EXHIBIT 10.9
BIG STONE PLANT PROPERTY LEASE
This Lease is made and executed effective on April 18, 2001 (the
"Effective Date"), by and between Big ▇▇▇▇▇-▇▇▇▇▇ Industrial Development and
Transportation, L.L.C., a South Dakota limited liability company, having its
principal office at Post ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇,
referred to as "Lessor," and Northern Lights Ethanol, LLC, a limited liability
company, organized and existing under the laws of South Dakota having its
principal office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
referred to as "Lessee."
SECTION ONE
LEASED PREMISES
For and in consideration of the mutual promises and covenants set forth
in this Lease , Lessor leases to Lessee, and Lessee leases from Lessor, the
parcel of real estate, legally described on Schedule A, attached and
incorporated as an integral part of this Lease (such real estate being referred
to in this Lease as the "Leased Premises").
SECTION TWO
USE OF LEASED PREMISES
The Leased Premises shall be used for the construction and operation of a
plant for the production of ethanol and its co-products, and for such structures
as are necessary for its support, and for no other purpose. The Lessee covenants
that during the term of this lease in the use of the Leased Premises it will, at
its own expense, comply with all private building restrictions and all
applicable laws, codes, ordinances, regulations and orders (collectively,
"Laws") of governmental authorities now or hereafter in any manner affecting the
Leased Premises and the improvements thereon or the use thereof, whether or not
any such Laws which may hereafter be enacted involve change of policy on the
part of the governmental body enacting the same, and the Lessee will do any work
or make any alteration in the Leased Premises and the improvements thereon which
is required to make such premises conform with the requirements and standards of
Laws applicable to the Leased Premises, whether the work involved is structural
or otherwise. The Lessee agrees to indemnify and hold the Lessor harmless from
the consequences of any violation of any Laws. The Lessee further agrees that it
will not permit any unlawful occupation, business or trade to be conducted on
the Leased Premises or any use to be made thereof contrary to any Law with
respect thereto, and further agrees to protect the Lessor and the Leased
Premises against any tax, fee or other charge or penalty imposed or levied upon
the Leased Premises on account of any failure to comply with any such Law or the
provisions of this lease. In no event shall the Leased Premises be used for any
purpose that would invalidate the current and future maximum electrical output
of the
Big Stone Plant. Lessee shall not do or permit any act or thing which might
impair the value or usefulness of the Leased Premises or which constitutes a
public or private nuisance or waste.
SECTION THREE
TERM
Subject to the terms, provisions, covenants, and conditions of this
Lease , Lessee shall have, hold, possess, and enjoy the Leased Premises for a
term of 99 years, which shall begin on the Effective Date and continue for a
period of 99 years thereafter unless sooner terminated as provided herein.
"Lease Year," as used in this Lease , shall mean each of the successive 12-month
periods during the lease term, the first Lease Year to commence on the date of
execution of this Lease Agreement.
SECTION FOUR
DELIVERY OF POSSESSION
If Lessor, for any reason whatever, cannot deliver possession of the
Leased Premises to Lessee at the commencement of the lease term, as specified
above, Lessee, as its sole and exclusive remedy, may terminate this Lease
Agreement by giving written notice of termination to Lessor on or before the
date that Lessor is able to tender possession.
SECTION FIVE
TITLE TO LEASED PREMISES
Lessor covenants that Lessor is seized of the Leased Premises in fee
simple and has full right to make this Lease Agreement. The Leased Premises are
subject to all zoning regulations and other Laws now in effect or which may in
the future be adopted by any governmental authority having jurisdiction and to
all reservations, restrictions, easements, liens and other encumbrances of
record. Lessee has examined the title to the Leased Premises and has found the
same to be satisfactory.
SECTION SIX
RENT
Subject to adjustment as provided below, the total rent for the first
five years of the lease term shall be $12,000.00, which Lessee shall pay to
Lessor, without deduction or offset, at the place or places as may be designated
from time to time by Lessor, in installments of $2,400.00 per lease year as
follows:
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Lease Year Rent Due Date
---------- -------------
One Date of this Lease Agreement
Two May 1, 2002
Three May 1, 2003
Four May 1, 2004
Five May 1, 2005
The rental to be paid by Lessee under this Lease Agreement shall be
adjusted on January 1, 2006, and every five years thereafter by increasing the
rental in effect during the immediately preceding five-year period by five
percent.
SECTION SEVEN
IMPROVEMENTS
The "Improvements" on the Leased Premises shall consist of and be deemed
to include the buildings, structures, and equipment to be located, erected,
constructed, or installed by or on behalf of Lessee on the Leased Premises
during the lease term, including without limitation all buildings, machinery,
equipment, heating, plumbing, corn processing equipment, and related fixtures
constructed for the use and operation of an ethanol facility.
Improvements shall not include personal property located on or at, and
used or useful in connection with the operation or maintenance of, the Leased
Premises.
Prior to constructing the Improvements on the Leased Premises, Lessee
shall obtain Lessor's prior written consent of the site layout, architectural
drawings and any other drawings reasonably requested by Lessor for the
Improvements in accordance with this paragraph. The plans and drawings shall be
prepared by licensed architects and engineers at Lessee's cost and expense, and
submitted by Lessee to Lessor for Lessor's written approval or any revisions
required by Lessor. Lessor shall not unreasonably withhold approval, and in the
event of disapproval, Lessor shall give to Lessee an itemized statement of
reasons for disapproval within 30 days after the plans and drawings are
submitted to Lessor.
Lessee shall strictly comply with the following provisions relating to
the construction of any and all Improvements on the Leased Premises:
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(a) No construction shall be undertaken until Lessee shall have procured
and delivered to Lessor an affidavit setting forth the equity level raised and
construction financing committed for completion of the Improvements as designed;
(b) No construction shall be undertaken until Lessee shall have procured
and paid for all municipal and other governmental permits and authorizations of
the various municipal departments and governmental subdivisions having
jurisdiction, relating to the particular phase of the construction to be
undertaken;
(c) The construction shall be performed in accordance with the plans and
drawings approved by Lessor and shall be conducted under the supervision of the
architect by whom the approved plans and specifications are prepared, or by such
other licensed architect as shall be retained by and at the expense of Lessee
and who shall be reasonably satisfactory to Lessor;
(d) The construction shall be done promptly and in a good and workmanlike
manner of first-class materials, and in compliance with the building and zoning
laws and with all other laws, ordinances, orders, rules, regulations and
requirements of all federal, state and municipal governments and the appropriate
departments, commissions, boards and officers thereof;
(e) At Lessor's option, the construction shall be subject to inspection
at any time and from time to time by Lessor and its architect, or their duly
authorized representatives, and in the event that Lessor's architect shall, upon
any such inspection, be of the opinion that the construction is not to be
carried out in accordance with the conditions in this Article or that any of the
materials or workmanship are not in conformance with the building and zoning
laws and with all other laws, ordinances, orders, rules, regulations and
requirements of all federal, state and municipal governments and the appropriate
departments, commissions, boards and officers thereof, Lessee shall cause
Lessee's architect to consult with Lessor's architect with a view of correcting
any such failure to comply with the conditions hereof ;
(f) At all times when construction is in progress, Lessee shall, at
Lessee's sole cost and expense, maintain, or cause to be maintained, workmen's
compensation insurance covering all persons employed in connection with the
construction and with respect to whom death or bodily injury claims could be
asserted against Lessor, Lessee or the Leased Premises and/or the building, and
commercial general liability insurance naming Lessor as an additional insured
and expressly covering the additional hazards due to the construction, with
combined single limits of not less than $2,000,000 per occurrence for bodily
injury or property. The commercial general liability insurance provided for in
this subsection may be provided by an appropriate endorsement, if
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obtainable, upon the insurance required to be maintained by Lessee pursuant to
the Article 19 entitled "Insurance", and shall otherwise comply with all
applicable requirements of Article 19.
Lessee shall have the right to make such alterations, improvements, and
changes to any Improvements that may from time to time be on the Leased Premises
as Lessee may deem necessary, or to replace any Improvements; provided however,
in all cases Lessee shall have first obtained Lessor's written approval of the
site layout, architectural drawings and other drawings reasonably requested by
Lessor for the alteration, improvement, change or replacement, which approval
shall not be unreasonably withheld. Lessee shall not, without the written
consent of Lessor, connect or interconnect the Improvements to or with any other
structure not located entirely on the Leased Premises.
The ethanol plant design, operations, plans and drawings provided to or
inspected by Lessor pursuant to this Section including but not limited to
specifications, photocopies, magnetic tapes, drawings, sketches, models,
samples, tools, technical information, data, know-how, engineering reports,
operating instructions and manuals and all other information observed or
obtained regarding Lessee's Improvements and operations, shall be deemed to be
confidential and proprietary information of Lessee. Lessor shall hold such
confidential information in confidence and shall use the same solely for the
purposes set forth in this Section. Lessor further agrees that it shall not make
disclosure of any such confidential information to any person, except those
employees, agents or representatives necessary to complete any inspection or
review. Prior to providing the confidential information to any employee, agent
or representative, Lessor will notify each person to whom such disclosure is
made that the confidential information is received in confidence and shall be
kept in confidence by such person. Lessor's obligation to keep the confidential
information confidential shall be subject to any requirement that the
confidential information be disclosed in order to comply with applicable law or
regulation or with any requirement imposed by judicial, administrative process
or any governmental or court order.
SECTION EIGHT
EMINENT DOMAIN
In the case of condemnation by public authority of any part or all of the
Leased Premises, or the commencement of any proceedings or negotiations which
might result in any such condemnation, each party will promptly give written
notice thereof to the other party, generally describing the nature and extent of
such condemnation or the nature of such proceedings or negotiations and the
nature and extent of the condemnation which might result therefrom, as the case
may be.
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If the entire Leased Premises shall be taken by condemnation, this Lease
and all right, title and interest of Lessee hereunder shall cease and come to an
end as of the date the condemning authority takes possession.
In the event of any partial taking of the Leased Premises, this Lease
shall terminate as to the portion of the Leased Premises so taken as of the date
the condemning authority takes possession of the portion so taken. In the event
of a partial taking of the Leased Premises or of any material part of any
Improvements constructed on the Leased Premises that renders the Leased Premises
and Improvements unsuitable for the use and operation of the business then being
conducted on the Leased Premises, then the Lessee shall have the option,
exercised, if at all, in writing within 30 days of the date when the condemning
authority takes possession of the property, to terminate this Lease Agreement as
to the portion of the Leased Premises not taken.
In the event Lessee does not timely elect to terminate this Lease as
provided in the preceding sentence, then Lessee shall be required, at its own
cost and expense, to repair and restore the Leased Premises and the Improvements
constructed thereon to the same or equivalent condition or status that they were
in or required to be kept in before such condemnation and so that they may
continue to be operated as an economic unit, taking into account the effect of
such condemnation. In the event the Lessee is obligated to repair or restore the
Leased Premises or Improvements constructed thereon, the condemnation award
shall be divided between Lessor and Lessee so that after all fees and expenses
in connection with obtaining the award have been paid, Lessor shall receive that
portion thereof attributable to the Leased Premises, including Lessee's
leasehold estate therein, and Lessee shall receive that portion thereof
attributable to the Improvements constructed by Lessee on the Leased Premises.
The Lessor shall make available to the Lessee the Lessee's portion of any
condemnation award for the limited purpose of paying for such repair and
restoration in accordance with reasonable construction disbursing procedures. In
the event the Lessee's portion of the proceeds of any condemnation award shall
be insufficient to pay the costs of such repair or restoration, the Lessee shall
be obligated to pay the difference, and to complete the repair and restoration
free and clear of all liens for mechanics or other liens against the Leased
Premises for such work.
The rental to be paid by Lessee to the Lessor shall not be abated either
in whole or in part by reason of any condemnation proceeding except where this
Lease Agreement shall be terminated by reason thereof, and except that in the
event of a partial taking from which the Lessor receives proceeds for the taking
of the Leased Premises, the rent shall be reduced proportionately to the square
footage of the Leased Premises which remains before and after such taking.
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The foregoing notwithstanding, in the event of a taking affecting Lessee,
Lessee shall have the right to make a claim against the condemning authority for
moving expenses, business relocation benefits and for the value of Lessee's
Improvements only to the extent that such claim does not reduce the sums
otherwise payable by the condemning authority to Lessor. Except as expressly
provided to the contrary in this Section, all damages, awards and payments for
the taking shall belong to Lessor irrespective of the basis upon which they were
awarded, and Lessee hereby assigns all claims against the condemning authority
to Lessor, including, but not limited to, all claims relating to Lessee's
interest in the leasehold estate created by this Lease.
SECTION NINE
UTILITIES
Lessee shall fully and promptly pay for all water, gas, heat, light,
power, steam, telephone service, and other public or private services and
utilities of every kind furnished to the Leased Premises throughout the term of
this Lease Agreement, and all other costs and expenses of every kind whatever of
or in connection with the use, operations, and maintenance of the Leased
Premises and all activities conducted on the Leased Premises, and Lessor shall
have no responsibility of any kind for any such utilities.
SECTION TEN
INSPECTIONS
Lessee shall permit Lessor, its agents and employees, to enter all parts
of the Leased Premises and the Improvements during Lessee's business hours to
inspect the same and to enforce or carry out any provisions of this Lease
Agreement, provided Lessee is given three (3) days prior written notice (except
in an emergency) and Lessee's business shall not be unreasonably interfered
with.
SECTION ELEVEN
TAXES AND ASSESSMENTS
Lessee shall pay when due all taxes, charges, fees and assessments
(general and special), levied against the Leased Premises and Improvements from
time to time during the lease term. If at any time any taxes, fees or other
charges payable during the term hereof shall be levied by the State of South
Dakota or any political subdivision thereof against the Lessor with respect to
its interest in the Leased Premises, or rentals payable by the Lessee hereunder
in lieu of, or in substitution in whole or in part for, any taxes, fees or other
charges that might otherwise be levied or assessed by such taxing authority on
the Leased Premises or any part thereof and any Improvements thereon, the Lessee
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agrees to pay, or cause to be paid, when due, any and all such taxes, fees and
other charges. Lessee shall pay all of the above mentioned taxes, charges, fees
and assessments before any fine, penalty, interest, or cost may be added for
nonpayment, and shall furnish to Lessor, on request, official receipts or other
satisfactory proof evidencing such payment.
Nothing contained in this Lease shall prevent or prohibit Lessee or
Lessor from protesting the validity or amount of any levy or assessment against
the Leased Premises and Improvements or from taking such actions as may be
required or permitted by law for enforcing and effecting a protest, provided the
Leased Premises and Improvements or any part of same or any interest in the
Leased Premises and Improvements, or the rent due under this Lease Agreement
would not be in any material danger of being sold, forfeited, or lost solely by
reason of such proceedings, and Lessor would not be in any danger of any civil
or criminal liability by reason of such protest. Lessor, at the expense of
Lessee, shall cooperate with Lessee and execute any documents or pleadings
legally required for any such protest.
In connection with any such protest, Lessee may, if permitted or required
by law, withhold the payment of any protested taxes or assessments, but only on
the express condition that the withholding of payment shall be consented to by
Lessor. Lessor's consent shall not be withheld so long as Lessee proceeds in the
protest according to statute and provides satisfactory security under the
statute or otherwise to the effect that the Leased Premises and Improvements
shall not be lost due to the nonpayment of such taxes or assessments.
SECTION TWELVE
MAINTENANCE AND REPAIRS
Lessee shall, at its sole expense, keep and maintain the Leased Premises
and Improvements in good condition and repair, all ordinary wear and tear
excepted, and to that end shall make all necessary repairs and replacements to
the Leased Premises including repairs and replacements which may be necessary
from time to time to the buildings and other Improvements on the Leased
Premises, and to the electrical, plumbing, heating, air conditioning, and other
equipment of all types on or in the Leased Premises or Improvements. Lessee
shall, at its sole expense, keep and maintain the Leased Premises, in good,
sanitary and neat order.
Lessor shall not be obligated to make any repairs, replacements, or
renewals of any kind, nature, or description whatever to the Leased Premises or
any buildings or other Improvements on the Leased Premises.
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SECTION THIRTEEN
INDEMNIFICATION
Lessee shall protect, indemnify, and save harmless Lessor from and
against all liabilities, obligations, claims, damages, penalties, causes of
action, judgments, costs and expenses, (including without limitation reasonable
attorneys' fees and expenses) imposed on or incurred by or assessed against
Lessor or the Leased Premises or the Improvements during the lease term, for any
reason including but not limited to (a) any accidents or injury to or death of
persons or loss of or damage to property occurring on or about the Leased
Premises or the Improvements or any part of same; or (b) any failure on the part
of Lessee to perform or comply with any of the terms of this Lease Agreement;
(c) any negligence or tortious act on the part of Lessee or any of its agents,
contractors, sublessees, licensees, or invitees; or (d) any mechanic's or
supplier's claim for lien in connection with or work done or materials furnished
relating to the Leased Premises or the Improvements. In case any action, suit,
or proceeding is brought against Lessor by reason of any such occurrence,
Lessee, on request of Lessor, shall at Lessee's expense defend the action, suit,
or proceeding with counsel designated by Lessee and approved by Lessor, which
approval shall not be unreasonably withheld. Lessee waives all claims against
Lessor for damages to the Improvements that are now on or will be placed or
constructed on the Leased Premises and to the property of Lessee in, on, or
about the Leased Premises, or the Improvements, from any cause arising at any
time except for such claim arising by reason of the negligence or misconduct of
Lessor, its agents or employees, and except as otherwise expressly provided in
this Lease.
Lessor shall protect, indemnify and save harmless Lessee from and against
all liabilities, obligations, claims, damages, penalties, causes of action,
judgments, costs and expenses including without limitation reasonable attorneys'
fees and expenses imposed on or incurred by or assessed against Lessee, the
Leased Premises or the Improvements during the lease term for: (a) any failure
on the part of Lessor to perform or comply with any of the terms of this Lease;
(b) any accidents or injury to or death of persons or loss of or damage to
property occurring on or about the Leased Premises or the Improvements or any
part of the same arising from the negligence or tortious act on the part of
Lessor or any of its agents, contractors, sublessees, licensees or invitees; or
(c) any mechanic's or supplier's claim or lien in connection with or work done
or materials furnished by or for Lessor to the Leased Premises or the adjoining
land owned by Lessor. In case any claim is brought against Lessee by reason of
any such occurrence, Lessor, on request of Lessee, shall at Lessor's expense
defend the action, suit or proceeding with counsel designated by Lessor and
approved by Lessee, which approval shall not be unreasonably withheld.
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SECTION FOURTEEN
ENCUMBRANCE OF LESSEE'S LEASEHOLD INTEREST
Lessee may encumber by mortgage or other proper instrument, its leasehold
interest and estate in the Leased Premises, together with all buildings and
other Improvements placed by Lessee on the Leased Premises, as security for any
indebtedness of Lessee. The execution of any mortgage, or other instrument, or
the foreclosure of any mortgage or other instrument, or any sale, either by
judicial proceeding or by virtue of any power reserved in a mortgage, or
conveyance by Lessee to the holder of the indebtedness or the exercising of any
right, power or privilege reserved in any mortgage (hereinafter, the "Leasehold
Mortgagee"), shall not be held as a violation of any of the terms or conditions
of this Lease Agreement, or as an assumption by the Leasehold Mortgagee
personally of the obligations of this Lease Agreement. The foregoing
notwithstanding, the Leasehold Mortgagee shall be personally liable for the
payment and performance of all rental and other obligations to be paid or
performed on the part of the Lessee under this Lease Agreement during any period
the Leasehold Mortgagee succeeds to the Lessee's interest under this Lease by
virtue of foreclosure, conveyance in lieu of foreclosure or other transfer of
the Lessee's interest to the Leasehold Mortgagee, and should the Leasehold
Mortgagee thereafter assign or otherwise transfer the Lessee's interest under
this Lease Agreement to a transferee, the Leasehold Mortgagee shall be released
from all obligations and liabilities under this Lease Agreement arising from and
after the date of such assignment or transfer provided that the assignee or
transferee expressly assumes in writing, for the benefit of Lessor, such
liabilities and obligations. No encumbrances, foreclosure, conveyance, or
exercise of right shall relieve Lessee from its liability under this Lease
Agreement.
If Lessee shall encumber its leasehold interest and estate in the Leased
Premises and if Lessee or the Leasehold Mortgagee shall give notice to Lessor of
the existence of the encumbrance and the address of the Leasehold Mortgagee,
then Lessor shall mail or deliver to the Leasehold Mortgagee, at such address, a
duplicate copy of all material notices in writing which Lessor may from time to
time give to or serve on Lessee under and pursuant to the terms and provisions
of this Lease Agreement. The copies shall be mailed or delivered to the
Leasehold Mortgagee at, or as near as possible to, the same time the notices are
given to or served on Lessee. The Leasehold Mortgagee may, at its option, at any
time before the rights of Lessee shall be terminated as provided in this Lease
Agreement, pay any of the rents due under this Lease Agreement, or pay any taxes
and assessments, or do any other act or thing required of Lessee by the terms of
this Lease Agreement, or do any act or thing that may be necessary and proper to
be done in the observance of the covenants and conditions of this Lease
Agreement or to prevent the termination of this Lease Agreement. All payments so
made and all things so done and performed by the Leasehold Mortgagee shall be as
effective to prevent a termination of
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the rights of Lessee thereunder as the same would have been if done and
performed by Lessee.
SECTION FIFTEEN
LIENS
Lessee shall keep all and every part of the Leased Premises and all
Improvements at any time located on the Leased Premises free and clear of any
and all mechanic's, material supplier's, and other liens for or arising out of
or in connection with work or labor done, services performed, or materials or
equipment used or furnished for in connection with any operations of Lessee, any
alteration, improvement, or repairs or additions that Lessee may make or permit
or cause to be made, or any work or construction, by, for, or permitted by
Lessee on or about the Leased Premises, or any obligations of any kind incurred
by Lessee, and at all times promptly and fully to pay and discharge any and all
claims on which any such lien may or could be based, and to indemnify Lessor and
all of the Leased Premises and all Improvements on the Leased Premises from and
against any and all such liens and claims of liens and suits or other
proceedings pertaining to the Leased Premises.
Lessee shall give Lessor written notice no less than 30 days in advance
of the commencement of any construction, alteration, addition, improvement, or
repair estimated to cost in excess of $250,000.00 in order that Lessor may post
appropriate notices of Lessor's nonresponsibility.
If Lessee desires to contest any lien, it shall notify Lessor of its
intention to do so within 30 days after filing of the lien. In that case, and
provided that Lessee shall on demand protect Lessor by a good and sufficient
surety bond against any lien and any cost, liability, or damage arising out of
such contest, or by providing Lessor with other collateral security in a form
and amount satisfactory to Lessor. Lessee shall not be in default under this
Lease Agreement until 30 days after the non-appealable, final determination of
the validity of the lien within which time Lessee shall satisfy and discharge
the lien to the extent held valid. However, the satisfaction and discharge of
any lien shall not, in any case, be delayed until execution is had on any
judgment rendered on the lien, and such delay shall be a default of Lessee under
this Lease Agreement. In the event of any such contest, Lessee shall protect and
indemnify Lessor against any and all loss, expense, and damage resulting from
the contest.
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SECTION SIXTEEN
ATTORNEYS' FEES
If any action at law or in equity shall be brought to recover any rent
under this Lease Agreement, or for or on account of any breach of, or to enforce
or interpret any of the covenants, terms, or conditions of this Lease Agreement,
or for the recovery of the possession of the Leased Premises, the prevailing
party shall be entitled to recover reasonable attorneys' fees and costs from the
other party.
SECTION SEVENTEEN
REDELIVERY OF LEASED PREMISES
Lessee shall pay the rent and all other sums required to be paid by
Lessee under this Lease in the amounts, at the times, and in the manner provided
in this Lease , and shall keep and perform all the terms and conditions on its
part to be kept and performed. In the event of the nonperformance by Lessee of
any of the covenants of Lessee undertaken in this Lease , this Lease may be
terminated as provided elsewhere in this instrument. Prior to the expiration, or
earlier termination, of this Lease , title to all Improvements constructed on
the Leased Premises from and after the Effective Date shall be vested in the
Lessee. Unless Lessor exercises its option to require Lessee to remove all or a
portion of the Improvements as provided below, at the expiration or earlier
termination of this Lease Agreement the title to all railroad tracks, concrete,
buildings and underground utilities constructed on the Leased Premises shall
vest in the Lessor, its successors or assigns, free and clear of all
encumbrances arising through Lessee, its successors or assigns, and Lessee shall
peaceably and quietly quit and surrender to Lessor the Leased Premises and all
Improvements in good order and condition, subject to the other provisions of
this Lease Agreement. Lessee shall, upon the expiration or earlier termination
of this Lease Agreement, execute such instruments and in such form as the
Lessor, its successors or assigns, may require for the purpose of confirming
title to the above-described Improvements in the Lessor, its successors or
assigns.
Lessor may, at Lessor's option, upon the expiration or termination of
this Lease require Lessee to remove, at Lessee's sole expense, all or any
portion of the Improvements constructed by or on behalf of Lessee on the Leased
Premises. In such event, Lessee shall promptly and with all diligence remove the
Improvements specified by Lessor, repair any and all damage to the Leased
Premises and any remaining Improvements located thereon resulting from, or
caused by, the removal, conduct such environmental investigation and remediation
as Lessor may reasonably require, and restore and reclaim the Leased Premises or
affected portion thereof to its natural condition prior to the execution of this
Lease Agreement.
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SECTION EIGHTEEN
REMEDIES CUMULATIVE
All remedies conferred on Lessor in this Lease shall be deemed cumulative
and no one remedy exclusive of the other, or of any other remedy conferred by
law.
SECTION NINETEEN
INSURANCE
Lessee shall, at its own expense, procure and maintain, or cause to be
procured and maintained, in force throughout the term of this Lease Agreement,
hazard insurance with extended coverage endorsement against loss or damage to
the Leased Premises and improvements, in a reasonable amount and as may be
required by any mortgagee of Lessee. insurance against loss or damage to the
Leased Premises and Improvements with coverage for perils as set forth under the
Causes of Loss-Special Form in an amount equal to the full insurable replacement
cost of the Improvements (except for footings, foundations, railroad tracks,
driveways, parking areas and site work), and such other insurance as Lessor may
reasonably deem appropriate or as may be required from time-to-time by any
mortgagee. Such policies shall be written by reputable companies licensed to do
business in South Dakota, and shall be in such form as shall be satisfactory to
Lessor and to the holder of any mortgage permitted under this Lease . Further
the policies shall: (a) provide that the insurance proceeds shall be payable to
Lessor and Lessee as their respective interests may appear; (b) include any
mortgagee of the Leased Premises and Improvements, as its interest may appear
and as such mortgagee may require; and (c) require the insurer to give Lessor
and any mortgagee at least ten days' advance written notice of any expiration or
cancellation of any policy. Lessee hereby waives any and all rights of recovery
which it may have against Lessor for any loss which is covered by the insurance
carried by Lessee pursuant to the foregoing provision of this paragraph, or
would have been covered had the Lessee maintained the insurance required by this
paragraph, including without limitation any loss due to the negligence of Lessor
or Lessor's agents or employees.
Lessee, at its own expense, shall keep in effect commercial general
liability insurance, including contractual liability insurance, covering
Lessee's operations on or about the Leased Premises and Improvements, with such
limits of liability as Lessor may reasonably determine from time-to-time, but
not less than combined single limits of $2,000,000.00 per occurrence for bodily
injury or property damage; however, such limits shall not limit the liability of
Lessee hereunder. The policy shall name Lessor, and if requested by Lessor,
Lessor's mortgagee(s) as additional insured parties with respect to the Leased
Premises, shall be written on an "occurrence" basis and not on a "claims made"
basis, shall be endorsed to provide that it is primary to and not contributory
to any
13
policies carried by Lessor, shall contain a severability of interests clause,
shall provide that it shall not be cancelable or reduced without at least 30
days' prior written notice to Lessor and shall be issued in form satisfactory to
Lessor.
Any insurance required to be maintained by Lessee pursuant to this
Section may be evidenced by blanket insurance policies covering the Leased
Premises and Improvements and other property or assets of Lessee.
All insurance policies covering the Leased Premises and Improvements
shall expressly waive any right on the part of the insurer to subrogate to any
rights of Lessor or any mortgagee against Lessee and to any rights of Lessee
against Lessor or mortgagee.
Lessee shall promptly on request deliver to Lessor and any holder of any
mortgage permitted under this Lease certified copies of all insurance policies
(or, in the case of blanket policies, certificates of the same) with respect to
the Leased Premises and Improvements which Lessee is required to maintain
pursuant to this Section.
In the event of the failure of Lessee either to obtain the insurance
required under this Section, or to pay the premiums for each insurance policy or
to deliver the policies or certificates to Lessor, Lessor shall be entitled, but
shall have no obligation, to effect such insurance and pay the premiums for the
insurance, which premiums shall be repayable by Lessee to Lessor with the next
installment of rent. Failure of Lessee to so repay to Lessor such premiums shall
carry with it the same consequences as failure to pay any installment of rent.
In the event that Lessor or Lessee or a holder of any mortgage permitted
under this Lease Agreement shall at any time deem the limits of the insurance
required to be carried under this Section to be either excessive or
insufficient, the parties shall endeavor to agree on the proper and reasonable
limits for insurance then to be carried. Insurance shall thereafter be carried
with the limits thus agreed on until further change pursuant to the provisions
of this Section.
SECTION TWENTY
FIRE OR OTHER CASUALTY
Except as provided hereafter in this Section, if at any time during the
term of this Lease Agreement, the Improvements or any part of the Improvements,
shall be damaged or destroyed by fire or other casualty (including any casualty
for which insurance coverage was not obtained or obtainable) of any kind or
nature, ordinary or extraordinary, foreseen or unforeseen, Lessee, at its sole
cost and expense, and whether or not the insurance proceeds, if any, shall be
sufficient for the purpose, shall proceed with
14
reasonable diligence (excepting delays due to Acts of God, weather conditions,
riot, war, court order, and the like), subject to a reasonable time allowance
for the purpose of adjusting such loss, to repair, alter, restore, replace, or
rebuild the same as nearly as possible to its value, condition, and character
immediately prior to such damage or destruction. Such repairs, alterations,
restoration, replacement, or rebuilding, including temporary repairs or the
protection of other property pending the completion of any repairs, are
sometimes referred to in this Section as the "work."
Notwithstanding anything to the contrary as set forth above, in case of
the destruction of the Improvements on the Leased Premises or damage to the
Improvements from any cause so as to make them unusable at any time during the
lease term, Lessee, if not then in default under this Lease may elect to
terminate this Lease by written notice served on Lessor within 30 days after the
occurrence of the damage or destruction. In the event of such termination, the
Lessee shall have the obligation to tear down, raise, and demolish the
Improvements and to restore and reclaim the Leased Premises to its natural
condition prior to the execution of this Lease if so requested by Lessor. Such
restoration, reclamation, and demolition shall be at the sole cost of Lessee
whether or not the Lessee has the right to receive any proceeds collected under
any insurance policies covering the Improvements. On such termination, rent,
taxes, assessments, and any other sums payable by Lessee to Lessor under this
Lease shall be prorated as of the termination date, and Lessee shall remain
liable for all obligations and liabilities accrued under this Lease prior to the
date of termination and for all obligations and liabilities that by their
express terms survive the termination of this Lease. In the event any rent,
taxes, or assessments shall have been paid in advance, Lessor shall rebate any
such payment for the unexpired period for which payment shall have been made.
SECTION TWENTY-ONE
PROHIBITION OF INVOLUNTARY ASSIGNMENT;
EFFECT OF BANKRUPTCY OR INSOLVENCY
Neither this Lease nor the leasehold estate of Lessee nor any interest of
Lessee under this Lease in the Leased Premises or in the Improvements on the
Leased Premises shall be subject to involuntary assignment, transfer, or sale,
or to assignment, transfer, or sale by operation of law in any manner whatever,
except as is otherwise provided in this Section. Any attempt at involuntary
assignment, transfer, or sale except as is otherwise provided in this Section
shall be void and of no effect.
Without limiting the generality of the provisions of the preceding
paragraph of this Section, Lessee agrees that in the event any proceeding is
commenced by or against Lessee under any bankruptcy act as amended or replaced,
and in the event that the bankruptcy trustee or debtor in possession fails to
assume timely this Lease under the
15
provisions of the bankruptcy act, any such proceeding shall constitute an
involuntary assignment prohibited by the provisions of the proceeding paragraph
of this Section and shall be deemed to constitute a breach of this Lease by
Lessee.
The foreclosure of a mortgage granted by Lessee on Lessee's leasehold
interest in the Leased Premises and/or the Improvements located thereon, or the
appointment of a receiver as part of or in conjunction with a foreclosure action
initiated by a mortgagee of the Lessee holding a mortgage lien upon the Lessee's
leasehold interest in the Leased Premises and/or the Improvements located
thereon, and the subsequent sale by said mortgagee to a third party purchaser
shall not be deemed an involuntary assignment, transfer or sale prohibited under
the first paragraph of this Section. If a receiver is appointed in any other
proceeding or action to which the Lessee is a party and such receivership is not
discharged within a period of 180 days after the creation of the receivership by
a court of competent jurisdiction, or if Lessee has not posted a bond or
obtained a surety to indemnify the petitioner for the receivership in an amount
satisfactory to the court, then such receivership proceeding shall constitute an
involuntary assignment prohibited by the provisions of the first paragraph in
this Section and shall be deemed to constitute a breach of this Lease by Lessee.
In this event, Lessor may at its election terminate this Lease and also all
rights of Lessee under this Lease and in and to the Leased Premises and also all
rights of any persons claiming under Lessee.
SECTION TWENTY-TWO
ASSIGNMENT
Except as provided in Section Fourteen above, the Lessee shall not assign
this lease or sublet the Leased Premises either in whole or in part, without in
each such case receiving the prior written consent of Lessor, which consent
shall not be unreasonably withheld. Any consent given by Lessor hereunder shall
be with respect to the particular transaction for which such consent is
requested, and the giving of such consent shall not be deemed consent to a
subsequent transaction.
SECTION TWENTY-THREE
DEFAULT -- REMEDIES
If any of the following events of default shall occur: (a) if the Lessee
or the Leasehold Mortgagee shall fail to pay any installment of rent and such
failure shall continue for more than 30 days after written notice thereof from
the Lessor; or (b) if the Lessee or the Leasehold Mortgagee shall fail to
perform or comply with any other term hereof and such failure shall continue for
more than 30 days after written notice thereof from the Lessor (or, if such
failure is of such a character as to require more than 30 days to cure and if
the Lessee continues to use reasonable diligence in curing such failure, for
16
more than that period of time reasonably necessary to cure such failure ); or
(c) if any of the events or circumstances described in Section Twenty-One above
occur and the Leasehold Mortgagee does not assume the Lease, then and in any
such event, the Lessor may, at its option, declare a forfeiture of this Lease
and, whether or not such a forfeiture shall be declared, may re-enter into
possession of the Leased Premises and remove all persons therefrom and collect
all rents owing but unpaid for all periods to and including the last day of the
month during which the Lessor shall obtain possession of the Leased Premises
together with any costs, expenses or damages incurred or suffered as a result of
such default, which sums shall thereupon become immediately due and payable, and
in the event that the Lessor shall elect to declare a forfeiture and shall
recover possession of the Leased Premises, the Lessee shall nevertheless remain
liable for, as liquidated and agreed current damages, and shall pay amounts
equal to the rent hereunder in monthly installments as such rent becomes due,
plus all payments to be made by the Lessee hereunder, less (i) the net proceeds,
if any, of any reletting effected for the account of the Lessee pursuant to the
provisions of this Section after deducting from such proceeds all of the
Lessor's expenses in connection with such repossession or such reletting; or
(ii) the net proceeds, if any, of all rents, issues and profits arising from or
related to the Leased Premises and all Improvements constructed thereon after
deducting from such proceeds all of the Lessor's expenses in connection with
receiving such rents, issues and profits.
In the event the Lessor shall recover possession of the Leased Premises
for default under the terms of this Lease, the Lessee does hereby assign unto
the Lessor all rents, issues and profits arising from or related to the Leased
Premises and all buildings and other Improvements constructed thereon.
At any time or from time to time after repossession of the Leased
Premises or any part thereof pursuant to the provisions of this Section, whether
or not the term of this Lease shall have been terminated pursuant to the
provisions of this Section, Lessor may (but shall be under no compulsion) to
relet the Leased Premises or any part thereof for the account of Lessee, in the
name of Lessee, or Lessor or otherwise, without notice to Lessee, for such term
or terms (which may be greater or less than the period which would otherwise
have constituted the balance of the term of this Lease) and on such conditions
(which may include concessions or free rent) and for such uses as Lessor, in its
uncontrolled discretion, may determine, and may collect and receive the rents
therefor. The Lessor shall not be responsible or liable for any failure to relet
the Leased Premises or any part thereof or for any failure to collect any rent
due upon such reletting.
Except insofar as inconsistent with, or contrary to, any provisions of
this Lease, no right or remedy herein conferred upon or reserved to the Lessor
is intended to be exclusive of any other right or remedy, and each and every
right and remedy shall be
17
cumulative and in addition to any other right or remedy given hereunder or now
or hereafter existing at law or in equity or by statute.
Except to the extent that the Lessor may have otherwise agreed in
writing, no waiver by the Lessor of any breach of the Lessee of any of its
obligations, agreements or covenants hereunder shall be deemed to be a waiver of
any subsequent breach of the same, or any other obligations, agreements or
covenants, nor shall any forbearance by the Lessor to seek a remedy for such
breach by the Lessee be deemed a waiver by the Lessor of its rights or remedies
with respect to such breach.
SECTION TWENTY-FOUR
LESSOR'S RIGHT TO PERFORM
If the Lessee shall fail to make any payment or perform any act required
to be made or performed hereunder, or shall fail to make any payment or perform
any act required to be made or performed by any mortgage which is a lien on the
Leased Premises, or the Lessee's interest therein, or shall fail to make any
payment or perform any act required to be performed by Lessee under any lease or
sublease from Lessee, Lessor, without waiving or releasing any obligation or
default, may, but shall be under no obligation to, make such payment or perform
such act for the account and at the expense of the Lessee, and may enter upon
the Leased Premises or any part thereof for such purposes and take such action
thereon as, in the Lessor's option, may be necessary or appropriate therefor:
(a) in the event of an emergency, at any time and without any notice; (b) in the
event of a nonemergency, at any time after such failure continues for more than
30 days after written notice thereof from the Lessor (or if the failure is of
such a character as to require more than 30 days to cure and the Lessee
continues to use reasonable diligence in curing such failure, at any time after
that period of time reasonably necessary to cure such failure).
No such entry shall be deemed an eviction of Lessee. All sums so paid by
Lessor and all costs, fees and expenses so insured, shall constitute additional
rent hereunder and shall be paid immediately upon demand with interest at the
rate provided below.
All amounts payable by Lessee to Lessor under any of the provisions of
this Lease , if not paid when they become due as in this Lease Agreement
provided, shall bear interest from the date they become due until paid at the
rate of 4% per annum in excess of the rate of interest per annum published in
THE WALL STREET JOURNAL as the "High Prime Rate," or the "Prime Rate" if only
one "Prime Rate" is published, as the same may fluctuate from time-to-time. If
THE WALL STREET JOURNAL ceases to publish a "High Prime Rate" or "Prime Rate,"
then the "High Prime Rate" or "Prime Rate" shall be determined by reference to a
similar publication.
18
SECTION TWENTY-FIVE
LESSEE'S OPTION TO TERMINATE
Lessee shall have the right, by written notice to Lessor given at least
365 days prior to: (a) the expiration of the first five-year period of the term
of this Lease ; or (b) the expiration of any five-year period of the term of
this Lease thereafter, to terminate this Lease and surrender its leasehold
interest under this Lease to Lessor, effective on the expiration of the
five-year term as specified in the written notice. On the effective date Lessee
shall be relieved from all liability under this Lease arising from and after the
effective date, except for those liabilities and obligations that by their terms
survive the expiration or termination of this Lease. Without limiting the
foregoing, upon such termination Lessee shall comply with the provisions of
Section 17 (entitled "Redelivery of the Premises").
Until December 31, 2001, Lessee shall have the further right, by written
notice to Lessor, to terminate this Lease and surrender to Lessor its leasehold
interest under this Lease following 30 days' prior notice for each and every of
the following reasons: (a) Lessee is unable to obtain from the proper government
authorities any zoning permit, variance or special use permit for the
construction and operation of Lessee's ethanol production facility, or if the
award of any zoning permit, variance or special use permit is conditioned upon
an expenditure of funds unduly prohibitive from a cost and/or profit perspective
as determined by Lessee; (b) if Lessee is unable to obtain from the proper
government authorities all necessary licenses, permits and other authorizations
to utilize the Leased Premises for its use as an ethanol production facility, or
the conditions for obtaining said licenses, permits and other authorizations are
unduly prohibitive from a cost and/or profit perspective as determined by
Lessee; (c) if Lessee is unable to obtain all utility services required to
operate Lessee's ethanol production facility at a price that is not unduly
prohibitive from a cost and/or profit perspective as determined by Lessee; or
(d) if Lessee is unable to obtain construction and operating loans in an amount
or under terms which are not unduly prohibitive from a cost and/or profit
perspective as determined by Lessee. In this event, Lessee shall return to
Lessor the Leased Premises in the same condition as it existed on the date of
this Lease.
Lessor shall cooperate with Lessee in Lessee's attempt to obtain any
zoning permit, variance, special use permit, license, permit or other
authorization from the proper government authorities. Lessee shall be
responsible for all costs and expenses with respect to the applications
required, and proceedings initiated, to obtain any and all of the foregoing.
19
SECTION TWENTY-SIX
NON-DISTURBANCE AGREEMENT
In the event that title commitment reflects that there is a mortgage or
similar debt agreement in which the Leased Premises is the security, in whole or
in part, Lessor shall obtain a non-disturbance agreement in recordable form
satisfactory in all respects to Lessee, whereby the mortgagee or other secured
party recognizes this Lease and Lessee's rights hereunder in the event of any
foreclosure, and Lessee agrees to attorn to such mortgagee or secured party in
furtherance thereof.
SECTION TWENTY-SEVEN
QUIET ENJOYMENT
Lessor covenants that Lessor has full right and lawful authority to enter
into this Lease for the full term hereof, and that Lessor is lawfully seized of
the entire Leased Premises hereby demised and that all times when Lessee is not
in default under the terms and conditions of the Lease, Lessee's quiet and
peaceable enjoyment of the Leased Premises shall not be disturbed.
SECTION TWENTY-EIGHT
SERVICE OF NOTICE
All notices, demands and communications as provided herein shall be
served to the parties at their then current addresses, or as may be advised by
each to the other in writing by registered or certified United States mail,
available express mail carrier (such as Federal Express, ▇▇▇▇▇, Airborne, etc.)
return receipt requested, by facsimile transmission, or by personal delivery.
▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
Anything contained herein to the contrary notwithstanding, Lessor and/or
Lessee shall be excused for the period of delay in the performance of any and
all of their obligations under this Lease, other than the obligation to pay rent
as the same shall fall due, and shall not be considered in default when
prevented from so performing by cause or causes beyond Lessor's or Lessee's
control, including, but not limited to, all labor disputes, civil commotion,
war, fire or other casualty, shortage of supplies and materials, government
regulations or through act of God.
20
SECTION THIRTY
ENVIRONMENTAL
30.01 DEFINITIONS.
(a) "CLAIM" shall mean and include any notice of violation, summons,
complaint, claim, citation, demand, notice of responsibility or potential
responsibility, suit, cause of action, orders, decrees, judgements, information
request with respect to potential liability under Environmental Laws, action, or
proceeding brought or issued by any Governmental Authority or other Person
regarding the Leased Premises, the Improvements, or the operations thereon
respecting or based upon Environmental Laws or Hazardous Materials to the extent
relating to Environmental Law.
(b) "ENVIRONMENTAL LAW" shall mean and include all federal, state and
local laws, rules, orders, codes, ordinances and requirements, and the common
law, relating to or imposing liability or standards of conduct with respect to
environmental quality now or hereafter in force or effect, including, without
limitation, the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Clean Water
Act, 33 U.S.C. Section 1251 et seq., and the Water Quality Act of 1987; the
Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. Section
136 et seq.; the Marine Protection, Research, and Sanctuaries Act, 33 U.S.C.
Section 1401 et seq.; the National Environmental Policy Act, 42 U.S.C. Section
4321 et seq.; the Noise Control Act, 42 U.S.C. Section 4901 et seq.; the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et seq.,
as amended by the Hazardous and Solid Waste Amendments of 1984; the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et seq., as amended by the Superfund Amendments and Reauthorization
Act, the Emergency Planning and Community Right-to-Know Act, and Radon Gas and
Indoor Air Quality Research Act; the Toxic Substances Control Act ("TSCA"), 15
U.S.C. Section 2601 et seq.; the Atomic Energy Act, 42 U.S.C. Section 2011 et
seq., and the Nuclear Waste Policy Act of 1982, 42 U.S.C. Section 10101 et seq.;
and state superlien and environmental clean-up statutes, with implementing
regulations and legally binding guidelines.
(c) "HAZARDOUS MATERIALS" shall mean and include the following, including
hazardous or dangerous mixtures thereof: any hazardous, dangerous, or toxic
substance; any waste, by-product, or constituent regulated under any
Environmental Law; oil, petroleum products, petroleum derived substances or
wastes, and natural gas, natural gas liquids, liquefied natural gas and
synthetic gas usable for fuel; pesticides regulated under the FIFRA; asbestos
and asbestos-containing materials, PCBs and other substances
21
regulated under the TSCA; source material, special nuclear material, by-product
material and any other radioactive materials or radioactive wastes, however
produced, regulated under the Atomic Energy Act or the Nuclear Waste Policy Act;
and industrial process and pollution control wastes whether or not hazardous
within the meaning of RCRA.
(d) "LOSS" or "LOSSES" shall mean any liability, demand, claim, action,
cause of action, assessment, cost, damage, deficiency, tax, penalty, fine or
other loss or expense (including reasonable attorney fees and legal expenses,
costs of environmental experts, and any interest and penalties).
(e) "MANAGE" or "MANAGEMENT" means to generate, manufacture, sell,
process, distribute, handle, treat, store, use, re-use, refine, recycle,
reclaim, blend or burn for energy recovery, incinerate, accumulate
speculatively, transport, transfer, or abandon Hazardous Materials.
(f) "POST TERM CONDITION" means a Release in, on, to, from, or at the
Leased Premises or the Improvements by a party other than Tenant, or their
respective partners, directors, officers, agents, representatives, employees,
contractors, guests, or invitees after the expiration or termination of this
Lease.
(g) "PREEXISTING CONDITION" means the condition of the Leased Premises
prior to the Effective Date of this Lease.
(h) "RELEASE" or "RELEASED" shall mean any actual or threatened spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, presence, depositing, dumping, or disposing of Hazardous Materials in
the environment.
(i) "RESPONSE" or "RESPOND" shall mean reasonable action taken in
compliance with Environmental Laws for industrial/commercial properties to
investigate, correct, treat, remove, remediate, cleanup, prevent, mitigate,
monitor, evaluate, investigate, assess, or ▇▇▇▇▇ a Release.
30.02 LESSEE'S COVENANTS. Lessee covenants that during the Term: (a)
Lessee shall at its own cost comply with all Environmental Laws (except with
respect to Preexisting Conditions); (b) Lessee shall not Manage in violation of
any Environmental Law any Hazardous Materials on the Leased Premises or at the
Improvements, nor permit nor authorize the same; (c) Lessee shall not install
any underground storage tanks in, at, or on the Leased Premises or the
Improvements; (d) Lessee shall not take any action that subjects the Leased
Premises or the Improvements to permit requirements under RCRA for storage,
treatment, or disposal of Hazardous Materials; (e) Lessee shall not dispose
22
(as the term "dispose" is defined in RCRA) of Hazardous Materials at, in, on, or
around the Leased Premises or the Improvements or any portion of Lessor's total
property; (f) Lessee shall not Release in violation of Environmental Law any
Hazardous Materials into drains, sewers, groundwater or navigable waterways; (g)
Lessee shall not cause or permit the Release of any Hazardous Materials on, to,
or from the Leased Premises or the Improvements except in the ordinary course of
its business and in compliance with Environmental Laws; (h) except for
Pre-Existing Conditions, Lessee shall keep the soils and ground water at or
under the Leased Premises and the Improvements free from Hazardous Materials;
(i) Lessee shall at its own cost arrange for the lawful transportation and
off-site disposal of all Hazardous Materials and other wastes that it generates.
30.03 NOTICE OF CLAIMS. During the term of this Lease, each party shall
promptly provide the other party with copies of all written actual or threatened
Claims and other written communications to or from the United States
Environmental Protection Agency, the South Dakota Department of Environment and
Natural Resources or other federal, state, or local agency or authority or any
other entity or individual, concerning (a) any Release on, to, or from the
Leased Premises or the Improvements; (b) the imposition of any lien on the
Leased Premises or the Improvements, pursuant to Environmental Law; (c) any
alleged violation of or non-routine responsibility under Environmental Laws with
respect to the Leased Premises or the Improvements; or (d) environmental
liability with respect to the Leased Premises or the Improvements.
30.04 EVIDENCE OF COMPLIANCE. Upon Lessor's reasonable belief that Lessee
materially has failed or is materially failing to comply with Environmental Laws
or this Section 30, Lessee shall, promptly upon Lessor's written request,
provide Lessor copies of reports, tests, permits issued under Environmental
Laws, and any other applicable documents that demonstrate that Lessee complies
with such Environmental Laws relating to the Leased Premises and the
Improvements, this Section 30, and Lessee's operations at the Leased Premises
and the Improvements.
Upon Lessors reasonable belief that Lessee materially has failed or is
materially failing to comply with Environmental Laws or this Section 30, Lessee
shall, at Lessee's expense, cause an environmental consultant reasonably
acceptable to Lessor to perform an environmental assessment of the Leased
Premises and Improvements in accordance with a Scope of Work approved in advance
by Lessor (the "Periodic Environmental Assessments"). Lessee shall provide
Lessor with a complete copy of all final reports, including test results
prepared in connection with each Periodic Environmental Assessment which are
delivered to Lessee within ten days after receipt thereof. If Lessee fails to
undertake and seek diligently to perform any Periodic Environmental Assessment
within the time frame set forth above or 30 days after Lessor's subsequent
written request, Lessor shall have the right but not the obligation to retain an
environmental
23
consultant to perform the Periodic Environmental Assessment. All reasonable
out-of-pocket costs and expenses incurred by Lessor in the exercise of such
rights shall be payable by Lessee upon demand. Lessee shall, at Lessee's cost,
promptly and diligently, but in no event later than any date required by
Environmental Laws, rectify or remediate any violations of Environmental Law
indicated by the Periodic Environmental Assessments, or Respond to the presence
of any Hazardous Materials. To the extent a corrective action plan is required
by Environmental Law or is necessary under the circumstances, Lessee shall cause
the environmental consultant to create a detailed corrective action plan to
rectify or remediate any of said violations or presence of Hazardous Materials
and then promptly and diligently implement the plan. Lessee shall provide Lessor
with a complete copy of the corrective action plan prior to Lessee's
implementation thereof and a complete copy of all test results and reports
delivered to Lessee in connection with the implementation of said plan. Lessee
shall conduct such rectification, remediation, or Response in a manner that does
not unreasonably interfere with Lessor's operations at the Big Stone Power
Plant.
Even if Lessor does not have a reasonable belief that Lessee materially
has failed or is materially failing to comply with Environmental Laws or this
Section 30, Lessor may, at Lessor's expense, cause an environmental consultant
to perform an environmental assessment of the Leased Premises and Improvements
in accordance with a Scope of Work approved in advance by Lessor (the "Periodic
Environmental Assessments"). If Lessor determines that Lessee materially has
failed or is materially failing to comply with Environmental Laws or this
Section 30 based upon the Periodic Environmental Assessments, Lessee shall, at
Lessee's cost, promptly and diligently, but in no event later than any date
required by Environmental Laws, rectify or remediate any violations of
Environmental Law indicated by the Periodic Environmental Assessment, or Respond
to the presence of any Hazardous Materials, and reimburse Lessor for the cost of
the Periodic Environmental Assessment. To the extent a Corrective Action Plan is
required by Environmental Law or is necessary under the circumstances, Lessee
shall cause the environmental consultant to create a detailed Corrective Action
Plan to rectify or remediate any of said violations or presence of Hazardous
Materials and then promptly and diligently implement the plan. Lessee shall
provide Lessor with a complete copy of the Corrective Action Plan prior to
Lessee's implementation thereof and a complete copy of all test results and
reports delivered to Lessee in connection with the implementation of said plan.
Lessee shall conduct such rectification, remediation, or Response in a manner
that does not unreasonably interfere with Lessor's operations at the Big Stone
Power Plant.
30.05 LESSOR'S RIGHT TO CURE. If Lessee's Management of Hazardous
Materials at the Leased Premises or the Improvements (a) gives rise to liability
or to a Claim under or fails to comply in all material respects with any
Environmental Law or the
24
environmental provisions of this Lease, (b) causes a significant personal
injury, (c) gives rise to a third party claim, or (d) requires a Response as
reasonably indicated by any Periodic Environmental Assessment, and if: (i) such
matters could cause liability or obligation of Lessor, and (ii) Lessee is not
promptly and diligently addressing, rectifying, or remediating the matter, then
Lessor shall have the right, but not the obligation, after providing Lessee with
notice and a reasonable opportunity to cure and upon Lessee's failure to
undertake such a cure, to enter onto the Leased Premises or the Improvements or
to take such Response action(s). All reasonable out-of-pocket Response costs and
expenses and other costs and expenses incurred by Lessor in the exercise of any
such rights shall be payable by Lessee upon demand. This Section 30.05 shall not
create any obligations upon Lessee with respect to Preexisting Conditions.
30.06 LESSEE'S INDEMNITY. Lessee shall indemnify, defend, and hold
harmless Lessor, any mortgagee of the Leased Premises, and each of their
respective agents, representatives, partners, members, officers, directors,
employees, tenants (other than Lessee), licensees, guests, and invitees from all
Losses suffered or incurred by any of the foregoing arising from or attributable
to (a) any breach by Lessee of any of its warranties, representations, or
covenants in this Section 30; (b) noncompliance of the Leased Premises, the
Improvements, or Lessee with any Environmental Laws, except with respect to any
Preexisting Conditions; (c) any actual or alleged illness, disability, injury,
or death of any person in any manner arising out of or allegedly having arisen
out of exposure to Hazardous Materials or other substances or conditions present
at the Leased Premises or the Improvements during the Lease term or Managed or
Released by Lessee or any of Lessee's agents, contractors, employees,
representatives, licensees or subtenants, regardless of when any such illness,
disability, injury, or death shall have occurred or been incurred or manifested
itself, except to the extent such illness, disability, injury, or death results
solely from a Preexisting Condition; and (d) Hazardous Materials Managed or
Released by Lessee or Lessee's agents, contractors, employees, representatives,
licensees, or subtenants regardless of location, including without limitation,
those Hazardous Materials Managed or Released by Lessee or any of the Lessee
related parties upon or from the Leased Premises or the Improvements except to
the extent such Losses arise from a Preexisting Condition. In the event any
Claims or other assertion of liability shall be made against Lessor for which
Lessor is entitled to indemnity hereunder, Lessor shall notify Lessee of such
Claim or assertion of liability and thereupon Lessee shall, at its sole cost and
expense, assume the defense of such Claim or assertion of liability and continue
such defense at all times thereafter until completion. Lessee's obligations
hereunder shall survive the termination or expiration of this Lease.
30.07 LESSOR'S INDEMNITY. Lessor shall indemnify, defend, and hold
harmless Lessee, any Leasehold Mortgagee of the Lessee's leasehold interest in
the Leased
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Premises and the Improvements, and each of their respective agents,
representatives, partners, members, officers, directors, employees, tenants,
licensees, guests, and invitees from all Losses suffered or incurred by any of
the foregoing arising from or attributable to: (a) any Pre-Existing Conditions;
(b) any actual or alleged illness, disability, injury, or death of any person in
any manner arising out of or allegedly having arisen out of exposure to
hazardous materials or other substances or conditions Managed or Released by
Lessor or any of Lessor's agents, contractors, employees, representatives,
licensees or other tenants, regardless of when any such illness, disability,
injury, or death shall have occurred or been incurred or manifested itself; and
(c) Hazardous Materials Managed or Released by Lessor or Lessor's agents,
contractors, employees, representatives, licensees, or other tenants regardless
of location, including without limitation, those Hazardous Materials Managed or
Released by Lessor or any of the Lessor's related parties. In the event any
Claims or other assertion of liability shall be made against Lessee for which
Lessee is entitled to indemnity hereunder, Lessee shall notify Lessor of such
Claim and assertion of liability and thereupon Lessor shall, at its sole cost
and expense, assume the defense of such Claim or assertion of liability and
continue such defense at all times thereafter until completion. Lessor's
obligations hereunder shall survive the termination of expiration of this Lease.
SECTION THIRTY-ONE
EASEMENTS
Lessor shall grant to Lessee easements for ingress and egress to and from
the Leased Premises to the public roadways and highways, for railroad tracks and
access to the Lessor's spur line originating from the Burlington Northern Santa
Fe Railroad, and for installation of utilities, including, but not limited to,
steam, condensate, water, wastewater disposal and fuel oil. All easements shall
be reduced to writing and filed of record with the Register of Deeds, Grant
County, South Dakota. All easements shall be to the mutual satisfaction of both
parties.
SECTION THIRTY-TWO
WAIVER
The waiver by Lessor of, or the failure of Lessor to take action with
respect to, any breach of any term, covenant, or condition contained in this
Lease shall not be deemed to be a waiver of such term, covenant, or condition,
or subsequent breach of the same, or any other term, covenant or condition
contained in this Lease. The subsequent acceptance of rent under this Lease by
Lessor shall not be deemed to be a waiver of any preceding breach by Lessee of
any term, covenant, or condition of this Lease, other than the failure of Lessee
to pay the particular rental so accepted regardless of Lessor's knowledge of a
preceding breach at the time of acceptance of rent.
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SECTION THIRTY-THREE
PARTIES BOUND
The covenants and conditions contained in this Lease shall, subject to
the provisions as to assignment, transfer, and subletting, apply to and bind the
heirs, successors, executors, administrators, and assigns of all of the parties
to the Lease . All of the parties shall be jointly and severally liable under
this Lease .
SECTION THIRTY-FOUR
TIME OF THE ESSENCE
Time is of the essence of this Lease, and of each and every covenant,
term, condition, and provision of this Lease.
SECTION THIRTY-FIVE
CAPTIONS
The captions appearing under the section number designations of this
Lease are for convenience only and are not a part of this Lease and do not in
any way limit or amplify the terms and provisions of this Lease.
SECTION THIRTY-SIX
GOVERNING LAW
It is agreed that this Lease shall be governed by, construed, and
enforced in accordance with the laws of South Dakota.
SECTION THIRTY-SEVEN
ENTIRE AGREEMENT
This Lease shall constitute the entire agreement between the parties. Any
prior understanding or representation of any kind preceding the date of this
Lease shall not be binding on either party except to the extent incorporated in
this agreement.
SECTION THIRTY-EIGHT
MODIFICATION OF AGREEMENT
Any modification of this Lease or additional obligation assumed by either
party in connection with this Lease shall be binding only if evidenced in
writing signed by each party or an authorized representative of each party.
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SECTION THIRTY-NINE
ADDITIONAL DOCUMENTS
The parties agree to execute whatever papers and documents may be
necessary to effectuate the terms of this Lease . This Lease shall be filed in
the real estate records of the Register of Deeds, Grant County, South Dakota,
and with the South Dakota Secretary of State.
IN WITNESS WHEREOF, each party to this Agreement has caused it to be
executed on the date indicated above.
BIG ▇▇▇▇▇-▇▇▇▇▇ INDUSTRIAL
DEVELOPMENT AND TRANSPORTATION,
L.L.C, - Lessor
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Manager
------------------------
NORTHERN LIGHTS ETHANOL, LLC,
Lessee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
Title: President
------------------------
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ )
: SS
COUNTY OF GRANT )
On this the 18th day of April 2001, before me personally appeared ▇▇▇▇ ▇▇▇▇▇▇,
known to me to be a Manager of Big ▇▇▇▇▇-▇▇▇▇▇ Industrial Development and
Transportation, L.L.C., the limited liability company that is described in and
that executed the within instrument, and acknowledged to me that such limited
liability company executed the same.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Notary Public - South Dakota
STATE OF SOUTH DAKOTA )
: SS
COUNTY OF GRANT )
On this the 18th day of August 2001, before me the undersigned officer,
personally appeared ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, who acknowledged himself to be the
President of Northern Lights Ethanol, LLC, a limited liability company, and that
he, as such President, being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
limited liability company by himself as a the President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Notary Public - South Dakota
Document Prepared By:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Woods, Fuller, ▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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SCHEDULE A
LEGAL DESCRIPTION OF LEASED PREMISES
Parcel A in the Southwest Quarter (SW 1/4) of Section Twelve (12),
Township One Hundred Twenty-One (121) North, Range Forty-Seven (47) West of the
Fifth Principal Meridian, Grant County, South Dakota, according to the recorded
plat thereof.
Parcel B in the Southeast Quarter (SE 1/4) of Section Eleven (11),
Township One Hundred Twenty-One (121) North, Range Forty-Seven (47) West of the
Fifth Principal Meridian, Grant County, South Dakota, according to the recorded
plat thereof.
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