Document:

Exhibit 10.17

 

Noble - Confidential
Document – EXECUTION 
COPY

 

* Portions omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission.

 

ETHANOL PURCHASE AND SALE AGREEMENT

 

This Ethanol Purchase and Sale Agreement
(this “Agreement”) dated this 12 day of December 2007.

 

BETWEEN:

 

NOBLE AMERICAS CORP.,
a Delaware Corporation, having its offices in the City of Stamford, Connecticut
(hereinafter referred to as “Noble” or “Purchaser”),

 

- and -

 

UNITED WISCONSIN GRAIN PRODUCERS a limited liability company having its
principal place of business at W1231 Tessmann Drive, Friesland, in the County
of Columbia, State of Wisconsin (hereinafter referred to as “Seller” or
“Producer”).

 

RECITALS:

 

Producer owns and operates a Ethanol production facility in Friesland,
Wisconsin..

 

Purchaser wishes to enter into an agreement with Producer to purchase
from Producer the Ethanol produced by such facility.

 

Purchaser intends to sell all the Ethanol which Purchaser purchases
from Producer hereunder.

 

Producer has agreed to sell to Purchaser and Purchaser has agreed to
buy from Producer all of the Ethanol to be produced from such facility on the
following terms and conditions.

 

NOW  THEREFORE,
this Agreement witnesses that, in consideration of the promises and mutual
covenants and conditions contained herein, the parties agree as follows:

 

 

ARTICLE I

DEFINITIONS AND
INTERPRETATION

 

1.1           Definitions.  In this Agreement, including the recitals,
the following words and terms shall have
the following meanings ascribed thereto:

 

(a)           “Affiliate”
of a specified person shall mean a
person that directly or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the person specified. The
term “control” (including the terms “controlling,” “controlled by” and “under
common control with”) means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract, or otherwise. A
person will be deemed in “control” for purposes of the foregoing if inter alia the person is the beneficial owner, directly or
indirectly, of more than ten percent of any class of voting securities of the
person specified.

 

(b)           “
Agreement” means this Ethanol Purchase and Sale Agreement.

 

(c)           “
Alternative Supply Arrangements” shall have the meaning set forth
in   Section    13..3.

 

(d)           “Commencement
Date” means the date of this Agreement.

 

(e)           “Date
of First Delivery” means that date after the date of execution of this
Agreement when    Ethanol meeting the
specifications set forth in Articles IV and VI is first made available for
delivery on  a commercial scale  to Purchaser from the Plant.

 

(f)            Delivery
Point” means the place of loading of the Ethanol onto rail cars or trucks
at  the Plant .

 

(g)           “Ethanol”
means the clear liquid produced for use as a motor fuel additive made from
fermented grain being approximately 200 proof alcohol produced by Producer at
the Plant as described in Article VI.

 

(h)           “Fee”
means the marketing and distribution fee payable as set forth in Section 7.4
hereof and Schedule B hereto.

 

(i)            “Force
Majeure” shall have the meaning set forth in Section 13.2.

 

(j)            “Gallon”
means one U.S. gallon of Ethanol at 60 degrees Fahrenheit.

 

(k)           “Initial
Period” means a period of Two (2) years from the Date of First
Delivery.

 

2

 

(l)            “Plant”
means the Ethanol production plant with a nameplate production capacity of
approximately Fifty Two Million (52) million Gallons of Ethanol per annum and
associated co-products to be located at , Freisland, WI.

 

(m)          “Prime
Commercial Lending Rate” means the rate of interest most recently published from
time to time in the Money Rate Table of the “Wall Street Journal” as the prime
annual rate of interest or such other successor or alternative publication or
table as the parties may mutually agree if this publication ceases to exist.

 

(n)           “Product”
means Ethanol as defined in Section 1.1 (g) above.

 

(o)           “Purchase
Price” is defined in Section 7.1(a).

 

(p)           “Sale
Price” is defined in Section 7.1.

 

(q)           “Taxes”
is defined in Section 7.8.

 

(r)            “Total
Annual Plant Production” means the entire production of Ethanol from the Plant.

 

(s)           [*]

 

1.2           Headings.  The division of this Agreement into Articles,
Sections, Paragraphs and Clauses or any other divisions and the inclusion of
the various headings, is for convenience of reference only and shall not affect
the interpretation or construction hereof.

 

1.3           Interpretation.  Whenever the singular or masculine or neuter
is used in this Agreement the same shall be construed as meaning plural or
feminine or body politic or corporate and vice versa where the context or the parties
hereto so require.

 

1.4           Hereof, etc.  Reference to “Articles”, “Sections”,
“Paragraphs” or “Clauses” are references to the Articles, Sections,
Subsections, Paragraphs and Clauses of this Agreement.  Words such as “hereunder”, “hereto” and
“herein” and similar expressions shall refer to the whole of this Agreement and
not to any particular Article, Section or Paragraph hereof.

 

1.5           Currency.  All references to “dollars” or “$” in this
Agreement shall be references to amounts expressed in United States
currency.  All calculations of monetary
sums to be hereunder shall be made in United States currency.

 

1.6           Schedules.  Schedules A and  B 
attached to this Agreement, as they may be amended and revised from time
to time, shall constitute part of, and shall be included in, this Agreement.

 

* Portion omitted
pursuant to a request for confidential treatment and filed separately with the
Securities and Exchange Commission.

 

3

 

ARTICLE II

DATE OF FIRST
DELIVERY

 

2.1           Producer advises it is
currently producing Ethanol on a commercial scale meeting the specifications
set forth in Articles IV and VI hereof. Producer’s obligation to supply such
Ethanol to Purchaser and  Purchaser’s obligation
to purchase same shall arise upon the execution of this Agreement by the
Parties. In order to carry out the foregoing obligations,   Purchaser shall nominate to  Producer  the quantity and potential date(s) for
first delivery of Ethanol  hereunder
covering a range of seven (7) consecutive days.  Upon acceptance of such nomination by
Producer, Purchaser shall schedule with Producer the  Date of First Delivery which shall be a day
within such date range.  Producer shall
be responsible for making delivery, and Purchaser shall be responsible for
taking delivery, of such Ethanol  on such
Date of First Delivery..

 

2.2           Production
Estimates..  After such  Date of First Delivery, Producer shall
monthly provide to Purchaser by the 20th of each month, an estimate of daily
production for the following six (6) month period beginning the first
full  month following the date of the
last estimate.  Producer shall promptly
notify Purchaser of any known adjustments to the production schedule that is
then in effect.

 

2.3.          Denaturant Supply.
Upon the mutual written agreement of Producer and Purchaser, Producer and
Purchaser will enter into a separate denaturant supply agreement with mutually
agreed upon terms.

 

ARTICLE
III

 

TERM

 

3.1           Term. Subject to
the conditions hereof, this Agreement shall be effective for the Initial Period
and with automatic renewal(s) thereafter for additional period(s) of
two (2) years each (the “Additional Term(s)”) unless either party gives
written notice of termination to the other party at least one hundred and
eighty (180) calendar days prior to the end of the Initial Period or of any
Additional Term in which case this Agreement shall terminate at the end of such
Initial Period or Additional Term (except that as to any sales obligations
existing on the date of such notice, this Agreement shall terminate upon the
termination and discharge of such obligations).

 

3.2           Termination by
Bankruptcy. In the event that Purchaser becomes insolvent or suffers the
filing of a petition of bankruptcy, executes an assignment for the benefit of
creditors, or becomes the subject of any insolvency proceeding of any nature,
then, in such event, and in addition to any other rights and remedies Producer
may have, Producer shall have the right to immediately terminate this Agreement
by written notice.  In the event that
Producer becomes insolvent or suffers the filing of a petition of bankruptcy,
executes an assignment for the benefit of creditors, or becomes the subject of
any insolvency proceeding of any nature, then, in such event, and in addition to
any other rights and remedies it may have, Purchaser shall have the right to
immediately terminate this Agreement by written notice.

 

4

 

3.3           Commencement of
Obligations. The obligations under this Agreement  shall arise  
upon the  date of execution of
this Agreement.

 

3.4           Railroad Tank Car
Leases.  Subject to the conditions
hereof, in all cases of termination or non-renewal of this Agreement as
provided above, to the extent  Purchaser shall have leased railroad tank
cars to transport Product from  the Plant pursuant to Section 8.1 of
this Agreement (which Purchaser may only do with the written consent of
Producer)  such cars will continue to be
provided by the Purchaser, and utilized by the Producer, with Producer’s paying
to Purchaser an amount equal to Purchaser’s actual incurred third party costs
relating thereto, including,
without limitation, Purchaser’s railcar leasing costs and related third party
costs and expenses, plus [*], until the expiration of such  lease(s).
Purchaser will also endeavor, but only with Producer’s consent, to obtain the
agreement of its railcar lessor(s) to a novation or assignment of such
railcar leases directly to Producer so as to release Purchaser from any further
obligations thereunder.  In such latter
event, Producer shall have no further obligation to utilize railcars provided
by Purchaser and Purchaser shall have no further obligation to provide railcars
to Producer as set forth above.  Any
railcar leases entered into with the approval of Producer shall be a financial
obligation of the Producer for the term of the railcar lease and said
obligation will remain in effect regardless of the status of this agreement.

 

In all cases of termination of this Agreement whether
by Purchaser or Producer, except if termination is due to any of the events
referred to in Clause 3.2, or in case of material default of any of Purchaser’s
obligations hereunder (as determined by 
final and non-appealable judgment of a court of competent jurisdiction),
Producer shall be obligated to honor all third-party sales commitments that
Purchaser shall have entered into if they are within the target NP ( as defined
in Section 7.5) previously approved by Producer [*]. Purchaser shall be
paid its Marketing and Distribution Fee on such sales as provided in Section 7.4
of this Agreement.

 

ARTICLE IV

PURCHASE, DELIVERY
AND MARKETING OBLIGATIONS

 

4.1           [*]

 

* Portion omitted pursuant to a request for
confidential treatment and filed separately with the Securities and Exchange
Commission.

 

5

 

4.2           Delivery.
Purchaser shall be given access to the truck loading facilities at any time
during normal business hours, upon reasonable prior notice, to perform its
duties hereunder. Purchaser will provide Producer with delivery schedules based
on Purchaser’s established Product resale agreements. Producer shall handle and
supervise the loading and dispatch of Ethanol, prepare and distribute delivery
documentation and generally be responsible for all matters ancillary to such
matters.  . Producer shall supply all
equipment necessary to load rail cars or trucks at the Plant without charge to
Purchaser. Producer shall instruct all  
truck vehicle operators in the rules and regulations of Producer,
which rules and regulations shall include inter alia
requirements for such truck vehicle operators to inspect each of their
transportation vehicles prior to loading at the Plant to ensure that such
vehicles are clean and suitable for maintaining product integrity without
contamination or spilling. Producer shall provide Purchaser with copies of such
rules and regulations in advance of loading so that Purchaser can
contractually require such truck vehicle operators to abide by such rules and
regulations in loading and upon receipt thereof. Purchaser shall contractually
require such truck vehicle operators to abide by same. Producer will oversee
such loading to ensure that such rules and regulations are complied with..

 

4.3           Exclusivity .
Purchaser shall have the exclusive right to purchase the Total Annual Plant
Production from Producer; provided however that in the event that
Producer’s  Ethanol storage capacity at
the Plant shall be within three days (i.e. 500,000 gallons) of being exceeded,
Producer shall immediately provide Purchaser with at least twenty-four hours
prior written notice thereof. In the event that Purchase shall not commence
taking delivery of such amount of such Total Annual Plant Production which is
in excess of such aggregate storage capacity (the “Tank Top Amount”) within
twenty-four (24)  hours  of  
receipt of such notice Producer 
shall have the right to sell such Tank Top Amount directly to its own
customers until such Tank Top Amount has been removed from such storage. Purchaser
shall have no right to such Tank Top Amount or any marketing fee with respect
thereto; all  subject to Purchaser’s
right to obtain delivery of Ethanol with which to  supply 
all sales contracts previously 
agreed upon by Purchaser with its customer consistent with target NP
previously approved by Producer and/or the Marketing Committee.

 

4.4.          Increase in
Production. In the event that Producer shall intend to increase the
production level of the Plant through expansion of the Plant, Producer will
give Purchaser not less than two (2) months’ prior written notice of its
intention to increase production levels in excess of the existing Total Annual
Plant Production by reason of such expansion. Purchaser shall have an option,
exercisable by written notification to Producer of Purchaser’s intention given
within one (1) month from the date of receipt of the notice of such
intended increase of Total Annual Plant Production, to contract for the
purchase of the incremental production on the same terms and conditions as this
Agreement.    Producer shall not be
obligated to give Purchaser such notice where such increase in the production
level of the Plant shall not exceed twenty (20) percent in excess of nameplate
capacity

 

4.5           [intentionally
deleted.]

 

6

 

4.6           [*]

 

4.7           [*]

 

4.8           Marketing Plan.  Upon Producer’s request, Purchaser shall
submit to Producer for approval an annual Marketing Plan, which approval shall
not be unreasonably withheld. Such Marketing 
Plan shall include inter alia:

 

a.             A preliminary
schedule of quantities of the Product to be lifted by the Purchaser and its
geographical allocation;

 

b.             Projected prices and
target NP for per each market area,

 

c.             Projected costs for
transportation from Plant to each market area;,

 

d.             The
calculated net Product prices FOB Plant.

 

4.9           [*]

 

4.10         Sales and Marketing.
.. Working within the framework of the Marketing Committee, and subject to its
decisions, the Purchaser retains sole responsibility for the sales and marketing
of the Plant’s Ethanol output in accordance with the terms of this
Agreement.  In order to fulfill this
responsibility, the Purchaser shall have the right, at its sole discretion, to
enter into sales agreements for sales of Product which are consistent with target NP previously approved by the Producer
and/or the Marketing Committee as set forth under Sections 4.1, 4.6, 4.7 and
4.8   above.

 

ARTICLE V

QUANTITY

 

5.1           Quantity.
Delivery and receipt of Product hereunder shall take place at the Delivery Point
at uniform weekly rates, as nearly as practicable, after taking into account
interruptions in production caused by maintenance and planned turnarounds, such
that the Ethanol delivered in any one month shall approximately equal one
twelfth (1/12th) of the Total Annual Plant Production.  Purchaser shall be obligated to take delivery of, and to pay for in
accordance with Article VII, all quantities of Ethanol tendered by
Producer.  Nothing in this Agreement
shall require Producer to operate the Plant in a manner that is inconsistent
with prudent practices for a plant of this nature.

 

* Portion omitted
pursuant to a request for confidential treatment and filed separately with the
Securities and Exchange Commission.

 

7

 

5.2           Method of
Measurement. The quantity of Ethanol delivered to Purchaser from the Plant
shall be established by outbound meter tickets or per certified scale expressed
in net temperature-corrected Gallons in accordance with standards commonly used
within the industry in the United States of America.   The meter and/or scale tickets shall be
obtained from meters/scales which are certified as of the time of loading and
which comply with all applicable laws, rules and regulations.  The outbound meter and/or scale tickets shall
be determinative in the absence of fraud or manifest error of the quantity of
Ethanol for which Purchaser is obligated to pay pursuant to Article VII.

 

ARTICLE VI

QUALITY

 

6. 1          Quality.
Producer represents and warrants to Purchaser that all Ethanol delivered by
Producer to Purchaser hereunder shall be merchantable and shall meet the
specifications set forth in Schedule A hereto at the time of delivery of such
Ethanol by Producer to Purchaser.  Should
any government entity require a change in the specifications set forth in
Schedule A, such specifications shall be changed accordingly. Should any
customer require a change in the specifications set forth in Schedule A, the
Purchaser and Producer shall evaluate the impact of changing or not changing
the specifications set forth in Schedule A and shall consider any capital costs
that may be necessary to implement such action in the light thereof If Producer
shall consent in writing in its sole discretion to such customer requests then Producer
shall implement such change. .

 

6.2           Insurance.
Producer shall purchase and maintain a minimum of five million dollars
($5,000,000) of product and commercial general liability insurance and cause
Purchaser to be designated as loss payee or additional insured as their
interests may appear, with waiver of subrogation by the insurer against
Purchaser.  Producer shall further
arrange and maintain employer’s liability insurance meeting all statutory
requirements.  In each case Producer
shall provide to Purchaser a copy of the cover notes of insurance evidencing
the existence of the required insurance. 
Purchaser shall purchase and maintain a minimum of five million dollars
($5,000,000) of product and commercial general liability insurance and cause
Producer to be designated as a loss payee or additional insured as their
interests may appear, with waiver of subrogation by the insurer against
Producer.  Purchaser shall further
arrange and maintain employer’s liability insurance meeting all statutory
requirements.  In each case Purchaser
shall provide to Producer a copy of the cover notes of insurance evidencing the
existence of the required insurance.

 

6.3           Quality Claims.
Producer warrants that the quality of Ethanol delivered into the transportation
vehicles conforms to the specifications attached as Schedule A.  Producer shall not be required to sell or
deliver, and Purchaser shall not be required to purchase or take delivery, of
Ethanol that does not meet such specifications without the prior written mutual
consent of Producer and Purchaser.  In
the event Ethanol does not meet the standards set forth in 

 

8

 

Schedule A when delivered by Producer to the
transportation vehicles or upon receipt by Purchaser’s third party customer and
quality claims arise as a result thereof, such quality claims will be
administered by Purchaser upon notice to 
Producer.  Such claims shall be
solely for Producer’s account, and Purchaser shall not be responsible in any
manner whatsoever for such claims. Notwithstanding the above, Producer shall
not be responsible for the quality of any Ethanol which is transloaded (i.e.
unloaded and reloaded into a transportation vehicle ) prior to its delivery to
the third party customer.

 

6.4           In the event of any
question or disagreement regarding the grade or quality of any Ethanol sold by
Producer to Purchaser, such Ethanol shall be submitted for testing to a
mutually acceptable neutral, independent and unrelated inspector (who shall be
selected by mutual agreement of Producer and Purchaser with the costs of same
being shared equally between them.) The decision of such inspector and any
certificates of quantity and/or quality issued by such inspector shall be final
and binding in the absence of fraud and/or manifest error.

 

6.5           Samples. Producer agrees to maintain
original sealed numbered samples of all Ethanol (i) for railcars, after
loading of such Ethanol into railcars and before such railcars  leave the Delivery Point and (ii)otherwise ,
while in the storage tanks and prior to loading into trucks .  Producer will label these samples to indicate
date of shipment and rail car number will be included as applicable.  Producer will retain these samples for
three  (3) months and shall send
such samples as may be requested to Purchaser immediately upon Purchaser’s
request.

 

6.6           On-Site Lab. Producer
agrees to maintain a fully staffed and equipped laboratory on the plant site
capable of producing correct certificate of analysis in a timely basis for all
deliveries. The certificates of analysis will meet all customer and government
requirements.

 

ARTICLE VII

PRICE

 

7.1           [*]

 

7.2           [*]

 

7.3           [*]

 

7.4           [*]

 

7.5           [*]

 

7.6           [*]

 

* Portion omitted
pursuant to a request for confidential treatment and filed separately with the
Securities and Exchange Commission.

 

9

 

7.7           Taxes. Producer
shall pay or cause to be paid all valid levies, assessments, duties, rates and
taxes (together “Taxes”) on Ethanol delivered hereunder.   Where any Taxes are included in the Sales
Price payable by Purchaser or by any third-party customer, Purchaser’s  Purchase Price hereunder shall be reduced by
the value of such Taxes; provided that the amount of any such Taxes
included in the Sale Price shall not be included in the calculation of NP under
Section 7.5 above.

 

ARTICLE VIII

TRANSPORTATION

 

8.1           Transportation. Purchaser agrees to
diligently pursue, secure and maintain all necessary agreements, permits and
governmental approvals to transport the Ethanol from the Delivery Point.  Purchaser shall be solely responsible for the
arrangement of transportation, which shall be by truck unless otherwise
mutually agreed in writing by Producer and Purchaser.  Purchaser shall not lease any railcars for
the removal and delivery of the Plant’s Ethanol production unless mutually
agreed in writing by Producer and Purchaser.

 

8.2           Subject to 
any target NP or any other limitations or restrictions as may be
established by the Marketing Committee and/or Producer from time to time,
Purchaser shall endeavor to obtain the best prices in respect of such
transportation on the same terms and conditions available at that time such
that Producer may achieve the best net price reasonably available after payment
for Transportation Costs in accordance with Article VII hereof; it being
understood and agreed by the Parties that such NP and/or other  limitations or restrictions as aforesaid
may  impact   the 
prices obtainable by  Purchaser
hereunder.

 

ARTICLE IX

STORAGE

 

9.1           Storage
Requirements. Producer shall at all times provide storage (finished product
tankage) at the Plant for Ethanol, in an amount of  1,200,000 gallons  (i.e seven days production) at any one time,
at no cost to Purchaser

 

9.2           Outside
Storage. The parties may determine, as part of the Marketing Plan, or as
otherwise decided and agreed by both Producer and Purchaser ,that it  is in the best interest of Producer to
maintain storage at a offsite location in addition to the storage at the
Producer’s  Facility, (“Third Party
Storage”) and, in such case, Purchaser 
shall arrange for such Third Party Storage as well as transportation to
such Third Party Storage with all cost deemed to be Transportation Costs under Section 7.3
above and shall be deducted from the Sales Price for  Product sales out of  such storage as provided under Article VII
above. Costs for such outside storage including transportation of product,
inspections, taxes including inventory taxes (if any), port fees and any other
cost associated with maintaining Producers position in such storage shall be
for Producers account and will be billed to and paid by Producer as they are
incurred.

 

10

 

ARTICLE X

 

PAYMENTS

 

10.1         Payment Terms.  Purchaser shall pay to Producer the Purchase
Price for each Gallon of Ethanol delivered to Purchaser’s customer hereunder by
direct wire transfer or electronic transfer to Producer’s designated bank
account.  Unless otherwise agreed between
Producer and Purchaser, Purchaser will attempt to make all payments hereunder
as soon as possible after receipt of payment by Purchaser from its
customers  but in no event later than
within  three  (3) business days after such receipt of
payment. [*] Purchaser shall conduct prior credit review of its customers
hereunder and shall grant prior credit approval for all such customers found by
it to be creditworthy by it in its sole discretion.  All risk of and liability for nonpayment or
delayed payment by such customer(s) for which Purchaser shall have
conducted prior credit review and shall have found to be creditworthy  shall be for the account of Purchaser.
Purchaser shall diligently pursue its customers for payment within the time
provided for payment in Purchaser’s payment terms. Past due payments that
exceed the Purchaser’s payment terms with its third party customer(s) for
a period in excess of fourteen (14) days shall be considered delinquent and
payable by Purchaser to Producer. Upon request, Purchaser shall provide to
Producer information indicating Purchaser’s payment terms with its customers.

 

If the above time of payment shall become unfair in that either party
shall suffer and be able to demonstrate hardship thereby as a result of
unforeseen circumstances over which such party shall have no control and which
occur after the date of this Agreement (other than those which can be imputed
to the parties themselves or to companies of their respective group) then the
party so affected shall provide evidence thereof to the other party and shall ask
for and receive timely review of such time of payment so as to establish new
payment terms that  are fair and
equitable to both parties.

 

In the case where a dispute may arise as to the amount due in a
transaction by either Producer or Purchaser the party from whom such amount
shall be due or alleged to be due shall not to hold up payment of the entire
transaction but must make prompt and timely payment of the undisputed portion.
The disputed portion shall be paid into escrow subject to resolution by the parties
in good faith or, if the parties cannot resolve the issue, in accordance with
the terms of this Agreement.

 

10.2         Fee.  Producer shall pay to Purchaser, as a
marketing/distribution fee for its services, the Marketing Fee in the amounts
set forth in Section 7.4 above and in Schedule B hereto.  Such Marketing Fee will be paid through
deductions by Purchaser from remittances to Producer hereunder.

 

* Portion omitted
pursuant to a request for confidential treatment and filed separately with the
Securities and Exchange Commission.

 

11

 

10.3         Interest.  If either party fails to pay all or any
portion of the amount owing by it when due, such unpaid amount will bear
interest at a rate equal to one (1) percent per annum above the Prime
Commercial Lending Rate calculated daily from the date such amount is due
hereunder until the date it is actually paid. 
Upon failure of a party to pay the unpaid amount, including interest thereon
within ten (10) calendar days after the due date set out in this
Agreement, the party to whom sums are due may upon giving five (5) business
days’ notice suspend in whole or in part its delivery or acceptance of Ethanol
(as the case may be) hereunder until such outstanding amount has been paid in
full.

 

10.4         Audit. Any payment
made pursuant to this Article X will not preclude a party from
subsequently auditing the accounts of the other as permitted in this Agreement.

 

ARTICLE XI

TITLE AND RISK OF
LOSS

 

11.1         Title and Risk of
Loss. Delivery shall be deemed to occur when the Ethanol is delivered FOB
transportation vehicles at their inlet flange. 
Title and risk of loss or damage shall only pass from Producer to
Purchaser upon such delivery.  Until such
time, Producer shall be deemed to be in control of and in possession of and
shall have title to and risk in the Ethanol.

 

11.2         No Liability.
Purchaser will have no responsibility or liability with respect to any Ethanol
deliverable under this Agreement until it is delivered to Purchaser as described
in Section 11.1.  Subject  to Section 6.3, Producer will have no
responsibility or liability with respect to such Ethanol after its delivery to
Purchaser, as described in Section11.1 or on account of anything which may be
done or happen to arise with respect to such Ethanol after such delivery,
unless as a result of matters affecting the Ethanol quality prior to such
delivery.

 

ARTICLE XII

REPRESENTATIONS, COVENANTS AND WARRANTIES

 

12.1         Producer’s
Representations, Warranties and Covenants. 
Producer represents and warrants to Purchaser, as of the date hereof and
covenants to Purchaser at all times during the term of this Agreement, as
follows and acknowledges that Purchaser is relying upon such representations,
warranties and covenants in connection with the purchase of Ethanol hereunder:

 

(a)           Producer
has title to all Ethanol delivered hereunder, it has the right to sell the same
to Purchaser, and the Ethanol is free from any liens or encumbrances at the
time of delivery to Purchaser;

 

                PROVIDED THAT
EXCEPT AS PROVIDED IN THIS SECTION 12.1(a) AND AS PROVIDED IN ARTICLE
VI WITH RESPECT TO THE QUALITY OF ETHANOL TO BE DELIVERED, THERE ARE NO  OTHER WARRANTIES EITHER EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION, WARRANTIES OF 

 

12

 

MERCHANTABILITY OR FITNESS FOR AN EXPRESS PURPOSE
EXCEPT THAT THE ETHANOL WILL CONFORM WITH THE SPECIFICATIONS SET FORTH IN
SCHEDULE “A”, AS MAY BE AMENDED FROM TIME TO TIME BY WRITTEN AGREEMENT
BETWEEN THE PARTIES, TO THIS AGREEMENT.

 

(b)           Producer
covenants that it shall procure and maintain in force all licenses, consents
and approvals required for its operation of the Plant and manufacture and sale
to Purchaser of the Ethanol under this Agreement and shall be solely
responsible for and indemnify Purchaser against any costs, liabilities or fines
arising out of Producer’s failure to comply with any applicable requirements of
such licenses, consents and approvals;

 

(c)           Producer
covenants that it will maintain accurate and complete production and delivery
records in a prudent and businesslike manner in accordance with sound
commercial practices in respect of Ethanol produced by Producer hereunder;

 

(d)           Producer
covenants that it will provide Purchaser with a minimum of sixty (60) days
prior written notice of any actual or anticipated production downtime or
disruption to Ethanol availability; provided however that in the event of  any unexpected downtime or disruption in
Ethanol production at the  Plant,
Producer shall give Purchaser prompt notice of 
same by telephone as soon as reasonably possible, together with an
advice as to then existing finished Product inventory at the Plant, promptly
followed by written confirmation of same by email or fax.

 

(e)           Producer
represents it is a U.S. entity for purposes of state and federal income and
excise taxes.

 

12.2         Purchaser’
Representations, Warranties and Covenants. 
Purchaser represents and warrants to Producer, as of the date hereof and
covenants to Producer at all times during the term of this Agreement, as
follows and acknowledges that Producer is relying upon such representations,
warranties and covenants in connection with the sale of Ethanol hereunder.

 

(a)           This
Agreement has been duly and validly executed and delivered by Purchaser; this
Agreement constitutes a legal, valid and binding obligation of Purchaser,
enforceable in accordance with its terms, except to the extent its
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally or
by general principles of equity.

 

(b)           Purchaser
covenants that it will maintain or cause to be maintained accurate and complete
records in a prudent and businesslike manner in accordance with sound
commercial practices, of the selling prices described in Article VII 

 

13

 

hereof and the associated transportation and other
costs in respect of Ethanol purchased by Purchaser hereunder;

 

(c)           Purchaser
is a U.S. entity for purposes of state and federal income and excise taxes;

 

(d)           Purchaser
covenants that it will provide to Producer as soon as available each year a
copy of the audited financial statements of Noble Group Limited; and

 

(e)           Purchaser
covenants that it shall procure and maintain in force all licenses, consents
and approvals required for its purchase from Producer and resale of Ethanol
hereunder and all its other obligations under this Agreement except for those
licenses for which Producer is responsible under Section12.1(b), and shall be
solely responsible for and indemnify Producer against any costs, liabilities or
fines arising out of Purchaser’ failure to comply with any applicable
requirements of such licenses, consents and approvals.

 

ARTICLE XIII

FORCE MAJEURE

 

13.1         Force Majeure.  Subject to the other provisions of this
Article, if either party is unable by reason of Force Majeure, as hereinafter
described, to perform in whole or in part any obligation or covenant set forth
hereunder, the obligations of both parties under this Agreement will be
suspended or curtailed to the extent necessary for the period such Force
Majeure condition continues.

 

13.2         Definition.  For the purposes of this Agreement, Force
Majeure will include any event or circumstance arising or occurring beyond the
reasonable control of Producer or Purchaser, including without limiting the
generality of the foregoing:

 

(a)           Any
acts of God, including, but without restricting the generality thereof,
lightning, earthquakes, storms, epidemics, landslides, floods, fires,
explosions or washouts;

 

(b)           Any
strikes or other labor disputes of a regional or national character that are
not limited to only employees of either party;

 

(c)           Any
acts of the enemies of the state, sabotage, wars, blockades, insurrections,
riots, civil disturbances, arrests or restraints;

 

(d)           Any
freezing, explosions or craterings;

 

(e)           Any
orders of any court or government authority, which physically limits the use,
production or transportation of Ethanol;

 

(f)            Any
acts or omissions (including failure to take Ethanol) of a transporter or
carrier of Ethanol, which are caused by any event or occurrence of the nature
described in this Section 13.2; and

 

14

 

(g)           Any
other reasonable causes, whether of the kind herein enumerated or otherwise,
not within the reasonable control of the party claiming suspension and which,
by the exercise of due diligence, such party could not have prevented or is
unable to overcome.

 

13.3         [*]

 

13.4         [*]

 

13.5         [*]

 

13.6         Exclusions.  Force Majeure shall not include failure
caused by lack of funds or lack of market for Ethanol deliverable hereunder by
Producer to Purchaser.

 

13.7         Claiming Relief.  A party claiming relief under this Article will
not be entitled to the benefit of the provisions of Section13.1 hereof unless,
as soon as reasonably possible after the happening of the occurrence relied
upon as soon as possible after determining that the occurrence was in the
nature of Force Majeure and would affect the claiming party’s ability to
observe or perform any of its covenants or obligations hereunder, the party
claiming suspension gives to the other party notice to the effect that such
party is unable, by reason of Force Majeure, to perform the particular covenants
or obligations.

 

13.8         Notice.  The party claiming suspension will give
notice as soon as reasonably possible when the Force Majeure condition has or
will be remedied to the effect that the same has been remedied and that such
party has resumed, or is then in a position to resume, the performance of the
suspended covenants or obligations.

 

ARTICLE XIV

LIABILITY AND
INDEMNIFICATION

 

14.1         Damages.  Each Party shall be entitled to all direct
damages and other rights and remedies available at law or in equity, except as
may be provided otherwise in this Agreement, upon the default or other failure
to perform of the other Party

 

14.2         Limitation of Liability.  In no event shall Purchaser or Producer be
liable to any  other party hereunder for
any indirect, consequential, punitive or special damages, loss of business
expectations, business interruptions, lost profits, or any damage to third
parties arising in any way out of this Agreement or any breach thereof;

 

* Portion omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission.

 

15

 

14.3         Indemnification.

 

(a)           Subject to Section 14.2 above, Purchaser agrees to indemnify, save
and hold Producer harmless against and from any and all claims, damages,
losses, liabilities for  death or bodily
injury to any person or for the destruction or damage to any property and
expenses (including, without limitation, reasonable attorneys’ fees) arising
from any willful misconduct or grossly negligent acts, errors and omissions of
Purchaser, its agents, contractors, servants, employees, customers, or invitees
in or about the Plant.

 

(b)           Subject to Section 14.2 above, Producer agrees to indemnify, save
and hold Purchaser  harmless against and
from any and all claims, damages, losses, liabilities for  death or bodily injury to any person or for
the destruction or damage to any property and expenses (including, without
limitation, reasonable attorneys’ fees) arising from any willful misconduct or
grossly negligent acts, errors and omissions of Producer, its agents,
contractors, servants, employees, customers, or invitees in or about the Plant.

 

ARTICLE XV

AUDIT RIGHTS

 

15.1         Records.  Each party will, establish and maintain at
all times, true and accurate books, records and accounts in accordance with
generally accepted accounting principles applied consistently from year to year
consistent with good industry practices, distinguishable from all other books
and records, in respect of all transactions undertaken by such party pursuant
to this Agreement.

 

15.2         Audit.

 

(a)           During
normal business hours upon five (5) business days’ prior written
notice  each party shall have the right
to audit such books, records and accounts of the other party, provided
such right to audit shall be limited to two (2) calendar years following
the completion of any sale or other transaction associated with this Agreement.

 

(b)           Subject
to paragraph (a) of this Section, through the expiration of one (1) calendar
year following the expiration or termination of this Agreement, each party
shall have the right to have a third-party auditor, who will be a member of a
national U.S. chartered accounting firm, audit on such party’s behalf the
relevant accounts, books and records of the other party, to the extent
necessary in order to verify the accuracy of any statement, charge, computation
or demand made under or pursuant to any of the provisions of this Agreement.

 

(c)           If
any error is discovered hereunder, such error will be adjusted within seven (7) calendar
days from the date of discovery, but no adjustment will be made for any error
discovered more than two (2) calendar years after delivery and receipt of
such statements.

 

16

 

(d)           If
a material difference (defined as the greater of: (i) one (1) percent
of  the aggregate GP for all sales of Product
during the time period covered by the audit, or (ii) a net amount of U.S.
Dollars five thousand (5,000) dollars on all sales of Product during the time
period covered by the audit)  discovered
by any audit and is documented in writing by a Certified Public Accountant,
appointed by either party, the party 
benefiting from such difference shall pay the cost of such audit as well
as providing restitution of such difference.

 

The auditor shall conduct a full and impartial audit
for the period involved. Both parties shall receive a copy of the audit report.
If no such material difference is found the party initiating the audit shall
pay the cost of the audit.

 

ARTICLE XVI

MISCELLANEOUS

 

16.1         Default.

 

(a)  Except as set forth
under  Section 16.1 (e) below,
if Purchaser commits or omits an act or occurrence which upon notice and/or the
passage of time without cure may become an Event of Default under this
Agreement then Producer shall give Purchaser written notice describing such
default. If Producer commits or omits an act or occurrence which upon notice
and/or the passage of time without cure may become an Event of Default under
this Agreement, then Purchaser shall give Producer written notice describing
such default.

 

(b)           Events of Default of
Producer.  Unless the following acts
or occurrences s are cured within thirty (30) days after the date of written
notice from Purchaser as provided for in Section 16.1 (a), such acts or
occurrences shall constitute Events of Default of Producer provided
that, if any such act or occurrence cannot be cured within thirty
(30) days of such notice with exercise of due diligence, and if Producer within
such period submits to Purchaser a plan reasonably designed to correct the
default within a reasonable additional period of time, then an Event of Default
shall not exist unless and until Producer fails to pursue diligently such cure
or fails to cure such default within the additional period of time specified by
the plan or ninety (90) days, whichever occurs first.

 

(1)           Seller’s material breach of its material
obligations under this Agreement, except to the extent Producer is excused
pursuant to Article XIII or any other provision of this Agreement.

 

(2)           Producer’s
dissolution or liquidation.

 

(3)           Producer’s assignment of this Agreement or
any of its rights under this Agreement for the benefit of creditors, provided
that the foregoing shall not be 

 

17

 

grounds for an Event of Default if, pursuant to applicable law and with
any required court approval, this Agreement is assumed by a trustee, assignee
or receiver, who promptly provides adequate assurance and evidence reasonably
satisfactory to Purchaser of the capacity to continue Producer’s  obligations under this Agreement.

 

(4)           The Producer’s filing of a petition for, or
other commencement, authorization or acquiescence in the commencement of, a
proceeding or cause under any bankruptcy or similar law for the protection of
creditors.

 

(5)           The filing of a case in bankruptcy or any
proceeding under any other insolvency law against Producer as debtor, which
case is not vacated within forty-five (45) days of filing, provided, however,
that the foregoing shall not be grounds for default if, pursuant to applicable
law and with any required court approval, this Agreement is assumed by an
assignee who promptly provides adequate assurance and evidence reasonably
satisfactory to Purchaser of the capacity to perform Producer’s obligations
under this Agreement.

 

(6)           Producer’s assignment of this Agreement
without Purchaser’s  consent to the
extent required by this Agreement.

 

(7)           An Event of Default of
Producer shall exist and be continuing under the Lease.

 

(8)           The Facility shall be unavailable for the
production of Ethanol during all or part of ninety (90) days, whether or not
consecutive, during any consecutive three hundred sixty-five (365) day period;
provided, however, upon notice thereof as set forth hereinabove, such default
shall be deemed to be cured if the cause of such unavailability is eliminated
or otherwise cured within the periods following such notice set forth
hereinabove in this Section 16.1.

 

(9)           Abandonment of the Facility by Producer
after the Commencement Date.

 

(d)           Events of Default of Purchaser.   Unless the following acts or occurrences are
cured within thirty (30) days after the date of written notice from Producer as
provided for in Section 16.1 (a) such acts or occurrences shall
constitute Events of Default of Purchaser; provided that, if any such
act or occurrence cannot be cured within thirty (30) days with exercise of due
diligence, and if Purchaser within such period submits to Producer a plan
reasonably designed to correct the default within a reasonable additional
period of time, then an Event of Default shall not exist unless and until
Purchaser fails to pursue diligently such cure or fails to cure such default
within the additional period of time specified by the plan or ninety (90) days,
whichever occurs first:

 

(1)           Purchaser’s
general assignment of this Agreement or any of its rights hereunder and its
interests in the Site for the benefit of its creditors, provided that, the
foregoing shall not be grounds for default if, pursuant to applicable 

 

18

 

law
and with any required court approval, this Agreement is assumed by a
creditworthy trustee, assignee or receiver.

 

(2)           Purchaser’s entry into bankruptcy or
insolvency proceedings under any bankruptcy or insolvency law as debtor;
provided that the foregoing shall not be grounds for default if, pursuant to
applicable law and with any required court approval, this Agreement is assumed
by a creditworthy assignee, receiver or trustee.

 

(3)           Purchaser’s assignment of this Agreement or
any of its rights under the Agreement without obtaining Seller’s prior written
consent to the extent required under this Agreement; provided in no event,
however, will any assignment by Purchaser of this Agreement to an Affiliate or
to any bank or other financial institution providing Purchaser with financing
be deemed a breach or failure of this provision.

 

(4)           Except for failures provided for in the other
subparagraphs of this Section 9.3, Purchaser’s material breach of any
material obligation of Purchaser under this Agreement, unless such failure is excused
pursuant to Article XIII or any other provision of this Agreement.

 

(e)           In the event Purchaser shall fail to make
any payment of any undisputed portion of any invoice or any other statement of
amounts due hereunder within eleven (11) days after Purchaser’s receipt of such
invoice or other statement, then Producer shall provide written notice thereof
to Purchaser either by Certified Mail, Return Receipt Requested, or by email or
by facsimile specifically acknowledged by Purchaser as having been received
(which acknowledgment shall not be unreasonably withheld, conditioned or
delayed.)  Purchaser’s failure to pay
such undisputed portion within three business days after receipt of such notice
from Producer shall be deemed to be an Event of Default not subject to any
right to cure by Purchaser hereunder.

 

(f)            Termination.  If, in the absence of a timely cure in
accordance with Section 16.1(b) or 
Section 16.1(c), or any other provision of this Agreement, an Event
of Default shall arise hereunder, the non-defaulting Party may, upon written
notice to the other Party, terminate this Agreement.  Neither Party shall have the right to
terminate this Agreement except as provided for upon the occurrence of an Event
of Default as described above or as otherwise may be explicitly provided in
this Agreement.

 

16.2         Non-Waiver of Future Default.  No waiver by either party of any default by
the other party in the performance of any of the provisions of this Agreement
will operate or be construed as a waiver of any other or future default or
defaults, whether of a like or of a different character.

 

19

 

16.3         Assignment.  Neither party may assign this Agreement or
any of its rights hereunder without the prior consent in writing of the other,
which consent may not be unreasonably withheld or delayed; provided in no
event, however, will any assignment by Purchaser of this Agreement to an
Affiliate or to any bank or other financial institution providing Purchaser
with financing be deemed a breach or failure of this provision. A change in
composition of Purchaser or Producer will not be construed to be an assignment
for the purposes of this Section 16.3. 
Notwithstanding the foregoing, as security for its obligation to its
bank lender or other institutional lender providing financing to either party
(“Financing Entities”),  either
party  may (with prior written notice to
the other party ) assign this Agreement, with the right to cure defaults of the
assigning party,  to its financing sources
as they may require from time to time, and it is understood by the parties
hereto that Producer, will, concurrently with or subsequent to the execution
hereof, assign its rights hereunder to its 
Financing Entities, as agent for certain of Producer’s financing sources
(the “Agent”), and that the Agent or its assigns shall have the right to cure
defaults of Producer hereunder.

 

16.4         Interpretation and
Fair Construction of Contract.  This
Agreement has been reviewed and approved by each of the parties. Producer and
Purchaser have each participated in the negotiation of this Agreement, have
proposed language incorporated within this Agreement, and have otherwise been
instrumental in the drafting of this Agreement. 
Each party has been represented by legal counsel in the negotiation and
drafting of this Agreement, and has had ample opportunity to confer with that
counsel.  Therefore, in the event that it
should be determined that any provision of this Agreement is uncertain or
ambiguous, the language in all parts of this Agreement shall in all cases be
construed as a whole according to its fair meaning and not strictly construed
for nor against any party.  The parties
agree that the contract, and any of its provisions, shall not be construed
against any party as its drafter.

 

16.5         Document.  Each party to this Agreement shall perform
any and all acts and execute and deliver any and all documents as may be
necessary and proper under the circumstances in order to accomplish the intents
and purposes of this Agreement and to carry out its provisions.

 

16.6         Time.  Time is of the essence with respect to the
performance of each of the covenants and agreements herein set forth.

 

16.7         [intentionally omitted]

 

16.8         Inurement.  This Agreement will inure to the benefit of
and be binding upon the respective successors and permitted assigns of the
parties.

 

16.9         Entire Agreement.  This Agreement constitutes the entire
Agreement between the parties with respect to the subject matter contained
herein and any and all previous agreements, written or oral, express or
implied, between the parties or on their behalf relating to the matters
contained herein are hereby terminated and canceled.

 

20

 

16.10       Notices.  Except as herein otherwise provided, each
notice, request, demand, statement, report and bill which must or may be given
pursuant hereto will be in writing and may be mailed by prepaid first class
mail (or equivalent), delivered by hand or sent by telecopier to the address or
number indicated below:

 

(a)   if to Producer:

 

UNITED WISCONSIN
GRAIN PRODUCERS, LLC

 

P.O. Box 247,
W 1231 Tessmann Drive

 

Friesland, WI  53935

 

Attention: Dan Wegner

 

Fax number: (920)348-5009

 

(b)   if to Purchaser:

 

NOBLE AMERICAS
CORP.

333 Ludlow Street,
Suite 1230

 

Stamford Harbor
Park Stamford, CT 06902

 

Attention:  Ethanol Contract Administration

 

Fax number: (203)
326-6505

 

The date of
receipt of each such notice, demand or other communication will be the date of
delivery thereof if hand delivered, or, if given by mail as provided herein,
will be deemed conclusively to be the fifth (5th) business day after
the same is so mailed, except in the event of disruption of the postal service
in which event the notice, demand or other communication will be deemed to be
received only when actually received and, if sent by facsimile, be deemed to
have been given or received on the first business day after it was so
sent.  Either party hereto may at any
time and from time to time notify the other party in writing as to the change
of address and the new address to which notice shall be given to it thereafter
until further changed.

 

16.11       Modification and Waiver.  This document may be amended through the
mutual agreement of the parties for the purpose of satisfying requirements of
the Financing Entities. All such modification of the terms and provisions
hereof are to be only by the mutual agreement in writing signed by the parties.

 

16.12       Governing Law.  This Agreement shall be construed in
accordance with and governed by the law of the State of New York determined
without reference to the principles of conflicts of laws (other than
Sections 5-1401 and 5-1402 of the General Obligations Law of the State of
New York).

 

21

 

16.13       Compliance with Laws.  This Agreement and the respective obligations
of the parties hereunder are subject to present and future valid laws and valid
orders, rules and regulations of duly constituted authorities having
jurisdiction.

 

16.14       Severability.  If any provisions of this Agreement shall be
held to be invalid or unenforceable, such invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
invalid or enforceable any other provision of this Agreement.

 

16.15       Furnishing of
Information.  The parties will, upon
request and mutually agreement, provide such additional information as may be
reasonably required to allow the parties to efficiently and effectively carry
out their respective obligations hereunder and to determine and enforce
individual or collective rights under this Agreement.

 

16.16       Cumulative Remedies.  Unless otherwise specifically provided
herein, the rights, powers, and remedies of each of the parties provided herein
are cumulative and the exercise of any right, power or remedy hereunder does
not affect any other right, power or remedy that may be available to either
party hereunder or otherwise at law or in equity.

 

16.17       Faithful Performance.  The parties shall faithfully perform and
discharge their respective obligations under this Agreement and endeavor in
good faith to negotiate and settle all matters arising during the performance
of this Agreement not specifically provided for.

 

16.18       No Partnership.  This Agreement shall not create or be
construed to create in any respect a partnership between the parties.

 

16.19       Costs.  Each of the parties hereto shall pay its own
costs and expenses incurred in the negotiation, preparation and execution of
this Agreement and of all documents referred to in it and in carrying out the
transactions contemplated hereby and thereby.

 

16.20       Counterparts.  This Agreement may be executed in any number
of counterparts with the same effect as if all parties to this Agreement had
signed the same document and all counterparts will be  construed together and constituted one and
the same instrument.

 

16.23       Survival.  All provisions of this Agreement which are
expressly or by implication to come into or continue in force and effect after
the expiration or termination of this Agreement shall remain in effect and be
enforceable following such expiration.

 

22

 

IN
WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written.

 

	
   

  	
  UNITED WISCONSIN GRAIN
  PRODUCERS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/
  Jeff Robertson

  
	
   

  	
   

  	
  Name: Jeff
  Robertson

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NOBLE AMERICAS CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/ Ted
  Robinson

  
	
   

  	
   

  	
  Name: Ted Robinson

  
	
   

  	
   

  	
  Title: EVP Clean
  Fuels

  

 

23

 

SCHEDULE
A

 

To Ethanol Terms and Conditions

 

FUEL-GRADE
ETHANOL

SPECIFICATIONS

(DENATURED)

 

Ethanol must meet  or  exceed all industry
standards, including ASTM D.4806 specifications and Williams’ Pipeline
specifications for E-Grade Denatured Fuel Ethanol.

 

	
  TEST

  	
   

  	
  NON-DETERGENT

  GRADE

  	
   

  	
  METHOD OF TEST

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Apparent Proof - 60°F

  	
   

  	
  200 min.

  203 max.

  	
   

  	
  Hydrometer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Specific Gravity, 60/60°F

  	
   

  	
  0.7870 – 0.7950

  	
   

  	
  ASTM D-1298

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Water, Mass Percent

  	
   

  	
  0.50 nom.

  0.80 max.

  	
   

  	
  ASTM E-203

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ethanol
  Content, Volume Percent

  	
   

  	
  92.5 min.

  	
   

  	
  Gas Chromatography

  ASTM D-2/E-44

  P170 Method, A or B

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Methanol, (vol.%)

  	
   

  	
  0.5 max.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Non-Volatile
  Matter, mg/100 mL

  	
   

  	
  5 max.

  	
   

  	
  ASTM D-1353

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chloride Ion Content, mg/L

  	
   

  	
  32 max.

  	
   

  	
  ASTM D-512, Meth. C

  Modified Note (1)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Copper Content, mg/kg

  	
   

  	
  0.1 max.

  	
   

  	
  ASTM D-1688, Meth. D

  Modified Note (2)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Acidity (as acetic acid CH3COOH),
  mass%

  	
   

  	
  0.007 max.

  	
   

  	
  ASTM D-1613

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Appearance

  	
   

  	
  Clear and Bright, visibly free of suspended
  and/or settled contaminants.

  	
   

  	
  Visual

  

 

 

	
  TEST

  	
   

  	
  NON-DETERGENT

  GRADE

  	
   

  	
  METHOD OF TEST

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Color, Platinum – Cobalt

  	
   

  	
  50.0 max.

  	
   

  	
  ASTM D-1209

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hydrocarbon Denaturant gal/100 gal.

  	
   

  	
  5.0 max.

  2.0 min.

  	
   

  	
  Gas Chromatography

  ASTM D-2/E-44

  P170 Method, A or B Note (3)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PHe 

  	
   

  	
  6.5 min.

  9.0 max 

  	
   

  	
  Williams test procedure (Pending ASTM approval)
  

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sulfur 

  	
   

  	
  10 ppm, max. 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sulfates

  	
   

  	
  4.0 ppm, max.

  	
   

  	
  ASTM 5827 & D 6174

  

 

(NOTES)

 

Note 1:       The modification of Test
Method D-512, Procedure C, consists of using 5 mL of sample diluted with 20 mL
of distilled water instead of the 25 mL sample specified in the standard
procedure.  The volume of the sample
prepared by this modification will be slightly more than 25 mL.  To allow for the dilution factor, report the
chloride ion present in the Ethanol sample as 5 times that determined in the
sample.

 

Note 2:       The modification of Test Method D-1688,
Procedure D, consists of mixing reagent grade ethanol (which may be denatured
according to BATF Formula 3A or 3O) in place of water as the solvent or
dilutent for the preparation of reagents and standard solutions.  However, this must not be done to prepare the
stock copper solution described in 39.1 of D-1688.  Because a violent reaction may occur between
the acid and the ethanol, use water as specified in the acid solution part of
the procedure to prepare the stock copper solution.  Use ethanol for the rinse and final dilution
only.

 

Note 3:       The only denaturants used for Ethanol shall be
unleaded gasoline or rubber hydrocarbon solvent at a minimum concentration of 2
parts by volume per 100

 

2

 

parts by volume.  Hydrocarbons, with an end boiling point
higher than 437°F as determined by
ASTM Method D-86, shall not be used.

 

Note 4:       All Ethanol will contain a minimum of one
of the following corrosion inhibitors:

 

a)     20 pounds per 1,000 barrels of Octel America
DCI-11,

b)    13 pounds per 1,000 barrels of Petrolite Tolad
3222, or

c)     20 pounds per 1,000 barrels
of Nalco 5403.

d)    20 pounds per 1,000 barrels of
Betz ACN 13

e)     20 pounds per 1,000 barrels of MidContinental
MCC5011E

 

Note 5:      If at any time during
the term of this Agreement the Petroleum Industry Fuel Standards or ASTM
Specifications introduce any required tests for the detection of sulfates or
otherwise modify specifications or standards for acceptable levels of sulfates
or any other properties in ethanol, then compliance with such required testing
and compliance with any such modified specifications or standards shall be
incorporated into this Agreement and shall be binding upon the Producer and any
Product sold hereunder

 

3

 

SCHEDULE
B

 

 

[*]

 

* Portion
omitted pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.

 

4EXHIBIT 10.4

 

AMERICAN DG ENERGY INC.

2005 STOCK INCENTIVE PLAN

 

1.             Purposes
of the Plan.

 

This
2005 Stock Incentive Plan (the “Plan”), as amended to date, is intended to
provide incentives (a) to the officers and employees of American DG Energy
Inc., a Delaware corporation (the “Company”), and any parent or subsidiary of
the Company, by providing such officers and employees with opportunities to
purchase stock in the Company pursuant to options granted hereunder which
qualify as “incentive stock options” under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the “Code”) (“ISO” or “ISOs”); (b) to
directors, officers, employees, consultants and advisors of the Company and any
present or future parent, subsidiary or affiliate of the Company (hereinafter
collectively “Related Corporations”) by providing them with opportunities to
purchase stock in the Company pursuant to options granted hereunder which do
not qualify as ISOs (“Non-Qualified Option” or “Non-Qualified Options”); (c) to
directors, officers, employees, consultants and advisors of the Company and
Related Corporations by providing them with opportunities to receive awards of
stock in the Company whether such stock awards are in the form of bonus shares,
deferred stock awards, or of performance share awards (“Awards”); and (d) to
directors, officers, employees, consultants and advisors of the Company and
Related Corporations by providing them with opportunities to make direct
purchases of restricted stock in the Company (“Restricted Stock Purchases”).  Both ISOs and Non-Qualified Options are
referred to hereafter individually as an “Option” and collectively as “Options”.  Options, Awards and authorizations to make
Restricted Stock Purchases are referred to hereafter individually as a “Stock
Right” and collectively as “Stock Rights”. 
As used herein, the terms “parent” and “subsidiary” mean “parent
corporation” and “subsidiary corporation”, respectively, as those terms are
defined in Section 424 of the Code.

 

2.             Administration
of the Plan.

 

(a)           Board or Committee Administration.  This Plan shall be administered by the Board
of Directors of the Company (the “Board”). 
The Board may appoint a Compensation Committee or Human Resources
Committee (as the case may be, the “Committee”) of two (2) or more of its
members to administer this Plan and to grant Stock Rights hereunder, provided
such Committee is delegated such powers in accordance with applicable state
law.  (All references in this Plan to the
“Committee” shall mean the Board if no such Compensation Committee or Stock
Incentive Plan Committee has been so appointed).  If the Company or any Related Corporation
registers any class of any equity security pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), this Plan
shall be administered in accordance with the applicable rules set forth in
Rule 16b-3 or any successor provisions of the Exchange Act (“Rule 16b-3”).  From and after the date the Company becomes
subject to Section 162(m) of the Code with respect to compensation
earned under this Plan, each member of the Committee shall also be an “outside
director” within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.

 

(b)           Authority of Board or Committee.  Subject to the terms of this Plan, the
Committee shall have the authority to: (i) determine the employees of the
Company and any Related Corporation (from among the class of employees eligible
under paragraph 3 to receive ISOs) to whom ISOs may be granted, and to
determine (from among the class of individuals and entities eligible under
paragraph 3 to receive Non-Qualified Options and Awards and to make Restricted
Stock Purchases) to whom Non-Qualified Options, Awards and authorizations to
make Restricted Stock Purchases may be granted; (ii) determine the time or
times at which Options or Awards may be granted or Restricted Stock Purchases
made; (iii) determine the exercise price of shares subject to each Option,
which price shall not be less than the minimum price specified in paragraph 6,
and the purchase price of shares subject to each Restricted Stock Purchase; (iv) determine
whether each Option granted shall be an ISO or a Non-Qualified Option; (v) determine
(subject to paragraph 8) the time or times when or what conditions must be
satisfied before each Option shall become exercisable and the duration of the
exercise period; (vi) determine whether restrictions such as transfer
restrictions, repurchase options and “drag along” rights and rights of first
refusal are to be imposed on shares subject to Options, Awards and Restricted
Stock Purchases and the nature of such restrictions, if any; (vii) impose
such other terms and conditions with respect to capital stock issued pursuant
to Stock Rights not inconsistent with the terms of this Plan as it deems
necessary or desirable; and (viii) interpret the Plan and prescribe and
rescind rules and regulations relating to it.

 

If
the Committee determines to issue a Non-Qualified Option, the Committee shall
take whatever actions it deems necessary, under the Code and the regulations
promulgated thereunder, to ensure that such Option is not treated as an
ISO.  The interpretation and construction
by the Committee of any provisions of the Plan or of any Stock Right granted
under it shall be final unless otherwise determined by the Board.  The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem
best.  No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Stock Right granted under it.

 

 

 

 

(c)           Delegation of Authority to Grant
Awards to Officer.  Without limiting
the foregoing, the Board, in its discretion, may also delegate to a single
officer of the Company who is a member of the Board (to the extent consistent
with state law) all or part of the Board’s or Committee’s authority and duties
with respect to the granting of Stock Rights to individuals who are not subject
to the reporting and other provisions of Section 16 of the Exchange Act or
“covered employees” within the meaning of Section 162(m) of the Code,
subject to such limitations as the Board or the Committee deems appropriate,
including without limitation as to the amount of Stock Rights that may be
granted during the period of delegation, and guidelines as to the determination
of the exercise price of any Option, the purchase price of other Stock Rights
and the setting of vesting schedules or criteria.  Such officer (the “Delegated Officer”) shall
act as a one member committee of the Board, and shall in any event be subject
to the same limitations as are applicable to the Committee.  References to the Committee in this Plan
shall also include the Delegated Officer, but only to the extent consistent
with the authorities and duties delegated to the Delegated Officer by the
Board.  The Board may revoke or amend the
terms of a delegation at any time but such action shall not invalidate any
prior actions of the Delegated Officer that were consistent with the terms of
this Plan.

 

(d)           Committee Actions.  The Committee may select one of its members
as its chairman and shall hold meetings at such time and places as it may
determine.  Acts by a majority of the
Committee, acting at a meeting (whether held in person or by teleconference),
or acts reduced to or approved in writing by all of the members of the
Committee, shall be the valid acts of the Committee.  From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and thereafter
directly administer this Plan, subject to compliance with paragraph 2(a).

 

(e)           Grant of Stock Rights to Board
Members.  Stock Rights may be granted
to members of the Board, subject to compliance with Rule 16b-3 when
required by paragraph 2(a).  All grants
of Stock Rights to members of the Board shall in all respects be made in accordance
with the provisions of this Plan applicable to other eligible persons.

 

3.             Eligible
Employees and Others.

 

ISOs
may be granted to any employee of the Company or any parent or subsidiary of
the Company.  Those officers and
directors of the Company who are not employees of the Company or any parent or
subsidiary of the Company may not be granted ISOs under this Plan.  Non-Qualified Options, Awards and
authorizations to make Restricted Stock Purchases may be granted to any
employee, officer or director (whether or not also an employee) of or
consultant or advisor to the Company or any Related Corporation.  The Committee may take into consideration a
recipient’s individual circumstances in determining whether to grant a Stock
Right.  Granting a Stock Right to any
individual or entity shall neither entitle that individual or entity to, nor
disqualify him or her from, participation in any other grant of Stock Rights.

 

4.             Stock.

 

The
stock subject to Stock Rights shall be the authorized but unissued shares of
Common Stock of the Company (the “Common Stock”), or shares of Common Stock
reacquired by the Company in any manner. 
The aggregate number of shares of Common Stock which may be issued
pursuant to this Plan is 4,000,000, subject to adjustment as provided in
paragraph 13 or amendment as provided in Section 15.  Any such shares may be issued pursuant to the
exercise of Stock Rights, so long as the aggregate number of shares so issued
does not exceed the number of such shares authorized under this paragraph 4.

 

5.             Granting
of Stock Rights.

 

Stock
Rights may be granted under this Plan at any time on or after October 1,
2005 and prior to October 1, 2015. 
The date of grant of a Stock Right under this Plan will be the date
specified by the Committee at the time it grants the Stock Right or such date
that is specified in the instrument or agreement evidencing such Stock Right;
provided, however, that such date shall not be prior to the date on which the
Committee acts to approve the grant and
that with respect to an ISO grant such date shall not be earlier than the date
of commencement of employment of the employee granted the ISO.  The Committee shall have the right, with the
consent of the optionee, to convert an ISO granted under this Plan to a
Non-Qualified Option pursuant to paragraph 17.

 

6.             Minimum
Option Price; ISO Limitations.

 

(a)           Price for ISOs.  The exercise price per share specified in the
agreement relating to each ISO granted under this Plan shall not be less than
the fair market value per share of Common Stock on the date of such grant.  In the case of an ISO to be granted to an
employee owning stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, the price per
share specified in the agreement relating to such ISO shall not be less than
one hundred ten percent (110%) of the fair market value per share of Common
Stock on the date of grant.

 

 

 

(b)           $100,000 Annual Limitation on ISOs.  Each eligible employee may be granted ISOs
only to the extent that, in the aggregate under this Plan and all other
incentive stock option plans of the Company and any parent or subsidiary of the
Company, such ISOs do not become exercisable for the first time by such
employee during any calendar year in a manner which would entitle the employee
to purchase more than $100,000 in fair market value (determined at the time the
ISOs were granted) of Common Stock in that year.  Any Options granted to an employee in excess
of such amount will be granted as Non-Qualified Options.

 

(c)           Determination of Fair Market Value.  If, at the time an Option is granted under
the Plan, the Common Stock is publicly traded, “fair market value” shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such Option is granted and
shall mean (i) the average (on that date) of the high and low prices of
the Common Stock on the principal national securities exchange on which the
Common Stock is traded, if the Common Stock is then traded on a national
securities exchange; or (ii) the last reported sale price (on that date)
of the Common Stock on the NASDAQ National Market List, if the Common Stock is
not then traded on a national securities exchange; or (iii) the closing
bid price (or average of bid prices) last quoted (on that date) by an
established quotation service for over-the-counter securities, if the Common
Stock is not then traded on a national securities exchange and is not reported
on the NASDAQ National Market List. 
However, if the Common Stock is not publicly traded at the time an
Option is granted under the Plan, “fair market value” shall be deemed to be the
fair value of the Common Stock as determined by the Committee after taking into
consideration all factors in good faith it deems appropriate, including,
without limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm’s length, if any.

 

7.             Option
Duration.

 

Subject
to earlier termination as provided in paragraphs 9, 10, and 13(b), each Option
shall expire on the date specified by, or
shall have such duration as may be specified by, the Committee and set
forth in the original stock option agreement granting such Option, but not more
than ten years from the date of grant. 
Notwithstanding the foregoing, in the case of ISOs granted to an
employee owning stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, such ISOs shall
expire not more than five years from the date of grant.  Non-Qualified Options shall expire on the
date specified in the agreement granting such Non-Qualified Options, subject to
extension as determined by the Committee. 
ISOs, or any part thereof, that have been converted into Non-Qualified
Options may be extended as provided in paragraph 17.

 

8.             Exercise
of Options.

 

Subject
to the provisions of paragraphs 9 through 13, each Option granted under the
Plan shall be exercisable as follows:

 

(a)           Vesting.  As set forth in paragraph 2(b), and subject
to paragraphs 9 and 10 with respect to ISOs, the Committee shall determine the
time or times when or what conditions must be satisfied before each Option
shall become exercisable and the duration of the exercise period. The Committee
may also specify such other conditions precedent as it deems appropriate to the
exercise of an Option.

 

(b)           Full Vesting of Installments.  Once an installment becomes exercisable it
shall remain exercisable until expiration or termination of the Option, unless otherwise
specified by the Committee.

 

(c)           Partial Exercise.  Each Option or installment may be exercised
at any time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable, provided that
the Committee may specify a certain minimum number or percentage of the shares
issuable upon exercise of any Option that must be purchased upon any exercise.

 

(d)           Acceleration of Vesting.  The Committee shall have the right to
accelerate the date of exercise of any installment of any Option, despite the
fact that such acceleration may (i) cause the application of Sections 280G
and 4999 of the Code if a Change in
Control Event, as defined below in paragraph 13(b), occurs, or (ii) disqualify
all or part of the Option as an ISO.

 

9.             Termination
of Employment.

 

Subject
to the provisions of paragraph 13(b), if an ISO optionee ceases to be employed
by the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his or her
ISOs shall become exercisable following the date of such cessation of
employment, and his or her ISOs shall terminate after the passage of ninety
(90) days from the date of termination of his or her  employment, but in no event later than on
their specified expiration dates, except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified
Options pursuant to paragraph 17. 
Nothing in this Plan shall be deemed to give any grantee of any Stock 

 

 

 

Right
the right to be retained in employment or other service by the Company or any
Related Corporation for any period of time.

 

Notwithstanding
anything contained in this paragraph 9 to the contrary, the Board or Committee
may establish rules in particular stock option agreements with respect to
Misconduct, as defined below, committed by a grantee of a Stock Right.

 

10.          Death;
Disability.

 

(a)           Death.  If an ISO optionee ceases to be employed by
the Company and all Related Corporations by reason of his or her death, or if
the employee dies within the thirty (30) day period after the employee ceases
to be employed by the Company and all Related Corporations, any ISO of his or
hers may be exercised, to the extent of the number of shares with respect to
which he or she could have exercised it on the date of his or her death, by his
or her estate, personal representative or beneficiary who has acquired the ISO
by will or by the laws of descent and distribution, at any time prior to the earlier
of the specified expiration date of the ISO or one (1) year from the date
of such optionee’s death.

 

(b)           Disability.  If an ISO optionee ceases to be employed by
the Company and all Related Corporations by reason of his or her disability, he
or she shall have the right to exercise any ISO held by the optionee on the
date of termination of employment, to the extent of the number of shares with
respect to which he or she could have exercised it on that date, at any time
prior to the earlier of the specified expiration date of the ISO or one (1) year
from the date of the termination of the optionee’s employment.  For the purposes of the Plan, the term “disability”
shall mean “permanent and total disability” as defined in Section 22(e)(3) of
the Code or successor statute.

 

11.          Assignability.

 

Except
for Non-Qualified Options which may be transferred for estate planning purposes
to the extent provided in the instrument or agreement granting such
Non-Qualified Options, no Stock Right shall be assignable or transferable by
the grantee except by will or by the laws of descent and distribution, and
during the lifetime of the grantee each Stock Right shall be exercisable only
by the optionee.  No Stock Right, and no
right to exercise any portion thereof, shall be subject to execution,
attachment, or similar process, assignment, or any other alienation or
hypothecation.  Upon any attempt so to
transfer, assign, pledge, hypothecate, or otherwise dispose of any Stock Right,
or of any right or privilege conferred thereby, contrary to the provisions
thereof or hereof or upon the levy of any attachment or similar process upon
any Stock Right, right or privilege, such Stock Right and such rights and
privileges shall immediately become null and void.  The foregoing shall not be construed to
restrict the ability to assign or transfer shares of Common Stock issued upon
the exercise or award of a Stock Right to the extent that the instrument or
agreement granting such Stock Right permits such assignment or transfer.

 

12.          Terms and
Conditions of Stock Rights.

 

Stock
Rights shall be evidenced by instruments (which need not be identical) in such
forms as the Committee may from time to time approve.  Such instruments shall conform to the terms
and conditions set forth in paragraphs 6 through 11 hereof to the extent
applicable and may contain such other provisions as the Committee deems
advisable which are not inconsistent with this Plan.  Without limiting the foregoing, such
provisions may include transfer restrictions, rights of refusal, vesting
provisions, repurchase rights, lock-up provisions and drag-along rights with
respect to shares of Common Stock issuable upon exercise of Stock Rights, and
such other restrictions applicable to shares of Common Stock as the Committee
may deem appropriate.  In granting any
Non-Qualified Option, the Committee may specify that such Non-Qualified Option
shall be subject to the restrictions set forth herein with respect to ISOs, or
to such other termination, cancellation or other provisions as the Committee
may determine.  The Committee may from
time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments.  The proper officers of the
Company are authorized and directed to take any and all action necessary or
advisable from time to time to carry out the terms of such instruments.

 

13.          Adjustments.

 

Upon
the occurrence of any of the following events, an optionee’s rights with
respect to Options granted to the optionee hereunder shall be adjusted as
hereinafter provided, unless otherwise specifically provided in the written
agreement between the optionee and the Company relating to such Option:

 

(a)           Stock Dividends and Stock Splits.  If the shares of Common Stock subject to
Options granted under this Plan shall be subdivided or combined into a greater
or smaller number of shares or if the Company shall issue any shares of Common
Stock as a stock dividend on its outstanding Common Stock, the number of shares
of Common Stock deliverable upon the exercise of Options shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall be
made in the purchase price per share to reflect such subdivision, combination
or stock dividend.

 

 

(b)           Acquisitions and Change in Control
Events.  If the Company is to be
subject to or engage in (x) a merger (or reverse merger), consolidation,
or other similar event affecting the Company in which outstanding shares of
Common Stock are exchanged for cash, securities, and/or other property of
another entity, or (y) the sale or lease of all or substantially all of
the Company’s assets to another person or entity (any such event in such
clauses (x) and (y) an “Acquisition”), the Committee or the Board
shall (i) provide that the entity that survives the Acquisition or
purchases or leases the Company’s assets in the Acquisition or any affiliate of
such entity (the “Surviving Entity”) shall assume the Options granted pursuant
to this Plan or substitute options to purchase securities of the Surviving
Entity (or an affiliate thereof) on an equitable basis, (ii) upon written
notice to the optionees, provide that all Options will become exercisable in
full subject to the consummation of the Acquisition as of a specified time
prior to the Acquisition and will terminate immediately prior to the
consummation of such Acquisition or within a specified period of time after the
Acquisition, and will not be exercisable after such termination, or (iii) in
the event of an Acquisition under the terms of which holders of Common Stock
will receive upon consummation thereof an amount of cash, securities and/or
other property for each share of Common Stock surrendered pursuant to such
Acquisition (the amount of cash plus the fair market value reasonably
determined by the Committee of any securities and/or other property received by
holders of Common Stock in exchange for each share of Common Stock shall be the
“Acquisition Price”), provide that all outstanding Options shall terminate upon
consummation of such Acquisition and that each optionee shall receive, in
exchange for all vested shares of Common Stock under such Option on the date of
the Acquisition, a payment in cash or in kind having a fair market value
reasonably determined by the Committee or the board of directors of the
Surviving Entity equal to the amount (if any) by which (A) the Acquisition
Price multiplied by the number of such vested shares of Common Stock exceeds (B) the
aggregate exercise price of such shares. 
If the Committee chooses under clause (iii) in the preceding
sentence that all outstanding Options shall terminate upon consummation of an
Acquisition and that each optionee shall receive a payment for the optionee’s
vested shares, with respect to any optionee whose stock option agreement
specifies that no shares are vested until the first anniversary of the
commencement of the optionee’s employment, if the consummation of the
Acquisition occurs prior to such first anniversary, then the number of vested shares
under such Option shall be deemed to be equal to the product of (x) the
number of shares of stock subject to the Option that otherwise would vest on
the first anniversary and (y) the quotient obtained by dividing the number
of days the optionee was employed by the Company, by 365.  For purposes hereof, an Option shall be
considered to be assumed or substituted “on an equitable basis” (without
limiting other ways in which an Option may be assumed or substituted on an
equitable basis hereunder) if, following consummation of the Acquisition, the
assumed or substituted option confers the right to purchase, for each share of
Common Stock subject to the Option immediately prior to the consummation of the
Acquisition, the consideration received as a result of the Acquisition by the
holders of Common Stock for each share of Common Stock held immediately prior
to the consummation of the Acquisition (and if holders of Common Stock were
offered a choice of consideration, the type of consideration chosen by the holders
of a majority of the outstanding shares of Common Stock); provided, however,
that if the consideration received as a result of the Acquisition Event is not
solely common stock of the Surviving Entity (or an affiliate thereof), the
Company may, with the consent of the Surviving Entity, provide for the
consideration to be received upon the exercise of each share of Common Stock
subject to the Option to consist solely of common stock of the Surviving Entity
(or an affiliate thereof) having a fair market value as reasonably determined
by the Committee or the board of directors of the Surviving Entity equal to the
Acquisition Price.

 

If
a Change in Control Event, as defined below, occurs that either (a) does
not also constitute an Acquisition or (b) does constitute an Acquisition
and clause (i) of the preceding paragraph is elected, and the optionee’s
employment with the Company, the Related Corporation or the Surviving Entity is
terminated on or prior to the six month anniversary of the date of the consummation
of such Change in Control Event either by the optionee for Good Reason, as
defined below, or by the Company, the Related Corporation or the Surviving
Entity for reason(s) other than Misconduct, as defined below, then all of
the Options, or the equivalent to such Options in the form of assumed or
substituted options granted in the Surviving Entity, that but for such
termination and such Change in Control Event would vest on or prior to the next
following annual anniversary of the Grant Date thereafter shall become
immediately exercisable in full and any repurchase provisions applicable to
Common Stock issued upon exercise thereof shall lapse, provided,
however, that in particular stock option agreements issued pursuant to this
Plan, the Board may provide that the Options or assumed or substituted options
covered by such agreement shall become immediately exercisable upon the
consummation of such Change in Control Event without regard to termination of
employment, and that any repurchase provisions applicable to Common Stock
issued upon exercise thereof shall lapse.

 

A
“Change in Control Event” shall occur upon the occurrence of (i) an
Acquisition after which holders of the Common Stock before the Acquisition do
not beneficially own, directly or indirectly, at least 50% of the combined
voting power of the then-outstanding securities of the Surviving Entity
entitled to vote generally in the election of directors immediately after the
consummation of the Acquisition, (ii) a single transaction or a series of
transactions pursuant to which any person (within the meaning of Section 13(d) or
Section 14(d)(2) of the Securities Exchange Act of 1934), excluding
any employee benefit plan sponsored by the Company and any affiliates of the
Company prior to such transaction or transactions, acquires the beneficial
ownership, directly or indirectly, of at least 50% of the combined voting power
of the then-outstanding securities of the Company or the Surviving Entity, as
the case may be, entitled to vote generally in the election of directors
immediately after the consummation of the transaction or transactions, except
that any acquisitions of securities directly from the Company shall be
disregarded for purposes of this clause (ii), or (iii) the liquidation or
dissolution of the Company.

 

 

If,
in connection with a Change in Control Event, a tax under Section 4999 of
the Code would be imposed on the grantee of any Stock Right (after taking into
account the exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of
the Code), and the grantee, on an after-tax basis (taking into account such
tax) would receive greater net compensation by not having any or all of such
Stock Rights accelerate, then at the discretion of the Committee, the number of
Stock Rights of any such grantee which shall become immediately exercisable,
realizable or vested as provided in this Section 13 (or such provision of
any other agreement or instrument governing such Stock Right that provides for
such an acceleration in connection with a Change in Control Event) may be
reduced (or delayed), to the extent necessary to maximize such net
compensation.  For purposes of
determining “net compensation” under this paragraph, the amount of compensation
considered to be realized by the grantee of any Stock Right as a result of the
acceleration of the vesting of such Stock Right shall be determined in
accordance with the principles set forth in the proposed Treasury Regulations
under Section 280G of the Code (or any final or temporary Treasury
Regulations replacing such proposed Treasury Regulations) for determining the
amount of any “parachute payment” resulting from the acceleration of vesting of
restricted stock, a stock option or any other unvested stock right.

 

“Misconduct”
shall mean any one or more of the following: (a) the commission of an act
of embezzlement, fraud, dishonesty or deliberate disregard of the rules or
policies of the Company or any Related Corporation which results in material
loss, damage or injury to the Company or any Related Corporation, whether
directly or indirectly; (b) the unauthorized disclosure of any trade
secret or confidential information of the Company or any Related Corporation; (c) the
breach by the optionee of any agreement with the Company or any Related
Corporation, including without limitation any noncompetition agreement between
the optionee and the Company or any Related Corporation; or (d) the
willful failure by the optionee to perform his or her material responsibilities
to the Company or any Related Corporation.

 

“Good
Reason” shall mean (i) any material diminution in the optionee’s title,
authority, or responsibilities from and after such Acquisition or Change in
Control Event, as the case may be, (ii) any reduction in the annual cash
compensation payable to the optionee from and after such Acquisition or Change
in Control Event, as the case may be or (iii) a change of more than 100
miles in the optionee’s permanent workplace without the optionee’s consent.

 

(c)           Recapitalization or Reorganization.  If a recapitalization or reorganization of
the Company (other than a transaction described in subparagraph (b) above)
occurs, pursuant to which securities of the Company or another entity are
issued with respect to the outstanding shares of Common Stock, an optionee,
upon exercising an Option, shall be entitled to receive for the purchase price
paid upon such exercise the securities he or she would have received if he or
she had exercised his or her Option prior to such recapitalization or
reorganization and had been the owner of the Common Stock receivable upon such
exercise at such time.

 

(d)           Modification of ISOs.  Notwithstanding the foregoing, any
adjustments made pursuant to the foregoing subparagraphs (a), (b) or (c) with
respect to ISOs shall be made only after the Committee, after consulting with
counsel for the Company, determines whether such adjustments would constitute a
“modification” of such ISOs (as that term is defined in Section 424 of the
Code or any successor thereto) or would cause any adverse tax consequences for
the holders of such ISOs.  If the
Committee determines that such adjustments made with respect to ISOs would
constitute a modification of such ISOs, it may refrain from making such
adjustments.

 

(e)           Issuances of Securities and
Non-Stock Dividends.  Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, of the
Company shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options.  No adjustments shall be made for dividends
paid in cash or in property other than securities of the Company (and, in the
case of securities of the Company, such adjustments shall be made pursuant to
the foregoing subparagraph (a)).

 

(f)            Fractional Shares.  No fractional shares shall be issued under
this Plan, and the optionee shall receive from the Company cash in lieu of such
fractional shares.

 

(g)           Adjustments.  Upon the happening of any of the foregoing
events described in subparagraphs (a), (b) or (c) above, the class
and aggregate number of shares set forth in paragraph 4 hereof that are subject
to Stock Rights which previously have been or subsequently may be granted under
this Plan shall also be appropriately adjusted to reflect the events described
in such subparagraphs.  The Committee or
the board of directors of the Surviving
Entity  (the “ Successor Board”),
as applicable, shall determine the specific adjustments to be made under this
paragraph 13 and its determination shall be conclusive.

 

If
any person or entity owning Common Stock obtained by exercise of a Stock Right
made hereunder receives shares or securities or cash in connection with a
corporate transaction described in subparagraphs (a), (b) or (c) above
as a result of owning such Common Stock, except as otherwise provided in
subparagraph (b), such shares or securities or cash shall be subject to all of
the conditions and restrictions applicable to the Common Stock with respect to
which such shares or securities or cash were issued, unless otherwise
determined by the Committee or the Successor Board.

 

 

14.          Means of
Exercising Options.

 

An
Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal office address.  Such notice shall identify the Option being
exercised and specify the number of shares as to which such Option is being
exercised, accompanied by full payment of the purchase price therefor either (a) in
United States dollars in cash or by check, or (b) at the discretion of the
Committee, by delivery of an irrevocable and unconditional undertaking,
satisfactory in form and substance to the Company, by a creditworthy broker to
deliver promptly to the Company sufficient funds to pay the exercise price, or
delivery to the Company of a copy of irrevocable and unconditional
instructions, satisfactory in form and substance to the Company, to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price, or (c) at the discretion of the
Committee, by delivery of the grantee’s personal recourse note bearing interest
payable not less than annually at no less than 100% of the applicable Federal
rate, as defined in Section 1274(d) of the Code, or (d) at the
discretion of the Committee, by any combination of (a), (b) and (c) above.  The holder of an Option shall not have the
rights of a shareholder with respect to the shares covered by his or her Option
until the date of issuance of a stock certificate to the optionee for the
shares subject to the Option.  Except as
expressly provided above in paragraph 13 with respect to changes in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar rights for which the record date is before the date such stock
certificate is issued.

 

15.          Term and
Amendment of Plan.

 

This
Plan shall expire on September 30, 2015 (except as to Options outstanding
on that date).  Subject to the provisions
of paragraph 5 above, Options may be granted under this Plan prior to the date
of stockholder approval of this Plan. 
The Board may terminate or amend this Plan in any respect at any time,
except that (a) the total number of shares that may be issued under this
Plan may not be increased without stockholder approval (except by adjustment
pursuant to paragraph 13); (b) the provisions of paragraph 3 regarding
eligibility for grants of ISOs may not be modified; (c) the provisions of
paragraph 6(b) regarding the exercise price at which shares may be offered
pursuant to ISOs may not be modified (except by adjustment pursuant to
paragraph 13); and (d) the expiration date of this Plan may not be
extended without the approval of the
stockholders obtained within 12 months before or after the Board adopts a resolution
authorizing any of the foregoing actions.

 

16.          Section 162(m).

 

Notwithstanding
anything in this Plan to the contrary, no Stock Right shall become exercisable,
vested or realizable if such Stock Right is granted to an employee that is a “covered
employee” as defined in Section 162(m) of the Code and the Committee
has determined that such Stock Right should be structured so that it is not “applicable
employee remuneration” under such Section 162(m) unless and until the
terms of this Plan, including any amendment hereto, have been approved by the
Company’s stockholders in the manner and to the extent required under such Section 162(m).

 

17.          Amendment
of Stock Rights.

 

The
Board or Committee may amend, modify or terminate any outstanding Stock Rights
including, but not limited to, substituting therefor another Stock Right of the
same or a different type, changing the date of exercise or realization, and
converting an ISO to a Non-Qualified Option, provided,  that, except as otherwise provided in paragraphs 9 or 10, the
grantee’s consent to such action shall be required unless the Board or
Committee determines that the action, taking into account any related action,
would not materially and adversely affect the grantee.

 

18.          Application
of Funds.

 

The
proceeds received by the Company from the sale of shares pursuant to Stock
Rights issued or granted under this Plan shall be used for general corporate
purposes.

 

19.          Governmental
Regulation.

 

The
Company’s obligation to sell and deliver shares of the Common Stock under this
Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such shares.

 

20.          Withholding
of Additional Income Taxes.

 

Upon
the exercise of a Non-Qualified Option, the making of a Restricted Purchase of
Common Stock for less than its fair market value, the granting of an Award, the
making of a Disqualifying Disposition (as defined in paragraph 21) or the
vesting of restricted Common Stock acquired on the exercise of a Stock Right
hereunder, the Company, in accordance with Section 3402(a) of the
Code, may require the optionee or purchaser to pay additional withholding taxes
in respect of the amount that 

 

 

is
considered compensation includible in such person’s gross income.  The Committee in its discretion may condition
(i) the exercise of an Option, (ii) the making of a Restricted Stock
Purchase of Common Stock for less than its fair market value, or (iii) the
granting of an award, or (iv) the vesting of restricted Common Stock
acquired by exercising a Stock Right, on the grantee’s payment of such
additional withholding taxes.

 

21.          Notice to
Company of Disqualifying Disposition.

 

Each
employee who receives an ISO must agree to notify the Company in writing
immediately after the employee makes a Disqualifying Disposition of any Common
Stock acquired pursuant to the exercise of an ISO.  A “Disqualifying Disposition” is any
disposition (including any sale) of such Common Stock before the later of

 

(a)           two years after the date the employee
was granted the ISO, or

 

(b)           one year after the date the employee
acquired Common Stock by exercising the ISO. 
If the employee has died before such stock is sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur
thereafter.

 

22.          Governing
Law; Construction.

 

The
validity and construction of this Plan and the instruments evidencing Stock
Rights shall be governed by the laws of the State of Delaware.

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