Attached files
| file | filename |
|---|---|
| 8-K - RED TRAIL ENERGY, LLC | v205987_8k.htm |
Portions
omitted pursuant to a request for confidential treatment and filed separately
with the SEC.
MEDIATED
SETTLEMENT AGREEMENT
1. This
mediated Settlement Agreement is entered into by, between and among Red Trail
Energy, LLC (“RTE”), Fagen, Inc. and Fagen Engineering, LLC, (collectively
referred to as “Fagen”), and ICM, Inc. (“ICM”) as of November 8, 2010, relating
to the Red Trail Energy Ethanol Plant (“Plant”). (Each, a “Party,” and,
collectively, the “Parties”).
2. RTE
commenced a lawsuit against Fagen in Stark County, North Dakota, (the
“Lawsuit”). Fagen removed the Lawsuit to federal court. Fagen and RTE
stipulated to remand the Lawsuit to Stark County District
Court. Proceedings in Stark County District Court will be stayed
while the Parties work to execute the terms of this Agreement. Any
Party may lift the stay in Stark County District Court upon seven days written
notice to the other Parties after this Agreement has been breached or terminated
pursuant to its terms.
3. The
Parties have been advised of the provisions of Minn. Stat. Sec. 572.31 et seq., which are
incorporated into this Agreement by reference.
4. The
following terms will be enforceable should the Plant achieve “Required
Emissions” as provided in paragraph 5 below. The following payments
and releases are a negotiated resolution resulting from the Plant’s change in
specified fuel from lignite to sub-bituminous coal and the parties’ various
obligations and responsibilities under the Plant’s construction contract,
subcontracts and documents related to the foregoing.
a. The
undersigned, and their officers, directors, members, shareholders, employees,
agents, predecessors, successors, assigns, affiliates and insurers, agree to
release and waive all claims by, between and among each other arising out of or
regarding the Plant, including, but not limited to, any and all claims that were
made or that could have been made in the Lawsuit. In addition, Fagen
and ICM represent that they have fully paid all their respective subcontractors
and suppliers that worked on the project as of the date of this
Agreement.
b. RTE
agrees to pay *** presently being held by the First National Bank of Omaha
(“FNBO”) to Fagen in full satisfaction of RTE’s obligations to
Fagen. Within 3 business days of Fagen successfully demonstrating the
Plant’s achievement of Required Emissions (as defined below), First National
Bank of Omaha (“FNBO”) shall release the *** to Fagen pursuant to FNBO’s letter
dated November 8, 2010.
c. Fagen
releases RTE from payment of the Note and Security Agreement and all other
related documents for the *** of the subordinated debt that RTE owes
Fagen. Fagen will execute written satisfactions and releases of these
documents if requested by RTE.
d. RTE
will pay to ICM *** on the Note and Security Agreement for the subordinated debt
RTE owes ICM. ICM will execute written satisfactions and releases of
these documents if requested by RTE, and the Note and Security Agreement will be
deemed satisfied in full.
*** Portions omitted pursuant to a request for confidential
treatment and filed separately with the SEC.
e. Notwithstanding
the foregoing, the obligations of RTE to pay interest to ICM and Fagen shall
continue until such time as the Plant achieves Required Emissions (as defined
below). However, such interest payments shall only become due and
payable to Fagen and ICM in the event the Plant fails to achieve Required
Emissions or this Agreement is otherwise voided. If the Plant
achieves Required Emissions, all interest accruing after the date of this
Agreement is waived by Fagen and ICM.
f. Upon
payment and satisfaction of the Note following achievement of Required
Emissions, ICM will resign as Agent under the Collateral and Agency Agreement
related to the Note and Security Agreement. RTE will work with
Greenway Consulting, LLC to appoint a new Agent.
g. ICM
will pay to RTE, as damages, the sum of ***.
h. All
other amounts claimed to be due and owing between RTE and Fagen or ICM arising
out of or regarding the Plant are hereby released and waived.
5. a. The
Parties anticipate that the North Dakota Department of Health (“NDDoH”) will
revise the Plant’s permit pursuant to the proposed emissions levels set forth in
the Prevention of Significant Deterioration Permit Amendment Application,
Revision 1, dated November 2009 (“Permit Amendment Application”), attached and
incorporated by reference to this Agreement as Exhibit A. However,
the issuance of such revised permit is not a requirement or condition precedent
to the parties’ obligations to perform under this Agreement.
b. RTE
represents that during normal operations that the Plant currently operates
within Required Emissions (as defined below) except with respect to NOx and
PM/PM 10 levels for boiler stack house particulate. Upon execution of
this Agreement, Fagen, with assistance from ICM, will provide operational and
engineering assistance and recommend reasonable and industry accepted
improvements to RTE for the purpose of assisting the Plant to achieve Required
Emissions. RTE and Fagen will split, on an even 50/50 basis, the
costs of making Fagen’s recommended improvements to the Plant so that the Plant
achieves Required Emissions. However, RTE shall be solely responsible
for the cost of installing a flue gas recirculation, syrup injection and a steam
separator (collectively, “Owner’s Scope”) and shall promptly complete such
installations during or immediately following the scheduled October 2010
outage. Fagen and ICM shall be given the opportunity to witness,
inspect, and verify the operability of the completed and installed Owner’s Scope
and review all documents related to its design and operation so that each may
become familiar with the impacts and effects of the Owner’s Scope on the testing
required by this Agreement.
c. For
the purposes of this Agreement, “Required Emissions” are the North Dakota permit
limits for the Plant’s emissions originating from the boiler existing at the
time the Contract was executed, modified as proposed by RTE in the Permit
Amendment Application, whether such proposed modifications are accepted or not
by the North Dakota Department of Health. For clarification, the
emissions originating from the boiler in the permit are PM/PM10, VOC, SO2, NOx,
CO and Opacity.
*** Portions omitted pursuant to a request for confidential
treatment and filed separately with the SEC.
d. There
shall be a testing period of One Hundred Eighty (180) days (the “Testing
Period”) during which Fagen and ICM will be provided the opportunity to
demonstrate that the Plant meets Required Emissions. The Testing
Period shall not commence until (a) the Owner’s Scope has been completed and (b)
Fagen and ICM have had a period of thirty (30) days to inspect, monitor and
observe operation of the Plant following completion of the Owner’s
Scope. If the Plant does not achieve Required Emissions within the
Testing Period, this Agreement shall be voidable at RTE’s sole discretion by
written notice to Fagen and ICM, provided however, that such written notice must
be served upon Fagen and ICM within ninety (90) days following completion of the
Testing Period. Should the Owner’s Scope be determined by a
third-party engineer reasonably acceptable to RTE and hired at Fagen/ICM’s
expense to be installed or operating incorrectly or operating in a manner that
adversely affects emissions, then the Testing Period shall be extended on a
day-for-day basis until the owner’s incorrect installation or operation of the
Owner’s Scope is corrected. In addition, if the third-party engineer
determines during the 30-day inspection period that the Plant is in need of
maintenance and/or repair, the operation of which may affect emissions
originating from the boiler, RTE will cause such maintenance or repair to be
made and the Testing Period shall be extended on a day-for-day basis until said
maintence or repair is completed. Additionally, the Parties agree the
Testing Period will be extended by the duration of any delay to Fagen’s
opportunity to meet the Required Emissions levels during the Testing Period
caused by Force Majeure events beyond the control of Fagen/ICM or by other acts
or failure to act by RTE.
e. Should
RTE void this Agreement for failure to achieve Required Emissions during the
Testing Period, then ICM, Fagen, and RTE agree that the following provision
shall survive and be enforceable among the Parties:
Fagen and
ICM agree that RTE provided Fagen the opportunity to cure provided in the
Contract and the Parties agree that Fagen’s opportunity and responsibility to
cure was modified to allow use of the PRB coal as provided in this
Agreement.
f. Achievement
of Required Emissions shall be demonstrated on the Plant through a test
performed by a third-party testing company reasonably acceptable to RTE using
the same sampling protocol, testing methods and durations required by the North
Dakota Department of Health to prove compliance with “Required Emissions” as
defined under paragraph 5(c) of this Agreement. For pollution
emissions limits based on a thirty (30) day rolling average, compliance shall be
determined using the average of readings collected during a seven (7) day
period. During the test, the Plant shall not be operated in excess of
its nameplate capacity.
g. The
Parties agree that the protocol attached as Exhibit B will be followed as the
Parties work together in an attempt to achieve Required Emissions.
6. Except
as otherwise provided in this Agreement, by entering this Agreement the Parties
do not admit liability for any Parties’ claims, counterclaims or third-party
claims. The Parties agree to hold the terms of this Agreement
confidential and to not disclose the terms of this Agreement, except as required
by law, normal accounting requirements, or regulatory reporting
requirements.
7. Except
as required by law, normal accounting requirements, or regulatory reporting
requirements, the Parties agree not to make any statement that disparages or
reflects negatively on each other, including, but not limited to, statements
regarding the work on the Plant or the Parties’ business practices or operation
of the Plant. The Parties will perform other actions or execute other
documents reasonably necessary to effectuate the terms and intent of this
Agreement.
8. This
Agreement represents the entire and integrated mediated settlement agreement
between the Parties concerning the Plant. All prior negotiations,
understandings, and representations with regard to the settlement, either
written or oral, are superseded by this Agreement. This Agreement may
only be modified by a writing signed by all the Parties. The Parties
intend no representations or warranties other than those expressly stated in
this Agreement. Any existing License Agreement (including the License
Agreement attached as Exhibit D to the Lump Sum Design-Build Agreement Between
Red Trail Energy, LLC and Fagen, Inc.) allowing RTE to use technology for
operation of the Plant shall remain effective to allow RTE to use such
technology for operation of the Plant consistent with the terms of the License
Agreement and this Agreement. Any modification to the Plant performed
by RTE, Fagen, or ICM per this Agreement, including the Owner’s Scope, does not
constitute a breach of the License Agreement. Notwithstanding any
term to the contrary in the License Agreement, the License is fully
effective. ICM hereby consents to the Owner Scope modifications to
the Plant, and agrees that such modifications do not breach the License
Agreement.
9. The
Parties each represent that the person executing this document has the authority
to do so and that no additional individual or entity needs to approve this
Agreement. This Agreement may be executed in
counterparts.
| RED TRAIL ENERGY, LLC | ||
| By: | /s/ Gerald Bachmeier | |
| Its: | CEO | |
| Dated: | 12/8/2010 | |
| FAGEN, INC. | ||
| By: | /s/ Ron Fagen | |
| Its: | President and CEO | |
| Dated: | December 9, 2010 | |
| FAGEN ENGINEERING, LLC | ||
| By: | /s/ Ron Fagen | |
| Its: | Chief Manager | |
| Dated: | December 9, 2010 | |
| ICM, INC. | ||
| By: | /s/ Dave VanderGriend | |
| Its: | President and CEO | |
| Dated: | December 9, 2010 | |
EXHIBIT
B
***
***
Portions omitted pursuant to a request for confidential treatment and filed
separately with the SEC.