-----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, HGLgM+MHW53tKK9Dc163A0jt/9q871pHgLr8dQyeXR7mud7qUEt+qmAWN06zZPRu 5mBeOW7XftzbB/EXr4bPdA== 0000941158-97-000014.txt : 19970929 0000941158-97-000014.hdr.sgml : 19970929 ACCESSION NUMBER: 0000941158-97-000014 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970926 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: SEC FILE NUMBER: 001-08680 FILM NUMBER: 97686579 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 For Annual and Transition Reports Pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934 (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Required). For the fiscal year ended June 30, 1997 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 June 30, 1997, there were 15,985,444 outstanding common shares of the Registrant. As of June 30, 1997, the aggregate market value of voting stock of High Plains Corporation held by nonaffiliates was approximately $63,514,287. Documents Incorporated by Reference: Portions of the Registrant's definitive Proxy Statement for the 1997 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 1997 Annual Report to Stockholders for the fiscal year ended June 30, 1997 (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. 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 and reduces pollutants, including carbon monoxide and hydrocarbon particulate emissions. Industry sources estimate that 1.1 billion gallons of ethanol were used to oxygenate United States fuel supplies in 1996. In addition, the Company sells distiller's grain (DDG), the primary by-product of ethanol production. Selling prices of DDG generally vary with sorghum and corn prices. The primary markets for the Company's DDG continues to be manufacturers of animal and pet foods, and direct consumers such as feedlots and dairies. The Company operated two ethanol production facilities, one located in Colwich, Kansas and the other in York, Nebraska. The Company's ethanol production capacity at the Colwich plant exceeds 18 million gallons per year and production capacity at the York facility is approximately 35-40 million gallons per year. Actual ethanol production in fiscal 1996 and 1997, was below capacity due to the temporary shutdown of the plants in May 1996 through September 1996 for the Colwich plant and May 1996 through October 1996 for the York facility. (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 herein by reference.) During fiscal 1997 and in prior years, the Company has typically maintained sufficient on-site grain storage for three to five days of continuous production. During fiscal 1997, the Company entered into an exclusive grain supply agreement with Centennial Trading, LLC for the procurement of all its grain requirements. The Company believes this agreement eliminates the need to buy and store grain offsite. (Also see the discussion of raw materials 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 the Company believes these supplies will be sufficient for its production needs. If this source of natural gas supply is interrupted, the Company believes alternative supplies could be contracted with little or no interruption to the Company's normal operations due to the competitive nature of the natural gas market. 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. During the latter part of fiscal 1997 the Company experienced a slow down in railcar movement as a result of a merger between two major railroad companies. This slow down has created some minor delays in deliveries of product. However, these delays are believed to be temporary and symptomatic of the railway system for all shippers, at this time. Historically, the maximum finished ethanol inventory which the Company has attempted to keep in stock has equaled approximately four to five days of production. Also, typical payment terms in the industry are "Net 10 days from delivery". These low inventories of finished goods and quick payment terms from customers generally help to minimize the working capital needs of the Company. At June 30, 1997, the Company's ethanol inventory levels met or exceeded its normal inventory maximum levels, due to accumulation of inventory resulting from a slowdown in railcar deliveries. The market price of ethanol is not related to grain prices, but has historically been determined by gasoline, octane enhancers and oxygenates prices plus 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 herein by reference.) For the fiscal year ended June 30, 1997, the Company's sales to three customers represented in the aggregate approximately 43.8% of the Company's total product sales and revenues. The Company's DDG production is brokered under an exclusive agreement with ConAgra, Inc. This exclusive agreement automatically renews 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, Cargill, Minnesota Corn Processors and New Energy Co. of Indiana which are capable of producing approximately 700 million, 100 million, 115 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 the Company. Recent estimates place total domestic ethanol production capacity at 1.5 billion gallons per year. Additionally, industrial grade ethanol production has increased in recent years. This is a result of Archer Daniels Midland, other producers, and the Company diverting a portion of existing production capacity from fuel grade production to industrial grade products. The Company is unable to predict what effect these changes in production will have on the demand and price of fuel grade or industrial grade ethanol. (Also see the discussion of ethanol production in Management's Discussion and Analysis in the Company's Annual Report, which is incorporated herein by reference.) 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 due to the efficiencies of its 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 throughout the year concerning emissions of volatile compounds. The Company was required to obtain an air operating permit from the NDEQ and must obtain approval to make any plant alterations that could change the emission levels. 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 air quality permits, water discharge permits, and all other environmental permits required for operations at the York location. At June 30, 1997, the Company employed 104 persons. These included 42 employees at the Colwich, Kansas plant, 55 employees at the York, Nebraska plant, and 7 employees in the Wichita, Kansas corporate office. The total number of employees is significantly higher compared to the prior year due to employees furloughed during the temporary shutdown of both of the Company's production facilities 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.) 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 also owns approximately 142 acres of land and the improvements thereon which comprise its York, Nebraska facility. The Company's primary lender holds a mortgage on approximately 59 acres of land where the York facility is situated and on the ethanol production plant itself, as security for a 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 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 1995, 1996, or 1997 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. Currently, the Company 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. All damage claims with the Company's DDG customers have now been settled (except for the CSC litigation described above). As a result of this incident, the Company recorded expenses totaling $967,848 through 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 and expenses incurred by the Company in connection with this incident. No affirmative claims have been made against the Company by the defendants in this lawsuit. At June 30, 1997 the Company had reached a compromise settlement with one of the defendants, Abbott Laboratories, who has now been dismissed as a defendant in the suit. The Company is also involved in one other pending lawsuit which has arisen in the course of normal business operations, but which is not 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, 1997. 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 22, 1997, was approximately 8,683 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 has no current plans 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, including historical market prices for the Company's Common Stock, is hereby incorporated by reference from the "Market For Registrant's Common Equity" section of the 1997 High Plains Corporation Annual Report to Stockholders for the year ended June 30, 1997 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, 1997. 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 1997 High Plains Corporation Annual Report to Stockholders for the year ended June 30, 1997 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, 1997. 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 1997 High Plains Corporation Annual Report to Stockholders for the year ended June 30, 1997 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, 1997. 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 1997 High Plains Corporation Annual Report to Stockholders for the year ended June 30, 1997 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, 1997. 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 as noted below Ronald D. Offutt and Arthur Greenberg each failed to timely file one Form 4, reflecting a total of one transaction each for the month of June 1997. The transactions involved the issuance of stock options to each of the individuals as new directors of the Company. The Form 4 reflecting these transactions was filed in September, 1997. Also, Gregory Heuer and Daniel Allison, management personnel of the Company, failed to file one Form 4 each reflecting a total of two transactions each for the month of January 1997. The transactions involved the purchase of stock through an employee stock purchase plan. The Form 4's listing these transactions were filed in March 1997. The balance of information relating to this item is hereby incorporated by reference from the "Directors and Executive Officers" section of the High Plains Corporation definitive Proxy Statement for the 1997 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, 1997. 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 1997 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, 1997. 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 1997 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, 1997. 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 1997 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, 1997. 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 Income - Years Ended June 30, 1997, 1996, and 1995 * Statements of Stockholders' Equity - Years Ended June 30, 1997, 1996, and 1995 * Balance Sheets - June 30, 1997 and 1996 * Statements of Cash Flows - Years Ended June 30, 1997, 1996, and 1995 * Notes to Financial Statements * Independent Auditors' Report on Financial Statements * *Incorporated by reference from the Company's 1997 Annual Report for the year ended June 30, 1997 which is anticipated to be filled with the Securities and Exchange Commission within 120 days after the end of the Company's fiscal year ended June 30, 1997. (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 14, 1997 Disclosure of delay in production of industrial grade ethanol and extension of time granted to meet sales contract for same. May 14, 1997 Company disclosed appointment of Raymond G. Friend, President to the Board of Directors, along with two new outside directors, Ronald D. Offutt and Arthur Greenberg. May 15, 1997 Announced the retirement of then Chairman and President Stanley E. Larson, election of Daniel O. Skolness as Chairman of the Board and promotion of Raymond G. Friend as President. Additionally, Company announces cancellation of industrial grade contract by customer for reasons of force majeure. May 22, 1997 Disclosure of earnings per share for the quarter ending March 31, 1997. (c) Exhibits Exhibits are listed in Item 14(a)(3) and filed as part of this report. 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 24th day of September, 1997. HIGH PLAINS CORPORATION By:/Raymond G. Friend/ Director/President 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 Chairman of the Board and a / Daniel O. Skolness / Director September 24, 1997 / Raymond G. Friend / Director/President September 24, 1997 / H.T. Ritchie / Director/Secretary September 24, 1997 / Roger D. Skaer / Director/Treasurer September 24, 1997 / John F. Chivers / Director September 24, 1997 / Donald M. Wright / Director September 24, 1997 / Arthur Greenberg / Director September 24, 1997 / Ronald Offutt / Director September 24, 1997 Page 1 of 3 Index to Exhibits 3-1 Articles of Incorporation, as amended, of the Company, (incorporated herein by reference to Exhibits 3.1 through 3.10 to the Company's Registration Statement on Form S-1, dated February 9, 1993). 3-2 Bylaws of the Company, as amended, of the Company (incorporated herein by reference to Exhibits 3.5 and 3.6 to the Company's Registration Statement on Form S-1, dated April 18, 1988). 3-3 Certificate of Amendment to Articles of Incorporation of the Company, dated October 14, 1994 (incorporated herein by reference to Exhibit 3-7 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995). 3-4 Certificate of Amendment of Articles of Incorporation of the Company, dated November 22, 1994 (incorporated herein by reference to Exhibit 3-8 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995). 3-5 Certificate of Correction of Certificate of Amendment to Articles of Incorporation of the Company, dated March 22, 1993, (incorporated herein 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 herein 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). 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 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). 10-7 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). 10-8 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). Page 3 of 3 10-9 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). 10-10 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). 10-11 High Plains Corporation 1995 Employee Stock Purchase Plan (incorporated herein by reference from Exhibit 4-14 to the Company's Registration statement on Form S-8, dated January 22, 1996). 10-12 High Plains Corporation 1995 Key Management Employee Stock Purchase Plan (incorporated herein by reference from Exhibit 4-15 to the Company's Registration Statement on Form S-8, dated January 22, 1996). 10-13 Agreement between the Company and ConAgra, Inc., for sale of Dried Distiller's Grains and Wet Distiller's Grains (incorporated herein by reference from Exhibit 10-14 to the Company's annual filing on Form 10-K dated June 30, 1996). 10-14 Stanley E. Larson Retirement and Consulting Agreement, dated April 11, 1997 attached hereto. 10-15 Agreement between Centennial Trading, LLC, Michael Rowan and the Company, dated January 7, 1997, for the exclusive supply of grain to the Company, attached hereto. 11-1 Statement on Computation of Per Share Earnings (incorporated herein by reference from the Company's 1997 Annual Report to Stockholders for the fiscal year ended June 30, 1997 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, 1997). 24-1 Consent of Allen, Gibbs, and Houlik, L.C., independent certified public accountants. 27-1 Financial Data Schedule. EX-10.14 2 Exhibt 10-14 AGREEMENT This Agreement is made this 11th day of April, 1997 by and between High Plains Corporation (High Plains or HPC), a Kansas corporation, and Stanley E. Larson (Larson), an individual resident of Tucson, Arizona. Whereas, Larson is currently the President and Chairman of the Board of High Plains pursuant to that certain Employment Agreement dated April 1, 1995; and, Whereas, Larson and the Board of Directors of High Plains have reached an agreement pursuant to which Larson will resign as an officer and director, and agree to the termination of his Employment Contract, in return for the consideration set forth herein. Therefore, in consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. By his signature below, Larson hereby resigns, effective immediately, his positions as an officer, board member, and Chairman of the Board, of High Plains. Larson further agrees that his Employment Contract with High Plains is terminated, effectively immediately; that neither he nor High Plains shall be under any further obligation to each other pursuant to the terms of said Employment Contract except for the provisions of paragraphs 9, 10, 11, 12, and 13, which specifically survive the termination of that contract, and which the parties agree shall be effective and in force until July 1, 2000; and that each party hereby waives any and all claims against the other arising out of the Employment Contract, the employment relationship, or the termination thereof. 2. Larson agrees to terminate the Vehicle Lease Agreement dated May 29, 1996 with High Plains in accordance with its terms, by paying to High Plains the sum of $24,048, representing the unearned portion of the lease prepayment made on the vehicle by High Plains. Upon receipt of this amount, High Plains will release to Larson any right title or interest it may have in the vehicle covered by said lease. 3. Larson agrees to immediately surrender for cancellation 388,761 options to purchase common stock of High Plains previously granted to him by the company. He may retain the 10,000 options that were granted on May 8, 1996 with an exercise price of $3.50, under the terms of the High Plains Corporation Stock Option Plan, and the Stock Option Agreement, which require these options to be exercised within 90 days of termination of employment, or they will expire. The parties acknowledge that the options previously issued to Larson pursuant to the High Plains Corporation Employee Stock Purchase Plan (ESPP) were exercised by Larson on April 10, 1997. 4. In consideration of the termination of Larson's employment contract, High Plains agrees to pay to Larson an amount equal to the payments High Plains would have made for bonus payments (pursuant to paragraph 5(b) of the Employment Contract) over the remaining term of the contract (expiring July 1, 2000), even though Larson will no longer be an employee of High Plains. Larson specifically waives any additional benefits which would have been due and payable under the Employment Contract, except as otherwise specifically set forth below. Payments shall be made quarterly for these bonus amounts, in accordance with the payment terms which were set forth in the contract. Additionaly, High Plains agrees to grant to Larson the following options to purchase High Plains' common stock: 14,000 non-qualified options to be granted on August 1, 1997, under the terms of the company's 1992 Stock Option Plan, at an exercise price equal to one-half of the lowest closing price achieved by the company's stock between May 1, 1997 and August 1, 1997 (in replacement of the options Larson would have received under the ESPP if he were still an employee as of August 1, 1997). These options will terminate if not exercised on or before April 10, 2001, or in the event of Larson's death prior to that time, within 12 months after the date of his death, but not later than April 10, 2001. 5. The parties further agree to enter into a consulting arrangement whereby Larson will consult for High Plains on an as needed basis at the request of High Plains and in the areas of his expertise. The parties currently contemplate these services to include areas such as legislative initiatives, public relations, and assistance in reviewing and evaluating merger and acquisition opportunities. Larson also agrees to cooperate with High Plains in the prosecution or defense of pending or future litigation involving the company. This consulting agreement shall continue until July 1, 2000, and Larson agrees to use his best efforts to make himself available to perform these services as reasonably requested by High Plains. However, both parties agree that Larson is no longer an employee of High Plains, and that his status as a consultant will be on individual matters specifically requested by the High Plains Corporation Board of Directors. Larson shall have no authority to contract on behalf of High Plains, or to commit High Plains to any obligation or agreement, but only to advise the Board regarding requested matters. Any expenses incurred by Larson in this consulting capacity on requested matters shall be subject to reimbursement by High Plains. 6. In consideration of this consulting agreement High Plains agrees to pay to Larson payments equal to those that High Plains would have made as salary pursuant to paragraph 5(a) of the Employment Contract over the remaining term of the contract (expiring July 1, 2000). These payments shall be made at least monthly, however, the parties agree that these salary amounts may be prepaid at any time if High Plains determines in its discretion that it can do so without impairing its cash flow requirements. In the event of either the termination of this consulting agreement or the death of Larson prior to full payment of the amounts due under this paragraph 6, the amounts payable in replacement of the salary portion of the Employment Contract shall continue to be paid to Larson or his estate until paid in full, but all other payments or benefits provided for in this paragraph 6 shall terminate immediately. Any options already granted shall be retained by Larson, but no additional options shall be granted after Larson's death or termination of the Consulting Agreement. The consulting agreement may be terminated at any time by Larson upon written notice to High Plains, and shall be considered terminated automatically upon Larson's death. As additional consideration for the services to be provided by Larson pursuant to this consulting agreement, High Plains agrees to grant to Larson the following options to purchase High Plains common stock: a. 50,000 non-qualified options to be granted on April 11, 1997, under the terms of the company's 1992 Stock Option Plan, at an exercise price equal to the closing price of the stock on April 11, 1997. b. 50,000 non-qualified options to be granted on April 11, 1998, under the terms of the company's 1992 Stock Option Plan, at an exercise price equal to the closing price of the stock on April 13, 1998. c. 50,000 non-qualified options to be granted on April 11, 1999, under the terms of the company's 1992 Stock Option Plan, at an exercise price equal to the closing price of the stock on April 12, 1999. All of these options shall expire if not exercised on or before the earlier of either April 10, 2001, or 12 months following the termination of the consulting agreement as described above. In witness whereof, the parties have executed this agreement as of the day and year first written above. HIGH PLAINS CORPORATION LARSON By_s/H.T. Ritchie____________ s/Stanley E. Larson______ H.T. Ritchie Stanley E. Larson Chairman, Compensation Committee EX-10.15 3 Exhibit 10-15 EXCLUSIVE GRAIN SUPPLY AGREEMENT AGREEMENT made this 1st day of January, 1997, by and between Mike Rowan, an individual resident of 1620 Magnolia, Liberty, Missouri, 64068 "Rowan" and High Plains Corporation, a Kansas corporation with its principal offices at 200 W. Douglas, Suite 820, Wichita, Kansas 67202, "High Plains". WHEREAS, High Plains is a purchaser of grain for use at its Colwich, Kansas and York, Nebraska plants, and Rowan has expertise in the grain and feed business; and WHEREAS, both Rowan and High Plains desire to enter into an exclusive supply agreement for the procurement of grain by Rowan for High Plains for use at High Plains' Colwich, Kansas and York, Nebraska, plants. NOW, THEREFORE, in consideration of the mutual agreements and other good and valuable consideration hereinafter set forth, the parties agree as follows: 1. SALE OF PRODUCTS. This Agreement applies to all grain purchased by High Plains for use at its Colwich, Kansas and York, Nebraska, plants (the "Grain"). High Plains agrees to buy all of its requirements of Grain through Rowan, who will contract for High Plains as an independent contractor, during the term of this Agreement. Rowan agrees to sell or acquire for the benefit of High Plains, subject to availability, such Grain to High Plains for the term of this Agreement. Rowan and High Plains agree that such purchases will be at terms, conditions and price as agreed upon. Title and risk of loss for grain shall pass to High Plains upon unloading of the grain at High Plains plant. Rowan shall provide grain in quantities as necessary to permit High Plains to maintain its usual production schedule. 2. FORECAST INFORMATION. Rowan agrees to provide High Plains with regular feedgrain analyses and other forecast information available from third-parties to assist High Plains in its purchase decisions. However, regardless of any price or purchase recommendations or forecasts provided by Rowan, High Plains remains solely responsible for its purchasing decisions and any gains or losses resulting from those decision. Rowan PROVIDES NO WARRANTY AS TO ANY PRICING PROJECTIONS, FORECASTS OR PURCHASE RECOMMENDATIONS. Rowan further agrees to provide the following additional services to High Plains during the term of this agreement at his own cost and expense: a) continually monitor, arrange and adjust scheduling of grain shipments to meet High Plains needs; b) responsibility for truck and rail transportation needs, including price management techniques such as back-hauls and arbitrage arrangements; c) sourcing of alliances with third parties for storage and execution backstops as needed; d) accounting and auditing for transportation, grain taxes, cash flow management, etc.; e) assist High Plains in lobbying efforts in grain and feed areas; f) assist in implementation and monitoring of appropriate risk management procedures relating to High Plains grain needs; and g) communicate and cooperate with designated High Plains personnel in determining grain needs, sourcing, scheduling and pricing grain, and coordinating the other services Rowan agrees to perform for High Plains pursuant to this agreement. 3. PRICE. Rowan agrees to supply grain to High Plains at a fixed price, F.O.B. Colwich, Kansas or York, Nebraska. Rowan will absorb the costs of all freight, transportation, inventory carry charges, and all state or other grain taxes prior to delivery of grain. Rowan will use his best efforts to obtain the lowest possible total grain cost for High Plains under prevailing market conditions. High Plains shall pay Rowan the amount actually paid by Rowan to his supplier for the grain, plus actual freight incurred (crediting reductions for backhaul or arbitrage arrangements), plus grain taxes paid , plus a fee in the amount of $.0175 per bushel. The parties may also agree to enter into certain hedging, or other futures agreements from time to time, in which event all costs of such hedging, including margin calls and commissions, will be the responsibility of High Plains. Rowan agrees to back up all contracts for delivery of grain to High Plains with either futures or trades on the Chicago Board of Trade, or with individual supply contracts from farmers, local elevators, or other legitimate sources, and shall provide evidence of this backup to High Plains upon request. All such futures or contracts shall be executed on behalf of, and transacted in the name of High Plains by Rowan, upon approval of High Plains. Rowan shall keep complete and accurate records of all transactions made for the benefit of High Plains, and High Plains shall have the right to audit and copy all records in any way relating to grain or futures contracts purchased, or to expenses incurred in connection with said transactions, upon reasonable notice to Rowan, and at the sole expense of High Plains. The parties agree that after the first 90 days of the term of this agreement has passed, they will cooperate in attempting to establish a mutually agreeable method for measuring Rowan's effectiveness as a grain purchasing agent, with the idea that if Rowan's performance under this contract can be effectively measured, and his efforts have resulted in significant savings to High Plains, then Rowan's fee arrangement may be restructured to include a performance bonus provision agreeable to both parties. 4. PAYMENT. Payment for purchases under this Agreement are due daily, and shall be made by drafting an account of High Plains' choice on the first business day following delivery to High Plains. The weight of Raw Grains delivered by Rowan to High Plains shall be established by weight certificates. High Plains shall obtain truck weights on the scales at the High Plains Plants, which shall be maintained by High Plains as required by applicable laws, rules and regulations, and rail weights will be obtained on any certified railroad scales. Whenever High Plains truck scales are unavailable or inoperable, any certified scales may be used, at High Plains expense, until High Plains scales are restored. The inbound weight certificates shall be determinative of the quantity of Raw Grains for which High Plains is obligated to pay pursuant to Section 3 hereof. 5. TERM. This Agreement shall commence on January 31, 1997 and continue for one year. After the first year, the Agreement shall automatically renew for one-year terms. However, either party may terminate this Agreement at any time upon giving the other party thirty (30) days notice of termination in writing. This Agreement may be terminated immediately by either party if (i) the other party's financial responsibility becomes impaired, (ii) the other party makes an assignment or arrangement for benefit of creditors or (iii) files a petition in bankruptcy or has such petition filed against it. Upon expiration, termination, or cancellation of this Agreement, neither party shall have any rights or obligations or liability to the other party with respect to this Agreement except for (a) the obligation to make full payment of any outstanding monetary obligations owed to the other party which monetary obligation was incurred prior to the date of such expiration, termination or cancellation, and (b) obligations under any Grain or futures contract which existed prior to such expiration, termination or cancellation of this Agreement. 6. EMPLOYEES. The parties agree that Rowan is not an employee of High Plains, and that his relationship is that of an Independent contractor only. Each party shall be solely responsible for the acts and inactions of its own employees acting within the course and scope of their employment by such party and each party shall be solely responsible for the salary, wages and payroll taxes for its employees and shall maintain Workers' Compensation Insurance on its employees as required by applicable state law. The parties shall have no joint employees as a result of this Agreement and neither party shall incur any responsibility or liability whatsoever with respect to, or for the acts or inactions of, the employees of the other party as a result of this Agreement. 7. INDEMNIFICATION. Rowan shall indemnify and hold High Plains, and its affiliates, subsidiaries, parents, directors, officers, employees and agents harmless from and against any and all claims, losses, awards, judgements, settlements, fines, penalties, liabilities, damages, costs or expenses (including attorneys' fees) alleged or incurred on account of any injury or death of persons or damages to property or any other claim to the extent caused by or arising out of the negligent acts or omissions of Rowan, its officers, agents or employees, or any breach by Rowan, its officers, agents or employees, of any of the terms of this Agreement, or any representations by Rowan which are not authorized pursuant to the Agreement or pursuant to specific instructions given to Rowan by High Plains. High Plains shall indemnify and hold Rowan, and its affiliates, subsidiaries, parents, directors, officers, employees and agents harmless from and against any and all claims, losses, awards, judgements, settlements, fines, penalties, liabilities, damages, costs or expenses (including attorneys' fees) alleged or incurred on account of any injury or death of persons or damages to property or any other claim to the extent caused by or arising out of the negligent acts or omissions of High Plains, its officers, agents or employees, or any breach by High Plains, its officers agents, or employees, of any of the terms of this Agreement, or any representations by High Plains which are not authorized pursuant to this Agreement or pursuant to specific instructions given to High Plains by Rowan. 8. FORCE MAJEURE. Neither party shall be liable for failure to perform or for delay in performing this Agreement, other than for an existing debt, where such failure or delay is occasioned by (a) fire, explosion, breakdown of plant, failure of machinery, strike, lock-out, labor dispute, casualty or accident, or lack or failure in whole or in part of transportation facilities, (b) storm, flood or drought, (c) lack or failure in whole or in part of the sources of supply (other than Grain), labor, or power or other utilities, (d) acts of God or the public enemy, war, riots, police action, or civil commotion, (e) any law, regulation, ordinance, demand, judgment, injunction, arbitral award, or other requirement or regulation of any government or government agency or instrumentality or (f) any other act whatsoever, whether similar or dissimilar to those above-enumerated, beyond the reasonable control of the party suffering such event of force majeure. The party asserting that an event of force majeure has occurred shall send the other party notice thereof by cable, telecopy or telex no later than three (3) days after the beginning of such claimed event setting forth a description of the event of force majeure, an estimate of its effect upon the party's ability to perform its obligations under this Agreement and the duration thereof. The notice shall be supplemented by such other information or documentation as the party receiving the notice may reasonably request. As soon as possible after the cessation of any event of force majeure, the party which asserted such event shall give the other party written notice os such cessation. Whenever possible, each party shall give the other party notice of any threatened or impending event of force majeure. 9. ALTERNATE DISPUTE RESOLUTION. This contract is subject to the National Grain and Feed Association Grain Trade Rules and Arbitration Rules. Any controversy arising out of, or relating to, the Agreement between the parties or any modification or extension thereof, including any claim for damages or rescission, or both, shall be settled by arbitration in accordance with those rules unless the parties should agree otherwise in writing. The parties further agree that arbitration proceedings must be instituted within one year after the occurrence of the claimed breach, and that the failure to institute arbitration proceedings within such time period shall constitute an absolute bar to the institution of any proceedings and a waiver of all claims. All fees for such arbitration will be divided equally between the parties except that each party shall pay its own attorney's fees and the costs associated with producing documents and other information. 10. NOTICES. All notices, consents and other communications under this Agreement shall be in writing and shall be deemed to have been duly given when delivered in person or deposited in the United States mail (registered or certified), postage prepaid or deposited with a reputable overnight delivery service, with delivery charges prepaid, in each case addressed or transmitted to the appropriate address as follows (or as otherwise designated by a party as to itself by notice to the other party given in accordance with this section): If to Rowan: Mr. Mike Rowan 1620 Magnolia Liberty, Missouri 64068 If to High Plains: High Plains Corporation 200 W. Douglas Suite 820 Wichita, Kansas 67202 Attn: Raymond G. Friend 11. INSURANCE. During the term of this Agreement, Rowan shall, at his sole cost and expense, maintain in force Statutory Worker's Compensation and Employer's Liability Insurance in compliance with the laws of the states where the work is being performed; comprehensive General Liability Insurance, which shall include property damage and personal liability insurance under which Rowan and High Plains shall be named as coinsureds; and coverage for contractual liability under this agreement. Such insurance policy or policies shall be maintained in a minimum amount of One Million Dollars per occurrence, and Rowan shall deliver to High Plains a copy of each insurance policy, showing High Plains as a named insured thereon. The insurance requirements set forth herein are minimum coverage requirements and are not to be construed in any was as a limitation on liability under this agreement. 12. WARRANTIES. Rowan understands that High Plains intends to utilize the Raw Grains purchased from Rowan as primary base stock for ethanol production and for production of a dried distillers grain cattle feed, and that said Raw Grains are subject to minimum quality standards for such use. Rowan agrees and warrants that all grain contracts and deliveries negotiated by Rowan for High Plains shall contain provisions requiring, and Rowan shall use his best efforts to insure that: a. Raw Grains delivered to High Plains shall not be adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act and that said Raw Grains may lawfully be introduced into interstate commerce pursuant to the provisions of the Act. Raw Grains shall fully comply with any applicable state laws governing quality, naming and labeling of Raw Grains. b. Raw Grains delivered to High Plains shall be free and clear of liens and encumbrances. c. Rowan agrees and warrants that Raw Grains delivered to the Plants shall be acceptable in the feed trade under current industry standards and shall be of merchantable quality. c. Raw Grains that are deemed to be of non-merchantable quality shall not be delivered to either plant unless both parties agree in writing in advance of delivery that the quality of the grain will not effect the quality of the cattle feed or other by- products of High Plains' plants. 13. ASSIGNMENT. This Agreement shall not be assigned by either party without the written consent of the other party, and any attempted assignment without such consent shall be ineffective. 14. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the parties and supersedes all previous agreements either oral or written, between the parties hereto, and no modifications hereof shall be valid unless made in writing and signed by the parties hereto. IN WITNESS WHEREOF, the parties hereto have set their hands and seals the day and year above written. THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES. HIGH PLAINS CORPORATION Mike Rowan By:s/Raymond G. Friend s/ Michael L. Rowan Title: Executive Vice President ADDENDUM TO EXCLUSIVE GRAIN SUPPLY AGREEMENT This Addendum to Exclusive Grain Supply Agreement is made this 7th day of January, 1997, by and between Mike Rowan, an individual resident of 1620 Magnolia, Liberty, Missouri, 64068 "Rowan"; High Plains Corporation, a Kansas corporation with its principal offices at 200 W. Douglas, Suite 820, Wichita, Kansas 67202, "High Plains"; and Centennial Trading, LLC, a Limited Liability Company with its principal offices at Kansas City Board of Trade, 4800 Main Street, Suite 502, Kansas City, MO 64112, "Centennial". WHEREAS, High Plains and Rowan entered into an Exclusive Grain Supply Agreement (the "Agreement") dated and effective January 1, 1997; and, WHEREAS, all parties hereto wish to amend said Agreement so that Centennial assumes all of the rights and responsibilities of Rowan thereunder. NOW, THEREFORE, in consideration of the mutual agreements of the parties and other good and valuable consideration hereinafter set forth, the parties agree as follows: 1. Rowan hereby assigns, and Centennial accepts and assumes, all of the rights and responsibilities of Rowan under the Agreement referenced above, effective immediately. Rowan shall continue to be personally responsible for the performance by Centennial of its obligations under the agreement. 2. By its signature below, High Plains consents to the above assignment to Centennial on the terms set forth herein. IN WITNESS WHEREOF, the parties hereto have set their hands and seals effective as of the day and year above written. HIGH PLAINS CORPORATION Mike Rowan By:s/ Christopher G. Standlee s/ Michael L. Rowan Title: Vice President CENTENNIAL TRADING, LLC By:s/ Michael L. Rowan Michael L. Rowan, Member By:s/ Bryce Wells Bryce Wells, Member EX-24.1 4 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, 1997 of our report dated August 7, 1997 which appears in the annual report to stockholders for the year ended June 30, 1997. ALLEN, GIBBS & HOULIK, L.C. Wichita, Kansas September 24, 1997 EX-27 5
5 YEAR JUN-30-1997 JUN-30-1997 2,389,758 0 5,756,131 75,000 4,246,783 12,847,350 86,022,531 20,444,381 79,074,532 12,777,233 10,200,014 0 0 1,639,662 54,016,514 79,074,532 57,941,785 63,121,510 59,414,514 58,804,445 1,653,681 0 1,354,983 1,714,395 18,895 1,733,290 0 0 0 1,733,290 .11 .11
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