AGREEMENT OF
PURCHASE AND SALE OF ASSETS
BY AND BETWEEN
CENEX HARVEST STATES COOPERATIVES
and
FARMLAND INDUSTRIES, INC.
DATED NOVEMBER 16, 2001
AGREEMENT OF PURCHASE AND SALE OF ASSETS
THIS Agreement of Purchase and Sale of Assets (the "Agreement") is
entered into and made effective as of this 16th day of November, 2001, by and
between Cenex Harvest States Cooperatives, a Minnesota cooperative corporation,
with principal offices at 5500 Cenex Drive, Inver Grove Heights, MN, 55077
("CHS") and Farmland Industries, Inc., a Kansas cooperative corporation, with
principal offices at 12200 North Ambassador Drive, Kansas City, MO, 64163
("Farmland").
RECITALS
WHEREAS, Farmland is the owner of certain assets associated with its
business of wholesale marketing of energy products (the "Business"); and
WHEREAS, Farmland wishes to sell, and CHS wishes to purchase, certain
of the assets associated with Farmland's operation of the Business, upon terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties, undertakings, covenants, promises, and agreements
as set forth herein, which Farmland and CHS each acknowledge are adequate and
sufficient, Farmland and CHS do hereby agree as follows:
AGREEMENT
1. PURCHASE AND SALE OF ASSETS. Subject to all the terms and conditions set
forth in this Agreement, at the Closing (as such term is defined in Section 21.
herein) on the Closing Date (as such term is defined in Section 21. herein),
Farmland agrees to sell, transfer, assign, deliver, and convey to CHS, and CHS
agrees to purchase, assume, and accept from Farmland, all of Farmland's rights,
title, and interest to all the following described assets that are owned by
Farmland and associated with the Business (collectively referred to as the
"Assets"):
a. Real Property. Certain real estate in Amarillo, Texas owned by
Farmland and associated with the Business on the Closing Date, as more
particularly described on Exhibit "A", attached hereto and incorporated
herein, along with all buildings, fixtures, and other improvements and
appurtenances owned by Farmland that are located on and constituting a
part of such real estate on the Closing Date, together with all the
estates and rights in and to such real estate, and in and to lands
lying in streets, alleys and roads adjoining such real estate (the
"Real Property");
b. Personal Property. Certain personal property owned by Farmland and
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associated with the Business on the Closing Date,
as more particularly described on Exhibit "B", attached hereto and
incorporated herein (the "Personal Property");
c. Personal Property Leases. To the extent assignable, all of
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Farmland's rights and obligations in certain personal
property leases associated with the Business
on the Closing Date, as more particularly described on Exhibit "C",
attached hereto and incorporated herein (the "Personal Property
Leases");
d. Contracts and Agreements. To the extent assignable, all of
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Farmland's rights and obligations in certain contracts
and agreements associated with the Business
on the Closing Date, as more particularly described on Exhibit "D",
attached hereto and incorporated herein (the "Contracts and
Agreements");
e. Intellectual Property. All of Farmland's rights, title and interest
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in certain trademarks, service marks, logos,
trade names, and commercial symbols associated exclusively with the
Business on the Closing Date, as more particularly described on
Exhibit "E", attached hereto and incorporated herein (the
"Intellectual Property");
f. Business Records. Certain business records (or copies thereof),
including but not limited to a list of customers served by the
Business (the "Customer List") and all written and electronic
information, files, records, and data relating to the Customer List,
owned by Farmland and associated with the Business on the Closing
Date, as more particularly described on Exhibit "F", attached hereto
and incorporated herein (the "Business Records");
g. Country Energy, LLC. All of Farmland's membership interest in
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Country Energy, LLC (the "Investment");
h. JD Edwards ERP System. All of Farmland's investment in the JD
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Edwards ERP System, which investment was made jointly
with CHS to be used by Country Energy, LLC, as
agent for Farmland and CHS (the "ERP System");
i. Permits/Licenses. To the extent assignable, all permits and
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licenses which are held by Farmland and associated with
the Business on the Closing Date, (the
"Permits/Licenses");
j. Purchased Inventory. Certain inventories of energy products owned
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by Farmland and associated with the Business on
the Closing Date, as more particularly described in Section 7. herein
(the "Purchased Inventory").
2. EXCLUDED ASSETS. Notwithstanding anything to the contrary set forth,
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or implied, in this Agreement, it is specifically agreed to by both
Farmland and CHS that the Assets, as such term is defined in Section 1.
herein, do not include any of the following:
a. Excluded Inventory. Any inventories of energy products owned by
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Farmland on the Closing Date that are not included
in Purchased Inventory pursuant to the provisions of Section 7. herein
(the "Excluded Inventory").
b. Excluded Energy Facilities. Any interest of Farmland (including its
subsidiaries) in real and/or personal property at Farmland facilities
located at North Kansas City, Missouri, Coffeyville, Kansas, and
Phillipsburg, Kansas, and any interest of Farmland (including its
subsidiaries, including but not limited to Northeast Arkansas Oil
Company, LLC) in retail petroleum facilities.
c. Excluded Contracts/Leases. Any interest of Farmland (including its
subsidiaries) in contracts and/or leases not included on an Exhibit to
this Agreement, including but not limited to, the Petroleum Products
Transportation Agreement (inclusive of all exhibits, tariffs, and
division sheets related thereto) among Farmland, Farmland Pipeline
Company, and Williams Pipe Line Company, effective May 1, 1997.
d. Receivables. Any interest of Farmland (including its subsidiaries)
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in trade accounts and/or notes receivable as of the
Closing Date.
e. Farmland Other Business Enterprises. Any interest of Farmland
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(including its subsidiaries)
in any business enterprises not included in Farmland's wholesale
energy business, including but not limited to, Farmland Pipeline
Company, GEMM Energy Partners, LLC, Tri-Energy Limited Liability
Company, Northeast Arkansas Oil Company, LLC, Nebraska Energy Limited
Liability Company, Heartland Grain Fuels, L.P., and Dakota Fuels, Inc.
3. PROMOTION OF CHS. As additional consideration for CHS to purchase the
Business and Assets set forth herein, Farmland agrees that it shall actively
support CHS' purchase of the Business from Farmland to Farmland's member-owners,
and that it shall actively promote CHS as the preferred wholesale energy
products supplier in the agricultural marketplace ("Farmland Promotion");
provided however, that CHS agrees that Farmland shall not be required to expend
funds for the purpose of performing such Farmland Promotion.
4. COVENANT NOT TO COMPETE. As additional consideration for CHS to purchase the
Business and Assets set forth herein, Farmland agrees that, effective as of
Closing, it shall not, directly, or indirectly through any affiliate and/or
joint venture, engage in any business operations that competes, directly or
indirectly, with CHS' operation of its wholesale energy business anywhere in the
United States (the "Cenex Energy Business") for a period of seven (7) years from
and after the Closing Date (the "Non-Compete Period"), pursuant to the terms and
conditions set forth in this Section 4. (the "Covenant Not to Compete"). For all
purposes of this Section 4., each and every reference to Farmland is intended,
and shall be construed, to include Farmland, and every affiliate of Farmland,
and every joint venture in which Farmland is a partner, and/or any successor in
interest to Farmland, any affiliate of Farmland or any joint venture in which
Farmland is a partner. For all purposes of this Section 4., "affiliate" shall be
defined to be any individual or legal business entity which, directly or
indirectly, controls, is controlled by, or is under common control with,
Farmland, where the concept of "control" means the ability, directly or
indirectly, to influence the management and policies of any such individual or
legal business entity.
a. Manufacturing Activities Not a Violation. Notwithstanding anything
set forth herein to the contrary, Farmland and CHS agree that the
provisions of this Section 4. shall not apply to the following
activities by Farmland: (i) the sale of intermediate products
historically produced at the Farmland refinery at Coffeyville, KS, and
the sale of coke, steam, butane, carbon dioxide, nitrogen, argon,
oxygen, hydrogen, benzene, xylene, and/or toluene produced at the
manufacturing or processing facilities owned by Farmland (the
"Manufacturing Byproduct(s)"); and/or (ii) the sale of electricity
produced by co-generation involving utilization of manufacturing or
processing facilities owned by Farmland (the "Co-Generation
Electricity").
b. Other Energy Products. Farmland specifically acknowledges and agrees
that, except as specifically provided for in subsections c. through e.
of this Section 4., any sale of propane, and/or lubricants, and/or
gasolines and/or distillates (the "Defined Energy Product(s)") to
persons or legal business entities other than CHS at any time during
the Non-Compete Period will constitute a violation of the Covenant Not
to Compete. In the event that a manufacturing or processing facility
owned by Farmland will produce any energy product other than a Defined
Energy Product or Manufacturing Byproduct or Co-Generation Electricity
that is a product marketed by CHS as part of its Cenex Energy Business
(the "Non-Defined Energy Product"), Farmland shall notify CHS of such
Non-Defined Energy Product, and allow CHS to purchase such Non-Defined
Energy Product at a fair market value price (the "CHS Option"). In the
event that CHS notifies Farmland that it will not purchase any such
Non-Defined Energy Product, Farmland shall have the right to sell such
Non-Defined Energy Product to persons and/or legal business entities
other than CHS (the "Refused Option Sale"), and CHS agrees that
Farmland shall not be deemed to be in violation of its Covenant Not to
Compete for making any such Refused Option Sale.
c. Northeast Arkansas Facilities. Notwithstanding anything set forth
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herein to the contrary, Farmland and CHS agree
that the following provisions shall
apply to activities of Northeast Arkansas Oil Company, LLC, a wholly
owned subsidiary of Farmland ("NEA") during the Non-Compete Period.
i. NEA Business at Closing. Farmland and CHS acknowledge and
agree that, prior to the Closing Date, although NEA's primary
business consists of operating retail petroleum facilities,
NEA also markets refined energy products to customers on a
wholesale basis (the "NEA Wholesale Sales Business"), which
NEA Wholesale Sales Business will constitute a violation of
the Covenant Not to Compete as of the Closing Date.
ii. Limited Waiver of Covenant Not to Compete. Farmland and
CHS acknowledge and agree that it is currently Farmland's
intention that the NEA Wholesale Sales Business will be sold
within twelve (12) months after the Closing Date. CHS agrees
that Farmland shall not be deemed to be in violation of its
Covenant Not to Compete for a limited period of time not to
exceed twelve (12) months after the Closing Date (the "NEA
Non-Violation Period") as a result of the NEA Wholesale Sales
Business, provided that, in the event that NEA is owned by
Farmland, and in the event that NEA continues to operate the
NEA Wholesale Sales Business, NEA's operation of such NEA
Wholesale Sales Business during the NEA Non-Violation Period
is in full compliance with the provisions of subdivisions iii.
and iv. of subsection a. of this Section 4. (the "CHS Limited
NEA Waiver"). Farmland specifically acknowledges and agrees
that the CHS Limited NEA Waiver shall not be effective at any
time beyond the time period that ends twelve (12) months after
the Closing Date.
iii. No Expansion of NEA Wholesale Sales Business. In the
event that Farmland owns NEA, and in the event that NEA
continues to operate the NEA Wholesale Sales Business pursuant
to the provisions of subdivision ii. of subsection a. of this
Section 4., Farmland shall be deemed to be in violation of its
Covenant Not to Compete if the NEA Wholesale Sales Business is
expanded beyond the size of the geographical area in which NEA
conducted such NEA Wholesale Sales Business during the twenty
four (24) months prior to the Closing Date., where such
expansion occurs in any geographical area in which the Cenex
Energy Business markets energy products to customers on or
before the Closing Date.
iv. No Patronage to New Customers. In the event that Farmland,
or any affiliate of Farmland, owns NEA, and NEA continues to
operate the NEA Wholesale Sales Business pursuant to the
provisions of subdivision ii. of subsection a. of this Section
4., Farmland shall be deemed to be in violation of its
Covenant Not to Compete if it pays any patronage dividends (or
similar distribution), whether in cash, stock, or other
instrument, to any person or legal business entity as a result
of such person or legal business entity purchasing energy
products from the NEA Wholesale Sales Business if such person
or legal business entity had not purchased energy products
from the NEA Wholesale Sales Business within twenty four (24)
months prior to the Closing Date, and if such person or legal
business entity is a patron of the Cenex Energy Business on or
before the Closing Date.
d. Acquisition of Competing Business. Notwithstanding anything set
forth herein to the contrary, Farmland and CHS agree that the following
provisions shall apply in the event that Farmland becomes the owner of
a business that competes with the Cenex Energy Business (the "Competing
Business") during the Non-Compete Period as a result of a merger or
acquisition of all or substantially all of the assets of a third party
(the "Triggering Event").
i. First Right of Negotiation - Initial Period. If a
Triggering Event occurs during a period of time beginning on
the Closing Date and ending five (5) years after the Closing
Date (the "Initial Period"), Farmland shall negotiate
exclusively with CHS to sell such Competing Business to CHS
for a period of forty five (45) days beginning on the day
after the closing date of the Triggering Event (the "Initial
Period Negotiating Time"). If an agreement cannot be reached
between Farmland and CHS as to the sale of such Competing
Business to CHS on terms acceptable to Farmland and CHS within
such Initial Period Negotiating Time, then CHS agrees that
Farmland shall not be deemed to be in violation of its
Covenant Not to Compete if it operates such Competing Business
for a period of time not to exceed twelve (12) months after
the last day of the Initial Period Negotiating Time (the
"Initial Period Non-Violation Period"), at which time Farmland
shall be required to divest itself of such Competing Business,
provided that Farmland's operation of such Competing Business
during the Initial Period Non-Violation Period is in full
compliance with the provisions of subdivisions iii. and iv. of
subsection b. of this Section 4..
ii. First Right of Negotiation - Subsequent Period. If a
Triggering Event occurs during a period of time beginning on
the day immediately following the last day of the Initial
Period and ending two years after the last day of the Initial
Period (the "Subsequent Period"), Farmland shall negotiate
exclusively with CHS to sell such Competing Business to CHS
for a period of forty five (45) days beginning on the day
after the closing date of the Triggering Event (the
"Subsequent Period Negotiating Time"). If an agreement cannot
be reached between Farmland and CHS as to the sale of such
Competing Business to CHS on terms acceptable to Farmland and
CHS within such Subsequent Period Negotiating Time, then CHS
agrees that Farmland shall not be deemed to be in violation of
its Covenant Not to Compete if it operates such Competing
Business for a period of time not to exceed twelve (12) months
after the last day of the Subsequent Period Negotiating Time
(the "Subsequent Period Non-Violation Period"), at which time
Farmland shall be required to either divest itself of such
Competing Business or pay to CHS the amount of One Million
Dollars ($1,000,000) (the "Liquidated Damages Fee", which
Farmland and CHS specifically agree represents an amount that
is reasonable in light of the anticipated or actual loss and
the inconvenience or nonfeasibility of otherwise obtaining an
adequate remedy, and is not, and shall not be construed to be,
a penalty), at Farmland's option, provided that Farmland's
operation of such Competing Business during the Subsequent
Period Non-Violation Period is in full compliance with the
provisions of subdivisions iii. and iv. of subsection b. of
this Section 4.. In the event that Farmland elects to pay to
CHS the Liquidated Damages Fee, Farmland shall not be deemed
to be in violation of its Covenant Not to Compete if it
operates such Competing Business for the remainder of the
Non-Compete Period in full compliance with the provisions of
subdivisions iii. and iv. of subsection b. of this Section 4..
iii. No Expansion of Competing Business. In the event
----------------------------------- that Farmland
operates a Competing Business pursuant to the provisions of
subdivision i. and/or subdivision ii. of subsection b. of
this Section 4., Farmland shall be deemed to be in
violation of its
Covenant Not to Compete if it expands the size of the
geographical area that such Competing Business marketed to
customers during the twenty four (24) months prior to the
closing date of the applicable Triggering Event, where such
expansion occurs in any geographical area in which the Cenex
Energy Business markets energy products to customers on or
before the closing date of the applicable Triggering Event.
iv. No Patronage to New Customers. In the event that
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Farmland operates a
Competing Business pursuant to the provisions of
subdivision i. and/or
subdivision ii. of subsection b. of this Section 4.,
Farmland shall be deemed to be in violation of its Covenant
Not to Compete if it pays any patronage dividends (or
similar distribution), whether in cash, stock, or other
instrument, to any person or legal business entity as a
result of such person or legal business entity purchasing
energy products from the Competing Business while Farmland
operates such Competing Business if such person or legal
business entity had not purchased energy products from such
Competing Business within twenty four (24) months prior to
the closing date of the applicable Triggering Event, and if
such person or legal business entity is a patron of the
Cenex Energy Business on or before the closing date of the
applicable Triggering Event.
e. Refinery Production of Refined Energy Products. Notwithstanding
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anything set forth herein to the contrary, Farmland
and CHS agree that the following provisions shall apply to
activities of Farmland's Coffeyville, Kansas refinery (the
"Refinery") during the Non-Compete Period.
(i) Refinery Supply Agreement. Farmland and CHS acknowledge
and agree that, as of the Closing Date, Farmland shall sell
and deliver, and CHS shall purchase and accept the delivery
of, certain refined energy products produced at the Refinery
(the "Refined Energy Products"), pursuant to provisions of a
Refinery Supply Agreement (the "Refinery Supply Agreement").
(ii) Termination of Refinery Supply Agreement. In the event
that such Refinery Supply Agreement is terminated, for any
reason other than a "Manufacturing Shut Down" as such term is
defined in the Refinery Supply Agreement, and provided that
Farmland continues to own an uninterrupted controlling equity
interest in the Refinery, CHS agrees that Farmland shall not
be deemed to be in violation of its Covenant Not to Compete if
it sells such Refined Energy Products produced at the Refinery
to any person or legal business entity after the termination
of such Refinery Supply Agreement.
(iii) Force Majeure Declared by CHS. In the event that the
Refinery Supply Agreement is in effect, and CHS has notified
Farmland that it requests to be excused from its obligation to
purchase some or all of the Refined Energy Products produced
at the Refinery pursuant to the provisions of Paragraph 16. of
Exhibit A of the Refinery Supply Agreement (the "Force Majeure
Event") (the "Excused Refined Energy Products"), CHS agrees
that Farmland shall not be deemed to be in violation of its
Covenant Not to Compete if it sells such Excused Refined
Energy Products produced at the Refinery to any person or
legal business entity during the "continuance" of such Force
Majeure Event, which "continuance" shall conclude upon
Farmland's receipt of written notice from CHS that the
conditions leading to such Force Majeure Event have ended and
CHS is no longer requesting to be excused from its obligations
to purchase Excused Refined Energy Products (the "Force
Majeure Conclusion Notice"). Further, CHS agrees that,
provided that Farmland exercises commercially reasonable
efforts to promptly discontinue sales of Refined Energy
Products produced at the Refinery to persons or legal business
entities other than CHS following its receipt of such Force
Majeure Conclusion Notice, Farmland shall not be deemed to be
in violation of its Covenant Not to Compete if it sells
Refined Energy Products produced at the Refinery following
Farmland's receipt of such Force Majeure Conclusion Notice to
persons or legal business entities who have, prior to
Farmland's receipt of such Force Majeure Conclusion Notice,
entered into written agreements with Farmland for the sale of
such Refined Energy Products produced at the Refinery, for a
period of time not to exceed thirty (30) days after Farmland's
receipt of such Force Majeure Conclusion Notice. Farmland
specifically acknowledges and agrees that sales of Refined
Energy Products to persons or legal business entities other
than CHS at any time during the Non-Compete Period following
the time period that ends thirty (30) days after Farmland's
receipt of such Force Majeure Conclusion Notice will
constitute a violation of the Covenant Not to Compete.
(iv) Limitations On Activity That Is Not a Violation. Except
as specifically provided for in subdivision (ii) and
subdivision (iii) of this Section 4.c. of this Agreement,
Farmland specifically acknowledges and agrees that sales of
Refined Energy Products produced at the Refinery to persons or
legal business entities other than CHS at any time during the
Non-Compete Period will constitute a violation of the Covenant
Not to Compete.
f. Ethanol Joint Ventures. Notwithstanding anything set forth herein to
the contrary, Farmland and CHS agree that the provisions of this
Section 4. shall not apply to activities of joint ventures that produce
ethanol in which Farmland has an equity ownership interest (the
"Ethanol Joint Ventures"), provided that such Ethanol Joint Ventures
only sell "raw" unblended ethanol, and never sell ethanol blended with
gasoline. Farmland specifically acknowledges and agrees that sales of
ethanol blended with gasoline by any such Ethanol Joint Venture at any
time during the Non-Compete Period will constitute a violation of the
Covenant Not to Compete.
g. Equitable Relief. Farmland specifically acknowledges and agrees that
any breach or violation of the provisions of this Section 4. by itself,
or by any of its employees and/or agents, would cause CHS immediate and
irreparable harm, and the extent of such injury would be difficult to
measure, and may not be adequately compensated by money damages.
Accordingly, Farmland specifically agrees that, in the event of any
such breach or violation of any of the provisions of this Section 4.,
in addition to all the other remedies that are available at law or in
equity, CHS shall be entitled to equitable relief, including temporary
and permanent injunctive relief, to restrain any such breach or
violation without the necessity of posting bond or showing or proving
actual damage sustained by CHS, or the lack of an adequate remedy at
law, as a result of the breach or violation by Farmland.
h. Enforceability. If any provision of this Section 4. shall be
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determined by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced by reason of any rule of law or
public policy: (i) all other provisions of this Section 4. shall
nevertheless remain in full force and effect and shall be deemed
separate and divisible from all other provisions herein and none shall
be deemed to be dependent upon any other unless so expressed herein,
and (ii) such court may enforce such provision as the court finds to be
reasonable.
i. Assignability. Notwithstanding anything to the contrary herein,
Farmland acknowledges and agrees that, in the event that CHS sells all
or substantially all of the CHS Energy Business, CHS may assign, in
part or in whole, its rights and benefits set forth in this Section 4.
to the person or legal business entity that buys all or substantially
all of the CHS Energy Business as part of such sale, without the
consent of Farmland.
5. LICENSED MARKS. As additional consideration for CHS to purchase the Business
and Assets set forth herein, Farmland agrees to grant to CHS, effective as of
the Closing: (i) a non-exclusive royalty-free license to use certain trademarks,
service marks, logos, trade names, and commercial symbols, or any combination
thereof, owned by Farmland that are not associated exclusively with the Business
on the Closing Date (the "Farmland Marks") for CHS' operation of the CHS Energy
Business for a period of six (6) months from and after the Closing Date (the
"License"); and (ii) a non-exclusive royalty-free right to sublicense certain of
the Farmland Marks to customers of the CHS Energy Business for a period of two
(2) years from and after the Closing Date (the "Sublicense"); provided however
that CHS' use of such License and Sublicense is limited to the following
conditions:
a. Limited List of Farmland Marks. The License and
---------------------------------
Sublicense granted to CHS herein is applicable only to the
following Farmland Marks: Farmland(R), Big Country(R), and Double
Circle(R)(the "Licensed Marks").
b. Limited Use of Licensed Marks by CHS. CHS' use of the Licensed Marks
shall be limited to activities associated with the Cenex Energy
Business as of the Closing Date. CHS agrees that it shall use
commercially reasonable efforts to discontinue its use of the Licensed
Marks pursuant to the License as soon as practicable after the Closing.
c. Limited Use of Sublicense. CHS' Sublicense of the
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Licensed Marks shall be limited to customers of the CHS Energy
Business using such Licensed Marks as of the Closing Date.
d. General Terms and Conditions. CHS agrees that the Farmland Marks are
the sole property of Farmland and that any goodwill generated from any
and all uses of the Licensed Marks shall inure to the benefit of
Farmland. CHS also agrees that the License granted to CHS herein is
subject to and conditioned upon the agreement by CHS that any products
or services sold or transferred by CHS using the Licensed Marks will be
in accordance with, and subject to, commercial reasonable quality
controls issued by Farmland to CHS in writing. In addition, CHS agrees
that CHS' use of the Licensed Marks shall be in accordance with
commercially reasonable written instructions from Farmland, and shall
be in a manner consistent with the use of such Licensed Marks by
Country Energy, LLC, during the time that it acted as agent for
Farmland and CHS. CHS shall not, directly or indirectly, attack or
assist a third party in attacking the validity of the Licensed Marks.
CHS and Farmland shall coordinate in good faith with respect to the
enforcement of CHS' Sublicense of the Licensed Marks to customers of
the CHS Energy Business.
6. ASSUMPTION OF LIABILITIES. CHS agrees that, effective as of the Closing Date,
it shall assume and perform all obligations, liabilities, and duties of Farmland
under Personal Property Leases and Contracts and Agreements as set forth on
Exhibits "C" and "D", by an assumption instrument in the form set forth on
Exhibit "G", attached hereto and incorporated herein (the "Assumption
Agreement").
7. PURCHASED INVENTORY. Inventories of energy products to be purchased by
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CHS as of the Closing Date shall include:
a. Propane. All inventories of propane owned by Farmland and
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associated with the Business on the Closing Date
b. Lubricants. All inventories of merchantable base oils,
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additives, containers, lubricating oils, and greases owned by Farmland
and associated with the Business on the Closing Date (which
inventories exclude all base oils, additives, containers, and greases
owned by Farmland located at Farmland's North Kansas City, Missouri
Grease Plant).
c. Refined Products Additives. All inventories of additives for
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gasoline and distillate products owned by Farmland and associated with
the Business on the Closing Date.
d. Ethanol. All inventories of ethanol owned by Farmland and
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associated with the Business on the Closing Date.
e. Refined Products. All inventories of gasoline and distillate
----------------
products owned by Farmland and associated with the Business on the
Closing Date, except for inventories of gasoline and distillate
products in certain locations as set forth herein (the "Excluded
Inventories"). Excluded Inventories shall consist of all inventories of
gasoline and distillate products: (A) in the pipeline and terminals
that are part of the Williams Pipeline System, Kaneb Pipeline System,
Chase Pipeline System, and Cenex Pipeline System, and (B) in terminals
operated by CHS and located at Chippewa Falls, McFarland, and Green
Bay, Wisconsin. Excluded Inventory will be purchased by CHS from
Farmland in the ordinary course of business pursuant to mutual
agreement of Farmland and CHS as set forth in a "Inventory
Exchange/Purchase Agreement" to be executed on or before the Closing
Date.
f. Equipment. All inventories of petroleum equipment and
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propane equipment owned by Farmland and associated with the Business
on the Closing Date.
8. PRO-RATIONS.
a. Property Taxes, Utility Charges, and Lease Rentals. Real property
taxes, personal property taxes, and utility charges associated with the
Real Property and Assets at the Real Property that are due and payable
in the year of Closing and rents for Personal Property Leases shall be
pro-rated between Farmland and CHS as of the Closing Date. All special
assessments, if any, levied against the Real Property prior to the
Closing Date but due after the Closing Date shall be allocated to
Farmland as of the Closing Date.
b. Trade Payables. Trade payables associated with the Business while it
was operated by Country Energy, LLC, as agent for Farmland and CHS,
prior to the Closing Date that are unpaid as of the Closing Date shall
be paid by Farmland and CHS on and after the Closing Date, and shall be
pro-rated between Farmland and CHS effective as of the Closing Date.
c. Expenses of Country Energy, LLC. Expenses of Country Energy, LLC, as
agent for Farmland and CHS, that apply to time periods prior to the
Closing Date that are unpaid as of the Closing Date shall be paid by
Farmland and CHS on and after the Closing Date, and shall be pro-rated
between Farmland and CHS effective as of the Closing Date.
d. Netting Against Payment of Purchase Price. The net
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amount of the pro-rated amounts calculated pursuant to
subsections a. through c. of this Section 8. (the "Pro-Rations") shall
increase or decrease, as appropriate, the amount paid
by CHS to Farmland for the Assets to be sold and purchased hereunder.
9. PURCHASE PRICE. The purchase price to be paid for all the Assets
---------------
to be sold and purchased under this Agreement (the
"Purchase Price") shall be an amount equal to the sum of:
a. Assets Other Than Purchased Inventory (e.g. Real Property, Personal
Property, Personal Property Leases, Contracts, Intellectual Property,
Business Records, Investment, ERP System, and Permits/Licenses), plus
the Farmland Promotion, Covenant Not To Compete, and License and
Sublicense of Licensed Marks. Twenty nine million dollars ($29,000,000)
plus the estimated amount of money invested by Farmland for its
investment in the ERP System prior to Closing (which is an estimated
amount of approximately two million three hundred thousand dollars
($2,300,000), which estimated amount shall be mutually agreed upon by
Farmland and CHS on or before the Closing Date) (the "Base Price");
plus
b. Purchased Inventory. An amount equal to the value of
--------------------
Purchased Inventory, as calculated pursuant to mutual
agreement of Farmland and CHS on or before the Closing Date.
The Base Price shall be allocated among the Assets, exclusive of Purchased
Inventory, as set forth and described on Exhibit "H", attached hereto and
incorporated herein, for all purposes, including but not limited to tax
reporting.
10. PAYMENT OF PURCHASE PRICE. Provided that Farmland has performed all
representations, warranties, undertakings, covenants, promises, and agreements
in favor of CHS that are to be performed by Farmland on or before the Closing
Date, as set forth and described in this Agreement, CHS shall pay the Purchase
Price to Farmland as follows:
a. Payment on the Closing Date. On the Closing Date, CHS shall pay to
Farmland, by wire transfer of immediately available funds, an amount
equal to the Base Price, plus an amount equal to the estimated amount
of Purchased Inventory as mutually agreed upon by Farmland and CHS on
the Closing Date, plus or minus an estimated amount of Pro-Rations as
mutually agreed upon by Farmland and CHS on the Closing Date.
b. Payment Subsequent to the Closing Date. Farmland and CHS agree to
cooperate in good faith to complete the calculation of actual money
invested by Farmland for its investment in the ERP System, actual
Purchased Inventory and actual Pro-Rations, and compare such actual
amounts to respective estimated amounts used to calculate the cash
payment by CHS to Farmland on the Closing Date (with the collective net
differences between actual and estimated amounts to be the "Settlement
Amount") not later than thirty (30) days after the Closing Date (the
"Subsequent Payment Date"). The party owing the Settlement Amount shall
pay to the other party, by wire transfer of immediately owing funds, an
amount equal to such Settlement Amount on the Subsequent Payment Date;
provided however that in the event that Farmland and CHS have not
agreed on the Settlement Amount by the Subsequent Payment Date, then
the undisputed portion of the Settlement Amount shall be paid by the
party owing such undisputed portion of the Settlement Amount, and
Farmland and CHS shall cooperate in good faith to resolve and complete
payment of the disputed portion of the Settlement Amount as soon as
practicable after the Subsequent Payment Date.
11. DUE DILIGENCE. CHS and Farmland acknowledge that the parties have entered
into a letter agreement dated October 17, 2001 setting forth terms and
conditions pertaining to CHS' access upon the Real Property for the purpose of
conducting environmental-related investigation activities (the "Letter
Agreement"). In addition to the agreements set forth in the Letter Agreement,
Farmland agrees that: (i) CHS' agents, servants, contractors, employees, and/or
other representatives shall have the right to enter upon the Real Property
between 9:00 a.m. and 5:00 p.m. CDT on Monday through Friday for the purpose of
inspecting any or all of the Assets located at such Real Property; provided
however that any such inspection pertaining to environmental conditions must be
performed in accordance with provisions of the Letter Agreement; (ii) it shall
provide CHS with copies of all Personal Property Leases, Contracts, Business
Records and such other information as CHS reasonably deems necessary for it to
evaluate the Assets and the Business; and (iii) it shall make available to CHS
appropriate representatives of Farmland to discuss due diligence issues
pertaining to the Assets and the Business. CHS shall have until the Closing Date
to complete its due diligence review and investigation of the Assets and the
Business. Farmland specifically agrees that no inspection or other review of the
Assets and the Business by CHS, on or prior to the Closing Date, shall
constitute a waiver or relinquishment on the part of CHS of its rights to rely
on any of the representations, warranties, undertakings, covenants, promises,
and agreements of Farmland in favor of CHS as are set forth in this Agreement.
12. ENVIRONMENTAL MATTERS.
a. Warranty. Farmland represents and warrants to CHS that, to the best
of its knowledge, except as set forth on Exhibit "I", attached hereto
and incorporated herein, the Assets associated with the Real Property
are in substantial compliance with all "Applicable Environmental Laws"
(as such term is defined in subsection d. below) with respect to its
operation of the Business on the Real Property, and neither Farmland,
or any other third party, has received a notice of violation of an
Applicable Environmental Law with respect to the Real Property,
pursuant to which any government agency would require soil and/or
groundwater remediation. Further, Farmland represents and warrants
that, to the best of its knowledge, except as specifically set forth on
Exhibit "I", there are not any active, inactive, and/or abandoned
wells, and/or any underground storage tanks located on the Real
Property.
b. Environmental Due Diligence. Farmland agrees that CHS shall have the
right to perform Phase I and Phase II Environmental Site Assessments on
the Real Property (the "Environmental Assessments") prior to the
Closing Date, pursuant to the terms and conditions of the Letter
Agreement. CHS agrees to notify the environmental consultant hired by
CHS to perform the Environmental Assessments (the "Environmental
Consultant") that the Environmental Consultant must treat all the
information provided by Farmland or CHS pertaining to the Real Property
(the "Confidential Information") in accordance with the terms of the
Letter Agreement and in the same manner that the Environmental
Consultant treats its own proprietary and confidential information, and
CHS agrees that it shall not allow the Environmental Consultant to
disclose Confidential Information to any person other than Farmland or
CHS except in compliance with the terms of the Letter Agreement. CHS
and Farmland agree that CHS shall provide a copy of the Letter
Agreement to the Environmental Consultant and require such
Environmental Consultant to abide by its terms. CHS also agrees to
provide copies of final Phase I and Phase II Environmental Site
Assessment Reports pertaining to the Real Property that are issued by
the Environmental Consultant (the "Environmental Reports") to Farmland
promptly upon CHS' receipt of such final Environmental Reports.
c. Reporting Requirements. Farmland specifically agrees that it shall
be solely responsible for any and all reporting requirements
established by "Applicable Environmental Laws" (as such term is defined
in subsection d. below) resulting from final Environmental Reports;
provided however that nothing in this Section 12.c. shall be
interpreted as precluding CHS from providing any information in such
final Environmental Reports to any governmental entities: (i) at any
time after the Closing Date; or (ii) at any time prior to the Closing
Date if CHS reasonably believes, after consultation with legal counsel,
that it is specifically required by law to provide such information to
governmental entities.
d. Applicable Environmental Laws. As used herein, "Applicable
-------------------------------
Environmental Laws" shall include the: Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601, et seq.; Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq.; Federal Water Pollution
Control Act, 33 U.S.C. Section 1251, et seq.; Clean Air Act,
42 U.S.C. Section 7401, et seq.; Toxic Substances Control Act, 15
U.S.C. Section 2601, et seq.; Safe Drinking Water Act, 42
U.S.C. Section 300; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Section 136, et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. 1801, et seq.; and any
similar state and local laws and/or ordinances, and
regulations implementing such statutes and/or otherwise intended
for the protection of the environment in the state of
Texas.
13. INDEMNFICATIONS.
a. No Other Liabilities Assumed by CHS. Except as provided for in
Section 6., it is specifically agreed to by Farmland and CHS that (i)
liabilities, debts and obligations of every character or description,
known or unknown, of Farmland accruing or arising from transactions or
occurrences prior to 11:59 p.m. CST on the Closing Date (the
"Pre-Closing Liabilities"), shall be Farmland's sole obligation and
responsibility, and (ii) CHS is not assuming, and shall not have any
responsibility for, any Pre-Closing Liabilities. Notwithstanding
anything to the contrary herein, it is specifically agreed to by
Farmland that CHS shall have no responsibility for any costs associated
with any investigation, remediation and/or corrective action required
under Applicable Environmental Laws as a result of environmental
conditions existing on, under, or adjacent to the Real Property as of
11:59 p.m. CST on the Closing Date.
b. Indemnification. Farmland and CHS agree to indemnify each
---------------
other as set forth in subdivisions i. through iv. of this
subsection b.:
i. Farmland's Indemnification Obligations. Farmland agrees to
defend, indemnify and hold harmless CHS (including its
affiliates, officers, directors, employees, and agents), from
and against any and all claims, demands, damages, losses,
liabilities, causes of action, judgments, fines, assessments
(including penalties and/or interest), costs and expenses of
any kind or nature, including attorneys' fees, consultants'
fees, and costs and expenses of litigation and/or other form
of dispute resolution, without regard to amount, caused by or
arising or resulting from, whether directly or indirectly: (A)
investigation, remediation, and/or corrective action required
under Applicable Environmental Laws as a result of
environmental conditions existing at the Real Property, or any
adjoining real property, which environmental conditions
resulted from a spill and/or release on the Real Property,
prior to 11:59 p.m. CST on the Closing Date (provided,
however, that if there is not a Closing of this Agreement,
then Farmland's indemnification obligations as set forth in
this subdivision (A) shall extend to environmental conditions
resulting from any spill and/or release on the Real Property
at any time); (B) Farmland's ownership of the Assets and/or
operation of the Business prior to 11:59 p.m. CST on the
Closing Date; and/or (C) Farmland's failure to comply with any
applicable federal, state or local laws, ordinances, orders,
permits, rules, and regulations; and/or (D) Farmland's breach
of any of its representations, warranties, undertakings,
covenants, promises and agreements as set forth in this
Agreement.
ii. CHS' Indemnification Obligations. CHS agrees to defend,
indemnify and hold harmless Farmland (including its
affiliates, officers, directors, employees, and agents), from
and against any and all claims, demands, damages, losses,
liabilities, causes of action, judgments, fines, assessments
(including penalties and/or interest), costs and expenses of
any kind or nature, including attorneys' fees, consultants'
fees, and costs and expenses of litigation and/or other form
of dispute resolution, without regard to amount, caused by or
arising or resulting from, whether directly or indirectly: (A)
if there is a Closing of this Agreement, investigation,
remediation, and/or corrective action required under
Applicable Environmental Laws as a result of environmental
conditions existing at the Real Property, or any adjoining
real property, which environmental conditions resulted from a
spill and/or release on the Real Property, from and after
11:59 p.m. CST on the Closing Date; (B) if there is a Closing
of this Agreement, CHS' ownership of the Assets and/or
operation of the Business from and after 11:59 p.m. CST on the
Closing Date; and/or (C) CHS' failure to comply with any
applicable federal, state or local laws, ordinances, orders,
permits, rules, and regulations; and/or (D) CHS' breach of any
of its representations, warranties, undertakings, covenants,
promises and agreements as set forth in this Agreement.
iii. Notice of Demand for Indemnification. Within ninety (90)
days after discovery of, or constructive receipt of notice of
the assertion of, any claim as to which CHS or Farmland is, or
may be, indemnified by the other party hereto pursuant to
provisions of this Section 13.b., the party seeking
indemnification shall notify the other party hereto of such
claim, and tender to the other party the right to defend
against such claim, but reserving the right to participate, at
its own cost and expense, in the litigation and/or the
settlement of such claim. The party receiving a claim for
indemnification shall not be obligated to indemnify the party
seeking indemnification if such party seeking indemnification
(A) fails to notify the other party hereto as provided herein,
or (B) compromises or settles the claim without consent of the
other party hereto.
iv. Country Energy, LLC. Farmland and CHS acknowledge that,
since September 1, 1998 to the Closing, Country Energy, LLC
has acted as agent for Farmland and CHS in the marketing, sale
and distribution of energy products. Farmland and CHS
specifically agree that nothing in this Section 13.b. shall be
construed as expanding, limiting, or otherwise modifying, in
any way, the respective rights and obligations associated with
Farmland's and CHS' respective membership interests in Country
Energy, LLC.
v. Survival of Indemnification Obligations. Farmland
------------------------------------------
and CHS specifically agree that, notwithstanding
anything to the contrary, all of the terms and conditions of
this Section 13.b. shall survive the Closing.
14. CHS' USE OF FARMLAND'S LEGACY COMPUTER SYSTEM. Farmland agrees to allow CHS
to use Farmland's "Legacy Computer System" for a transition period after the
Closing Date, in accordance with the provisions set forth in Exhibit "J,
attached hereto and incorporated herein.
15. RECEIVABLES. Farmland and CHS mutually agree to cooperate in good
-----------
faith to resolve all issues related to receivables owned
by Farmland and CHS generated by sales of energy products before and after the
Closing Date.
- -
a. CREATION OF ACCOUNTS RECEIVABLE PRIOR TO CLOSING. During the time
period beginning September 1, 1998 through the Closing, Country Energy,
LLC sold energy products to customers of CHS and Farmland, as agent for
CHS and Farmland, with each sale being jointly made by CHS and Farmland
(the "Joint Sales"). Both CHS' and Farmland's accounts receivable
systems were used to record accounts receivable from customers
generated by such Joint Sales. Effectively, the accounts receivable
recorded on CHS' system that resulted from Farmland's share of Joint
Sales were purchased by CHS from Farmland at the time of recording, and
the accounts receivable recorded on Farmland's system that resulted
from CHS' share of Joint Sales were purchased by Farmland from CHS at
the time of recording (the "Receivable Purchases"). Such Receivable
Purchases were made with full recourse in the event that any of such
Receivables Purchases were later determined to be uncollectible. After
such Receivable Purchases were made, Farmland managed the collection of
receivables from Joint Sales recorded on Farmland's accounts receivable
system, and CHS managed the collection of receivables from Joint Sales
recorded on CHS' accounts receivable system.
b. POST-CLOSING COLLECTION OF RECEIVABLES RECORDED FROM JOINT SALES.
CHS and Farmland agree that it is their intent that for a time period
of six (6) months after Closing, Farmland will continue to manage the
collection of receivables from Joint Sales prior to Closing that were
recorded on Farmland account receivables system, and CHS will continue
to manage the collection of receivables from Joint Sales prior to
Closing that were recorded on CHS' accounts receivables system (the
"Post Closing Collection Period"). To facilitate in the timely
collection of receivables arising from Joint Sales prior to the
Closing, Farmland and CHS agree to the following:
i. Farmland irrevocably constitutes and appoints CHS, with
full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority, in
the place and stead of Farmland, and in the name of Farmland
or in its own name, without notice to or assent by Farmland,
to sign, endorse, and negotiate any check, draft, or other
instrument received by CHS as payments by customers of
accounts receivable balances owned by Farmland as of the
Closing Date.
ii. CHS irrevocably constitutes and appoints Farmland, with
full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority, in
the place and stead of CHS, and in the name of CHS or in its
own name, without notice to or assent by CHS, to sign,
endorse, and negotiate any check, draft, or other instrument
received by Farmland as payments by customers of accounts
receivable balances owned by CHS as of the Closing Date.
iii. Farmland and CHS acknowledge that some of the customers
who purchased energy products jointly from Country Energy,
LLC, as agent for Farmland and CHS, prior to Closing,
erroneously paid Farmland instead of CHS and CHS instead of
Farmland. Farmland and CHS expect that these payment errors
may continue to occur after Closing, and agree to mutually
cooperate to discuss, resolve, and settle such payment errors
weekly during the Post Closing Collection Period
c. SETTLEMENT OF RECEIVABLES FROM JOINT SALES. CHS and Farmland agree
to mutually cooperate during the Post Closing Receivable Collections
Period to promptly discuss and resolve issues arising from post-closing
collection of receivables recorded from Joint Sales prior to Closing.
At the end of the Post Closing Receivable Collections Period, CHS and
Farmland representatives shall meet to mutually agree on the proper
actions to take on open issues related to uncollected receivables from
Joint Sales prior to Closing.
d. POST-CLOSING COLLECTION OF RECEIVABLES ARISING FROM POST-CLOSING
SALES OF ENERGY PRODUCTS BY CHS. Farmland and CHS acknowledge that some
customers who purchased energy products jointly from Country Energy,
LLC, as agent for Farmland and CHS, prior to Closing, may erroneously
pay to Farmland amounts properly due to CHS for its sales of energy
products after Closing. Farmland agrees to promptly pay to CHS all such
amounts it receives.
16. GENERAL REPRESENTATIONS AND WARRANTIES OF FARMLAND. In addition to the
specific representations, warranties, undertakings, covenants, promises, and
agreements of Farmland as set forth elsewhere in this Agreement, Farmland hereby
makes the following general representations, warranties, covenants,
undertakings, covenants, promises, and agreements to, and with, CHS with the
intent that CHS may rely upon the same:
a. Organization and Standing of Farmland. Farmland is a cooperative
corporation duly organized and validly existing in good standing under
the laws of the State of Kansas, is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where
the conduct of the Business makes such qualification necessary, and has
the corporate power to own the Assets and to carry on the Business as
it is currently being conducted.
b. Corporate Authority of Farmland. Farmland has taken all corporate
actions required to authorize the execution and delivery of this
Agreement. Prior to the Closing Date, Farmland shall have taken all
corporate actions required in order to enable it to consummate the
transaction contemplated by this Agreement and to make binding upon it
all the representations, warranties, undertakings, covenants, promises,
and agreements made, and to be performed by it, under this Agreement.
c. No Breach of Other Agreements. Neither the execution of this
Agreement by Farmland, nor the Closing of the transaction contemplated
by this Agreement by Farmland, will constitute a violation of, or are
or will be in conflict with, or are or will constitute a breach of, or
default under, any term or provision of any contract, indenture or
other agreement or instrument to which Farmland is a party.
d. No Violation of Law. Neither the execution of this
---------------------
Agreement by Farmland, nor the Closing of the transaction
contemplated by this Agreement by Farmland, will constitute a
violation of any applicable law, order, rule or regulation of
any governmental or quasi-governmental authority.
e. Property Taxes/Utilities. Farmland has paid all property taxes and
special assessments associated with the Real Property which are due and
payable as of the Closing Date. All utilities for power, gas, electric,
water, sewer and telephone are available to the Real Property without
the need for any right of way, easement, or other consent in order to
access and use said utilities.
f. Compliance With Laws and Regulations. Exclusive of environmental
matters, which shall be governed solely by the provisions of Section
12. herein, the Business is in substantial compliance with all
applicable federal, state, and/or local laws, ordinances, orders,
rules, and/or regulations. Farmland's operation of its Business on the
Real Property is a permitted use of the Real Property under all the
current applicable zoning ordinances, regulations and restrictions
thereto , and to the best of Farmland's knowledge, there are no
conditions which would interfere with, or restrict, CHS' peaceful
possession of the Real Property, or CHS' intended use of the Assets as
part of the Cenex Energy Business.
g. No Legal Proceedings Affecting the Assets. Exclusive of
environmental matters, which shall be governed solely by the provisions
of Section 12. herein, to the best of Farmland's knowledge, there are
no claims, investigations, litigation and/or any other legal
proceedings, administrative or judicial, present, pending or
threatened, by any person or entity, whether regulatory or private,
which will, directly or indirectly, materially affect the use or the
marketability of any of the Assets.
h. Ownership of the Assets. On the Closing Date, Seller will own fee
title to the Real Property, free of any liens, claims, restrictions,
encumbrances or encroachments except those encumbrances shown on the
Title Insurance Commitment described in subsection m. of this Section
16. and accepted by CHS (the "Permitted Encumbrances") . On the Closing
Date, Seller shall own good and marketable title to all the Personal
Property, free of any liens, claims, restrictions, or encumbrances.
i. Condition of Real Property Improvements. Exclusive of environmental
matters, which shall be governed solely by the provisions of Section
12. herein, to the best of Farmland's knowledge, there are not, and as
of the Closing Date there will not be, any defects, structural or
non-structural, of material significance in any of the improvements to
the Real Property, including the heating, air conditioning,
ventilating, electrical, plumbing, water, sewer, or other systems
installed in such improvements.
j. Conduct of the Business. Without the prior written consent of CHS,
Farmland will not sell or otherwise dispose of, or purchase or acquire,
any assets in a manner inconsistent with any of the provisions of this
Agreement. Farmland agrees to carry on its Business in the same manner
as heretofore conducted, and will not take any action other than in
conformity with prior practice in the ordinary and regular course of
business as heretofore conducted. Further, Farmland agrees that it will
use commercially reasonable efforts to maintain all of the Assets in
the same condition as existed on the effective date of this Agreement
through the Closing Date (normal wear and tear excepted).
k. No Right of Others to Purchase the Assets. Except for the
-----------------------------------------
transactions contemplated by this Agreement, no person or
other entity has an option, or any other right, to purchase all or any
part of the Assets.
l. No Covenants, Conditions, and/or Restrictions. None of the
----------------------------------------------
Assets are subject to any agreement with any third party
which contain covenants, conditions, and/or restrictions which
affect, directly or indirectly, the use or the marketability
of the Assets, except for the Permitted Encumbrances described in
subsection h. of this Section 16., and except as set forth
on Exhibit E-1 herein .
m. Status of Real Property. Farmland represents that, at the request of
CHS, it has ordered a Title Insurance Commitment to be delivered to
CHS, committing the issuing insurance company to issue title insurance
insuring marketable title of the Real Property included in the Assets
to be conveyed hereunder, free and clear of liens, claims,
restrictions, encumbrances, or encroachments except for the Permitted
Encumbrances. CHS shall be allowed a reasonable time after receipt of
the title commitment for the making of any objections to the status of
the title of the Real Property. If any objections to the status of the
title of the Real Property are made by CHS, Farmland shall make
reasonable efforts to resolve such objections as soon as practicable
after its receipt of any such notice of objections from CHS. All
expenses incurred by Farmland in resolving any such objection(s) shall
be Farmland's sole responsibility to pay. In the event that any
objection as to title has not been resolved prior to the Closing Date,
either the Closing Date shall be delayed until all such objections have
been resolved, or upon a mutual agreement of the parties, the Purchase
Price set forth herein shall be reduced by an amount which is mutually
acceptable to CHS and Farmland, and CHS shall take such Real Property
subject to such defect(s) in title.
n. Status of Tangible Personal Property. All items of Personal Property
that are included in the Assets, including, but not limited to,
pollution control equipment, shall be conveyed to CHS on an "AS IS,
WHERE IS, WITH ALL FAULTS" basis, and except for Farmland's
representations and warranties specifically set forth in this
Agreement, including but not limited to the warranty of unencumbered
title set forth in Section 11.g., ALL WARRANTIES OR REPRESENTATIONS
CONCERNING THE CONDITION OF PERSONAL PROPERTY, INCLUDING ANY WARRANTY
OF MERCHANTABILITY OR ANY WARRANTY OF FITNESS FOR ANY PARTICULAR
PURPOSE, ARE EXPRESSLY DISCLAIMED.
o. Consents or Approvals for Assignment. In the event that the consent
or approval of a third party is required in connection with the
assignment of any of the Leases or Contracts, Farmland agrees to use
commercially reasonable efforts to obtain consent or approval from such
third party(ies); provided however, that any failure to obtain such a
consent or approval shall not constitute a breach of this Agreement, so
long as Farmland has complied with its obligation to use commercially
reasonable efforts.
17. GENERAL REPRESENTATIONS AND WARRANTIES OF CHS. In addition to the specific
representations, warranties, undertakings, covenants, promises, and agreements
of CHS as set forth elsewhere in this Agreement, CHS hereby makes the following
general representations, warranties, covenants, undertakings, covenants,
promises, and agreements to, and with, Farmland with the intent that Farmland
may rely upon the same:
a. Organization and Standing of CHS. CHS is a cooperative corporation
duly organized and validly existing in good standing under the laws of
the State of Minnesota, and has the corporate power to own the Assets
and to carry on the Business as it is currently being conducted. Prior
to the Closing Date, CHS shall be duly qualified to do business as a
foreign corporation in good standing in each jurisdiction where the
conduct of the Business makes such qualification necessary.
b. Corporate Authority of CHS. CHS has taken all corporate actions
required to authorize the execution and delivery of this Agreement.
Prior to the Closing Date, CHS shall have taken all corporate actions
required in order to enable it to consummate the transaction
contemplated by this Agreement and to make binding upon it all the
representations, warranties, undertakings, covenants, promises, and
agreements made, and to be performed by it, under this Agreement.
c. No Breach of Other Agreements. Neither the execution of this
Agreement by CHS, nor the Closing of the transaction contemplated by
this Agreement by CHS will constitute a violation of, or are or will be
in conflict with, or are or will constitute a breach of, or default
under, any term or provision of any contract, indenture or other
agreement or instrument to which CHS is a party.
d. No Violation of Law. Neither the execution of this
---------------------
Agreement by CHS, nor the Closing of the transaction
contemplated by this Agreement by CHS, will constitute a violation of
any applicable law, order, rule or regulation of any
governmental or quasi-governmental authority.
18. FARMLAND'S CONDITIONS PRECEDENT TO CLOSING. Farmland's obligation
--------------------------------------------
to consummate the transaction contemplated by this
Agreement will be subject to satisfaction of the following conditions
on or before the Closing Date:
a. Continuing Representations and Warranties. All
--------------------------------------------
representations and warranties of CHS as are contained in this
Agreement shall be true in all material respects at, or as of, the
Closing Date as though all such representations and
warranties were made at, or as of, such date.
b. CHS' Obligation to Perform. CHS shall have performed or complied
with all of its undertakings, covenants, promises, and agreements
required by this Agreement to be performed and/or satisfied by CHS at
or prior to the Closing Date.
c. Material Discrepancies/ Breaches. Farmland shall not have
----------------------------------
discovered any material error, misstatement, and/or
omission in any of the representations and warranties made by CHS in
this Agreement, or any material breach by CHS of CHS'
undertakings and agreements as set forth in this Agreement, on or
before the Closing Date.
d. Corporate Resolution. Prior to the Closing Date, CHS shall
---------------------
have delivered to Farmland for its review certified
copies of resolutions adopted by CHS' Board of Directors,
authorizing the entry into this Agreement by CHS, and consummation
of transactions contemplated herein.
e. Lender Approval. Prior to the Closing Date, Farmland's
----------------
lenders shall have given the necessary approval to enable
Farmland to execute this Agreement, and the Additional Agreements
described in Section 20.c. herein, and to consummate the
Closing of the transaction contemplated by this Agreement.
19. CHS' CONDITIONS PRECEDENT TO CLOSING. CHS' obligation to consummate
-------------------------------------
the transaction contemplated by this Agreement will be
subject to satisfaction of the following conditions on or before the Closing
Date:
a. Continuing Representations and Warranties. All
-------------------------------------------
representations and warranties of Farmland as are contained in this
Agreement shall be true in all material respects at, or as of, the
Closing Date as though all such representations and
warranties were made at, or as of, such date.
b. Farmland's Obligation to Perform. Farmland shall have
-----------------------------------
performed or complied with all of its undertakings,
covenants, promises, and agreements required by this Agreement to be
performed and/or satisfied by Farmland at or prior to
the Closing Date.
c. Material Discrepancies/ Breaches. CHS shall not have
----------------------------------
discovered any material error, misstatement, and/or omission
in any of the representations and warranties made by Farmland in
this Agreement, or any material breach by Farmland of
Farmland's undertakings and agreements as set forth in this Agreement,
on or before the Closing Date.
d. Corporate Resolution. Prior to the Closing Date, Farmland
---------------------
shall have delivered to CHS for its review certified
copies of resolutions adopted by Farmland's Board of Directors,
authorizing the entry into this Agreement by Farmland, and
consummation of transactions contemplated herein.
e. Satisfactory Due Diligence. CHS shall have completed its
---------------------------
due diligence investigation and concluded, at its sole
discretion, that it is satisfied with the results of its due diligence
investigation.
f. Release of Security Interests. Prior to the Closing Date,
------------------------------
Farmland shall have obtained termination statements and
release or satisfaction of mortgages from all parties having a security
interest in any of the Assets to be conveyed to CHS.
g. Condition of Assets. There shall have been no material
--------------------
change in the condition of all or any part of the Assets
during the time period passing from the execution of this Agreement to
the Closing Date.
h. Contract with OSG. CHS shall have negotiated to its satisfaction, at
its sole discretion, a contract with One System Group ("OSG")
pertaining to CHS' transition use of Farmland's Legacy Computer System.
20. RECIPROCAL CONDITIONS PRECEDENT TO CLOSING. In addition to the
--------------------------------------------
respective conditions precedent to closing as set forth in
Sections 18. and 19. herein, CHS' and Farmland's respective obligation to
consummate the transaction contemplated by this Agreement
will be subject to satisfaction of the following conditions on or before the
Closing Date:
a. Completion of Exhibits. CHS and Farmland acknowledge and agree that
certain of the Exhibits attached to this Agreement have not been
completed as of execution of this Agreement. CHS and Farmland agree
that they shall cooperate in good faith to ensure that all such
Exhibits are completed by the Closing Date, and the completion of all
such Exhibits shall be a closing condition for each of CHS and
Farmland.
b. Mutual Agreements. Farmland and CHS acknowledge and agree that
certain provisions set forth in this Agreement require mutual agreement
of both parties hereto. Farmland and CHS agree that they shall
cooperate in good faith to ensure that all such required mutual
agreements are achieved by the Closing Date, and the completion of all
such mutual agreements shall be a closing condition for each of
Farmland and CHS.
c. Execution of Additional Agreements. CHS and Farmland shall negotiate
and execute a Refinery Supply Agreement with respect to the production
of refined energy products at Farmland's Coffeyville, KS refinery, a
Grease Supply Agreement with respect to the production of grease
products at Farmland's North Kansas City, MO grease plant, a Management
Oversight Agreement with respect to activities of NEA's retail
petroleum facilities, an Inventory Exchange/Purchase Agreement with
respect to Excluded Inventory, a Terminal Throughput Agreement with
respect to Farmland's terminal at Philipsburg, KS, and a Lease
Agreement with respect to Farmland Transportation's use of space at the
Real Property (collectively, the "Additional Agreements"). CHS and
Farmland agree that they shall cooperate in good faith to ensure that
all of the Additional Agreements are executed by the Closing Date, and
the completion of all such Additional Agreements shall be a closing
condition for each of Farmland and CHS.
21. CLOSING. Subject to and conditional upon the satisfaction of the
-------
conditions precedent set forth in Sections 18., 19., and
20. herein, consummation of the purchase and sale of Assets, pursuant to
terms and conditions of this Agreement (the "Closing"),
shall be held on November 30, 2001, or such other date as is mutually
agreed upon by the parties and shall occur at such place and
time as is mutually agreed upon by the parties (referred to as the
"Closing Date").
a. Deliveries by Farmland at the Closing. At the Closing, Farmland
shall sell, transfer, assign, deliver, and convey all of the Assets to
be sold hereunder, and shall deliver to CHS a General Assignment and
Bill of Sale in a form set forth on Exhibit "K", attached hereto and
incorporated herein, effective to vest in CHS good and marketable title
to all of the Assets other than Real Property, free and clear of any
liens, claims, restrictions, or encumbrances, and a Special Warranty
Deed in a form and substance acceptable to CHS, effective to vest in
CHS good and marketable title to the Real Property, free and clear of
any liens, claims, restrictions, encumbrances, or encroachments except
for Permitted Encumbrances. Upon completion of the Closing, Farmland
shall also instruct the title insurance company which issued a
commitment for a policy of title insurance (pursuant to Section 16.m.
herein) to issue and deliver a policy of title insurance consistent
with the terms of this Section 21.a. to CHS.
b. Deliveries by CHS at the Closing. At the Closing, CHS
----------------------------------
shall deliver to Farmland a cash payment as provided in
Section 10. herein, and an Assumption Agreement in the form set
forth on Exhibit "H", effective to assume all the
obligations and liabilities of Farmland as set forth in Section 5.
herein.
c. Sales/Transfer Taxes/Fees. Farmland shall be responsible to pay any
and all recording fees, sales taxes, transfer taxes, appraisal costs,
survey costs, and title insurance policy expenses applicable to, or
incurred pursuant to, or resulting from, the sale, transfer,
assignment, delivery, and conveyance of the Assets (the "Transfer
Fees"). Upon the payment of all Transfer Fees, Farmland shall remit to
CHS an invoice for one-half of such Transfer Fees, which invoice shall
be paid by CHS promptly upon its receipt of such invoice and copies of
invoices for Transfer Fees paid by Farmland.
d. Delivery of Assets; Risk of Loss. Delivery of possession of Assets
purchased hereunder shall be deemed to have occurred, for all purposes,
at 11:59 p.m. CST on the Closing Date, and all the risks of loss,
whether or not covered by insurance, shall be on Farmland until such
time, and on CHS from and after such time.
22. DISPUTE RESOLUTION PROCESS. Farmland and CHS each agree to act in good faith
to resolve any dispute which may arise out of or relate to the obligations
and/or rights of the parties hereto pertaining to the terms and conditions of
this Agreement. If any such dispute arises, Farmland and CHS each agree to
attempt to resolve such dispute through the following procedures.
a. Negotiating Person. Representatives of each party shall
-------------------
meet within ten (10) days after a request by either party.
The meeting shall be held at the offices of the party receiving the
request to meet at a mutually agreed upon time.
b. Senior Executives. In the event that such dispute has not been
resolved by the procedures as set forth in subsection a. of this
Section 22. within twenty (20) days after the first meeting of the
parties, then the dispute shall be referred to senior executives for
both parties, and such executives shall meet for negotiations on the
dispute not later than fifteen (15) days after the end of the twenty
(20) day period set forth herein. The meeting shall be held at the
offices of the party receiving the request to meet at a mutually agreed
upon time.
c. Additional Meetings. In the event that more than one meeting
--------------------
is scheduled by the parties pursuant to subsection a.
or subsection b. of this Section 22., the location of such
meetings shall alternate between the offices of the party
receiving the request to meet and the party making the request to meet.
d. Binding Arbitration. In the event that the dispute has not been
resolved within thirty (30) days after the initial meeting of the
senior executives described in subsection b. of this Section 22.,
unless the parties mutually agree to change the procedures, the parties
will then attempt in good faith to resolve the dispute in accordance
with the Center for Public Resources ("CPR") applicable binding
arbitration procedures then in effect. Any such binding arbitration
procedure shall be governed by the Federal Arbitration Act 9 U.S.C.
ss.ss.1-16, and judgment upon the arbitration award rendered by the
arbitrator may be entered by any court having jurisdiction thereof. The
place of arbitration shall be the principal place of business of the
party who received the original request to meet, unless the parties
mutually agree to another location. Each of Farmland and CHS shall be
responsible for one-half (1/2) of the fees charged by CPR and the
arbitrator for such binding arbitration. Each of Farmland and CHS shall
bear its own attorney's fees and costs associated with prosecuting or
defending the claim brought pursuant to the dispute resolution process
procedures set forth in this Section 22. of the Agreement.
23. NOTICES. All notices, requests, demands, or other communications provided
for in this Agreement shall be in writing and delivered in person, or by
facsimile transmission, or deposited in the United States mail, postage prepaid,
for mailing by certified mail, return receipt requested, addressed as follows:
a. If to CHS: CHS Cooperatives
---------
5500 Cenex Drive
St. Paul, MN 55077
Attention: Leon Westbrock
Telephone Number: 651-451-5284
Facsimile Number: 651-451-4905
with a copy to: CHS Cooperatives
5500 Cenex Drive
St. Paul, MN 55077
Attention: Scott T. Beiswenger
Telephone Number: 651-306-3751
Facsimile Number: 651-451-4554
b. If to Farmland: Farmland Industries, Inc.
--------------
12200 North Ambassador Drive
Kansas City, MO 64163
Attention: Robert Honse
Telephone Number: 816-713-6415
Facsimile Number: 816-713-5933
with a copy to: Farmland Industries, Inc.
12200 North Ambassador Drive
Kansas City, MO 64163
Attention: Robert Terry
Telephone Number: 816-713-8263
Facsimile Number: 816-713-5902
or to such other address as either party shall designate by written notice to
the other party hereto. All such notices, requests, demands or other
communications shall be effective when actually delivered, if in person, or when
actually received, in the case of a facsimile transmission, or on the third
business day after being deposited in the mail.
24. ADDITIONAL INSTRUMENTS AND FURTHER ASSURANCES. Farmland agrees that it will,
upon receiving a request from CHS, on and/or after the Closing Date, execute and
promptly deliver to CHS such other instruments of sale, transfer, assignment,
and conveyance, and/or take such other actions, as CHS reasonably believes are
necessary or proper, to more effectively vest ownership of the Assets in CHS
and/or to put CHS in possession of all the Assets. CHS agrees that it will, upon
receiving a request from Farmland, on and/or after the Closing Date, execute and
promptly deliver to Farmland such additional instruments and to take such other
actions as Farmland reasonably believes are necessary or proper to evidence the
assumptions, covenants and agreements of CHS under this Agreement. In addition,
Farmland and CHS each agree to the following terms and conditions in respect of
business records, including written and electronic information, files, records,
and associated data, related to their respective wholesale energy businesses,
including business records (or copies thereof) related to their joint wholesale
energy business managed by Country Energy, LLC (the "Wholesale Energy Business
Records"):
(a) Business Records Retention. Farmland and CHS each agree to retain
all their respective Wholesale Energy Business Records after the
Closing Date in accordance with their respective record retention
policies, which record retention policies shall require retention of
records for a period of time at least as long as the time required by
applicable law.
(b) Response to Reasonable Request. Farmland and CHS each agree that,
upon receiving a request from the other party after the Closing Date,
provide reasonable access to the other party to their respective
Wholesale Energy Business Records, or deliver to the other party copies
of such Wholesale Energy Business Records, and/or take such other
actions (including, but not limited to, providing reasonable access to
employees), as the other party reasonably believes are necessary to
resolve employee claims and/or third party claims, and/or necessary to
comply with legal and/or regulatory matters.
CHS and Farmland each agree that to perform all of their respective obligations
set forth in this Section 24. without further consideration from the other party
hereto, other than reimbursement of out of pocket expenses incurred in
performing such obligations.
25. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties agree that all the
representations, warranties, undertakings, covenants, promises, and agreements
contained herein or made pursuant to this Agreement shall survive the Closing
Date for a period of the statute of limitations that is applicable thereto, and
shall not be merged into the Closing. Each party hereto shall be, and shall
remain, liable to the other party hereto for the amount of all damages or losses
to such party resulting from any breach of, or inaccuracy in, such
representations and warranties, or failure to observe or comply with any such
undertakings, covenants, promises, and agreements.
26. EXHIBITS. All Exhibits attached hereto are expressly made a part of
--------
this Agreement as fully as though completely set forth
herein. All statements contained in any Exhibit are an integral part of this
Agreement, and shall be deemed to be representations
and warranties of the party making such statement.
27. ENTIRE AGREEMENT. This Agreement, including the Exhibits attached hereto,
contains the entire understanding between the parties hereto relating to the
subject matter hereof, and shall supersede all prior negotiations,
representations, agreements, and understandings, whether oral or written,
between these parties with respect to the subject matter herein, and neither
party shall be liable or bound to the other in any manner by any warranties or
representations (whether oral, implied, or otherwise) not set forth herein.
28. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall for all purposes be deemed to
be an original, and all of which shall constitute one and the same Agreement.
29. HEADINGS. The headings of sections in this Agreement are
--------
inserted for convenience only and shall not be deemed to
constitute a part of this Agreement, or to affect interpretation of provisions
hereof.
30. MODIFICATION AND WAIVER. The failure of either party to exercise any right,
power, or option given it hereunder, or to insist on strict compliance with all
terms and conditions hereof, shall not constitute a waiver of any term,
condition, or right under this Agreement, unless and until that party shall have
confirmed any such action or inaction to be a waiver in writing. Any such waiver
shall not act as a waiver of any other terms, conditions, or rights under this
Agreement, or the same term, condition or right on any other occasion not
specifically waived in writing by such party. This Agreement may be modified,
altered or amended only by a writing signed by each party with the same
formality as the Agreement.
31. SUCCESSORS AND ASSIGNS. Except as provided in Section 4.d., this Agreement
may not be assigned by either party hereto, in full or in part, without prior
written consent of the other party, which consent shall not be unreasonably
withheld; provided, however, that such consent need not be obtained in the case
of assignment through a merger, consolidation or any form of joint venture
involving one of the parties. The terms and conditions of this Agreement shall
inure to the benefit of, and shall be binding upon, respective successors and
permitted assigns of the parties hereto.
32. SEVERABILITY. Wherever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but in the event that a term or provision of this Agreement shall be determined
by a court of competent jurisdiction to be invalid or unenforceable under
applicable law, such term or provision shall be ineffective to the extent of
such a term or provision, but the remainder of this Agreement shall not be
affected thereby, and all the other terms and provisions of this Agreement shall
be valid and enforced to the fullest extent permitted by law. Upon a
determination that a term or provision is invalid, illegal, or incapable of
being enforced, the parties agree to negotiate in good faith to modify this
Agreement so as to effect their original intent as closely as possible.
33. BROKERS. Farmland and CHS represent to each other that no broker or other
party claiming a commission or finder's fee has been engaged in respect of the
transactions described in this Agreement. It is specifically agreed to by both
Farmland and CHS that the other party hereto shall not be liable for costs or
expenses of any real estate broker's commission, agent's commission, or finder's
fee of the other party, in connection with or arising out of the transactions
described in this Agreement, and each party hereto agrees to defend, indemnify
and hold harmless the other party hereto from and against all costs and expenses
of any kind or nature, including attorneys' fees and costs and expenses of
litigation and/or other form of dispute resolution, incurred or suffered by the
other party hereto, as a result of any real estate broker's commission, agent's
commission, or finder's fee for which the indemnifying party is responsible.
Each party hereto agrees that it shall be liable for its own legal, accounting
and administrative expenses in connection with the transaction described in this
Agreement.
34. BULK TRANSFER LAWS. CHS hereby waives compliance by Farmland with any
applicable bulk transfer laws (including the bulk transfer provisions of the
Uniform Commercial Code as adopted in Minnesota, Kansas, Missouri, and/or Texas,
and/or any similar applicable statute relating to sales in bulk or sales not in
the ordinary course of business) relating to the transactions contemplated by
this Agreement. Farmland agrees to defend, indemnify and hold harmless CHS from
and against all costs and expenses of any kind or nature, including attorneys'
fees and costs and expenses of litigation and/or other form of dispute
resolution, incurred or suffered by CHS which are in any way associated with
Farmland's failure to comply with any bulk transfer laws.
35. CONFIDENTIALITY UPON TERMINATION. In the event this Agreement is terminated
or rescinded for whatever reason Farmland and CHS shall keep confidential, and
shall cause their respective affiliates, officers, directors, employees, agents,
and representatives (including but not limited to each party's lenders and third
party professionals) to keep confidential, all the contents of this Agreement,
and all the documents or materials related thereto, except as may be required by
law or administrative process.
36. NO THIRD PARTY BENEFICIARY. Nothing contained in this Agreement
---------------------------
shall be considered or construed as conferring any right or
benefit on any person or entity other than Farmland and CHS, and their
respective permitted successors and assigns.
37. SECURITY INTERESTS PERMITTED. CHS and Farmland agree that no provision of
this Agreement shall be construed as limiting, in any way, the respective rights
of CHS and Farmland (each, a "Granting Party") to grant to a lender(s) a
security interest in the respective Granting Party's rights as set forth in this
Agreement (a "Security Interest"); provided however, that nothing set forth in
this Section 37. is intended to, or shall be construed as, creating any conflict
with any other provision of this Agreement, or relieving either CHS or Farmland
of any of its obligations set forth in this Agreement. Upon receiving a request
from the Granting Party, on and/or after the Closing Date, the other party
hereto (the "Non-Granting Party") shall make efforts that the Non-Granting Party
believes are commercially reasonable to cooperate with reasonable requests from
the Granting Party and the Granting Party's lender(s) to execute documents that
are not inconsistent with the provisions of this Agreement and the intent of the
parties in executing this Agreement.
38. CHOICE OF LAW. This Agreement, and all rights, obligations, and
-------------
duties arising hereunder, and all disputes which may arise
hereunder, shall be construed in accordance with, and governed by, laws of the \
State of Minnesota.
THIS AGREEMENT OF PURCHASE AND SALE SHALL NOT CONSTITUTE A CONTRACT BETWEEN
THE PARTIES UNLESS AND UNTIL IT HAS BEEN FULLY EXECUTED
BY BOTH PARTIES
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective on the day and year first above written.
CENEX HARVEST STATES COOPERATIVES
By: ________________________________________
John Johnson
Its: President and Chief Executive Officer
FARMLAND INDUSTRIES, INC.
By: ________________________________________
Robert Honse
Its: President and Chief Executive Officer
EXHIBIT "A"
REAL PROPERTY - Page 1/2
LEGAL DESCRIPTION OF REAL PROPERTY
TRACT ONE:
A 0.527 acre tract of land in Section No. 183, Block No. 2, A.B. & M.
Survey, Randall County, Texas, being more particularly
described by metes and bounds as follows:
BEGINNING at a point located N 0(0)08'14" W a distance of 1582.32 feet and S
89(0)53'30" W a distance of 850.80 feet from the Southeast corner of said
Section No. 183, and said point being located on the Southeasterly property line
of the Atchison, Topeka and Santa Fe Railway Company;
THENCE N 16(0)57' E a distance of 56.4 feet to a1/2" iron rod set for corner;
THENCE N 89(0)53'30" E a distance of 418.01 feet to a1/2" iron rod set for
corner;
THENCE S 0(0)06'30" E a distance of 53.9 feet to a point;
THENCE S 89(0)53'30" W a distance of 434.55 feet to the POINT OF BEGINNING.
TRACT TWO:
A 5.000 acre tract of land in Section 183, Block 2, A.B. & M. Survey, Randall
County, Texas, being more particularly described by metes and bounds as follows:
BEGINNING at a point located N 0(0)08'14" W. a distance of 1582.32 feet
and S. 89(0)53'30" W. a distance of 850.80 feet from the
Southeast corner of said Section 183, and said point being located in the
Southeasterly property line of the Atchison, Topeka and
Santa Fe Railway Company;
THENCE N. 89(0)53'30" E. a distance of 434.55 feet to a point;
THENCE S. 0(0)06'30" E. a distance of 434.55 feet to a point;
THENCE S. 89(0)53'30" W. a distance of 567.89 feet to a point;
THENCE N. 16(0)57' E. along the Southeasterly property line of the Atchison,
Topeka and Santa Fe Railway Company, a distance of 454.55
feet to the POINT OF BEGINNING.
EXHIBIT "A"
REAL PROPERTY - Page 2/2
LEGAL DESCRIPTION OF REAL PROPERTY
TRACT THREE:
A 10 acre tract of land out of Section 183, Block 2, A.B. & M. Survey, Randall
County, Texas, lying between Washington Street and the Santa Fe Railroad, and
being further described by metes and bounds as follows:
BEGINNING from a point whence the Southeast 183 bears South 2,273.1 feet and
East 50 feet, said point being in the West right of way of Washington;
THENCE West 587.2 feet to a point in the East right of way line of the Santa Fe
Railroad;
THENCE South 16(0)57'8" West along said Santa Fe Railroad right of way a
distance of 665.6 feet to a point;
THENCE East 781.2 feet to a point in the West right of way line of Washington
Street;
THENCE North along the West right of way line of Washington Street 636.7 feet to
the PLACE OF BEGINNING.
EXHIBIT "B"
PERSONAL PROPERTY
Any and all personal property owned by Farmland and associated with the
Business as of the Closing Date including, but not limited to, the following:
1. Those specific items of personal property listed in Exhibit B-1
(consisting of 15 pages), attached hereto and incorporated herein, that
are located on, or otherwise used in connection with, the Real
Property.
2. Any and all additive equipment and/or additive systems owned by
Farmland and used at terminals to inject additives into gasolines
and/or distillates or propane, except for the red dye additive system
owned by Farmland and located at Farmland's refinery at Coffeyville,
Kansas.
3. Any and all computer equipment, copiers, facsimile, printers, office
furniture and other office equipment owned by Farmland as of the
Closing Date that have been utilized by employees of Country Energy,
LLC, as agent for Farmland and CHS, prior to the Closing Date.
[NOTE: EXHIBIT B-1 IS THE 15 PAGE LISTING OF PERSONAL PROPERTY AT AMARILLO
PROVIDED BY FARMLAND.]
EXHIBIT "C"
PERSONAL PROPERTY LEASES
Any and all personal property leases to which Farmland is a party that
are associated with the Business as of the Closing Date including, but not
limited to, the following:
1. Farmland's interest in any and all written and/or oral leases in
connection with the Business operated by Farmland at the
Real Property.
2. Farmland's interest in any and all written and/or oral leases of
computer equipment, copiers, facsimile equipment, printers, office
furniture and other office equipment existing as of the Closing Date
that have been utilized by employees of Country Energy, LLC, as agent
for Farmland and CHS, prior to the Closing Date.
3. Farmland's interest in any and all written and/or oral leases entered
into by Farmland for the purpose of storing gasolines
and/or distillates or propane.
EXHIBIT "D"
CONTRACTS and AGREEMENTS
Any and all contracts and agreements to which Farmland is a party that
areassociated with the Business as of the Closing Date including, but not
limited to, the following:
1. Farmland's interest in written and oral contracts and agreements with
customers, vendors, suppliers and other parties including, but not
limited to, contracts and agreements in connection with the Business
operated by Farmland at the Real Property, and contracts and agreements
in connection with the Business managed by Country Energy, LLC, as
agent for Farmland and CHS.
2. Farmland's interest in that certain Asset Purchase Agreement entered
into as of May 1, 2000, by and between Williams Energy Marketing &
Trading Company and The Williams Companies, as Seller, and CHS and
Farmland acting through Country Energy, LLC, as Buyer.
3. Farmland's interest in that certain Propane Supply Agreement entered
into as of May 1, 2000 by and between Williams Energy Marketing &
Trading Company and The Williams Companies, as Supplier, and CHS and
Farmland acting through Country Energy, LLC, as Customer.
4. Farmland's interest in that certain Agreement for the Sale of Base
Oils entered into as of December 15, 2000 by and between
Conoco, Inc., as Seller, and CHS and Farmland acting through Country
Energy, LLC, as Buyer.
5. Farmland's interest in that certain Contract of Sale entered into as of
December, 2000 by and between ExxonMobil Lubricants and Petroleum
Specialties Company, a division of ExxonMobil Corporation, as Seller,
and Country Energy, LLC, as Buyer.
EXHIBIT "E"
INTELLECTUAL PROPERTY
All of Farmland's rights, title, and interest in intellectual property
associated exclusively with the Business on the Closing Date, including, but not
limited to, those specific trademarks, service marks, logos, trade names and
commercial symbols listed in Exhibit E-1 (consisting of 5 pages), attached
hereto and incorporated herein.
EXHIBIT E-1
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
TRADEMARK REG. NO. OWNER STATUS OUTSIDE COUNSEL
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
RUBY FIELDMASTER Licenses from Farmland
and Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
AMPRIDE (Class 4) 1,832,572 Farmland Registered. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
AMPRIDE (Class 37, 42) 1,498,043 Farmland Registered. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
AMPLUS 1,538,999 Farmland Registered. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
BULL'S EYE & DESIGN 1,923,168 Farmland Mark not renewed. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
CIRCLE THREE 1,089,532 Farmland Registered. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
CLEANGUARD 1,618,344 Farmland Registered. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
DOUBLE CIRCLE 0,826,728 Farmland Registered. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
IRRIFLEX 1,509,833 Farmland Registered. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
TRADEMARK REG. NO. OWNER STATUS OUTSIDE COUNSEL
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
LITH-GARD 0,826,729 Farmland Registered. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
LUBE SCAN 2,408,655 Farmland Registered. Outside Counsel:
Spencer Fane Britt & Browne
1000 Walnut St., Suite 1400
Kansas City, MO 64106
Contact: Ed Marquette
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
MARKSMAN 1,917,564 Farmland Mark not renewed. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
MAXTRON 2,097,768 Farmland Registered. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
PROPANE LOGO 2,174,860 Farmland Registered Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
RUBY 1,522,334 Farmland Registered. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
SHARPSHOOTER 1,923,169 Farmland Mark not renewed. Outside counsel:
Hovey Williams
2450 Grand
Kansas City, MO 64111
Contact: Bob Hovey
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
SUPER TMS PLUS 1,717,403 Farmland Registered. Outside Counsel:
Shook, Hardy & Bacon
1200 Main Street, Suite 2700
Kansas City, MO 64105
Contact: Bill Kircher
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
CENEX (Class 37, 42) 1,591,300 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
CENEX (Class 37, 42) 1,590,170 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
CENEX (Class 4) 1,070,076 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
TRADEMARK REG. NO. OWNER STATUS OUTSIDE COUNSEL
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
CENEX (Class 4) 0,652,618 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
CENEX (Class 3) 1,053,822 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
CENEX ROADMASTER XL 2,080,468 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
Cenex Xpress 24 75/839,190 Farmland Registration pending. Outside Counsel:
Spencer Fane, Britt & Browne
1000 Walnut St., Suite 1400
Kansas City, MO 64106
Contact: Ed Marquette
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
COME TO THE ISLANDS 1,975,692 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
FIELDMASTER XL 1,600,264 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
ML 365 0,797,694 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
PUMP 24 1,345,817 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
QWIKLIFT 0,678,328 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
PLATINUM D 1,977,240 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
SNOW MAX 2,364,965 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
STAY CLEAN 1,616,368 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
TC BIO PLUS 1,829,155 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
TOWNMART 1,444,612 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
TRI-BAND/TRI-COLOR DESIGN 1,862,003 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
VIKING 1,635,924 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
WINTER MASTER 2,300,725 Cenex
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
CF ROADMASTER N/A N/A Mark not N/A
registered.
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
DRIP SOYL N/A N/A Mark not registered. N/A
Country
Energy
using
the
mark
with
the
(TM)
symbol.
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
TRADEMARK REG. NO. OWNER STATUS OUTSIDE COUNSEL
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
HTB 76/225,106 (Serial No.) Country Energy Mark filed by Farmland Farmland Legal
on behalf of Country 12200 N. Ambassador Drive
Energy. Pending Kansas City, MO 64163
registration. Contact: Ami Wisdom
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- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
INDOL ISO N/A N/A Mark not registered. N/A
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
KLEANSWEEP 76/274,819 (Serial No.) Farmland Mark filed by Farmland Legal
Farmland. Pending 12200 N. Ambassador Drive
registration. Kansas City, MO 64163
Contact: Ami Wisdom
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- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
MOLYPLEX 500+ N/A N/A Mark not registered. N/A
Country
Energy
using
the
mark
with
the
(TM)
symbol.
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
TC-501 N/A N/A Mark not registered. N/A
Country
Energy
using
the
mark
with
the
(TM)
symbol.
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
TC-502 N/A N/A Mark not registered. N/A
Country
Energy
using
the
mark
with
the
(TM)
symbol.
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
License of: 2,233,978 Automotive No file. Country N/A
AUTO GOLD Gold, Inc. Energy employees
believe the mark has
been licensed to CE for
use.
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
License of: 1,410,407 Beverly Hills No file. Country N/A
BLUEGARD 500+ Motoring Energy employees
Accessories
believe
the
mark
has
been
licensed
to
CE
for
use.
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
SOYMASTER N/A N/A Mark not registered. N/A
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
SUPERLUBE 518 N/A N/A Mark not registered. N/A
Country
Energy
using
the
mark
with
the
(TM)
symbol.
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
TRADEMARK REG. NO. OWNER STATUS OUTSIDE COUNSEL
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
TC-W3 1,847,512 National Marine No file. TC-W3 is a N/A
Manufacturers certification mark that
Association,
Inc
certifies
that
engine
lubricants
tested
meet
the
standards
set
forth
in
the
Certificate
Test
Booklet.
Used
by
the
industry.
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
TOTAL PROTECTION PLAN N/A N/A Mark not registered. N/A
Country
Energy
using
the
mark
with
the
(TM)
symbol.
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
LUBESCAN 2,408,655 Farmland Registered. Outside Counsel:
Spencer Fane Britt & Browne
1000 Walnut St., Suite 1400
Kansas City, MO 64106
Contact: Ed Marquette
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VALUE ASSURANCE 75/877957 (Serial No.) Farmland Mark filed by Farmland Legal
Farmland. Pending 12200 N. Ambassador Drive
registration. Kansas City, MO 64163
Contact: Ami Wisdom
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BIOMAX Other registrations: Other owners Mark not registered by N/A
78023910; 74077994; Farmland.
78035194; 75692626;
75511202;75510705;
75337633;75171746;
75014184;74497847;
74514418;74380579;
73254753
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SECURE COMFORT (WORD) 75/877956 (Serial No.) Farmland Mark filed by Farmland Legal
Farmland. Pending 12200 N. Ambassador Drive
registration. Kansas City, MO 64163
Contact: Ami Wisdom
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SECURE COMFORT DESIGN 75/877955 (Serial No.) Farmland Mark filed by Farmland Legal
Farmland. Pending 12200 N. Ambassador Drive
registration. Kansas City, MO 64163
Contact: Ami Wisdom
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- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
AUTOPLUS Other registrations: Other owners Mark not registered by N/A
75788525; Farmland.
75490406; 75490408;
75623886; 74454386;
73737387
- ------------------------------- --------------------------- ----------------- ------------------------- ----------------------------
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QWIKLIFT HTB N/A N/A Mark not registered. N/A
HTB is pending
registration.
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EXHIBIT "F"
BUSINESS RECORDS
Any and all business records(or copies thereof) owned by Farmland and
associated with the Business as of the Closing Date including, but not limited
to, the following:
1. Farmland's interest in the Customer List.
2. Farmland's interest in any and all credit files and records relating to
customers identified on the Customer List including, but not limited
to, credit files and records that predate the formation of Country
Energy, LLC, as agent for Farmland and CHS; provided however, that CHS
agrees that Farmland shall have the right to retain such credit files
for as long a period of time as Farmland believes is reasonably
necessary to collect accounts receivable existing as of the Closing
Date.
EXHIBIT "G"
ASSUMPTION AGREEMENT
IN CONSIDERATION of the assignment by FARMLAND INDUSTRIES, INC., a
Kansas cooperative corporation ("Farmland") to CENEX HARVEST STATES
COOPERATIVES, a Minnesota cooperative corporation ("CHS") of all of Farmland's
rights, title and interest in Personal Property Leases and Contracts (as such
terms are defined in that certain Agreement of Purchase and Sale of Assets
effective as of November __, 2001, by and between Farmland and CHS), CHS does
hereby assume, and agree to be bound by, and to perform, observe and comply
with, all of the terms, covenants, conditions, undertakings, and other
provisions of all such Personal Property Leases and Contracts from and after
November __, 2001, in the same manner and with the same force and effect as if
CHS had originally executed all such Personal Property Leases and Contracts.
IN WITNESS WHEREOF, CHS has caused this Assumption Agreement to be
executed and made effective this ___ day of November,
2001.
CENEX HARVEST STATES COOPERATIVES
EXHIBIT "H"
ALLOCATION OF BASE PRICE
To Be Completed By CHS Accounting Department
EXHIBIT "I"
ENVIRONMENTAL ISSUES
Material Compliance and Related Proceedings
Except as stated below, to the best of Farmland's knowledge, the Assets
associated with the Real Property, are in substantial compliance with all
"Applicable Environmental Laws" with respect to its operation of the Business on
the Real Property.
1. None.
Except as stated below, neither Farmland, or any other third party, has received
a notice of violation of an Applicable Environmental Law with respect to the
Real Property, as pursuant to which any government agency would require future
soil or groundwater remediation at the Real Property.
1. None.
Wells and Tanks
Except as stated below, to the best of Farmland's knowledge, there are no
active, inactive, and/or abandoned wells, and/or any underground storage tanks
located on the Real Property.
1. One 10,000-gallon underground storage tank for diesel on the Amarillo
property
(TNRCC Facility Number 0001454)
EXHIBIT "J"
TRANSITION USE OF LEGACY COMPUTER SYSTEM
The following provisions apply to CHS' use of the Farmland Legacy Computer
Systems for a transition period on and after the Closing Date.
1. Farmland and CHS agree to the following background statements:
a. Country Energy, LLC ("Country Energy") was formed by Farmland and
CHS to act as their agent for the marketing, sale and distribution of
certain energy products, effective on September 1, 1998, and has acted
in such agency role to the Closing Date (the "Agency Period").
b. During the Agency Period, Farmland and Country Energy engaged in a
course of dealing pertaining to certain Farmland computer systems and
mainframe processing (the "Legacy Computer Systems", as such term is
specifically defined in paragraph 5. below of this Exhibit "J"),
whereby Farmland and Country Energy shared resources and exchanged data
using the Legacy Computer Systems, and in which both Farmland and
Country Energy utilized the services of One System Group LLC ("OSG") to
provide support with regard to such use of the Legacy Computer Systems
(the "Prior Activities").
c. CHS has notified Farmland that it is imperative to CHS that it be
allowed to use the Legacy Computer Systems for its management of the
Cenex Energy Business in a manner that is consistent with the Prior
Activities during a transition period on and after the Closing Date.
d. CHS' use of the Legacy Computer Systems on and after the Closing
Date will unavoidably result in CHS gaining access to certain
proprietary information of Farmland that CHS does not reasonably need
for it to manage its Cenex Energy Business, as for example, information
related to Farmland's consolidated financial data or business
enterprises not included in Farmland's wholesale energy business (the
"Farmland Proprietary Information").
2. Subject to all of the paragraphs as set forth in this Exhibit "J", including
but not limited to paragraph 4. herein, Farmland shall make the Legacy Computer
Systems available to CHS for its use, where such use will be similar in scope to
Prior Activities engaged in by Farmland, Country Energy, and OSG during the
Agency Period, for a limited time period beginning on December 1, 2001 and
ending on February 28, 2002 (the "Transition Period").
3. Subject to all of the paragraphs as set forth in this Exhibit "J", including
but not limited to paragraph 4. herein, during the Transition Period, Farmland
shall provide the following services with respect to the Legacy Computer
Systems: system monitoring, system processing functions (such as the closing
process), security maintenance, and user support on how to use the systems. CHS
personnel, not Farmland personnel, shall perform all other functions necessary
for CHS to use the Legacy Computer Systems during the Transition Period.
4. Notwithstanding anything to the contrary in this Exhibit "J", CHS and
Farmland agree that Farmland shall be required to perform its obligations set
forth in paragraphs 2. and 3. of this Exhibit "J" in accordance with a "good
faith, commercially reasonable" standard, which shall be interpreted and
construed to mean the same manner that a reasonable commercial entity would
utilize if it was performing the functions that are set forth in paragraphs 2.
and 3. of this Exhibit "J" for itself, and not for another party; provided,
further, that Farmland shall be compensated as set forth in paragraph 7. of this
Exhibit "J" for its exercise of "good faith, commercially reasonable" efforts to
perform its obligations set forth in paragraphs 2. and 3. of this Exhibit "J".
Except for Farmland's representation that it shall perform its obligations in
accordance with such "good faith, commercially reasonable" standard, FARMLAND
DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING
THE LEGACY COMPUTER SYSTEMS, INCLUDING BUT NOT LIMITED TO ANY REPRESENTATIONS OR
WARRANTIES REGARDING CONTINUED OPERATION OF THE LEGACY COMPUTER SYSTEMS OR THE
AVAILABILITY OF STAFFING OR OTHER NECESSARY SUPPORT FOR SUCH LEGACY COMPUTER
SYSTEMS, AND/OR CHS' USE OF THE LEGACY COMPUTER SYSTEMS DURING THE TRANSITION
PERIOD, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
USE OR PURPOSE.
5. The Legacy Computer Systems are defined as consisting of the following:
a. The financial legacy systems, which includes the following systems:
M&D, SIS, and CARMS, including the closing process, table and security
maintenance and user support, and associated utilities (for example,
interfaces, data transformation, data transmission and direct connect
utilities) (the "Financial Legacy Systems"); and
b. The petroleum legacy systems, which includes the following systems:
Consolidated Sales, PIBS, COMS, PTLS, Petroex, Direct Ship, Commodity
Rates Management, TBA, TOPS, WNAD, Fieldman and Refined Fuels Tax, and
associated utilities (for example, interfaces, data transformation,
data transmission and direct connect utilities) (the "Petroleum Legacy
Systems"); and
c. The transportation legacy system, which includes the following
systems: TOES, and associated utilities (for example, interfaces, data
transformation, data transmission and direct connect utilities) (the
"Transportation Legacy System").
6. CHS shall not make, or cause to be made, any programming enhancements or
changes to the Financial Legacy Systems or the Transportation Legacy System
without prior written approval from Farmland, which approval shall not be
unreasonably withheld, regardless of whether CHS pays for, or offers to pay for,
such enhancements or changes.
7. In consideration of Farmland performing its obligations set forth in
paragraphs 2. and 3. of this Exhibit "J", CHS shall pay
the following amounts (the "Compensation").
a. As base compensation for its use of the Legacy Computer Systems
during the Transition Period, a fee of One Hundred Thousand ($100,000)
for each of the months of December, 2001, January, 2002, and February,
2002, with each such fee due to Farmland on the first day of each such
month (the "Base Fee").
b. As compensation for computer hardware processing services to be
provided by OSG to Farmland, in accordance with the IT Services
Agreement in effect between Farmland and OSG, which services are
measured in a quantity of millions of instructions per second ("MIPS"),
in connection with CHS' use of the Legacy Computer Systems during the
Transition Period, a fee that is equal to Farmland's obligation to OSG,
which fee shall be calculated to be the greater of the two amounts set
forth in subsections i. and ii. immediately below, with such fee due to
OSG monthly, without setoff (the "MIPS Fee"):
i. A minimum amount of Sixty Eight Thousand, Five Hundred
Seventy Two Dollars and Sixty Eight Cents ($68,572.68), OSG's
fee for 12 MIPS.
ii. A calculated fee for actual usage of MIPS, which
shall be the sum of the following two items:
A. One hundred percent (100%) of the MIPS
usage that is directly associated with the
Petroleum Legacy
Systems, the Financial Legacy Systems, and
the Transportation Legacy System; and
B. An overhead usage factor, calculated as a
proportion of the overhead MIPS not
specifically allocated to any application
equal to the greater of: (i) thirty percent
(30%) of the overhead MIPS; or (ii) a
fraction equal to the total MIPS other than
overhead MIPS allocable to CHS as set forth
in subdivision A. immediately above divided
by total MIPS other than overhead MIPS.
c. As compensation for direct access storage device services ("DASD")
to be provided by OSG to Farmland, in accordance with the IT Services
Agreement in effect between Farmland and OSG, in connection with CHS'
use of the Legacy Computer Systems during the Transition Period, a fee
that is equal to Farmland's obligation to OSG, which fee shall be
calculated the same as the MIPS Fee set forth in subsection b.
immediately above, except that the minimum amount set forth in
subsection i. of subsection b. shall be Thirteen Thousand Dollars, Nine
Hundred and Three Dollars and Twenty Eight Cents ($13,903.28), OSG's
fee for 34 Gigabytes of DASD, with such fee due to OSG monthly, without
setoff (the "DASD Fee"). . d. As compensation for maintenance, support
and enhancement services to be provided by OSG to Farmland, in
accordance with the IT Services Agreement in effect between Farmland
and OSG, in connection with CHS' use of the Legacy Computer Systems
during the Transition Period, a fee that is equal to Farmland's
obligation to OSG, which fee shall be calculated to be the sum of the
two amounts set forth in subsections i. and ii. immediately below, with
such fee due to OSG monthly, without setoff:
i. One hundred percent (100%) of the maintenance and
support hours actually provided by OSG with respect to
the Financial Legacy Systems, the Petroleum Legacy Systems,
and the Transportation Legacy System; and
ii. One hundred percent (100%) of the costs that are
associated with any enhancements made to the Legacy
Computer Systems with consent of Farmland as provided for in
paragraph 6. of this Exhibit "J".
8. Notwithstanding the fact that CHS' use of the Legacy Computer Systems during
the Transition Period will result in CHS gaining access to Farmland Proprietary
Information (as defined in paragraph 1. of this Exhibit "J"), CHS acknowledges
and agrees that Farmland is not transferring to CHS any ownership of, or any
license or right to use, or any other interest in, Farmland Proprietary
Information. CHS shall not use any Farmland Proprietary Information to which it
has gained access through its use of the Legacy Computer Systems during the
Transition Period, and shall treat Farmland Proprietary Information confidential
with the same degree of care that CHS treats its own proprietary and
confidential information.
9. Provided that Farmland fulfills its obligations that are set forth in this
Exhibit "J", in accordance with the provisions of paragraph 4. herein, CHS
hereby releases Farmland (and its officers, agents, employees and affiliates)
from any claims that CHS may have arising out of, or in any way related to, CHS'
use of the Legacy Computer System during the Transition Period.
10. In no event shall either Farmland or CHS be liable to the other party hereto
for any consequential, incidental, punitive, special, or similar damages,
regardless of whether such liability is based on breach of contract, tort,
strict liability, breach of warranties, the failure of essential purpose or
otherwise, in any way arising out of, or in any way related to, the provisions
of this Exhibit "J", even if such party was advised of the likelihood of such
damages.
EXHIBIT "K"
GENERAL ASSIGNMENT AND BILL OF SALE
IN CONSIDERATION of the sum of one dollar and other good and valuable
consideration given by CENEX HARVEST STATES COOPERATIVES, a Minnesota
cooperative corporation ("CHS"), as the transferee, to the undersigned FARMLAND
INDUSTRIES, INC., a Kansas cooperative corporation ("Farmland"), as the
transferor, the receipt and sufficiency of which is acknowledged by Farmland,
Farmland does hereby ll, transfer, assign, deliver, and convey to CHS all of its
right, title, and interest in the following assets (the "Assets") owned by
Farmland, pursuant to terms and conditions of that certain Agreement of Purchase
and Sale of Assets effective as of November __, 2001, by and between Farmland
and CHS (the "Asset Purchase Agreement").
(a) All Personal Property as defined in the Asset Purchase
Agreement;
(b) All Personal Property Leases as defined in the Asset Purchase
Agreement;
(c) All Contracts as defined in the Asset Purchase Agreement;
(d) All Intellectual Property as defined in the Asset Purchase
Agreement;
(e) All Business Records as defined in the Asset Purchase
Agreement;
(f) Farmland's Investment as defined in the Asset Purchase
Agreement;
(g) Farmland's ERP System as defined in the Asset Purchase
Agreement;
(h) All Permits/Licenses as defined in the Asset Purchase
Agreement; and
(i) All Purchased Inventory as defined in the Asset Purchase
Agreement.
Farmland represents and warrants that it has good and marketable title to all of
the Assets free and clear of all liens, claims, restrictions, or encumbrances.
Capitalized terms not otherwise defined herein shall have the meaning given them
in the Asset Purchase Agreement.
IN WITNESS WHEREOF, Farmland has caused this Assignment and Bill of
Sale to be executed effective this _____ day of November, 2001.
FARMLAND INDUSTRIES, INC.