Document:

Exhibit 10.6 - Placement Agent Agreement

    Exhibit
      10.6

    
 

    July
      25,
      2006

     

    Board
      of
      Directors

    Carrizo
      Oil & Gas, Inc.

    1000
      Louisiana, Suite 1500

    Houston,
      TX 77002

    Attention: Mr.
      Paul
      F. Boling

    Chief
      Financial Officer

     

    
      	 	
              Re:

            	
              Engagement
                of Johnson Rice & Company L.L.C. as Managing Placement
                

              Agent
                of up to 1,350,000 shares of Common
                Stock

            

    

     

    Dear
      Sir:

     

    1.  Engagement
      of Placement Agent.
      Carrizo
      Oil & Gas, Inc., a Texas corporation (the “Company”), proposes to make a
      private placement (the “Offering”) of up to 1,350,000 shares of the Company’s
      common stock (“Common Stock”), par value $0.01 per share (individually, a
“Security”, and collectively, the “Securities”), pursuant to the exemptions (the
“Exemptions”) from registration provided in the Securities Act of 1933, as
      amended (the “Securities Act”). By entering into this Placement Agent Agreement
      (this “Agreement”), the Company engages Johnson Rice & Company L.L.C.
      (the “Agent”) as its managing “Placement Agent,” and as a representative of such
      other participating broker/dealers as from time to time are mutually agreed
      upon
      by the parties hereto and listed on Exhibit
      C
      attached
      hereto (collectively, the “Placement Agents”), as from time to time updated, and
      provided that each such other broker/dealers enter into an agreement with the
      Agent in the form attached hereto as Exhibit
      E
      (the
“Agreement Among Placement Agents”) agreeing upon the allocation to the
      Placement Agents, cross-indemnities and such other agreements typically found
      in
      agreements among multiple placement agents, in connection with the Offering
      through July 27, 2006, at which time this Agreement may terminate in accordance
      with Section 11 hereof. By entering into this Agreement, the Agent acting on
      behalf of itself and the other Placement Agents, severally, accepts such
      engagement and agrees, as more fully described in Section 4(a) hereof, to use
      its reasonable best efforts to place up to 1,350,000 shares of Securities solely
      with (i) institutions
      that are “accredited investors” within the meaning of Rule 501(a)(1), (2), (3),
      (7) or (8) of Regulation D under the Securities Act that (A) are current
      security holders of the Company or have been security holders of the Company
      within the 12 months prior to the date the Agent or the Company first contacted
      such prospective investor regarding the Offering (but not, in either case,
      someone who only became a securityholder within 30 days of such date) and (B)
      have
      a
      prior substantive relationship with either the Company or the Agent prior to
      the
      date the Agent
      or the
      Company first contacted such investor regarding the Offering;
      and
      (ii) “qualified institutional buyers” within the meaning of Rule 144A under the
      Securities Act that (A) did not attend, participate in, listen to or view (in
      each case, whether in person or via webcast, whether live or via replay or
      other
      delayed transmission or otherwise) any investment conferences at which the
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Company
      made presentations (including the viewing or listening to the Company’s
      presentation for such conference) within the 30 days prior to the date on which
      such prospective investor was first contacted by the Company or the Agent in
      connection with the proposed purchase of Shares in the Offering and (B) have
      a
      prior substantive relationship with either the Company or the Agent prior to
      the
      date the Agent
      or the
      Company first contacted such prospective investor regarding the Offering or
      any
      such conference or presentation; in each case including those institutions
      listed on Exhibit
      D
      hereto
      and any other such institutions approved by the Company (the persons described
      in this sentence being referred to herein as the “Qualified
      Investors”).

     

    The
      offering price shall be such price as is mutually agreeable to the Company
      and
      the Agent. The Company shall prepare a private placement memorandum, a
      subscription and registration rights agreement (the “Subscription Agreement”)
      and, if required, any other documents which may be necessary to comply with
      the
      Exemptions, each of which shall be subject to the Agent’s reasonable approval
      (the “Offering Documents”). The Agent hereby acknowledges and agrees that the
      Company, in the Company’s sole discretion, may (1) reject any subscription for
      Securities presented to the Company by the Agent, (2) withdraw the offering
      of
      the Securities at any time, and (3) allot to any prospective investor less
      than
      the full amount of Securities sought by it. The Company agrees to enter into
      a
      Subscription Agreement with each of the purchasers of the Securities
      (individually, an “Investor”, and collectively, the “Investors”) substantially
      on the following terms: (1) the Company will use its commercially reasonable
      efforts to file with the Securities and Exchange Commission (the “SEC”), within
      thirty (30) days following the closing of the Offering, a registration statement
      covering the resale of the Securities, and will use its commercially reasonable
      best efforts to have such registration statement become effective with the
      SEC
      as soon as practicable thereafter (with such initial and subsequent 30-day
      periods being extended by such additional number of days as are attributable
      to
      any delay caused by any act or failure to act by any of the Investors or their
      counsel); (2) if the Company fails to file such registration statement within
      thirty (30) days following the closing of the Offering, it will be required
      to
      pay liquidated damages to each Investor in the Offering equal to two percent
      (2%) of such Investor’s purchase price for Securities, and an additional two
      percent (2%) of such Investor’s purchase price for Securities for each
      additional 30-day period during which such registration statement is not filed
      (with such initial and subsequent 30-day periods being extended by such
      additional number of days as are attributable to any delay caused by any act
      or
      failure to act by any of the Investors or their counsel); and (3) if such
      registration statement has not been declared effective under the Securities
      Act
      by the SEC within 120 days following the filing date of such registration
      statement, it will be required to pay liquidated damages to each Investor in
      the
      Offering equal to two percent (2%) of such Investor’s purchase price for
      Securities, and an additional two percent (2%) of such Investor’s purchase price
      for Securities for each additional 30-day period during which such registration
      statement is not declared effective by the SEC (with such 120-day period or
      30-day periods being extended by such additional number of days as are
      attributable to any delay caused by any act or failure to act by any of the
      Investors or their counsel).

     

    The
      persons listed on Exhibit
      A
      attached
      hereto shall have entered into lock-up agreements substantially in the form
      attached hereto as Exhibit
      B,
      and
      shall have delivered the same to the Agent, on or prior to the closing of the
      Offering.

     

    
      
        
          Initial
            Here (Company)

           

          _________________

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.  Fees.

     

    (a)  In
      consideration of the Agent’s performance of the services described in Section 1
      hereof, the Company agrees to pay to the Placement Agents a fee equal to four
      percent (4.0%) of
      the
      gross proceeds of the Offering sold by the Placement Agents (“Commissions”), of
      which amount no less than thirty percent (30%) will be payable to the Agent
      and
      not more than seventy percent (70%) will be payable to the other Placement
      Agents as a group, if any, listed on Exhibit
      C
      attached
      hereto in accordance with the percentages set out in Exhibit
      C.
      The
      Company shall pay to the Placement Agents all Commissions in full upon the
      closing of the Offering. 

     

    (b)  Regardless
      of whether or not the Offering is completed or this Agreement is terminated,
      the
      Company shall pay all of its expenses in connection with the Offering and shall
      pay the Agent all reasonable out-of-pocket expenses incurred by the Agent under
      this Agreement within five (5) business days after being demanded by the Agent
      in writing with supporting documentation; provided, however, that under no
      circumstances shall the Company be obligated to pay the Agent an amount in
      excess of $35,000 (including attorneys’ fees) under this subsection. In the
      event that the Offering is consummated, then an estimate of expenses shall
      be
      paid to the Agent at the closing with the remainder to be remitted upon demand
      as set forth above.

     

    3.  Representations
      and Warranties of the Company.
      The
      Company represents and warrants to and agrees with the Agent that:

     

    (a)  The
      Offering Documents, and any amendments or supplements thereto (including the
      documents that are incorporated therein by reference), will conform in all
      material respects to any applicable requirements of the Securities Act and
      the
      Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any
      applicable state securities laws, and the Offering Documents, and any amendments
      or supplements thereto (including the documents that are incorporated therein
      by
      reference), will not include any untrue statement of a material fact or omit
      to
      state any material fact required to be stated therein or necessary to make
      the
      statements therein in light of the circumstances under which they were made
      not
      misleading, except that this representation and warranty will not apply to
      statements or omissions made in reliance upon and in conformity with information
      furnished by the Agent in writing to the Company in connection with the Offering
      Documents, or any amendment or supplement thereto.

     

    (b)  The
      Company’s counsel will review the applicable registration requirements of the
      Securities Act and all applicable state securities laws and if the Offering
      is
      consummated reach a conclusion that the Exemptions are available to the Company
      in this Offering and that the Company complies with the Exemptions. The Company
      complies with the Exemptions.

     

    (c)  All
      potential investors will be given reasonable access to material information
      regarding the Company and reasonable opportunity to ask questions of the
      Company’s executive officers. Notwithstanding the foregoing, the Company shall
      not be required to disclose to the Agent or any potential investors any material
      nonpublic information or information regarding the Company’s trade secrets or
      other proprietary information.

     

    
      
        Initial
          Here (Company) 
           

          _________________

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)  The
      Company makes, with respect to itself and this Agreement, all of the
      representations made by it in Section 6 of the Subscription Agreement with
      respect to itself and that agreement.

     

    4.  Representations
      and Warranties of Placement Agents.
      The
      Agent does, and each other Placement Agent will upon its execution and delivery
      of the Agreement Among Placement Agents, represent and warrant to and agree
      with
      the Company, severally (and not jointly or jointly and severally),
      that:

     

    (a)  Such
      Placement Agent is familiar or will make itself familiar with all applicable
      federal and state securities laws and the regulations thereunder which restrict
      the public sale and distribution of securities without a registration statement,
      qualification or exemption being in effect with respect thereto. In exercising
      its duties under this Agreement, such Placement Agent will not cause the Company
      to be engaged in a public offering, or otherwise take any action or omit to
      take
      any action such that the Offering fails to be entitled to the
      Exemptions.

     

    Such
      Placement Agent will offer Securities only to those offerees who such Placement
      Agent reasonably believes are Qualified Investors or are otherwise approved
      in
      advance in writing by the Company and will provide certification as to the
      foregoing upon request by the Company, all in the manner described in the
      Subscription Agreement. Such Placement Agent will not disclose any material
      nonpublic information regarding the Company to any offeree, including without
      limitation, the fact that the Company is considering the private placement
      of
      the Securities, without first obtaining an agreement, oral or written, from
      such
      offeree that such information is to be kept confidential and used only in
      connection with the Offering.

     

    Such
      Placement Agent shall (i) deliver to each prospective investor that agrees
      to
      the foregoing, a current copy of the Offering Documents, (ii) maintain and
      furnish to the Company a list of all prospective investors contacted by such
      Placement Agent with regard to the Offering, including, if requested by the
      Company, the addresses of such prospective investors and the name and telephone
      number of a contact person with respect thereto, and (iii) present to the
      Company all written offers for the purchase of Securities received by such
      Placement Agent from any such prospective investors.

     

    (b)  Such
      Placement Agent shall comply with all applicable federal, state and other
      regulatory agencies’ securities laws, regulations and rules applicable to the
      Offering, including, without limitation, those restricting the solicitation
      of
      investors and those requiring the delivery to investors of certain information
      about the Company and the Offering.

     

    (c)  Such
      Placement Agent shall comply with all applicable laws and the rules of the
      National Association of Securities Dealers, Inc. in recommending to a customer
      the purchase, sale or exchange of the Securities.

     

    (d)  Such
      Placement Agent shall not give to any prospective investor any information,
      sales or advertising material or make any representation in connection with
      the
      Offering other than as contained in the Offering Documents or as otherwise
      agreed to by the Company which representation includes any untrue statement
      of
      any material fact or omission to state a material 

     

    
      
        Initial
          Here (Company) 
           

          _________________

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    fact
      necessary to make the representation, in light of the circumstances under which
      they were made, not misleading, and will distribute such permitted materials
      in
      accordance with the legends thereon and applicable securities laws.

     

    5.  Covenants
      of the Company.
      The
      Company agrees with the Agent that until this Agreement terminates pursuant
      to
      Section 11 hereof:

     

    (a)  The
      Company will advise the Agent promptly and consult with the Agent regarding
      the
      drafting of the Offering Documents (but not including documents already filed
      or
      required to be filed, subsequent to the execution of this Agreement, with the
      SEC in accordance with Section 12, Section 14 or Section 15 of the Exchange
      Act)
      and any amendments or supplements thereto and all related documents, including
      Subscription Agreements, confidential investor questionnaires, an opinion of
      counsel to the Company and other documents associated with the Offering. The
      opinion will be addressed to the Placement Agents and will be substantially
      in
      the form attached hereto as Exhibit
      F.
      

     

    (b)  The
      Company will not distribute any Offering Documents or amendments or supplements
      thereto, that name the Agent as a Placement Agent to any potential investor
      without the prior written consent of the Agent.

     

    (c)  The
      Company will furnish to the Agent copies of all Offering Documents in such
      quantities as the Agent may reasonably request.

     

    (d)  If
      any
      event occurs following the Company’s agreement that marketing efforts may
      commence and prior to the closing of the Offering as a result of which any
      Offering Documents, as then amended or supplemented (including the documents
      that are incorporated therein by reference), would include an untrue statement
      of a material fact, or omit to state any material fact necessary to make the
      statements therein, in the light of the circumstances under which they were
      made, not misleading, the Company will promptly prepare (and file with the
      SEC
      or any state securities commission, if so required) any amendment or supplement
      which will correct such statement or omission or an amendment or supplement
      which will effect such compliance and will supply such amended or supplemented
      Offering Documents to the Agent, in each case as soon as available and in such
      quantities as the Agent may reasonably request.

     

    (e)  During
      the period from the date of this Agreement to the completion of the Offering,
      an
      officer of the Company shall promptly notify an officer of the Agent of material
      events which would necessitate modification of any Offering Documents or any
      amendments or supplements thereto and shall be reasonably responsive to the
      Agent’s inquiries about the Company’s ongoing operations as they relate to the
      Offering and the Offering Documents or any amendments or supplements thereto.
      The Company shall permit the Agent to make such investigations of the business,
      properties and financial and legal conditions of the Company and its
      subsidiaries as the Agent may reasonably request provided such investigations
      shall remain confidential. No such investigation by the Agent, if made, shall
      affect the representations and warranties of the Company in Section 3
      hereof.

     

    
      
        
          Initial
            Here (Company) 
             

            _________________

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f)  Except
      as
      otherwise agreed to by the Company, as is required by law (including applicable
      securities laws) or as is necessary to complete its engagement hereunder, the
      Agent will keep confidential and use solely in the performance of its services
      hereunder all information which is supplied by the Company and which has not
      previously entered the public domain, and will not use any such information
      for
      its own benefit except in connection with the matters undertaken pursuant to
      the
      terms of this engagement. At the termination of this Agreement, upon the request
      of the Company, the Agent shall return all information and copies thereof
      furnished by the Company, other than materials which the Agent’s counsel advises
      it to retain to evidence its due diligence in connection with the performance
      of
      its services.

     

    6.  No
      Liability; Indemnification.

     

    (a)  Neither
      the Agent or any other Placement Agent, nor any of their respective officers,
      directors, employees, attorneys, agents, or representatives, or any person
      controlling the Agent or any other Placement Agent within the meaning of federal
      and state securities laws (“controlling persons”), will be liable to the Company
      for any claims, damages, expenses, losses or liabilities of any kind or nature
      (“Losses”) related to, arising out of, or in connection with their engagement
      hereunder except to the extent a court having jurisdiction shall have determined
      by a final nonappealable judgment that such Loss resulted from information
      furnished by or on behalf of that Placement Agent in writing specifically for
      use in the Offering Documents or the gross negligence or willful misconduct
      of
      such person, in which event the person or persons furnishing such information
      or
      so determined to have committed gross negligence or willful misconduct shall
      not
      be released by this paragraph 6(a).

     

    (b)  The
      Company shall (1) indemnify and hold harmless the Agent, the other Placement
      Agents and the respective directors, officers, agents, employees and controlling
      persons of the Agent and such other Placement Agents (collectively, the “Agent
      Indemnified Persons”) from and against any and all Losses of any kind or nature
      (including reasonable attorneys’ fees) as incurred, to which any Agent
      Indemnified Person may become subject, to the extent such Losses are related
      to,
      arise out of, or arise in connection with, the rendering of services by the
      Agent or such other Placement Agents hereunder, including, without limitation,
      (i) any Action (as defined below) or Loss related to, arising out of, or arising
      in connection with any violation of the registration requirements under the
      Securities Act or any state or foreign securities law in connection with the
      offering contemplated by this Agreement, except that a Placement Agent and
      its
      directors, officers, agents, employees and controlling persons shall not be
      indemnified against a registration violation caused by it or them, (ii) any
      Action or Loss related to, arising out of, or arising in connection with any
      breach of this Agreement by the Company and (iii) any Action or Loss related
      to,
      arising out of, or arising in connection with any untrue statement or alleged
      untrue statement of any material fact contained in the Offering Documents,
      or
      any amendment or supplement thereto (including any document incorporated therein
      by reference), or related to or arising out of the omission or alleged omission
      to state therein a material fact necessary to make the statements therein not
      misleading; provided, however, that in the case of this clause (iii) the Company
      shall not be liable to a particular Placement Agent if and to the extent that
      the untrue statement or alleged untrue statement or omission or alleged omission
      was made in conformity with information furnished by or on behalf of that
      Placement Agent in writing specifically for use in the Offering Documents;
      provided, however, that in any instance under this paragraph 6(b) 

     

    
      
        Initial
          Here (Company) 
           

          _________________

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    an
      Agent
      Indemnified Person shall not be entitled to be indemnified and held harmless
      hereunder to any extent that a court having jurisdiction shall determine by
      a
      final nonappealable judgment that such Losses resulted from the gross negligence
      or willful misconduct of such Agent Indemnified Person; and (2) reimburse each
      Agent Indemnified Person promptly for any reasonable legal or other out of
      pocket expenses incurred by it, as they are incurred and for which reasonably
      satisfactory documentation is provided to the Company, to the extent they relate
      to matters for which the Agent Indemnified Person is entitled to indemnification
      hereunder, in connection with investigating, preparing to defend or defending
      or
      providing evidence in any lawsuits, claims or other proceeding (“Actions”)
      related to, arising out of, or in connection with, the rendering of services
      by
      the Agent or such other Placement Agents hereunder; provided, however, that
      in
      the event a final nonappealable judicial determination is made to the effect
      that one or more Agent Indemnified Persons that makes a claim for
      indemnification under this paragraph 6(b) is not entitled to be so indemnified
      under this paragraph 6(b), such Agent Indemnified Person who is subject to
      such
      determination will remit to the Company any amounts previously reimbursed under
      this subparagraph 6(b)(2).

     

    (c)  Each
      Placement Agent, severally (and not jointly or jointly and severally), shall
      (1) indemnify and hold harmless the Company and each of its directors,
      officers, agents, employees and controlling persons (together with the Company,
      collectively called the “Company Indemnified Persons”) from and against any and
      all Losses of any kind or nature (including reasonable attorneys’ fees) as
      incurred, to which the Company or any other Company Indemnified Person may
      become subject, to the extent such Losses are related to, arise out of, or
      arise
      in connection with, the breach of this Agreement by such Placement Agent or
      the
      gross negligence or willful misconduct of such Placement Agent; and (2)
      reimburse each Company Indemnified Person promptly for any reasonable legal
      or
      other out of pocket expenses incurred by it, as they are incurred and for which
      reasonably satisfactory documentation is provided to the indemnifying Placement
      Agent, to the extent such expenses relate to matters for which the Company
      Indemnified Person is entitled to indemnification hereunder, in connection
      with
      investigating, preparing to defend or defending or providing evidence in any
      Actions to the extent they relate to such matters. The indemnification provided
      under this paragraph 6(c) includes, without limitation, any Action or Loss
      arising from or in respect of any untrue statement or alleged untrue statement
      of any material fact contained in the Offering Documents, or any amendment
      or
      supplement thereto, or related to or arising out of the omission or alleged
      omission to state therein a material fact necessary to make the statements
      therein not misleading, but in any such case only if and to the extent such
      misstatement or omission, or alleged misstatement or omission, was made in
      conformity with information furnished by or on behalf of such Placement Agent
      in
      writing specifically for use in the Offering Documents; provided, however,
      that
      in the event a final nonappealable judicial determination is made to the effect
      that one or more Company Indemnified Persons that makes a claim for
      indemnification under this paragraph 6(c) is not entitled to be so indemnified
      under this paragraph 6(c), such Company Indemnified Person who is subject to
      such determination will remit to the Placement Agent any amounts previously
      reimbursed under this subparagraph 6(c)(2).

     

    (d)  Each
      indemnifying party agrees that the indemnification and reimbursement commitments
      set forth in this paragraph 6 shall apply whether or not an Indemnified Person
      is a formal party to any such Actions. The Company further agrees that without
      the Agent’s prior 

     

    
      
        Initial
          Here (Company) 
           

          _________________

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    consent,
      which will not be unreasonably withheld, any settlement of a lawsuit, claim
      or
      other proceeding against the Company arising out of the engagement contemplated
      by this Agreement that is entered into by the Company shall include an explicit
      release from the party bringing such lawsuit, claim or other proceeding of
      all
      Indemnified Persons, which release shall be reasonably satisfactory to the
      Agent.

     

    (e)  No
      Indemnified Person may, without the indemnifying party’s prior written consent
      (which will not be unreasonably withheld), settle or compromise or consent
      to
      the entry of any judgment to any pending or threatened Action in respect of
      which indemnification may be sought hereunder. Promptly after receipt by an
      Indemnified Person of notice of any intention or threat to commence an Action
      or
      notice of the commencement of any Action, such Indemnified Person will, if
      a
      claim in respect thereof is to be made against an indemnifying party pursuant
      hereto, promptly notify the indemnifying party in writing of the same; provided,
      however, that any delay or failure to give such notice shall not prejudice
      the
      rights of the Indemnified Person to be indemnified hereunder except to the
      extent that the indemnifying party is actually prejudiced by such delay or
      failure. In case any such Action is brought against any Indemnified Person,
      the
      indemnifying party may elect to assume the defense thereof, with counsel
      reasonably satisfactory to such Indemnified Person. An Indemnified Person may
      retain separate counsel to participate in the defense of any such Action, which
      shall be at its own expense unless such counsel advises the indemnifying party
      in writing that the same counsel may not represent the indemnifying party and
      such Indemnified Person under applicable ethical standards; provided, however,
      that in no event shall an indemnifying party be required to pay fees and
      expenses for more than one firm of attorneys representing all of the persons
      entitled to indemnification hereunder (with the exception of local counsel
      where
      reasonably required).

     

    (f)  THE
      COMPANY UNDERSTANDS AND ACKNOWLEDGES THAT THE INDEMNIFIED PERSONS ARE RELEASED
      BY SECTION 6(a) FROM LIABILITY FOR THEIR OWN NEGLIGENCE (OTHER THAN GROSS
      NEGLIGENCE OR WILLFUL MISCONDUCT DETERMINED AS STATED THEREIN) AND EACH PARTY
      UNDERSTANDS THAT THE INDEMNIFIED PARTIES ARE INTENDED TO BE INDEMNIFIED AND
      HELD
      HARMLESS BY SECTION 6(b) AGAINST THEIR OWN NEGLIGENCE (OTHER THAN GROSS
      NEGLIGENCE OR WILLFUL MISCONDUCT DETERMINED AS STATED
      THEREIN).

     

    (g)  The
      Company, the Agent and the Placement Agents agree that if any indemnification
      or
      reimbursement sought pursuant to paragraph 6 is determined by a court having
      jurisdiction by a final nonappealable judgment to be unavailable other than
      for
      the reasons provided for in Section 6, then the Company and the Placement Agents
      shall contribute to the losses, claims, damages, liabilities and expenses for
      which such indemnification or reimbursement is held unavailable in such
      proportion as is appropriate to reflect the relative benefits received by,
      and
      fault of, the Company on the one hand, and each Placement Agent on the other
      hand (severally and not jointly or jointly and severally), in connection with
      the transactions to which such indemnification or reimbursement relates, and
      other equitable considerations; provided, however, that in no event shall the
      amount to be contributed by any Placement Agent pursuant to this paragraph
      6(g)
      exceed the amount of the fees actually received by such Placement Agent under
      this Agreement.

     

    
      
        Initial
          Here (Company) 
           

          _________________

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7.  Allocation
      of Fees.
      If, on
      or prior the date of closing of the Offering, any proposed Placement Agent
      whose
      name is set forth on Exhibit
      C
      shall
      fail to execute the Agreement Among Placement Agents and participate in the
      Offering, the fee that such Placement Agent would have received shall be
      allocated to the participating Placement Agents in the proportion that their
      respective fee allocations set forth on Exhibit
      C
      bear to
      the aggregate fee percentage that would exist in the absence of the fee
      contemplated to be paid to the nonparticipating Placement Agent.

     

    8.  Notice.
      All
      notices, requests, demands, claims, and other communications hereunder will
      be
      in writing. Any notice, request, demand, claim or other communication if
      addressed to the intended recipient as set forth below shall be deemed to be
      duly given either when personally delivered or two days after it is sent by
      registered or certified mail, return receipt requested, postage prepaid, or
      one
      day after it is delivered to a commercial overnight courier, or upon
      confirmation if delivered by facsimile:

     

    If
      to the
      Company:

     

    Carrizo
      Oil & Gas, Inc.

    1000
      Louisiana, Suite 1500

    Houston,
      TX 77002

    Attn:
      Mr.
      Paul F. Boling

    Chief
      Financial Officer

    Telephone:
      (713) 328-1000

    Facsimile:
      (713) 358-6473

     

    With
      copy
      to:

     

    Baker
      Botts L.L.P.

    One
      Shell
      Plaza

    910
      Louisiana Street

    Houston,
      TX 77002

    Attn:
      Gene J. Oshman, Esq.

    Telephone:
      (713) 229-1178

    Facsimile:
      (713) 229-7778

     

    If
      to the
      Agent:

     

    Johnson
      Rice & Company L.L.C.

    639
      Loyola Avenue, Suite 2775

    New
      Orleans, LA 70113

    Attn: Joshua
      C.
      Cummings, Partner

    Telephone:
      (504) 584-1247

    Facsimile:
      (504) 566-0742

     

    
      
        Initial
          Here (Company) 
           

          _________________

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    With
      copy
      to:

     

    Porter
      & Hedges, L.L.P.

    1000
      Main
      Street, 36th Floor

    Houston,
      TX 77002

    Attn:
      Robert G. Reedy

    Telephone:
      (713) 226-6674

    Facsimile:
      (713) 226-6274

     

    Any
      party
      may give any notice, request, demand, claim, or other communication hereunder
      using any other means, but no such notice, request, demand, claim, or other
      communication shall be deemed to have been duly given unless and until it is
      actually received by the party for whom it is intended. Any party may change
      the
      address to which such notices, requests, demands, claims, or other
      communications are to be delivered by giving the other parties notice in the
      manner herein set forth.

     

    9.  Benefit
      and Non-Assignment.
      This
      Agreement is made solely for the benefit of the Agent and the other Placement
      Agents, the Company, their respective officers and directors and any controlling
      person referred to in Section 15 of the Securities Act, the respective
      Indemnified Persons, and their respective successors and assigns, and no other
      person shall acquire or have any right under or by virtue of this Agreement.
      Notwithstanding the foregoing, this Agreement may not be assigned by the Agent
      without the prior written consent of the Company or assigned by the Company
      without the prior written consent of the Agent. The term “successor” or the term
“successors and assigns” as used in this Agreement shall not include any
      purchasers, as such, in the Offering. the Agent is acting on behalf of itself
      and the other Placement Agents and may enter into any amendment or waiver of
      the
      provisions hereof on behalf of such Placement Agents.

     

    10.  Survival.
      Subject
      to any applicable statutes of limitations, the respective agreements,
      representations, warranties, covenants and other statements, of the Agent or
      the
      Company or their officers as set forth in or made pursuant to this Agreement
      shall survive and remain in full force and effect for a period of two (2) years,
      regardless of (i) any investigation made by or on behalf of the Agent or the
      Company or any such officer or director thereof or any controlling person of
      the
      Company or the Agent and (ii) delivery of or payment for the Securities. Any
      successor of the Company or the Agent or any controlling person, officer or
      director thereof, as the case may be, shall be entitled to the benefits hereof.
      Notice of a claim or Loss shall toll the expiration of each agreement,
      representation, warranty, covenant and other statement on which such claim
      or
      Loss is based.

     

    11.  Termination.
      Either
      party may, at its option, terminate this Agreement prior to the Closing of
      the
      Offering upon giving the other party written notice in the event that (a) the
      other party fails to cure any violation of its representations and warranties
      in
      Section 3 or 4 hereof, as applicable, within 15 days after the non-terminating
      party receives written notice of such violation, or (b) the other party fails
      to
      comply in any material respect with any of its covenants, including, in the
      case
      of the Company, those in Section 5 hereof. Notwithstanding any other provision
      in this Agreement, this Agreement shall terminate on the earlier of (i) August
      8, 2006 

     

    
      
        Initial
          Here (Company) 
           

          _________________

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    or
      (ii)
      the closing of the Offering; provided, however, that the Company and the Agent
      may mutually agree to extend such deadline; provided further, however, that
      except as otherwise provided herein, neither the termination, for any reason,
      of
      this Agreement nor the Closing of the Offering shall affect (1) any compensation
      earned by the Agent up to the date of termination or completion, as the case
      may
      be; (2) the reimbursement of expenses incurred by the Agent up to the date
      of
      termination or completion, as the case may be; (3) the release and
      indemnification provisions of Section 6 hereof, all of which shall remain
      operative and in full force and effect; (4) the representations and warranties
      in Sections 3 and 4 hereof; and (5) any liability for breaches that occur prior
      to the date of termination.

     

    12.  Governing
      Law.
      The
      validity, interpretation and construction of this Agreement and of each part
      hereof will be governed by the laws of the State of Texas without regard to
      the
      conflict of laws principles thereof.

     

    13.  Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which may
      be
      deemed an original and all of which together will constitute one and the same
      instrument.

     

    [signature
      page follows]

     

    
      
        Initial
          Here (Company) 
           

          _________________

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    If
      the
      foregoing is in accordance with your understanding of our agreement, kindly
      sign
      and return to us the enclosed duplicate hereof, whereupon it will become a
      binding agreement between the Company and the Placement Agents in accordance
      with its terms.

     

     

    Very
      truly yours,

     

    JOHNSON
      RICE & COMPANY L.L.C.

     

     

    By: /s/
      Joshua C. Cummings

    Name:Joshua
      C. Cummings 

    Title:Partner 

     

     

    Accepted
      this 25th day of July, 2006

     

    CARRIZO
      OIL & GAS, INC.

     

     

    By:
      /s/
      Paul F. Boling      

    Paul
      F.
      Boling

    Chief
      Financial Officer

     

    
      
        Initial
          Here (Company) 
           

          _________________Exhibit
10.1

 

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

 

ETHANOL PURCHASE
AND SUPPLY AGREEMENT

 

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

 

RECITALS:

 

A.                                  
IFEP is in the
process of constructing an ethanol plant located in or around Iowa Falls, Iowa.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

The nameplate design
capacity of the Plant is 40,000,000 gallons of ethanol per year, and the
estimated output of Ethanol from the Plant at full production capacity is
anywhere from approximately 40,000,000 to 50,000,000 gallons per year once the
Plant is at full production capacity.  IFEP estimates that the Plant will
commence operations and the production of Ethanol some time during the month of
November, 2004, and that the Plant could be at full production capacity within
thirty (30) days of the commencement date of operations at the Plant. 
IFEP may, however, in its discretion, from time to time expand the nameplate
design capacity of the Plant to anywhere up to 90,000,000 gallons of ethanol per
year, such that the estimated output of Ethanol from the Plant at full
production capacity may be anywhere from the current approximately 40,000,000
gallons per year to up to approximately 100,000,000 gallons per year. 
IFEP will keep EEI reasonably apprised of the progress of any such expansion,
and IFEP will provide EEI with written notice of the estimated date on which
additional Ethanol will first be available pursuant to any such expansion at
least one hundred eighty (180) days before such date.

 

IFEP shall, however, have
the right to manage its business in all respects and in its discretion, and it
is understood that the total output of Ethanol may vary and shall be determined
by IFEP from time to time, and that no warranty or representation has been made
by IFEP as to the output of Ethanol from the Plant at any given time or from
time to time.  IFEP will, however, fulfill Accepted Purchase Orders, and
will use commercially reasonable efforts to produce the amount of Ethanol
estimated in its Projection Estimates, all upon and subject to the terms and
conditions of this Agreement.  EEI also understands that IFEP may produce
Ethanol in excess of the amounts set forth in IFEP’s Production Estimates, and
EEI will submit Purchase Orders for all Ethanol which may from time to time be
produced at the Plant which is in excess of the

 

3

 

amounts set forth in any Production Estimates, all
upon and subject to the terms and conditions of this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

               
Each Purchase Order placed by EEI by a Purchase Order Form in the form of
Exhibit “A” or another similar written Purchase Order Form acceptable to IFEP
shall be irrevocable by EEI for the Acceptance Period specified in the Purchase
Order, but EEI does not have a binding obligation to purchase any Ethanol
pursuant to said Purchase Order unless EEI is able to enter into an agreement
with a third party for the sale of the Ethanol by EEI to such third party
within one (1) day of IFEP’s acceptance of the Purchase Order in
question.  If EEI does not enter into

 

4

 

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

 

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

 

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

 

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

 

If delivery of any
Ethanol by EEI will be by rail car, the Ethanol will be made available F.O.B.
the Plant and shall otherwise be at EEI’s cost and expense, except only as may
be provided below in this Section and that IFEP will provide the labor and
Plant equipment necessary to load the Ethanol onto the rail car of the EEI
Carrier at the Plant.

 

EEI shall, in
consultation and with the prior approval and agreement of IFEP, (i) estimate
the number of rail cars required to handle the transportation of Ethanol
purchased by EEI pursuant to this Agreement; (ii) negotiate the lease rates and
other terms for the lease or leases of

 

5

 

such rail cars (collectively, the “Rail Car Leases”);
and (iii) negotiate the rates and other terms of such rail and freight
contracts as are deemed necessary by EEI and IFEP (collectively, the “Rail
Contracts”).  All Rail Car Leases shall be entered into by, and shall be
in the name of, EEI and EEI shall fully and timely comply with all of the terms
and conditions of the Rail Car Leases, including, without limitation, after the
rail cars subject to the Rail Car Leases have been subleased to IFEP as
provided below.  EEI and IFEP agree that the initial Rail Car Leases and
related rail cars for purposes of this Agreement are identified in Exhibit “D”
to this Agreement (respectively, the “Current Rail Car Leases” and the “Current
Rail Cars”).  EEI represents and warrants to IFEP that EEI has provided
IFEP with a true, correct and complete copy of each of the Current Rail Car
Leases and that all of the Current Rail Car Leases permit the sublease of the
Current Rail Cars to IFEP upon the same terms and conditions as set forth in
the applicable Current Rail Car Lease.

 

If this Agreement is
terminated for any reason, including, but not limited to, pursuant to Section
19(b) of this Agreement, IFEP shall sublease all of the Current Rail Cars from
EEI, upon the same terms and conditions as are provided in the respective
Current Rail Car Leases.  EEI shall, notwithstanding any such sublease of
any Current Rail Cars to IFEP, be and remain responsible for any and all
breaches of and defaults under the Current Rail Car Leases by EEI.  All
payments required to be made under the Current Rail Car Leases after the
Current Rail Cars have been subleased to IFEP shall be made by IFEP to EEI, by
wire transfer, within ten (10) days of IFEP’s receipt of an invoice therefor
from EEI.  EEI will not invoice IFEP for any amounts payable under the
Current Rail Car Leases more than ten (10) days in advance of the date such
amounts are due under the applicable Current Rail Car Lease.  Any such
payments which are not made by IFEP when due shall bear interest at the rate of
ten percent (10%) per annum from the date due until paid.

 

EEI agrees to utilize its
best efforts to include terms in any future Rail Car Leases as may be agreed
upon by EEI and IFEP which allow for the assignment of the Rail Car Lease to
IFEP or its successors and assigns at any time and for any reason, without the
consent of the lessor.  If any future Rail Car Lease contains such
assignment terms, such Rail Car Lease shall be deemed to be automatically
assigned by EEI to IFEP upon any termination of this Agreement for any reason,
including, but not limited to, pursuant to Section 19(b) of this
Agreement.  If any future Rail Car Lease does not allow for assignment to
IFEP, the Rail Car Lease must permit the sublease of the rail cars subject to
the Rail Car Lease to IFEP, and in such circumstance, the rail cars will be
subleased by EEI to IFEP upon any termination of this Agreement as is otherwise
provided above with respect to the Current Rail Car Leases and the Current Rail
Cars.  EEI shall in all events be and remain responsible for any and all
breaches of and defaults under any future Rail Car Leases by EEI.

 

All Rail Contracts shall
be in the name of IFEP.

 

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

 

6

 

of the invoice from EEI.  EEI’s invoice shall
include a copy of any invoice received from the lessor under the Rail Car Lease
in question.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

IFEP also agrees as
follows:

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

EEI shall also pay to
IFEP, in addition to the Purchase Price, an amount equal to [***] percent
([***]%) of the Net Profit Amounts (as that term is defined below) that are to
be received by EEI in all Value-Added Transactions (as that term is also
defined below).  The term “Value-Added Transaction” means any transaction
entered into by EEI for the sale or other

 

9

 

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

 

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

 

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

 

11.          
Expenses of EEI.  Except only as may be otherwise expressly and
specifically provided for herein, EEI shall pay and be solely responsible for
all costs and expenses of any nature whatsoever which are incurred by EEI in
promoting, marketing, selling and delivering the

 

10

 

Ethanol and otherwise in providing any services
pursuant to or in performing any duties or obligations under this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

IFEP have been taken to authorize the execution,
delivery and performance of this Agreement.

 

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

 

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

 

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

 

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

 

12

 

15.         
Exclusion of All Other Warranties.  Except only for the limited warranties expressly given
in Section 13 of this Agreement and for the limited warranty expressly given in
the first paragraph of Section 14 of this Agreement, IFEP makes no express
warranties whatsoever regarding any Ethanol or any other thing or matter
whatsoever, and IFEP hereby excludes and disclaims in entirety all implied
warranties whatsoever, including, without limitation, the implied warranties of
merchantability, noninfringement and fitness for a particular purpose, with
respect to all Ethanol and all other things or matters whatsoever.

 

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

 

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

 

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

 

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

 

18.         
Grant of Security Interest by EEI.  EEI hereby grants to IFEP a
security interest in and to all of the Ethanol which is at any time sold by
IFEP to EEI, with such security interest to

 

13

 

secure payment of all amounts payable by EEI to IFEP
under this Agreement and the performance of all of the other duties and
obligations of EEI under this Agreement, whether now existing or hereafter
arising.  EEI will be in breach of and default under the security interest
granted by this Section upon the failure to make any payment, when due and
payable, of any amounts payable under this Agreement, or upon the breach or
nonfulfillment of or default under any other term or condition of this
Agreement.  After the occurrence of any such breach, nonfulfillment or
default, IFEP may exercise at any time and from time to time any and all rights
and remedies available to a secured party under applicable law.

 

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

 

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

 

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

 

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

 

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

 

(d)          
This Agreement may be terminated by IFEP or by EEI if such termination is
required by any governmental or regulatory authority, and any such termination
shall

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

21.          
Additional Rights of IFEP and EEI.  Notwithstanding anything in
this Agreement which may appear to be to the contrary, IFEP reserves the right
to reject Purchase Orders and to

 

15

 

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

 

Notwithstanding anything
in this Agreement which may appear to be to the contrary, EEI reserves the
right to not submit Purchase Orders and to withhold purchasing under any and
all Accepted Purchase Orders during any period of time that IFEP is in breach
or nonfulfillment of or default under any payment term or payment condition of
this Agreement.  EEI also reserves the right to terminate or not be
obligated to purchase according to any Accepted Purchase Order under the circumstances
and as provided in Section 20(b) of this Agreement, as well as any rights under
the applicable Uniform Commercial Code, including, without limitation, any
right to demand and receive adequate assurances of performance by IFEP.

 

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

 

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

 

16

 

and the transactions contemplated hereby to their
respective legal counsel and accountants; and (iv) the reasonable use of any
proprietary or confidential information as part of or in connection with the
transactions contemplated by this Agreement during the term of this Agreement
is permitted.

 

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

 

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

 

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

 

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

 

24.          
Noncompete Covenant.  EEI covenants and agrees that during the term
of this Agreement, EEI will not, directly or indirectly, become an investor in
or provide any services, goods or materials to or for, or otherwise become
interested, associated or concerned in any way in or with, any ethanol plant
which is located anywhere within a [***] mile radius of the location

 

17

 

of the Plant, other than an ethanol plant owned or
operated by IFEP or an Affiliate of IFEP.  IFEP’s remedies upon a breach
or imminent breach of this Section include the right to preliminary and
permanent injunctive relief restraining EEI from any further violation of this
Section, and without the posting of any bond or other form of collateral or
security.  EEI acknowledges and warrants that enforcement of a remedy by
way of injunction will not prevent EEI from earning a livelihood or work an undue
hardship on EEI, and that injunctive relief is necessary and appropriate to
protect the justifiable business interests of IFEP.  Notwithstanding the
foregoing, IFEP acknowledges that this Section 24 does not limit or prohibit
EEI from purchasing ethanol from, or providing marketing services to, the plant
owned by [***] which is located in or around [***], [***], and that this
Section 24 does not limit or prohibit EEI from (i) entering into Value Added
Transactions with plants that are located within the [***]-mile radius
specified above, or (ii) making isolated, opportunistic purchases from time to
time of ethanol from a plant otherwise located in the [***]-mile radius
specified above.

 

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

 

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

 

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

 

27.          
Impossibility.  Notwithstanding anything in this Agreement which
may appear to be to the contrary, if any term or condition of this Agreement to
be performed or observed by IFEP or EEI (except for payment obligations and
under Sections 23 and 24) is rendered impossible of performance or observance
due to any force majeure or any other act, omission, matter, circumstance,
event or occurrence beyond the reasonable control of IFEP or EEI, as the case
may be (each, an “Impossibility Event”), IFEP or EEI, as the case may be,
shall, for so long as such Impossibility Event exists, be excused from such
performance or observance, provided

 

 

18

 

that the affected party notifies the other in writing
within twenty-four (24) hours of the occurrence of the Impossibility Event and
takes all appropriately reasonable steps as soon as reasonably practicable upon
the termination of the Impossibility Event to recommence performance or
observance; provided, however, that if after forty-five (45) days from the
onset of the Impossibility Event, IFEP or EEI is still unable to perform their
obligations hereunder, either IFEP or EEI may, in their respective discretion,
terminate this Agreement effective upon the giving of written notice thereof to
the other.  The term “Impossibility Event” includes, without limitation,
fire, storm, flood, earthquake, acts of God, civil disturbances or disorders,
an actual or threatened act or acts of war, an actual or threatened act or acts
of terrorism, computer failures, computer viruses, acts of computer hackers,
sabotage, strikes, lockouts, labor disputes, labor shortages, stoppages or
slowdowns initiated by labor, transportation embargos, failure or shortage of
supplies or materials, accidents, equipment or mechanical failures, or acts or regulations
or priorities of any governmental authority or branches or agencies thereof.

 

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

 

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

 

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

 

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

 

19

 

31.          
Consent to Jurisdiction.  Each of the parties submits to the
nonexclusive jurisdiction of any United States or Iowa court sitting in Des
Moines, Iowa in any action or proceeding arising out of or relating to this
Agreement.  Each party agrees that all claims and counterclaims with
respect to any such action or proceeding may be heard and determined in any
such courts, and waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in any such courts.  Each of the parties consents to
the service of any and all process in any such action or proceeding by the
personal service of copies of such process to the party, at its address
specified for notices to be given hereunder.

 

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

 

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

 

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

 

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

 

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

 

20

 

the addresses set forth below the signatures to this
Agreement, or to such other person or at such other place as any party hereto
may by Notice designate as a place for service of Notice.

 

36.          
Severability.  If any term of this Agreement is held to be invalid,
illegal or unenforceable, in whole or in part, the remaining terms of this
Agreement will not be affected thereby and will continue to be valid, legal and
enforceable.  If any term of this Agreement is held to be invalid, illegal
or unenforceable as written, but valid, legal and enforceable if modified, then
such term shall be deemed to be written and construed, and shall be enforced,
as so modified.  Any finding of invalidity, illegality or unenforceability
in any jurisdiction shall not invalidate or render illegal or unenforceable
such term in any other jurisdiction.  Without limiting the generality of
the foregoing, each term of this Agreement which provides for a limitation of
remedies or liability, disclaimer or exclusion of warranties, or exclusion or
limitation of damages is subject to this Section.  Further, if any remedy
is determined to have failed of its essential purpose or otherwise, all
limitations of liability and exclusions and limitations of damages provided for
in this Agreement will remain in full force and effect.

 

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

 

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

 

21

 

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

 

	
  IOWA FALLS
  ETHANOL PLANT, L.L.C.

  	
   

  	
  ECO-ENERGY, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Russell
  Stidolph

  	
   

  	
  By: 

  	
  /s/ Larry
  Beckwith

  
	
  Name: 

  	
  Russell Stidolph

  	
   

  	
  Name: Larry
  Beckwith

  
	
  Title: 

  	
  Manager

  	
   

  	
  Title: President

  
	
   

  	
   

  	
  730 Cool Springs Blvd.,
  Suite 130

  
	
  Address

  	
   

  	
  Franklin, TN 37067

  
	
  21050 140th Street

  	
   

  	
  Facsimile Number:

  	
   

  
	
  Iowa Falls, IA 50126

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

 

Exhibit A
-             Fixed
Ethanol Purchase Order Form [Section 4]

Exhibit B
-             
Posted Price Ethanol Purchase Order Form [Section 4]

Exhibit C -
            
Specifications [Section 14]

Exhibit D
-             
List of Current Rail Car Leases and Current Rail Cars [Section 5]

 

22

 

EXHIBIT
A

 

ECO-ENERGY,
INC.

FIXED
ETHANOL  PURCHASE ORDER

Dated:  _____________________, 20___

 

                Eco-Energy, Inc. (“EEI”) hereby
submits this Purchase Order for Ethanol to Iowa Falls Ethanol Plant, L.L.C.
(“IFEP”) pursuant to that certain Ethanol Purchase and Supply Agreement between
EEI and IFEP dated as of ___________________, 200__ (as the same may be
amended, the “Agreement”).

 

1.             Aggregate Gallons of Ethanol:                                              _____________________
gallons

 

2.             Pick Up Dates for Ethanol (strike out all that do not
apply):

 

(a)           ______________ gallons of Ethanol on the _____ day of each
month commencing on _____________, ________ and continuing up to and including
_____________, ______.

 

(b)           _____________ gallons of Ethanol on each of
_______________, ______;  ______________,
______;  _______________, ______;  and _______________, ______.

 

(c)           All of the Ethanol on _______________, ______.

 

(d)           Other: __________________________________.

 

3.             Minimum Purchase Price for Ethanol: ____________________

 

4.             Time Period for Acceptance of this Purchase Order (the
“Acceptance Period”):  _____________________________.

 

This Purchase Order is irrevocable for the Acceptance Period or until
the time at which this Purchase Order becomes a Rejected Purchase Order as
provided in the Agreement.  EEI does not,
however, have a binding obligation to purchase any Ethanol pursuant to this
Purchase Order unless EEI is able to enter into an agreement with a third party
for the sale of the Ethanol by EEI to such third party within one (1) day of
IFEP’s acceptance of this Purchase Order.

 

This Purchase Order is subject to acceptance by IFEP as provided in the
Agreement and is otherwise tendered and made subject to and upon all of the
terms and conditions of the Agreement.

 

	
   

  	
  ECO-ENERGY,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
  E-Mail
  Address:

  	
   

  
							

 

 

ACCEPTANCE
OR REJECTION

 

                This Purchase Order is
accepted/rejected (strike out and initial the one that does not apply) by Iowa
Falls Ethanol Plant, L.L.C., subject to and upon all of the terms and
conditions of the Agreement.

 

	
   

  	
  IOWA
  FALLS ETHANOL PLANT, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Date:

  	
   

  	
  ,
  20

  	
   

  
							

 

 

2

 

EXHIBIT
B

 

ECO-ENERGY,
INC.

POSTED
PRICE ETHANOL  PURCHASE ORDER

Dated:  _____________________, 20___

 

                Eco-Energy, Inc. (“EEI”) hereby
submits this Purchase Order for Ethanol to Iowa Falls Ethanol Plant, L.L.C.
(“IFEP”) pursuant to that certain Ethanol Purchase and Supply Agreement between
EEI and IFEP dated as of ___________________, 200__ (as the same may be
amended, the “Agreement”).

 

1.             Maximum Aggregate
Gallons of Ethanol:                            _____________________
gallons

 

2.             Pick Up Dates for Ethanol (strike
out all that do not apply):

 

(a)           ______________ gallons of Ethanol on the _____ day of each
month commencing on _____________, ________ and continuing up to and including
_____________, ______.

 

(b)           _____________ gallons of Ethanol on each of
_______________, ______;  ______________,
______;  _______________, ______;  and _______________, ______.

 

(c)           All of the Ethanol on _______________, ______.

 

(d)           Other: __________________________________.

 

3.             Minimum Purchase Price for the
Ethanol (the “Posted Price”): ____________________

 

4.             Time Period Over Which the Posted Price Will Be
Effective (the “Posted Price Sales Period”): 
_____________________________.

 

5.             Time Period for Acceptance of this Purchase Order (the
“Acceptance Period”): 
_____________________________.

 

This Purchase Order is irrevocable for the Acceptance Period or until
the time at which this Purchase Order becomes a Rejected Purchase Order as
provided in the Agreement.  EEI does not,
however, have a binding obligation to purchase any Ethanol pursuant to this
Purchase Order unless and until EEI enters into an agreement with a third party
for the sale of the Ethanol by EEI to such third party during, and for pick-up
by EEI during, the Posted Price Sales Period.

 

This Purchase Order is subject to acceptance by IFEP as provided in the
Agreement and is otherwise tendered and made subject to and upon all of the
terms and conditions of the Agreement.

 

	
   

  	
  ECO-ENERGY,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
  E-Mail
  Address:

  	
   

  
							

 

 

3

 

 

 

ACCEPTANCE
OR REJECTION

 

                This Purchase Order is
accepted/rejected (strike out and initial the one that does not apply) by Iowa
Falls Ethanol Plant, L.L.C., subject to and upon all of the terms and
conditions of the Agreement.

 

	
   

  	
  IOWA
  FALLS ETHANOL PLANT, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Date:

  	
   

  	
  ,
  20

  	
   

  
							

 

 

4

 

 

 

5

 

EXHIBIT
D

 

LIST
OF CURRENT RAIL CAR LEASES AND CURRENT RAIL CARS

 

 

6

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