EXHIBIT 10.33
TACOMA EXPORT MARKETING COMPANY
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
BETWEEN
CARGILL, INCORPORATED
AND
CENEX HARVEST STATES COOPERATIVES
DATED AS OF JULY 12, 1999
THIS AMENDED AND RESTATED PARTNERSHIP AGREEMENT made as of this 12th
day of July, 1999, between CENEX HARVEST STATES COOPERATIVES, a Minnesota
corporation ("Cenex Harvest States") and CARGILL, INCORPORATED, a Delaware
corporation ("Cargill").
WITNESSETH:
WHEREAS, Cenex Harvest States and Continental Grain Company
("Continental") formed this general partnership dated as of September 28, 1992
for the purpose of engaging in the buying, selling, storing and handling of
certain feedgrains and oilseeds for export from the Pacific Northwest, United
States primarily through Continental's leased facility at Tacoma, Washington
(the "Tacoma Facility") and such other business activities as were related
thereto; and
WHEREAS, the partnership formed thereby subleased the Tacoma Facility
from Continental; and
WHEREAS, Cenex Harvest States and Continental amended the Partnership
Agreement dated September 28, 1992 with that certain Amendment No. 1 dated June
1, 1997; and
WHEREAS, Cargill has purchased and taken an assignment of
Continental's interest in the partnership, the Tacoma Facility and the sublease
between Continental and the partnership; and
WHEREAS, the partnership desires to put grain through Cargill's leased
facility at Seattle, Washington (the "Seattle Facility"); and
WHEREAS, Cenex Harvest States and Cargill, as partners in the
partnership, wish to amend certain terms and conditions of the Agreement and to
restate the Agreement as amended.
NOW, THEREFORE, in consideration of the premises and covenants and
agreements hereinafter set forth, the Partners hereby agree as follows:
ARTICLE I
DEFINITIONS
Definitions. The following terms wherever used in this
Agreement shall have the meanings hereinafter assigned to them:
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such Person.
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"Agreement" means this Amended and Restated Partnership
Agreement as in effect on the date hereof and as the same may be modified or
amended by action of the Partners as provided herein.
"Control" (including "controlling", "controlled by" and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person by ownership of more than 50% of the voting securities of a corporation
or by contract or otherwise.
"Controlling Affiliate" means, with respect to any Person,
any Affiliate of such Person that Controls such Person.
"Encumbrance" means and includes any mortgage, pledge, lien,
charge, encumbrance, lease, sublease, security interest or trust interest; and
to "Encumber" an asset is to create an Encumbrance thereon.
"Feedgrains" means the corn and sorghum as provided in
Section 7.1.
"Fundamental Issues" means those issues which require the
vote of both of the Partners or the approval of the Management Committee, as
provided in Section 5.3.
"Management Committee" means the Management Committee
constituted as provided in Section 5.2.
"Net Income" and "Net Loss" shall mean the income and losses
of the Partnership, determined on an accrual basis in accordance with generally
accepted accounting principles consistently applied, after all expenses of the
Partnership have been taken into account (including allowances for depreciation
or amortization of Partnership assets) and shall include gain or loss realized
by the Partnership on the sale or the disposition of assets in connection with a
dissolution of the Partnership pursuant to Article XI.
"Oilseeds" means soybeans as provided in Section 7.1.
"Partner" or "Partners" means Cargill or Cenex Harvest States
or both Cargill and Cenex Harvest States, as the case may be, and their
permitted successors and assigns.
"Partner Account" means, with respect to each Partner, the
account maintained for such Partner in accordance with Section 10.10.
"Partner Interest" means the interest of a Partner in the
Partnership.
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"Partnership Law" means the Washington Uniform Partnership
Act, Ch. 25.04 RCW as amended from time to time.
"Person" means any natural person, firm, trust, partnership,
joint venture, unincorporated association, corporation, government or
governmental agency.
"Prime Rate" means the prime or base rate announced from time
to time by the Chase Manhattan Bank, N.A. The Prime Rate shall be adjusted on a
[daily] basis.
"Secretary" means the Secretary of the Partnership as
provided in Section 6.2.
"Share", when used with respect to either Partner means fifty
percent (50%) unless and until such percentage shall be changed by a vote of the
Partners.
"Treasurer" means the Treasurer of the Partnership as
provided in Section 6.3.
ARTICLE II
2.1 The Partnership. The Partners hereby form and constitute a
partnership as a general partnership (the "Partnership") under the Partnership
Law of the State of Washington upon the terms and conditions set forth in this
Agreement. Except as otherwise provided in this Agreement, the rights and
liabilities of the Partners shall be governed by the Partnership Law.
2.2 Name. The Partnership shall operate under the name of Tacoma
Export Marketing Company ("TEMCO").
2.3 Principal Office. The principal office of the Partnership shall be
located at 5500 Cenex Drive, Inver Grove Heights, Minnesota 55077 or at such
other place as may be designated by the Management Committee as hereinafter
defined.
2.4 Duration. The Partnership commenced on or about September 15, 1992
and shall continue for a term of five years after the date of this Agreement,
unless sooner terminated as provided herein. In the event Cargill and Cenex
Harvest States reach a written, executed agreement regarding additional areas of
potential synergies within twelve months of the date of this Agreement, the term
of the Partnership shall be extended automatically until the expiration or
termination of Cargill's lease of either the Tacoma Facility or the Seattle
Facility, as from time to time extended, whichever shall first occur, unless
sooner terminated as provided herein.
2.5 Purpose. The purpose of the Partnership is to engage in the
business of buying, trading, selling, handling and transporting for export and
exporting Feedgrains
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and Oilseeds, as defined in Section 7.1, from the Pacific Northwest, United
States through the Tacoma Facility and through the Seattle Facility pursuant to
a put through agreement with the operator of the Seattle Facilityto Pacific
Basin destinations and engaging in such other activities and business as may be
incidental or related thereto or necessary or desirable in furtherance of such
purpose. The Partnership shall establish or cause to be established such
business organizations and shall own, directly or indirectly, such assets as the
Partners shall agree are appropriate to achieve the purpose of the Partnership.
2.6 Scope. The Partnership is and shall be a partnership only for the
purposes specified in this Agreement and nothing contained in this Agreement
shall be deemed to create a general partnership between the Partners with
respect to any activities whatsoever other than activities within the proper
business purposes of the Partnership. Neither of the Partners shall have the
power to bind the other Partner or the Partnership except as specifically
provided in this Agreement. Neither of the Partners or the Partnership shall be
responsible or liable for any indebtedness, liability or obligation of the other
Partner incurred either before or after the execution of this Agreement except
for indebtedness, liabilities, and obligations incurred after the execution of
this Agreement in connection with authorized activities within the proper
business purposes of the Partnership. Each Partner, respectively, hereby
indemnifies and agrees to hold the other Partner, and its Affiliates and
directors and officers, and the Partnership harmless from and against all such
indebtedness, liabilities and obligations incurred by it which are not
authorized and within the proper business purposes of the Partnership.
ARTICLE III
3.1 Initial Capital Contributions. The initial capital of the
Partnership shall consist of $100.00 cash, contributed by the Partners in
proportion to their Shares. Each Partner shall make its initial capital
contribution contemporaneous with the execution of this Agreement.
3.2 Additional Capital Contributions.
(a) The Partners agree that the Partnership shall meet its capital
needs through the borrowing of funds as provided in Section 10.3 and that unless
specifically agreed to by the Partners and except as set forth in this Section
3.2, the Partners shall not be obligated to make any additional capital
contributions to the Partnership. If the Partners agree to make additional
capital contributions, the contributions shall be made at such times, in such
amounts and under such conditions as shall be determined by the Partners in
accordance with the provisions of this Agreement.
(b) No interest shall accrue on any Partner's Partner Account. A
Partner shall not be entitled to withdraw any part of its capital in the
Partnership or to receive any capital distribution from the Partnership except
as part of a distribution of capital agreed to by the Management Committee as
hereinafter defined or as provided in Article XI.
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(c) All capital contributions and other payments required or permitted
to be made by a Partner under this Agreement shall be either in cash or, at the
request of any Partner and if agreed to by the Management Committee, on such
conditions and for such fair value as the Management Committee as hereinafter
defined shall so determine, in kind.
(d) If a Partner (a "Delinquent Partner") shall fail to make when due
a contribution required pursuant to this Agreement, the other Partner (the
"Contributing Partner") may, in its sole discretion, advance all or part of that
amount to the Partnership. Such advance shall be deemed to be a demand loan by
the contributing Partner to the Delinquent Partner at an interest rate equal to
2% in excess of the Prime Rate for the period during which the advance is
outstanding. This loan shall be repaid, together with such interest, by the
Delinquent Partner promptly upon demand from any funds of the Delinquent
Partner, including, without limitation, any distribution from the Partnership
which would otherwise be payable to the Delinquent Partner. Unless and until the
Delinquent Partner makes such repayment, the Partnership shall make no cash
distribution to such Partner (except that a cash distribution shall be applied
to make such repayment and the balance then made to the formerly Delinquent
Partner) The Contributing Partner to which such debt is due (or to which a debt
pursuant to Article VIII is due) shall have a security interest in the Partner
Interest of the Delinquent Partner to secure such amounts owed to it, and such
security interest is hereby granted by each Partner. To the extent that the
principal amount of the delinquency is repaid, the principal amount of such
repayment (excluding any interest) shall be deemed a contribution to the capital
of the Partnership by the Delinquent Partner and shall be reflected as such in
the Partner Account of the Delinquent Partner.
ARTICLE IV
4.1 Allocation of Profits and Losses. Except as otherwise specifically
provided in Section 10.10; all items of Net Income and Net Loss shall be
allocated to the Partners in accordance with their respective Shares.
ARTICLE V
5.1 Voting and Meeting of the Partners. Each Partner shall have an
equal vote in the management of the Partnership. Meetings of the Partners may be
called by either Partner on ten (10) Business Days prior notice to discuss any
matter including, without limitation, any matter related to the finances,
operations, management, policies, or personnel of the Partnership. Notice of
meetings may be waived by the Partner entitled to such notice.
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5.2 Management Committee.
(a) The conduct of the business and affairs of the Partnership shall
be managed by a standing Management Committee consisting of four (4) members,
with each Partner appointing two (2) regular members and such alternate members
as such Partner deems advisable. Each of the Partners may initially appoint or
replace any or all of its members or alternate members of the Management
Committee by written notice to the Partnership and the other Partner. Each of
the Partners shall at all times maintain in effect the appointment of at least
one (1) member of the Management Committee. Each member of the Management
Committee shall serve for indefinite terms at the pleasure of the appointing
Partner.
(b) The Management Committee shall meet not less than quarterly at
such times and places as it may determine. Meetings of the Management Committee
may be called by one (1) member of the Management Committee. The General Manager
shall have the right to attend all meetings of the Management Committee but
shall not be entitled to participate in the voting on any decision or other
matter before the Management Committee. Notice of each meeting of the Management
Committee shall be telexed, telecopied, sent by mail or delivered personally, or
by telephone, to each regular and alternate member not later than ten (10)
Business Days before the date on which the meeting is to be held. Notice of
meetings may be waived by the member or members entitled to such notice.
(c) The attendance of one (1) member from each Partner shall
constitute a quorum for the transaction of business of the management Committee.
Each member at the meeting shall be entitled to one vote for each matter to be
voted upon by the Management Committee. Any decision or approval before the
Management Committee shall be taken by majority vote of those of the Management
Committee present or participating in a meeting at which a quorum is present;
provided, however, no action shall be authorized unless at least one (1) member
appointed by each Partner votes affirmatively on such action. The failure of the
Management Committee to authorize action with respect to any matter pursuant to
the foregoing sentence shall constitute a Deadlocked Matter pursuant to Section
5.4.
(d) Any decision or approval of the Management Committee may be made
without a meeting if either (i) such decision is first approved in writing by
one of the members or alternates of each of the Partners or (ii) such meeting is
held by means of a conference telephone or similar communications equipment
allowing all Persons participating in the meeting to hear each other at the same
time.
(e) The regular members of the Management Committee shall alternately
act as chairman of meetings of the Management Committee. Minutes of all meeting
shall be prepared by the Secretary and shall be distributed to all regular
members (and alternate members if present at a meeting) within thirty (30) days
following any meeting.
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5.3 Fundamental Issues. No action may be taken or decision made which
binds the Partnership by the General Manager, any Partner on behalf of the
Partnership, or the Partnership, with regard to any of the Fundamental Issues
without the vote (or written consent) of the Management Committee in accordance
with Section 5.2(c). Fundamental Issues shall include decisions and actions on
the following matters, and such other matters as may be deemed Fundamental
Issues, from time to time, by the Management Committee:
(a) calls for additional capital or guarantees hereunder;
(b) the issuance of any notes, bonds, debentures or other obligations
by the Partnership, or the incurrence of or assumption of any indebtedness if,
after giving effect thereto, the aggregate principal amount of all such
indebtedness of the Partnership, other than indebtedness previously approved by
the Management Committee (including, without limitation, the utilization by the
Partnership of lines of credit previously approved by the Management Committee
for the purpose of financing the business of the Partnership in the ordinary
course), would either (i) exceed the amounts specifically provided therefor and
sufficiently identified in the Partnership's current annual budgets referred to
in Sections 5.3(p) and 10.1, or (ii) result in direct or indirect liability on
either or both of the Partners for repayment of such indebtedness;
(c) any acquisition, disposition, sale, conveyance, lease, sublease,
exchange or other disposition of any interest in the Tacoma Facility other than
the subleases contemplated by Section 7.2 hereof;
(d) the acquisition, disposition, sale, conveyance, lease, sublease,
exchange or other disposition of real property having a value greater than a
threshold amount to be determined by the Management Committee;
(e) the acquisition, disposition, sale, conveyance, lease, sublease,
exchange or other disposition of personal property, other than agricultural
commodities traded in the ordinary course of business, with a value greater than
a threshold amount to be determined by the Management Committee;
(f) investing in any Person;
(g) the establishment of trading position limits for agricultural
commodities traded by the Partnership;
(h) the making of loans or provision of guaranties, or the extension
or pledge of credit to others, except endorsements and extensions of credit in
the ordinary course of business;
(i) the sale of any equity interests (or operation, warrant,
conversion in similar rights with respect thereto) in the Partnership;
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(j) the selection, appointment, remuneration, removal and
determination of the terms and conditions of employment agreements of officers,
executives and key employees of the Partnership;
(k) the payment of bonuses and perquisites to officers, executives and
key employees of the Partnership;
(l) the confession of any judgment against the Partnership or the
creation, assumption, incurrence, or suffering to be created, assumed or
incurred or to exist of, any encumbrance upon any of the assets or property of
the Partnership, or the acquisition or holding or agreement to acquire or hold
such property or assets subject to any encumbrance other than (i) liens for
taxes not yet due or which are being contested in good faith by appropriate
proceedings, and (ii) other minor encumbrances incidental to the conduct of the
business of the Partnership or the ownership of its property and assets which
are not incurred in connection with the borrowing of money or the obtaining of
advances or credit, and which do not in the aggregate materially detract from
the value of such property or assets or materially impair the use thereof in the
operation of the business of the Partnership;
(m) the compromise or submission to arbitration (other than contract
specifically providing for arbitration) or litigation of any claim due, or any
dispute or controversy involving the Partnership for any claim, dispute or
controversy in excess of any amount to be determined by the Management
Committee;
(n) the entering into of any contract or commitment (other than those
contracts made in the ordinary course of business) involving aggregate
expenditures in excess of an amount to be determined by the Management
Committee;
(o) the entering into any contract or commitment (other than those
commodity, sales and purchase contracts made in the ordinary course of the
Partnership's grain merchandising business) involving either Partner, or any of
their Affiliates;
(p) the approval of the annual business operating budget, capital
expenditure budget and business plan and the amount of cash for distribution and
adoption of other major financial policies of the Partnership;
(q) the approval of the opening financial statements of the
Partnership as referred to in Section 10.7;
(r) the appointment and removal of the independent accountants for the
Partnership;
(s) the appointment and removal of the Liquidator of the Partnership
pursuant to Section 11.2;
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(t) any material changes in the purposes of the Partnership beyond
that expressly contemplated by this Agreement as provided in Section 2.5;
(u) the voluntary dissolution and winding-up of the Partnership,
provided, however, that this provision shall in no way limit the rights of the
Partners under Article XI.
(v) any changes in the scope or method of operations or business
policies of the Partnership which is likely to materially increase the working
capital or cash requirements of the Partnership.
(w) approval of the credit policy applicable to export sales and any
material deviation therefrom.
5.4 Deadlock.
If the Management Committee cannot agree on any Fundamental Issue
within thirty (30) days following the Management Committee meeting at which a
decision on such Fundamental Issue was sought, or within thirty (30) days of any
such Fundamental Issue being submitted to the members of the Management
Committee for approval, then such matter shall be submitted to the Chief
Executive Officer of Cenex Harvest States and the Sector President of Cargill to
resolve. If the above mentioned executives of the Partners are unable to resolve
such deadlocked Fundamental Issue within thirty (30) days following submission
of the matter to them for resolution, and such Fundamental Issue has or will
have a material adverse effect on the business of the Partnership, then the
matter shall be submitted to arbitration in accordance with Section 12.2 of this
Agreement.
5.5 Subcommittees. The Management Committee may appoint such
subcommittees as it deems advisable, each with an equal number of
representatives from each Partner.
ARTICLE VI
OFFICERS AND EMPLOYEES
6.1 The General Manager.
(a) The General Manager shall be a Cargill employee so long as the
administration and trading functions of the Partnership are predominantly
operated out of Cenex Harvest States' facilities. If the Partnership's
administration and trading functions are moved to any Cargill facility, the
General Manager shall be an employee of Cenex Harvest States. The General
Manager is hereby vested with such executive and financial authority as to
enable him to direct the business and affairs of the Partnership, subject to the
directions of the Management Committee and in accordance
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with this Agreement and the annual budget adopted by the Management Committee.
The General Manager shall be authorized to execute documents within the scope of
his authority on behalf of the Partnership which will bind the Partnership
without the necessity of obtaining the signature of either of the Partners. The
General Manager shall be responsible for the implementation of the various
decisions of the Management Committee and for the day to day management and
operation of the Partnership. The General Manager shall regularly inform the
Management Committee of the Partnership's ongoing activities. The General
Manager shall report to and take direction from the Management Committee. The
General Manager shall enter into transactions on behalf of the Partnership
except that the General Manager is not authorized to take any action on a
Fundamental Issue unless such action shall have been approved by the Management
Committee pursuant to Section 5.2(c).
(b) The General Manager shall provide the following reports to the
Management Committee:
(i) daily position reports;
(ii) a weekly management report;
(iii) a monthly report on the financial condition and the
business prospects of the Partnership;
(iv) a monthly report summarizing all claims made and suits
filed against the Partnership, all potential claims and suits, and the
final settlement or other resolution of claims and suits; and
(v) other reports requested by the Management Committee or
one of the Partners.
6.2 Secretary. The Secretary shall be appointed by the Management
Committee and shall report to the General Manager. The Secretary shall act as
Secretary of all meetings of the Management Committee, shall keep the minutes
thereof in the proper book or books to be provided for that purpose, shall see
that all notices required to be given by the Partnership are duly given and
served, shall have charge of the books, records and papers of the Partnership
relating to its organization and management as a Partnership, and shall see that
the reports, statements and other documents required by law are properly kept
and filed; and shall, in general, perform all the duties incident to the office
of Secretary and such other duties as from time to time may be assigned to him
by the Management Committee and the General Manager.
6.3 Treasurer. The Treasurer shall be appointed by the Management
Committee. The Treasurer shall report to the Management Committee. The Treasurer
shall perform all the duties assigned to him by this Agreement including,
without limitation, (a) arranging for the Partnership to borrow funds pursuant
to Section 10.3; (b)
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submission to each Partner of quarterly comparisons pursuant to Section 10.1(b),
current cash estimates pursuant to Section 10.2, and statements relating to
Emergency Needs pursuant to Section 10.2(b); (c) determination of the amount of
Cash for Distribution and the distribution of such Cash for Distribution
pursuant to Section 10.4; (d) causing to be prepared and given to each Partner
unaudited financial statements pursuant to Section 10.8(b); (e) having charge
of, and being responsible for, all funds, securities and notes of the
Partnership; (f) receiving and giving receipts for moneys due and payable to the
Partnership from any sources whatsoever; (g) depositing all such moneys in the
name of the Partnership in such banks, trust companies or other depositaries as
shall be selected by the Management Committee; (h) against proper vouchers,
causing such funds to be disbursed by checks or drafts on the authorized
depositaries of the Partnership, and being responsible for accuracy of the
amounts of all moneys so disbursed; (i) regularly entering or causing to be
entered into books to be kept by him or under his discretion full and adequate
account of all moneys received or paid by him for the account of the
Partnership; (j) having the right to require, from time to time, reports or
statements giving such information as he may desire with respect to any and all
financial transactions of the Partnership from the officers or agents
transacting the same; and, (k) in general, all the duties incident to the office
of Treasurer and such other duties as from time to time may be assigned to him
by the Management Committee or the General Manager.
6.4 Other Persons. The Management Committee may appoint such other
executive and management employees, including Persons employed by Cargill or
Cenex Harvest States, as it shall from time to time deem appropriate, and may
approve a plan for hiring of other salaried employees including employees from
Cargill and Cenex Harvest States.
6.5 Appointment and Removal of Officers and Employees. The appointment
and removal of officers and employees of the Partnership shall be made by the
Management Committee. Either Partner may request the removal of any officer or
employee.
6.6 Affiliations. The officers, executives and other employees of the
Partnership may also be employees of the Partners or their Affiliates, and shall
not be required (except as may be determined by the Management Committee) to be
full-time employees of the Partnership. The Management Committee and the
Partners will agree on the designation of employees of the respective Partners
to be made available by the respective Partners for the purpose of providing
marketing, transportation, logistics, export administration, grain settlements,
accounting and other services, for and on behalf of the Partnership. Such
designated employees shall at all times remain employees of the respective
Partners. The duties performed by such designated employees for and on behalf of
the Partnership in conducting and performing Partnership business shall be
Partnership business activities. In consideration of each of the Partner's
making such employees available to the Partnership, the Partnership shall pay to
each of the Partners the charges for services by and other expenses
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incurred by such designated employees in performing Partnership business and
agreed by the Management Committee as reflected in the operating budget. The
Partnership shall have the right to direct the action of such designated
employees in performance of their duties for and on behalf of the Partnership.
If the Partnership does not desire to maintain the services of any such
designated employee, the Partnership may so advise the respective Partner
employing such designated employee and such Partner shall cause the designated
employee to cease performing such services for and on behalf of the Partnership.
Each Partner retains the right to fire its employees even if designated to the
Partnership or to transfer any such employee to other duties within the business
of such Partner; provided, however, that such Partner will cooperate with the
Partnership to provide a suitable replacement so that the services of like kind
provided by such dismissed or transferred employee will continue to be provided
to the Partnership.
6.7 Exculpation. Any regular or alternate member of the Management
Committee, the officers, executives and employees' of the Partnership which are
employed by either Partner or its Affiliate shall not be liable to the
Partnership or to the Partners for any action taken or omitted to be taken by
him with respect to the Partnership, except to the extent any such act or
omission was attributable to the willful misconduct, gross negligence or bad
faith of such member of the Management Committee, officer, executive or
employee.
ARTICLE VII
7.1 The Partnership business shall be limited to corn and sorghum
("Feedgrains") and soybeans ("Oilseeds") destined primarily for export from the
Pacific Northwest, United States. The Partnership intends to source Feedgrains
and Oilseeds from its Partners and its Partners intend to supply Feedgrains and
Oilseeds on market terms from their grain originating facilities and, in the
case of Cenex Harvest States, its affiliated cooperatives from which it
purchases such Feedgrains and Oilseeds, customarily tributary to the Pacific
Northwest export market.
7.2 In order to facilitate the ability of the Partnership to transport
and handle the Feedgrains and Oilseeds which it intends to market into export
channels, the Partnership desires to utilize the Tacoma Facility and has entered
into the Sublease Agreement between Continental and the Partnership dated
September 28, 1992 and amended by that certain Amendment No. 1 to Sublease dated
June 1, 1997 and amended and restated in that certain Amended and Restated
Sublease executed concurrently with the execution of this Agreement (the "Tacoma
Facility Sublease"). The Tacoma Facility Sublease shall terminate on the
termination, expiration or dissolution of the Partnership.
7.3 Each Partner agrees to commit all of its Feedgrains and Oilseeds
origination which is tributary to the Pacific Northwest United States (not to
include California) ("PNW") for export to the Partnership. Whether origination
is tributary to the
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PNW for export shall be based upon what is the best market (i.e., what is the
best net value to the Partner originating and selling the grain) for such grain
at the time the grain is to be liquidated. If markets offer equal value,
origination shall be split equally between the markets, unless doing so
negatively impacts the net value to the Partner. Grain shall be transferred to
the Partnership by the Partners at the Partnership's bid price for such grain.
The Partners further agree that the Partnership shall be the exclusive
export marketing vehicle for each of them and their Affiliates for Feedgrains
and Oilseeds exported through the PNW.
Upon request of either Partner, the other Partner shall provide
information reasonably requested to the requesting Partner to verify compliance
with the terms of this section.
7.4 The Partnership shall also provide throughput services for wheat,
barley or other commodities at the Tacoma Facility for either Partner from time
to time at market rates as determined by the parties.
ARTICLE VIII
NATURE OF OBLIGATIONS; INDEMNITIES; CHARGES
8.1 Obligations. As between the Partners, no Partner shall be liable
or bear responsibility for more than its Share of each and all of the costs,
expenses, liabilities and charges incurred or accrued by the Partnership. If any
Partner shall pay or be required to pay, discharge or otherwise bear
responsibility for any amount in excess of its share of the costs, expenses,
liabilities and charges incurred or accrued by the Partnership, (i) such payment
shall be deemed a demand loan by the advancing Partner to the other Partner, and
shall be treated in the same manner as a loan pursuant to Section 3.2(d), and
(ii) the other Partner covenants and agrees to indemnify, hold harmless and
reimburse such Partner against and for the amount of such excess.
8.2 Indemnities. Each Partner covenants and agrees to indemnify and
hold harmless the Partnership and the other Partner from and against any and all
damage, losses and expenses caused by or arising out of any and all of the
following: (i) any failure to perform any obligation required to be performed by
such Partner hereunder and (ii) any wrongful or negligent act or omission by
such Partner in connection with the Partnership's property or the ownership or
operation thereof.
8.3 Charges. Upon the request of the General Manager or the Management
Committee, either Partner, without charge, shall provide to the Partnership
basic management and administrative advice and consultation of the kind
generally provided by corporate staff to operating line functions and, including
but not limited to, legal services, loss prevention and safety counseling,
transportation and human resources
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counseling, and insurance counseling (but excluding management information
services), so long as that Partner is providing those services to its other
business segments.
8.4 Nature of Obligations; Indemnities; Charges. The expenses incurred
by Cargill in its Portland, Oregon office to provide the Partnership with export
administration support shall be provided at no cost to the Partnership.
Similarly, the expenses incurred by Cenex Harvest States in its St. Paul,
Minnesota office to provide the Partnership with accounting and trading
administration support shall be provided at no cost to the Partnership. The
Management Committee shall oversee the provision of these services as well as
those covered by Section 8.3, and in the event the contribution by the Partners
is not generally equal, the Management Committee shall take such action as it
deems necessary, such as having the Partnership pay one or both Partners for
some or all of such services.
8.5 Insurance. The Partnership shall purchase and maintain commercial
general liability and property insurance on the Tacoma Facility and other
insurance coverages, with deductibles and limits, as established and approved by
the Management Committee. Initially, the Management Committee establishes and
approves the insurance with the coverages, limits and deductibles set forth on
the Certificates of Insurance attached hereto as Exhibit A. The coverages,
limits and deductibles shall not be changed without the approval of the
Management Committee.
ARTICLE IX
TRANSFER OF INTERESTS
9.1 No Transfer of Interest. Except as hereinafter otherwise provided
in this Article IX, during the term of this Agreement, no Partner (or any
successor) shall, directly or indirectly in any manner, sell, transfer, assign,
encumber or otherwise dispose of any interest in the Partnership, nor shall any
such interest be subject, in whole or in part, directly or indirectly, to sale,
transfer, assignment, encumbrance or other disposition by operation of law or
agreement, without the prior written consent of the other Partner, and any
attempt so to do shall be void.
9.2 Transfer to Affiliates. Notwithstanding anything in Section 9.1 to
the contrary, any Partner may sell, transfer or otherwise dispose of its Partner
Interest to any entity which is an Affiliate of such Partner or of the ultimate
Controlling Affiliate of such Partner, subject, however, to the conditions that
(i) in the opinion of counsel to the Partnership, such sale, transfer or other
disposition would not (a) constitute a default under any material agreement to
which the Partnership is a party or (b) result in the termination of the
Partnership for Federal income tax purposes, (ii) the transferee may not be a
debtor subject to any proceeding under Title 7 or 11 of the United States
Bankruptcy Code or any successor legislation or similar state legislation
(unless otherwise consented to in writing by the other Partner) , and (iii) the
transferor and its
15
Affiliates shall not be released from any of its or their obligations under this
Agreement or the Subleases.
9.3 Reasonableness of Restrictions. Each Partner acknowledges and
agrees that the restrictions on the transfer of interests herein are reasonable
in view of the purpose and intent of the Partners.
9.4 Certain Encumbrances Permitted. Anything in this Agreement to the
contrary notwithstanding, any Partner (and the Affiliates of any Partner) may
encumber all or part of such Partner's Partner Interest to the extent and in the
manner which may be required pursuant to financing agreements contemplated by
Section 10.3.
ARTICLE X
FINANCIAL MATTERS
10.1 Programs and Budgets.
(a) The General Manager shall, not later than one (1) month prior to
the commencement of the next succeeding fiscal year of the Partnership, prepare
and submit to the Management Committee for its review and approval a business
operating budget and a capital expenditure budget for such fiscal year.
(b) Not later than the 25th calendar day after the close of each
fiscal quarter, the Controller shall submit to each Partner a comparison, for
the immediately preceding quarter and for the year to date, of the results of
operations of the Partnership with the applicable fiscal year budget.
10.2 Estimates on Cash Needs.
(a) Based on the budgets referred to in Section 10.1(a) and the
quarterly comparisons referred to in Section 10.1(b), the Treasurer will, at
such time and for such periods as requested by the Management Committee, submit
to the Management Committee a current cash estimate showing: (i) the estimated
cash disbursements which the Partnership will be required to make during the
next succeeding calendar period for operating costs; (ii) estimated receipts;
(iii) amounts needed for additional working capital; and (iv) the amount of
funds ("Cash Needs") that will be required to cover the amount, if any, by which
estimated cash disbursements and amounts needed for additional working capital
exceed estimated receipts available to cover such cash disbursements and
additional working capital. The current cash estimate shall also specify the
dates on which the Partnership must receive the necessary funds.
(b) In the event an emergency requires cash payments ("Emergency
Needs") not provided for by such current cash estimates, the General Manager or
the Treasurer, may at any time furnish a statement thereof to the Management
Committee, giving the maximum period of notice for any such additional cash
payments as is practicable in
16
the circumstances, specifying in detail the reasons for such emergency cash
payment and the amount thereof. Upon receipt of such emergency cash statement,
the Management Committee shall promptly decide, taking into account the
circumstances, how the Emergency Needs shall be met.
(c) Unless otherwise agreed by the Management Committee, the Cash
Needs and the Emergency Needs shall be made through borrowings of the
Partnership in accordance with Section 10.3.
10.3 Partnership Borrowings and Partner Loans. In the event that the
Management Committee decides at any time during the term of this Agreement that
it is desirable for the Partnership to borrow funds to acquire significant
inventories or to meet the Cash Needs, Emergency Needs or other requirements of
the Partnership, the Treasurer shall, within the limits of his authority as
defined by the Management Committee, negotiate on behalf of the Partnership to
borrow such funds from financial institutions. The Management Committee may
approve, reject, or modify the terms negotiated by the Treasurer and may
negotiate or authorize others to negotiate borrowings on behalf of the
Partnership in order to find terms more beneficial to the Partnership. The
Partnership may, upon approval of the Management Committee, also borrow from the
Partners, based on their respective Shares, on terms to be separately agreed.
The parties agree to use their best efforts to obtain Partnership borrowings
from financing institutions who will agree to limit recourse to each Partner to
50% of any sums financed.
10.4 Cash for Distribution. The Treasurer shall determine, at such
times as requested by the Management Committee, the amount of cash for
distribution and shall distribute such cash for distribution, if any, to the
Partners, in accordance with their Shares; provided, however, that (a) if any
Partner has advanced loans to a Delinquent Partner, the distributions otherwise
payable to the Delinquent Partner shall be made to the other Partner up to an
amount sufficient to repay such loans in full with interest, and (b) if any
Partner is in default or delinquent in respect of an obligation to the
Partnership, no distribution shall be made to such Partner until such default is
cured or such delinquent obligation is paid.
10.5 Deposits and Investments. The funds of the Partnership shall be
deposited in the name of the Partnership in accounts designated by the
Management Committee in banks or banking institutions to be selected by the
Management Committed or invested in such manner as shall be authorized by the
Management Committee. The Management Committee shall prescribe such procedures
as its shall deem necessary with respect to making such investments.
10.6 Fiscal Year. The fiscal year of the Partnership shall end on
August 31 in each year.
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10.7 Books of Account.
(a) The Management Committee shall approve the opening financial
statements for the Partnership as of the date hereof.
(b) Accurate books of account of the Partnership shall be maintained
in accordance with generally accepted accounting principles consistently
applied. In those instances in which more than one generally accepted accounting
principle can be applied, the Management Committee shall determine, in
consultation with the Partnership's independent accountants, which principle
will be adopted by the Partnership. Such books shall at any reasonable time be
available for examination by either Partner or Persons acting on its behalf at
the sole expense of such Partner.
10.8 Financial Statements.
(a) Within ninety (90) days after the close of each fiscal year of the
Partnership there shall be prepared and submitted to each Partner the following
financial statements, accompanied by the report thereon of the independent
accountants for the Partnership:
(1) a balance sheet of the Partnership as at the end of such
fiscal year;
(2) a statement of profit and loss for such fiscal year;
(3) a statement of changes in financial position; and
(4) a statement of the respective Partner Accounts and
changes therein for such fiscal year.
(b) Within twenty (20) Business Days after the close of each fiscal
month the Treasurer will cause to be prepared and given to each Partner
unaudited financial statements comparable to those referred to in Section
10.8(a)(1) and (2).
10.9 Tax Matters.
(a) The Partners hereby agree that the Partnership shall be treated as
a partnership for purposes of United States, Federal, state and local income tax
or other taxes, and further agree not to take any position or make any election,
in a tax return or otherwise, inconsistent therewith.
(b) The Management Committee shall cause all required United States
Federal, state and local partnership income, franchise, property or other tax
returns, including information returns, to be filed with the appropriate office
of the Internal Revenue Service or any other relevant taxing jurisdiction, as
the case may be. As promptly as practicable, and in any event in sufficient time
to permit timely preparation and filing by
18
each Partner of its respective state and Federal tax returns, the Partnership
shall deliver to each Partner a copy of each state and Federal tax return or tax
report filed by the Partnership.
(c) All elections for Federal income tax purposes, except as stated in
Section 10.9(a), required or permitted to be made by the Partnership, and all
material decisions with respect to the calculation of its income or loss for tax
purposes, shall be made in such manner as the Management Committee shall
determine.
10.10 Partner Accounts.
(a) An individual partner account ("Partner Account") shall be
maintained for each Partner and shall be adjusted as set forth herein.
(b) The Partner Account maintained for each Partner (X) shall be
credited with the sum of (a) the fair market value at the time of contribution
of all capital contributions made by such Partner to the Partnership and the
amount of all Net Income credited to the Partner account of such Partner
pursuant to Section 4 and decreased by the sum of (i) the amount of all
distributions made to such Partner and (ii) the amount of Net Loss charged to
the Partner Account of such Partner pursuant to Section 4.1;
(c) Partnership income, gains, losses and deductions shall, solely for
income tax purposes, be allocated among the Partners in accordance with Section
704(c) of the Internal Revenue Code of 1986, as amended.
ARTICLE XI
DISSOLUTION AND WINDING UP
11.1 Dissolution Events. The Partnership shall be dissolved in case
any of the following events shall occur:
(a) The term of the Partnership shall expire pursuant to Section 2.4
of this Agreement.
(b) The sale, abandonment or disposal by the Partnership of all or
substantially all of its assets not in the ordinary course of business.
(c) If the Partnership incurs a net loss for any fiscal year in excess
of $10 million, and either Partner requests dissolution in writing within thirty
(30) days of receipt of the financial statements referred to in Section 10.8(a)
of this Agreement.
(d) If Cargill assigns, subleases or in any manner transfers its
rights under its lease of the Seattle Facility to Cenex Harvest States.
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(e) If Cargill assigns, subleases or in any manner transfers its
rights under its lease of the Seattle Facility to Tomen, Marubeni, Mitsui,
Zennoh, Itochu, KFA (Korean Feed Assoc) or COFCO (Chinese Oil) (such parties are
hereafter referred to collectively as the "First Tier Third Parties") and
executes a put through agreement with such party giving Cargill access to 40% or
more of the capacity of the Seattle Facility on an annual basis, and (i)
Cargill, Cenex Harvest States and the Partnership cannot agree upon the terms
and conditions under which said put through agreement will be assigned to the
Partnership, or (ii) the terms and conditions of such put through agreement are
unacceptable to Cenex Harvest States.
(f) If Cargill assigns, subleases or in any manner transfers its
rights under its lease of the Seattle Facility to one of the First Tier Third
Parties but does not execute a put through agreement with such party giving
Cargill access to 40% or more of the capacity of the Seattle Facility on an
annual basis, then either Cargill or Cenex Harvest States can elect to dissolve
the Partnership within thirty (30) days of such assignment, sublease or
transfer.
(g) If Cargill assigns, subleases or in any manner transfers its
rights under its lease of the Seattle Facility to any third party other than the
First Tier Third Parties or Cenex Harvest States, and (i) Cargill executes a put
through agreement with such party giving Cargill access to 40% or more of the
capacity of the Seattle Facility on an annual basis and (aa) Cargill, Cenex
Harvest States and the Partnership cannot agree upon the terms and conditions
under which said put through agreement will be assigned to the Partnership, or
(bb) the terms and conditions of such put through agreement are unacceptable to
Cenex Harvest States, or (ii) Cargill does not execute a put through agreement
with such party giving Cargill access to 40% or more of the capacity of the
Seattle Facility on an annual basis, then either Cargill or Cenex Harvest States
can elect to dissolve the Partnership within thirty (30) days of such
assignment, sublease or transfer.
(h) The Partnership or either Partner shall (i) file a petition in
bankruptcy, (ii) petition or apply to any tribunal for the appointment of a
receiver or any trustee for it or a substantial part of its assets, (iii)
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or (iv) make an assignment for
the benefit of creditors or take any other similar action for the protection or
benefit of creditors; or if there shall have been filed any such petition or
application, or any such petition shall have been commenced against it, in which
an order for relief is entered or which remains undismissed for a period of
forty-five (45) days or more; or the Partnership or either Partner by any act or
omission shall indicate its consent to, approval of or acquiescence in any such
petition, application or proceeding or order for relief or the appointment of a
receiver or any trustee for it or any substantial part of any of its properties,
or shall suffer any such receivership or trusteeship to continue undischarged
for a period of forty-five (45) days or more.
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No Partner shall have the right to dissolve or terminate the
Partnership for any reason other than as set forth above or to withdraw from the
Partnership other than as set forth in Article IX, and each Partner hereby
waives any other right it may have with respect thereto.
11.2 Winding Up. Upon dissolution of the Partnership pursuant to
Section 11.1, the Partnership shall be wound up and liquidated in accordance
with law and the following provisions:
(a) Each Partner shall pay to the Partnership all amounts owing by it
to the Partnership.
(b) The Partnership shall continue with the business necessary to
complete and perform existing contracts until the distribution of the
Partnership's assets as hereinafter provided. No new business or contracts shall
be undertaken except as necessary to wind up and liquidate the Partnership.
(c) The property and business of the Partnership shall be wound up and
liquidated under the direction of the Management Committee or a Person duly
appointed by the Management Committee (in any such case, the "Liquidator"). Upon
the dissolution of the Partnership, the Liquidator shall cause a statement
setting forth the assets and liabilities of the Partnership as of the date of
dissolution of the Partnership (the "Dissolution Date") (including the fair
market value of all of the assets of the Partnership) to be prepared promptly
and furnished to each of the Partners, or upon the written request of either
Partner, by the independent auditors of the Partnership. In preparing such a
statement, the Liquidator may retain such independent appraisers or other
advisors as the Liquidator deems advisable. All fees, costs, and expenses
incurred in connection therewith shall be borne by the Partnership.
(d) Following the preparation and distribution of such statement, the
Liquidator shall distribute all the assets and assign all the liabilities of the
Partnership to the Partners in the ratio of the Partner Account balances of the
Partners after adjustment of the Partner Accounts for any profit or loss in the
year of liquidation, any profit or loss realized or to be realized on any
property sold or disposed of as part of the liquidation, and any profit which
would be realized if any property distributed in kind had been sold at its fair
market value by the Partnership.
(e) In conjunction with dissolution and liquidation of the
Partnership, Cargill shall pay to the Partnership the then book value (net of
accumulated depreciation) of all capital improvements and/or repairs made by the
Partnership to the Tacoma Facility during the term of the Partnership and which
have been authorized to be made by the Management Committee.
(f) In conjunction with dissolution and liquidation of the
Partnership, the shares of the Bank of Cooperatives (the "COBANK") held by the
Partnership shall be
21
distributed equally to the Partners; provided, however, that in the even that
COBANK will not transfer the Partnership's shares in COBANK stock to Cargill,
then Cenex Harvest States will purchase all of the COBANK shares owned by the
Partnership from the Partnership at the Net Present Value (NPV) of the stated
carrying value of such shares as expressed on the Partnership's financial
statements. It being understood that the NPV would be computed based upon the
cash payout formula for stock redemption in use by COBANK at the date of the
dissolution. The discount factor to be used for calculating the NPV would be 100
basis points over the applicable United States Treasury Note rate for the cash
payout period.
11.3 Put-through Agreement. Upon dissolution of the Partnership
pursuant to Section 11.01(g), Cargill and Cenex Harvest States shall enter into
a put-through agreement giving Cenex Harvest States the right to access the
Tacoma Facility for put-through of Feedgrains and Oilseeds until May 31, 2000 at
market put-through rates. The put-through agreement shall be substantially in
accordance with the terms of the Put-Through Agreement attached hereto as
Exhibit B. The term of the put-through agreement shall be likewise extended for
any extensions which Cargill receives from the United States Department of
Justice beyond six (6) months to divest its operation of the Seattle Facility.
11.4 Put-through Agreement. Upon dissolution of the Partnership
pursuant to Section 11.01(a), (b), (c), (e), (f) or (h), Cargill and Cenex
Harvest States shall enter into a put-through agreement giving Cenex Harvest
States the right to access the Tacoma Facility for put-through of Feedgrains and
Oilseeds for the balance of the term of Cargill's lease of the Tacoma Facility
(including any extensions, renewals or amendments thereof) at market put-through
rates. The put-through agreement shall be substantially in accordance with the
terms of the Put-Through Agreement attached hereto as Exhibit C.
ARTICLE XII
DISPUTES; ARBITRATION
12.1 Resolution of Controversies. Any dispute, controversy or claim
between the Partners arising from this Agreement or the performance thereof
shall be settled solely by arbitration in accordance with the provisions of
Section 12.2.
12.2 Method of Arbitration. The arbitration shall be effected by
arbitrators selected as hereinafter provided and shall be conducted by the
American Arbitration Association in Minneapolis, Minnesota applying the
Commercial Arbitration Rules in effect on the date thereof. The dispute shall be
submitted to three arbitrators, each of who shall have had at least five (5)
years' experience in connection with the business of the Partnership, one
arbitrator being selected by the Partner submitting the controversy or dispute
to arbitration, the second arbitrator being selected by the other Partner and
the third arbitrator being selected by the two arbitrators so selected.
Conditions of any such arbitration shall include (a) that the arbitrators shall
not have the authority to
22
modify, amend or supplement the terms of this Agreement, and shall interpret
this Agreement strictly in accordance with its terms; (b) that the amount of
capital required to be contributed by a Partner to the partnership shall not be
increased; and (c) that the Partner submitting such controversy or dispute to
arbitration shall appoint its arbitrator within fifteen (15) Business Days after
the date of such submission. The failure of the Partner requesting arbitration
to timely appoint such arbitrator shall void the effectiveness of the notice of
submission of the matter to arbitration. The second arbitrator to be selected by
the other Partner as hereinbefore provided shall be selected within fifteen (15)
Business Days after receipt of notice by such Partner of the selection of the
submitting arbitrator and, if the second arbitrator is not so selected, the
determination of the single arbitrator selected by the submitting Partner shall
be binding and conclusive. If the non-submitting Partner shall have timely
selected the second arbitrator, then the two selected arbitrators shall select
the third arbitrator within five (5) Business Days following the selection of
the second arbitrator. The meetings of the arbitrators shall be held at such
place or places as may be agreed upon by the arbitrators, and each Partner shall
bear the cost of the fees and expenses of the arbitrator selected by or for it,
with the fees and expenses of the third arbitrator to be borne equally. Upon
making any order or award, which order may include an order to dissolve the
Partnership pursuant to the provisions of Article X, the arbitrators shall
retain jurisdiction to determine any subsequent claim that a defaulting Partner
has failed to comply with terms of any such order or award. The arbitrators
shall have no authority to impose a fine or penalty.
ARTICLE XIII
CONFIDENTIAL INFORMATION
13.1 Confidential Information. During the continuance of the
Partnership and for a period of three (3) years after its termination, no
Partner or its Affiliates or any officer or employee thereof shall divulge to
any Person (except an Affiliate of such Person which shall undertake to be bound
to the provisions of this Article XIII) any trade secret, or secret process,
method or means or any other confidential information concerning the business or
properties of the Partnership, the Partners or their Affiliates, or the
manufacture, sale or licensing of products, processes and designs made or owned
by the Partnership, the Partners, or their Affiliates, that come to the
knowledge of such Partner, Affiliate, officer or employee by reason of the
relationship of such Partner, Affiliate, officer or employee with the
Partnership. The obligations under this Article XIII shall not apply to any
information to the extent that (a) such information is or shall become part of
the public domain, by publication or otherwise, through no fault of the Partner
seeking to use or disclose such information, or (b) the receiving Partner,
Affiliate, officer or employee shall be able to show such information to have
been in its or his possession prior to the receipt thereof from the Partnership
or other Partner or Affiliate or to have been received from a third party which
shall not itself have received such information on a confidential basis from the
Partnership or any Partner or Affiliate of a Partner.
23
13.2 Non-Solicitation Clause. During the duration of this Agreement
each Partner represents that it will not initiate employment discussions with
personnel employed by the other Partner by direct contact or through executive
search firms, employment agencies, or other indirect means, for so long as such
personnel is employed by the Partner and for an additional six (6) months after
such personnel leaves that Partner's employ. It being understood that this would
not apply in instances where personnel from either Partner are responding to
general advertisements of job openings.
ARTICLE XIV
SECURITY INTEREST
14.1 Security for Indemnity. To secure their respective indemnity
obligations hereunder, each Partner hereby grants to the partnership and to the
other Partner, pursuant to Article IX of the Uniform Commercial Code, a security
interest in their respective right, title and interest in and to the
Partnership, and under the Partnership Agreement, including all present and
future rights to any profits, payments, distributions, or other rights to
payment arising under or in connection with the Partnership Agreement (the
"Collateral"); provided, however, that for so long as a Partner is not in
default of any of its indemnity obligations hereunder, that Partner may receive
all payments or distributions to which its is entitled as Partner of the
Partnership. In the event a Partner is in default under its indemnity
obligation, to the extent such default may be cured by the payment of money, the
Partnership may, at the request of the non-defaulting Partner, make such payment
and pay to the non-defaulting Partner the next available funds which would
otherwise have been distributed to the defaulting Partner, up to an amount which
will make the non-defaulting Partner whole, together with interest thereon from
the date paid by the Partnership until reimbursed to the other Partner at the
rate of 2% in excess of the Prime Rate.
Alternatively, if such loss is incurred by the other Partner, such
other Partner shall be entitled to receive all subsequent distributions
otherwise payable to the defaulting Partner until the non-defaulting Partner has
recovered the full amount of its loss together with interest at the rate of 2%
in excess of the Prime Rate.
Neither Partner will transfer or assign, grant a security interest in
or otherwise dispose of its respective interests as debtor in and to the
Collateral and will maintain the Collateral free and clear of all other liens,
claims and security interests whatsoever. Provided that a Partner has discharged
its respective obligations under and is not otherwise in default of its
obligations hereunder, and is not the subject of any bankruptcy or insolvency
proceeding, this security interest shall terminate only upon the settlement of
all debts and claims outstanding with respect to the dissolution of the
Partnership. Each Partner shall furnish to the Partnership and the other
Partner, upon request, duly executed UCC1 financing statements covering the
Collateral and such other documents, certifications and instruments as requested
by the Partnership or the
24
other Partner, to evidence, grant, perfect and prioritize the security interest
granted in the Collateral.
ARTICLE XV
GOVERNING LAW
15.1 Governing Law. The Partnership is formed pursuant to and shall be
governed by and construed in accordance with the Partnership Law and laws of the
State of Washington, exclusive of Washington's conflict of laws rules.
ARTICLE XVI
AMENDMENTS
16.1 Amendments. The terms of this Agreement cannot be modified,
varied or amended orally but only by a written instrument executed by all the
Partners.
ARTICLE XVII
NOTICES
17.1 Notices.
(a) All notices, consents, demands, requests, reports and other
documents authorized or required to be given pursuant to this Agreement shall be
given in writing and either personally served to an officer or a member of the
Management Committee of the Partner to whom it is given or mailed by registered
or certified first class mail, postage prepaid, or sent by facsimile or
telegram, addressed as follows:
If to Cargill:
CARGILL, INCORPORATED
North American Grain/Lake
15615 McGinty Road West
Wayzata, MN 55391-2398
Attn: President
Facsimile No: (612) 404-6025
With a copy to:
CARGILL, INCORPORATED
Law Department/24
15407 McGinty Road West
Wayzata, MN 55391-2399
Attn: North American Grain Attorney
Facsimile No: (612) 742-6349
25
If to Cenex Harvest States:
CENEX HARVEST STATES COOPERATIVES
5500 Cenex Drive
Inver Grove Heights, MN 55077
Attention: Legal Department
Facsimile No.: (651) 451-4554
(b) Any Partner may change the address to which notices and other
communications to it shall be sent by giving to the other Partner written notice
of such change, in which case notices and other communications to the Partner
giving the notice of the change of address shall not be deemed to have been
sufficiently given or delivered unless addressed to it at the new address as
stated in said notice. Notices shall be deemed to have been given (except as
otherwise expressly set forth in this Agreement) (i) when delivered, if given by
personal delivery or actual delivery during normal business hours, (ii) three
(3) Business Days after posting, if given by registered or certified mail,
return receipt requested, (iii) two (2) Business Days after dispatch if given by
telegram, or (iv) upon receipt, if given by facsimile.
ARTICLE XVIII
SUCCESSORS AND ASSIGNS
18.1 Successors and Assigns. Subject to the provisions of Article IX,
this Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of the respective parties hereto in all respects as if
they were mentioned throughout by words of proper designation.
ARTICLE XIX
MISCELLANEOUS
19.1 Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the Partners with respect to the formation and operation of
the Partnership and related transactions contemplated by this Agreement, and
supersedes all prior agreements and understandings, written or oral, between the
Partners with respect thereto.
19.2 Severability. The unenforceability, invalidity, or illegality of
any provision of this Agreement shall not affect or impair any other provision
hereof or render it unenforceable, invalid or illegal.
19.3 Interpretation. Wherever used in this Agreement, unless the
context clearly indicates otherwise, the use of the singular includes the
plural, and vice versa; and the use of any gender is applicable to any other
gender.
26
19.4 Captions. Captions contained in this Agreement are inserted only
as a matter of convenience and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any provision hereof.
19.5 Partition Waived. The Partners agree that the Partnership's
interest, properties and investments are not and will not be suitable for
partition. Accordingly, each of the Partners hereby irrevocable waives any and
all rights that it may have to maintain any action for partition of any of such
interests, properties or investments.
19.6 Waiver and Consent. No consent or waiver, express or implied, by
any Partner to or of any breach or default by any other Partner in the
performance by such other Partner of its obligations hereunder shall be deemed
or construed to be a consent or waiver to or of any other breach or default in
the performance by such other Partner of the same or any other obligations of
such Partner hereunder. Failure on the part of any Partner to complain of any
act or failure to act of the other Partner or to declare such other Partner in
default, irrespective of how long such failure continues, shall not constitute a
waiver by such Partner of its right hereunder.
19.7 Commercial Efficacy. The Partners shall take all reasonable
actions to give commercial efficacy to the terms and conditions of this
Agreement and to promote the business of the Partnership, including, but not
limited to, taking or causing the members of the Management Committee appointed
by them to take all necessary actions in a timely fashion, in order for the
Partnership to pursue the business contemplated by this Agreement, entering into
all the agreements contemplated hereby and any additional agreements or
instruments of further assurance, as on advice from legal counsel, the Partners
shall reasonably deem necessary, and seeking all necessary governmental
approvals.
19.8 Counterparts. This Agreement may be executed in any number of
counterpart copies, each of which shall constitute an original and all of which
shall constitute one agreement.
19.9 GAAP Basis. In the event the auditors of the Partnership are
required hereunder to determine the values, accounts, give opinions or make, any
other valuation of any nature, the auditors shall employ generally accepted
accounting principles consistently applied unless the context otherwise requires
the application of the principles of tax accounting (or differing regulatory
rules).
19.10 First Right on Tacoma Facility. In the event Cargill wishes to
sell, transfer or assign its lease of the Tacoma Facility to a third party
during the term of the Partnership, Cargill shall provide Cenex Harvest States
with thirty (30) days prior written notice of its desire to do so. During such
thirty day period Cenex Harvest States shall have the first right to acquire the
Tacoma Facility, and the Partners shall negotiate in good faith the terms and
conditions of such proposed transaction. In the event the Partners cannot reach
a mutually acceptable agreement for such transaction in the
27
thirty day period, Cargill shall be free to pursue and consummate the sale,
transfer or assignment of the Tacoma Facility to and with any third party,
provided that such sale, transfer or assignment is on no less favorable terms
and conditions to Cargill than the last offer of Cenex Harvest States to Cargill
for same and Cenex Harvest States is still willing to agree to such terms and
conditions (i.e., Cargill cannot sell, transfer or assign the Tacoma Facility to
a third party on terms and conditions less favorable to Cargill than the last
offer of Cenex Harvest States to Cargill for same). This section 19.10 shall not
apply in the event Cargill is also transferring its interest in the Partnership
to a third party.
IN WITNESS WHEREOF, the Partners have executed this Agreement as of
the date first above written.
CARGILL, INCORPORATED
By: /s/ Frank L. Sims
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
CENEX HARVEST STATES COOPERATIVES
By: /s/ Mark L. Palmquist
-------------------------------------
Name: Mark L. Palmquist
-----------------------------------
Title: Senior Vice President
----------------------------------
28
EXHIBIT B
PUT-THROUGH AGREEMENT
THIS Put-Through Agreement, dated ______________________ by and
between CENEX HARVEST STATES COOPERATIVES ("CHS"), a Minnesota corporation; and
CARGILL, INCORPORATED ("Cargill"), a Delaware corporation is made with reference
to the following:
WITNESSETH:
WHEREAS, CHS desires to enter into a put through agreement with
respect to various commodities to be stored and handled at Cargill's Tacoma,
Washington grain elevator ("Facility") all as described herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreement set forth herein, the parties hereto, intending to be legally
bound, mutually agree as follows:
1. SERVICES PROVIDED. Cargill agrees to use its elevator facility, office
space, personnel and support equipment currently located at the Facility to
provide put through services for CHS in accordance with the terms of this
Agreement for corn, sorghum and soybeans. CHS and Cargill may, but shall not be
obligated to, agree to the put through of other commodities from time to time.
2. PAYMENT FOR SERVICES. As consideration for providing the put through
services and necessary elevator facilities, office space, personnel and support
equipment, Cargill will be paid a put through fee equal to the fair market put
through fee charged by elevators similarly situated for the applicable
commodities. The fee shall be established upon commencement of this Agreement.
If the parties are unable to agree upon what is the fair market put through fee
at the time such fee is to be established, either party may submit the matter to
the American Arbitration Association in Minneapolis, Minnesota. The decision of
the arbitrators shall be binding upon the parties and enforceable in a court of
law having jurisdiction over the parties.
3. OPERATING EXPENSES. In consideration of payment received hereunder,
Cargill will be responsible for all fixed and variable operating expenses with
regard to the Facility (including labor), including, without limitation,
depreciation, taxes, insurance, repairs and utilities.
4. CARGILL FUNCTIONS. Cargill will be responsible for performing the
normal day-to-day functions of the grain elevator business, including, without
limitation, weighing, grading and binning inbound grain deliveries and loading
outbound shipments.
5. INSURANCE. Cargill will maintain the property and casualty insurance
on the Facility as it sees fit. CHS shall be responsible for insuring its
inventory.
6. INDEMNITY. CHS, its respective affiliates, officers, directors and
employees, successors and assigns shall be indemnified and held harmless by
Cargill from any and all liabilities, losses, damages, costs and expenses,
interest, awards, judgments and penalties (including, without limitation,
reasonable legal costs and expenses) actually suffered or incurred by it to the
extent arising out of or resulting from the negligent acts of any of Cargill,
its employees or agents hereunder. In no event shall Cargill be liable under
this paragraph for CHS's lost profits, lost business or damage to the goodwill
or reputation of CHS; provided, however, that nothing herein shall be construed
as limiting Cargill's liability for, and the preceding limitations shall not
apply to, breach of this Agreement.
7. TERM. [LENGTH OF TERM DETERMINED IN ACCORDANCE WITH PARAGRAPH 11.3 OF
THE TEMCO PARTNERSHIP AGREEMENT BETWEEN CHS AND CARGILL]. Cargill covenants and
agrees to keep such lease in full force and effect for the term of this
Agreement and covenants and agrees not to voluntarily terminate such lease
before expiration or termination of this Agreement without the prior written
consent of CHS. If Cargill sells or otherwise transfers its interest in the
Facility during the term of this Agreement, Cargill shall obtain the written
agreement of the transferee to be bound by the terms of this Agreement.
8. MISCELLANEOUS PROVISIONS.
8.1 BINDING EFFECT. This Agreement shall be binding on and inure to
the benefit of the parties and their heirs, personal representatives,
successors, and, to the extent permitted by Section 8.2, assigns.
8.2 ASSIGNMENT. Except with the other party's prior written consent, a
party may not assign any rights or delegate any duties under this Agreement.
8.3 NOTICES. Any notice or other communication required or permitted
to be given under this Agreement shall be in writing and shall be mailed by
certified mail, return receipt requested, postage prepaid, addressed to the
parties as follows:
(a) To CHS: Cenex Harvest States Cooperatives
Attention: Senior Vice President, Grain Marketing
5500 Cenex Drive
Inver Grove Heights, MN 55077
with a copy to: Cenex Harvest States Cooperatives
Attention: Legal Department
5500 Cenex Drive
Inver Grove Heights, MN 55077
(b) To Cargill: Cargill, Incorporated
Attention: N.A. Grain President/Lake
15615 McGinty Road West
Wayzata, MN 55391-2398
with copies to: Cargill, Incorporated
Attention: Law Department/N.A. Grain Attorney
P.O. Box 5624
Minneapolis, MN 55440-5624
Any notice or other communication shall be deemed to be given at the expiration
of the day after the date of deposit in the United States mail. The addresses to
which notices or other communications shall be mailed may be changed from time
to time by giving written notice to the other party as provided in this Section.
2
8.4 ATTORNEY FEES. If any suit, action or arbitration proceeding is
filed by any party to enforce this Agreement or otherwise with respect to the
subject matter of this Agreement, the prevailing party shall be entitled to
recover reasonable attorney fees incurred in preparation or in prosecution or
defense of such suit, action or arbitration proceeding as fixed by the trial
court, or the arbitrator(s) and if any appeal is taken from the decision of the
trial court or the arbitrator(s), reasonable attorney fees as fixed by the
appellate court.
8.5 AMENDMENTS. This Agreement may be amended only by an instrument in
writing executed by all the parties.
8.6 HEADINGS. The headings used in this Agreement are solely for
convenience of reference, are not part of this Agreement, and are not to be
considered in construing or interpreting this Agreement.
8.7 ENTIRE AGREEMENT. This Agreement (including the exhibits) sets
forth the entire understanding of the parties with respect to the subject matter
of this Agreement and supersedes any and all prior understandings and
agreements, whether written or oral, between the parties with respect to such
subject matter.
8.8 COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument.
8.9 SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any respect for any reason, the validity and enforceability
of any such provision in any other respect and of the remaining provisions of
this Agreement shall not be in any way impaired.
8.10 WAIVER. A provision of this Agreement may be waived only by a
written instrument executed by the party waiving compliance. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver.
Failure to enforce any provision of this Agreement shall not operate as a waiver
of such provision or any other provision.
8.11 GENDER. Any indication of gender of a party in this Agreement
shall be modified, as required, to fit the gender of the party or parties in
question.
8.12 FURTHER ASSURANCES. From time to time, each of the parties shall
execute, acknowledge, and deliver any instruments or documents necessary to
carry out the purposes of this Agreement.
8.13 TIME OF ESSENCE. Time is of the essence for each and every
provision of this Agreement.
8.14 NO THIRD-PARTY BENEFICIARIES. Nothing in this Agreement, express
or implied, is intended to confer on any person, other than the parties to this
Agreement, any right or remedy of any nature whatsoever.
8.15 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the state of Washington.
3
8.16 ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, including, without limitation, the making, performance, or
interpretation of this Agreement, shall be settled by arbitration before the
American Arbitration Association in Minneapolis, Minnesota.
8.17 FORCE MAJEURE. Neither party shall be liable to the other for
failure or delay in performance of its obligations by a cause not within its
reasonable control, including, but not limited to, acts of God, acts of public
disturbance, riots, war, fire, windstorm, flood, strikes, destruction of
facilities, or other labor disputes or government intervention, provided,
however, that the party experiencing the force majeure condition shall use
commercially reasonable efforts to remove such condition as soon as possible,
and upon such removal, the terms of this Agreement shall become fully in effect.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date and year first above written.
CENEX HARVEST STATES COOPERATIVES, a Minnesota
corporation
By:
-----------------------------------------
Its
CARGILL, INCORPORATED, a Delaware corporation
By:
-----------------------------------------
Its
4
EXHIBIT C
PUT-THROUGH AGREEMENT
THIS Put-Through Agreement, dated ___________________________ by and
between CENEX HARVEST STATES COOPERATIVES ("CHS"), a Minnesota corporation; and
CARGILL, INCORPORATED ("Cargill"), a Delaware corporation is made with reference
to the following:
WITNESSETH:
WHEREAS, CHS desires to enter into a put through agreement with
respect to various commodities to be stored and handled at Cargill's Tacoma,
Washington grain elevator ("Facility") all as described herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreement set forth herein, the parties hereto, intending to be legally
bound, mutually agree as follows:
1. SERVICES PROVIDED. Cargill agrees to use its elevator facility, office
space, personnel and support equipment currently located at the Facility to
provide put through services for CHS in accordance with the terms of this
Agreement for corn, sorghum and soybeans. CHS and Cargill may, but shall not be
obligated to, agree to the put through of other commodities from time to time.
2. PAYMENT FOR SERVICES. As consideration for providing the put through
services and necessary elevator facilities, office space, personnel and support
equipment, Cargill will be paid a put through fee equal to the fair market put
through fee charged by elevators similarly situated for the applicable
commodities. The fee shall be established upon commencement of this Agreement
and shall be adjusted annually during the term of this Agreement to reflect the
then current fair market put through fee. If the parties are unable to agree
upon what is the fair market put through fee at the time such fee is to be
established or adjusted, either party may submit the matter to the American
Arbitration Association in Minneapolis, Minnesota. The decision of the
arbitrators shall be binding upon the parties and enforceable in a court of law
having jurisdiction over the parties.
3. OPERATING EXPENSES. In consideration of payment received hereunder,
Cargill will be responsible for all fixed and variable operating expenses with
regard to the Facility (including labor), including, without limitation,
depreciation, taxes, insurance, repairs and utilities.
4. CARGILL FUNCTIONS. Cargill will be responsible for performing the
normal day-to-day functions of the grain elevator business, including, without
limitation, weighing, grading and binning inbound grain deliveries and loading
outbound shipments.
5. INSURANCE. Cargill will maintain the property and casualty insurance
on the Facility as it sees fit. CHS shall be responsible for insuring its
inventory.
6. INDEMNITY. CHS, its respective affiliates, officers, directors and
employees, successors and assigns shall be indemnified and held harmless by
Cargill from any and all liabilities, losses, damages, costs and expenses,
interest, awards, judgments and penalties (including, without limitation,
reasonable legal costs and expenses) actually suffered or incurred by it to the
extent arising out of or resulting from the negligent acts of any of Cargill,
its employees or agents hereunder. In no event shall Cargill be liable under
this paragraph for CHS's lost profits, lost business or damage to the goodwill
or
reputation of CHS; provided, however, that nothing herein shall be construed as
limiting Cargill's liability for, and the preceding limitations shall not apply
to, breach of this Agreement.
7. TERM. The term of this Agreement shall continue until expiration of
the term of the Cargill's lease of the Facility, including any extensions,
renewals or amendments thereof. Cargill covenants and agrees to keep such lease
in full force and effect for the term thereof and covenants and agrees not to
voluntarily terminate such lease before its expiration without the prior written
consent of CHS. If Cargill sells or otherwise transfers its interest in the
Facility, Cargill shall obtain the written agreement of the transferee to be
bound by the terms of this Agreement.
8. MISCELLANEOUS PROVISIONS.
8.1 BINDING EFFECT. This Agreement shall be binding on and inure to
the benefit of the parties and their heirs, personal representatives,
successors, and, to the extent permitted by Section 8.2, assigns.
8.2 ASSIGNMENT. Except with the other party's prior written consent, a
party may not assign any rights or delegate any duties under this Agreement.
8.3 NOTICES. Any notice or other communication required or permitted
to be given under this Agreement shall be in writing and shall be mailed by
certified mail, return receipt requested, postage prepaid, addressed to the
parties as follows:
(a) To CHS: Cenex Harvest States Cooperatives
Attention: Senior Vice President, Grain Marketing
5500 Cenex Drive
Inver Grove Heights, MN 55077
with a copy to: Cenex Harvest States Cooperatives
Attention: Legal Department
5500 Cenex Drive
Inver Grove Heights, MN 55077
(b) To Cargill: Cargill, Incorporated
Attention: N.A. Grain President/Lake
15615 McGinty Road West
Wayzata, MN 55391-2398
with copies to: Cargill, Incorporated
Attention: Law Department/N.A. Grain Attorney
P.O. Box 5624
Minneapolis, MN 55440-5624
Any notice or other communication shall be deemed to be given at the expiration
of the day after the date of deposit in the United States mail. The addresses to
which notices or other communications shall be mailed may be changed from time
to time by giving written notice to the other party as provided in this section.
2
8.4 ATTORNEY FEES. If any suit, action or arbitration proceeding is
filed by any party to enforce this Agreement or otherwise with respect to the
subject matter of this Agreement, the prevailing party shall be entitled to
recover reasonable attorney fees incurred in preparation or in prosecution or
defense of such suit, action or arbitration proceeding as fixed by the trial
court, or the arbitrator(s) and if any appeal is taken from the decision of the
trial court or the arbitrator(s), reasonable attorney fees as fixed by the
appellate court.
8.5 AMENDMENTS. This Agreement may be amended only by an instrument in
writing executed by all the parties.
8.6 HEADINGS. The headings used in this Agreement are solely for
convenience of reference, are not part of this Agreement, and are not to be
considered in construing or interpreting this Agreement.
8.7 ENTIRE AGREEMENT. This Agreement (including the exhibits) sets
forth the entire understanding of the parties with respect to the subject matter
of this Agreement and supersedes any and all prior understandings and
agreements, whether written or oral, between the parties with respect to such
subject matter.
8.8 COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument.
8.9 SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any respect for any reason, the validity and enforceability
of any such provision in any other respect and of the remaining provisions of
this Agreement shall not be in any way impaired.
8.10 WAIVER. A provision of this Agreement may be waived only by a
written instrument executed by the party waiving compliance. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver.
Failure to enforce any provision of this Agreement shall not operate as a waiver
of such provision or any other provision.
8.11 GENDER. Any indication of gender of a party in this Agreement
shall be modified, as required, to fit the gender of the party or parties in
question.
8.12 FURTHER ASSURANCES. From time to time, each of the parties shall
execute, acknowledge, and deliver any instruments or documents necessary to
carry out the purposes of this Agreement.
8.13 TIME OF ESSENCE. Time is of the essence for each and every
provision of this Agreement.
8.14 NO THIRD-PARTY BENEFICIARIES. Nothing in this Agreement, express
or implied, is intended to confer on any person, other than the parties to this
Agreement, any right or remedy of any nature whatsoever.
8.15 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the state of Washington.
3
8.16 ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, including, without limitation, the making, performance, or
interpretation of this Agreement, shall be settled by arbitration before the
American Arbitration Association in Minneapolis, Minnesota.
8.17 FORCE MAJEURE. Neither party shall be liable to the other for
failure or delay in performance of its obligations by a cause not within its
reasonable control, including, but not limited to, acts of God, acts of public
disturbance, riots, war, fire, windstorm, flood, strikes, destruction of
facilities, or other labor disputes or government intervention, provided,
however, that the party experiencing the force majeure condition shall use
commercially reasonable efforts to remove such condition as soon as possible,
and upon such removal, the terms of this Agreement shall become fully in effect.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date and year first above written.
CENEX HARVEST STATES COOPERATIVES, a Minnesota
corporation
By:
-----------------------------------------
Its
CARGILL, INCORPORATED, a Delaware corporation
By:
-----------------------------------------
Its
4