*PORTIONS OF THIS GRAIN FEEDSTOCK SUPPLY AGREEMENT HAVE BEEN OMITTED PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
EXECUTION COPY
GRAIN FEEDSTOCK SUPPLY AGREEMENT
THIS GRAIN FEEDSTOCK SUPPLY AGREEMENT (this "Agreement") is made and
entered into as of December 15, 2008 by and between Southwest Iowa Renewable
Energy, LLC, an Iowa limited liability company ("Producer") and AGRI-Xxxxx, LLC,
an Iowa limited liability company ("A-B") (each of Producer and A-B, a "Party"
and collectively, the "Parties").
RECITALS
A. The Parties intend to temporarily suspend the terms of that certain
Grain Feedstock Agency Agreement between the Parties dated October 13, 2006, as
amended by that certain First Amendment dated as of the date hereof, during the
Term of this Agreement.
B. Producer is in the process of constructing an ethanol plant located near
Council Bluffs, Iowa (the "Facility").
C. As of the date of this Agreement, Bunge North America, Inc. ("Bunge") is
a Member of Producer pursuant to the Amended and Restated Operating Agreement of
Producer dated March 7, 2008 ("Operating Agreement") and holds an equity
ownership interest in A-B.
D. As of the date of this Agreement, Producer is leasing from Bunge the
grain processing facility located in Council Bluffs, Iowa (the "Elevator").
E. Producer desires to buy from A-B, and A-B desires to sell to Producer,
all grain ("Feedstock") required for ethanol production at the Facility in
accordance with the terms set forth in this Agreement.
F. The Parties desire to purchase and sell Feedstock in accordance with the
fees, payment, delivery and other terms set forth in this Agreement.
AGREEMENT
Therefore, the Parties agree as follows:
1. Feedstock Supplier.
1.1 Sale of Feedstock. Subject to the terms of this Agreement, A-B
will sell to Producer, and Producer will purchase from A-B, all Feedstock
that Producer requires for ethanol production at the Facility during the
Term (as hereinafter defined). A-B will have absolute discretion to manage
all logistics in connection with the origination, handling, and delivery of
Feedstock to Producer except as otherwise provided in this Agreement. As of
the date of this Agreement, it is the intent of Producer that initially the
Facility will only use corn as its Feedstock. Accordingly, the remainder of
this Agreement will deal with A-B procuring corn for
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sale to Producer meeting the specifications described herein ("Corn") as a
Feedstock for the Facility. If Producer requires the use of another grain
Feedstock, Producer will negotiate in good faith an amendment to this
Agreement covering the procurement by A-B of such additional feedstock.
1.2 Exclusive Supplier. Subject to the terms of this Agreement,
Producer agrees that A-B will be its exclusive supplier of Corn and
Producer will not obtain Corn from any other source during the Term (as
defined in Section 4.1 hereof), including the Facility as initially
constructed and any modifications or expansions thereof. Upon any
modifications or expansions of the Facility, the Parties shall make such
amendments to this Agreement as are mutually agreed upon as necessary to
reflect such modifications or expansions at the Facility. A-B agrees that
it will be the exclusive supplier of Corn necessary for the operation of
the Facility during the Term under the conditions herein set forth.
1.3 Restrictions in Facility Service Area. Except as provided in this
Agreement, after the Restriction Date (as hereinafter defined), none of A-B
or any Affiliate of A-B ("A-B Entity") will * or * within a * radius of the
Facility (the "Facility Service Area") for * or * thereof other than *. An
A-B Entity may contract for * to be * within the Facility Service Area if:
(1) the contract is not with *, and (2) * is not the *, and (3) the
Producer is * provided that such * must be promptly * by Producer's general
manager or his designee, and any unavailability or failure to * shall be
deemed a *. No A-B Entity will * in a * within the Facility Service Area.
If this Agreement is terminated by Producer under Sections 4.2(b) or
4.2(g), the restrictions under this Section 1.5 shall survive for a period
of one year from the effective date of termination. For purposes of this
Agreement: (a) the term "Affiliate" means a Person that directly, or
indirectly through one or more intermediaries, controls or is controlled
by, or is under common control with, the party specified, with "control" or
"controlled" meaning the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting
interests, by contract or otherwise, provided, that Bunge shall not be
deemed an Affiliate of A-B; (b) the term "Person" shall mean any
individual, general partnership, limited partnership, limited liability
company, joint venture, trust, business trust, cooperative, association or
other entity of whatever nature; and (c) the term "Restriction Date" shall
mean the date that the Facility first becomes ready for delivery of Corn to
the Facility; provided that Producer will notify A-B at least thirty (30)
days in advance of such date.
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
2. Corn Procurement Policy; Order and Delivery of Corn.
2.1 Corn Procurement Policy. Producer and A-B will jointly establish a
Corn procurement policy setting forth the guidelines and parameters within
which A-B will acquire Corn for sale to Producer pursuant to this Agreement
and under which A-B will use commercially reasonable efforts to obtain the
best price for Corn under market conditions based on the guidelines,
parameters and instructions of Producer (the "Corn Procurement Policy").
The Corn Procurement Policy is subject to approval and modification jointly
by A-B and Producer's risk management committee and/or Board of Managers
and may be developed in connection with a comprehensive risk management
policy for the marketing of all products
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produced by the Facility and the inputs required for operation of the
Facility. The Corn Procurement Policy shall include, among other things,
allowable range of prices and guidelines for the establishment of daily
bids, forward contracting limits, risk management guidelines, quality
standards, a price discount schedule and other daily operating parameters
to be followed by A-B in supplying Corn to Producer. The Corn Procurement
Policy shall be jointly updated by Producer and A-B as necessary to reflect
current market conditions and operational needs of the Facility. The
allowable range of prices for Corn included within the Corn Procurement
Policy may include, in Producer's discretion, the price actually paid by
Producer to purchase the Corn, plus all expenses incurred by Producer to
deliver the Corn to a Delivery Destination (as hereinafter defined),
whether incurred before or during the Term, less any quality discounts.
2.2 Order and Delivery of Corn.
(a) Monthly Estimates and Minimum Supply. At least 30 days before the
beginning of each calendar quarter during the Term (but not before the
Effective Date), Producer will deliver to A-B a written estimate of its
anticipated Corn requirements at the Facility for such calendar quarter. At
least 30 days before the beginning of each calendar month during the Term
(but not before the Effective Date), Producer will deliver to A-B a written
estimate of its anticipated Corn requirements at the Facility for such
calendar month (a "Monthly Estimate"). A-B shall maintain at all times a
minimum supply of Corn in storage for the Facility of three days usage
based on the Monthly Estimate, which is estimated to be approximately
330,000 bushels, or 110,000 bushels per day, unless the general manager of
the Facility, or his designee (or such other individual identified in
writing by Producer) approves in advance lower minimum supply requirements
(with such requirements collectively, the "Minimum Supply"). Producer will
immediately notify A-B if the Minimum Supply has not been met by A-B.
Producer's sole and exclusive remedy for A-B's failure to maintain the
Minimum Supply in accordance with this Section 2.2(a) shall be the rights
set forth in Sections 4.2(b) and 13.2. Producer will make storage room
available pursuant to Section 2.2(g) in order for A-B to fulfill the
Minimum Supply requirement. A-B and Producer will renegotiate the preceding
sentences of this Section in the event of any material changes to the three
days usage estimate set forth above. In addition, Producer will give A-B
reasonable advance notice of any circumstances that would reasonably be
expected to materially affect Corn requirements at the Facility. A-B will
have no obligation to supply Producer with a quantity of Corn for a month:
(a) in material excess of the quantity stated in the applicable Monthly
Estimate, and (b) which exceeds 110% of the average monthly quantity of
Corn actually used by Producer during the three month period preceding such
month.
(b) Production Schedules. If Producer has timely delivered a Monthly
Estimate to A-B pursuant to Section 2.2(a), then A-B will provide Corn in
quantities necessary to permit Producer to maintain its actual production
schedule for the month described in the Monthly Estimate, subject to the
limitations contemplated in Section 2.2(a) hereof. On Wednesday of each
week, Producer will provide A-B notice of the actual production schedule
for the following production week (Monday through Sunday). A-B is entitled
to rely on Monthly Estimates in supplying Corn and in entering into
Contracts (as hereinafter defined). Producer will immediately notify A-B of
any revisions to such estimates; provided, that, to the extent A-B has
relied upon such estimates, such estimates may not be revised and shall be
deemed fixed for purposes of determining any liability of Producer pursuant
to this Section. A-B will utilize commercially reasonable efforts to adjust
its Corn procurement strategy according to any such revised estimates;
provided that Producer will bear all costs incurred by A-B to attempt to
adjust such strategies.
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(c) Contracting and Sales Confirmations. In performing the Services
(as hereinafter defined), A-B will negotiate and execute in its own name
and on its own behalf contracts and agreements for the purchase of Corn
("Contracts") from corn suppliers upon terms consistent with the Policy,
including, without limitation, deferred pricing contracts ("DP Contracts").
Effective as of 1:15 pm Central Time on each business day during the Term,
Producer and A-B shall enter into a sales confirmation evidencing the sale
by A-B to Producer of all grain ("Contracted Grain Volume") covered by
Contracts that A-B has entered into since 1:16 pm Central Time on the most
recent preceding business day. Each such sales confirmation shall be in the
form attached hereto as Exhibit B (each, a "Sales Confirmation") and shall
set the applicable per bushel sale price (each, a "Confirmed Sale Price")
equal to the weighted average price of Corn under all of the Contracts,
calculated separately for each applicable delivery period, covered by such
Sales Confirmation. No Sales Confirmation may alter the terms of this
Agreement. To the extent that the terms of a Sales Confirmation conflict
with the terms of this Agreement, the terms of this Agreement shall
control. Notwithstanding the foregoing provisions of this Section 2.2(c),
to the extent that A-B enters into a DP Contract with a corn supplier, A-B
and Producer shall enter into a DP Contract whereby A-B sells such Corn to
Producer on a deferred pricing contract basis (subject to the payment
provisions of Section 3.1).
(d) Futures. Producer hereby directs A-B, and A-B agrees, to cause
Producer to take a futures position on the Chicago Board of Trade in order
to hedge a Corn purchase under a Contract within a commercially reasonable
time after A-B enters into such Contract. Producer (i) releases A-B from
any liability in any way connected to such futures transactions and (ii)
will defend, indemnify and hold A-B harmless for, all costs, liabilities
and expenses of A-B incurred in connection with any such futures
transaction, including, without limitation, reasonable attorney fees.
(e) Delivery Location. The place of delivery for all Corn provided by
A-B pursuant to this Agreement will be F.O.B. Facility or F.O.B. Elevator
(each, a "Delivery Destination"), as determined by A-B in its reasonable
discretion. A-B will cause Corn to be delivered via truck or rail to the
extent that a Delivery Destination has appropriate receiving facilities. To
the extent any transportation is required after Corn has been delivered to
the Elevator in order to transport Corn to the Facility, any such
transportation and all costs associated therewith shall be the
responsibility of Producer. A-B, its agents, and the counterparties to
Contracts will be given access to the Delivery Destinations in a manner and
at all times reasonably necessary and convenient for performance under this
Agreement. The Parties acknowledge that A-B shall cause the delivery of
Corn to a Delivery Destination by providing for such delivery pursuant to
the terms of the Contracts. A-B shall not be in violation of this Agreement
to the extent that a corn supplier fails to deliver Corn in accordance with
a Contract (unless such default was as the result of A-B's gross negligence
or intentional misconduct). Upon any such default by a corn supplier, A-B
shall pursue any available remedy against the corn supplier for such
default upon request of Producer and Producer shall reimburse all costs and
expenses of A-B (including, without limitation, reasonable attorney fees)
associated therewith. From time to time, A-B may cancel or accept alternate
delivery of Corn under one or more of the Contracts.
(f) Unloading. Producer will direct the unloading and receiving of all
Corn purchased hereunder. All labor and equipment necessary to load or
unload Corn delivered by or on behalf of A-B will be supplied by Producer
without charge to A-B. Producer agrees to handle
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the unloading and receiving of all Corn in a good and workmanlike manner in
accordance with A-B's reasonable requirements and normal industry practice.
Producer will maintain (at its own expense) its receiving facilities at the
applicable Delivery Destination in accordance with applicable laws and
regulations and in safe operating condition in accordance with normal
industry standards. Producer will be responsible for any additional costs
to A-B resulting from any breach by Producer to meet its obligations set
forth in this Section 2.2(f). If Producer fails to unload or receive a
quantity of Corn which is scheduled for delivery to a Delivery Destination
pursuant to a Contract or otherwise causes A-B to be in default under the
terms of a Contract (either, a "Producer Default"), A-B will utilize
commercially reasonable efforts to mitigate or remedy such Producer Default
after consultation with Producer. Such efforts may include, without
limitation, A-B arranging for the storage of Corn by a corn supplier for
which Producer failed to take delivery to delay the purchase of Corn
pursuant to a Contract, directing delivery of such Corn to another facility
or selling such Corn to a third party. Producer will defend, indemnify and
hold A-B harmless for, all costs, liabilities and expenses of A-B incurred
in connection with any Producer Default, including, without limitation,
reasonable attorney fees, storage costs, price adjustments, rail/truck
demurrage and freight costs.
(g) Storage. Producer will maintain Corn storage space at the Delivery
Destinations, at its sole cost, for not less than three days' maximum
production of ethanol and related co-products, and will be responsible at
all times for the quality and condition of Corn in storage at the Delivery
Destinations. If Producer expands the Facility's ethanol production
capacity, Producer will correspondingly expand its Corn storage capacity.
(h) Receiving Agent; Title. A-B hereby appoints Producer as its
receiving agent to take delivery, on A-B's behalf, of all Contracted Grain
Volumes delivered to a Delivery Destination and Producer hereby accepts
such appointment. Risk of loss, and responsibility for the quality of
Contracted Grain Volume will pass to Producer upon unloading the Contracted
Grain Volume at the Delivery Destinations, but title to unloaded Contracted
Grain Volumes will remain in A-B and will not pass to Producer until
Producer pays the applicable Confirmed Sale Price to A-B in accordance with
Section 3.1 (prior to title passing to Producer, such unloaded Contracted
Grain Volumes are "A-B-Owned Volumes"). Producer will store all A-B Owned
Volumes at the applicable Delivery Destination free of charge to A-B until
(a) title to an A-B Owned Volume passes to Producer, or (b) A-B removes an
A-B Owned Volume from such location. A-B and its agents will be given
access to the Delivery Destinations in a manner and at all times reasonably
necessary and convenient for A-B to remove an A-B Owned Volume, including
access to rail and truck loadout equipment. A-B shall be entitled to post a
sign or other notice reasonably acceptable to Producer to put third parties
on notice that certain Contracted Grain Volumes are A-B Owned Volumes.
Notwithstanding any other provision in this Agreement to the contrary, with
respect to all bushels of Corn that have been delivered to a Delivery
Destination and are the subject of DP Contracts, title shall pass to SIRE
in accordance with applicable law.
(i) Corn Quality Standards. Prior to unloading, Producer will have the
right to inspect and reject any Corn delivery that does not meet the "Corn
Quality Standards" set forth in Exhibit A to this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, A-B
will not be responsible for any failure of Corn to comply with the terms of
this Agreement or any Contract. If any Corn supplied under this Agreement
fails to comply with the Corn Quality Standards, then Producer's exclusive
remedy and recourse will be to reject such non-compliant Corn on A-B's
behalf as A-B's agent under the terms of any Contract (and
5
provide A-B with written notice of such rejection) prior to Producer
unloading the Corn. Any failure by Producer to provide written notice of
rejection as set forth in this Section 2.2(i) will be deemed an absolute
and unconditional waiver of its rejection right and any claims relating to
such Corn. At A-B's request, Producer will promptly deliver to A-B a
representative sample of any rejected Corn.
2.3 Additional A-B Services. The services provided by A-B pursuant to
this Agreement shall be collectively referred to herein as the
"Services". The Services shall also include the following:
(a) Corn Originators. A-B shall provide or make available the
following staff, which may be employees of A-B or employees leased or
subcontracted from Bunge to A-B (the "A-B Staff") dedicated to
performing the Services:
i. A-B shall provide not less than two grain originators, to
be located at the Facility, having the following characteristics:
(A) one being a Senior Grain Merchandiser of Bunge and a
pre-existing employee of Bunge; and (B) the other having at least
two years grain merchandising experience. The originators shall
be responsible for formulating and implementing a merchandising
strategy consistent with the Corn Procurement Policy to purchase
Corn for sale to Producer as provided under this Agreement. In
furtherance of those responsibilities, the originators will
gather and analyze market data.
ii. Upon any expansion of the Facility, A-B shall provide
additional A-B Staff as necessary for A-B to provide the same
level of services under this Agreement as was provided by A-B
before such expansion. All employee compensation, bonuses,
benefits (including retirement benefits) and employment taxes for
the A-B Staff shall be the responsibility of A-B.
(b) A-B Staff and Producer Employees. A-B shall be responsible
for supervision of A-B Staff and Producer shall be responsible for
supervision of Producer's employees. A-B Staff will abide by the same
rules of conduct as are applied to Producer's employees in Producer's
employee handbook for the Facility. Notwithstanding the foregoing, the
Producer's general manager and A-B will jointly conduct periodic
employment review of the A-B Staff. Producer's general manager may
make staffing recommendations to A-B at any time. A-B may also notify
Producer's general manager or Board of Managers of any misconduct by
Producer's employees. If the recommendations of the Producer's general
manager are not accepted by A-B, Producer may issue a Notice of
Dispute as provided in Section 13.2. If A-B's concerns regarding any
misconduct by Producer's employees are not timely addressed by
Producer, A-B may issue a Notice of Dispute as provided in Section
13.2.
(c) Corn Procurement Policy. A-B shall abide by any terms of the
Corn Procurement Policy applicable to A-B in connection with provision
of the Services. Neither A-B nor its Affiliates shall be in breach of
this Agreement or liable to Producer as the result of Services
provided under this Agreement to the extent A-B acts in accordance
with the Corn Procurement Policy or in accordance with directions
given by Producer's Board or general manager.
2.4 Services, Weights, and Quality.
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(a) Settlements and Accounting. Producer will be solely
responsible to provide all back office administrative and accounting
responsibilities for A-B in connection with this Agreement, including
but not limited to making settlements under Contracts, issuing
associated payments and invoices to corn suppliers, balancing open
Contracts activity with corn suppliers, balancing open contract
activity and daily settlement activity between Producer and A-B, and
providing daily activity reporting to A-B, including reporting of: (i)
current Corn inventory held at the Delivery Destinations, (ii) open
Contracts and Sales Confirmations with consolidated delivery dates,
and (iii) Corn delivered to a Delivery Destination, both with respect
to Corn accepted by Producer and Corn rejected by Producer for failure
to meet Corn Quality Standards. Producer will provide such information
in a daily report to A-B in a form reasonably acceptable to A-B.
Producer will also be solely responsible for completing necessary UCC
and Farm Security Act searches to confirm clear title in the Corn
delivered for the benefit of A-B and will defend, indemnify and hold
A-B harmless for, all costs, liabilities and expenses of A-B incurred
in connection with any errors by Producer with respect to such
searches, including, without limitation, reasonable attorney fees.
Producer will perform such searches in a commercially reasonable
manner consistent with industry standards.
(b) Information Technology. Producer shall provide the grain
origination and accounting software identified by A-B to record Corn
contracts, purchases and deliveries. Producer will ensure that its
information technology systems (including the use of such software)
provide Bunge and A-B with all real time information requested by
Bunge and/or A-B regarding (i) Corn deliveries to a Delivery
Destination, (ii) changes to the amount of Corn held in storage at a
Delivery Destination; and (iii) Producer's cash corn positions (price
and quantity according to both delivery month and estimated delivery
schedule). Producer will ensure that all information generated by the
scales described in Section 2.4(c) is provided electronically and
promptly to Bunge and A-B.
(c) Scales. A-B may originate and cause to be delivered Corn that
may have origin official weights. In such event, A-B will timely
notify Producer and the origin official weights of such Corn will
govern. In the event A-B originates and causes to be delivered Corn
that has estimated origin weights, Producer will determine the weight
of such Corn delivered by A-B to the applicable Delivery Destination
using scales at the Delivery Destination; provided, that, to the
extent Producer does not have scales at a Delivery Destination to
determine the weight of Corn delivered by rail, then such estimated
weights shall govern. Producer will maintain (at its expense) the
accuracy of such scales and ensure that they are inspected and
certified as required by applicable law; provided that any scale
tickets generated by such scales shall be in A-B's name. Upon A-B's
request, Producer will promptly provide A-B with copies of all scale
certifications. A-B may, at its sole expense, test the accuracy of
such scales. If the scales at a Delivery Destination are unavailable
or inoperable, any scales certified as required by applicable law may
be used, at Producer's sole cost and expense, until the scales at a
Delivery Destination are available and operable.
(d) Weight Certificates. Except as contemplated by Section
2.4(c), the inbound weight certificates generated pursuant to Section
2.4(c) will determine the quantity of Corn for which Producer is
obligated to pay pursuant to Article 3.
2.5 Producer's Additional Obligations. In connection with A-B's
provision of the Services, Producer will provide the following:
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(a) Corn Procurement Policy. Producer will abide by any terms of
the Corn Procurement Policy applicable to Producer.
(b) Financial Risk Management. Producer may elect to engage A-B,
or an Affiliate of A-B, for a separately negotiated fee, to provide a
portfolio strategy (which may include the purchase and use of futures,
options, and other hedging tools, as well as storage at sites other
than the Facility) that will permit Producer to optimize its Corn
supply pricing and security.
3. Price and Payment.
3.1 Confirmed Sale Price. For each bushel of Corn that has been
delivered to a Delivery Destination and for which A-B has paid the
applicable corn supplier, Producer will pay A-B a price equal to the oldest
Confirmed Sale Price (as defined in Section 2.2(c)) for which Corn has not
yet been delivered for the applicable delivery period (i.e., Corn will be
priced on a "FIFO" basis). At 1:00 p.m. Central Time each day, Producer
will pay to A-B by wire transfer the appropriate Confirmed Sale Price
amounts for all Corn delivered to a Delivery Destination during the prior
24 hours. Notwithstanding the foregoing two sentences, with respect to each
bushel of Corn that has been delivered to a Delivery Destination and for
which A-B has entered into a DP Contract with the applicable corn supplier,
the following shall apply: (a) A-B shall pay the applicable corn supplier
at the time such corn supplier prices the Corn subject to such DP Contract
in accordance with the terms of such DP Contract, (b) Producer shall pay
A-B a price equal to eighty percent (80%) of (i) the per bushel price for
such volume of Corn based on the closing price on the Chicago Board of
Trade as of the date such Corn was delivered to the Delivery Destination,
plus (ii) a basis amount for such quantity of Corn based on Bunge's FOB
Council Bluffs basis quotes as of such day (such sum, the "80% Market
Price"), with Producer making payment of such amounts to A-B at 1:00 p.m.
Central Time each day for all Corn delivered to a Delivery Destination
during the prior 24 hours that is subject to a DP Contract, and (c) upon
payment by A-B to the applicable corn supplier as set forth in (a) above,
A-B and Producer shall true-up any differences between the 80% Market Price
paid by Producer and the price paid by A-B to the applicable corn supplier.
3.2 Origination Fees. For each bushel of Corn covered by an executed
Contract, Producer will pay A-B $* (the "Origination Fee"). At 1:00
p.m. Central Time on the fifth day of each month, Producer will pay to A-B
by ACH transfer the aggregate of all Origination Fees payable for the
prior, just-completed month.
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
3.3 Payments. Interest will accrue on amounts past due at a rate per
annum equal to the lesser of (a) the prime rate, as reported from time to
time by the Wall Street Journal (or similar publication), plus 2%,
and (b) the highest rate permitted by law. All amounts due to A-B under
this Agreement will be paid without setoff, counterclaim or deduction.
3.4 Annual Minimum Payments. Subject to Section 9 hereof, if as of
each anniversary of the Effective Date during the Term, the total amount of
Origination Fees that
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Producer has paid or has been obligated to pay A-B during the immediately
preceding 12-month period (a "Total Fees Amount") is less than $675,000
("Annual Minimum Amount"), then within 15 days after Producer receives
notice from A-B, Producer will pay to A-B an amount equal to the Annual
Minimum Amount minus the Total Fees Amount. At Producer's request, A-B
shall provide evidence supporting the amount. Notwithstanding, if the
Facility has not operated for twelve consecutive months due to a Force
Majeure Event, then Producer shall not be obligated to pay any Annual
Minimum Amount for periods after the twelve consecutive months.
3.5 Adjustments.
(a) Beginning on the third anniversary of the Effective Date (as
defined in Section 4.1). and on each anniversary thereafter, the
Origination Fee and the Annual Minimum Amount will be increased or
decreased by an amount equal to the product of: (i) the Origination
Fee and the Annual Minimum Amount, as applicable, for the immediately
preceding 12-month period, multiplied by (ii) the percentage increase
(or decrease) for such 12-month period in the Employment Cost Index;
Not Seasonally Adjusted; Total Compensation; Private Industry;
twelve-month percent change; Midwest Workers, published by the Bureau
of Labor Statistics, U.S. Department of Labor.
(b) If the Effective Date has not occurred on or before July 15,
2009, then A-B may require the Parties to renegotiate the provisions
of this Article 3. Upon such renegotiation, if the Parties do not
agree upon adjustments to the compensation on terms agreeable to A-B,
then A-B may terminate this Agreement upon notice to Producer.
3.6 Tax. For purposes of personal property taxation and/or assessment
or other similar taxation, if any, any tax assessed on Corn acquired or
supplied by A-B for the benefit of Producer will be the responsibility of
Producer, and at no time will A-B be responsible for the payment of any
such tax.
3.7 Audit Rights. During the Term and for a period of two years
thereafter, A-B or its designated representatives, after 10 days' prior
written notice to Producer, shall have the right during normal business
hours to inspect, review and audit, at its own expense, all books and
records of Producer relating to the fees payable to A-B hereunder. To the
extent that any such inspection, review or audit shows an underpayment to
A-B of any amounts under this Agreement, such amounts shall be deemed to be
past due and shall bear interest in accordance with Section 3.3.
4. Term and Termination.
4.1 Term. The initial term of this Agreement will begin upon execution
of this Agreement by both Parties and, unless earlier terminated in
accordance with the terms hereof, will expire upon the tenth anniversary of
the Effective Date. Unless earlier terminated in accordance with this
Agreement, this Agreement will automatically renew for successive
three-year terms thereafter unless either Party gives written notice to the
other Party of its election not to renew, no later than 180 days prior to
the expiration of the initial term or the then current renewal term, as
applicable. The "Term" will be the total of the initial term of this
Agreement and any renewal terms. The "Effective Date" will be December 15,
2008 or such other date agreed by the Parties in writing.
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4.2 Termination Rights.
(a) Either Party may terminate this Agreement immediately upon
notice to the other Party if such other Party has (i) materially
breached any representation, warranty, or obligation under this
Agreement, and (ii) failed to remedy such breach within 30 days after
the terminating Party has given notice of such breach, or if such
breach cannot reasonably be cured within such 30-day period, such
other Party has failed to commence and diligently pursue remedy of the
breach and failed to remedy such breach not later than 120 days after
the terminating Party has given notice of such breach.
(b) Producer may terminate this Agreement upon thirty days prior
written notice to A-B if: (i) A-B has failed to maintain the Minimum
Supply of Corn in accordance with the standards set in Section 2.2(a)
on six or more days during a twelve-month period and Producer has
notified A-B of each such failure in accordance with Section 2.2(a);
or (ii) subject to the remaining provisions of this Section 4.2(b),
the Facility has shut down operations because of the lack of Corn
delivered to or in storage for the Facility on two or more occasions
during a twelve-month period and Producer has notified A-B of such
shut-downs ("Facility Shut-Down"). If Producer has not exercised its
right to deliver notice to terminate this Agreement within 10 days
after each day or occasion (as applicable) allowing a termination
right under this Section 4.2(b), then Producer's right to terminate
shall cease with respect to such day or occasion, as applicable.
Notwithstanding the foregoing, to the extent A-B's failure to maintain
the Minimum Supply of Corn or a Facility Shut-Down occurs as the
result of Producer's actions or inactions (unless Producer provides
reasonable notice to A-B of such actions or inactions), then such
event shall not be considered in determining whether Producer has a
termination right (or any other right, including any right of payment)
under this Section 4.2(b). On the first Facility Shut-Down in a twelve
month period, A-B will pay to Producer an amount equal to the actual
damages suffered by Producer as a result of the shut down of the
Facility. On the second Facility Shut-Down in a twelve month period,
Producer may elect to: (i) exercise its right to terminate this
Agreement as set forth in the first sentence of this Section 4.2(b)
and A-B will pay to Producer an amount equal to the actual damages
suffered by Producer as a result of the shut down of the Facility; or
(ii) not exercise its right to terminate the Agreement as set forth in
the first sentence of this Section 4.2(b) and A-B will pay to Producer
an amount equal to $750,000. On the third or more Facility Shut-downs
during a twelve month period, then either Party may elect to terminate
this Agreement on thirty days notice to the other Party and A-B will
pay to Producer an amount equal to the actual damages suffered by
Producer as a result of the shut down of the Facility.
(c) Notwithstanding anything to the contrary herein, A-B may
terminate this Agreement immediately upon notice to Producer (i) if
Producer fails to pay any amount due under this Agreement within two
business days after the date that such payment is due; (ii) if the
Effective Date has not occurred on or before October 15, 2009; (iii)
in accordance with Section 3.5(b) or Section 24 hereof; (iv) upon the
occurrence of a Dissolution Event (as defined in Article X of the
Operating Agreement); and/or (v) upon termination of that certain
Lease Agreement between Producer and Bunge, dated as of the same date
as this Agreement.
(d) Either Party may terminate this Agreement immediately upon
notice to the other Party if (i) such other Party files a petition for
adjudication as bankrupt, for reorganization or for an arrangement
under any bankruptcy or insolvency law; (ii) an involuntary petition
under such law is filed against such other Party and is not dismissed,
vacated or stayed within 60 days
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thereafter; or (iii) such other Party makes an assignment of all or
substantially all of its assets for the benefit of its creditors.
(e) A-B may terminate this Agreement immediately upon notice to
Producer if there is a Change in Control of Producer. A "Change of
Control" occurs upon any of: (i) a sale of all or substantially all of
the assets of Producer; (ii) a merger or consolidation involving
Producer, excluding a merger or consolidation after which 50% or more
of the outstanding equity interests of Producer continue to be held by
the same holders that held 50% of more of the outstanding equity
interests of Producer immediately before such merger or consolidation;
or (iii) any issuance and/or acquisition of equity interests of
Producer that results in a person or entity holding 50% or more of the
outstanding equity interests of Producer, excluding any persons or
entities that held 50% or more of the outstanding equity interests of
Producer immediately before such acquisition and, with respect to
Producer, excluding Bunge.
(f) Either Party may terminate this Agreement in accordance with
Section 9.3 hereof.
(g) Producer may terminate this Agreement upon thirty days prior
written notice to A-B if: (i) prior to May 1, 2011, Bunge or its
Affiliates sell any of the Series B Units of Producer originally
purchased by Bunge from Producer; or (ii) from and after May 1, 2011,
(A) Bunge and/or its Affiliates sell more than 15% per annum (on a
cumulative basis) of the Series B Units of Producer originally
purchased by Bunge from Producer; or (B) Bunge and/or its Affiliates
hold 25% or less of the Series B Units originally purchased by Bunge
from Producer. The provisions of this Section 4.2(g) shall not apply
to intra-Affiliate transfers by Bunge and/or its Affiliates.
(h) Producer may terminate this Agreement immediately upon notice
to A-B if there is a Change in Control of Producer upon payment to A-B
of an amount equal to the Annual Minimum Amount on the date of such
termination.
4.3 Survival. The provisions of this Agreement which expressly or by
their nature survive expiration or termination of this Agreement,
including, but not limited to, Sections 1.3, 2.2(h), 3.1, 3.2, 3.3, 3.7, 4,
6, 7, 12, 13, 14 and 24, will remain in effect after the expiration or
termination of this Agreement. For the avoidance of doubt, Section 1.3 will
only survive termination of this Agreement to the extent set forth in
Section 1.3.
5. Covenants of Producer. Producer covenants to A-B that it will use
commercially reasonable efforts to ensure that the Facility will be fully
operational no later than July 15, 2009.
6. Representations and Warranties. The following parties make warranties,
representations or guarantees as described below.
6.1 A-B represents and warrants to Producer that A-B, either through
its own management or through lawful contracts entered into with third
parties, currently has and shall maintain or cause to be maintained such
licenses, permits and/or authorities as may be required to lawfully engage
in the purchase and sale of Corn.
6.2 A-B represents and warrants to Producer that all necessary
corporate action has been taken for the authorization, execution, delivery
and performance of this Agreement; the
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execution, delivery and performance of this Agreement by it does not, and
will not, violate or constitute a breach of or default under any
Governmental Requirement (as defined in Section 14.4) or any indenture,
contract or other instrument to which the representing party or its assets
are bound or to which its business is subject.
6.3 Producer represents and warrants to A-B that all necessary
corporate action has been taken for the authorization, execution, delivery
and performance of this Agreement; the execution, delivery and performance
of this Agreement by Producer does not, and will not, violate or constitute
a breach of or default under any Governmental Requirement or any indenture,
contract or other instrument to which the representing party or its assets
are bound or to which its business is subject.
7. Limitation of Liability; General Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT, A-B MAKES NO STATUTORY, WRITTEN, ORAL, EXPRESSED OR IMPLIED
WARRANTIES, REPRESENTATIONS OR GUARANTEES OF ANY KIND CONCERNING THE SERVICES
PROVIDED BY A-B OR ITS AFFILIATES UNDER THIS AGREEMENT. EXCEPT AS EXPRESSLY
PROVIDED IN THIS AGREEMENT (INCLUDING SECTION 4.2(b)), NEITHER A-B NOR ITS
AFFILIATES, NOR ANY OTHER PARTY PROVIDING SERVICES HEREUNDER (INCLUDING ANY
SUBCONTRACTOR ALLOWED TO PROVIDE SERVICES BY THIS AGREEMENT), WILL BE LIABLE TO
PRODUCER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES ARISING OUT OF, RELATING TO
OR RESULTING FROM SERVICES PROVIDED UNDER THIS AGREEMENT OR THE FAILURE TO
PROVIDE SERVICES UNDER THIS AGREEMENT, EXCEPT TO THE EXTENT SUCH DAMAGES ARISE
OUT OF OR RESULT FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A-B OR SUCH
PARTY PROVIDING SERVICES (INCLUDING ANY SUBCONTRACTOR ALLOWED TO PROVIDE
SERVICES BY THIS AGREEMENT); PROVIDED, THAT THE AGGREGATE AMOUNT OF ALL SUCH
DAMAGES UNDER THIS AGREEMENT IN ANY FISCAL YEAR WILL NOT EXCEED THE AMOUNT OF
THE FEE IN SUCH FISCAL YEAR. THE REMUNERATION TO BE PAID FOR THE SERVICES TO BE
PERFORMED REFLECTS THIS LIMITATION OF LIABILITY. IN NO EVENT WILL A-B OR ANY OF
ITS AFFILIATES OR ANY OTHER PARTY PROVIDING SERVICES HEREUNDER (INCLUDING ANY
SUBCONTRACTOR ALLOWED TO PROVIDE SERVICES BY THIS AGREEMENT) BE LIABLE TO
PRODUCER OR ANY OTHER PERSON OR ENTITY FOR ANY INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES UNDER ANY CIRCUMSTANCES.
8. Remedies.
8.1 Suspend Performaince. A-B may suspend its performance under this
Agreement until Producer has paid all amounts due under this Agreement if
Producer fails to pay any amount within two business days after the date
when such amount is due and uncured under this Agreement. During any
suspension pursuant to this Section 8.1, none of A-B, Bunge, or any
either's Affiliates shall be bound by the restrictions set forth in Section
1.3 of this Agreement or the restrictions set forth in Section 2.1 of that
certain agreement between Bunge and Producer dated as of October 13, 2006
that addresses, inter alia, issues related to the Council Bluffs elevator.
8.2 Specific Enforcement. The Parties shall have the right and remedy
to seek to
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have the provisions of this Agreement specifically enforced by any court
having equity jurisdiction without the necessity of posting any bond, it
being acknowledged and agreed by the parties that the scope of the
provisions of this Agreement are reasonable under the circumstances.
8.3 Rights Not Exclusive. Subject to Section 2.2(a) and Article 7, no
right, power or remedy conferred by this Agreement will be exclusive of any
other right, power or remedy now or hereafter available to a Party at law,
in equity, by statute or otherwise.
9. Force Majeure.
9.1 Definition of Force Majeure Event. Each Party is excused from
performing its obligations under this Agreement to the extent that such
performance is prevented by an act or event (a "Force Majeure Event")
whether or not foreseen, that: (i) is beyond the reasonable control of, and
is not due to the fault or negligence of, such Party, and (ii) could not
have been avoided by such Party's exercise of due diligence, including, but
not limited to, a labor controversy, strike, lockout, boycott,
transportation stoppage, action of a court or public authority, fire,
flood, earthquake, storm, war, civil strife, terrorist action, epidemic, or
act of God; provided that a Force Majeure Event will not include economic
hardship, changes in market conditions, or insufficiency of funds.
Notwithstanding the foregoing sentence, a Force Majeure Event does not
excuse any obligation to make any payment required by this Agreement
(including Section 3.4) and will not affect either Party's right to
terminate this Agreement pursuant to Section 4.2
9.2 Conditions Regarding Force Majeure Event. A Party claiming a Force
Majeure Event must: (i) use commercially reasonable efforts to cure,
mitigate, or remedy the effects of its nonperformance; provided that
neither Party will have any obligation hereunder to settle a strike or
labor dispute; (ii) bear the burden of demonstrating its existence; and
(iii) notify the other Party of the occurrence of the Force Majeure Event
as quickly as reasonably possible, but no later than five business days
after learning of the occurrence of the Force Majeure Event. Any Party that
fails to notify the other Party of the occurrence of a Force Majeure Event
as required by this Section 9.2 will forfeit its right to excuse
performance of its obligations due to such Force Majeure Event. When a
Party claiming a Force Majeure Event is able to resume performance of its
obligations under this Agreement, it will immediately give the other Party
notice to that effect and resume performance.
9.3 Third Parties; Termination. During any period that a Party
claiming a Force Majeure Event is excused from performance under this
Agreement, the other Party may accept performance from other parties as it
may reasonably determine under the circumstances. If a Party has not
performed under this Agreement due to a Force Majeure Event for twelve
consecutive months or more, the other Party may terminate this Agreement
immediately upon notice to the non-performing Party.
10. Insurance.
10.1 Other Required Coverage.
(a) Each Party will maintain automobile liability insurance
covering owned, hired, and non-owned vehicles against claims for
bodily injury, death and property damage, with a combined single limit
of not less than $1,000,000, or equivalent coverage using split
limits.
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Such insurance will name the other Party, its parents, subsidiaries
and Affiliates as additional insureds thereunder, and will be primary
to any other insurance available to such other Party, its parents,
subsidiaries and Affiliates as insureds or otherwise.
(b) Each Party will maintain commercial general liability
insurance (including, without limitation, coverage for Contractual
Liability and Products/Completed Operations) against claims for bodily
injury, death and property damage, with limits of not less than
$1,000,000 for each occurrence and $1,000,000 in the General and
Products/Completed Operations Aggregate. Such insurance will name the
other Party, its parents, subsidiaries and Affiliates as additional
insureds there under, and will be primary and non-contributory to any
other insurance available to such other Party, its parents,
subsidiaries and Affiliates as insureds or otherwise.
(c) An excess or umbrella liability policy with a limit of not
less than $2,000,000 per occurrence and $2,000,000 aggregate. Such
excess or umbrella liability policy shall follow form with the primary
liability policies, and contain a drop-down provision in case of
impairment of underlying limits.
(d) Notwithstanding the provisions of Section 10.1(b) and (c),
each Party's total coverage under both its commercial general
liability insurance in Section 10.1(b) and excess or umbrella
liability policy in Section 10.1(c) must have combined limits together
totalling $4,000,000 for each occurrence and $4,000,000 aggregate.
(e) Worker's Compensation insurance providing statutory benefits
for injury or disease in the state(s) of operation of the Parties, and
Employer's Liability with limits of at least $500,000 for individual
injury or disease, with an aggregate of $500,000 for disease.
(f) Each Party waives all rights against the other Party and its
employees and agents for all losses and damages caused by, arising out
of or resulting from any of the perils or causes of loss of the Party
covered by the policies contemplated by Section 10.1 and any other
property insurance covering the Party applicable to the Facility.
10.2 Policy Requirements. All insurance policies required by this
Agreement will (a) provide coverage on an "occurrence" basis; (b) provide
that no cancellation or non-renewal will be effected without giving the
other Party at least thirty (30) days prior written notice, except ten (10)
days notice for non-payment of premium; and (c) be valid and enforceable
policies issued by insurers of recognized responsibility, properly licensed
in the State where the Facility is located, with an A.M. Best's Rating of
A- or better and Class VII or better. General Liability and Excess/Umbrella
Liability policies will not contain a cross-liability exclusion, or an
exclusion for punitive or exemplary damages where insurable under law.
Prior to the Effective Date and, thereafter, within five business days of
renewal, certificates and endorsements of such insurance will be delivered
to the other Party, as appropriate, as evidence of the specified insurance
coverage. From time to time, upon a Party's request, the other Party will
provide the requesting Party, within five business days, a certified
duplicate original of any policy required to be maintained hereunder. Each
Party will provide the other Party at least thirty (30) days prior written
notice of any material change or amendment to a Party's insurance policy.
11. Relationship of Parties. This Agreement creates no relationship other than
that of producer/seller and purchaser between the Parties hereto. Except as
expressly provided herein,
14
there is no partnership, joint venture or other joint or mutual enterprise
or undertaking created hereby and neither Party, or any of such Party's
representatives, agents or employees, will be deemed to be the
representative or employee of the other Party. Except as expressly provided
herein or as otherwise specifically agreed in writing, neither Party will
have authority to act on behalf of or bind the other Party. Notwithstanding
the foregoing, the Parties acknowledge that Bunge will be a member of
Producer and has certain rights related thereto.
12. Confidential9ity.
12.1 Definition of Confidential Information. The term "Confidential
Information" means all material or information relating to a Party's
business operations and affairs (including trade secrets) that such Party
treats as confidential. Without limiting the generality of the foregoing,
all information regarding quantities of Corn requested, supplied, or
capable of being supplied and any pricing matter under this Agreement will
be deemed to be Confidential Information of the appropriate Party;
provided, however, that quantities of Corn purchased, the price at which
the Corn was purchased, and aggregate fees paid to A-B, on a quarterly and
annual basis, shall not be deemed "Confidential Information."
12.2 Use of Confidential Information. During the Term and for three
years thereafter, neither Party will (a) use any Confidential Information
of the other Party for any purpose other than in accordance with this
Agreement or for its and its Affiliates' internal business purposes, or (b)
disclose Confidential Information to any Person, except to its personnel
(and with respect to A-B, to Bunge and its Affiliates) who are subject to
nondisclosure obligations comparable in scope to this Section 12 and who
have a need to know such Confidential Information in order to perform under
this Agreement. Notwithstanding the foregoing, the Parties acknowledge that
A-B, Bunge and/or their respective Affiliates may perform services for
other third parties similar to the services provided to Producer hereunder
and that the use by A-B, Bunge and/or their respective Affiliates of any
Confidential Information regarding the services provided under this
Agreement in the course of the provision of such services to other third
parties and for A-B's, Bunge's and their Affiliates' internal business
purposes shall not be considered a violation of this Section 12; provided,
that such use of Producer's Confidential Information may not be to the
competitive disadvantage of Producer.
12.3 Disclosure of Confidential Information. Notwithstanding Section
12.2, either Party may use for any purpose or disclose any material or
information that it can demonstrate (i) is or becomes publicly known
through no act or fault of such Party; (ii) is developed independently by
such Party without reference to the other Party's Confidential Information;
(iii) is known by such Party when disclosed by the other Party, and such
Party does not then have a duty to maintain its confidentiality; or (iv) is
rightfully obtained by such Party from a third party not obligated to
preserve its confidentiality who did not receive the material or
information directly or indirectly from the other Party. A Party also may
disclose the other Party's Confidential Information to the extent required
by a court, law, legal or administrative process or by other governmental
authority, provided that the disclosing Party (a) gives the other Party
advance written notice of the disclosure, (b) uses reasonable efforts to
resist disclosing the Confidential Information, (c) cooperates with the
other Party on request to obtain a protective order or otherwise limit the
disclosure, and (d) as soon as reasonably possible, provides a letter from
its counsel confirming that such Confidential Information is, in fact,
required to be disclosed.
15
12.4 Injunctive Relief. Each Party acknowledges and agrees that its
breach or threatened breach of any provision of this Section 12 would cause
the other Party irreparable injury for which it would not have an adequate
remedy at law. In the event of a breach or threatened breach, the
nonbreaching Party will be entitled to injunctive relief in addition to all
other remedies it may have at law or in equity.
13. Governing Law; Disputes.
13.1 Governing Law. This Agreement shall be governed by I the laws of
the state of Iowa, without regard to principles of conflicts of laws.
13.2 Notice of Dispute. If any dispute shall arise under or in
connection with this Agreement, the Parties hereto agree to follow the
procedures set forth in this Section 13 in an effort to resolve the dispute
prior to the commencement of any formal proceedings; provided, however,
that either Party may institute judicial proceedings seeking equitable
relief or remedies without following the procedures set forth herein. The
Parties shall attempt in good faith to resolve any dispute arising out of
or relating to this Agreement, the breach, termination, or validity hereof,
or the transactions contemplated herein promptly by negotiation between
representatives who have authority to settle the controversy. Any Party may
give the other Party written notice that a dispute exists (a "Notice of
Dispute") setting forth a statement of such Party's position. Within twenty
(20) business days of the delivery of the Notice of Dispute,
representatives of the Parties shall meet at a mutually acceptable time and
place, and thereafter as long as they both reasonably deem necessary, to
exchange relevant information and attempt to resolve the dispute. If the
matter has not been resolved within thirty (30) days of the disputing
party's delivering its Notice of Dispute, the dispute shall be referred to
the Boards of Directors or Managers of Producer and A-B who shall within
twenty (20) additional days meet to attempt in good faith to resolve the
dispute.
13.3 Mediation. If the matter still has not been resolved within sixty
(60) days of the delivery of the Notice of Dispute, then any Party may seek
to resolve the dispute through mediation administered by the Commercial
Mediation Rules of the American Arbitration Association. If the Parties
fail to resolve the dispute within twenty-one (21) days after starting
mediation, then either Party may initiate appropriate proceedings to obtain
a judicial resolution of the dispute.
13.4 Negotiations; Jurisdictional Matters. If a representative of any
Party intends to be accompanied at a meeting by an attorney, the other
negotiator shall be given at least three (3) business days' notice of such
intention and may also be accompanied by an attorney. All negotiations
pursuant to this clause are confidential and shall be treated as compromise
and settlement negotiations for purposes of the Federal Rules of Evidence
and similar state rules of evidence. Any proceeding initiated by either
Party hereto shall be commenced and prosecuted in the United States
District Courts for the Eastern District of Missouri or the Western
District of Iowa or the state courts in St. Louis County, Missouri or Des
Moines, Iowa, and any courts to which an appeal may be taken, and each
Party hereby consents to and submits to the personal jurisdiction of each
of such courts.
13.5 Waiver of Jury Trial. EACH PARTY IRREVOCABLY WAIVES ANY AND ALL
RIGHTS TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
16
HEREBY.
14. Indemnification.
14.1 Indemnification By Producer. Producer agrees to indemnify and
hold A-B harmless from any Loss suffered or incurred by A-B arising out of,
or in any way relating to:
(a) Producer's use or possession or operations on or at, or any
action or failure to act at, the Facility;
(b) any personal injury or property damage related to the use,
possession, condition of, disposal of, physical contact with or
exposure to any products manufactured at the Facility;
(c) injuries or alleged injuries suffered by Producer's employees
whether at the Facility or elsewhere and whether or not under the
direction of A-B and/or the Producer; or
(d) any violation or alleged violation of any Governmental
Requirement by Producer,
unless and to the extent such Loss was directly caused by A-B's gross negligence
or willful misconduct and in each case only to the extent A-B is not otherwise
compensated for such Loss by applicable insurance (to the extent actually paid).
14.2 Indemnification By A-B. A-B agrees to indemnify and hold Producer
harmless from any Loss suffered or incurred by Producer arising out of, or
in any way relating to:
(a) injuries or alleged injuries suffered by A-B's employees, or
leased or subcontracted by A-B, whether at the Facility or elsewhere;
or
(b) any violation or alleged violation of any Governmental
Requirement by A-B,
unless and to the extent such Loss was directly caused by Producer's gross
negligence or willful misconduct and in each case only to the extent Producer is
not otherwise compensated for such Loss by applicable insurance (to the extent
actually paid).
14.3 Employees, Affiliates, Etc. A party's indemnification of the other party
pursuant to this Section 14 will also run in favor of such indemnified party's
officers, managers, directors, employees, agents and representatives, and
indemnification claims may be made hereunder by any of such parties or by the
indemnified party on such third parties' behalf.
14.4 Definitions. For purposes of this Agreement:
(a) "Governmental Requirement" means all laws, statutes, codes,
ordinances and governmental rules, regulations and requirements of any
governmental authority that are applicable to the Parties, the
property of the Parties or activities described in or contemplated by
this Agreement.
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(b) "Loss" means any claim, loss, cost, expense, liability, fine,
penalty, interest, payment or damage, including but not limited to
reasonable attorneys' fees, accountants' fees and any cost and expense
of litigation, negotiation, settlement or appeal
15. Notices. All notices required or permitted under this Agreement will be in
writing and will be deemed given and made: (i) if by personal delivery, on the
date of such delivery, (ii) if by facsimile, on the date sent (as evidenced by
confirmation of transmission by the transmitting equipment), (iii) if by
nationally recognized overnight courier, on the next business day following
deposit, and (iv) if by certified mail, return receipt requested, postage
prepaid, on the third business day following such mailing; in each case
addressed to the address or facsimile number shown below for such Party, or such
other address or facsimile number as such Party may give to the other Party by
notice:
If to A-B:
AGRI-Bunge, LLC
x/x Xxxxx Xxxxx Xxxxxxx, Inc.
00000 Xxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Senior Vice President - Bunge Grain
Facsimile: (000) 000-0000
with copies to:
Xxxxx North America, Inc. AGRI Industries, Inc.
00000 Xxxxxx Xxxxx 000 XX Xxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000 Xxxxxx, XX 00000
Attn: General Counsel Attn: Chief Executive Officer
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
If to Producer:
Southwest Iowa Renewable Energy, LLC
00000 000xx Xxxxxx
Xxxxxxx Xxxxxx, Xxxx 00000
Attn: General Manager
Facsimile: 712-366-0394
with copies to:
Xxxxx X. Xxxxxxx, Esq.
Husch Xxxxxxxxx Xxxxxxx LLP
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Facsimile: (000) 000-0000
16. Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes
the entire agreement between the Parties with respect to the subject matter
hereof and supersedes all prior agreements and understandings, both written and
oral, between the Parties with respect to the
18
subject matter hereof. This Agreement does not, and is not intended to, confer
any rights or remedies upon any person other than the Parties (or their
Affiliates, successors, assignees or subcontractors to the extent set forth
herein).
17. Amendments; Waiver. The Parties may amend this Agreement only by a written
agreement of the Parties. No provision of this Agreement may be waived, except
as expressly provided herein or pursuant to a writing signed by the Party
against whom the waiver is sought to be enforced. No failure or delay in
exercising any right or remedy or requiring the satisfaction of any condition
under this Agreement, and no "course of dealing" between the Parties, operates
as a waiver or estoppel of any right, remedy or condition. A waiver made in
writing on one occasion is effective only in that instance and only for the
purpose that it is given and is not to be construed as a waiver on any future
occasion or against any other person.
18. Assignment. No Party may assign this Agreement, or assign or delegate any of
its rights, interests, or obligations under this Agreement, voluntarily or
involuntarily, whether by merger, consolidation, dissolution, operation of law,
or any other manner, without the prior written consent of the other Party, and
any purported assignment or delegation without such consent will be void.
Despite the prior sentence, (a) SIRE may assign to Affiliates of SIRE and may
enter in assignments required by lenders without A-B's prior written consent,
and (b) A-B may assign this Agreement, or assign or delegate any of its rights,
interests, or obligations under this Agreement, to Bunge North America, Inc. and
its Affiliates without Producer's prior written consent. Upon the dissolution or
termination of A-B, this Agreement shall be automatically assigned to Bunge
North America, Inc. without any further action by the Parties. Subject to the
preceding sentences in this Section 18, this Agreement binds and benefits the
Parties and their respective permitted successors and assigns.
19. Subcontracting. In connection with A-B providing the Services, A-B may
subcontract with or otherwise retain the services of Bunge and Bunge's
Affiliates, and Producer hereby consents to such subcontracting activities for
purposes of Section 18 hereof.
20. Severability. If a court or arbitrator with proper jurisdiction determines
that any provision of this Agreement is illegal, invalid, or unenforceable, the
remaining provisions of this Agreement remain in full force. The Parties will
negotiate in good faith to replace such illegal, invalid, or unenforceable
provision with a legal, valid, and enforceable provision that carries out the
Parties' intentions to the greatest lawful extent under this Agreement.
21. Interpretation. Each Party has been represented by counsel during the
negotiation of this Agreement and agrees that any ambiguity in this Agreement
will not be construed against one of the Parties.
22. Further Assurances. Each Party will execute and cause to be delivered to the
other Party such instruments and other documents, and will take such other
actions, as the other Party may reasonably request for the purpose of carrying
out or evidencing any of the transactions contemplated by this Agreement.
23. Counterparts. This Agreement may be executed by the Parties by facsimile and
in separate counterparts, each of which when so executed will be deemed to be an
original and all of which together will constitute one and the same agreement.
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24. Suspension of Agency Agreement.
24.1 Suspension. This Agreement is being entered into to temporarily
replace that certain Grain Feedstock Agency Agreement between the Parties
dated October 13, 2006, as amended by that certain First Amendment dated as
of the date hereof (the "Agency Agreement") until such time as Producer has
obtained a grain dealers license from the State of Iowa. During the Term of
this Agreement, Producer agrees to use its best efforts to obtain a grain
dealers license from the State of Iowa. The Agency Agreement is hereby
suspended and shall not govern the terms of delivery of Corn to the
Facility until the Parties mutually agree to terminate this Agreement and
reinstate the terms of the Agency Agreement in accordance with the
following procedures. After its receipt of a grain dealers license from the
State of Iowa, Producer shall provide A-B notice in writing at least 60
days prior to the date Producer desires to terminate this Agreement and
reinstate the terms of the Agency Agreement. Upon A-B's receipt of such
notice, A-B and Producer shall mutually agree in writing upon the date of
termination of this Agreement and reinstatement of the terms of the Agency
Agreement; provided, that, if termination of this Agreement and
reinstatement of the terms of the Agency Agreement shall not have occurred
by June 30, 2009, then A-B may terminate either or both of this Agreement
and the Agency Agreement in its sole discretion. Notwithstanding anything
contained in this Agreement to the contrary, upon any termination of this
Agreement other than pursuant to this Section 24, the Agency Agreement
shall be deemed to have been immediately terminated upon mutual agreement
of the Parties without any further action by any Party.
24.2 Reinstatement of Agency Agreement. Upon termination of this
Agreement and reinstatement of the terms of the Agency Agreement pursuant
to Section 24.1: (a) the "Effective Date" and "Restriction Date" of the
Agency Agreement shall be deemed to be the Effective Date and Restriction
Date, respectively, of this Agreement, (b) the Monthly Estimates delivered
under this Agreement will be deemed to be the monthly estimates which
Producer is obligated to deliver under the Agency Agreement, (c) the Corn
supplied by A-B to Producer under this Agreement will be applied against
any minimum Corn supply requirements under the Agency Agreement, (d) the
Origination Fees paid by Producer under this Agreement during the 12-month
period preceding termination of this Agreement shall be applied against the
Agency Fee (as defined in the Agency Agreement) for purposes of calculating
the Total Fees Amount under the Agency Agreement, and (e) Confidential
Information of a Party which is obtained by the other Party under this
Agreement shall become "Confidential Information" which is governed by the
Agency Agreement.
24.3 Treatment of Contracts. At A-B's option, with respect to any
Contracts in existence on the date of termination of this Agreement for any
reason (including, without limitation, termination pursuant to this Section
24), the terms of this Agreement shall survive such termination and
continue to govern the sale by A-B of the Contracted Grain Volume subject
to such Contracts.
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20
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed the
day and year first above written.
AGRI-XXXXX, LLC SOUTHWEST IOWA RENEWABLE
ENERGY, LLC
By: /s/ X. Xxxxxx Xxxxx By: /s/ Xxxx Xxxxx
------------------- -----------------------------
Name: X. Xxxxxx Xxxxx Name: Xxxx Xxxxx
Title: Manager Title: President and CEO
21
EXHIBIT A
QUALITY STANDARDS
CORN SPECIFICATION:
------------------
GRADE: U.S. No. 2 Yellow Corn
MOISTURE 15.0%
AFLATOXIN: Maximum 20ppm
PRICE DISCOUNT SCHEDULE: per market scale of discounts
22
EXHIBIT B
FORM OF SALES CONFIRMATION
AGRI - Xxxxx, LLC CONFIRMATION OF
SALES CONTRACT
B
U
Y
E
R
The following confirms the terms of the contract between the Seller and the
Buyer. Seller and Buyer are parties to a Grain Feedstock Supply Agreement dated
December 15, 2008. In the event of any consistency between this confirmation and
the Grain Feedstock Supply Agreement, the terms of the Grain Feedstock Supply
Agreement shall apply.
The Seller hereby sells and agrees to deliver, and the Buyer hereby purchases
and agrees to receive in the amounts and on the terms and conditions hereinafter
set forth, the following:
-------------------------------- ----------------------------------------- -------------------- ----------------------
QUANTITY GRADE AND COMMODITY PRICE BASIS
-------------------------------- ----------------------------------------- -------------------- ----------------------
-------------------------------- ----------------------------------------- -------------------- ----------------------
INSPECTIONS WEIGHTS TIME OF SHIPMENT
-------------------------------- ----------------------------------------- -------------------------------------------
SPECIAL TERMS & CONDITIONS
===============================================================================
THE UNDERSIGNED HEREBY AGREE TO THE ABOVE TERMS TOGETHER WITH THE GENERAL TERMS
ON THE REVERSE SIDE OF THIS CONTRACT.
BUYER SELLER
AGRI - Xxxxx, LLC
--------------------------------------------
By: DATE: BY:
--------------------------------- --------------------- -------------------------------------------------
PLEASE SIGN COPY AND RETURN
GENERAL TERMS
1. Unless otherwise provided herein, this contract is subject to the rules and
regulations of the National Grain and Feed Association in effect on the
date of this contract; and to the extent not in conflict with this
confirmation or with said rules and regulations, to the Uniform Commercial
Code. Buyer and Seller agree that all disputes and controversies between
them with respect to this contract shall be arbitrated according to said
rules and regulations, that the decision and award determined thereunder
shall be final and binding on Buyer and Seller, and that judgment thereon
may be entered in any court of competent jurisdiction.
2. The term "Inspection" as it pertains to grain, shall mean inspection in
accordance with the terms of National Grain and Feed Association's Class A
Official Inspection. Seller's weights and inspections shall be specified
where official weights and grades are not available.
3. (a) If any commodity covered by this contract fails to comply with the
Federal Food, Drug and Cosmetic Act as a result of causes or conditions
proven to have existed prior to the time when title passed to the Buyer,
Buyer, as his exclusive remedy and recourse may reject same prior to
unloading and Seller shall replace with a like amount. Seller shall not be
responsible for any failure of the commodity to comply with the Federal
Food, Drug and Cosmetic Act which results from causes or conditions arising
subsequent to the time title passed to Buyer. In no event shall Seller be
liable to Buyer for any consequential damages suffered by Buyer. (b) THE
EXPRESS WARRANTIES SET FORTH HEREIN ARE EXCLUSIVE AND NO OTHER WARRANTIES,
GUARANTEES OR REMEDIES OF ANY KIND, WHETHER STATUTORY, WRITTEN, ORAL,
EXPRESSED OR IMPLIED INCLUDING THE WARRANTIES OF MERCHANTABILITY AND/OR
FITNESS FOR A PARTICULAR PURPOSE SHALL APPLY. (c) No verbal agreement,
representation or warranty concerning the terms of this contract or the
commodity itself shall be valid or binding unless confirmed by the Seller
in writing.
4. Failure on the part of Seller to deliver, or non-conformity of any
installment of this contract shall not be a breach of the entire contract.
5. This entire contract or any unshipped portion thereof is subject to
cancellation by Seller if any federal, state or municipal laws, rules, or
regulations now in effect or which may become in force during the term of
this contract, prevent or adversely affect performance of this contract in
accordance with its provisions.
6. Any increase in present freight rates shall be for Buyer's account. Any
existing, new or increased tax or charge hereinafter imposed by the United
States or any State, County, or Municipality shall be paid by Buyer.
7. Either party may continue its performance of this contract, despite the
other's breach, without waiving any of its rights or remedies arising from
the breach.
8. This contract is subject to reciprocal margins common in the trade,
including the following: When the contract price exceeds the market price,
Seller may require Buyer to place the difference between market price and
contract price on the undelivered balance in escrow and/or withhold amounts
due Buyer for deliveries on this or any other contract in an amount no
greater than the difference between market price and contract price, until
the balance is delivered. When the contract price is below the market
price, Buyer may require Seller to place the difference between market
price and contract price on the undelivered balance in escrow If more than
one contract is outstanding, the aggregate balance on all open contracts
will be considered. Either party may treat the contract as breached by the
other party if the other party fails to place the margin in escrow upon
demand.
9. Reconsignment or diversion of any private car furnished by Seller is
prohibited unless Seller consents thereto in writing.
10. Seller is not responsible for performance under this contract in the event
of conditions beyond Seller's control such as, but not limited to, labor
disputes and disturbances, embargo delays, accidents, fire, delay or
non-performance of carriers, acts of God or war. Seller shall, at its
option, and upon notice to Buyer, either be relieved of further performance
under this contract or Seller's performance may be suspended for a period
of time equal to the time period of the delay.
11. Buyer hereby warrants that it was and is solvent, as that term is defined
under bankruptcy law, at the time it entered into this contract, at the
time it signs the confirmation of sales contract, and at the time it takes
delivery of the commodities covered by this contract. Buyer shall promptly
inform Seller in writing if it becomes insolvent, as that term is defined
under bankruptcy law, prior to the full performance and completion of this
contract.
12. If Buyer does not return a signed copy of this confirmation to Seller
within ten days from the above date, Seller shall have the option to cancel
this contract by sending written notice to Buyer within fourteen days from
the above date. If Seller does not give such written notice, this contract
shall remain in full force and effect. Buyer's failure to advise Seller in
writing of any discrepancies in, objections to, or disagreements with the
terms and conditions of this confirmation within ten days from the above
date will be construed as acceptance of these terms and conditions.
