Document:

Exhibit
10.2

 

Pursuant to 17 C.F.R. § 240.24b-2, confidential information
(indicated by [***]) has been omitted and has been filed separately with the
Securities and Exchange Commission pursuant to a Confidential Treatment Application
filed with the Commission.

 

ETHANOL
PURCHASE AND SUPPLY AGREEMENT

 

                THIS
ETHANOL PURCHASE AND SUPPLY AGREEMENT (“Agreement”) is made and entered into as
of the day and year set forth above the signatures hereto by and between Iowa
Falls Ethanol Plant, L.L.C., an Iowa limited liability company (“IFEP”), and
Eco-Energy, Inc., a Tennessee corporation (“EEI”).

 

RECITALS:

 

A.                                   IFEP intends to
construct an ethanol plant to be located in or around Fairbank, Iowa.

 

B.                                     EEI desires to
submit purchase orders for the entire output of Ethanol (as that term is
defined in Section 1 of this Agreement) to IFEP, and IFEP desires to receive
purchase orders for the entire output of Ethanol from EEI, and if IFEP accepts
any such purchase orders, EEI and IFEP desire to, respectively, purchase and sell
the Ethanol which is the subject of those accepted purchase orders, all upon
and subject to the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the Recitals and the
mutual agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
IFEP and EEI agree as follows:

 

1.             Definitions.  The following terms shall have the meanings
set forth below for purposes of this Agreement:

 

(a)            Accepted
Purchase Order.  The term “Accepted
Purchase Order” is defined in Section 3 of this Agreement.

 

(b)           Affiliate.  The term “Affiliate” shall mean, with respect
to either party to this Agreement, any person that now or hereafter (i) is
owned or controlled, directly or indirectly, by such party, (ii) owns or
controls, directly or indirectly, such party, or (iii) is under common control
with such party.

 

(c)            Agreement.  The term “Agreement” shall mean this Ethanol
Purchase and Supply Agreement, as the same may be amended from time to time
pursuant to Section 29 of this Agreement.

 

(d)           EEI.  The term “EEI” shall mean Eco-Energy, Inc.,
and its permitted successors and assigns.

 

 

 

 

(e)            EEI Carrier.  The term “EEI Carrier” is defined in Section
5 of this Agreement.

 

(f)            Ethanol.  The term “Ethanol” shall mean the denatured
ethanol which is produced at the Plant.

 

(g)           IFEP.  The term “IFEP” shall mean Iowa Falls Ethanol
Plant, L.L.C., and its permitted successors and assigns.

 

(h)           Impossibility
Event.  The term “Impossibility Event”
is defined in Section 27 of this Agreement.

 

(i)             Plant.  The term “Plant” shall mean the ethanol plant
of IFEP to be located in or around Fairbank, Iowa.

 

(j)             Production
Estimate.  The term “Production
Estimate” is defined in Section 2 of this Agreement.

 

(k)            Purchase Order.  The term “Purchase Order” is defined in
Section 2 of this Agreement.

 

(l)             Purchase Order
Form.  The term “Purchase Order Form”
is defined in Section 4 of this Agreement.

 

(m)           Purchase Price.  The term “Purchase Price” is defined in Section
9 of this Agreement.

 

(n)           Rejected Purchase
Order.  The term “Rejected Purchase
Order” is defined in Section 3 of this Agreement.

 

(o)           Specifications.  The term “Specifications” is defined in
Section 14 of this Agreement.

 

(p)           Storage Limit.  The term “Storage Limit” is defined in
Section 8 of this Agreement.

 

(q)           Substantial
Completion Date.  The term “Substantial
Completion Date” shall mean the date on which there is a substantial completion
of the Plant, or the Plant is otherwise found to be substantially completed, as
determined under the agreement between IFEP and the general contractor for the
construction of the Plant.

 

(r)            Value-Added Transaction.  The term “Value-Added Transaction” is defined
in Section 9 of this Agreement.

 

(s)            VAT Payment.  The term “VAT Payment” is defined in Section
9 of this Agreement.

 

2

 

Other
terms utilized in this Agreement may be defined elsewhere in this Agreement.

 

2.            Purchase Orders From EEI;
Estimated Production of Ethanol.  EEI
shall submit purchase orders (each, a “Purchase Order”) to IFEP for purchases
of the entire output of Ethanol from the Plant, all upon and subject to the
terms and conditions of this Agreement.

 

EEI shall submit Purchase Orders on such a periodic basis as is
necessary to permit IFEP to operate at and maintain IFEP’s normal, full
production capacity schedule and otherwise with such sufficient advance notice
so as to reasonably allow IFEP to determine that the Storage Limit will not be
exceeded and for IFEP to provide the services required of IFEP under Section 5
of this Agreement.

 

IFEP shall  provide to EEI, at
least four (4) days prior to the first business day of each calendar week,
commencing with the first calendar week which begins after the Substantial
Completion Date, a written estimate (each, a “Production Estimate”) of IFEP’s
estimated production of Ethanol which includes the calendar week in
question.  IFEP may give Production
Estimates on a weekly, monthly or other periodic basis, and IFEP may amend any
Production Estimate at any time.  IFEP
will also keep EEI informed on each business day (i.e., excluding weekends and
IFEP recognized holidays) regarding the Ethanol inventory at the Plant.  All such Production Estimates and daily information
may be given by IFEP to an EEI Representative (as that term is defined in
Section 25 of this Agreement) designated by EEI by facsimile, or to such other
individual, facsimile number and/or by such other reasonable means as EEI may
designate to IFEP in writing from time to time in accordance with Section 35 of
this Agreement.  The current facsimile
number of EEI for this purpose is set forth below EEI’s signature to this
Agreement.

 

The nameplate design capacity of the Plant will be 100,000,000 gallons
of ethanol per year, and the estimated output of Ethanol from the Plant at full
production capacity is anywhere from approximately 100,000,000 to 110,000,000
gallons per year once the Plant is at full production capacity.  IFEP currently estimates that the Plant will
commence operations and the production of Ethanol some time during the month of
March, April or May of 2006, and that the Plant could be at full production
capacity within thirty (30) days of the commencement date of operations at the
Plant.  IFEP will keep EEI reasonably
apprised of the estimated date for the Substantial Completion Date, and will
give EEI prompt notice of the actual date of the Substantial Completion Date.

 

IFEP may, in its discretion, from time to time expand the nameplate design
capacity of the Plant.  IFEP will keep
EEI reasonably apprised of the progress of any such expansion, and IFEP will
provide EEI with written notice of the estimated date on which additional
Ethanol will first be available pursuant to any such expansion at least one
hundred eighty (180) days before such date.

 

IFEP
shall, however, have the right to manage its business in all respects and in
its discretion, and it is understood that the total output of Ethanol may vary
and shall be determined by IFEP from time to time, and that no warranty or
representation has been made by IFEP as to 

 

3

 

the output of Ethanol from the Plant at any
given time or from time to time.  IFEP
will, however, fulfill Accepted Purchase Orders, and will use commercially
reasonable efforts to produce the amount of Ethanol estimated in its Projection
Estimates, all upon and subject to the terms and conditions of this
Agreement.  EEI also understands that
IFEP may produce Ethanol in excess of the amounts set forth in IFEP’s
Production Estimates, and EEI will submit Purchase Orders for all Ethanol which
may from time to time be produced at the Plant which is in excess of the
amounts set forth in any Production Estimates, all upon and subject to the
terms and conditions of this Agreement.

 

3.             Acceptance or Rejection of
Purchase Orders by IFEP.  IFEP may
accept or reject each Purchase Order, in whole, but not in part, in IFEP’s
commercially reasonable discretion.

 

IFEP
shall attempt to notify EEI via e-mail (if an e-mail address is provided in the
Purchase Order), or otherwise to any EEI Representative, of whether IFEP
accepts or rejects each Purchase Order within the time period set forth in the
Purchase Order.  If IFEP fails to notify
EEI within the time period set forth in the Purchase Order, however, IFEP shall
be deemed to have rejected the Purchase Order in question.

 

Any
Purchase Order which is accepted by IFEP is referred to in this Agreement as an
“Accepted Purchase Order”.  Any Purchase
Order which is rejected by IFEP is referred to in this Agreement as a “Rejected
Purchase Order”.

 

4.             Additional Terms Regarding
Submission of Purchase Orders; Priority of This Agreement.  A Purchase Order may include a request for
the sale of Ethanol on a one-time basis or on a weekly, monthly, quarterly or
other periodic basis.

 

                Each Purchase Order shall be
placed by EEI properly completing and executing a purchase order in either the
form attached to this Agreement as Exhibit “A” or Exhibit “B” or another
written purchase order form acceptable to IFEP (in any case, the “Purchase
Order Form”), and forwarding the completed and executed Purchase Order Form to
IFEP either (i) in accordance with Section 35 of this Agreement, or (ii) by
e-mail to the attention of           at           or
to the attention of such other individual or to such other e-mail address as
may be designated by IFEP from time to time in accordance with Section 35 of
this Agreement.

 

                The Purchase Order contemplated
by Exhibit “B” will (or another written Purchase Order Form acceptable to IFEP
may) take the form of EEI submitting to IFEP a proposed minimum purchase price
for Ethanol (the “Posted Price”) which will be effective for the day, week,
month or other period of time set forth in the Purchase Order Form (in any such
case, the “Posted Price Sales Period”), along with a proposed maximum number of
gallons of Ethanol which may be sold at or above the Posted Price at any time
during, and for pick-up by EEI during, the Posted Price Sales Period.  If IFEP accepts such a Purchase Order, EEI
may sell up to the maximum number of gallons of Ethanol set forth in the
Purchase Order Form at or above the Posted Price at any time during, and for
pick-up by EEI during, the Posted Price Sales Period without further approval
of each such sale by IFEP, but otherwise upon and subject to the terms and
conditions of this Agreement, and each such sale shall also be an Accepted
Purchase Order.

 

4

 

                Each Purchase Order placed by
EEI by a Purchase Order Form in the form of Exhibit “A” or another similar
written Purchase Order Form acceptable to IFEP shall be irrevocable by EEI for
the Acceptance Period specified in the Purchase Order, but EEI does not have a
binding obligation to purchase any Ethanol pursuant to said Purchase Order
unless EEI is able to enter into an agreement with a third party for the sale
of the Ethanol by EEI to such third party within one (1) day of IFEP’s
acceptance of the Purchase Order in question. 
If EEI does not enter into such agreement within said one (1) day
period, the Purchase Order in question shall automatically become a Rejected
Purchase Order.  EEI shall, however,
utilize its best efforts to enter into such third party sales and to otherwise
purchase the Ethanol subject to each Purchase Order.  Each Purchase Order placed by EEI by a
Purchase Order Form in the form of Exhibit “B” or another similar written
Purchase Order Form acceptable to IFEP shall be irrevocable by EEI for the
Acceptance Period specified in the Purchase Order, but EEI does not have a
binding obligation to purchase any Ethanol pursuant to said Purchase Order
unless and until EEI enters into an agreement with a third party for the sale
of the Ethanol by EEI to such third party during, and for pick-up by EEI
during, the Posted Price Sales Period. 
EEI shall, however, utilize its best efforts to enter into such third
party sales and to otherwise purchase the Ethanol subject to each Purchase
Order.  EEI shall provide IFEP with
written notice of all sales by EEI to third parties of Ethanol which is the
subject of an Accepted Purchase Order, which notice may be in the form of
loading instructions pursuant to Section 5 of this Agreement.

 

All Accepted Purchase Orders are made upon and subject to, and are
expressly limited solely to, the terms and conditions of the corresponding
Purchase Order Form and this Agreement, and IFEP hereby objects to any
additional, different or inconsistent terms which may be set forth in any Purchase
Order Form or in any other document that EEI may at any time submit to IFEP
along with any Purchase Order Form or otherwise, and no such additional,
different or inconsistent terms shall be part of any Accepted Purchase Order or
this Agreement or shall otherwise have any force or effect whatsoever.  Without limiting the generality of the
foregoing, in the event of any inconsistency or conflict between any terms or
conditions of this Agreement and any terms or conditions of any Purchase Order
Form submitted by EEI, the terms and conditions of this Agreement shall govern
and control to the full extent of such inconsistency or conflict.

 

                5.             Loading of Ethanol.  All Ethanol purchased by EEI under this
Agreement shall be made available to EEI at the Plant in gallons which have
been temperature corrected to sixty (60) degrees Fahrenheit.  EEI shall be responsible for arranging and
providing for the pick-up at the Plant of all Ethanol purchased by EEI under
this Agreement by truck carrier or by rail car carrier (in either case, each an
“EEI Carrier”) and for the subsequent delivery of all such Ethanol by each EEI
Carrier to whatever locations are desired by EEI.

 

If delivery of any Ethanol
by EEI will be by truck, the Ethanol will be made available F.O.B. the Plant
and shall otherwise be at EEI’s cost and expense, except only that IFEP will
provide the labor and Plant equipment necessary to load the Ethanol onto the
truck of the EEI Carrier at the Plant.

 

If delivery of any Ethanol
by EEI will be by rail car, the Ethanol will be made available F.O.B. the Plant
and shall otherwise be at EEI’s cost and expense, except only as may be 

 

5

 

provided below in this Section and that IFEP
will provide the labor and Plant equipment necessary to load the Ethanol onto
the rail car of the EEI Carrier at the Plant.

 

EEI
shall, in consultation and with the prior approval and agreement of IFEP, (i)
estimate the number of rail cars required to handle the transportation of
Ethanol purchased by EEI pursuant to this Agreement; (ii) negotiate the lease
rates and other terms for the lease or leases of such rail cars (collectively,
the “Rail Car Leases”); and (iii) negotiate the rates and other terms of such
rail and freight contracts as are deemed necessary by EEI and IFEP
(collectively, the “Rail Contracts”). 
All Rail Car Leases shall be entered into by, and shall be in the name
of, EEI and EEI shall fully and timely comply with all of the terms and
conditions of the Rail Car Leases, including, without limitation, after any of
the rail cars subject to the Rail Car Leases have been subleased to IFEP as
provided below.

 

EEI
agrees to utilize its best efforts to include terms in each Rail Car Lease
which allow for the assignment of the Rail Car Lease to IFEP or its successors
and assigns at any time and for any reason, without the consent of the
lessor.  If a Rail Car Lease contains
such assignment terms, such Rail Car Lease shall be deemed to be automatically
assigned by EEI to IFEP upon any termination of this Agreement for any reason,
including, but not limited to, pursuant to Section 19(b) of this
Agreement.  If a Rail Car Lease does not
allow for assignment to IFEP, the Rail Car Lease must permit the sublease of
the rail cars subject to the Rail Car Lease to IFEP, and in such circumstance,
IFEP shall sublease the rail cars from EEI upon any termination of this
Agreement, including, but not limited to, pursuant to Section 19(b) of this
Agreement, upon the same terms and conditions as are provided in the Rail Car
Lease.  All payments required to be made
under a Rail Car Lease after the rail cars subject to the Rail Car Lease have
been subleased to IFEP shall be made by IFEP to EEI, by wire transfer, within
ten (10) days of IFEP’s receipt of an invoice therefor from EEI, but EEI will
not invoice IFEP for any amounts payable under the Rail Car Lease in question
more than ten (10) days in advance of the date such amounts are due under the
Rail Car Lease.  Any such payments which
are not made by IFEP when due shall bear interest at the rate of ten percent
(10%) per annum from the date due until paid.

 

EEI
shall in all events be and remain responsible for any and all breaches of and
defaults under any Rail Car Leases by EEI, including after the rail cars
subject to a Rail Car Lease have been subleased to IFEP as provided above.  EEI will provide IFEP with a true, correct
and complete copy of each Rail Car Lease.

 

All
Rail Contracts shall be in the name of IFEP.

 

All rental and other
amounts payable under the Rail Car Leases shall be timely paid by EEI.  EEI will, however, invoice IFEP for all such
rental and other amounts, and all such rental and other amounts will be
deducted from the next Purchase Price payable by EEI to IFEP unless IFEP pays
such rental and other amounts by wire transfer within ten (10) days of IFEP’s
receipt of the invoice from EEI.  EEI’s
invoice shall include a copy of any invoice received from the lessor under the
Rail Car Lease in question.

 

IFEP will timely pay all
freight and other amounts payable under the Rail Contracts. IFEP will, however,
invoice EEI for all such freight and 

 

6

 

other amounts, and
all such freight and other amounts shall be payable by EEI by wire transfer within
ten (10) days of EEI’s receipt of IFEP’s invoice.  IFEP’s invoice shall include a copy of any
invoice received from the other party under the Rail Contract in question.

 

As provided above, EEI
shall be responsible for the selection of the EEI Carriers, but IFEP reserves
the right to reject or to revoke any prior approval of any truck or rail car
carrier selected by EEI from time to time upon any reasonable basis and upon
fifteen (15) days notice.

 

EEI shall be responsible
for compliance with all laws, rules, regulations, ordinances and orders
applicable to the delivery, transportation and shipment of all Ethanol.

 

6.             Title and Risk of Loss.  The title to, and all risk of shipment, loss,
destruction or damage to all Ethanol purchased by EEI shall automatically pass
from IFEP to EEI at the time the Ethanol crosses the loading flange between the
Plant and the truck or the rail car, as the case may be, of the EEI Carrier.

 

                7.             Other Duties of EEI.  EEI will devote its best efforts and such
time as is necessary to diligently market and promote the sale of the entire
output of Ethanol from the Plant. 
Without limiting the generality of the foregoing, EEI agrees as follows:

 

(a)           EEI shall use its best efforts to
achieve the highest price for the Ethanol available under prevailing market
conditions and to enter into Value-Added Transactions.

 

(b)           EEI shall comply with all applicable
local, provincial, state, federal or other governmental laws, rules,
regulations, ordinances and orders.

 

(c)           EEI shall promptly notify IFEP of any
problems or questions raised by any customer of EEI with respect to any Ethanol
or EEI’s relationship or dealings with such customer regarding any Ethanol.

 

(d)           EEI shall advise IFEP of any matter
regarding any Ethanol which comes to the attention of EEI which raises an issue
of compliance of the Ethanol with any applicable local, provincial, state,
federal or other governmental laws, rules, regulations, ordinances or orders.

 

(e)           EEI shall obtain and continuously
maintain in effect any and all governmental or other consents, approvals,
authorizations, qualifications, registrations, licenses or permits which are
necessary or appropriate for EEI to fully and timely perform all of its
services, duties and obligations under this Agreement.

 

(f)            EEI shall not engage in any
negligent, illegal, deceptive, fraudulent or misleading acts or omissions in
connection with the performance of any services, duties or obligations under
this Agreement, including, without limitation, providing any deceptive, fraudulent,
misleading, false or incorrect information to IFEP or any customer of EEI.

 

7

 

(g)           EEI will engage, at the sole cost and
expense of EEI, such number of personnel as are necessary for EEI to timely and
fully comply with the terms of this Agreement. 
All such personnel shall be employees, agents or independent contractors
of EEI and not of IFEP, and shall be bound by all of the terms and conditions
of this Agreement.  EEI shall be
responsible and liable for assuring full compliance by all such personnel with
all of the terms and conditions of this Agreement.

 

(h)           The facilities and equipment which
are utilized in connection with any inventory of Ethanol which is held by EEI
from time to time will be of the nature and quality which are necessary to
maintain the quality and condition of the Ethanol.

 

(i)            EEI shall have the sole and complete
responsibility for the collection of its accounts (including in all Value-Added
Transactions), and no delinquencies in any of those accounts shall affect EEI’s
duty to pay IFEP the Purchase Price for any Ethanol purchased by EEI pursuant
to this Agreement or any VAT Payments. 
All collection steps and procedures which are taken by EEI with respect
to any delinquent account regarding any Ethanol shall be in compliance with all
applicable laws, rules, regulations, ordinances and orders.

 

8.            Other Duties of IFEP; Storage
Limit.  IFEP shall utilize meters at
the Plant that measure both gross and net 60 degrees Fahrenheit temperature
corrected gallons of Ethanol.

 

IFEP
shall provide storage space at the Plant for not less than ten (10) full days
of production of Ethanol (the “Storage Limit”), based on the then current
nameplate design capacity of the Plant. 
EEI will immediately notify IFEP in writing (a “Storage Notice”) in the
event EEI determines that EEI will not, for whatever reason, remove some
Ethanol before the Storage Limit is exceeded. 
The giving of a Storage Notice does not, however, establish a waiver of
or otherwise relieve EEI of its duties and obligations under this
Agreement.  If EEI gives IFEP a Storage
Notice or otherwise does not remove some Ethanol before the Storage Limit is
exceeded, for whatever reason (including under Section 27 of this Agreement),
then IFEP may, in its discretion, but is not required to, sell or otherwise
dispose of such Ethanol as is necessary to cause the Storage Limit to not be
exceeded.  IFEP’s rights under this
paragraph include the right to sell or otherwise dispose of Ethanol which is
the subject of an Accepted Purchase Order, but only if such Ethanol is not
timely removed by EEI in accordance with this Agreement, in which event the
Accepted Purchase Order may, at IFEP’s option, be terminated by IFEP, without
IFEP having any liability to EEI.

 

IFEP
also agrees as follows:

 

(a)           IFEP shall comply with all applicable
local, provincial, state, federal or other governmental laws, rules,
regulations, ordinances and orders.

 

(b)           IFEP shall advise EEI of any matter
regarding any Ethanol which comes to the attention of IFEP which raises an
issue of compliance of the Ethanol with any applicable local, provincial,
state, federal or other governmental laws, rules, regulations, ordinances or
orders.

 

8

 

(c)           IFEP shall obtain and continuously
maintain in effect any and all governmental consents, approvals,
authorizations, qualifications, registrations, licenses or permits which are
necessary or appropriate for IFEP to fully and timely perform all of its
services, duties and obligations under this Agreement.

 

(d)           IFEP shall not engage in any
negligent, illegal, deceptive, fraudulent or misleading acts or omissions in
connection with the performance of any services, duties or obligations under
this Agreement, including, without limitation, providing any deceptive,
fraudulent, misleading or false information to EEI.

 

(e)           IFEP will engage, at the sole cost
and expense of IFEP, such number of personnel as are necessary for IFEP to
timely and fully comply with the terms of this Agreement.  All such personnel shall be employees, agents
or independent contractors of IFEP and not of EEI, and shall be bound by all of
the terms and conditions of this Agreement. 
IFEP shall be responsible and liable for assuring full compliance by all
such personnel with all of the terms and conditions of this Agreement.

 

9.             Purchase Price and VAT Payments.  The purchase price for Ethanol under each
particular Accepted Purchase Order shall be the purchase price specified in the
Accepted Purchase Order (in each case, the “Purchase Price”).  The aggregate Purchase Price payable with
respect to all Ethanol which has been loaded onto the trucks or rail cars of
the EEI Carriers by Sunday of any given week and for which EEI has received a bill
of lading and a certificate of analysis by 11:59 a.m., Plant time, on that
Sunday shall be paid by EEI, in full, in United States dollars, by wire
transfer on or before the next following Thursday.  If EEI has not received a bill of lading and
a certificate of analysis with respect to some Ethanol on or before 11:59 a.m.
on a Sunday, payment for the Ethanol in question shall be made on the next
scheduled Purchase Price payment date which follows the date on which EEI
receives a bill of lading and a certificate of analysis for the Ethanol in
question.

 

The certificate of analysis
shall be in a format mutually agreeable to IFEP and EEI.  EEI acknowledges and agrees that each such
certificate of analysis may or may not be indicative of any future Ethanol, and
that no certificate of analysis is a representation or warranty by IFEP or
otherwise a part of this Agreement.

 

EEI shall also pay to IFEP, in addition to the Purchase
Price, an amount equal to [***] percent ([***]%) of the Net Profit Amounts (as
that term is defined below) that are to be received by EEI in all Value-Added
Transactions (as that term is also defined below).  The term “Value-Added Transaction” means any
transaction entered into by EEI for the sale or other disposition of Ethanol
purchased by EEI pursuant to this Agreement which is different than the
transaction that EEI had originally established or entered into for the sale or
other disposition of such Ethanol by EEI (the “Original Transaction”), and
pursuant to which EEI obtains a net profit which is greater than the net profit
that EEI would have obtained if EEI had sold such Ethanol in strict accordance
with the Original Transaction. 
Value-Added Transactions may involve EEI establishing a different
transaction or agreement with the purchaser under the Original Transaction, or
may involve EEI negotiating a buyout from the Original Transaction, and may
include 

 

9

 

freight savings, swaps, bookouts, time exchanges,
location exchanges, rack pricing and spread differentials.  The term “Net Profit Amounts” means the
difference between the net profit to be received by EEI pursuant to all
Value-Added Transactions and the net profit which EEI was to receive under the
related Original Transactions.  The
payments required to be made by EEI under this paragraph (each, a “VAT Payment”)
shall be paid by EEI quarterly, by wire transfer, within thirty (30) days of
the close of each calendar quarter.  Each
VAT Payment shall be accompanied by documentation evidencing the amount and
basis for the VAT Payment in question. 
EEI agrees that the VAT Payments with respect to each calendar year
commencing with the 2005 calendar year shall in no event be less than the
Minimum VAT Amount (as that term is defined below), regardless of whether EEI
engaged in any Value-Added Transactions during such calendar year or had
sufficient Profit Amounts during such calendar year, and if the VAT Payments
otherwise made by EEI to IFEP with respect to any calendar year do not equal or
exceed the Minimum VAT Amount, the final VAT Payment by EEI with respect to
such calendar year shall be in such amount as is necessary to cause the
aggregate of the VAT Payments made by EEI to IFEP with respect to that calendar
year to equal the Minimum VAT Amount. 
The term “Minimum VAT Amount” means the amount determined by multiplying
(i) the number of gallons of Ethanol purchased by EEI during the calendar year
in question, by (ii) [***]¢.  By way of
example, the Minimum VAT Amount in the event EEI purchases 100,000,000 gallons
of Ethanol during any given calendar year will be $[***].

 

Any Purchase Price or VAT
Payment which is not made by EEI when due shall bear interest at the rate of
ten percent (10%) per annum from the date due until paid.

 

10.           Monthly Fee to EEI. 
IFEP shall pay EEI a monthly fee (the “Monthly Fee”) for all services
and materials provided by EEI pursuant to this Agreement in an amount
determined by multiplying (i) the number of gallons of Ethanol purchased by EEI
during the month in question, by (ii) $[***]. 
The Monthly Fee with respect to each month shall be payable, in arrears,
on or before the tenth day following IFEP’s receipt of an invoice therefor from
EEI.  Any Monthly Fee which is not paid
by IFEP when due shall bear interest at the rate of ten percent (10%) per annum
from the date due until paid.  IFEP
reserves the right, at its option and in its discretion, to elect to pay any
Monthly Fee by having EEI set off the Monthly Fee against, and withheld from,
the next scheduled Purchase Price to be paid by EEI.  IFEP may exercise this option from time to
time by providing notice thereof to EEI at any time within six (6) days of IFEP’s
receipt of EEI’s invoice for the Monthly Fee in question.

 

11.           Expenses of EEI. 
Except only as may be otherwise expressly and specifically provided for
herein, EEI shall pay and be solely responsible for all costs and expenses of
any nature whatsoever which are incurred by EEI in promoting, marketing,
selling and delivering the Ethanol and otherwise in providing any services
pursuant to or in performing any duties or obligations under this Agreement.

 

12.           Representations of EEI.  EEI represents and warrants to IFEP as
follows, both as of the date of this Agreement and again effective with each
Accepted Purchase Order:

 

10

 

(a)           EEI has and shall maintain
substantial knowledge of, and contacts and relationships within, the ethanol
industry, and EEI has and shall maintain substantial expertise in the marketing,
sale, distribution and transportation of ethanol.

 

(b)           EEI is a corporation duly organized,
validly existing and in good standing under the laws of the State under which
EEI was organized, and has and shall maintain all requisite power and authority
to own its property and carry on its business as now conducted and as to be
conducted pursuant to this Agreement.

 

(c)           This Agreement has been duly
authorized, executed and delivered by EEI, and constitutes the legal, valid and
binding obligation of EEI, enforceable in accordance with its terms.  EEI has and shall maintain all requisite
power and authority to enter into and perform this Agreement, and all necessary
actions and proceedings of EEI have been taken to authorize the execution,
delivery and performance of this Agreement.

 

(d)           The execution and performance of this
Agreement do not and will not conflict with, breach or otherwise violate any of
the terms or provisions of the organizational or governing documents of EEI or
of any agreement, document or instrument to which EEI is a party or by which
EEI or any of its assets or properties are bound.

 

(e)           There is no civil, criminal,
governmental or other litigation, action, suit, investigation, claim or demand
pending, or, to the knowledge of EEI, threatened against EEI, which may have a
material adverse effect upon the transactions contemplated by this Agreement or
EEI’s ability to perform its duties and obligations under, or to otherwise
comply with, this Agreement.

 

13.           Representations of IFEP.  IFEP represents and warrants to EEI as
follows, both as of the date of this Agreement and again effective with each
Accepted Purchase Order:

 

(a)           IFEP is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State under which IFEP was organized, and has and shall maintain all requisite
power and authority to own its property and carry on its business as now
conducted and as to be conducted pursuant to this Agreement.

 

(b)           This Agreement has been duly
authorized, executed and delivered by IFEP, and constitutes the legal, valid
and binding obligation of IFEP, enforceable in accordance with its terms.  IFEP has and shall maintain all requisite
power and authority to enter into and perform this Agreement, and all necessary
actions and proceedings of IFEP have been taken to authorize the execution,
delivery and performance of this Agreement.

 

(c)           The execution and performance of this
Agreement do not and will not conflict with, breach or otherwise violate any of
the terms or provisions of the organizational or governing documents of IFEP or
of any agreement, document or 

 

11

 

instrument to which IFEP is
a party or by which IFEP or any of its assets or properties are bound.

 

(d)           There is no civil, criminal,
governmental or other litigation, action, suit, investigation, claim or demand
pending, or, to the knowledge of IFEP, threatened against IFEP, which may have
a material adverse effect upon the transactions contemplated by this Agreement
or IFEP’s ability to perform its duties and obligations under, or to otherwise
comply with, this Agreement.

 

14.           Limited Warranty. 
IFEP represents and warrants to EEI that the Ethanol sold to EEI
pursuant to this Agreement will, in the form as loaded onto the truck or rail
car of the EEI Carrier, meet or exceed (but need not exceed) the specifications
set forth in Exhibit “C” to this Agreement (the “Specifications”) for a period
of ninety (90) days from the date of loading onto the truck or rail car, as the
case may be, of the EEI Carrier at the Plant (the “Warranty Period”).  The foregoing warranty will automatically be
void if the failure of any Ethanol to meet the Specifications has resulted in
any way from the condition or prior use of the truck or rail car of the EEI
Carrier, any act or omission of the EEI Carrier, EEI’s negligence, or from
accident, abuse, misapplication or an Impossibility Event.

 

If
any Ethanol fails to conform to the warranty set forth above in this Section 14
during the Warranty Period and EEI provides IFEP, before the close of the
Warranty Period, with (i) written notice of the failure, and (ii) satisfactory
written evidence and other proof of such failure, IFEP will replace the
Ethanol, at IFEP’s cost, with Ethanol which meets or exceeds (but need not
exceed) the Specifications within five (5) business days of IFEP’s receipt of
EEI’s written notice and evidence; provided, however, that in the event IFEP
has commitments for the sale of its entire production and inventory of Ethanol
over the next five (5) business day period, IFEP will reasonably cooperate with
EEI to replace the Ethanol in question with other Ethanol as soon as is
commercially practicable.  If IFEP
disagrees with EEI’s written notice or other written evidence, IFEP may have
the Ethanol in question or any samples of the shipment of Ethanol in question
which may have been retained by IFEP tested by an independent laboratory for
verification that the Ethanol did not meet the Specifications and/or the reasons
why the Ethanol did not meet the Specifications.  IFEP shall bear the costs for any such
testing; provided, however, that in the event the Ethanol in question is found
by the independent laboratory to be in conformance with the Specifications or
that the Ethanol failed to meet the Specifications because of any reason or
cause referred to in the first paragraph of this Section, then EEI shall accept
and pay for both the Ethanol and the replacement Ethanol provided by IFEP, and
shall also fully reimburse IFEP for all costs incurred in connection with the
testing of the Ethanol and the shipping and handling of the replacement
Ethanol, all within five (5) days of the demand therefore by IFEP.  EEI shall reasonably cooperate with IFEP in
the testing of any Ethanol pursuant to this paragraph.

 

15.          Exclusion of All Other Warranties.  Except only for the limited warranties expressly given in
Section 13 of this Agreement and for the limited warranty expressly given in
the first paragraph of Section 14 of this Agreement, IFEP makes no express
warranties whatsoever regarding any Ethanol or any other thing or matter
whatsoever, and IFEP hereby excludes and disclaims in entirety all implied
warranties whatsoever, including, without

 

12

 

limitation, the implied warranties of merchantability, noninfringement
and fitness for a particular purpose, with respect to all Ethanol and all other
things or matters whatsoever.

 

16.          Limitation of Liability; Statute of
Limitations.  Neither IFEP nor EEI makes any
warranty, express or implied, to the other of profit or of any particular
economic results from the transactions contemplated by this Agreement.  Under no circumstances or theories shall IFEP
or EEI be liable to the other for any lost profits, business or goodwill, or
for any exemplary, special, incidental, consequential, punitive or indirect
damages whatsoever, which are in any way related to or connected with or arise
out of this Agreement (and even if IFEP or EEI, as the case may be, knew or
should have known of the possibility of any of those damages), including,
without limitation, to, with or out of any performance or nonperformance of any
Ethanol or by EEI or IFEP, or EEI’s use of or inability to use any Ethanol
(whether alone or in connection with or as part of other goods or products) or
any other goods or products for any reason and for any purpose whatsoever;
provided, however, that the foregoing shall not be applicable to, and neither
IFEP nor EEI waive any losses or damages that result or arise from, any breach
of Sections 23 or 24 of this Agreement, or any negligent or reckless act or
omissions of, or willful misconduct by, the other.  Any claim, suit or action for any breach or
nonfulfillment of or default under any term or condition of this Agreement must
be commenced within two (2) years of the date the cause of action accrued, or
such claim, suit or action shall be lost and forever barred.

 

IFEP
and EEI each also hereby absolve and release the other from, and agree to refrain
from seeking any claims, suits, actions or remedies whatsoever against the
other for, any and all losses, claims, damages, costs, suits and liabilities
for deterioration of quality, shrinkage in quantity, or loss of grade of
Ethanol resulting from the inherent nature of loading operations and the
inherent nature of Ethanol, provided, however, that this paragraph is in no way
intended or shall be interpreted to relieve either IFEP or EEI for their own
negligence, willful misconduct or theft.

 

17.           Insurance. 
At all times during the term of this Agreement, EEI will maintain in
full force and effect a policy or policies of commercial general liability
insurance with combined single limits of not less than $2,000,000.  EEI shall provide evidence of such insurance
to IFEP upon the request of IFEP from time to time.

 

At
all times during the term of this Agreement, IFEP will maintain in full force
and effect a policy or policies of commercial general liability insurance with
combined single limits of not less than $2,000,000.  IFEP shall provide evidence of such insurance
to EEI upon the request of EEI from time to time.

 

18.          Grant of Security Interest by EEI.  EEI hereby grants to IFEP a security interest
in and to all of the Ethanol which is at any time sold by IFEP to EEI, with
such security interest to secure payment of all amounts payable by EEI to IFEP
under this Agreement and the performance of all of the other duties and
obligations of EEI under this Agreement, whether now existing or hereafter
arising.  EEI will be in breach of and
default under the security interest granted by this Section upon the failure to
make any payment, when due and payable, of any amounts payable under this
Agreement, or upon the breach or nonfulfillment of or default under 

 

13

 

any other term or condition of this
Agreement.  After the occurrence of any
such breach, nonfulfillment or default, IFEP may exercise at any time and from
time to time any and all rights and remedies available to a secured party under
applicable law.

 

19.           Term and Termination.  The term of this Agreement shall commence on
the date hereof and shall continue thereafter until the date which is one (1)
year after the Substantial Completion Date (the “Initial Term”), and shall be
automatically renewed thereafter for successive terms of two (2) years each
(each, a “Renewal Term”), unless either IFEP or EEI provides the other with
written notice of its desire to not renew this Agreement, for any reason or for
no reason, at least forty-five (45) days prior to the close of the Initial Term
or the Renewal Term then in effect or this Agreement is earlier terminated
pursuant to any other provision of this Agreement.

 

This Agreement may or will
be, as the case may be, terminated in accordance with any of the following:

 

(a)           This Agreement may be terminated by
IFEP at any time, with or without cause, for any reason or for no reason,
effective ninety (90) days following the giving of written notice thereof to
EEI by IFEP.

 

(b)          This Agreement may be terminated by
IFEP or by EEI in the event of any breach or nonfulfillment of or default under
any term or condition of this Agreement by the other, which breach,
nonfulfillment or default is not fully cured within twenty (20) days, or eight
(8) days in the event of nonpayment of an amount due, following the giving of
written notice thereof to the breaching party by the nonbreaching party;
provided, however, that this Agreement may be terminated by IFEP or by EEI, as
the case may be, effective upon the giving of written notice pursuant to this
subparagraph (b), and without any opportunity for cure by the other, if they
have previously provided the other with bona fide written notices pursuant to
this subparagraph (b) on at least three (3) or more prior occasions during the
Initial Term or the Renewal Term then in effect.

 

(c)           This Agreement may be terminated by
IFEP or by EEI, effective upon the giving of written notice thereof to the
other, in the event of the dissolution or liquidation of, termination of
existence of, insolvency of, business failure of, appointment of a receiver of
or for any part of the property of, assignment for the benefit of creditors by,
or the commencement of any proceeding (whether voluntary or involuntary) under
any bankruptcy, insolvency, debtor/creditor, receivership or similar or related
law by or against the other, and which proceeding is not dismissed within sixty
(60) days of the commencement thereof.

 

(d)           This Agreement may be terminated by
IFEP or by EEI if such termination is required by any governmental or
regulatory authority, and any such termination shall be effective on the
earlier of:  (i) the date required by
such governmental or regulatory authority, or (ii) the thirtieth day following
the giving of written notice of termination pursuant to this subparagraph (d)
by IFEP or EEI, as the case may be, to the other.

 

14

 

20.          Transactions Upon and After
Termination.  In addition to any
other provisions hereof addressing the rights or obligations of IFEP or EEI
upon or after the termination of this Agreement, IFEP and EEI agree that upon
the termination of this Agreement, for whatever reason or no reason:

 

(a)           IFEP shall satisfy and fulfill any
Purchase Orders which became Accepted Purchase Orders before the earlier of (i)
the giving of any notice pursuant to Section 19 of this Agreement, or (ii) the
effective date of the termination of this Agreement; provided, however, that
IFEP shall not be obligated to fill any Accepted Purchase Order in the event of
the giving of any notice by IFEP pursuant to, or the termination of this
Agreement by IFEP pursuant to, Section 19(b) or Section 19(c) of this
Agreement, and any such Accepted Purchase Orders which IFEP determines, in its
sole discretion, not to fill shall be deemed to be canceled and terminated and
IFEP shall have no responsibility or liability therefor.

 

(b)          EEI shall satisfy and comply with any
Purchase Orders which became Accepted Purchase Orders before the earlier of (i)
the giving of any notice pursuant to Section 19 of this Agreement, or (ii) the
effective date of the termination of this Agreement; provided, however, that
EEI shall not be obligated to purchase according to any Accepted Purchase Order
in the event of the giving of any notice by EEI pursuant to, or the termination
of this Agreement by EEI pursuant to, Section 19(b) or Section 19(c) of this
Agreement, and any such Accepted Purchase Orders which EEI determines, in its
sole discretion, not to comply with shall be deemed to be canceled and
terminated and EEI shall have no responsibility or liability therefor, and IFEP
shall be free to sell or otherwise dispose of the Ethanol which was subject to
such Accepted Purchase Orders.

 

(c)           All amounts owing by IFEP to EEI, or
by EEI to IFEP, under this Agreement, shall be paid in full by IFEP to EEI or
by EEI to IFEP, as the case may be, by the earlier of (i) the normal and
ordinary course payment date as otherwise provided in this Agreement, or (ii)
the date which is ten (10) days following the effective date of the termination
of this Agreement.

 

The
termination of this Agreement, for whatever reason or for no reason, shall not
affect any liability or obligation of IFEP or EEI hereunder which shall have accrued
prior to or as a result of such termination, including, but not limited to, any
liability for loss or damage on account of breach, nor shall the termination of
this Agreement, for whatever reason or for no reason, affect the terms or
provisions hereof which contemplate performance by or continuing obligations of
IFEP and/or EEI beyond the termination hereof, including, without limitation,
the respective obligations of IFEP and EEI under Sections 23 and 28 of this
Agreement.

 

21.           Additional Rights
of IFEP and EEI.  Notwithstanding
anything in this Agreement which may appear to be to the contrary, IFEP
reserves the right to reject Purchase Orders and to withhold fulfilling any and
all Accepted Purchase Orders during any period of time that EEI is in breach or
nonfulfillment of or default under any payment term or payment condition of
this Agreement.  IFEP also reserves the
right to terminate or withhold fulfilling any Accepted Purchase Order under the
circumstances and as provided in Sections 8 and 20(a) of this Agreement, as
well as all rights under the applicable Uniform Commercial Code, including,
without limitation, the right to demand and receive adequate assurances of
performance by EEI.

 

Notwithstanding anything in this Agreement which may appear to be to
the contrary, EEI reserves the right to not submit Purchase Orders and to
withhold purchasing under any and all Accepted Purchase Orders during any
period of time that IFEP is in breach or nonfulfillment of or default under any
payment term or payment condition of this Agreement.  EEI also reserves the right to terminate or
not be obligated to purchase according to any Accepted Purchase Order under the
circumstances and as provided in Section 20(b) of this 

 

15

 

Agreement,
as well as any rights under the applicable Uniform Commercial Code, including,
without limitation, any right to demand and receive adequate assurances of
performance by IFEP.

 

22.           All Rights
Reserved by IFEP and EEI.  IFEP and
EEI each reserve all of their respective patent, copyright, trade secret,
trademark, service mark, proprietary or confidential information, and
intellectual property rights, and this Agreement does not grant either party
any license, right to use or other right, title or interest in or to any
patents, copyrights, trade secrets, trademarks, service marks, proprietary or
confidential information, or intellectual property rights or properties
whatsoever of the other party, except only to the limited extent that the use
of proprietary or confidential information may be expressly permitted under
Section 23 of this Agreement.

 

23.           Confidential
Information.  IFEP and EEI
acknowledge that they may have access to certain proprietary or confidential
information of the other and that such information constitutes valuable,
special and unique property of the other. 
IFEP and EEI agree that they will not, at any time during the term of
this Agreement or for a period of five (5) years after the termination of this
Agreement (whether this Agreement is terminated by IFEP or EEI and with or
without cause, for any reason or for no reason), in any fashion, form or
manner, either directly or indirectly, use for their own or another’s benefit,
or divulge, disclose or communicate to any person in any manner whatsoever, any
such proprietary or confidential information; provided, however, that (i) IFEP
may make disclosures regarding this Agreement and the transactions contemplated
hereby to the extent IFEP deems necessary or appropriate or as may be required
in connection with any debt or equity financing or insurance coverage as may
from time to time be pursued or obtained by IFEP or any Affiliate of IFEP,
including to prospective or actual lenders and investors and to actual or
potential assignees or transferees of any such lender or in connection with a
foreclosure, assignment in lieu of foreclosure or other exercise of any rights
or remedies by any such lender; (ii) EEI may make disclosures regarding this
Agreement and the transactions contemplated hereby to the extent EEI deems
necessary or appropriate or as may be required in connection with any debt or
equity financing or insurance coverage as may from time to time be pursued or
obtained by EEI or any Affiliate of EEI, including to prospective or actual
lenders and investors and to actual or potential assignees or transferees of
any such lender or in connection with a foreclosure, assignment in lieu of
foreclosure or other exercise of any rights or remedies by any such lender;
(iii) IFEP and EEI may make disclosures regarding this Agreement and the
transactions contemplated hereby to their respective legal counsel and
accountants; and (iv) the reasonable use of any proprietary or confidential
information as part of or in connection with the transactions contemplated by
this Agreement during the term of this Agreement is permitted.

 

16

 

For purposes of this Agreement, the term “proprietary or confidential
information” shall mean all information, documentation or financial data which
is proprietary or confidential in nature and which is used by or belongs or
relates to IFEP or EEI, as the case may be, and which is disclosed or made
available to or otherwise obtained by the other, its employees or agents, and
includes but is not limited to, the prices charged for services hereunder or
any other information concerning the other’s business, manner of operation,
plans, processes or other data of any kind. 
“Proprietary or confidential information” shall not include, however,
any of the following information and/or types of information:  (i) information of IFEP or EEI, as the case
may be, that at the time furnished to the other is in the public domain or
later becomes part of the public domain by publication or otherwise through no
fault of the other or its employees or agents; (ii) information of IFEP or EEI,
as the case may be, that was independently developed by the other by persons
without access to or knowledge of, or any use of, the proprietary or confidential
information of IFEP or EEI, as the case may be; or (iii) information of IFEP or
EEI, as the case may be, that was obtained by the other on a nonconfidential
basis from a person entitled to disclose the information.

 

                If the proprietary or confidential
information of IFEP or EEI, as the case may be, is required to be disclosed by
the other by court order, governmental action, legal process or applicable law,
such party shall, if legally permissible, first give written notice thereof to
the other party whose confidential information is to be disclosed and
reasonably cooperate with such party (at such party’s cost and expense) in such
party’s attempt to obtain a protective order or waiver or exclusion from the
court or other applicable governmental or other authority or law.

 

                IFEP and EEI agree that the
other would be irreparably damaged by reason of their violation of any of the
provisions contained in this Section 23 and that any remedy at law for a breach
of such provisions would be inadequate, and that they shall each be entitled to
seek injunctive or other equitable relief in a court of competent jurisdiction
against the other or its employees or agents for any breach or threatened
breach of any of the provisions contained in this Section 23 without the
necessity of proving actual monetary loss or posting any bond or other form of
collateral or security.  It is expressly
understood that the remedy described in this Section 23 shall not be the
exclusive remedy for any breach of this Section 23.

 

                Nothing in this Section 23 is
intended or shall be construed as requiring either IFEP or EEI to furnish any
proprietary or confidential information to the other, except only to the
limited extent, if any, as may be necessary for the other to perform and provide
its services and duties under this Agreement.

 

24.           Noncompete
Covenant.  EEI covenants and agrees
that during the term of this Agreement, EEI will not, directly or indirectly,
become an investor in or provide any services, goods or materials to or for, or
otherwise become interested, associated or concerned in any way in or with, any
ethanol plant which is located anywhere within a [***] mile radius of the
location of the Plant, other than an ethanol plant owned or operated by IFEP or
an Affiliate of IFEP.  IFEP’s remedies
upon a breach or imminent breach of this Section include the right to
preliminary and permanent injunctive relief restraining EEI from any further
violation of this Section, and without the posting of any bond or other form of
collateral or security.  

 

17

 

EEI
acknowledges and warrants that enforcement of a remedy by way of injunction
will not prevent EEI from earning a livelihood or work an undue hardship on
EEI, and that injunctive relief is necessary and appropriate to protect the
justifiable business interests of IFEP. 
Notwithstanding the foregoing, IFEP acknowledges that this Section 24
does not limit or prohibit EEI from purchasing ethanol from, or providing
marketing services to, the plant owned by [***] which is located in or around [***],
[***], and that this Section 24 does not limit or prohibit EEI from (i)
entering into Value Added Transactions with plants that are located within the [***]-mile
radius specified above, or (ii) making isolated, opportunistic purchases from
time to time of ethanol from a plant otherwise located in the [***]-mile radius
specified above.

 

                25.           IFEP and EEI Representative.  IFEP shall designate to EEI in writing one or
more representatives of IFEP through whom all contacts from EEI pursuant to
this Agreement may be made, and, unless otherwise specified in this Agreement,
each such representative shall be deemed to have full authority to make all
decisions and to resolve all matters, disputes and issues under this Agreement
on IFEP’s behalf.  IFEP may change its
representative or representatives from time to time for any reason or no
reason, effective upon the giving of written notice to EEI.

 

                EEI shall designate to IFEP in
writing one or more representatives of EEI (each, an “EEI Representative”)
through whom all contacts from IFEP pursuant to this Agreement may be made,
and, unless otherwise specified in this Agreement, each such representative
shall be deemed to have full authority to make all decisions and to resolve all
matters, disputes and issues under this Agreement on EEI’s behalf.  EEI may change its representative or
representatives from time to time for any reason or no reason, effective upon
the giving of written notice to IFEP.

 

26.           Nature of Relationship; Authority
of Parties.  Nothing contained in
this Agreement and no action taken or omitted to be taken by IFEP or EEI
pursuant hereto shall be deemed to constitute IFEP and EEI a partnership, an
association, a joint venture or other entity whatsoever.  This Agreement is not intended and shall not
be construed to constitute IFEP or EEI to be an agent of the other or to cause
IFEP or EEI to be responsible in any way for the acts, omissions, debts, liabilities
or obligations of the other (including, without limitation, any liability
arising from any negligent or other acts or omissions of the other). Neither
IFEP nor EEI have the authority to bind the other in any respect
whatsoever.  Without limiting the
generality of the foregoing, neither IFEP nor EEI have any responsibility for
the completion or performance of the other’s contracts and agreements with
their customers, suppliers or other persons.

 

27.           Impossibility.  Notwithstanding anything in this Agreement
which may appear to be to the contrary, if any term or condition of this
Agreement to be performed or observed by IFEP or EEI (except for payment
obligations and under Sections 23 and 24) is rendered impossible of performance
or observance due to any force majeure or any other act, omission, matter,
circumstance, event or occurrence beyond the reasonable control of IFEP or EEI,
as the case may be (each, an “Impossibility Event”), IFEP or EEI, as the case
may be, shall, for so long as such Impossibility Event exists, be excused from
such performance or observance, provided that the affected party notifies the
other in writing within twenty-four (24) hours of the occurrence of the
Impossibility Event and takes all appropriately reasonable steps as soon as
reasonably practicable upon the termination of the Impossibility Event to
recommence performance or observance; provided, however, that if after
forty-five (45) days from the onset 

 

18

 

of
the Impossibility Event, IFEP or EEI is still unable to perform their
obligations hereunder, either IFEP or EEI may, in their respective discretion,
terminate this Agreement effective upon the giving of written notice thereof to
the other.  The term “Impossibility Event”
includes, without limitation, fire, storm, flood, earthquake, acts of God,
civil disturbances or disorders, an actual or threatened act or acts of war, an
actual or threatened act or acts of terrorism, computer failures, computer
viruses, acts of computer hackers, sabotage, strikes, lockouts, labor disputes,
labor shortages, stoppages or slowdowns initiated by labor, transportation
embargos, failure or shortage of supplies or materials, accidents, equipment or
mechanical failures, or acts or regulations or priorities of any governmental
authority or branches or agencies thereof.

 

28.
          Indemnification.  Subject to the limitation of EEI’s liability
under Section 16 of this Agreement, EEI shall defend, indemnify, and hold IFEP
harmless from and against any loss, claim, liability, damage, cost or expense
(including, without limitation, attorneys’ fees and court costs) arising in
connection with or resulting from (i) EEI’s marketing, sale or use of Ethanol
and any other goods or products, and/or (ii) any breach or nonfulfillment of or
default under any term or condition of this Agreement on the part of EEI (or
any employee, agent or other personnel of EEI).

 

Subject
to the exclusions and limitations on EEI’s remedies and on the liability of
IFEP as provided in Sections 14, 15 and 16 of this Agreement, IFEP shall
defend, indemnify and hold EEI harmless from and against any loss, claim,
liability, damage, cost or expense (including, without limitation, attorneys’
fees and court costs) arising in connection with or resulting from any breach
or nonfulfillment of or default under any term or condition of this Agreement
on the part of IFEP (or any employee, agent or other personnel of IFEP).

 

29.           No Waiver; Modifications in
Writing.  No failure or delay on the
part of any party in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.  Except as may be otherwise expressly provided
herein (including, without limitation, as provided in Sections 14, 15 and 16 of
this Agreement), the remedies provided herein are cumulative and are not
exclusive of any remedies that may be available to any party at law or in
equity or otherwise.  No amendment,
modification, supplement or waiver of or to any provision of this Agreement, or
consent to any departure therefrom, shall be effective unless the same shall be
in writing and signed by each of the parties hereto.  Any amendment, modification or supplement of
or to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure from the terms of any provision of
this Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given.

 

               30.           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Iowa, but without regard
to provisions thereof relating to conflicts of law.

 

31.           Consent to Jurisdiction.  Each of the parties submits to the
nonexclusive jurisdiction of any United States or Iowa court sitting in Des
Moines, Iowa in any action or proceeding arising out of or relating to this
Agreement.  Each party agrees that all
claims and 

 

19

 

counterclaims
with respect to any such action or proceeding may be heard and determined in
any such courts, and waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in any such courts. 
Each of the parties consents to the service of any and all process in
any such action or proceeding by the personal service of copies of such process
to the party, at its address specified for notices to be given hereunder.

 

32.           Waiver of Jury Trial.  Each of the parties hereby unconditionally waives any right
to a jury trial with respect to and in any action, suit, proceeding, claim,
counterclaim, demand, dispute or other matter whatsoever arising out of this
Agreement.

 

33.           Assignment. 
Neither IFEP nor EEI shall have the right to assign this Agreement
without the prior written consent of the other, which consent shall not be
unreasonably withheld, delayed or conditioned; provided, however, that IFEP
may, without the consent of EEI, (i) assign its rights and obligations under
this Agreement to any Affiliate of IFEP or in connection with any sale of all
or substantially all of the assets of IFEP, and (ii) assign this Agreement as
security, collateral or otherwise to any lender of IFEP or any Affiliate of
IFEP, and any such lender may in turn assign this Agreement upon any
foreclosure or other exercise of any rights or remedies against IFEP or any
Affiliate of IFEP.  IFEP will, however,
provide EEI with written notice of any such assignment by no later than five
(5) business days after the effective date of the assignment.

 

34.           Binding Effect on Successors and Assigns.  This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors, legal representatives and assigns. 
Nothing in this Agreement, express or implied, is intended to confer
upon any person other than the parties hereto (and their respective successors,
legal representatives and assigns) any rights, remedies, liabilities or
obligations under or by reason of this Agreement.

 

                35.           Giving of Notice.  Except as may be otherwise provided in this
Agreement, all notices, demands, requests, and other communications desired or
required to be given hereunder  (“Notices”)
shall be in writing and shall be given by: (i) hand delivery to the address for
Notices; (ii) delivery by overnight courier service to the address for Notices;
or (iii) sending the same by United States mail, postage prepaid, certified
mail, return receipt requested, addressed to the address for Notices.

 

               All Notices shall
be deemed given and effective upon the earlier to occur of: (i) the hand
delivery of such Notice to the address for Notices; (ii) one (1) business day
after the deposit of such Notice with an overnight courier service by the time
deadline for next day delivery addressed to the address for Notices; or (iii)
three (3) business days after depositing the Notice in the United States mail
as set forth above in this Section 35. 
All Notices shall be addressed to the addresses set forth below the
signatures to this Agreement, or to such other person or at such other place as
any party hereto may by Notice designate as a place for service of Notice.

 

36.           Severability. 
If any term of this Agreement is held to be invalid, illegal or
unenforceable, in whole or in part, the remaining terms of this Agreement will
not be affected 

 

20

 

thereby and will continue to be valid, legal
and enforceable.  If any term of this
Agreement is held to be invalid, illegal or unenforceable as written, but
valid, legal and enforceable if modified, then such term shall be deemed to be
written and construed, and shall be enforced, as so modified.  Any finding of invalidity, illegality or
unenforceability in any jurisdiction shall not invalidate or render illegal or
unenforceable such term in any other jurisdiction.  Without limiting the generality of the
foregoing, each term of this Agreement which provides for a limitation of
remedies or liability, disclaimer or exclusion of warranties, or exclusion or
limitation of damages is subject to this Section.  Further, if any remedy is determined to have
failed of its essential purpose or otherwise, all limitations of liability and
exclusions and limitations of damages provided for in this Agreement will
remain in full force and effect.

 

                37.           Entire Agreement. 
This Agreement, all exhibits and schedules hereto, and, subject to
Section 4 of this Agreement, each Purchase Order Form for each Accepted
Purchase Order, constitute the entire agreement between the parties hereto
pertaining to the subject matters hereof, and supersede all negotiations,
preliminary agreements and all prior or contemporaneous discussions and
understandings of the parties hereto in connection with the subject matters
hereof.  No course of dealing or usage of
trade shall be relevant or admissible to supplement or vary any of the terms of
this Agreement.  All exhibits and
schedules to this Agreement are incorporated into this Agreement as if set
forth in their entirety and constitute a part hereof.

 

38.           Miscellaneous. 
The titles or captions of sections and paragraphs in this Agreement are
provided for convenience of reference only and shall not be considered a part
hereof for purposes of interpreting or applying this Agreement, and such titles
or captions do not define, limit, extend, explain or describe the scope or
extent of this Agreement or any of its terms or conditions.  This Agreement shall not be construed more
strongly against any party, regardless of who was more responsible for its
preparation.  Words and phrases herein
shall be construed as in the singular or plural number and as masculine,
feminine or neuter gender, according to the context.  The use of the words “herein,” “hereof,” “hereunder”
and other similar compounds of the word “here” refer to this entire Agreement
and not to any particular section, paragraph or provision.  The term “person” and words importing persons
as used in this Agreement include firms, associations, partnerships, limited
partnerships, joint ventures, trusts, corporations and other legal entities,
including public or governmental bodies, agencies or instrumentalities, as well
as natural persons.  This Agreement may
be executed by the parties hereto on any number of separate counterparts
(including by facsimile or e-mail transmission), and all of said counterparts
taken together shall be deemed to constitute one and the same agreement.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the 15th
day of November, 2004.

     

	
  IOWA FALLS ETHANOL PLANT,
  L.L.C.

  	
   

  	
  ECO-ENERGY, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Russell Stidolph

  	
   

  	
  By: 

  	
  /s/ Larry Beckwith

  
	
  Name: 

  	
  Russell Stidolph

  	
   

  	
  Name: Larry Beckwith

  
	
  Title: 

  	
  Manager

  	
   

  	
  Title: President

  
	
   

  	
   

  	
  730
  Cool Springs Blvd., Suite 130

  
	
  Address

  	
   

  	
  Franklin,
  TN 37067

  
	
  21050
  140th Street

  	
   

  	
  Facsimile
  Number:

  	
   

  
	
  Iowa
  Falls, IA 50126

  	
   

  	
   

  	
   

  
							

 

 

21Exhibit
10.3

 

Pursuant to 17 C.F.R. § 240.24b-2,
confidential information (indicated by [***]) has been omitted and has been
filed separately with the Securities and Exchange Commission pursuant to a
Confidential Treatment Application filed with the Commission.

 

RESTATED DISTILLER’S GRAINS
MARKETING AGREEMENT

 

 

                THIS
RESTATED DISTILLER’S GRAINS MARKETING AGREEMENT (this “Restated Agreement”),
made and entered into this 7th day of July, 2006, by and
between Hawkeye Renewables, LLC, a Delaware limited liability company (“HR”),
and United Bio Energy Ingredients, LLC, a Kansas limited liability company (“UBE”).

 

 

W I T N E S S E T H :

 

                WHEREAS, HR and UBE are parties
to the Distiller’s Grains Marketing Agreement, dated November 19, 2004 (the “Agreement”)
and the First Amendment to the Distiller’s Grains Marketing Agreement, dated
April 1, 2006 (the “First Amendment” and, collectively, with the Agreement, the
“Amended Agreement”), with HR having become a party to the Amended Agreement by
assignment from Iowa Falls Ethanol Plant, L.L.C. (now known as Hawkeye
Holdings, L.L.C.);

 

WHEREAS, pursuant to the
Amended Agreement, HR has sold and UBE has purchased all the dried distiller’s
grains (“DDG”) and wet distiller’s grains (including modified wet distiller’s
grains, “WDG”) (collectively the “Distiller’s Grains”) produced at HR’s ethanol
plant located near Iowa Falls, Iowa (as such plant may be expanded from time to
time, the “Plant”);

 

                WHEREAS, for administrative
ease, the parties desire to restate the Amended Agreement to consolidate in one
document changes made to the Agreement by the First Amendment; and

 

                WHEREAS, this Restated Agreement
restates and supersedes the Amended Agreement in its entirety.

 

                NOW,
THEREFORE, in consideration of the foregoing premises and the mutual covenants
and conditions herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by both parties,
the parties hereby agree to restate the Amended Agreement in its entirety as follows:

 

1.             COMMITMENT AND TERM.  UBE shall from time to time submit purchase
orders (each, a “Purchase Order”) to HR for purchases of the Distiller’s
Grains, all upon and subject to the terms and conditions of this Restated
Agreement, with each such Purchase Order to be placed by UBE properly
completing and executing a Purchase Order form in either the form of Exhibit “A”
or Exhibit “B” to this Restated Agreement or other form acceptable to HR.  The terms of any Purchase Order may include a
request for the sale and delivery of Distiller’s Grains on a one-time basis or
on a daily, weekly, monthly or other periodic basis.  A Purchase Order submitted in the form of
Exhibit “B” to this Restated Agreement may take the form of UBE

 

 

submitting to HR a proposed minimum F.O.B.
Plant Price (as that term is defined in Section 2) to UBE Customers (as the
term is defined in Section 2 of this Restated Agreement) for DDG and/or WDG
(the “Posted Price”) which will be effective for the day, week, month or other
period of time set forth in the Purchase Order (in any such case, the “Posted
Price Sales Period”), along with a proposed maximum number of tons of DDG
and/or WDG (the “Maximum Posted Price Tons”) which may be sold at the Posted
Price at any time during, and for pick-up by UBE during, the Posted Price Sales
Period.  Any such Purchase Order is
referred to in this Restated Agreement as a “Posted Price Purchase Order”.  All references to “Purchase Order” in this
Restated Agreement shall include Posted Price Purchase Orders.  Each Purchase Order shall be irrevocable by
UBE, unless and until the time at which the particular Purchase Order becomes a
Rejected Purchase Order (as that term is defined below).

 

UBE and HR shall reasonably
cooperate in attempting to schedule weekly or other periodic meetings at the
Plant or by phone or other communications methods for purposes of discussing
any Purchase Order UBE desires to submit to HR, but no such Purchase Order
shall become effective unless and until such Purchase Order has both been
submitted in writing by UBE in the form of either Exhibit “A” or Exhibit “B” to
this Restated Agreement or other form acceptable to HR and such Purchase Order
has been accepted by HR.

 

Notwithstanding any term or
condition of this Restated Agreement or otherwise which may appear to be to the
contrary, HR may accept or reject each Purchase Order, in whole, but not in
part, in HR’s commercially reasonable discretion.  HR shall notify UBE of whether HR accepts or
rejects each particular Purchase Order within one (1) day of HR’s receipt of
the Purchase Order.  If HR fails to
notify UBE within said one (1) day period, however, HR shall be deemed to have
rejected the Purchase Order in question. 
If HR accepts a Posted Price Purchase Order, UBE may sell all (if the
Posted Price Purchase Order is an “All or Nothing” sale), or (if the Posted
Price Purchase Order is a “Best Efforts” sale) anywhere up to, the Maximum
Posted Price Tons of DDG and/or WDG, as the case may be, to UBE Customers at or
above the Posted Price at any time during the Posted Price Sale Period without
further approval of each such sale from HR, but otherwise upon and subject to
the terms and conditions of this Restated Agreement, and each such sale shall
also be an Accepted Purchase Order (as that term is defined below).

 

Any Purchase Order which is
accepted by HR is referred to in this Restated Agreement as an “Accepted
Purchase Order”, and any Purchase Order which is rejected by HR is referred to
in this Restated Agreement as a “Rejected Purchase Order”.  UBE shall sell all Distiller’s Grains which
are the subject of an Accepted Purchase Order to the UBE Customers in
accordance with the terms as were set forth in UBE’s Purchase Order.

 

Subject to Section 11 of
this Restated Agreement, the initial term of this Restated Agreement shall be
for two (2) years, commencing on the date of the Agreement, but HR and UBE
acknowledge that the Plant will not commence production operations until at
least some time in November, 2004, and that the Plant will not reach full
production capacity until approximately thirty (30) days after the commencement
date of production operations at the Plant. 
Subject again to Section 11 of this Restated Agreement, this Restated
Agreement shall be automatically renewed after the end of the initial two (2)
year term for successive one (1) year

 

2

 

terms unless either party gives written
notice to the other party of its election not to renew, for whatever reason or
for no reason, not later than ninety (90) days prior to the expiration of the
initial two (2) year term or the then current one (1) year renewal term, as the
case may be.

 

2.             PRICE AND PAYMENT.

 

A.            PRICE.  UBE
agrees to pay HR for all Distiller’s Grains removed by UBE from the Plant as
follows:

 

1.             Intentionally Left Blank.

 

2.             To UBE Customers. 
For purposes of this Restated Agreement, “UBE Customers” shall mean any
buyer of DDG or WDG from UBE.

 

a.             DDG.  A
price equal to [***] percent ([***]%) of the F.O.B. Plant Price for the DDG.

 

b.             WDG.  A
price equal to [***] percent ([***]%) of the F.O.B. Plant Price for the WDG.

 

For purposes of this Restated Agreement, the “F.O.B.
Plant Price” shall mean the sale price and other amounts billed or invoiced to
the UBE Customer in question (other than amounts which are for reimbursement of
out-of-pocket costs/expenses of UBE), less all freight costs incurred by UBE in
delivering the Distiller’s Grains to the UBE Customer in question.

 

UBE will communicate and
consult with HR about prices and trends in the dried distiller’s grains and wet
distiller’s grains markets on a weekly basis so that both parties are informed
regarding pricing and trends.

 

UBE will allocate its
purchases of dried distiller’s grains and wet distiller’s grains among HR and
UBE’s other suppliers of dried distiller’s grains and wet distiller’s grains in
a fair, reasonable and consistent manner, but UBE will submit Purchase Orders
to HR for purchases of all of the Distiller’s Grains.

 

B.            Intentionally Left Blank.

 

C.            PAYMENT.  On
a daily basis, weekends and holidays excluded, HR shall provide UBE with weight
certificates (which certificates will be in accordance with Section 6.C below)
for the previous day’s shipments of Distiller’s Grains, and UBE shall pay HR
the F.O.B. Plant Price for all such shipments. 
The weight certificates with respect to any shipments which are made on
a weekend or a holiday will be provided to UBE on the next succeeding business
day.  Payment for all shipments shall be
made by UBE so that payment is received by HR on or before the second (2nd)
following Friday of each one week shipment period (Sunday through
Saturday).  Each payment shall be
accompanied by a detail of the shipments which are the subject of the payment
and documentation supporting the amount of the payment.  Any payment

 

3

 

which is not received by HR when due shall
bear interest from the date due, until paid, at the rate of ten percent (10%)
per annum.

 

UBE agrees to maintain complete,
accurate and up-to-date sales records and to provide such records to HR upon
request.  HR shall also have the right to
audit UBE’s sales invoices and records at any time during normal business hours
at the corporate office of UBE.  If HR’s
review of any such sales records or any such audit reveals any shortages or
deficiencies in the amount of any of the payments required to be made by UBE to
HR pursuant to this Restated Agreement (an “Unpaid Amount”), UBE shall pay HR
the Unpaid Amount, along with interest thereon at the rate provided above,
within ten (10) days of HR’s written notice to UBE of the Unpaid Amount.  HR’s notice must include the basis for the
calculation of the Unpaid Amount.  UBE
shall also pay, or reimburse HR for, the out-of-pocket costs and expenses
incurred by HR in connection with the review or audit if the review or audit in
question reveals a shortage or deficiency of [***] percent ([***]%) or more in
the aggregate amount of payments that were required to be made by UBE to HR with
respect to any month.

 

D.            DUTIES OF UBE. 
UBE will devote commercially reasonable efforts and such time as is
necessary to diligently market and promote the sale of all of the Distiller’s
Grains to UBE Customers.  Without
limiting the generality of the foregoing, UBE agrees as follows:

 

1.             UBE
agrees to use commercially reasonable efforts to achieve the highest price for
Distiller’s Grains available under prevailing market conditions.

 

2.             UBE shall comply with all applicable local, provincial,
state, federal or other governmental laws, rules, regulations, ordinances and
orders.

 

3.             UBE shall promptly notify HR of any material problems or
questions raised by any UBE Customer with respect to any Distiller’s Grains or
UBE’s relationship or dealings with such UBE Customer regarding any Distiller’s
Grains.

 

4.             UBE shall advise HR of any matter regarding the
Distiller’s Grains which comes to the attention of UBE which raises an issue of
compliance of the Distiller’s Grains with applicable local, provincial, state,
federal or other governmental laws, rules, regulations, ordinances or orders.

 

5.             UBE shall not do or omit to do any act or thing, during
the term of this Restated Agreement or at any time thereafter (where such
action or inaction was intentional or malicious or constituted gross negligence
or willful misconduct), which impairs, damages or destroys the goodwill or
reputation of HR or that is otherwise detrimental to HR or its business.

 

6.             UBE shall recognize, both during and after the term of
this Restated Agreement, the exclusive right and ownership of HR in and to all
names, trade names, trademarks, service marks, patents, copyrights and all
other intellectual properties used by HR in connection with the Distiller’s
Grains or in HR’s business.

 

4

 

7.             UBE shall obtain and continuously maintain in effect any
and all governmental or other consents, approvals, authorizations,
registrations, licenses or permits which are necessary or appropriate for UBE
to fully and timely perform all of its services, duties and obligations under
this Restated Agreement.

 

8.             UBE shall not engage in any negligent, illegal or
fraudulent activities in connection with the performance of any services,
duties or obligations under this Restated Agreement, including, without
limitation, providing any fraudulent, false or incorrect information to any UBE
Customer or any deceptive, fraudulent, misleading, false or incorrect
information to HR.

 

9.             UBE will engage, at the sole cost and expense of UBE,
such number of personnel as are necessary for UBE to timely and fully comply
with the terms of this Restated Agreement. 
All such personnel shall be employees, agents or independent contractors
of UBE and not of HR, and shall be bound by all of the terms and conditions of
this Restated Agreement.  UBE shall be
responsible and liable for assuring full compliance by all such personnel with
all of the terms and conditions of this Restated Agreement.

 

                                E.             COLLECTION.  UBE shall be responsible for all UBE customer
billing and account servicing, including, but not limited to, the collection of
amounts owed UBE by all UBE Customers. 
UBE shall bear all costs and expenses associated with such billing,
account servicing and collection activities, and shall bear all losses due to
the failure of any UBE Customers to pay their account.  HR shall comply with the credit policies of
UBE which are set forth in Exhibit “E” to this Restated Agreement with respect
to any sales of Distiller’s Grains which are effectuated by any HR Merchandiser
(as that term is defined in Section 3).

 

                3.             HR MERCHANDISER:  UBE acknowledges and agrees that HR may, in
HR’s discretion, retain a merchandiser for the Plant who may assist and
participate in the sale of Distiller’s Grains and otherwise in the development
and the maintenance of the Plant’s capabilities for the sale of Distiller’s
Grains, all as authorized and directed by HR from time to time (the “HR
Merchandiser”).  UBE agrees to fully
cooperate and communicate with any such HR Merchandiser from time to time and
to otherwise coordinate UBE’s activities under this Restated Agreement with
those of such HR Merchandiser, and HR agrees it shall cause any such HR
Merchandiser to fully cooperate and communicate with UBE and to otherwise
coordinate the HR Merchandiser’s activities with those of UBE under this
Restated Agreement.  The HR Merchandiser
shall be an employee and agent of HR.  

 

                4.             FEES AND EXPENSES.  Unless otherwise specifically provided for
herein or related to any amounts received or retained by UBE or any of the
services or actions of UBE, and to the extent not already included in the price
of the Distiller’s Grains, HR shall be responsible for any and all fees and
expenses assessed by any State or other regulatory agency on any Distiller’s
Grains, whether for licensing, dues, branding, packaging,

 

 

5

 

inspecting, or otherwise.  HR shall, as a result of its responsibility
for such expenses, retain all rights in and to any name, branding, and
packaging of the Distiller’s Grains upon
termination of this Restated Agreement. 
UBE shall, however, consult with HR regarding licensing, dues, branding,
packaging, inspections and other governmental or regulatory matters regarding
dried distiller’s grains and wet distiller’s grains.

 

                5.             DELIVERY AND TITLE.

                                A.            PLACE.  The place of delivery for all Distiller’s
Grains purchased by UBE pursuant to this Restated Agreement shall be F.O.B.
Plant.  UBE shall, in accordance with
Section 5.E below, schedule the loading and shipping of all Distiller’s Grains
purchased hereunder, whether shipped by
truck or rail.  UBE and its agents shall
be given access to the Plant in a manner and at all times reasonably necessary
and convenient for UBE to take delivery in accordance with such loading
schedules.  All labor and equipment
necessary to load Distiller’s Grains purchased hereunder onto UBE’s trucks or
rail cars at the Plant shall be supplied by HR without charge to UBE.  The parties agree to handle the Distiller’s
Grains during the loading process in a good and workmanlike manner in
accordance with the other’s reasonable
requirements and in accordance with normal industry practice.  HR shall maintain
the truck/rail loading facilities at the Plant in safe operating condition.

 

                                B.            STORAGE.  HR shall provide storage space for not less
than ten (10) full days combined production of WDG and DDG (the “Storage Limit”),
based on the then current nameplate operating capacity of the Plant.  The initial nameplate operating capacity of
the Plant is 40,000,000 gallons of ethanol per year, which is expected to
produce approximately 10,715 tons of Distiller’s Grain per month on a dry
matter basis.

 

                                C.            REMOVAL.  UBE warrants and agrees to use its best
efforts to remove Distiller’s Grains before the Storage Limit is exceeded. UBE
shall immediately notify HR in writing (a “Storage Notice”) in the event UBE
determines that UBE will not, for whatever reason, remove some Distiller’s
Grains before the Storage Limit is exceeded. 
The giving of a Storage Notice does not, however, relieve UBE of its
duties and obligations under this Restated Agreement.  Subject to UBE’s removal of the Distiller’s
Grains before the Storage Limit is exceeded, HR shall be responsible at all times
for the quality and condition of any Distiller’s Grains in storage at the
Plant.

 

D.            SALE OR DISPOSAL BY HR.  Notwithstanding any term or condition of this
Restated Agreement which may appear to be to the contrary, if (i) UBE gives HR
a Storage Notice, (ii) UBE has not provided HR with a schedule in accordance
with Section 5.E below, or (iii) UBE does not remove some Distiller’s Grains
before the Storage Limit is exceeded, for whatever reason (including under
Section 15 of this Restated Agreement), then, in any such event, HR may, in its
discretion, but is not required to, dispose of such Distiller’s Grains as are
from time to time necessary to cause the Storage Limit to not be exceeded, and
upon terms and conditions determined by HR, and notwithstanding the fact that
some or all of the Distiller’s Grains in question were the subject of an
Accepted Purchase Order.  In the latter
event, the Accepted Purchase Order or Accepted Purchase Orders in question
shall be deemed to be terminated by HR, without liability to UBE.

 

                                E.             LOADING SCHEDULE.  UBE shall give to HR a loading schedule of
quantities of Distiller’s Grains to be removed by truck and rail respectively
in accordance with Section 5.F below and with such sufficient advance notice so
as to reasonably allow HR to

 

 

6

 

determine that the Storage Limit will not be
exceeded and for HR to provide the services required by Section 5.A above and
this Section 5.E.  Subject to the
foregoing, HR shall provide the labor, equipment and facilities necessary at
the Plant to meet UBE’s loading schedule. UBE shall order and supply trucks as
scheduled for truck shipments.  All
shipment, freight and related charges shall be the responsibility of UBE and
shall be billed directly to UBE. 
Demurrage charges will be for the account of UBE if UBE fails to provide
railcars in accordance with the loading schedule provided to HR.  Subject to the first sentence in this
paragraph, demurrage charges will be for the account of HR if HR fails to load
railcars in accordance with UBE’s loading schedule.

 

F.             PRODUCTION SCHEDULE.

 

                                                1.             UBE shall provide Purchase Orders
and related loading schedules as necessary to permit HR to maintain its usual,
full operating capacity production schedule, provided, however, that UBE shall
not be responsible for failure to provide Purchase Orders for the Distiller’s
Grains produced in any given calendar month unless HR shall have provided to
UBE production schedules as follows:  At
least five (5) days prior to the beginning of each calendar month during the
term hereof, HR shall provide to UBE a tentative schedule for production in the
next calendar month, and on Wednesday of each week during the term of this
Restated Agreement, HR shall provide to UBE a schedule for actual production
for the following production week (Monday through Sunday).  HR shall also inform UBE daily of inventory
and production status by 8:30 a.m., local time.

 

                                                2.             NOTICE.  For purposes of this Section 5.F,
notification will be sufficient if made as follows:

 

If to UBE, to the attention
of       , Facsimile number       ,
Email address:       , and

 

If to HR, to the attention
of       , Facsimile number       ,
Email address:       .

 

Or to such other
representatives of UBE or HR as they may designate to the other in writing.

 

                                F.             TITLE.   Title, risk of loss and full shipping
responsibility for Distiller’s Grains shall pass to UBE at the point in time
when the loading of the Distiller’s Grains into trucks or rail cars at the
Plant has been completed.

 

                                G.            RAIL CAR LEASES.  UBE shall, in consultation with HR, determine
the number of rail car leases required to handle the transportation of the
Distiller’s Grains.  The rail car leases
shall be in UBE’s name, and UBE shall negotiate, in consultation with HR, the
terms of such rail car leases, but UBE shall not enter into any such rail car
lease without HR’s prior written approval of such lease, which approval shall
not be unreasonably withheld or delayed. 
Each such rail car lease must in all events, however, be applicable only
to rail cars to be used exclusively in connection with the Plant and must be
assignable, at any time and for any reason,

 

 

7

 

to HR or its successors or assigns without the
consent of the lessor, and such rail car leases shall be deemed to be
automatically assigned to HR by UBE effective upon the termination date of this
Restated Agreement.  UBE shall in all
events be and remain responsible, however, for any and all breaches of and
defaults under any rail car lease by UBE. 
HR shall reimburse UBE for any reasonable expenses incurred by UBE
associated with such rail car leases, to the extent such expenses are not
already accounted for in the price of the Distiller’s Grains.

 

                                H.            RAIL CONTRACTS.  UBE shall negotiate, in consultation with HR,
the terms of rail contracts and rates on behalf of HR, and if such contracts
are acceptable to HR, HR shall execute each such contract, which shall be
placed in the sole name of HR.  UBE shall,
however, if permitted by the terms of the rail contracts, directly pay all
freight, costs and other amounts payable under such rail contracts.  If UBE is not permitted to directly pay all
such freight, costs and other amounts, HR shall pay such freight, costs and
other amounts, but UBE shall reimburse HR for all such freight, costs and other
amounts within five (5) days of HR’s written demand therefore from time to
time.

 

6.             QUANTITY AND WEIGHTS.

 

                                A.            PRODUCTION AMOUNT.  Notwithstanding any term or condition of this
Restated Agreement or of any schedule or other document or information provided
by HR pursuant to this Restated Agreement which may appear to be to the
contrary, it is understood that the total production amount of Distiller’s
Grains shall be determined by HR’s production schedule, which shall be
established and determined from time to time by HR, in HR’s discretion, and
that no warranty or representation has been made by HR as to the exact
quantities or timing of Distiller’s Grains to be produced at the Plant.

 

                                B.            ESTIMATED PRODUCTION.  UBE acknowledges that the estimated
production of Distiller’s Grains at the Plant is 11,250 tons of Distiller’s
Grains per month on a dry matter basis once the Plant is initially fully
operational, but that HR may (but is not required to) expand the capacity of
the Plant.  If HR determines to
materially expand the capacity of the Plant, HR shall give UBE written notice
of such expansion, and of the estimated production of Distiller’s Grains at the
Plant after such expansion, at least one hundred eighty (180) days before the
estimated completion date of the construction activities related to such
expansion.

 

                                C.            SCALES. The quantity of
Distiller’s Grains provided to UBE from the Plant shall be established by
weight certificates, obtained from scales of HR or another person which are
certified as of the time of loading in accordance with any requirements imposed
by any governmental or regulatory authorities of the State of Iowa and which
otherwise materially comply with all applicable laws, rules and
regulations.  In the case of rail
shipments, however, the first official railroad weights will govern
establishment of said quantities.  These
outbound weight certificates shall be determinative of the quantity of the
Distiller’s Grains provided to UBE.

 

D.            RAIL CARS.  All rail cars for Distiller’s Grains shall be
grain hopper cars.  HR agrees that such
cars for Distiller’s Grains shall be loaded to full visible capacity at the
Plant.  If not loaded to full visible
capacity at the Plant, HR shall pay in full the portion of freight

 

 

8

 

charges allocable to the
unused capacity of the car.

 

7.             QUALITY.

 

                                A.              STANDARDS.  HR understands that UBE intends to sell the
Distiller’s Grains purchased from HR as a primary animal feed ingredient.  HR warrants that the Distiller’s Grains sold
to UBE shall, immediately prior to the time of loading at the Plant, meet the
minimum quality standards outlined in Exhibit C attached hereto.  The minimum quality standards set forth in
Exhibit C may be changed as may be mutually agreed in writing by and between
UBE and HR.

 

                                B.            COMPLIANCE.  HR represents and warrants that immediately
prior to the time of loading at the Plant, the Distiller’s Grains will not be
adulterated or misbranded within the meaning of the Federal Food, Drug and
Cosmetic Act and may lawfully be introduced into interstate commerce under said
Act.

 

C.            REJECTION. 
Unless otherwise agreed between the parties to this Restated Agreement,
and in addition to other remedies permitted by law, UBE may, without obligation
to pay, reject either before or after delivery, any of the Distiller’s Grains
which, when inspected or used are found by UBE to fail in a material way to
conform to Section 7.B of this Restated Agreement; provided, however, that HR
must receive written notice of rejection of a load of Distiller’s Grains on
such basis from UBE within twenty-four (24) hours of the delivery of such
Distiller’s Grains to the first delivery location after leaving the Plant or
such Distiller’s Grains shall conclusively be deemed to be accepted by UBE,
except that if delivery to such first delivery location occurs on a Saturday or
a Sunday or on a United States federally recognized holiday, written notice of
rejection must be received by HR by 5:00 p.m. on the next following business
day or the Distiller’s Grains shall conclusively be deemed to be accepted by
UBE.  Should any of the Distiller’s
Grains be seized or condemned by any federal or state department or agency for
any reason, except noncompliance by UBE with applicable federal or state
requirements or any term or condition of this Restated Agreement, such seizure
or condemnation shall operate as a rejection by UBE of the Distiller’s Grains
seized or condemned and UBE shall not be obligated to offer any defense in
connection with the seizure or condemnation. 
However, UBE agrees to cooperate with HR in connection with the defense
of any quality or other product claims, or any claims involving governmental
seizure or condemnation.  When rejection
properly occurs before or after delivery, UBE will, in the following order:

 

                                                (1)  Offer HR a reasonable opportunity of
examining and taking possession thereof, if the condition of the Distiller’s
Grains reasonably appears to UBE to permit such delay in making disposition;

 

                                                (2)  Dispose of the rejected Distiller’s Grains in
any manner directed by HR which UBE can accomplish without violation of
applicable laws, rules, regulations or property rights; or

 

(3)  If any of the Distiller’s Grains
are seized or condemned by any federal or state department or agency or if UBE
has no available means of disposal of rejected Distiller’s

 

 

9

 

Grains and HR fails to direct UBE to dispose
of the same as provided herein, UBE may return such Distiller’s Grains to HR,
and upon such return UBE’s obligations with respect to said seized, condemned
or rejected Distiller’s Grains shall be deemed fulfilled.

 

                                                HR
shall reimburse UBE for all costs actually and reasonably incurred by UBE in
storing, transporting, returning and disposing of any properly rejected
Distiller’s Grains.  UBE shall provide HR
with reasonable substantiating documentation for all such costs and expenses.  UBE shall have no obligation to pay HR for
properly rejected Distiller’s Grains and may deduct reasonable costs and
expenses to be reimbursed by HR pursuant to this Section 7.C from amounts
otherwise owed by UBE to HR.

 

                UBE’s
payment for Distiller’s Grains prior to a rejection thereof does not waive UBE’s
rights under this Section 7.C.

 

D.           NON-STANDARD PRODUCTS.  If HR produces Distiller’s Grains which
comply with the warranty in Section 7.B but which do not meet the warranty in
Section 7.A, UBE agrees to purchase such Distiller’s Grains for resale but
makes no representation or warranty as to the price at which such Distiller’s
Grains can be sold.  If the Distiller’s
Grains deviate so severely from the warranty in Section 7.A as to be
unmarketable in UBE’s reasonable judgment, then such Distiller’s Grains shall,
subject to UBE’s compliance with Section 7.C, be disposed of in the manner
provided for rejected Distiller’s Grains in Section 7.C.

 

E.          PRODUCT TESTING.  If HR knows or reasonably suspects that any
Distiller’s Grains produced at the Plant do not meet the warranty in Section
7.A or Section 7.B, HR shall promptly so notify UBE so that such Distiller’s
Grains can be tested before loading the Distiller’s Grains at the Plant.  If UBE knows or reasonably suspects that any
Distiller’s Grains produced at the Plant do not meet the warranty in Section
7.A or Section 7.B, then UBE may obtain independent laboratory tests of the
affected Distiller’s Grains.  If such
Distiller’s Grains are tested and found to comply with the warranty in Section
7.A and Section 7.B, then UBE shall pay all testing costs, and if the Distiller’s
Grains are found not to comply with the warranty in Section 7.A and Section
7.B, HR shall pay all testing costs.

 

8.             RETENTION OF SAMPLES.

 

                                A.            SAMPLING.  HR will take an origin sample of the
Distiller’s Grains sold to UBE from each truck or rail car before each shipment leaves the Plant, using industry standard sampling
methodology.  HR will label these samples
to indicate the date of shipment and the truck, rail car, or pickup number
involved.  HR shall retain the samples
and labeling information for no less than six (6) months for DDG samples and no
less than fourteen (14) days for WDG.

 

                                B.            ANALYSIS.  For the first year of operation of ethanol
production at the Plant, HR shall, within two (2) days after the close of each
calendar week, furnish UBE with a composite analysis on all Distiller’s Grains
produced at the Plant during such calendar week.  Thereafter, HR
shall, within ten (10) days of the close of each calendar month, furnish UBE
with a composite analysis on all Distiller’s Grains produced at the Plant
during such month.  The composite
analysis shall address the matters set forth in Exhibit D hereto and shall be
in a format

 

10

 

reasonably acceptable to UBE and HR.  The matters set forth in Exhibit D or the
then current format for the composite analysis may be changed as may be
mutually agreed in writing by and between UBE and HR.  It is understood that each such analysis will
be a composite and may or may not be indicative of any particular DDG or WDG or
the current analysis, and that no composite is a representation or warranty by
HR or otherwise a part of this Restated Agreement.

 

 

11

 

9.             INSURANCE.

 

                                A.            POLICIES.  HR warrants to UBE that all HR’s employees
engaged in the loading of Distiller’s Grains from the Plant shall be covered as
required by law by worker’s compensation and unemployment compensation
insurance.

 

                                B.            COVERAGES.  During the term of this Restated Agreement,
HR shall maintain commercial general liability insurance with combined single
limits of not less than $2,000,000 and property insurance upon the Plant to the
full replacement value of the Plant.  The
policies of commercial general liability insurance and property insurance shall
be endorsed to require at least thirty (30) days advance notice to UBE prior to
the effective date of any termination or cancellation of coverage, and HR shall
cause UBE to be named as an additional insured on HR’s commercial general
liability insurance policies.  The
policies of commercial general liability insurance and property insurance shall
also contain provisions to the effect that in the event of payment of any loss
or damage the insurers will have no rights of recovery against UBE.  HR waives all rights against UBE and UBE’s
employees and agents for all losses and damages caused by, arising out of or
resulting from any perils or causes of loss if and to the extent covered by
such policies of commercial general liability insurance or property
insurance.  HR shall provide UBE with
certificates of insurance to confirm such coverage.

 

                                C.            UBE INSURANCE AND VEHICLES.  During the term of this Restated Agreement,
UBE shall maintain commercial general liability insurance with combined single
limits of not less than $2,000,000.  The
policy of commercial general liability insurance shall be endorsed to require
at least thirty (30) days advance notice to HR prior to the effective date of
any termination or cancellation of coverage, and UBE shall cause HR to be named
as an additional insured on UBE’s commercial general liability insurance
policies.  The policies shall also
contain provisions to the effect that in the event of payment of any loss or
damage the insurers will have no rights of recovery against HR.  UBE waives all rights against HR and HR’s
employees and agents for all losses and damages caused by, arising out of or
resulting from any perils or causes of loss if and to the extent covered by
such policies of commercial general liability insurance.  UBE also agrees to carry such insurance on
its vehicles and personnel operating on HR’s property as UBE reasonably deems appropriate.  The parties acknowledge that UBE may elect to
self insure its vehicles.  UBE shall
provide certificates of insurance to HR to establish the coverage maintained by
UBE.

 

D.            CONSEQUENTIAL DAMAGES.  EACH PARTY TO THIS RESTATED AGREEMENT
UNDERSTANDS THAT NO OTHER PARTY MAKES ANY GUARANTEE, EXPRESS OR IMPLIED, TO ANY
OTHER PARTY OF PROFIT, OR OF ANY PARTICULAR ECONOMIC RESULTS FROM TRANSACTIONS
CONTEMPLATED BY THIS RESTATED AGREEMENT. 
IN NO EVENT SHALL ANY PARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL,
COLLATERAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES FOR ANY ACT OR OMISSION OF THE
PARTY, OR FOR BREACH OF ANY OF THE PROVISIONS OF THIS RESTATED AGREEMENT, EVEN
IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, SUCH EXCLUDED
DAMAGES INCLUDE, BUT ARE NOT LIMITED TO, LOSS OF GOOD WILL,

 

 

12

 

LOSS OF PROFITS, LOSS OF USE, AND
INTERRUPTION OF BUSINESS. NOTWITHSTANDING THE FOREGOING, HOWEVER, THE PARTIES
DO NOT WAIVE ANY DAMAGES OR LOSSES THAT RESULT FROM OR ARISE OUT OF A BREACH OF
SECTION 19 OF THIS RESTATED AGREEMENT OR FROM OR OUT OF ANY WILLFUL MISCONDUCT,
GROSSLY NEGLIGENT ACTS OR GROSSLY NEGLIGENT OMISSIONS.

 

                                E.             OTHER CLAIMS.  Except as provided in Section 9.D above,
nothing herein shall be construed as a waiver by either party against the other
party of claims, causes of action or other rights which either party may have
or hereafter acquire against the other party for damage or injury to its
agents, employees, invitees, property, equipment or inventory, or third party
claims against the other party for damage or injury to other persons or the
property of others.

 

10.           REPRESENTATIONS AND WARRANTIES.

 

                A.            Each
party represents and warrants that it is an entity in good standing under the
laws that it is organized and has all the requisite power and authority to
carry on its business as it has been and to own, lease, and operate the
properties and assets used in connection therewith.

 

B.            HR represents and warrants that the Distiller’s Grains HR
sells to UBE shall be free and clear of liens and encumbrances created by HR.

 

                C.            Each
party represents that this Restated Agreement has been duly authorized,
executed and delivered by the party, and constitutes the legal, valid and
binding obligation of the party, enforceable against the party in accordance
with its terms.

 

                D.            Each
party represents that the execution and performance of this Restated Agreement
do not and will not conflict with, breach or otherwise violate any of the
provisions of the organizational or governing documents of the party or of any
agreement, document or instrument by which the party is bound.

 

                E.             Each
individual executing this Restated Agreement in a representative capacity, by
his or her execution hereof, represents and warrants that such person is fully
authorized to do so on behalf of the respective party hereto, and that no
further action or consent on the part of the party for whom such signatory is
acting is required for the effectiveness and enforceability of this Restated
Agreement against such party, following such execution.

 

                                F.             EXCEPT
FOR THE EXPRESS WARRANTIES SET FORTH IN SECTIONS 7.A, 7.B, 10.A, 10.B, 10.C AND
10.D OF THIS RESTATED AGREEMENT, HR DOES NOT MAKE ANY EXPRESS WARRANTIES
WHATSOEVER REGARDING ANY DISTILLER’S GRAINS OR ANY OTHER MATTER WHATSOEVER, AND
HR HEREBY EXCLUDES AND DISCLAIMS IN ENTIRETY ALL IMPLIED WARRANTIES WHATSOEVER,
INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NONINFRINGEMENT AND

 

 

13

 

FITNESS FOR
A PARTICULAR PURPOSE, WITH RESPECT TO ALL DISTILLER’S GRAINS AND ALL OTHER
MATTERS WHATSOEVER.

 

11.           TERMINATION.

 

                                A.            FOR CAUSE.  Either party may terminate this Restated
Agreement for cause, by providing written notice to the other party.  The term “cause” shall mean the happening of
an event of default listed in Section 12 below.

 

                                B.            WITHOUT CAUSE.  Either party may terminate this Restated
Agreement with or without cause, for any reason or no reason, by providing
ninety (90) days prior written notice to the other party.  If HR terminates this Restated Agreement
pursuant to this Section 11.B during the initial two year term of this Restated
Agreement, however, then HR shall pay to UBE, within thirty (30) days of
termination, the amount of $75,000.

 

                                C.            TERMINATION OF OTHER DISTILLER’S
GRAINS MARKETING AGREEMENTS.  HR or
UBE may, in their discretion, terminate this Restated Agreement in the event of
the termination of any other dried distiller’s grains and/or wet distiller’s
grains marketing agreements by and between HR and UBE, effective upon the
giving of written notice to the other; provided, however, that such notice must
be given by at least the date which is thirty (30) days after the termination
date of such other dried distiller’s grains and/or wet distiller’s grains
marketing agreement.

 

                                D.            OTHER TERMINATION.  This Restated Agreement may also be
terminated as provided in Section 1 and Section 15 of this Restated Agreement.

 

                                E.             EFFECT OF TERMINATION.  The termination of this Restated Agreement,
for whatever reason or for no reason, will not affect any liability of either
HR or UBE under this Restated Agreement which accrued prior to termination,
including, but not limited to, any liability for loss or damage on account of
breach or nonfulfillment of or default under any term or condition of this
Restated Agreement, nor shall the termination of this Restated Agreement, for
whatever reason or for no reason, affect any of the terms of this Restated
Agreement which contemplate performance by or continuing obligations of a party
beyond the termination of this Restated Agreement, including, without
limitation, the obligations of the parties under Sections 16 and 19 of this
Restated Agreement.

 

12.           EVENTS OF DEFAULT. 
The occurrence of any of the following shall be an event of default
allowing for the termination of this Restated Agreement under Section
11.A:  (1) failure of either party to
make payment to the other when due, if such
nonpayment has not been cured within five (5) days of the receipt of written
notice thereof from the nonbreaching party; (2) default by either party in the
performance of any covenant, condition or agreement imposed upon that party by
this Restated Agreement (other than a payment obligation), if such nonperformance
has not been cured within ten (10) days of the receipt of written notice
thereof from the nonbreaching party; (3) if either party shall 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 and such petition is not dismissed within

 

14

 

ninety (90) days following the date of
filing, 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 ninety (90) days following appointment.

 

                13.           REMEDIES.  Upon the happening of an event of default
under Section 12, the parties hereto shall have all remedies available under
applicable law with respect to an event of default by the other party,
including but not limited to the recovery of attorneys’ fees and other costs
and expenses, but subject to Section 9.D. 
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) to terminate this Restated Agreement upon
the giving of notice in accordance with the provisions of Section 11.A.

 

                14.           OPEN CONTRACTS.  Upon the termination of this Restated
Agreement, for whatever reason, HR shall be responsible for making available to
UBE, in accordance with the terms and conditions of this Restated Agreement,
any remaining quantities of Distiller’s Grains which are the subject of an
Accepted Purchase Order and which have not yet been picked up by UBE in
accordance with Section 5, provided UBE complies with its obligations under
Section 5 and UBE provides HR with reasonable assurances of payment to HR for
all such remaining Accepted Purchase Orders.

 

                15.           FORCE MAJEURE.  Neither HR nor UBE will be liable to the
other for any failure or delay in the performance of any obligation under this
Restated Agreement (except for payment obligations and under Section 19) due to
events beyond its reasonable control, including, but not limited to, fire,
storm, flood, earthquake, explosion, act of the public enemy or terrorism,
riots, civil disorders, sabotage, strikes, lockouts, labor disputes, labor
shortages, war, stoppages 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; provided, however, that if such failure or delay continues
for ten (10) days or more, either party may terminate this Restated Agreement
effective thirty (30) days following the giving of written notice to the other.

 

16.           INDEMNIFICATION.

 

                                A.            BY HR.  Except as otherwise provided in this Restated
Agreement, including Section 9.D, HR shall indemnify, defend and hold UBE and its officers,
directors, employees and agents harmless from any and all losses, liabilities,
damages, expenses (including reasonable attorneys’ fees), costs, claims, and
demands, that UBE or its officers, directors, employees or agents may suffer,
sustain or become subject to as a result of

 

15

 

(i) any breach of warranty, covenant or
agreement of HR contained herein or (ii) HR’s or its employees’ or agents’
gross negligence or willful misconduct.

 

B.            BY UBE. 
Except as otherwise provided in this Restated Agreement, including Section 9.D, UBE
shall indemnify, defend and hold HR and its officers, managers, members,
employees and agents harmless from any and all losses, liabilities, damages,
expenses (including reasonable attorneys’ fees), costs, claims, and demands,
that HR or its officers, managers, members, employees or agents may suffer,
sustain or become subject to as a result of (i) any breach of warranty,
covenant or agreement of UBE contained herein or (ii) UBE’s or its employees’
or agents’ gross negligence or willful misconduct.

 

                                C.            Where any personal injury or death
is the result of negligence on the part of both HR and UBE, each party’s duty
of indemnification shall be in proportion to the percentage of that party’s
negligence or fault.

 

                17.           RELATIONSHIP OF PARTIES.  This Restated Agreement creates no
relationship other than those of seller and buyer 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 Restated Agreement authorizes one party to act for or on
behalf of the other and neither party is entitled to commissions from the
other.

 

                18.           TRADE RULES.  All purchases and sales of Distiller’s Grains
made hereunder shall, to the extent they are otherwise expressly applicable, be
governed by the Feed Trade Rules of the National Grain and Feed Association
unless otherwise specified, and said Trade Rules shall, to the extent expressly
applicable, be a part of this Restated Agreement as if fully set forth herein;
provided, however, that in the event of a conflict or inconsistency between any
term or provision of such Trade Rules and any term or condition of this
Restated Agreement, this Restated Agreement shall govern and control to the
full extent of such conflict or inconsistency. 
Notwithstanding the foregoing, the Arbitration Rules of the National
Grain and Feed Association shall not be applicable to this Restated Agreement
and, except as provided in Section 20 below, nothing herein contained shall be
construed to constitute an agreement between the parties to submit disputes
arising hereunder to arbitration before any organization or tribunal.

 

                19.           CONFIDENTIALITY.  The parties acknowledge that they may have
access to certain confidential information of the other party and that such
information constitutes valuable, special and unique property to such
party.  The parties agree that they will
not at any time during or for a period of five (5) years after the termination
of this Restated Agreement, in any fashion, form or manner, either directly or
indirectly, divulge, disclose or communicate to any person, firm or corporation
in any manner whatsoever any such confidential information; provided, however,
that (i) HR may make disclosures and reports regarding this Restated Agreement
and the transactions contemplated hereby to the extent HR deems necessary or
appropriate or as may be required in connection with any debt or equity
financing as may from time to time be pursued or obtained by HR or any
affiliate of HR, including to any prospective or actual lenders or investors
and to actual or potential assignees or transferees of any such lender or in
connection with a foreclosure, assignment in lieu of foreclosure or exercise of
any rights or remedies by any such lender; (ii) HR and UBE may make disclosures
regarding this Restated Agreement and the transactions contemplated thereby to
their respective legal counsel and accountants; and (iii) the reasonable use of
any confidential information as part of or in connection with the transactions
contemplated by this Restated Agreement during the term of this Restated
Agreement is permitted.  For purposes of
this Restated Agreement, the term “confidential information” shall mean all
information, documentation or financial data which is proprietary or
confidential in nature and which is used by or belongs to or relates to either
party which is disclosed or made available to the other party, its agents,
employees or advisors, including but not limited to the prices charged for
services hereunder or any other information concerning the other party’s

 

 

16

 

business, manner of operation, plans, processes or other data of any
kind.  “Confidential information” shall
not include, however, any of the following information and/or types of
information:  (a) information of a party
that at the time furnished to the other party is in the public domain or later
becomes part of the public domain by publication or otherwise through no fault
of the other party or its employees or agents; (b) information of a party that
was independently developed by the other party by persons without access to or
knowledge of, or any use of, the confidential information of the party; or (c)
information of a party that was obtained by the other party on a
nonconfidential basis from a source or a third party entitled to disclose it.

 

                If the
confidential information of a party is required to be disclosed by the other
party by court order, governmental action, legal process or applicable law,
such party shall, if legally permissible, first give written notice thereof to
the other party whose confidential information is to be disclosed and
reasonably cooperate with such party (at such party’s cost and expense) in such
party’s attempt to obtain a protective order or waiver or exclusion from the
court or other applicable governmental or other authority or law.

 

                Each party agrees
that the other party would be irreparably damaged by reason of any violation of
the provisions contained in this Section 19 and that any remedy at law for a
breach of such provisions would be inadequate. 
Therefore, a party shall be entitled to seek injunctive or other
equitable relief in a court of competent jurisdiction against the other party
or its agents or employees, for any breach or threatened breach of any of the
provisions contained in this Section 19 without the necessity of proving actual
monetary loss.  It is expressly
understood that the remedy described in this Section 19 shall not be the
exclusive remedy of a party for any breach of this Section 19, and such party
shall also be entitled to seek any other relief or remedy, at law or in equity,
to which it may be entitled as a consequence of any breach of this Section 19.

 

                Nothing in this
Section 19 is intended or shall be construed as requiring any party to furnish
any confidential information to the other party, except to the extent necessary
for a party to perform and provide the services and duties required of that
party under this Restated Agreement.

 

              20.     DISPUTE RESOLUTION.  The parties
shall attempt to settle amicably any dispute or difference of any kind
whatsoever arising out of or in connection with the validity or invalidity,
construction, execution, meaning, operation or effect or breach of this
Restated Agreement (except for any such dispute or difference involving Section
19).  If the parties do not promptly do
so, either party may, by written notice to the other party, call for private
mediation of the issue before a mediator to be agreed upon by the parties.  The parties agree to conclude such private
mediation within thirty (30) days of the filing by a party of a request for
such mediation.  In the event of a
dispute between the parties that is not resolved by such mediation, either party
may, by written notice to the other party, call for private, binding,
non-appealable arbitration of the issue before a single arbitrator agreed upon
by the parties.  In the event a single
arbitrator cannot be agreed upon within ten (10) days of the end of the private
mediation, each party shall appoint a third party arbitrator from a list
provided by the American Arbitration Association (AAA) (not a principal of a
party) and the two arbitrators thus selected by the parties shall select a
third arbitrator.  The arbitrators shall
meet as expeditiously as possible to resolve the dispute, and a majority
decision of the arbitrators shall be controlling.  While each party is free to select

 

 

17

 

an
arbitrator of its own choosing from the list provided by the AAA, either party
by written notice to the other may require that all arbitrators chosen have
sufficient expertise in the subject matter of the arbitration that they would
qualify as “expert witnesses” in a judicial proceeding.

 

The
arbitrators so chosen shall conduct the arbitration in accordance with the
Rules of the AAA as applicable in the State of Iowa.  Such arbitration shall take place at a
mutually agreed upon location in Iowa. 
The arbitrators shall be governed, in their determinations hereunder, by
the intention of the parties as evidenced by the terms of this Restated
Agreement.  The decision of the
arbitrators shall be rendered in writing and shall be final and binding upon
the parties and shall be non-appealable. 
Judgment upon the award rendered may, however, be entered by either
party and enforced in any court having competent jurisdiction.  The parties shall share the procedural costs
of the mediation and arbitration equally. 
Each party shall pay its own attorney’s fees and costs incurred by it
relating to the mediation and arbitration. 
Notwithstanding the foregoing sentences, the parties hereby authorize
the arbitrators to award costs and fees to the prevailing party as the
arbitrators deem appropriate.

 

Pending
resolution of such dispute or difference and without prejudice to their rights,
the parties shall continue to respect all their obligations and to perform all
their duties under this Restated Agreement; provided, however, the parties shall
not be obligated to perform their obligations after this Restated Agreement has
been terminated by any party pursuant to Section 11, or if such termination is
the dispute being arbitrated.

 

After
signing this Restated Agreement, each party understands that it will not be
able to bring a lawsuit concerning any dispute that may arise that is covered
by this arbitration provision (other than to enforce the arbitration
decision).  The parties hereby agree that
any dispute or difference involving Section 19 shall not be subject to this
mediation or arbitration provision.

 

                21.           MISCELLANEOUS.

 

                                A.            This Restated Agreement, together
with any exhibits hereto, is the complete understanding and agreement of the
parties to this Restated Agreement with respect to the subject matter of this
Restated Agreement, and no other representations or agreements shall be binding
upon the parties, or shall be effective to interpret, change or restrict the
provisions of this Restated Agreement. 
This Restated Agreement supersedes the Amended Agreement in its
entirety.  HR hereby objects to any
additional, different or inconsistent terms which may be set forth in any
Accepted Purchase Order, any Purchase Order or any other document that UBE may
at any time submit to HR, and no such additional, different or inconsistent
terms shall be a part of any Accepted Purchase Order or this Restated Agreement
or shall have any force or effect whatsoever. 
In the event of any conflict or inconsistency between any terms and
conditions of this Restated Agreement and any terms or conditions of any
Purchase Order or Accepted Purchase Order, the terms and conditions of this
Restated Agreement shall govern and control to the full extent of such conflict
or inconsistency.

 

                                B.            No course of 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 Restated Agreement.

 

 

18

 

                                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 Restated Agreement even
though the accepting or acquiescing party has knowledge of the nature or the
performance and an opportunity to make objection.

 

                                D.            This Restated Agreement may be
executed in multiple counterparts, all of which shall constitute but one and
the same instrument.  Facsimile or e-mail
signatures shall be deemed as originals as between the parties.

 

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

 

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

 

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

 

                                H.            The respective rights, obligations
and liabilities of the parties under this Restated Agreement are not assignable
or delegable without the prior written consent of the other party, which shall
not be unreasonably delayed, conditioned or withheld; provided, however, that
HR may, without the consent of UBE, (i) assign its rights and obligations under
this Restated Agreement to any affiliate of HR, and (ii) assign this Restated
Agreement as collateral, security or otherwise to any lender of HR or any
affiliate of HR, and any such lender may in turn assign this Restated Agreement
upon any foreclosure or other exercise of any rights or remedies against HR or
any affiliate of HR.

 

I.              Time shall be of the essence in
the performance of this Restated Agreement.

 

                                J.             This Restated Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.

 

                                K.            The use of the words “herein,” “hereof,”
“hereunder” and other similar compounds of the word “here” refer to this entire
Restated Agreement and not to any particular section, paragraph or provision.

 

                                L.             This Restated Agreement shall not
be construed more strongly against any party regardless of who was more
responsible for its preparation.

 

                                M.           Subject to Section 20 of this
Restated Agreement, HR and UBE submit to the nonexclusive jurisdiction of any
United States or Iowa court sitting in Des Moines, Iowa in any action or
proceeding arising out of or relating to this Restated Agreement.  HR and UBE agree that all claims and
counterclaims with respect to any such action or proceeding may be heard and
determined in any such United States or Iowa court, and they each waive any
objection, including, without limitation, any objection to the laying of venue
or based on the

 

 

19

 

grounds of forum non conveniens, which they
may now or hereafter have to the bringing of any action or proceeding in any
such United States or Iowa court.

 

                                N.            HR and UBE waive any right to a jury
trial in or otherwise with respect to any suit, action, proceeding, claim,
counterclaim, demand or other matter whatsoever arising out of this Restated
Agreement.

 

                                O.            This Restated Agreement may be
executed in counterparts, including by facsimile or e-mail, all of which shall
constitute one and the same agreement.

 

                22.           RECORDING
OF COMMUNICATIONS.  HR acknowledges
that some UBE business telephones and other electronic communication systems
are customized with centralized recording devices for purposes of improving
customer service, improving techniques, eliminating errors and general quality
control.  HR also acknowledges that
communications systems used primarily to negotiate the sale or purchase of
commodities or to discuss commodity futures transactions are recorded by UBE
and that other communications may also be recorded by UBE.  UBE acknowledges that HR may also record any
communications between HR and UBE.

 

                23.           NOTICES.  Unless a different method of notice is
provided herein, notice shall be deemed to have been given to the party to whom
it is addressed two days after the day it is deposited in certified U.S. mail,
postage prepaid, return receipt requested, addressed as follows:

 

	
   

  	
  HR:

  	
   

  	
  Hawkeye Renewables, LLC

  
	
   

  	
   

  	
   

  	
  Attention: JD Schlieman

  
	
   

  	
   

  	
   

  	
  21050 140th
  Street

  
	
   

  	
   

  	
   

  	
  Iowa Falls, Iowa 50126

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  UBE:

  	
   

  	
  United Bio Energy Ingredients,
  LLC

  
	
   

  	
   

  	
   

  	
  2868 North Ridge Road

  
	
   

  	
   

  	
   

  	
  Wichita, Kansas 67205

  
	
   

  	
   

  	
   

  	
  Attn.:                                                      

  
	
   

  	
   

  	
   

  	
   

  

 

                Either
party may change the address for notices hereunder by giving notice of such
change to the other party in the manner above provided.

 

 

20

 

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

 

	
   

  	
  Hawkeye Renewables, L.L.C.

  
	
   

  	
   

  
	
   

  	
  /s/ J.D. SCHLIEMAN

  
	
   

  	
  By: J. D. Schlieman

  
	
   

  	
   

  
	
   

  	
  United Bio Energy
  Ingredients, LLC

  
	
   

  	
   

  
	
   

  	
  /s/ RANDY IVES

  
	
   

  	
  By: Randy Ives

  

 

	
  Exhibit A -

  	
   

  	
  Fixed
  Distiller’s Grains Purchase Order Form [Section 1]

  
	
  Exhibit
  B -

  	
   

  	
  Posted
  Price Distiller’s Grains Purchase Order Form [Section 1]

  
	
  Exhibit
  C -

  	
   

  	
  Minimum
  Quality Standards [Section 7.A]

  
	
  Exhibit
  D -

  	
   

  	
  Composite
  Analysis Matters [Section 8.B]

  
	
  Exhibit
  E -

  	
   

  	
  UBE
  Credit Policy [Section 2.E]

  

 

21

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