Federal Food, Drug and Cosmetic Act
(the “Act”), (ii) may lawfully be introduced into interstate commerce
under the Act, and (iii) shall comply with all state and federal laws, rules and
regulations (including without limitation the Trade Rules) including those
governing quality, naming and labeling of bulk product. If Producer knows or
reasonably suspects that any corn oil produced at the Ethanol Facility is
adulterated or misbranded, or otherwise not in compliance with the terms of the
Agreement, Producer shall immediately so notify RPMG in writing.

 

(d)                                 Regulatory
Seizure. Should any corn oil provided by Producer to RPMG hereunder be seized
or condemned by any federal or state department or agency as a result of its
failure to conform to any applicable law, rule or regulation prior to
delivery to an End Customer, such seizure or condemnation shall operate as a
rejection by RPMG of the goods seized or condemned and RPMG shall not be
obligated to offer any defense in connection with such seizure or condemnation.
When such rejection occurs, RPMG shall deliver written notice to Producer
within a reasonable time of the rejection and identify the deficiency that
resulted in such rejection. In addition to other obligations under this
Agreement or at law, Producer shall reimburse RPMG for all out-of-pocket costs
reasonably incurred by RPMG in storing, transporting, returning and disposing
of the rejected goods in accordance with this Agreement.

 

(e)                                  Sampling. Producer
shall take one representative origin sample (pint size) from each lot of the
corn oil before it leaves the Ethanol Facility (each, a “Sample”). RPMG shall
be entitled to witness the taking of Sample. Producer shall label Sample to
indicate the applicable corn oil lot numbers, date of shipment, and the truck
or railcar number. Producer shall send half of Sample to RPMG promptly upon
RPMG’s request. Producer may request that RPMG test results be provided to it
at any time after the tests are completed. Producer shall retain corn oil
Sample for no less than three (3) months or any longer period required 

 

 

by law. If RPMG knows or reasonably suspects that any corn oil produced
by Producer at the Ethanol Facility is not in compliance with the terms of this
Agreement, then RPMG may obtain independent laboratory tests of such corn oil,
and, if such corn oil is found not to be in compliance with the terms of this
Agreement, Producer shall, in addition to its other obligations hereunder, pay
all such testing costs.

 

6.             Term and Termination

 

(a)                                  Term. The initial
term of this Agreement shall commence on the date hereof and continue for 12
months from the first day of the month that PRODUCER initially ships corn oil.
Thereafter, this Agreement shall remain in effect until terminated by either
party at its unqualified option by providing the other party hereto not less
than 90 days written notice of its election to terminate this agreement. Either
party may terminate this Agreement if the other party breaches this Agreement
and fails to cure the breach within 30 days after receipt of notice of such
breach or if the other party becomes insolvent, files or has filed against it a
petition in bankruptcy that is not dismissed within 30 days, or has a receiver
appointed over its assets.

 

(b)                                 Producer
Termination Right. Producer may immediately terminate this Agreement
upon written notice to RPMG if RPMG fails on three (3) separate occasions
within any 12-month period to purchase corn oil or to market corn oil under
circumstances where such breach or failure is not excused by this Agreement.

 

(c)                                  RPMG
Termination Right. RPMG may immediately terminate this Agreement upon
written notice to Producer, if, for reasons other than a Force Majeure (as defined
in Section 10 herein) event, during any consecutive three (3) months,
Producer’s actual production or inventory of any corn oil product at the
Ethanol Facility varies by twenty percent (20%) or more from the monthly
production and inventory estimates provided by Producer to RPMG pursuant to Section 3(b) hereunder.

 

(d)                                 Termination for
Insolvency. Either Party may immediately terminate the
Agreement upon written notice to the other Party if the other Party files a
voluntary petition in bankruptcy, has filed against it an involuntary petition
in bankruptcy, makes an assignment for the benefit of creditors, has a trustee
or receiver appointed for any or all of its assets, is insolvent or fails or is
generally unable to pay its debts when due, in each case where such petition,
appointment or insolvency is not dismissed, discharged or remedied, as
applicable, within thirty (30) days.

 

 

 

 

7.                                      Indemnification;
Limitation on Liability

 

(a)                                  Producer’s
Indemnification Obligation. Producer shall indemnify,
defend and hold harmless RPMG and its shareholders, directors, officers,
employees, agents and representatives, from and against any and all Damage (as
defined in Section 7(c) herein) to the extent arising out of (i) any
fraud, negligence or willful misconduct of Producer or any of its
directors/governors, officers, employees, agents, representatives or
contractors or (ii) any breach of this Agreement by Producer. RPMG shall
promptly notify Producer of any suit, proceeding, action or claim for which
Producer may have liability pursuant to this Section 7(a).

 

(b)                                 RPMG’s
Indemnification Obligation. RPMG shall indemnify,
defend and hold harmless Producer and its shareholders/members,
directors/governors, officers, employees, agents and representatives from and
against any and all Damages to the extent arising out of (i) any fraud,
negligence or willful misconduct of RPMG or any of its directors, officers,
employees, agents, representatives or contractors or (ii) any breach of
this Agreement by RPMG. Producer shall promptly notify RPMG of any suit,
proceeding, action or claim for which Producer may have liability pursuant to
this Section 7(b).

 

(c)                                  Definition of
Damages. As used in this Agreement, the capitalized term “Damages” means any
and all losses, costs, damages, expenses, obligations, injuries, liabilities,
insurance deductibles and excesses, claims, proceedings, actions, causes of
action, demands, deficiencies, lawsuits, judgments or awards, fines, penalties
and interest, including reasonable attorneys’ fees, but excluding any indirect,
incidental, special, exemplary, consequential or punitive damages.

 

(d)                                 Limitation on
Liability. NEITHER PARTY MAKES ANY GUARANTEE, WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY PROFIT, OR OF ANY
PARTICULAR ECONOMIC RESULTS FROM TRANSACTIONS HEREUNDER. EXCEPTING FOR A BREACH
OF ITS NONDISCLOSURE OBLIGATIONS OR PERFORMANCE OF ITS INDEMNIFICATION
OBLIGATIONS HEREUNDER, RPMG’S AGGREGATE LIABILITY TO PRODUCER SHALL IN NO EVENT
EXCEED THE AMOUNT PAID BY PRODUCER TO RPMG UNDER THIS AGREEMENT.

 

8.                                      Insurance.  During the term of this Agreement, each party
shall maintain insurance coverage that is standard for a company of its type
and size that is engaged in the production and/or selling of corn oil. At a
minimum, each party’s insurance coverage shall include: (i) comprehensive
general product and public liability insurance, with liability limits of at
least $5 million in the aggregate; (ii) property and casualty insurance
adequately insuring its facilities and its other assets against theft, damage
and destruction on a replacement cost basis; and (iii) workers’ 

 

 

compensation
insurance to the extent required by law. RPMG, or Producer, as the case may be,
shall be added as a loss payee under the comprehensive general product and
public liability insurance policy and the property and casualty insurance
policy. In relation to insurance requirements on the corn oil leased railcars, (a) the
Producer will be responsible for the liability insurance on the corn oil leased
railcars in the form and amount as required by the railcar lessor’s contract,
or at a minimum in the amounts required by this Article 8 and (b) RPMG
will carry property/physical damage insurance for the corn oil railcars for
loss or destruction, but will not be responsible for the insurance deductible,
maintenances (scheduled or otherwise), including normal wear and tear related
to such corn oil railcars. The Producer will be listed as a Loss Payee on RPMG’s
Rolling Stock Policy in relation to the corn oil leased railcars. A party shall
not change its insurance coverage during the term of this Agreement, except to
increase it or enhance it, without the prior written consent of the other Party
which consent shall not be unreasonably withheld.

 

9.                                      Confidentiality

 

(a)                                  Confidential
Information. As used in this Agreement, the capitalized term “Confidential
Information” means (i) the terms and conditions of this Agreement and (ii) any
information disclosed by one Party to the other, including, without limitation,
trade secrets, strategies, marketing and/or development plans, End Customer
lists and other End Customer information, prospective End Customer lists and
other prospective End Customer information, vendor lists and other vendor
information, pricing information, financial information, production or
inventory information, and/or other information with respect to the operation
of its business and assets, in whatever form or medium provided.

 

(b)                                 Nondisclosure. Each Party
shall maintain all Confidential Information of the other in trust and
confidence and shall not without the prior written consent of the other Party:

 

(i)                                     disclose,
disseminate or publish Confidential Information to any person or entity without
the prior written consent of the disclosing Party, except to employees of the
receiving Party who have a need to know, who have been informed of the
receiving Party’s obligations hereunder, and who have agreed not to disclose
Confidential Information or to use Confidential Information except as permitted
herein, or

 

(ii)                                  use
Confidential Information for any purpose other than the performance of its
obligations under the Agreement.

 

(c)                                  Standard of Care. The receiving
Party shall protect the Confidential Information of the disclosing Party from
inadvertent disclosure with the same level of care 

 

 

(but
in no event less than reasonable care) with which the receiving Party protects
its own Confidential Information from inadvertent disclosure.

 

(d)                                 Exceptions. The receiving
Party shall have no obligation under this Agreement to maintain in confidence
any information which it can prove:

 

(i)            is in the
public domain at the time of disclosure or subsequently becomes part of the
public domain through no act or failure to act on the part of the receiving
Party or persons or entities to whom the receiving Party has disclosed such
information;

 

(ii)           is in the
possession of the receiving Party prior to the time of disclosure by the
disclosing Party and is not subject to any duty of confidentiality;

 

(iii)          the receiving
Party obtains from any third party not under any obligation to keep such
information confidential;

 

(iv)          or the
receiving Party is compelled to disclose or deliver in response to a law,
regulation, or governmental or court order (to the least extent necessary to
comply with such order), provided that the receiving Party notifies the
disclosing Party promptly after receiving such order to give the disclosing
Party sufficient time to contest such order and/or to seek a protective order

 

(e)                                  Ownership of
Confidential Information. All Confidential Information shall remain
the exclusive property of the disclosing Party.

 

(f)                                    Injunctive
Relief for Breach. The receiving Party acknowledges that monetary
damages may not be a sufficient remedy for unauthorized disclosure or use of
Confidential Information, and that the disclosing Party may be entitled, in
addition to all other rights or remedies in law and equity, to obtain
injunctive or other equitable relief, without the necessity of posting bond in
connection therewith.

 

10.                               Force
Majeure. In the event either Party is unable by Force Majeure (as defined
below) to carry out its obligations under this Agreement, it is agreed that on
such Party’s giving notice in writing, or by telephone and confirmed in
writing, to the other Party as soon as possible after the commencement of such
Force Majeure event, the obligations of the Party giving such notice, so far as
and to the extent they are affected by such Force Majeure, shall be suspended
from the commencement of such Force Majeure and during the remaining period of
such Force Majeure, but for no longer period, and such Force Majeure shall so
far as possible be remedied with all reasonable dispatch; provided, however,
the obligation to make payments then accrued hereunder prior to the occurrence
of such Force Majeure shall not be suspended and Producer shall remain
obligated for any loss or expense to the extent otherwise provided in this
Agreement. The capitalized term 

 

 

“Force
Majeure” as used in this Agreement shall mean events beyond the reasonable
control and without the fault of the Party claiming Force Majeure, including
acts of God, war, riots, insurrections, laws, proclamations, regulations,
strikes of a regional or national nature, acts of terrorism, sabotage, and acts
of any government body.

 

11.                               Dispute
Resolution. In the event a dispute arises under this Agreement
that cannot be resolved by those with direct responsibility for the matter in
dispute, such dispute shall be resolved by way of the following process:

 

(a)                                  Senior
management from Producer and from RPMG shall meet to discuss the basis for the
dispute and shall use their best efforts to reach a reasonable resolution to
the dispute.

 

(b)                                 If negotiations
pursuant to Section 11(a) are unsuccessful, the matter shall promptly
be submitted by either Party to arbitration in accordance with NGFA®
ARBITRATION OF DISPUTES: The parties to this contract agree that the sole
remedy for resolution of any and all disagreements or disputes arising under or
related to this contract shall be through arbitration proceedings before the
National Grain and Feed Association (NGFA) pursuant to the NGFA® Arbitration Rules.
The decision and award determined through such arbitration shall be final and
binding upon the Buyer and Seller. Judgment upon the arbitration award may be
entered and enforced in any court having jurisdiction thereof. (Copies of the
NGFA® Arbitration Rules are available from the National Grain and Feed
Association, 1250 Eye Street, N.W., Suite 1003, Washington, D.C. 20005;
Telephone: 202-289-0873; Website: http://www.ngfa.org). If the Parties reach
agreement pertaining to any dispute pursuant to the procedures set forth in
this Section 11, such agreement shall be reduced to writing, signed by
authorized representatives of each Party, and shall be final and binding upon
the Parties.

 

12.                               Miscellaneous.

 

(a)                                  Successors and
Assigns; Assignment. All of the terms, covenants, and conditions of
this Agreement shall be binding upon, and inure to the benefit of and be
enforceable by the Parties and their respective successors, heirs, executors
and permitted assigns. No Party may assign its rights, duties or obligations
under this Agreement to any other person or entity without the prior written
consent of the other Party, such consent not to be unreasonably withheld or
delayed; notwithstanding the foregoing, a Party may, without the consent of the
other Party, assign its rights and obligations under this Agreement to (i) its
parent, a subsidiary, or affiliate under common control with the Party or (ii) a
third party acquiring all or substantially all of the assets or business of
such Party.

 

(b)                                 Notices. Any notice or
other communication required or permitted hereunder 

 

 

shall be in writing and shall be considered delivered in all respects
when delivered by hand, mailed by first class mail postage prepaid, or sent by
facsimile with delivery confirmed, addressed as follows:

 

To RPMG:                                    RPMG, Inc.

1157
Valley Park Drive, Suite 100

Shakopee,
MN 55379

Fax:
952-465-3222

 

To
Producer:                         Granite Falls
Energy, LLC

14045
Hwy 23 SE

Granite
Falls, MN 56241

Fax:
320-564-3190

 

Either
Party may, from time to time, furnish, in writing, to the other Party, notice
of a change in the address and/or fax number(s) to which notices are to be
given hereunder.

 

(c)                                  Applicable Law. This
Agreement shall be governed in all respects by the laws of the State of
Minnesota, except with respect to its choice of law provisions.

 

(d)                                 Severability. In the event
that any provision of this Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, either in whole or
in part, this Agreement shall continue in full force and effect without said
provision.

 

(e)                                  No Third Party
Beneficiaries. No provision of this Agreement is intended, or
shall be construed, to be for the benefit of any third party, including,
without limitation, the Designee.

 

(f)                                    Entire Agreement;
Amendment. This Agreement constitutes the entire
understanding and agreement between the Parties with respect to the subject
matter hereof, and supersedes all prior and contemporaneous understandings
and/or agreements, written or oral, regarding the subject matter of this
Agreement. No amendment or modification to this Agreement shall be binding
unless in writing and signed by a duly authorized officer of both Parties.

 

(g)                                 Counterparts. This
Agreement may be executed in counterparts, including facsimile counterparts,
each of which shall be deemed an original but together shall constitute but one
and the same instrument.

 

(h)                                 Waiver. The failure
of either Party at any time to require performance of any provision of the
Agreement or to exercise any right provided for in the Agreement shall not be
deemed a waiver of such provision or right unless made in writing and executed
by the Party waiving such performance or right. No waiver by either Party of
any breach of any provision of the Agreement or of 

 

 

any right provided for in the Agreement shall be construed as a waiver
of any continuing or succeeding breach of such provision or right or a waiver
of the provision or right itself.

 

(i)                                     Independent
Contractors. The Parties to this Agreement are independent
contractors. There is no relationship of partnership, joint venture,
employment, franchise, or agency between the Parties, and no Party shall make
any representation to the contrary.

 

(j)                                     Additional Rules of
Interpretation.

 

(i)                                     The words “include,”
“includes” and “including” as used in this Agreement shall be deemed to be
followed by the phrase “without limitation” and shall not be construed to mean
that the examples given are an exclusive list of the topics covered.

 

(ii)                                  The headings as
to contents of particular sections of this Agreement are inserted for
convenience and shall not be construed as part of the Agreement or as a
limitation on the scope of any terms or provisions of this Agreement.

 

(k)                                  Survival. The following
provisions of this Agreement shall survive its termination: (i) to the
extent of outstanding payment obligations, Sections 2(a), 2(b), 2(c), and 2(d) and
(ii) Sections 2(e), 2(f), 7, 9, 11, and 12.

 

IN
WITNESS THEREOF, each of the Parties hereto has caused this Agreement to be
executed by its respective duly authorized representative as of the day and
year first above written.

 

	
   

  	
  RPMG,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Steve Dietz

  
	
   

  	
  Name:
  

  	
  Steve
  L. Dietz

  
	
   

  	
  Its
  (title):

  	
  COO

  
	
   

  	
   

  	
   

  
	
   

  	
  PRODUCER

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Tracey L. Olson

  
	
   

  	
  Name:
  

  	
  Tracey
  L. Olson

  
	
   

  	
  Its
  (title): 

  	
  CEO/GM

  

 

 

*** Confidential material redacted and filed separately with the
Commission.

 

EXHIBIT A

 

Terms Relating to Payment and Commission Calculation

 

RPMG
shall pay Producer for all Standard-Grade and Non-Standard Grade corn oil
loaded into railcars and trucks and weighed at the Ethanol Facility for
shipment to End Customers an amount equal to *** percent (***%) of the
estimated F.O.B. Ethanol Facility Price per pound, with RPMG being entitled to
retain its commission, with settlement weights as described in Section 4(d) of
the Agreement. After month-end is completed and any differences will be
reconciled, RPMG will make the final payment to the Producer for corn oil
shipped during the month.

 

“Accessorial
Charges” shall mean charges imposed by third parties for the off-loading,
movement and storage of Producer’s corn oil, including without limitation
taxes, tonnage taxes, hard-to-unload truck or railcar charges/transloading
charges, railcar repair charges, fuel surcharges, storage charges, demurrage
charges, product shrinkage, detention charges, switching, and weighing charges
(but excluding Tariff Freight Costs). Neither Party shall be responsible for
demurrage charges caused solely by the negligence or willful misconduct of the
other Party.

 

“Delivered
Sale Price” shall mean sales dollars received by RPMG for Producer’s corn
oil, inclusive of tariff freight, as evidenced by RPMG’s invoices to End
Customers.

 

“F.O.B.
Corn Oil Facility Price” shall mean the F.O.B. sale price equivalent net of
applicable deductions and costs as described in this Agreement, including
without limitation Accessorial Charges and Tariff Freight Costs (or, if
applicable, the Delivered Sales Price net of applicable deductions and costs as
described in this Agreement, including without limitation Accessorial Charges
and Tariff Freight Costs) that RPMG invoices End Customers.

 

“Tariff
Freight Costs” shall mean freight and related costs incurred by RPMG to
transport Producer’s corn oil.

 

“Standard-Grade”
shall mean corn oil that meet the Specifications set forth in this Agreement.

 

“Non-Standard-Grade”
shall mean corn oil that fail to meet the Specifications set forth in this
Agreement, but which RPMG nonetheless accepts for marketing under this
Agreement.

 

 

***
Confidential material redacted and filed separately with the Commission.

 

EXHIBIT B

 

Corn Oil Specifications

 

Producer
covenants that all corn oil shall, upon delivery to RPMG at the Ethanol
Facility, conform to the following Specification:

 

	
  Component

  	
   

  	
  Maximum %

  	
   

  	
  Minimum %

  	
   

  
	
  Moisture; wt%

  	
   

  	
  ***

  	
  %

  	
   

  	
   

  
	
  Impurities; wt%

  	
   

  	
  ***

  	
  %

  	
   

  	
   

  
	
  Unsaponafiables;  Wt%

  	
   

  	
  ***

  	
  %

  	
   

  	
   

  
	
  FFA; wt%

  	
   

  	
  ***

  	
  %

  	
   

  	
   

  
	
  Iodine Value

  	
   

  	
   

  	
   

  	
  ***Exhibit 10.2

 

AMENDMENT

TO

DISTILLER’S
GRAIN MARKETING AGREEMENT

 

This AMENDMENT TO
DISTILLER’S GRAIN MARKETING AGREEMENT (the “Amendment”) is entered
into effective as of June 7, 2010, by and between Grainte Falls Energy,
LLC, a Minnesota limited liablity company (the “Seller”) and CHS Inc., a
Minnesota cooperative corporation (the “Buyer”).

 

RECITALS

 

A.            Seller and Commodity Specialists Company
entered into a certain Distiller’s Grain Marketing Agreement dated as of December 1,
2004, which was subsequently assigned by Commodity Specialists Company to Buyer
(the “Agreement”); and

 

B.            Subject to the terms and conditions set
forth herein, Seller and Buyer desire to amend description of the Products to
be sold under the Agreement, as provided herein.

 

AGREEMENT

 

NOW,
THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

1.                                      Purchase and Sale. 
The first
sentence of Section 2 of the Agreement is deleted and replaced in its
entirety with the following:

 

“Seller agrees to sell to
Buyer and Buyer agrees to purchase from Seller the entire bulk feed grade DDGS
output from Seller’s plant at Granite Falls Minnesota (hereinafter, the “Plant”),
other than the Montevideo Intermodal facility sales (defined below), subject to
all terms and conditions set forth in this Agreement.  Notwithstanding the foregoing, the parties
agree that Seller may sell DDGS from the Plant to Montevideo Intermodal facility,
or its subsidiaries (collectively, “Motevideo Intermodal”) for delivery to the
Montevideo Intermodal container loading facility located in Montevideo,
Minnesota, without any fees, commissions or amounts due Buyer, provided that
Seller notifies Buyer of the quantity to be sold under this provision prior to
any such sale.”

 

2.                                      Reminaing Terms Unchanged. 
Except as
set forth in this Amendment, all terms of the Agreement shall remain unchanged
and in full force and effect.

 

3.                                      Definitions.  Any
capitalized term not defined in this Amendment shall have the meaning set forth
in the Agreement.

 

4.                                      Counterparts 
This Amendment may be executed in any number of counterparts, each of
which shall be an original, but all of which will constitute on in the same
instrument.  Any executed counterpart of
this Amendment delivered by facsimile or other electronic transmission to a
party to the Amendment will constitute an original counterpart of this
Amendment.

 

IN WITNESS WHEREOF,  the undersigned have duly executed this
Amendment effective as of the date first above written.

 

	
  Granite Falls Energy,
  LLC

  	
   

  	
  CHS Inc.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Tracey L. Olson

  	
   

  	
  By:

  	
  /s/ Steve Markham

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  CEO/GM

  	
   

  	
  Its:

  	
  Merchant

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