*PORTIONS OF THIS ETHANOL PURCHASE AGREEMENT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
EXECUTION COPY
ETHANOL PURCHASE AGREEMENT
THIS ETHANOL PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of December 15, 2008 by and between Southwest Iowa Renewable Energy,
LLC, an Iowa limited liability company ("Producer"), and ▇▇▇▇▇ North America,
Inc., a New York corporation ("Bunge") (each of Producer and Bunge, a "Party"
and collectively, the "Parties").
RECITALS
A. Producer is in the process of constructing an ethanol plant located near
Council Bluffs, Iowa (the "Facility").
▇. ▇▇▇▇▇ is regularly engaged in the business of marketing ethanol, grain
and feed products throughout the world.
C. As of the date of this Agreement, Bunge is a Member of Producer pursuant
to the Amended and Restated Operating Agreement of Producer dated March 7, 2008
("Operating Agreement").
D. Producer desires to sell and Bunge desires to purchase all ethanol
produced by the Facility ("Ethanol").
E. The Parties desire to agree in advance of such sale and purchase to the
price formula, payment, delivery and other terms thereof in consideration of the
mutually promised performance of the other.
AGREEMENT
Therefore, the Parties agree:
1. Ethanol Purchase/Sale.
1.1 Exclusive Purchaser. Subject to the terms of this Agreement (including,
but not limited to, Section 1.2 hereof), Producer agrees to sell to Bunge all
Ethanol produced during the Term (as defined in Section 6.1 hereof) by the
Facility. Bunge agrees that it will be obligated to purchase all Ethanol
produced by the Facility during the Term under the conditions herein set forth,
up to an annual maximum equal to the Facility's nameplate design capacity of
110,000,000 gallons of Ethanol per year. Upon
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any modifications or expansions of the Facility, the Parties shall make such
amendments to this Agreement as are mutually agreed upon as necessary to reflect
such modifications or expansions at the Facility.
1.2 Title. Title, risk of loss and full shipping responsibility shall pass
to Bunge upon Producer loading the Ethanol into trucks, rail cars or pipeline at
the Delivery Location (as defined below) and delivery to Bunge of a ▇▇▇▇ of
lading for each shipment. Bunge and Producer shall agree upon documented
inspection, loading and sealing procedures.
1.3 Location. The place of delivery by Producer for all Ethanol sold to
Bunge pursuant to this Agreement shall be the Facility or as otherwise agreed by
the Parties (the "Delivery Location"). Bunge will provide loading instructions
to Producer designating the shipment date and amount of Ethanol to be shipped
with enough advance notice such that Producer can direct the loading of all
Ethanol delivered hereunder in a commercially reasonable manner. Producer shall
give Bunge and Bunge's agents access to the Facility, in such a manner and at
all times as shall be commercially reasonably necessary and convenient, in order
for Bunge or Bunge's agents and/or designees to take delivery as provided
herein. To the extent that Bunge has provided Producer with loading
instructions, such instructions are subject to change at the discretion of Bunge
upon reasonable notice to Producer. If Producer has delivered Ethanol prior to
such notice, Producer will not be responsible for any failure of such Ethanol to
comply with the changed instructions and Bunge will incur the cost, if any
associated with the change of instructions.
1.4 Ethanol Marketing Policy. Producer and Bunge will jointly establish an
Ethanol marketing policy with respect to Contracts (as defined in Section
2.1(b)) setting forth how far in advance such Contracts may provide for the sale
of Ethanol, referred to as forward contracting limits (the "Ethanol Marketing
Policy"). Without limitation, subject to Section 2.2, the Ethanol Marketing
Policy shall also include obligations of Producer to deliver to Bunge written
estimates of Ethanol production at the Facility a reasonable period of time
prior to such production. The Ethanol Marketing Policy is subject to approval
and modification from time-to-time jointly by Bunge and Producer's risk
management committee and/or Board of Managers and may be developed in connection
with a comprehensive risk management policy for the marketing of all products
produced by the Facility. The Ethanol Marketing Policy will be updated by the
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Parties as necessary. Bunge shall promptly make Producer aware if the Ethanol
Marketing Policy is reasonably believed to be limiting Bunge's ability to market
Ethanol in accordance with this Agreement.
2. Obligations of the Parties; Quantity and Weights.
2.1 Bunge's Obligations.
(a) Market Information. Bunge will provide Producer with relevant and
transparent market information, including bid/ask sheets for Ethanol
produced at the Facility.
(b) Ethanol Contracts. Bunge will negotiate and execute contracts,
arrangements and agreements on its own behalf for the resale by Bunge of
Ethanol ("Contracts"), and provide Producer with copies of such Contracts
upon request. Bunge will also provide Producer with, or make available to
Producer, consolidated daily position reports of delivery dates, volumes
and pricing under all open Contracts.
(c) Bunge Re-Sale Efforts. Bunge agrees to use commercially reasonable
efforts to market the Ethanol to maximize the sale price and minimize
related costs, subject to prevailing market conditions; provided that Bunge
will have no obligation to enter into any long-term sale agreement with
terms outside of the Policy (even if requested to do so by Producer) to the
extent that Bunge determines, in its sole discretion, that there is a risk
that a sufficient quantity of appropriate Ethanol may not be available to
satisfy all of Bunge's obligations under such sale agreement. Producer
acknowledges that Bunge will use its reasonable judgment in making such
marketing decisions (due, among other things, to varying freight and other
costs).
(d) Shipping Charges. Bunge will schedule and arrange, in conjunction
with Producer's general manager or designee, the loading, shipping and
delivery of all Ethanol bought by Bunge pursuant to this Agreement. All
freight and delivery charges after delivery of the Ethanol by Producer to
the Delivery Location will be the responsibility of Bunge or the purchasers
of Ethanol from Bunge, and will be included in the calculation of Purchase
Price to the extent set forth Section 5.1. With respect to rail freight
service to the Facility, Bunge shall be responsible for negotiating with
the rail service provider the rates and service levels for shipments of
Ethanol from the Facility. Bunge shall disclose to Producer any
discussions, negotiations, proposals and agreements involving such rail
service and rail rates for the Facility and, upon termination of
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the Agreement, Bunge shall assign rights to such rail service and rates to
Producer, as agreed by the rail carrier. Producer shall buy or lease, and
shall maintain and be responsible for, the rail cars which will be used for
the loading, shipping and delivery of all Ethanol bought by Bunge pursuant
to this Agreement.
(e) Ethanol Marketing Policy; Directions Given by Producer. Subject to
the provisions of this Agreement, Bunge will abide by any terms of the
Ethanol Marketing Policy applicable to Bunge and neither Bunge nor its
Affiliates shall be in breach of this Agreement or liable to Producer under
this Agreement to the extent Bunge acts in accordance with the Ethanol
Marketing Policy or in accordance with directions given by Producer's Board
or general manager.
(f) Other Activities of Bunge. Producer understands that Bunge is in
the business of marketing ethanol for itself and for other third parties
outside the terms of this Agreement and that Bunge may sell and market
Ethanol into the same markets where Bunge sells other parties' ethanol. If
Bunge determines to accept, for its own account and at its risk, contracts
with terms that are outside the parameters of the Ethanol Marketing Policy,
Bunge will promptly offer Producer the opportunity to waive or amend the
Ethanol Marketing Policy and authorize Bunge to enter into such contract as
a Contract subject to this Agreement. If Producer elects to accept the
contract, the waiver or amendment must be made promptly. If Producer elects
not to accept the contract, then Producer understands that Bunge may
fulfill the contract with spot market purchases from Producer and such spot
market purchases shall fulfill Bunge's obligations to maximize the sale
price pursuant to Section 2.1(c). Producer and Bunge may, from time to
time, mutually agree that Bunge will purchase certain quantities of Ethanol
for its own account for resale to third parties in contracts which are not
Contracts subject to this Agreement and Bunge will pay to Producer the
current fair market value of such Ethanol as determined by the Parties.
2.2 Producer's Obligations.
(a) Production Estimates. At least 90 days before the Effective Date,
Producer will provide Bunge with Producer's best estimate of Producer's
anticipated monthly Ethanol production for the next twelve months. On or
before the first day of each month thereafter, Producer will provide Bunge
with its updated best estimate of Producer's anticipated monthly Ethanol
production for the next twelve months, so that Bunge will have Ethanol
production estimates from Producer twelve months into the future
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during the Term (each such monthly anticipated amount, a "Monthly
Estimate"). If Producer fails to timely provide a written estimate for a
month as required by this Section 2.2, then the Monthly Estimate for such
month will be deemed to be the average amount of monthly production of
Ethanol over the two months immediately preceding the month in question.
Producer will notify Bunge of anticipated production downtime or disruption
in Ethanol availability at least three months in advance of such outage. In
addition to the Monthly Estimates, Producer will provide a written estimate
to Bunge of the quantity of Ethanol to be produced and delivered by
Producer in each given week (each such weekly anticipated amount, a "Weekly
Estimate") during the Term at least five days prior to the beginning of
such week. Each Weekly Estimate will (a) include a statement of the amount
of Ethanol in storage as of such date, and (b) be consistent with the
applicable Monthly Estimate.
(b) Failure to Produce and Changes to Estimates. Bunge is entitled to
rely on Monthly Estimates and Weekly Estimates in marketing Ethanol and in
entering into Contracts. Producer will immediately notify Bunge of any
revisions to such estimates; provided, that, to the extent Bunge has relied
upon such estimates, such estimates may not be revised and shall be deemed
fixed in determining any amounts payable by Producer in this Section. Bunge
will utilize commercially reasonable efforts to adjust its Ethanol
marketing and sales strategy according to any such revised estimates;
provided that Producer will bear all costs incurred by Bunge to attempt to
meet such revised quantities. To the extent that Bunge is able to obtain
Substitute Ethanol to meet such revised quantities and the price paid by
Bunge to procure the Substitute Ethanol (including transportation,
handling, or other charges related to the procurement and/or delivery of
the Substitute Ethanol) was less than the price at which Bunge sold ethanol
in such sale commitments, then Bunge shall retain the Cover Amount. To the
extent that Bunge is able to obtain Substitute Ethanol to meet such revised
quantities and the price paid by Bunge to procure the Substitute Ethanol
(including transportation, handling, or other charges related to the
procurement and/or delivery of the Substitute Ethanol) was greater than the
price at which Bunge sold ethanol in such sale commitments, then Producer
will pay to Bunge an amount equal to (i) the Cover Amount for the
Substitute Ethanol, plus (ii) Bunge's Marketing Fee on the Substitute
Ethanol. The "Substitute Ethanol" means the volume of ethanol procured by
Bunge to meet ethanol sale commitments due to Producer's failure to supply
the amount of Ethanol in the applicable Monthly Estimate or Weekly
Estimate. The "Cover
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Amount" is the difference between the price paid by Bunge to procure the
Substitute Ethanol (including transportation, handling, or other charges
related to the procurement and/or delivery of the Substitute Ethanol) and
the price at which Bunge sold ethanol in such sale commitments.
(c) Excess Ethanol Production. If Producer produces Ethanol in excess
of the Monthly Estimate for a given month or Weekly Estimate for a given
week, then Producer acknowledges that any sale by Bunge of such excess
volume of Ethanol on the spot market will fulfill Bunge's obligation in
Section 2.1(c) to maximize the sale price that it receives for such excess
volume of Ethanol.
(d) Handling and Shipping. In connection with this Agreement, Producer
will:
i. Determine the weight of all Ethanol delivered to Bunge as
provided in Section 3;
ii. Load the Ethanol for shipment in accordance with the loading
instructions from Section 1.3 to trucks, rail cars or pipeline with
Ethanol in a timely manner, which shall include supplying adequate
labor and equipment necessary for such loading;
iii. Handle Ethanol in a good and workmanlike manner;
iv. Maintain the truck/rail/pipeline loading facilities in safe
operating condition;
v. Supply all product description tags, certificates of analysis,
bills of lading and/or material safety data sheets applicable to
Ethanol shipments;
vi. Comply with all federal, state and local rules, regulations
regarding the shipment of Ethanol from the Facility, including but not
limited to all U.S. Department of Transportation requirements relating
to shipment of hazardous materials; and
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vii. Abide by the Ethanol Marketing Policy.
(e) Storage. Storage space for not less than 3 million gallons of
Ethanol shall be reserved by Producer at the Facility, which shall be
continuously available for storage of Ethanol to be purchased by Bunge from
Producer.
(f) Storage Purchase. Bunge may from time to time notify Producer (a
"Storage Notice") that Bunge proposes to place a certain quantity of
Ethanol in storage at a location away from the Facility for some period of
time before purchase by Bunge for resale to end customers. Unless Producer
notifies Bunge within 24 hours after receiving a Storage Notice that
Producer agrees to the storage proposal, then Producer shall be deemed to
have rejected such proposal and Bunge will not place Ethanol in storage
pursuant to the Storage Notice. If Producer accepts such storage proposal,
then Producer will bear the cost related to such storage.
2.3 Contract Commitments.
(a) Subject to the provisions of Sections 2.1(c) and (f), all
Contracts negotiated by Bunge shall be consistent with the Ethanol
Marketing Policy unless the general manager of the Facility, or his
designee, approves in advance any Contract terms inconsistent with the
Ethanol Marketing Policy.
(b) Producer will not be a party to, or have any liability or
obligation to any purchaser or to Bunge under Contracts except as provided
in this Section 2. Producer acknowledges that in order to maximize the
total revenue to be generated through the sale of the Ethanol, Bunge may
take positions by selling Ethanol in anticipation of Producer providing the
Ethanol, subject to the terms of the Ethanol Marketing Policy.
Notwithstanding the fact that Producer's obligation is to provide Bunge
with the Ethanol output of the Facility, the Parties acknowledge that Bunge
may suffer losses as a result of positions taken by Bunge if Producer
discontinues operations for any reason whatsoever including Force Majeure.
Producer shall indemnify, defend and hold Bunge and its Affiliates (as
defined below) harmless from all liabilities, costs and expenses
(including, without limitation, attorneys fees) that Bunge or its
Affiliates may suffer, sustain or become subject to as a result of any sale
or purchase of Ethanol taken by Bunge which is consistent with the Ethanol
Marketing Policy in anticipation of Producer delivering the Ethanol
hereunder, provided Bunge has taken commercially reasonable steps to avoid
the loss. Bunge will indemnify, defend and hold harmless Producer
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and its Affiliates, employees and agents from and against any and all
liabilities, costs and expenses (including, without limitation, attorneys
fees) arising out of, relating to or resulting from any failure of Ethanol
to comply with the Production Standards or degrading the quality of Ethanol
which results from causes or conditions arising after title passes to
Bunge, except to the extent such liabilities, costs and expenses arise out
of the gross negligence or intentional misconduct of Producer or a breach
of this Agreement by Producer.
3. Quantity and Weights.
3.1 Meters. Producer will determine the quantity of Ethanol (expressed in
both gross and net 60(degree) Fahrenheit temperature compensated gallons)
delivered to Bunge from the Facility using meters at the Facility. Producer will
maintain (at its expense) the accuracy of such meters and ensure that they are
inspected and certified as required by applicable law. Upon Bunge's request,
Producer will promptly provide Bunge with copies of all meter certifications.
Bunge may, at its sole expense, test the accuracy of such meters. Producer will
maintain all meter certificates for at least two years after their creation and
provide copies of such meter certificates to Bunge upon request. If the meters
are found to be inaccurate, the Parties will negotiate in good faith a
reasonable adjustment for Ethanol sales reasonably believed to have been
affected.
3.2 Meter Certificates. The net 60(degree) Fahrenheit temperature
compensated gallon volumes of Ethanol recorded on outbound meter certificates
generated pursuant to Section 3.1 will determine the quantity of Ethanol for
which Bunge is obligated to pay pursuant to Section 5.1, in the absence of
manifest error (greater than 0.5% variation). Producer will provide a copy of
each such meter certificate to Bunge at the same time that a truck, rail car or
pipeline is loaded and a certificate is produced for such loading.
4. Quality; Sampling; Rejection; Disposition.
4.1 Quality. Producer agrees and warrants that the Ethanol produced at the
Facility and delivered to Bunge at the Delivery Location shall meet the minimum
quality standards outlined in Exhibit A hereto and such other quality standards
set forth in this Agreement (the "Production Standards"). Producer will not be
responsible for any failure of Ethanol to comply with the Production Standards
or degrading the quality of Ethanol which results from causes or conditions
arising after title passes to
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Bunge. Producer will provide a certificate of analysis to Bunge for each
shipment of Ethanol under this Agreement, and Bunge will have the right (but not
the obligation) to test each such shipment to determine whether the Production
Standards are being met. In addition, from time to time as requested by Bunge,
Producer will provide Bunge samples of Ethanol for Bunge to test.
4.2 Non-Conforming Ethanol. If any Ethanol does not conform to the
Production Standards when crossing the Delivery Location, or when unloaded at an
end customer's facility (other than due to actions or inactions by Bunge), Bunge
may, in its sole discretion, reject such Ethanol and require Producer to
promptly replace such non-conforming Ethanol with Ethanol that complies with the
Production Standards. In addition to other obligations under this Agreement or
at law, Producer will promptly reimburse Bunge for all out-of-pocket costs
reasonably incurred by Bunge in storing, transporting, returning and disposing
of rejected ethanol in accordance with this Agreement.
4.3 Samples. Producer will take and analyze representative (a) origin
samples of Ethanol before loading it into any truck, rail car or pipeline and
(b) samples of Ethanol after it is loaded into each truck, rail car or pipeline
before it leaves the Facility (any sample under this Section 4.3, a "Sample"),
and Bunge will have the right to witness the taking of the Samples. Each Sample
will be no less than 250 milliliters in amount. Producer will label each Sample
to indicate the (i) date of shipment, (ii) truck, rail car or pipeline from
which the Sample was taken or into which the Ethanol was loaded, and (iii)
order/shipment number. Producer will retain such Samples for not less than 60
days in a manner that preserves the integrity of each Sample, and will send any
Sample to Bunge immediately upon Bunge's request. Producer will prepare a
certificate of analysis in accordance with industry standards for every truck,
rail car or pipeline loaded at the Facility.
5. Price/Payment.
5.1 Purchase Price.
(a) Bunge will pay the Purchase Price to Producer for all Ethanol
purchased hereunder within 30 days after the date that (i) meter
certificates for all properly loaded Ethanol are delivered by Producer to
Bunge in accordance with this Agreement or (ii) Bunge invoices end
customers for ethanol that has been placed in storage pursuant to Section
2.2(f). In either case,
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Bunge will retain the applicable Marketing Fee and Transportation Costs for
such Ethanol.
(b) The following definitions shall apply to any given gallon of
Ethanol:
(i) The "Purchase Price" shall be equal to the Sale Price
minus the applicable Marketing Fee and Transportation Costs (if
any).
(ii) The "Sale Price" shall be equal to: (A) with respect to
Ethanol that Bunge purchases to fulfill its commitments to third
party purchasers under agreements consistent with this Agreement,
the sale price received by Bunge from such purchasers; and (b)
with respect to Ethanol purchased by Bunge on the spot market,
the spot price for such Ethanol agreed upon by Bunge and
Producer.
(iii) The "Marketing Fee" shall be equal to the lesser of
(A) *% of the Net Sales Price, or (B) $* per gallon of Ethanol.
* OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(iv) The "Net Sales Price" will be equal to the Sales Price
minus all Transportation Costs.
(v) "Transportation Costs" shall be equal to: (A)
with respect to Ethanol delivered via rail, all rail freight
charges, rail and fuel surcharges, switching charges, and any
other accessorial charges applicable to delivery of the Ethanol;
and (B) with respect to Ethanol delivered via truck, pipeline or
other conveyance, all freight charges, fuel surcharges, and any
other accessorial charges applicable to delivery of the Ethanol.
There are no Transportation Costs for any Ethanol picked up at
the Facility by purchasers. For Ethanol placed in storage under
Section 2.2(d), accessorial charges will include all charges
related to such storage. For purposes of this Section,
assessorial charges include all charges related to the movement,
offloading and storage of Ethanol.
(c) Payment. Bunge will pay the Purchase Price by wire transfer.
Interest will accrue on amounts past due at a rate per annum equal to
the lesser of (a) the prime rate, as reported from time to time by the
Wall Street Journal plus 2%, and (b) the highest rate permitted by
law. Bunge will provide Purchaser with
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a copy of an invoice supporting the Sale Price for such Sale upon
request.
(d) Annual Minimum Payments. Subject to Section 9 hereof, if on
each anniversary of the Effective Date, the total amount of the
Marketing Fee retained by Bunge during the immediately preceding
12-month period (a "Total Fee Amount") is less than $750,000 ("Annual
Minimum Amount"), then within 15 days after such anniversary, Producer
will pay to Bunge an amount equal to the Annual Minimum Amount minus
the Total Fee Amount.
5.2 Adjustments.
(a) Beginning on the third anniversary of the Effective Date of
this Agreement and on each anniversary thereafter, the Annual Minimum
Amount will be increased (or decreased) by an amount equal to the
product of: (i) the Annual Minimum Amount for the immediately
preceding 12-month period, multiplied by (ii) the percentage increase
(or decrease) for such 12-month period in the Employment Cost Index;
Not Seasonally Adjusted; Total Compensation; Private Industry;
twelve-month percent change; Midwest Workers, published by the Bureau
of Labor Statistics, U.S. Department of Labor.
(b) If the Effective Date has not occurred on or before July 15,
2009, then Bunge may require the Parties to renegotiate the provisions
of this Section 5. Upon such renegotiation, if the Parties do not
agree upon adjustments to the compensation on terms agreeable to
Bunge, then Bunge may terminate this Agreement upon notice to
Producer.
5.3 Tax. For purposes of personal property taxation and/or assessment or
other taxation, if any, any tax assessed on Ethanol produced under this
Agreement will be the responsibility of Producer, and at no time will Bunge be
responsible for the payment of any such tax.
6. Term and Termination.
6.1 Term. The initial term of this Agreement will begin upon execution of
this Agreement by both Parties and, unless earlier terminated in accordance with
the terms hereof, will expire upon the third anniversary of the Effective Date.
Unless earlier terminated in accordance with this Agreement, this Agreement will
automatically renew for successive three-year terms thereafter unless either
Party gives written notice to the other Party of its election not to renew, no
later than 180 days prior to the expiration of the initial term or the then
current
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renewal term, as applicable. The "Term" will be the total of the initial term of
this Agreement and any renewal terms. The "Effective Date" will be the later of
(a) December 15, 2008, and (b) the effective date of termination of that certain
Ethanol Merchandising Agreement between Producer and Lansing Ethanol Services,
LLC, or in each case such other date agreed by the Parties in writing.
6.2 Termination Rights.
(a) Either Party may terminate this Agreement immediately upon notice
to the other Party if such other Party has (i) materially breached any
representation, warranty, or obligation under this Agreement, and (ii)
failed to remedy such breach within 30 days after the terminating Party has
given notice of such breach, or if such breach cannot reasonably be cured
within such 30-day period, such other Party has failed to commence and
diligently pursue remedy of the breach and failed to remedy such breach not
later than 120 days after the terminating Party has given notice of such
breach.
(b) Producer may terminate this Agreement immediately upon notice to
Bunge if Bunge fails to pay any amount due under this Agreement within 15
days after Producer gives Bunge notice of such nonpayment.
(c) Bunge may terminate this Agreement immediately upon notice to
Producer: (i) if the Effective Date has not occurred on or before October
15, 2009; (ii) in accordance with Section 5.2(b) hereof; and/or (iii) upon
the occurrence of a Dissolution Event (as defined in Article X the
Operating Agreement).
(d) Either Party may terminate this Agreement immediately upon notice
to the other Party if (i) such other Party files a petition for
adjudication as a bankrupt, for reorganization or for an arrangement under
any bankruptcy or insolvency law; (ii) an involuntary petition under such
law is filed against such other Party and is not dismissed, vacated or
stayed within 60 days thereafter; or (iii) such other Party makes an
assignment of all or substantially all of its assets for the benefit of its
creditors.
(e) Bunge may terminate this Agreement immediately upon notice to
Producer if there is a Change in Control of Producer. A "Change of Control"
occurs upon any of: (i) a sale of all or substantially all of the assets of
Producer; (ii) a merger or consolidation involving Producer, excluding a
merger or
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consolidation after which 50% or more of the outstanding equity interests
of Producer continue to be held by the same holders that held 50% of more
of the outstanding equity interests of Producer immediately before such
merger or consolidation, or (iii) any issuance and/or acquisition of equity
interests of Producer that results in a person or entity holding 50% or
more of the outstanding equity interests of Producer, excluding any persons
or entities that held 50% or more of the outstanding equity interests of
Producer immediately before such acquisition and, with respect to Producer,
excluding Bunge.
(f) Either Party may terminate this Agreement in accordance with
Section 11.3 hereof.
(g) Producer may terminate this Agreement immediately upon notice to
Bunge if there is a Change in Control of Producer upon payment to Bunge of
an amount equal to $750,000.
6.3 Survival. The provisions of this Agreement which expressly or by their
nature survive expiration or termination of this Agreement, including, but not
limited to, Sections 2.1(d), 2.3(b), 4, 5.1, 5.3, 6.2, 6.3, 9, 10, 14, 15 and
16, will remain in effect after the expiration or termination of this Agreement.
7. Covenants of Producer. Producer covenants to Bunge that it will use
commercially reasonable efforts to ensure that the Facility will be fully
operational no later than July 15, 2009.
8. Representations and Warranties. The parties make the following warranties,
representations or guarantees as described below:
(a) Bunge represents and warrants to Producer that Bunge, either
through its own management or through lawful contracts entered into with
third parties, currently has and shall maintain or cause to be maintained
such licenses, permits and/or authorities as may be required to lawfully
engage in the purchase and sale of Ethanol.
(b) Bunge represents and warrants to Producer that: all necessary
corporate action has been taken to authorize the execution, delivery and
performance of this Agreement; the execution, delivery and performance of
this Agreement by Bunge does not, and will not, violate or constitute a
breach of or default under any Governmental Requirement (as defined in
Section 16.5) or any indenture, contract or other instrument to
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which its assets are bound or to which the representing party's business is
subject.
(c) Producer represents and warrants to Bunge that: all necessary
corporate action has been taken to authorize the execution, delivery and
performance of this Agreement; the execution, delivery and performance of
this Agreement by Producer does not, and will not, violate or constitute a
breach of or default under any Governmental Requirement or any indenture,
contract or other instrument to which Producer or its assets are bound or
to which Producer's business is subject.
(d) Producer warrants that at the time of loading at the Delivery
Location the Ethanol will be of merchantable quality, and will be fit for
its intended purpose. All Ethanol must meet all applicable ASTM Standards.
(e) Producer warrants that the Ethanol delivered to Bunge shall be
free and clear of liens and encumbrances.
9. Limitation of Liability.
9.1 General Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
PRODUCER MAKES NO STATUTORY, WRITTEN, ORAL, EXPRESSED OR IMPLIED WARRANTIES,
REPRESENTATIONS OR GUARANTEES OF ANY KIND CONCERNING THE ETHANOL SOLD UNDER THIS
AGREEMENT, OR ITS QUALITY SOURCE, OR CHARACTERISTICS, INCLUDING WITHOUT
LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, BUNGE MAKES NO
STATUTORY, WRITTEN, ORAL, EXPRESSED OR IMPLIED WARRANTIES, REPRESENTATIONS OR
GUARANTEES OF ANY KIND CONCERNING THE SERVICES PROVIDED UNDER THIS AGREEMENT OR
THE FAILURE TO PROVIDE SERVICES UNDER THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE.
9.2 IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER OR ANY OTHER
PERSON OR ENTITY FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES UNDER ANY
CIRCUMSTANCES.
10. Remedies.
10.1 Suspend Performance. Producer may suspend its performance under this
Agreement until Bunge has paid all amounts due under this Agreement if Bunge
fails to pay any amount within 15 days after the date when such amount is due
and uncured under this Agreement.
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10.2 Specific Enforcement. The Parties shall have the right and remedy to
seek to have the provisions of this Agreement specifically enforced by any court
having equity jurisdiction without the necessity of posting any bond, it being
acknowledged and agreed by the parties that the scope of the provisions of this
Agreement are reasonable under the circumstances.
10.3 Rights Not Exclusive. No right, power or remedy conferred by this
Agreement will be exclusive of any other right, power or remedy now or hereafter
available to a Party at law, in equity, by statute or otherwise.
11. Force Majeure.
11.1 Definition of Force Majeure Event. Each Party is excused from
performing its obligations under this Agreement to the extent that such
performance is prevented by an act or event (a "Force Majeure Event") whether or
not foreseen, that: (i) is beyond the reasonable control of, and is not due to
the fault or negligence of, such Party, and (ii) could not have been avoided by
such Party's exercise of due diligence, including, but not limited to, a labor
controversy, strike, lockout, boycott, transportation stoppage, action of a
court or public authority, fire, flood, earthquake, storm, war, civil strife,
terrorist action, epidemic, or act of God; provided that a Force Majeure Event
will not include economic hardship, changes in market conditions, or
insufficiency of funds. Notwithstanding the foregoing sentence, a Force Majeure
Event does not excuse any obligation to make any payment required by this
Agreement (including without limitation Section 5.1(d) and will not affect
Bunge's right to terminate this Agreement pursuant to Section 6.2(c)(i).
11.2 Conditions Regarding Force Majeure Event. A Party claiming a Force
Majeure Event must: (i) use commercially reasonable efforts to cure, mitigate,
or remedy the effects of its nonperformance; provided that neither Party will
have any obligation hereunder to settle a strike or labor dispute; (ii) bear the
burden of demonstrating its existence; and (iii) notify the other Party of the
occurrence of the Force Majeure Event as quickly as reasonably possible, but no
later than five business days after learning of the occurrence of the Force
Majeure Event. Any Party that fails to notify the other Party of the occurrence
of a Force Majeure Event as required by this Section 11 will forfeit its right
to excuse performance of its obligations due to such Force Majeure Event. When a
Party claiming a Force Majeure Event is able to resume performance of its
obligations under this
15
Agreement, it will immediately give the other Party notice to that effect and
resume performance.
11.3 Third Parties; Termination. During any period that a Party claiming a
Force Majeure Event is excused from performance under this Agreement, the other
Party may accept performance from other parties as it may reasonably determine
under the circumstances. If a Party has not performed under this Agreement due
to a Force Majeure Event for twelve consecutive months or more, the other Party
may terminate this Agreement immediately upon notice to the non-performing
Party.
12. Insurance.
12.1 Other Required Coverage.
(a) Each Party will maintain automobile liability insurance covering
owned, hired, and non-owned vehicles against claims for bodily injury,
death and property damage, with a combined single limit of not less than
$1,000,000, or equivalent coverage using split limits. Such insurance will
name the other Party, its parents, subsidiaries and Affiliates as
additional insureds thereunder, and will be primary to any other insurance
available to such other Party, its parents, subsidiaries and Affiliates as
insureds or otherwise.
(b) Each Party will maintain commercial general liability insurance
(including, without limitation, coverage for Contractual Liability and
Products/Completed Operations) against claims for bodily injury, death and
property damage, with limits of not less than $1,000,000 for each
occurrence and $1,000,000 in the General and Products/Completed Operations
Aggregate. Such insurance will name the other Party, its parents,
subsidiaries and Affiliates as additional insureds there under, and will be
primary and non-contributory to any other insurance available to such other
Party, its parents, subsidiaries and Affiliates as insureds or otherwise.
(c) An excess or umbrella liability policy with a limit of not less
than $2,000,000 per occurrence and $2,000,000 aggregate. Such excess or
umbrella liability policy shall follow form with the primary liability
policies, and contain a drop-down provision in case of impairment of
underlying limits.
(d) Notwithstanding the provisions of Section 12.1(b) and (c), each
Party's total coverage under both its commercial general liability
insurance in Section 12.1(b) and excess or umbrella liability policy in
Section 12.1(c) must have combined
16
limits together totalling $4,000,000 for each occurrence and $4,000,000
aggregate.
(e) Worker's Compensation insurance providing statutory benefits for
injury or disease in the state(s) of operation of the Parties, and
Employer's Liability with limits of at least $500,000 for individual injury
or disease, with an aggregate of $500,000 for disease.
(f) Each Party waives all rights against the other Party and its
employees and agents for all losses and damages caused by, arising out of
or resulting from any of the perils or causes of loss of the Party covered
by the policies contemplated by Section 12.1 and any other property
insurance covering the Party applicable to the Facility.
12.2 Insurance Policy Requirements. All insurance policies required by this
Agreement will (a) provide coverage on an "occurrence" basis; (b) provide that
no cancellation or non-renewal will be effected without giving the other Party
at least thirty (30) days prior written notice, except ten (10) days notice for
non-payment of premium; and (c) be valid and enforceable policies issued by
insurers of recognized responsibility, properly licensed in the State where the
Facility is located, with an A.M. Best's Rating of A- or better and Class VII or
better. General Liability and Excess/Umbrella Liability policies will not
contain a cross-liability exclusion, or an exclusion for punitive or exemplary
damages where insurable under law. Prior to the Effective Date and, thereafter,
within five business days of renewal, certificates and endorsements of such
insurance will be delivered to the other Party, as appropriate, as evidence of
the specified insurance coverage. From time to time, upon a Party's request, the
other Party will provide the requesting Party, within five business days, a
certified duplicate original of any policy required to be maintained hereunder.
Each Party will provide the other Party at least thirty (30) days prior written
notice of any material change or amendment to a Party's insurance policy.
13. Relationship of Parties. This Agreement creates no relationship other than
those of producer/seller and purchaser between the Parties hereto. Except as
expressly provided herein, there is no partnership, joint venture or other joint
or mutual enterprise or undertaking created hereby and neither Party, or any of
such Party's representatives, agents or employees, will be deemed to be the
representative or employee of the other Party. Except as expressly provided
herein or as otherwise specifically
17
agreed in writing, neither Party will have authority to act on behalf of or bind
the other Party.
14. Confidentiality.
14.1 Definition of Confidential Information. The term "Confidential
Information" means all material or information relating to a Party's business
operations and affairs (including trade secrets) that such Party treats as
confidential. Without limiting the generality of the foregoing, all information
regarding quantities of Ethanol produced and any pricing matter under this
Agreement will be deemed to be Confidential Information of the appropriate
Party; provided, however, that quantities of Ethanol produced and sold, the
price at which the Ethanol is sold, and aggregate fees paid to Bunge, on a
quarterly and annual basis, shall not be deemed "Confidential Information."
14.2 Use of Confidential Information. During the Term and for three years
thereafter, neither Party will (a) use any Confidential Information of the other
Party for any purpose other than in accordance with this Agreement or for its
and its Affiliates internal business purposes, or (b) disclose Confidential
Information to any Person, except to its personnel who are subject to
nondisclosure obligations comparable in scope to this Section 14 and who have a
need to know such Confidential Information in order to perform under this
Agreement. Notwithstanding the foregoing, the Parties acknowledge that Bunge
and/or its Affiliates may perform services for other third parties similar to
the services provided to Producer hereunder and that the use by Bunge and/or its
Affiliates of any Confidential Information regarding the services provided under
this Agreement in the course of the provision of such services to other third
parties and for Bunge's and its Affiliates' internal business purposes shall not
be considered a violation of this Section 14; provided, that such use of
Producer's Confidential Information may not be to the competitive disadvantage
of Producer.
14.3 Disclosure of Confidential Information. Notwithstanding Section 14.2,
either Party may use for any purpose or disclose any material or information
that it can demonstrate (i) is or becomes publicly known through no act or fault
of such Party; (ii) is developed independently by such Party without reference
to the other Party's Confidential Information; (iii) is known by such Party when
disclosed by the other Party, and such Party does not then have a duty to
maintain its confidentiality; or (iv) is rightfully obtained by such Party from
a third party not
18
obligated to preserve its confidentiality who did not receive the material or
information directly or indirectly from the other Party. A Party also may
disclose the other Party's Confidential Information to the extent required by a
court, law, legal or administrative process or by other governmental authority,
provided that the disclosing Party (a) gives the other Party advance written
notice of the disclosure, (b) uses reasonable efforts to resist disclosing the
Confidential Information, (c) cooperates with the other Party on request to
obtain a protective order or otherwise limit the disclosure, and (d) as soon as
reasonably possible, provides a letter from its counsel confirming that such
Confidential Information is, in fact, required to be disclosed.
14.4 Injunctive. Relief. Each Party acknowledges and agrees that its
breach or threatened breach of any provision of this Section 14 would cause the
other Party irreparable injury for which it would not have an adequate remedy at
law. In the event of a breach or threatened breach, the nonbreaching Party will
be entitled to injunctive relief in addition to all other remedies it may have
at law or in equity.
15. Governing Law; Disputes.
15.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Iowa, excluding any applicable
conflicts-of-law rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another state.
15.2 Notice of Dispute. If any dispute shall arise under or in
connection with this Agreement, the Parties hereto agree to follow the
procedures set forth in this Section 15.2 in an effort to resolve the dispute
prior to the commencement of any formal proceedings; provided, however, that
either Party may institute judicial proceedings seeking equitable relief or
remedies without following the procedures set forth herein. The Parties shall
attempt in good faith to resolve any dispute arising out of or relating to this
Agreement, the breach, termination, or validity hereof, or the transactions
contemplated herein promptly by negotiation between representatives who have
authority to settle the controversy. Any Party may give the other Party written
notice that a dispute exists (a "Notice of Dispute") setting forth a statement
of such Party's position. Within twenty (20) business days of the delivery of
the Notice of Dispute, representatives of the Parties shall meet at a mutually
acceptable time and place, and thereafter as long as they both
19
reasonably deem necessary, to exchange relevant information and attempt to
resolve the dispute. If the matter has not been resolved within thirty (30) days
of the disputing party's delivering its Notice of Dispute, the dispute shall be
referred to the Boards of Directors or Managers of Producer and Bunge who shall
within twenty (20) additional days meet to attempt in good faith to resolve the
dispute.
15.3 Mediation. If the matter still has not been resolved within sixty
(60) days of the delivery of the Notice of Dispute, then any Party may seek to
resolve the dispute through mediation administered by the Commercial Mediation
Rules of the American Arbitration Association. If the Parties fail to resolve
the dispute within twenty-one (21) days after starting mediation, then either
Party may initiate appropriate proceedings to obtain a judicial resolution of
the dispute.
15.4 Negotiations; Jurisdictional Matters. If a representative of any
Party intends to be accompanied at a meeting by an attorney, the other
negotiator shall be given at least three (3) business days' notice of such
intention and may also be accompanied by an attorney. All negotiations pursuant
to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence and
similar state rules of evidence. Any proceeding initiated by either Party hereto
shall be commenced and prosecuted in the United States District Courts for the
Eastern District of Missouri or the Western District of Iowa or the state courts
in St. Louis County, Missouri or Des Moines, Iowa and any courts to which an
appeal may be taken, and each Party hereby consents to and submits to the
personal jurisdiction of each of such courts.
15.5 Waiver of Jury Trial. EACH PARTY IRREVOCABLY WAIVES ANY AND ALL
RIGHTS TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
16. Indemnification.
16.1 Indemnification By Producer. Producer agrees to indemnify and hold
Bunge harmless from any Loss suffered or incurred by Bunge arising out of, or in
any way relating to:
(a) Producer's use or possession or operations on or at, or any action or
failure to act at, the Facility;
20
(b) any personal injury or property damage related to the use, possession,
condition of, disposal of, physical contact with or exposure to any products
manufactured at the Facility;
(c) injuries or alleged injuries suffered by Producer's employees whether
at the Facility or elsewhere and whether or not under the direction of Bunge
and/or the Producer; or
(d) any violation or alleged violation of any Governmental Requirement by
Producer,
unless and to the extent such Loss was directly caused by Bunge's gross
negligence or willful misconduct and in each case only to the extent Bunge is
not otherwise compensated for such Loss by applicable insurance (to the extent
actually paid).
16.2 Indemnification By Bunge. Bunge agrees to indemnify and hold
Producer harmless from any Loss suffered or incurred by Producer arising out of,
or in any way relating to:
(a) injuries or alleged injuries suffered by Bunge's employees, or leased
or subcontracted by Bunge, whether at the Facility or elsewhere;
(b) any violation or alleged violation of any Governmental Requirement
by Bunge.
unless and to the extent such Loss was directly caused by Producer's gross
negligence or willful misconduct and in each case only to the extent Producer is
not otherwise compensated for such Loss by applicable insurance (to the extent
actually paid).
16.3 Mutual Indemnification. Each Party shall indemnify, defend and
hold the other Party harmless from all liabilities, costs and expenses
(including, without limitation, attorneys fees) that such Party may suffer,
sustain or become subject to as a result any misrepresentation or breach of
warranty, covenant or agreement of the indemnifying Party contained herein or
the indemnifying Party's gross negligence or willful misconduct in performance
of its obligations under this Agreement.
16.4 Employees, Affiliates, Etc. A party's indemnification of the other
party pursuant to this Section 16 will also run in favor of such indemnified
party's officers, directors, employees, agents and representatives, and
indemnification claims may be
21
made hereunder by any of such parties or by the indemnified party on such third
parties' behalf.
16.5 Definitions. For purposes of this Agreement:
(a) "Governmental Requirement" means all laws, statutes, codes, ordinances
and governmental rules, regulations and requirements of any governmental
authority that are applicable to the Parties, the property of the Parties or
activities described in or contemplated by this Agreement.
(b) "Loss" means any claim, loss, cost, expense, liability, fine, penalty,
interest, payment or damage, including but not limited to reasonable attorneys'
fees, accountants' fees and any cost and expense of litigation, negotiation,
settlement or appeal.
(c) "Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, the party specified, with "control" or "controlled" meaning the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities or voting interests, by contract or otherwise.
(d) "Person" means any individual, general partnership, limited
partnership, limited liability company, joint venture, trust, business trust,
cooperative, association or other entity of whatever nature.
17. Notices. All notices required or permitted under this Agreement will be in
writing and will be deemed given and made: (i) if by personal delivery, on the
date of such delivery, (ii) if by facsimile, on the date sent (as evidenced by
confirmation of transmission by the transmitting equipment), (iii) if by
nationally recognized overnight courier, on the next business day following
deposit, and (iv) if by certified mail, return receipt requested, postage
prepaid, on the third business day following such mailing; in each case
addressed to the address or facsimile number shown below for such Party, or such
other address or facsimile number as such Party may give to the other Party by
notice:
If to Bunge:
▇▇▇▇▇ North America, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President -
Bunge Grain Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
with copy to:
▇▇▇▇▇ North America, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ Attn: General
Counsel Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
If to Producer:
Southwest Iowa Renewable Energy, LLC
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: General Manager
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Husch ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
18. Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes
the entire agreement between the Parties with respect to the subject matter
hereof and supersedes all prior agreements and understandings, both written and
oral, between the Parties with respect to the subject matter hereof. This
Agreement does not, and is not intended to, confer any rights or remedies upon
any person other than the Parties.
19. Amendments; Waiver. The Parties may amend this Agreement only by a written
agreement of the Parties. No provision of this
23
Agreement may be waived, except as expressly provided herein or pursuant to a
writing signed by the Party against whom the waiver is sought to be enforced. No
failure or delay in exercising any right or remedy or requiring the satisfaction
of any condition under this Agreement, and no "course of dealing" between the
Parties, operates as a waiver or estoppel of any right, remedy or condition. A
waiver made in writing on one occasion is effective only in that instance and
only for the purpose that it is given and is not to be construed as a waiver on
any future occasion or against any other person.
20. Assignment. No Party may assign this Agreement, or assign or delegate any of
its rights, interests, or obligations under this Agreement, voluntarily or
involuntarily, whether by merger, consolidation, dissolution, operation of law,
or any other manner, without the prior written consent of the other Party, and
any purported assignment or delegation without such consent will be void.
Despite the prior sentence, Bunge may assign this Agreement, or assign or
delegate any of its rights, interests, or obligations under this Agreement, to
any of its Affiliates without Producer's prior written consent. Subject to the
preceding sentences in this Section 20, this Agreement binds and benefits the
Parties and their respective permitted successors and assigns.
21. Severability. If a court or arbitrator with proper jurisdiction determines
that any provision of this Agreement is illegal, invalid, or unenforceable, the
remaining provisions of this Agreement remain in full force. The Parties will
negotiate in good faith to replace such illegal, invalid, or unenforceable
provision with a legal, valid, and enforceable provision that carries out the
Parties' intentions to the greatest lawful extent under this Agreement.
22. Interpretation. Each Party has been represented by counsel during the
negotiation of this Agreement and agrees that any ambiguity in this Agreement
will not be construed against one of the Parties.
23. Further Assurances. Each Party will execute and cause to be delivered to the
other Party such instruments and other documents, and will take such other
actions, as the other Party may reasonably request for the purpose of carrying
out or evidencing any of the transactions contemplated by this Agreement.
24
24. Counterparts. This Agreement may be executed by the Parties by facsimile and
in separate counterparts, each of which when so executed will be deemed to be an
original and all of which together will constitute one and the same agreement.
[Remainder of page intentionally left blank]
25
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed the
day and year first above written.
SOUTHWEST IOWA RENEWABLE
▇▇▇▇▇ NORTH AMERICA, INC. ENERGY, LLC
By: /s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------- --------------
Name: ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President Title: President and CEO
26
EXHIBIT A
Production Standards
The Parties agree that the Production Standards shall be all of the standards
and requirements set forth in the current (as of the time of delivery of Ethanol
under this agreement) ASTM standard specifications for denatured fuel ethanol
for blending with gasolines for use as automotive spark ignition engine fuel.