AMENDMENT NO. 1 TO PARTNERSHIP AGREEMENT
BETWEEN
CONTINENTAL GRAIN COMPANY ["CONTINENTAL"]
AND
HARVEST STATES COOPERATIVES ["HARVEST STATES"]
[THE PARTNERSHIP AGREEMENT]
This Amendment No. 1 to the Partnership Agreement dated as of September
28, 1992 is made effective June 1, 1997 by and between Continental and Harvest
States.
WHEREAS, Continental and Harvest States desire to amend the Partnership
Agreement in accordance with the terms of this Amendment No. 1.
NOW, THEREFORE, Continental and Harvest States agree as follows:
1. All capitalized terms used herein, unless otherwise defined herein,
have the same meaning given to them in the Partnership Agreement.
2. Paragraph 2.4 of the Partnership Agreement is hereby amended to read as
follows:
"2.4 Duration. The Partnership shall commence on September 15, 1992 and
shall continue through the close of business on May, 31 2002, unless
sooner terminated as provided herein. The term of the Partnership shall
be extended automatically for three [3] successive five [5] year
periods unless either Partner delivers written notice to the other
Partner not less than one hundred eighty [180] days prior to the
expiration of the then current term that it elects not to renew or
extend the term of the Partnership. In no event, however, shall the
term of the Partnership continue beyond 2017 without the written
agreement of both Partners."
3. Section 5.4 of the Partnership Agreement is hereby amended to read as
follows:
"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
Harvest States Cooperatives and the Chief Executive Officer of
Continental Grain
Company 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,
then the matter shall be submitted to arbitration in accordance with
Section 12.2 of this Partnership Agreement."
4. Section 5.5 of the Partnership Agreement is hereby amended to read as
follows:
"5.5 Subcommittees. The Management Committee shall appoint such
subcommittees as it deems advisable, each with an equal number of
representatives from each Partner."
5. The first sentence of Section 6.1[a] of the Partnership Agreement is
deleted and replaced in its entirety by the following:
"The General Manager shall be a Continental employee so long as the
administration and trading functions of the Partnership are
predominantly operated out of Harvest States' facilities. If the
Partnership's administration and trading functions are moved to any
Continental facility, the General Manager shall be an employee of
Harvest States."
6. The last sentence of Section 6.1[a] is hereby amended to read as
follows:
"...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]."
7. The Partnership Agreement is hereby amended by adding the following two
[2] sections under Article VIII. NATURE OF OBLIGATIONS; INDEMNITIES;
CHARGES:
"8.4 Administrative Expenses. The expenses incurred by Continental in
it's 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 Harvest States in it's St. Xxxx,
Minnesota office to provide the Partnership with accounting and trading
administrator support shall be provided at no cost to the Partnership."
"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."
8. Section 11.1[b] of the Partnership Agreement is deleted in it entirety
and replaced with the following:
"[b] If either Partner requests dissolution in writing within thirty
[30] days of the sale, assignment or transfer of any Strategic Asset to
the other Partner or to a third party pursuant to Section 19.10 of this
Agreement."
9. Section 11.2 of the Partnership Agreement is hereby amended by adding
the following subparagraphs [e] and [f]:
"[e] In conjunction with dissolution and liquidation of the
Partnership, Continental 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 distributed equally to the Partners; provided,
however, that in the event that COBANK will not transfer the
Partnership's shares in COBANK stock to Continental, then 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 000 xxxxx xxxxxx xxxx xxx
xxxxxxxxxx Xxxxxx Xxxxxx Treasury Note rate for the cash payout
period."
10. The third sentence of Section 12.2 of the Partnership Agreement is
hereby amended to read as follows:
"Conditions of any such arbitration shall include [a] that the
arbitrators shall not have the authority to 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."
11. The Partnership Agreement is hereby amended by adding the following
Section 19.10:
"19.10 First and Last Rights of Refusal. This provision will apply
under either of the below circumstances:
[a] Continental wishes to sell, transfer, sublease or
assign the Tacoma Facility to a third party [whether
a corporation, partnership, or individual]; or
[b] Harvest States wishes to sell, transfer, sublease or
assign any of the Line Elevators, set forth in
Exhibit B hereto, to a third party [whether a
corporation, partnership or individual] who directly
or indirectly operates a grain elevator in the
Pacific Northwest for the export of corn and/or
soybeans.
For the purposes of this Agreement, the Tacoma Elevator and
the Line Elevators set forth in Exhibit B, shall be
individually and collectively known as the "Strategic
Asset[s]".
When either of the above events occurs [the "Proposed Transfer"], the
applicable Partner shall provide the other Partner with at least thirty
[30] days prior written notice. During such thirty [30] day period the
Partner receiving such notice shall have the first right to acquire the
Strategic Assets being disposed. The Partners shall negotiate the terms
and conditions of such acquisition in good faith.
If the Partners are unable to reach agreement on the terms of such
Proposed Transfer within such thirty [30] day period, the other Partner
shall be free to proceed with the Proposed Transfer of its interest in
the Strategic Asset to a third party, provided that the Partner
divesting the Strategic Assets shall provide the other Partner with at
least thirty [30] days prior written notice of a Proposed Transfer to
any third party, which notice shall contain the terms and conditions of
the Proposed Transfer along with any documents or agreements relating
thereto. The other Partner shall then have the right [the "Last Right"]
during such thirty [30] day period to match the terms of the Proposed
Transfer by sending written notice thereof to the other Partner within
such thirty [30] day period. If the Partner receiving such notice
exercises its Last Right, the Proposed Transfer shall be made upon the
same terms and conditions contained in the written notice. If the
Partner receiving such notice fails to exercise its Last Right within
such thirty [30] day period, the other Partner shall be free to
transfer its interest in the Strategic Assets on the original terms and
conditions of the Proposed Transfer. If the Proposed Transfer is not
consummated within the following ninety [90] day period, or the terms
and conditions of the Proposed Transfer are changed, it and all
subsequent Proposed Transfers shall again become subject to the terms
of this Section. For this purpose Strategic Assets are defined to
include the Tacoma Facility and the Line Elevators owned and operated
by Harvest States as set forth in Exhibit B, attached hereto."
12. The Partnership Agreement is hereby amended by adding the following
section under Article XIII CONFIDENTIAL INFORMATION:
"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."
13. Except as amended above, the remaining terms and conditions of the
Partnership Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1
effective as of June 1, 1997.
HARVEST STATES COOPERATIVES
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------
Its: Group Vice President
-------------------------------
Grain & Agri Services
CONTINENTAL GRAIN COMPANY
By: /s/ Xxxx Xxxx
------------------------------------
Its: Sr. VP/& General Manager
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North American Grain Division
EXHIBIT B
Farm Marketing & Supply Unit Train Facilities
Marshall, MN
Ruthton, MN
Xxxxxx, MN
West Fargo, ND
Mooreton, ND
French (Fergus Falls), MN
Milbank, SD
Groton, SD
Xxxxx (Soo Line), MN
Galchutt, ND
Canton, SD
Xxxxxx, SD
Wentworth, SD
Mitchell, SD
