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, 2001 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 incorporation (I.R.S. Employer 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 August 31, 2001, there were 16,393,890 outstanding shares of common stock of the Registrant. As of August 31, 2001, the aggregate market value of voting stock of High Plains Corporation held by non-affiliates was approximately $72,389,871, based on the last trade transacted on August 31, 2001. Documents Incorporated by Reference: Portions of the Registrant's definitive Proxy Statement for the 2001 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. 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 accounting for the majority of the Company's revenue. The Company, in recent years, has developed an industrial grade ethanol customer base capable of consuming its existing industrial grade ethanol production capacity. The Company also markets other ethanol producers' product and offers technical consulting services to other ethanol producers. In addition, the Company sells distiller's grain solubles (DDGS), both wet and dry and carbon dioxide. Carbon dioxide and DDGS are the two recoverable by-products of ethanol fermentation process. 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. In May 2000, the Company entered into a contract to sell the Portales, New Mexico facility. The purchaser could not meet all the conditions of the sales contract by May 31, 2001, consequently the purchase contract expired. The Portales, New Mexico facility generated operating profits of $1.7 million before allocated interest and selling, general, and administrative expenses for the fiscal year ended June 30, 2001. The Company intends to operate the Portales, New Mexico facility for the foreseeable future.

NARRATIVE DESCRIPTION OF BUSINESS For the Years Ended June 30, 2001 2000 1999 ~~1998~~ (In Millions) Ethanol and incentive revenues $91 99.57 $79 80.81 $66 71.02 Ethanol marketing 31.7 11.4 8.6 By-~~product~~products and other sales 19.1 17.0 16.9 ~~18.9~~ Net sales and revenues $ 150.5 $ 108.5 $ 96.7 ~~84.9~~

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 is scheduled to expire September 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 program, the current tax rate reduction equals $.053 per blended gallon which contains 10% or more ethanol by volume. However, the tax rate reduction decreases to $.052 and $.051 in 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 additive. Since July 1997, the York, Nebraska facility has had the ability to further refine a portion of its ethanol production for sale to markets such as the industrial grade ethanol market and the food and beverage markets. The Company's product is primarily used as a chemical intermediate or solvent, but it also is used in the manufacturing of cosmetics, perfumes, paint thinner and vinegar. Management has elected to limit its industrial grade sales volume to approximately 1.0 million gallons per month in fiscal 2002. Limiting industrial sales volume will allow the Company to take advantage of the United States Department of Agriculture Commodity Credit Corporation's (CCC) Bioenergy Program. Under the program the Company is eligible to receive a two-year cash incentive for incremental grain consumption for the purpose of producing fuel grade ethanol. Over the past several years, the Company has increased its focus on the marketing or trading other producers ethanol production. The Company believes its marketing of other producer's ethanol allows the Company to serve its core market area better while leverage its marketing resources and know-how. The Company markets both fuel and industrial grade ethanol for other producers, but it predominately focuses on marketing fuel grade ethanol. The Company increased its marketing volume from 9.3 million gallons in fiscal 2000 to 21.7 million gallons in fiscal 2001. In addition to marketing, the Company, recently, began offering technical consulting to other ethanol producers. This strategy is also focused on fully utilizing the Company's growing technical expertise to generate new revenue streams for the Company. The main by-product from the conversion of grain sorghum (milo) or corn into ethanol is distiller's grain solubles DGS. DGS can then be further processed into either dryed distiller's grain solubes (DDGS) or wet distiller's grain solubles (WDGS). The principal distinction between the two by-product forms is the moisture content. The majority of the additional processing necessary to produce the two by-products in primarily drying, thus the WDGS takes less additional processing compared to the DDGS. In fiscal 2001, the Company experienced higher natural gas prices, which lead to higher by-product processing costs, thus the Company increased its marketing campaign for WDGS to mitigate its gas usage for by-product processing. The WDGS marketing campaign, also promoted the superior nutritional benefits of WDGS. The Company was able to increase its sales volume of WDGS from 269 thousand tons in fiscal 2000 to 331 thousand tons in fiscal 2001. Since March 1999, the Company has contracted with ICM, Inc. for the exclusive sale of the Company's DDG production, both wet and dry at its York, Nebraska and Colwich, Kansas facilities. This exclusive agreement has an initial term of two years and automatically renews for successive one-year terms unless written notice of termination is issued 90 days prior to the end of the then current term. In March 1999, the Company began direct marketing the distiller's by-products from its Portales, New Mexico plant, including wet distiller's grains and condensed solubles. The primary markets for the Company's DDGS and WDGS by-products continue to be manufacturers of animal feed, and direct consumers such as feedlots and dairies. Sales prices for DDGS and WDGS generally vary with milo, corn, and other competing protein prices. As the competing proteins prices decline, the Company's revenue for DDG and related by-products typically decline. Therefore, if milo, corn, or other competing protein sources remain depressed the Company's DDGS and WDGS revenues could be adversely affected. 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 ten years. In March 1999, the Company signed an agreement with EPCO to capture and purchase CO2 gas produced at the Colwich, Kansas plant. EPCO has contracted for the purchase of CO2 gas for an initial period of eight years. Availability of Raw Materials and Supplies. The Company's primary raw material is grain feedstock, either milo or corn based on availability and price. 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. In May 2000, the Company added an in-house grain procurement department, to procure all the Company's grain needs at its three facilities. The Company subsequently terminated the grain supply agreement with Centennial Trading, LLC, which had been the Company's exclusive grain broker since 1997. The Company believes that by establishing internal grain procurement it can develop better local supply relationships that will reduce the need to buy and store grain offsite and better manage its raw material risk management program. (Also see the discussion of raw materials in Item 7 -- Management's Discussion and Analysis.) 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 interruption to the Company's normal operations would have a significant detrimental impact on Company operations. However, due to the competitive nature of the natural gas market, the Company believes no significant risk of long-term interruption exist. In fiscal 1999, 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 natural gas supply from this landfill provides up to 90% of the Colwich, Kansas facility's natural gas requirements. The Company contracted for the landfill gas for an initial term of 20 years at a per unit cost that is lower than the current spot market price at the Colwich, Kansas facility. The landfill gas per unit price is $1.50/MMBTU for the initial four years of the contract. The Company is dependent on rail and commercial tanker trucks to distribute its finished products. Any disruption in the rail system or commercial tanker truck system would have a significant detrimental effect on the Company's operations. Seasonal Factors in Business. Historically, the Company has been able to sell its fuel grade ethanol at a premium during the mandated wintertime oxygenate period, which coincides with the Company's second and third fiscal quarters. Conversely, the Company's average sales price for fuel grade ethanol during the summer blending season, which fuel grade ethanol is primarily used for a octane enhancer or fuel supply extender, historically has declined. Due to the chronic shortness in gasoline refining capacity and demand fundamentals, gasoline prices have been trending higher in the periods that coincide with the Company's first and fourth quarters. This trend has decreased the differential between the winter and summer blending seasons. This has translated into more consistent pricing across the Company's four fiscal quarters. To further reduce the cyclical swings in pricing the Company is moving toward longer-term contracts. In the past the Company primarily contracted for six-month blending cycles, whereas today the Company is committing more production volume to twelve-month contracts. This practice typically leads to more stable pricing. The Company's industrial grade ethanol sales prices tend to be more consistent quarter over quarter due to the length of the contracts. The Company's industrial grade ethanol sales contracts generally stipulate twelve-month terms, thus providing some stability, over the course of the contract, in pricing. Plant operations also tend to be more efficient in the cooler months which also coincide with the Company's second and third quarters, thus production rates tend to be higher during this period. This generally tends to spread the fixed cost of operations across more units, thus lowering the overall per unit cost. However, if the fixed cost change over the same relevant range of output, no financial benefit will be reflected in the financial statements. Corn and milo, the Company main raw material inputs, typically increase in price during the Company's second and third fiscal quarters. (For information regarding the seasonality of the Company's business, see the "Seasonality" discussion in Item 7 -- Management's Discussion and Analysis.) Customers. For fiscal year ended June 30, 2001, the Company's sales to five customers represented in the aggregate approximately 46% of the Company's total product sales and revenues. The Company's DDGS and WDGS sales to ICM, Inc., which held an exclusive brokerage agreement throughout fiscal 2001, represents approximately 20% of the total sales to these five customers, while one fuel grade ethanol customer represents approximately 37% of the sales to these five customers. Remaining sales were primarily 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 71 million gallons of ethanol production capacity, ranks seventh in size, in the industry. With the projected completion of the York, Nebraska expansion in early fiscal 2002, the Company should be able increase its annual capacity to 85 million gallons, thus becoming the sixth largest producer. The top ten ranking is estimated to be as follows:

Annual Capacity (in millions of gallons) Fuel Industrial Company Grade Grade ADM 646 210 Williams Energy Ventures 95 35 Minnesota Corn Processors 125 0 Cargill 100 0 Midwest Grain Products 48 48 New Energy 80 0 High Plains Corporation 5659 12 Grain Processing 0 60 AE Staley 40 5 AGP 30 0

While the Company has diversified its operation 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 Item 7 -- Management's Discussion and Analysis.) 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, 2001, the Company employed 154 persons, in a full-time capacity. These included 44 employees at the Colwich, Kansas plant; 55 employees at the York, Nebraska plant; 41 employees at the Portales, New Mexico plant; and 14 employees in the Wichita, Kansas Corporate office. The total number of employees increased in fiscal year 2000 as the Company's operations strengthened its technical capability. Item 2 PROPERTIES The Company's principal executive offices at 200 W. Douglas, Suite 820, Wichita, Kansas are leased and cover approximately 5,500 square feet. The Company presently owns approximately 70 acres of land and improvements thereon which comprise its Colwich, Kansas plant. The Company also owns approximately 142 acres of land and improvements thereon which comprise its York, Nebraska facility. During fiscal 1998, the Company acquired approximately 15 acres of land and 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 As of June 30, 2001, and through the filing of this Form 10-K, the Company is not a party to any legal proceedings other than those which have arisen in the course of normal business operations, none of which are expected to have a material adverse effect on the Company's financial condition. Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of the stockholders of the Company during the fourth quarter of the fiscal year ended June 30, 2001. 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 the Company's common stock as of June 30, 2001, was approximately 5,666 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. The table below sets forth the range of high and low market prices for the Company's shares during fiscal 2001 and fiscal 2000. These prices do not include retail mark-ups, mark-downs or commissions and may not necessarily represent actual transactions.

Fiscal Price Fiscal Price ~~2000~~2001 High Low ~~1999~~2000 High Low 1st Quarter 4.047 2.125 1st Quarter 1.906 1.375 ~~1st~~2nd Quarter 24.~~625~~063 12.~~563~~063 2nd Quarter 1.906 0.688 ~~2nd~~3rd Quarter 23.~~250~~719 12.~~156~~625 3rd Quarter 4.938 1.750 ~~3rd~~4th Quarter 25.~~563~~000 13.~~438~~063 4th Quarter 3.750 2.000 ~~4th Quarter 2.625 1.750 Item 6 SELECTED FINANCIAL DATA~~

Item 6 SELECTED FINANCIAL DATA

Five Year Summary Financial Data (Audited) (in thousands of dollars, except per share data) Year ended June 30 2001 2000 1999 1998 1997 ~~1996~~ Income Data Net Sales and Revenue $ 150,459 $ 108,531 $ 96,730 $ 84,864 $ 63,122 ~~$ 87,925~~ Net Earnings (Loss) 6,164 160 535 (3,593) 1,733 ~~11,821~~ Earnings(Loss) Per Share Basic .38 .01 .03 (.22) .11 ~~.75~~ Assuming Dilution .37 .01 .03 (.22) .11 ~~.74~~ Balance Sheet Long-term Debt 10,306 17,433 9,178 11,703 10,200 ~~14,460~~ Total Assets $ 94,587 $ 85,403 $ 80,613 $ 83,250 $ 79,075 ~~$ 75,096~~

Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS During fiscal 2001 we achieved many goals, and took advantage of favorable market conditions to make great progress towards our long-range strategic plan for the Company. We posted record revenues of $150 million; increased our marketing presence and our flexibility in delivery of products; improved operational efficiencies; and achieved a modest production expansion at the Colwich, KS facility while initiating a 14 million gallon expansion of the York, Nebraska facility. At the same time, we established a risk management strategy that helped us to level out the volatility of the commodity markets that affect our industry, and to post four consecutive quarters of more consistent, predictable profitability. High Plains produces and markets primarily fuel grade ethanol. However, since July 1997 the Company has maintained a presence in the industrial and beverage grade ethanol markets. Since that date, the York, Nebraska facility has had the capability to further refine approximately one million gallons per month of existing fuel ethanol production capacity for sale in additional markets in the industrial, food, and beverage industries. Even higher volumes can be marketed as a mid-grade product to certain users within these industries. Sales of these products have historically provided greater returns and greater margins than fuel grade ethanol, although prices for fuel ethanol during fiscal 2001 were higher than normal, to the point that industrial margins were somewhat less attractive. Even with the high prices of fuel ethanol, the Company has made a conscious decision to maintain this presence in the industrial markets, although at production levels less than maximum capacity for these products. Industrial production typically requires an incremental additional cost ranging from $.09 to $.15 per gallon, depending primarily on the cost of natural gas. Prices for these more highly refined industrial products rose slowly but steadily during 2001, and management believes that industrial pricing will continue to rise to compete with fuel ethanol pricing, and the markets will again reflect a premium for the more highly refined products. For now, both market pricing and incentive programs (discussed in more detail below) favor an emphasis on fuel ethanol production. The York facility does have the ability to switch between fuel and industrial production depending on current market demands, and typically is run at full production capacity. During fiscal 2001, High Plains derived approximately 85% of its revenues from the sale of ethanol, with 75% attributed to fuel ethanol sales, and 10% attributed to industrial grade ethanol sales. Approximately 13% of revenues were derived from the sale of distiller's grain solubles. The remaining 2% of revenues were from state production incentive programs, CCC Bioenergy program and carbon dioxide gas sales. The majority of the 2% was related to state producer incentive programs. The sale prices of ethanol (both fuel, and to some extent industrial) tend to vary with the wholesale price of gasoline, although fuel ethanol prices tend to track gasoline prices more directly. Prices for distiller's grain solubles vary with the cost of grain and other protein animal feeds in the marketplace. Carbon dioxide prices received by the company are set by a long-term contract and vary only with production volumes. Under the federal government's excise tax incentive program, gasoline distributors who blend gasoline with ethanol receive a federal excise tax credit for each blended gallon, resulting in an indirect pricing incentive to ethanol. Originally scheduled to expire in September of 2000, this excise tax credit was extended until September 2007. The current tax rate reduction equals $.053 per blended gallon which contains 10% or more ethanol by volume. However, the tax rate reduction decreases to $.052 and $.051 in 2003 and 2005, respectively. Consequently, the excise tax credit should continue to enhance the value of fuel grade ethanol through that date, and provide a level of continuity, which supports funding and expansion in the industry. Another federal incentive targets new and expanded production of fuel ethanol. The CCC Bioenergy Program, administered through the Department of Agriculture, became effective in December of 2000, and provides for "large" ethanol producers to receive reimbursement for the cost of one bushel of grain for every 3.5 bushels of increased grain usage in fuel ethanol production. "Small" producers (less than 65 million gallons annually) would receive one bushel for every 2.5 bushels of increased usage. Based on anticipated additional ethanol production at our Nebraska and Kansas plants, the Company expects to receive approximately $4 million from this program during the two-year period that it is in place. The ethanol industry also benefits from various state production incentives. During fiscal 2001, the Company received approximately $.06 per gallon as a production incentive from the state of Kansas for ethanol produced at its Colwich, Kansas facility. This incentive was recently renewed and modified by the Kansas legislature to continue to benefit existing ethanol production, while further encouraging new and expanded production within the state. Ethanol producers will now receive a fixed incentive of $.05 per gallon for existing production, and $.075 per gallon for new or expanded production, through June 30, 2004. During fiscal 2001, the Company effectively expanded the production capacity at this facility from approximately 16 million gallons per year, to 20 million gallons per year. Additional expansions of that facility are currently being considered by management, in light of the various incentive programs available. Until recently, the state of Nebraska also provided a production incentive of $.20 per gallon for the first 25 million gallons of annual ethanol production at the Company's York, Nebraska facility. The incentive was available for a five year period, and the Company completed its original eligibility for benefits under this program in November of 1999. During one year of this initial incentive program (1996) the Company failed to produce enough gallons to achieve approximately $1.8 million of its maximum annual incentive. This amount was awarded to the Company in the second quarter of fiscal 2001 under a provision of the original program that allows additional credit for expansions of production after initial production is established. Nebraska has now adopted a new three-year incentive program, which provides $.075 per gallon for new or expanded gallons produced within the state. The portion of the incremental gallons, resulting from the Company's recent 14 million gallon expansion of the York, Nebraska facility, should qualify for production credits under the new production incentive program. However, the Company's maximum eligibility under the incentive program is 10 million gallons or $750,000 per year, which is significantly less than the previous incentive program. In addition to incentives, fuel ethanol sales prices reflect a premium due to ethanol's oxygenate (see discussion below) and octane enhancing properties. Demand for ethanol also affects price. Ethanol demand is influenced primarily by its cost in relation to availability and cost of gasoline and other octane enhancing products, and also by availability of alternative oxygenates (where oxygenated fuels are required). The dramatic increase in gasoline prices subsequent to December 1999 has increased demand for ethanol as a fuel extender, as the net cost of ethanol to blenders became less than unblended gasoline. With continued strong oil prices, and a corresponding increase in gasoline pricing, ethanol has become a much more competitive product in the marketplace. While a similarly dramatic decrease in the price of oil would have a negative effect on ethanol demand, such a decrease is not currently anticipated by most industry analysts. Other federal programs such as the Reformulated Gasoline (RFG) program also affect ethanol demand. Specific designated areas of the country which have poor air quality or which have elected to be subject to RFG II, are required to comply with RFG II vehicle emission standards. Phase II of the RFG program (RFG II) was implemented June 1, 2000, and contains more stringent fuel volatility requirements than RFG. Ethanol blending during hotter summer months requires either the cooperation of refineries in producing a lower vapor pressure gasoline blendstock, or a change in the way volatility is calculated, in order to be in compliance. Ethanol supporters have requested the Environmental Protection Agency (EPA) and the United States Congress to consider modification of these volatility restrictions for ethanol blended fuels due to ethanol's other benefits, including a reduction in ozone forming carbon monoxide emissions. These requests are under consideration, but no rulings or legislation granting such a waiver have been enacted to date. During the summer of 2000, there was a shortage of this low volatility blendstock, creating a shortage of RFG II gasoline in some areas. While the EPA did grant temporary waivers to certain areas during supply interruption periods allowing non-compliant fuels to be used, many requested waivers were refused. During the summer of 2001, the EPA granted a similar waiver to ethanol blenders located in the Chicago and Milwaukee areas, but not in other areas of the country. In the absence of a longer term and more wide spread solution, ethanol demand created by the RFG II program could decrease during hotter summertime months in comparison to prior years. Recent negative publicity received by ethanol's competing oxygenate, MTBE, in California and other states has also affected ethanol demand. Based on the discovery of MTBE in local water supplies, California Governor Gray Davis issued an executive order in March of 1999 calling for the elimination of MTBE from California gasoline supplies by December 31, 2002. As of September, 2001, thirteen other states have also legislated restrictions on the use of MTBE on the basis that the environmental risk of its use outweighs the air quality benefit. Under the provisions of the federal 1990 Clean Air Act, gasoline used in certain air quality "non-attainment" areas must contain a certain oxygen content during the wintertime months of September through March. Ethanol and MTBE are the two most common oxygenates, dividing the market approximately 20% to 80% respectively. If MTBE use is limited, ethanol demand and usage could be substantially increased. However, the state of California specifically petitioned the EPA to waive the oxygenate requirements of the Clean Air Act, and to allow the use of non-oxygenated fuels either locally or nationally. In June of 2001, the EPA formally denied this waiver request, and shortly thereafter an attempt to grant California a legislative exemption from the oxygenate requirement was soundly defeated in the House of Representatives. In August California filed a lawsuit against the EPA seeking to overturn its decision on the waiver. While industry supporters believe the chances of that lawsuit succeeding are unlikely, an elimination of the oxygen standard, whether by legislation or by court order, could have a significant negative impact on the ethanol industry. At the same time, continued enforcement of the oxygenate standard could have a significant positive impact on ethanol demand. Ethanol has not previously been widely blended in California because of their more stringent state fuel volatility requirements. However, California now requires all MTBE blended gasoline pumps to carry labels stating that MTBE blended gasoline has been determined to be hazardous to the environment. The state has also granted ethanol blended gasoline a year round vapor pressure waiver to facilitate its use within the state. During fiscal 2001, High Plains Corporation delivered approximately 12 million gallons of its own production into California markets. It is anticipated that the replacement of MTBE with ethanol in California alone would require an additional 580 million gallons of ethanol each year to be shipped into the state. Nationally, there is also a movement to eliminate MTBE. In addition to the 14 individual states which have restricted its use, federal legislation has been proposed which has focused on a compromise solution which would phase out MTBE, eliminate the oxygen requirement of the Clean Air Act, and replace it with a renewable fuels content requirement that gradually increases over the next several years. If this solution were adopted, it should significantly increase the demand for ethanol over this time period. In short, current law is favorable to ethanol in that it requires oxygenate blending. If MTBE usage is reduced and the law is not changed, or if the oxygen requirement is replaced with a similar "renewable fuels" requirement, the ethanol industry stands to see stronger demand and significant benefit. Conversely, the elimination of the oxygen requirement without adopting a renewable fuels requirement (or other similar incentive for ethanol blending), could have a significantly negative impact on both ethanol demand and pricing. The Company traditionally has sold a majority of its fuel ethanol production based on spot market conditions and short-term seasonal contracts. It is now attempting to make greater use of longer-term contracts to sell fuel ethanol (see Note 6 to the financial statements). Management believes that this strategy will provide a better basis for long-term planning, especially in the areas of production and margin predictability. As of August, 2001 the Company had contracted to sell almost all of its ethanol production through March of 2002. While most of these sales were made on fixed price contracts, approximately one-third were done on variable price agreements tied to reported prices of either gasoline or ethanol. The Company has also announced an intention to increase its marketing or trading of ethanol produced by other ethanol producers. This would be accomplished either by marketing product of others on a straight commission basis, or by purchasing product of others to meet existing sales opportunities. In July of 2001, the Company announced that it had entered into initial agreements with four independent ethanol producers to market approximately 60 million gallons of their fuel ethanol production annually. Combining these gallons with the 85 million gallons now produced by High Plains own facilities, the Company has leveraged its marketing expertise, generated additional revenues, and gained flexibility in product delivery with more origination locations and potential for freight arbitrage. By increasing the number of gallons it has to sell, management also believes that it can be competitive in markets not readily available to small producers. The Company's primary grain feedstocks during fiscal 2001 were milo and corn. Production at the Colwich, Kansas and Portales, New Mexico facilities relied almost exclusively on milo, while the York, Nebraska plant primarily utilized corn. The utilization of milo versus corn feedstocks is a function of availability and price per bushel. The cost of these grains is dependent upon factors that are generally unrelated to those affecting the price of ethanol. Milo prices generally vary directly with corn prices. Corn prices generally vary with regional grain supplies, and can be significantly affected by weather, storage, planting and carryout projections, government loan programs, exports, and other national and international market conditions. In an effort to reduce the volatility of these unrelated markets, management announced in fiscal 1999 its intention to search for an additional product that could be produced utilizing existing facilities, and the Company's perceived expertise in fermentation based chemical products. In fiscal 2000 glycerol was identified as the most promising alternative, the Company acquired a license to utilize a new patented technology to extract glycerol from its existing distillers grain solubles by-products, and pilot plant testing of the process was initiated in September of 2000. While laboratory testing indicated a promising process, difficulties were encountered in scaling up production to full plant flows, and the project has been suspended in favor of expansions and improvements in fuel ethanol production assets described above. Early in the year ended June 30, 2001, the Company implemented a new Grain Risk Management Program. This program's stated objective is to stabilize the Company's cost of grain and to generate more predictable margins. Also for the year ended June 30, 2001, the Company adopted the provisions of the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133 establishes the accounting and reporting standards for derivative instruments, including hedging activities. Operation of the Company's ethanol production facilities requires the purchase of grain feedstocks, and the sale of ethanol, primarily fuel-grade ethanol. Accordingly, assuming ongoing operations, the Company is naturally "short" on grain and "long" on fuel ethanol. The Company's Grain Risk Management Program is intended to use grain purchase contracts together with grain futures derivatives to fix the cost of some of the Company's expected future grain feedstock purchases. The Company's policy allows for the use of fixed price forward purchase contracts, unpriced forward basis differential purchase contracts, and Chicago Board of Trade (CBOT) derivative contracts (futures contracts). The Company procured approximately 44% of its fiscal 2001 grain requirements through the use of fixed price forward purchase contracts, and procured approximately 56% of its grain requirements through unpriced forward basis differential purchase contracts using designated derivative future contracts on the CBOT to fix the cost of the grain. During 2001, the Company's practice was to fix the cost of its grain, generally, for 75% of forecasted feedstock purchases for three months. Under this program, the Company does not enter into commitments or derivatives for grain in excess of expected feedstock requirements. In addition to its forecasted cash flow hedging derivatives positions on unpriced forward grain purchase commitments, the Company maintains grain trading accounts, where it engages in derivative trading activity intended to generate trading profits. Grain markets remained relatively low during fiscal 2001, the Company's average price of grain decreased $.05 per bushel from fiscal 2000. While CBOT prices remained somewhat consistent with fiscal 2000 price levels, the Company was able to take advantage of beneficial local availability (basis) which yielded favorable basis spreads compared to fiscal 2000. As always, weather, exports, government programs, and other factors all have potentially major impacts on grain pricing, and any unexpected changes in those factors could adversely affect the price which the Company pays for its feedstock. As of September 1, 2001, the Company had futures contracts to purchase approximately 10 million bushels of corn and milo for its three plants, of which approximately 9 million bushels also had a basis contracted. Unfortunately, lower grain prices have also brought lower prices for the Company's feed by-products, wet and dried distiller's grain solubles (DGS). While prices for feed by-products historically rise in the late fall and winter, they also tend to follow corn prices, and have remained lower than normal throughout the last fiscal year as a result. Significant improvement in these prices is not expected in the near future due to (anticipated) continuing low grain prices, and an excess of competing protein feed ingredients in the marketplace. In an effort to remove some of this detrimental reliance on corn pricing, the Company has emphasized the production and marketing of wet rather than dried DGS, at all three of its facilities. Wet DGS has certain benefits that distinguish it from other competing feed products, and allow some price premium to be realized in highly competitive markets. The Company has included the forward contracting of feed sales in its overall decisions regarding risk management. During 2001, the Company also implemented a new Fuel Ethanol Risk Management Program. The program's stated objectives are to stabilize its sales price of fuel ethanol, and to generate more predictable margins. Part of this program involves unpriced forward contracts to sell portions of the Company's fuel ethanol output to customers with variable prices that are tied directly to the price of unleaded gasoline as quoted on national exchanges. The Company may use derivative contracts to fix the price under the forward contract. Such derivative contracts are treated as forecasted cash flow hedges under the provisions of SFAS 133, and the resulting gains and losses on the open and closed derivative contracts are recognized when the related fuel ethanol delivery occurs under the forward contract with the customer. The deferred gains or losses on these open and closed derivative positions are disclosed as a component of other comprehensive income in these financial statements. Under this program, the Company does not enter into forward sales commitments in excess of expected fuel ethanol output, and it only enters into gasoline derivatives to the extent that it has unpriced forward sales contracts with customers with variable pricing arrangements that are tied to the price of gasoline as quoted on national exchanges. During the third and fourth quarters of 2001, the Company sold approximately 3% of its fuel ethanol output under the above-described program. The Company's risk management also includes the oversight of purchases of natural gas needed to produce steam to run the plants, and fuel to fire the feed driers. Natural gas prices increased significantly through the last half of fiscal 2000 and through fiscal 2001. While spot gas prices at the Nebraska and New Mexico plants more than tripled over this time period, the Nebraska plant's gas requirements were contracted for the year at prices that were significantly lower, and almost all of the gas needs at the Kansas plant are supplied by a long term (ten year) contract to take gas from the local landfill at prices significantly reduced from the spot market. Natural gas prices for 2001 averaged $4.62 per million British Thermal Unit (MMBTU) at York, $6.00 per MMBTU at Colwich, and $6.12 per MMBTU at Portales for Fiscal 2001. While extremely beneficial in fiscal 2001, contracts were continued forward through fiscal 2002, and the Company is now paying somewhat more for its gas needs than the spot market would require. In December 1997 the Company purchased its Portales, New Mexico ethanol production facility. The acquisition of the Portales plant added approximately 13.5 million gallons per year to the Company's fuel grade ethanol production capacity, although improvements made to that plant have now increased its capacity to approximately 15 million gallons per year. (The Company's production capacity for all three facilities, including 20 million gallons at the Colwich, Kansas plant and 50 million gallons at the York, Nebraska plant, now totals approximately 85 million gallons of ethanol per year.) However, start-up problems and high grain prices in the Portales area contributed to significant operating losses from that plant in fiscal 1998 and 1999. Although local grain prices had declined to more manageable levels by December 1999, management believed continued ownership of that facility did not fit with its long term strategic plan for the Company. While products other than fuel grade ethanol were being produced or planned for the Kansas and Nebraska facilities, higher grain prices in New Mexico, and the fact that the Company was too large to take advantage of a small ethanol producer's tax credit that might otherwise be available for the plant, led to management's decision to sell. As of September 2000, the Company had executed a contract to sell the Portales facility to a third party with closing on that sale originally scheduled to occur sometime in late October or November of 2000. In connection with the execution of this contract, the fiscal 2000 financials included a $1.0 million charge resulting from a write-down of the plant's value to its net realizable value, as established by the contracted sales price. However, improvements made to the facility, and the increase in ethanol prices late in calendar 2000, resulted in profitability from the Portales facility for the quarters commencing January 1, 2001. At the same time, even after extensions of the closing date to May 31, 2001, the buyer was unable to complete its obligations to close the sale, and the contract expired on that date. While the Portales facility remains profitable, and is projected to remain profitable with fiscal 2002 contracted ethanol pricing and expected grain prices, the margins at that facility are more narrow than at the Company's other two plants, and substantial increases in grain prices would adversely affect profitability there more quickly than at either the Nebraska or Kansas facilities. Results of Operations

~~CURRENT~~Comparison ~~ASSETS~~of ~~Cash~~the ~~and~~fiscal ~~cash~~years ~~equivalents~~ended $June 430,~~886,011~~ $2001 ~~330~~and June 30,~~672~~ ~~Accounts~~2000 ~~receivable:~~(amounts ~~Trade~~in millions except averages and per unit prices) Increase (~~less~~Decrease) ~~allowance~~2001 of2000 $~~75,000~~ in/ ~~2000~~Qty Percent Net sales and ~~1999)~~revenues ~~10,026,422~~$ 150.5~~,081,396~~ ~~Production~~$ ~~credits~~108.5 ~~and~~$ ~~incentives~~42.0 ~~(less~~39% ~~allowance~~Gallons of ~~$124,222~~fuel ingrade ~~2000~~ethanol ~~and~~sold ~~1999~~Proprietary production 64.0 65.8 (1.8) ~~329,829~~-3% ~~917,717~~Marketing/trading ~~Inventories~~20.3 7.4~~,283,561~~ ~~5,038,199~~12.9 ~~Note~~174% ~~receivable~~Total ~~50,000~~84.3 73.2 11.1~~,000,000~~ ~~Prepaid~~15% ~~expenses~~Average ~~487,428~~sales ~~391,590~~price ~~Refundable~~$ ~~income~~1.35 ~~tax~~$ ~~30,000~~1.08 $ 0.27 25% Gallons of industrial grade ethanol sold Proprietary production 8.8 4.9 3.9 80% Marketing/trading 1.4 1.9 (0.5) --26% Total ~~current~~10.2 ~~assets~~6.8 ~~20,093,251~~3.4 ~~12,759,574~~50% ~~PROPERTY,~~Average ~~PLANT,~~sales ~~AND~~price ~~EQUIPMENT~~$ ~~Land~~1.50 ~~and~~$ ~~land~~1.41 ~~improvements~~$ ~~450,403~~0.09 ~~450,403~~6% ~~Ethanol~~Production ~~plants~~incentives ~~93,366,635~~included ~~92,994,900~~in ~~Other~~net ~~equipment~~sales ~~573,911~~and ~~573,911~~revenues ~~Office~~Kansas ~~equipment~~producers ~~389,446~~incentive ~~308,699~~program ~~Leasehold~~$ ~~improvements~~1.1 ~~48,002~~$ ~~48,002~~1.3 ~~Construction~~$ in(0.2) ~~progress~~-15% ~~914,586~~Average ~~892,664~~per ~~95,742,983~~gallon ~~95,268,579~~$ ~~Less~~0.06 ~~accumulated~~$ ~~depreciation~~0.07 $ (~~31,295,936~~0.01) Nebraska producers incentive program $ 1.8 $ 1.5 $ (~~27,563,913~~0.3) ~~Net~~20% ~~property,~~Distiller's ~~plant,~~grains and ~~equipment~~other ~~64,447,047~~by-product ~~67,704,666~~sales ~~OTHER~~$ ~~ASSETS~~19.1 ~~Deferred~~$ ~~loan~~17.0 ~~costs~~$ ~~(less~~2.0 ~~accumulated~~12% ~~amortization~~Cost of ~~$125,372~~products sold Cost of products sold as a percent of sales and revenues 90.1% 94.1% Average grain cost per bushel $~~75,181~~ in2.00 ~~2000~~$ ~~and~~2.05 ~~1999)~~$ ~~849,244~~0.05 ~~122~~2% Selling,~~116~~ ~~Other~~general and administrative expenses $ 3.6 $ 3.2 $ 0.4 13~~,054~~% ~~26,578~~Earnings ~~Total~~Gross ~~other~~profit ~~assets~~margin ~~862,298~~9.9% ~~148,694~~5.9% Net income $~~85,402,596~~ 6.2 $~~80,612,934~~ 0.2 $ 6.0

Revenues The 39% increase in net sales and revenues resulted from two primary factors: increased sales volumes and higher average sales prices. Significant sales volume increases were achieved in fuel grade marketing/trading (marketing/trading other fuel grade ethanol producers' product) and industrial grade ethanol proprietary production (internally produced industrial grade ethanol volume). The Company participated in the marketing/trading of other ethanol producers' product prior to fiscal 2001, but in fiscal 2001 the Company's management elected to place an emphasis on that segment of its business. The Company believes it can better utilize its marketing resources and better serve its core fuel grade ethanol market through its marketing/trading activities. In 1999, the Company hired a full- time industrial grade ethanol salesperson to increases its market share, thus increasing its utilization of its industrial grade ethanol assets. Since then the Company has been able to develop a core group of industrial customers, which should provide the Company with a stable volume base. Production increased 3.1 million gallons from fiscal 2000 levels due to increased operating efficiency at all three of the Company's facilities, thus allowing for the increased sales volume related to internally produced ethanol. Average sales prices increased 25% and 6% for fuel grade ethanol and industrial grade ethanol, respectively. Both increases are correlated to the increased average price of gasoline. Fuel grade ethanol historically has tracked with the price of gasoline, while industrial grade ethanol has tracked with the price of fuel grade ethanol. There is typically a lag between price increases in fuel grade ethanol and industrial grade ethanol due to long-term nature of industrial grade ethanol sales contracts compared to the shorter-term nature of traditional fuel grade ethanol sales contracts. Net sales and revenues include both Kansas state producer incentive payments and Nebraska state production tax credits. Approximately $1.1 million is included in fiscal 2001 net sales and revenues from the state of Kansas. These payments, based on the Company's ratable share of overall Kansas ethanol production, equated to an average incentive of $0.06 per gallon for fiscal 2001 compared to $0.07 per gallon fiscal 2000. Thus indicating increased production by other Kansas producers. The Kansas incentive program has been renewed five times since its inception, most recently in July 2001. This program is currently scheduled to expire July 1, 2004. Under the newly extended Kansas state producers incentive program, existing capacity will be eligible for a flat $0.05 per gallon incentive payment and new incremental capacity for a flat $0.075 per gallon incentive payment. This new structure could further reduce the aggregate amount on Kansas state producer incentives payments the company receives in the future. The Company maintains on-going efforts to extend the program beyond the current expiration date. Management believes the Kansas legislature will continue to support the incentive program in the future due to its economic and agricultural benefits. Production tax credits from the State of Nebraska recorded as revenues totaled $1.8 million in fiscal 2001. The $1.8 million of additional production tax credits were received in conjunction with the Company's calendar 1996 expansion of the Nebraska facility. Under the Nebraska program, the Company received, over a five year period starting in calendar 1995, an incentive in the form of a transferable production tax credit in the amount of $.20 per gallon of anhydrous ethanol produced. Not less than two million gallons and not more than twenty-five million gallons produced annually, at the York, Nebraska facility, were eligible for the credit. The availability of this credit, based upon original production capacity, expired as of December 31, 1999. The Nebraska legislature amended this program in 1999 to allow additional credits for new ethanol plants, or for increased production capacity at current ethanol plants. The Company has increased the capacity of its Nebraska facility by approximately 14 million gallons per year; a portion of the incremental volume should be eligible for the reduced $0.075 state production tax credit. However, the Company believes the available production tax credits will be significantly less than previous years. Currently, the State of New Mexico does not provide any ethanol production incentives or tax credits. Because of lack of production incentives or tax credits, inconsistent operations, and higher regional grain feedstock costs the Portales facility had not generated any operating profits since its start-up, prior to fiscal 2001. Due to this and management's strategic goals of diversification, it was determined the Portales, New Mexico facility did not complement the Company's portfolio and was subsequently offered for sale. In May 2000, the Company agreed to accept an offer to sell the Portales, New Mexico facility, while maintaining the rights to market the ethanol for a three to five year period. However, the purchaser was unable to meet the conditions of the sales contract and the contract expired on May 31, 2001. In fiscal 2001, both the Portales facility's operational consistence and general ethanol industry economic conditions improved dramatically. The Portales facility was able to generate operating profits of $1.7 million before allocated interest and selling, general, and administrative expenses. The Company intends to operate the facility for the foreseeable future. Distiller's grain and other by-products sales increased 12% compared to fiscal 2000. The increase was primarily due to increased sales volume and higher WDGS sales prices. As ethanol production across the Company's facilities increased, additional grain was consumed in the conversion process which equates into higher distiller's grain and related by-product production. Along with the increased production volume, the Company was able to shift sales volume from DDGS to WDGS. The Company's current strategy is to grow its WDGS markets, thus reducing its presence in the DDGS markets. WDGS average sales prices also increased, as the markets began to recognize the superior nutritional value of WDGS compared to alternative protein sources. However, DDGS average sales prices decreased slightly from fiscal 2000 in response to lower grain and alternative protein values. Distiller's grain and its other related by-products tend to track very close to alternative protein sources pricing, and the main alternative protein source is corn or milo. Therefore, depressed corn or milo pricing typically translates into lower average sales prices for distiller's grain and its related products. Cost of Products Sold Cost of products sold, as a percentage of net sales and revenues, decreased 4% from fiscal 2000 levels. The major drivers of the 4% decrease in fiscal 2001 were lower average cost of grain coupled with higher average ethanol sales prices. The Company's average cost of grain decreased $.05 per bushel to an average of $2.00 per bushel for fiscal 2001. The higher average ethanol prices were a result of higher gasoline prices. Average natural gas, which the Company utilizes for steam generation and drying, prices increased dramatically in fiscal 2001. The Company's average price of natural gas increased $2.26 per million British Thermal Unit (MMBTU) in fiscal 2001, up 86% from the average price in fiscal 2000. Selling, General and Administrative Selling, general and administrative expenses were up approximately 13% or $.4 million from the prior year. A majority of the increase related to research and development expenses related to the Company's glycerol side-stream research. Fiscal 2001 research and development expenses increased approximately $.2 million compared to fiscal 2000. The remaining increase was the result of: increased administrative salaries resulting from customary raises; increased dues and subscription expense; increased travel and entertainment; and increased insurance expense. Earnings Earnings increased $6.0 million to $6.2 million in fiscal 2001. The increase was driven by: higher gross profit margins; decreased operating expenses; increased interest income; and lower effective financial statement tax rate. Gross profit margin increased 5% to 9.9% in fiscal 2001. The increase was primarily driven by the 25% increase in average fuel grade ethanol prices and the $.05 per bushel decline in average grain prices in fiscal 2001. The gross profit margin increase in fiscal 2001 was diluted by the affects of the incremental marketing/trading revenues, as marketing/trading gross profit margins typically are 1% or less. Operating profits increased $9.0 million compared to fiscal 2000. Fiscal 2000 operating expenses included a $1.0 million expense related to the write-down of the Portales, New Mexico facility to its net realizable value based on the then pending sales contract. Other expenses decreased $.3 million, as a result of increased interest income generated on excess cash, compared to fiscal 2000. The effective income tax rate per the financial statements was reduced from 73% in fiscal 2000 to 38% in fiscal 2001. This reduction resulted primarily from changes in reserves taken in fiscal 2000 against deferred tax assets that management believed were more likely than not to expire before adequate taxable income could be generated to utilize the deferred tax assets.

Comparison of the fiscal years ended June 30, 2000 and June 30, 1999 ~~CURRENT~~(amounts ~~LIABILITIES~~in ~~Revolving~~millions ~~line-of-credit~~except $averages --and per unit prices) Increase (Decrease) 2000 1999 $ ~~9,200,000~~/ ~~Current~~Qty ~~maturities~~Percent ofNet ~~long-term~~sales ~~debt~~and ~~2,507,138~~revenues --$ ~~Current~~108.5 ~~maturities~~$ of96.7 ~~capital~~$ ~~lease~~11.8 ~~obligations~~12% ~~561,518~~Gallons ~~520,168~~of ~~Accounts~~fuel ~~payable~~grade ethanol sold Proprietary production 65.8~~,695,216~~ 64.6~~,693,746~~ ~~Accrued~~1.2 ~~interest~~2% ~~295,772~~Marketing/trading ~~55,342~~7.4 ~~Accrued~~3.4 ~~payroll~~4.0 ~~and~~118% ~~property~~Total ~~taxes~~73.2 ~~779,199~~68.0 ~~721,463~~5.2 ~~Accrued~~8% ~~income~~Average ~~tax~~sales ~~payable~~price --$ ~~10,000~~1.08 ~~Total~~$ ~~current~~1.04 ~~liabilities~~$ ~~12,838,843~~0.04 ~~17,200,719~~4% ~~Revolving~~Gallons ~~line-~~of~~-credit~~ --industrial ~~7,700,000~~grade ~~Long-term~~ethanol ~~debt,~~sold ~~less~~Proprietary ~~current~~production ~~maturities~~4.9 ~~16,492,860~~1.7 3.2 188% Marketing/trading 1.9 -- ~~Capital~~1.9 ~~lease~~n/a ~~obligations,~~Total ~~less~~6.8 ~~current~~1.7 ~~maturities~~5.1 ~~940,376~~300% Average sales price $ 1~~,477,534~~.41 ~~Other~~$ ~~273,253~~1.34 ~~426,107~~$ ~~Deferred~~0.08 ~~income~~6% ~~tax~~Production ~~payable~~incentives included in net sales and revenues Kansas producers incentive program $ 1~~,389,000~~.3 ~~945,845~~$ ~~19,095,489~~1.3 ~~10,549,486~~Average ~~STOCKHOLDERS'~~per ~~EQUITY~~gallon ~~Common~~$ ~~stock,~~0.07 $ 0.1008 ~~par~~$ ~~value,~~(0.01) ~~authorized~~Nebraska ~~50,000,000~~producers ~~shares;~~incentive ~~issued~~program ~~16,453,798~~$ ~~and~~1.5 ~~16,410,622~~$ ~~shares~~5.2 of$ ~~which~~(3.7) ~~276,847~~-71% Distiller's grains and ~~411,178~~other ~~shares~~by-product ~~were~~sales ~~held~~$ as17.0 ~~treasury~~$ ~~stock,~~16.9 ~~respectively~~$ 0.2 1~~,645,380~~% Cost of products sold $ 102.1~~,641,062~~ ~~Additional~~$ ~~paid-in~~92.0 ~~capital~~$ ~~37,695,277~~10.1 ~~37,486,655~~11% ~~Retained~~Cost ~~earnings~~of ~~14,865,932~~products ~~14,705,578~~sold ~~54,206,589~~as ~~53,833,295~~a ~~Less:~~percent ~~Treasury~~of ~~stock~~sales -and atrevenues 94.1% 95.1% Average grain cost ~~(710,849)~~per ~~(863,911)~~bushel ~~Deferred~~$ ~~compensation~~2.05 $ 2.15 $ (~~27,476~~0.10) ~~(106~~-5% Selling,~~655)~~ ~~Total~~general ~~stockholders'~~and ~~equity~~administrative ~~53,468,264~~expenses $ 3.2 $ 2.1 $ 1.1 52~~,862,729~~% Earnings Gross profit margin 5.9% 4.9% Net income $~~85,402,596~~ 0.2 $~~80,612,934~~ 0.5 $ (0.3)

Revenues The 12% increase in net sales and revenues resulted from two primary factors: increased sales volumes and higher average sales prices. Sales volume increases were achieved in fuel grade ethanol marketing/trading (marketing/trading other fuel grade ethanol producers' product), industrial grade ethanol proprietary production (internally produced industrial grade ethanol volume), fuel grade ethanol proprietary production (internally produced fuel grade ethanol), and industrial grade ethanol marketing/trading. The Company increased its participation in the marketing/trading of other ethanol producers' product in an effort to expand its market presence and to offer a full range of products to its industrial grade customers. In 1999, the Company hired a full-time industrial grade ethanol salesperson to increases its market share, thus increasing its utilization of its industrial grade ethanol assets. The Company has been able to grow its industrial grade sales volume by 188% from its fiscal 1999 level. Production increased 5.6 million gallons from fiscal 1999 levels due to increased operating efficiency at the Company's York, Nebraska and Portales, New Mexico facilities, thus allowing for the increased sales volume related to internally produced ethanol. Average sales prices increased 4% and 6% for fuel grade ethanol and industrial grade ethanol, respectively. Both increases are correlated to the increased average price of gasoline. Fuel grade ethanol historically has tracked with the price of gasoline, while industrial grade ethanol has tracked with the price of fuel grade ethanol. There is typically a lag between price increases in fuel grade ethanol and industrial grade ethanol due to long-term nature of industrial grade ethanol sales contracts compared to the shorter-term nature of traditional fuel grade ethanol sales contracts. Net sales and revenues include both Kansas state producer incentive payments and Nebraska state production tax credits. Approximately $1.3 million is included in fiscal 2000 net sales and revenues from the state of Kansas. These payments, based on the Company's ratable share of overall Kansas ethanol production, equated to an average incentive of $0.07 per gallon for fiscal 2000 compared to $0.08 per gallon fiscal 1999, thus indicating increased production by other Kansas producers. The Kansas incentive program has been renewed four times since its inception, most recently in July 1997. This program was scheduled to expire July 1, 2001, but has since been extended to July 1, 2004. However, the Company maintains on-going efforts to extend the program beyond the current expiration date. Management believes the Kansas legislature will continue to support the incentive program in the future due to its economic and agricultural benefits. Production tax credits from the State of Nebraska recorded as revenues totaled $1.5 million and $5.2 million for the fiscal years ended June 30, 2000 and 1999, respectively. Under the Nebraska program, the Company received, over a five year period starting in calendar 1995, an incentive in the form of a transferable production tax credit in the amount of $.20 per gallon of anhydrous ethanol produced. Not less than two million gallons and not more than twenty-five million gallons produced annually, at the York, Nebraska facility, were eligible for the credit. The availability of this credit, based upon original production capacity, expired as of December 31, 1999. The Nebraska legislature amended this program in 1999 to allow additional credits for new ethanol plants, or for increased production capacity at current ethanol plants. Currently, the State of New Mexico does not provide any ethanol production incentives or tax credits. Operating losses at the Portales plant, which is located in a region of higher grain feedstock costs, were approximately $0.1 million in fiscal 2000 prior to allocated interest, selling, general and administrative expenses, and asset impairment write-down. In light of management's strategic goals of diversification, it was determined the Portales, New Mexico facility did not complement the Company's portfolio and was subsequently offered for sale. In May 2000, the Company agreed to accept an offer to sell the Portales, New Mexico facility, while maintaining the rights to market the ethanol for a three to five year period. The sales contract price for the plant and other assets was $3,000,000 plus inventory at 85% of fair value at time of closing. The Company recorded a $1.0 million loss associated with the write-down of the Portales, New Mexico facility to its estimated fair value based on the preliminary offer. Subsequently, the contracted buyer was unable to complete its obligations to close the sale and the contract expired on May 31, 2001. Distiller's grain and other by-product sales increased 1% compared to fiscal 1999. The increase in distiller's grain and other by-products revenues is the net effect of lower per unit sales prices and increased sales volume. The increased sales volume is a direct result of increased production at York, Nebraska and Portales, New Mexico. Distiller's grain prices vary with the cost of alternative feedstocks or protein sources for animal consumption such as grain. Since grain prices trended down in fiscal 2000, distiller's grain prices followed this trend downward. As noted earlier, significant improvement in distillers grain prices is not expected in the near future. Cost of Products Sold Cost of products sold, as a percentage of net sales and revenues, decreased 1% from fiscal 1999 levels. The fiscal 2000 decrease in cost of products sold, as a percentage of net sales and revenues was due to the decline in the average price per bushel for grain feedstocks and higher average sales prices for ethanol. However, this decrease was partially offset by a decline in the average sale price of distiller's grain. The Company's average cost of grain decreased $.10 per bushel to an average price of $2.05 per bushel for fiscal 2000. Selling, General and Administrative Selling, general and administrative expenses were up approximately 52% or $1.1 million from the prior fiscal year. The increase was the result of increases in administrative salaries and benefits expense resulting from increased staffing, stock grants to key management personnel, increased professional fees resulting from side-stream research and tax planning, increased investor relations expenses, and increased Board of Directors fees and expenses. Earnings Earnings decreased $0.3 million to $0.2 million in fiscal 2000. The Company's gross profit percentage increased 1% due to the 4% increase in the average sales price of fuel grade ethanol and the $.10 per bushel decline in average grain prices in fiscal 2000. The Company's operating expenses included increased selling, general, and administrative expenses compared to fiscal 1999 and a $1.0 million write-down of the Portales, New Mexico facility to its net realizable value. The $0.4 million increase in net other expenses was due to decreased other income, which was primarily debt forgiveness recorded in fiscal 1999, and decreased gains on sale of assets in fiscal 2000 compared to fiscal 1999. Income taxes were lower in fiscal 2000 due to reduced earnings with the balance related to the increase in net deferred tax liabilities compared to fiscal 1999. Income Taxes The Company has recognized income tax expense at the statutory federal rates, plus applicable state rates, for financial reporting purposes for substantially all pre-tax earnings reported after June 30, 1998 and expects to continue to do so. Most of this tax expense has been in the form of increased deferred tax liabilities as opposed to currently payable obligations. As of June 30, 2001, the Company's deferred tax liabilities were approximately $17.5 million. For financial reporting purposes, these deferred liabilities have been offset by deferred tax assets of approximately $14.4 million, including unused net operating loss (NOL) carryforwards and tax credit carryforwards. The deferred liabilities are not subject to expiration, but the offsetting deferred assets are subject to expiration at various future dates. Certain of these deferred tax assets have been reserved with a $1.9 million allowance, leaving approximately $5.0 million of net deferred tax liabilities on the Company's balance sheet at June 30, 2001. The reserve covers portions of federal and state operating loss carryforwards, and tax credit carryforwards in excess of amounts expected to be utilized. In the past, the Company has considered tax-planning strategies intended to preserve as much of the deferred tax assets as possible, however, at June 30, 2001, no tax planning strategies were in place. During the fiscal years ending June 30, 1999, and 2000, the Company recognized additional tax expenses from providing allowances on the assets expected to expire. At June 30, 2001, the Company has substantial deferred tax assets subject to expiration, for which allowances have not been provided. When, based on available evidence and management estimates, it becomes more likely than not that amounts of deferred tax assets will expire before the benefit is realized, additional allowances will be necessary resulting in the Company recognizing tax expenses in amounts in excess of the statutory federal rates, plus state rates. See Note 7 to the financial statements for additional information, including scheduled expiration dates of the Company's deferred tax assets. If changes in the stock ownership of the Company cause the Company to undergo an "ownership change" as broadly defined in Section 382 of the Internal Revenue Code (a "Section 382 Event"), utilization of the Company's tax credit and NOL carryforwards may be subject to an annual limitation. The Company does not expect this annual limitation to necessarily limit the total tax carryforwards ultimately utilized in the future. However, this annual limitation could defer the timing of these tax benefits, or even limit their utilization, depending on future events. The Company does not believe that a Section 382 Event has occurred during the last three fiscal years. However, application of the complex provisions of Section 382 may be subject to differing interpretations by taxing authorities. The Company has no current plans that it expects will limit utilization of its NOL's. However, large purchases of the Company's stock by a single stockholder could create a Section 382 Event over which the Company has no control. Seasonality Historically, the Company generates higher gross profits during the second and third fiscal quarters (October through March) of each fiscal year. This is due to production efficiencies experienced during the cooler months of the year and the traditional decrease in grain feedstock prices during and shortly following the autumn grain harvest. Historically demand and average selling prices for ethanol are higher during the winter months due to federal, state and local governments' oxygenate programs. However, due to chronically tight refining capacity and the initial stages of the MTBE phase- out, fuel grade ethanol prices remained strong throughout the Company's fiscal 2001. The Company believes that due to the tight refining capacity it is likely that gasoline prices will continue to hold above traditional levels, and this, given that fuel grade ethanol traditionally tracks gasoline, should translate into relatively strong fuel grade ethanol prices. In light of these factors, management anticipates strong ethanol prices throughout the first quarter of fiscal 2002, which is typically a period of depressed prices, leading into the typically strong oxygenate season that extends through the second and third quarters. However, the legislative issues regarding MTBE and/or RFG II or significant changes in gasoline supplies or demand could have adverse affect on the long-term ethanol demand and price.

~~2000~~Liquidity ~~1999 1998 Net sales~~ and ~~revenues~~Capital ~~$108,531,461~~Resources ~~$96,729,806~~(in ~~$84,863,782~~000's) ~~Cost~~2001 of2000 ~~products~~1999 ~~sold~~Cash ~~102,088,325~~provided ~~91,978,197~~by ~~84,734,820~~operating ~~Gross~~activities ~~profit~~$ ~~6,443,136~~15.5 ~~4,751,609~~$ ~~128,962 Selling, general, and administrative expenses 3,249,161 2,096,731~~ 5.1~~,834,725~~ ~~Management~~$ ~~restructuring costs -- -- 600,000 Write down of property, plant, and equipment to estimated fair value~~4. 1~~,022,567~~ --Cash ~~-- Operating income (loss) 2,171,408 2,654,878 (2,305,763) Other income (expense): Interest~~ and ~~other~~cash ~~income~~equivalents ~~179,148 297,135 128,155 Interest expense (~~6.1~~,788,958)~~ ~~(1,694,430)~~4.9 ~~(1,535,819) Gain on sale of equipment 31,911 233,143 26,157 (1,577,899) (1,164,152) (1,381,507) Net earnings (loss) before income taxes 593,509 1,490,726 (~~0.3~~,687,270)~~ ~~Income~~Working ~~tax~~capital ~~(expense) benefit (433,155) (955,845) 94,340 Net earnings (loss) $ 160,354 $ 534,881 $(3,592,930) Earnings (loss) per share - basic $~~ 5.015 $ 7.033 $ (4.224) ~~Earnings~~Capital ~~(loss)~~expenditures ~~per share - assuming dilution $~~ 8.015 $ 1.035 ~~$ (~~2.~~22)~~2

The Company obtained funds during the last three fiscal years from several sources, including cash from operations, exercise of stock options, and proceeds from various credit facilities. Cash provided by operating activities increased approximately $10.4 million in fiscal 2001 compared to fiscal 2000. Earnings plus non-cash charges for depreciation and amortization and deferred income tax expense generated cash flows of approximately $13.7 million. In addition to the earnings and non-cash charges, accounts payable increased significantly near year-end, as a result of the increase in capital expenditures related to the York, Nebraska facility's expansion, providing approximately $4.9 million of additional cash. These operating activity cash increases where reduced by approximately $3.4 million of increases in accounts receivables and inventories. Cash provided by operating activities was used to upgrade the Company's facilities; approximately $8.5 million was reinvested in plant equipment and upgrades, including $6.5 million in expenditures for the York, Nebraska facility expansion. An additional $5.7 million, of the cash flow, was applied to debt and capital leases. In fiscal 2001, increases in accounts payable and current maturities of long- term debt caused a decline in working capital. Liquidity risks have been partially mitigated by the refinancing of the Company's credit facilities, during fiscal 2000. In December 1999, the Company was able to refinance its revolving and reducing lines-of-credit with a bank. The bank provided the Company with a line-of-credit of up to $8 million and $20 million of term debt. The facilities carry interest rate alternatives equal to the bank's prime rate or a rate based on LIBOR rate, whichever the Company elects, plus a premium. The credit facilities have a term of five years. The Company's financing agreement requires the Company to maintain certain financial ratios, fulfill certain net worth and indebtedness tests, and limit the Company's capital expenditures. At June 30, 2001, the Company was in violation of the capital expenditure covenant, but has since received a waiver on the violation. The Company used the loan proceeds of $20 million to extinguish its existing $16.9 million revolving lines-of- credit, pay loan origination and closing cost of approximately $1.0 million, and strengthen its working capital and liquidity situation. On February 23, 2001, the Company amended the original loan agreement to allow for the $10 million York, Nebraska expansion. The agreement stipulated a non-recoverable $2.6 million prepayment on the Company's estimated fiscal 2001 excess cash flow recapture and placed a $5.0 million reserve on the Company's revolver. The reserve is reduced by suppressed borrowing capacity, as determined by the monthly borrow base certificate calculation. At August 31, 2001, the Company's $8 million line-of-credit had $5.3 million of unreserved availability which was fully available and undrawn. The Company believes it has the liquidity and borrowing capacity to sustain normal cyclical downturns because of its current financing arrangements. However, should the Company experience an increase in the cost of its feedstocks, a decrease in the demand for ethanol or related oxygenates, or if instability in the oil markets results in decreased prices for gasoline, for a sustained period of time then the Company's liquidity and cash reserves could be inadequate. If any of these events should occur and cash reserves proved insufficient, the Company would have to seek additional funding through additional financing, sale of stock, or the sale of assets. Fiscal 2001 capital expenditures were concentrated on two main projects: dryer modifications at the Colwich, Kansas facility; and capacity expansion at the York, Nebraska facility. The Company expended approximately $1.7 million and $6.5 million on the dryer modifications and capacity expansion projects, respectively. The balance of the expenditures were made between the three facilities on sustain capital projects. In fiscal 2000, approximately $0.8 million and $0.5 million of the capital expenditures were for process plant equipment at the Colwich, Kansas and York, Nebraska facilities, respectively, with the balance split between the corporate office and Portales, New Mexico facility. In fiscal 1999, approximately $1.0 million of the capital expenditures were for modifications to the York, Nebraska facility, with the balance split between the Colwich, Kansas and Portales, New Mexico plants. The Company has approximately $3.5 million committed to acquire capital assets as of June 30, 2001. These capital commitments are primarily for York, Nebraska facility expansion project. Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company produces ethanol from corn and milo, and as such is sensitive to changes in the prices of these commodities. The Company has traditionally attempted to reduce the market risk associated with fluctuations in the prices of its grain feedstock by periodically employing certain strategies, including forward contracting, and transactions in grain futures or options. As of June 30, 2001, the Company held the equivalent of 5,180,000 bushels of grain futures positions, which establish a price ceiling of $2.09 per bushel. In addition to the futures contracts, the Company had entered into forward contract arrangements, both for the purchase of grain, and for the sale of ethanol and related by-products. More details regarding these forward contracts are included in Note 6 to the financial statements. Additional information relating to this item is included in Item 7 -- Management's Discussion and Analysis. The Company had $13.9 million of debt related to its term debt credit facility outstanding, as of June 30, 2001. The debt carries a floating interest rate, therefore the debt's carrying value approximates fair market value as of June 30, 2001. The Company, also entered into an interest rate swap arrangement in fiscal 2000 to mitigate upside interest rate risk on approximately seventy five percent of the floating rate term debt outstanding. Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA HIGH PLAINS CORPORATION FINANCIAL STATEMENTS Years Ended June 30, 2001 and 2000 TABLE OF CONTENTS Page Independent Auditors' Report 1 Financial Statements: Balance Sheets 2 Statements of Operations 3 Statements of Stockholders' Equity 4 Statements of Cash Flows 5 Notes to Financial Statements 6 - 28 INDEPENDENT AUDITORS' REPORT The Board of Directors High Plains Corporation We have audited the accompanying balance sheets of High Plains Corporation as of June 30, 2001 and 2000, and the related statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended June 30, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of High Plains Corporation as of June 30, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2001 in conformity with accounting principles generally accepted in the United States of America. July 27, 2001 Wichita, Kansas HIGH PLAINS CORPORATION BALANCE SHEETS June 30, 2001 and 2000 ASSETS

~~Common~~2001 ~~Stock~~2000 ~~Number~~CURRENT ~~Additional~~ASSETS ofCash ~~Paid-in~~and ~~Retained~~cash ~~Treasury~~equivalents ~~Deferred~~$ ~~Shares Amount Capital Earnings Stock Compensation Total Balance~~6, ~~June 30~~097,284 ~~1997 16,396,622~~ $ 14,~~639~~886,~~662~~011 ~~$37,348,072~~Accounts ~~$17,763,627~~receivable: ~~$(863,911)~~Trade $(~~231,274)~~less allowance of $5575,~~656,176~~000 ~~Exercise~~in of2001 ~~stock~~and ~~options~~2000) 1411,~~000 1~~936,~~400~~169 1910,~~600 21~~026,~~000~~422 ~~Amortization~~Production ofcredits ~~deferred~~and ~~compensation~~incentives ~~97,406~~(less ~~97,406~~allowance ~~Compensation~~of ~~expense~~$-0- onand ~~stock~~$124,222 ~~options~~in ~~granted~~2001 89and 2000) 278,~~495~~462 89329,~~495~~829 ~~Net~~Inventories ~~loss for year (3~~6,~~592~~027,~~930)~~036 (34,~~592~~283,~~930)~~561 ~~Balance,~~Prepaid ~~June~~expenses ~~30,~~and ~~1998~~other 16536,~~410,622~~310 1567,~~641,062~~428 37Total current assets 24,~~457~~875,~~167~~261 1420,~~170~~093,~~697~~251 ~~(863~~PROPERTY,~~911)~~ ~~(133~~PLANT,~~868)~~ ~~52,271,147~~AND ~~Amortization~~EQUIPMENT ofLand ~~deferred~~and ~~compensation~~land 50improvements 450,~~564~~403 50450,~~564~~403 ~~Employee~~Ethanol ~~stock~~plants ~~purchase (23~~95,~~351)~~817,355 ~~(23~~93,~~351)~~366,635 ~~Compensation~~Other ~~expense~~equipment ~~on stock options granted 29~~496,~~488~~614 29573,~~488~~911 ~~Net~~Office ~~earnings~~equipment ~~for~~and ~~year~~leasehold ~~534,881~~improvements ~~534~~459,~~881~~742 ~~Balance~~437,448 ~~June~~Construction-in-progress 306, ~~1999 16~~600,~~410,622~~789 1914,~~641,062~~586 37103,~~486~~824,~~655~~903 1495,~~705~~742,~~578~~983 Less accumulated depreciation (~~863~~34,~~911~~847,298) (~~106~~31,~~655~~295,936) 52Net property,~~862~~ plant,~~729~~ ~~Exercise of stock options~~ and ~~employee~~equipment ~~stock purchase plan 43~~68,~~176 4~~977,~~318~~605 ~~123~~64,~~453 127~~447,~~771~~047 ~~Re-issuance~~OTHER ofASSETS ~~treasury~~Deferred ~~stock~~loan tocosts ~~employees~~ and ~~directors~~other ~~85,169~~assets ~~153,062~~(less ~~238,231~~accumulated ~~Amortization~~amortization of ~~deferred compensation 79~~$331,~~179~~031 ~~79,179~~and ~~Net earnings for year 160~~$125,~~354~~372 ~~160,354~~in ~~Balance,~~2001 ~~June~~and ~~30,~~ 2000) 16733,~~453,798~~655 ~~$ 1~~862,~~645,380~~298 $~~37,695,277~~ ~~$14~~94,~~865~~586,~~932~~521 $~~(710,849)~~ ~~$ (27~~85,~~476) 53~~402,~~468,264~~596

LIABILITIES AND STOCKHOLDERS' EQUITY

2001 2000 ~~1999~~CURRENT ~~1998~~LIABILITIES ~~Cash~~Current ~~flows~~maturities ~~from~~of ~~operating~~long-term ~~activities:~~debt ~~Net earnings (loss)~~ $ ~~160~~3,~~354~~928,148 $ ~~534~~2,~~881 $(3~~507,~~592,930)~~138 ~~Adjustments~~Current tomaturities ~~reconcile~~of ~~net~~capital ~~earnings~~lease ~~(loss)~~obligations ~~to net cash provided by operating activities: Provision for deferred income tax 443~~607,~~155~~206 ~~945~~561,~~845~~518 --Accounts ~~Depreciation~~payable ~~and amortization 3~~13,~~995~~270,~~802~~462 38,~~801~~321,~~834~~407 ~~3,484,573~~Accrued ~~Provision~~interest ~~for uncollectible accounts receivable 55~~178,~~165~~227 ~~124~~295,~~222~~772 --Accrued ~~Write~~payroll ~~down~~and of property, ~~plant,~~taxes ~~and equipment to estimated fair value~~ 1,~~022~~441,~~567~~738 ~~-- -- Gain on sale of property~~1, ~~plant~~153,008 ~~and~~Total ~~equipment~~current ~~and~~liabilities ~~equipment held for resale (31~~19,~~911) (194~~425,~~816)~~781 ~~(26~~12,~~157) Amortization of deferred compensation (1~~838,~~623)~~843 ~~45,681 46,204 Compensation expense on stock options granted~~ Long--term 29debt,~~488~~ ~~89,495~~less ~~Payments~~current ~~received~~maturities ~~on notes receivable 1~~9,~~000~~964,~~000~~712 3116,~~307 127~~492,~~852~~860 ~~Issuance~~Capital oflease ~~notes receivable (50~~obligations,~~000)~~ --less --current ~~Changes~~maturities ~~in operating assets and liabilities: Accounts receivable (4~~341,~~412,303)~~433 ~~(792~~940,~~907)~~376 ~~336,561~~Other ~~Inventories 753,378 1,413,369 (2,081,449) Equipment held for resale~~ -- ~~365~~273,~~614~~253 ~~157,540~~Deferred ~~Refundable~~ income tax ~~(30,000) 30,000 115,328 Prepaid expenses (95,838) (306,422) 224,182 Accounts~~ payable 24,~~001~~979,~~470~~836 (1,~~670~~389,~~328)~~000 315,~~249~~285,~~622~~981 ~~Accrued liabilities 288~~19,~~166 (259~~095,~~888)~~489 ~~103,296~~STOCKHOLDERS' ~~Net~~EQUITY ~~cash~~Common ~~provided~~stock, by$.10 ~~operating~~par ~~activities 5~~value,~~098,382~~ ~~4,097,880~~authorized 250,~~234~~000,~~117~~000 ~~Cash~~shares; ~~flows~~issued ~~from investing activities: Proceeds from sale of property~~16, ~~plant~~778,574 and ~~equipment 22~~16,~~000 5~~453,~~000~~798 ~~167,090~~shares ~~Acquisition~~ of ~~property,~~which ~~plant~~461,649 and ~~equipment (1~~276,~~476,006)~~847 ~~(2,182,724)~~shares ~~(8,359,325)~~were ~~Decrease~~held inas ~~other~~treasury ~~non-current assets 13~~stock,~~524~~ ~~39,308~~respectively ~~10,349 Net cash used in investing activities (~~1,~~440~~677,~~482)~~857 (21,~~138~~645,~~416)~~380 ~~(8,181,886)~~Additional ~~Cash flows from financing activities: Proceeds from long~~paid-~~term~~in ~~debt~~capital 2038,~~000~~443,~~000~~851 ~~-- -- Payments on long-term debt (1~~37,~~000~~695,~~002)~~277 --Retained --earnings ~~Payments on revolving lines-of-credit (16~~21,~~900~~029,~~000)~~645 (214,~~700~~865,~~000)~~932 ~~(4,900,000)~~Accumulated ~~Proceeds~~other ~~from~~comprehensive ~~revolving~~loss: ~~lines-of-credit~~Cash --flow ~~900,000~~hedge ~~9,700,000~~derivatives ~~Payments on capital lease obligations~~ (~~521,893)~~net ~~(505,773)~~of ~~(520~~$20,~~923)~~164 ~~Increase~~income ~~in other non-current assets (974,616~~taxes) (4133,~~312~~607) ~~(41,505) (Increase) decrease in other non~~-~~current~~- ~~liabilities (72~~61,~~052) 43~~117,~~399~~746 ~~(25~~54,~~667)~~206,589 ~~Re-issuance~~Less: ofTreasury ~~treasury~~ stock ~~238,231~~ -- --at ~~Proceeds~~cost ~~from exercise of options 127~~(1,~~771 -- 21~~242,~~000 Net cash provided by (used in~~987) ~~financing activities 897,439~~ (2710,~~303,686~~849) ~~4,232,905~~Deferred ~~Increase~~compensation ~~(decrease)~~-- ~~in cash and cash equivalents 4,555,339~~ (~~344~~27,~~222~~476) ~~(1,714,864)~~Total ~~Cash~~stockholders' ~~and~~equity ~~cash equivalents: Beginning of year 330~~59,~~672 674~~874,~~894~~759 253,~~389~~468,~~758~~264 ~~End of year~~ $ 494,~~886~~586,~~011~~521 $ ~~330~~85,~~672 $ 674~~402,~~894~~596

The accompanying notes are an integral part of these financial statements 2 HIGH PLAINS CORPORATION STATEMENTS OF OPERATIONS Years Ended June 30, 2001, 2000, and 1999

~~June~~2001 ~~30,~~ 2000 1999 ~~Raw~~Net ~~materials~~sales and revenues $1150,~~276~~458,~~938~~632 $108,531,461 $ 96,729,806 Cost of products sold 135,638,742 102,088,325 91,978,197 Gross profit 14,819,890 6,443,136 4,751,609 Selling, general, and administrative expenses 3,580,739 3,249,161 2,096,731 Write-down of property, plant and equipment to estimated fair value -- 1,~~280~~022,~~676~~567 ~~Work~~-in-~~process~~ ~~493~~Operating income 11,~~064~~239,151 ~~481~~2,~~287~~171,408 ~~Finished~~2,654,878 ~~goods~~Other income (expense): Interest and other income 441,060 179,148 297,135 Interest expense (1,~~469~~713,~~053~~094) 2(1,~~251~~788,~~228~~958) ~~Spare~~(1,694,430) ~~parts~~(Loss) gain on sale of equipment (14,304) 31,911 233,143 (1,~~044~~286,~~506~~338) (1,~~025~~577,~~008~~899) (1,164,152) Net earnings before income taxes 9,952,813 593,509 1,490,726 Income tax expense (3,789,100) (433,155) (955,845) Net earnings $4 6,~~283~~163,~~561~~713 $5 160,~~038~~354 $ 534,~~199~~881 Earnings per share - basic $ .38 $ .01 $ .03 Earnings per share - assuming dilution $ .37 $ .01 $ .03

The accompanying notes are an integral part of these financial statements 3 HIGH PLAINS CORPORATION STATEMENTS OF STOCKHOLDERS' EQUITY Years Ended June 30, 2001, 2000, and 1999

Accumu- lated Common Stock Other Additional Compre- Compre- Deferred Number of Paid-in hensive Retained hensive Treasury Compen- Shares Amount Capital ~~Operating~~Income ~~Year~~Earnings ~~Ending~~Loss Stock sation Total Balance, June 30, ~~Leases~~1998 ~~Leases~~16,410,622 ~~2001~~$1,641,062 $37,457,167 ~~656~~$ -- $14,~~322~~170,697 $1 -- $ (863,~~360~~911) $(133,~~171~~868) ~~2002~~$52,271,147 ~~656~~Amortization of deferred compensation 50,~~322~~564 50,564 Employee stock purchase (23,351) (23,351) Compensation expense on stock options granted 29,488 29,488 Net earnings for year 534,881 534,881 534,881 Comprehensive income $ 534,881 Balance, June 30, 1999 16,410,622 1,~~243~~641,~~121~~062 ~~2003~~37,486,655 ~~331~~14,705,578 -- (863,911) (106,655) 52,862,729 Exercise of stock options and employee stock purchase plan 43,176 ~~877~~4,~~362~~318 ~~2004~~123,453 6$ -- 127,~~031~~771 ~~581~~Re-issuance of treasury stock to employees and directors 85,~~080~~169 ~~2005~~153,062 7238,~~539~~231 ~~263~~Amortization of deferred compensation 79,~~940~~179 ~~Total~~79,179 ~~minimum~~Net ~~lease~~earnings ~~payments~~for 1year 160,~~657~~354 160,~~390~~354 160,354 Comprehensive income $4 160,~~325~~354 Balance,~~674~~ ~~Less~~June ~~amount~~30, ~~representing~~2000 ~~interest~~16,453,798 ~~155~~1,~~496~~645,380 ~~Present~~37,695,277 ~~value~~14,865,932 -- (710,849) (27,476) 53,468,264 Exercise of ~~net~~stock ~~minimum~~options ~~lease~~and ~~payments~~employee stock purchase plan 324,776 32,477 748,574 $ -- 781,051 Acquisition of treasury stock (532,138) (532,138) Amortization of deferred compensation 27,476 27,476 Financial derivative recovery/(expense) (33,607) (33,607) (33,607) Net earnings for year 6,163,713 6,163,713 6,163,713 Comprehensive income $6,130,106 Balance, June 30, 2001 16,778,574 $1,~~501~~677,~~894~~857 ~~Less~~$38,443,851 ~~current~~$21,029,645 ~~maturities~~$(33,607) ~~561~~$(1,~~518~~242,987) $ ~~940~~-- $59,~~376~~874,759

The accompanying notes are an integral part of these financial statements 4 HIGH PLAINS CORPORATION STATEMENTS OF CASH FLOWS Years Ended June 30, 2001, 2000, and 1999

~~Fixed~~2001 ~~Price~~2000 ~~Quantity~~1999 inCash ~~Total~~flows ~~Purchase~~from ofoperating ~~corn~~activities: ~~and~~Net ~~milo~~earnings 2$ 6,~~248~~163,~~367~~713 bu$ 160,354 $ 4534,~~478~~881 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for deferred income tax 3,~~747~~611,000 ~~Purchase~~443,155 945,845 Depreciation and amortization 3,914,999 3,995,802 3,801,834 Provision for uncollectible accounts receivable 49,395 55,165 124,222 Write down of ~~corn~~property, plant, and ~~milo~~equipment to estimated fair value -- 1,~~310~~022,~~000~~567 bu-- ~~Unpriced~~Loss ~~Sale~~(gain) on sale of ~~dried~~property, plant, and ~~wet~~equipment ~~distillers~~14,304 ~~grains~~(31,911) 60(194,~~654~~816) ~~tons~~Amortization 2of deferred compensation 27,~~323~~476 (1,623) 45,681 Compensation expense on stock options granted -- -- 29,488 Gain on cash flow hedge derivatives (53,771) -- -- Changes in operating assets and liabilities: Accounts receivable (1,907,775) (4,412,303) (792,907) Inventories (1,481,148) 753,378 1,413,369 ~~Sale~~Equipment ofheld ~~fuel~~for ~~grade~~resale ~~ethanol~~-- 14-- 365,~~864~~614 Prepaid expenses and other 31,~~620~~118 ~~gal~~824,162 17(245,~~787~~115) Accounts payable 4,~~423~~949,055 ~~Sale~~1,627,661 (1,670,328) Accrued liabilities 171,185 661,975 (259,888) Net cash provided by operating activities 15,489,551 5,098,382 4,097,880 Cash flows from investing activities: Proceeds from sale of ~~industrial/beverage~~property, ~~grade~~plant, ~~ethanol~~and ~~720~~equipment 18,589 22,000 ~~gal 882~~5,~~720~~000 ~~Sale~~Acquisition of ~~syrup~~property, plant, and equipment (8,525,276) (1,476,006) (2,182,724) (Increase) decrease in other bynon-~~products~~current ~~412~~assets ~~tons~~(27,016) 13,524 39,308 Net cash used in investing activities (8,533,703) (1,440,482) (2,138,416) Cash flows from financing activities: Proceeds from long-term debt -- 20,000,000 -- Payments on long-term debt (5,107,138) (1,000,002) -- Payments on revolving lines-of-credit -- (16,900,000) (2,700,000) Proceeds from revolving lines-of-credit -- -- 900,000 Payments on capital lease obligations (563,099) (521,893) (505,773) Increase in other non-current assets (50,000) (974,616) (41,312) (Increase) decrease in other non-current liabilities (18,374) (72,052) 43,399 (Acquisition) re-issuance of treasury stock (532,138) 238,231 -- Proceeds from exercise of options 526,174 127,771 -- Net cash (used in) provided by financing activities (5,744,575) 897,439 (2,303,686) Increase (decrease) in cash and cash equivalents 1,211,273 4,555,339 (344,222) Cash and cash equivalents: Beginning of year 4,886,011 330,672 674,894 End of year $ 6,~~103~~097,284 $ 4,886,011 $ 330,672

The accompanying notes are an integral part of these financial statements 5 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash Equivalents - High Plains Corporation (Company) considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Included in cash equivalents are United States government securities which are held in the Company's managed derivative clearing account to generate a return on excess cash. At June 30, 2001, the Company held the following United States Treasury Bills: Face Effective Maturity Amount Yield Date $ 50,000 3.73% July 19, 2001 100,000 3.49% August 19, 2001 100,000 3.38% September 20, 2001 The Company maintains its cash in bank deposit accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. Inventories and Risk Management - Inventories are stated at the lower of cost (first-in, first-out) or market. During the year ended June 30, 2000, the Company purchased grain futures contracts intended to hedge grain purchasing transactions for the fourth quarter of that year. During the fourth quarter of 2000, it was determined that the grain purchasing contracts intended to be in correlation with the futures did not have the expected fixed cost reduction arrangements. Accordingly, the Company's financial statement for the year ended June 30, 2000, includes additional, unexpected grain costs of approximately $1,800,000, related to the absence of locked-in cost reductions on grain purchase contracts in correlation with the grain future derivative instruments. During the fourth quarter of fiscal 2000, the Company sold substantially all of its grain future derivative positions held during 2000. Early in the year ended June 30, 2001, the Company implemented a new Grain Risk Management Program. This program's stated objective is to stabilize the Company's cost of grain and to generate more predictable margins. Also for the year ended June 30, 2001, the Company adopted the provisions of the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133 establishes the accounting and reporting standards for derivative instruments, including hedging activities. (Continued) 6 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Operation of the Company's ethanol production facilities requires the purchase of grain feedstocks, and the sale of ethanol, primarily fuel- grade ethanol. Accordingly, assuming ongoing operations, the Company is naturally "short" on grain and "long" on fuel ethanol. The Company's Grain Risk Management Program is intended to use grain purchase contracts together with grain futures derivatives to fix the cost of some of the Company's expected future grain feedstock purchases. The Company's policy allows for the use of fixed price forward purchase contracts, unpriced forward basis differential purchase contracts, and Chicago Board of Trade (CBOT) derivative contracts (futures contracts). The Company procured approximately 56% of its grain requirements through unpriced forward basis differential purchase contracts using designated derivative future contracts on the CBOT to fix the cost of the grain. Under this program, the Company does not enter into commitments or derivatives for grain in excess of expected feedstock requirements. At June 30, 2001, the Company had the following grain purchase positions: Fixed Price Quantity in Total Fixed price grain purchase contracts (forwards) 1,350,000 bu $ 2,771,550 Unpriced grain purchase contracts (forwards) with cost fixed through derivatives (futures) 5,180,000 bu 10,826,200 Unpriced grain purchase contracts (forwards) with no corresponding futures 5,138,000 bu N/A Under the provisions of SFAS 133, the derivatives in the Company's Grain Risk Management program are designated as cash flow hedges. Accordingly, the gains and losses on those open and closed grain derivative positions (futures on the CBOT) are deferred and reported in income and earnings per share as a component of the cost of related, purchased grain feedstocks when the grain inventory is consumed in the production process. The deferred gains or losses on these open and closed derivative positions are disclosed as a component of other comprehensive income in these financial statements. (Continued) 7 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) In addition to the Company's forecasted cash flow hedging derivative positions on unpriced forward grain commitments, the Company maintains a grain trading account, where it engages in grain derivative (futures on the CBOT) trading activity intended to take advantage of profit opportunities from trading in that market. The derivatives that are designated as trading account activity are marked to market, resulting in immediate recognition of the resulting gain or loss. During the year ended 2001, the Company's grain trading account entered into 1,230 CBOT grain futures contracts (representing 6.2 million bushels); this activity resulted in net losses of $74,450. At June 30, 2001, the Company's futures trading account had entered into four CBOT contracts and had a net settlement amount receivable of $9,400. The settlement amount payable or receivable is included in trade receivables or payables in these financial statements. During 2001, the Company also implemented a new Fuel Ethanol Risk Management Program. The program's stated objectives are to stabilize its sales price of fuel ethanol and to generate more predictable margins. Part of this program involves unpriced forward contracts to sell portions of the Company's fuel ethanol output to customers with variable prices that are tied directly to the price of unleaded gasoline as quoted on national exchanges. The Company may use derivative contracts to fix the price under the forward contract. Such derivative contracts are treated as forecasted cash flow hedges under the provisions of SFAS 133, and the resulting gains and losses on the open and closed derivative contracts are recognized when the related fuel ethanol delivery occurs under the forward contract with the customer. The deferred gains or losses on these open and closed derivative positions are disclosed as a component of other comprehensive income in these financial statements. Under this program, the Company does not enter into forward sales commitments in excess of expected fuel ethanol output, and it only enters into gasoline derivatives to the extent that it has unpriced forward sales contracts with customers with variable pricing arrangements that are tied to the price of gasoline as quoted on national exchanges. (Continued) 8 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) During the third and fourth quarters of 2001, the Company sold approximately 3% of its fuel ethanol output under the above-described program. At June 30, 2001, the Company had the following fuel ethanol sales positions: Fixed Price Quantity in Total Fixed price fuel grade ethanol sales contracts (forwards) 13,822,100 gal $ 19,125,294 Unpriced fuel grade ethanol sales contracts (forwards) with sales price fixed through derivatives (futures) 1,260,000 gal 1,737,540 Unpriced fuel grade ethanol sales contracts (forwards) with no corresponding futures 4,260,471 gal N/A Property, Plant, and Equipment - Property, plant, and equipment are recorded at cost. The cost of internally-constructed assets includes direct and allocable indirect costs. Plant improvements are capitalized, while maintenance and repair costs are charged to expense as incurred. Periodically, a plant or a portion of a plant's equipment is shut down to perform certain maintenance projects that are expected to improve the operating efficiency of the plant over the next year. These expenses are generally incurred once a year and thus are capitalized and amortized over the future 12-month period benefited. Included in prepaid expenses at June 30, 2001 and 2000 were $126,689 and $328,266, respectively, of these expenditures. Provisions for depreciation of property, plant, and equipment are computed using the straight-line method over the following estimated useful lives: Ethanol plants 5 - 40 years Other equipment 5 - 10 years Office equipment 3 - 10 years Leasehold improvements 5 years (Continued) 9 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Impairment of Long-Lived Assets - In accordance with the FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," the Company evaluates its assets for impairment whenever events or changes in circumstances indicate the carrying amount of the long-lived asset may not be fully recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset to the future net cash flows expected to be generated by the asset or by comparison of the carrying amount of the asset to the estimated fair value of the asset. If such assets are considered to be impaired, the impairment loss recognized is equal to the excess of the carrying value of the assets over the fair values. No such losses were recorded in fiscal years 1999 or 2001. During 2000, events and circumstances indicated that long-lived assets associated with the Company's Portales facility were impaired. Based on a preliminary purchase offering price, the estimated fair value of the long-lived assets was less than the carrying value. This difference between estimated fair value and the carrying value was recorded as a write down of property, plant, and equipment in the Company's fiscal year 2000 statement of operations. Estimates of fair value are subject to revision in the future. Deferred Loan Costs - The Company incurred certain costs in connection with obtaining financing. The Company amortizes these costs over the life of the debt. Fair Value of Financial Instruments - The fair value of financial instruments recorded on the balance sheet are not significantly different from the carrying amounts. Income Taxes - The Company uses an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when considered necessary to reduce deferred tax assets to the estimated amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. (Continued) 10 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Stock-Based Compensation - The Company accounts for stock-based compensation for employees using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of grant over the amount an employee must pay to acquire the stock. However, the Company accounts for stock-based compensation for non-employees as provided under FASB Statement No. 123, Accounting for Stock-Based Compensation. The fair value of the option grant is estimated on the date of grant using the Black-Scholes option pricing model. Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect: (1) the reported amounts of assets and liabilities, (2) disclosures such as contingencies, and (3) the reported amounts of revenues and expenses included in such financial statements. Actual results could differ from those estimates. Contingencies - In the normal course of business, the Company becomes party to litigation and other contingencies that may result in loss or gain contingencies. The Company follows FASB Statement No. 5, Accounting for Contingencies. Under FASB Statement No. 5, loss contingencies are accrued if available information indicates it is probable a loss is incurred and the amount of such loss can be reasonably estimated. Reclassifications - Certain items on the 1999 and 2000 financial statements have been reclassified in order to be comparable with the presentation used on the 2001 financial statements. 2. DESCRIPTION OF BUSINESS Ethanol Production Business - The Company's principal business is the operation of three plants in Kansas, Nebraska, and New Mexico for the distillation and production of industrial grade and fuel grade ethanol for sale to customers concentrated primarily in the western United States, primarily for mixture with gasoline to be used as a motor fuel. (Continued) 11 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 2. DESCRIPTION OF BUSINESS (CONTINUED) The Company's operations are dependent upon state governmental incentive payments. Kansas production incentive payments recorded as product sales and revenues in the accompanying financial statements were $1,336,642 for fiscal 1999, $1,288,405 for fiscal 2000, and $1,074,454 for fiscal 2001. The Kansas incentive program, originally scheduled to expire July 1, 2001, has been extended through June 30, 2004. The State of Nebraska (Nebraska) offered a transferable production tax credit in the amount of $.20 per gallon of ethanol produced for a period of 60 months from date of first eligibility. The credit was only available to offset Nebraska motor fuels excise taxes. The Company transferred these credits to a Nebraska gasoline retailer who then reimbursed the Company for the credit amounts less a handling fee. Not less than 2 million gallons and not more than 25 million gallons of ethanol produced annually at the Nebraska facility were eligible for the tax credit. Based on the Nebraska plant's original production capacity, this credit was no longer available after the first quarter of fiscal 2000. However, during the second quarter of fiscal 2001, the Company was able to recover the additional amounts, below, upon completion of an amendment to the original production incentive agreement with Nebraska. Nebraska adopted a new three-year incentive program under which the Company will receive a $.075 per gallon incentive for ethanol production expansion. Nebraska production tax credit amounts recorded as revenues in the accompanying financial statements were $5,210,273 in fiscal 1999, $1,500,470 in fiscal 2000, and $1,814,668 in fiscal 2001. The market for the Company's ethanol product is affected by the federal government's excise tax incentive program scheduled to expire September 30, 2007. Under this program, gasoline distributors who blend gasoline with ethanol receive a federal excise tax rate reduction for each blended gallon, resulting in an indirect pricing incentive to ethanol. For calendar year 2000, the tax rate reduction equaled $.054 per blended gallon containing 10% or more ethanol by volume. Alternatively, blenders could claim an income tax credit of $.54 per gallon of ethanol blended with gasoline. However, in 2001, the tax rate reduction began to decrease over the remaining life of the program. The rate decreases to $.053 in 2001, $.052 in 2003, and $.051 in 2005. (Continued) 12 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 2. DESCRIPTION OF BUSINESS (CONTINUED) The market for the Company's product is also affected through federal regulation by the Environmental Protection Agency under the Clean Air Act and the Reformulated Gasoline Program. The U.S. Department of Agriculture Commodity Credit Corporation's (CCC) Bioenergy Program provides a two-year cash incentive for ethanol producers who increase their grain consumption in order to increase their fuel ethanol production. The program allows the Company reimbursement for the cost of one bushel of grain for every two and one-half bushels, in fiscal 2001, and three and one-half bushels, in fiscal 2002, used for increases in fuel ethanol production. CCC payments recorded as product sales and revenues in the accompanying financial statements were $500,910 for fiscal 2001. Ethanol Marketing Business - The Company actively purchases fuel ethanol produced by independent producers unrelated to the Company. The Company has also contracted to provide process and operational consulting services to select ethanol producers. Portales Plant - In December 1997, the Company acquired an idle ethanol production facility in Portales, New Mexico, for $4,000,000. After improvements were made, production began in March 1998. In March 1999, the carbon dioxide (CO2) processing equipment from the Portales plant was sold. The $933,000 difference between the carrying amount of the equipment and the sales price was treated as an adjustment to the original purchase price allocation. This was in recognition of a change in the estimated fair value of the CO2 equipment used at the date of acquisition. On May 10, 2000, the Company agreed to accept an offer for the Portales plant with a proposed purchase price of $3,000,000 for the plant and other assets plus inventory at approximately 85% of fair value at the time of closing. The purchase was proposed to close within 90 days, subject to the buyer obtaining financing. Based on this preliminary offer, management revised its estimate of the fair value of the plant and other related assets and in fiscal 2000 provided for an expense due to impairment of the Portales plant in the amount of $1,022,567. This proposed transaction was initially extended and then abandoned when the buyer could not obtain suitable financing. No further provision has been made in the current year for additional impairment expense. The Company intends to operate the Portales, New Mexico, facility for the foreseeable future. (Continued) 13 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 3. INVENTORIES Inventories consisted of: June 30, 2001 2000 Raw materials $ 1,200,473 $ 1,276,938 Work-in-process 500,583 493,064 Finished goods 2,642,186 1,469,053 Spare parts 1,683,794 1,044,506 $ 6,027,036 $ 4,283,561 4. REVOLVING LINE-OF-CREDIT AND LONG-TERM DEBT In December 1999, the Company entered into a credit facility (loan agreement) with a bank providing a line-of-credit up to $8,000,000 and term debt with an original principal balance of $20,000,000. The line- of-credit carries an interest rate option equal to the bank's prime rate or a rate based on the LIBOR rate, whichever the Company elects. In February 2001, the bank amended the original loan agreement to allow for expansion of the York, Nebraska plant. The amended agreement requires a non-recoverable $2.6 million prepayment on the term debt (based on fiscal 2001 excess cash flow). The amended agreement also places a $5 million reserve on the Company's borrowing base. At June 30, 2001, the Company had not advanced any funds on the line, and after consideration of the borrowing base and required reserve, the Company had approximately $5,726,000 available. The term debt, at June 30, 2001, consists of five tranches with interest rates ranging from 6.98% to 7.18%. The principal payments are due monthly as follows: $187,500 through December 2003, $270,834 from January 2004 through December 2004, and all remaining principal and interest due December 31, 2004. Maturities of long-term debt for the next five years are as follows: 2002 $ 3,928,148 2003 2,250,000 2004 2,749,998 2005 4,964,714 13,892,860 Less current maturities 3,928,148 $ 9,964,712 (Continued) 14 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 4. REVOLVING LINE-OF-CREDIT AND LONG-TERM DEBT (CONTINUED) Collateral on the facility includes substantially all accounts receivables, inventory, general intangibles, property, and equipment located at the Company's ethanol facilities, and the Company's rights to payments under present or future production incentive contracts from the Ethanol Plant Production Credit Agreement with Nebraska. The financing agreement contains various customary restrictions, including the maintenance of certain financial ratios, fulfilling certain net worth and indebtedness tests, and capital expenditure limitations. 5. LEASES Sale - Leaseback Transaction - In 1996, the Company sold certain processing equipment for the production of industrial grade ethanol for $3,128,676 and concurrently entered into an agreement to lease the property back at $54,191 per month through December 12, 2002. The sale of equipment was recorded resulting in a gain of $87,447 that was deferred and will be recognized over a period not to exceed the six- year term of the lease agreement. The lease has been classified as a capital lease. The equipment under lease is included in ethanol plants totaling $3,128,676, less accumulated depreciation of $760,263, for a net book value of $2,368,413 at June 30, 2001. Operating Leases - The Company leases 248 railroad cars under operating leases expiring in various years through June 30, 2006. Annual rentals approximate $1,514,000 for all 248 cars. These rail car leases require the Company to pay certain executory costs. Corporate offices are also under a five-year lease expiring in 2003 that requires annual rentals of $52,111. Rent paid for all operating leases during the years ended June 30, 2001, 2000, and 1999 was $1,789,747, $1,484,143, and $1,474,387, respectively. (Continued) 15 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 5. LEASES (CONTINUED) Future Minimum Lease Payments - The following is a schedule of future minimum lease payments for capital leases and non-cancelable operating leases as of June 30, 2001: Capital Operating Year Ending June 30, Leases Leases 2002 $ 658,725 $ 1,697,683 2003 333,580 1,377,391 2004 8,434 969,034 2005 8,434 409,191 2006 2,513 101,365 Total minimum lease payments 1,011,686 $ 4,554,664 Less amount representing interest 63,047 Present value of net minimum lease payments 948,639 Less current maturities 607,206 $ 341,433 6. COMMITMENTS Forward Contracts - The Company periodically enters into forward contracts with suppliers and customers on both the purchase of grain and the sale of ethanol and by-products. At June 30, 2001, the Company had forward contracts as follows: Fixed Price Quantity in Total Purchase of corn and milo 6,530,000 bu $ 13,597,750 Purchase of corn and milo 5,138,000 bu Unpriced Purchase of natural gas 959,100 MMBTU 5,275,050 Sale of dried and wet distillers grains 123,511 ton 4,682,807 Sale of fuel grade ethanol 15,082,100 gal 20,862,834 Sale of fuel grade ethanol 4,260,471 gal Unpriced Sale of industrial/beverage grade ethanol 1,771,000 gal 2,670,180 Sale of syrup and other by-products 412 ton 6,103 (Continued) 16 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 6. COMMITMENTS (CONTINUED) The unpriced corn and milo contracts, above, generally have fixed basis adjustment provisions whereby the supplier has agreed a specified adjustment to the market price. No losses are expected on these contracts because the Company intends to convert the grain feedstocks into ethanol and sell the ethanol at prices above costs to produce. However the two commodities are subject to selling prices, which vary independently, and there can be no assurance that such prices will produce a profit in the future. The Company customarily settles these contracts out by making or taking delivery of the product. The Company has contracts to sell carbon dioxide, a production by- product, to another company from its York, Nebraska, and Colwich, Kansas, facilities through 2008 and 2007, respectively. The York, Nebraska, facility contract requires the Company to supply a minimum of 200 tons per day of CO2 throughout the term of the contract at a fixed price of $7 per short ton. The Colwich, Kansas, facility contract requires the Company to supply a minimum of 100 tons per day of CO2. The Company will receive from $1.96 to $3.12 per ton of CO2 produced based on a volume of 100 tons to in excess of 150 tons of daily production and other factors. Capital Expenditures - As of June 30, 2001, the Company was committed to approximately $3,500,000 of additional capital expenditures for expansion and energy efficiency enhancements at the York plant. 7. INCOME TAXES For federal and state income tax purposes, the Company has net operating loss carryforwards and federal general business tax credit carryforwards. These result in deferred tax assets (operating loss carryforwards are computed at 34% and 6% rates for federal and state taxes, respectively), which, if the carryforwards are not used, expire as follows: (Continued) 17 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 7. INCOME TAXES (CONTINUED)

Expires in Operating Loss Carryforwards Net General Fiscal Year New Business Credit Ending Federal Kansas Nebraska ~~New~~ Mexico Carryforward ~~2001~~2002 $ ~~251,000 $155,000 $~~ -- $ ~~-- $ 86~~316,000 ~~2002~~$ 247,~~186,~~000 ~~386,000~~$ ~~112,000~~ -- $ -- 2003 -- -- 202,000 -- -- 2004 ~~428~~336,000 -- 28,000 -- -- 2005 -- -- 2314,000 -- -- 2007 -- 139,000 -- -- 1,500,000 2008 -- 220,000 -- -- 1,500,000 2009 -- 43,000 -- -- 1,500,000 2010 -- 5547,000 -- -- -- 2012 1,664,000 -- -- -- -- 2013 2,760,000 -- -- ~~37,000~~-- -- 2014 589,000 -- -- ~~19,000~~-- -- 2015 ~~678~~681,000 -- -- 221,000 -- $86,~~556~~030,000 $~~998~~ 765,000 $~~365~~ 291,000 $78 1,000 $4,~~586~~500,000

The general business credits in fiscal 2007 - 2009 are small ethanol producer federal tax credits. In the event these credits would expire, the Company would receive an income tax deduction of 100% of the small ethanol producer credit in the year of expiration. At June 30, 2001, the Company also has a Nebraska investment credit carryforward of $1,647,000, expiring in fiscal 2009, which may be used to offset future income taxes in Nebraska. At June 30, 2000, the Nebraska investment credit carryforward was $2,725,000. The reduction in this credit carryforward is attributable to the Company's determination, during 2001, to utilize portions of this credit as offsets to future Nebraska sales taxes rather than income taxes. Accordingly, the benefits of the credit carryforward will be recognized at the time of the sales tax offset. The tax net operating loss carryforwards and federal tax credit carryforwards discussed above and other matters result in deferred tax assets (DTAs) under FASB Statement No. 109 totaling $14,435,164 at June 30, 2001. The book basis of property, plant, and equipment in excess of its tax basis results in a deferred tax liability of $17,544,000, and the valuation allowance offsets an additional $1,871,000 of deferred tax assets, leaving a net deferred tax liability at June 30, 2001 of $4,979,836. (Continued) 18 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 7. INCOME TAXES (CONTINUED) Income taxes consisted of:

June 30, 2001 2000 1999 ~~1998~~ Current tax expense (benefit) ~~expense~~$ 178,100 $ (10,000) $ 10,000 ~~$ (94,340)~~ Tax effect of changes in deferred tax assets and liabilities: Book basis of plant and equipment in excess of tax basis ~~479~~1,050,000 ~~946~~479,000 1946,~~751,~~000 Capital lease liability 223,000 (591,000) -- -- Nondeductible accrued expenses and other 39,000 66,155 (28,155) Decrease (~~97,000~~increase) ~~Increase~~ in net operating loss carryforward ~~(959~~2,910,000) (~~365~~959,000) (3365,~~163,~~000) Decrease in ~~tax~~general business credits carryforward 86,000 7,000 1,263,000 ~~1,000~~ Change in Nebraska investment credit carryforward 1,078,000 2,336,000 (167,000) ~~(366,000)~~ AMT credit carryforward ~~and~~(171,000) ~~other~~ -- (16,000) ~~(122,000)~~Decrease ~~Change~~ in asset valuation allowance (~~895~~1,604,000) (~~687~~895,000) 1(687,~~996,~~000) Deferred tax expense 3,611,000 443,155 945,845 -- Income tax expense ~~(benefit)~~$ 3,789,100 $ 433,155 $ 955,845 ~~$ (94,340)~~

A reconciliation between the actual income tax expense and income taxes computed by applying the statutory federal income tax rate to earnings before income taxes is as follows:

June 30, 2001 2000 1999 ~~1998~~ Computed income tax expense ~~(benefit)~~, at 34% $ 3,384,000 $ 201,800 $ 506,850 ~~$(1~~State income taxes 461,~~253,672)~~000 -- -- Revised estimates of deferred tax assets 729,000 (1,206,000) -- --Change ~~Increase~~ in valuation allowance, net of expired or reduced assets (440,000) 1,441,000 572,000 ~~1,253,672~~ Other, net (344,900) (3,645) (123,005) ~~(94,340)~~ Total income tax expense ~~(benefit)~~$ 3,789,100 $ 433,155 $ 955,845 ~~$ (94,340)~~

(Continued) 19 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 7. INCOME TAXES (CONTINUED) The Company has deferred income tax liabilities and assets arising from the following temporary differences and carryforwards:

June 30, 2001 2000 ~~1999~~ Deferred tax liabilities: Book basis of property, plant, and equipment in excess of tax basis $16 17,~~494~~544,000 $ 16,~~015~~494,000 Deferred tax assets: Net federal and state operating loss carryforwards $ 97,~~997~~087,000 $ 9,~~038~~997,000 Nebraska investment credit carryforward 21,~~725~~647,000 52,~~061~~725,000 General business credit carryforward 4,~~586~~500,000 4,~~593~~586,000 AMT credit carryforward ~~495~~666,000 495,000 Nondeductible accrued expenses and other 167,164 186,000 ~~252,155~~ Capital lease liability 368,000 591,000 --14,435,164 18,580,000 ~~19,439,155~~ Less: Valuation allowance 31,~~475~~871,000 43,~~370~~475,000 $15 12,~~105~~564,~~000~~164 $ 15,~~069~~105,~~155~~000 Net deferred income tax liability $ (14,~~389~~979,~~000~~836) $ (~~945~~1,~~845~~389,000)

The valuation allowance has been established to reduce deferred tax assets as follows:

June 30, 2001 2000 ~~1999~~ Net federal and state operating loss carryforwards $ ~~346~~171,000 $ ~~406~~346,000 Nebraska investment credit carryforward 1,~~724~~200,000 31,~~871~~724,000 General business credit carryforward 500,000 1,405,000 93$ 1,871,000 $ 3,475,000 ~~$4,370,000~~

(Continued) 20 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 7. INCOME TAXES (CONTINUED) The Company has considered the feasibility of certain tax planning strategies aimed at preservation of the expiring tax assets, and the Company intends to monitor the status of its expiring tax assets and the ongoing suitability of tax planning strategies. However, the Company currently has no specific plan to implement a tax strategy, and accordingly, the allowance is based on the Company's best estimates of utilization of the tax assets through generation of future taxable income with no provision for the use of tax strategies or the cost thereof. Accordingly, the Company's determination of the allowance for deferred tax assets is based on available evidence and is necessarily an estimate that is subject to change based on future events. 8. SEGMENT INFORMATION Segment information has been prepared in accordance with FASB SFAS No. 131 (SFAS 131), "Disclosures about Segments of an Enterprise and Related Information." Segments were determined based on products and services provided by each segment. Accounting policies of the segments are the same as those described in the summary of significant accounting policies. Performance of the segments is evaluated on gross profit before allocated selling, general and administrative expenses and income taxes, excluding other income and expenses. The Company believes its gross profit approach for evaluating each segment's performance is a better indicator of the segment's incremental contribution to the Company's performance. This approach mitigates the impact of subjective allocations of selling, general, and administrative expense, which may or may not be incremental in relation to the increased activity related to the segment. Intersegment sales were made at prices approximating current market value. The Company has two reportable segments: (1) ethanol production and (2) ethanol marketing. The ethanol production segment produces and sells ethanol and its by-products. The ethanol marketing segment actively markets fuel ethanol purchased by the Company, in bulk, from independent producers unrelated to the Company. The Company has also contracted to provide process and operational consulting services to select ethanol producers, but provided no consulting services in fiscal years 1999 through 2001. (Continued) 21 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 8. SEGMENT INFORMATION (CONTINUED)

~~2000~~Ethanol ~~1999~~Ethanol ~~1998~~Production Marketing Total For the Year Ended June 30, 2001 Net ~~earnings~~sales ~~(loss):~~to Asexternal ~~reported~~customers $118,804,388 ~~160~~$ 31,~~354~~654,244 $150,458,632 ~~534~~Intersegment sales 1,~~881~~459,403 -- 1,459,403 Depreciation and amortization 3,914,999 -- 3,914,999 Segment gross profit 14,705,593 114,297 14,819,890 Segment assets 90,779,393 3,807,128 94,586,521 Additions to property, plant and equipment 8,525,276 -- 8,525,276 For the Year Ended June 30, 2000 Net sales to external customers $( 97,108,898 $ 11,422,563 $108,531,461 Intersegment sales -- -- -- Depreciation and amortization 3,~~592~~995,~~930)~~802 ~~Pro~~-- ~~forma~~3,995,802 (Segment gross profit 6,377,035 66,101 6,443,136 Segment assets 82,~~037)~~595,654 ~~404~~2,~~382~~806,942 (385,~~866~~402,~~883)~~596 ~~Earnings~~Additions ~~(loss)~~to ~~per~~property, ~~share:~~plant Asand ~~reported~~equipment 1,476,006 -- 1,476,006 For the Year Ended June 30, 1999 Net sales to external customers $~~.01~~ 93,061,081 $~~.03~~ 3,668,725 $~~(.22)~~ ~~Pro~~96,729,806 ~~forma~~Intersegment sales -- ~~.02~~-- ~~(.24)~~-- Depreciation and amortization 3,801,834 -- 3,801,834 Segment gross profit 4,636,649 114,960 4,751,609 Segment assets 85,105,817 296,779 85,402,596 Additions to property, plant and equipment 2,182,724 -- 2,182,724

(Continued) 22 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 9. QUARTERLY FINANCIAL DATA (UNAUDITED) Summary data relating to the results of operations for each quarter of the year ended June 30, 2001 follows (in thousands, except per share amounts): First Second Third Fourth Total Quarter Quarter Quarter Quarter Year Net sales and revenues $ 29,182 $ 36,079 $ 40,179 $ 45,019 $150,459 Gross profit 3,272 5,066 3,224 3,258 14,820 Net income 1,298 2,344 1,247 1,275 6,164 Earnings per share: Basic .08 .14 .08 .08 .38 Assuming dilution .08 .14 .08 .08 .37 The Company's first quarter gross profit is $95,000 less than reported in the respective Form 10-Q due to a reclassification of certain expenses from selling, general, and administrative to cost of goods sold. 10. STOCK-BASED COMPENSATION The Company has three stock-based compensation plans, which are described below. Grants to employees under those plans are accounted for following APB Opinion No. 25. Accordingly, no compensation cost has been recognized for options granted to employees in the financial statements, except under the employee stock purchase plan where compensation expense equals the excess of the fair market value of the shares over the exercise price on the grant date. Grants to non- employees under the plans are accounted for under SFAS 123. There were no options granted to non-employees (excluding non-employee directors) during the years ended June 30, 2001 and 2000. For the 50,000 options granted to a non-employee in the year ended June 30, 1999, $29,489 was recognized as compensation expense. Had compensation cost for all the stock-based compensation plans been determined based on the fair value grant date, consistent with the provisions of SFAS 123, the Company's net earnings and earnings per share would have been reduced to the pro forma amounts below: 2001 2000 1999 Net earnings (loss): As reported $ 6,163,713 $ 160,354 $ 534,881 Pro forma 5,607,787 (82,037) 404,382 Earnings per share: As reported $.38 $.01 $.03 Pro forma .34 -- .02 (Continued) 23 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 10. STOCK-BASED COMPENSATION (CONTINUED) Fixed Stock Option Plans - The Company has two fixed option plans under which it may grant options to key employees, officers, and directors to purchase common stock, with a maximum term of 10 years, at the market price on the date of grant. Options up to 1,200,000 shares may be granted under the 1990 plan and options up to 4,000,000 shares may be granted under the 1992 plan. These options typically have a six-month vesting period from the date of grant. The fair value under SFAS 123 of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for 2001, 2000, and 1999: dividend rate of 0% for all years; price volatility of 61.72%, 48.98%, and 45.74%; risk-free interest rates of 5.7%, 6.1%, and 4.6%; and expected lives of 5 years, 5 years, and 4 years, respectively. A summary of the status of the two fixed plans at June 30, 2001, 2000, and 1999, and changes during the years then ended is as follows:

2001 2000 1999 ~~1998~~ Weighted- Weighted- Weighted- ~~Number~~Average Average ~~Number~~ Average Number ~~Average~~ of Exercise Number of Exercise Number of Exercise Shares Price Shares Price Shares Price Outstanding and exercisable at beginning of year 2,123,318 $4.7563 1,918,318 $5.1069 1,795,918 $5.4443 Granted 1,~~818~~837,~~193~~500 $52.~~6612~~9331 ~~Granted~~ 230,000 1.5833 180,000 1.7870 ~~496~~Exercised (245,~~325~~600) 42.~~5781~~0391 ~~Exercised~~ (20,000) 1.6723 -- -- ~~(14,000) 1.5000~~ Expired or surrendered (5276,~~000~~325) 56.~~6300~~0741 (575,~~600~~000) 5.~~2500~~6300 (~~504~~57,600) 5.~~4832~~2500 Outstanding and exercisable at end of year 3,438,893 3.8703 2,123,318 4.7563 1,918,318 5.1069 ~~1,795,918 5.4443~~ Weighted average fair value per option of options granted during the year $ 1.8864 $ .7288 $ .7172

(Continued) 24 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 10. STOCK-BASED COMPENSATION (CONTINUED) The following table summarizes information about the outstanding options at June 30, 2001: Weighted- Weighted- Average Average Number Remaining Exercise Range of Exercise Prices Outstanding Life Price $ 1.13 to $ 2.94 1,653,500 8.9 $ 2.60 $ 3.00 to $ 4.81 871,600 7.1 $ 3.50 $ 5.13 to $ 5.63 553,793 2.7 $ 5.35 $ 8.34 360,000 3.5 $ 8.34 3,438,893 The Company's 1990 and 1992 Stock Option Plans were approved for modification at the Company's November 1994 and 2000 annual meetings of stockholders. The amendment approved in 1994 provide that when optionees exercise their options and remit the exercise payment to the Company, they may be granted a one-time option to purchase a like quantity of Common Shares as those options exercised (Reload Options). The Reload Options shall have an exercise price equal to the closing sales price of the Company's Common Stock on the day in which the original options were exercised, and shall have an exercise period that extends to the later of one year from the date of grant of the Reload Option or the expiration date of the originally exercised option. Options subject to reload included in total outstanding options at June 30, 2001 totaled 271,500 shares. These have a weighted average exercise price of $4.9346. The amendment approved in 2000 modified the 1992 Stock Option Plan by providing for scheduled grants to non- employee directors. Included in the 1,837,500 options granted during fiscal 2001 were 750,000 options granted to directors of the Company and 600,000 options to the Company's president, all of which are exercisable ratably over three years. The remainder were issued to key members of management and are also exercisable ratably over three years.0 Employee Stock Purchase Plan - In August, 1995 the Company adopted a compensatory Employee Stock Purchase Plan (ESPP), effective for a three-year period, to provide employees of the Company with an incentive to remain with the Company and an opportunity to participate in the growth of the Company. In January 2000, the Company's board of directors resolved to terminate the ESPP. During 2001, materially all grants under the ESPP had either been paid or stock was issued. (Continued) 25 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 11. MAJOR CUSTOMERS Sales to individual customers of 10% or more of net sales and revenues are as follows: Trade Accounts Receivable Sales During the Year Ended June 30, Balance at June 30, Customer 2001 2000 1999 2001 2000 A $ 16,510 $ 572,337 $14,127,657 $ -- $ -- B 2,639,389 7,623,696 16,434,233 442,180 757,366 C 1,063,406 13,691,936 9,984,620 48,152 234,528 D 9,704,846 7,256,603 9,196,843 10,584 1,063,815 E 13,646,334 12,496,316 -- 292,355 214,344 F 24,186,735 5,806,548 -- 1,577,166 1,945,337 $51,257,220 $47,447,436 $49,743,353 $2,370,437 $4,215,390 12. EARNINGS PER SHARE Basic earnings per share is computed by deducting from net earnings or adding to net losses the income not available to common stockholders and dividing the result by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by increasing the weighted average shares outstanding by the number of additional shares that would have been outstanding if all dilutive potential common shares had been issued, unless the effect is to reduce the loss or increase the income per common share outstanding. For the Year Ended 2001 Per Income Shares Share (numerator) (denominator) Amount Basic EPS: Income available to common stockholders $ 6,163,713 16,226,799 $ 0.38 Effect of Dilutive Securities Stock Options 238,624 Diluted EPS: Income available to common stockholders plus assumed conversions $ 6,163,713 16,465,423 $ 0.37 (Continued) 26 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 12. EARNINGS PER SHARE (CONTINUED) Options outstanding at June 30, 2001 to purchase 3,198,289 shares of common stock with a range of exercise prices from $3.19 to $8.34, were not included in the computation of diluted EPS because the options' exercise prices were greater than the average market price of the common shares. The options expire over a 10-year period. For the Year Ended 2000 Per Income Shares Share (numerator) (denominator) Amount Basic EPS: Income available to common stockholders $ 160,354 16,148,899 $ .01 Effect of Dilutive Securities Stock Options 63,531 Diluted EPS: Income available to common stockholders plus assumed conversions $ 160,354 16,212,430 $ .01 Options outstanding at June 30, 2000 to purchase 2,059,787 shares of common stock with a range of exercise prices from $2.19 to $8.34, were not included in the computation of diluted EPS because the options' exercise prices were greater than the average market price of the common shares. The options expire over a 10-year period. For the Year Ended 1999 Per Income Shares Share (numerator) (denominator) Amount Basic EPS: Income available to common stockholders $ 534,881 15,999,444 $ .03 Effect of Dilutive Securities Stock Options 15,540 Diluted EPS: Income available to common stockholders plus assumed conversions $ 534,881 16,014,984 $ .03 Options outstanding at June 30, 1999 to purchase 1,902,778 shares of common stock with a range of exercise prices from $1.63 to $8.34, were not included in the computation of diluted EPS because the options' exercise prices were greater than the average market price of the common shares. The options expire over a 10-year period. (Continued) 27 HIGH PLAINS CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) 13. ADDITIONAL INFORMATION FOR STATEMENTS OF CASH FLOWS 2001 2000 1999 Interest paid $1,830,639 $1,548,528 $1,862,810 Income taxes paid 165,000 30,000 -- The Company had the following non-cash transactions: 2001 2000 1999 Issued stock and recorded additional paid-in capital in connection with the liquidation of the ESPP plan $ 254,879 $ -- $ -- Transfer of inventory to property, plant, and equipment 262,327 -- -- Purchase of plant and equipment in exchange for debt -- 26,085 -- Increase in accrued compensation costs at implementation of ESPP -- -- 23,351 Decrease in deferred compensation from employee terminations 80,802 4,883 Acceptance of receivable in exchange for sale of property, plant, and equipment -- -- 1,000,000 14. 401(k) PLAN The Company has a 401(k) plan whereby all employees who are over the age of 19 and have 60 days of continuous service are eligible to participate. Employees may contribute from 1% to 12% of their pay. The Company matches 100% of the first 3% of employee salary deferrals and 50% of the next 2% of employee salary deferrals. The Company contributions to the Plan for the years ended June 30, 2001, 2000, and 1999, were $170,750, $187,169, and $58,600, respectively. 28 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 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, except that Daniel B. Allison failed to timely file one Form 4, representing one transaction, for the month of February, 2001. This Form 4 reported a sale of 500 shares of the Company's common stock, filing was due on March 10, 2001, and the form was filed on May 10, 2001. The balance of information relating to this item is hereby incorporated by reference from the "Directors and Executive Officers" section of the Company's 2001 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, 2001. Item 11 EXECUTIVE COMPENSATION The information relating to this item is hereby incorporated by reference from the "Executive Compensation" section of the Company's 2000 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, 2001. 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 2000 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, 2001. 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 2000 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, 2001. Part IV Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS FILED ON FORM 8-K (a) Documents Filed as a Part of This Report (1) Financial Statements Statements of Income - Years Ended June 30, 2001, 2000 and 1999 Statements of Stockholders' Equity - Years Ended June 30, 2001, 2000 and 1999 Balance Sheets - June 30, 2001 and 2000 Statements of Cash Flows - Years Ended June 30, 2001, 2000 and 1999 Notes to Financial Statements Independent Auditors' Report on Financial Statements (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 fourth quarter of the period covered by this report, these reports on Form 8-K have been filed. April 9, 2001 Company provided update on York, Nebraska facility expansion and stock buy-back program (Item 5 of Form 8-K). April 16, 2001 Company announced fiscal 2001 third quarter earnings (Item 5 of Form 8-K). June 1, 2001 Company announced the expiration of Portales, New Mexico sales contract (Item 5 of Form 8-K). June 13, 2001 Company announced EPA's decision to deny California's request for a waiver from compliance with the clean octane (oxygenate) requirement of the Clean Air Act. (Item 5 of Form 8-K). June 19, 2001 Company announced decision to de-classify (de-stagger) the terms of office served by its Board members (Item 5 of Form 8-K). July 12, 2001 Company announced initial agreements with four ethanol producers to market 60 million gallons of ethanol annually (Item 5 of Form 8-K). August 15, 2001 Company announced fiscal 2001 fourth quarter earnings (Item 5 of Form 8-K). September 6, 2001 Company provided update on York, Nebraska expansion and updated earnings guidance for the first quarter of fiscal 2002. (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. Such statements are identified as including terms such as "may", "will", "should", "expects", "anticipates", "estimates", "plans", or similar language. 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. The Company does not undertake to update any forward-looking statement which may be made from time to time by or on behalf of the Company. 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 28th day of September, 2000. HIGH PLAINS CORPORATION By: /s/Gary R. Smith President / Chief Executive Officer / Director 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 Donald D. Schroeder Director September 28,2001 H.T. Ritchie Director September 28,2001 Gilbert B. Eckhoff Director September 28,2001 David C. Nesbitt Director September 28,2001 Gary R. Smith Director September 28,2001 Vice President General Council Christopher G. Standlee Secretary September 28,2001 Vice President David E. Dykstra Sales and Marketing September 28,2001 Vice President Timothy W. Newkirk Operations September 28,2001 Index to Exhibits Page 1 of 4 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 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). 3-3 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). 3-4 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). 3-5 Amended Bylaws of the Company, dated January 15, 1981, (incorporated herein by reference to Exhibit 3-5 to the Company's Annual Report on Form 10-K, dated June 30, 1998). 3-6 Amendment to Article III, Section 1 and 2 of the Amended Bylaws of the Company, dated March 6, 1986, (incorporated herein by reference to Exhibit 3-6 to the Company's Annual Report on Form 10-K, dated June 30, 1998). 3-7 Amendment to Article V, of the Amended Bylaws of the Company, dated April 6, 1998, (incorporated herein by reference to Exhibit 3-7 to the Company's Annual Report on Form 10-K, dated June 30, 1998). 3-8 Amendment to Articles III and V, of the Amended Bylaws of the Company, dated September 30, 2000 (incorporated herein by reference to Exhibit 3-8 to the Company's Annual Report on Form 10-K, dated June 30, 2000. 3-9 Amendment to Article III, of the Amended Bylaws of the Company dated June 7, 2001, attached hereto as Exhibit 3-9. 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 Report 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). Page 2 of 4 10-3 High Plains Corporation 1992 Stock Option Plan (incorporated by reference from Exhibit 10-14 to the Company's Registration Statement on Form S-1, dated February 9, 1993). 10-4 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 Report 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 Report on Form 10-K dated June 30, 1995). 10-6 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 Report on Form 10-K dated June 30, 1995). 10-7 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). 10-8 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). 10-9 Stanley E. Larson Retirement and Consulting Agreement (incorporated herein by reference from Exhibit 10-14 to the Company's Annual Report on Form 10-K dated June 30, 1997). 10-10 Agreement between Centennial Trading, LLC, Michael Rowan and the Company to purchase feedstock for the Company, (incorporated herein by reference from Exhibit 10-14 to the Company's Annual Report on Form 10-K dated June 30, 1997). 10-11 Agreement between the Company and EPCO Carbon Dioxide Products, Inc., for the sale of raw CO2 for an initial period of five years, dated November 6, 1997, (incorporated herein by reference to Exhibit 10-11 to the Company's Annual Report on Form 10-K, dated June 30, 1998). 10-12 Employment agreement dated March 31, 1998, between the Company and Gary R. Smith, for an initial period of three years, expiring March 30, 2001, (incorporated herein by reference to Exhibit 10-12 to the Company's Annual Report on Form 10-K, dated June 30, 1998). 10-13 Amendment to employment agreement between the Company and Raymond G. Friend, dated June 30, 1998, (incorporated herein by reference to Exhibit 10-13 to the Company's Annual Report on Form 10-K, dated June 30, 1998). Page 3 of 4 10-14 Lease Agreement between the Company and EPCO Carbon Dioxide Products, Inc. for the lease of land relating to CO2 Agreement listed under 10-10, (incorporated herein by reference to Exhibit 10-14 to the Company's Annual Report on Form 10-K, dated June 30, 1998). 10-15 Lease dated April 17, 1998 between the Company and Center Towers L.C. for a five year lease of office space, (incorporated herein by reference to Exhibit 10-15 to the Company's Annual Report on Form 10-K, dated June 30, 1998). 10-16 Employment agreement dated March 12, 1999, between the Company and Roger Hill, for an initial period of three years, expiring April 30, 2002, (incorporated herein by reference to Exhibit 10-16 to the Company's Annual Report on Form 10-K, dated June 30, 1999). 10-17 Agreement between the Company and Kolmar Petrochemicals Americas, Inc., for the sale of fuel grade ethanol for an initial period of one year, dated March 2, 1999, (incorporated herein by reference to Exhibit 10-17 to the Company's Annual Report on Form 10-K, dated June 30, 1999). 10-18 Amendment to agreement between the Company and Kolmar Petrochemicals Americas, Inc., for the sale of fuel grade ethanol for an initial period of one year, dated March 10, 1999, (incorporated herein by reference to Exhibit 10-18 to the Company's Annual Report on Form 10-K, dated June 30, 1999). 10-19 Agreement between the Company and EPCO Carbon Dioxide Products, Inc., for the sale of raw CO2 for an initial period of fifteen years and dated March 30, 1999, (incorporated herein by reference to Exhibit 10-19 to the Company's Annual Report on Form 10-K,dated June 30, 1999). 10-20 Agreement between the Company and EPCO Carbon Dioxide Products, Inc., for the sale of CO2 Liquefaction Plant assets dated March 30, 1999, (incorporated herein by reference to Exhibit 10-20 to the Company's Annual Report on Form 10-K, dated June 30, 1999). 10-21 Agreement between the Company and EPCO Carbon Dioxide Products, Inc., for lease of parcel located at the Company's Colwich, Kansas plant for an initial period of fifteen years and dated March 30, 1999, (incorporated herein by reference to Exhibit 10-21 to the Company's Annual Report on Form 10-K, dated June 30, 1999). 10-22 Agreement between the Company and ICM, Inc., for sale of Dry Distiller's Grain and Wet Distiller's Grain from Colwich, Kansas and York, Nebraska plants for an initial period of two years and dated March 29, 1999, (incorporated herein by reference to Exhibit 10-22 to the Company's Annual Report on Form 10-K, dated June 30, 1999). Page 4 of 4 10-23 Agreement between the Company and Black Hole Enterprises, Ltd, an affiliated entity, for lease of Aztec Airplane for an initial period of three years and dated October 20, 1998, (incorporated herein by reference to Exhibit 10-23 to the Company's Annual Report on Form 10-K, dated June 30, 1999). 10-24 Agreement between the Company and Black Hole Enterprises, Ltd, an affiliated entity, terminating the lease of the Aztec Airplane, as of November 4, 1999, (incorporated herein by reference to Exhibit 10-24 to the Company's Annual Report on Form 10-K, dated June 30, 2000). 10-25 Agreement between the Company and Natural Chem Industries, LLC for the sale of the Company's Portales, New Mexico facility dated May 10, 2000, (incorporated herein by reference to Exhibit 10-25 to the Company's Annual Report on Form 10-K, dated June 30, 2000). 10-26 Lease dated April 7, 2000 between the Company and Center Towers L.C. for a 37 month lease of office space, (incorporated herein by reference to Exhibit 10-26 to the Company's Annual Report on Form 10-K, dated June 30, 2000). 10-27 Employment agreement dated April 1, 2001, between the Company and Gary R. Smith, for an initial period of thirty months, expiring September 30, 2003, attached hereto as exhibit 10-27. 10-28 Employment agreement dated July 1, 2001, between the Company and Christopher G. Standlee, for an initial period of eighteen months, expiring December 31, 2002, attached hereto as exhibit 10-28. 10-29 Employment agreement dated July 1, 2001, between the Company and Timothy W. Newkirk, for an initial period of eighteen months, expiring December 31, 2002, attached hereto as exhibit 10-29. 10-30 Employment agreement dated July 1, 2001, between the Company and David E. Dykstra, for an initial period of eighteen months, expiring December 31, 2002, attached hereto as exhibit 10-30. 10-31 Employment agreement dated July 1, 2001, between the Company and Michael S. Shook, for an initial period of eighteen months, expiring December 31, 2002, attached hereto as exhibit 10-31. 10-32 Employment agreement dated July 1, 2001, between the Company and Christopher S. Glaves, for an initial period of eighteen months, expiring December 31, 2002, attached hereto as exhibit 10-32. 10-33 Agreement between the Company and ICM, Inc., for sale of Dry Distiller's Grain and Wet Distiller's Grain from Colwich, Kansas and York, Nebraska plants through May 1, 2002, attached hereto as exhibit 10-33. 11-1 Statement on Computation of Per Share Earnings (Please see note 12 in the Financial Statements included herein). 23-1 Consent of Allen, Gibbs and Houlik, L.C., independent certified public accountants. 27-1 Financial Data Schedule. Exhibit 3-8 HIGH PLAINS CORPORATION AMENDED BYLAWS As of June 30, 2001 ARTICLE I OFFICES Section 1. The principal office shall be in the City of Wichita, Kansas and the name of the resident agent in charge thereof is Christopher G. Standlee. Section 2. The corporation may also have offices at such other places both within and without the State of Kansas as the Board of Directors may from time to time determine, or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for any purpose may be held at such time and place, within or without the State of Kansas, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. An annual meeting of stockholders commencing with the year 1981, shall be held on the 2nd Tuesday of November (or on such other date as the Board of Directors may determine) of each year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10 o'clock a.m., at which time the stockholders shall elect by a plurality vote a Board of Directors and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting shall be served upon or mailed to each stockholder entitled to vote thereat at such address as appears on the books of the corporation at least seven (7) days prior to the meeting. Section 4. At least ten (10) days before every election of directors, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order, with the residence of each and the number of voting shares held by each, shall be prepared by the secretary. Such list shall be open at the place or in the city where the election is to be held for said ten (10) days, to the examination of any stockholder, and shall be produced and kept at the time and place of election during the whole time thereof, and subject to the inspection of any stockholder who may be present. Section 5. Special meetings of the stockholders for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request, in writing, of a majority of the Board of Directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting of stockholders, stating the time and place and object thereof, shall be served upon or mailed to each stockholder entitled to vote thereat at such address as appears on the books of the corporation, at least seven (7) days before such meeting. Section 7. Business transacted at all special meetings shall be confined to the objects stated in the call. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute, by the certificate of incorporation or by these Bylaws. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the statutes or of the certificate of incorporation or of these Bylaws, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. At any meeting of the stockholders, every stockholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three (3) years prior to said meeting, unless said instrument provides for a longer period. Each stockholder shall have one vote for each share of stock having voting power, registered in his name on the books of the corporation. Except where the transfer books of the corporation shall have been closed or a date shall have been fixed as a record date for the determination of its stockholders entitled to vote, no share of stock shall be voted on at any election of directors which shall have been transferred on the books of the corporation within twenty (20) days next preceding such election of directors. Section 11. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the statutes or of the certificate of incorporation or of these Bylaws, the meeting and vote of stockholders may be dispensed with, if all the stockholders who would have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be set from time to time as determined by the Board of Directors. Beginning at the annual meeting of stockholders and election of directors next following the close of fiscal 2001 and continuing thereafter, there shall be only one class of directors elected for a term to expire at the next annual meeting of stockholders following their election. Provided however, that directors previously elected to longer terms may continue to serve until the expiration of the term to which they were elected. The directors shall be elected at the appropriate annual meetings of the stockholders except as provided in Section Two of this Article, and each director elected shall hold office until his successor shall be elected and shall qualify. Directors need not be stockholders. At least two-thirds of the members of the Board of Directors (the "Board") shall be independent. For purposes of any action of the Board, at least one-half of the directors present and eligible to vote must be independent. An independent director means a person who: a. has never been an employee of the Company or any of its subsidiaries. b. provides no services to the Company or to the Chief Executive Officer or senior management of the Company as an adviser, consultant or otherwise. c. is not employed by an entity which provides services to the Company or to the Chief Executive Officer or senior management of the Company as an adviser, consultant or otherwise. d. is not affiliated with a significant customer or supplier of the Company ("significant" means more than 1% of annual sales). e. has not had, during the past two years, any interest in any significant transaction, or any business or financial relationship, with the Company or an affiliate of the Company (other than service as a director) for which the Company has been required to make disclosure under Regulation S-K of the Securities and Exchange Commission. f. is not a relative of an executive officer or director of the Company. g. receives no compensation from the Company other than director's fees. h. does not personally receive and is not an employee, director, or trustee of a foundation, university, or other institution that receives grants or endowments from the Company that are material to the Company or to either the recipient and/or the foundation, university or institution. i. is not employed by an entity of which (i) an executive officer of the Company serves as a director or trustee, or (ii) a director of the Company serves in a senior executive capacity. Section 2. If any vacancies occur in the Board of Directors caused by death, resignation, retirement, disqualification or removal from office of any directors or otherwise, or any new directorship is created by any increase in the authorized number of directors, a majority of the directors then in office, though less than a quorum, may choose a successor or successors, or fill the newly created directorship and the directors so chosen shall hold office until the next annual election of directors and until their successors shall be duly elected and qualified, unless sooner displaced. Section 3. The property and business of the corporation shall be managed by its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not, by statute or by the certificate of incorporation or by these Bylaws, required to be exercised or done by the stockholders. MEETINGS OF THE BOARD Section 4. The directors of the corporation may hold their meetings, both regular and special, either within or without the state of Kansas. Section 5. The first meeting of each newly elected Board shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such place and time as shall be fixed by the consent in writing of all the directors. Section 6. Regular meetings of the Board may be held without notice at such time and place as shall from time to time be determined by the Board. Section 7. Special meetings of the Board may be called by the president on seven (7) days' notice of each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two (2) directors. Special meetings may be held without notice if all directors consent in writing to any such meeting, and the place and time for such meeting shall be fixed by the written consent to the particular meeting. Section 8. At all meetings of the Board, the presence of a majority of the directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors except as may be otherwise specifically provided by statute or by the certificate of incorporation or by these Bylaws. If a quorum shall not be present at any meeting of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. The directors shall choose one of their number to serve as Chairman of the Board of Directors. If at any time the Chairman of the Board shall be an executive officer of the Company, or for any other reason shall not be an independent director, a non-executive Lead Director shall be selected by the independent directors. The Lead Director shall be one of the independent directors, shall be a member of the Audit Committee and of the Executive Committee, if there is such a committee, and shall be responsible for coordinating the activities of the independent directors. He shall assist the Board in assuring compliance with these corporate governance procedures and policies, and shall coordinate, develop the agenda for, and moderate executive sessions of the Board's independent directors. Such executive sessions shall be held immediately before or following each regular meeting of the Board, and may be held at other times as designated by the Lead Director. The Lead Director shall approve, in consultation with the other Independent Directors, the retention of consultants who report directly to the Board. If at any time the Chairman of the Board is one of the independent directors, then he or she shall perform the duties of the Lead Director. COMMITTEES OF DIRECTORS Section 9. The Board of Directors, by resolution passed by a majority of the whole Board, may designate one or more committees with each committee to consist of two or more of the directors of the corporation which, to the extent provided in side resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. In addition to such other committees as may be established by the Board from time to time, the following committees shall be established and maintained by the Board: a. There shall be an Audit Committee of the Board, composed entirely of independent directors, which shall oversee the Company's financial reporting process and internal controls, review compliance with laws and accounting standards, recommend the appointment of public accountants, and provide a direct channel of communication to the Board for public accountants, internal auditors and finance officers. b. There shall be a Nominating Committee of the Board, composed entirely of independent directors, which shall be responsible for the evaluation and nomination of Board members. c. There shall be a Compensation Committee of the Board, composed entirely of independent directors, which shall be responsible for (i) ensuring that senior management will be accountable to the Board through the effective application of compensation policies, and (ii) monitoring the effectiveness of both senior management and the Board (including committees thereof). The Compensation Committee shall establish compensation policies applicable to the Company's executive officers. A fair summary of such policies and the relationship of corporate performance to executive compensation, including the factors and criteria upon which the Chief Executive Officer's compensation was based, shall be disclosed to shareholders in the Company's proxy statement for the annual meeting. d. There shall be a Transaction Committee of the Board, composed entirely of independent directors, which shall be responsible for reviewing all related-party transactions involving the Company, and considering and making recommendations to the full Board with respect to all proposals involving (i) a change in control, or (ii) the purchase or sale of assets constituting more than 10% of the Company's total assets. Additionally, the Transaction Committee shall be responsible for reviewing all transactions or proposed transactions that trigger the Company's Shareholder Rights Plan, if any. COMPENSATION OF DIRECTORS Section 10. Directors, as such, shall not receive any stated salary for their services but by resolution of the Board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board; provided that nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. AMENDMENT OF ARTICLE III Section 11. The foregoing provisions of this Article III are adopted as part of the Bylaws of the Company and cannot be amended or repealed without either (a) approval by a majority of the shareholders of the Company, or (b) approval by a two-thirds majority of all the existing directors of the Company, specifically including approval by at least two-thirds of the independent directors. Any inconsistent provisions of these Bylaws are hereby modified to be consistent with the provisions of this Article III. The foregoing provisions, insofar as they establish eligibility to serve as a director or as a committee member, shall not have the effect of removing any director or committee member from office, but shall be given effect at the next election of directors and the next selection of committee members, as the case may be. The foregoing provisions shall not be construed to limit or restrict the effective exercise of statutory cumulative voting rights by any shareholder, but the Nominating Committee shall not nominate candidates for election to the Board except as may be consistent with such provisions, and no corporate funds may be expended for the solicitation of proxies which are inconsistent with the foregoing provisions. ARTICLE IV NOTICES Section 1. Whenever under the provisions of the statutes or of the certificate of incorporation or of these Bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice but such notice may be given in writing, by mail, addressed to such director or stockholder at such address as appears on the books of the corporation and such notice shall be deemed to be given at the time when the same shall be thus mailed. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation, or by these Bylaws, a waiver thereof in writing signed by the person or persons entitled to said notice whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the directors and, at the discretion of the directors, such officers may include a chief executive officer, president, executive vice president, vice president, secretary and treasurer. The Board of Directors may also choose additional vice presidents and one or more assistant secretaries and assistant treasurers. Two or more offices may be held by the same person, except that the offices of president and secretary shall not be held by the same person. Section 2. The Board of Directors, at its first meeting after each annual meeting of stockholders shall choose the officers described in Section 1 above, each of whom may, but need not be a member of the Board. Section 3. The Board may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify in their stead. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the whole Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy shall be filled by the Board of Directors. CHIEF EXECUTIVE OFFICER Section 6. The chief executive officer shall preside at all meetings of the stockholders, shall be ex officio a member of all standing committees, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board are carried into effect. Section 7. The chief executive officer shall execute deeds and conveyances of real or personal property, assignments and releases of oil and gas leases, bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. THE PRESIDENT Section 8. The president shall, in the absence or disability of the chief executive officer, perform the duties and exercise the powers of the chief executive officer and shall have such other duties, powers and responsibilities as shall be directed from time to time by the Board of Directors and by the chief executive officer of the corporation. Section 9. The president may, at the discretion of the Board of Directors, also serve as the chief executive officer of the corporation. VICE PRESIDENTS Section 10. The vice presidents in the order of their seniority shall, in the absence or disability of the chief executive officer and the president, perform the duties and exercise the powers of the chief executive officer and the president, and shall perform such other duties as the Board of Directors shall prescribe. SECRETARY AND ASSISTANT SECRETARIES Section 11. The secretary shall attend all sessions of the Board and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors and shall perform such other duties as may be pre- scribed by the Board of Directors or president under whose supervision he shall be. He shall keep in safe custody the seal of the corporation and when authorized by the Board, affix the same to any instrument requiring it and when so affixed, it shall be attested by his signature or by the signature of the Treasurer or an assistant secretary. Section 12. The assistant secretaries in order of their seniority shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties as the Board of Directors shall prescribe. TREASURER AND ASSISTANT TREASURERS Section 13. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. Section 14. He shall disburse the funds of the corporation as may be ordered by the Board, taking proper vouchers for such disbursements and shall render to the president and directors at the regular meetings of the Board, or whenever they may require it, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 15. If required by the Board of Directors, he shall give the corporation a bond (which shall be renewed every six (6) years) in such sum and with such surety or sureties as shall be satisfactory to the Board for the restoration to the corporation, in case of his death, resignation, retirement or removal from office of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 16. The assistant treasurers in the order of their seniority shall, in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer and shall perform such other duties as the Board of Directors shall prescribe. ARTICLE VI CERTIFICATES OF STOCK Section 1. The certificates of stock of the corporation shall be numbered and shall be entered in the books of the corporation as they are issued. They shall exhibit the holder's name and number of shares and shall be signed by the president or vice president and the treasurer or an assistant treasurer or the secretary or an assistant secretary. If any stock certificate is signed (i) by a transfer agent or an assistant transfer agent, or (ii) by a transfer clerk acting on behalf of the corporation and a registrar, the signature of any such officer may be facsimile. LOST CERTIFICATES Section 2. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. TRANSFERS OF STOCK Section 3. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. CLOSING OF TRANSFER BOOKS Section 4. The Board of Directors may close the stock transfer books of the corporation for a period not exceeding fifty (50) days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect or for a period of not exceeding fifty (50) days in connection with obtaining the consent of stockholders for any purpose. In lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date not exceeding fifty (50) days preceding the date of any meeting of stockholders or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent, as a record date for the determination of the stockholders entitled to notice of and to vote at any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend or to any such allotment of rights or to exercise the rights in respect of any such change, conversion or exchange of capital stock or to give consent and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of and to vote at such meeting and any adjournment thereof, or to receive payment of such dividend or to receive such allotment of rights, or to exercise such rights or to give consent as the came may be, notwithstanding any transfer of any stock on the books of the corporation after such record date fixed as aforesaid. REGISTERED STOCKHOLDERS Section 5. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice, except an otherwise provided by the laws of Kansas. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time in their absolute discretion think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The Board of Directors shall present at each annual meeting and when called for by vote of the stockholders at any special meeting of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the word "Kansas." Said seal may be used by causing it or a facsimile thereon to be impressed or affixed or reproduced cc otherwise. ARTICLE VIII AMENDMENTS Section 1. These Bylaws may be altered or repealed at any regular meeting of the stockholders or at any special meeting of the stockholders at which a quorum is present or represented, provided notice of the proposed alteration or repeal be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock entitled to vote at such meeting and present or represented thereat or by the affirmative vote of a majority of the stock entitled to vote at such meeting and present or represented thereat, or by the affirmative vote of a majority of the Board of Directors at any regular meeting of the Board or at any special meeting of the Board if notice of the proposed alteration or repeal be contained in the notice of such special meeting; provided, however, that no change of the time or place of the meeting for the election of directors shall be made within sixty (60) days next before the day on which such meeting is to be held, and that in case of any change of such time or place, notice thereof shall be given to each stockholder in person or by letter mailed to his last known address at least twenty (20) days before the meeting is held. The above constitutes the Bylaws adopted by the Board of Directors at their meeting held on the 15th day of January 1981, as subsequently amended by the Board of Directors at meetings held on March 6, 1986; April 6, 1998; July 18, 2000, and June 7, 2001. By: /s/ Christopher G. Standlee Christopher G. Standlee, Secretary Exhibit 3-9 HIGH PLAINS CORPORATION AMENDED BYLAWS As of June 30, 2001 ARTICLE I OFFICES Section 1. The principal office shall be in the City of Wichita, Kansas and the name of the resident agent in charge thereof is Christopher G. Standlee. Section 2. The corporation may also have offices at such other places both within and without the State of Kansas as the Board of Directors may from time to time determine, or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for any purpose may be held at such time and place, within or without the State of Kansas, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. An annual meeting of stockholders commencing with the year 1981, shall be held on the 2nd Tuesday of November (or on such other date as the Board of Directors may determine) of each year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10 o'clock a.m., at which time the stockholders shall elect by a plurality vote a Board of Directors and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting shall be served upon or mailed to each stockholder entitled to vote thereat at such address as appears on the books of the corporation at least seven (7) days prior to the meeting. Section 4. At least ten (10) days before every election of directors, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order, with the residence of each and the number of voting shares held by each, shall be prepared by the secretary. Such list shall be open at the place or in the city where the election is to be held for said ten (10) days, to the examination of any stockholder, and shall be produced and kept at the time and place of election during the whole time thereof, and subject to the inspection of any stockholder who may be present. Section 5. Special meetings of the stockholders for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request, in writing, of a majority of the Board of Directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting of stockholders, stating the time and place and object thereof, shall be served upon or mailed to each stockholder entitled to vote thereat at such address as appears on the books of the corporation, at least seven (7) days before such meeting. Section 7. Business transacted at all special meetings shall be confined to the objects stated in the call. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute, by the certificate of incorporation or by these Bylaws. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the statutes or of the certificate of incorporation or of these Bylaws, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. At any meeting of the stockholders, every stockholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three (3) years prior to said meeting, unless said instrument provides for a longer period. Each stockholder shall have one vote for each share of stock having voting power, registered in his name on the books of the corporation. Except where the transfer books of the corporation shall have been closed or a date shall have been fixed as a record date for the determination of its stockholders entitled to vote, no share of stock shall be voted on at any election of directors which shall have been transferred on the books of the corporation within twenty (20) days next preceding such election of directors. Section 11. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the statutes or of the certificate of incorporation or of these Bylaws, the meeting and vote of stockholders may be dispensed with, if all the stockholders who would have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be set from time to time as determined by the Board of Directors. Beginning at the annual meeting of stockholders and election of directors next following the close of fiscal 2001 and continuing thereafter, there shall be only one class of directors elected for a term to expire at the next annual meeting of stockholders following their election. Provided however, that directors previously elected to longer terms may continue to serve until the expiration of the term to which they were elected. The directors shall be elected at the appropriate annual meetings of the stockholders except as provided in Section Two of this Article, and each director elected shall hold office until his successor shall be elected and shall qualify. Directors need not be stockholders. At least two-thirds of the members of the Board of Directors (the "Board") shall be independent. For purposes of any action of the Board, at least one-half of the directors present and eligible to vote must be independent. An independent director means a person who: a. has never been an employee of the Company or any of its subsidiaries. b. provides no services to the Company or to the Chief Executive Officer or senior management of the Company as an adviser, consultant or otherwise. c. is not employed by an entity which provides services to the Company or to the Chief Executive Officer or senior management of the Company as an adviser, consultant or otherwise. d. is not affiliated with a significant customer or supplier of the Company ("significant" means more than 1% of annual sales). e. has not had, during the past two years, any interest in any significant transaction, or any business or financial relationship, with the Company or an affiliate of the Company (other than service as a director) for which the Company has been required to make disclosure under Regulation S-K of the Securities and Exchange Commission. f. is not a relative of an executive officer or director of the Company. g. receives no compensation from the Company other than director's fees. h. does not personally receive and is not an employee, director, or trustee of a foundation, university, or other institution that receives grants or endowments from the Company that are material to the Company or to either the recipient and/or the foundation, university or institution. i. is not employed by an entity of which (i) an executive officer of the Company serves as a director or trustee, or (ii) a director of the Company serves in a senior executive capacity. Section 2. If any vacancies occur in the Board of Directors caused by death, resignation, retirement, disqualification or removal from office of any directors or otherwise, or any new directorship is created by any increase in the authorized number of directors, a majority of the directors then in office, though less than a quorum, may choose a successor or successors, or fill the newly created directorship and the directors so chosen shall hold office until the next annual election of directors and until their successors shall be duly elected and qualified, unless sooner displaced. Section 3. The property and business of the corporation shall be managed by its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not, by statute or by the certificate of incorporation or by these Bylaws, required to be exercised or done by the stockholders. MEETINGS OF THE BOARD Section 4. The directors of the corporation may hold their meetings, both regular and special, either within or without the state of Kansas. Section 5. The first meeting of each newly elected Board shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such place and time as shall be fixed by the consent in writing of all the directors. Section 6. Regular meetings of the Board may be held without notice at such time and place as shall from time to time be determined by the Board. Section 7. Special meetings of the Board may be called by the president on seven (7) days' notice of each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two (2) directors. Special meetings may be held without notice if all directors consent in writing to any such meeting, and the place and time for such meeting shall be fixed by the written consent to the particular meeting. Section 8. At all meetings of the Board, the presence of a majority of the directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors except as may be otherwise specifically provided by statute or by the certificate of incorporation or by these Bylaws. If a quorum shall not be present at any meeting of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. The directors shall choose one of their number to serve as Chairman of the Board of Directors. If at any time the Chairman of the Board shall be an executive officer of the Company, or for any other reason shall not be an independent director, a non-executive Lead Director shall be selected by the independent directors. The Lead Director shall be one of the independent directors, shall be a member of the Audit Committee and of the Executive Committee, if there is such a committee, and shall be responsible for coordinating the activities of the independent directors. He shall assist the Board in assuring compliance with these corporate governance procedures and policies, and shall coordinate, develop the agenda for, and moderate executive sessions of the Board's independent directors. Such executive sessions shall be held immediately before or following each regular meeting of the Board, and may be held at other times as designated by the Lead Director. The Lead Director shall approve, in consultation with the other Independent Directors, the retention of consultants who report directly to the Board. If at any time the Chairman of the Board is one of the independent directors, then he or she shall perform the duties of the Lead Director. COMMITTEES OF DIRECTORS Section 9. The Board of Directors, by resolution passed by a majority of the whole Board, may designate one or more committees with each committee to consist of two or more of the directors of the corporation which, to the extent provided in side resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. In addition to such other committees as may be established by the Board from time to time, the following committees shall be established and maintained by the Board: a. There shall be an Audit Committee of the Board, composed entirely of independent directors, which shall oversee the Company's financial reporting process and internal controls, review compliance with laws and accounting standards, recommend the appointment of public accountants, and provide a direct channel of communication to the Board for public accountants, internal auditors and finance officers. b. There shall be a Nominating Committee of the Board, composed entirely of independent directors, which shall be responsible for the evaluation and nomination of Board members. c. There shall be a Compensation Committee of the Board, composed entirely of independent directors, which shall be responsible for (i) ensuring that senior management will be accountable to the Board through the effective application of compensation policies, and (ii) monitoring the effectiveness of both senior management and the Board (including committees thereof). The Compensation Committee shall establish compensation policies applicable to the Company's executive officers. A fair summary of such policies and the relationship of corporate performance to executive compensation, including the factors and criteria upon which the Chief Executive Officer's compensation was based, shall be disclosed to shareholders in the Company's proxy statement for the annual meeting. d. There shall be a Transaction Committee of the Board, composed entirely of independent directors, which shall be responsible for reviewing all related-party transactions involving the Company, and considering and making recommendations to the full Board with respect to all proposals involving (i) a change in control, or (ii) the purchase or sale of assets constituting more than 10% of the Company's total assets. Additionally, the Transaction Committee shall be responsible for reviewing all transactions or proposed transactions that trigger the Company's Shareholder Rights Plan, if any. COMPENSATION OF DIRECTORS Section 10. Directors, as such, shall not receive any stated salary for their services but by resolution of the Board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board; provided that nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. AMENDMENT OF ARTICLE III Section 11. The foregoing provisions of this Article III are adopted as part of the Bylaws of the Company and cannot be amended or repealed without either (a) approval by a majority of the shareholders of the Company, or (b) approval by a two-thirds majority of all the existing directors of the Company, specifically including approval by at least two-thirds of the independent directors. Any inconsistent provisions of these Bylaws are hereby modified to be consistent with the provisions of this Article III. The foregoing provisions, insofar as they establish eligibility to serve as a director or as a committee member, shall not have the effect of removing any director or committee member from office, but shall be given effect at the next election of directors and the next selection of committee members, as the case may be. The foregoing provisions shall not be construed to limit or restrict the effective exercise of statutory cumulative voting rights by any shareholder, but the Nominating Committee shall not nominate candidates for election to the Board except as may be consistent with such provisions, and no corporate funds may be expended for the solicitation of proxies which are inconsistent with the foregoing provisions. ARTICLE IV NOTICES Section 1. Whenever under the provisions of the statutes or of the certificate of incorporation or of these Bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice but such notice may be given in writing, by mail, addressed to such director or stockholder at such address as appears on the books of the corporation and such notice shall be deemed to be given at the time when the same shall be thus mailed. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation, or by these Bylaws, a waiver thereof in writing signed by the person or persons entitled to said notice whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the directors and, at the discretion of the directors, such officers may include a chief executive officer, president, executive vice president, vice president, secretary and treasurer. The Board of Directors may also choose additional vice presidents and one or more assistant secretaries and assistant treasurers. Two or more offices may be held by the same person, except that the offices of president and secretary shall not be held by the same person. Section 2. The Board of Directors, at its first meeting after each annual meeting of stockholders shall choose the officers described in Section 1 above, each of whom may, but need not be a member of the Board. Section 3. The Board may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify in their stead. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the whole Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy shall be filled by the Board of Directors. CHIEF EXECUTIVE OFFICER Section 6. The chief executive officer shall preside at all meetings of the stockholders, shall be ex officio a member of all standing committees, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board are carried into effect. Section 7. The chief executive officer shall execute deeds and conveyances of real or personal property, assignments and releases of oil and gas leases, bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. THE PRESIDENT Section 8. The president shall, in the absence or disability of the chief executive officer, perform the duties and exercise the powers of the chief executive officer and shall have such other duties, powers and responsibilities as shall be directed from time to time by the Board of Directors and by the chief executive officer of the corporation. Section 9. The president may, at the discretion of the Board of Directors, also serve as the chief executive officer of the corporation. VICE PRESIDENTS Section 10. The vice presidents in the order of their seniority shall, in the absence or disability of the chief executive officer and the president, perform the duties and exercise the powers of the chief executive officer and the president, and shall perform such other duties as the Board of Directors shall prescribe. SECRETARY AND ASSISTANT SECRETARIES Section 11. The secretary shall attend all sessions of the Board and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors and shall perform such other duties as may be pre- scribed by the Board of Directors or president under whose supervision he shall be. He shall keep in safe custody the seal of the corporation and when authorized by the Board, affix the same to any instrument requiring it and when so affixed, it shall be attested by his signature or by the signature of the Treasurer or an assistant secretary. Section 12. The assistant secretaries in order of their seniority shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties as the Board of Directors shall prescribe. TREASURER AND ASSISTANT TREASURERS Section 13. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. Section 14. He shall disburse the funds of the corporation as may be ordered by the Board, taking proper vouchers for such disbursements and shall render to the president and directors at the regular meetings of the Board, or whenever they may require it, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 15. If required by the Board of Directors, he shall give the corporation a bond (which shall be renewed every six (6) years) in such sum and with such surety or sureties as shall be satisfactory to the Board for the restoration to the corporation, in case of his death, resignation, retirement or removal from office of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 16. The assistant treasurers in the order of their seniority shall, in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer and shall perform such other duties as the Board of Directors shall prescribe. ARTICLE VI CERTIFICATES OF STOCK Section 1. The certificates of stock of the corporation shall be numbered and shall be entered in the books of the corporation as they are issued. They shall exhibit the holder's name and number of shares and shall be signed by the president or vice president and the treasurer or an assistant treasurer or the secretary or an assistant secretary. If any stock certificate is signed (i) by a transfer agent or an assistant transfer agent, or (ii) by a transfer clerk acting on behalf of the corporation and a registrar, the signature of any such officer may be facsimile. LOST CERTIFICATES Section 2. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. TRANSFERS OF STOCK Section 3. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. CLOSING OF TRANSFER BOOKS Section 4. The Board of Directors may close the stock transfer books of the corporation for a period not exceeding fifty (50) days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect or for a period of not exceeding fifty (50) days in connection with obtaining the consent of stockholders for any purpose. In lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date not exceeding fifty (50) days preceding the date of any meeting of stockholders or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent, as a record date for the determination of the stockholders entitled to notice of and to vote at any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend or to any such allotment of rights or to exercise the rights in respect of any such change, conversion or exchange of capital stock or to give consent and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of and to vote at such meeting and any adjournment thereof, or to receive payment of such dividend or to receive such allotment of rights, or to exercise such rights or to give consent as the came may be, notwithstanding any transfer of any stock on the books of the corporation after such record date fixed as aforesaid. REGISTERED STOCKHOLDERS Section 5. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice, except an otherwise provided by the laws of Kansas. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time in their absolute discretion think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The Board of Directors shall present at each annual meeting and when called for by vote of the stockholders at any special meeting of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the word "Kansas." Said seal may be used by causing it or a facsimile thereon to be impressed or affixed or reproduced cc otherwise. ARTICLE VIII AMENDMENTS Section 1. These Bylaws may be altered or repealed at any regular meeting of the stockholders or at any special meeting of the stockholders at which a quorum is present or represented, provided notice of the proposed alteration or repeal be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock entitled to vote at such meeting and present or represented thereat or by the affirmative vote of a majority of the stock entitled to vote at such meeting and present or represented thereat, or by the affirmative vote of a majority of the Board of Directors at any regular meeting of the Board or at any special meeting of the Board if notice of the proposed alteration or repeal be contained in the notice of such special meeting; provided, however, that no change of the time or place of the meeting for the election of directors shall be made within sixty (60) days next before the day on which such meeting is to be held, and that in case of any change of such time or place, notice thereof shall be given to each stockholder in person or by letter mailed to his last known address at least twenty (20) days before the meeting is held. The above constitutes the Bylaws adopted by the Board of Directors at their meeting held on the 15th day of January 1981, as subsequently amended by the Board of Directors at meetings held on March 6, 1986; April 6, 1998; July 18, 2000, and June 7, 2001. By: /s/ Christopher G. Standlee Christopher G. Standlee, Secretary Exhibit 10-27 EMPLOYMENT AGREEMENT THIS AGREEMENT, made and entered into effective as of the 1st day of April, 2001, by and between High Plains Corporation, a Kansas corporation (the "Company"), and Gary R. Smith ("Employee"). WITNESSETH: WHEREAS, the Company wishes to assure itself of Employee's full-time employment during the term specified herein; and WHEREAS, Employee is prepared to enter into this Agreement with the Company and to give the 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 Employee, and 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 the 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 matters 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 30-month period commencing this date and ending on September 30, 2003 ("Employment Period"). 3. Compensation. As compensation for all of Employee's services under this Agreement, the Company agrees to pay Employee, and Employee agrees to accept: (a) Base Salary. A base salary of $250,000 per annum ($20,833.33 per month) during the Employment Period. 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, Employee shall be paid (i) a bonus for the fiscal year ending June 30, 2002, equal to 20% of his Base Salary upon the successful completion of his work plan in the form previously approved by the Board of Directors, (ii) a further bonus for the fiscal year ending June 30, 2002, of up to 80% of his Base Salary, in such amount as may be determined by the Board of Directors, in its discretion, based upon the performance of the Company's stock and the return on equity to the shareholders during such fiscal year, (iii) a bonus for the fiscal year ending June 30, 2003, equal to 20% of his Base Salary upon the successful completion of his work plan in the form previously approved by the Board of Directors, and (iv) a further bonus for the fiscal year ending June 30, 2003, of up to 80% of his Base Salary, in such amount as may be determined by the Board of Directors, in its discretion, based upon the performance of the Company's stock and the return on equity to the shareholders during such fiscal year. The provisions in (i) and (ii) in the foregoing sentence shall be deemed to be the "Bonus Plan" for the fiscal year ending June 30, 2002; and the provisions in (iii) and (iv) in the foregoing sentence shall be deemed to be the "Bonus Plan" for the fiscal year ending June 30, 2003. (c) Benefits. (i) Expenses. The Company shall reimburse Employee for any ordinary, necessary and reasonable business expenses that Employee incurs in connection with the performance of his responsibilities under this Agreement, including entertainment and travel expenses; provided, however, that Employee provides 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 Employee abides by all policies of the Company regarding such business expenses. (ii) Medical, Life and Disability Insurance. The Company shall provide 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. The Company shall pay the initiation fees incurred by Employee at a Wichita, Kansas country club, which 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, the Company shall reimburse Employee for his monthly dues at said club. (iv) Vacation. Employee shall be entitled to a vacation period of three 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 applies 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 benefit all Employees similarly situated), it being understood that Employee shall have the same right and privileges to participate in such plans or benefits as any other employee similarly situated. (viii) Vehicle. The Company shall provide Employee with a vehicle suitable to his position for his use during the term of this Agreement. 4. Termination. This Agreement may not be terminated prior to the end of the Employment Period 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 (v) below, where the ability to cure is not allowed, the Company shall give Employee 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 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 Employee's death, 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 Employee hereunder, Employee or his representatives shall be paid (i) the compensation due 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 Employee died pro-rated to the date of his death, and (iii) any unpaid expense reimbursement. (b) Total Disability. As used herein, the term "Total Disability" shall mean the inability of 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 months. The determination of Employee's Total Disability shall be made by the Board of Directors and an examining physician acceptable to the Company and Employee. If Employee and the Company cannot agree as to a physician or if 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, 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 Employee under the Bonus Plan for the year in which such Total Disability occurred pro-rated to the date that Employee was terminated, (iii) accrued but unpaid vacation pay for the year in which Employee became Totally Disabled pro-rated to the date that Employee was terminated, and (iv) any unpaid expense reimbursement. Upon such Total Disability, the Company shall have the right to terminate any insurance that it has owned and maintained on the life of 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 for cause under the terms of this Agreement, the Company shall be relieved of all obligations and liability 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 the Company in accordance with the terms and conditions of the specific plan. (d) Change of Control. In the event of the sale of all or substantially all of the assets of the Company or the acquisition of greater than 50% of the stock of the Company by any party or group of affiliated parties, Employee shall be paid (i) the Base Salary payable under this Agreement through the end of the Employment Period, (ii) the amount due Employee under the Bonus Plan for the fiscal year during which such event occurred, pro-rated to the "closing date" of such event (iii) accrued but unpaid vacation for the year in which such event occurred, pro-rated to the "closing date" of such event, and (iv) any unpaid expense reimbursement; provided, however, that no payment shall be due pursuant to this subparagraph (d) if Employee remains employed following such event pursuant to this Agreement or otherwise remains employed by the Company or its successor following such event in a similar executive capacity with salary, bonus and benefits similar to those provided for in this Agreement. 6. Covenants of Employee. Employee agrees to comply with the provisions of this Paragraph 6 during the Employment Period and for one full year after the expiration or termination thereof (except as otherwise provided in the subparagraphs below). (a) Assistance in Litigation. Employee agrees that he shall, upon reasonable notice, furnish such information and proper assistance to the 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 to the Company, its subsidiaries or affiliates, or any business operated by them including, without limitation, confidential customer information, sales and marketing strategies, process information, or other similar confidential information; and Employee hereby confirms that such information constitutes the exclusive property of the Company. (c) Conflicts of Interest. During the Employment Period, including any extension thereof, 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 of Directors; provided, however, that Employee may acquire up to 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) Propriety information. During or after the Employment Period, including any extension thereof, 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 subsidiaries' or affiliates' Board of Directors, as the case may be, to receive the information, nor shall Employee make use of any Propriety Information for his own purposes or for the benefit of any person, firm, corporation or other entity except the Company. "Propriety 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 consumer 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, 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 Employee during the Employment Period, including any extension thereof, 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 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. Employee agrees that both during the Employment Period, including any extension thereof, and thereafter, 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 herein above 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, produce developments, patents, registered designs or equivalent rights, computer software, tradenames, trademarks and copyrights and any similar property of Employee. This subparagraph (e) 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 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 Employee for the Company. (f) Covenants Not to Compete, Etc. Employee agrees that for a period of two years after the termination of his employment (the "Termination Date"), for whatever reason, neither he nor any entity with which 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 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 Employee nor any entity with which 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 Employee nor any entity with which Employee is affiliated shall within the Territory, at any time within three 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 Employee shall have received the prior written consent of the Company to do so, in which written consent the name of the person to be employed following the Termination Date by Employee or by any entity with which Employee is affiliated is specifically identified. As used herein, the term "Employee" in the phrase "entity with which Employee is affiliated" shall include, without limitation, 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 Employee terminates this Agreement with cause, the provisions of this paragraph shall only continue for the period of time that 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, then the parties hereto agree that such provision shall be reformed to set forth the maximum limitations permitted. (g) Secrecy. 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. (h) 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 this 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 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 entre Agreement will continue to be valid in other jurisdictions. (d) Waivers. No failure or delay by either the Company or Employee in exercising any right or remedy under this Agreement will waive any provision of this Agreement, nor will any single partial exercise by either the Company or 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 and 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 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 West Douglas #820 Wichita KS 67202 Attn: Christopher G. Standlee If to Employee: Gary R. Smith 12610 Bradford Circle Wichita KS 67206 (h) Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Kansas. IN WITNESS WHEREOF, the Company and Employee have executed this Agreement as of the date first above written. COMPANY: HIGH PLAINS CORPORATION By _________________________________ Its ________________________________ EMPLOYEE: ____________________________________ Gary R. Smith Exhibit 10-28 EMPLOYMENT AGREEMENT THIS AGREEMENT, made and entered into effective as of the 1st day of July, 2001, by and between High Plains Corporation, a Kansas corporation (the "Company"), and Christopher G. Standlee ("Employee"). WITNESSETH: WHEREAS, the Company wishes to assure itself of Employee's full-time employment during the term specified herein; and WHEREAS, Employee is prepared to enter into this Agreement with the Company and to give the 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 Employee, and Employee hereby accepts employment with the Company as its Vice President and General Counsel. (a) Employee will render exclusive and full-time services to the Company and its subsidiaries and successors (any later reference to the Company shall be deemed to include subsidiaries and successors, of which Employee shall act as Vice President and General Counsel). In this capacity, he will be responsible for duties as described for his position in the Bylaws of the Company, and as directed from time to time by the President and the Board of Directors. Employee will report to the President and 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, and the compliance with all federal and state laws, rules and regulations. Employee acknowledges that the Board of Directors shall have final authority in matters affecting the interests of the Company. 2. Term. Subject to earlier termination in accordance with this Agreement, Employee's employment shall be for an 18-month period commencing July 1, 2001 and ending on December 31, 2002 ("Employment Period"). 3. Compensation. As compensation for all of Employee's services under this Agreement, the Company agrees to pay Employee, and Employee agrees to accept: (a) Base Salary. A base salary of $100,000 per annum ($8.3833.33 per month) through December 31, 2001, then a base salary of $110,000 per annum for the duration of the Employment Period. 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, Employee shall be paid (i) a bonus for the fiscal year ending June 30, 2002, equal to 20% of his Base Salary upon the successful completion of his work plan in the form previously approved by President and/or the Board of Directors, and (ii) a further bonus for the fiscal year ending June 30, 2002, of up to 20% of his Base Salary, in such amount as may be determined by the Board of Directors, in its discretion, based upon the performance of the Company's stock and the return on equity to the shareholders during such fiscal year. (c) Benefits. (i) Expenses. The Company shall reimburse Employee for any ordinary, necessary and reasonable business expenses that Employee incurs in connection with the performance of his responsibilities under this Agreement, including entertainment and travel expenses; provided, however, that Employee provides 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 Employee abides by all policies of the Company regarding such business expenses. (ii) Medical, Life and Disability Insurance. The Company shall provide Employee with the medical, life and disability insurance currently provided to all other employees of the Company similarly situated. (iii) Change of Control. In the event of the sale of all or substantially all of the assets of the Company or the acquisition of greater than 50% of the stock of the Company by any party or group of affiliated parties, Employee shall be entitled to a "stay put" bonus equal to one year's base salary, payable as of the completion of the transaction described above, provided that employee is still employed with the Company on the date such transaction is completed. (iv) Vacation. Employee shall be entitled to a vacation period of three 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 applies 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 benefit all Employees similarly situated), it being understood that Employee shall have the same right and privileges to participate in such plans or benefits as any other employee similarly situated. (viii) Vehicle. The Company shall provide Employee with a vehicle allowance in the amount of $400 per month during the term of this Agreement. 4. Termination. This Agreement may not be terminated prior to the end of the Employment Period 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 (v) below, where the ability to cure is not allowed, the Company shall give Employee 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 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 President or 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 Employee's death, 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 Employee hereunder, Employee or his representatives shall be paid (i) the compensation due 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 Employee died pro-rated to the date of his death, and (iii) any unpaid expense reimbursement. (b) Total Disability. As used herein, the term "Total Disability" shall mean the inability of 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 months. The determination of Employee's Total Disability shall be made by the Board of Directors and an examining physician acceptable to the Company and Employee. If Employee and the Company cannot agree as to a physician or if 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, 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 Employee under the Bonus Plan for the year in which such Total Disability occurred pro-rated to the date that Employee was terminated, (iii) accrued but unpaid vacation pay for the year in which Employee became Totally Disabled pro-rated to the date that Employee was terminated, and (iv) any unpaid expense reimbursement. Upon such Total Disability, the Company shall have the right to terminate any insurance that it has owned and maintained on the life of 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 for cause under the terms of this Agreement, the Company shall be relieved of all obligations and liability to Employee under this Agreement (except for payment of accrued but unpaid base salary, expenses, and vacation) 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 the Company in accordance with the terms and conditions of the specific plan. (d) Change of Control. In the event of the sale of all or substantially all of the assets of the Company or the acquisition of greater than 50% of the stock of the Company by any party or group of affiliated parties, Employee shall be paid (i) the Base Salary payable under this Agreement through the end of the Employment Period, (ii) the amount due Employee under the Bonus Plan for the fiscal year during which such event occurred, pro-rated to the "closing date" of such event (iii) accrued but unpaid vacation for the year in which such event occurred, and (iv) any unpaid expense reimbursement; provided, however, that no payment shall be due pursuant to subsections (i) and (ii) of this subparagraph (d) if the Company or its successor requests and offers a contract providing that Employee remain employed for one year following such event in a similar executive capacity with salary, bonus and benefits similar to those provided for in this Agreement. 6. Covenants of Employee. Employee agrees to comply with the provisions of this Paragraph 6 during the Employment Period and for one full year after the expiration or termination thereof (except as otherwise provided in the subparagraphs below). (a) Assistance in Litigation. Employee agrees that he shall, upon reasonable notice, furnish such information and proper assistance to the 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 to the Company, its subsidiaries or affiliates, or any business operated by them including, without limitation, confidential customer information, sales and marketing strategies, process information, or other similar confidential information; and Employee hereby confirms that such information constitutes the exclusive property of the Company. (c) Conflicts of Interest. During the Employment Period, including any extension thereof, 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 of Directors; provided, however, that Employee may acquire up to 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) Propriety information. During or after the Employment Period, including any extension thereof, 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 subsidiaries' or affiliates' Board of Directors, as the case may be, to receive the information, nor shall Employee make use of any Propriety Information for his own purposes or for the benefit of any person, firm, corporation or other entity except the Company. "Propriety 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 consumer 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, 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 Employee during the Employment Period, including any extension thereof, 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 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. Employee agrees that both during the Employment Period, including any extension thereof, and thereafter, 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 herein above 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, produce developments, patents, registered designs or equivalent rights, computer software, tradenames, trademarks and copyrights and any similar property of Employee. This subparagraph (e) 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 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 Employee for the Company. (f) Covenants Not to Compete, Etc. Employee agrees that for a period ending on December 31, 2002 (the "Termination Date"), for whatever reason, neither he nor any entity with which 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 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 Termination Date, neither Employee nor any entity with which 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 Employee nor any entity with which Employee is affiliated shall within the Territory, at any time prior to 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 Employee shall have received the prior written consent of the Company to do so, in which written consent the name of the person to be employed following the Termination Date by Employee or by any entity with which Employee is affiliated is specifically identified. As used herein, the term "Employee" in the phrase "entity with which Employee is affiliated" shall include, without limitation, 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 Employee terminates this Agreement with cause, the provisions of this paragraph shall only continue for the period of time that 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, then the parties hereto agree that such provision shall be reformed to set forth the maximum limitations permitted. (g) Secrecy. 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. (h) 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 this 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 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 entre Agreement will continue to be valid in other jurisdictions. (d) Waivers. No failure or delay by either the Company or Employee in exercising any right or remedy under this Agreement will waive any provision of this Agreement, nor will any single partial exercise by either the Company or 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 and 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 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 West Douglas #820 Wichita KS 67202 Attn: Gary R. Smith If to Employee: Christopher G. Standlee 427 N. Rutland Wichita KS 67206 (h) Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Kansas. IN WITNESS WHEREOF, the Company and Employee have executed this Agreement as of the date first above written. COMPANY: HIGH PLAINS CORPORATION By ________________________________ Its _______________________________ EMPLOYEE: ___________________________________ Christopher G. Standlee Exhibit 10-29 EMPLOYMENT AGREEMENT THIS AGREEMENT, made and entered into effective as of the 1st day of July, 2001, by and between High Plains Corporation, a Kansas corporation (the "Company"), and Timothy W. Newkirk ("Employee"). WITNESSETH: WHEREAS, the Company wishes to assure itself of Employee's full-time employment during the term specified herein; and WHEREAS, Employee is prepared to enter into this Agreement with the Company and to give the 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 Employee, and Employee hereby accepts employment with the Company as Vice President of Operations. (a) Employee will render exclusive and full-time services to the Company and its subsidiaries and successors (any later reference to the Company shall be deemed to include subsidiaries and successors, of which Employee shall act as Vice President of Operations). In this capacity, he will be responsible for duties as described for his position in the Bylaws of the Company, and as directed from time to time by the President and the Board of Directors. Employee will report to the President and 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, and the compliance with all federal and state laws, rules and regulations. Employee acknowledges that the Board of Directors shall have final authority in matters affecting the interests of the Company. 2. Term. Subject to earlier termination in accordance with this Agreement, Employee's employment shall be for an 18-month period commencing July 1, 2001 and ending on December 31, 2002 ("Employment Period"). 3. Compensation. As compensation for all of Employee's services under this Agreement, the Company agrees to pay Employee, and Employee agrees to accept: (a) Base Salary. A base salary of $125,000 per annum ($10,416.66 per month) through December 31, 2001, then a base salary of $137,500 per annum for the duration of the Employment Period. 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, Employee shall be paid (i) a bonus for the fiscal year ending June 30, 2002, equal to 20% of his Base Salary upon the successful completion of his work plan in the form previously approved by President and/or the Board of Directors, and (ii) a further bonus for the fiscal year ending June 30, 2002, of up to 20% of his Base Salary, in such amount as may be determined by the Board of Directors, in its discretion, based upon the performance of the Company's stock and the return on equity to the shareholders during such fiscal year. (c) Benefits. (i) Expenses. The Company shall reimburse Employee for any ordinary, necessary and reasonable business expenses that Employee incurs in connection with the performance of his responsibilities under this Agreement, including entertainment and travel expenses; provided, however, that Employee provides 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 Employee abides by all policies of the Company regarding such business expenses. (ii) Medical, Life and Disability Insurance. The Company shall provide Employee with the medical, life and disability insurance currently provided to all other employees of the Company similarly situated. (iii) Change of Control. In the event of the sale of all or substantially all of the assets of the Company or the acquisition of greater than 50% of the stock of the Company by any party or group of affiliated parties, Employee shall be entitled to a "stay put" bonus equal to one year's base salary, payable as of the completion of the transaction described above, provided that employee is still employed with the Company on the date such transaction is completed. (iv) Vacation. Employee shall be entitled to a vacation period of three 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 applies 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 benefit all Employees similarly situated), it being understood that Employee shall have the same right and privileges to participate in such plans or benefits as any other employee similarly situated. (viii) Vehicle. The Company shall provide Employee with a vehicle allowance in the amount of $600 per month during the term of this Agreement. 4. Termination. This Agreement may not be terminated prior to the end of the Employment Period 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 (v) below, where the ability to cure is not allowed, the Company shall give Employee 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 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 President or 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 Employee's death, 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 Employee hereunder, Employee or his representatives shall be paid (i) the compensation due 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 Employee died pro-rated to the date of his death, and (iii) any unpaid expense reimbursement. (b) Total Disability. As used herein, the term "Total Disability" shall mean the inability of 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 months. The determination of Employee's Total Disability shall be made by the Board of Directors and an examining physician acceptable to the Company and Employee. If Employee and the Company cannot agree as to a physician or if 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, 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 Employee under the Bonus Plan for the year in which such Total Disability occurred pro- rated to the date that Employee was terminated, (iii) accrued but unpaid vacation pay for the year in which Employee became Totally Disabled pro-rated to the date that Employee was terminated, and (iv) any unpaid expense reimbursement. Upon such Total Disability, the Company shall have the right to terminate any insurance that it has owned and maintained on the life of 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 for cause under the terms of this Agreement, the Company shall be relieved of all obligations and liability to Employee under this Agreement (except for payment of accrued but unpaid base salary, expenses, and vacation) 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 the Company in accordance with the terms and conditions of the specific plan. (d) Change of Control. In the event of the sale of all or substantially all of the assets of the Company or the acquisition of greater than 50% of the stock of the Company by any party or group of affiliated parties, Employee shall be paid (i) the Base Salary payable under this Agreement through the end of the Employment Period, (ii) the amount due Employee under the Bonus Plan for the fiscal year during which such event occurred, pro-rated to the "closing date" of such event (iii) accrued but unpaid vacation for the year in which such event occurred, and (iv) any unpaid expense reimbursement; provided, however, that no payment shall be due pursuant to subsections (i) and (ii) of this subparagraph (d) if the Company or its successor requests and offers a contract providing that Employee remain employed for one year following such event in a similar executive capacity with salary, bonus and benefits similar to those provided for in this Agreement. 6. Covenants of Employee. Employee agrees to comply with the provisions of this Paragraph 6 during the Employment Period and for one full year after the expiration or termination thereof (except as otherwise provided in the subparagraphs below). (a) Assistance in Litigation. Employee agrees that he shall, upon reasonable notice, furnish such information and proper assistance to the 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 to the Company, its subsidiaries or affiliates, or any business operated by them including, without limitation, confidential customer information, sales and marketing strategies, process information, or other similar confidential information; and Employee hereby confirms that such information constitutes the exclusive property of the Company. (c) Conflicts of Interest. During the Employment Period, including any extension thereof, 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 of Directors; provided, however, that Employee may acquire up to 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) Propriety information. During or after the Employment Period, including any extension thereof, 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 subsidiaries' or affiliates' Board of Directors, as the case may be, to receive the information, nor shall Employee make use of any Propriety Information for his own purposes or for the benefit of any person, firm, corporation or other entity except the Company. "Propriety 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 consumer 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, 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 Employee during the Employment Period, including any extension thereof, 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 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. Employee agrees that both during the Employment Period, including any extension thereof, and thereafter, 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 herein above 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, produce developments, patents, registered designs or equivalent rights, computer software, tradenames, trademarks and copyrights and any similar property of Employee. This subparagraph (e) 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 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 Employee for the Company. (f) Covenants Not to Compete, Etc. Employee agrees that for a period ending on December 31, 2002 (the "Termination Date"), for whatever reason, neither he nor any entity with which 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 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 Termination Date, neither Employee nor any entity with which 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 Employee nor any entity with which Employee is affiliated shall within the Territory, at any time prior to 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 Employee shall have received the prior written consent of the Company to do so, in which written consent the name of the person to be employed following the Termination Date by Employee or by any entity with which Employee is affiliated is specifically identified. As used herein, the term "Employee" in the phrase "entity with which Employee is affiliated" shall include, without limitation, 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 Employee terminates this Agreement with cause, the provisions of this paragraph shall only continue for the period of time that 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, then the parties hereto agree that such provision shall be reformed to set forth the maximum limitations permitted. (g) Secrecy. 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. (h) 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 this 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 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 entre Agreement will continue to be valid in other jurisdictions. (d) Waivers. No failure or delay by either the Company or Employee in exercising any right or remedy under this Agreement will waive any provision of this Agreement, nor will any single partial exercise by either the Company or 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 and 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 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 West Douglas #820 Wichita, KS 67202 Attn: Christopher G. Standlee If to Employee: Timothy W. Newkirk 5776 S. 107th St. E. Derby, KS 67037 (h) Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Kansas. IN WITNESS WHEREOF, the Company and Employee have executed this Agreement as of the date first above written. COMPANY: HIGH PLAINS CORPORATION By _________________________________ Its ________________________________ EMPLOYEE: ____________________________________ Timothy W. Newkirk Exhibit 10-30 EMPLOYMENT AGREEMENT THIS AGREEMENT, made and entered into effective as of the 1st day of July, 2001, by and between High Plains Corporation, a Kansas corporation (the "Company"), and David Dykstra ("Employee"). WITNESSETH: WHEREAS, the Company wishes to assure itself of Employee's full-time employment during the term specified herein; and WHEREAS, Employee is prepared to enter into this Agreement with the Company and to give the 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 Employee, and Employee hereby accepts employment with the Company as Vice President of Marketing. (a) Employee will render exclusive and full-time services to the Company and its subsidiaries and successors (any later reference to the Company shall be deemed to include subsidiaries and successors, of which Employee shall act as Vice President of Marketing). In this capacity, he will be responsible for duties as described for his position in the Bylaws of the Company, and as directed from time to time by the President and the Board of Directors. Employee will report to the President and 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, and the compliance with all federal and state laws, rules and regulations. Employee acknowledges that the Board of Directors shall have final authority in matters affecting the interests of the Company. 2. Term. Subject to earlier termination in accordance with this Agreement, Employee's employment shall be for an 18-month period commencing July 1, 2001 and ending on December 31, 2002 ("Employment Period"). 3. Compensation. As compensation for all of Employee's services under this Agreement, the Company agrees to pay Employee, and Employee agrees to accept: (a) Base Salary. A base salary of $125,000 per annum ($10,416.66 per month) through December 31, 2001, then a base salary of $137,500 per annum for the duration of the Employment Period. 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, Employee shall be paid (i) a bonus for the fiscal year ending June 30, 2002, equal to 20% of his Base Salary upon the successful completion of his work plan in the form previously approved by President and/or the Board of Directors, and (ii) a further bonus for the fiscal year ending June 30, 2002, of up to 20% of his Base Salary, in such amount as may be determined by the Board of Directors, in its discretion, based upon the performance of the Company's stock and the return on equity to the shareholders during such fiscal year. (c) Benefits. (i) Expenses. The Company shall reimburse Employee for any ordinary, necessary and reasonable business expenses that Employee incurs in connection with the performance of his responsibilities under this Agreement, including entertainment and travel expenses; provided, however, that Employee provides 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 Employee abides by all policies of the Company regarding such business expenses. (ii) Medical, Life and Disability Insurance. The Company shall provide Employee with the medical, life and disability insurance currently provided to all other employees of the Company similarly situated. (iii) Change of Control. In the event of the sale of all or substantially all of the assets of the Company or the acquisition of greater than 50% of the stock of the Company by any party or group of affiliated parties, Employee shall be entitled to a "stay put" bonus equal to one year's base salary, payable as of the completion of the transaction described above, provided that employee is still employed with the Company on the date such transaction is completed. (iv) Vacation. Employee shall be entitled to a vacation period of three 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 applies 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 benefit all Employees similarly situated), it being understood that Employee shall have the same right and privileges to participate in such plans or benefits as any other employee similarly situated. (viii) Vehicle. The Company shall provide Employee with a vehicle allowance in the amount of $600 per month during the term of this Agreement. 4. Termination. This Agreement may not be terminated prior to the end of the Employment Period 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 (v) below, where the ability to cure is not allowed, the Company shall give Employee 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 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 President or 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 Employee's death, 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 Employee hereunder, Employee or his representatives shall be paid (i) the compensation due 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 Employee died pro-rated to the date of his death, and (iii) any unpaid expense reimbursement. (b) Total Disability. As used herein, the term "Total Disability" shall mean the inability of 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 months. The determination of Employee's Total Disability shall be made by the Board of Directors and an examining physician acceptable to the Company and Employee. If Employee and the Company cannot agree as to a physician or if 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, 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 Employee under the Bonus Plan for the year in which such Total Disability occurred pro-rated to the date that Employee was terminated, (iii) accrued but unpaid vacation pay for the year in which Employee became Totally Disabled pro-rated to the date that Employee was terminated, and (iv) any unpaid expense reimbursement. Upon such Total Disability, the Company shall have the right to terminate any insurance that it has owned and maintained on the life of 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 for cause under the terms of this Agreement, the Company shall be relieved of all obligations and liability to Employee under this Agreement (except for payment of accrued but unpaid base salary, expenses, and vacation) 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 the Company in accordance with the terms and conditions of the specific plan. (d) Change of Control. In the event of the sale of all or substantially all of the assets of the Company or the acquisition of greater than 50% of the stock of the Company by any party or group of affiliated parties, Employee shall be paid (i) the Base Salary payable under this Agreement through the end of the Employment Period, (ii) the amount due Employee under the Bonus Plan for the fiscal year during which such event occurred, pro-rated to the "closing date" of such event (iii) accrued but unpaid vacation for the year in which such event occurred, and (iv) any unpaid expense reimbursement; provided, however, that no payment shall be due pursuant to subsections (i) and (ii) of this subparagraph (d) if the Company or its successor requests and offers a contract providing that Employee remain employed for one year following such event in a similar executive capacity with salary, bonus and benefits similar to those provided for in this Agreement. 6. Covenants of Employee. Employee agrees to comply with the provisions of this Paragraph 6 during the Employment Period and for one full year after the expiration or termination thereof (except as otherwise provided in the subparagraphs below). (a) Assistance in Litigation. Employee agrees that he shall, upon reasonable notice, furnish such information and proper assistance to the 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 to the Company, its subsidiaries or affiliates, or any business operated by them including, without limitation, confidential customer information, sales and marketing strategies, process information, or other similar confidential information; and Employee hereby confirms that such information constitutes the exclusive property of the Company. (c) Conflicts of Interest. During the Employment Period, including any extension thereof, 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 of Directors; provided, however, that Employee may acquire up to 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) Propriety information. During or after the Employment Period, including any extension thereof, 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 subsidiaries' or affiliates' Board of Directors, as the case may be, to receive the information, nor shall Employee make use of any Propriety Information for his own purposes or for the benefit of any person, firm, corporation or other entity except the Company. "Propriety 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 consumer 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, 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 Employee during the Employment Period, including any extension thereof, 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 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. Employee agrees that both during the Employment Period, including any extension thereof, and thereafter, 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 herein above 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, produce developments, patents, registered designs or equivalent rights, computer software, tradenames, trademarks and copyrights and any similar property of Employee. This subparagraph (e) 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 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 Employee for the Company. (f) Covenants Not to Compete, Etc. Employee agrees that for a period ending on December 31, 2002 (the "Termination Date"), for whatever reason, neither he nor any entity with which 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 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 Termination Date, neither Employee nor any entity with which 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 Employee nor any entity with which Employee is affiliated shall within the Territory, at any time prior to 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 Employee shall have received the prior written consent of the Company to do so, in which written consent the name of the person to be employed following the Termination Date by Employee or by any entity with which Employee is affiliated is specifically identified. As used herein, the term "Employee" in the phrase "entity with which Employee is affiliated" shall include, without limitation, 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 Employee terminates this Agreement with cause, the provisions of this paragraph shall only continue for the period of time that 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, then the parties hereto agree that such provision shall be reformed to set forth the maximum limitations permitted. (g) Secrecy. 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. (h) 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 this 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 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 entre Agreement will continue to be valid in other jurisdictions. (d) Waivers. No failure or delay by either the Company or Employee in exercising any right or remedy under this Agreement will waive any provision of this Agreement, nor will any single partial exercise by either the Company or 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 and 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 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 West Douglas #820 Wichita, KS 67202 Attn: Christopher G. Standlee If to Employee: David Dykstra 13115 E. Crestwood Wichita, KS 67230 (h) Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Kansas. IN WITNESS WHEREOF, the Company and Employee have executed this Agreement as of the date first above written. COMPANY: HIGH PLAINS CORPORATION By _________________________________ Its ________________________________ EMPLOYEE: ____________________________________ David Dykstra Exhibit 10-31 EMPLOYMENT AGREEMENT THIS AGREEMENT, made and entered into effective as of the 1st day of July, 2001, by and between High Plains Corporation, a Kansas corporation (the "Company"), and Michael Shook ("Employee"). WITNESSETH: WHEREAS, the Company wishes to assure itself of Employee's full-time employment during the term specified herein; and WHEREAS, Employee is prepared to enter into this Agreement with the Company and to give the 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 Employee, and Employee hereby accepts employment with the Company as its Director of Finance and Controller. (a) Employee will render exclusive and full-time services to the Company and its subsidiaries and successors (any later reference to the Company shall be deemed to include subsidiaries and successors, of which Employee shall act as Director of Finance and Controller). In this capacity, he will be responsible for duties as described for his position in the Bylaws of the Company, and as directed from time to time by the President and the Board of Directors. Employee will report to the President and 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, and the compliance with all federal and state laws, rules and regulations. Employee acknowledges that the Board of Directors shall have final authority in matters affecting the interests of the Company. 2. Term. Subject to earlier termination in accordance with this Agreement, Employee's employment shall be for an 18-month period commencing July 1, 2001 and ending on December 31, 2002 ("Employment Period"). 3. Compensation. As compensation for all of Employee's services under this Agreement, the Company agrees to pay Employee, and Employee agrees to accept: (a) Base Salary. A base salary of $85,000 per annum ($7,083.33 per month) through December 31, 2001, then a base salary of $93,500 per annum for the duration of the Employment Period. 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, Employee shall be paid (i) a bonus for the fiscal year ending June 30, 2002, equal to 20% of his Base Salary upon the successful completion of his work plan in the form previously approved by President and/or the Board of Directors, and (ii) a further bonus for the fiscal year ending June 30, 2002, of up to 20% of his Base Salary, in such amount as may be determined by the Board of Directors, in its discretion, based upon the performance of the Company's stock and the return on equity to the shareholders during such fiscal year. (c) Benefits. (i) Expenses. The Company shall reimburse Employee for any ordinary, necessary and reasonable business expenses that Employee incurs in connection with the performance of his responsibilities under this Agreement, including entertainment and travel expenses; provided, however, that Employee provides 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 Employee abides by all policies of the Company regarding such business expenses. (ii) Medical, Life and Disability Insurance. The Company shall provide Employee with the medical, life and disability insurance currently provided to all other employees of the Company similarly situated. (iii) Change of Control. In the event of the sale of all or substantially all of the assets of the Company or the acquisition of greater than 50% of the stock of the Company by any party or group of affiliated parties, Employee shall be entitled to a "stay put" bonus equal to one year's base salary, payable as of the completion of the transaction described above, provided that employee is still employed with the Company on the date such transaction is completed. (iv) Vacation. Employee shall be entitled to a vacation period of three 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 applies 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 benefit all Employees similarly situated), it being understood that Employee shall have the same right and privileges to participate in such plans or benefits as any other employee similarly situated. (viii) Vehicle. The Company shall provide Employee with a vehicle allowance in the amount of $400 per month during the term of this Agreement. 4. Termination. This Agreement may not be terminated prior to the end of the Employment Period 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 (v) below, where the ability to cure is not allowed, the Company shall give Employee 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 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 President or 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 Employee's death, 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 Employee hereunder, Employee or his representatives shall be paid (i) the compensation due 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 Employee died pro-rated to the date of his death, and (iii) any unpaid expense reimbursement. (b) Total Disability. As used herein, the term "Total Disability" shall mean the inability of 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 months. The determination of Employee's Total Disability shall be made by the Board of Directors and an examining physician acceptable to the Company and Employee. If Employee and the Company cannot agree as to a physician or if 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, 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 Employee under the Bonus Plan for the year in which such Total Disability occurred pro-rated to the date that Employee was terminated, (iii) accrued but unpaid vacation pay for the year in which Employee became Totally Disabled pro-rated to the date that Employee was terminated, and (iv) any unpaid expense reimbursement. Upon such Total Disability, the Company shall have the right to terminate any insurance that it has owned and maintained on the life of 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 for cause under the terms of this Agreement, the Company shall be relieved of all obligations and liability to Employee under this Agreement (except for payment of accrued but unpaid base salary, expenses, and vacation) 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 the Company in accordance with the terms and conditions of the specific plan. (d) Change of Control. In the event of the sale of all or substantially all of the assets of the Company or the acquisition of greater than 50% of the stock of the Company by any party or group of affiliated parties, Employee shall be paid (i) the Base Salary payable under this Agreement through the end of the Employment Period, (ii) the amount due Employee under the Bonus Plan for the fiscal year during which such event occurred, pro-rated to the "closing date" of such event (iii) accrued but unpaid vacation for the year in which such event occurred, and (iv) any unpaid expense reimbursement; provided, however, that no payment shall be due pursuant to subsections (i) and (ii) of this subparagraph (d) if the Company or its successor requests and offers a contract providing that Employee remain employed for one year following such event in a similar executive capacity with salary, bonus and benefits similar to those provided for in this Agreement. 6. Covenants of Employee. Employee agrees to comply with the provisions of this Paragraph 6 during the Employment Period and for one full year after the expiration or termination thereof (except as otherwise provided in the subparagraphs below). (a) Assistance in Litigation. Employee agrees that he shall, upon reasonable notice, furnish such information and proper assistance to the 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 to the Company, its subsidiaries or affiliates, or any business operated by them including, without limitation, confidential customer information, sales and marketing strategies, process information, or other similar confidential information; and Employee hereby confirms that such information constitutes the exclusive property of the Company. (c) Conflicts of Interest. During the Employment Period, including any extension thereof, 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 of Directors; provided, however, that Employee may acquire up to 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) Propriety information. During or after the Employment Period, including any extension thereof, 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 subsidiaries' or affiliates' Board of Directors, as the case may be, to receive the information, nor shall Employee make use of any Propriety Information for his own purposes or for the benefit of any person, firm, corporation or other entity except the Company. "Propriety 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 consumer 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, 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 Employee during the Employment Period, including any extension thereof, 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 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. Employee agrees that both during the Employment Period, including any extension thereof, and thereafter, 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 herein above 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, produce developments, patents, registered designs or equivalent rights, computer software, tradenames, trademarks and copyrights and any similar property of Employee. This subparagraph (e) 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 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 Employee for the Company. (f) Covenants Not to Compete, Etc. Employee agrees that for a period ending on December 31, 2002 (the "Termination Date"), for whatever reason, neither he nor any entity with which 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 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 Termination Date, neither Employee nor any entity with which 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 Employee nor any entity with which Employee is affiliated shall within the Territory, at any time prior to 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 Employee shall have received the prior written consent of the Company to do so, in which written consent the name of the person to be employed following the Termination Date by Employee or by any entity with which Employee is affiliated is specifically identified. As used herein, the term "Employee" in the phrase "entity with which Employee is affiliated" shall include, without limitation, 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 Employee terminates this Agreement with cause, the provisions of this paragraph shall only continue for the period of time that 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, then the parties hereto agree that such provision shall be reformed to set forth the maximum limitations permitted. (g) Secrecy. 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. (h) 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 this 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 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 entre Agreement will continue to be valid in other jurisdictions. (d) Waivers. No failure or delay by either the Company or Employee in exercising any right or remedy under this Agreement will waive any provision of this Agreement, nor will any single partial exercise by either the Company or 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 and 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 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 West Douglas #820 Wichita KS 67202 Attn: Christopher G. Standlee If to Employee: Michael Shook 237 Winterset Wichita KS 67212 (h) Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Kansas. IN WITNESS WHEREOF, the Company and Employee have executed this Agreement as of the date first above written. COMPANY: HIGH PLAINS CORPORATION By ______________________________ Its _____________________________ EMPLOYEE: _________________________________ Michael Shook Exhibit 10-32 EMPLOYMENT AGREEMENT THIS AGREEMENT, made and entered into effective as of the 1st day of July, 2001, by and between High Plains Corporation, a Kansas corporation (the "Company"), and Christopher S. Glaves ("Employee"). WITNESSETH: WHEREAS, the Company wishes to assure itself of Employee's full-time employment during the term specified herein; and WHEREAS, Employee is prepared to enter into this Agreement with the Company and to give the 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 Employee, and Employee hereby accepts employment with the Company as its Director of Grain Procurement and Feed Sales. (a) Employee will render exclusive and full-time services to the Company and its subsidiaries and successors (any later reference to the Company shall be deemed to include subsidiaries and successors, of which Employee shall act as Director of Grain Procurement and Feed Sales). In this capacity, he will be responsible for duties as described for his position in the Bylaws of the Company, and as directed from time to time by the President and the Board of Directors. Employee will report to the President and 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, and the compliance with all federal and state laws, rules and regulations. Employee acknowledges that the Board of Directors shall have final authority in matters affecting the interests of the Company. 2. Term. Subject to earlier termination in accordance with this Agreement, Employee's employment shall be for an 18-month period commencing July 1, 2001 and ending on December 31, 2002 ("Employment Period"). 3. Compensation. As compensation for all of Employee's services under this Agreement, the Company agrees to pay Employee, and Employee agrees to accept: (a) Base Salary. A base salary of $85,000 per annum ($7,083.33 per month) through December 31, 2001, then a base salary of $93,500 per annum for the duration of the Employment Period. 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, Employee shall be paid (i) a bonus for the fiscal year ending June 30, 2002, equal to 20% of his Base Salary upon the successful completion of his work plan in the form previously approved by President and/or the Board of Directors, and (ii) a further bonus for the fiscal year ending June 30, 2002, of up to 20% of his Base Salary, in such amount as may be determined by the Board of Directors, in its discretion, based upon the performance of the Company's stock and the return on equity to the shareholders during such fiscal year. (c) Benefits. (i) Expenses. The Company shall reimburse Employee for any ordinary, necessary and reasonable business expenses that Employee incurs in connection with the performance of his responsibilities under this Agreement, including entertainment and travel expenses; provided, however, that Employee provides 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 Employee abides by all policies of the Company regarding such business expenses. (ii) Medical, Life and Disability Insurance. The Company shall provide Employee with the medical, life and disability insurance currently provided to all other employees of the Company similarly situated. (iii) Change of Control. In the event of the sale of all or substantially all of the assets of the Company or the acquisition of greater than 50% of the stock of the Company by any party or group of affiliated parties, Employee shall be entitled to a "stay put" bonus equal to one year's base salary, payable as of the completion of the transaction described above, provided that employee is still employed with the Company on the date such transaction is completed. (iv) Vacation. Employee shall be entitled to a vacation period of three 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 applies 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 benefit all Employees similarly situated), it being understood that Employee shall have the same right and privileges to participate in such plans or benefits as any other employee similarly situated. (viii) Vehicle. The Company shall provide Employee with a vehicle allowance in the amount of $500 per month during the term of this Agreement. 4. Termination. This Agreement may not be terminated prior to the end of the Employment Period 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 (v) below, where the ability to cure is not allowed, the Company shall give Employee 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 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 President or 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 Employee's death, 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 Employee hereunder, Employee or his representatives shall be paid (i) the compensation due 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 Employee died pro-rated to the date of his death, and (iii) any unpaid expense reimbursement. (b) Total Disability. As used herein, the term "Total Disability" shall mean the inability of 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 months. The determination of Employee's Total Disability shall be made by the Board of Directors and an examining physician acceptable to the Company and Employee. If Employee and the Company cannot agree as to a physician or if 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, 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 Employee under the Bonus Plan for the year in which such Total Disability occurred pro-rated to the date that Employee was terminated, (iii) accrued but unpaid vacation pay for the year in which Employee became Totally Disabled pro-rated to the date that Employee was terminated, and (iv) any unpaid expense reimbursement. Upon such Total Disability, the Company shall have the right to terminate any insurance that it has owned and maintained on the life of 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 for cause under the terms of this Agreement, the Company shall be relieved of all obligations and liability to Employee under this Agreement (except for payment of accrued but unpaid base salary, expenses, and vacation) 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 the Company in accordance with the terms and conditions of the specific plan. (d) Change of Control. In the event of the sale of all or substantially all of the assets of the Company or the acquisition of greater than 50% of the stock of the Company by any party or group of affiliated parties, Employee shall be paid (i) the Base Salary payable under this Agreement through the end of the Employment Period, (ii) the amount due Employee under the Bonus Plan for the fiscal year during which such event occurred, pro-rated to the "closing date" of such event (iii) accrued but unpaid vacation for the year in which such event occurred, and (iv) any unpaid expense reimbursement; provided, however, that no payment shall be due pursuant to subsections (i) and (ii) of this subparagraph (d) if the Company or its successor requests and offers a contract providing that Employee remain employed for one year following such event in a similar executive capacity with salary, bonus and benefits similar to those provided for in this Agreement. 6. Covenants of Employee. Employee agrees to comply with the provisions of this Paragraph 6 during the Employment Period and for one full year after the expiration or termination thereof (except as otherwise provided in the subparagraphs below). (a) Assistance in Litigation. Employee agrees that he shall, upon reasonable notice, furnish such information and proper assistance to the 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 to the Company, its subsidiaries or affiliates, or any business operated by them including, without limitation, confidential customer information, sales and marketing strategies, process information, or other similar confidential information; and Employee hereby confirms that such information constitutes the exclusive property of the Company. (c) Conflicts of Interest. During the Employment Period, including any extension thereof, 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 of Directors; provided, however, that Employee may acquire up to 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) Propriety information. During or after the Employment Period, including any extension thereof, 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 subsidiaries' or affiliates' Board of Directors, as the case may be, to receive the information, nor shall Employee make use of any Propriety Information for his own purposes or for the benefit of any person, firm, corporation or other entity except the Company. "Propriety 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 consumer 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, 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 Employee during the Employment Period, including any extension thereof, 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 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. Employee agrees that both during the Employment Period, including any extension thereof, and thereafter, 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 herein above 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, produce developments, patents, registered designs or equivalent rights, computer software, tradenames, trademarks and copyrights and any similar property of Employee. This subparagraph (e) 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 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 Employee for the Company. (f) Covenants Not to Compete, Etc. Employee agrees that for a period ending on December 31, 2002 (the "Termination Date"), for whatever reason, neither he nor any entity with which 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 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 Termination Date, neither Employee nor any entity with which 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 Employee nor any entity with which Employee is affiliated shall within the Territory, at any time prior to 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 Employee shall have received the prior written consent of the Company to do so, in which written consent the name of the person to be employed following the Termination Date by Employee or by any entity with which Employee is affiliated is specifically identified. As used herein, the term "Employee" in the phrase "entity with which Employee is affiliated" shall include, without limitation, 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 Employee terminates this Agreement with cause, the provisions of this paragraph shall only continue for the period of time that 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, then the parties hereto agree that such provision shall be reformed to set forth the maximum limitations permitted. (g) Secrecy. 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. (h) 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 this 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 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 entre Agreement will continue to be valid in other jurisdictions. (d) Waivers. No failure or delay by either the Company or Employee in exercising any right or remedy under this Agreement will waive any provision of this Agreement, nor will any single partial exercise by either the Company or 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 and 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 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 West Douglas #820 Wichita KS 67202 Attn: Christopher G. Standlee If to Employee: Christopher S. Glaves 2550 Welgate Circle Wichita KS 67226 (h) Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Kansas. IN WITNESS WHEREOF, the Company and Employee have executed this Agreement as of the date first above written. COMPANY: HIGH PLAINS CORPORATION By ______________________________ Its _____________________________ EMPLOYEE: _________________________________ Christopher S. Glaves Exhibit 10-33 AGREEMENT THIS AGREEMENT made and entered into as of November 21st, 2000 by and between High Plains Corporation, a Kansas corporation ("Seller"), and ICM Marketing, Inc. a Kansas corporation ("Buyer"). W I T N E S S E T H : WHEREAS, Seller desires to sell and Buyer desires to purchase the Wet Distiller's Grains with Solubles, and Dried Distiller's Grains with Solubles, (hereinafter the "Products") output of the ethanol production "Plants" which Seller owns at York, Nebraska and Colwich, Kansas (hereinafter called the "Plants") and WHEREAS, Seller and Buyer wish to agree in advance of such sale and purchase to the price formula, payment, delivery and other terms thereof in consideration of the mutually promised performance of the other; NOW, THEREFORE, in consideration of the promises and the mutual covenants and conditions herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by both parties, it is hereby agreed: 1. PURCHASE AND SALE. Seller agrees to sell to Buyer its entire bulk feed grade "Products" output from Seller's "Plants", and Buyer agrees to purchase from Seller the entire bulk feed grade "Products" output from Seller's "Plants", subject to all the terms and conditions set forth in this Agreement. 2. TRADE RULES. All purchases and sales made hereunder shall be governed by the Feed Trade Rules of the National Grain and Feed Association unless otherwise specified. Said Trade Rules, shall to the extent applicable, be a part of this Agreement as if fully set forth herein. Notwithstanding the foregoing, the Arbitration Rules of the National Grain and Feed Association shall not be applicable to this Agreement and nothing herein contained shall be construed to constitute an agreement between the parties to submit disputes arising hereunder to arbitration before any organization or tribunal. 3. TERM. The current term of this Agreement shall be from the date of signing through May 1st, 2002. This agreement shall be automatically renewed for successive one-year terms unless either party gives written notice to the other party of it's election not to renew not later than ninety (90) days prior to the expiration of the then current term. 4. DELIVERY AND TITLE. A. The place of delivery for all "Products" sold pursuant to this Agreement shall be FOB "Plants". Buyer and Buyer's agents shall be given access to Seller's "Plants" in a manner and at all times reasonably necessary and convenient for Buyer to take delivery as provided herein. Buyer shall schedule the loading and shipping of all outbound "Products" purchased hereunder which is shipped by truck or rail, but all labor and equipment necessary to load trucks, or rail cars shall be supplied by Seller without charge to Buyer. Delivery from Seller's Colwich plant shall occur only between the hours of 8:00 a.m. and 6:00 p.m. central daylight time (CDT) Monday through Friday, excluding Holidays, unless prior arrangements are made at Seller's discretion. Seller agrees to handle the "Products" in a good and workmanlike manner in accordance with Buyer's reasonable requirements and in accordance with normal industry practice. Seller shall maintain the truck/rail loading facilities in safe operating condition in accordance with normal industry standards. B. Seller further warrants that storage space for not less than 10 days production of "Products", (5 days at Colwich) based on normal operating capacity, shall be reserved for Buyer's use at the "Plants" and shall be continuously available for storage of "Products" purchased by Buyer hereunder at no charge to Buyer. Buyer warrants and agrees to remove "Products" before the aforementioned storage limits are exceeded, or before "Plant" operations are effected. Seller shall be responsible at all times for the quantity, quality and condition of any "Products" in storage at the "Plants". Seller shall not be responsible for the quantity, quality and condition of any "Products" stored by Buyer at locations other than the "Plants". C. Buyer shall give to Seller a schedule of quantities of "Products" to be removed by truck and rail respectively with sufficient advance notice reasonably to allow Seller to provide the required services. Seller shall provide the labor, equipment and facilities necessary to meet Buyer's loading schedule and, except for any consequential or indirect damages, shall be responsible for Buyer's actual costs or damages resulting from Seller's failure to do so. Buyer shall order and supply trucks as scheduled for truck shipments. All freight charges shall be the responsibility of Buyer and shall be billed directly to Buyer. Demurrage charges will be for the account of the Buyer if Buyer fails to provide railcars in accordance with the production schedule provided by Seller. Demurrage charges will be for the account of the Seller if Seller fails to load railcars in accordance with said schedule. D. Subject to Section 1, Buyer shall provide loading orders as necessary to permit Seller to maintain Seller's usual production schedule, provided, however, that Buyer shall not be responsible for failure to schedule removal of "Products" unless Seller shall have provided to Buyer production schedules as follows: Five (5) days prior to the beginning of each calendar month during the term hereof, Seller shall provide to Buyer a tentative schedule for production in the next calendar month. On Wednesday of each week during any term hereof, Seller shall provide to Buyer a schedule for actual production during the next production week (Monday through Sunday). Seller shall inform Buyer daily of inventory and production status by 8:30 a.m. CDT. For purposes of this paragraph, notification will be sufficient if made by facsimile as follows: If to Buyer, to the attention of ICM, Inc., Randy Ives, Facsimile number 316-796-0944 and If to Seller, to the attention of J.R. Hermes, Facsimile number 316-796-1523 and Danny Allison, Facsimile number 402-362-6707. Or to such other representatives of Buyer and Seller as they may designate to the other in writing. E. Title, risk of loss and full shipping responsibility shall pass to Buyer upon loading the "Products" into trucks or rail cars, as the case may be, and delivering to Buyer of the bill of lading for each such shipment. F. None of the Seller "Products" shall be sold more than 180 days in advance by Buyer unless Seller explicitly approves the price and terms of any such contract. Buyer will advise weekly and update Seller monthly on all outstanding contractual obligations, and the terms thereof. The aforementioned method of notification shall be deemed sufficient for this purpose. Any forward sales authorized and approved by the Seller shall be the property of the Seller, and the Seller shall have the full benefit or burden of those contracts. 5. PRICE AND PAYMENT. A. Buyer agrees to pay Seller for all "Products" removed by Buyer from the "Plants", a price equal to ninety-eight percent (98%) of the FOB Plant price actually received by Buyer from its customers. For purposes of this provision, the FOB Plant price shall be the actual sale price, less all freight costs incurred by Buyer in delivering the Product to its customer. Buyer agrees to use commercially reasonable efforts to achieve the highest resale price available under prevailing market conditions as judged by Buyer. Seller's sole and exclusive remedy for breach of Buyer's obligations hereunder shall be to terminate this Agreement. Provided that this provision shall not limit Seller's rights in the event of Buyer's willful misconduct or grossly negligent actions. B. On a daily basis, Weekends and Holidays excluded, Seller shall provide Buyer with certified weight certificates for the previous day's shipments. Buyer shall pay Seller the full price, determined pursuant to paragraph 5A above, for all properly documented shipments. Payment for such shipments shall occur so that payment is received on or by the following Thursday of each shipment week (Monday through Sunday). Buyer agrees to maintain accurate sales records and to provide such records to Seller upon request. Seller shall have the option to audit Buyer's sales invoices at any time during normal business hours and during the term of this Agreement. 6. QUANTITY AND WEIGHTS. A. It is understood that said output of the "Products" shall be determined by Seller's production schedule and that no warranty or representation has been made by Seller as to the exact quantities of "Products" to be sold pursuant to this Agreement. At the effective date of this Agreement, the output estimated by Seller to be sold to the Buyer is approximately sixteen thousand tons (16,000) of Product per month from the aforementioned "Plants". B. The quantity of "Products" delivered to Buyer from Seller's "Plants" shall be established by weight certificates obtained from scales which are certified as of the time of weighing and which comply with all applicable laws, rules and regulations. In the case of rail shipments, the first official railroad weights will govern establishment of said quantities. The outbound weight certificates shall be determinative of the quantity of "Products" for which Buyer is obligated to pay pursuant to Section 5. C. All rail cars loaded at Seller's York, NE plant shall be grain hopper cars. Seller agrees that such cars shall be loaded to full visible capacity at Seller's "Plants". If not loaded to full visible capacity, Seller shall pay in full the portion of freight charges allocable to the unused capacity of the car. It is agreed and understood that all railcars, when loaded to full visible capacity, shall be defined as having a "light weight". 7. QUALITY. A. Seller understands that Buyer intends to sell the "Products" purchased from Seller as a primary animal feed ingredient and that said "Products" are subject to minimum quality standards outlined in Exhibit A for such use. Seller agrees and warrants that "Products" produced at it's "Plants" and delivered to Buyer shall be accepted in the feed trade under the minimum quality standards outlined in Exhibit A and shall be of merchantable quality. B. Seller warrants that all "Products" sold to Buyer hereunder shall, at the time of delivery to Buyer, conform to the minimum quality standards outlined in Exhibit A. Said minimum quality standards are subject to change at the discretion of Seller. Sufficient notice shall be deemed to be 30 days of written notification to Buyer. C. Seller warrants that at the time of loading, the "Products" will not be adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act and that each shipment may lawfully be introduced into interstate commerce under said Act. Payment of invoice does not waive Buyer's rights if goods do not comply with terms or specifications of this Agreement. Unless otherwise agreed between the parties to this Agreement, and in addition to other remedies permitted by law, the Buyer may, without obligation to pay, reject either before or after delivery, any of the "Products" which when inspected or used are found by Buyer to fail in a material way to conform to this Agreement. Should any of the "Products" be seized or condemned by any federal or state department or agency for any reason except noncompliance by Buyer with applicable federal or state requirements, such seizure or condemnation shall operate as a rejection by Buyer of the goods seized or condemned and Buyer shall not be obligated to offer any defense in connection with the seizure or condemnation. However, Buyer agrees to cooperate with Seller in connection with the defense of any quality or other product claims, or any claims involving seizure or condemnation. Buyer shall be fully responsible for, and shall indemnify Seller against any liability for, claims arising from any failure to deliver feed products, except to the extent that delivery under those contracts fails due to Seller's fault. When rejection occurs before or after delivery, at its option, Buyer may: (1) Dispose of the rejected goods after first offering Seller a reasonable opportunity of examining and taking possession thereof, if the condition of the goods reasonably appears to Buyer to permit such delay in making disposition; or (2) Dispose of the rejected goods in any manner directed by Seller which Buyer can accomplish without violation of applicable laws, rules, regulations or property rights; or (3) If Buyer has no available means of disposal of rejected goods and Seller fails to direct Buyer to dispose of them as provided herein, Buyer may return the rejected goods to Seller, upon which event Buyer's obligations with respect to said rejected goods shall be deemed fulfilled. Title and risk of loss shall pass to Seller promptly upon rejection by Buyer. (4) Seller shall reimburse Buyer for all costs reasonably incurred by Buyer in storing, transporting, returning and disposing of the rejected goods. Buyer shall have no obligation to pay Seller for rejected goods and may deduct reasonable costs and expenses to be reimbursed by Seller from amounts otherwise owed by Buyer to Seller. (5) If Seller produces "Products" which comply with the warranty in Section C above but which do not meet applicable industry standards, Buyer agrees to purchase such "Products" for resale but makes no representation or warranty as to the price at which such Product can be sold. If the Product deviates so severely from industry standard as to be unsalable in Buyer's reasonable judgment; then it shall be disposed of in the manner provided for rejected goods in Section C above. D. If Seller knows or reasonably suspects that any "Products" produced at it's "Plants" are adulterated or misbranded, or outside of minimum quality standards set forth in Exhibit B, Seller shall promptly so notify Buyer so that such Product can be tested before entering interstate commerce. If Buyer knows or reasonably suspects that any "Products" produced by Seller at it's "Plants" are adulterated, misbranded or outside of minimum quality standards set forth in Exhibit B, then Buyer may obtain independent laboratory tests of the affected goods. If such goods are tested and found to comply with all warranties made by Seller herein, then Buyer shall pay all testing costs and if the goods are found not to comply with such warranties, Seller will pay all testing costs. 8. RETENTION OF SAMPLES. Seller will take an origin sample of the "Products" from each truck or rail car before it leaves the "Plants" using standard sampling methodology. Seller will label these samples to indicate the date of shipment that the truck, rail car, or pickup number involved. Seller will also retain the samples and labeling information for no less than 6 months. At a minimum, a composite analysis on all "Products" shall be sent once a month to Buyer. It is understood that said analysis is a composite and may or may not be indicative of the current analysis. 9. INSURANCE. A. Seller warrants to Buyer that all Seller's employees engaged in the removal of "Products" from Seller's Plant shall be covered as required by law by worker's compensation and unemployment compensation insurance. B. Seller agrees to maintain throughout every term of this Agreement comprehensive general liability insurance, including Product Liability coverage, with combined single limits of not less than $2,000,000. Seller's policies of comprehensive general liability insurance shall be endorsed to require at least thirty (30) days advance notice to Buyer prior to the effective date of any decrease in or cancellation of coverage. Seller shall cause Buyer to be named as an additional insured on Seller's insurance policy and shall provide a certificate of insurance to Buyer to establish the coverage maintained by Seller by the start of the contract term. C. Buyer agrees to carry such insurance on its vehicles and personnel operating on Seller's property as Seller reasonably deems appropriate. The parties acknowledge that Buyer may elect to self insure its vehicles. Upon request, Buyer shall provide certificate of insurance to Seller to establish the coverage maintained by Buyer. D. Each of the parties hereto shall obtain from its respective insurers a waiver of subrogation provision in all insurance policies required pursuant to item C, waiving any subrogation rights against the other party. 10. REPRESENTATIONS AND WARRANTIES. A. Seller represents and warrants that all "Products" delivered to Buyer shall not be adulterated or misbranded, except that Buyer assumes all responsibility for labeling and tagging the feed products in accordance with applicable law, and assuming that Seller's "Products" meet the specifications set forth in Exhibit A as amended from time to time, within the meaning of the Federal Food, Drug and Cosmetic Act and may lawfully be introduced into interstate commerce pursuant to the provisions of the Act. Seller further warrants that the "Products" shall fully comply with any applicable state laws governing quality, naming and labeling of "Product". Payment of invoice shall not constitute a waiver by Buyer of Buyer's rights as to goods which do not comply with this Agreement or with applicable laws and regulations. B. Seller represents and warrants that "Products" delivered to Buyer shall be free and clear of liens and encumbrances. 11. EVENTS OF DEFAULT. The occurrence of any of the following shall be an event of default under this Agreement: (1) failure of either party to make payment to the other when due; (2) default by either party in the performance of the covenants, conditions and agreements imposed upon that party by this Agreement; (3) if either party shall become insolvent, or make a general assignment for the benefit of creditors or to an agent authorized to liquidate any substantial amount of its assets, or be adjudicated bankrupt, or file a petition in bankruptcy, or apply to a court for the appointment of a receiver for any of its assets or properties with or without consent, and such receiver shall not be discharged within sixty (60) days following appointment. 12. REMEDIES. Upon the happening of an Event of Default, the parties hereto shall have all remedies available under applicable law with respect to an Event of Default by the other party. Without limiting the foregoing, the parties shall have the following remedies whether in addition to or as one of the remedies otherwise available to them: (1) to declare all amounts owed immediately due and payable; and (2) to immediately terminate this Agreement effective upon receipt by the party in default of the notice of termination, provided, however, Buyer shall be allowed 3 calendar days from the date of receipt of notice of default for non-payment to cure any non-payment. Notwithstanding any other provision of this Agreement, Buyer may offset against amounts otherwise owed to Seller the price of any "Products" which fails to conform to any requirements of this Agreement. 13. FORCE MAJEURE. Neither Seller nor Buyer will be liable to the other for any failure or delay in the performance of any obligation under this Agreement due to events beyond its reasonable control, including, but not limited to, fire, storm, flood, earthquake, explosion, act of the public enemy, riots, civil disorders, sabotage, strikes, lockouts, labor disputes, labor shortages, war, stoppages or slowdowns initiated by labor, transportation embargoes, failure or shortage of materials, acts of God, or acts or regulations or priorities of the federal, state or local government or branches or agencies thereof. 14. INDEMNIFICATION. A. Seller shall indemnify, defend and hold Buyer and its officers, directors, employees and agents harmless, from any and all losses, liabilities, damages, expenses (including reasonable attorneys' fees), costs, claims, demands, that Buyer or its officers, directors, employees or agents may suffer, sustain or become subject to, or as a result of (i) any misrepresentation or breach of warranty, covenant or agreement of Seller contained herein or (ii) the Seller's negligence or willful misconduct. B. Buyer shall indemnify, defend and hold Seller and its officer, directors, employees and agents harmless, from any and all losses, liabilities, damages, expenses (including reasonable attorneys' fees), costs, claims, demands, that Seller or its officers, directors, employees or agents may suffer, sustain or become subject to, or as a result of (i) any misrepresentation or breach of warranty, covenant or agreement of Buyer contained herein or (ii) the Buyer's negligence or willful misconduct. C. Where such personal injury, death or loss of or damage to property is the result of negligence on the part of both Seller and Buyer, each party's duty of indemnification shall be in proportion to the percentage of that party's negligence or faults. 15. RELATIONSHIP OF PARTIES. This Agreement creates no relationship other than that of buyer and seller between the parties hereto. Specifically, there is no agency, partnership, joint venture or other joint or mutual enterprise or undertaking created hereby. Nothing contained in this Agreement authorizes one party to act for or on behalf of the other and neither party is entitled to commissions from the other. 16. MISCELLANEOUS. A. This writing is intended by the parties as a final expression of their agreement and a complete and exclusive statement of the terms thereof. B. No course of prior dealings between the parties and no usage of trade, except where expressly incorporated by reference, shall be relevant or admissible to supplement, explain, or vary any of the terms of this Agreement. C. Acceptance of, or acquiescence in, a course of performance rendered under this or any prior agreement shall not be relevant or admissible to determine the meaning of this Agreement even though the accepting or acquiescing party has knowledge of the nature or the performance and an opportunity to make objection. D. No representations, understandings or agreements have been made or relied upon in the making of this Agreement other than as specifically set forth herein. E. This Agreement can only be modified by a writing signed by all of the parties or their duly authorized agents. F. The paragraph headings herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. G. This Agreement shall be construed and performed in accordance with the laws of the State of Kansas. H. The respective rights, obligations and liabilities of the parties under this Agreement are not assignable or delegable without the prior written consent of the other party. I. Notice shall be deemed to have been given to the party to whom it is addressed forty-eight (48) hours after it is deposited in certified U. S. mail, postage prepaid, return receipt requested, addressed as follows: Buyer: ICM Marketing, Inc. P.O. Box 397 310 North First Colwich, Kansas 67030 Attn.: Randy Ives Seller: High Plains Corporation O. W. Garvey Bldg. 200 W. Douglas, Suite 820 Wichita, KS 67202 Attn.: Chris Glaves IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the day and year first above written. ICM Marketing, Inc. By: ______________________________ Title: President High Plains Corporation By: ______________________________ Title: Director of Procurement and Feed Sales EXHIBIT A Minimum Quality standards by product and plant: Plant Component Minimum Maximum Colwich DDGS Protein 30 % -- Fat 7.5 % -- Fiber -- 15 % Ash -- 5 % Plant Component Minimum Maximum Colwich WDGS Protein 14 % -- Fat 4 % -- Fiber -- 5 % Ash -- 2.5 % Plant Component Minimum Maximum York DDGS Protein 25 % -- Fat 7 % -- Fiber -- 15 % Ash -- 5 % Plant Component Minimum Maximum York WDGS Protein 10.5 % -- Fat 3 % -- Fiber -- 5 % Ash -- 2.5 % Minimum quality standards for all "products" shall also be deemed to be "cool and sweet, and with Aflatoxin levels less than 20 ppb maximum."

Weighted- Weighted Average Average Number Remaining Exercise Range of Exercise Prices Outstanding Life Price $1.06 to $2.63 501,000 8.2 $1.85 $3.13 to $4.81 442,200 5.0 3.56 $5.13 to $5.63 748,118 2.8 5.34 $8.34 432,000 3.7 8.34 2,123,318

Trade Accounts Receivable Balance at Sales During the Year Ended June 30, June 30, Customer 2000 1999 1998 2000 1999 A $ 572,337 $14,127,657 $17,956,247 $ -- $ 58,530 B 7,623,696 16,434,233 15,255,183 757,366 612,850 C 13,691,936 9,984,620 8,666,195 234,528 229,558 D 7,256,603 9,196,843 5,633,279 1,063,815 884,916 E 12,496,316 -- 13,091 214,344 -- $41,640,888 $49,743,353 $47,523,995 $2,270,053 $1,785,854

For the Year Ended 2000 Income Shares Per Share (numerator) (denominator) Amount Basic EPS: Income available to common stockholders $ 160,354 16,148,899 $ .01 Effect of Dilutive Securities Stock Options 63,531 Diluted EPS: Income available to common stockholders plus assumed conversions $ 160,354 16,212,430 $ .01

For the Year Ended 2000 Income Shares Per Share (numerator) (denominator) Amount Basic EPS: Income available to common stockholders $ 534,881 15,999,444 $ .03 Effect of Dilutive Securities Stock Options 15,540 Diluted EPS: Income available to common stockholders plus assumed conversions $ 534,881 16,014,984 $ .03

For the Year Ended 2000 Income Shares Per Share (numerator) (denominator) Amount Basic EPS: Loss available to common stockholders $(3,592,930) 16,095,443 $ (.22) Diluted EPS: Loss income available to common stockholders plus assumed conversions $(3,592,930) 16,095,443 $ (.22)

2000 1999 1998 Interest paid $1,548,528 $1,862,810 $1,656,796 Income taxes paid 30,000 -- --

2000 1999 1998 Purchase of plant and equipment in exchange for debt $ 26,085 $ -- $ 5,000 Increase in accrued compensation costs at implementation of employee stock purchase plan -- 23,351 -- Decrease in deferred compensation from employee terminations 80,802 4,883 51,202 Acceptance of receivable in exchange for sale of property, plant, and equipment -- 1,000,000 28,275

Filing Compare · HIGH PLAINS CORP