-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LZMJWNM2PMquYGLDujuS3gTIJMxNhFnFTA9s76pYZxZFmby/8Oh4lK4irpHw87OA 4wXXBONrG2vmd0An95XHyw== 0000941158-96-000023.txt : 19961016 0000941158-96-000023.hdr.sgml : 19961016 ACCESSION NUMBER: 0000941158-96-000023 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19961015 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HIGH PLAINS CORP CENTRAL INDEX KEY: 0000317551 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 480901658 STATE OF INCORPORATION: KS FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08680 FILM NUMBER: 96643323 BUSINESS ADDRESS: STREET 1: 200 W DOUGLAS STREET 2: STE 820 CITY: WICHITA STATE: KS ZIP: 67202 BUSINESS PHONE: 3162694310 MAIL ADDRESS: STREET 1: 200 W DOUGLAS STREET 2: STE 820 CITY: WICHITA STATE: KS ZIP: 67202 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN GASOHOL REFINERS INC DATE OF NAME CHANGE: 19830807 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Fee Required). For the fiscal year ended June 30, 1996 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Required) For the transition period from ___________to __________. Commission File No. 1-8680 HIGH PLAINS CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Kansas 48-0901658 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 200 W. Douglas, Suite #820, Wichita, Kansas 67202 ----------------------------------------------------- (Address and zip code of principal executive offices) (316) 269-4310 ---------------------------------------------------- (Registrant's telephone number, including area code) Securities Registered Pursuant to Section 12 (b) of the Act: NONE Securities Registered Pursuant to Section 12 (g) of the Act: Common Stock, $0.10 par value ---------------------------------------------------- (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety (90) days. YES X NO Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ]. As of September 30, 1996, there were 15,856,111 outstanding common shares of the Registrant. As of September 30, 1996, the aggregate market value of voting stock of High Plains Corporation held by nonaffiliates was approximately $71,984,573. Documents Incorporated by Reference: Portions of the Registrant's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders (the "Proxy Statement"), which is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the Registrant's fiscal year end, are incorporated by reference in Part III. Portions of the Registrant's 1996 Annual Report to Stockholders for the fiscal year ended June 30, 1996 (the "Annual Report") which is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the Registrant's fiscal year end, are incorporated by reference in Parts I, II and IV. 2 PART I Item 1 BUSINESS High Plains Corporation (the "Company") was incorporated under the laws of the State of Kansas on February 28, 1980. The Company's principal offices are located at 200 W. Douglas, Suite 820, Wichita, Kansas 67202 and its telephone number is (316) 269-4310. (Financial information concerning the Company's operations is incorporated by reference from Management's Discussion and Analysis of Financial Condition and Results of Operations (Management's Discussion and Analysis) and the Financial Statements and Notes thereto in the Company's Annual Report.) The Company manufactures and sells ethanol for blending with gasoline as a motor fuel. The Company believes it is currently the sixth largest ethanol producer in the United States. Ethanol increases the oxygen level in gasoline, reducing pollutants, including carbon monoxide and hydrocarbon particulate emissions. Industry sources estimate that 1.5 billion gallons of ethanol were used to oxygenate United States fuel supplies in 1995. In addition, the Company sells distiller's grains (DDG), its primary by-product. Selling prices of DDG generally varies with sorghum and corn prices with primary markets for the Company's DDG continuing to be feed manufacturers of animal and pet foods, and direct consumers such as feedlots and dairies. Since fiscal 1992, ethanol production capacity at the Colwich plant has exceeded 17 million gallons per year. Production at the York facility during fiscal 1996 exceeded 29.1 million gallons compared to 15.7 million gallons for the last eight months of fiscal 1995, its start-up year. Actual production in fiscal 1996, for both plants was below capacity due to the temporary shutdown of the plants in May 1996. (For information regarding the temporary shutdown of the Company's plants see "Temporary Shutdown of Plant Operations" discussion in Management's Discussion and Analysis in the Company's Annual Report which is incorporated by reference herein.) The Company's production process depends upon a substantial uninterrupted supply of natural gas. The Company has contracted with one natural gas provider to supply both its Colwich and York plants, and believes these supplies will be sufficient for its production needs. Should this source of supply be interrupted, the market is very competitive, and the Company believes alternative supplies could be contracted with little or no interruption to normal operations. Other materials used in the production of ethanol are readily available from numerous suppliers. In addition, the Company is dependent on rail transportation to ship its ethanol and DDG to its customers. Any interruption of rail transportation due to a rail strike or any other circumstance would have a significant detrimental effect on the Company's operations. 3 In prior years, the Company has maintained sufficient on-site grain storage for three to five days of production. The Company believes that the continuing exclusive grain supply agreement with Farmland Industries, Inc., will allow the Company to minimize grain inventory levels on-site. At fiscal year end 1996 the Company had zero grain inventories due to the temporary shutdown of its production facilities. (Also see the discussion of raw materials and the temporary shutdown of the Company's plants in Management's Discussion and Analysis in the Company's Annual Report, which is incorporated by reference herein.) Historically, the maximum finished ethanol inventory which the Company has attempted to keep in stock equal approximately four to five days of production. Also, typical payment terms in the industry are "Net 10 days from delivery". As such, low inventories of finished goods and quick payment terms from customers help to minimize the working capital needs of the Company. At June 30, 1996, the Company's ethanol inventory levels met or exceeded typical maximum levels as finished goods were held for delivery in partial satisfaction of future contract commitments during the temporary shutdown of the Company's production facilities. (For more information see "Temporary Shutdown of Plant Operations " discussion in Management's Discussion and Analysis in the Company's Annual Report which is incorporated by reference herein.) The market price of ethanol is not related to grain prices, but has historically been determined by gasoline prices and federal tax incentives. Therefore, High Plains is generally not able to compensate for increases in the cost of grain feedstock through upward adjustments in prices charged for its ethanol. (For information regarding the seasonality of the Company's business see "Seasonality" discussion in Management's Discussion and Analysis in the Company's Annual Report which is incorporated by reference herein.) For the fiscal year ended June 30, 1996, the Company's sales to three customers represented in the aggregate approximately 45.8% of the Company's total product sales and revenues. Through February 1996, virtually all of the Company's DDG production was brokered under an exclusive agreement with ICM, Inc. However, in March 1996, the Company terminated the ICM, Inc. agreement and entered into a new brokerage agreement with ConAgra, Inc. for the sale of the Company's DDG production. This exclusive agreement will automatically renew for successive one-year terms unless written notice of termination is issued 90 days prior to the end of a term. The Company is in direct competition with other ethanol producers, many of which have greater resources than the Company. The largest ethanol producers include Archer Daniels Midland, Pekin Energy Co., and New Energy Co. of Indiana which are capable of producing approximately 700 million, 100 million, and 75 million gallons of ethanol per year, respectively. In addition, there are several other competitors of a similar size and with similar resources to 4 the Company. Recent estimates place total domestic ethanol production capacity at 1.5 billion gallons per year. However, the Company is unable to accurately predict the number and production capacity of the plants which may ultimately be constructed by third parties, or the effect of resulting production, upon the demand or price for ethanol. Additionally, in response to increasing grain prices Archer Daniels Midland, other producers and the Company announced reduced ethanol production compared to prior years. The Company competes with the other ethanol producers on the basis of price and, to a lesser extent, delivery and service. High Plains believes that it is able to compete favorably with other ethanol producers due to its proximity to ample grain supplies and the efficiencies of the plants. The Company also believes that its locations offer an advantage over other ethanol producers in that the Company has ready access by rail to growing ethanol markets, which reduces its cost of sales. The Company is also in competition with producers of MTBE, a petrochemical derived from methanol which costs less to produce than ethanol. Many major oil companies produce MTBE, and because it is petroleum based, its use is strongly supported by such oil companies. These companies have significant resources to market MTBE and to influence legislation and public perception of MTBE. These companies also have sufficient resources to begin production of ethanol should they choose to do so. The Company is subject to extensive environmental regulation at the federal, state and local levels. Air quality at the Colwich plant is regulated by the Environmental Protection Agency and the Division of Environment of the Kansas Department of Health and Environment (the "KDHE"). The KDHE regulates emission of volatile organic compounds into the air. Volatile organic compound emissions are tested on a monthly basis at the Colwich plant, and the Company must submit semi-annual reports to the KDHE regarding these emissions tests. The Company is required to obtain an air operating permit from the KDHE and must obtain KDHE approval to make plant alterations that could change the emission levels. The KDHE also regulates the water usage, waste water discharge and hazardous waste at the Colwich plant under Kansas water pollution control and hazardous waste laws. Water usage and waste water effluent quality are tested daily. Monthly reports regarding water usage and quality are filed with the KDHE. The Company is also required to submit periodic reports pursuant to the Kansas and Federal Emergency Planning Community Right-to-Know Act. At the local level, the Company files semi-annual reports with the Sedgwick County Community Health Department regarding air quality at the Colwich plant. The York facility is subject to similar environmental regulations at the federal, state and local level. Air quality at the York plant is regulated by the Environmental Protection Agency and the Nebraska Department of Environmental Quality (the "NDEQ"). The Company submits various reports routinely throughout the year concerning emissions of volatile compounds. The Company was 5 required to obtain an air operating permit from the NDEQ and must obtain approval to make any plant alternations that could change the emission levels. Consequently, the Company's Air Quality Operating Permit was revised for the industrial ethanol plant modifications. The Company has made application for a construction permit and the NDEQ has authorized construction to commence during their review and comment period. The NDEQ also regulates waste water discharge at the York Plant. Waste water effluent quality is tested daily, and monthly reports are filed with NDEQ. The York facility is also required to submit periodic reports pursuant to the Nebraska and Federal Emergency Planning Community Right-to-Know Act. The Company has received air quality permits, water discharge permits, and all other environmental permits required for operations at the York location. At June 30, 1996, the Company employed 27 persons. These included 8 employees at the Colwich, Kansas plant, 14 employees at the York, Nebraska plant, and 5 employees in the Wichita, Kansas corporate office. The total number of employees is significantly lower compared to prior years due employees furloughed during the temporary shutdown of both production facilities. (For information regarding the temporary shutdown of the Company's plants see "Temporary Shutdown of Plant Operations" discussion in Management's Discussion and Analysis in the Company's Annual Report which is incorporated by reference herein.) Item 2 PROPERTIES The Company's principal executive offices at 200 W. Douglas, Suite 820, Wichita, Kansas are leased and cover approximately 2,800 square feet. The Company presently owns the approximately 70 acres of land and the improvements thereon which comprise its Colwich, Kansas plant. The Company's primary lender holds a mortgage on this land, as well as the ethanol production plant as security for its loan to the Company. Additionally, the Company owns approximately 142 acres of land and the improvements thereon in York, Nebraska. Approximately 59 acres of this land was required for the Company's ethanol facility in York which was completed in November, 1994. The Company's primary lender holds a mortgage on these aforementioned 59 acres as well as the ethanol production plant as security for its loan to the Company. Item 3 LEGAL PROCEEDINGS Commodity Specialist Company, (CSC) is a distributor of agricultural products which, from 1988 until April 1994, marketed and sold DDG produced by the Company. A dispute developed between the Company and CSC after the termination of the contract under 6 which CSC sold the Company's DDG. In early September 1995, the Company filed suit in the U.S. District Court for the District of Kansas, against CSC in an attempt to collect approximately $110,000 which the Company believes it is owed by CSC for DDG sold but not paid for by CSC. Subsequently, CSC filed a suit in the U.S. District Court for the District of Minnesota, Fourth Division, against the Company claiming damages in excess of $1.2 million for lost profits, costs and expenses allegedly resulting from the termination of the contract and from the Company's alleged delivery of contaminated DDG to CSC for re-sale. The two cases have now been consolidated for trial in the Minnesota Court. No reserves have been made for fiscal years 1994, 1995, or 1996 for any amounts which may be payable to CSC; although for accounting purposes, a receivable of approximately $100,000 due from CSC to the Company was written down in fiscal 1994. The Company's product liability insurance carrier has taken the position that its policy does not cover the claims made by CSC. However, the Company intends to pursue the issue of insurance coverage, and is vigorously defending the action filed by CSC. The Company believes that the ultimate resolution of this dispute will not have a material adverse effect on the Company's financial condition. On March 22, 1996, the Company filed suit against Summit Resource Management, Inc., Commodity Trading Incorporated, and Abbott Laboratories, in the United States District Court for the District of Kansas, as Civil Action No. 96-1105-FGT. The suit alleges that the defendants are liable to the Company for damages suffered as a result of their sale to the Company of contaminated alcohol, which was processed into the Company's DDG by-product, and which caused damage to certain of the Company's customers who purchased this DDG for cattle feed. Most of these damage claims with the Company's DDG customers have now been settled (except for several claims which the Company considers to be immaterial and the CSC litigation described above) and as a result of this incident, the Company incurred expenses totaling $859,848 in fiscal 1994, and $108,000 in fiscal 1995. The current suit by the Company against the providers of the contaminated alcohol seeks to recover these damages, as well as other losses incurred by the Company in connection with this incident. The Company is also involved in two other pending lawsuits which have arisen in the course of normal business operations, neither of which are expected to have a material adverse effect on the Company's financial condition. Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of the stockholders of the Company during the fourth quarter of the fiscal year ended June 30, 1996. 7 PART II Item 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS The Company's Common Stock is traded on the NASDAQ National Market System under the symbol HIPC. The number of holders of record of the Company's common stock as of September 30, 1996, was approximately 9,190 determined by an examination of the Company's transfer book and through broker search. The Company has not declared or paid any cash dividends on its Common Stock since its organization in 1980. The Company is currently restricted by loan covenants from paying dividends on its capital stock if an event of default or unmatured event of default has occurred and continues or would occur by reason of payment of any such dividend. The Company does not intend to declare or pay any cash dividends in the foreseeable future. The payment and rate of future cash dividends on the Company's Common Stock, if any, would be subject to review by the Board of Directors in light of the Company's financial condition, results of operations, capital requirements and other factors deemed relevant at that time. Additional information relating to this item is hereby incorporated by reference from the "Market For Registrant's Common Equity" section of the 1996 High Plains Corporation Annual Report to Stockholders for the year ended June 30, 1996 which is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the Company's fiscal year ended June 30, 1996. Item 6 SELECTED FINANCIAL DATA The information relating to this item is hereby incorporated by reference from the "Five Year Summary of Selected Financial Data" in the 1996 High Plains Corporation Annual Report to Stockholders for the year ended June 30, 1996 which is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the Company's fiscal year ended June 30, 1996. 8 Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information relating to this item is hereby incorporated by reference from the "Management's Discussion and Analysis" in the 1996 High Plains Corporation Annual Report to Stockholders for the year ended June 30, 1996 which is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the Company's fiscal year ended June 30, 1996. Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information relating to this item is hereby incorporated by reference from the Financial Statements and Notes thereto in the 1996 High Plains Corporation Annual Report to Stockholders for the year ended June 30, 1996 which is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the Company's fiscal year ended June 30, 1996. Item 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III Item 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Under the securities laws of the United States, the Company's directors, executive officers, and any persons holding more than ten percent of the Company's securities are required to report to the Securities and Exchange Commission and to the NASDAQ National Market System by a specified date his or her ownership of or transactions in the Company's securities. To the Company's knowledge, based solely on information filed with the Company, all of these requirements have been satisfied, except that Daniel O. Skolness failed to timely file one Form 4 reflecting a total of 20 transactions in the month of June 1996. Nine of the these transactions involving an estate for which Mr. Skolness is the executor. The remaining transactions involved Mr. Skolness's minor children. The Form 4 reflecting these transactions was filed in August 1996. The balance of information relating to this item is hereby incorpo- rated by reference from the "Directors and Executive Officers" section of the High Plains Corporation definitive Proxy Statement for the 1996 Annual Meeting of Stockholders, which is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the Company's fiscal year ended June 30, 1996. 9 Item 11 EXECUTIVE COMPENSATION The information relating to this item is hereby incorporated by reference from the "Executive Compensation" section of the High Plains Corporation definitive Proxy Statement for the 1996 Annual Meeting of Stockholders, which is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the Company's fiscal year ended June 30, 1996. Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information relating to this item is hereby incorporated by reference from the "Security Ownership of Certain Beneficial Owners and Management" section of the High Plains Corporation definitive Proxy Statement for the 1996 Annual Meeting of Stockholders, which is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the Company's fiscal year ended June 30, 1996. Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information relating to this item is hereby incorporated by reference from the "Certain Relationships and Related Transactions" section of the High Plains Corporation definitive Proxy Statement for the 1996 Annual Meeting of Stockholders, which is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the Company's fiscal year ended June 30, 1996. PART IV Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Documents Filed as a Part of This Report (1) Financial Statements Statements of Operations - Years Ended June 30, 1996, 1995, and 1994 * Statements of Stockholder's Equity - Years Ended June 30, 1996, 1995, and 1994 * Balance Sheets - June 30, 1996 and 1995 * Statements of Cash Flows - Years Ended June 30, 1996, 1995, and 1994 * 10 Notes to Financial Statements * Independent Auditors' Report on Financial Statements * *Incorporated by reference from the Company's 1996 Annual Report to Stockholders for the year ended June 30, 1996 which is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the Company's fiscal year ended June 30, 1996. (2) Financial Statement Schedules None. (3) Exhibits See Index to Exhibits attached hereto and incorporated by reference herein. (b) Reports on Form 8-K During the quarter for which this report is filed, these reports on Form 8-K have been filed. May 8, 1996 Concerning record fourth quarter net revenues resulting from additional sales of forward grain contracts. April 26, 1996 Disclosure of increased fourth quarter earnings and earnings per share estimates, achieved by the sale of forward grain contracts. April 4, 1996 Company disclosed reduction in ethanol production to approximately 80%, to not exceed grain supplies under forward contracts. (c) Exhibits Exhibits are listed in Item 14(a)(3) and filed as part of this report. 11 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in Wichita, Kansas on the 10th day of October, 1996. HIGH PLAINS CORPORATION By: /Stanley E. Larson/ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on the behalf of the Registrant and in the capacities and on the date indicated. Signature Title Date -------------------- ------------------------- ----------------- President, Chairman of the Board and a Director (Principal /Stanley E. Larson/ Executive Officer) October 10, 1996 /H. Tom Ritchie/ Director/Secretary October 10, 1996 /Roger D. Skaer/ Director/Treasurer October 10, 1996 /John F. Chivers/ Director October 10, 1996 /Daniel O. Skolness/ Director October 10, 1996 /Donald M. Wright/ Director October 10, 1996 Executive Vice President /Raymond G. Friend/ Chief Financial Officer October 10, 1996 12 Page 1 of 3 Index to Exhibits 3-1 Articles of Incorporation of the Company, as amended through February 4, 1993 (incorporated herein by reference from the Company's Registration Statement on Form S-1, dated February 9, 1993). 3-2 Amended Bylaws of the Company, dated January 15, 1981. (incorporated by reference from Exhibit 3-5 to the Company's Registration Statement on Form S-1, dated April 18, 1988). 3-3 Amendment to Article III, Sections 1 and 2 of Bylaws of the Company. (incorporated by reference from Exhibit 3-6 to the Company's Registration Statement on Form S-1, dated April 18, 1988). 3-4 Certificate of Amendment to Articles of Incorporation of the Company dated October 14, 1994, increasing the number of shares which the Company may issue to fourteen million shares of Common Stock and twenty-five thousand shares of Preferred Stock (incorporated by reference from Exhibit 3-7 to the Company's annual filing on Form 10-K dated June 30, 1995). 3-5 Certificate of Amendment to Articles of Incorporation of the Company dated November 22, 1994 increasing the number of shares which the Company may issue to fifty million shares of Common Stock and five million shares of Preferred Stock (incorporated by reference from Exhibit 3-8 to the Company's annual filing on Form 10-K dated June 30, 1995). 3-6 Certificate of Correction of Certificate of Amendment to Articles of Incorporation of the Company, dated March 22, 1993, (incorporated by reference from Exhibit 4-2 to the Company's Registration Statement on Form S-8, dated January 16, 1996.) 4-1 Form of Common Stock Certificate (incorporated by reference from Exhibit 4-1 to the Company's Registration Statement on Form S-1, dated April 18, 1988). 10-1 Ethanol production credit agreement with the State of Nebraska Department of Revenue dated October 9, 1992 (incorporated by reference from Exhibit 10-7 to the Company's annual filing on Form 10-K, dated June 30, 1994). 13 Page 2 of 3 10-2 High Plains Corporation 1990 Stock Option Plan (incorporated by reference from Exhibit 10-8 to the Company's Registration Statement on Form S-1, dated February 9, 1993). 10-3 High Plains Corporation 1992 Stock Option Plan (incorporated by reference from Exhibit 10-14 to the Company's Registration Statement on Form S-1, dated February 9, 1993). 10-4 Lease dated April 12, 1993 between High Plains Corporation and Garvey Center L.C. (incorporated by reference from Exhibit 10-8 to the Company's annual filing on Form 10-K, dated June 30, 1994). 10-5 Exchange and Release Agreements dated October 18, 1994, providing conversion rights for the 11 1/2% Cumulative Preferred Stock to Common Stock (incorporated by reference from Exhibit 10-2 to the Company's quarterly filing on Form 10-Q, dated September 30, 1994). 10-6 Promissory Note, converting construction loan to term loan dated October 31, 1994, between Bank One, Indianapolis, N.A., and the Company (incorporated by reference from Exhibit 10-3 to the Company's quarterly filing on Form 10-Q dated September 30, 1994). 10-7 Amendment to the Company's 1990 Stock Option Plan, dated November 18, 1994, increasing the number of shares available under the plan and granting of additional options to replace certain options when exercised (incorporated by reference from Exhibit 10-11 to the Company's annual filing on Form 10-K dated June 30, 1995). 10-8 Amendment to the Company's 1992 Stock Option Plan, dated November 18, 1994, increasing the number of shares available under the plan and granting of additional options to replace certain options when exercised (incorporated by reference from Exhibit 10-12 to the Company's annual filing on Form 10-K dated June 30, 1995). 10-9 Real Estate Installment Agreement dated January 19, 1995, between David J. Vander Griend and the Company, regarding sale of certain real estate (incorporated by reference from Exhibit 10-5 to the Company's filing on Form 8-K dated January 19, 1995). 14 Page 3 of 3 10-10 Asset Purchase Agreement dated January 19, 1995, between ICM, Inc. and the Company, regarding sale of various tangible and intangible property (incorporated by reference from Exhibit 10-6 to the Company's filing on Form 8-K dated January 19, 1995). 10-11 Employment Agreement dated April 1, 1995, between the Company and Stanley E. Larson, for the continuation of employment through July 1, 2000 (incorporated by reference from Exhibit 10-17 to the Company's annual filing on Form 10-K dated June 30, 1995). 10-12 Employment Agreement dated April 1, 1995, between the Company and Raymond G. Friend, for the continuation of employment through July 1, 2000 (incorporated by reference from Exhibit 10-18 to the Company's annual filing on Form 10-K dated June 30, 1995). 10-13 Agreement between Farmland Industries, Inc., and the Company, commencing July 1, 1995, for the exclusive supply of grain feedstock (incorporated by reference from Exhibit 10-19 to the Company's annual filing on Form 10-K dated June 30, 1995). 10-14 Agreement between the Company and ConAgra, Inc., for sale of Dried Distiller's Grains and Wet Distiller's Grains, dated March 7, 1996 attached hereto. 11-1 Statement on Computation of Per Share Earnings (incorporated by reference from the Company's 1996 Annual Report to Stockholders for the fiscal year ended June 30, 1996 which is anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the Company's fiscal year ended June 30, 1996). 18-1 Accountants Letter re: Change in Accounting Estimate incorporated by reference from Exhibit 18-1 to the Company's quarterly filing on Form 10-Q dated September 30, 1994). 24-1 Consent of Allen, Gibbs, and Houlik, L.C., independent certified public accountants. 27-1 Financial Data Schedule. 15 EX-10.14 2 Exhibit 10-14 Page 1 AGREEMENT THIS AGREEMENT, made this 7th day of March, 1996, by and between HIGH PLAINS CORPORATION, a Kansas corporation ("Seller"), and CONAGRA, INC. dba ConAgra Feed Ingredient Merchandising, a Delaware corporation ("Buyer"). WITNESSETH: WHEREAS, Seller desires to sell and Buyer desires to purchase the Distiller's Dried Grains ("DDGS") and Wet Distillers Grain ("WDG") output of Seller's plant at Colwich, Kansas and York, Nebraska; and WHEREAS, Seller and Buyer wish to agree in advance of such sale and purchase to the price formula, payment, delivery and other terms thereof in consideration of the mutually promised performance of the other; NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by both parties, it is hereby agreed: 1. PURCHASE AND SALE. Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller the bulk feed grade DDGS and WDG output from Seller's plants at Colwich, Kansas and York, Nebraska (hereinafter the "Plants"), subject to all the terms and conditions set forth in this Agreement. Seller agrees to sell to Buyer hereunder its entire bulk feed grade DDGS and WDG output from the Plants and Buyer agrees to purchase from Seller hereunder Seller's entire bulk feed grade DDGS and WDG output from the plants. 2. TRADE RULES. All purchases and sales made hereunder shall be governed by the Feed Trade Rules of the National Grain and Feed Association unless otherwise agreed to by the parties. Said Trade Rules shall, to the extent applicable, be a part of this Agreement as if fully set forth herein. Notwithstanding the foregoing, the Arbitration Rules of the National Grain and Feed Association shall not be applicable to this Agreement and nothing herein contained shall be construed to constitute an agreement between the parties to submit disputes arising hereunder to arbitration before any organization or tribunal. Exhibit 10-14 Page 2 3. INITIAL AND RENEWAL TERMS. The Initial Term of this Agreement shall be one (1) year, commencing on March 7, 1996 and terminating on March 6, 1997 ("Initial Term"). Thereafter, this Agreement shall be automatically renewed for successive one-year terms ("Renewal Term") without action or notice by either party; provided, however, that either party may terminate this Agreement after the Initial Term or any Renewal Term hereof by giving written notice of termination to the other party at least ninety (90) calendar days prior to the termination of the then current term. 4. DELIVERY AND TITLE. A. The place of delivery for all DDGS and WDG sold pursuant to this Agreement shall be the rail site or truck loading facilities FOB Seller's Plants. Buyer and Buyer's agents shall be given access to Seller's Plants in a manner and at all times reasonably necessary and convenient for Buyer to take delivery as provided herein. Buyer shall schedule loading and shipping of all outbound DDGS and WDG purchased hereunder, but all labor and equipment necessary to load rail cars or trucks shall be supplied by Seller without charge to Buyer. Seller agrees to handle the DDGS and WDG in a good and workmanlike manner in accordance with Buyer's requirements and normal industry practice. Seller warrants that both rail and truck loading facilities shall be continuously maintained in safe, operating condition. B. Seller further warrants that storage space for not less than five (5) days production of DDGS under normal operating capacity shall be reserved for Buyer's use at or near the loading facilities and shall be continuously available for storage of DDGS purchased by Buyer hereunder. Seller shall be responsible at all times for the quantity, quality and condition of all DDGS in storage at Seller's Plant. Buyer shall be responsible for taking delivery of the DDGS and WDG prior to the expiration of this 5 day period. C. On Friday of each week during any term hereof, Buyer shall give to Seller a schedule of quantities of DDGS and WDG to be removed by rail by Buyer during the next loading week (Monday through Sunday). For removal of DDGS and WDG by truck, Buyer shall give Seller sufficient advance notice to allow Seller to provide the required services. Seller shall provide the labor, equipment and facilities necessary to meet Buyer's loading schedule and shall be responsible for Buyer's additional costs resulting from Seller's failure to do so; provided, however, that Seller is obligated only to use its best efforts to accommodate Buyer's request for loading when Seller has not received advance notice as hereinabove provided. Buyer shall arrange all railcars required to meet Buyer's loading schedule for rail shipments; Buyer shall arrange all trucks as scheduled for truck shipments. All freight charges shall be the responsibility of Buyer and shall be billed directly to Buyer. Demurrage charges shall be the responsibility of Seller if incurred as a result of Seller's failure to fill or move railcars as projected or obligated under this agreement. Demurrage charges shall be the responsibility of Buyer if incurred as a result of Buyer's failure to timely move railcars, to timely notify Seller of railcar schedules, or to supply railcars in a manner reasonably designed to meet Seller's loading schedule. Exhibit 10-14 Page 3 D. Buyer shall provide loading orders as necessary to permit Seller to maintain Seller's usual production schedule; provided, however, that Buyer shall not be responsible for failure to schedule removal of DDGS and WDG unless Seller shall have provided to Buyer production schedules as follows: Five (5) days prior to the beginning of each calendar month during any term hereof, Seller shall provide to Buyer a tentative schedule for production in the next calendar month. On Wednesday of each week during any term hereof, Seller shall provide to Buyer a schedule for production during the next production week (Monday through Sunday). E. Title, risk of loss and full shipping responsibility shall pass to Buyer upon completion of loading the DDGS and WDG into truck or rail equipment and delivery to Buyer of the bill of lading for each such shipment. 5. PRICE AND PAYMENT. A. For all quantities of DDGS and WDG to be sold to Buyer hereunder, Seller shall receive ninety-eight and 1/2 percent (98-1/2%) of the "Product Price". Buyer shall receive one and one-half percent (1 1/2%) of the "Product Price" which shall total a minimum of Three Hundred Thousand Dollars ($300,000) and a maximum of Four Hundred Fifty Thousand Dollars ($450,000) during the term of this Agreement. After this maximum is reached, Seller shall receive one hundred percent (100%) of the "Product Price". For the purposes of this Agreement, "Product Price" shall equal FOB Plant current market bid price for product of like grade and quality. Buyer agrees to use reasonable commercial efforts to achieve the highest resale price available under prevailing market conditions. Buyer agrees to maintain accurate records in relation to this Agreement. Seller shall have the option to audit said records to support shipping and market prices referenced in Section 5A. The time of any such audit shall be negotiated by the Buyer and Seller, upon notification from the Seller of their desire to audit, and shall only occur between the 10th and 25th of any given month. B. On each business day, holidays excluded, Seller shall provide Buyer with certified weight certificates for the previous day's shipments. Seller shall send these to Buyer via facsimile. These certificates shall determine the tonnage shipped from Seller's Plants during the previous pricing day. Buyer shall pay Seller each Thursday for the prior production week's (Monday through Sunday) properly documented shipments pursuant to paragraph 5A above. With each payment, Buyer shall send to Seller a detail of the shipments that are included in the payment. This report shall include ship date, weight, and purchase price of each shipment. Any weight certificates not received by Buyer by the Tuesday following the production week in which the load was shipped shall be included in the following week's payment. Exhibit 10-14 Page 4 C. In the event of an intentional shutdown of either Plant for more than two weeks, other than for normal repairs and/or maintenance and exluding plant construction or expansion, the minimum of Three Hundred Thousand Dollars ($300,000) referenced in 5A shall be reduced by an amount pro-rated for the time of the shutdown. Seller agrees to give Buyer forty-five (45) days notice before any intentional shutdown. 6. QUANTITY AND WEIGHTS. A. The weight of DDGS and WDG delivered to Buyer from Seller's Plants shall be established by weight certificates. Seller shall obtain truck weights on the scales at the Seller's Plants, which shall be certified and maintained by Seller as required by applicable laws, rules and regulations, and rail weights shall be obtained on any certified railroad scales. Whenever Seller's truck scales are unavailable or inoperable, any certified scales may be used, at Seller's expense, until Seller's scales are restored. The outbound weight certificates shall be determinative of the quantity of DDGS and WDG for which Buyer is obligated to pay pursuant to Section 5 hereof. B. All rail cars loaded at Seller's Plants shall be grain hopper cars. Seller agrees that such cars shall be loaded to full visible capacity at Seller's Plants. If not loaded to full visible capacity, Seller shall pay in full the portion of freight charges allocable to the unused capacity of the car. 7. QUALITY. A. Seller understands that Buyer intends to sell the DDGS and WDG purchased from Seller as a primary animal feed ingredient and that said DDGS and WDG is subject to minimum quality standards for such use. Seller agrees and warrants that DDGS and WDG produced at its plants and delivered to Buyer shall be accepted in the feed trade under current industry standards and shall be of merchantable quality. B. Seller warrants that all DDGS and WDG sold to Buyer hereunder shall, at the time of delivery to Buyer, conform to the following quality standards: Colwich, Kansas - Milo DDGS York, Nebraska - Corn DDGS Component Maximum % Minimum % Component Maximum % Minimum % --------- --------- --------- --------- --------- --------- Protein -- 29% Protein -- 28% Fat -- 7.5% Fat -- 7.5% Fiber 15% -- Fiber 15% -- Ash 8% -- Ash 8% -- Moisture 15% -- Moisture 15% -- Exhibit 10-14 Page 5 York, Nebraska - Corn WDGS Component Maximum % Minimum % --------- --------- --------- Protein -- 10.5% Fat -- 3.0% Fiber 5.0% -- Ash 2.5% -- Moisture 68.0% -- C. Seller guarantees that at the time of loading the DDGS and WDG is not adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act and that it may lawfully be introduced into interstate commerce under said Act. Payment of invoice does not waive Buyer's rights if goods do not comply with terms of specifications of this Agreement. Unless otherwise agreed between the parties to this Agreement, and in addition to other remedies permitted by law, the Buyer may, without obligation to pay, reject either before or after delivery, any of the DDGS and WDG which when inspected or used is found by Buyer to fail in any way to conform to this Agreement. Should any of the WDG or DDGS be seized or condemned by any federal or state department or agency for any reason except the negligence or intentional actions or omissions by Buyer, such seizure or condemnation shall operate as a rejection by Buyer of the DDGS seized or condemned and Buyer shall not be obligated to offer any defense in connection with the seizure or condemnation. When rejection occurs either before or within a reasonable time after delivery, at its option, Buyer may: (1) Dispose of the rejected WDG or DDGS after first offering Seller a reasonable opportunity of examining and taking possession of rejected WDG or DDGS if its condition reasonably appears to Buyer to permit such delay in making disposition; or (2) Dispose of the WDG or DDGS in any manner directed by Seller which Buyer can accomplish without violation of applicable laws, rules, regulations or property rights; or (3) If Buyer has no available means of disposal of rejected WDG or DDGS and Seller fails to direct Buyer to dispose of it as provided herein, Buyer may return the rejected WDG or DDGS to Seller, upon which event Buyer's obligations with respect to said rejected WDG or DDGS shall be deemed fulfilled. Title and risk of loss shall pass to Seller promptly upon notification to Seller of rejection by Buyer. Exhibit 10-14 Page 6 (4) Seller shall reimburse Buyer for all costs reasonably incurred by Buyer in storing, transporting, returning and disposing of the rejected WDG or DDGS. Buyer shall have no obligation to pay Seller for rejected WDG or DDGS and may deduct costs and expenses to be reimbursed by Seller from amounts otherwise owed by Buyer to Seller. D. If Seller produces WDG or DDGS which comply with the warranty in Section 7C above but which do not meet applicable industry standards, Buyer agrees to purchase such WDG or DDGS for resale but makes no representation or warranty as to the price at which such product can be sold. If the product deviates so severely from industry standards as to be unsaleable in Buyer's reasonable judgment, then it shall be disposed of in the manner provided for rejected WDG or DDGS in Section 7C above. E. If Seller knows or reasonably suspects that any WDG or DDGS produced at its Plants is adulterated or misbranded, or outside of industry quality standards, Seller shall promptly so notify Buyer so that such product can be tested before entering interstate commerce. If Buyer knows or reasonably suspects that any WDG or DDGS produced by Seller at its plants is adulterated, misbranded or outside of industry quality standards, then Buyer may obtain independent laboratory tests of the affected WDG or DDGS. If such WDG or DDGS are tested and found to comply with all warranties made by Seller herein, then Buyer shall pay all testing costs; and if the WDG or DDGS are found not to comply with such warranties, Seller shall pay all testing costs. F. Seller shall be responsible for inspecting all railcars and trucks before loading to ensure non-contamination. If Seller knows or suspects of any contamination in railcars and/or trucks to be loaded, Seller shall promptly so notify Buyer so that arrangements for replacement railcars and/or trucks can be made by Buyer. 8. INSURANCE. Both parties agree to maintain the following types and limits of insurance coverages, or in the case of the Buyer, to self-insure, for any of its employees, agents, representatives, or subcontractors which have occasion to come onto Seller's property: A. Worker's compensation insurance as required by law in Nebraska for the plant in York, Nebraska, and as required by law in Kansas for the plant in Colwich, Kansas. Parties shall also maintain employer's liability insurance with minimum limits of One Million Dollars ($1,000,000). Exhibit 10-14 Page 7 B. Commercial general liability insurance against claims for bodily injury, death, and property damage occurring in or about the Plants for a minimum protection of Two Million Dollars ($2,000,000) with respect to personal injury or death and property damage occurring or resulting from one occurrence. This policy shall also maintain endorsements for contractual liability, for products and completed operations. Seller's policies of comprehensive general liability insurance shall be endorsed to require at least thirty (30) days advance notice to Buyer prior to the effective date of material change or cancellation of coverage. C. Automobile Liability Insurance with Bodily Injury and Property Damage limits of at least Two Million Dollars ($2,000,000) per occurrence. D. Upon request, Seller shall supply Buyer with certificates of insurance to support that all required coverages and policies are in place. 9. REPRESENTATIONS AND WARRANTIES. A. Seller represents and warrants that all DDGS and WDG delivered to Buyer shall not be adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act and that said DDGS and WDG may lawfully be introduced into interstate commerce pursuant to the provisions of the Act. Seller further warrants that the DDGS and WDG shall fully comply with any applicable state laws governing quality, naming and labeling of product. Payment of invoice shall not constitute a waiver by Buyer of Buyer's rights as to goods which do not comply with this Agreement or with applicable laws and regulations. B. Seller represents and warrants that DDGS and WDG delivered to Buyer shall be free and clear of liens and encumbrances. 10. EVENTS OF DEFAULT. The occurrence of any of the following shall be an event of default under this Agreement: (1) failure of either party to make payment to the other when due; (2) default by either party in the performance of the covenants, conditions and agreements imposed upon that party by this Agreement; (3) if either party shall become insolvent, or make a general assignment for the benefit of creditors or to an agent authorized to liquidate any substantial amount of its assets, or be adjudicated a bankrupt, or file a petition in bankruptcy, or apply to a court for the appointment of a receiver for any of its assets or properties with or without consent, and such receiver shall not be discharged within sixty (60) days following appointment. Exhibit 10-14 Page 8 11. REMEDIES. Upon the happening of an event of default, the parties hereto shall have all remedies available under applicable law. Without limiting the foregoing, the parties shall have the following remedies whether in addition to or as one of the remedies otherwise available to them: (1) to declare all amounts owed immediately due and payable; and (2) to immediately terminate this Agreement effective upon receipt by the party in default of the notice of termination. Notwithstanding any other provision of this Agreement, Buyer may offset against amounts otherwise owed to Seller the price of any product which fails to conform to any requirements of this Agreement. 12. FORCE MAJEURE. Neither Seller nor Buyer will be liable to the other for any failure or delay in the performance of any obligation under this Agreement due to events beyond its control, including, but not limited to, fire, storm, flood, earthquake, explosion, act of the public enemy, riots, civil disorders, sabotage, strikes, lockouts, labor disputes, labor shortages, war, stoppages or slowdowns initiated by labor, transportation embargoes, failure or shortage of materials, acts of God, or acts or regulations or priorities of the federal, state or local government or branches of agencies thereof. 13. INDEMNIFICATION. Seller agrees to indemnify and hold Buyer harmless from any and all third-party claims, damages, causes of action liabilities and expenses, including but not limited to reasonable attorney's fees, arising by Seller's breach of obligations of this Agreement, unless the same shall be due to the negligence or intentional acts or omissions of Buyer. Buyer agrees to indemnify and hold Seller harmless from any and all third-party claims, damages, causes of action liabilities and expenses, including but not limited to reasonable attorney's fees, arising by Buyer's breach of obligations of this Agreement, unless the same shall be due to the negligence or intentional acts or omissions of Seller. 14. RELATIONSHIP OF PARTIES. This Agreement creates no relationship other than that of buyer and seller between the parties hereto. Specifically, there is no agency, employee/employer relationship, partnership, joint venture or other joint or mutual enterprise or undertaking created hereby. Nothing contained in this Agreement authorizes one party to act for or on behalf of the other and neither party is entitled to commissions from the other. 15. MISCELLANEOUS. A. This writing is intended by the parties as a final expression of their agreement and a complete and exclusive statement of the terms thereof. If terms of any other documents used in the course of this Agreement conflict with this Agreement, this Agreement shall control. B. No course of prior dealings between the parties and no usage of trade, except where expressly incorporated by reference, shall be relevant or admissible to supplement, explain, or vary any of the terms of this Agreement. C. Acceptance of, or acquiescence in, a course of performance rendered under this or any prior agreement shall not be relevant or admissible to determine the meaning of this Agreement even though the accepting or acquiescing party has knowledge of the nature of the performance and an opportunity to make objection. Exhibit 10-14 Page 9 D. No representations, understandings or agreements have been made or relied upon in the making of this Agreement other than as specifically set forth herein. E. This Agreement can only be modified by a writing signed by all of the parties or their duly authorized agents. F. The paragraph headings herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. G. This Agreement shall be construed and performed in accordance with the laws of the State of Kansas. H. The respective rights, obligations and liabilities of the parties under this Agreement are not assignable or delegable without the prior written consent of the other party. I. Notice shall be deemed to have been given to the party of whom it is addressed when received after it is deposited in certified U.S. mail, postage prepaid, return receipt requested, addressed as follows or by facsimile transmission: Buyer: ConAgra, Inc. Seller: High Plains Corporation Feed Ingredient 200 W. Douglas Merchandising Company Suite 820 Nine ConAgra Drive Wichita, Kansas 67202-3008 Omaha, Nebraska 68102 Fax: 316/269-4008 Fax: 402/595-4360 Exhibit 10-14 Page 10 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the day and year first above written. CONAGRA, INC. By: Greg A. Heckman ---------------------------------- Vice President HIGH PLAINS CORPORATION By: Stanley E. Larson ---------------------------------- Title: President ---------------------------------- EX-24.1 3 Exhibit 24-1 REPORT AND CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Stockholders and Board of Directors High Plains Corporation We hereby consent to the incorporation by reference in this annual report on Form 10-K of High Plains Corporation for the year ended June 30, 1996 of our report dated August 23, 1996 which appears in the annual report to stockholders for the year ended June 30, 1996. ALLEN, GIBBS & HOULIK, L.C. Wichita, Kansas October 7, 1996 EX-27 4
5 YEAR JUN-30-1996 JUN-30-1996 8,889,246 0 1,946,361 100,000 1,680,843 13,471,880 78,062,128 17,573,003 75,096,095 6,898,730 14,460,274 0 0 1,624,729 51,956,614 75,096,095 68,365,273 87,925,409 69,414,221 71,938,456 2,022,095 0 2,220,427 12,176,333 355,256 11,821,077 0 0 0 11,821,077 .74 .74
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