Exhibit 10.1
Confidential Treatment Requested. Confidential portions of this document have
been redacted and have
been separately filed with the Commission.
PRODUCT MARKETING AGREEMENT
THIS PRODUCT MARKETING AGREEMENT (the “Agreement”) is entered into this
September 21, 2010, with an effective date as stipulated in Section 1 below, by
and between Archer-Daniels-Midland Company, a Delaware corporation with its
principal place of business in Decatur, Illinois (“ADM”), and Western Iowa
Energy, LLC, an Iowa limited liability company with its principal place of
business in Wall Lake, Iowa (“WIE”).
BACKGROUND
WHEREAS, ADM has knowledge of the soybean crushing industry in the United
States, and has experience related to the marketing, sales, and distribution of
renewable fuels; and
WHEREAS, WIE and ADM believe that it would be in their mutual best interests for
ADM to purchase biodiesel, glycerin, fatty acids and soapstock (collectively,
the “Products”) produced by WIE at its production facilities owned, leased or
otherwise controlled by WIE in Wall Lake, IA (the “WIE Production Facilities”)
for purposes of ADM marketing, selling, and distributing the Products;
WHEREAS, WIE and ADM desire to enter into this Agreement, for purposes of
setting out the terms and conditions of the business arrangement; and
WHEREAS, WIE and ADM are simultaneously entering into a Feedstock Agreement and
Services Agreement.
NOW, THEREFORE, the parties to this Agreement hereby covenant and agree as
follows:
AGREEMENT
1. TERM. This Agreement shall commence on the first day of the month of which
production of Products begins at the WIE Production Facilities located in Wall
Lake, Iowa (the “Effective Date”) and shall continue in force for one year
unless terminated by one of the following events: (i) upon thirty (30) days
written notice by either party; (ii) the insolvency of the other party;
(iii) the assignment by the other party for the benefit of creditors; (iv) the
filing of a voluntary or involuntary bankruptcy, judicial liquidation, or
reorganization petition by or against the other party or the suspension of
check/note clearance privilege; (v) the appointment of a receiver, liquidator or
judicial administrator, or a trustee for either party, of any part or interest
of its business; (vi) the failure of either party to vacate, set aside or have
dismissed any insolvency proceeding under any law governing within sixty
(60) days from the date of the commencement of any such proceeding; (vii) or the
dissolution of the entity of the other party for any cause whatsoever.

 

 

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2. TERMINATION. In addition to the termination events identified in Section 1,
this Agreement may be terminated under the circumstances set out below:
(a) Termination for Intentional Misconduct. If either party engages in
intentional misconduct reasonably likely to result in significant adverse
consequences to the other party, the party harmed or likely to be harmed by the
intentional misconduct may terminate this Agreement immediately, upon written
notice to the party engaging in the intentional misconduct.
(b) Termination for Uncured Breach. If one of the parties breaches the terms of
this Agreement, the other party may give the breaching party a notice in writing
which specifically sets out the nature and extent of the breach, and the steps
that must be taken to cure the breach. After receiving the written notice, the
breaching party will then have thirty (30) days to cure the breach, if the
breach does not involve a failure to make any payments which are required by
this Agreement.
If the breach does involve a failure to make any payments which are required by
this Agreement, then the breaching party will have five (5) days after receiving
the written notice to cure the breach. If the breaching party does not cure any
breach within the applicable cure period, then the non-breaching party will have
the right to terminate this Agreement immediately.
(c) Termination by Mutual Written Agreement. This Agreement may also be
terminated upon any terms and under any conditions, which are mutually agreed
upon in writing by the parties.
(d) Cross Default. If a party fails to perform or observe any covenant,
condition or provision to be performed or observed by it under the terms of the
Feedstock Agreement, the Services Agreement or any other agreement in writing
between the parties in connection therewith or herewith and such default is not
remedied within thirty (30) days of its occurrence.
3. REPRESENTATIONS AND WARRANTIES OF WIE. In connection with its sale of
Products to ADM under this Agreement, WIE makes the following representations
and warranties, for the benefit of ADM:
(a) Good Title. WIE will have good and marketable title to all of the Products
sold to ADM under this Agreement, free and clear of all liens and encumbrances.
(b) Corporate Existence and Good Standing. WIE is a limited liability company
validly existing and in good standing under the laws of the State of Iowa.
Further, WIE is qualified to do business and is in good standing in each
jurisdiction where the conduct of its business or the ownership of its property
requires such qualification.

 

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(c) Corporate Authority and Corporate Approval. WIE has the power and authority
to enter into this Agreement. Further, WIE has taken all corporate action
necessary to authorize it to execute, become bound by, and perform its duties
and obligations under this Agreement.
(d) No Conflicts as to Law or Agreements. The execution of this Agreement by
WIE, the sale and transfer of Products from WIE to ADM, and the taking of all
actions by WIE under this Agreement do not require the consent of any person,
entity, or agency; do not violate any law, rule, or regulation; and do not
breach or violate any contract or agreement to which WIE is a party, or by which
WIE is bound.
(e) Compliance with Laws. WIE is now in compliance, and during the entire term
of this Agreement will remain in compliance, with all applicable federal, state,
local, and foreign laws, ordinances, orders, rules, and regulations (“Laws”),
other than Laws where neither the costs or potential costs of failing to comply,
nor the costs or potential costs of causing compliance, would be material to WIE
or its business or assets. The definition of Laws set out above includes, but is
not limited to, the Toxic Substances Control Act (“TOSCA”), the Comprehensive
Environmental Response, Compensation and Liability Act, the Clean Air Act, the
Federal Water Pollution Control Act of 1986, the Emergency Planning and
Community Right-to-Know Act of 1986, the Occupational Safety and Health Act, the
Resource Conservation and Recovery Act, any state equivalent thereof, and all
other laws related to the protection of the environment.
(f) Complete and Accurate Disclosure. WIE has not withheld from ADM any material
documents, material information, or material facts relating to WIE Products
production capabilities, and/or relating to the business operations of WIE.
Further, no representation or warranty in this Agreement, or in any letter,
certificate, exhibit, schedule, statement, or other document furnished or to be
furnished pursuant to this Agreement, contains any untrue statement of a
material fact.
(g) Licenses and Permits. WIE now has or will have prior to the commencement of
operations at the WIE Production Facilities, and will have at all times
thereafter during the term of this Agreement, all of the licenses and permits
necessary to operate the WIE Production Facilities.
(h) Production Capacity. At the commencement of the Agreement, WIE and ADM shall
in writing agree upon the WIE’s expected annual production capacity by
feedstock, based on the nameplate design capacity of the WIE production
facilities. The parties hereby acknowledge that WIE’s production capacity will
vary based on the type of feedstock used and that the use of various animal fats
as feedstock generally slows production rates relative to the use of vegetable
oils as feedstock.

 

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(i) Product Quality. All of the Products sold to ADM by WIE under this Agreement
will be of merchantable quality, and will be fit for its intended purpose. All
biodiesel must meet all applicable ASTM Standards, must meet any other
applicable industry standards or guidelines, must meet the biodiesel standards
established by all other standard biodiesel industry tests and must include
oxidative stability enhancers reasonably necessary for the commercialization of
the biodiesel.
(j) Patent Infringement. WIE is not now, and will not be at any time in the
future during the term of this Agreement, infringing upon any patents or other
intellectual property rights held by any other parties. WIE shall use
commercially reasonable efforts to cause ADM to be a third party beneficiary of
any and all representations, warranties and indemnities that WIE may receive
from any third party providing WIE with intellectual property rights concerning
the manufacture or sale of Products.
4. REPRESENTATIONS AND WARRANTIES OF ADM. In connection with providing the
services on behalf of WIE which are described in this Agreement, ADM makes the
following representations and warranties, for the benefit of WIE.
(a) Corporate Existence and Good Standing. ADM is a corporation validly existing
and in good standing under the laws of the State of Delaware. Further, ADM is
qualified to do business and is in good standing in each jurisdiction where the
conduct of its business or the ownership of its property requires such
qualification.
(b) Corporate Authority and Corporate Approval. ADM has the power and the
authority to enter into this Agreement. Further, ADM has taken all corporate
action necessary to authorize it to execute, become bound by, and perform its
duties and obligations under this Agreement.
(c) No Conflicts as to Law or Agreements. The execution of this Agreement by
ADM, the purchasing of Products from WIE by ADM, and the taking of all actions
by ADM under this Agreement do not require the consent of any person, entity, or
agency; do not violate any law, rule, or regulation; and do not breach or
violate any contract or agreement to which ADM is a party, or by which ADM is
bound.
(d) Compliance with Laws. As it relates to this Agreement, ADM is now in
compliance, and during the entire term of this Agreement will use its best
efforts to remain in compliance, with all Laws related to this Agreement.
(e) Licenses and Permits. ADM now has, and will have at all times during the
term of this Agreement, all of the licenses and permits necessary to perform its
obligations pursuant to this Agreement.

 

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*** Confidential material redacted and filed separately with the Commission.
(f) Complete and Accurate Disclosure. No representation or warranty in this
Agreement, or in any letter, certificate, exhibit, schedule, statement, or other
document furnished or to be furnished pursuant to this Agreement, contains any
untrue statement of a material fact.
5. QUANTITY. During the entire term of this Agreement, WIE agrees to sell to
ADM, and ADM agrees to purchase from WIE all of the Products produced by WIE at
the WIE Production Facilities that conforms to the warranties set forth in this
Agreement in quantities as set forth in purchase order contracts issued by ADM
to WIE. ADM and WIE will endeavor to work mutually together to run the WIE
facility at an optimum rate and profit margin given the current market
conditions at that time subject to Section 7. ***. It is understood that
glycerin, fatty acids, and soapstock are a by-product of biodiesel production
and that biodiesel sales —and therefore production from those sales —will
determine the quantity of glycerin, fatty acids, and soapstock available for
purchase/marketing by ADM. The terms and conditions of these purchases and sales
will be set out in this Agreement. ADM shall not enter into derivative
contracts, including without limitation futures contracts, for sales of
glycerin, fatty acids, or soapstock to be produced by WIE at the WIE Production
Facilities, without WIE’s prior written consent. Upon the sale of Products from
WIE to ADM pursuant to this Agreement, ***.
6. PRODUCTION ESTIMATES; PRODUCTION COSTS. As of the effective date of this
Agreement, WIE will provide ADM with WIE’s estimate of WIE’s anticipated monthly
Products production for the next twelve (12) months, to assist ADM in developing
appropriate marketing strategies for the Products to be produced by WIE.
On or before the first day of each month, WIE will provide ADM with its updated
estimate of WIE’s anticipated monthly Products production for the next twelve
(12) months, so that ADM will have Products production estimates from WIE twelve
(12) months into the future during the entire time that this Agreement is in
effect.
Once this Agreement has been terminated under Sections 1 or 2 above, WIE’s
monthly Products production estimates must continue to cover the time period
through the proposed termination date, but need not extend to any months after
the proposed termination date.
In addition, WIE will provide ADM (i) monthly with its fixed and variable costs
to produce Products for the previous month and (ii) weekly with projected margin
information on a spot and forward basis as reasonably requested by ADM.
7. MONTHLY VOLUME REQUIREMENTS. Both parties acknowledge and agree that if
market conditions and other conditions are favorable, it is their intent for WIE
to operate the WIE Production Facilities at or near full capacity, based on the
feedstock(s) used by WIE, during the entire term of this Agreement.

 

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*** Confidential material redacted and filed separately with the Commission.
8. SHORTFALLS IN THE MONTHLY VOLUME REQUIREMENTS. To the extent that WIE fails
to produce enough Products to meet actual contracted volumes in any month, ADM
will have the right, but not the obligation, to purchase Products elsewhere, in
a commercially reasonable manner, in order to cover the shortfall. All costs and
expenses related to such purchases which are in excess of the costs and expenses
that ADM would have incurred in the absence of such a shortfall will be charged
to WIE.
9. SALES LIMITATIONS. ADM will not be required to purchase Products from WIE, if
ADM does not believe in good faith that it is in the best interests of the
parties, based on market conditions, unavailability of customers, or other
factors. This means that ADM will have the discretion to both build and decrease
stored inventories of the Products produced under this Agreement, during the
entire term of this Agreement. ADM agrees to attempt to do so efficiently,
effectively, and in a manner that is in the best interests of the parties.
10. SERVICES TO BE PROVIDED BY ADM. ADM in its sole discretion will provide, in
good faith, the marketing, sales, off-site storage, and transportation services
for the Products produced under this Agreement.
11. PAYMENTS TO ADM FOR SERVICES PROVIDED. In exchange for the services provided
by ADM under this Agreement and the services provided by ADM under the Feedstock
Agreement and Services Agreement being simultaneously entered into by ADM and
WIE, WIE will pay ADM the sum of *** of the Net Products Selling Price, plus ***
of WIE’s Net Profits. The “Net Products Selling Price” shall be defined as ***.
The Net Products Selling Price portion of ADM’s fee shall be due and payable
***. WIE’s “Net Profits” shall be defined as ***. For any partial year for WIE
occurring during the term of this Agreement, “Net Profits” shall be computed
based on the portion of the fiscal year during which ADM provides services
hereunder.
12. INDEPENDENT CONTRACTOR STATUS OF ADM, AND EMPLOYMENT STATUS OF ADM’S
EMPLOYEES. Nothing contained in this Agreement, including the services to be
provided by ADM on behalf of WIE, will make ADM the agent of WIE for any
purpose. ADM and its employees shall be deemed to be independent contractors,
with full control over the manner and method of performance of the services they
will be providing on behalf of WIE under this Agreement. This Agreement is not
intended to create and shall not be construed as creating between the parties
hereto a relationship of principal and agent, joint venturers, co-partners, or
any other similar relationship, the existence of which is hereby expressly
denied by the parties.

 

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Any of the employees of ADM which are providing services on behalf of WIE under
this Agreement will remain employees of ADM. These employees will continue to be
paid by ADM and to enjoy the benefits to which they are entitled as employees of
ADM, unless otherwise provided in any separate agreement covering the services
of such employees.
13. SEPARATE ENTITIES. WIE and ADM are separate entities. Nothing in this
Agreement or otherwise shall be construed to create any rights or liabilities of
either party to this Agreement with regard to any rights, privileges, duties, or
liabilities of the other party to this Agreement, except to the extent otherwise
provided in this Agreement, or in any other agreement between the parties to
this Agreement.
14. DEVELOPMENT OF ORDERING AND SHIPPING PROCEDURES. Because WIE and ADM have
not done business in the past in the manner described in this Agreement, they
have not yet attempted to develop efficient and effective procedures related to
ordering Products, delivering Products, and shipping Products, in connection
with ADM’s Products purchases from WIE. After this Agreement becomes effective,
ADM and WIE agree to work together promptly and in good faith to develop
effective and efficient policies and procedures to cover these matters, based on
their mutual experiences working together under this Agreement.
Once those policies and procedures have been developed and mutually agreed upon,
ADM and WIE intend to document them, in the form of an addendum to this
Agreement.
15. QUALITY ASSURANCE AND QUALITY CONTROL.
(a) WIE’s Responsibility and Liability for the Products that it Produces. WIE
will ultimately be responsible for the quality of the Products produced at the
WIE Production Facilities. Further, the parties agree that WIE, and not ADM,
will be responsible and liable for all claims related to the quality of the
Products produced by WIE at the WIE Production Facilities.
(b) WIE’s Release of ADM from Liability Related to QA and QC Support. In the
event that ADM provides quality assurance (QA) and quality control
(QC) assistance to WIE under this Agreement, such assistance is a good faith
attempt by ADM to help WIE meet the Product quality standards set out in this
Agreement, for the mutual benefit of ADM and WIE. However, ADM’s provision of QA
and QC support to WIE does not constitute a warranty or a guarantee of any type
with respect to the quality of the Products produced by WIE. Thus, WIE and all
of its related persons and organizations hereby release ADM and all of its
related persons and organizations from all liability, in the absence of gross
negligence and/or willful misconduct, related to any QA and QC support provided
to WIE by ADM under this Agreement.

 

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16. PRODUCT DISTRIBUTION.
(a) Biodiesel Product Substitution. Except as provided below, the parties agree
that the biodiesel produced at the WIE Production Facilities will be considered
fungible and interchangeable with biodiesel meeting all applicable ASTM
standards for purposes of product distribution under this Agreement. ADM will
not brand, label, or otherwise identify any biodiesel sold under this Agreement
differently because that biodiesel was produced at the WIE Production
Facilities, as opposed to being produced at ADM’s own production facilities or
the production facilities of third parties. WIE must obtain certification and
maintain BQ-9000 accredited producer status.
(b) Efficient Product Distribution. When customers purchase Products from ADM
that has been produced under this Agreement, ADM may fill the orders of those
customers with Products produced at the WIE Production Facilities, Products
produced at ADM’s production facilities, or the production facilities of a third
party, or any combination thereof. ADM will attempt to manage factors such as
customer and delivery locations, order sizes, freight availability, and product
delivery logistics in a manner that will result in efficient product
distribution, for the mutual benefit of both WIE and ADM.
17. PRODUCT TESTING. At least twice each week during the term of this Agreement,
and more often at the request of ADM, WIE agrees to provide ADM with samples of
the Products produced at the WIE Production Facilities, so that ADM can test
WIE’s product quality on a regular basis. ADM agrees to provide WIE with the
information WIE will need in order to collect, pack, and ship these Products
samples to ADM in a manner satisfactory to ADM.
18. COLLECTION AND RETENTION OF PRODUCT SAMPLES.
(a) Collection of Product Samples. During the entire term of this Agreement, WIE
agrees to collect samples of not less than 250 milliliters each from each
shipment of Products that leaves the WIE Production Facilities under this
Agreement. Each such product sample will be labeled to include the production
date, the plant at which the product sample was produced, and any other
applicable information.
(b) Retention of Product Samples. WIE agrees to retain these product samples for
at least three months after the date of the shipment from which each product
sample was taken, in a manner which preserves the integrity of each individual
product sample. Further, WIE agrees to promptly provide any of these samples to
ADM, at the request of ADM.
19. THE ACTUAL PRICE FOR PRODUCTS SOLD TO ADM BY WIE. ADM agrees to pay WIE a
price for all Products sold to ADM by WIE under this Agreement calculated as
follows: the sales price charged by ADM to third party purchasers (or the sales
price to be paid by ADM, in the event of no underlying third party sale or, with
respect to biodiesel, in the event ADM intends to blend biodiesel produced at
the WIE Production Facilities and directly receive government payments or tax
credits in connection with such blending) for such Products shall be adjusted to
a FOB Wall Lake, IA price by subtracting ADM’s marketing costs related to such
Products, including freight, fuel surcharges, brokerage fees, off-site storage
and any applicable shrink, independent lab fees, and other related costs.

 

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*** Confidential material redacted and filed separately with the Commission.
In the event ADM proposes to purchase Products without an underlying sale to a
third party ***.
ADM shall write up purchase contracts with WIE that either correspond to actual
sales to end users or accepted Bids.
***.
20. INVOICES AND PAYMENTS
(a) Invoices and Payments Between WIE and ADM. WIE will invoice ADM, upon
shipment for all Products sold to ADM by WIE under this Agreement and pursuant
to the purchase contracts generated under Section 19. The parties will endeavor
to utilize an electronic data interchange to exchange information concerning
amounts due and payable pursuant to this Agreement. All payments shall be made
via ACH transfer, and the parties shall execute all documents reasonable
necessary to make and receive ACH transfers pursuant to this Agreement. For all
sales of Products by WIE to ADM pursuant to this Agreement, ADM shall remit
payment via ACH transfer to WIE for such Products no later than *** after the
loading document(s) for such Products are received by ADM.
At the time of shipment of Products, if the shipment is destined for third
party, then that shipment will apply to the purchase contract specifically
related to that shipment. If the shipment is to apply to a Bid or an ADM
specific contract, then such shipment will apply to the purchase contract that
corresponds with that position activity.
21. MONTHLY RECONCILIATION. On a monthly basis, WIE and ADM will compare and
reconcile their information related to the volumes of Products shipped from the
WIE Production Facilities including but not limited to Products sales contracts
and invoices in order to minimize disputes and help ensure that each party is
applying shipments in the same manner.
In the event that the parties are unable to agree on which party’s numbers are
correct for any month, the numbers proposed by ADM will be used, subject to
WIE’s right to challenge ADM’s books and records through its independent public
accounting firm, as described below in Section 22.

 

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22. BOOKS AND RECORDS; AUDITING.
(a) Books and Records. ADM shall furnish to WIE once every week a report of
ADM’s sales, including customers, volumes and prices, of Products produced at
the WIE Production Facilities. Such information shall be treated as confidential
by WIE pursuant to Section 23 of this Agreement.
(b) Purposes of the Audits. Twice per year during this Agreement, WIE will have
the right, at its own expense, to have qualified representatives from an
independent public accounting firm audit those portions of ADM’s books and
records which are directly related to the Products bought and sold under this
Agreement. Such audit shall occur at a mutually agreeable time. The purposes of
such audits will include confirming the information provided to WIE by ADM
regarding pricing and volume information, confirming ADM’s production and
shipment volumes for Products bought and sold under this Agreement and verifying
any other information which is reasonably related to this Agreement. The
auditors shall be from the list shown on Schedule A attached hereto, or if not
from the list shown on Schedule A, shall be mutually acceptable to both WIE and
ADM.
(c) Confidentiality Obligations. Any such independent public accountants hired
by WIE will be subject to the same confidentiality obligations that WIE is
subject to under Section 23 of this Agreement. WIE agrees to inform its
accountants of those confidentiality obligations.
(d) Challenges. WIE may challenge ADM’s books and records for any month during
this Agreement, based on an audit by WIE’s independent public accounting firm.
WIE must provide written notice of such a challenge to ADM within two (2) years
of the end of the month that is the subject of the challenge.
(e) On a yearly basis, WIE will provide ADM with copies of current balance
sheets, income statements, and other financial statements (audited if available)
related to WIE and its affiliated entities.
23. HANDLING OF CONFIDENTIAL INFORMATION. The parties acknowledge that they will
be exchanging information about their businesses under this Agreement which is
confidential and proprietary, and the parties agree to handle that confidential
and proprietary information in the manner described in this Section 23.
(a) Definition of Confidential Information. For purposes of this Agreement, the
term “Confidential Information” will mean information related to the business
operations of WIE or ADM that meets all of the following criteria:

  (i)  
The information must not be generally known to the public, and must not be a
part of the public domain, must not be information that the receiving party was
already in possession of, must not be information that the receiving party
receives from a third party without violating any confidentiality obligation
owed to the disclosing party, and must not be information that is independently
developed by the receiving party without relying upon the Confidential
Information supplied by the disclosing party.

 

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  (ii)  
The information must belong to the party claiming it is confidential, and must
be in that party’s possession.

  (iii)  
The information must have been protected and safeguarded by the party claiming
it is confidential by measures that were reasonable under the circumstances
before the information was disclosed to the other party.

  (iv)  
The disclosure of the information to third parties must be likely to result in
adverse consequences to the party claiming it is confidential.

(b) Limitations on the Use of Confidential Information. Each party agrees that
it will not use any Confidential Information that it obtains about the other
party for any purpose, other than to perform its obligations under this
Agreement.
(c) The Duty Not to Disclose Confidential Information. The parties agree that
they will not disclose any Confidential Information about each other to any
person or organization without first getting written consent to do so from the
other party. This will be the case both while this Agreement is in effect, and
for a period of three (3) years after it has been terminated.
(d) The Duty to Notify the Other Party in Cases of Improper Use or Disclosure.
Each party agrees to immediately notify the other party if either party becomes
aware of any improper use of or any improper disclosure of the Confidential
Information of the other party at any time while this Agreement is in effect,
and for a period of three (3) years after it has been terminated.
(e) Protection of the Confidential Information. Each party agrees to protect the
Confidential Information that it obtains from the other party with the same
degree of care that it uses in protecting its own Confidential Information.
(f) Return of the Confidential Information. Immediately upon the termination of
this Agreement, each party agrees to return to the other party all of the other
party’s Confidential Information that is in its possession or under its control.

 

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24. RIGHT OF OFFSET. ADM will have the right to withhold payments for the
Products that it purchases from WIE, as an offset against any payments that WIE
fails to make to ADM under this Agreement, or any other payments due to ADM from
WIE, whether pursuant to this Agreement or otherwise.
If ADM exercises its right of offset at any time, WIE may request a written
explanation from ADM that includes the amount of the offset claimed by ADM, and
the basis for ADM’s exercise of its right of offset. Upon receiving a written
request from WIE for such an explanation, ADM will promptly provide a reasonably
detailed written explanation.
25. INSURANCE.
(a) Insurance Coverage of WIE. During the entire term of this Agreement and
through any applicable statute of limitations, WIE will maintain insurance
coverage which is standard, in the reasonable opinion of ADM, for a company of
its type and size which is engaged in the business of producing and selling
Products. At a minimum, WIE’s insurance coverage must include:

  (i)  
Commercial General Liability Insurance, naming ADM as an additional insured for
all claims connected with or arising out of work covered by this Agreement, with
liability limits of at least one million dollars ($1,000,000) each occurrence
and in the aggregate.

  (ii)  
Umbrella Excess Liability Insurance, naming ADM as an additional insured for all
claims connected with or arising out of work covered by this Agreement, with
liability limits of at least five million dollars ($5,000,000) each occurrence
and in the aggregate.

  (iii)  
Automobile Liability Insurance, with liability limits of at least one million
dollars ($1,000,000) each accident.

  (iv)  
Property Insurance adequately insuring WIE’s production facilities and WIE’s
other assets against “all risk” perils of loss, on a replacement cost basis.

  (v)  
Workers’ Compensation Insurance and Employer’s Liability, to the extent required
by law and must include an endorsement with a waiver of subrogation in favor of
ADM.

On or before the effective date of this Agreement, WIE will provide ADM with a
Certificate of Insurance Coverage verifying that insurance coverage complying
with the requirements of this Section 25(a) is in place. WIE shall provide ADM
with notice of any cancellation or material modification of any policies
required herein in accordance with policy provisions.

 

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(b) Insurance Coverage of ADM. During the entire term of this Agreement and
through any applicable statute of limitations, ADM will maintain insurance
coverage which is standard, in the reasonable opinion of WIE, for a company of
its type and size which is engaged in the duties required of ADM pursuant to
this Agreement. At a minimum, ADM’s insurance coverage must include:

  (i)  
Commercial General Liability Insurance, naming WIE as an additional named
insured for all claims connected with or arising out of work covered by this
Agreement, with liability limits of at least one million dollars ($1,000,000)
each occurrence and in the aggregate.

  (ii)  
Umbrella Excess Liability Insurance, naming WIE as an additional insured for all
claims connected with or arising out of work covered by this Agreement, with
liability limits of at least five million dollars ($5,000,000) each occurrence
and in the aggregate.

  (iii)  
Automobile Liability Insurance, with liability limits of at least one million
dollars ($1,000,000) each accident.

  (iv)  
Property Insurance, adequately insuring the tools and equipment of ADM utilized
by ADM at those ADM facilities involved in performing its obligations under this
Agreement, on a replacement cost basis or demolition basis, as ADM determines in
its reasonable discretion.

  (v)  
Workers’ Compensation Insurance and Employer’s Liability, to the extent required
by law and must include an endorsement with a waiver of subrogation in favor of
WIE.

On or before the effective date of this Agreement, ADM will provide WIE with a
Certificate of Insurance Coverage verifying that insurance coverage complying
with the requirements of this Section 25(b) is in place. WIE shall provide ADM
with notice of any cancellation or material modification of any policies
required herein in accordance with policy provisions.
(c) Insurance Companies. All policies required to be procured by WIE pursuant to
Section 25(a) and by ADM pursuant to Section 25(b) shall be procured from
insurance companies listed in the current A.M. Best’s Insurance Guide as
possessing a minimum policyholder’s rating of “A-.” If allowed by state law, ADM
can meet its obligations under Section 25(b)(iv) of the Agreement by becoming a
licensed self-insurer for workers’ compensation insurance. If ADM chooses to
become a licensed self-insurer, it will purchase an excess workers’ compensation
policy in excess of $250,000 up to statutory limits.

 

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(d) Subrogation. No indemnity shall be paid to a party under this Agreement
where the claim, damage, liability, loss or expense incurred would have been
covered by insurance proceeds if the incident was or was required to be insured
against by the party for whose benefit such indemnity would run and such party
failed to maintain such insurance. WIE and ADM shall each exercise commercially
reasonable efforts to cause any insurance policies obtained by them pursuant to
this Agreement to have the effect of waiving any right of subrogation by the
insurer of one party against the other party or its insurer. Each party hereby
releases the other from any claims to the extent covered by collected insurance
proceeds obtained by the parties pursuant to this Agreement.
26. INDEMNIFICATION.
(a) If any third party makes a claim against ADM or any person or organization
related to ADM as a result of (i) the actions or omissions of WIE or any person
or organization related to WIE (excluding ADM), (ii) a breach of one or more
representations or warranties made by WIE hereunder; or (iii) the quality or
condition of the Products produced by or on behalf of WIE except as may be
caused by feedstock produced by ADM at an ADM facility failing to conform to the
representations and warranties furnished by ADM to WIE pursuant to any
individual contract entered into by the parties for the origination of such ADM
feedstock, then WIE agrees to indemnify ADM and its related persons and
organizations, and to hold all of them harmless from any liabilities, damages,
costs, and/or expenses, including costs of litigation and reasonable attorneys’
fees, which they incur as a result of any such claims made against them by third
parties; provided, however, that this indemnification provision shall not apply
with respect to any damage to property, personal injury, including death, or
violation of any law, order or regulation to the extent resulting from the gross
negligence or willful misconduct of ADM.
(b) If any third party makes a claim against WIE or any person or organization
related to WIE as a result of (i) the gross negligence or willful misconduct of
ADM or any person or organization related to ADM (excluding WIE); or (ii) a
breach of one or more representations or warranties made by ADM hereunder, then
ADM agrees to indemnify WIE and its related persons and organizations, and to
hold all of them harmless from any liabilities, damages, costs, and/or expenses,
including costs of litigation and reasonable attorneys’ fees, which they incur
as a result of any such claims made against them by third parties; provided,
however, that this indemnification provision shall not apply with respect to any
damage to property, personal injury, including death, or violation of any law,
order or regulation to the extent resulting from the gross negligence or willful
misconduct of WIE.

 

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*** Confidential material redacted and filed separately with the Commission.
27. LIMITATIONS ON LIABILITY. UNDER NO CIRCUMSTANCES WILL THE PARTIES BE LIABLE
FOR INDIRECT AND/OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO LOST
PROFITS, LOSS OF GOODWILL, EVEN IF THE PARTIES HAVE BEEN MADE AWARE OF THE
POSSIBILITY OF SUCH DAMAGES.
28. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AGREEMENTS, AND CLAIMS. All
representations, warranties, and agreements made in connection with this
Agreement will survive the termination of this Agreement. The parties will
therefore be able to pursue claims related to those representations, warranties,
and agreements after the termination of this Agreement, unless those claims are
barred by the applicable statutes of limitation.
Similarly, any claims that the parties have against each other that arise out of
actions or omissions that take place while this Agreement is in effect will
survive the termination of this Agreement. This means that those claims may be
pursued by the parties even after the termination of this Agreement, unless
those claims are barred by the applicable statutes of limitation.
29. COSTS AND ATTORNEYS’ FEES IN DISPUTE RESOLUTION PROCEEDINGS, AND FOLLOWING
UNCURED BREACHES. The parties agree that the prevailing party in any dispute
resolution proceedings related to this Agreement shall be entitled to collect
all of its costs, expenses, and reasonable attorneys’ fees from the other party.
The same shall be true if one of the parties incurs costs, expenses, or
attorneys’ fees in connection with the enforcement or the protection of its
rights under this Agreement, as a result of an uncured breach by the other
party. The breaching party shall reimburse the other party for costs, expenses,
and reasonable attorneys’ fees incurred after the expiration of the applicable
cure period, regardless of whether or not the enforcement or the protection of
the rights of the other party involved judicial proceedings, arbitration
proceedings, or other formal dispute resolution proceedings.
30. TITLE AND RISK OF LOSS. With regard to the Products sold to ADM by WIE under
this Agreement, title to and risk of loss for such Products will pass from WIE
to ADM ***.
31. GOVERNING LAW. The parties agree that the Agreement will be governed by,
interpreted under, and enforced in accordance with the substantive laws of the
State of Iowa, without regard to its conflict of law principles. Any action for
enforcement, damages or otherwise, will have its exclusive venue in the Polk
County District Court in the State of Iowa or the United States District Court
for the Southern District of Iowa. Each of ADM and WIE hereby irrevocably waives
all right to trial by jury in any action, proceeding or counterclaim arising out
of or relating to this Agreement.

 

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32. NOTICES. All notices related to this Agreement which relate to breaches of
this Agreement, indemnification claims or other claims being made under this
Agreement, challenges to the books and records of the parties, or the
termination of this Agreement (the “Significant Notices”) must be in writing,
and must be delivered personally or sent by certified or registered mail, return
receipt requested. All Significant Notices will be effective, and will be deemed
to have been received, upon the actual receipt of the Significant Notice by its
intended recipient, meaning either WIE or ADM.
Subject to change upon ten (10) days written notice to the other party, all
written notices to WIE provided for in this Agreement will be addressed as
follows:
Western Iowa Energy, LLC
1220 S. Center St., P.O. Box 399
Wall Lake, IA, 51466
Attn: General Manager
and notices to ADM will be addressed as follows:
Archer-Daniels-Midland Company
4666 Faries Parkway
Decatur, Illinois 62526
Attn: Vice President, Global Oleo Chemicals
with a copy to:
Archer-Daniels-Midland Company
4666 Faries Parkway
Decatur, Illinois 62526
Attn: General Counsel
Written notices required or permitted under this Agreement which are not
Significant Notices may be hand delivered, sent by mail, or sent via facsimile.
These written notices will be effective, and will be deemed to have been
received, upon the actual receipt of the written notices by their intended
recipients, meaning either WIE or ADM.
33. ASSIGNMENT; SUCCESSORS AND ASSIGNS. Because of ADM’s concerns about product
quality, and because of WIE’s concerns about the proper performance of the
services to be provided by ADM, neither party may assign its rights or
obligations under this Agreement without the written consent of the other party,
which consent will not be unreasonably withheld. This Agreement will be binding
on the successors of the parties, and their permitted assigns.

 

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34. NO WAIVER. If any party to this Agreement fails to insist upon strict
performance of any obligation under this Agreement, that failure will not result
in a waiver of that party’s right to demand strict performance in the future.
This will still be the case, no matter how long the failure to insist upon
strict performance continues.
35. ENTIRE AGREEMENT. This Agreement, and the other documents related to the
business transactions described in this Agreement which are referred to either
generally or specifically in this Agreement, set out the entire agreement
between the parties regarding the business transactions described in this
Agreement. This Agreement and those other documents supersede all prior
understandings between the parties with respect to the subject matter of this
Agreement. The parties agree that there are no other oral or written
understandings or agreements between them regarding the subject matter of this
Agreement.
36. AMENDMENT, MODIFICATION, OR WAIVER. No amendment, modification, or waiver of
any provision of this Agreement or any other related document will be effective
unless it is made in writing, unless it is signed by the parties to be bound by
it, and unless it clearly specifies the extent and nature of the amendment,
modification, or waiver.
37. SEVERABILITY. If any provision of this Agreement or any other related
document is held to be invalid or unenforceable under any applicable law, that
holding will not affect the validity or enforceability of the rest of this
Agreement, or the other related document. Also, any provision of this Agreement
or any other related document which is held to be invalid or unenforceable will
not be completely invalidated, but will instead be considered amended to the
extent necessary to remove the cause of the invalidity or unenforceability.
38. INTERPRETATION. This Agreement and any other documents related to it will be
interpreted in a fair and neutral manner, without favoring one party over the
other. No provision of this Agreement or any other document related to it will
be interpreted for or against either party because the provision was drafted by
that party, or its legal representative.
39.) DEFAULT. In the event of any default regarding the provisions of this
Agreement, the parties shall be able to exercise all available legal and
equitable rights and remedies. However, the parties agree that with respect to
the individual contracts entered into regarding the purchase and sale of
Products, the parties’ rights and remedies regarding default under such
individual contracts shall be governed by the following provisions of this
Section 39.
Should either the seller or the buyer fail to fulfill the requirements of any
term of the contract, the party so failing shall be considered in default.
Should the seller be in default the buyer shall have the right to buy in the
open market goods of the kind, quantity, quality and description specified in
the defaulted contract. Such right, if exercised, shall be exercised not later
than the close of the seventh calendar day after the buyer becomes aware of the
default, provided that the buyer shall have given prior notice by telegram,
telex or telecopier to the seller of his intention so to buy. The seller shall
reimburse the buyer in the amount of any direct market loss. Should the seller
be dissatisfied with the price of the covering purchase, or if the buyer’s right
to cover the defaulted contract is not exercised as provided herein, then the
matter of any damages shall be settled by arbitration. Damages shall be measured
by the difference between the contract price and the fair market value of the
contract commodity on the day the defaulted contract is covered, plus freight,
insurance and other costs to the extent applicable.

 

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Should the buyer be in default the seller shall have the right to sell in the
open market goods of the kind, quantity, quality and description specified in
the defaulted contract. Such right, if exercised, shall be exercised not later
than the close of the seventh calendar day after the seller becomes aware of the
default, provided that the seller shall have given prior notice by telegram,
telex or telecopier to the buyer of his intention so to sell. The buyer shall
reimburse the seller in the amount of any direct market loss. Should the buyer
be dissatisfied with the price of the covering sale, or if the seller’s right to
cover the defaulted contract is not exercised as provided herein, then the
matter of any damages shall be settled by arbitration. Damages shall be measured
by the difference between the contract price and the fair market value of the
contract commodity on the day the defaulted contract is covered, plus freight,
insurance and other costs to the extent applicable. If for any reason sale of
the defaulted merchandise should prove to be impossible, then the seller shall
be fully reimbursed for the value of such merchandise plus any and all expenses
incurred as a result of the buyer’s default.
Should either party to a contract suspend payments, admit bankruptcy or commit
an act of insolvency, the other party need not await maturity of the contract or
any unfulfilled portion thereof in order to take appropriate action, and under
these circumstances, after giving one business day’s notice by telegram, telex
or telepcopier, may resell or repurchase an appropriate quantity of the contract
material and thereupon earn the right to recover any direct market loss
incurred.
40. UNDERSTANDING OF AND VOLUNTARY EXECUTION OF THE AGREEMENT. The parties
acknowledge and agree that they have read this Agreement, that they understand
it, and that they are entering into it willingly and voluntarily. The parties
further acknowledge that they either consulted with their respective legal
counsel, or had ample opportunity to consult with their respective legal
counsel, before entering into this Agreement.
41. HEADINGS AND CAPTIONS. The headings and captions of the sections and
subsections of this Agreement are inserted for convenience of reference only,
and do not constitute part of the Agreement.
42. SUPERSEDING OF OTHER AGREEMENTS. It is the intent of the parties that this
Agreement be consistent with any other documents or agreements related to the
same subject matter covered in this Agreement. However, in the event of any
inconsistencies, the parties agree that this Agreement will supersede and take
priority over the other inconsistent documents or agreements, except in cases
where there is specific contract language to the contrary which has been
identified as contradicting this Agreement and has been expressly agreed to in
writing by both parties.

 

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43. FORCE MAJEURE. Neither party shall be liable for delay in performance or
failure to perform (excluding the payment of money) when such delay or failure
is due to unforeseen causes beyond its control and without its fault or
negligence, including but not limited to acts of God or the public enemy,
governmental action, fires, floods, earthquakes, epidemics, quarantine
restrictions, labor difficulties, riots, insurrections, freight embargoes, plant
breakdown, loss of raw material supply, and unusually severe weather.
44. DISCLOSURE OF MATERIAL CONTRACTS. The parties acknowledge that this
Agreement may need to be disclosed to the Securities Exchange Commission or
other regulators, and agree to allow such disclosure upon receipt of an
appropriate request. The parties hereby agree to seek redaction and confidential
treatment of the financial and/or other terms of this Agreement, including
without limitation any compensation to be paid hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
day and year set forth above.
ARCHER-DANIELS-MIDLAND COMPANY

         
By:
  /s/ M. J. Livergood
 
Its: V.P.    
 
        WESTERN IOWA ENERGY, LLC    
 
       
By:
  /s/ William J. Horan
 
Its: Chairman    

 

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SCHEDULE A
(List of Auditors)
1. Eide Bailly LLP
2. Boulay, Heutmaker, Zibell & Co. P.L.L.P.
3. McGladrey & Pullen, LLP

 

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