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DISTILLER'S GRAIN MARKETING AGREEMENT

Advertising or Marketing Agreement

DISTILLER'S GRAIN MARKETING AGREEMENT | Document Parties: Comprehensive Coproducts Marketing Services | One Earth Energy, LLC | United Bio Energy Ingredients, LLC You are currently viewing:
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Comprehensive Coproducts Marketing Services | One Earth Energy, LLC | United Bio Energy Ingredients, LLC

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Title: DISTILLER'S GRAIN MARKETING AGREEMENT
Governing Law: Kansas     Date: 3/19/2007

DISTILLER'S GRAIN MARKETING AGREEMENT, Parties: comprehensive coproducts marketing services , one earth energy  llc , united bio energy ingredients  llc
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DISTILLER’S GRAINS MARKETING AGREEMENT
     THIS DISTILLER’S GRAINS MARKETING AGREEMENT (the “Agreement”), made and entered into this 3rd day of November, 2006, by and among One Earth Energy, LLC, an Illinois limited liability company (“One Earth Energy”), and United Bio Energy Ingredients, LLC, a Kansas limited liability company (“UBE”).
WITNESSETH:
          WHEREAS, One Earth Energy desires to sell and UBE desires to buy all the distiller’s grains (the “Distiller’s Grains”) produced at One Earth Energy’s ethanol plant located at Gibson City, Illinois (the “Plant”);
     WHEREAS, the parties desire to purchase and sell such assets, and receive and provide such services, in accordance with the fees, price formula, payment, delivery and other terms set forth in this Agreement.
     NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and conditions herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by both parties, it is hereby agreed:
     1.  COMMITMENT AND TERM . Subject to the terms of this Agreement, One Earth Energy hereby agrees to sell, and UBE hereby agrees to purchase, all Distiller’s Grains produced at the Plant. The initial term of this Agreement shall be for thirty-six (36) months, commencing on the date that the Plant begins operations to produce ethanol. The parties shall execute a memorandum setting forth the actual date of commencement of the term. This Agreement shall be automatically renewed for successive one (1) year terms thereafter unless either party gives written notice to the other party of its election not to renew, not later than ninety (90) days prior to the expiration of the initial term or the then current renewal term, as the case may be.
     2.  PRICE AND PAYMENT .
          A. PRICE . UBE will provide Comprehensive Coproducts Marketing Services to One Earth Energy which shall include an onsite merchandiser at the Plant. For the purposes of this Agreement, the term “F.O.B. Facility Price” shall mean the actual net sales price that UBE invoices buyers of Distiller’s Grains. Fees begin with Plant startup and include all logistical shipment coordination, administration of sales contracts and assumption of accounts receivable and credit risk. Rail car lease costs will be at an additional cost to One Earth Energy dependent upon utilization of rail for shipments of coproducts. Freight costs and insurance will be at an additional cost to One Earth Energy.

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     UBE shall pay One Earth Energy for all Distiller’s Grains removed by UBE from the Plant as follows: for DDGS, a price equal to Ninety Seven Percent (97.0%) of the F.O.B. Facility Price charged by UBE to its customers; for WDGS, a price equal to Ninety Six Percent (96.0%) of the F.O.B. Facility Price charged by UBE to its customers; for WMGS, a price equal to Ninety Five Percent (95.0%) of the F.O.B. Facility Price charged by UBE to its customers.
     The percentages described above are subject to a minimum and maximum per ton, as per the following chart example:
                                 
            Commission           Commission
    Sales Price   Min Cap   Sales Price   Max Cap
Coproduct   Per Ton   Per Ton   Per Ton   Per Ton
DDGS
  $ 41.75       1.25     $ 100.00       3.00  
WDGS
  $ 18.75       0.75     $ 45.00       1.80  
WMGS
  $ 20.00       1.00     $ 46.00       2.30  
     Using the example above, assuming 1,000 tons of DDGS are sold, if the Sales Price Per Ton falls below $41.75 to $40.00, UBE’s commission will be capped at the 1.25 per ton minimum and UBE’s commission will remain the same as if the sales price were $41.75, i.e., $1,250.00. Assuming 1,000 tons of DDGS are sold at the Sales Price Per Ton of $125.00, UBE’s commission will be capped at the 3.00 per ton maximum Sales Price Per Ton of $100.00, or $3,000.00.
          B. PAYMENT . On a daily basis, Weekends and Holidays excluded, One Earth Energy shall provide UBE with certified weight certificates for the previous day’s shipments of Distiller’s Grains. UBE shall pay One Earth Energy the F.O.B. Plant Price defined in paragraph 2.A. above, for all properly documented shipments. Payment for such shipments shall occur so that payment for all shipments in each one week shipment period (Sunday through Saturday) is received on or before the second following Friday of such one week shipment period. UBE agrees to maintain accurate sales records and to provide such records to One Earth Energy upon request. One Earth Energy shall have the right to audit UBE’s sales invoices at any time during normal business hours at the corporate office of UBE.
          C. SALES CONFIRMATION . Each week’s Distiller’s Grains sales shall be evidenced by a separate sales confirmation substantially in the form of Exhibit A attached hereto (“Sales Confirmation”). Each Sales Confirmation shall at a minimum specify the quantity and quality of the Distiller’s Grains; the delivery date; the purchase price; any applicable discount from the purchase price; and such other information as the Parties may agree to include. Upon receipt of the Sales Confirmation, the Plant must execute and return the Sales Confirmation within three (3) business day(s) to UBE. If the Plant fails to respond by execution and return of the Sales Confirmation to UBE within three (3) business day(s) of its receipt of the same, said non-response shall be deemed to be an acceptance of the Sales Confirmation.
          D. BEST EFFORTS . UBE agrees to use its best efforts to achieve the highest resale price of Distiller’s Grains available under prevailing market conditions as judged by UBE.

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One Earth Energy’s sole and exclusive remedy for breach of UBE’s obligations hereunder shall be to terminate this Agreement.
          E. COLLECTION . UBE shall be responsible for all customer billing and account servicing, including, but not limited to, the collection of amounts owed UBE by its customers, shall bear all costs associated with such billing and collection activities, and shall assume all losses due to failure of its customers to pay their account.
          F. FUTURE SALES BY UBE . UBE shall not contract for the sale of Distiller’s Grains, to its customers, more than one hundred eighty (180) days in advance, unless One Earth Energy explicitly approves the price and terms of any such contract and provides notice of such approval to UBE. UBE will advise One Earth Energy weekly and update One Earth Energy monthly on all outstanding contractual obligations, and the terms thereof.
     3.  FEES AND EXPENSES . Unless otherwise specifically provided for herein, and to the extent not already included in the price of the Distiller’s Grains, One Earth Energy shall be responsible for any and all fees and reasonable and normal expenses, including but not limited to fees assessed by any State or other regulatory agency, incurred or assessed on any Distiller’s Grains, whether for licensing, dues, branding, packaging, inspecting, or otherwise. One Earth Energy shall, as a result of its responsibility for such expenses, retain all rights to any name, branding, and packaging of the Distiller’s Grains upon termination of this Agreement.
     4.  DELIVERY AND TITLE.
          A. PLACE . The place of delivery for all Distiller’s Grains purchased by UBE pursuant to this Agreement shall be F.O.B. Plant. UBE and its agents shall be given access to the Plant in a manner and at all times reasonably necessary and convenient for UBE and One Earth Energy to make delivery as provided herein. UBE shall schedule the loading and shipping of all Distiller’s Grains purchased hereunder. All labor and equipment necessary to load or unload trucks and rail cars shall be supplied by One Earth Energy without charge to UBE. The parties agree to handle the Distiller’s Grains in a good and workmanlike manner in accordance with the other’s reasonable requirements and in accordance with normal industry practice. One Earth Energy shall maintain the truck loading and rail car loading facilities in safe operating condition in accordance with normal industry standards.
          B. STORAGE . One Earth Energy shall provide storage space for not less than ten (10) full days production of Distiller’s Grains, based on normal operating capacity.
          C. REMOVAL . UBE warrants and agrees to use its best efforts to remove Distiller’s Grains before the aforementioned storage limits are exceeded or, if later, three (3) days after notice from One Earth Energy that the Plant’s operations are adversely affected by such storage. One Earth Energy shall be responsible at all times for the quantity, quality and condition of any Distiller’s Grains in storage at the Plant.

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          D. LOADING AND UNLOADING SCHEDULE . UBE shall give to One Earth Energy a schedule of quantities of Distiller’s Grains to be removed by truck or rail with sufficient advance notice reasonably to allow One Earth Energy to provide the required services. One Earth Energy shall provide the labor, equipment and facilities necessary to meet UBE’s loading schedule and One Earth Energy shall be responsible for UBE’s actual costs or damages resulting from One Earth Energy’s failure to do so. UBE shall order and supply trucks or railcars as scheduled for truck or rail shipments. All freight charges shall be the responsibility of UBE and shall be billed directly to UBE.
          E. PRODUCTION SCHEDULE .
               1. UBE shall provide loading orders as necessary to permit One Earth Energy to maintain its usual production schedule, provided, however, that UBE shall not be responsible for failure to schedule removal of Distiller’s Grains unless One Earth Energy shall have provided to UBE production schedules as follows: At least five (5) days prior to the beginning of each calendar month during the term hereof, One Earth Energy shall provide to UBE a tentative schedule for production in the next calendar month. On Wednesday of each week during the term of this Agreement, One Earth Energy shall provide to UBE a schedule for actual production for the following production week (Monday through Sunday). One Earth Energy shall inform UBE daily of inventory and production status by 8:30 a.m. CDT.
               2.  NOTICE . For purposes of this paragraph, notification will be sufficient if made by facsimile as follows:
If to UBE for Distiller’s Grain, to the attention of Randy Ives, Facsimile number 316-616-3786, Email address: randy.ives@usbioenergy.net; and
If to One Earth Energy, to the attention of                                                                , Facsimile number                                           , Email address:                                                                                                          ; or
To such other representatives of UBE and One Earth Energy as they may designate to the other in writing.
          F. TITLE . Title and risk of loss shall pass to UBE at the point in time when loading the Distiller’s Grains into trucks or rail cars has been completed and delivery to UBE of the bill of lading for each such shipment.
     5.  QUANTITY AND WEIGHTS .
          A. PRODUCTION AMOUNT . It is understood that total production amount of Distiller’s Grains shall be determined by One Earth Energy’s production schedule and that no

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warranty or representation has been made by One Earth Energy as to the exact quantities or timing of Distiller’s Grains to be produced pursuant to this Agreement.
          B. ESTIMATE . The estimated production of Distiller’s Grains at the Plant by One Earth Energy, to be sold to UBE, is approximately twenty six thousand (26,000) tons of Distiller’s Grains per month on a dry matter basis, and One Earth Energy shall use its best efforts to produce such amount of Distiller’s Grains.
          C. METERS AND SCALES . The quantity of Distiller’s Grains delivered to UBE from the Plant shall be established by meter or weight certificates, obtained from meters or scales which are certified as of the time of loading and which comply with all applicable laws, rules and regulations. The outbound meter or weight certificates shall be determinative of the quantity of the Distiller’s Grains for which UBE is obligated to pay pursuant to paragraph 2 above.
     6.  QUALITY .
          A. STANDARDS . One Earth Energy understands that UBE intends to sell the Distiller’s Grains purchased from One Earth Energy as a primary animal feed ingredient and that the same are subject to minimum quality standards for such use and each shall be of merchantable quality. One Earth Energy warrants that the Distiller’s Grains produced by the Plant and delivered to UBE shall be acceptable under current industry standards in the feed trade industry and that at the time of delivery, the Distiller’s Grains shall conform to the minimum quality standards outlined in Exhibit B attached hereto, as may be amended from time to time.
          B. COMPLIANCE . One Earth Energy represents and warrants that at the time of loading, the Distiller’s Grains will not be adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act and that each shipment may lawfully be introduced into interstate commerce under said Act. Payment of invoices does not waive UBE’s rights if the Distiller’s Grains do not comply with terms or specifications of this Agreement. Unless otherwise agreed between the parties to this Agreement, and in addition to other remedies permitted by law, UBE may, without obligation to pay, reject either before or after delivery, any of the Distiller’s Grains, which, when inspected or used are found by UBE to fail in a material way to conform to this Agreement. Should any of the Distiller’s Grains be seized or condemned by any federal or state department or agency for any reason, except noncompliance by UBE with applicable federal or state requirements, such seizure or condemnation shall operate as a rejection by UBE of the Distiller’s Grains seized or condemned and UBE shall not be obligated to offer any defense in connection with the seizure or condemnation. However, UBE agrees to cooperate with One Earth Energy in connection with the defense of any quality or other product claims, or any claims involving governmental seizure or condemnation. When rejection occurs before or after delivery, at its option, UBE may:

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               (1) Dispose of the rejected Distiller’s Grains after first offering One Earth Energy a reasonable opportunity of examining and taking possession thereof, if the condition of the Distiller’s Grains reasonably appears to UBE to permit such delay in making disposition;
               (2) Dispose of the rejected Distiller’s Grains in any manner directed by One Earth Energy which UBE can accomplish without violation of applicable laws, rules, regulations or property rights;
               (3) If any of the Distiller’s Grains are seized or condemned by any federal or state department or agency or if UBE has no available means of disposal of rejected Distiller’s Grains and One Earth Energy fails to direct UBE to dispose of the same as provided herein, UBE’s obligations with respect to said seized, condemned or rejected Distiller’s Grains shall be deemed fulfilled. Title and risk of loss shall pass to One Earth Energy promptly upon such seizure or condemnation or rejection by UBE.
               (4) One Earth Energy shall reimburse UBE for all costs reasonab

 
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