Confidential Treatment Requested. Confidential portions of this document have been redacted and have been separately filed with the Commission. PRODUCT MARKETING AGREEMENT
Exhibit 10.1
Confidential Treatment Requested. Confidential portions of this document have been redacted and have
been separately filed with the Commission.
been separately filed with the Commission.
THIS PRODUCT MARKETING AGREEMENT (the “Agreement”) is entered into this September 21, 2010,
with an effective date as stipulated in Section 1 below, by and between Xxxxxx-Xxxxxxx-Midland
Company, a Delaware corporation with its principal place of business in Decatur, Illinois (“ADM”),
and Western Iowa Energy, LLC, an Iowa limited liability company with its principal place of
business in Wall Lake, Iowa (“WIE”).
BACKGROUND
WHEREAS, ADM has knowledge of the soybean crushing industry in the United States, and has
experience related to the marketing, sales, and distribution of renewable fuels; and
WHEREAS, WIE and ADM believe that it would be in their mutual best interests for ADM to
purchase biodiesel, glycerin, fatty acids and soapstock (collectively, the “Products”) produced by
WIE at its production facilities owned, leased or otherwise controlled by WIE in Wall Lake, IA (the
“WIE Production Facilities”) for purposes of ADM marketing, selling, and distributing the Products;
WHEREAS, WIE and ADM desire to enter into this Agreement, for purposes of setting out the
terms and conditions of the business arrangement; and
WHEREAS, WIE and ADM are simultaneously entering into a Feedstock Agreement and Services
Agreement.
NOW, THEREFORE, the parties to this Agreement hereby covenant and agree as follows:
AGREEMENT
1. TERM. This Agreement shall commence on the first day of the month of which production of
Products begins at the WIE Production Facilities located in Wall Lake, Iowa (the “Effective Date”)
and shall continue in force for one year unless terminated by one of the following events: (i)
upon thirty (30) days written notice by either party; (ii) the insolvency of the other party;
(iii) the assignment by the other party for the benefit of creditors; (iv) the filing of a
voluntary or involuntary bankruptcy, judicial liquidation, or reorganization petition by or against
the other party or the suspension of check/note clearance privilege; (v) the appointment of a
receiver, liquidator or judicial administrator, or a trustee for either party, of any part or
interest of its business; (vi) the failure of either party to vacate, set aside or have dismissed
any insolvency proceeding under any law governing within sixty (60) days from the date of the
commencement of any such proceeding; (vii) or the dissolution of the entity of the other party for
any cause whatsoever.
2. TERMINATION. In addition to the termination events identified in Section 1, this
Agreement may be terminated under the circumstances set out below:
(a) Termination for Intentional Misconduct. If either party engages in intentional misconduct
reasonably likely to result in significant adverse consequences to the other party, the party
harmed or likely to be harmed by the intentional misconduct may terminate this Agreement
immediately, upon written notice to the party engaging in the intentional misconduct.
(b) Termination for Uncured Breach. If one of the parties breaches the terms of this
Agreement, the other party may give the breaching party a notice in writing which specifically sets
out the nature and extent of the breach, and the steps that must be taken to cure the breach.
After receiving the written notice, the breaching party will then have thirty (30) days to cure the
breach, if the breach does not involve a failure to make any payments which are required by this
Agreement.
If the breach does involve a failure to make any payments which are required by this
Agreement, then the breaching party will have five (5) days after receiving the written notice to
cure the breach. If the breaching party does not cure any breach within the applicable cure
period, then the non-breaching party will have the right to terminate this Agreement immediately.
(c) Termination by Mutual Written Agreement. This Agreement may also be terminated upon any
terms and under any conditions, which are mutually agreed upon in writing by the parties.
(d) Cross Default. If a party fails to perform or observe any covenant, condition or
provision to be performed or observed by it under the terms of the Feedstock Agreement, the
Services Agreement or any other agreement in writing between the parties in connection therewith or
herewith and such default is not remedied within thirty (30) days of its occurrence.
3. REPRESENTATIONS AND WARRANTIES OF WIE. In connection with its sale of Products to ADM
under this Agreement, WIE makes the following representations and warranties, for the benefit of
ADM:
(a) Good Title. WIE will have good and marketable title to all of the Products sold to ADM
under this Agreement, free and clear of all liens and encumbrances.
(b) Corporate Existence and Good Standing. WIE is a limited liability company validly
existing and in good standing under the laws of the State of Iowa. Further, WIE is qualified to do
business and is in good standing in each jurisdiction where the conduct of its business or the
ownership of its property requires such qualification.
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(c) Corporate Authority and Corporate Approval. WIE has the power and authority to enter into
this Agreement. Further, WIE has taken all corporate action necessary to authorize it to execute,
become bound by, and perform its duties and obligations under this Agreement.
(d) No Conflicts as to Law or Agreements. The execution of this Agreement by WIE, the sale
and transfer of Products from WIE to ADM, and the taking of all actions by WIE under this Agreement
do not require the consent of any person, entity, or agency; do not violate any law, rule, or
regulation; and do not breach or violate any contract or agreement to which WIE is a party, or by
which WIE is bound.
(e) Compliance with Laws. WIE is now in compliance, and during the entire term of this
Agreement will remain in compliance, with all applicable federal, state, local, and foreign laws,
ordinances, orders, rules, and regulations (“Laws”), other than Laws where neither the costs or
potential costs of failing to comply, nor the costs or potential costs of causing compliance, would
be material to WIE or its business or assets. The definition of Laws set out above includes, but
is not limited to, the Toxic Substances Control Act (“TOSCA”), the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Air Act, the Federal Water Pollution Control
Act of 1986, the Emergency Planning and Community Right-to-Know Act of 1986, the Occupational
Safety and Health Act, the Resource Conservation and Recovery Act, any state equivalent thereof,
and all other laws related to the protection of the environment.
(f) Complete and Accurate Disclosure. WIE has not withheld from ADM any material documents,
material information, or material facts relating to WIE Products production capabilities, and/or
relating to the business operations of WIE. Further, no representation or warranty in this
Agreement, or in any letter, certificate, exhibit, schedule, statement, or other document furnished
or to be furnished pursuant to this Agreement, contains any untrue statement of a material fact.
(g) Licenses and Permits. WIE now has or will have prior to the commencement of operations at
the WIE Production Facilities, and will have at all times thereafter during the term of this
Agreement, all of the licenses and permits necessary to operate the WIE Production Facilities.
(h) Production Capacity. At the commencement of the Agreement, WIE and ADM shall in writing
agree upon the WIE’s expected annual production capacity by feedstock, based on the nameplate
design capacity of the WIE production facilities. The parties hereby acknowledge that WIE’s
production capacity will vary based on the type of feedstock used and that the use of various
animal fats as feedstock generally slows production rates relative to the use of vegetable oils as
feedstock.
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(i) Product Quality. All of the Products sold to ADM by WIE under this Agreement will be of
merchantable quality, and will be fit for its intended purpose. All biodiesel must meet all
applicable ASTM Standards, must meet any other applicable industry standards or guidelines, must
meet the biodiesel standards established by all other standard biodiesel industry tests and must
include oxidative stability enhancers reasonably necessary for the commercialization of the
biodiesel.
(j) Patent Infringement. WIE is not now, and will not be at any time in the future during the
term of this Agreement, infringing upon any patents or other intellectual property rights held by
any other parties. WIE shall use commercially reasonable efforts to cause ADM to be a third party
beneficiary of any and all representations, warranties and indemnities that WIE may receive from
any third party providing WIE with intellectual property rights concerning the manufacture or sale
of Products.
4. REPRESENTATIONS AND WARRANTIES OF ADM. In connection with providing the services on behalf
of WIE which are described in this Agreement, ADM makes the following representations and
warranties, for the benefit of WIE.
(a) Corporate Existence and Good Standing. ADM is a corporation validly existing and in good
standing under the laws of the State of Delaware. Further, ADM is qualified to do business and is
in good standing in each jurisdiction where the conduct of its business or the ownership of its
property requires such qualification.
(b) Corporate Authority and Corporate Approval. ADM has the power and the authority to enter
into this Agreement. Further, ADM has taken all corporate action necessary to authorize it to
execute, become bound by, and perform its duties and obligations under this Agreement.
(c) No Conflicts as to Law or Agreements. The execution of this Agreement by ADM, the
purchasing of Products from WIE by ADM, and the taking of all actions by ADM under this Agreement
do not require the consent of any person, entity, or agency; do not violate any law, rule, or
regulation; and do not breach or violate any contract or agreement to which ADM is a party, or by
which ADM is bound.
(d) Compliance with Laws. As it relates to this Agreement, ADM is now in compliance,
and during the entire term of this Agreement will use its best efforts to remain in compliance,
with all Laws related to this Agreement.
(e) Licenses and Permits. ADM now has, and will have at all times during the term of this
Agreement, all of the licenses and permits necessary to perform its obligations pursuant to this
Agreement.
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*** Confidential material redacted and filed separately with the Commission.
(f) Complete and Accurate Disclosure. No representation or warranty in this Agreement, or in
any letter, certificate, exhibit, schedule, statement, or other document furnished or to be
furnished pursuant to this Agreement, contains any untrue statement of a material fact.
5. QUANTITY. During the entire term of this Agreement, WIE agrees to sell to ADM, and
ADM agrees to purchase from WIE all of the Products produced by WIE at the WIE Production
Facilities that conforms to the warranties set forth in this Agreement in quantities as set forth
in purchase order contracts issued by ADM to WIE. ADM and WIE will endeavor to work mutually
together to run the WIE facility at an optimum rate and profit margin given the current market
conditions at that time subject to Section 7. ***. It is understood that glycerin, fatty acids,
and soapstock are a by-product of biodiesel production and that biodiesel sales —and therefore
production from those sales —will determine the quantity of glycerin, fatty acids, and soapstock
available for purchase/marketing by ADM. The terms and conditions of these purchases and sales will
be set out in this Agreement. ADM shall not enter into derivative contracts, including without
limitation futures contracts, for sales of glycerin, fatty acids, or soapstock to be produced by
WIE at the WIE Production Facilities, without WIE’s prior written consent. Upon the sale of
Products from WIE to ADM pursuant to this Agreement, ***.
6. PRODUCTION ESTIMATES; PRODUCTION COSTS. As of the effective date of this Agreement, WIE
will provide ADM with WIE’s estimate of WIE’s anticipated monthly Products production for the next
twelve (12) months, to assist ADM in developing appropriate marketing strategies for the Products
to be produced by WIE.
On or before the first day of each month, WIE will provide ADM with its updated estimate of
WIE’s anticipated monthly Products production for the next twelve (12) months, so that ADM will
have Products production estimates from WIE twelve (12) months into the future during the entire
time that this Agreement is in effect.
Once this Agreement has been terminated under Sections 1 or 2 above, WIE’s monthly Products
production estimates must continue to cover the time period through the proposed termination date,
but need not extend to any months after the proposed termination date.
In addition, WIE will provide ADM (i) monthly with its fixed and variable costs to produce
Products for the previous month and (ii) weekly with projected margin information on a spot and
forward basis as reasonably requested by ADM.
7. MONTHLY VOLUME REQUIREMENTS. Both parties acknowledge and agree that if market conditions
and other conditions are favorable, it is their intent for WIE to
operate the WIE Production Facilities at or near full capacity, based on the feedstock(s) used by
WIE, during the entire term of this Agreement.
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*** Confidential material redacted and filed separately with the Commission.
8. SHORTFALLS IN THE MONTHLY VOLUME REQUIREMENTS. To the extent that WIE fails to produce
enough Products to meet actual contracted volumes in any month, ADM will have the right, but not
the obligation, to purchase Products elsewhere, in a commercially reasonable manner, in order to
cover the shortfall. All costs and expenses related to such purchases which are in excess of the
costs and expenses that ADM would have incurred in the absence of such a shortfall will be charged
to WIE.
9. SALES LIMITATIONS. ADM will not be required to purchase Products from WIE, if ADM
does not believe in good faith that it is in the best interests of the parties, based on market
conditions, unavailability of customers, or other factors. This means that ADM will have the
discretion to both build and decrease stored inventories of the Products produced under this
Agreement, during the entire term of this Agreement. ADM agrees to attempt to do so efficiently,
effectively, and in a manner that is in the best interests of the parties.
10. SERVICES TO BE PROVIDED BY ADM. ADM in its sole discretion will provide, in good faith, the
marketing, sales, off-site storage, and transportation services for the Products produced under
this Agreement.
11. PAYMENTS TO ADM FOR SERVICES PROVIDED. In exchange for the services provided by ADM under
this Agreement and the services provided by ADM under the Feedstock Agreement and Services
Agreement being simultaneously entered into by ADM and WIE, WIE will pay ADM the sum of *** of the
Net Products Selling Price, plus *** of WIE’s Net Profits. The “Net Products Selling Price” shall
be defined as ***. The Net Products Selling Price portion of ADM’s fee shall be due and payable
***. WIE’s “Net Profits” shall be defined as ***. For any partial year for WIE occurring during
the term of this Agreement, “Net Profits” shall be computed based on the portion of the fiscal year
during which ADM provides services hereunder.
12. INDEPENDENT CONTRACTOR STATUS OF ADM, AND EMPLOYMENT STATUS OF ADM’S EMPLOYEES. Nothing
contained in this Agreement, including the services to be provided by ADM on behalf of WIE, will
make ADM the agent of WIE for any purpose. ADM and its employees shall be deemed to be independent
contractors, with full control over the manner and method of performance of the services they will
be providing on behalf of WIE under this Agreement. This Agreement is not intended to create and
shall not be construed as creating between the parties hereto a relationship of principal and
agent, joint venturers, co-partners, or any other similar relationship, the existence of which is
hereby expressly denied by the parties.
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Any of the employees of ADM which are providing services on behalf of WIE under this Agreement
will remain employees of ADM. These employees will continue to be paid by ADM and to enjoy the
benefits to which they are entitled as employees of ADM, unless otherwise provided in any separate
agreement covering the services of such employees.
13. SEPARATE ENTITIES. WIE and ADM are separate entities. Nothing in this Agreement or
otherwise shall be construed to create any rights or liabilities of either party to this Agreement
with regard to any rights, privileges, duties, or liabilities of the other party to this Agreement,
except to the extent otherwise provided in this Agreement, or in any other agreement between the
parties to this Agreement.
14. DEVELOPMENT OF ORDERING AND SHIPPING PROCEDURES. Because WIE and ADM have not done
business in the past in the manner described in this Agreement, they have not yet attempted to
develop efficient and effective procedures related to ordering Products, delivering Products, and
shipping Products, in connection with ADM’s Products purchases from WIE. After this Agreement
becomes effective, ADM and WIE agree to work together promptly and in good faith to develop
effective and efficient policies and procedures to cover these matters, based on their mutual
experiences working together under this Agreement.
Once those policies and procedures have been developed and mutually agreed upon, ADM and WIE
intend to document them, in the form of an addendum to this Agreement.
15. QUALITY ASSURANCE AND QUALITY CONTROL.
(a) WIE’s Responsibility and Liability for the Products that it Produces. WIE will ultimately
be responsible for the quality of the Products produced at the WIE Production Facilities. Further,
the parties agree that WIE, and not ADM, will be responsible and liable for all claims related to
the quality of the Products produced by WIE at the WIE Production Facilities.
(b) WIE’s Release of ADM from Liability Related to QA and QC Support. In the event that ADM
provides quality assurance (QA) and quality control (QC) assistance to WIE under this Agreement,
such assistance is a good faith attempt by ADM to help WIE meet the Product quality standards set
out in this Agreement, for the mutual benefit of ADM and WIE. However, ADM’s provision of QA and
QC support to WIE does not constitute a warranty or a guarantee of any type with respect to the
quality of the Products produced by WIE. Thus, WIE and all of its related persons and
organizations hereby release ADM and all of its related persons and organizations from all
liability, in the absence of gross negligence and/or willful misconduct, related to any QA and QC
support provided to WIE by ADM under this Agreement.
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16. PRODUCT DISTRIBUTION.
(a) Biodiesel Product Substitution. Except as provided below, the parties agree that the
biodiesel produced at the WIE Production Facilities will be considered fungible and interchangeable
with biodiesel meeting all applicable ASTM standards for purposes of product distribution under
this Agreement. ADM will not brand, label, or otherwise identify any biodiesel sold under this
Agreement differently because that biodiesel was produced at the WIE Production Facilities, as
opposed to being produced at ADM’s own production facilities or the production facilities of third
parties. WIE must obtain certification and maintain BQ-9000 accredited producer status.
(b) Efficient Product Distribution. When customers purchase Products from ADM that has been
produced under this Agreement, ADM may fill the orders of those customers with Products produced at
the WIE Production Facilities, Products produced at ADM’s production facilities, or the production
facilities of a third party, or any combination thereof. ADM will attempt to manage factors such
as customer and delivery locations, order sizes, freight availability, and product delivery
logistics in a manner that will result in efficient product distribution, for the mutual benefit of
both WIE and ADM.
17. PRODUCT TESTING. At least twice each week during the term of this Agreement, and
more often at the request of ADM, WIE agrees to provide ADM with samples of the Products produced
at the WIE Production Facilities, so that ADM can test WIE’s product quality on a regular basis.
ADM agrees to provide WIE with the information WIE will need in order to collect, pack, and ship
these Products samples to ADM in a manner satisfactory to ADM.
18. COLLECTION AND RETENTION OF PRODUCT SAMPLES.
(a) Collection of Product Samples. During the entire term of this Agreement, WIE agrees to
collect samples of not less than 250 milliliters each from each shipment of Products that leaves
the WIE Production Facilities under this Agreement. Each such product sample will be labeled to
include the production date, the plant at which the product sample was produced, and any other
applicable information.
(b) Retention of Product Samples. WIE agrees to retain these product samples for at least
three months after the date of the shipment from which each product sample was taken, in a manner
which preserves the integrity of each individual product sample. Further, WIE agrees to promptly
provide any of these samples to ADM, at the request of ADM.
19. THE ACTUAL PRICE FOR PRODUCTS SOLD TO ADM BY WIE. ADM agrees to pay WIE a price for all
Products sold to ADM by WIE under this Agreement calculated as follows: the sales price charged by
ADM to third party purchasers (or the sales price to be paid by ADM, in the event of no underlying
third party sale or, with respect to biodiesel, in the event ADM intends to blend biodiesel
produced at the WIE Production Facilities and directly
receive government payments or tax credits in connection with such blending) for such Products
shall be adjusted to a FOB Wall Lake, IA price by subtracting ADM’s marketing costs related to
such Products, including freight, fuel surcharges, brokerage fees, off-site storage and any
applicable shrink, independent lab fees, and other related costs.
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*** Confidential material redacted and filed separately with the Commission.
In the event ADM proposes to purchase Products without an underlying sale to a third party
***.
ADM shall write up purchase contracts with WIE that either correspond to actual sales to end
users or accepted Bids.
***.
20. INVOICES AND PAYMENTS
(a) Invoices and Payments Between WIE and ADM. WIE will invoice ADM, upon shipment for all
Products sold to ADM by WIE under this Agreement and pursuant to the purchase contracts generated
under Section 19. The parties will endeavor to utilize an electronic data interchange to exchange
information concerning amounts due and payable pursuant to this Agreement. All payments shall be
made via ACH transfer, and the parties shall execute all documents reasonable necessary to make and
receive ACH transfers pursuant to this Agreement. For all sales of Products by WIE to ADM pursuant
to this Agreement, ADM shall remit payment via ACH transfer to WIE for such Products no later than
*** after the loading document(s) for such Products are received by ADM.
At the time of shipment of Products, if the shipment is destined for third party, then that
shipment will apply to the purchase contract specifically related to that shipment. If the
shipment is to apply to a Bid or an ADM specific contract, then such shipment will apply to the
purchase contract that corresponds with that position activity.
21. MONTHLY RECONCILIATION. On a monthly basis, WIE and ADM will compare and reconcile their
information related to the volumes of Products shipped from the WIE Production Facilities including
but not limited to Products sales contracts and invoices in order to minimize disputes and help
ensure that each party is applying shipments in the same manner.
In the event that the parties are unable to agree on which party’s numbers are correct for any
month, the numbers proposed by ADM will be used, subject to WIE’s right to challenge ADM’s books
and records through its independent public accounting firm, as described below in Section 22.
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22. BOOKS AND RECORDS; AUDITING.
(a) Books and Records. ADM shall furnish to WIE once every week a report of ADM’s sales,
including customers, volumes and prices, of Products produced at the WIE Production Facilities.
Such information shall be treated as confidential by WIE pursuant to Section 23 of this Agreement.
(b) Purposes of the Audits. Twice per year during this Agreement, WIE will have the right, at
its own expense, to have qualified representatives from an independent public accounting firm audit
those portions of ADM’s books and records which are directly related to the Products bought and
sold under this Agreement. Such audit shall occur at a mutually agreeable time. The purposes of
such audits will include confirming the information provided to WIE by ADM regarding pricing and
volume information, confirming ADM’s production and shipment volumes for Products bought and sold
under this Agreement and verifying any other information which is reasonably related to this
Agreement. The auditors shall be from the list shown on Schedule A attached hereto, or if not from
the list shown on Schedule A, shall be mutually acceptable to both WIE and ADM.
(c) Confidentiality Obligations. Any such independent public accountants hired by WIE will be
subject to the same confidentiality obligations that WIE is subject to under Section 23 of this
Agreement. WIE agrees to inform its accountants of those confidentiality obligations.
(d) Challenges. WIE may challenge ADM’s books and records for any month during this
Agreement, based on an audit by WIE’s independent public accounting firm. WIE must provide written
notice of such a challenge to ADM within two (2) years of the end of the month that is the subject
of the challenge.
(e) On a yearly basis, WIE will provide ADM with copies of current balance sheets, income
statements, and other financial statements (audited if available) related to WIE and its affiliated
entities.
23. HANDLING OF CONFIDENTIAL INFORMATION. The parties acknowledge that they will be
exchanging information about their businesses under this Agreement which is confidential and
proprietary, and the parties agree to handle that confidential and proprietary information in the
manner described in this Section 23.
(a) Definition of Confidential Information. For purposes of this Agreement, the term
“Confidential Information” will mean information related to the business operations of WIE or ADM
that meets all of the following criteria:
| (i) | The information must not be generally known to
the public, and must not be a part of the public domain, must not be
information
that the receiving party was already in possession of, must not be
information that the receiving party receives from a third party
without violating any confidentiality obligation owed to the
disclosing party, and must not be information that is independently
developed by the receiving party without relying upon the
Confidential Information supplied by the disclosing party. |
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| (ii) | The information must belong to the party
claiming it is confidential, and must be in that party’s possession. |
| (iii) | The information must have been protected and
safeguarded by the party claiming it is confidential by measures that
were reasonable under the circumstances before the information was
disclosed to the other party. |
| (iv) | The disclosure of the information to third
parties must be likely to result in adverse consequences to the party
claiming it is confidential. |
(b) Limitations on the Use of Confidential Information. Each party agrees that it will not
use any Confidential Information that it obtains about the other party for any purpose, other than
to perform its obligations under this Agreement.
(c) The Duty Not to Disclose Confidential Information. The parties agree that they will not
disclose any Confidential Information about each other to any person or organization without first
getting written consent to do so from the other party. This will be the case both while this
Agreement is in effect, and for a period of three (3) years after it has been terminated.
(d) The Duty to Notify the Other Party in Cases of Improper Use or Disclosure. Each party
agrees to immediately notify the other party if either party becomes aware of any improper use of
or any improper disclosure of the Confidential Information of the other party at any time while
this Agreement is in effect, and for a period of three (3) years after it has been terminated.
(e) Protection of the Confidential Information. Each party agrees to protect the Confidential
Information that it obtains from the other party with the same degree of care that it uses in
protecting its own Confidential Information.
(f) Return of the Confidential Information. Immediately upon the termination of this
Agreement, each party agrees to return to the other party all of the other party’s Confidential
Information that is in its possession or under its control.
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24. RIGHT OF OFFSET. ADM will have the right to withhold payments for the Products that it
purchases from WIE, as an offset against any payments that WIE fails to make to ADM under this
Agreement, or any other payments due to ADM from WIE, whether pursuant to this Agreement or
otherwise.
If ADM exercises its right of offset at any time, WIE may request a written explanation from
ADM that includes the amount of the offset claimed by ADM, and the basis for ADM’s exercise of its
right of offset. Upon receiving a written request from WIE for such an explanation, ADM will
promptly provide a reasonably detailed written explanation.
25. INSURANCE.
(a) Insurance Coverage of WIE. During the entire term of this Agreement and through any
applicable statute of limitations, WIE will maintain insurance coverage which is standard, in the
reasonable opinion of ADM, for a company of its type and size which is engaged in the business of
producing and selling Products. At a minimum, WIE’s insurance coverage must include:
| (i) | Commercial General Liability Insurance, naming
ADM as an additional insured for all claims connected with or arising
out of work covered by this Agreement, with liability limits of at
least one million dollars ($1,000,000) each occurrence and in the
aggregate. |
| (ii) | Umbrella Excess Liability Insurance, naming ADM
as an additional insured for all claims connected with or arising out
of work covered by this Agreement, with liability limits of at least
five million dollars ($5,000,000) each occurrence and in the aggregate. |
| (iii) | Automobile Liability Insurance, with liability
limits of at least one million dollars ($1,000,000) each accident.
|
| (iv) | Property Insurance adequately insuring WIE’s
production facilities and WIE’s other assets against “all risk” perils
of loss, on a replacement cost basis. |
| (v) | Workers’ Compensation Insurance and Employer’s
Liability, to the extent required by law and must include an
endorsement with a waiver of subrogation in favor of ADM. |
On or before the effective date of this Agreement, WIE will provide ADM with a Certificate of
Insurance Coverage verifying that insurance coverage complying with the requirements of this
Section 25(a) is in place. WIE shall provide ADM with notice of any
cancellation or material modification of any policies required herein in accordance with policy
provisions.
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(b) Insurance Coverage of ADM. During the entire term of this Agreement and through any
applicable statute of limitations, ADM will maintain insurance coverage which is standard, in the
reasonable opinion of WIE, for a company of its type and size which is engaged in the duties
required of ADM pursuant to this Agreement. At a minimum, ADM’s insurance coverage must include:
| (i) | Commercial General Liability Insurance, naming
WIE as an additional named insured for all claims connected with or
arising out of work covered by this Agreement, with liability limits of
at least one million dollars ($1,000,000) each occurrence and in the
aggregate. |
| (ii) | Umbrella Excess Liability Insurance, naming WIE
as an additional insured for all claims connected with or arising out
of work covered by this Agreement, with liability limits of at least
five million dollars ($5,000,000) each occurrence and in the aggregate. |
| (iii) | Automobile Liability Insurance, with liability
limits of at least one million dollars ($1,000,000) each accident.
|
| (iv) | Property Insurance, adequately insuring the
tools and equipment of ADM utilized by ADM at those ADM facilities
involved in performing its obligations under this Agreement, on a
replacement cost basis or demolition basis, as ADM determines in its
reasonable discretion. |
| (v) | Workers’ Compensation Insurance and Employer’s
Liability, to the extent required by law and must include an
endorsement with a waiver of subrogation in favor of WIE. |
On or before the effective date of this Agreement, ADM will provide WIE with a Certificate of
Insurance Coverage verifying that insurance coverage complying with the requirements of this
Section 25(b) is in place. WIE shall provide ADM with notice of any cancellation or material
modification of any policies required herein in accordance with policy provisions.
(c) Insurance Companies. All policies required to be procured by WIE pursuant to Section
25(a) and by ADM pursuant to Section 25(b) shall be procured from insurance companies listed in the
current A.M. Best’s Insurance Guide as possessing a minimum
policyholder’s rating of “A-.” If allowed by state law, ADM can meet its obligations under Section
25(b)(iv) of the Agreement by becoming a licensed self-insurer for workers’ compensation insurance.
If ADM chooses to become a licensed self-insurer, it will purchase an excess workers’ compensation
policy in excess of $250,000 up to statutory limits.
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(d) Subrogation. No indemnity shall be paid to a party under this Agreement where the claim,
damage, liability, loss or expense incurred would have been covered by insurance proceeds if the
incident was or was required to be insured against by the party for whose benefit such indemnity
would run and such party failed to maintain such insurance. WIE and ADM shall each exercise
commercially reasonable efforts to cause any insurance policies obtained by them pursuant to this
Agreement to have the effect of waiving any right of subrogation by the insurer of one party
against the other party or its insurer. Each party hereby releases the other from any claims to
the extent covered by collected insurance proceeds obtained by the parties pursuant to this
Agreement.
26. INDEMNIFICATION.
(a) If any third party makes a claim against ADM or any person or organization related to ADM
as a result of (i) the actions or omissions of WIE or any person or organization related to WIE
(excluding ADM), (ii) a breach of one or more representations or warranties made by WIE hereunder;
or (iii) the quality or condition of the Products produced by or on behalf of WIE except as may be
caused by feedstock produced by ADM at an ADM facility failing to conform to the representations
and warranties furnished by ADM to WIE pursuant to any individual contract entered into by the
parties for the origination of such ADM feedstock, then WIE agrees to indemnify ADM and its related
persons and organizations, and to hold all of them harmless from any liabilities, damages, costs,
and/or expenses, including costs of litigation and reasonable attorneys’ fees, which they incur as
a result of any such claims made against them by third parties; provided, however, that this
indemnification provision shall not apply with respect to any damage to property, personal injury,
including death, or violation of any law, order or regulation to the extent resulting from the
gross negligence or willful misconduct of ADM.
(b) If any third party makes a claim against WIE or any person or organization related to WIE
as a result of (i) the gross negligence or willful misconduct of ADM or any person or organization
related to ADM (excluding WIE); or (ii) a breach of one or more representations or warranties made
by ADM hereunder, then ADM agrees to indemnify WIE and its related persons and organizations, and
to hold all of them harmless from any liabilities, damages, costs, and/or expenses, including costs
of litigation and reasonable attorneys’ fees, which they incur as a result of any such claims made
against them by third parties; provided, however, that this indemnification provision shall not
apply with respect to any damage to property, personal injury, including death, or violation of any
law, order or regulation to the extent resulting from the gross negligence or willful misconduct of
WIE.
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*** Confidential material redacted and filed separately with the Commission.
27. LIMITATIONS ON LIABILITY. UNDER NO CIRCUMSTANCES WILL THE PARTIES BE LIABLE FOR INDIRECT
AND/OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO LOST PROFITS, LOSS OF GOODWILL, EVEN IF
THE PARTIES HAVE BEEN MADE AWARE OF THE POSSIBILITY OF SUCH DAMAGES.
28. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AGREEMENTS, AND CLAIMS. All representations,
warranties, and agreements made in connection with this Agreement will survive the termination of
this Agreement. The parties will therefore be able to pursue claims related to those
representations, warranties, and agreements after the termination of this Agreement, unless those
claims are barred by the applicable statutes of limitation.
Similarly, any claims that the parties have against each other that arise out of actions or
omissions that take place while this Agreement is in effect will survive the termination of this
Agreement. This means that those claims may be pursued by the parties even after the termination
of this Agreement, unless those claims are barred by the applicable statutes of limitation.
29. COSTS AND ATTORNEYS’ FEES IN DISPUTE RESOLUTION PROCEEDINGS, AND FOLLOWING UNCURED
BREACHES. The parties agree that the prevailing party in any dispute resolution proceedings
related to this Agreement shall be entitled to collect all of its costs, expenses, and reasonable
attorneys’ fees from the other party.
The same shall be true if one of the parties incurs costs, expenses, or attorneys’ fees in
connection with the enforcement or the protection of its rights under this Agreement, as a result
of an uncured breach by the other party. The breaching party shall reimburse the other party for
costs, expenses, and reasonable attorneys’ fees incurred after the expiration of the applicable
cure period, regardless of whether or not the enforcement or the protection of the rights of the
other party involved judicial proceedings, arbitration proceedings, or other formal dispute
resolution proceedings.
30. TITLE AND RISK OF LOSS. With regard to the Products sold to ADM by WIE under this
Agreement, title to and risk of loss for such Products will pass from WIE to ADM ***.
31. GOVERNING LAW. The parties agree that the Agreement will be governed by, interpreted
under, and enforced in accordance with the substantive laws of the State of Iowa, without regard to
its conflict of law principles. Any action for enforcement, damages or otherwise, will have its
exclusive venue in the Polk County District Court in the State of Iowa or the United States
District Court for the Southern District of Iowa. Each of ADM and WIE
hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement.
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32. NOTICES. All notices related to this Agreement which relate to breaches of this
Agreement, indemnification claims or other claims being made under this Agreement, challenges to
the books and records of the parties, or the termination of this Agreement (the “Significant
Notices”) must be in writing, and must be delivered personally or sent by certified or registered
mail, return receipt requested. All Significant Notices will be effective, and will be deemed to
have been received, upon the actual receipt of the Significant Notice by its intended recipient,
meaning either WIE or ADM.
Subject to change upon ten (10) days written notice to the other party, all written notices to
WIE provided for in this Agreement will be addressed as follows:
Western Iowa Energy, LLC
0000 X. Xxxxxx Xx., X.X. Xxx 000
Xxxx Xxxx, XX, 00000
Attn: General Manager
0000 X. Xxxxxx Xx., X.X. Xxx 000
Xxxx Xxxx, XX, 00000
Attn: General Manager
and notices to ADM will be addressed as follows:
Xxxxxx-Xxxxxxx-Midland Company
0000 Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Vice President, Global Oleo Chemicals
0000 Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Vice President, Global Oleo Chemicals
with a copy to:
Xxxxxx-Xxxxxxx-Midland Company
0000 Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
Xxxxxx-Xxxxxxx-Midland Company
0000 Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
Written notices required or permitted under this Agreement which are not Significant Notices may be
hand delivered, sent by mail, or sent via facsimile. These written notices will be effective, and
will be deemed to have been received, upon the actual receipt of the written notices by their
intended recipients, meaning either WIE or ADM.
33. ASSIGNMENT; SUCCESSORS AND ASSIGNS. Because of ADM’s concerns about product quality,
and because of WIE’s concerns about the proper performance of the services to be provided by ADM,
neither party may assign its rights or obligations under this Agreement without the written consent
of the other party, which consent will not be unreasonably withheld. This Agreement will be
binding on the successors of the parties, and their permitted assigns.
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34. NO WAIVER. If any party to this Agreement fails to insist upon strict performance of any
obligation under this Agreement, that failure will not result in a waiver of that party’s right to
demand strict performance in the future. This will still be the case, no matter how long the
failure to insist upon strict performance continues.
35. ENTIRE AGREEMENT. This Agreement, and the other documents related to the business
transactions described in this Agreement which are referred to either generally or specifically in
this Agreement, set out the entire agreement between the parties regarding the business
transactions described in this Agreement. This Agreement and those other documents supersede all
prior understandings between the parties with respect to the subject matter of this Agreement. The
parties agree that there are no other oral or written understandings or agreements between them
regarding the subject matter of this Agreement.
36. AMENDMENT, MODIFICATION, OR WAIVER. No amendment, modification, or waiver of any
provision of this Agreement or any other related document will be effective unless it is made in
writing, unless it is signed by the parties to be bound by it, and unless it clearly specifies the
extent and nature of the amendment, modification, or waiver.
37. SEVERABILITY. If any provision of this Agreement or any other related document is held to
be invalid or unenforceable under any applicable law, that holding will not affect the validity or
enforceability of the rest of this Agreement, or the other related document. Also, any provision
of this Agreement or any other related document which is held to be invalid or unenforceable will
not be completely invalidated, but will instead be considered amended to the extent necessary to
remove the cause of the invalidity or unenforceability.
38. INTERPRETATION. This Agreement and any other documents related to it will be interpreted
in a fair and neutral manner, without favoring one party over the other. No provision of this
Agreement or any other document related to it will be interpreted for or against either party
because the provision was drafted by that party, or its legal representative.
39.) DEFAULT. In the event of any default regarding the provisions of this Agreement, the
parties shall be able to exercise all available legal and equitable rights and remedies. However,
the parties agree that with respect to the individual contracts entered into regarding the purchase
and sale of Products, the parties’ rights and remedies regarding default under such individual
contracts shall be governed by the following provisions of this Section 39.
Should either the seller or the buyer fail to fulfill the requirements of any term of the
contract, the party so failing shall be considered in default. Should the seller be in default the
buyer shall have the right to buy in the open market goods of the kind, quantity, quality and
description specified in the defaulted contract. Such right, if exercised, shall be exercised not
later than the close of the seventh calendar day after the buyer becomes aware of the default,
provided that the buyer shall have given prior notice by telegram, telex or telecopier to the
seller
of his intention so to buy. The seller shall reimburse the buyer in the amount of any direct
market loss. Should the seller be dissatisfied with the price of the covering purchase, or if the
buyer’s right to cover the defaulted contract is not exercised as provided herein, then the matter
of any damages shall be settled by arbitration. Damages shall be measured by the difference
between the contract price and the fair market value of the contract commodity on the day the
defaulted contract is covered, plus freight, insurance and other costs to the extent applicable.
- 17 -
Should the buyer be in default the seller shall have the right to sell in the open market
goods of the kind, quantity, quality and description specified in the defaulted contract. Such
right, if exercised, shall be exercised not later than the close of the seventh calendar day after
the seller becomes aware of the default, provided that the seller shall have given prior notice by
telegram, telex or telecopier to the buyer of his intention so to sell. The buyer shall reimburse
the seller in the amount of any direct market loss. Should the buyer be dissatisfied with the
price of the covering sale, or if the seller’s right to cover the defaulted contract is not
exercised as provided herein, then the matter of any damages shall be settled by arbitration.
Damages shall be measured by the difference between the contract price and the fair market value of
the contract commodity on the day the defaulted contract is covered, plus freight, insurance and
other costs to the extent applicable. If for any reason sale of the defaulted merchandise should
prove to be impossible, then the seller shall be fully reimbursed for the value of such merchandise
plus any and all expenses incurred as a result of the buyer’s default.
Should either party to a contract suspend payments, admit bankruptcy or commit an act of
insolvency, the other party need not await maturity of the contract or any unfulfilled portion
thereof in order to take appropriate action, and under these circumstances, after giving one
business day’s notice by telegram, telex or telepcopier, may resell or repurchase an appropriate
quantity of the contract material and thereupon earn the right to recover any direct market loss
incurred.
40. UNDERSTANDING OF AND VOLUNTARY EXECUTION OF THE AGREEMENT. The parties acknowledge and
agree that they have read this Agreement, that they understand it, and that they are entering into
it willingly and voluntarily. The parties further acknowledge that they either consulted with
their respective legal counsel, or had ample opportunity to consult with their respective legal
counsel, before entering into this Agreement.
41. HEADINGS AND CAPTIONS. The headings and captions of the sections and subsections of this
Agreement are inserted for convenience of reference only, and do not constitute part of the
Agreement.
42. SUPERSEDING OF OTHER AGREEMENTS. It is the intent of the parties that this Agreement be
consistent with any other documents or agreements related to the same subject matter covered in
this Agreement. However, in the event of any inconsistencies, the parties agree that this
Agreement will supersede and take priority over the other inconsistent documents or agreements,
except in cases where there is specific contract language to the
contrary which has been identified as contradicting this Agreement and has been expressly agreed to
in writing by both parties.
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43. FORCE MAJEURE. Neither party shall be liable for delay in performance or failure to
perform (excluding the payment of money) when such delay or failure is due to unforeseen causes
beyond its control and without its fault or negligence, including but not limited to acts of God or
the public enemy, governmental action, fires, floods, earthquakes, epidemics, quarantine
restrictions, labor difficulties, riots, insurrections, freight embargoes, plant breakdown, loss of
raw material supply, and unusually severe weather.
44. DISCLOSURE OF MATERIAL CONTRACTS. The parties acknowledge that this Agreement may need to
be disclosed to the Securities Exchange Commission or other regulators, and agree to allow such
disclosure upon receipt of an appropriate request. The parties hereby agree to seek redaction and
confidential treatment of the financial and/or other terms of this Agreement, including without
limitation any compensation to be paid hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the day and year
set forth above.
XXXXXX-XXXXXXX-MIDLAND COMPANY
By:
|
/s/ X. X. Xxxxxxxxx
|
|||
| WESTERN IOWA ENERGY, LLC | ||||
By:
|
/s/ Xxxxxxx X. Xxxxx
|
|||
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SCHEDULE A
(List of Auditors)
1. Xxxx Bailly LLP
2. Boulay, Heutmaker, Xxxxxx & Co. P.L.L.P.
3. McGladrey & Xxxxxx, LLP
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