Exhibit 10.4

 

MARKETING AGREEMENT

 

THIS MARKETING AGREEMENT (this “Agreement”) is  made and entered into this 20th
day of November, 2009 (the “Effective Date”), by and between MGP
Ingredients, Inc., a Kansas corporation (“MGPI”), and Illinois Corn Processing,
LLC, a Delaware limited liability company (“Manufacturer”).

 

RECITALS

 

WHEREAS, MGPI has entered into a Limited Liability Company Agreement of
Manufacturer dated as of the Effective Date (the “LLC Agreement”) with Illinois
Corn Processing Holdings LLC (“Holdings”), in accordance with the requirements
of that certain LLC Interest Purchase Agreement dated the Effective Date (the
“Purchase Agreement”) between MGPI and Holdings whereby Holdings acquired a 50%
interest in Manufacturer; and

 

WHEREAS, MGPI and Holdings will operate the alcohol production facility located
at 1301 S. Front Street, Pekin, Illinois 61554 (the “Plant”), which Plant is
capable of producing both the Products (as defined herein) and also fuel ethanol
alcohol; and

 

WHEREAS, this Agreement is the “Food Grade Alcohol Off-Take Agreement” (as such
term is defined in the LLC Agreement and the Purchase Agreement).

 

MGPI and Manufacturer, intending to be legally bound, hereby agree as follows:

 

1.             MANUFACTURE AND SALE OF THE PRODUCTS.  SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT, MANUFACTURER WILL MANUFACTURE AND DELIVER
FOOD-GRADE AND INDUSTRIAL-USE ALCOHOL PRODUCTS (THE “PRODUCTS”) IN ACCORDANCE
WITH THE SPECIFICATIONS (THE “SPECIFICATIONS”), EACH AS DESCRIBED IN EXHIBIT A,
FOR MGPI, AND MGPI WILL PURCHASE, TRANSPORT, MARKET AND SELL THE PRODUCTS
PURSUANT TO THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT.

 

2.             TERM.  SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT,

 

(A)           THE INITIAL TERM OF THIS AGREEMENT WILL COMMENCE ON THE EFFECTIVE
DATE AND CONTINUE FOR ONE YEAR (THE “INITIAL TERM”).  THIS AGREEMENT WILL
AUTOMATICALLY RENEW FOR SUCCESSIVE ONE (1) YEAR TERMS THEREAFTER (TOGETHER WITH
THE INITIAL TERM, THE “TERM”) UNLESS AND UNTIL (I) MGPI PROVIDES WRITTEN NOTICE
OF ITS INTENT TO TERMINATE THIS AGREEMENT NOT LESS THAN NINETY (90) DAYS PRIOR
TO THE END OF THE THEN CURRENT TERM OR (II) MGPI OR ITS AFFILIATES CEASE TO BE A
MEMBER OF MANUFACTURER.

 

(B)           THE MATERIAL TERMS OF THIS AGREEMENT SHALL BE REVIEWED BY THE
PARTIES APPROXIMATELY THIRTY (30) DAYS PRIOR TO EACH ANNIVERSARY OF THE
EFFECTIVE DATE (EACH, A “CONTRACT YEAR”), AND EITHER PARTY MAY PROPOSE IN
WRITING CHANGES OR MODIFICATIONS DETERMINED IN GOOD FAITH BY SUCH PARTY TO BE
NECESSARY OR DESIRABLE TO FURTHER THE PURPOSES OF THE PARTIES’ RESPECTIVE
EXPECTATIONS OF THE ECONOMIC BENEFITS ARISING FROM THIS AGREEMENT AND THEIR
LIMITED LIABILITY COMPANY INTERESTS IN MANUFACTURER.  IN THE EVENT THAT THE
PARTIES ARE UNABLE TO MUTUALLY AGREE UPON ANY SUCH CHANGES OR MODIFICATIONS

 

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WITHIN SIXTY (60) DAYS AFTER SUCH MODIFICATIONS ARE FIRST PROPOSED, THE TERM
SHALL BE SHORTENED SUCH THAT  THIS AGREEMENT SHALL TERMINATE AT THE END OF THE
FOLLOWING CONTRACT YEAR UNLESS THE PARTY PROPOSING SUCH CHANGES OR MODIFICATIONS
AGREES TO CONTINUE WITH THE THEN CURRENT TERMS OF THIS AGREEMENT.

 

(C)           IN ANY EVENT, THIS AGREEMENT MAY BE TERMINATED BY THE PARTIES
PRIOR TO THE END OF THE THEN CURRENT TERM IN ACCORDANCE WITH SECTION 21.

 

3.             PURCHASE REQUIREMENTS.

 

(A)           BOTH PARTIES RECOGNIZE THAT PRODUCT(S) WILL BE SOLD UNDER
CONTRACTS THAT MAY SPAN A VARIETY OF TIME PERIODS AND MAY CONTAIN CUSTOMER
SPECIFIC DELIVERY TERMS THAT WILL REQUIRE FLEXIBILITY AND PLANNING AMONG
MANUFACTURER, MGPI, AND THE CUSTOMER.  THIS SECTION 3 IS NOT INTENDED TO
PRECLUDE ARRANGEMENTS NOT SPECIFICALLY ADDRESSED HEREIN PROVIDED THAT
MANUFACTURER AND MGPI MUTUALLY AGREE, IN WRITING, TO THOSE ARRANGEMENTS.

 

(B)           MGPI IN FULFILLING ITS ROLE AS MARKETER WILL SOLICIT AND IDENTIFY
MARKET OPPORTUNITIES FOR PRODUCT(S) AND WILL PRESENT EACH SUCH OPPORTUNITY,
TOGETHER WITH MGPI’S COMMERCIAL RECOMMENDATIONS, TO MANUFACTURER FOR APPROVAL. 
MANUFACTURER WILL APPROVE OF, OR PROVIDE SPECIFIC GUIDELINES THAT ALLOW MGPI TO
CONCLUDE NEGOTIATIONS RELATING TO, THE APPLICABLE OPPORTUNITY.  WHEN A SALE IS
COMPLETED THAT RELATES TO PRODUCT(S) TO BE SHIPPED FROM THE PLANT, THOSE SALES
WILL BE ADDED TO THE FORWARD CONTRACT OBLIGATIONS OF THE PLANT (THE “FORWARD
CONTRACT OBLIGATIONS”).  THE FORWARD CONTRACT OBLIGATIONS SHALL BE ALL COMPLETED
SALES OF PLANT PRODUCT(S)).

 

(C)           AS PART OF THE PROCESS FOR BOOKING FIXED PRICED FORWARD CONTRACT
OBLIGATIONS, MGPI AND MANUFACTURER WILL AGREE ON A MARGIN MANAGEMENT STRATEGY
THAT RELATES TO THAT SALE THAT WILL INCLUDE ITEMS SUCH AS RAW MATERIAL
ORIGINATION AND HEDGING STRATEGIES, PRODUCT HEDGING STRATEGIES,  INVENTORY
MANAGEMENT, FIXING/LOCKING IN TRANSFER PRICES, AND ANY OTHER ITEMS THAT THE
PARTIES NEED TO CONSIDER.

 

(D)           MGPI WILL MAINTAIN REGULAR COMMUNICATIONS WITH ITS CUSTOMERS TO
DETERMINE AS SOON AS POSSIBLE THE DELIVERY/SHIPPING SCHEDULE TO MEET THE FORWARD
CONTRACT OBLIGATIONS AND CUSTOMER NEEDS.

 

(E)           ON OR BEFORE THE 5TH OF EACH MONTH DURING THE TERM, MGPI WILL
FURNISH TO MANUFACTURER AN UPDATED THREE (3) MONTH ROLLING DELIVERY SCHEDULE
FORECAST, THAT SETS FORTH MGPI’S BEST ESTIMATION, BASED UPON FORWARD CONTRACT
OBLIGATIONS AND CUSTOMER REQUIREMENTS, FOR THE PRODUCTS BY SKU DURING FOLLOWING
THREE (3) MONTH PERIOD.  EACH ROLLING FORECAST WILL SET FORTH:

 

(I)            THE QUANTITY, BY SKU, AND DESIRED SHIPPING DATES FOR FORWARD
CONTRACT OBLIGATIONS WITH FIRM DELIVERY DATES.

 

(II)           THE QUANTITY, BY SKU, AND FORECAST DELIVERY DATES FOR FORWARD
CONTRACT OBLIGATIONS THAT REFLECTS BEST INFORMATION FROM THE CUSTOMER AS WELL AS
ANY VARIABILITY IN DELIVERIES PERMITTED IN THE CONTRACT TERMS.

 

(III)          A PROJECTION OF WHETHER MANUFACTURER AND MGPI WILL NOT BE ABLE TO
FULFILL ALL DELIVERIES DURING THE PERIOD AND NEED TO LIMIT ALLOCATIONS OF
PRODUCT(S) TO CUSTOMERS.

 

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(IV)          PRESENT ANY VALUE CREATING ARBITRAGE OPPORTUNITIES FOR SHIFTING
DELIVERIES BETWEEN MGPI’S ATCHISON, KANSAS PLANT AND MANUFACTURER’S PLANT.

 

(V)           PROPOSE TO MANUFACTURER THE QUANTITY OF PRODUCT(S) MGPI SUGGESTS
MARKETING IN THE SPOT MARKET DURING THE FORECAST PERIOD.  THE FIRST MONTH OF
EACH THREE MONTH FORECAST (THE “NEARBY MONTH”) WILL INCLUDE A FORECAST VOLUME BY
SKU TO BE MARKETED IN THE SPOT MARKET (THE “PROPOSED SPOT VOLUME”).  PROPOSED
SPOT VOLUMES SHALL NOT EXCEED 25% OF THE NEARBY MONTH FORWARD CONTRACT
OBLIGATIONS UNLESS SPECIFICALLY AGREED BY MANUFACTURER.

 

(F)            MGPI WILL PROVIDE A SPECIAL QUARTERLY FORECAST 45 DAYS PRIOR TO
THE COMMENCEMENT OF EACH CALENDAR QUARTER TO ASSIST MANUFACTURER IN DETERMINING
ITS OVERALL PRODUCTION ALLOCATIONS BETWEEN FUEL GRADE ETHANOL AND PRODUCT(S).

 

(G)           MGPI SHALL BE REQUIRED TO PURCHASE AND ACCEPT DELIVERY OF ALL
APPROVED FORWARD CONTRACT OBLIGATIONS IN ACCORDANCE WITH THE DELIVERY TERMS OF
THOSE CONTRACTS.

 

(H)           MANUFACTURER WILL ACCEPT OR REJECT ALLOCATION OF ALL OR A PORTION
OF THE APPLICABLE PROPOSED SPOT VOLUME SET FORTH IN A FORECAST NOT LESS THAN TEN
(10) DAYS PRIOR TO THE COMMENCEMENT OF THE NEARBY MONTH, IT BEING THE CLEARLY
UNDERSTOOD OBJECTIVE OF MANUFACTURER TO MAXIMIZE OVERALL PLANT PROFIT.

 

4.             PURCHASE ORDERS.

 

(A)           MGPI WILL SUBMIT TO MANUFACTURER WRITTEN PURCHASE ORDERS AS
APPROPRIATE FOR THE PRODUCTS (EACH A “PURCHASE ORDER”).  UPON ACCEPTANCE OR
CONFIRMATION OF A PURCHASE ORDER BY MANUFACTURER, SUCH PURCHASE ORDER AND THIS
AGREEMENT WILL COMPRISE ALL THE TERMS WHICH GOVERN THE MANUFACTURE, SUPPLY AND
PURCHASE OF THE SPECIFIC PRODUCT(S) ORDERED.  ANY TERMS AND CONDITIONS ON ANY
PURCHASE ORDER, ACKNOWLEDGEMENT, INVOICE, BILL OF LADING OR OTHER DOCUMENT THAT
ARE INCONSISTENT WITH OR ADDITIONAL TO THE TERMS AND CONDITIONS IN THIS
AGREEMENT, ARE HEREBY EXPRESSLY REJECTED AND WILL HAVE NO FORCE OR EFFECT,
UNLESS OTHERWISE AGREED TO BY THE PARTIES.  EACH PURCHASE ORDER WILL SET FORTH:

 

(I)            QUANTITIES AND SKUS OF THE PRODUCTS,

 

(II)           DESIRED DELIVERY DATES CONSISTENT WITH THE APPLICABLE
DELIVERY/LOAD SCHEDULE (AS DEFINED HEREIN) ESTABLISHED BY THE PARTIES,

 

(III)          SHIPPING AND BILLING INSTRUCTIONS,

 

(IV)          SHIPPING AND BILLING ADDRESS(ES), AND

 

(V)           ANY OTHER INFORMATION REGARDING THE PRODUCTS AS MUTUALLY AGREED TO
BETWEEN THE PARTIES.

 

(B)           MANUFACTURER WILL PROVIDE MGPI WITH TIMELY NOTIFICATION IF IT IS
UNABLE TO COMPLETE ALL ASPECTS OF A PURCHASE ORDER.

 

5.             DELIVERY.

 

(A)           MGPI AND MANUFACTURER SHALL WORK TOGETHER TO ESTABLISH A MUTUALLY
AGREEABLE DELIVERY/LOAD OUT SCHEDULE FOR THE PRODUCT(S) PURCHASED PURSUANT TO
THE FORWARD CONTRACT OBLIGATIONS AND ACCEPTED SPOT VOLUME (THE “DELIVERY/LOAD

 

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SCHEDULE”).  THE DELIVERY/LOAD SCHEDULE SHALL BE AGREED TO BY THE PARTIES ON A
MONTHLY BASIS PRIOR TO THE COMMENCEMENT OF ANY NEARBY MONTH DURING THE TERM AND
IT SHALL BE EFFECTIVE FOR THE NEARBY MONTH, ADJUSTED AS MUTUALLY AGREED TO BY
THE PARTIES.

 

(B)           MGPI SHALL MAKE AVAILABLE TO MANUFACTURER, A SUFFICIENT NUMBER OF
TRUCKS, RAILCARS, MARINE BARGES, AS APPLICABLE, TO RECEIVE AND TRANSPORT THE
PRODUCT(S) BEING DELIVERED BY MANUFACTURER HEREUNDER AT THE TIMES SUCH
PRODUCT(S) ARE READY TO BE DELIVERED BY MANUFACTURER. MGPI SHALL ASSURE THAT ALL
SUCH TRUCKS, RAILCARS, MARINE VESSELS ARE PROPERLY MAINTAINED, IN PROPER WORKING
CONDITION, FREE FROM LEAKS AND CONTAMINATION AND MEET ALL APPLICABLE FEDERAL,
STATE AND LOCAL LAWS AND REGULATIONS, AS WELL AS ALL REQUIREMENTS INSTITUTED BY
THE APPLICABLE COMMON CARRIER(S).

 

(C)           TITLE TO AND ALL RISK LOSS OF OR DAMAGE TO PRODUCT(S) DELIVERED
HEREUNDER SHALL PASS AS FOLLOWS:  WHEN BY OR INTO ANY MARINE VESSEL, AT THE
FLANGE BETWEEN THE VESSEL’S PERMANENT HOSE CONNECTION AND THE SHORE LINE; WHEN
INTO ANY TRUCK OR TANK CAR, AS THE PRODUCT ENTERS THE RECEIVING EQUIPMENT, OR,
IF RECEIVED BY A COMMON CARRIER, WHEN ACCEPTED BY THE CARRIER FOR SHIPMENT; WHEN
INTO STORAGE (OTHER THAN FROM VESSELS), AS THE PRODUCT ENTERS THE TANK; AND WHEN
BY IN TANK TRANSFER, ON THE EFFECTIVE DATE OF THE TRANSFER.  DELIVERY SHALL BE
DEEMED TO BE COMPLETE WHEN TITLE TO AND ALL RISK OF LOSS IS TRANSFERRED TO MGPI
AS SPECIFIED HEREIN.

 

(D)           ALL PURCHASE ORDERS WILL BE DELIVERED TO MGPI FOB (AS DEFINED IN
INCOTERMS 2000) PLANT WITHIN THE SCHEDULED DELIVERY WINDOW AS SET FORTH ON THE
APPLICABLE DELIVERY/LOAD SCHEDULE, OR AS OTHERWISE AGREED TO BY THE PARTIES. 
THE MARINE TERMS SET FORTH IN EXHIBIT D SHALL APPLY FOR DELIVERIES TO MARINE
VESSEL.  MANUFACTURER SHALL PROVIDE MGPI WITH ALL NECESSARY AND CUSTOMARY
SHIPPING DOCUMENTS, INCLUDING, WITHOUT LIMITATION, BILL OF LADING, CERTIFICATE
OF ANALYSIS (“COA”), CERTIFICATES OF QUANTITY.

 

(E)           MANUFACTURER SHALL PROVIDE CURRENT MATERIAL SAFETY DATA SHEETS TO
ALL CARRIERS AND TO MGPI FOR ALL DELIVERED PRODUCT.

 

(F)            MGPI WILL ARRANGE FOR SHIPMENT OF ALL PRODUCT(S).  MANUFACTURER
WILL LOAD PRODUCT(S) INTO MGPI PROVIDED EQUIPMENT FOR SHIPMENT DURING REGULAR
HOURS ESTABLISHED BY MANUFACTURER FOR SUCH DELIVERIES AND IN ACCORDANCE WITH
REASONABLE INSTRUCTIONS FROM MGPI ACCOMPANYING AN ACCEPTED AND CONFIRMED
PURCHASE ORDER.  MGPI SHALL ENSURE THAT EQUIPMENT AND PRODUCT IS REMOVED FROM
THE PLANT PROPERTY AS SOON AS POSSIBLE AFTER LOADING IS COMPLETE.  MANUFACTURER
RESERVES THE RIGHT TO IMPOSE SURCHARGES ON DELIVERIES REQUEST OUTSIDE ITS
REGULAR HOURS.

 

(G)           MANUFACTURER AND MGPI WILL FURNISH EACH OTHER REASONABLY
SUFFICIENT INFORMATION TO VERIFY SHIPMENT OF THE PRODUCTS IN A MANNER OF
COMMUNICATION THAT WILL BE MUTUALLY ACCEPTABLE TO BOTH MANUFACTURER AND MGPI. 
MANUFACTURER WILL MAINTAIN REASONABLY DETAILED RECORDS OF ALL PRODUCTS LOADED
AND SHIPPED FOR A MINIMUM OF THREE (3) YEARS, OR SUCH LONGER PERIOD AS REQUIRED
UNDER ALCOHOL AND TOBACCO TAX AND TRADE BUREAU REGULATIONS.

 

(H)           ALL AGENTS AND EMPLOYEES OF MGPI, WHEN ON PLANT PROPERTY, WILL
ADHERE TO SUCH RULES AND REGULATIONS AS MAY BE ESTABLISHED BY MANUFACTURER,
INCLUDING THOSE CONCERNING SAFETY AND ROUTING PROCEDURES.

 

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6.             PRICING; PAYMENT AND COMMISSIONS.

 

(A)           PAYMENT:

 

(I)            UNLESS OTHERWISE SPECIFIED IN THE APPLICABLE PURCHASE ORDER, MGPI
SHALL MAKE PAYMENT VIA WIRE TRANSFER OF IMMEDIATELY AVAILABLE FEDERAL FUNDS OR
ACH PAYMENT TO MANUFACTURER IN U.S. DOLLARS UPON COMPARABLE TERMS AS MGPI’S
CUSTOMERS FOR THE PRODUCTS, BUT IN ANY EVENT TERMS SHALL NOT EXCEED THIRTY (30)
DAYS AFTER RECEIPT OF A LEGIBLE, UNALTERED COPY OF THE INVOICE AND SUPPORTING
DOCUMENTS.  IF THE INVOICE IS RECEIVED AFTER NOON OF ANY ONE DATE, SUCH INVOICE
WILL BE DEEMED RECEIVED ON THE NEXT DAY.

 

(II)           IN THE EVENT THE PAYMENT DUE DATE FALLS ON A SATURDAY OR A NEW
YORK BANKING HOLIDAY OTHER THAN A MONDAY, THEN PAYMENT SHALL BE MADE ON THE
NEAREST PRECEDING NEW YORK BANKING DAY.  IF THE PAYMENT DUE DATE FALLS ON A
SUNDAY OR A MONDAY THAT IS A BANKING HOLIDAY IN NEW YORK, THEN PAYMENT SHALL BE
MADE ON THE NEXT NEW YORK BANKING DAY.

 

(III)          IF MGPI DOES NOT TIMELY PAY AN UNDISPUTED INVOICE AND DOES NOT
CURE SUCH NON-PAYMENT WITHIN FIVE (5) NEW YORK BANKING DAYS FOLLOWING
MANUFACTURER’S WRITTEN NOTICE THEREOF, MGPI SHALL BE DEEMED IN DEFAULT OF THIS
AGREEMENT AND SUCH UNPAID AMOUNTS WILL INCUR INTEREST AT THE LESSER OF (I) ONE
AND A HALF PERCENT PER MONTH (18% PER ANNUM) OR (II) THE MAXIMUM RATE ALLOWED BY
LAW.  MGPI SHALL PAY ALL OF MANUFACTURER’S COSTS (INCLUDING ATTORNEYS’ FEES AND
COURT COSTS) OF COLLECTING PAST DUE AMOUNT.  EITHER PARTY MAY CHANGE ITS INVOICE
ADDRESS AND/OR FAX NUMBER UPON NOTICE TO THE OTHER PARTY GIVEN AT LATEST TEN
(10) DAYS IN ADVANCE OF THE EFFECTIVE DATE OF THE CHANGE

 

(B)           MANUFACTURER SHALL INVOICE MGPI FOR **** DELIVERY AT THE **** COST
DEFINED IN EXHIBIT B.  ****

 

(C)           MANUFACTURER SHALL PRESENT ITS CALCULATION OF THE **** COST ****.

 

(D)           MGPI SHALL REMIT **** PAYMENTS DUE MANUFACTURER WITHIN **** DURING
THE TERM.  IN CONNECTION WITH SUCH PAYMENT, MGPI SHALL PRESENT ITS CALCULATION
OF THE ****.

 

7.             AUDIT.

 

(A)           EACH PARTY WILL PERMIT THE OTHER PARTY, AT ITS SOLE EXPENSE, UPON
REASONABLE PRIOR NOTICE AND DURING NORMAL BUSINESS HOURS, TO AUDIT ITS
ACCOUNTING RECORDS AND OTHER DOCUMENTS WHICH SPECIFICALLY RELATE TO THE
CALCULATION OF **** COST IN ACCORDANCE WITH EXHIBIT B AND **** PAYMENT IN
ACCORDANCE WITH EXHIBIT C OF THIS AGREEMENT, AND SHALL HAVE THE RIGHT TO AUDIT
SUCH RECORDS AT ANY REASONABLE TIME OR TIMES WITHIN TWO (2) YEARS AFTER THE
DELIVERY OF PRODUCT(S) PURSUANT TO THIS AGREEMENT; PROVIDED, HOWEVER, A PARTY
MAY ONLY CONDUCT ONE (1) AUDIT PER CALENDAR YEAR, AND RECORDS PERTAINING TO A
YEAR PREVIOUSLY AUDITED MAY NOT BE RE-AUDITED.

 

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**** INDICATES THAT MATERIAL DEEMED CONFIDENTIAL HAS BEEN OMITTED FROM THIS
DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER EXCHANGE ACT
RULE 24B-2 AND 5 U.S.C. 552(B)(4) AND HAS BEEN FILED SEPARATELY WITH THE OFFICE
OF THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION.

 

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(B)           IF ANY SUCH AUDIT DETERMINES THAT THERE WAS AN ERROR IN THE
CALCULATIONS MADE AND REPORTED PURSUANT TO SECTION 6, THE MANAGEMENT OF EACH OF
MGPI AND MANUFACTURER WILL MAKE A GOOD FAITH EFFORT TO RESOLVE ANY DIFFERENCES
BETWEEN THE PARTIES WITH RESPECT TO THE RESULTS OF THE AUDIT.  IF WITHIN THIRTY
(30) DAYS AFTER THE AUDIT RESULTS ARE PROVIDED TO THE AUDITED PARTY, THE
MANAGEMENTS OF MGPI AND MANUFACTURER ARE UNABLE TO RESOLVE ALL DIFFERENCES,
EITHER PARTY MAY SEEK DAMAGES AND ANY OTHER EQUITABLE OR LEGAL RELIEF FROM A
COURT OF COMPETENT JURISDICTION.

 

(C)           WITHIN THIRTY DAYS OF RESOLUTION OF ANY AUDIT DIFFERENCES EITHER
BY AGREEMENT OR BY A FINAL, NON-APPEALABLE JUDGMENT OF A COURT OF COMPETENT
JURISDICTION, MGPI OR MANUFACTURER, AS APPLICABLE, SHALL REMIT TO THE OTHER
PARTY ANY AMOUNT SHOWN TO BE DUE BY IT UNDER SUCH AUDIT RESOLUTION.

 

8.             FINANCIAL RESPONSIBILITY.  IF EITHER PARTY’S PAYMENTS OR
DELIVERIES TO THE OTHER PARTY SHALL BE IN ARREARS, OR THE FINANCIAL
RESPONSIBILITY OF EITHER PARTY BECOMES IMPAIRED OR UNSATISFACTORY IN THE
REASONABLE OPINION OF THE OTHER PARTY, ADVANCE CASH PAYMENT OR SATISFACTORY
SECURITY SHALL BE GIVEN UPON DEMAND, AND DELIVERIES MAY BE WITHHELD UNTIL SUCH
PAYMENT OR SECURITY IS RECEIVED.  IF SUCH PAYMENT OR SECURITY IS NOT RECEIVED
WITHIN FIVE (5) NEW YORK BANKING DAYS FROM DEMAND THEREOF, THE PARTY DEMANDING
SUCH PAYMENT OR SECURITY, IN ADDITION TO ANY OTHER RIGHTS WHICH IT MAY HAVE, MAY
CANCEL THIS AGREEMENT, MAY ACCELERATE PAYMENT OF ANY AMOUNTS OWED BUT NOT YET
DUE AND PAYABLE TO BE IMMEDIATELY DUE AND PAYABLE, OR BOTH.  EACH PARTY GRANTS
TO THE OTHER PARTY AND ITS DOMESTIC AFFILIATES THE RIGHT TO SET OFF AND TO APPLY
ANY MONEY, ACCOUNTS PAYABLE, OR PRODUCT BALANCE OWED BY THE OTHER PARTY AND ITS
DOMESTIC AFFILIATES TO THE OTHER PARTY OR ANY COLLATERAL OF EVERY DESCRIPTION
HELD BY THE OTHER PARTY AND ITS DOMESTIC AFFILIATES TO SECURE ANY INDEBTEDNESS
OR OBLIGATION OWED BY THE GRANTING PARTY TO THE OTHER PARTY AND ITS DOMESTIC
AFFILIATES AGAINST ANY UNPAID MONEY OR ACCOUNTS RECEIVABLE OWED TO THE OTHER
PARTY AND ITS DOMESTIC AFFILIATES BY THE GRANTING PARTY.  IN THE EVENT EITHER
PARTY BECOMES INSOLVENT, MAKES AN ASSIGNMENT TO ANY GENERAL ARRANGEMENT FOR THE
BENEFIT OF CREDITORS OR IF THERE ARE INSTITUTED BY OR AGAINST EITHER PARTY
PROCEEDINGS IN BANKRUPTCY OR UNDER ANY INSOLVENCY LAW OR LAW FOR REORGANIZATION,
RECEIVERSHIP OR DISSOLUTION, THE OTHER PARTY MAY WITHHOLD DELIVERIES OR CANCEL
THIS AGREEMENT.  THE EXERCISE BY EITHER PARTY OF ANY RIGHT RESERVED UNDER THIS
PARAGRAPH SHALL BE WITHOUT PREJUDICE TO ANY CLAIM FOR DAMAGES OR ANY OTHER RIGHT
OF SUCH PARTY UNDER THIS AGREEMENT OR APPLICABLE LAW.

 

9.             TAXES.

 

(A)           THE PARTIES RECOGNIZE THAT TRANSACTIONS INVOLVING THE TRANSFER OF
PRODUCT(S) BETWEEN DISTILLED SPIRITS PLANT PERMIT HOLDERS ARE GENERALLY NOT
TAXABLE.

 

(B)           ANY AND ALL TAXES, FEES, OR OTHER CHARGES IMPOSED OR ASSESSED BY
GOVERNMENTAL OR REGULATORY BODIES, THE TAXABLE INCIDENCE OF WHICH IS THE
TRANSFER OF TITLE OR THE DELIVERY OF THE PRODUCT(S) HEREUNDER, OR THE RECEIPT OF
PAYMENT THEREFOR, REGARDLESS OF THE CHARACTER, METHOD OF CALCULATION, OR MEASURE
OF THE LEVY OR ASSESSMENT, SHALL BE PAID BY THE PARTY UPON WHOM THE TAX, FEE OR
CHARGE IS IMPOSED BY LAW, EXCEPT THAT MGPI SHALL REIMBURSE MANUFACTURER FOR ALL
FEDERAL, STATE, AND LOCAL TAXES, FEES, OR CHARGES WHICH ARE IMPOSED BY LAW ON
MANUFACTURER OR REQUIRED TO BE REMITTED AND PAID BY THE MANUFACTURER.  IF MGPI
CLAIMS EXEMPTION FROM ANY OF THE AFORESAID TAXES, FEES, OR OTHER CHARGES, THEN
MGPI MUST FURNISH MANUFACTURER WITH A PROPERLY COMPLETED AND EXECUTED

 

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EXEMPTION CERTIFICATE IN THE FORM PRESCRIBED BY THE APPROPRIATE TAXING AUTHORITY
IN LIEU OF PAYMENT OF SUCH TAXES OR REIMBURSEMENT OF SUCH TAXES TO
MANUFACTURER.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, EACH
PARTY SHALL BE RESPONSIBLE FOR ITS OWN INCOME, FRANCHISE AND AD VALOREM TAXES.

 

(C)           MGPI HEREBY ACKNOWLEDGES AND AGREES TO MAINTAIN ITS STATUS AS A
“DISTILLED SPIRITS PLANT” PURSUANT TO THE APPLICABLE REGULATIONS OF THE ALCOHOL
AND TOBACCO TAX AND TRADE BUREAU OF THE U.S. DEPARTMENT OF THE TREASURY.

 

10.           PRODUCTION FACILITIES.

 

(A)           MANUFACTURER WILL MANUFACTURE THE PRODUCTS AT THE PLANT IN
ACCORDANCE WITH THE SPECIFICATIONS AND PROVIDE A VALID COA FOR ALL PRODUCT
DELIVERED UNDER THIS AGREEMENT.

 

(B)           MANUFACTURER WILL MAINTAIN THE PLANT AND THE EQUIPMENT USED IN THE
MANUFACTURE OF THE PRODUCTS IN GOOD WORKING ORDER AND CONDITION NECESSARY TO
PRODUCE THE QUANTITIES AND QUALITIES OF THE PRODUCTS ORDERED BY MGPI UNDER THIS
AGREEMENT.

 

(C)           THE PLANT WILL AT ALL TIMES BE IN COMPLIANCE WITH ANY LAWS,
REGULATIONS OR OTHER REQUIREMENTS APPLICABLE TO THE MANUFACTURE AND SALE OF THE
PRODUCTS.

 

11.           MATERIALS; HANDLING AND STORAGE.

 

(A)           UNLESS OTHERWISE AGREED BETWEEN THE PARTIES IN WRITING,
MANUFACTURER IS RESPONSIBLE FOR (I) OBTAINING SUITABLE RAW MATERIALS NECESSARY
FOR THE MANUFACTURE OF THE PRODUCTS UNDER THIS AGREEMENT (“RAW MATERIALS”) IN
ACCORDANCE WITH THE SPECIFICATIONS, AND (II) MANUFACTURING, PROCESSING, STORING,
AND LOADING OF THE ORDERED PRODUCTS FOR DELIVERY INTO MGPI PROVIDED EQUIPMENT.

 

(B)           MANUFACTURER WILL FURNISH MGPI WITH A COPY OF ITS RECALL POLICY
AND PROCEDURES.  MANUFACTURER WILL FURTHER NOTIFY MGPI AS SOON AS PRACTICABLE BY
PHONE (WITH WRITTEN CONFIRMATION TO FOLLOW) IF IT KNOWS OF

 

(I)            ANY RECALL OR OTHER ACTION OR SCHEDULED INSPECTION BY ANY
REGULATORY AGENCY AGAINST THE PLANT OR PRODUCTS COVERED UNDER THIS AGREEMENT,

 

(II)           ANY VIOLATIONS REPORTED OR RECORDED DURING ANY SUCH INSPECTION
AND/OR ANY ANALYTICAL RESULTS OBTAINED FROM REGULATORY AGENCIES WHICH ADVERSELY
AND MATERIALLY IMPACT THE PRODUCTS OR THE ABILITY TO ACQUIRE THE RAW MATERIALS
OR PACKAGING MATERIALS, AND

 

(III)          ANY SIGNIFICANT MANUFACTURING PROCESS DEVIATION THAT COMPROMISES
THE SAFETY AND/OR QUALITY OF THE PRODUCTS.

 

(C)           IN ADDITION, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING:

 

(I)            MGPI SHALL PROVIDE MANUFACTURER WITH A DESIGNATED PARTY AND
DESIGNATED PHONE NUMBER FOR THE PURPOSE OF PROVIDING THE NOTIFICATIONS TO MGPI
UNDER THIS SECTION 11.  MANUFACTURER SHALL NOT BE RESPONSIBLE FOR THE FAILURE OF
MGPI TO MONITOR ITS DESIGNATED PHONE NUMBER.

 

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(II)           MANUFACTURER WILL NOT USE RAW MATERIALS IF THEY (A) DO NOT
REASONABLY APPEAR TO CONFORM TO THE SPECIFICATIONS, OR (B) EXHIBIT APPARENT
QUALITY DEFECTS.

 

(III)          MANUFACTURER WILL REASONABLY MAINTAIN THE QUALITY OF RAW
MATERIALS FROM THE TIME IT RECEIVES THE RAW MATERIALS AT THE PLANT UNTIL IT
MANUFACTURES THE RAW MATERIALS INTO THE PRODUCTS.  THEREAFTER, MANUFACTURER WILL
MAINTAIN THE QUALITY OF PRODUCTS UNTIL SUCH PRODUCTS ARE DELIVERED TO MGPI.

 

(IV)          MANUFACTURER WILL CREDIT, REPLACE, AND RE-BILL WITHOUT COST TO
MGPI ALL PRODUCTS SOLD TO MGPI UNDER THIS AGREEMENT THAT DO NOT MEET THE
SPECIFICATIONS UNLESS THE FAILURE TO MEET SPECIFICATIONS IS CAUSED BY (A) MGPI
OR OTHERS AFTER TITLE TO THE PRODUCTS HAS PASSED TO MGPI, (B) ANY INSTRUCTION OR
DIRECTION RECEIVED BY MANUFACTURER FROM MGPI DIRECTING MANUFACTURER TO
MANUFACTURE THE PRODUCTS IN A MANNER NOT CONSISTENT WITH THE SPECIFICATIONS OR
(C) MGPI’S FAILURE TO COMPLY WITH ANY OF  ITS OBLIGATIONS UNDER THIS AGREEMENT. 
MANUFACTURER WILL PROMPTLY CREDIT, REPLACE, AND RE-BILL SUCH PRODUCTS WHEN MGPI
NOTIFIES IT OF SAME.

 

12.           INSPECTIONS, MEASUREMENT, TESTING AND ACCEPTANCE.

 

(A)           QUALITY.

 

(I)            QUALITY OF THE PRODUCT SHALL BE DETERMINED AND CERTIFIED FROM
SAMPLES TAKEN PRIOR TO OR AT THE TIME AND PLACE OF LOADING OR TRANSFER OF THE
PRODUCT BY A MUTUALLY AGREED LABORATORY.  THE COST OF SUCH INSPECTION SHALL BE
BORNE EQUALLY BY MGPI AND MANUFACTURER UNLESS MGPI AND MANUFACTURER AGREE THAT
MANUFACTURER MAY CONDUCT TESTING.

 

(II)           QUALITY OF THE PRODUCT SHALL BE BASED UPON LABORATORY ANALYSIS OF
A REPRESENTATIVE COMPOSITE SAMPLE TAKEN FROM STORAGE TANK(S) OF THE ENTIRE LOT
TO BE LOADED AND A VALID COA SHALL BE PROVIDED BY THE TESTING LABORATORY TO MGPI
FOR ALL DELIVERED PRODUCTS.

 

(B)           MEASUREMENT.

 

(I)            METERS AND OTHER MEASURING DEVICES BELONGING TO THE MANUFACTURER
OR ITS AGENTS OR SUPPLIERS AND USED HEREUNDER SHALL BE DEEMED CONCLUSIVE OF THE
QUANTITIES OF PRODUCT DELIVERED TO MGPI BY MANUFACTURER HEREUNDER, UNLESS EITHER
PARTY NOTIFIES THE OTHER OF ANY ERRORS IN MEASUREMENT.

 

(II)           MANUFACTURER SHALL BE RESPONSIBLE FOR THE ACCURACY OF ITS
MEASURING EQUIPMENT AT THE LOADING LOCATION, INCLUDING ALL GAUGES AND METERS,
AND SHALL ENSURE THAT SUCH EQUIPMENT COMPLIES IN ALL RESPECTS WITH APPLICABLE
LAWS, RULES, AND REGULATIONS AND WILL BE CERTIFIED AT LEAST EVERY THREE MONTHS
OR 10,000,000 GALLONS OR PER TTB REQUIREMENTS, WHICHEVER OCCURS FIRST.  MGPI
SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, DURING THE TERM TO HAVE A
REPRESENTATIVE INSPECT MANUFACTURER’S MEASUREMENT EQUIPMENT FOR SUITABILITY AND
ACCURACY AND BE PRESENT FOR PROVING AND CALIBRATION.  SUCH MGPI INSPECTION,
TESTING, OR ADDITIONAL CERTIFICATION SHALL BE AT MGPI’S EXPENSE.  MGPI SHALL BE
GIVEN ACCESS TO ALL TRANSACTION AND METER PROVING RECORDS.  ALL CUSTODY METERS
SHALL BE PROVED AND CALIBRATED WITH THE LATEST API MPMS.  ALL CALIBRATION
EQUIPMENT SHALL BE CERTIFIED

 

8

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AND TRACEABLE TO NIST.  METERS SHALL BE PROVED ON A NET BASIS UNLESS OTHERWISE
REQUIRED BY REGULATORY AGENCIES.

 

(III)          ALL VOLUMES OR QUANTITIES OF PRODUCT SHALL BE NET VOLUMES OR
QUANTITIES AS ADJUSTED PER ASTM/API STANDARDS.  PRODUCT SHALL BE MEASURED AND
BILLED ON A PER GALLON BASIS.  THE TERM “GALLON” AS USED HEREIN SHALL MEAN A
U.S. GALLON OR 231 CUBIC INCHES.  ALL QUANTITIES DELIVERED SHALL BE ADJUSTED TO
A TEMPERATURE OF 60 DEGREES FAHRENHEIT IN ACCORDANCE WITH THE LATEST APPLICABLE
ASTM STANDARDS

 

(IV)          TRUCK/RAIL CAR.  QUANTITIES OF PRODUCT DELIVERED PURSUANT TO THIS
AGREEMENT INTO OR FROM TANK TRUCKS/CARS OR RAIL CARS SHALL BE MEASURED USING
CALIBRATED METERS LOCATED AT OR NEAR THE DELIVERY POINT OR, IF SUCH METERS ARE
UNAVAILABLE, BY CERTIFIED CALIBRATED SCALES OR APPLICABLE CALIBRATION TABLES.

 

(V)           MARINE VESSEL.  UNLESS OTHERWISE AGREED, INSPECTION AND
MEASUREMENT OF PRODUCT DELIVERED PURSUANT TO THIS AGREEMENT INTO OR FROM MARINE
VESSELS SHALL BE MADE BY A MUTUALLY LICENSED INDEPENDENT INSPECTOR, THE COST OF
WHICH SHALL BE BORN EQUALLY BY MGPI AND MANUFACTURER.  SAID INSPECTOR’S
DETERMINATIONS SHALL BE REPORTED TO MGPI AND MANUFACTURER AND SHALL SERVE AS THE
BASIS FOR THE INVOICE, EXCEPT IN CASES OF MANIFEST ERROR OR FRAUD.

 

THE QUANTITY OF PRODUCT SHALL BE DETERMINED BY PROVEN METERS, IN THE IMMEDIATE
VICINITY OF THE BERTH LOCATED AT THE DESIGNATED POINT OF CUSTODY AND TITLE
TRANSFER.  IF METERS ARE UNAVAILABLE, NOT PROVEN, NOT FUNCTIONING CORRECTLY, OR
DETERMINED BY THE INDEPENDENT INSPECTOR TO BE INACCURATE OR OTHERWISE NOT TO
REPRESENT THE VOLUME DELIVERED TO OR FROM THE VESSEL, THEN THE QUANTITY SHALL BE
SHALL BE BASED ON STATIC SHORE TANK MEASUREMENTS.  IF THE SHORE TANK(S) IS/ARE
ACTIVE, OR A SHORE TANK, BEFORE RECEIPT OR AFTER DELIVERY, CONTAINS LESS THAN
ONE (1) FOOT OF PRODUCT, OR THE INDEPENDENT INSPECTOR CANNOT VERIFY THE SHORE
TANK MEASUREMENTS PRIOR TO OR AFTER DELIVERY, OR THE INDEPENDENT INSPECTOR
DETERMINES THAT THE SHORE TANK MEASUREMENTS ARE INACCURATE OR OTHERWISE NOT
REPRESENTATIVE OF THE VOLUME QUANTITIES DELIVERED TO OR FROM THE VESSEL, THEN
THE QUANTITY SHALL BE DETERMINED BY THE VESSEL LESS ANY OBQ (ON-BOARD QUANTITY)
OR ROB (REMAINING ON BOARD) ADJUSTED FOR VESSEL LOAD VEF (VESSEL EXPERIENCE
FACTOR) IF AVAILABLE.  IF NO VESSEL LOAD VEF IS AVAILABLE, THE QUANTITY SHALL BE
DETERMINED BY THE VARIOUS QUANTITIES ADJUSTED FOR OBQ OR ROB.

 

(C)           TESTING AND ACCEPTANCE:

 

(I)            MANUFACTURER OR THE DESIGNATED LABORATORY SHALL ISSUE A COA
CONFIRMING THE RESULTS OF THE TESTS OF THE QUALITY OF THE PRODUCT OBTAINED
PURSUANT TO SECTION 12(A) ABOVE.

 

(II)           MGPI WILL NOT ACCEPT, AND MANUFACTURER SHALL NOT LOAD INTO MGPI
EQUIPMENT, PRODUCT NOT CONFORMING TO THE SPECIFICATIONS.

 

(III)          ANY CLAIMS THAT THE PRODUCT(S) DELIVERED HEREUNDER DO NOT CONFORM
TO THE SPECIFICATIONS ARE WAIVED UNLESS PRESENTED IN WRITING BY MGPI TO
MANUFACTURER WITHIN FOURTEEN (14) DAYS AFTER DELIVERY OF PRODUCT(S).  EXCEPT AS
SET

 

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FORTH IN THIS SECTION 12(C)(III), NO CLAIM SHALL BE MADE OR HONORED FOR PRODUCT
NOT MEETING THE SPECIFICATIONS (“NON-CONFORMING PRODUCTS”) AFTER DELIVERY TO
MGPI.

 

(IV)          MANUFACTURER’S LIABILITY REGARDING THE CONDITION, QUALITY, OR
FITNESS OF NON-CONFORMING PRODUCT(S) DELIVERED TO MGPI IS STRICTLY LIMITED, AT
MANUFACTURER’S SOLE OPTION, TO 1) A REFUND BY MANUFACTURER TO MGPI AN AMOUNT
EQUAL TO THE DIFFERENCE BETWEEN THE MARKET VALUE AS OF THE DATE TITLE
TRANSFERRED OF THE NON-CONFORMING PRODUCTS AND THE PRICE PAID THEREFOR BY MGPI,
OR 2) MANUFACTURER MAY REPLACE THE NON-CONFORMING PRODUCTS UPON THE RETURN OF
THE NON-CONFORMING PRODUCTS BY MGPI.

 

13.           CONFIDENTIALITY.

 

(A)           GENERAL OBLIGATION. ALL INFORMATION PROVIDED BY ONE PARTY (THE
“DISCLOSING PARTY”) TO THE OTHER PARTY (THE “RECIPIENT”) WILL BE GOVERNED BY
THIS SECTION 13.  THE TERM “CONFIDENTIAL INFORMATION” WILL MEAN (I) ALL
INFORMATION CONTAINED IN ANY REPORTS DELIVERED PURSUANT TO THIS AGREEMENT,
(II) THE PRODUCT KNOW-HOW AND (III) ALL OTHER TRADE SECRETS OR CONFIDENTIAL OR
PROPRIETARY INFORMATION DESIGNATED AS SUCH IN WRITING BY THE DISCLOSING PARTY,
WHETHER BY LETTER OR BY THE USE OF AN APPROPRIATE PROPRIETARY STAMP OR LEGEND,
BEFORE OR WHEN ANY SUCH TRADE SECRET OR CONFIDENTIAL OR PROPRIETARY INFORMATION
IS DISCLOSED BY THE DISCLOSING PARTY TO THE RECIPIENT. CONFIDENTIAL INFORMATION
WILL ALSO INCLUDE INFORMATION THAT THE DISCLOSING PARTY DISCLOSES TO THE
RECIPIENT (WHETHER ORALLY, VISUALLY OR IN WRITING WITHOUT AN APPROPRIATE LETTER,
PROPRIETARY STAMP OR LEGEND) IF THE DISCLOSING PARTY NOTIFIES THE RECIPIENT IN
WRITING AND DESCRIBES THE INFORMATION DISCLOSED, REFERENCES THE PLACE AND DATE
OF THE DISCLOSURE, AND THE NAMES OF THE EMPLOYEES OR OFFICERS OF THE RECIPIENT
TO WHOM THE DISCLOSURE WAS MADE. THE PARTIES ALSO AGREE TO TREAT ANY INFORMATION
OR MATERIALS JOINTLY DEVELOPED AS PROPRIETARY AND AS CONFIDENTIAL INFORMATION.

 

(B)           DISCLOSURE.  THE RECIPIENT WILL HOLD IN CONFIDENCE, AND WILL NOT
DISCLOSE TO ANY PERSON OUTSIDE ITS ORGANIZATION, ANY CONFIDENTIAL INFORMATION
DURING THE TERM OF THIS AGREEMENT AND FOR TWO (2) YEARS THEREAFTER. THE
RECIPIENT WILL USE CONFIDENTIAL INFORMATION ONLY FOR THE PURPOSE OF PRODUCING
THE PRODUCTS FOR THE DISCLOSING PARTY OR FULFILLING ITS CONTRACTUAL OBLIGATIONS
UNDER THIS AGREEMENT; IT WILL NOT USE OR EXPLOIT CONFIDENTIAL INFORMATION FOR
ANY OTHER PURPOSE OR FOR ITS OWN BENEFIT OR THE BENEFIT OF ANOTHER WITHOUT THE
PRIOR WRITTEN CONSENT OF THE DISCLOSING PARTY.  RECIPIENT WILL DISCLOSE
CONFIDENTIAL INFORMATION RECEIVED BY IT UNDER THIS AGREEMENT ONLY TO PERSONS
WITHIN ITS ORGANIZATION OR SUPPLIERS AND/OR THIRD PARTY VENDORS WHO HAVE A NEED
TO KNOW SUCH CONFIDENTIAL INFORMATION IN THE COURSE OF THE PERFORMANCE OF THEIR
DUTIES AND WHO ARE DIRECTED TO PROTECT THE CONFIDENTIALITY OF THE CONFIDENTIAL
INFORMATION IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.  IN PARTICULAR, THE
PARTIES AGREE TO TAKE REASONABLY APPROPRIATE STEPS TO ENSURE SUPPLIERS AND THIRD
PARTY VENDORS RECEIVING CONFIDENTIAL INFORMATION MAINTAIN THE CONFIDENTIALITY OF
SUCH CONFIDENTIAL INFORMATION.

 

(C)           LIMITATION ON OBLIGATIONS.  THE OBLIGATIONS OF THE RECIPIENT UNDER
THIS SECTION WILL NOT APPLY TO, AND CONFIDENTIAL INFORMATION DOES NOT INCLUDE,
INFORMATION THAT:

 

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(I)            IS GENERALLY KNOWN TO THE PUBLIC BEFORE THE DISCLOSURE BY THE
DISCLOSING PARTY OR BECOMES GENERALLY KNOWN TO THE PUBLIC THROUGH NO WRONGFUL
ACT ON THE PART OF THE RECIPIENT IN VIOLATION OF THIS AGREEMENT;

 

(II)           IS IN THE RECIPIENT’S POSSESSION AT THE TIME OF DISCLOSURE BY THE
DISCLOSING PARTY OTHER THAN AS A RESULT OF RECIPIENT’S BREACH OF ANY LEGAL
OBLIGATION;

 

(III)          BECOMES KNOWN TO THE RECIPIENT THROUGH DISCLOSURE BY SOURCES
OTHER THAN THE DISCLOSING PARTY HAVING THE LEGAL RIGHT TO DISCLOSE THE
CONFIDENTIAL INFORMATION;

 

(IV)          IS INDEPENDENTLY DEVELOPED BY THE RECIPIENT WITHOUT REFERENCE TO
OR RELIANCE UPON THE CONFIDENTIAL INFORMATION; OR

 

(V)           MUST BE DISCLOSED BY THE RECIPIENT PURSUANT TO APPLICABLE LAW OR
GOVERNMENTAL REGULATIONS; PROVIDED, HOWEVER, THAT THE RECIPIENT NOTIFIES THE
DISCLOSING PARTY IN WRITING, TO THE EXTENT NOT PROHIBITED BY LAW, BEFORE
DISCLOSING THE CONFIDENTIAL INFORMATION AND REASONABLY COOPERATES WITH THE
DISCLOSING PARTY TO AVOID AND/OR MINIMIZE THE EXTENT OF THE DISCLOSURE.

 

(D)           OWNERSHIP OF CONFIDENTIAL INFORMATION.  THE DISCLOSING PARTY IS
AND WILL REMAIN THE EXCLUSIVE OWNER OF CONFIDENTIAL INFORMATION AND ALL RIGHTS
EMBODIED IN IT.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
SPECIFICATIONS WILL CONSTITUTE CONFIDENTIAL INFORMATION OWNED BY OR PROVIDED
UNDER LICENSE TO MGPI AND MAY NOT BE USED BY MANUFACTURER FOR ANY PURPOSE EXCEPT
IN CONNECTION WITH ITS PERFORMANCE OF THIS AGREEMENT.

 

(E)           RETURN OF DOCUMENTS. UPON THE REQUEST OF THE DISCLOSING PARTY,
RECIPIENT WILL, AT ITS OPTION, DESTROY OR RETURN TO THE DISCLOSING PARTY ALL
DRAWINGS, DOCUMENTS AND OTHER TANGIBLE MANIFESTATIONS OF CONFIDENTIAL
INFORMATION RECEIVED BY THE RECIPIENT UNDER THIS AGREEMENT, INCLUDING ALL COPIES
AND REPRODUCTIONS.

 

14.           INTELLECTUAL PROPERTY LICENSE; MISAPPROPRIATION.

 

(A)           MGPI GRANTS TO MANUFACTURER A NON-EXCLUSIVE MANUFACTURING LICENSE
TO UTILIZE THE SPECIFICATIONS AND ANY RELATED CONFIDENTIAL INFORMATION (“PRODUCT
KNOW-HOW”) TO MANUFACTURE PRODUCTS IN ACCORDANCE WITH THIS AGREEMENT. 
MANUFACTURER ACKNOWLEDGES THAT PRODUCT KNOW-HOW MAY INCLUDE THE CONFIDENTIAL
INFORMATION OF MGPI CUSTOMERS AND THAT MANUFACTURER WILL NOT MISAPPROPRIATE ANY
SUCH CONFIDENTIAL INFORMATION.

 

(B)           MGPI REPRESENTS, WARRANTS AND COVENANTS THAT IT HAS THE RIGHT TO
DISCLOSE TO MANUFACTURER UNDER CONFIDENTIALITY THE PRODUCT KNOW-HOW FOR
MANUFACTURER’S USE WHILE MANUFACTURING PRODUCTS UNDER THIS AGREEMENT.

 

(C)           MGPI REPRESENTS AND WARRANTS THAT IT WILL NOT KNOWINGLY REQUEST
MANUFACTURER TO PRODUCE PRODUCT OR PROVIDE TO MANUFACTURER PRODUCT-KNOW-HOW THAT
INFRINGES ON ANY RIGHTS OF THIRD PARTIES.

 

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15.           MANUFACTURER’S WARRANTIES AND REPRESENTATIONS.

 

(A)           MANUFACTURER WARRANTS AND REPRESENTS THAT:

 

(I)            MANUFACTURER HAS AND WILL DELIVER GOOD AND MARKETABLE TITLE TO
THE PRODUCT(S),

 

(II)           MANUFACTURER HAS FULL RIGHT AND AUTHORITY TO TRANSFER SUCH TITLE
TO THE PRODUCT(S) TO MGPI,

 

(III)          THE PRODUCT(S) WILL CONFORM TO THE SPECIFICATIONS SET FORTH ON
THE FACE OF THE APPLICABLE PURCHASE ORDER,

 

(IV)          THE PRODUCT(S) SHALL BE DELIVERED FREE AND CLEAR OF ANY AND ALL
SECURITY INTERESTS, LIENS, ENCUMBRANCES, PLEDGES, AND CHARGES.

 

(V)           MANUFACTURER IS OR WILL BE AT ALL RELEVANT TIMES REGISTERED WITH
THE IRS AS MAY BE REQUIRED TO ENGAGE IN TRANSACTIONS WITH RESPECT TO ETHANOL,
AND POSSESS ALL FEDERAL, STATE AND LOCAL REGISTRATIONS AS MAY BE REQUIRED BY LAW
IN THE STATE WHERE TITLE PASSES.

 

(VI)          THE MANUFACTURE AND DELIVERY OF ALL PRODUCTS WILL BE CONDUCTED IN
STRICT COMPLIANCE WITH ANY LAWS OR REGULATIONS APPLICABLE TO THE MANUFACTURE AND
SALE OF THE PRODUCTS, INCLUDING WITHOUT LIMITATION, OPERATING UNDER BASIC AND
OPERATING PERMITS FROM THE ALCOHOL AND TOBACCO TAX AND TRADE BUREAU OF THE U.S.
DEPARTMENT OF TREASURY AND MAINTAINING ANY BONDS REQUIRED THEREUNDER.

 

(B)           WARRANTY DISCLAIMERS.  THE EXPRESS WARRANTIES IN THIS SECTION 15
ARE IN LIEU OF, AND MANUFACTURER DISCLAIMS, ALL OTHER WARRANTIES,
REPRESENTATIONS AND CONDITIONS, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR
PURPOSE.

 

16.           MGPI’S WARRANTIES AND REPRESENTATIONS.  MGPI WARRANTS AND
REPRESENTS THAT:

 

(A)           THE PURCHASE, TRANSPORTATION, AND MARKETING OF ALL PRODUCT WILL BE
CONDUCTED IN STRICT COMPLIANCE WITH ANY LAWS OR REGULATIONS APPLICABLE TO THE
PURCHASE, TRANSPORTATION AND SALE OF THE PRODUCTS, INCLUDING WITHOUT LIMITATION
HOLDING REQUIRED PERMITS AND LICENSING FROM THE ALCOHOL AND TOBACCO TAX AND
TRADE BUREAU OF THE U.S. DEPARTMENT OF TREASURY;

 

(B)           MGPI HAS INSTITUTED ITS OWN QUALITY CONTROL AND DELIVERY
PROTOCOLS, INCLUDING WITH ITS CUSTOMERS, THAT WILL PREVENT THE CONTAMINATION OR
USE OF PRODUCT THAT MAY BECOME CONTAMINATED OR BE PUT “OFF SPECIFICATION” AFTER
DELIVERY; AND

 

(C)           THE PRODUCT(S) AND THEIR SPECIFICATIONS ARE SUITABLE FOR THEIR
INTENDED PURPOSE AND WILL NOT BE USED BY MGPI ALONE OR AS A COMPONENT IN
MANUFACTURING ANOTHER PRODUCT THAT IS INJURIOUS TO PERSONS, THE ENVIRONMENT,
EQUIPMENT, OR PROPERTY.

 

17.           LIQUIDATION AND CLOSE-OUT:

 

(A)           NOTWITHSTANDING ANY OTHER PROVISION OF THIS OR ANY OTHER COMMODITY
CONTRACT BETWEEN THE PARTIES, IF EITHER PARTY (THE “NON-PERFORMING PARTY”) SHALL
(I) DEFAULT IN THE PAYMENT OR PERFORMANCE OF ANY OTHER MATERIAL OBLIGATION TO
THE OTHER PARTY UNDER

 

12

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THIS OR ANY OTHER AGREEMENT BETWEEN THE PARTIES AND FAILS TO CURE SUCH PAYMENT
DEFAULT WITHIN FIVE (5) NEW YORK BANKING DAYS AFTER RECEIPT OF NOTICE OF SUCH
FAILURE, (II) FILE A PETITION OR OTHERWISE COMMENCE OR AUTHORIZE THE
COMMENCEMENT OF  A PROCEEDING OR CASE UNDER ANY BANKRUPTCY, REORGANIZATION, OR
SIMILAR LAW FOR THE PROTECTION OF CREDITORS OR HAVE ANY SUCH PETITION FILED OR
PROCEEDING COMMENCED AGAINST IT, (III) OTHERWISE BECOME BANKRUPT OR INSOLVENT
(HOWEVER EVINCED), (IV) BE UNABLE TO PAY ITS DEBTS AS THEY FALL DUE, OR (V) FAIL
TO GIVE ADEQUATE SECURITY FOR OR ASSURANCE OF ITS ABILITY TO PERFORM ITS
OBLIGATIONS HEREUNDER OR THEREUNDER WITHIN TWO (2) NEW YORK BANKING DAYS AFTER
RECEIPT OF A REASONABLE REQUEST THEREFOR, THE OTHER PARTY (THE “PERFORMING
PARTY”) SHALL HAVE THE RIGHT, IMMEDIATELY AND WITHOUT LIABILITY, TO LIQUIDATE
AND CLOSE OUT ANY OR ALL FORWARD CONTRACTS, INCLUDING, WITHOUT LIMITATION,
PURCHASE ORDERS, THEN OUTSTANDING BETWEEN THE PARTIES.

 

(B)           IN THE EVENT OF THE FOREGOING, THE PERFORMING PARTY, MAY, BUT
SHALL NOT BE OBLIGATED TO, (I) CLOSE OUT EACH SUCH FORWARD CONTRACT AT ITS
MARKET VALUE AS REASONABLY DETERMINED BY THE PERFORMING PARTY AT SUCH TIME (SO
THAT A SETTLEMENT PAYMENT IN AN AMOUNT EQUAL TO THE DIFFERENCE, IF ANY, BETWEEN
THE THEN PREVAILING MARKET VALUE AND THE VALUE SPECIFIED IN SUCH CONTRACT SHALL
BE DUE TO MGPI UNDER THAT FORWARD CONTRACT IF SUCH MARKET VALUE IS GREATER THAN
SUCH CONTRACT VALUE AND SHALL BE DUE TO MANUFACTURER UNDER THAT FORWARD CONTRACT
IF THE OPPOSITE IS THE CASE), (II) SET OFF ALL MARKET DAMAGES SO DETERMINED AND
PAYABLE BY EACH OF THE PARTIES TO THE OTHER AND (III) SET OFF ALL MARGIN HELD BY
EITHER TO SECURE THE OBLIGATIONS OF THE OTHER PARTY (INCLUDING ALL PAYMENTS DUE
TO THE OTHER PARTY WITH RESPECT TO DELIVERIES RECEIVED FROM SUCH OTHER PARTY,
WHICH PAYMENTS, PRIOR TO PAYMENT, SHALL BE DEEMED TO HELD BY EACH AS MARGIN TO
SECURE THE OTHER PARTY’S OBLIGATIONS FROM TIME TO TIME INCURRED); WHEREUPON ALL
SUCH AMOUNTS SHALL BE AGGREGATED OR NETTED TO A SINGLE LIQUIDATED AMOUNT PAYABLE
WITHIN (1) BUSINESS DAY BY THE PARTY OWING THE GREATER SUCH AMOUNT TO THE OTHER.

 

(C)           THE PERFORMING PARTY’S RIGHTS UNDER THIS SECTION SHALL BE IN
ADDITION TO, AND NOT IN LIMITATION OR EXCLUSION OF, ANY OTHER RIGHTS WHICH THE
PERFORMING PARTY MAY HAVE (WHETHER BY AGREEMENT, OPERATION OF LAW, OR
OTHERWISE), INCLUDING ANY RIGHTS AND REMEDIES UNDER THE UNIFORM COMMERCIAL
CODE.  THE NON-PERFORMING PARTY SHALL INDEMNIFY AND HOLD THE PERFORMING PARTY
HARMLESS FROM AND AGAINST ALL COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS’ FEES) INCURRED IN THE EXERCISE OF ANY REMEDIES HEREUNDER.  IF A
DEFAULT OCCURS, THE PERFORMING PARTY, WITHOUT LIMITATION OF ITS RIGHTS
HEREUNDER, MAY SET OFF AMOUNTS WHICH THE NON-PERFORMING PARTY OWES TO IT AGAINST
ANY AMOUNT WHICH IT OWES TO THE NON-PERFORMING PARTY (WHETHER HEREUNDER, UNDER A
FORWARD CONTRACT, OR OTHERWISE AND WHETHER OR NOT THEN DUE).  THE PARTIES
ACKNOWLEDGE THAT THIS AGREEMENT CONSTITUTES A FORWARD CONTRACT FOR THE PURPOSES
OF SECTION 556 OF THE U.S. BANKRUPTCY CODE.

 

18.           INDEMNITIES.

 

(A)           MANUFACTURER WILL INDEMNIFY, DEFEND AND WILL HOLD HARMLESS MGPI
(INCLUDING ITS PARENT, AFFILIATE, AND SUBSIDIARY COMPANIES) FOR, AND WILL PAY TO
MGPI THE AMOUNT OF, ANY LOSS, LIABILITY, CLAIM, DAMAGE, EXPENSE (INCLUDING COSTS
OF INVESTIGATION AND DEFENSE AND REASONABLE ATTORNEYS’ FEES) (COLLECTIVELY,
“DAMAGES”), ARISING, DIRECTLY OR INDIRECTLY, FROM OR IN CONNECTION WITH: (I) ANY
BREACH OF ANY REPRESENTATION OR WARRANTY MADE BY MANUFACTURER IN THIS AGREEMENT
OR (II) ANY BREACH BY MANUFACTURER OF ANY

 

13

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COVENANT OR OBLIGATION OF MANUFACTURER IN THIS AGREEMENT. IN ADDITION,
NOTWITHSTANDING ANY OTHER PROVISION CONTAINED IN THIS AGREEMENT, MGPI SHALL NOT
BE RESPONSIBLE FOR LOSS OF OR DAMAGE TO THE PROPERTY OF MANUFACTURER OR OF ITS
CONTRACTORS, SUB-CONTRACTORS OR CUSTOMERS (OTHER THAN MGPI) (HEREIN
“MANUFACTURER GROUP”), OR FOR PERSONAL INJURY OR DEATH OF THE EMPLOYEES OF ANY
ENTITY IN THE MANUFACTURER GROUP, ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THE PERFORMANCE OF THIS AGREEMENT, AND EVEN IF SUCH LOSS, DAMAGE, INJURY OR
DEATH IS CAUSED WHOLLY OR PARTIALLY BY THE NEGLIGENCE OF ANY ENTITY IN THE MGPI
GROUP (AS DEFINED BELOW) (BUT EXCLUDING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF THE MGPI GROUP), AND MANUFACTURER SHALL INDEMNIFY, PROTECT, DEFEND AND HOLD
HARMLESS MGPI GROUP FROM ANY AND ALL CLAIMS, COSTS, EXPENSES, ACTIONS,
PROCEEDINGS, SUITS, DEMANDS AND LIABILITIES WHATSOEVER ARISING OUT OF OR IN
CONNECTION WITH SUCH LOSS, DAMAGE, PERSONAL INJURY OR DEATH.  MANUFACTURER WILL
CONFER WITH MGPI AND ITS INSURANCE CARRIER BEFORE SETTLING ANY CLAIMS FOR WHICH
MANUFACTURER IS RESPONSIBLE UNDER THIS AGREEMENT.

 

(B)           MGPI WILL INDEMNIFY, DEFEND AND WILL HOLD HARMLESS MANUFACTURER
FOR, AND WILL PAY TO MANUFACTURER THE AMOUNT OF, ANY DAMAGES ARISING, DIRECTLY
OR INDIRECTLY, FROM OR IN CONNECTION WITH: (I) ANY BREACH OF ANY REPRESENTATION
OR WARRANTY MADE BY MGPI IN THIS AGREEMENT OR (II) ANY BREACH BY MGPI OF ANY
COVENANT OR OBLIGATION OF MGPI IN THIS AGREEMENT.  IN ADDITION, NOTWITHSTANDING
ANY OTHER PROVISION CONTAINED IN THIS AGREEMENT, EXCEPTING SECTION 12(C),
MANUFACTURER SHALL NOT BE RESPONSIBLE FOR LOSS OF OR DAMAGE TO THE PROPERTY OF
MGPI OR OF ITS CONTRACTORS, SUB-CONTRACTORS OR CUSTOMERS (HEREIN “MGPI GROUP”),
INCLUDING THE PRODUCT(S) AFTER TITLE HAS PASSED TO MGPI, OR FOR PERSONAL INJURY
OR DEATH OF THE EMPLOYEES OF ANY ENTITY IN THE MGPI GROUP, ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THE PERFORMANCE OF THIS AGREEMENT, AND EVEN IF SUCH LOSS,
DAMAGE, INJURY OR DEATH IS CAUSED WHOLLY OR PARTIALLY BY THE NEGLIGENCE OF ANY
ENTITY IN THE MANUFACTURER GROUP (BUT EXCLUDING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE MANUFACTURER GROUP), AND MGPI SHALL INDEMNIFY, PROTECT, DEFEND
AND HOLD HARMLESS THE MANUFACTURER GROUP FROM ANY AND ALL CLAIMS, COSTS,
EXPENSES, ACTIONS, PROCEEDINGS, SUITS, DEMANDS AND LIABILITIES WHATSOEVER
ARISING OUT OF OR IN CONNECTION WITH SUCH LOSS, DAMAGE, PERSONAL INJURY OR
DEATH.  MGPI WILL CONFER WITH MANUFACTURER AND ITS INSURANCE CARRIER BEFORE
SETTLING ANY CLAIMS FOR WHICH MGPI IS RESPONSIBLE UNDER THIS AGREEMENT.

 

(C)           LIMITATION OF LIABILITY.  IN NO EVENT WILL EITHER PARTY BE LIABLE
TO THE OTHER FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL
DAMAGES (INCLUDING LOSS OF USE, DATA, BUSINESS OR PROFITS) OR FOR COSTS OF
PROCURING SUBSTITUTE SERVICES, ARISING OUT OF, RELATING TO, OR IN CONNECTION
WITH THIS AGREEMENT OR THE SERVICES OR ANY PRODUCTS PROVIDED BY MANUFACTURER,
HOWEVER CAUSED AND REGARDLESS OF THE THEORY OF LIABILITY, EVEN IF THE PARTIES
HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

19.           THIRD PARTY CLAIMS.  PROMPTLY AFTER SERVICE OF NOTICE OF ANY CLAIM
OR OF PROCESS BY ANY THIRD PERSON IN ANY MATTER IN RESPECT OF WHICH INDEMNITY
MAY BE SOUGHT FROM AN INDEMNIFYING PARTY UNDER THIS AGREEMENT, THE INDEMNIFIED
PARTY WILL NOTIFY THE INDEMNIFYING PARTY AFTER BEING SERVED.  THE INDEMNIFYING
PARTY WILL HAVE THE RIGHT TO PARTICIPATE IN, OR ASSUME AND CONTROL, AT ITS OWN
EXPENSE, THE DEFENSE OF ANY SUCH CLAIM OR PROCESS OR SETTLEMENT.  AFTER

 

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NOTICE FROM THE INDEMNIFYING PARTY OF ITS ELECTION TO ASSUME THE DEFENSE OF THE
ACTION, THE INDEMNIFYING PARTY WILL NOT BE LIABLE TO THE INDEMNIFIED PARTY FOR
ANY LEGAL OR OTHER EXPENSE INCURRED BY THE INDEMNIFIED PARTY IN CONNECTION WITH
SUCH DEFENSE.  SUCH DEFENSE WILL BE CONDUCTED EXPEDITIOUSLY (BUT WITH DUE REGARD
FOR OBTAINING THE MOST FAVORABLE OUTCOME REASONABLY LIKELY UNDER THE
CIRCUMSTANCES, TAKING INTO ACCOUNT COSTS AND EXPENDITURES) AND THE INDEMNIFIED
PARTY WILL BE ADVISED PROMPTLY OF ALL DEVELOPMENTS.

 

Notwithstanding the foregoing, with respect to any matter which is the subject
of any such claim and as to which the indemnified party fails to give the
indemnifying party notice, and this failure adversely affects the ability of the
indemnifying party to defend the claim or materially increases the amount of
indemnification which the indemnifying party is obligated to pay under this
Agreement, the amount of indemnification which the indemnified party will be
entitled to receive will be reduced to an amount which the indemnifying party
would have been entitled to receive had such notice been timely given.  No
settlement of any such claim as to which the indemnifying party has not elected
to assume the defense thereof will be made without the prior written consent of
the indemnifying party, which consent will not be unreasonably withheld or
delayed.

 

20.           INSURANCE.

 

(A)           EACH PARTY AGREES TO PROVIDE AND MAINTAIN AT ALL TIMES DURING THIS
CONTRACT SUCH MINIMUM INSURANCE COVERAGE AS SET FORTH IN THIS PARAGRAPH
20(A) AND TO OTHERWISE COMPLY WITH THE PROVISIONS THAT FOLLOW.  WITHOUT LIMITING
IN ANY WAY THE SCOPE OF ANY OBLIGATIONS AND/OR LIABILITIES ASSUMED HEREUNDER BY
EACH PARTY, EACH PARTY SHALL PROCURE, OR CAUSE TO BE PROCURED FROM REPUTABLE
INSURANCE COMPANIES WITH AT LEAST AN A+ OR AA RATING AND MAINTAIN, AT ALL TIMES
WHILE CONDUCTING OPERATIONS UNDER THIS AGREEMENT, THE FOLLOWING MINIMUM LEVELS
OF INSURANCE:

 

(I)            WORKERS’ COMPENSATION INSURANCE FOR THE FULL STATUTORY LIMITS AND
EMPLOYERS’ LIABILITY INSURANCE OR ITS EQUIVALENT WITH A LIMIT OF NOT LESS THAN
FIVE MILLION DOLLARS ($5,000,000.00) PER OCCURRENCE, APPLICABLE TO ALL PERSONS
EMPLOYED BY SUCH PARTY;

 

(II)           COMMERCIAL GENERAL LIABILITY INSURANCE (ON AN OCCURRENCE BASIS
NOT A CLAIMS MADE BASIS) INCLUDING CONTRACTUAL LIABILITY AND PRODUCTS-COMPLETED
OPERATIONS LIABILITY COVERAGE, COVERING ALL OPERATIONS BY OR ON BEHALF OF SUCH
PARTY AGAINST BODILY INJURY (INCLUDING DEATH) AND PROPERTY DAMAGE (INCLUDING
LOSS OF USE) HAVING A COMBINED SINGLE LIMIT OF NOT LESS THAN TWENTY-FIVE MILLION
DOLLARS ($25,000,000.00) PER OCCURRENCE;

 

(III)          AUTOMOBILE LIABILITY INSURANCE WITH A COMBINED SINGLE LIMIT OF
NOT LESS THAN FIVE MILLION DOLLARS ($5,000,000.00) FOR BODILY INJURY AND
PROPERTY DAMAGE PER OCCURRENCE FOR ALL OWNED, HIRED AND NON-OWNED VEHICLES;

 

(IV)          AS TO MGPI, CARGO AND LOSS INSURANCE IN AN AMOUNT NOT LESS THAN
THAT COVERS THE ACTUAL VALUE OF PRODUCT AS TO WHICH TITLE HAS TRANSFERRED BUT
NOT YET PAID FOR.  ANY SUCH INSURANCE SHALL NAME MANUFACTURER AS THE LOSS PAYEE
FOR DISTRIBUTION AS THE PARTIES’ INTEREST MAY APPEAR.

 

15

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All limits as required above may be met by the use of primary and excess
liability insurance, where any excess insurance shall be excess to the
underlying primary liability limits, terms and conditions for each category of
liability insurance, shall be written on a following form basis of underlying
coverages (including on an occurrence basis and not a claims made basis), and if
there are aggregate limits, such aggregate limits shall apply separately to each
annual policy period. All insurance policies to be maintained by each party,
except Workers’ compensation, shall include coverage for contractual liability,
extending to and including (but not in any way limit) all indemnities given by
each party hereunder and shall be primary to the extent of liabilities assumed
by each party to any policies held by or providing coverage to the other party
and coverage afforded to each party under the other party’s policies shall
delete any excess clause or co-insurance clause that requires sharing or renders
primary any other insurance covering the other.  Furthermore, all insurance
policies shall be endorsed to: (i) name the other party as an additional
insured; (ii) provide for a waiver of subrogation or equivalent endorsement in
favor of the other party; and (iii) provide a Severability of Interests or Cross
Liability Clause.

 

In no event shall the amount or scope of the insurance required herein limit the
liability of either party assumed by it in this Agreement nor shall the failure
to collect under any policy for any reason relieve such party of any of its
obligations. Any and all deductibles or self-insured retentions in the above
described policies shall be assumed by, for the account of, and at the sole risk
of such party.

 

(B)           EACH PARTY WILL FURNISH THE OTHER PARTY WITH CERTIFICATES OF
INSURANCE EVIDENCING THE ABOVE COVERAGE BEFORE BEGINNING ANY PRODUCTION UNDER
THIS AGREEMENT, AND AFTERWARDS FROM TIME TO TIME UPON THE EXPIRATION OF ANY
CERTIFICATE OF INSURANCE.  THE CERTIFICATES DELIVERED BY EACH PARTY WILL CONTAIN
A CLAUSE SPECIFYING THAT THE OTHER PARTY WILL BE NOTIFIED IN WRITING NO LESS
THAN 30 DAYS BEFORE THERE IS A CANCELLATION OR MATERIAL CHANGE IN COVERAGE.

 

21.           TERMINATION BY THE PARTIES.

 

(A)           MGPI MAY TERMINATE THIS AGREEMENT UPON WRITTEN NOTICE TO
MANUFACTURER:

 

(I)            IF MANUFACTURER BREACHES OR VIOLATES ANY OF THE WARRANTIES,
REPRESENTATIONS, AGREEMENTS, COVENANTS, OR CONDITIONS THAT THIS AGREEMENT
CONTAINS OR REQUIRES AND MANUFACTURER FAILS TO REMEDY THE BREACH OR VIOLATION
WITHIN THIRTY (30) DAYS AFTER RECEIPT FROM MGPI OF WRITTEN NOTICE OF THE BREACH
OR VIOLATION; OR

 

(II)           IF MANUFACTURER MAKES AN ASSIGNMENT FOR THE BENEFIT OF ITS
CREDITORS, COMMITS ANY ACT OF BANKRUPTCY, HAS A RECEIVER APPOINTED, OR OTHERWISE
ADMITS OF ITS INABILITY TO PAY ITS DEBTS AS THEY MATURE.

 

(B)           MANUFACTURER MAY TERMINATE THIS AGREEMENT UPON WRITTEN NOTICE TO
MGPI:

 

(I)            IF MGPI BREACHES OR VIOLATES ANY OF THE WARRANTIES,
REPRESENTATIONS, AGREEMENTS, COVENANTS, OR CONDITIONS THAT THIS AGREEMENT
CONTAINS OR REQUIRES AND MGPI FAILS TO REMEDY THE BREACH OR VIOLATION WITHIN
THIRTY (30) DAYS AFTER RECEIPT FROM MANUFACTURER OF WRITTEN NOTICE OF THE BREACH
OR VIOLATION; OR

 

16

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(II)           IF MGPI MAKES AN ASSIGNMENT FOR THE BENEFIT OF ITS CREDITORS,
COMMITS ANY ACT OF BANKRUPTCY, HAS A RECEIVER APPOINTED, OR OTHERWISE ADMITS OF
ITS INABILITY TO PAY ITS DEBTS AS THEY MATURE; OR

 

22.           EFFECT OF TERMINATION.

 

(A)           FOR THE SIX (6) MONTHS IMMEDIATELY FOLLOWING THE EXPIRATION OR
TERMINATION OF THIS AGREEMENT, MANUFACTURER WILL PROVIDE TO MGPI REASONABLE
COOPERATION AND ASSISTANCE (INCLUDING WITHOUT LIMITATION KNOWLEDGE TRANSFER,
MATERIALS SOURCING, TRANSFER OF UNUSED MATERIALS AND UNFINISHED INVENTORY) TO
TRANSITION PRODUCTION OF THE PRODUCTS TO A THIRD PARTY DESIGNATED BY MGPI. 
MANUFACTURER MAY INVOICE MGPI FOR ACTUAL CHARGES, INCLUDING WITHOUT LIMITATION,
MAN HOURS PAID FOR BY MANUFACTURER, IT INCURS FOR THE PROVISION OF TRANSITION
SERVICES PROVIDED TO MGPI PURSUANT TO THIS SECTION 22.  THIS PARAGRAPH (A) WILL
SURVIVE TERMINATION OR EXPIRATION OF THE AGREEMENT.

 

(B)           TERMINATION OF THIS AGREEMENT WILL BE WITHOUT PREJUDICE TO ANY
RIGHTS THAT MAY HAVE ACCRUED TO MANUFACTURER OR MGPI AT THE DATE OF
TERMINATION.  THE OBLIGATIONS OF THE PARTIES UNDER SECTIONS 13, 14, 15, 16, 18,
21, 22, 23, AND 24 WILL SURVIVE ANY TERMINATION.

 

23.           FORCE MAJEURE. IN THE EVENT EITHER PARTY IS RENDERED UNABLE,
WHOLLY OR IN PART, TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT (OTHER THAN
TO MAKE PAYMENTS DUE HEREUNDER) BECAUSE OF ACTS OF GOD; FLOODS; FIRES;
EXPLOSIONS; EXTREME HEAT OR COLD, EXTREME STORMS, OR OTHER EXTREME ADVERSE
WEATHER; EARTHQUAKES; POWER SHORTAGES; TRANSPORTATION DIFFICULTIES; STRIKES,
LOCKOUTS, OR OTHER INDUSTRIAL DISTURBANCES; WARS, ACTS OF TERRORISM, OR
SABOTAGE; ACCIDENT OR BREAKAGE OF EQUIPMENT OR MACHINERY; FAILURE OF
TRANSPORTERS TO FURNISH TRANSPORTATION; FAILURE OF SUPPLIERS TO FURNISH
SUPPLIES, FUEL, OR RAW MATERIALS; OR ANY NEWLY ENACTED LAW, RULE, ORDER, OR
ACTION OF ANY COURT OR INSTRUMENTALITY OF THE FEDERAL, STATE OR LOCAL
GOVERNMENT; OR ANY OTHER MATERIAL CAUSE OR MATERIAL CAUSES BEYOND THE AFFECTED
PARTY’S REASONABLE CONTROL, IT IS AGREED THAT ON SUCH PARTY’S GIVING NOTICE AND
FULL PARTICULARS OF SUCH FORCE MAJEURE EVENT OR CONDITION TO THE OTHER PARTY,
THE OBLIGATIONS OF THE PARTY GIVING SUCH NOTICE SHALL BE SUSPENDED FROM THE DATE
OF THE OTHER PARTY’S RECEIPT OF SUCH NOTICE AND FOR THE CONTINUANCE OF ANY
INABILITY SO CAUSED, BUT FOR NO LONGER PERIOD; AND SUCH CAUSE SHALL, SO FAR AS
POSSIBLE, BE REMEDIED WITH ALL REASONABLE DISPATCH.  EVENTS OF FORCE MAJEURE
SHALL NOT EXTEND THE TERM.  IF AN EVENT OF FORCE MAJEURE CONTINUES FOR A PERIOD
IN EXCESS OF 90 DAYS, THE PARTY NOT AFFECTED BY THE FORCE MAJEURE MAY TERMINATE
THIS AGREEMENT AT ANY TIME THEREAFTER DURING THE CONTINUANCE OF THE FORCE
MAJEURE EFFECTIVE UPON THE GIVING OF WRITTEN NOTICE TO THE PARTY WHICH IS
SUBJECT TO THE FORCE MAJEURE EVENT.

 

24.           INDEPENDENT CONTRACTORS.  THE PARTIES ARE INDEPENDENT CONTRACTORS
AND ENGAGE IN THE OPERATION OF THEIR OWN RESPECTIVE BUSINESSES.  NEITHER
MANUFACTURER NOR MGPI WILL BE CONSIDERED THE AGENT OF THE OTHER FOR ANY PURPOSE
WHATSOEVER.  NEITHER MANUFACTURER NOR MGPI HAS ANY AUTHORITY TO ENTER INTO ANY
CONTRACTS OR ASSUME ANY OBLIGATIONS FOR THE OTHER OR TO MAKE ANY WARRANTIES OR
REPRESENTATIONS ON BEHALF OF THE OTHER, EXCEPT AS MAY BE PROVIDED IN A WRITTEN
AGREEMENT BETWEEN THE PARTIES SPECIFICALLY AUTHORIZING SUCH PARTY TO DO SO. 
NOTHING IN THIS AGREEMENT WILL ESTABLISH A RELATIONSHIP OF CO-PARTNERS OR JOINT
VENTURERS BETWEEN MANUFACTURER AND MGPI.  UNDER NO CIRCUMSTANCES WILL MGPI BE
LIABLE FOR THE DEBTS OR OBLIGATIONS OF MANUFACTURER OR FOR THE WAGES, SALARIES,
OR BENEFITS OF MANUFACTURER’S EMPLOYEES, NOR WILL MANUFACTURER BE LIABLE FOR THE
WAGES, SALARIES, OR BENEFITS OF MGPI’S EMPLOYEES, EXCEPT AS MAY

 

17

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BE PROVIDED IN A WRITTEN AGREEMENT BETWEEN THE PARTIES SPECIFICALLY STATING THAT
SUCH PARTY ASSUMES SUCH LIABILITY.

 

25.           SEVERABILITY.  IF ANY SECTION OR PORTION OF THIS AGREEMENT
VIOLATES ANY APPLICABLE LAW, SUCH SECTION OR PORTION WILL BE INOPERATIVE.  IF A
COURT OF COMPETENT JURISDICTION RULES THAT ANY PROVISION SET FORTH IN THIS
AGREEMENT IS UNENFORCEABLE, THEN SUCH PROVISION WILL (IF POSSIBLE) BE DEEMED
MODIFIED TO THE EXTENT THAT, IN THE COURT’S OPINION, IS NECESSARY TO MAKE IT
ENFORCEABLE.  THE REMAINDER OF THE AGREEMENT WILL REMAIN VALID AND WILL CONTINUE
TO BIND THE PARTIES.

 

26.           SUCCESSORS AND ASSIGNS.  THIS AGREEMENT WILL BE BINDING AND INURE
TO THE BENEFIT OF EACH OF THE PARTIES AND ITS SUCCESSORS AND ASSIGNS.

 

27.           NOTICES.  EXCEPT AS PROVIDED OTHERWISE, EACH PARTY WILL GIVE IN
WRITING BY PERSONAL DELIVERY, CONFIRMED FACSIMILE TRANSMISSION OR OVERNIGHT
COURIER ANY NOTICE OR COMMUNICATION THAT SUCH PARTY MAY OR MUST GIVE UNDER THIS
AGREEMENT OR REGARDING IT.  THIS NOTICE WILL BE DEEMED TO HAVE BEEN GIVEN OR
MADE WHEN PERSONALLY DELIVERED, UPON THE DATE RECEIVED BY FACSIMILE IF RECEIVED
BY 5 PM LOCAL TIME (AND IF NOT, THE FOLLOWING BUSINESS DAY) AND UPON THE DATE
THE OVERNIGHT COURIER DELIVERS SUCH NOTICE OR COMMUNICATION AS EVIDENCED BY THE
OVERNIGHT COURIER’S DELIVERY CONFIRMATION.

 

Either party may advise the other of changes of address or additional addresses
for giving notice from time to time by notice given according to this Section.

 

28.           WAIVER.  NO WAIVER BY EITHER PARTY OF ANY BREACH, DEFAULT, OR
VIOLATION OF THIS AGREEMENT WILL CONSTITUTE A WAIVER OF ANY SUBSEQUENT BREACH,
DEFAULT, OR VIOLATION OF THE SAME OR OTHER TERM, WARRANTY, REPRESENTATION,
AGREEMENT, COVENANT, CONDITION, OR PROVISION.

 

29.           ASSIGNMENTS, SUCCESSORS, AND NO THIRD PARTY RIGHTS.  NEITHER PARTY
MAY ASSIGN ANY OF ITS RIGHTS UNDER THIS AGREEMENT WITHOUT THE PRIOR CONSENT OF
THE OTHER PARTY.  SUBJECT TO THE PRECEDING SENTENCE, THIS AGREEMENT WILL APPLY
TO, BE BINDING IN ALL RESPECTS UPON, AND INURE TO THE BENEFIT OF THE SUCCESSORS
AND PERMITTED ASSIGNS OF THE PARTIES. NOTHING EXPRESSED OR REFERRED TO IN THIS
AGREEMENT WILL BE CONSTRUED TO GIVE ANY PERSON OTHER THAN THE PARTIES TO THIS
AGREEMENT ANY LEGAL OR EQUITABLE RIGHT, REMEDY, OR CLAIM UNDER OR WITH RESPECT
TO THIS AGREEMENT OR ANY PROVISION OF THIS AGREEMENT. THIS AGREEMENT AND ALL OF
ITS PROVISIONS AND CONDITIONS ARE FOR THE SOLE AND EXCLUSIVE BENEFIT OF THE
PARTIES TO THIS AGREEMENT AND THEIR SUCCESSORS AND ASSIGNS.

 

30.           ENTIRE AGREEMENT.  THIS AGREEMENT, TOGETHER WITH THE EXHIBITS
ATTACHED AND INCORPORATED BY REFERENCE, CONTAINS ALL OF THE TERMS, WARRANTIES,
REPRESENTATIONS, AGREEMENTS, COVENANTS, CONDITIONS, AND PROVISIONS THE PARTIES
HAVE AGREED UPON WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT AND MERGES
AND SUPERSEDES ALL PRIOR AGREEMENTS, UNDERSTANDINGS, AND REPRESENTATIONS
RELATING TO SUCH SUBJECT MATTER.  THIS AGREEMENT WILL NOT BE ALTERED OR CHANGED
EXCEPT BY A WRITING THAT AN AUTHORIZED OFFICER OR REPRESENTATIVE OF EACH PARTY
SIGNS.  THIS AGREEMENT MAY BE EXECUTED IN ONE OR MORE COUNTERPARTS AND BY
ELECTRONIC OR FACSIMILE SIGNATURES, ALL OF WHICH TOGETHER WILL BE CONSIDERED ONE
DOCUMENT AND WILL SERVE AS AN ORIGINAL FOR ALL PURPOSES.

 

31.           GOVERNING LAW; INTERPRETATION.  THIS AGREEMENT WILL BE GOVERNED BY
NEW YORK LAW WITHOUT REGARD TO ITS CONFLICTS OF LAW RULES.

 

18

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32.           CURRENCY.  ALL AMOUNTS SET FORTH IN THIS AGREEMENT AND ALL
BUSINESS CONDUCTED PURSUANT TO THIS AGREEMENT ARE AND WILL BE DENOMINATED AND
CONDUCTED IN US DOLLARS.

 

33.           TERMS AND CONDITIONS.  THE TERMS AND CONDITIONS OF PURCHASE AND
SALE OF PRODUCTS ARE SET FORTH IN THIS AGREEMENT, AS AMENDED OR MODIFIED IN
WRITING SIGNED BY BOTH PARTIES, AND NEITHER PARTY’S STANDARD TERMS AND
CONDITIONS WILL APPLY.  IN THE EVENT OF ANY CONFLICT BETWEEN THIS AGREEMENT AND
TERMS OF ANY DOCUMENTS DELIVERED PURSUANT TO THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION ANY PURCHASE ORDER AND ANY INVOICES SENT BY MANUFACTURER, THIS
AGREEMENT WILL CONTROL.

 

[SIGNATURE PAGE FOLLOWS]

 

19

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IN WITNESS WHEREOF, each party has executed this Agreement on the day and year
first above written.

 

 

MGP Ingredients, Inc.

 

 

 

 

 

 

 

By:

/s/ Timothy W. Newkirk

 

 

Timothy W. Newkirk, President

 

 

 

 

 

 

 

Illinois Corn Processing, LLC

 

 

 

 

 

 

 

By:

/s/ Randy Schrick

 

 

Randy Schrick, President

 

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EXHIBIT A — PRODUCTS AND SPECIFICATIONS

 

ASTM 4806 specifications current at the time of delivery or any successor
specifications thereof with sulfates not to exceed 4 ppm and denaturant not to
exceed the Internal Revenue Service volume maximum so that the Product qualifies
for the full blender’s credit.

 

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EXHIBIT B ****

 

**** [3 pages omitted]

 

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**** indicates  that material deemed confidential has been omitted from this
document pursuant to a request for confidential treatment under Exchange Act
Rule 24b-2 and 5 U.S.C. 552(b)(4) and has been filed separately with the Office
of the Secretary of the Securities and Exchange Commission.

 

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EXHIBIT C ****

 

**** [ 2 pages omitted]

 

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**** indicates  that material deemed confidential has been omitted from this
document pursuant to a request for confidential treatment under Exchange Act
Rule 24b-2 and 5 U.S.C. 552(b)(4) and has been filed separately with the Office
of the Secretary of the Securities and Exchange Commission.

 

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EXHIBIT D — MARINE TERMS

 

1.               NOMINATIONS

 

(A)           MGPI SHALL NOMINATE A MARINE VESSEL ACCEPTABLE TO MANUFACTURER
(THE “VESSEL”), SUCH ACCEPTANCE SHALL NOT BE UNREASONABLY WITHHELD. FOR THE
AVOIDANCE OF DOUBT, MANUFACTURER SHALL BE ENTITLED TO REJECT MGPI’S NOMINATED
VESSEL IF IT DOES NOT PASS MANUFACTURER’S INTERNAL SAFETY VETTING PROCEDURE OR
THAT OF ANY OF MANUFACTURER’S FACILITY.

 

(B)           WHERE PRACTICABLE OR UNLESS OTHERWISE AGREED, MGPI SHALL NOMINATE
THE VESSEL AT LEAST THREE (3) DAYS BEFORE THE FIRST DAY OF THE AGREED ARRIVAL
WINDOW.

 

(C)           ALL NOMINATIONS SHALL BE IN WRITING AND MGPI SHALL INCLUDE, TO THE
EXTENT KNOWN:

 

Contract Reference

Vessel Name

Product Grade

Quantity

Agreed Loading Date Range / Arrival Date Range (as applicable)

Estimated Time of Arrival (ETA)

Independent inspector

Product and Quality Specifications (as applicable)

Comments / Instructions (as applicable)

 

(D)           MANUFACTURER SHALL GIVE NOTICE ACCEPTING OR REJECTING ANY VESSEL
NOMINATION WITHIN ONE (1) BANKING DAY AFTER RECEIPT OF SUCH NOMINATION.

 

2.               ESTIMATED TIME OF ARRIVAL (“ETA”):

 

(A)           WHERE PRACTICABLE, MGPI SHALL PROVIDE VESSEL’S ETA NO LATER THAN
48 HOURS PRIOR TO THE VESSEL’S ARRIVAL.

 

(B)           THE TERMINAL OPERATOR AT THE MANUFACTURER’S FACILITY SHALL BE
FURTHER NOTIFIED 6 HOURS IN ADVANCE OF THE VESSEL’S ARRIVAL.

 

(C)           AFTER THE SIX-HOUR NOTICE, WHEN A SCHEDULED ARRIVAL TIME CHANGES
BY MORE THAN TWO HOURS, ALL REASONABLE EFFORTS SHALL BE MADE TO NOTIFY THE
TERMINAL OPERATOR AT THE DISCHARGE PORT OF SUCH CHANGE.

 

3.               NOTICE OF READINESS:  AFTER THE VESSEL HAS ARRIVED AT THE
CUSTOMARY PLACE OF WAITING, IS OTHERWISE IN ALL RESPECTS READY TO LOAD CARGO.

 

4.               LAYTIME:

 

(A)           UNLESS OTHERWISE AGREED, BARGE LAYTIME (“LAYTIME”) SHALL BE 3,000
BARRELS/HOUR PLUS THREE HOURS FREETIME.

 

(B)           IF THE VESSEL ARRIVES BEFORE THE AGREED ARRIVAL DATE RANGE,
TENDERS A VALID NOR, AND IS IN ALL RESPECTS READY TO LOAD ITS CARGO, LAYTIME
SHALL NOT COMMENCE UNTIL

 

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00:01 HOURS ON THE FIRST DAY OF THE AGREED ARRIVAL DATE RANGE, UNLESS
MANUFACTURER ELECTS TO ACCEPT THE VESSEL EARLIER, IN WHICH CASE LAYTIME SHALL
BEGIN WHEN THE VESSEL IS ALL FAST.

 

(C)           IF THE VESSEL ARRIVES WITHIN ITS AGREED ARRIVAL DATE RANGE,
TENDERS A VALID NOR, AND IS IN ALL RESPECTS READY TO LOAD ITS CARGO, LAYTIME
SHALL COMMENCE UPON THE VESSEL’S NOR BEING TENDERED, BERTH OR NO BERTH, OR WHEN
THE VESSEL IS ALL FAST, WHICHEVER OCCURS FIRST.

 

(D)           IF THE VESSEL ARRIVES AFTER THE LAST DAY OF THE AGREED ARRIVAL
DATE RANGE, TENDERS A VALID NOR, AND IS IN ALL RESPECTS READY TO LOAD ITS CARGO,
LAYTIME SHALL COMMENCE WHEN THE VESSEL IS ALL FAST.

 

(E)           TIME CONSUMED DUE TO ANY OF THE FOLLOWING SHALL NOT COUNT AS USED
LAYTIME OR IF THE VESSEL IS ON DEMURRAGE, FOR DEMURRAGE:

 

(I)            ANY DELAY DUE TO THE VESSEL’S CONDITION, BREAKDOWN, OR ANY OTHER
CAUSES ATTRIBUTABLE TO THE VESSEL;

 

(II)           ANY DELAY DUE TO PROHIBITION OF DISCHARGING AT ANY TIME BY THE
OWNER OR OPERATOR OF THE VESSEL OR BY THE PORT AUTHORITIES, UNLESS THE
PROHIBITION IS CAUSED BY MANUFACTURER OR MANUFACTURER’S FACILITY’S FAILURE TO
COMPLY WITH APPLICABLE LAWS, RULES, AND REGULATIONS;

 

(III)          ANY DELAY DUE TO POLLUTION OR THREAT THEREOF CAUSED BY ANY DEFECT
IN THE VESSEL OR ANY ACT OR OMISSION TO ACT BY THE MASTER OR CREW OF THE VESSEL;

 

(IV)          ANY DELAY DUE TO THE VESSEL’S VIOLATION OF THE OPERATING OR SAFETY
RULES AND/OR REGULATIONS, NONCOMPLIANCE WITH: (I) FEDERAL OR STATE LAWS,
(II) U.S. COAST GUARD REGULATIONS, (III) ANY OTHER APPLICABLE REGULATIONS,
(IV) OR FAILURE TO OBTAIN OR MAINTAIN REQUIRED CERTIFICATION;

 

(V)           ANY DELAYS CAUSED BY STRIKE, LOCKOUT, STOPPAGE OR RESTRAINT OF
LABOR OF MASTER, OFFICERS OR CREW OF THE VESSEL OR OF TUGBOATS;

 

(VI)          ANY DELAY, NOT BEING FIRST CAUSED BY THE NEGLIGENCE OF
MANUFACTURER OR MANUFACTURER’S FACILITY, BY REASON OF FIRE, EXPLOSION, STORM,
STRIKE, LOCKOUT, STOPPAGE OR RESTRAINT OF LABOR, BREAKDOWN OF MACHINERY OR
EQUIPMENT IN OR ABOUT THE FACILITIES OF MANUFACTURER OR MANUFACTURER’S FACILITY,
ADVERSE WEATHER, CIVIL UNREST, ACT OF WAR, RIOT, ARREST OR RESTRAINT OF PRINCES,
RULERS OR PEOPLES, OR “ACT OF GOD” SHALL BE PAID FOR AT ONE-HALF (1/2) THE RATE
OTHERWISE PROVIDED FOR DEMURRAGE.

 

(F)            LAYTIME SHALL CEASE AFTER ALL PRODUCT HAS BEEN LOADED AND WHEN
THE HOSES HAVE BEEN DISCONNECTED FROM THE VESSEL AND THE VESSEL HAS BEEN
RELEASED BY MANUFACTURER OR MANUFACTURER’S FACILITY.

 

(G)           A DECLARATION OF FORCE MAJEURE EVENT SHALL NOT RELIEVE THE
MANUFACTURER FROM THE OBLIGATION TO PAY DEMURRAGE UNDER THIS AGREEMENT.

 

4.         DEMURRAGE:

 

(A)           DEMURRAGE RATE: MANUFACTURER SHALL PAY DEMURRAGE, AT THE CHARTER
PARTY RATE FOR ALL TIME THAT USED LAYTIME EXCEEDS THE LAYTIME ALLOWANCE.

 

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(B)           FOR DEMURRAGE PURPOSES, ALL INLAND BARGES OR TOWS OPERATING AS A
UNIT SHALL BE CONSIDERED COLLECTIVELY AS ONE UNIT.

 

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