FORM OF CORN SUPPLY AGREEMENT

Exhibit 10.9

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

EXECUTION COPY

FORM OF CORN SUPPLY AGREEMENT

This Form of Agreement (“Agreement”) is made this          day of                     , 2006, by and between CARGILL, INCORPORATED, a Delaware corporation (“Cargill”), with a place of business at 15407 McGinty Road West, Wayzata, MN 55391, and                                 , a Delaware limited liability company (“Producer”). Cargill and Producer are each a “Party” and collectively are the “Parties” to this Agreement.

RECITALS

A. Producer intends to construct, own and operate a plant at                                  for the production of 100 million gallons per year of denatured fuel grade ethanol and relate products (as such plant may be expanded or upgraded according to the terms of this Agreement, the “Ethanol Facility”).

B. The Ethanol Facility will be located immediately adjacent to Cargill’s grain handling facility located in                              (“Grain Facility”).

C. The Parties intend for Producer to purchase Corn (as defined below) exclusively from Cargill for the purpose of ethanol production at the Ethanol Facility.

D. Corn will be delivered from Cargill to Producer primarily via a bulk grain conveyor running between the Ethanol Facility and the Grain Facility.

E. Producer and Cargill have executed that certain Master Agreement of even date herewith relating to the Ethanol Facility (the “Master Agreement”).

NOW THEREFORE, in consideration of the terms, conditions and covenants contained in this Agreement and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows.

AGREEMENT

1. Incorporation of Master Agreement; Definitions.

a. Master Agreement. The terms and conditions of the Master Agreement are hereby incorporated herein by reference. To the extent any provision of the Master Agreement conflicts with any provision contained herein, the provision contained herein will control.

b. Definitions. Terms capitalized but not defined in this Agreement shall have the meanings ascribed to them by the Master Agreement. In addition, as used in this Agreement, the following capitalized terms have the meanings indicated:

“Agreement” means this Corn Supply Agreement as the same may be amended, supplemented or otherwise modified according to its terms.

“Average Initial Basis” has the meaning specified in Section 4(b).

“Average Origination Basis” has the meaning specified in Section 4(b).

“Belt” has the meaning specified in Section 2(f).

“Bulk Weigher” has the meaning specified in Section 2(f).

“Buyer” has the meaning specified in Section 9(b).

“Capacity Payment” has the meaning specified in Section 4(e).

“Cargill Event of Default” has the meaning specified in Section 10.1.

“Cargill Fiscal Year” means a fiscal year of June 1 through May 31.

“Corn” has the meaning specified in Section 2(e).

“Corn Trading P&L” means Cargill’s corn trading margin profit and loss statement applicable to the Grain Facility; provided, however, that the Corn Trading P&L shall not include (i) the Origination Fee, (ii) the Handling Fee, or (iii) income generated outside of corn positions, including, but not limited to, income from mixing-blending, income from contract marketing alternatives, or drying income.

“Ethanol Facility” has the meaning specified in the Recitals.

“Event of Default” means either a Producer Event of Default or a Cargill Event of Default, as the context requires.

“Forecast” has the meaning specified in Section 3(a).

“Grain Facility” has the meaning specified in the Recitals.

“Handling Fee” has the meaning specified in Section 4(d).

“Initial Basis” has the meaning specified in Section 4(a)(i).

“Initial Quantity” means the number of bushels of Corn Producer expects to purchase for delivery on the Projected Date of First Delivery.

“Invoice” has the meaning specified in Section 5(a).

“Investment Grade Credit Rating” means a credit rating of (i) BBB- by Standard & Poor’s, a division of the McGraw-Hill Companies, Inc., (ii) Baa3 by Moody’s Investors Services or (iii) BBB- by Fitch, Inc. or Fitch Ratings Ltd. (or, in each case, from such Person’s successors or assigns or such equivalent ratings if such ratings cease to be used by such Person, its successor or assigns).

“Master Agreement” has the meaning specified in the Recitals.

 

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“Maximum Amount” means an aggregate maximum amount of $5,350,000 for the costs (i) to acquire and install the Belt for the Ethanol Facility, (ii) to acquire and install the Bulk Weigher for the Ethanol Facility, and (iii) to acquire and install the Related Equipment. The Maximum Amount under this Corn Supply Agreement shall be reduced by any amounts paid to Cargill or on behalf of Cargill for the costs incurred by Cargill to acquire and install the Related Equipment.

“Non-Defaulting Party” has the meaning specified in Section 10.3(a).

“Operating Procedures” has the meaning specified in Section 6.

“Origination Fee” has the meaning specified in Section 4(c).

“Payment Deadline” has the meaning specified in Section 5(b)(i).

“Producer Event of Default” has the meaning specified in Section 10.2.

“Projected Date of First Delivery” has the meaning specified in Section 3(c).

“Purchase Price” has the meaning specified in Section 4.

“Sales Confirmation” has the meaning specified in Section 3(b).

“Start-up Period” has the meaning specified in Section 5(b)(i).

“Start-up Period Invoice” has the meaning specified in Section 5(b)(iii).

“Term” has the meaning specified in Section 11(a).

“Threshold Amount” means an amount equal to the product of (i) $0.05 multiplied by (ii) the number of bushels of Corn sold and delivered by Cargill to Producer during each Cargill Fiscal Year.

2. Corn Supply and Use of the Grain Facility.

a. Sale and Purchase of Corn Requirements. Except as otherwise provided in this Section 2 or Section 14, Producer will purchase exclusively from Cargill, and Cargill will sell and deliver to Producer from the Grain Facility, all of Producer’s Corn requirements for ethanol production at the Ethanol Facility, including any Corn requirements that result from the future expansion of the Ethanol Facility so long as such expansion does not increase the Corn requirements to volumes in excess of 3.67 million bushels per month, subject to and in accordance with the terms and conditions of this Agreement. It is anticipated that Producer’s Corn requirements at the Ethanol Facility will be approximately 3 million bushels per month.

b. Use of Grain Facility and Other Facilities to Supply Corn. Cargill’s grain procurement and supply obligations pursuant to this Agreement will be performed primarily using the Grain Facility, and the Grain Facility will be used primarily

 

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throughout the term of this Agreement for the collection, handling and storage of Corn to be supplied to the Ethanol Facility pursuant to this Agreement. Cargill may utilize other grain handling and storage facilities available to Cargill for purposes of procuring, handling and storing Corn for use in the Ethanol Facility, if the Parties determine that the use of such other facilities is economically beneficial to the Parties, or necessary to provide for a continuing supply of Corn to the Ethanol Facility (it is understood and agreed, however, that if the Parties determine to use any such arrangement, the grain receiving facilities and the Belt located at the Grain Facility will nevertheless continue to be used for delivery of Corn to the Ethanol Facility). Cargill may also utilize the Grain Facility for purposes of collection, handling, and storage of other farm products, including soybeans, or collection, handling and storage of corn for sale to third parties, as long as the use of the Grain Facility for such other purposes does not disrupt the continuing supply of corn to the Ethanol Facility as contemplated in this Agreement, and does not otherwise interfere with the operations of the Ethanol Facility. It is understood and agreed that (without limiting the generality of the previous sentence) (i) such other uses may include (A) use of the Grain Facility to collect, handle and store soybeans procured from soybean producers who also sell corn to Cargill at the Grain Facility (it being the Parties’ intention that storage of soybeans will not normally result in use of more than ten percent (10%) of the Grain Facility’s storage capacity), and (B) use of the Grain Facility for other purposes during periods in which the Ethanol Facility is not in operation, as a result of planned outages, Force Majeure conditions or otherwise, and (C) use of the Grain Facility for other purposes in the event that and during periods in which the Ethanol Facility’s Corn requirements are less than 2.78 million bushels per month, but (ii) such other uses may not interfere with the use of the Grain Facility’s grain receiving facilities or the Belt to provide for a continuing supply of Corn to the Ethanol Facility. Cargill shall maintain the Grain Facility in such a state of repair so as not to interfere with Producer’s operations.

c. Disruption of Use of Grain Facility. In the event Cargill is unable to utilize the Grain Facility to supply Corn to the Ethanol Facility as a result of Force Majeure, Cargill and Producer will immediately meet and determine alternative methods under which Cargill may arrange for the supply of Corn to the Ethanol Facility, it being expressly understood by the Parties that this Section 2(c) shall in no way limit Producer’s or Cargill’s rights under Section 4 (Force Majeure) of the Master Agreement.

d. Unexcused Failure to Supply. In the event and during any period in which Cargill fails to supply the Corn requirements of the Ethanol Facility (including a failure to supply Corn that complies with the specifications set forth herein or in the applicable Sales Confirmation and Cargill has not supplied replacement Corn within a reasonable period of time (not to exceed 12 hours after the time for delivery should have been completed based on normal operating procedures) in accordance with Section 14(a)), and such failure is not excused by the terms of this Agreement or is the result of a Force Majeure event not affecting the operation of the Grain Facility (i.e., the Grain Facility is operational and capable of supplying corn to the Ethanol Facility), then, if Cargill has not paid to Producer sufficient Damages (including lost Net Revenues) for such unexcused failure to supply, Producer may purchase the Corn requirements of the Ethanol Plant from any other source available to the Producer and Cargill shall be responsible for all

 

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reasonable costs of cover; provided, however, that Cargill shall still be entitled to a Handling Fee for all bushels of corn handled through the Grain Facility. Producer shall promptly send an invoice electronically to Cargill itemizing the costs of cover (along with adequate supporting documentation) due and payable with respect to such purchase, which amounts shall be paid by Cargill within three (3) Business Days following Cargill’s receipt of the invoice.

e. Corn Specifications. All product supplied to Producer by Cargill shall meet the applicable legal requirements for U.S. No. 2 yellow corn or better, and shall be 15.5% or less moisture and 10 ppm or less aflatoxin (subject to mutually agreed upon discounts or premiums) unless otherwise agreed by the Parties as evidenced by a specific Sales Confirmation (“Corn”).

f. Corn Delivery Belt. Corn will be delivered from Cargill to Producer primarily via a bulk grain conveyor running between the Ethanol Facility and the Grain Facility (“Belt”). The Belt will be owned by Producer but acquired and installed by Cargill not later than thirty (30) days prior to the Testing Date pursuant to plans and specifications mutually agreed upon by the Parties. Cargill will be reimbursed up to the Maximum Amount for the costs incurred by Cargill to acquire and install the Belt in a manner mutually agreed upon by the Parties; all such costs in excess of the Maximum Amount shall be payable by, and for the sole account of, Cargill. Cargill will have responsibility to operate and maintain the Belt, and all of the costs reasonably incurred by Cargill in maintenance of the Belt will be shared fifty percent (50%) each by Cargill and Producer. In the event the Belt becomes inoperable for any reason, the Parties will immediately meet and determine alternative methods for delivery of Corn to the Ethanol Facility. The Corn will be weighed on a bulk weigher owned by Producer but acquired and installed by Cargill on the Belt not later than thirty (30) days prior to the Testing Date according to the plans and specifications for the Belt (“Bulk Weigher”), and Corn will be graded by Cargill before delivery to Producer pursuant to Section 6 hereof. Cargill will be reimbursed up to the Maximum Amount for the costs incurred by Cargill to acquire and install the Bulk Weigher in a manner mutually agreed upon by the Parties; all such costs in excess of the Maximum Amount shall be payable by, and for the sole account of, Cargill. Producer’s rights to locate the Belt and Bulk Weigher on the Grain Facility site are set forth in the Grain Facility Lease.

g. Use of Alternative Feedstocks. In the event, and to the extent, that Producer determines it is beneficial for the operation of the Ethanol Facility to use any raw commodity other than Corn as a substitute or alternative in the production of ethanol at the Ethanol Facility (“Alternative Commodity”), Producer shall notify Cargill of such intended use as soon as practicable after the determination is made, and Producer and Cargill shall attempt to reach mutual agreement regarding the supply of such Alternative Commodity by Cargill. In the event that Cargill and Producer reach agreement regarding the supply of such Alternative Commodity by Cargill, the parties shall negotiate in good faith the terms of such supply agreement and/or any appropriate amendments to this Agreement to reflect the terms thereof. In the event that Cargill and Producer are unable to reach agreement regarding the supply of such Alternative Commodity by Cargill, Producer may not utilize the Alternative Commodity at the Ethanol Facility unless Cargill

 

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and Producer reach mutual agreement on amendments to this Agreement to reflect the reduction in the anticipated volume of Corn deliveries contemplated in this Agreement.

h. Logistics. Cargill will have absolute discretion to manage all logistics and related operations in connection with the origination, handling, storage, and delivery of the Corn to Producer, subject to the parameters set forth in this Agreement.

3. Forecasts; Orders and Sales Confirmations; Initial Quantity of Corn.

a. Forecasts. On a monthly basis, Producer shall provide to Cargill a written forecast estimating Producer’s anticipated Corn requirements for the immediately following 6 month period (“Forecast”) (for example, a Forecast provided in January would estimate the Corn needs at the Ethanol Facility for the following February through July). On a weekly basis, Producer and Cargill will discuss Producer’s Corn volume needs for the subsequent week. From time to time as the parties deem appropriate, Cargill and Producer will discuss the cash corn basis price and/or basis range that the parties believe appropriate for originating Producer’s estimated Corn needs; provided, however, that Cargill will have ultimate discretion, exercised in a commercially reasonable manner, to determine the basis price used to originate Corn for Producer’s Corn needs.

b. Orders and Sales Confirmations. Cargill will sell to Producer, and Producer will purchase from Cargill, approximately 100,000 bushels of Corn per calendar day during the Term, commencing on the Start-Up Date, and the Corn will be priced in accordance with Section 4 of this Agreement. Each sale of Corn to Producer shall be evidenced by a separate Cargill sales confirmation (“Sales Confirmation”). Each Sales Confirmation at a minimum shall specify the quantity and quality of the Corn, the delivery date and delivery location, the purchase price (i.e., the applicable basis and futures reference month as determined in accordance with Section 4 below), and any applicable discount from or premium to the purchase price, and such other information as the Parties may agree to include. On a daily basis, Producer shall submit to Cargill firm orders (setting forth specific bushel requirements) in writing or via telephone and Cargill shall issue the Sales Confirmation to Producer in writing promptly upon receipt of such firm order. Corn shall not be transferred across the Belt to the Ethanol Facility unless a Sales Confirmation is in place and the Corn has been priced. To the extent that any terms of any Sales Confirmation conflict with the terms of this Agreement, the terms of this Agreement shall govern unless both Parties have specifically expressed their intent in writing to supercede the terms of this Agreement. If both parties mutually agree that a Sales Confirmation may be cancelled, then such Sales Confirmation will be cancelled. Cargill shall provide Producer with a daily list, by no later than 9:00 am CST/10:00 a.m. EST, of Corn transfers to the Ethanol Facility for the prior 24-hour period (12 midnight to 12 midnight).

c. Initial Quantity of Corn. Producer expects to purchase the Initial Quantity for delivery by August 1, 2007 (the “Projected Date of First Delivery”). Producer shall provide reasonable advance notice to Cargill of the Initial Quantity and any revisions to

 

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the Projected Date of First Delivery, together with its anticipated need for Corn during the first six months of operations at the Facility.

4. Purchase Price. The purchase price (“Purchase Price”) for each bushel of Corn shall be the sum of the Base Corn Price (as may be adjusted through the monthly reconciliation process), the Origination Fee and the Handling Fee, which are defined in Sections 4(a), 4(c) and 4(d) hereof.

a. Base Corn Price. Producer shall pay to Cargill the Base Corn Price for Corn supplied to the Facility. The Base Corn Price charged to Producer will be determined as follows:

 

i.

For all Corn delivered to Producer on a particular day, the initial corn cash/basis bid (“Initial Basis”) to be applied will be the daily posted Cargill Grain Facility cash/basis bid (delivered Grain Facility) for U.S. No. 2 yellow corn, 15.5 moisture, 10 ppm aflatoxin for the day immediately preceding the Sales Confirmation (i.e., the day before the Corn is delivered); plus

 

ii.

The applicable futures price, as determined under the Futures Advisory Agreement between Cargill Commodity Services, Inc. and Producer; plus or minus