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Exhibit 10.2
 
PURSUANT TO AND IN ACCORDANCE WITH ITEM 601(B) OF REGULATION S-K, CERTAIN
IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT BOTH (I)
IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

CORN PROCUREMENT AGREEMENT

This Corn Procurement Agreement (this "Agreement") is made and entered into to
be effective as of January 24, 2020 (the "Effective Date") by and between
Lincolnway Energy, LLC, an Iowa limited liability company ("LWE") and Innovative
Ag Services Co, a cooperative under the laws of the State of Illinois ("Seller")
(LWE and Seller may hereinafter from time to time be referred to, individually,
as a "Party," and collectively are the “Parties” to this Agreement.

RECITALS

A.
LWE owns and operates an ethanol manufacturing plant (the "Plant") and related
storage facilities (collectively, the "Facility") in Nevada, Iowa, which it
operates in support of its ethanol production system;

 

B.
The acquisition of a steady and reliable supply of corn is essential to the use
and operation of the Plant and the Facility;

 

C.
LWE needs a willing business partner with a valid Iowa Grain Dealers License to
procure corn for LWE from Producers who do not have a valid Iowa Grain Dealers
License (“Producers”); and

D.
The Parties have discussed, negotiated, and agreed on a corn procurement
arrangement between the Parties to provide LWE with a steady and reliable supply
of Producer corn, pursuant to the terms and conditions to be set forth
hereinafter.

NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein
contained, and in exchange for other good and valuable consideration, the
receipt and sufficiency of which are herein acknowledged and agreed, the Parties
hereby agree as follows:

1.
The Facility. The Parties hereby acknowledge, understand, agree, and accept that

(a)   the Facility consists of a corn receiving and storage operation;  and
 

(b)   located at the Facility is a truck scale that meets the requirements for
certification by the Iowa Department of Agriculture and Land Stewardship and
moisture testing and grading equipment for grading corn delivered to the
Facility.

2. Regulatory and Licensing of the Facility. LWE will be responsible for
satisfying all conditions and requirements associated with or necessary for the
procurement and maintenance of all necessary licenses, including all legal and
regulatory requirements, as required by any governmental authority with
jurisdiction over the Plant and Facility, including without limitation the
federal, state, or local governmental unit.

3. Operating Expenses. Except as expressly provided in this Agreement, LWE shall
pay all costs associated with the operation of the Plant and Facility, including
utilities, maintenance, repairs, capital improvements, real estate taxes,
maintenance of access roads, and depreciation.

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4. Requirements Contract.  Except as otherwise provided in this Agreement, LWE
shall buy from Seller and Seller shall sell to LWE pursuant to this Agreement
all of the Producer corn LWE needs for the operation of the Plant during the
term of this Agreement and run-out period after the Agreement terminates. 
Notwithstanding the foregoing, Seller shall not be held liable for failure of
delivery of necessary quantity of corn as required to meet the Plant’s ethanol
production schedule.  LWE hereby promises, agrees, represents, warrants and
covenants that LWE maintains full responsibility for sourcing and arranging for
delivery of all corn needed to supply the Plant, and LWE is solely responsible
to cover holiday weekends, anticipation of abnormal weather conditions, or other
events likely to disrupt corn delivery.

5. Corn Standards.  LWE may establish, change, modify, and amend, from time to
time, standards for accepting or rejecting corn delivered to the Facility as
well as schedules for applicable discounts for corn which may be accepted even
though it does not meet LWE's standards. LWE may reject any delivery of corn
that does not meet its quality standards.  Seller will utilize the LWE discount
schedule and pass through any and all discounts per the LWE discount schedules
to Producers for the Producer corn it purchases per this Agreement. LWE shall
consult with Seller before LWE establishes or changes such standards and
schedules. A change in the standards for accepting corn or in the applicable
discounts shall not apply to corn delivered to fulfill a contract to purchase
corn between the Parties that is outstanding at the time of the change in
standards or discounts. LWE acknowledges that it has primary responsibility to
verify whether or not corn delivered to the Facility satisfies LWE's quality
standards for acceptance so long as LWE's employees are solely responsible for
inspecting the quality of each load at the time of delivery. SELLER DISCLAIMS
ALL EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES AS TO THE CONDITION,
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, SAFETY OR ANY OTHER ASPECT
OF THE CORN SOLD UNDER THIS AGREEMENT.

6. Corn Receipts.

a.
Seller’s Obligations. Seller shall locate a computer at the Facility, and
provide the necessary software into its computer system (“Seller’s Grain
Accounting System”).  Seller shall pay for all Producer corn delivered to the
Facility.

b.
LWE’s Obligations.

1.
LWE will provide necessary computer hardware and high-speed internet access with
a firewall configuration acceptable to Seller to allow LWE to access Seller’s
Grain Accounting System.  LWE understands that all logon identifiers and
passwords provided to LWE for access into the Seller’s Grain Accounting System
and any information that is accessed or acquired with said credentials is deemed
Confidential Information of Seller.  LWE is responsible for maintaining the
confidentiality of such logon identifiers and passwords and shall be fully
responsible for all activities that occur under such logon credentials.  LWE
agrees to immediately notify Seller of any unauthorized use of such logon
credentials, and to ensure that its authorized users exit from their account at
the end of each session.

2.
LWE shall arrange for all purchases and deliveries of corn to the Facility.

3.
LWE shall staff the Facility with its employees and shall be responsible for all
aspects of the physical receipt of corn into the Facility, including corn
inspection, operation of the truck scale, giving scale tickets to the delivering
party, operation of the moisture testing and grading equipment. LWE shall
maintain the roadways at the Facility so that corn can be delivered to the
Facility.

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4.
LWE shall maintain the truck scale, moisture testing and grading equipment so
that it meets the requirements of the Iowa Department of Agriculture and Land
Stewardship.

5.
Each day, LWE will enter each and every scale ticket to include at minimum entry
of weights, grades, and delivering party information for Producer corn delivered
to the Facility and accepted by LWE into the Seller’s Grain Accounting System.

7.
Ownership, Storage, and Sale of Corn.  LWE and Seller hereby acknowledge and
agree that, unless otherwise provided in this Agreement: (a) LWE will own and
retain title to the corn delivered to the Facility and inventoried at the
Facility; (b) LWE shall be responsible to pay the Iowa Grain Handlers Tax for
all corn received and in the Facility; (c) LWE may remove corn from the Facility
into the Plant at any time in its sole discretion; (d) ownership and title to
the corn will transfer from Seller to LWE when the corn is delivered and
accepted by LWE.

8.
Merchandising Strategy.  LWE will have the right to establish and revise its
merchandising strategy subject to the terms and conditions hereof.

a.
LWE reserves the right to procure and contract non-Producer corn in accordance
with its merchandising strategy.

b.
LWE can  procure and contract Producer corn to be delivered no more than eight
complete calendar months into the future from the month the contract is written,
therefore there should never be any Producer contracts with delivery dates
greater than 276 days from the issue date without prior written approval, with
the exception of the initial contracts per Section 13(e).

c.
LWE will only contract with Producers Priced Contracts and Basis Contracts for
the duration of this Agreement with the exception of the initial contracts per
Section 13(e).  As used herein, the term Priced Contracts refers to a contract
that allows the grower to lock in a specific price for a predetermined delivery
period.  A Priced Contract would always have the Futures Month, Basis, and Cash
Price. A Basis Contract refers to a contract that is made based on the spread
between the cash and futures market for a predetermined delivery period.  Basis
Contracts become price contracts before delivery when the futures price is set,
and the resulting cash price is calculated.

i.
Each day, LWE will enter all pertinent details of corn purchase contracts
entered into with Producers in Seller’s Grain Accounting System on Producers
account at a mutually agreeable time to not affect Seller’s Long/Short
reporting.  If Producer is not expected to deliver the corn within the next
week, LWE will mail a copy of the corn contract to the Producer.

ii.
Each day, LWE will summarize the corn purchase contracts by contract type and
delivery period.  LWE will utilize this summary to enter offsetting sales
contract by contract type and delivery period from Seller to LWE in Sellers’s
Grain Accounting System.

iii.
Each day, LWE will reconcile and affirm to Seller that all Producer purchase
contracts have been entered and all corresponding Sales contracts have been
entered into Seller’s Grain Accounting System on a “back to back” basis per
Section 9.

d.
Any changes to the merchandising terms and conditions need to be approved in
writing by Seller prior to implementation.

 
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9.
Hedging Activity/Risk Management – LWE and Seller hereby acknowledge and agree
that LWE solely retains the responsibility and risk for hedging or off-setting
any changes in corn futures price vs. the futures prices contracted on all corn
purchases of LWE.  LWE agrees to offset all priced contract corn purchases
including non-Producer and Producer bushels by placing timely short corn hedge
positions on the board in the corresponding option month as the purchase
bushels.   LWE will provide to Seller on a weekly basis adequate assurance of
LWE’s total hedge position to include a summary of all non-Producer and Producer
priced contracts by option month and their corresponding broker statements to
show the offsetting short corn hedge positions.  At no time through the duration
of this Agreement should the total purchased bushels be different than the total
short corn hedge position bushels by more than 10,000 bushels.  Furthermore, LWE
and Seller expressly agree that all Producer purchase bushels and corresponding
sales contracts will be “back to back” in total on a daily basis so that Seller
does not have any net risk in any corn bushels purchased from Producer and sold
by Seller to LWE.

 

10.
Accounting and Payment.

a.
By the end of business on each business day, LWE will have entered all of the
Producer scale ticket information per Section 6. B (5) into the Seller’s Grain
Accounting System on account of each Producer.

b.
By the end of business on each business day, LWE will apply all scale tickets of
Producer corn to Producers Contract in Seller’s Grain Accounting System.  For
weights and grading purposes, each scale ticket stands alone and will not be
averaged with other scale tickets.

c.
If a Producer delivers more corn bushels than they have contracted,  LWE will
“Spot” these bushels by entering a new contract into the Seller’s Grain
Accounting System on said Producers account at the current bid price for the
bushels in excess of their contract.

d.
LWE will summarize all bushels that were Spotted each day.  LWE will enter one
sales contract for the total spot bushels at the current bid price each day into
the Seller’s Grain Accounting System for Seller to Sell and LWE to buy those
bushels at the current bid price.

e.
If any Producer delivers less corn bushels than they have contracted and LWE
agrees to let them out of their remaining corn bushel contract,  LWE will need
to reduce the back to back purchase with Seller for the same delivery period by
the same quantity of undelivered bushels.

f.
By 10:00 AM on each business day or the next business day in the event of a
weekend or holiday, LWE shall report to Seller the quantity of corn delivered
and accepted by LWE for the previous day, the amount owed to Seller for those
bushels, and the “Payable” LWE will calculate as the amount owed for the
previous days bushels received by applying the delivered corn to the oldest open
purchase contract with Seller for each respective delivery period. LWE will
provide adequate detail to Seller for Seller to apply to its own account.

g.
LWE will set up an Automated Clearing House (“ACH”) payment for the Payable to
be paid to Seller’s account the same business day.

h.
Seller will receive the ACH and apply to open sales contracts with LWE per the
detailed payment summary as provided in 10 (f).

i.
Each business day, Seller and LWE will work together to ensure that all
contracts have been completed on a back to back basis, and that there is no
impact to Seller’s Daily Long/Short report.

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j.
LWE will communicate with Seller to inform when Producer contracts are full for
Seller to settle the Producer corn contracts.

k.
Seller will not set up ACH payments for Producer payments for the duration of
the Agreement.

 

11.
Procurement Fee – Seller and LWE hereby acknowledge and agree that LWE will
compensate Seller $[*]/bushel for all Producer bushels delivered to LWE per this
Agreement. LWE will calculate this fee by the end of the second day of the
calendar month for the previous month’s activity and will include the
procurement fee in the next possible ACH payment from LWE to Seller, and forward
the fee calculation to the Seller.

 

12.
Deposit – Upon inception of this Agreement, LWE will advance $250,000 to Seller
as a deposit on their account with Seller.  This deposit will assure LWE’s
timely payment for the corn purchased hereunder pursuant to the terms and
conditions hereof and the applicable corn contracts and will remain on account
with Seller until all terms and conditions of this Agreement have been reached. 
This deposit will not earn interest.

13.
Onboarding – LWE and Seller acknowledge and agree on the following as it relates
to the initial onboarding of the Agreement.

a.
Due to the initial start-up time and efforts with the Agreement, the minimum
amount due from LWE to Seller under Section 11 is $25,000.

b.
Upon execution of the Agreement, LWE will provide a complete customer list of
all customers that have open contracts with LWE.  The list is to include LWE’s
customer #, complete customer legal name, address, phone #, and any current
active lienholders with specifics on lienholder indemnification per Section 16.

c.
LWE will provide a detailed listing of open Producer purchase contracts to be
assigned to Seller.

d.
Seller will accept as assignee all current Producer purchase contracts for the
month of signing and two additional delivery months.

e.
Seller will accept as assignee months beyond two additional delivery months if
the contracts were on the original contract listing provided by LWE to Seller on
or about Jan. 6th 2020 and is attached for reference.

f.
LWE will transfer the Priced purchase contracts as back to back contracts with
Seller, thus LWE will maintain and price risk associated with the futures price
change and the futures price on the contracts.

g.
Seller will accept as assignee the HTA purchase contracts that LWE has, LWE will
transfer the related hedges to Seller’s account.  Any differences in the hedge
position and the HTA contract futures prices assigned will be settled up with
Seller paying LWE if the hedge value is less than the contract price, and LWE
paying Seller if the hedge value is more than the contract price.

h.
Seller will accept as assignee the basis purchase contracts that LWE has, and
LWE will immediately enter into basis purchase contracts with Seller for same
bushel quantity, basis levels, and delivery periods.

i.
Communication with Producers is an important aspect for the success of this
Agreement.  Any mass communication with Producers that is sent on behalf of or
in reference to the other Party must be approved in advance by the referenced
Party prior to the communication.

 
* Portion omitted pursuant to request for confidential treatment filed
separately with the Securities and Exchange Commission.

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14.
Insurance.

Seller's Insurance. Seller shall obtain and maintain at its costs the following
insurance pursuant to policies that are reasonably acceptable to LWE:

i.
Commercial general liability insurance that contains broad form contractual
liability with a combined single limit of not less than $2,000,000, which must
include coverage for bodily injury and property damage caused by Seller or its
employees. Seller will have LWE listed as an additional named insured under this
policy.

LWE's Insurance. LWE shall obtain and maintain at its costs the following
insurance pursuant to policies that are reasonably acceptable to Seller:

i.
Commercial general liability insurance that contains broad form contractual
liability with a combined single limit of not less than $2,000,000, which must
include coverage for bodily injury and property damage caused by LWE or its
employees. LWE will have Seller listed as an additional named insured under this
policy.

ii.
Casualty insurance insuring the replacement value of the Facility against losses
from fire, theft, vandalism or other casualty.

 

15.
 Term. Subject to the terms and conditions of this Agreement, this Agreement
shall be in effect commencing on the Effective Date and continue thereafter
unless and until terminated on the earliest of the termination dates determined
as follows (the "Term"):

 
(i)    Either Party may terminate this Agreement with or without cause by a
written notice of termination provided to the other Party, in which event, this
Agreement  will terminate  on the thirtieth (30th day) after the notice of
termination was received by the other Party.

(ii)   If either Party materially breaches a term or condition of this
Agreement, the other non-breaching Party may deliver to such breaching Party a
notice of default specifying the nature of the default. Unless the default is
cured to the satisfaction of the non-breaching Party within fifteen (15) days,
this Agreement will terminate on the fifteenth (15) day after the notice of
default was received by the breaching Party. In addition to such right to
terminate this Agreement, the non-breaching Party may exercise any and all
rights and remedies that such Party is entitled to under any and all applicable
law or in equity. Nothing herein shall be construed to prohibit any Party from
seeking injunctive or other equitable relief to prevent recurring material
defaults during the time afforded such breaching Party to cure a default.

(iii)  If Seller does not receive a payment required by Section 10(g) prior to
the end of the business hours of the next banking day, then Seller may
immediately terminate this Agreement by giving a notice of termination to LWE.

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(iv)  If Seller does not receive adequate assurance that the total priced
purchase contract bushels of LWE are appropriately offset by short corn hedged
positions as required by Section 9, then Seller may immediately terminate this
Agreement by giving a notice of termination to LWE.
 

15.
Termination. Upon the termination of the Agreement, LWE will no longer contract
and arrange for delivery of Producer corn on behalf of Seller.  Seller will
maintain and deliver on the remaining Producer purchase contracts and the
corresponding sales contracts to LWE. If after termination LWE creates
additional sales contracts with the same individual Producers as Seller already
has contracts for, LWE agrees that all delivered bushels get delivered on
Producers account with Seller until all of Sellers contracts with Producers have
been filled.

16.
Indemnification. LWE shall indemnify, defend and hold Seller harmless from and
against any and all costs, liabilities,  losses, and expenses  (including, but
not limited to, reasonable attorneys' fees) resulting from any claim, suit,
action, or proceeding brought by any third party against Seller alleging (i)
personal injury caused by the negligence or willful misconduct of LWE; or (ii)
matters arising on account of a material breach by LWE of its obligations under
this Agreement; or (iii) for incomplete customer lienholder records provided to
Seller from LWE for initial Producer set-up and continued lienholder maintenance
communication for the duration of the Agreement and run-out period.

17.
Confidential Information.  It is understood and agreed that both Parties may
provide certain information that is and must be kept confidential.  To ensure
the protection of such information it is agreed that.

a.
For purposes of this Agreement, "Confidential Information" shall mean any and
all non-public information, including, without limitation, business information
relating to proprietary ideas and inventions, trade secrets, existing and
potential customers, clients, marketing, and current or future business plans
and models.

 

b.
Both Parties agree not to disclose the Confidential Information obtained from
the discloser to anyone unless required to do so by law.

 

c.
This Agreement is to remain in effect for two (2) years from signing or until
mutually cancelled. Confidentiality obligations survive any expiration or
termination of this Agreement.

 

d.
This Agreement states the entire agreement between the Parties concerning the
disclosure of Confidential Information. Any addition, modification, or transfer
of this Agreement must be made in writing and signed by both Parties.

 

 
18.
Miscellaneous.

 

a.
Independent Contractor Relationship. The Parties hereto agree that the
relationship created by this Agreement is not that of employer-employee, nor
shall anything herein be construed to establish any kind of partnership, joint
venture, employment, franchise, or agency between the Parties, and neither Party
shall make any representation to the contrary.  The relationship of the Parties
is as a buyer and seller of com and independent contractors.  Under no
circumstances shall Seller be liable for any of the debts or obligations of LWE.

 
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b.
Compliance with Law. Each Party represents and warrants that at all times during
the Term hereof it will comply with all applicable law with respect to
performance of the terms and conditions hereof.

 

c.
Force Majeure. In case of fire, explosions, interruption of power, strikes or
other labor disturbances, lack of transportation facilities, shortage of labor
or supplies, floods, action of the elements, riot, interference of civil or
military authorities, enactment of legislation or any unavoidable casualty or
cause beyond the control of a Party and affecting the conduct of its business to
the extent of preventing or unreasonably restricting the receiving, handling,
production, marketing, or other operations, that Party shall be excused from
performance during the period that its business or operations are so affected.
However, the Party not subject to the force majeure event may, during such
period, accept performance from the other Party or a third party as it may
reasonably determine under the circumstances.

d.
Modification. This Agreement may be amended or modified only by the written
mutual consent of the Parties. Except as so amended or modified, this Agreement
represents the entire agreement of the Parties.

 

e.
Binding Effect; Assignment. This Agreement is binding upon and shall inure to
the benefit of the Parties and their respective representatives, successors and
assigns. Any transfer, assignment or delegation, in whole or in part, of this
Agreement shall require the advance written consent of both Parties.

 

f.
Waivers. No waiver of a breach of any of the Agreements or provisions contained
in this Agreement shall be construed to be a waiver of any subsequent breach of
the same or of any other provision of this Agreement.

 

g.
Notices. All notices, demands, or requests from one Party to another may be
personally delivered or sent by mail, certified or registered, postage prepaid,
to the addresses stated in this section, and shall be deemed to have been given
at the time of personal delivery or forty-eight (48) hours after the time of
mailing.

 
i. All notices, demands or requests shall be given to LWE at:          
Lincolnway Energy, LLC
   
59511 W. Lincoln Hwy
   
Nevada, IA 50201
   
Attn:  CEO

  ii.
All notices, demands or requests shall be given to Seller at:
         
Innovative Ag Services Co.
   
Attn: CFO
   
2010 South Main St.
   
Monticello, IA 52310

 

h.
Severability.   In the event any term, covenant or condition herein contained is
held to be invalid or void by any court of competent jurisdiction, the
invalidity of any such term, covenant or condition shall in no way affect any
other term, covenant or condition herein contained.

 
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i.
Governing Law. This Agreement is and shall be deemed to be a contract entered
into and made pursuant to the laws of the State of Iowa, and shall, in all
respects, be governed in accordance with the laws of said state, regardless of
the conflict of law principles customarily applied by the courts of any
jurisdiction.

 

j.
Headings and Captions. The headings and captions of the titles, articles,
sections, and subsections of this Agreement are inserted for convenience of
reference only, and do not constitute part of the Agreement.

k.
Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall in such event be deemed an original, but all
of which together shall constitute one and the same instrument.

 
l.
Confidentiality. Each of the Parties shall keep all information, data, and items
included in this Agreement confidential and shall not disclose or otherwise use
any of the same without written prior consent by the other Party.

IN WITNESS WHEREOF, Seller and LWE have caused this Agreement to be executed by
their duly authorized representatives to be effective as of the Effective Date.
 
Seller:
Innovative Ag Services Co.

By:
/s/ Brenda Hoefler  
Name:
Brenda Hoefler, CFO
 

 
LWE:
Lincolnway Energy, LLC
  
By:
/s/ Jeff Kistner
 
Name:

Jeff Kistner, Interim CFO  

 
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Original Contract Listing

[*]

* Portion omitted pursuant to request for confidential treatment filed
separately with the Securities and Exchange Commission.

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