EXHIBIT 6.1
ETHANOL MARKETING AGREEMENT*
THIS ETHANOL MARKETING AGREEMENT (the "Agreement") is entered into on
February 19, 2002, to be effective as of the "Effective Date" (defined in
Section 1(c) hereof), by and between Minnesota Corn Processors, LLC, a Colorado
limited liability company with its principal place of business in Marshall,
Minnesota ("MCP"), and LSCP, L.P., an Iowa limited partnership with its
principal place of business in Marcus, Iowa ("LS").
BACKGROUND
WHEREAS, MCP and LS are both in the business of processing corn to produce
ethanol for commercial sale; and
WHEREAS, MCP has knowledge of the ethanol industry in the United States,
and has experience related to ethanol marketing, sales, and distribution; and
WHEREAS, LS and MCP believe that it would be in their mutual best interests
for MCP to purchase ethanol produced by LS, for purposes of marketing, selling,
and distributing that ethanol, along with the ethanol produced by MCP; and
WHEREAS, MCP is a limited partner in LS with the power to appoint a
representative to the board of directors of Little Sioux Corn Processors, LLC,
its general partner; and
WHEREAS, the terms of LS's limited partnership agreement require MCP to
agree to market LS's ethanol for a minimum of an initial term, and the parties
intend this Agreement to satisfy such requirement; and
WHEREAS, LS and MCP desire to enter into this Agreement, for purposes of
setting out the terms and conditions of the business arrangement;
NOW, THEREFORE, the parties to this Agreement hereby covenant and agree as
follows:
AGREEMENT
1. TERMS OF THIS AGREEMENT.
(a) THE INITIAL TERM. The term of this Agreement will be for four
years from its Effective Date, unless this Agreement is terminated earlier in
the manner described below in Section 2. That four-year period will hereafter be
referred to as the "Initial Term."
(b) THE RENEWAL TERMS. Unless this Agreement is terminated in the
manner described below in Section 2, this Agreement will automatically renew for
successive additional
* Portion omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
terms of one year each. These additional terms will each be referred to
hereafter as a "Renewal Term."
(c) EFFECTIVE DATE. "Effective Date" means the date on which the LS
Production Facilities, after having been constructed and tested, begin operating
and producing ethanol for sale.
2. TERMINATION. This Agreement may be terminated under the circumstances
set out below.
(a) TERMINATION FOR INTENTIONAL MISCONDUCT. If either party engages
in intentional misconduct reasonably likely to result in significant adverse
consequences to the other party, the party harmed or likely to be harmed by the
intentional misconduct may terminate this Agreement immediately, upon written
notice to the party engaging in the intentional misconduct.
(b) TERMINATION FOR UNCURED BREACH. If one of the parties breaches
the terms of this Agreement, the other party may give the breaching party a
notice in writing which specifically sets out the nature and extent of the
breach, and the steps that must be taken to cure the breach. After receiving the
written notice, the breaching party will then have thirty (30) days to cure the
breach, if the breach does not involve a failure to make any payments which are
required by this Agreement.
If the breach does involve a failure to make any payments which are
required by this Agreement, then the breaching party will have five (5) days
after receiving the written notice to cure the breach. If the breaching party
does not cure any breach within the applicable cure period, then the
non-breaching party will have the right to terminate this Agreement immediately.
(c) TERMINATION AT THE END OF THE INITIAL TERM OR ANY RENEWAL TERM.
Either party may terminate this Agreement at the end of the Initial Term, or at
the end of any Renewal Term, by providing the other party with a written notice
of intent to terminate. Such a written notice of intent to terminate must
specify the proposed termination date, and must be received by the
non-terminating party at least three (3) months before the proposed termination
date.
(d) TERMINATION BY MUTUAL WRITTEN AGREEMENT. This Agreement may also
be terminated upon any terms and under any conditions which are mutually agreed
upon in writing by the parties.
3. REPRESENTATIONS AND WARRANTIES OF LS. In connection with its sale of
ethanol to MCP under this Agreement, LS makes the following representations and
warranties, for the benefit of MCP:
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(a) GOOD TITLE. LS will have good and marketable title to all of the
ethanol sold to MCP under this Agreement, free and clear of all liens and
encumbrances.
(b) CORPORATE EXISTENCE AND GOOD STANDING. LS is a limited liability
company validly existing and in good standing under the laws of the State of
Iowa.
(c) CORPORATE AUTHORITY AND CORPORATE APPROVAL. LS has the power and
authority to enter into this Agreement. Further, LS has taken all corporate
action necessary to authorize it to execute, become bound by, and perform its
duties and obligations under this Agreement.
(d) NO CONFLICTS AS TO LAW OR AGREEMENTS. The execution of this
Agreement by LS, the sale and transfer of ethanol from LS to MCP, and the taking
of all actions by LS under this Agreement do not require the consent of any
person, entity, or agency; do not violate any law, rule, or regulation; and do
not breach or violate any contract or agreement to which LS is a party, or by
which LS is bound.
(e) COMPLIANCE WITH LAWS. LS is now in compliance, and during the
entire term of this Agreement will remain in compliance, with all applicable
federal, state, local, and foreign laws, ordinances, orders, rules, and
regulations ("Laws"), other than Laws where neither the costs or potential costs
of failing to comply, nor the costs or potential costs of causing compliance,
would be material to LS or its business or assets. The definition of Laws set
out above includes, but is not limited to, the Toxic Substances Control Act
("TOSCA"), and all other laws related to the protection of the environment
("Environmental Laws").
(f) COMPLETE AND ACCURATE DISCLOSURE. LS has not withheld from MCP
any documents, information, or material facts relating to LS's ethanol
production capabilities, and/or relating to the business operations of LS.
Further, no representation or warranty in this Agreement, or in any letter,
certificate, exhibit, schedule, statement, or other document furnished or to be
furnished pursuant to this Agreement, contains any untrue statement of a
material fact.
(g) LICENSES AND PERMITS. LS now has, and will have at all times
during the term of this Agreement, all of the licenses and permits necessary to
operate the LS Production Facilities.
(h) PRODUCTION CAPACITY. The amount of ethanol that LS is capable of
producing each year, based on the nameplate design capacity of all of the LS
Production Facilities, will hereafter be referred to as LS's "Annual Production
Capacity." The nameplate design capacity of LS's ethanol plant in Marcus, Iowa,
is at least forty million (40,000,000) gallons of ethanol per year and that is
LS's Annual Production Capacity as of the Effective Date of this Agreement. LS
has the plant capacity and the technical capability to produce the quality of
ethanol required under this Agreement, in the quantities required under this
Agreement.
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(i) PRODUCT QUALITY. All of the ethanol sold to MCP by LS under this
Agreement will be of merchantable quality, and will be fit for its intended
purpose. All such ethanol must meet all applicable ASTM Standards, must meet the
ethanol standards established by the Xxxxxxxx Pipeline test, and must meet the
ethanol standards established by all other standard ethanol industry tests.
(j) PATENT INFRINGEMENT. LS is not now, and will not be at any time
in the future during the term of this Agreement, infringing upon any patents or
other intellectual property rights held by any other parties.
4. REPRESENTATIONS AND WARRANTIES OF MCP. In connection with providing
the services on behalf of LS which are described in this Agreement, MCP makes
the following representations and warranties, for the benefit of LS:
(a) CORPORATE EXISTENCE AND GOOD STANDING. MCP is a limited liability
company validly existing and in good standing under the laws of the State of
Colorado.
(b) CORPORATE AUTHORITY AND CORPORATE APPROVAL. MCP has the power and
the authority to enter into this Agreement. Further, MCP has taken all corporate
action necessary to authorize it to execute, become bound by, and perform its
duties and obligations under this Agreement.
(c) NO CONFLICTS AS TO LAW OR AGREEMENTS. The execution of this
Agreement by MCP, the purchasing of ethanol from LS by MCP, and the taking of
all actions by MCP under this Agreement do not require the consent of any
person, entity, or agency; do not violate any law, rule, or regulation; and do
not breach or violate any contract or agreement to which MCP is a party, or by
which MCP is bound.
(d) COMPLIANCE WITH LAWS. MCP is now in compliance, and during the
entire term of this Agreement will remain in compliance, with all applicable
federal, state, local, and foreign laws, ordinances, orders, rules, and
regulations ("Laws"), other than Laws where neither the costs or potential costs
of failing to comply, nor the costs or potential costs of causing compliance,
would be material to MCP or its business or assets. The definition of Laws set
out above includes, but is not limited to, the Toxic Substances Control Act
("TOSCA"), and all other laws related to the protection of the environment
("Environmental Laws").
(e) LICENSES AND PERMITS. MCP now has, and will have at all times
during the term of this Agreement, all of the licenses and permits necessary to
perform its obligations under this Agreement.
(f) PRODUCT QUALITY. All of the ethanol produced by MCP and sold to
its customers under this Agreement will be of merchantable quality, and will be
fit for its intended purpose. All such ethanol must meet all applicable ASTM
Standards, must meet the ethanol
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standards established by the Xxxxxxxx Pipeline test, and must meet the ethanol
standards established by all other standard ethanol industry tests.
(g) PATENT INFRINGEMENT. MCP is not now, and will not be at any time
in the future during the term of this Agreement, infringing upon any patents or
other intellectual property rights held by any other parties.
5. QUANTITY. During the entire term of this Agreement, LS agrees to sell
to MCP, and MCP agrees to purchase from LS, all of the ethanol produced by LS at
its production facility near Marcus, Iowa (the "LS Production Facilities").
6. PRODUCTION ESTIMATES. As of the Effective Date of this Agreement, LS
will provide MCP with LS's best estimate of LS's anticipated monthly ethanol
production for the next twelve (12) months, to assist MCP in developing
appropriate marketing strategies for the ethanol to be produced by LS.
On or before the first day of each month, LS will provide MCP with its
updated best estimate of LS's anticipated monthly ethanol production for the
next twelve (12) months, so that MCP will have ethanol production estimates from
LS twelve (12) months into the future during the entire time that this Agreement
is in effect.
Once this Agreement has been terminated under Section 2(a), Section 2(b),
or Section 2(d) above, LS will no longer be required to provide MCP with any
further monthly ethanol production estimates, except to the extent required in
any written termination agreement between the parties entered into under Section
2(d) above.
Once either party has sent a written notice of intent to terminate this
Agreement under Section 2(c) above, LS's monthly ethanol production estimates
must continue to cover the time period through the proposed termination date,
but need not extend to any months after the proposed termination date.
7. MONTHLY ETHANOL VOLUME REQUIREMENTS
(a) DEVELOPMENT OF THE ETHANOL VOLUME REQUIREMENT. On or before the
first day of the month, LS will provide MCP with written notice setting out the
number of gallons of ethanol that LS expects to produce and make available for
sale under this Agreement during the next month (the "Ethanol Volume
Requirement").
For example, on or before April 1, the LS will provide MCP with its
Ethanol Volume Requirement for the next month, which would be May.
(b) INTENT OF THE PARTIES TO TRANSACT AT OR NEAR FULL CAPACITY. Both
parties acknowledge and agree that if market conditions and other conditions are
favorable, LS intends to operate the LS Production Facilities at or near full
capacity.
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8. SHORTFALLS IN THE MONTHLY ETHANOL VOLUME REQUIREMENTS OF LS. To the
extent that LS fails to produce enough ethanol to meet LS's Ethanol Volume
Requirement in any month, MCP will have the right to purchase ethanol elsewhere,
in a commercially reasonable manner, in order to cover the shortfall. All costs
and expenses related to such purchases which are in excess of the costs and
expenses that MCP would have incurred in the absence of such a shortfall will be
charged to LS.
9. EXCESS ETHANOL PRODUCTION. To the extent that LS produces more than
the Ethanol Volume Requirement for a particular month, MCP may, but is not
required to take immediate delivery of such excess ethanol. If MCP does not take
immediate delivery of such excess ethanol, LS shall add such excess ethanol to
the Ethanol Volume Requirement for the next month, and store such excess ethanol
at its own expense until the next month.
10. SERVICES TO BE PROVIDED BY MCP. MCP in its sole discretion will
provide, in good faith, the marketing, sales, storage, and transportation
services for the ethanol produced under this Agreement.
11. QUALITY ASSURANCE AND QUALITY CONTROL.
(a) INITIAL AND ONGOING QA AND QC SUPPORT. MCP agrees to provide
initial quality assurance ("QA") and quality control ("QC") support to LS, to
assist LS in consistently producing ethanol at the LS Production Facilities
which meets the standards for product quality which are set out in Section 3(i)
of this Agreement. After this initial support, MCP will continue to assist LS
with QA and QC matters throughout the duration of this Agreement on an "as
needed" basis, at the request of either party.
(b) LS'S RESPONSIBILITY AND LIABILITY FOR THE ETHANOL THAT IT
PRODUCES. Notwithstanding MCP's agreement to provide LS with QA and QC support
in the manner described in this Section 11, the parties agree that LS will
ultimately be responsible for the quality of the ethanol produced at the LS
Production Facilities. Further, the parties agree that LS, and not MCP, will be
responsible and liable for all claims related to the quality of the ethanol
produced by LS at the LS Production Facilities.
(c) LS'S RELEASE OF MCP FROM LIABILITY RELATED TO QA AND QC SUPPORT.
MCP's agreement to provide QA and QC support to LS under this Agreement is a
good faith attempt by MCP to help LS meet the ethanol quality standards set out
in this Agreement, for the mutual benefit of MCP and LS. However, MCP's
agreement to provide QA and QC support to LS does not constitute a warranty or a
guarantee of any type with respect to the quality of the ethanol produced by LS.
Thus, LS and all of its related persons and organizations hereby release MCP and
all of its related persons and organizations from all liability, in the absence
of gross negligence and/or willful misconduct, related to the QA and QC support
provided to LS by MCP under this Agreement.
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12. SALES TO MCP'S ETHANOL CUSTOMERS. When MCP sells the ethanol produced
under this Agreement to its customers, the parties understand and agree that the
ethanol sales prices, and all other terms and conditions of ethanol sales to
customers under this Agreement, will be established by MCP subject to
commercially reasonable standards. These decisions may be made by MCP, without
the need for obtaining consent from LS.
13. PAYMENTS TO MCP FOR SERVICES PROVIDED. In exchange for the marketing,
sales, storage, and transportation services provided by MCP under Section 10
above during the Initial Term, LS will pay MCP the sum of [*] per gallon of
ethanol produced at the LS Ethanol Production Facilities and sold by MCP under
this Agreement. During each Renewal Term, the fee paid to MCP by LS for these
same services will be negotiated and agreed upon by the parties.
During any time period after the Initial Term when the parties have
not agreed upon the amount that LS will pay MCP for these services, the fee paid
to MCP by LS for these services will be [*] per gallon. LS will pay MCP this fee
for services by the fourteenth day of each month, for the services provided and
the gallons of ethanol sold by MCP during the previous month.
14. INDEPENDENT CONTRACTOR STATUS OF MCP, AND EMPLOYMENT STATUS OF MCP'S
EMPLOYEES. Nothing contained in this Agreement, including the services to be
provided by MCP on behalf of LS, will make MCP the agent of LS for any purpose.
MCP and its employees shall be deemed to be independent contractors, with full
control over the manner and method of performance of the services they will be
providing on behalf of LS under this Agreement.
Any of the employees of MCP which are providing services on behalf of LS
under this Agreement will remain employees of MCP. These employees will continue
to be paid by MCP and to enjoy the benefits to which they are entitled as
employees of MCP, unless otherwise provided in any separate agreement covering
the services of such employees.
15. SEPARATE ENTITIES. LS and MCP are separate entities. Nothing in this
Agreement or otherwise shall be construed to create any rights or liabilities of
either party to this Agreement with regard to any rights, privileges, duties, or
liabilities of the other party to this Agreement, except to the extent otherwise
provided in this Agreement, or in any other agreement between the parties to
this Agreement.
16. DEVELOPMENT OF ORDERING AND SHIPPING PROCEDURES. Because LS and MCP
have not done business in the past in the manner described in this Agreement,
they have not yet attempted to develop efficient and effective procedures
related to ordering ethanol, delivering ethanol, and shipping ethanol, in
connection with MCP's ethanol
*Portion omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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purchases from LS. After this Agreement becomes effective, MCP and LS agree to
work together promptly and in good faith to develop effective and efficient
policies and procedures to cover these matters, based on their mutual
experiences working together under this Agreement.
Once those policies and procedures have been developed and mutually agreed
upon, MCP and LS intend to document them, in the form of an addendum to this
Agreement.
17. PRODUCT DISTRIBUTION.
(a) THE MCP PRODUCTION FACILITIES. MCP presently produces ethanol at
its plant in Marshall, Minnesota (the "Marshall Plant"), and at its plant in
Columbus, Nebraska (the "Columbus Plant"). The Xxxxxxxx Plant and the Columbus
Plant may be collectively referred to hereafter as the "MCP Production
Facilities."
(b) PRODUCT SUBSTITUTION. The parties agree that the ethanol produced
at the MCP Production Facilities and the ethanol produced at the LS Production
Facilities will be considered fungible and interchangeable for purposes of
product distribution under this Agreement. MCP will not brand, label, or
otherwise identify any ethanol sold under this Agreement differently because
that ethanol was produced at the LS Production Facilities, as opposed to being
produced at the MCP Production Facilities.
(c) EFFICIENT PRODUCT DISTRIBUTION. When customers purchase ethanol
from MCP that has been produced under this Agreement, MCP may fill the orders of
those customers with ethanol produced at the LS Production Facilities, the MCP
Production Facilities, or both. MCP will manage the factors such as customer and
delivery locations, order sizes, freight availability, and product delivery
logistics in a manner that will result in a reasonably efficient and cost
effective product distribution, for the mutual benefit of both LS and MCP.
18. PRODUCT TESTING. At least twice each week during the term of this
Agreement, and more often at the request of MCP, LS agrees to provide MCP with
samples of the ethanol produced at the LS Production Facilities, so that MCP can
test LS's product quality on a regular basis. MCP agrees to provide LS with the
information LS will need in order to collect, pack, and ship these ethanol
samples to MCP in a manner satisfactory to MCP.
19. COLLECTION AND RETENTION OF PRODUCT SAMPLES.
(a) COLLECTION OF PRODUCT SAMPLES. During the entire term of this
Agreement, LS agrees to collect samples of not less than 250 milliliters each
from each shipment of ethanol that leaves the LS Production Facilities under
this Agreement. Each such product sample will be labeled to include the
production date, the plant at which the product sample was produced, and any
other applicable information.
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(b) RETENTION OF PRODUCT SAMPLES. LS agrees to retain these product
samples for at least three months after the date of the shipment from which each
product sample was taken, in a manner which preserves the integrity of each
individual product sample. Further, LS agrees to promptly provide any of these
samples to MCP, at the request of MCP.
20. THE ACTUAL PRICE FOR ETHANOL SOLD TO MCP BY LS. MCP agrees to pay LS a
price for all ethanol sold to MCP by LS under this Agreement that is equal to
the "Average Net Ethanol Selling Price," as defined in this Section 20. For
purposes of this Agreement, the Average Net Ethanol Selling Price will be
calculated as follows:
(a) [*]
(b) [*]
(c) [*]
21. THE ESTIMATED PRICE FOR ETHANOL SOLD TO MCP BY LS.
(a) [*]
(b) INVOICES AND PAYMENTS BETWEEN LS AND MCP. LS will invoice MCP,
upon shipment, at the applicable Estimated Average Net Ethanol Selling Price for
all ethanol sold to MCP by LS under this Agreement. MCP will pay LS for all such
ethanol on a "Net 7 Days" basis.
(c) [*]
(d) RECONCILIATION OF ESTIMATED SELLING PRICES AND ACTUAL SELLING
PRICES AFTER EACH MONTH. Within fourteen (14) days after MCP provides LS with
the actual Average Net Ethanol Selling Price for the preceding month, the
parties will reconcile the difference between the Estimated Average Net Ethanol
Selling Price and the actual Average Net Ethanol Selling Price for the preceding
month. If the Estimated Average Net Ethanol Selling Price exceeded the Average
Net Ethanol Selling Price, then LS will refund to MCP the overpayments that it
previously received from MCP, within fourteen (14) days after the completion of
this actual and estimated selling price reconciliation. In lieu of LS directly
refunding any amounts to MCP by separate payment, and MCP directly refunding any
amounts to LS by separate payment, under this Section 21(d), the parties may
offset the required amounts on their next respective monthly payments.
*Portion omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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On the other hand, if the Estimated Average Net Ethanol Selling Price was
less than the actual Average Net Ethanol Selling Price, then MCP will pay LS the
additional amounts owed to LS, within fourteen (14) days after the completion of
this actual and estimated selling price reconciliation.
22. MONTHLY MEETINGS. Representatives of LS and MCP will meet on a monthly
basis to discuss issues related to this Agreement. It is the intent of both LS
and MCP that these monthly meetings be conducted in a manner that complies with
all applicable state and federal laws.
23. MONTHLY RECONCILIATION OF SHIPMENT VOLUMES. On a monthly basis, LS and
MCP will compare and reconcile their information related to the volumes of
ethanol shipped from the LS Production Facilities, in order to minimize disputes
and disagreements between them under this Agreement, and in order to provide
more accurate information for calculating the Average Net Ethanol Selling Price
under Section 20 of this Agreement.
In the event that the parties are unable to agree on which party's
numbers are correct for any month, the average of the parties' numbers for such
month shall be used unless either party demands resolution of the issue pursuant
to Section 31 of this Agreement.
24. AUDITING OF MCP'S BOOKS AND RECORDS.
(a) AUDIT OF RECORDS. During the term of this Agreement, LS may
either periodically inspect or periodically require that quarterly or annual
audits or reviews performed upon those books and records of MCP directly related
to the ethanol bought and sold under this Agreement. The audits or reviews shall
be performed in accordance with generally accepted accounting principals by an
independent certified public accounting firm selected by LS. The purposes of the
audits shall be to confirm the accuracy and completeness of information provided
by MCP to LS, the Average Net Ethanol Selling Price, MCP's sales and shipment
volumes for ethanol purchased under this Agreement, and to verify any other
information related to this Agreement.
LS shall be responsible for any accounting fees incurred during such
audits or reviews.
(b) CONFIDENTIALITY OBLIGATIONS. Any such independent public
accountants hired by LS will be subject to the same confidentiality obligations
that LS is subject to under Section 26 of this Agreement. LS agrees to inform
its accountants of those confidentiality obligations.
(c) CHALLENGES. Any disputes arising from the audit or review of
MCP's books and records shall be resolved pursuant to Section 31 hereof.
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25. FINANCIAL INFORMATION. On a quarterly basis, LS will provide MCP with
copies of current balance sheets, income statements, and statements of cash
flows (audited if available) related to LS. However, for each quarter during
which MCP is a limited partner of LS, the requirements of this Section 25 shall
be deemed satisfied by virtue of MCP's access to such information in its
capacity as a limited partner of LS.
26. HANDLING OF CONFIDENTIAL INFORMATION. The parties acknowledge that
they will be exchanging information about their businesses under this Agreement
which is confidential and proprietary, and the parties agree to handle that
confidential and proprietary information in the manner described in this Section
26.
(a) DEFINITION OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, the term "Confidential Information" will mean information related to
the business operations of LS or MCP that meets all of the following criteria:
(i) The information must not be generally known to the public,
and must not be a part of the public domain.
(ii) The information must belong to the party claiming it is
confidential, and must be in that party's possession.
(iii) The information must have been protected and safeguarded by
the party claiming it is confidential by measures that were
reasonable under the circumstances before the information
was disclosed to the other party.
(iv) The disclosure of the information to third parties must be
likely to result in adverse consequences to the party
claiming it is confidential.
(v) Written information must be clearly designated in writing as
"CONFIDENTIAL INFORMATION" by the party claiming it is
confidential before it is disclosed to the other party,
except that all information about costs and prices will
always be considered Confidential Information under this
Agreement, without the need for specifically designating it
as such.
(vi) Verbal Confidential Information which is disclosed to the
other party must be summarized in writing, designated in
writing as "CONFIDENTIAL INFORMATION," and transmitted to
the other party within ten (10) days of the verbal
disclosure.
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(b) LIMITATIONS ON THE USE OF CONFIDENTIAL INFORMATION. Each party
agrees that it will not use any Confidential Information that it obtains about
the other party for any purpose, other than to perform its obligations under
this Agreement.
(c) THE DUTY NOT TO DISCLOSE CONFIDENTIAL INFORMATION. The parties
agree that they will not disclose any Confidential Information about each other
to any person or organization, other than their respective legal counsel and
accountants, without first getting written consent to do so from the other
party. This will be the case both while this Agreement is in effect and for a
period of five (5) years after it has been terminated.
(d) THE DUTY TO NOTIFY THE OTHER PARTY IN CASES OF IMPROPER USE OR
DISCLOSURE. Each party agrees to immediately notify the other party if either
party becomes aware of any improper use of or any improper disclosure of the
Confidential Information of the other party at any time while this Agreement is
in effect, and for a period of five (5) years after it has been terminated.
(e) PROTECTION OF THE CONFIDENTIAL INFORMATION. Each party agrees to
develop effective procedures for protecting the Confidential Information that it
obtains from the other party, and to implement those procedures with the same
degree of care that it uses in protecting its own Confidential Information.
(f) RETURN OF THE CONFIDENTIAL INFORMATION. Immediately upon the
termination of this Agreement, each party agrees to return to the other party
all of the other party's Confidential Information that is in its possession or
under its control.
27. RIGHT OF OFFSET. A party hereto (the "Withholding Party") has the
right to withhold payments otherwise required hereby from the other party hereto
(the "Withheld Party") as an offset against any payments that the Withheld Party
fails to make under Sections 13 and 21 hereof. If a Withholding Party exercises
its right of offset at any time, the Withheld Party may request a written
explanation from the Withholding Party that includes the amount of the offset
claimed and the basis for the exercise of the offset. Upon receiving such
written notice for an explanation, the Withholding Party shall promptly provide
a reasonably detailed explanation to the Withheld Party.
28. INSURANCE.
(a) LS'S INSURANCE. During the entire term of this Agreement, LS will
maintain insurance coverage which is standard, in the reasonable opinion of MCP,
for a company of its type and size which is engaged in the business of producing
and selling ethanol. At a minimum, LS's insurance coverage must include:
(i) COMPREHENSIVE GENERAL PRODUCT AND PUBLIC LIABILITY
INSURANCE, naming MCP as an additional named
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insured, with liability limits of at least five million
dollars ($5,000,000) in the aggregate.
(ii) PROPERTY AND CASUALTY INSURANCE adequately insuring the LS
Production Facilities and LS's other assets against theft,
damage, and destruction, on a replacement cost basis.
(iii) WORKERS' COMPENSATION INSURANCE, to the extent required by
law.
On or before the Effective Date of this Agreement, LS will provide
MCP with a Certificate of Insurance Coverage verifying that insurance coverage
complying with the requirements of this Section 28 is in place.
LS will not change its insurance coverage during the term of this
Agreement, except to increase it or enhance it, without the prior written
consent of MCP.
(b) MCP'S INSURANCE. MCP now has, and will maintain during the entire
term of this Agreement, comprehensive general liability insurance with liability
limits of at least five million dollars ($5,000,000) in the aggregate. During
the entire term of this Agreement, LS will be an additional named insured under
MCP's comprehensive general liability insurance policy.
29. MUTUAL INDEMNIFICATION. If any third party makes a claim against MCP
or any person or organization related to MCP as a result of the actions or
omissions of LS or any person or organization related to LS, including but not
limited to claims related to the quality of the ethanol produced by LS, then LS
agrees to indemnify MCP and its related persons and organizations, and to hold
all of them harmless from any liabilities, damages, costs, and/or expenses,
including costs of litigation and reasonable attorneys' fees, which they incur
as a result of any such claims made against them by third parties.
The indemnification obligations of the parties under this Agreement will
be mutual, and MCP therefore makes the same commitment to indemnify LS and its
related persons or organizations that LS has made to MCP in the proceeding
paragraph.
30. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AGREEMENTS, AND CLAIMS.
All representations, warranties, and agreements made in connection with this
Agreement will survive the termination of this Agreement. The parties will
therefore be able to pursue claims related to those representations, warranties,
and agreements after the termination of this Agreement, unless those claims are
barred by the applicable statutes of limitation.
Similarly, any claims that the parties have against each other that arise
out of actions or omissions that take place while this Agreement is in effect
will survive the termination of this Agreement. This means that those claims may
be pursued by the parties even after the
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termination of this Agreement, unless those claims are barred by the applicable
statutes of limitation.
31. ALTERNATIVE DISPUTE RESOLUTION AND ATTORNEYS FEES AND COSTS
(a) MEDIATION. Any dispute, controversy or claim arising out of or
relating to this Agreement which cannot be independently resolved by the parties
shall then be attempted to be resolved by mediation with a single mediator
selected by mutual agreement of the parties. If the parties are unable to agree
on a mediator, such mediation, including without limitation, the selection of
the mediator, shall be administered under the Commercial Mediation Rules of the
American Arbitration Association
(b) ATTORNEY'S FEES AND COSTS. The parties agree that the prevailing
partying in any dispute resolution proceedings related to this Agreement shall
be entitled to collect that portion of its costs, expenses, and reasonable
attorneys' fees from the other party that the award of the court bears to the
amount claimed by the prevailing party in the proceeding. The same shall be true
if one of the parties incurs costs, expenses, or attorneys' fees in connection
with the enforcement or the protection of its rights under this Agreement, as a
result of an uncured breach by the other party. The breaching party shall
reimburse the other party for costs, expenses, and reasonable attorneys' fees
incurred after the expiration of the applicable cure period, regardless of
whether or not the enforcement or the protection of the rights of the other
party involved judicial proceedingsor other formal dispute resolution
proceedings.
32. TITLE AND RISK OF LOSS. With regard to the ethanol sold to MCP by LS
under this Agreement, title to and risk of loss for such ethanol will pass from
LS to MCP when the ethanol leaves the premises (not the Production Facilities)
of LS.
33. GOVERNING LAW AND FORUM. The parties agree that the Agreement will be
governed by, interpreted under, and enforced in accordance with Iowa law and
hereby consent to the jurisdiction of the United States District Court for the
Northern District of Iowa sitting in Sioux City, Iowa whenever federal
jurisdictional requirements are otherwise satisfied, and alternatively the
jurisdiction of the Iowa District Court in and for Cherokee County District
Court, sitting in Cherokee, Iowa, for the resolution of all disputes and legal
proceedings arising hereunder, and the parties waive any defense they might
otherwise have to venue.
34. NOTICES. All notices related to this Agreement which relate to
breaches of this Agreement, indemnification claims or other claims being made
under this Agreement, challenges to the books and records of the parties, or the
termination of this Agreement (the "Significant Notices") must be in writing,
and must be delivered personally or sent by certified or registered mail, return
receipt requested. All Significant Notices will be effective, and will be deemed
to have been received, upon the actual receipt of the Significant Notice by its
intended recipient, meaning either LS or MCP.
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Subject to change upon ten (10) days written notice to the other party, all
written notices to LS provided for in this Agreement will be addressed as
follows:
Xxxxx Xxxxx
President
Little Sioux Corn Processors, LLC
XX Xxx 000
Xxxxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxx, Winick, Graves, et xx.000 Xxxxx Xxx., Xxxxx 0000
Xxx Xxxxxx, XX 00000
and notices to MCP will be addressed as follows:
Xxx Xxxxxxxx
President & CEO
Minnesota Corn Processors, LLC
000 Xxxxx Xxxxxxx 00
Xxxxxxxx, XX 00000-0000
with a copy to:
Mr. Xxx Xxxxxxx
Secretary & General Counsel
Minnesota Corn Processors, LLC
000 Xxxxx Xxxxxxx 00
Xxxxxxxx, XX 00000-0000
Written notices required or permitted under this Agreement which are not
Significant Notices may be hand delivered, sent by mail, or sent via facsimile.
These written notices will be effective, and will be deemed to have been
received, upon the actual receipt of the written notices by their intended
recipients, meaning either LS or MCP.
35. ASSIGNMENT; SUCCESSORS AND ASSIGNS. Because of MCP's concerns about
product quality, and because of LS's concerns about the proper performance of
the services to be provided by MCP, neither party may assign its rights or
obligations under this Agreement without the written consent of the other party,
which consent will not be unreasonably withheld. This Agreement will be binding
on the successors of the parties, and their assigns.
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36. NO WAIVER. If any party to this Agreement fails to insist upon strict
performance of any obligation under this Agreement, that failure will not result
in a waiver of that party's right to demand strict performance in the future.
This will still be the case, no matter how long the failure to insist upon
strict performance continues.
37. ENTIRE AGREEMENT. This Agreement, and the other documents related to
the business transactions described in this Agreement which are referred to
either generally or specifically in this Agreement, set out the entire agreement
between the parties regarding the business transactions described in this
Agreement. This Agreement and those other documents supersede all prior
understandings between the parties with respect to the subject matter of this
Agreement. The parties agree that there are no other oral or written
understandings or agreements between them regarding the subject matter of this
Agreement.
38. AMENDMENT, MODIFICATION, OR WAIVER. No amendment, modification, or
waiver of any provision of this Agreement or any other related document will be
effective unless it is made in writing, unless it is signed by the parties to be
bound by it, and unless it clearly specifies the extent and nature of the
amendment, modification, or waiver.
39. SEVERABILITY. If any provision of this Agreement or any other related
document is held to be invalid or unenforceable under any applicable law, that
holding will not affect the validity or enforceability of the rest of this
Agreement, or the other related document. Also, any provision of this Agreement
or any other related document which is held to be invalid or unenforceable will
not be completely invalidated, but will instead be considered amended to the
extent necessary to remove the cause of the invalidity or unenforceability.
40. INTERPRETATION. This Agreement and any other documents related to it
will be interpreted in a fair and neutral manner, without favoring one party
over the other. No provision of this Agreement or any other document related to
it will be interpreted for or against either party because the provision was
drafted by that party, or its legal representative.
41. UNDERSTANDING OF AND VOLUNTARY EXECUTION OF THE AGREEMENT. The parties
acknowledge and agree that they have read this Agreement, that they understand
it, and that they are entering into it willingly and voluntarily. The parties
further acknowledge that they either consulted with their respective legal
counsel, or had ample opportunity to consult with their respective legal
counsel, before entering into this Agreement.
42. HEADINGS AND CAPTIONS. The headings and captions of the sections and
subsections of this Agreement are inserted for convenience of reference only,
and do not constitute part of the Agreement.
43. SUPERSEDING OF OTHER AGREEMENTS. It is the intent of the parties that
this Agreement be consistent with any other documents or agreements related to
the same subject matter covered in this Agreement. However, in the event of any
inconsistencies, the parties agree that this Agreement will supersede and take
priority over the other inconsistent
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documents or agreements, except in cases where there is specific contract
language to the contrary which has been agreed upon by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year set forth above, to be effective as of the Effective Date.
MINNESOTA CORN PROCESSORS, LLC LSCP, L.P.
By: /s/ L. XXX XXXXXXXX By: Little Sioux Corn Processors, LLC
---------------------------- Its: General Partner
L. Xxx Xxxxxxxx, President & CEO
By: /s/ XXXXX XXXXX
---------------
Xxxxx Xxxxx, President
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