Document:

exv10w43

 

EXHIBIT 10.43

THIS COAL SALES ORDER (“Order”) dated December 5, 2007 confirms the sale of coal by Westmoreland
Coal Sales Company (“WCSC”) to Red Trail Energy, LLC (“Buyer”) pursuant to the following terms and
conditions.

	 	 	 
	ORDER NUMBER:

	 	Red Trail WCSC #002-2008/2009
	 
	 	 
	SOURCE:

	 	The source of the coal to be delivered hereunder shall be from Area D of
Western Energy Company’s (“WECO”) Rosebud Mine located at Colstrip,
Montana; provided that WCSC may also, from time-to-time and with adequate
notice to Buyer, source coal meeting the quality specifications below
from other areas of the Rosebud Mine in the event of availability issues
in Area D. Availability issues may include, among other things,
restrictions in production capacity due to equipment or infrastructure
maintenance, temporary geologic conditions that impact quality and/or
volumes, or demands of the base Area D customer.
	 
	 	 
	 

	 	Subject to the availability of suitable railcar equipment, cooperation of
the BNSF Railroad, and similar economics to the costs of delivering and
using Rosebud Mine Area D coal, WCSC shall have the right to supply two
unit train shipments (or an equivalent volume in single-car shipments)
from the Westmoreland Resources, Inc. (“WRI”) Absaloka Mine at Sarpy
Creek, Montana during mid-2008 (coinciding with the anticipated Rosebud
Mine Area B dragline extended maintenance outage tentatively scheduled
for June-August 2008), and the parties shall cooperate in good faith to
arrange for as many additional shipments from the Absaloka Mine as
possible during the Term of this Order, provided that Buyer does not
incur a total cost of coal delivered to its plant at Richardton, North
Dakota, that exceeds the total cost of coal otherwise delivered from the
Rosebud Mine in single-car lots.
	 
	 	 
	 

	 	WCSC and Buyer may also discuss the potential to supply lignite from the
Dakota Westmoreland Corporation (“DWC”) Beulah Mine at Beulah, North
Dakota, and DWC shall make commercially reasonable efforts to supply
lignite for a test burn, as mutually agreed upon.
	 
	 	 
	 

	 	WECO, WRI, and DWC are affiliates of WCSC.
	 
	 	 
	TERM:

	 	January 1, 2008 through December 31, 2009.
	 
	 	 
	QUANTITY:

	 	The quantities of coal to be delivered in each year shall be no less than
90,000 tons and no more than 115,000 tons per year.
	 
	 	 
	 

	 	For purposes of this Order, a “ton” shall mean 2,000 pounds avoirdupois.
	 
	 	 
	 

	 	In the event Buyer shuts down for any reason or cause and does not
purchase coal from other sources, the amount of coal which Buyer would
ordinarily consume during such shutdown will be reduced and such amount
shall be deducted from the amount of coal Buyer is required to purchase
pursuant to this Order. Buyer will give prompt notice to WCSC of any
shutdown and the reduced amount of coal required as a result during such
shutdown.
	 
	 	 
	 

	 	In the event WCSC fails to provide the coal required in a timely manner,
other than due to an event of force majeure, and Buyer is required to
obtain the coal through alternate means (i.e. using trucks to haul the
coal from the mines or obtaining coal from another company), and Buyer
has provided WCSC a reasonable opportunity to provide coal from other
sources or to otherwise address its delay in a timely manner, WCSC shall
be liable to Buyer for the cost difference between the cost to obtain the
coal under the terms of this Order and the cost actually paid by Buyer to
obtain the coal using alternate means, specifically excluding any
incidental or consequential costs or damages.
	 
	 	 
	DELIVERY DATE & SCHEDULE:

	 	Buyer and WCSC shall coordinate and agree upon the delivery schedule in a prompt manner
based on the needs of Buyer.
	 
	 	 
	POINT OF DELIVERY:

	 	The Point of Delivery for coal sold hereunder shall be F.O.B. Mine,
loaded into Buyer provided railcars. All title and risk of loss shall transfer to Buyer
upon loading into railcars.

 

	 	 	 
	PRICE:

	 	US $14.32 per ton FOB Mine for deliveries during calendar
year 2008 and US$14.75 per ton FOB Mine for deliveries
during calendar year 2009 (as appropriate, “the Price”).
	 
	 

	 	In the event, subsequent to December 31, 2007, the supplying
Mine(s) has increased costs in the mining, production,
processing, delivery or marketing of coal under this Order
as a result of any new, amended or reinterpreted federal,
state or local law, regulation, rule or order, WCSC shall
have the right to increase the Price in an amount equal to
the increased costs. Notwithstanding the foregoing and in
lieu of paying the increased Price, Buyer shall have the
right to elect to terminate this Order upon thirty (30) days
prior written to WCSC.
	 
	 	 
	QUALITY:

	 	Typical coal quality specifications are set forth below.
Buyer acknowledges that the quality of actual coal
deliveries may vary based on industry standards from the
typical specifications below. All qualities below are on as
As-Received basis.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Quality	 	Rosebud Mine	 	Absaloka Mine*	 	Beulah Mine**
	Btu/lb
	 	 	8,500	 	 	 	8,650	 	 	 	6,900	 
	Sulfur
	 	 	0.70	%	 	 	0.64	%	 	 	0.9%-1.0	%
	Na20 in Ash
	 	 	2.00	%	 	 	2.00	%	 	 	7%-9	%
	Ash
	 	 	9.35	%	 	 	9.50	%	 	 	8%-9	%

	 	 	 
	 

	 	Notwithstanding the above, WCSC shall cause the Rosebud Mine to make commercially
reasonable efforts to supply coal with a sulfur content of 0.65% or less.
	 
	 	 
	 

	 	The size of the coal provided hereunder shall be two inch by zero inch (2” x 0”) with a
maximum oversize of ten percent (10%). WCSC will use commercially reasonable efforts to
maintain a top size not to exceed three inches (3”).

 

			
	*	 	Subject to the provisions of Source above.

	 
	**	 	Actual quality subject to timing of deliveries relative to mine progression and availability of various seams.

	 	 	 
	BILLING:

	 	Buyer will be invoiced for coal to the address shown below unless Buyer otherwise advises WCSC in
writing of a different address to which invoices should be mailed:
	 
	 	 
	 

	 	P.O. Box 11

Richardton, ND 58652 

Telephone #: 701-974-3308 

Telefax #: 701-974-3309
	 
	 	 
	PAYMENT:

	 	Buyer shall pay invoices within ten (10) days after the date of the invoice at the address provided
on the invoices, including by wire if requested by WCSC. Invoices will be sent every two weeks.
	 
	 	 
	WEIGHTS:

	 	The weight of the coal shall be determined by WCSC at the Mine by certified commercial weigh scale(s).
	 
	 	 
	PRIOR AGREEMENT:

	 	This Order #002-2008/2009 replaces and deletes Buyer’s options to extend the
Term beyond December 31, 2007 under Order #001-2007.
	 
	 	 
	GENERAL TERMS AND CONDITIONS:

	 	The General Terms and Conditions are as attached.

IN WITNESS WHEREOF, the parties hereto have caused this Order to be executed in duplicate
by their duly authorized representatives as of the day and year first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Buyer: Red Trail Energy, LLC	 	 	 	WCSC: Westmoreland Coal Sales Company  
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mick J. Miller
	 	 
	 	 	 	By:
	 	/s/ Todd A. Meyer	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	President
	 	 	 	 	 	Title:
	 	 President	 	 

 

GENERAL TERMS AND CONDITIONS

	1.	 	Title to and risk of loss of the coal shall pass to Buyer at the Point of Delivery.

	 
	2.	 	The term “force majeure” shall mean any cause beyond the control of the party affected thereby, such as acts of God, strike, lockout, labor
dispute, labor shortage, fire, flood, war, riot, explosion, accident, car shortage, embargo, contingencies of transportation, inability to secure
supplies or fuel or power, breakdown of machinery or apparatus, regulation or rule or law of any governmental authority, or any other
cause, whether similar or dissimilar to the aforestated causes and whether or not foreseen or foreseeable by the parties, which wholly or
partially prevents, interrupts or delays the performance by WCSC or Buyer of their respective obligations under this Order. A force
majeure event affecting any of WCSC’s suppliers, including its mining contractor, shall be considered a force majeure event affecting
WCSC. Settlement of a strike, lockout or other labor dispute shall be deemed beyond the control of the party claiming excuse thereby
regardless of the cause of, or the ability of such party to settle, such dispute.

If because of force majeure either Buyer or WCSC is unable to carry out its obligations under this Order, except obligations to pay money
to the other party, then the obligations of such party shall be suspended to the extent made necessary by such force majeure and during
its continuance, provided such force majeure is eliminated insofar as possible and economically practicable with all reasonable dispatch.
Any deficiency in coal tonnage to be delivered under this Order caused by such force majeure shall not be made up except by mutual
consent of Buyer and WCSC.

	 
	3.	 	The coal sold hereunder may not be used at, or reconsigned to, any location other than Buyer’s facility, without the prior written consent of
WCSC.

	 
	4.	 	WCSC shall provide for sampling and analysis of the coal at the Mine in accordance with ASTM standards. Buyer shall have the right to
have a representative present during sampling at any and all times to observe the sampling process. WCSC will provide to Buyer one
ASTM sample for each train load, and WCSC shall also provide by email to Buyer an electronic copy of WCSC’s quality analysis for each
train load.

	 
	5.	 	Failure of the Buyer to pay for coal delivered in accordance with the terms hereof shall give WCSC the option to (a) suspend further
shipments until all previous shipments are paid for, or (b) cancel the Order upon written notice to Buyer, provided that Buyer shall have a
thirty (30) day cure period after receipt of a notice of cancellation hereunder. If in the reasonable judgment of WCSC, Buyer’s ability to
perform hereunder has or will become impaired, WCSC shall have the right, upon notice to Buyer, to suspend further shipments until
WCSC receives adequate assurance of Buyer’s performance, which may include a prepayment account equal to one month of coal
deliveries. If such security is not furnished within ten (10) days after receipt of such notice, WCSC shall have the right to cancel this
Order upon notice to Buyer.

	 
	6.	 	This Order shall not be assigned by either party without the prior written consent of the other party, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, either party may assign this Order without such consent to a parent company, or
any other affiliate of the assigning party, or for purposes of securing indebtedness, but assignor shall continue to be liable for its
performance hereunder.

	 
	7.	 	A party’s failure to insist in any one or more instances upon strict performance of a provision of, or to take advantage of any of its rights
under this Order shall not be construed as a waiver of such provision or right. No default of either party to this Order in the performance of
any of its covenants or obligations hereunder, except the obligation for payment, shall result in a right to the other party to cancel this
contract unless such defaulting party shall fail to correct the default within thirty (30) days after written notice of claim of such default has
been given by the party claiming such default.

	 
	8.	 	Notice sent by facsimile, first class, certified or registered U.S. Mail, or a reputable over night courier service, addressed to the party to
whom such notice is given, at the address of such party stated in this Order or to such other address (or facsimile number) as such party
may designate, shall be deemed sufficient notice in any case requiring notice under this Order.

	 
	9.	 	EXCEPT AS EXPRESSLY STATED IN THIS ORDER, WCSC MAKES NO WARRANTIES, WHETHER EXPRESS OR IMPLIED,
WRITTEN OR ORAL, ARISING FROM A COURSE OF DEALING, USAGE OF TRADE, OR OTHERWISE, REGARDING
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, QUALITY, QUANTITY, OR OTHERWISE. Neither party shall be
liable for any punitive, special, incidental or consequential damages (including without limitation, loss of profits or overhead), based upon
breach of warranty or of contract, negligence or any other theory of legal liability arising out of this Order; provided, however, such
limitation regarding incidental or consequential damages shall not apply to any liability for third party claims for which WCSC has
indemnified Buyer pursuant to paragraph 12 below, to the extent that Buyer has liability for such incidental or consequential damages.

	 
	10.	 	The terms and conditions set forth in this Order are considered by both Buyer and WCSC to be CONFIDENTIAL. Neither party shall
disclose any such information to any third party without the advance written consent of the other party, except where such disclosure may
be required by law (including by rule or order of the Securities and Exchange Commission) or is necessary to assert a claim or defense in
judicial or administrative proceedings, in which event the party desiring to make the disclosure shall advise the other party in advance in
writing and shall cooperate to the extent practicable to minimize the disclosure of any such information. If a party believes that any
disclosure of the terms of this Order are required by law, such party shall (i) provide prompt written notice to the other party, and (ii) take
such steps are reasonably available to minimize the disclosure of the terms of this Order.

 

	11.	 	This Order shall be governed in all respects by the law of the State of Montana, without regard to its choice of laws provisions.

	 
	12.	 	WCSC shall be (i) liable to Buyer for, and (ii) indemnify and save harmless Buyer from and against any and all claims made or
brought by any third party in respect of, any damage, caused by the negligent acts or omissions of WCSC, to (a) Buyer’s or its
contracted rail carriers’ equipment while on WCSC’s property except to the extent such damage is caused by the negligence of
Buyer or its contracted rail carrier, and (b) Buyer’s equipment, including mobile railcars and stationary equipment at Buyer’s
coal combustion facility, to the extent said equipment is damaged due to non-coal material having been interspersed with the
coal prior to leaving WCSC’s mine property.

	 
	13.	 	This Order contains the entire agreement of the parties, is expressly limited to the terms and conditions specifically set forth
or incorporated by reference herein, supersedes all prior communications between the parties regarding the subject matter of
this Order and shall be amended or modified only by agreement of the parties in writing. Should any provision of this Order for
any reason be declared invalid or unenforceable by an order of any court having jurisdiction, such decision shall not affect the
validity or enforceability of the remaining provisions of this Order, and such provisions shall remain in full force and effect
as if this Order had been executed without the invalid or unenforceable provision.

#         #         #exv10w44

 

EXHIBIT 10.44

DISTILLER’S GRAIN MARKETING AGREEMENT

          THIS DISTILLER’S GRAIN MARKETING AGREEMENT (the “Agreement”), is entered into effective as of
March 10, 2008, by and between Red Trail Energy, LLC, a North Dakota limited liability company
(“Seller”) and CHS Inc., a Minnesota cooperative corporation (“Buyer”),

WITNESSETH:

          WHEREAS, Seller desires to sell and Buyer desires to purchase the distiller’s dried grains
with solubles (“DDGS”) (hereinafter DDGS are referred to as the “Products”) output from the
ethanol production plant that Seller owns and operates in Richardton; North Dakota

          WHEREAS, Seller and Buyer wish to agree in advance of the sale and purchase of the Products
to the price formula, payment, delivery and other terms thereof in consideration of the mutually
promised performance of the other.

          NOW, THEREFORE, in consideration of the promises and the mutual covenants and conditions
herein contained, and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by both parties, it is hereby agreed:

     1.
BUYER PERFORMANCE. Buyer agrees to perform the services that it provides
for Seller in a professional and competent manner.

     2. PURCHASE AND SALE. Seller agrees to sell to Buyer and Buyer agrees to
purchase from Seller the entire bulk feed grade DDGS output from Seller’s plant located at
Richardton, North Dakota (the “Plant”), subject to all terms and conditions set forth in
this Agreement, Buyer shall label all of Seller’s Products that are marketed or sold by
Buyer hereunder, and shall register all labels with the states where such Products are
sold.

     3. TRADE RULES. All purchases and sales made hereunder shall he governed by
the Feed Trade Rules of the National Grain and Feed Association unless otherwise specified
in this Agreement. Said Feed Trade Rules, a copy of which are
appended hereto as Exhibit A, shall, to the extent applicable and as amended from time to time, be a part of this
Agreement as if fully set forth herein.

     4. TERM. The initial term of this Agreement shall be for six months commencing
as of April 1, 2008 (the “Effective Date”). Unless earlier terminated in accordance with
this Agreement, this Agreement shall be automatically renewed for successive six month terms
thereafter unless either party gives written notice to the other party of its election not
to renew not later than thirty (30) days prior to the expiration of the then current term.
Each party hereto agrees that it shall be bound by specific commitments made to the other
party for the purchase or sale of Products entered into prior to termination or non-renewal
of this Agreement, regardless of whether the actual purchase or sale occurs before or after
termination or non-renewal of this Agreement. In

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no event, however, shall the preceding sentence require a party to purchase or sell Products
following an Event of Default (defined in Section 12) by the
other party.

5.
DELIVERY AND TITLE.

     A. The place of delivery for all the Products sold pursuant to this Agreement
shall be FOB Plant. Buyer and Buyer’s agents shall be given access to Seller’s Plant in
a manner and at all times reasonably necessary and convenient for Seller and for Buyer
to take delivery as provided herein. Buyer shall schedule the loading and shipping of
all outbound Products purchased hereunder which are shipped by truck or rail. All labor
and equipment necessary to load trucks or rail cars shall be supplied by Seller without
charge to Buyer. Seller agrees to handle the Products in a good and workmanlike manner
in accordance with Buyer’s reasonable requirements and in accordance with normal
industry practice. Seller shall maintain the truck and rail loading facilities in safe
operating condition and in accordance with normal industry standards.

     B. Seller further warrants that storage space for not less than five (5) days
production of DDGS shall be reserved for Buyer’s use at the Plant and shall be
continuously available for storage of DDGS purchased by Buyer hereunder at no charge to
Buyer. Seller shall also make available the necessary storage for Solubles which is
adequate for Buyer to market such products. Seller shall be responsible at all times for
the quantity, quality and condition of any of the Products in storage at the Plant. Seller
shall not be responsible for the quantity, quality and condition of any of the Products
stored by Buyer at locations other than the Plant.

     C. Buyer shall give to Seller a schedule of quantities of the Products to be removed
by truck and rail with sufficient advance notice to reasonably allow Seller to provide the
required services. Seller shall provide the labor, equipment and facilities necessary to
meet Buyer’s loading schedule and, except for any consequential or indirect damages, shall
be responsible for Buyer’s actual costs or damages resulting from Seller’s failure to do
so. Except as otherwise set forth herein, Buyer shall order and supply trucks and rail
cars as scheduled for truck and rail shipments. All freight charges shall be the
responsibility of Buyer and shall be billed directly to Buyer.

     D. Buyer shall provide loading orders as necessary to permit Seller to maintain
Seller’s usual production schedule; provided, however, that Buyer shall not be responsible
for failure to schedule removal of the Products unless Seller shall
have provided to Buyer production schedules as follows: Five (5) days prior to the beginning of each calendar
month during fee term hereof, Seller shall provide to Buyer a tentative schedule for
production in the next calendar month. Seller shall inform Buyer daily of inventory and
production

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status. For purposes of this paragraph, notification will be sufficient if made by e-mail or
facsimile as follows:

     If
to Buyer, to the attention of Steve Markham, Facsimile
number (651-355-6270) or email
to STEVE.MARKHAM@CHS INC.COM, and

     If
to Seller, to the attention of MICK MILLER, Facsimile
number 701-974-3309 or email to MICK@REDTRAILENERGY.COM

     Or to such other representatives of Buyer and Seller as they may designate to the other in
writing.

     E. Title, risk of loss and full shipping responsibility shall pass to Buyer upon
loading the Products into trucks or rail cars.

6. PRICE AND PAYMENT

     A. Buyer agrees to pay Seller as follows: for all DDGS removed by Buyer from the Plant a
price equal to ninety eight percent (98%) of the FOB Plant price (defined below) actually received
by Buyer from its customers. Buyer shall retain the balance of the FOB Plant price received by
Buyer from its customers (2% in the case of DDGS) as its fee for services provided under this
Agreement. In no event shall the fee for DDGS be less than $1.50 per ton, nor more than $2.15 per
per ton. For purposes of this provision, the “FOB Plant price” shall be the actual sale price
received by Buyer from its customers, less all customary freight costs incurred by Buyer in
delivering the Product to its customer. Buyer will use best efforts to minimize freight cost.

     B. Buyer agrees that it shall not sell Product for delivery more than ninety (90) days from
the date of entering into a sale without the prior consent of Seller, Buyer agrees to use
commercially reasonable efforts to achieve the highest sale price available under prevailing market
conditions. Seller’s sole and exclusive remedy for breach of Buyer’s obligations hereunder shall
be to terminate this Agreement. Buyer shall collect all applicable state tonnage taxes on Products
sold by Buyer and shall remit to the appropriate governmental agency.

     C. Within ten (10) days following receipt of certified weight certificates, which
certificates shall be presented to Buyer each Thursday for all shipments during the preceding week,
Buyer shall pay Seller the full price, determined pursuant to
paragraph 6A above, for all
properly documented shipments. Buyer shall submit to Seller a certificate with each such payment
showing in reasonable detail the price invoiced by Buyer to the third-party buyer, freight and
commission on all Products for which payment is being made. Buyer agrees to maintain accurate sales
records and to provide such records to Seller upon request. Seller shall have the option to audit
Buyer’s sales invoices at any time during normal business hours and during the term of this
Agreement. Any discrepancy discovered will be paid by Buyer and shall be calculated with accrued

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interest from the original due date at a rate equal to the Prime Commercial Lending
Rate as reported in the Wall Street Journal.

7.
QUANTITY AND WEIGHTS.

     A. It is understood that the output of the Products shall be determined by
Seller’s production schedule and that no warranty or representation has been made
by Seller as to the exact quantities of Products to be sold pursuant to this
Agreement.

     B. The quantity of Products delivered to Buyer from Seller’s Plant shall be
established by weight certificates obtained from the scale at the Plant which is
certified as of the time of weighing and which complies with all applicable laws,
rules and regulations or in the event that the scale at the Plant is inoperable
then at other scales which are certified as of the time of weighing
and which comply with all applicable laws, rules and regulations. The outbound weight
certificates shall be determinative of the quantity of the Products for which
Buyer is obligated to pay pursuant to Section 6.

8.
QUALITY.

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

     B. Seller warrants that all Products, unless the parties agree otherwise,
sold to Buyer hereunder shall, at the time of delivery to Buyer, conform to the
following minimum quality standard:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Protein	 	 	 	Fat	 	 	 	Fiber	 	 	 	Moisture	 	 	 	Ash	 	 
	 	 	Min	 	Max	 	Min	 	Max	 	Min	 	Max	 	Min	 	Max	 	Min	 	Max
	DDGS
	 	25	 	 	 	10	 	 	 	 	 	15	 	 	 	12	 	 	 	6
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Solubles
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

               The standard for DDGS will be determined on an as is basis rather than a
dry weight basis. From time to time with written consent of buyer and seller
minimum quality standards can be changed to better reflect sellers product
quality.

     C. Payment of invoice does not waive Buyer’s rights if Products do not
comply with terms or specifications of this Agreement. Unless otherwise agreed
between the parties to this Agreement, and in addition to other remedies
permitted by law, the Buyer may, without obligation to pay, reject either before
or after delivery, any of the Products which when inspected or used fail in a
material way to conform to this Agreement. Should any of the Products be

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seized or condemned by any federal or state department or agency for any reason except
noncompliance by Buyer with applicable federal or state requirements, such seizure or
condemnation shall operate as a rejection by Buyer of the Products seized or condemned and Buyer
shall not be obligated, to offer any defense in connection with the seizure or condemnation.
When rejection occurs before or after delivery, at its option, Buyer may:

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

          (2) Dispose of the rejected Products in any manner directed by Seller which Buyer can
accomplish without violation of applicable laws, rules, regulations or property rights; or

          (3) If Buyer has no available means of disposal of rejected Products and Seller fails to
direct Buyer to dispose of it as provided herein, Buyer may return the rejected Products to
Seller, upon which event Buyer’s obligations with respect to said rejected Products shall be deemed
fulfilled. Title and risk of loss shall pass to Seller promptly upon rejection by Buyer.

          (4) Seller shall reimburse Buyer for all costs reasonably incurred by Buyer in storing,
transporting, returning and disposing of the rejected Products. Buyer shall have no obligation to
pay Seller for rejected Products and may deduct reasonable costs and expenses to be reimbursed by
Seller from amounts otherwise owed by Buyer to Seller.

          (5) If Seller produces Products which comply with the warranty in Section C but which do not
meet applicable industry standards, Buyer agrees to purchase such Products for resale but makes no
representation or warranty as to the price at which such Products can be sold. If the Products
deviate so severely from industry standards as to be unsellable, then it shall be disposed of in
the manner provided for rejected Products in Section C.

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

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     9. RETENTION OF SAMPLES. Seller will take an origin sample of Products from each
truck and rail car before it leaves the Plant using standard sampling methodology. Seller will
label these samples to indicate the date of shipment and the truck or railcar number involved.
Seller will retain the samples and labeling information for no less than one (1) year.

     10. INSURANCE.

     A.
Seller warrants to Buyer that all employees engaged in the removal of the
Products from Seller’s Plant shall be covered as required by law by worker’s compensation
insurance.

     B. Seller agrees to maintain throughout every term of this Agreement comprehensive
general liability insurance, including product liability coverage, with combined single
limits of not less than $2,000,000. These limits can also be attained through the use of
an excess or umbrella policy. Seller’s policies of comprehensive general liability
insurance shall be endorsed to require Seller’s insurer endeavor to provide at least
thirty (30) days’ advance notice to Buyer prior to the effective date of any decrease in
or cancellation of coverage. Seller shall cause Buyer to be named as an additional
insured on Seller’s insurance policy and shall provide a certificate of insurance to
Buyer to establish the coverage maintained by Seller not later than fourteen (14) days
prior to completion and start-up of production of the Plant.

     C.
Buyer agrees to maintain throughout every term of this Agreement comprehensive
general liability insurance with combined single limits of not less than $2,000,000.
These limits can also be attained through the use of an excess or umbrella policy.
Buyer’s policies of comprehensive general liability insurance shall be endorsed to
require Buyer’s insurer to endeavor to provide at least thirty (30) days’ advance notice
to Seller prior to the effective date of any decrease in or cancellation of coverage.
Buyer shall cause Seller to be named as an additional insured on Buyer’s insurance policy
and shall provide a certificate of insurance to Seller to establish the coverage
maintained by Buyer not later than fourteen (14) days prior to completion and start-up of
production of the Plant.

     D. Buyer agrees to carry automobile liability insurance on Buyer owned, non-owned
and hired vehicles operating on Seller’s property with minimum limits of liability of
$5,000,000 combined single limit for each occurrence, listing Seller, its
employees, agents and representatives, as additional insured, and providing them
with a waiver of subrogation. These limits can also be attained through the use of an
excess or umbrella policy. Upon request, Buyer shall provide certificates of insurance
to Seller to establish the

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coverage maintained by Buyer. Buyer will monitor and require proper trucking authority
and insurance certificates for freight contracted by Buyer.

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

11. REPRESENTATIONS AND WARRANTIES.

     A. Seller represents and warrants that all of the Products delivered to Buyer shall
not be adulterated or misbranded within the meaning of the Federal Food, Drug and
Cosmetic Act (the “Act”) and may lawfully be introduced into interstate commerce pursuant
to the provisions of the Act. Seller further warrants that the Products shall fully
comply with any applicable state laws governing quality, naming and labeling of product.
Payment of invoice shall not constitute a waiver by Buyer of Buyer’s rights as to
Products which do not comply with this Agreement or with applicable laws and regulations.
Seller covenants that the Products will be merchantable as of the time they loaded into
railcars pursuant to this Agreement.

     B. Seller represents and warrants that the Products delivered to Buyer shall be free
and dear of liens and encumbrances.

     12. EVENTS OF DEFAULT. The occurrence of any of the following shall be an event of
default (“Event of Default”) under this Agreement: (1) failure of either party to make payment to
the other when due; (2) default by either party in the performance of the covenants and agreements
set forth in this Agreement; and (3) if either party shall become insolvent, or make a general
assignment for the benefit of creditors or to an agent authorized to liquidate any substantial
amount of its assets, or be adjudicated bankrupt, or file a petition in bankruptcy, or apply to a
court for the appointment of a receiver for any of its assets or properties with or without
consent, and such receiver shall not be discharged within sixty
(60) days following appointment.

     13. REMEDIES. Upon the happening of an Event of Default, the parties hereto shall
have all remedies available under applicable law with respect to an Event of Default by the other
party. Without limiting the foregoing, the parties shall have the following remedies whether in
addition to or as one of the remedies otherwise available to them; (1) to declare all amounts owed
immediately due and payable; and (2) immediately to terminate this Agreement effective upon receipt
by the party in default of the notice of termination, provided, however, the parties shall be
allowed, ten (10) days from the date of receipt of notice of default to cure any default.
Notwithstanding any other provision of this Agreement either party may offset against amounts
otherwise owed to the other party.

7

 

     14. FORCE MAJEURE. Neither Seller nor Buyer will be liable to the other for any
failure or delay in the performance of any obligation under this Agreement due to events beyond its
reasonable control, including, but not limited to, fire, storm, hurricane, tornado, flood,
earthquake, explosion, act of the public enemy, riots, civil disorders, sabotage, strikes,
lockouts, labor disputes, labor shortages, war stoppages (all strikes, lockouts, labor disputes,
labor shortages, or shutdowns shall be of a regional or national character), or slowdowns initiated
by labor, transportation embargoes, failure or shortage of materials, acts of God, or acts or
regulations or priorities of the federal, state or local government or branches or agencies
thereof. Notwithstanding the foregoing, a party shall not be entitled to claim relief under this
Section. 14, unless such party provides written notice of such force majeure event within five (5)
days of the first occurrence.

     15.
INDEMNIFICATION.

     A. Seller shall indemnify, defend and hold Buyer and its officers, directors,
employees and agents harmless, from any and all losses, liabilities, damages, expenses
(including reasonable attorneys’ fees), costs, claims, demands, that Buyer or its
officers, directors, employees or agents may suffer, sustain or become subject to, as a
result of (i) any misrepresentation or breach of warranty, covenant or agreement of
Seller contained herein (including, without limitation, Seller’s failure to perform its
obligations under Section 19.J. of this Agreement), or (ii) the Seller’s negligence or
willful misconduct.

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

     C.
Where such personal injury, death or loss of or damage to property is the result
of negligence on the part of both Seller and Buyer, each party’s duty of indemnification
shall be in proportion to the percentage of that party’s negligence or fault.

     D. Seller acknowledges that in order to maximize the total revenue to be generated
through the sale of the Products, Buyer may take positions by selling the Products in
anticipation of Seller providing the Products. Notwithstanding the fact that Seller’s
obligation is to provide Buyer with the output of the Plant, the parties acknowledge that
Buyer may suffer losses as a result of positions taken by Buyer if Seller discontinues
operations for any reason whatsoever including Force Majeure. Therefore, Seller shall
indemnify, defend and hold Buyer and its officers, directors, employees and agents
harmless from any and all losses, liabilities, damages, expenses (including reasonable
attorney’s fees), costs, claims, demands that Buyer or its officers,

8

 

directors, employees, or agents may suffer, sustain or become subject to as a result of
any sale or purchase of product taken by Buyer in anticipation of Seller delivering the
Products hereunder, provided Buyer has taken commercially reasonable steps to avoid the
loss. Seller shall not be liable for any loss resulting from Seller discontinuing
operations related to a position taken by Buyer for delivery more than ninety (90) days
from the date of entering into a sale without the consent of Seller.

The indemnification in this Section 15 shall survive the termination of this
Agreement.

     16. GOVERNMENTAL ACTION. The parties recognize that the value of the Products could
change as a result of various governmental programs, be they foreign or domestic. In the event
that a significant value change of the Products as a result of any such governmental program, the
Buyer may request re-negotiation of the contract price for the Products by providing written
notice to the Seller. The Buyer shall be required to demonstrate that the value of the Products
has significantly changed in the market. Should such a change take place, the parties agree to
negotiate, in good faith, a revised sale price for the Products. If, after a good faith effort,
the parties are unable to agree on a new price within the ninety (90) day period immediately
following notice to the other party, then in such event and notwithstanding the other provisions
hereof, the Buyer may terminate this Agreement upon ninety (90) days’ prior written notice.

     17. RELATIONSHIP OF PARTIES. This Agreement creates no relationship other than that
of buyer and seller between the parties hereto. Specifically, there is no agency, partnership,
joint venture or other joint or mutual enterprise or undertaking created hereby. Nothing contained
in this Agreement authorizes one party to act for or on behalf of the other and neither party is
entitled to commissions from the other.

     18. MISCELLANEOUS.

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

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

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

9

 

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

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

     F. The paragraph headings herein are for reference purposes only and shall not
in any way affect the meaning or interpretation of this Agreement.

     G. This Agreement shall be construed and performed in accordance with the laws
of the State of Minnesota.

     H. The respective rights, obligations and liabilities of the parties under this
Agreement are not assignable or delegable without the prior written consent of the
other party.

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

	 	 	 	 	 
	 

	 	Buyer:
	 	CHS Inc.
	 

	 	 	 	5500 Cenex Drive
	 

	 	 	 	Inver Grove Heights, MN. 55077
	 

	 	 	 	ATTN: Steve J. Markham
	 
	 	 	 	 
	 

	 	Seller:
	 	RED TRAIL ENERGY, LLC
	 

	 	 	 	5682 HIGHWAY 8 SOUTH
	 

	 	 	 	RICHARDTON, ND 58652
	 

	 	 	 	ATTN: MICK MILLER

10

 

          IN WITNESS THEREOF, the parties have caused this Agreement to be executed the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	CHS Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Steve Markham
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	Steve Markham
 
	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:
	 	Merchant	 	 
	 
	 	 	 	 	 	 
	 	 	Red Trail Energy,LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mick J. Miller	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	MICK J. MILLER
 
	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:
	 	PRESIDENT	 	 

11

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