Exhibit 10.10
AGREEMENT
FOR
PURCHASE AND SALE OF ANHYDROUS AMMONIA
THIS AGREEMENT is made this 1st day of January, 1994, by and between
Farmland Industries, Inc. (hereinafter "Seller"), a Kansas corporation, with
its principal place of business in Kansas City, Missouri, and El Dorado
Chemical Company (hereinafter "Buyer"), an Oklahoma corporation, with its
principal place of business in El Dorado, Arkansas.
WITNESSETH
WHEREAS, Seller represents that it has the right to sell certain
quantities of anhydrous ammonia as hereinafter defined; and
WHEREAS, Seller desires to sell and Buyer wishes to purchase the quantities of
anhydrous ammonia herein stipulated upon the conditions, covenants, and
agreements contained herein;
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements contained herein, Seller and Buyer agree as follows:
1. QUANTITY: Seller shall sell, transfer, convey, and deliver to
Buyer, and Buyer shall purchase and accept from Seller, not less than thirty-
four thousand (34,000) tons, nor more than fifty-one thousand (51,000) tons of
anhydrous ammonia during each quarter for use at El Dorado Chemical Company,
EL Dorado, Arkansas via the Gulf Central Pipeline or rail. All references
herein to quarters shall mean calendar quarters. Volumes are exclusive of any
tons supplied to El Dorado Chemical Company from customers of El Dorado
Chemical Company under tolling or conversion agreements. Seller shall not be
required to sell more than twenty-two thousand (22,000) tons in any one
calendar month. During the term of this Agreement, Seller shall make available
each quarter the amount of anhydrous ammonia forecasted by Buyer. In the event
Buyer does not take receipt of any amount made available in accordance with
Buyer's quarterly forecast, Seller shall have the right to invoice Buyer for,
and Buyer shall pay, within ten (10) days receipt of invoice, the full
purchase price the month the shortfall occurred for that quantity of Product
computed in accordance with the provisions of this Agreement. Any tons billed
in a period and not shipped in that period ("Shortfall Tons") will be shipped
and accepted no later than the end of the following quarter. The first Product
taken in the following quarter will be the Shortfall Tons from the previous
quarter. Notwithstanding the above, Buyer may take Shortfall Tons, if not
fully taken in the quarter following the forecast for such tons, at a time
such tons are reasonably available to Seller. Any tons shipped at a later
date shall not reduce the minimum ton requirement for that quarter. Buyer's
failure to forecast purchases does not relieve it from its quarterly purchase
obligations set forth in this paragraph. In the event Buyer fails to provide a
forecast, Buyer will be deemed to have forecasted the minimum thirty-four
thousand (34,000) ton per quarter. Failure of the parties to forecast
quarterly tonnage shall not excuse Buyer from its obligation to pay for
minimum volume hereunder.
2. FORECAST OF BUYER'S PURCHASES: During the term of this Agreement,
Buyer shall forecast quarterly by month, its purchases for each quarter of the
contract year. Buyer shall make this quarterly forecast and deliver it to
Seller on or before the 15th day of the month preceding the quarter.
3. TERM: This Agreement shall commence at 12:01 a.m., Central Standard
Time, January 1, 1994, and shall continue until 11:59 p.m., Central Standard
Time, December 31, 1996, unless terminated earlier in accordance with the
provisions hereof and shall continue in effect thereafter for successive
periods of three (3) years each, subject to the right of either party to
terminate this Agreement effective December 31, 1996 or upon December 31 of
the last year of each renewal period thereafter upon no less than one hundred
eighty (180) days prior written notice.
5. VERIFICATION OF POLLOCK, LA NATURAL GAS PRICES: Buyer shall have the
right, at any time during the term of this Agreement, to request Seller to
provide documentation to a mutually acceptable audit firm to verify that
excess charges for natural gas have not been made.
6. DELIVERY/FREIGHT:
(a) Pipeline - As shipper of record Seller shall invoice Buyer
for all actual Gulf Central Pipeline tariff charges plus a ten cents
($.10) per short ton meter fee for tons transported by pipeline to
Buyer's El Dorado, Arkansas facility. Seller will credit Buyer for all
shrink refunds allowed Seller by the Gulf Central Pipeline on tons
transported to El Dorado during the term of the Agreement.
(b) Rail - Freight charges on rail shipments shall be invoiced to
Buyer at either (a) the then current railroad tariff rate, or (b) a
negotiated contract freight rate as agreed by the parties. Seller may
invoice Buyer and Buyer shall pay Seller tank car demurrage at a daily
rate of Fifty Dollars ($50) per car per day for each day commencing with
the eighth day after constructive placement of the car at Buyer's
destination. Such rail shipments shall be priced at the time of the
order by Seller.
7. INVOICES AND PAYMENT: Seller shall deliver invoices to Buyer as soon
after the end of each calendar month as is reasonably possible. Buyer shall
make payment to Seller for each month's purchases, on or before the fifteenth
(15th) day of the following month. Payment shall be made by wire transfer to
such bank or banks as Seller shall designate. If at any time during the term
of this Agreement, Buyer becomes delinquent in payment or in Seller's
reasonable judgment there has occurred a material adverse change in the
financial condition of Buyer which could reasonably be expected to impair
Buyer's ability to carry out its financial obligations to Seller, Seller shall
have the sole and exclusive right to require the Buyer to open an irrevocable
letter of credit for the benefit of Farmland Industries, Inc., at a bank or
banks, acceptable to Farmland Industries, Inc. for an amount not to exceed the
result of multiplying twenty-two thousand (22,000) tons by the contract price
per ton of Product in the most recently completed calendar month.
8. DEFAULT AND NONPAYMENT: Default in payment, or failure to perform any
of the terms and conditions of this Agreement, shall constitute a default by
either party to this Agreement. In the event that either party (i) defaults in
making payment provided for herein when due or (ii) defaults in the
performance of any other material obligation provided for herein and, if such
default is susceptible of cure, fails to cure any such default of a material
obligation within 30 days of receipt of written notice from the non-defaulting
party thereof, the non-defaulting party shall have the right, by giving
written notice to the defaulting party, to immediately terminate this
Agreement.
On the occurrence of a default by either party, the nondefaulting party
shall have the option to terminate this Agreement without liability of any
kind as to future shipments; to alter credit terms provided to Buyer; to stop
any Product in transit; to treat any default as substantially impairing the
value of the whole Agreement, and hence a breach thereof. If Buyer does not
pay any invoice on its due date, then all outstanding invoices of Seller to
Buyer under this or any other agreement shall become immediately
due and payable, and Seller may assess a finance charge of one and five-tenths
percent (1.5%) per month, or the maximum legal rate, if less, on remittances
not received by their due date. On the occurrence of a default by either
party, the defaulting party shall be liable to the non-defaulting party for
all costs, losses, and expenses incurred by such non-defaulting party by
reason thereof, including reasonable attorneys' fees.
9. PRODUCT SPECIFICATION: "Product", where used in this
Agreement, means anhydrous ammonia solution of commercial grade, having
ammonia (NH3) content of not less than ninety-nine and five tenths percent
(99.5%), having water content of not more than five-tenths percent (0.5%), and
having oil content of not more than five (5) parts per million. Anhydrous
ammonia tendered to any pipeline shall meet or exceed such pipeline's Product
quality specifications for anhydrous ammonia shipped therein. Seller shall be
nominated as shipper of record on those volumes of anhydrous ammonia sold
pursuant to this Agreement and shipped via Gulf Central Pipeline.
10. DETERMINATION OF WEIGHTS: "Ton", where used in this Agreement, means
two thousand pounds (2,000 lbs.) avoirdupois, as measured by Gulf Central
Pipeline meter tickets if delivery is made by pipeline, by bills of lading if
delivery is made by rail or truck.
11. MANUFACTURE AND DELIVERY: Seller specifically reserves the
right to manufacture at, or exchange to, and to deliver from, any origin, all
of the anhydrous ammonia transferred to the location scheduled and agreed to
quarterly pursuant to this Agreement.
12. DISCLAIMER OF WARRANTIES: There are no warranties which
extend beyond the description on the face hereof, and SELLER MAKES NO WARRANTY
OF ANY KIND, EXPRESS OR IMPLIED, WHETHER OF MERCHANTABILITY OR FITNESS FOR ANY
PURPOSE OR AGAINST INFRINGEMENT OR OTHERWISE. Buyer assumes all risk and
liability for the use of the Product purchased, whether used singly or in
combination with other substances and for loss, damage, or injury to persons,
or property of Buyer or others arising out of the use or possession of the
Product; Buyer agrees to indemnify Seller from loss (including costs of
defense) in connection with claims arising from use or possession of the
Product.
13. CLAIMS BY BUYER OR SELLER: Notices by Seller or Buyer of claims as
to Product delivered, or for the nondelivery thereof, shall be made within
thirty (30) days after delivery, or the date fixed for delivery, as the case
may be, and failure to give such notice shall constitute a waiver by Seller or
Buyer of all claims in respect thereto. Buyer's sole claim for loss or damage
arising from nondelivery of Product hereunder shall be the difference between
the price for the Product specified in this Agreement and the average price of
such Product then charged by major suppliers of Product at the point of
shipment specified in this Agreement, duly adjusted for freight charges. In no
event shall any claims of any kind be greater than, nor shall Seller in any
event be liable for, any amount in excess of the purchase price of the Product
in respect of which a claim is made. SELLER SHALL NOT BE LIABLE FOR ANY
SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING
FROM SELLER'S PERFORMANCE OR BREACH OF THIS AGREEMENT AND/OR USE OR POSSESSION
OF THE PRODUCT, OR FOR LOSS OF PROFIT FROM RESALE OF PRODUCT. No suit or legal
proceeding arising upon this Agreement shall be maintainable against Seller or
Buyer unless commenced or made within one (1) year after passing of title to
Product, or delivery of or failure to delivery Product hereunder.
14. CONFLICTING TERMS: Notwithstanding any provision therein to the
contrary, no term in Seller's or Buyer's purchase order, acknowledgment form
or other document which conflicts with the terms hereof or increases Seller's
or Buyer's obligations hereunder, shall be binding on either party unless
accepted in writing by both parties hereunder.
15. WAIVER: Any waiver by Seller or Buyer of any term, provision, or
condition of this Agreement, or of any default hereunder in any one or more
instances shall not be deemed to be a further or continuing waiver of such
term, provision or condition, or of any subsequent default hereunder.
16. FORCE MAJEURE: Neither party will be liable for failure to perform
or for delay in performing this Agreement where such failure or delay is
occasioned by acts of any government, compliance with law or government
regulations, acts of God, war, riots, insurrections, civil commotion or
disturbances, fire, flood, or accident or by any other cause or circumstances
whether of like or different character, beyond the control of the party
affected thereby, including a declaration of force majeure by El Dorado
Chemical Company. Failure to obtain a supply of Product by Seller from a third
party supplier shall not be an event of force majeure
that can be exercised by Seller, herein referred to as "events for force
majeure". The party asserting that an event of force majeure has occurred
shall send the other party notice thereof by cable or telex no later than
three (3) days after the beginning of such claimed event setting forth a
description of the event of force majeure, an estimate of its effect upon the
party's ability to perform its obligations under this Agreement and the
duration thereof. The notice shall be supplemented by such other information
or documentation as the party receiving the notice may reasonably request. As
soon as possible after the cessation of any event of force majeure, the party
which asserted such event shall give the other party written notice of such
cessation. Whenever possible, each party shall give the other party notice of
any threatened or impending event of force majeure. If an event of force
majeure affecting Seller or Buyer performance by the party affected (the
"affected party") shall be excused during the continuation of the event of
force majeure and the other party shall send written notice to the affected
party whether the notifying party elects to (a) reduce the quantity of Product
specified in this Agreement by the amount which cannot be delivered or
received and/or (b) reschedule deliveries on a commercially reasonable basis
for delivery during the remainder of the applicable Contract Year.
"In the event of force majeure affecting Seller, Seller shall allocate
its available Product to Buyer in the same proportion as the quantity
delivered to Buyer's El Dorado, Arkansas facility hereunder during the twelve
(12) months preceding the event of force majeure is to the total quantity of
all Product sold or used by Seller during such twelve (12) month period."
(Provided, however, the total Product Buyer received shall not exceed the
quantities in Article 2.) In the event Seller has not given written notice of
cessation of force majeure, and such event of force majeure prevents
deliveries of Product for more than thirty (30) consecutive days, Buyer shall
have the right to terminate this Agreement.
17. CHANGE IN STATUS
Acquisition of Plant. In the event that El Dorado Chemical Company or
affiliated company having a common parent acquires more than fifty percent
(50%) interest in and to a plant or company that produces or has the capacity
to produce anhydrous ammonia, Buyer may upon twelve (12) months written notice
to Seller, terminate this Contract and thereafter have no further
responsibility to accept or pay for any quantity of anhydrous ammonia
hereunder.
18. COMMISSION/BROKER FEES: Seller and Buyer represent that
they are dealing with each other, that neither is the agent of the other, and
that no broker or agent has been involved, either directly or indirectly, in
consummating this Agreement and the sale of anhydrous ammonia hereunder.
SELLER AGREES TO INDEMNIFY, PROTECT AND SAVE BUYER HARMLESS from the claims of
any person or entity for commissions or finder's fees or similar fees in
connection with the transaction set forth herein where the claimant alleges
that his or its contact with this transaction is traceable to Seller. BUYER
AGREES TO INDEMNIFY, PROTECT, AND SAVE SELLER HARMLESS from the entity for
commissions or finder's fees or similar fees in connection with the
transaction set forth herein where the claimant alleges that his or its
contact with this transaction is traceable to Buyer.
19. TAXES: Any and all taxes of any type whatsoever levied, prior to
passage of title, against anhydrous ammonia transferred pursuant to this
Agreement shall be paid by Seller promptly as required by law. Any and all
taxes of any type whatsoever levied against the anhydrous ammonia at or upon,
or subsequent to, passage of title shall be paid by Buyer promptly as required
by law. Title to and risk of loss of the Product shall pass to the Buyer as
the Product progressively passes into tank cars, and/or pipeline.
Notwithstanding any provision to the contrary in this Agreement, with regard
to sales/purchases of Product pursuant to this Agreement Buyer shall pay any
and all taxes or charges that are due and owing under the federal Superfund
(Comprehensive Environmental Response, Compensation and Liability Act of 1986)
statutes, or regulations promulgated thereunder, as amended. Notwithstanding
any provision to the contrary in this Agreement with regard to sales/purchases
of Product pursuant to this Agreement, Buyer shall pay any and all taxes and
charges that may become in the future due and owing because of the future
enactment of any state law or regulation establishing a state tax or fee of
any kind whatsoever on the manufacturing and/or sale of anhydrous ammonia or
any constituent part thereof. All taxes hereunder are in addition to those
prices described herein.
20. NOTICES: No notice, actual or constructive, shall be effective
against any party unless it is (1) in writing; (2) signed
by the party giving the notice; and (3) sent by registered mail, postage
prepaid, or personally served on the party intended to receive said notice.
The address to be used on a mailed notice for each party shall be as
follows:
To Seller:
Farmland Industries, Inc. (via mail/fax)
P. O. Box 7305, Dept. 314
Kansas City, Missouri 64116
FAX 816/459-5913
Farmland Industries, Inc. (via delivery
3315 N. Oak Trafficway service)
Kansas City, Missouri 64116
To Buyer:
El Dorado Chemical Company (via mail/fax)
P.O. Box 231
El Dorado, Arkansas 71731
FAX: 501/863-1426
Attn: Kevin Brown
El Dorado Chemical Co. (via mail/fax)
16 S. Pennsylvania
Oklahoma City, OK 73007
FAX: 405/235-5067
Attn: James Wewers
David Shear
21. ALTERNATE DISPUTE RESOLUTION: In the event of any controversy
arising out of or relating to this Contract, or any breach thereof, the
parties agree to submit the dispute for resolution by Mini-trial, unless both
parties agree that such procedure is inappropriate for the matter in
controversy. Such Mini-trial shall be conducted in accordance with the Center
for Public Resources (CPR) Mini-trial Agreement for Business Disputes, a copy
of which is attached and may be initiated by either party by a written request
to the other party.
In the event the parties are unable to resolve the controversy through
the Mini-trial, the dispute shall be submitted to binding arbitration in
accordance with the rules of the Missouri Arbitration Act. V.A.M.S. 435 et.
seq. (or Uniform Arbitration Act). Such arbitration shall be initiated by
either party by notifying the other party in writing and requesting a panel of
five (5) arbitrators from the American Arbitration Association. Alternate
strikes shall be made to the panel commencing with the party requesting the
arbitration until one name remains. Such individual shall be the arbitrator
for the controversy. The party requesting the arbitration shall notify the
arbitrator who shall hold a hearing(s) within 60 days of the notice. The
arbitrator shall render a decision within 20 days after the conclusion of the
hearing(s). Judgment upon the award rendered by the Arbitrator may be entered
in any Court having jurisdiction thereof. All fees for such arbitration will
be divided equally between the parties.
22. MISCELLANEOUS: Buyer may offer to supply natural gas to Farmland
Industries for only their monthly quantity of anhydrous ammonia for delivery
at either Texas Gas or Truckline and/or LIG to be redelivered to Farmland,
(Pollock), Louisiana plant. Seller will then add the appropriate interstate
tariff rate as established by the transporting pipeline plus the procurement
cost of two cents ($ .02) per MMBTU previously listed in Paragraph 4(b)1 of
this Contract. Buyer must offer natural gas to Seller not less than fifteen
(15) days before the close of the current month for the upcoming month. Seller
must accept or reject this offer within ten (10) business days before the
close of the current month. This option to offer natural gas must be
made to the Administrative Assistant to the Vice President of Purchasing,
Engineering, and Emerging Technologies.
This Agreement expresses the whole agreement of the parties. There are
no promises, conditions, or obligations, other than those enumerated herein.
This Agreement shall supersede all previous or contemporaneous communications,
representations, or agreement, verbal or written, between or among the
parties. No usage of trade or prior course of dealing or performance between
Buyer and Seller shall be deemed to modify the terms of this Agreement.
This Agreement shall not be assigned by either party without the prior
written consent of the other party except that either party may assign its
interest under this Agreement to a successor to all or any substantial portion
(more than 50%) of its business or assets, or to any parent, subsidiary, or
affiliated company having a common parent. Any purported assignment of this
Agreement or any part thereof, except as set forth above, shall be void.
This Agreement shall not be modified except in writing signed by the
party to be charged.
No termination of this Agreement shall affect the rights or obligations
theretofore accrued.
Headings are for reference only, and do not affect the meaning of any
paragraph.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. To the extent permitted by applicable law, the parties
hereby waive any provision of law which renders any provision hereof
prohibited or unenforceable in any respect. Remedies herein reserved are
cumulative and in addition to any other or further remedies Seller or Buyer
may have at law or in equity.
This Agreement shall be governed in all respects, including, but not
limited to, interpretation and performance by the laws of the State of Kansas.
No terms and conditions of this Agreement shall be binding on either
Seller or Buyer, until this Agreement is signed and attested by authorized
representatives of both Seller and Buyer.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
FARMLAND INDUSTRIES, INC. EL DORADO CHEMICAL COMPANY
(Seller) (Buyer)
By: ____________________ By: _____________________
Title: __________________ Title: ___________________
Date: __________________ Date: ___________________