Exhibit 10-14
Page 1
AGREEMENT
THIS AGREEMENT, made this 7th day of March, 1996, by
and between HIGH PLAINS CORPORATION, a Kansas corporation
("Seller"), and CONAGRA, INC. dba ConAgra Feed Ingredient
Merchandising, a Delaware corporation ("Buyer").
WITNESSETH:
WHEREAS, Seller desires to sell and Buyer desires to purchase
the Distiller's Dried Grains ("DDGS") and Wet Distillers Grain
("WDG") output of Seller's plant at Colwich, Kansas and York,
Nebraska; and
WHEREAS, Seller and Buyer wish to agree in advance of such sale
and purchase to the price formula, payment, delivery and other
terms thereof in consideration of the mutually promised
performance of the other;
NOW, THEREFORE, in consideration of the 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. PURCHASE AND SALE. Seller agrees to sell to Buyer and Buyer
agrees to purchase from Seller the bulk feed grade DDGS and WDG
output from Seller's plants at Colwich, Kansas and York,
Nebraska (hereinafter the "Plants"), subject to all the terms
and conditions set forth in this Agreement. Seller agrees to
sell to Buyer hereunder its entire bulk feed grade DDGS and WDG
output from the Plants and Buyer agrees to purchase from Seller
hereunder Seller's entire bulk feed grade DDGS and WDG output
from the plants.
2. TRADE RULES. All purchases and sales made hereunder shall
be governed by the Feed Trade Rules of the National Grain and
Feed Association unless otherwise agreed to by the parties.
Said Trade Rules shall, to the extent applicable, be a part of
this Agreement as if fully set forth herein. Notwithstanding
the foregoing, the Arbitration Rules of the National Grain and
Feed Association shall not be applicable to this Agreement and
nothing herein contained shall be construed to constitute an
agreement between the parties to submit disputes arising
hereunder to arbitration before any organization or tribunal.
Exhibit 10-14
Page 2
3. INITIAL AND RENEWAL TERMS. The Initial Term of this
Agreement shall be one (1) year, commencing on March 7, 1996 and
terminating on Xxxxx 0, 0000 ("Xxxxxxx Xxxx"). Thereafter, this
Agreement shall be automatically renewed for successive one-year
terms ("Renewal Term") without action or notice by either party;
provided, however, that either party may terminate this
Agreement after the Initial Term or any Renewal Term hereof by
giving written notice of termination to the other party at least
ninety (90) calendar days prior to the termination of the then
current term.
4. DELIVERY AND TITLE.
A. The place of delivery for all DDGS and WDG sold
pursuant to this Agreement shall be the rail site or truck loading
facilities FOB Seller's Plants. Buyer and Buyer's agents shall
be given access to Seller's Plants in a manner and at all times
reasonably necessary and convenient for Buyer to take delivery
as provided herein. Buyer shall schedule loading and shipping
of all outbound DDGS and WDG purchased hereunder, but all labor
and equipment necessary to load rail cars or trucks shall be
supplied by Seller without charge to Buyer. Seller agrees to
handle the DDGS and WDG in a good and workmanlike manner in
accordance with Buyer's requirements and normal industry
practice. Seller warrants that both rail and truck loading
facilities shall be continuously maintained in safe, operating
condition.
B. Seller further warrants that storage space for not less
than five (5) days production of DDGS under normal operating
capacity shall be reserved for Buyer's use at or near the
loading facilities and shall be continuously available for
storage of DDGS purchased by Buyer hereunder. Seller shall be
responsible at all times for the quantity, quality and condition
of all DDGS in storage at Seller's Plant. Buyer shall be
responsible for taking delivery of the DDGS and WDG prior to the
expiration of this 5 day period.
C. On Friday of each week during any term hereof, Buyer shall
give to Seller a schedule of quantities of DDGS and WDG to be
removed by rail by Buyer during the next loading week (Monday
through Sunday). For removal of DDGS and WDG by truck, Buyer
shall give Seller sufficient advance notice to allow Seller to
provide the required services. Seller shall provide the labor,
equipment and facilities necessary to meet Buyer's loading
schedule and shall be responsible for Buyer's additional costs
resulting from Seller's failure to do so; provided, however,
that Seller is obligated only to use its best efforts to
accommodate Buyer's request for loading when Seller has not
received advance notice as hereinabove provided. Buyer shall
arrange all railcars required to meet Buyer's loading schedule
for rail shipments; Buyer shall arrange all trucks as scheduled
for truck shipments. All freight charges shall be the
responsibility of Buyer and shall be billed directly to Buyer.
Demurrage charges shall be the responsibility of Seller if
incurred as a result of Seller's failure to fill or move
railcars as projected or obligated under this agreement.
Demurrage charges shall be the responsibility of Buyer if
incurred as a result of Buyer's failure to timely move railcars,
to timely notify Seller of railcar schedules, or to supply
railcars in a manner reasonably designed to meet Seller's
loading schedule.
Exhibit 10-14
Page 3
D. Buyer shall provide loading orders as necessary to permit
Seller to maintain Seller's usual production schedule; provided,
however, that Buyer shall not be responsible for failure to
schedule removal of DDGS and WDG unless Seller shall have
provided to Buyer production schedules as follows: Five (5)
days prior to the beginning of each calendar month during any
term hereof, Seller shall provide to Buyer a tentative schedule
for production in the next calendar month. On Wednesday of each
week during any term hereof, Seller shall provide to Buyer a
schedule for production during the next production week (Monday
through Sunday).
E. Title, risk of loss and full shipping responsibility shall
pass to Buyer upon completion of loading the DDGS and WDG into
truck or rail equipment and delivery to Buyer of the xxxx of
lading for each such shipment.
5. PRICE AND PAYMENT.
A. For all quantities of DDGS and WDG to be sold to Buyer
hereunder, Seller shall receive ninety-eight and 1/2 percent
(98-1/2%) of the "Product Price". Buyer shall receive one and
one-half percent
(1 1/2%) of the "Product Price" which shall total a minimum of
Three Hundred Thousand Dollars ($300,000) and a maximum of Four
Hundred Fifty Thousand Dollars ($450,000) during the term of
this Agreement. After this maximum is reached, Seller shall
receive one hundred percent (100%) of the "Product Price". For
the purposes of this Agreement, "Product Price" shall equal FOB
Plant current market bid price for product of like grade and
quality. Buyer agrees to use reasonable commercial efforts to
achieve the highest resale price available under prevailing
market conditions. Buyer agrees to maintain accurate records in
relation to this Agreement. Seller shall have the option to
audit said records to support shipping and market prices
referenced in Section 5A. The time of any such audit shall be
negotiated by the Buyer and Seller, upon notification from the
Seller of their desire to audit, and shall only occur between
the 10th and 25th of any given month.
B. On each business day, holidays excluded, Seller shall
provide Buyer with certified weight certificates for the
previous day's shipments. Seller shall send these to Buyer via
facsimile. These certificates shall determine the tonnage
shipped from Seller's Plants during the previous pricing day.
Buyer shall pay Seller each Thursday for the prior production
week's (Monday through Sunday) properly documented shipments
pursuant to paragraph 5A above. With each payment, Buyer shall
send to Seller a detail of the shipments that are included in
the payment. This report shall include ship date, weight, and
purchase price of each shipment. Any weight certificates not
received by Buyer by the Tuesday following the production week
in which the load was shipped shall be included in the following
week's payment.
Exhibit 10-14
Page 4
C. In the event of an intentional shutdown of either Plant for
more than two weeks, other than for normal repairs and/or
maintenance and exluding plant construction or expansion, the
minimum of Three Hundred Thousand Dollars ($300,000) referenced
in 5A shall be reduced by an amount pro-rated for the time of
the shutdown. Seller agrees to give Buyer forty-five (45) days
notice before any intentional shutdown.
6. QUANTITY AND WEIGHTS.
A. The weight of DDGS and WDG delivered to Buyer from Seller's
Plants shall be established by weight certificates. Seller
shall obtain truck weights on the scales at the Seller's Plants,
which shall be certified and maintained by Seller as required by
applicable laws, rules and regulations, and rail weights shall
be obtained on any certified railroad scales. Whenever Seller's
truck scales are unavailable or inoperable, any certified scales
may be used, at Seller's expense, until Seller's scales are
restored. The outbound weight certificates shall be
determinative of the quantity of DDGS and WDG for which Buyer is
obligated to pay pursuant to Section 5 hereof.
B. All rail cars loaded at Seller's Plants shall be grain
xxxxxx cars. Seller agrees that such cars shall be loaded to
full visible capacity at Seller's Plants. If not loaded to full
visible capacity, Seller shall pay in full the portion of
freight charges allocable to the unused capacity of the car.
7. QUALITY.
A. Seller understands that Buyer intends to sell the DDGS and
WDG purchased from Seller as a primary animal feed ingredient
and that said DDGS and WDG is subject to minimum quality
standards for such use. Seller agrees and warrants that DDGS
and WDG produced at its plants and delivered to Buyer shall be
accepted in the feed trade under current industry standards and
shall be of merchantable quality.
B. Seller warrants that all DDGS and WDG sold to Buyer
hereunder shall, at the time of delivery to Buyer, conform to
the following quality standards:
Colwich, Kansas - Milo DDGS York, Nebraska - Corn DDGS
Component Maximum % Minimum % Component Maximum % Minimum %
--------- --------- --------- --------- --------- ---------
Protein -- 29% Protein -- 28%
Fat -- 7.5% Fat -- 7.5%
Fiber 15% -- Fiber 15% --
Ash 8% -- Ash 8% --
Moisture 15% -- Moisture 15% --
Exhibit 10-14
Page 5
York, Nebraska - Corn WDGS
Component Maximum % Minimum %
--------- --------- ---------
Protein -- 10.5%
Fat -- 3.0%
Fiber 5.0% --
Ash 2.5% --
Moisture 68.0% --
C. Seller guarantees that at the time of loading the DDGS and
WDG is not adulterated or misbranded within the meaning of the
Federal Food, Drug and Cosmetic Act and that it may lawfully be
introduced into interstate commerce under said Act. Payment of
invoice does not waive Buyer's rights if goods do not comply
with terms of specifications of this Agreement. Unless
otherwise agreed between the parties to this Agreement, and in
addition to other remedies permitted by law, the Buyer may,
without obligation to pay, reject either before or after
delivery, any of the DDGS and WDG which when inspected or used
is found by Buyer to fail in any way to conform to this
Agreement. Should any of the WDG or DDGS be seized or condemned
by any federal or state department or agency for any reason
except the negligence or intentional actions or omissions by
Buyer, such seizure or condemnation shall operate as a rejection
by Buyer of the DDGS seized or condemned and Buyer shall not be
obligated to offer any defense in connection with the seizure or
condemnation. When rejection occurs either before or within a
reasonable time after delivery, at its option, Buyer may:
(1) Dispose of the rejected WDG or DDGS after first offering
Seller a reasonable opportunity of examining and taking
possession of rejected WDG or DDGS if its condition reasonably
appears to Buyer to permit such delay in making disposition; or
(2) Dispose of the WDG or DDGS in any manner directed by
Seller which Buyer can accomplish without violation of
applicable laws, rules, regulations or property rights; or
(3) If Buyer has no available means of disposal of rejected
WDG or DDGS and Seller fails to direct Buyer to dispose of it as
provided herein, Buyer may return the rejected WDG or DDGS to
Seller, upon which event Buyer's obligations with respect to
said rejected WDG or DDGS shall be deemed fulfilled. Title and
risk of loss shall pass to Seller promptly upon notification to
Seller of rejection by Buyer.
Exhibit 10-14
Page 6
(4) Seller shall reimburse Buyer for all costs reasonably
incurred by Buyer in storing, transporting, returning and
disposing of the rejected WDG or DDGS. Buyer shall have no
obligation to pay Seller for rejected WDG or DDGS and may deduct
costs and expenses to be reimbursed by Seller from amounts
otherwise owed by Buyer to Seller.
D. If Seller produces WDG or DDGS which comply with the
warranty in Section 7C above but which do not meet applicable
industry standards, Buyer agrees to purchase such WDG or DDGS
for resale but makes no representation or warranty as to the
price at which such product can be sold. If the product
deviates so severely from industry standards as to be unsaleable
in Buyer's reasonable judgment, then it shall be disposed of in
the manner provided for rejected WDG or DDGS in Section 7C above.
E. If Seller knows or reasonably suspects that any WDG or DDGS
produced at its Plants is adulterated or misbranded, or outside
of industry quality standards, Seller shall promptly so notify
Buyer so that such product can be tested before entering
interstate commerce. If Buyer knows or reasonably suspects that
any WDG or DDGS produced by Seller at its plants is adulterated,
misbranded or outside of industry quality standards, then Buyer
may obtain independent laboratory tests of the affected WDG or
DDGS. If such WDG or DDGS are tested and found to comply with
all warranties made by Seller herein, then Buyer shall pay all
testing costs; and if the WDG or DDGS are found not to comply
with such warranties, Seller shall pay all testing costs.
F. Seller shall be responsible for inspecting all railcars and
trucks before loading to ensure non-contamination. If Seller
knows or suspects of any contamination in railcars and/or trucks
to be loaded, Seller shall promptly so notify Buyer so that
arrangements for replacement railcars and/or trucks can be made
by Buyer.
8. INSURANCE.
Both parties agree to maintain the following types and limits
of insurance coverages, or in the case of the Buyer, to
self-insure, for any of its employees, agents, representatives,
or subcontractors which have occasion to come onto Seller's
property:
A. Worker's compensation insurance as required by law in
Nebraska for the plant in York, Nebraska, and as required by law
in Kansas for the plant in Colwich, Kansas. Parties shall also
maintain employer's liability insurance with minimum limits of
One Million Dollars ($1,000,000).
Exhibit 10-14
Page 7
B. Commercial general liability insurance against claims for
bodily injury, death, and property damage occurring in or about
the Plants for a minimum protection of Two Million Dollars
($2,000,000) with respect to personal injury or death and
property damage occurring or resulting from one occurrence.
This policy shall also maintain endorsements for contractual
liability, for products and completed operations. Seller's
policies of comprehensive general liability insurance shall be
endorsed to require at least thirty (30) days advance notice to
Buyer prior to the effective date of material change or
cancellation of coverage.
C. Automobile Liability Insurance with Bodily Injury and
Property Damage limits of at least Two Million Dollars
($2,000,000) per occurrence.
D. Upon request, Seller shall supply Buyer with certificates of
insurance to support that all required coverages and policies
are in place.
9. REPRESENTATIONS AND WARRANTIES.
A. Seller represents and warrants that all DDGS and WDG
delivered to Buyer shall not be adulterated or misbranded within
the meaning of the Federal Food, Drug and Cosmetic Act and that
said DDGS and WDG may lawfully be introduced into interstate
commerce pursuant to the provisions of the Act. Seller further
warrants that the DDGS and WDG shall fully comply with any
applicable state laws governing quality, naming and labeling of
product. Payment of invoice shall not constitute a waiver by
Buyer of Buyer's rights as to goods which do not comply with
this Agreement or with applicable laws and regulations.
B. Seller represents and warrants that DDGS and WDG delivered
to Buyer shall be free and clear of liens and encumbrances.
10. EVENTS OF DEFAULT. The occurrence of any of the following
shall be an event of default under this Agreement: (1) failure
of either party to make payment to the other when due; (2)
default by either party in the performance of the covenants,
conditions and agreements imposed upon that party by this
Agreement; (3) if either party shall become insolvent, or make a
general assignment for the benefit of creditors or to an agent
authorized to liquidate any substantial amount of its assets, or
be adjudicated a bankrupt, or file a petition in bankruptcy, or
apply to a court for the appointment of a receiver for any of
its assets or properties with or without consent, and such
receiver shall not be discharged within sixty (60) days
following appointment.
Exhibit 10-14
Page 8
11. REMEDIES. Upon the happening of an event of default, the
parties hereto shall have all remedies available under
applicable law. Without limiting the foregoing, the parties
shall have the following remedies whether in addition to or as
one of the remedies otherwise available to them: (1) to declare
all amounts owed immediately due and payable; and (2) to
immediately terminate this Agreement effective upon receipt by
the party in default of the notice of termination.
Notwithstanding any other provision of this Agreement, Buyer may
offset against amounts otherwise owed to Seller the price of any
product which fails to conform to any requirements of this
Agreement.
12. FORCE MAJEURE. Neither Seller nor Buyer will be liable to
the other for any failure or delay in the performance of any
obligation under this Agreement due to events beyond its
control, including, but not limited to, fire, storm, flood,
earthquake, explosion, act of the public enemy, riots, civil
disorders, sabotage, strikes, lockouts, labor disputes, labor
shortages, war, stoppages or slowdowns initiated by labor,
transportation embargoes, failure or shortage of materials, acts
of God, or acts or regulations or priorities of the federal,
state or local government or branches of agencies thereof.
13. INDEMNIFICATION. Seller agrees to indemnify and hold Buyer
harmless from any and all third-party claims, damages, causes of
action liabilities and expenses, including but not limited to
reasonable attorney's fees, arising by Seller's breach of
obligations of this Agreement, unless the same shall be due to
the negligence or intentional acts or omissions of Buyer. Buyer
agrees to indemnify and hold Seller harmless from any and all
third-party claims, damages, causes of action liabilities and
expenses, including but not limited to reasonable attorney's
fees, arising by Buyer's breach of obligations of this
Agreement, unless the same shall be due to the negligence or
intentional acts or omissions of Seller.
14. RELATIONSHIP OF PARTIES. This Agreement creates no
relationship other than that of buyer and seller between the
parties hereto. Specifically, there is no agency,
employee/employer relationship, partnership, joint venture or
other joint or mutual enterprise or undertaking created hereby.
Nothing contained in this Agreement authorizes one party to act
for or on behalf of the other and neither party is entitled to
commissions from the other.
15. MISCELLANEOUS.
A. This writing is intended by the parties as a final
expression of their agreement and a complete and exclusive
statement of the terms thereof. If terms of any other documents
used in the course of this Agreement conflict with this
Agreement, this Agreement shall control.
B. No course of prior dealings between the parties and no
usage of trade, except where expressly incorporated by
reference, shall be relevant or admissible to supplement,
explain, or vary any of the terms of this Agreement.
C. Acceptance of, or acquiescence in, a course of performance
rendered under this or any prior agreement shall not be relevant
or admissible to determine the meaning of this Agreement even
though the accepting or acquiescing party has knowledge of the
nature of the performance and an opportunity to make objection.
Exhibit 10-14
Page 9
D. No representations, understandings or agreements have been
made or relied upon in the making of this Agreement other than
as specifically set forth herein.
E. This Agreement can only be modified by a writing signed by
all of the parties or their duly authorized agents.
F. The paragraph headings herein are for reference purposes
only and shall not in any way affect the meaning or
interpretation of this Agreement.
G. This Agreement shall be construed and performed in
accordance with the laws of the State of Kansas.
H. The respective rights, obligations and liabilities of the
parties under this Agreement are not assignable or delegable
without the prior written consent of the other party.
I. Notice shall be deemed to have been given to the party of
whom it is addressed when received after it is deposited in
certified U.S. mail, postage prepaid, return receipt requested,
addressed as follows or by facsimile transmission:
Buyer: ConAgra, Inc. Seller: High Plains Corporation
Feed Ingredient 000 X. Xxxxxxx
Xxxxxxxxxxxxx Company Suite 000
Xxxx XxxXxxx Xxxxx Xxxxxxx, Xxxxxx 00000-0000
Xxxxx, Xxxxxxxx 00000 Fax: 316/000-0000
Fax: 402/000-0000
Exhibit 10-14
Page 10
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed the day and year first above written.
CONAGRA, INC.
By: Xxxx X. Xxxxxxx
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Vice President
HIGH PLAINS CORPORATION
By: Xxxxxxx X. Xxxxxx
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Title: President
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