Exhibit 10.13
AGRICULTURE PRODUCTS DEVELOPMENT DIVISION
AGRICULTURAL VALUE ADDED CENTER
AWARD AND SECURITY AGREEMENT
This agreement is dated as of the 22nd day of August, 2001, by and among 3N
INVESTMENTS DBA HEARTLAND ETHANOL, LLC hereafter referred to as the "Company"
and the Agricultural Value Added Center of the Kansas Department of Commerce and
Housing, hereafter referred to as the "KDOC&H". The award identification number
is 2002-04.
1.0 REPRESENTATIONS AND WARRANTIES OF THE COMPANY - The Company represents and
warrants to the KDOC&H as follows:
1.1 The company is a Limited Liability Company validly existing, and in
good standing under the laws of the State of Kansas. The Federal Tax
Identification Number is 00-0000000.
1.2 Except as may have been previously disclosed in the application process,
there are no actions, suits, or proceedings pending, or (to the knowledge
of the Company) threatened against or affect the Company, before any
Court, commission, administrative agency or government instrumentality.
1.3 The Company is not infringing or violating any patent, copyright or
trademark.
1.4 The information provided by the Company in its application to the KDOC&H
is true, correct, and complete in all material aspects.
1.5 The individual signing this contract has the express authority to
represent the Company in such an agreement and has the authority to
represent the corporation as specified in the Articles of Incorporation of
the Company and/or the bylaws of the Company.
2.0 COVENANTS OF THE COMPANY - The Company shall:
2.1 Perform the project in accordance with this agreement, the Application,
proposal and subsequent amendments, Attachments A, B, and C, and Indices
1, 2, and 3, all of which are incorporated herein by reference, (if
required) as submitted for funding.
2.2 Develop and promote the commercialization, marketing and sale of products
from the project as described in the Application ("Product").
2.3 Make full restitution to the KDOC&H of all the KDOC&H funds provided to
the Company, in the event the Company is unable or unwilling to meet the
terms of this agreement.
2.4 The KDOC&H reserves the right to audit performance and financial records
of the Company pertaining to this project. The company shall
make the project records available to the KDOC&H on demand, during normal
business hours, as long as the loan is outstanding.
2.5 Company will provide quarterly reports on the status of the project, the
results and the expected completion date. In addition, Company will
provide all public reporting information to the KDOC&H annually for 5
years from the date of the final report for the project.
3.0 COVENANTS AND WARRANTS OF THE KDOC&H
3.1 The KDOC&H will provide a sum not to exceed $100,000.00 to the Company for
use in connection with financing the project upon terms and conditions set
forth in this document, provided such funds for this purpose are made
available to the KDOC&H from the State of Kansas.
4.0 FUNDING OF THE PROJECT
4.1 The KDOC&H will transfer moneys to the Company provided the KDOC&H
receives the signed agreement from the Company and funds from the State of
Kansas for use in financing the project as described in Section 3 .1
above, and the Company is in compliance with this agreement, the
application and the proposal, and all amendments, if any to any of the
foregoing documents.
5.0 INTELLECTUAL PROPERTY RIGHTS
5.1 KDOC&H will possess no intellectual property rights to the project or
products resulting from-this project.
6.0 PURPOSE
6.1 This award provides funding to the Company for professional services and
actual costs associated with SEC Filing.
7.0 IMPROPER USE OF FUNDS
7.1 The KDOC&H is providing moneys to the Company, for the expressed purpose
as identified in Section 6.1. Any other use of these moneys is prohibited.
8.0 PROJECT REPAYMENT TO THE KDOC&H. The provisions for repayment to the
KDOC&H are as follows:
8.1 If the company successfully meets the minimum escrow capitalization
requirement of $11 million from the stock offering, and if escrow is
broken by September 1, 2003, the Company will repay the sum of $100,000
within seven days. In the event escrow is broken after
September 1, 2003, within seven days of that date, the company will repay
$100,000 plus 7.75% simple interest compounded annually from September 1,
2003.
8.2 If the Company licenses, sells, or otherwise transfers the rights to
manufacture the Product to another Kansas firm, such that the primary
point of manufacture occurs in Kansas, the terms specified in 8.1 above
shall continue to apply.
8.3 If the Company: (1) commercializes the Product out-of-state such that no
management, marketing or production activity occurs in Kansas; or (2)
sells, transfers, licenses, or otherwise disposes of the rights to the
Product out-of-state, such that no management, marketing or production
activity occurs in Kansas, the Company shall pay the KDOC&H: (1) within
thirty (30) days of such transfer, the award amount of $100,000 plus 10%
simple interest from the date funds were disbursed by the KDOC&H; and (2)
an ongoing royalty of 4% of gross sales for the life of the Product. If
significant benefits to Kansas can occur as a result of such out-of-state
transfer, this repayment obligation may be subject to re-negotiation at
the discretion of the KDOC&H.
8.4 If the Company, in exercising its best business judgment, determines not
to commercialize, sell, license or market the Product, then no amounts
shall be payable to the KDOC&H under this agreement in excess of the
salvage or resale value of the equipment purchased.
8.5 The Company shall provide quarterly auditable summaries of sales for the
Company, which shall be signed by the president or the chief financial
officer of the Company. A sample of the form to be provided is attached as
Attachment B.
8.6 In the event the Company should become insolvent, or is unable to
successfully commercialize, sell, license or market the project, the
Company must notify the KDOC&H immediately.
8.7 If the Company dcfaults on any of its obligations hereunder, any equipment
financed by this funding will become property of the KDOC&H and the KDOC&H
will have the sole right to possess such equipment. The Company hereby
grants the KDOC&H purchase security interest in the equipment.
8.8 The Company has the right to accelerate payments at any time.
9.0 INDEMNIFICATION
The Company shall indemnify and hold harmless the KDOC&H and respective
affiliates, successors, assigns, agents and employees, harmless from and
against any liabilities, losses, causes of action, suits, penalties,
claims, demands, or expenses of any nature to the extent allowable by law
for performance under this agreement.
10.0 QUARTERLY REPORTS
The Company will provide the KDOC&H quarterly reports, due within 15 days
of the end of a respective quarter, as set forth in Attachment B. Failure
to provide quarterly reports is a breach of this agreement.
11.0 FINAL PROJECT REPORT
A final project report by Company to the KDOC&H is due within 30 days of
completion of the project.
12.0 ANNUAL REPORTS
Annual reports are due 30 days after the end of a calendar year once the
project is completed for a period of five years,
13.0 SEVERABILITY
If any one or more of the previous provisions contained in this agreement
are held to be invalid, illegal, or unenforceable for any reason, it shall
not affect any other provisions of the agreement.
14.0 APPLICABLE LAW
This agreement shall be governed by and construed in accordance with the
laws of the State of Kansas.
15.0 CONTRACTUAL PROVISIONS ATTACHMENT
The provisions found in Contractual Provisions Attachment Form (DA-146a),
which is attached hereto, hereby incorporated in this contract and made a
part thereof. Whenever the term state agency or words of like effect are
used in Form D-146a, such reference shall be deemed to apply to the
KDOC&H. The term contractor shall mean Company
Agreed to this 22nd day of August, 2001
/s/ Xxxx Xxxxxxxxx CEO /s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxxxx Xxxx Xxxxxxx
Heartland Ethanol, LLC Lt. Governor/Secretary KDOC&H
ATTACHMENT A
AGRICULTURAL VALUE ADDED CENTER
QUARTERLY SALES/PAYMENT REPORT
Instructions: Please fill in the areas below, and send the signed form and
appropriate payment to the KDOC&H. The figures you report below are auditable
according to our project agreement. Thank you for your timely response.
Project # Report #
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Company Name Responsible Contact
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Due Date
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Report Covering quarter (from to )
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Product(s):
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Report Basis:
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Units Sales: Revenues:
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Payment for quarter (payment basis times revenues)
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Payment is due within thirty days of the end of the quarter.
Please remit payment along with this form.
Additional Comments:
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Signature of CEO/CFO
Name:
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Title:
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ATTACHMENT B
Quarterly Reports will be due within 15 days of the end of a respective quarter
as follows:
Quarter Ending December 31 - Report due by January 15
Quarter Ending March 31 - Report due by April 15
Quarter Ending June 30 - Report due by July 15
Quarter Ending September 30 - Report due by October 15
Quarterly Report shall include details addressing the following:
1. Describe the progress of the project during the quarter.
2. Have any significant problems been encountered during this quarter which
have affected this project? If so, describe each problem, the resulting
impact on the project, and the action(s) you have taken to solve the
problem(s).
3. Have you increased or decreased the number of your employees this
quarter? If so, how many.
4. Total sales last year, same quarter, total sales this year, same
quarter.
5. Have the results of this project enhanced production, sales/marketing,
distribution, operating efficiency or other areas of your company? If yes,
please explain.
6. Are you aware of any other benefits to Kansas that have occurred as a
result of this project (for example, increased business for your
suppliers)? If yes, please explain.
7. What quantities of agricultural commodities (bushels, pounds, etc) were
utilized in the project this quarter?
8. Has the company paid a premium to producers for the commodities, if
yes, amount paid per unit.
9. Has the company returned any patronage to agricultural producers?
ADDENDUM TO
Agriculture Products Development Division
Agricultural Value Added Center
Award and Security Agreement
No. 2002-04
This addendum dated October 31, 2001, is to substitute Western Plains
Energy, L.L.C. for the "company" to agreement number 2002-04 originally dated
the 22nd day of August, 2001, by and between 3N Investments dba Heartland
Ethanol, LLC and Agricultural Value Added Center of the Kansas Department of
Commerce and Housing and referred to as KDOC&H.
The parties recite and agree as follows:
Heartland Ethanol, LLC has formerly amended its Articles of
Organization to reflect the change of its name to Western Plains Energy, L.L.C.
and this addendum is to reflect the name change of the company and to substitute
the new name of the company in the original agreement.
Subsection 1.1 of Section 1.0 entitled REPRESENTATIONS AND WARRANTIES OF
THE COMPANY is amended to read as follows:
1.1 The company is a Limited Liability Company validly existing and
in good standing under the laws of the State of Kansas. The
Federal Tax Identification Number is 00-0000000.
Western Plains Energy, L.L.C. hereby ratifies and agrees to comply with
all the terms and conditions of the original agreement and KDOC&H agrees to
Western Plains Energy, L.L.C. being substituted as the company to the
original agreement.
Agreed to this 31st day of October, 2001.
/s/ Xxxx Xxxxxxxxx CEO /s/ Xxxx Xxxxxxx
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XXXX XXXXXXXXX XXXX XXXXXXX
Chief Executive Officer Lt. Governor/Secretary KDOC&H
Western Plains Energy, L.L.C.
