-----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, HKSTohYdmlaAIG69ct2slMtGoRWsoNW2hjPJduRoWB1luFhs5ckuilQshm1epC15 S+1bhFm3jG8JMszinszFlw== 0000941158-98-000012.txt : 19981014 0000941158-98-000012.hdr.sgml : 19981014 ACCESSION NUMBER: 0000941158-98-000012 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19981013 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: 98724945 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, 1998 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, 1998, there were 15,999,444 outstanding shares of common stock of the Registrant. As of September 30, 1998, the aggregate market value of voting stock of High Plains Corporation held by nonaffiliates was approximately $27,999,027. Documents Incorporated by Reference: Portions of the Registrant's definitive Proxy Statement for the 1998 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 1998 Annual Report to Stockholders for the fiscal year ended June 30, 1998 (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 GENERAL DESCRIPTION OF BUSINESS High Plains Corporation, a Kansas corporation (the "Company") is engaged in the production and sale of fuel grade and industrial grade ethanol. Fuel grade ethanol is the Company's primary product, while industrial grade ethanol represents a recent diversification. In addition, the Company sells distiller's grains (DDG), both wet and dry, and other solubles. The primary by-product of ethanol production is distiller's grains. Founded in 1980, the Company believes it is currently the seventh largest ethanol producer in the United States. The Company built its first plant in 1982, located in Colwich, Kansas. In 1994, the construction of the Company's second facility was completed in York, Nebraska. In December 1997, the Company finalized negotiations with Giant Industries, Inc. to purchase a previously closed plant in Portales, New Mexico. The Company re-opened the Portales, New Mexico plant and began production in February 1998. (Also see the description of High Plains' business set forth on pages 3 through 8 of the Company's Annual Report, which is incorporated by reference herein.) NARRATIVE DESCRIPTION OF BUSINESS
For the Years Ended June 30, 1998 1997 1996 (In millions) Ethanol and incentive revenues $66.0 $46.3 $57.2 By-products and other sales 18.9 16.8 16.7 Revenues from forward contracts 14.0 Net sales and revenues $84.9 $63.1 $87.9
Principal Products. The Company's principal product, fuel grade ethanol, is sold for blending with gasoline as a motor fuel. The market for this product is affected by, among other things, the Federal excise tax incentive program. This program, which was recently extended to December 2007, allows gasoline distributors who blend ethanol with gasoline to receive a federal excise tax rate reduction for each blended gallon for which they sell. Under the recent extension, of this program, the current tax rate reduction equals $.054 per blended gallon which contains 10% or more ethanol by volume. However, the tax rate reduction decreases to $.053, $.052 and $.051 in 2001, 2003, and 2005, respectively. Fuel grade ethanol prices traditionally have varied directly with the wholesale price of gasoline. However fuel grade ethanol typically sells for a higher price per gallon than wholesale gasoline because of the aforementioned excise tax incentives. Historically, fuel grade ethanol prices have also reflected a premium due to the oxygenate and octane enhancing properties of this motor fuel. Since July 1997, the York Nebraska facility has had the ability to further refine a portion of its fuel grade ethanol production for sale to markets such as the industrial grade ethanol market and the food and beverage markets. The Company had only beverage grade ethanol sales during fiscal year 1998, which totaled approximately $4.8 million. Management?s goals for fiscal 1999, include increased sales in the both food and beverage and industrial grade ethanol markets. These markets may include sales for use in cosmetics, perfume, paint thinner and vinegar. Since March 1996, the Company has contracted with ConAgra, Inc. for the exclusive sale of the Company's DDG production, both wet and dry. This exclusive agreement automatically renews for successive one-year terms unless written notice of termination is issued 90 days prior to the end of the term. The primary markets for the Company's DDG by-products continue to be manufacturers of animal feed, and direct consumers such as feedlots and dairies. Selling prices for DDG generally vary with sorghum (milo) and corn prices. For example, as grain prices have increased, the Company's DDG prices have traditionally increased. Consequently, at the end of fiscal 1998, as the cost of grain trended toward near record low prices, DDG prices were trending lower as well. Subsequent to fiscal 1998 year end, the Company experienced a decline in DDG prices of approximately 29% compared to DDG prices during the same period in fiscal 1998. If this trend continues, or if DDG prices remain at these historically low levels, the Company?s DDG revenues will be significantly lower compared to prior years. In November 1997,the Company signed an agreement with EPCO Carbon Dioxide Products, Inc. (EPCO), of Monroe, Louisiana to capture and purchase CO2 gas produced at the York, Nebraska plant. EPCO has contracted for the purchase of the CO2 gases for an initial period of five years. Through September 30, 1998, CO2 sales were insignificant due to the recent start-up of this process. Availability of Raw Materials and Supplies. The Company's primary raw material is grain feedstock. Historically, the Company has maintained sufficient grain supplies on-site at each of its production facilities for approximately three to five days of continuous production. High Plains entered into an exclusive grain supply agreement in 1997 with Centennial Trading, LLC, a grain brokerage company, for the procurement of all the grain requirements for the Company's three plant locations. The agreement automatically renews for one-year terms. However, either party may terminate the agreement at any time upon thirty days? written notice. The Company believes that 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 requires a substantial uninterrupted supply of natural gas to maintain continuous production. Consequently, the Company contracted with one natural gas provider to supply all or part of the gas requirements at the Colwich, Kansas and York, Nebraska plants. Because of its location, the Company has contracted with a separate gas provider to supply natural gas to the Company?s Portales, New Mexico facility. If these sources of natural gas supplies were 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. Subsequent to fiscal 1998 year end, the Company completed testing of a natural gas supply hook-up, which connects the Colwich, Kansas plant to a landfill natural gas production operation. The Company?s management believes that the natural gas supply from this landfill will eventually provide up to 80% of the Colwich, Kansas facility's natural gas requirements. Pricing for the landfill gas is expected to be significantly lower than the currently contracted supply price at the Colwich, Kansas facility. During fiscal 1998, the Company experienced a continuation of slow railcar movement, primarily as a result of a merger between two major railroad companies. This has caused minor delays in deliveries of the Company?s product. The Company believes that the delays symptomatic of the railway system for all shippers at this time. The Company remains dependent on rail transportation to ship its ethanol and DDG to customers. Any interruption of this means of transportation due to a rail strike or any other circumstance would have a significant detrimental effect on the Company's operations. Seasonal Factors in Business. During the third quarter of fiscal 1998, fuel grade ethanol prices began to decline earlier than anticipated, primarily in response to falling wholesale gasoline prices. A decline in ethanol pricing has historically occurred during the fourth quarter of each fiscal year, as the wintertime oxygenate programs conclude. However, by the end of fiscal 1998, fuel grade ethanol sale prices were returning to more traditional levels for the summertime season. (For information regarding the seasonality of the Company's business, see the "Seasonality" discussion in the Management's Discussion and Analysis section of the Company's Annual Report which is incorporated herein by reference.) Customers. For fiscal year ended June 30, 1998, the Company's sales to three customers represented in the aggregate approximately 49.3% of the Company's total product sales and revenues. The Company?s DDG sales to ConAgra, Inc. under an exclusive brokerage agreement represents approximately 43% of the total sales to these three customers the remaining sales were to ethanol customers. The Company believes that the loss of any of these customers would not have a material adverse effect on the Company?s sales and revenues due to other available markets for its products. Competitive Conditions. The Company is in direct competition with other ethanol producers. Archer Daniels Midland is the largest ethanol producer in the United States with approximately 856 million gallons of capacity or approximately 43% of the industry?s total capacity of approximately 2 billion gallons. The Company, with approximately 68 million gallons of ethanol production capacity, ranks seventh in size, in the industry. The top ten ranking is estimated to be as follows: Annual Capacity
Industrial Company Fuel Grade Grade (in millions of gallons) ADM 646 210 Williams Energy Ventures 95 35 Minnesota Corn Processors 125 0 Cargil 100 0 Midwest Products 48 48 New Energy 80 0 High Plains Corporation 56 12 Grain Processing 0 60 AE Staley 40 5 AGP 30 0
While the Company has diversified its operations by investing in the capability to produce industrial and beverage grade ethanol, this segment of the ethanol industry is also dominated by Archer Daniels Midland as noted in the table. However, Archer Daniels Midland and the other large competitors in the industry, do not appear to have materially affected the demand or price of either grade of 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.) Environmental Disclosure. The Company is subject to extensive environmental regulation at the federal, state and local levels. Air quality at the Colwich, Kansas plant is regulated by the U. S. 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, wastewater discharge and hazardous waste at the Colwich plant under Kansas water pollution control and hazardous waste laws. Water usage and wastewater effluent quality is 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, Nebraska 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 wastewater discharge at the York plant. Wastewater 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 Portales, New Mexico facility is subject to similar environmental regulations at the federal, state and local level. Air quality at the Portales plant is regulated by the New Mexico Environmental Department Air Quality Bureau. The Company submits various reports throughout the year concerning emissions of volatile compounds. The Company was required to obtain an air operating permit from this bureau upon start-up of the plant in February 1998. If any plant changes are made that could change the emission levels, further approval would be required. The City of Portales regulates wastewater discharge to the city from the Portales plant. The Portales facility is also required to submit periodic reports pursuant to the New Mexico and Federal Emergency Planning Community Right-to-Know Act. Number of Employees. As of June 30, 1998, the Company employed 149 persons. These included 43 employees at the Colwich, Kansas plant; 56 employees at the York, Nebraska plant; 39 employees at the Portales, New Mexico plant and 11 employees in the Wichita, Kansas Corporate Office. The total number of employees is significantly higher compared to the fiscal year 1997 due to the acquisition of the Portales, New Mexico facility and increased staffing at the Corporate Office. Item 2 PROPERTIES The Company's principal executive offices at 200 W. Douglas, Suite 820, Wichita, Kansas are leased and cover approximately 4,000 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. During fiscal 1998, the Company acquired approximately 15 acres of land and the improvements thereon which comprise the Portales, New Mexico facility. The Company's primary lender holds a mortgage on approximately 59 acres of land where the York facility is situated, the York ethanol production plant itself, and both the Colwich, Kansas and Portales, New Mexico land and production plants, as security for loans to the Company. Item 3 LEGAL PROCEEDINGS In October 1997, the Company resolved all on going lawsuits between itself and Commodity Specialist Company. In addition, the Company reached a compromised settlement with Summit Resource Management, Inc. and Commodity Trading Incorporated during this same period. The resolution of these disputes did not have a material effect on the Company's financial condition for fiscal 1998. The Company is involved in two other pending administrative proceedings regarding employee terminations, which have arisen in the course of normal business operations. Neither of these claims is 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, 1998. 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, 1998, was approximately 7,648 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 Company?s 1998 Annual Report 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, 1998. 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 Company?s 1998 Annual Report 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, 1998. 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 Company?s 1998 Annual Report 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, 1998. Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK None. 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 Company?s 1998 Annual Report 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, 1998. 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 Section 16(a) Beneficial Ownership and Reporting Compliance: 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 during fiscal 1998, except Gary R. Smith failed to timely file one Form 3 and one Form 4, with a total of two transactions on the Form 4, for the month of April 1998. The securities transactions reported on these forms involved the issuance of stock options to Mr. Smith related to his employment as Chief Executive Officer and the purchase of the Company's stock by Mr. Smith in an over-the-counter transaction. The Form 3 and Form 4 reflecting these transactions were filed in October 1998. The balance of information relating to this item is hereby incorporated by reference from the "Directors and Executive Officers" section of the Company's 1998 Proxy Statement, 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, 1998. Item 11 EXECUTIVE COMPENSATION The information relating to this item is hereby incorporated by reference from the "Executive Compensation" section of the Company?s 1998 Proxy Statement, 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, 1998. 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 Company?s 1998 Proxy Statement, 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, 1998. 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 Company's 1998 Proxy Statement, 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, 1998. 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, 1998, 1998, and 1996 * Statements of Stockholders' Equity - Years Ended June 30, 1998, 1997, and 1996 * Balance Sheets - June 30, 1998 and 1997 * Statements of Cash Flows - Years Ended June 30, 1998, 1997, and 1996 * Notes to Financial Statements * Independent Auditors' Report on Financial Statements * * Incorporated by reference from the Company's 1998 Annual Report for the year ended June 30, 1998 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, 1998. (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. April 8, 1998 Announced appointment of Gary R. Smith as Chief Executive Officer. April 15, 1998 Disclosure of earnings per share for the quarter ending March 31, 1998. June 5, 1998 Company commented on legislative extension of federal ethanol tax incentive. Also brief comments concerning near-term implementation of CO2 sales, landfill gas usage and ISO 9002 certification. June 30, 1998 Announced lower-than-forecasted fourth quarter earnings. (c) Exhibits Exhibits are listed in Item 14(a)(3) and filed as part of this report. All forward-looking statements made in these materials and materials incorporated herein by reference are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Among the factors that could cause actual results to differ materially from those anticipated by certain of the above statements are the following: 1) legislative changes regarding air quality, fuel specifications or incentive programs; 2) changes in cost of grain feedstock; and 3) changes in market prices or demand for motor fuels and ethanol. Additional information concerning those and other factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to, its Proxy Statement, Annual Report, quarterly 10Q filings, and press releases, copies of which are available from the Company without charge. 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 13th day of October, 1998. HIGH PLAINS CORPORATION By: /s/Gary R. Smith President/Chief Executive Officer 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 Daniel O. Skolness Director October 13, 1998 Raymond G. Friend Director October 13, 1998 H.T. Ritchie Director/Secretary October 13, 1998 Donald Schroeder Director/Treasurer October 13, 1998 John F. Chivers Director October 13, 1998 Donald M. Wright Director October 13, 1998 Arthur Greenberg Director October 13, 1998 Ronald D. Offutt Director October 13, 1998 Christopher G. Standlee Vice President October 13, 1998 Chief Operating Officer Dianne S. Rice Vice President October 13, 1998 Chief Financial Officer (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). 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). (Page 2 of 3) 10-4 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). 10-5 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). 10-6 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). 10-7 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). 10-8 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). 10-9 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). 10-10 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). 10-11 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). (Page 3 of 3) 10-12 Stanley E. Larson Retirement and Consulting Agreement (incorporated herein by reference from Exhibit 10-14 to the Company's annual filing on Form 10-K dated June 30, 1997.) 10-13 Agreement between Centennial Trading, LLC, Michael Rowan and the Company (incorporated herein by reference from Exhibit 10-14 to the Company's annual filing on Form 10-K dated June 30, 1997.) 10-14 Agreement between the Company and EPCO Carbon Dioxide Products, Inc., for the sale of raw CO2 for an initial period of one year, dated November 6, 1997 attached hereto. 10-15 Employment agreement dated March 31, 1998, between the Company and Gary R. Smith, for an initial period of three years, expiring March 30, 2001, attached hereto. 10-16 Amendment to employment agreement between the Company and Raymond G. Friend, dated June 30, 1998, attached hereto. 10-17 Lease Agreement between the Company and EPCO Carbon Dioxide Products, Inc. for the lease of land relating to CO2 Agreement listed under 10-14 11-1 Statement on Computation of Per Share Earnings (incorporated herein by reference from the Company's 1998 Annual Report to Stockholders for the fiscal year ended June 30, 1998 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, 1998). 24-1 Consent of Allen, Gibbs, and Houlik, L.C., independent certified public accountants. 27-1 Financial Data Schedule. EX-27 2
5 12-MOS JUN-30-1998 JUN-30-1998 674,894 0 5,436,735 75,000 6,328,232 12,480,029 94,140,754 23,819,484 83,249,629 18,911,619 11,702,623 0 0 1,641,062 50,630,085 83,249,629 84,863,782 84,863,782 83,126,259 84,734,820 2,434,725 0 1,535,819 (3,687,270) 94,340 (3,592,930) 0 0 0 (3,592,930) (.22) (.22)
EX-10.15 3 EMPLOYMENT AGREEMENT THIS AGREEMENT, made and entered into effective as of the 31st day of March, 1998, by and between High Plains Corporation, a Kansas corporation ("Company") and Gary R. Smith ("Employee"). WITNESSETH: WHEREAS, Company wishes to assure itself of Employee's full-time employment during the term specified herein; and WHEREAS, the Employee is prepared to enter into this Agreement with Company and to give Company the assurances it desires. NOW, THEREFORE, in consideration of the premises and their mutual covenants, the parties agree as follows: 1. Nature and Capacity of Employment. The Company hereby employs the Employee, and the Employee hereby accepts employment with the Company as its Chief Executive Officer (CEO). (a) Employee will render exclusive and full-time services to the Company and its subsidiaries (any later reference to Company shall be deemed to include subsidiaries, of which Employee shall act as President and/or CEO). In his capacity as Chief Executive Officer he will be responsible for management of the Company as described in the Bylaws of the Company to the extent not inconsistent with the provisions of Paragraph 1(b) hereof. Employee will report to the Board of Directors and (in addition to his other responsibilities) will be responsible for implementing all orders and resolutions of the Board of Directors, for the conduct of the business of the Company, and the compliance with all federal and state laws, rules and regulations. Employee acknowledges that the Board of Directors shall have final authority in matter affecting the interests of the Company. (b) Employee shall have responsibility and authority to make routine operational decisions on behalf of the Company, and to act on behalf of the Company in implementation of the budget, and in furtherance of the goals and directions as approved or set forth by the Board of Directors from time to time. 2. Term. Subject to earlier termination in accordance with this Agreement, Employee's employment shall be for a three-year period commencing this date and ending on March 30, 2001 ("Employment Period"). 3. Compensation. As compensation for all of the Employee's services under this Agreement, the Company agrees to pay Employee, and Employee agrees to accept: (a) Base Salary. A base salary of: (i) One Hundred Eighty Thousand Dollars ($180,000.00) per annum for months 1-12; (ii) Two Hundred Thousand Dollars ($200,000.00) per annum for months 13-24; and (iii) Two Hundred Twenty-five Thousand Dollars ($225,000.00) per annum for months 25-36. The Base salary set forth above is hereinafter referred to as the "Base Salary." The Base Salary shall be payable in accordance with the Company's standard payroll practices. (b) Bonus. In addition to the Base Salary for each year or part thereof that the Employee is employed by the Company, the Employee may be paid a bonus (the "Bonus") in such amount as may be determined by the Board of Directors in its discretion. (c) Benefits. (i) Expenses. The Company shall reimburse the Employee for any ordinary, necessary and reasonable business expenses that the Employee incurs in connection with the performance of his responsibilities under this Agreement, including entertainment and travel expenses provided, however, that the Employee provide the Company documentation for these expenses in a form sufficient to sustain the Company's deduction for these expenses under Section 162 of the Internal Revenue Code of 1986, or any successor statute, and, provided further, that the Employee abides by all policies of the Company regarding such business expenses. (ii) Medical, Life and Disability Insurance. The Company shall provide the Employee with the medical, life and disability insurance currently provided to all other employees of the Company similarly situated. (iii) Membership in a Wichita, Kansas Country Club. On or after May 1, 1999, the Company shall pay the initiation fees incurred by the Employee at a Wichita, Kansas country club, which the Employee elects to join in the promotion of, or in the furtherance of, the Company's business. Appropriate expenses incurred for the Company's business purposes, properly documented by Employee as described in subparagraph (i) above, shall also be reimbursed. Further, Company shall reimburse Employee for his monthly dues at said club. (iv) Vacation. Employee shall be entitled to a vacation period of three (3) weeks each year. (v) 401K Plan. Employee will participate in the Company's existing 401K Plan in accordance with the terms and conditions of the plan. (vi) Benefit Changes. No reference in this Agreement to any policy or any employee benefit (under this Paragraph 3 (c)) established or maintained by the Company or its affiliate generally shall preclude the Company or such affiliate from changing that policy or amending or terminating that benefit if the amendment or termination applied to the other employees of the Company similarly situated. (vii) Other Plans. The Company agrees that nothing contained herein is intended to or shall be deemed to be granted to Employee in lieu of any rights and privileges which Employee may be entitled to as an Employee of the Company under any other plans which may hereafter be adopted (which benefits all Employees), it being understood that Employee shall have the same rights and privileges to participate in such plans or benefits as any other employee similarly situated. (viii) Relocation and Temporary Living Expenses. The Company shall reimburse Employee for reasonable and customary relocation expenses incurred in connection with the changing of Employee's primary residence to Wichita, Kansas. These costs shall be defined as: actual expenses incurred for moving household goods of Employee and his family; real estate commissions incurred in connection with the sale of Employee's current Ohio residence; closing costs (excluding real estate commissions) on the purchase of a Wichita, Kansas residence by Employee; Employee's temporary housing expenses in Wichita during the transitional period; and expenses incurred for reasonable travel between Wichita and Ohio during this transitional period. However, the parties agree that the temporary living portion of expense reimbursement to Employee (pursuant to this section 3viii) shall not exceed $20,000. (ix) Vehicle. The Company shall provide Employee with a vehicle suitable to his position for his use during the term of this Agreement. (d) Upon approval of Employee's employment by Company's Board of Directors, the Company shall grant to Employee options to acquire 25,000 shares of the Company's common stock at an exercise price equal to the closing market price reported on April 6, 1998 (the date of Board approval of employment). Such options shall be granted as Incentive Stock Options pursuant to the Company's 1992 Stock Option Plan, and an Option Agreement pursuant to said plan shall be entered into between Employee and the Company simultaneously with the execution of this Agreement. Conditioned upon Employee remaining employed by the Company, the Company shall grant to Employee additional Incentive Stock Options to acquire 15,000 shares of the Company's common stock each on December 31, 1998, and again on December 31, 1999. Conditioned upon the execution of a new employment agreement agreeable to both The Company and Employee which extends his employment for at least 12 months beyond April 1, 2001, Company shall grant to Employee options to acquire an additional 15,000 shares of The Company's common stock at an exercise price equal to the closing market price reported on December 31, 2000. Such options shall all be granted as Incentive Stock Options pursuant to the Company's 1992 Stock Option Plan. In the event any grant date shall occur on a weekend or holiday, the grant and pricing of options shall occur on the following business day. 4. Termination. This Agreement may not be terminated prior to the end of its term except as follows: (a) By Company for Cause. The Company may terminate this Agreement for cause upon Employee's material breach of this Agreement. Except as to subparagraphs (iv) and (vi) below, where the ability to cure is not allowed, the Company shall give Employee thirty (30) days' advance written notice of such termination, which notice shall describe in detail the acts or omissions which the Company believes constitute such breach; provided that such termination shall not take effect if Employee is able to cure such breach within thirty (30) days following delivery of such notice. Any failure to give notice shall not be deemed an approval by the Company of any conduct or a waiver by the Company of any of its rights. Acts or omissions which constitute material breach of this Agreement shall be limited strictly to the following: (i) Any material breach by Employee of his obligations under this Agreement. (ii) Willful failure of Employee to perform duties assigned to him by the Board of Directors. (iii) Willful failure of Employee to cease any other Activity which materially conflicts with the interests of the Company or materially and adversely affects the performance of his duties. (iv) Employee commits any fraud, theft or embezzlement of the Company's assets, any other act of dishonesty against the Company (or its affiliates), or any crime which is punishable as a felony. (v) Employee's habitual insobriety or use of controlled substances. (b) Death. This Agreement shall terminate upon Employee's death. (c) Disability. This Agreement shall terminate upon Employee's Total disability as determined under Paragraph 5. 5. Termination Payment. (a) Death. In the event that this Agreement is terminated due to the death of the Employee, the Employee's Base Salary shall cease as of the end of the month in which his death occurred and in lieu of all other compensation due the Employee hereunder the Employee or his representatives shall be paid (i) the compensation due the Employee under the Bonus Plan for the year in which his death occurred, pro-rated to the date of his death; (ii) accrued but unpaid vacation pay for the year in which the Employee died pro-rated to the date of the Employee's death; and (iii) any unpaid expense reimbursement. (b) Total Disability. As used herein, the term "Total Disability" shall mean the inability of the Employee to substantially perform the duties of his employment hereunder by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than six (6) months. The determination of the Employee's Total Disability shall be made by the Board and an examining physician acceptable to the Company and the Employee. If the Employee and the Company cannot agree as to a physician or if the Employee is unable to select a physician, then a physician shall be designated by the American Arbitration Association office nearest Wichita, Kansas. In the event that this Agreement is terminated due to Total Disability, the Employee shall be paid in lieu of all other compensation (i) the Base Salary, as adjusted, due Employee to the date it was determined that Employee became totally disabled, (ii) the compensation due the Employee under the Bonus Plan for the year in which such Total Disability occurred pro-rated to the date that the Employee was terminated, (iii) accrued by unpaid vacation pay for the Employee for the year in which the Employee became Totally Disabled pro-rated to the date that the Employee was terminated, and (iv) any unreimbursed expenses. Upon such Total Disability, the Company shall have the right to terminate any insurance that it has owned and maintained on the life of the Employee provided, however, that if the Company elects to maintain such insurance, the proceeds thereof shall be the sole property of the Company. (c) Termination by Company for Cause. If Employee is terminated under the terms of this Agreement, the Company shall be relieved of all obligations and liabilities to Employee under this Agreement effective the date written notice has been given to Employee pursuant to Paragraph 4(a) provided that Employee has not cured said breach pursuant to said paragraph. However, payments owing Employee under any Profit Sharing Plan shall still be payable to Employee by Company in accordance with the terms and conditions of the specific plan. 6. Covenants of Employee. Employee agrees to comply with the provisions of this Paragraph 6 during the term of this Agreement and for one (1) full year after the expiration or termination thereof. (a) Assistance in Litigation. Employee agrees that he shall, upon reasonable notice furnish such information and proper assistance to Company as may be required in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party. (b) Confidential Information. Employee agrees that he shall not, to the detriment of the Company, knowingly disclose or reveal to any unauthorized person any trade secret or other confidential information relating to the company, its subsidiaries or affiliates, or to any business operated by them' including, without limitation, confidential customer information, sales and marketing strategies, process information, or other similar confidential information, and Employee confirms that such information constitutes the exclusive property of the Company. (c) Conflicts of Interest. During the Employment Period, including any Extension Period, the Employee shall not, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be connected in any manner with any business, whether in corporate, partnership or proprietorship form, that provides any service or product in competition with any service or product provided by the Company or any of its subsidiaries from time to time without prior approval of the Board, provided, however, that the Employee may acquire up to one percent (1%) of the debt or equity securities of any corporation or other entity, if such debt or equity securities are traded on a national or regional securities exchange or quoted on the NASDAQ system. (d) Proprietary Information. During or after the Employment Period, including any Extension-Period, the Employee shall not disclose any Proprietary Information of the Company or its subsidiaries or affiliates to any person not authorized by the Company's or such subsidiary's or affiliates' Board, as the case may be, to receive the information, nor shall the Employee make use of any Proprietary Information for his own purposes or for the benefit of any person, firm, corporation or other entity except the Company. Proprietary Information of the Company, its subsidiaries and affiliates includes, but is not limited to, trade secrets and other confidential information, development projects, customer lists, billing and other customer information, pricing, process, product and market information, marketing strategies, computer programs, financial data and any other information about the Company, its subsidiaries and affiliates and their interests, affairs or business which is not in the public domain. Upon the termination of his employment hereunder, the Employee shall deliver to the Company and its subsidiaries all correspondence, mailing lists, letters, records and any and all other documents pertaining to or containing information relative to the Company's business, and the Company shall not remove any of such records either during the course of his employment or upon the termination thereof. (e) Inventions, Designs, Etc. Employee agrees that all inventions, discoveries, designs, product developments, patent applications, computer software, copyrightable material and any similar property developed or conceived by the Employee during the Employment Period, including any Extension Period, either solely or jointly with others, and relating to, or capable of being used or adopted for use in, the business of the Company, or developed or conceived by the Employee in the course of duties for the Company, shall inure to and be the property of the Company and must be promptly disclosed to the Company. The Employee agrees that both during the Employment Period, including any Extension Period, and thereafter the Employee will execute such documents and do such things as the Company reasonably may request to enable the company or its nominee (i) to apply for patent, registered design, trademark, copyright or equivalent protection in the United States, Canada and elsewhere for any invention, discovery, design or product development hereinabove referred to in this subparagraph (e), or (ii) to be vested with exclusive title, free and clear of any liens or encumbrance, to any such inventions, discoveries, designs, product developments, patents, registered designs or equivalent rights, computer software, tradenames, trademarks and copyrights and any similar property of the Employee. This paragraph does not apply to an invention for which no equipment, supplies, facility or trade secret information of the Company was used and which was developed entirely on the Employee's own time and (1) which does not relate (a) directly to the business of the company or (b) to the Company's actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by the Employee for the Company. (f) Covenants Not to Compete, Etc. The Employee agrees that for a period of two (2) years after the termination of his Employment (the "Termination Date"), for whatever reason, neither he nor any entity with which the Employee is affiliated anywhere in the United States (the "Territory") will, directly or indirectly, own, manage, operate, join, control, be employed by or participate in the ownership, management, operation or control of, or be connected in any manner with, any business whether in corporate, proprietorship or partnership form or otherwise, as more than ten percent (10%) owner in such business, or member of a group controlling such business, where such business is engaged in any activity which competes with the business of the company, as conducted on the Termination Date or which will Compete with any proposed business activity of the Company in the Planning stage on the Termination Date. From the date of this Agreement until the second anniversary of the Termination Date, neither the Employee nor any entity with which the Employee is affiliated shall solicit within the Territory business from, or perform services for, except on behalf of the Company, any company or other business entity which at any time during such period was a client of the Company (including, without limitation, any lessee, vendor, supplier or lender of or to the Company), except on behalf of the Company. Neither the Employee nor any entity with which the Employee is affiliated shall within the Territory, at any time within three (3) years from the Termination date, provide employment, either on a full-time, part-time or consulting basis, to any person who is employed by the Company on the Termination Date, unless the Employee shall have received the prior written consent of the Company to do so, in which written permission the name of the person to be employed following the Termination Date by the Employee or by any entity with which the Employee is affiliated is specifically identified. As used herein, the term "entity with which the Employee is affiliated" shall include, without limitation, the Employee's spouse and any other member of his immediate family. Notwithstanding the preceding, in the event that the Employer terminates this Agreement without cause or the Employee terminates this Agreement with cause, the provisions of this paragraph shall only continue for the period of time that the Employee is paid his Base Salary. In the event that the provisions of this subparagraph (f) should ever be judicially determined to exceed the limitations permitted by applicable law, than the parties hereto agree that such provision shall be reformed to set forth the maximum limitations permitted. (g) Secrecy. The Employee agrees that he shall hold in strict confidence and shall not disclose to any third person any of the terms or provisions of his employment arrangements with the Company, except to the extent required by applicable law. Injunctive Relief. The parties hereto specifically acknowledge and agree that the remedy at law for any breach of the provisions of this Paragraph 6 will be inadequate and that the Company, in addition to any other relief available to it, shall be entitled to temporary and permanent injunctive relief upon application by the Company to any arbitrator or directly to any court, without the necessity of proving actual damages. 7. Miscellaneous. (a) Successors and Assigns. This Agreement is binding on and inures to the benefit of the Company's successors and assigns, all of which are included in the term "Company" as it is used in the Agreement. The Company may assign this Agreement only in connection with a merger, consolidation, assignment, sale or other disposition of substantially all of its assets or business. This Agreement will be deemed materially breached by the Company if its successor or assign does not assume all of the company's obligations under this Agreement. (b) Modification. This Agreement may be modified or amended only by a writing signed by both the Company and the Employee. (c) Construction. Wherever possible, each provision of this Agreement will be interpreted so that it is valid under the applicable law. If any provision of this Agreement is to any extent invalid under the applicable law, the remainder of that provision will still be effective to the extent it remains valid. The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions. (d) Waivers. No failure or delay by either the Company or the Employee in exercising any right or remedy under this Agreement will waive any provision of this Agreement, nor will any single or partial exercise by either the Company or the Employee of any right or remedy under this Agreement preclude either of them from otherwise or further exercising these rights or remedies, or any other rights or remedies granted by any law or any related document. (e) Captions. The headings in this Agreement are for convenience only and do not affect the interpretation of this Agreement. (f) Entire Agreement. This Agreement supersedes all previous and contemporaneous oral negotiations, commitments, writings and understandings between the parties concerning the matters in this Agreement. (g) Notices. All notices and other communications required or permitted under this Agreement shall be in writing and either hand delivered, or sent by registered first class mail, postage prepaid, and shall be effective upon receipt in the event of hand delivery, or five (5) days after mailing to the addresses stated below, or to such other addresses as may be furnished in writing from time to time by the party to be served: If to the Company: High Plains Corporation 200 W. Douglas, Suite 820 Wichita, Kansas 67202 ATTN: Christopher G. Standlee If to the Employee: Gary R. Smith 2638 Radford Avenue North Canton, Ohio 44720 With a copy to: Gary R. Smith 7627 E. 37th St. North, #1402 Wichita, Kansas 67226 IN WITNESS WHEREOF, Company and Employee have executed this Agreement as of the date first above written. COMPANY: EMPLOYEE: HIGH PLAINS CORPORATION By: /s/Christoper G. Standlee _________________________ Vice President /s/Gary R. Smith ATTEST: ____________________________ /s/H.T. Ritchie, Secretary EX-10.14 4 CO2 Purchase and Sale Agreement WHEREAS, High Plains Corporation (hereinafter referred to as "SELLER") operates an ethanol production facility in York, Nebraska which produces as a by-product raw carbon dioxide (CO-2) in gaseous form; and WHEREAS, EPCO Carbon Dioxide Products, Inc. ("EPCO") will be manufacturing liquid CO2 at a CO2 Liquefaction Plant to be constructed by EPCO on premises leased or owned by EPCO in York, Nebraska; and WHEREAS, EPCO desires to purchase Raw CO-2 gas from SELLER; and WHEREAS, SELLER desires to sell such CO-2 gas on the terms and conditions set forth in this agreement; NOW THEREFORE, in consideration of the foregoing premises, the mutual covenants set forth below, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows, superceding all prior agreements: 1. Definitions: (a) EPCO CO2 Plant - The CO2 Liquefaction Plant to be constructed by EPCO in York, Nebraska; (b) SELLER'S Facility - The ethanol production facility and related operations located on the premises of SELLER in York, Nebraska which produces as a by-product quantities of CO-2 in gas form; (c) Contract year - shall mean a twelve (12) month period beginning on the first day of the first month after the EPCO CO2 Plant begins producing food grade liquid CO2, and every year thereafter for succeeding periods of twelve (12) months. (d) Matchpoint - The flange or other point on the necessary services and process facility conduits into and out of the EPCO CO2 Plant Site and shown on Exhibit A. Installation costs on the EPCO CO2 Plant side of the Matchpoint shall be borne by EPCO. Installation costs on the SELLER'S Facility side of the Matchpoint will be borne by SELLER. EPCO will fund the costs for SELLER's improvements and will recover those costs in the form of deductions from the funds due to SELLER from the first product sales. Unless agreed otherwise, this Matchpoint shall be located as near as practicable to the boundary of the EPCO CO2 Plant Site. (e) SELLER'S Facility Site - That parcel of land constituting the entire premises upon which the SELLER'S Facility in York, Nebraska is located, all as more particularly set out and described on Exhibit B, attached hereto and made a part hereof. (f) EPCO CO2 Plant Site - a parcel of land designated by EPCO on which its CO-2 Plant Site is located all as more particularly set out and described on Exhibit B, attached hereto and made a part hereof. 2. Term: The primary term of this agreement shall begin on the first day of operation of the EPCO CO-2 Plant and shall end on the last day of the tenth contract year thereafter. Provided, however, that this agreement shall automatically renew for additional term(s) of 5 years each until either SELLER or EPCO provides written notification of termination to the other at least six months prior to the end of the primary or any renewal term. Should SELLER during the initial term of this contract, or any extension thereto, file a voluntary petition under any chapter of the United States Bankruptcy code, or if a petition in Bankruptcy or under any debtors relief law shall be filed against SELLER, or if SELLER becomes insolvent, or if proceedings are begun by or against SELLER seeking the appointment of a receiver, or if SELLER should cease operations for a period of more than thirty consecutive days, except for events of Force Majeure, then EPCO shall have the right to terminate this agreement and retain all money owed by it to SELLER. 3. Quantity and Price: SELLER agrees to supply to EPCO at the Matchpoint at 6 p.s.i.g. at least 200 tons of CO-2 gas per day. The price for such CO2 shall be $7.00 per short ton. 4. Take or Pay Minimum: EPCO agrees to Take or Pay ("Take or Pay") for, whether taken or not, a minimum of 70% of 200 short tons, or 140 short tons per day, of CO2 during each six month period of this contract. EPCO's obligation to Take or Pay shall abate in the event of force majeure or cessation of operation of SELLER'S facility. 5. Measurement: The quantity of CO2 gas purchased by EPCO shall be measured by the number of tons of liquid CO-2 produced by EPCO's plant, determined on certified truck and rail scales located on the EPCO Plant Site. Title to and risk of loss of CO2 gas shall pass from SELLER to EPCO at the Matchpoint, as defined herein, but the quantity of CO-2 sold and purchased shall nonetheless be measured on the truck and rail scales stated above. EPCO will furnish certified Bills of Lading to SELLER, omitting the customer names and addresses, which shall establish the billable tons of product used by EPCO. EPCO shall not vent CO2 gas, and shall maximize recovery of condensation gas. EPCO shall keep a record of daily production, and of each individual shipment, a copy of which shall be given to SELLER on a daily basis. SELLER shall have the right to an independent audit of production and shipment information at SELLER's sole expense. SELLER is hereby granted a security interest in EPCO's inventory of all finished product prior to sale, to secure any amounts due SELLER. SELLER shall be entitled to purchase up to 10 tons of finished CO2 liquid product per day during the term of this agreement for $26.50 per ton utilized. High Plains will be furnished copies of any product quality tests performed by EPCO. 6. Payment and Terms: SELLER shall bill EPCO monthly for the Tons of Product shipped from the EPCO Facility. EPCO shall pay net thirty (30) days from billing date. 7. Force Majeure: Neither party shall be liable for failure to perform or for delay in performing this Agreement, where such failure or delay is occasioned by events constituting force majeure, and the parties shall use all reasonable efforts to minimize the duration of any event of force majeure. For purposes of this agreement force majeure shall include the following: (a) fire, explosion, strike, lock-out, labor dispute, casualty, accident or mechanical failure(s); (b) lack or failure in whole or in part of transportation facilities; (c) storm, flood or drought; (d) acts of God or of the public enemy, war, riots, police action, or civil commotion. 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 of such cessation. Whenever possible, each party shall give the other party notice of any threatened or impending event of force majeure, and the parties shall use all reasonable efforts to minimize the duration of any event of force majeure. In the event of force majeure affecting SELLER, EPCO shall have the right to the first 200 tons of CO2 per day produced by the SELLER'S Plant. It is agreed that if the SELLER'S Facility or EPCO's Plant is destroyed by some force beyond their control, they shall not be required to rebuild their facility and this Agreement will be terminated without penalty. 8. Confidentiality and Non-Competition: The parties hereby acknowledge that in the course of engaging in the sale and purchase of CO-2 gas at the York, Nebraska location, each will have access to Confidential Information which includes but is not limited to each other's business, the identity of customers, the quantity of liquid CO-2 used by such customers, shipping records, pricing, customer lists, production methods, technical and non-technical data, formulae, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, information regarding actual and potential customers of each party and actual and potential suppliers of each party. The parties agree that all such Confidential Information shall be kept secret and confidential. The parties further acknowledge that violation of the provisions of this Section shall constitute irreparable injury and shall entitle the non-violating party to temporary preliminary and/or permanent injunctive relief, in addition to any other remedy at law or in equity. 9. Insurance: Prior to construction of the CO-2 Liquefaction Plant EPCO shall furnish SELLER Certificates of Insurance with thirty days notice of cancellation and/or change in coverage clause as evidence of the following coverages: 1. Worker's Compensation as prescribed by law and Employer's Liability Insurance with a limit of not less than $1,000,000 per person and $1,000,000 per accident; 2. Comprehensive Public Liability and Automobile Liability, including broad form contractual liability provision to cover any liability assumed by EPCO under this Contract, with a combined single limit of $5,000,000 Property Damage and Bodily Injury; 3. SELLER shall be named as an additional insured on these policies of insurance. 10. Assignment: Subject to the terms and conditions set forth herein, no assignment by the parties of all or part of its rights and obligations shall be made without the consent of the non-assigning party, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, in the event the SELLER sells its Facility in York, Nebraska EPCO may, at its sole option, terminate this agreement without any penalty. 11. Entire Agreement: The entire Agreement is contained herein and there are no oral promises, representations, or other warranties affecting it. No amendment or modifications of any of the terms and provisions of this Agreement shall be binding upon either SELLER or EPCO unless the same be expressed in writing and signed by both parties. 12. Miscellaneous: This Agreement and the agreements referred to herein comprise the entire agreement between the parties relating to the subject matter hereof and there are no agreements, understandings, conditions, warranties or representations concerning the subject matter hereof which are not set forth or referred to herein. Headings are for reference only, and do not affect the meaning of any paragraph. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The failure of either party to require strict compliance with any of the terms and conditions of this agreement in any one situation shall not constitute a waiver of any of the terms and conditions of this agreement. 13. Notices: Notices and other communications between the parties hereto shall be in writing (by mail, telex, telecopy or telegraph unless a particular mode is specified herein), postage or transmission costs prepaid, and shall be addressed to the parties hereto at the addresses set forth below: To SELLER: High Plains Corporation 200 West Douglas, Suite 820 Wichita, Kansas 67202 To EPCO: EPCO Carbon Dioxide Products, Inc. 1500 Lamy Lane Monroe, Louisiana 71201 Telephone: (318) 361-0870 FAX: (318) 361-0047 All such Notices and communications shall be deemed effective on (i) the date of transmission, if sent by telecopy or if sent by telex, with confirmed answer back, or (ii) the date that is five (5) calendar days after the date on which deposited or sent, if sent by mail or telegraph. Each party hereto may change its address for purposes hereof by Notice given to the other party in the manner prescribed herein. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, this 6th day of November, 1997. EPCO CARBON DIOXIDE PRODUCTS, INC. By: /s/Eric P. Wiesemann President Attest: /s/Emmett W. Averett HIGH PLAINS CORPORATION By: /s/Christopher G. Standlee Title: Vice President Attest: /s/H.T. Ritchie EX-10.16 5 AMENDED EMPLOYMENT AGREEMENT This Amended Employment Agreement ("Amendment") is made and entered into as of June 30, 1998 by and between High Plains Corporation, a Kansas Corporation ("Company") and Raymond G. Friend ("Employee"). WHEREAS, the parties hereto are the same parties to that certain Employment Agreement dated April 1, 1995, and both parties wish to amend and modify the terms of that Employment Agreement as set forth herein. NOW, THEREFORE, in consideration of the terms, covenants and conditions set forth herein, the parties agree as follows: 1. Except as otherwise specifically set forth herein, both Company and Employee each hereby waive all rights and benefits under the Employment Agreement dated April 1, 1995, as well as under any other employment agreements between the parties, whether written, oral, or otherwise, and each specifically releases the other from any other obligations thereunder. Each party further waives and releases any claims which he might currently have against the other arising out of the employment, or the modification of that employment arrangement by this amendment. Employee hereby resigns as President of Company effective June 30, 1998. 2. Employee will continue to be employed by Company on a non-exclusive basis commencing July 1, 1998 and continuing through June 30, 2000. During this period he will be free to obtain other employment, and his only employment obligations with Company shall be generally to promote the best interests of Company, and specifically to advise and cooperate with the Company on an as needed basis at mutually agreeable times, defined to at least include meetings with Company representatives not more than twice monthly and not more than two hours in duration. Additionally, for a period of ten years from the date hereof, Employee will cooperate with Company in any litigation involving Company, and in which he is either subpoenaed, or requested by Company to testify. During the period of this continued employment, Employee shall not become an employee of (or independent contractor for) any other ethanol manufacturer within the continental United States. However, Company acknowledges that Employee may engage in the business of buying and selling ethanol for others on a brokerage basis during this period, provided that Company shall have a first right of refusal to supply ethanol to Employee for Employee's needs, and provided further that Company will also have a first right of refusal on any ethanol related business opportunities which Employee might procure or develop. If Company does not exercise its first right of refusal within a reasonable time after presentation of the proposal, Employee may proceed with that transaction on an individual basis with no further obligation or duty therein to Company. 3. Employee may, at his option, continue to serve as an employee director of the Company, with all the rights and responsibilities of that position, but acknowledges that he will receive no additional compensation therefor unless compensation is later paid to other employee directors of Company, or unless the Board adopts a policy to provide for compensation to other employee directors. Company does agree to pay reasonable expenses incurred by Employee for attendance of out of town board meetings. 4. As compensation for this continued employment, Employee shall be paid the total sum of $600,000 (less taxes and other lawful or agreed deductions), with $300,000 of that amount payable on June 30, 1998, and the remaining $300,000 payable ratably on the Company's normal payroll dates over the twenty-four month term of employment. During the continued employment, Employee shall continue to receive the following employment benefits as if he were an employee officer under the Company's current plans, or as those plans are amended, provided such amendments apply uniformly throughout the company: Health and Dental Insurance Life Insurance Disability Insurance 401(k) plan Employee Stock Purchase Plan (continued as a 10 year employee officer) Upon execution of this amendment, Employee shall pay Company an amount equal to the cash surrender value of any key man life insurance policies owned by Company, at which time Company shall assign ownership of said policies to Employee. Company also grants to Employee the option to purchase the GMC Suburban vehicle owned by the Company, and which is currently provided to Employee, for the sum of $29,000, provided that this option is exercised on the date of the execution of this amendment. Employee may also purchase the cellular phone and charger/car adapter equipment installed in the Suburban for the additional sum of $300. If Employee elects not to purchase this vehicle or phone equipment, the items not purchased and all keys thereto, shall be delivered to Company immediately. Employee may also keep the same cellular phone number and account provided that the contract is assigned to him personally, and Company is no longer responsible therefor. Employee acknowledges receipt of all amounts and benefits due or accrued from Company for wages, salary, bonus, vacation, expense reimbursement, or other compensation or benefit of any kind whatsoever, through June 30, 1998, and releases Company for any claims therefor. No additional vacation will accrue during the term of continued employment, and any and all other employment benefits from Company not specifically set forth herein are specifically waived by Employee. Employee acknowledges that he has no authority to bind the corporation to any contracts or agreements as of the date hereof, and will not purport to commit the Company in any way. Employee will not be entitled to reimbursement of any further expenses by the corporation unless specifically provided herein, or approved in writing in advance by an appropriate corporate officer, or the Company's Board of Directors. In connection with this continued employment, Employee shall surrender all of his existing stock options previously issued by the Company. All such options (except the options described in the following sentence) shall be reissued by Company to Employee as non-qualified options on terms set forth in the Company's 1992 Stock Option plan, retaining the same exercise price and re-load rights (if any) as the previous options, but eligible for immediate exercise, and with an expiration date of September 30, 2000. However, the parties agree that in return for Employee's surrender of the 72,000 stock options which he currently holds, and which have an exercise price of $5.382 and an expiration date of 12/10/2002, Company shall issue employee 36,000 new non-qualified stock options under the terms of the Company's 1992 Stock Option Plan, with an exercise price of $2.625, and an expiration date of 12/10/2001. 5. The letter of recommendation attached hereto as Exhibit A shall be maintained in Employee's personnel file, and shall constitute the recommendation letter disseminated by Company regarding Employee for all future inquiries. The parties specifically agree that Company's employment file on Employee shall not contain anything derogatory of Employee, and Employee agrees that he shall not make any negative or derogatory statements regarding Company, its officers, directors, or employees. Company agrees to instruct its employees and directors not to make any negative or derogatory statements regarding Employee, and further agrees to use reasonable efforts to enforce that instruction. Provided, however, that the foregoing shall not be construed to prevent full, fair, and complete discussion of grievances and any future business among the parties, or to inhibit either party or its representatives from testifying under subpoena or in the context of any criminal or civil court proceeding. 6. Any press releases announcing Employee's resignation as president, or the change in Employee's relationship with the Company pursuant to this amendment, shall be subject to approval by Employee prior to release. 7. All material correspondence directed to Employee and received by Company during the term of this agreement shall be copied and/or logged and provided to Employee within a reasonable time after receipt. Regarding phone calls received by the Company for Employee during the term of this agreement, Company agrees to ask its staff to respond as set forth in the attached Exhibit B. 8. All payments to Employee set forth herein (exclusive of employment benefits) shall continue in the event of the death or disability of Employee, during the term of this Amended Employment Agreement. All such payments shall be paid directly to Employee's heirs at law under the same terms and conditions. 9. This agreement represents the sole agreement of the parties hereto, incorporating all other agreements, whether written or oral, no modifications of this agreement shall be effective unless in writing and signed by both parties, and no other prior agreements between the parties shall be of any further force or effect. 10. In the event the Company terminates the Employee, whether with or without cause, then Company agrees that it shall still be obligated to specifically perform all the terms and conditions herein. IN WITNESS WHEREOF, the parties have executed this agreement as of the day and year first written above. EMPLOYEE: COMPANY: /s/Raymond G. Friend HIGH PLAINS CORPORATION By: /s/Gary R. Smith, C.E.O. Exhibit A (On Company letterhead) To: Whom it may concern Re: Raymond G. Friend Employment History Date: June 18, 1998 Ray Friend was initially employed by our company in June 1985 as Controller. In April of 1990, he became an officer in our company, being elected to the positions of Vice President of Finance and Marketing and Chief Financial Officer of the company. In 1995, Mr. Friend was elected Executive Vice President and retained his title of Chief Financial Officer. In April 1997, he was elected President of High Plains Corporation and in May of 1997 was appointed to the Company's Board of Directors. In November of 1997, he was elected by shareholders to the Board for a three year term. Mr. Friend resigned as President in June of 1998 for personal reasons and continues as a Director for the company, serving on both the Finance and Capital Expenditures and the Mergers and Acquisition committees of the Board. Mr. Friend was active within the Industry, serving for eleven years on the Board of The Clean Fuels Development Coalition (CFDC), a national organization with headquarters in Washington, DC that was formed to promote the development and use of clean alternative fuel sources. During this time, he served as Chairman of CFDC for two terms. He has also served as President of the Kansas Ethanol Association, an organization of ethanol producers which operate plants in the state of Kansas, for twelve years. He was part of a three person team that took over management of this publicly owned company in 1985, when the company was essentially bankrupt, and through their combined efforts turned the company around, increasing the market capitalization from $47 thousand to a level as high as $150 million. Mr. Friend has been a dedicated employee during the thirteen years he has worked here performing an assortment of duties. We would highly recommend him to any potential future employer for almost any facet of business management or marketing. Sincerely, /s/Daniel O. Skolness Chairman of the Board High Plains Corporation Exhibit B MEMO RE TELEPHONE REQUESTS FOR RAY FRIEND To: High Plains Corporation Office Staff In the event you receive telephone calls asking to speak with Ray Friend, please respond as follows: "Mr. Friend is no longer involved in the daily operations of the Company. I would be happy to direct your call to the appropriate department. If you need to speak directly with Mr. Friend, his new phone number is 681-0080." If further questioned as to Ray's status, refer the calls to Gary Smith or Chris Standlee. Responses by Gary and/or Chris will essentially state that "Ray is no longer officing here. We have retained his services on a consulting basis to assist with ongoing business. What may I do to help you." EX-10.17 6 LEASE AGREEMENT This Lease Agreement, ("Agreement"), is made and entered into as of the 6th day of November, 1997, between High Plains Corporation ("High Plains"), with offices at 200 W. Douglas, Suite 820, Wichita, KS 67202, and EPCO Carbon Dioxide Products, Inc. ("EPCO"), with offices at 1500 Lamy Lane, Monroe, Louisiana 71201. WHEREAS, EPCO and High Plains have entered into an agreement whereby High Plains will sell to EPCO and EPCO will purchase from High Plains raw gaseous CO2 produced at High Plains ethanol production facility located in York, Nebraska; WHEREAS, EPCO desires to lease from High Plains certain land and improvements thereon, upon which EPCO desires to construct and operate a liquefaction plant; and WHEREAS, High Plains desires to lease to EPCO certain land and improvements thereon and allow EPCO to construct and operate a liquefaction plant on one of the Properties; NOW, THEREFORE, in consideration of the foregoing promises, the mutual covenants set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. DEFINITIONS: (a) CO2 Purchase and Sale Agreement shall mean the CO2 Purchase and Sale Agreement entered into by High Plains and EPCO, dated November 6, 1997. (b) Contract Year shall mean a twelve (12) month period beginning on the first day that EPCO begins to manufacture liquid CO2 and every year thereafter for succeeding periods of twelve (12) months. (c) EPCO's Liquefaction Plant shall mean the CO2 liquefaction plant, owned by EPCO and to be located on Exhibit A Property owned by High Plains and leased to EPCO. (d) High Plains' Facility shall mean the ethanol production facility and related operations located on the premises of High Plains in York, Nebraska, which produces as a byproduct quantities of CO2 in gaseous form. 2. PROPERTY LEASED: High Plains hereby leases to EPCO and EPCO hereby leases from High Plains a parcel of land, ("Property"), the location of which is more particularly described in Exhibit A, attached hereto and made a part of this Agreement. 3. TERM: The primary term of this Agreement shall begin on the date of execution of this Agreement and shall end on the close of business of the last day of the tenth Contract Year. Within 30 days after EPCO begins producing liquid CO2, EPCO shall provide High Plains written notice of the date on which EPCO began producing liquid CO2. This Agreement shall automatically renew for successive five-year terms which shall be concurrent with the Contract Years, unless written notice is given by either party of its intent not to renew at least six (6) months prior to the expiration of the then current term. 4. USE OF THE PREMISES: (a) High Plains agrees to lease the Property to EPCO only for the purposes of constructing, operating, maintaining, disassembling, and removing EPCO's Liquefaction Plant and for transporting EPCO's products to and from EPCO's Liquefaction Plant as well as parking, storing and maintaining trucks, trailers and other vehicles used in operating EPCO's Liquefaction Plant. The adjoining pipeline shall be used only to carry raw CO2 gas from High Plains' ethanol plant to EPCO's Liquefaction Plant. (b) EPCO may, at EPCO's sole expense, construct improvements on the Property. All buildings and any alterations or modifications to the Property shall comply with OSHA or other applicable regulations or local codes in the jurisdiction in which the Property is located. (c) EPCO agrees to obtain from the appropriate governmental agencies, at EPCO's sole expense, any and all permits, licenses, and the like, required to permit EPCO to construct the improvements and to otherwise occupy the Property for the purposes stated in paragraph 4 of this Agreement. (d) EPCO shall make all repairs and do all acts of maintenance in or upon the Property as it becomes necessary during the term of this Agreement to ensure the Property remains in compliance with all applicable regulations or local codes in the jurisdiction in which the Property is located. EPCO shall be responsible for fencing the Liquefaction Plant. Existing fencing may be used, but any relocation or maintenance of fencing shall be the responsibility of EPCO. All fencing shall remain the property of High Plains upon termination of this Lease Agreement. EPCO further agrees to purchase from High Plains the spare truck scale currently located on High Plains facility for the agreed sum of $20,000.00. (e) Once construction of any improvement upon the Property has begun by EPCO, EPCO shall with reasonable diligence prosecute the work to completion. 5. WARRANTIES BY EPCO: (a) EPCO represents and warrants that EPCO is familiar with and has knowledge of applicable and relevant environmental, health, and safety laws, statutes, regulations, and ordinances, whether federal, state, or local, pertaining to the handling, storage, use, transportation, or other disposition of gaseous CO2 and liquid CO2. EPCO hereby assumes full responsibility for handling, storage, use, transportation, or other disposition of gaseous CO2 and liquid CO2 in compliance with all applicable and relevant environmental, health, and safety laws, statutes, regulations, and ordinances, whether federal, state, or local, pertaining to the handling, storage, use, transportation, or other disposition of gaseous CO2 and liquid CO2. (b) EPCO further represents and warrants that EPCO is familiar with and has knowledge of, applicable and relevant transportation, environmental, health, and safety laws, statutes, regulations, and ordinances, whether federal, state, or local, pertaining to the construction and maintenance of EPCO's Liquefaction Plant. EPCO hereby assumes full responsibility for constructing and maintaining EPCO's Liquefaction Plant in such a condition which ensures that EPCO's Liquefaction Plant is in compliance with all federal, state, and local laws, statutes, and regulations pertaining to the construction and maintenance of EPCO's Liquefaction Plant. EPCO further assumes full responsibility for the operation of the Liquefaction Plant in compliance with all federal, state, and local laws, statutes and regulations pertaining to the operation of EPCO's Liquefaction Plant. 6. AGREEMENT AND COVENANTS OF EPCO: (a) EPCO shall under no circumstances cause, suffer, or allow the release or disposal of any hazardous or nonhazardous wastes, substances, or other materials on, at, or in the Property and shall be and remain fully responsible for the ultimate disposition of such materials during and after the term of this Agreement. EPCO shall comply with any and all past, present, and future laws, rules, regulations, ordinances and the like, directly or indirectly relating to environmental protection, conservation, hazardous or non hazardous waste, substances, or other materials, emissions, discharges, releases, verbal or written notification or reporting, wildlife, natural resources, permitting, cleanup or remediation, onsite or offsite transportation, disposal, reclamation, recycling, or other disposition of such materials to the extent directly or indirectly relating or applying to EPCO's actions or inactions on, at, in or near the Property. EPCO shall maintain complete records of all materials relating to the foregoing during the term of this Agreement. (b) EPCO shall not use the Property for any disorderly or unlawful purpose, but only for the purposes stated in paragraph 4 of this Agreement. 7. CONDITIONS OF PREMISES: EPCO acknowledges that EPCO has had full opportunity to inspect the Properties and is fully informed, independent of High Plains to the character and construction of the Property. EPCO accepts the premises as is, and in their present condition. 8. TRADE FIXTURES AND EQUIPMENT: The parties agree that all fixtures and equipment installed or brought onto the Property shall not become or be deemed to be a part of the Property, but shall remain EPCO's property and may be removed from the Property by EPCO at any time during the term of this Agreement. Subject to the other provisions herein, repairs to EPCO's equipment shall be at EPCO's sole discretion and expense. High Plains covenants that any interest High Plains may now or hereafter have in EPCO's property located on the Property and any rights incident thereto shall be subordinate to the security interest of any secured party pursuant to a security agreement. 9. ANNUAL RENTAL FEE: EPCO agrees to pay High Plains as rental for the use and occupancy of the Property, at the times and in the manner provided, a rental fee of $1.00 each Contract Year. EPCO will pay any and all taxes resulting from the equipment or improvements being placed upon the leased premises, including all personal property taxes on equipment, and any increase in real property taxes for the leased premises resulting from the equipment or improvements. 10. PAYMENT OF RENT: The annual rental fee shall be paid in advance on or before the first day of a Contract Year. If the correct amount is not paid on or before the first day of a Contract Year, interest on any unpaid amount shall accrue at the rate of 10% for each Contract Year, and if such default continues for more than thirty (30) days after written notice from High Plains to EPCO, High Plains may terminate this Agreement without prejudice to its other remedies. 11: UTILITIES: (a) EPCO shall, at its sole cost and expense, cause to be installed in, on, and about the Property all facilities necessary to supply thereto all water, sewerage, gas, electricity, telephone, and other services required in EPCO's operations hereunder; and during the term of this Lease, EPCO agrees to pay all charges and expenses in connection therewith and to protect High Plains and the Property therefrom. High Plains represents that such services are or will be available at or near the perimeter of the Property before construction of EPCO's Liquefaction Plant is begun. (b) EPCO shall pay all charges for all utilities, including but not limited to electricity, gas, fuel, water, sewer charges, telephone services used in or on the premises, as they become due and payable and to establish all accounts therefor in EPCO's name at the outset of the term of this Agreement. EPCO shall reimburse High Plains for the actual charges made by the City of York for direct wastewater disposal (currently estimated to be $.50/1,000 gallons), or for High Plains prorated actual costs if wastewater is treated by High Plains prior to discharge to the City. High Plains agrees to treat EPCO's waste water only if required by the City of York. 12. RESTORATION OF THE PROPERTY: Within one hundred eighty (180) days of the termination of this Agreement, EPCO shall, at EPCO's sole expense, restore the Property and return possession of the Property to High Plains. Restoration of the Property shall mean the removal of all roads, parking lots, curbs, above ground structures, pilings, foundations, pipes and other underground structures placed on the Property by EPCO to at least one (1) foot below ground level. In the event EPCO fails to remove its personality from the Property and restore the Property as required in the preceding sentence, then High Plains may remove, or cause to have removed, EPCO's personality from the Property and restore the Property or cause to have the Property restored. EPCO shall reimburse High Plains for any reasonable costs High Plains may incur for removing EPCO's personality and restoring the Property. If requested by High Plains within 30 days after termination, EPCO shall leave certain specific improvements, which are integrally incorporated into the premises, such as roads, paving, curbs, foundations, etc. 13. INDEMNITY: (a) High Plains does not assume any liability for any acts or omissions of EPCO or EPCO's drivers, agents or employees. EPCO shall fully protect, indemnify, defend and hold High Plains, its affiliates, and their respective officers, directors, agents, servants and employees harmless from and against any and all claims and actions by third parties for personal injury, property damage or death caused by any liquid CO2 while at EPCO's Liquefaction Plant; any and all claims and actions by any third parties, against High Plains for personal injury, property damage or death sustained by anyone, arising out of or in connection with the maintenance, operation, control or use of the Property; all loss or damage to the High Plains facility, arising out of the ownership, maintenance, operations, control or use of the Property by EPCO; all taxes, penalties, fines, interest, liens or indebtedness or claims against High Plains property for work performed, or measured by the work performed, growing out of or incident to EPCO's operations under this Agreement. Third parties shall include, but not be limited to High Plains and EPCO employees, contractors and subcontractors. EPCO's duty to protect, indemnify, defend and hold High Plains harmless shall not extend to any action for which High Plains is insured through a Worker's Compensation plan. Additionally, EPCO shall not be held liable for any punitive damages assessed against High Plains. 14. INSURANCE: (a) EPCO shall maintain at its own cost and expense such insurance of a type and in the amounts to insure EPCO's indemnification and other obligations under this Agreement which will protect High Plains from all claims for damages to persons and to property which may arise from the operation of the liquefaction Plant, or from work performed pursuant to this Agreement or any subcontracts related to this Agreement. EPCO shall maintain during the entire term of this Agreement insurance policies with minimum limits of coverage, all as set forth on Exhibit B which is made a part hereof by reference. (b) Such insurance shall also name High Plains as an additional insured. 15. ASSIGNMENT AND SUBLEASING: Neither party may assign its rights and obligations under without the consent of the non-assigning party, which consent shall not be unreasonably withheld. 16. TERMINATION AND DAMAGES: (a) High Plains and EPCO may terminate this Agreement or any provision herein by mutual consent upon such terms as they may agree in writing. (b) If either party breaches any provision of this Agreement, the nonbreaching party shall provide the breaching party with written notice of the alleged breach. The notice of alleged breach shall sufficiently describe the conduct which constitutes the alleged breach, the nonbreaching party's expectation of remedial action to be taken by the breaching party, the alleged damages suffered by the nonbreaching party and the time, which shall not be less than thirty (30) days, within which the breach must be cured. If the breaching party fails to cure the breach within the time specified in the notice of alleged breach; the non- breaching party may terminate this Agreement. (c) If High Plains sells High Plains' Facility, EPCO may, at its sole discretion, terminate this Agreement without penalty assessed to EPCO. (d) If EPCO fails to have completed, or made substantial progress toward completion and beginning of operation of the plant on or before May 31, 1998, High Plains may terminate this agreement. (e) If the CO2 Purchase and Sale Agreement of even date herewith is terminated for any reason, then this lease shall also be considered terminated. 17. FORCE MAJEURE: (a) Neither party shall be liable for failure to perform or for delay in performing this Agreement, where such failure or delay is occasioned by (i) fire, explosion, breakdown of plant, failure of machinery, strike, lock-out, labor dispute, casualty or accident; (ii) storm, flood or drought; (iii) lack or failure in whole or in part of the sources of supply, labor, raw materials, or power, or other utilities; (iv) acts of God or of the public enemy, war, riots, police action, or civil commotion; or (v) any law regulation, ordinance, demand, judgment, injunction, arbitral award, or other requirement or regulation of any government or governmental agency or instrumentality; (vi) 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 fourteen (14) 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 of such cessation. Whenever possible, each party shall give the other party notice of any threatened or impending event of force majeure, and the parties shall use all reasonable efforts to minimize the duration of any event of force majeure. (b) It is agreed that if High Plains' Facility or EPCO's Liquefaction Plant is destroyed by some force beyond their control, neither shall be required to rebuild its facility, and this Agreement will be canceled without penalty to either party. 18. EMINENT DOMAIN: EPCO agrees that if the Property, or any part thereof, shall be taken or condemned for public or quasipublic use or purpose by any competent authority, EPCO shall have no claim against High Plains and shall not have any claim or right to any portion of the amount that may be awarded to High Plains as damages or paid as a result of any such condemnation. In the event that the Property or any substantial part thereof shall be taken or condemned by an governmental authority, then this Agreement shall terminate on the date on which EPCO is forced by such taking to cease carrying on the operation of EPCO's Liquefaction Plant. 19. LEASE SUBORDINATION: (a) This lease shall at all times be subject, subordinate, and inferior to a first mortgage, if any, that may be placed on the land owned by High Plains; and the recording of such mortgage shall be deemed prior to this lease, irrespective of the recording date of such mortgage, and EPCO will, upon demand, without cost, execute any instrument necessary to effectuate such subordination, and if EPCO, within five (5) days after submission of such instrument fails to execute the same, High Plains is hereby authorized to execute same as attorney-in-fact for EPCO. (b) It is a condition, however, to the foregoing subordination that so long as EPCO shall faithfully discharge the obligations on its part to be kept and performed under the terms of this lease, its tenancy will not be disturbed nor this lease affected by any default under such mortgage or mortgages; and in the event of foreclosure, or any enforcement of such mortgage, the right of EPCO hereunder shall expressly survive and not be cut off, and this lease shall, in all respects, continue in full force and effect, provided always, however, that EPCO fully performs all of its obligations hereunder. 20. EASEMENTS AND RESTRICTIONS OF RECORD: This lease is subject to all statutes, ordinances, and regulations, including, without limitation, those relating to zoning now or hereafter applicable to the Property, and to all covenants, easements, reservations, and restrictions of record applicable to the Property. High Plains agrees to provide EPCO with a survey which discloses easements and restrictions of record. 21. ENTIRE AGREEMENT: This Agreement comprises the entire agreement between the parties and there are no oral promises, representations, or other warranties affecting it. No amendment or modifications of any of the terms and provisions of this Agreement shall be binding upon either High Plains or EPCO unless the same be expressed in writing and signed by both parties. 22. MISCELLANEOUS: (a) Headings are for reference only and do not affect the meaning of any paragraph. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. (b) Nothing herein shall be construed to create a partnership, joint venture, or agency relationship between the parties hereto. Neither party shall have the authority to enter into agreements of any kind on behalf of the other, nor shall either party have the power or authority to bind or obligate the other in any manner to any third party. (c) The failure of either party at any time to require performance by the other party of any provision of this Agreement shall in no way affect the right of such party to require performance of that provision. Any waiver by either party of any breach or any provision of this Agreement shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself, or a waiver of any right under this Agreement. 23. CHOICE OF LAWS: This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Nebraska. 24. NOTICES: Notices and other communications between the parties hereto shall be in writing (by mail, telex, telecopy or telegraph unless a particular mode is specified herein), postage or transmission costs prepaid, and shall be addressed to the parties hereto at the addresses set forth below: To High Plains: High Plains Corporation 200 West Douglas, Suite 820 Wichita, Kansas 67202 To EPCO: EPCO Carbon Dioxide Products, Inc. 1500 Lamy Lane Monroe, Louisiana 71201 All such Notices and communications shall be deemed effective on (i) the date of transmission, if sent by telecopy or if sent by telex, with confirmed answer back, or (ii) the date that is five (5) calendar days after the date on which deposited or sent, if sent by mail or telegraph. Each party hereto may change its address for purposes hereof by Notice given to the other party in the manner prescribed herein. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, this 6th day of November, 1997. HIGH PLAINS CORPORATION EPCO CARBON DIOXIDE PRODUCTS, INC. By: /s/Christopher G. Standlee By: /s/Eric P. Wiesemann Title: Vice President Title: President Attest: /s/H.T. Ritchie Attest: /s/Emmett W. Averett -----END PRIVACY-ENHANCED MESSAGE-----