EXHIBIT 6.3
DISTILLER'S GRAIN MARKETING AGREEMENT
THIS DISTILLER'S GRAIN MARKETING AGREEMENT (the "Agreement"), is entered
into effective as of June 19th, 2002, by and between PLCP, L.P. ("Seller"),
d/b/a Little Sioux Corn Processors, L.P., an Iowa limited partnership, and
Commodity Specialist Company, a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller desires to sell and Buyer desires to purchase the
Distiller's Dried Grains with Solubles ("DDGS"), Wet Distillers Grains ("WDG"),
Modified Wet Distillers Grains ("MWDG") and Solubles (hereinafter DDGS, WDG and
MWDG and Solubles are referred to collectively as the "Products") output of the
ethanol production plant which Seller owns in Cherokee, Iowa; 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 promises 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. BUYER PERFORMANCE. Buyer agrees to perform the services that it
provides for Seller in a professional and competent manner.
2. PURCHASE AND SALE. Seller agrees to sell to Buyer and Buyer agrees to
purchase from Seller the entire bulk feed grade DDGS, WDG and MWDG output from
Seller's plant at Marcus, IA. (hereinafter the "Plant"), [*].
3. 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 specified. Said Trade Rules, a copy of which is appended hereto as
Exhibit C, shall, to the extent applicable, be a part of this Agreement as if
fully set forth herein.
4. TERM. [*]
*Portion omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission. A total of two pages of
this Exhibit 6.3 has been omitted pursuant to the request for confidential
treatment.
5. DELIVERY AND TITLE.
A. The place of delivery for all the Products sold pursuant to this
Agreement shall be FOB Plant. Buyer and Buyer's agents shall be given
access to Seller's Plant in a manner and at all times reasonably necessary
and convenient for Buyer to take delivery as provided herein. Buyer shall
schedule the loading and shipping of all outbound Products purchased
hereunder which is shipped by truck or rail. All labor and equipment
necessary to load trucks or rail cars shall be supplied by Seller without
charge to Buyer. Seller agrees to handle the Products in a good and
workmanlike manner in accordance with Buyer's reasonable requirements and
in accordance with normal industry practice. Seller shall maintain the
truck and rail loading facilities in safe operating condition in accordance
with normal industry standards.
B. Seller further warrants that storage space for not less than [*]
shall be reserved for Buyer's use at the Plant and shall be continuously
available for storage of DDGS purchased by Buyer hereunder at no charge to
Buyer. Seller shall also make available the necessary storage for WDG and
MWDG which is adequate for Buyer to market such products. Seller shall be
responsible at all times for the quantity, quality and condition of any the
Products in storage at the Plant. Seller shall not be responsible for the
quantity, quality and condition of any of the Products stored by Buyer at
locations other than the Plant.
C. Buyer shall give to Seller a schedule of quantities of the Products
to be removed by truck and rail with sufficient advance notice reasonably
to allow Seller to provide the required services. Seller shall provide the
labor, equipment and facilities necessary to meet Buyer's loading schedule
and, except for any consequential or indirect damages, shall be responsible
for Buyer's actual costs or damages resulting from Seller's failure to do
so. Buyer shall order and supply trucks and rail cars as scheduled for
truck and rail shipments. All freight charges shall be the responsibility
of Buyer and shall be billed directly to Buyer.
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 the Products
unless Seller shall have provided to Buyer production schedules as follows:
Five (5) days prior to the beginning of each calendar month during the term
hereof, Seller shall provide to Buyer a tentative schedule for production
in the next calendar month. Seller shall inform Buyer daily of inventory
and production status. For purposes of this paragraph, notification will be
sufficient if made by facsimile as follows:
If to Buyer, to the attention of Xxxxx Xxxxxxx, Facsimile number
000-000-0000, and
*Portion omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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If to Seller, to the attention of Xxxxx X. Xxxxx, President, Facsimile
number (000) 000-0000.
Or to such other representatives of Buyer and Seller as they may designate
to the other in writing.
E. Title, risk of loss and full shipping responsibility shall pass
to Buyer upon loading the Products into trucks or rail cars and
delivering to Buyer of the xxxx of lading for each such shipment.
F. In the event that Buyer orders WDG or MWDG from Seller and Xxxxx
does take such Products from Seller at the time that Buyer
specifies and such product spoils or otherwise goes out of
condition, Buyer shall pay Seller for such product.
6. PRICE AND PAYMENT
A. Buyer agrees to pay Seller as follows: for all DDGS removed by
Buyer from the Plant a price equal to [*]. For purposes of this provision,
the FOB Plant price shall be the actual sale price, less all freight costs
incurred by Buyer in delivering the Product to its customer. [*] Buyer
agrees to use commercially reasonable efforts to achieve the highest resale
price available under prevailing market conditions. Seller's sole and
exclusive remedy for breach of Buyer's obligations hereunder shall be to
terminate this Agreement. Buyer shall collect all applicable state tonnage
taxes on Products sold by Buyer and shall remit to the appropriate agency.
B. Within [*] business days following receipt of certified weight
certificates, which certificates shall be presented to Buyer each Thursday
for all shipments during the preceding week, Buyer shall pay Seller the
full price, determined pursuant to paragraph 6A above, for all properly
documented shipments. Buyer agrees to maintain accurate sales records and
to provide such records to Seller upon request. Seller shall have the
option to audit Buyer's sales invoices at any time during normal business
hours and during the term of this Agreement. If any such audit shall reveal
a deficiency in the payment due Seller, Buyer shall immediately pay Seller
the amount of such deficiency together with interest from the date that
such payment should have been made at the prime rate then in effect as
reported in the the Wall Street Journal.
7. QUANTITY AND WEIGHTS.
A. It is understood that the output of the Products shall be
determined by Seller's production schedule and that no warranty or
representation has been made by Seller as to the exact quantities of
Products to be sold pursuant to this Agreement.
*Portion omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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B. The quantity of Products delivered to Buyer from Seller's Plant
shall be established by weight certificates obtained from scales at the
Plant which are certified as of the time of weighing and which comply with
all applicable laws, rules and regulations or in the event that the scale
at the Plant is inoperable then at other scales which are certified as of
the time of weighing and which comply with all applicable laws, rules and
regulations. The outbound weight certificates shall be determinative of the
quantity of the Products for which Buyer is obligated to pay pursuant to
Section 5.
8. QUALITY.
A. Seller understands that Buyer intends to sell the Products
purchased from Seller as a primary animal feed ingredient and that said
Products are subject to minimum quality standards for such use. Seller
agrees and warrants that the Products produced at its plant and delivered
to Buyer shall be accepted in the feed trade under current industry
standards.
B. Seller warrants that all DDGS sold to Buyer hereunder shall, at the
time of delivery to Buyer, conform to the following minimum quality
standard:
Protein Fat Fiber Moisture Ash
---------------------------------------------------------------------------
Min Max Min Max Min Max Min Max Min Max
---------------------------------------------------------------------------
DDGS 25 10 15 12 6
Modified WDG 13 5 7 50 3
Wet Distillers Grain 8 3 5 67 2
The standard for DDGS will be determined on an as is basis rather
than a dry weight basis. Minimum quality standards for Solubles
shall be agreed upon by the parties at a subsequent date.
C. Seller warrants that at the time of loading, the Products will not
be adulterated or misbranded within the meaning of the Federal Food, Drug
and Cosmetic Act and that each shipment may lawfully be introduced into
interstate commerce under said Act. Payment of invoice does not waive
Buyer's rights if goods do not comply with terms or specifications of this
Agreement. Unless otherwise agreed between the parties to this Agreement,
and in addition to other remedies permitted by law, the Buyer may, without
obligation to pay, reject either before or after delivery, any of the
Products which when inspected or used fail in a material way to conform to
this Agreement. Should any of the Products be seized or condemned by any
federal or state department or agency for any reason except noncompliance
by Buyer with applicable federal or state requirements, such seizure or
condemnation shall operate as a rejection by Buyer of the goods seized or
condemned and Buyer shall not be obligated to offer any defense in
connection with the seizure or condemnation. When rejection occurs before
or after delivery, at its option,
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Buyer may:
(1) Dispose of the rejected goods after first offering
Seller a reasonable opportunity of examining and taking possession
thereof, if the condition of the goods reasonably appears to Buyer to
permit such delay in making disposition; or
(2) Dispose of the rejected goods 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
goods and Seller fails to direct Buyer to dispose of it as provided
herein, Buyer may return the rejected goods to Seller, upon which
event Buyer's obligations with respect to said rejected goods shall be
deemed fulfilled. Title and risk of loss shall pass to Seller promptly
upon rejection by Buyer.
(4) Seller shall reimburse Buyer for all costs reasonably
incurred by Buyer in storing, transporting, returning and disposing of
the rejected goods. Buyer shall have no obligation to pay Seller for
rejected goods and may deduct reasonable costs and expenses to be
reimbursed by Seller from amounts otherwise owed by Buyer to Seller.
(5) If Seller produces Products which comply with the
warranty in Section C above but which do not meet applicable industry
standards, Buyer agrees to purchase such Products for resale but makes
no representation or warranty as to the price at which such Product
can be sold. If the Products deviates so severely from industry
standard as to be unsalable, then it shall be disposed of in the
manner provided for rejected goods in Section C above.
D. If Seller knows or reasonably suspects that any of the Products
produced at its Plant are 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 of the Products produced by Seller at its
Plant are adulterated, misbranded or outside of industry quality standards,
then Buyer may obtain independent laboratory tests of the affected goods.
If such goods are tested and found to comply with all warranties made by
Seller herein, then Buyer shall pay all testing costs; and if the goods are
found not to comply with such warranties, Seller will pay all testing
costs.
9. RETENTION OF SAMPLES. Seller will take an origin sample of the DDGS
from each truck and rail car before it leaves the Plant using standard sampling
methodology. Seller will label these samples to indicate the date of shipment
and the truck or railcar number involved. Seller will also retain the samples
and labeling information for no less than 3 years.
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10. INSURANCE.
A. Seller warrants to Buyer that all employees engaged in the removal
of the Products from Seller's Plant shall be covered as required by law by
worker's compensation and unemployment compensation insurance.
B. Seller agrees to maintain throughout every term of this Agreement
comprehensive general liability insurance, including product liability
coverage, with combined single limits of not less than [*]. 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 any decrease in or cancellation of coverage. Seller shall
cause Buyer to be named as an additional insured on Seller's insurance
policy and shall provide a certificate of insurance to Buyer to establish
the coverage maintained by Seller not later than fourteen (14) days prior
to completion and start-up of production of the Plant.
C. Buyer agrees to carry such insurance on its vehicles operating on
Seller's property as Seller reasonably deems appropriate. The parties
acknowledge that Buyer may elect to self insure its vehicles. Upon request,
Buyer shall provide certificate of insurance to Seller to establish the
coverage maintained by Buyer.
D. Notwithstanding the foregoing, nothing herein shall be construed to
constitute a waiver by either party of claims, causes of action or other
rights which either party may have or hereafter acquire against the other
for damage or injury to its agents, employees, invitees, property,
equipment or inventory, or third party claims against the other for damage
or injury to other persons or the property of others.
11. REPRESENTATIONS AND WARRANTIES
A. Seller represents and warrants that all of the Products delivered
to Buyer shall not be adulterated or misbranded within the meaning of the
Federal Food, Drug and Cosmetic Act and may lawfully be introduced into
interstate commerce pursuant to the provisions of the Act. Seller further
warrants that the Products 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.
EXCEPT AS SPECIFICALLY STATED IN THIS AGREEMENT, SELLER MAKES NO WARRANTY
OR REPRESENTATION, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
*Portion omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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B. Seller represents and warrants that the Products delivered to Buyer
shall be free and clear of liens and encumbrances.
12. 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 and agreements set forth in 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 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.
13. REMEDIES. Upon the happening of an Event of Default, the parties
hereto shall have all remedies available under applicable law with respect to a
Event of Default by the other party. 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) immediately to terminate this Agreement
effective upon receipt by the party in default of the notice of termination,
provided, however, the parties shall be allowed 10 days from the date of receipt
of notice of default for to cure any default. 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.
14. 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 reasonable 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 or agencies
thereof.
15. INDEMNIFICATION.
A. Seller shall indemnify, defend and hold Buyer and its officers,
directors, employees and agents harmless, from any and all losses,
liabilities, damages, expenses (including reasonable attorneys' fees),
costs, claims, demands, that Buyer or its officers, directors, employees or
agents may suffer, sustain or become subject to, or as a result of (i) any
misrepresentation or breach of warranty, covenant or agreement of Seller
contained herein or (ii) the Seller's negligence or willful misconduct.
B. Buyer shall indemnify, defend and hold Seller and its officer,
directors, employees and agents harmless, from any and all losses,
liabilities, damages, expenses (including reasonable attorneys' fees),
costs, claims, demands, that Seller or its officers, directors, employees
or agents may suffer, sustain or become subject to, or as a result of (i)
any misrepresentation or breach of warranty, covenant or agreement of Buyer
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contained herein or (ii) the Buyer's negligence or willful misconduct.
C. Where such personal injury, death or loss of or damage to property
is the result of negligence on the part of both Seller and Buyer, each
party's duty of indemnification shall be in proportion to the percentage of
that party's negligence or faults.
D. Seller acknowledges that in order to maximize the total revenue to
be generated through the sale of the Products, Buyer may take positions by
buying or selling Product in anticipation of Seller providing the Products.
Notwithstanding the fact that Seller's obligation is to provide Buyer with
the output of the Plant the parties acknowledge that Buyer may suffer
losses as a result of positions taken by Buyer if Seller discontinues
operations for any reason whatsoever excluding Force Majeure. Therefore,
Seller shall indemnify, defend and hold Buyer and its officers, directors,
employees and agents harmless from any and all losses, liabilities,
damages, expenses (including reasonable attorney's fees), costs, claims,
demands that Buyer or its officers, directors, employees, or agents may
suffer, sustain or become subject to as a result of any sale or purchase of
product taken by Buyer in anticipation of Seller delivering the Products
hereunder, provided Buyer has taken commercially reasonable steps to avoid
the loss. Seller shall not be liable for any loss resulting from Seller
discontinuing operations related to a position taken by Buyer for delivery
more than 90 days from the date of entering inot a sale without the consent
of Seller.
16. GOVERNMENTAL ACTION. The parties recognize that the value of the
Products could change as a result of various governmental programs, be they
foreign or domestic. In the event that a significant value change of the
Products as a result of any such governmental program, Buyer may request
re-negotiation of the contract price for the Products by providing written
notice to Seller. Buyer shall be required to demonstrate that the value of the
Products has significantly changed in the market. Should such a change take
place, the parties agree to negotiate, in good faith, a revised sale price for
the Products. If, after a good faith effort, the parties are unable to agree on
a new price within the 90 day period immediately following notice to the other
party, then in such event and notwithstanding the other provisions hereof, Buyer
may terminate this Agreement upon 90 days prior written notice.
17. RELATIONSHIP OF PARTIES. This Agreement creates no relationship other
than that of buyer and seller between the parties hereto. Specifically, there is
no agency, 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.
18. 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.
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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 or the performance and an
opportunity to make objection.
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
Iowa.
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 to whom it
is addressed ninety-six (96) hours after it is deposited in
certified U.S. mail, postage prepaid, return receipt requested,
addressed as follows:
Buyer: Commodity Specialist Company
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxxxxxxxx, Xxxxxxxxx 00000
ATTN: Xxxxx X. Xxxxxxx
Seller: Little Sioux Corn Processors, L.P.
0000 X. Xxxxxx
Xxxxxx, Xxxx 00000
ATTN: Xxxxx X. Xxxxx, President
IN WITNESS THEREOF, the parties have caused this Agreement to be executed
the day and year first above written.
COMMODITY SPECIALISTS COMPANY
By /s/ Xxxxxx X. Xxxxxx
--------------------
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Title PRESIDENT
LSCP, L.P., LITTLE SIOUX CORN PROCESSORS, L.P.
By: LITTLE SIOUX CORN PROCESSORS, LLC
Its: General Partner
/s/ XXXXX X. XXXXX
-------------------
Xxxxx X. Xxxxx, President
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EXHIBIT A
SELLER'S RESERVED
IOWA COUNTIES
[*]
*Portion omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
11
EXHIBIT B
BUYER'S RESERVED CUSTOMERS
[*]
*Portion omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
12
