AGREEMENT FOR PURCHASE AND SALE
OF ANHYDROUS AMMONIA*
THIS AGREEMENT ("Agreement") is made this 1st day of January,
1999, 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
("Product"); and
WHEREAS, Seller desires to sell and Buyer wishes to purchase
the quantities of Product 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 deliver to Buyer at El Dorado,
Arkansas a volume of Product of not less than twenty four thousand
(24,000) tons and not more than seventy two thousand (72,000) tons,
during the contract term, commencing January 1, 1999.
2. Minimum/Maximum Monthly and Quarterly Quantities: Seller
shall not be required to deliver more than six thousand (6,000)
tons and not less than two thousand (2,000) ton of Product in any
one month. Seller shall not be required to deliver more than
eighteen thousand (18,000) tons and not less than six thousand
(6,000) tons of Product in any one quarter.
3. Forecast of Buyer's Purchases: During the term of this
Agreement, Buyer shall provide a written forecast quarterly by
month for 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.
4. Term: This Agreement shall commence at 12:01 a.m.,
Central Standard Time, January 1, 1999, and shall continue until
11:59 p.m. Central Standard Time, June 30, 2000, unless terminated
earlier in accordance with the provisions hereof.
5. Price:
(a) The parties to this Agreement have intentionally
left the purchase price to be paid by Buyer open for periodic
determination, pursuant to the contract pricing formula
contained herein. It is the intention of the parties that
there be a binding agreement from the date of the signing of
this Agreement, even if the price is not determined at the
time since a contract pricing formula is contained herein.
(b) "Base Price" hereunder shall be calculated as
follows, for each calendar month during the term of this
Agreement:
*INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED FROM THIS PUBLIC
FILING PURSUANT TO A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION. THE OMITTED
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE
SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.
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(1) On or before the first day of each calendar
month during the term of this Agreement, Seller shall
calculate on a million British Thermal Unit basis
(hereinafter MMBTU), *** cost of natural gas, for such
calendar month; plus a nominal fee of *** per MMBTU for
procurement and expense incurred in gas negotiation and
purchase. Such cost shall exclude gains or losses
pursuant to Paragraph 5(h) herein;
(2) The natural gas price per MMBTU, as calculated
in 5(b)(1) above, shall be multiplied by ***;
(3) To the results of 5(b)(2) shall be added an
amount of ***;
(4) The results in 5(b)(3) shall be multiplied by
***.
The total amount in 5(b)(4) shall be defined as the "Base
Price".
(c) The "*** Ammonia Price" shall be defined as the ***.
(d) If at any time during the term of this Agreement the
"*** Ammonia Price" exceeds the "Base Price", the
sale/purchase price per ton of Product hereunder shall be
calculated as follows:
(1) The "Base Price" shall be noted;
(2) The "*** Ammonia Price" shall be noted;
(3) ***;
(4) ***;
(5) The f.o.b. sale/purchase price at any time
during the term of this Agreement when the "*** Ammonia
Price" exceeds the "Base Price" shall be an amount equal
to ***.
(e) If at any time during the term of this Agreement the
"*** Ammonia Price" is below the "Base Price", the
sale/purchase price per ton of Product hereunder, shall be the
"*** Ammonia Price".
(f) Volume discounts may be earned quarterly for Product
priced monthly by either 5(d) or 5(e). Credit will be issued
on total volume per quarter and calculated as follows:
***
(g) All Product for shipments to Buyer's El Dorado,
Arkansas location shall be delivered to Buyer via Koch
Pipeline unless such pipeline becomes unavailable due to
mechanical failure of the pipeline. In the event the Koch
Pipeline is unavailable for that reason, Product shall be
shipped by rail cars and each party hereto shall use its best
efforts to minimize the cost of shipment by rail car. In the
event Product is shipped by rail car, the purchase price for
Product shall be adjusted to reflect the actual cost of such
transportation.
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
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(h) Gains or losses resulting from Seller's activities
in the natural gas Futures market shall not be incorporated
into the gas cost calculations irrespective of whether
delivery is taken by Farmland in any Futures transaction.
6. Verification of *** 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.
7. Delivery/Freight:
(a) Pipeline - As shipper of record Seller shall invoice
Buyer for all actual Koch Pipeline tariff charges plus a ***
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 Koch
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 (i) the then current railroad
tariff rate, or (ii) 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 *** 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.
8. 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 payments 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 *** by the contract price per ton of Product in the most
recently completed calendar month.
9. 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 form 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 non-
defaulting 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
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BYTHE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.
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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 *** 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 part for all costs, losses, and expenses incurred by
such non-defaulting party by reason thereof, including reasonable
attorneys' fees.
10. Product Specifications: "Product", where used in this
Agreement, means Product solution of commercial grade, having
ammonia (NH3) content of not less than ***, having water content of
not more than ***, and having oil content of not more than ***.
Product tendered to any pipeline shall meet or exceed such
pipeline's Product quality specifications for Product shipped
therein. Seller shall be nominated as shipper of record on those
volumes of Product sold pursuant to this Agreement and shipped via
Koch Pipeline.
11. Determination of Weights: "Ton", where used in this
Agreement, means two thousand pounds (2,000 lbs.) avoirdupois, as
measured by Koch Pipeline meter tickets if delivery is made by
pipeline, by bills of lading if delivery is made by rail or truck.
12. Manufacture and Delivery: Seller specifically reserves
the right to manufacture at, or exchange to, and to deliver from,
any origin, all of the Product transferred to the location
scheduled and agreed to quarterly pursuant to this Agreement.
13. 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.
14. 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 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 deliver Product hereunder.
***INDICATES INFORMATION IN THIS DOCUMENT WHICH HAS BEEN OMITTED
FROM THIS PUBLIC FILING PURSUANT TO A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION.
THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH
REQUEST.
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15. Conflicting Terms: Notwithstanding any provision herein
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.
16. 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.
17. 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, herein referred to as "Events of Force Majeure". 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. 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's or Buyer's 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.
18. 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 Product,
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 Product
hereunder.
19. 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 Product hereunder. SELLER AGREES TO INDEMNIFY, PROTECT AND SAVE
BUYER HARMLESS from the claims of any person or entity for
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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
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 Buyer.
20. Taxes: Any and all taxes of any type whatsoever levied,
prior to passage of title, against Product 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 Product
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 Product or any constituent part
thereof. All taxes hereunder are in addition to those prices
described herein.
21. Notices: No notice, actual or constructive, shall be
effective against any party unless it is (a) in writing; (b) signed
by the party giving the notice; and (c) 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.
3315 N. Oak Trafficway
P. O. Box 7305, Dept. 314
Kansas City, Missouri 64116
Facsimile: 816-459-5913
To Buyer: El Dorado Chemical Company
P. O. Box 231
El Dorado, Arkansas 71731
Facsimile: 501-863-1426
Attn.: Warren Jones
El Dorado Chemical Co.
16 S. Pennsylvania
Oklahoma City, OK 73007
Facsimile: 405-235-5067
Attn.: James Wewers
David Shear
22. 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
6
resolution to a senior executive of both parties. Such executives
shall meet within thirty (30) days of written request of either
party.
In the event the parties are unable to resolve the controversy
through such meeting, 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 sixty (60) days of the notice. The
arbitrator shall render a decision within twenty (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.
23. Confidentiality: The parties agree to maintain as
confidential the terms of this Agreement and not to divulge such
terms to any third party without the written consent of the other.
24. Miscellaneous: This Agreement expresses the whole
agreement of the parties. There are no promises, condition, 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 modified
except in writing signed by the party to be charged. Headings are
for reference only, and do not affect the meaning of any paragraph.
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.
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.
[The remainder of this page intentionally left blank.]
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This Agreement shall be governed in all respects, including,
but not limited to, interpretation and performance by the laws of
the State of Kansas. Remedies herein reserved are cumulative and
in addition to any other or further remedies Seller or Buyer may
have at law or in equity.
No termination of this Agreement shall affect the rights or
obligations theretofore accrued.
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:__________________________
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