Exhibit 10.4
SUPPLY AGREEMENT
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THIS AGREEMENT entered into effective as of the 24/th/ day of November,
2003 (the "Effective Date"), between CONAGRA INTERNATIONAL FERTILIZER COMPANY, a
Delaware corporation ("Seller") and UNITED AGRI PRODUCTS, INC., a Delaware
corporation ("Buyer").
RECITALS:
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(a) Buyer is engaged in the sale of fertilizer products and desires to
purchase its source of supply of such products from Seller.
(b) Seller is engaged in the sale of fertilizer products and desires to
sell such products to Buyer.
AGREEMENT:
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NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties agree as follows:
1. Definitions. Unless the context requires otherwise, as used in this
Agreement, certain words have the meanings as follows:
(a) "Year" - a year shall mean a calendar year during the term of this
Agreement.
(b) "Month" - a month shall mean a calendar month during the term of this
Agreement.
(c) "Product" - any one of the various agricultural fertilizer materials
as listed on Exhibit "A" of this Agreement.
(d) "Products" - collectively, all of the various agricultural fertilizer
materials listed on Exhibit "A" of this Agreement.
2. Term. The initial term of this Agreement shall commence on the
Effective Date and shall continue in full force and effect for a period of five
(5) years. This Agreement shall automatically renew from year to year after the
initial term, unless terminated by either party on not less than one hundred
eighty (180) days' written notice prior to the end of the initial or any renewal
term of this Agreement.
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3. Quantity. Subject to the parties mutually agreeing to prices and
producer availability, Buyer shall purchase from Seller and Seller shall sell to
Buyer that amount of Products equal to its historical purchases from Seller
(approximately seventy percent (70%) of Buyer's requirements of Products).
4. Price.
4.1 Bulk Product. The price for bulk Product sold under this Agreement
shall be a mutually agreed upon market price based on market
conditions existing at the time of sale and shall be similar to prices
for Product sold by Seller to third parties purchasing similar
quantities of Product, types of Product and during similar time
periods.
4.2 Back-to-Back Transactions. The price for Products sold to Buyer in
back-to-back transactions shall be an amount equal to the price Seller
paid to acquire such Products, plus $1.00 per ton.
4.3 Purchases from Seller's Mix Plants. Seller shall be responsible for
supplying raw materials to Seller's mix plants (Xxxxxxx, Iowa;
Irvington, Iowa; Franklin, Minnesota; Pekin, Illinois; Kentland,
Indiana; and Yoder, Indiana) at Seller's cost.
4.4 Seller/Buyer Imperial Joint Venture. Seller shall be responsible for
supplying raw materials to the Imperial Joint Venture between Seller
and Buyer at Seller's cost.
5. Payment and Remedies. Subject to the terms of this Section 5, for the
first nine (9) months from and after the Effective Date each payment due
from Buyer hereunder shall be paid within sixty (60) days from the date of
delivery of each invoice, or such other term mutually agreed to by the
parties. After such initial nine (9) month period, each payment due from
Buyer hereunder shall be paid within thirty (30) days from the date of each
invoice or such other term mutually agreed to by the parties. If Buyer
fails to pay when due any amount owed to Seller under this Agreement, a
service charge will be imposed by Seller equal to the greater of one and
one-half percent (11/2%) per month or the highest rate permitted by law on
the outstanding amount for each monthly portion thereof that such amount is
overdue. Notwithstanding the foregoing provisions, and unless the parties
mutually agree otherwise:
(a) If, during the first nine (9) months after the date hereof:
(i) Buyer has any invoices over sixty (60) days past due or
total outstanding invoices at any time exceeding
$90,000,000, then, upon written notice to Buyer advising of
the default (a "Notice"), Seller shall have the right to
discontinue shipment of Products to Buyer. Buyer shall then
have forty eight (48) hours after the time of delivery of
the Notice to cure its default.
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If at the end of this forty eight (48) hour cure period
Buyer has failed to cure its default, Seller shall have the
right to terminate this Agreement and accelerate all amounts
hereunder then due and owing by Buyer to Seller or suspend
shipments of Product to Buyer until Buyer cures its default.
(ii) Buyer is in material default under its Credit Agreement
dated as of November 24, 2003 by and among Buyer, United
Agri Products Canada, Inc., the other persons designated as
"Credit Parties" on the signature pages thereto, the
financial institutions who are or hereafter become parties
to the Credit Agreement as Lenders, General Electric Capital
Corporation, as the initial L/C Issuer and as Agent and GE
Canada Finance, as Canadian Agent (the "Credit Agreement")
but is otherwise in compliance with the terms of this
Agreement, then Buyer shall be immediately placed on thirty
(30) day terms until the default under the Credit Agreement
is cured. In such case, Buyer shall simultaneously send to
Seller copies of all notices Buyer sends to General Electric
Capital Corporation pursuant to and in connection with the
Credit Agreement.
(b) If, after such initial nine (9) month period:
(i) Buyer is not in compliance with the then-existing credit
terms under this Agreement, then, upon Notice to Buyer,
Seller shall have the right to discontinue shipment of
Products to Buyer. Buyer shall then have forty eight (48)
hours from and after the time of delivery of the Notice to
cure its default. If at the end of this forty eight (48)
hour cure period Buyer has failed to cure its default,
Seller shall have the right to terminate this Agreement and
accelerate all amounts hereunder then due and owing by Buyer
to Seller or suspend shipments of Product to Buyer until
Buyer cures its default. Buyer shall have the foregoing cure
rights a maximum of three (3) times during the term of this
Agreement. After such cure rights have been extended three
(3) times, Seller shall have the right to terminate this
Agreement upon notice to Buyer and accelerate all amounts
hereunder then due and owing by Buyer to Seller.
6. Schedules.
6.1 Shipping Schedule. During the term of this Agreement, Buyer shall, not
later than June 1 and December 1 of each Year, provide Seller with an
itemized monthly shipping schedule for the Products covering its
anticipated purchases of Products for the following six (6) Months
("Estimates"). Buyer shall use its commercially reasonable efforts to
update such Estimates Monthly.
6.2 Order Placement. Detailed orders for shipments of Products are to be
placed with Seller consistent with past practices (including
quantities of Product and time for delivery), taking into
consideration current market conditions and available transportation
resources and in quantities substantially consistent with the
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Estimates. All orders for Products shall be made by Buyer using the
form of purchase order attached hereto as Exhibit "B" ("Purchase
Order"). The parties agree that this Agreement will be automatically
incorporated into every Purchase Order documenting the sale of
Products under this Agreement. Each Purchase Order is binding upon the
parties, and will supplement this Agreement, to the extent that the
Purchase Order is not inconsistent with this Agreement. In the
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event of any inconsistencies between this Agreement and the Purchase
Order, the terms and conditions of this Agreement will supersede the
inconsistent provisions of the Purchase Order. The remaining
provisions of the Purchase Order which are not inconsistent with this
Agreement will remain effective.
7. Deliveries. Seller will ship the Product in packaging as reasonably
requested by Buyer and agreed to by Seller to Buyer's facility or designated
storage space. Title and risk of loss shall pass to Buyer as the Product is
progressively loaded on board carrier at such shipping point. All Products shall
be sold FOB Seller's terminals, except as otherwise agreed by the parties and
reflected in the Purchase Order for such sale. Seller will route all shipments
where transportation is Seller's responsibility; however, Buyer may issue
specific routing instructions and assume any additional cost associated with
same. Any subsequent charges due to action initiated by a party hereto such as,
but not limited to, diversions, stopovers and demurrage, or charges for returned
Product, are for that party's account. All shipments will be made on a
commercial straight xxxx of lading. Seller will furnish Buyer an original and,
upon request, one (1) copy of the invoice. Buyer shall promptly receive and
unload Products. Demurrage or car detention charges shall be imposed in
accordance with Seller's general policy as in effect from time to time. The
foregoing delivery terms set forth in Section 7 are subject to change based on
the mutual agreement of the parties.
8. Warranties.
(a) Seller warrants that the Products covered by this Agreement will meet
the specifications for such Products as reflected on Seller's then
current Product data sheets, that Seller will convey good title
thereto, and that such Products shall be delivered free from any
lawful security interest or encumbrance.
(b) EXCEPT AS SET FORTH IN SECTION 8(a) ABOVE, NEITHER SELLER NOR ANY
MANUFACTURER OR OTHER SELLER (OR ANY AGENT ON THEIR BEHALF, SUCH
AGENTS HAVING NO AUTHORITY IN SUCH RESPECT), MAKES ANY WARRANTIES,
GUARANTEES, OR REPRESENTATIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED,
OR BY USAGE OF TRADE, STATUTORY OR OTHERWISE, WITH REGARD TO THE
PRODUCTS SOLD, OR THE USE OF THE PRODUCTS, INCLUDING, BUT NOT LIMITED
TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, USE OR
ELIGIBILITY OF THE PRODUCTS FOR ANY PARTICULAR TRADE USAGE, ALL OF
WHICH ARE HEREBY EXPRESSLY DISCLAIMED.
(c) Buyer and the ultimate consumer of the Products assume all risks and
liabilities whatsoever resulting from transportation, handling,
storage, use, and disposal of the Products after delivery of the
Products, whether the Products are used singly or in combination with
other substances.
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(d) Except as otherwise expressly provided in this Agreement, no claim of
any kind whatsoever, whether arising in contract, tort, negligence,
breach of warranty, strict liability, or under any other legal theory,
as to Products delivered or for non-delivery of Products shall be
greater in amount than the purchase price of the Products with respect
to which damages are claimed, and Seller's sole liability to Buyer, if
any, and Buyer's sole remedy in respect of any such claim, shall in no
event exceed such purchase price. Seller may satisfy any such
liability at its option either by (i) replacing such Products, or (ii)
refunding to Buyer (by cash or credit) the purchase price of such
Products.
(e) Under no circumstances shall either party or their respective
affiliates be liable to the other party for consequential, incidental,
special or indirect damages.
(f) Any advice furnished by Seller or its agents with reference to the use
of the Products is given gratis and Seller assumes no obligation or
liability for the advice given or the results obtained and any such
Products advice furnished by Seller shall not constitute a
representation, warranty or guarantee as to any matter, all such
advice being given and accepted at Buyer's or the ultimate consumers'
risk. No statements or suggestions contained in Seller's or its
affiliates' literature are to be construed as inducements to infringe
any patent.
9. Indemnification.
(a) Buyer shall indemnify and hold Seller harmless against any liability,
damage, loss, cost or expense (including reasonable attorneys' fees)
arising out of Buyer's breach of its obligations under this Agreement
as well as the transportation, storage, promotion, distribution, sale
or use of the Products by Buyer or any negligent or willful act or
omission by Buyer, including those resulting from any property damage
(including, but not limited to, any kind of environmental damage or
contamination or a release or spill or exposure in or to the
environment or persons), personal injury (including death) to any
person, including employees, servants, or agents of Buyer, except to
the extent and in the proportion caused by any breach of this
Agreement by Seller or the failure of any Products supplied hereunder
to comply with its current data sheet.
(b) Seller shall indemnify and hold Buyer harmless against any liability,
damage, loss, cost or expense (including reasonable attorneys' fees)
arising out of Seller's breach of its warranties or any of its
obligations under this Agreement.
(c) With respect to Buyer's and Seller's indemnify obligations under this
Section 9, Seller and Buyer shall be responsible only for direct
damages and in no event shall either Buyer or Seller be liable for
indirect, special, consequential or similar damages.
10. Force Majeure. Except for Buyer's obligation to pay all monies
hereunder when due, neither party shall be liable for any failure or delay in
performance hereunder which may be
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due, in whole or in part, to fire; explosion; adverse weather conditions; labor
difficulties (for whatever cause arising and whether or not the demands of
employees are reasonable or within the party's power to grant); war,
insurrection, riot, act of God or the public enemy; acts of terrorism; law, act,
order, proclamation, decree, regulation, ordinance, instruction or request of
government or other public authorities; order, judgment or decree of any court;
delay or failure of carriers or contractors; labor shortage or inability to
obtain transportation equipment, raw materials, Products, fuel, power, plant
equipment or materials required for maintenance or repairs; or any contingency
or delay or failure or cause of any nature beyond the reasonable control of the
party, whether or not the kind hereinabove specified and whether or not any such
contingency is presently occurring or occurs in the future (a "Force Majeure
Event"). Seller shall exercise its commercially reasonable efforts to remedy
such Force Majeure Event as soon as reasonably possible, but in no event shall
it be required to take any action which would result in materially increasing
its cost of performance hereunder beyond the costs which it would have incurred
hereunder in the absence of such Force Majeure Event. In the event that
deliveries are impeded or supplies curtailed during to any such cause or causes,
Seller shall have the right to apportion deliveries among its then existing
customers on such basis as is equitable without liability for any failure to
perform this Agreement which may result therefrom. Where a party claims an
excuse for nonperformance under this Section, it must give prompt telephonic
notice promptly confirmed by written notice of the occurrence and estimated
duration of the Force Majeure Event to the other party; and shall give prompt
written notice when the Force Majeure Event has been remedied and performance
can recommence hereunder.
11. Waiver. Waiver by either party of the performance of any term or
condition of this Agreement by the other party shall not be construed to
constitute a waiver of any other term or condition nor shall such waiver be held
to be a waiver of any right to enforce such term or condition at any subsequent
time during the term of this Agreement.
12. Tax Responsibility. Buyer shall promptly pay and discharge any and all
sales, use, excise, transportation and other similar taxes which may be imposed
by federal, state or local authorities upon the sale, use or transportation of
the Product delivered hereunder. In the event that Seller is required to make
payment of any such tax or any penalty for delay in the payment thereof, Buyer
shall reimburse Seller for such payment within one (1) month after the same is
made.
13. Assignment. Either Buyer or Seller may assign all of its rights under
this Agreement to a buyer of all or substantially all of its assets with the
prior written consent of the other party, which consent will not be unreasonably
withheld or delayed. Otherwise, none of the parties hereto shall assign its
rights or delegate its duties under this Agreement without the prior written
consent of the other parties hereto except to an Affiliate of such party and
except that AAA or the Companies may assign and/or charge all or any of its
rights under this Agreement by way of security to any bank(s) and/or holders of
any debt securities and/or financial institution(s) and/or hedge counterparties
and/or any other person (together, the "Financiers") lending money or making
other banking facilities available to the Companies, AAA and their respective
affiliates or to any Financiers who provide funds on or in connection with any
subsequent refinancing of any such funding or to any person from time to time
appointed by any Financier to act as a security trustee on behalf of such
Financier; without limitation to the foregoing, any such
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person or Financier may assign such rights on any enforcement of the security
under such finance arrangement; provided further, however, that no assignment
under this Section 13 shall relieve AAA of its obligations hereunder. Subject to
the foregoing, this Agreement shall be binding on, and inure to the benefit of,
the parties and their respective affiliates, successors and assigns.
14. Termination. This Agreement may be terminated before the end of its
term under the following circumstances:
(a) The parties may agree to terminate this Agreement at any time and
under any circumstances that have been mutually agreed upon in
writing.
(b) If one of the parties breaches any material term of this Agreement,
the other party may give the breaching party a notice in writing which
specifically sets out the nature and extent of the breach, and the
steps that must be taken to cure the breach. After receiving such a
written notice, the breaching party will then have thirty (30) days
(or such greater period of time as is reasonably necessary under the
circumstances) to cure the breach. If the breaching party does not do
so, the non-breaching party will have the right to terminate this
Agreement.
(c) If one of the parties shall become insolvent or shall take advantage
of any law for the benefit of debtors or makes an assignment of assets
for the benefit of its creditors or a receiver shall be appointed for
it or any of its property.
(d) In the event that a party to this Agreement incurs costs, expenses,
and attorneys' fees in connection with protecting its rights or
enforcing its remedies following a breach of this Agreement by the
other party, the breaching party must reimburse the non-breaching
party for all such costs, expenses, and attorneys' fees, regardless of
whether or not the protection of rights or the enforcement of remedies
involved judicial proceedings, arbitration proceedings, or other
formal dispute resolution proceedings. The breaching party must
reimburse the non-breaching party for these costs, expenses, and
attorneys' fees within 10 days of receiving a reasonably detailed
reimbursement claim from the non-breaching party.
15. Buyer's Fertilizer Locations. In the event Buyer decides to sell any
assets relating to or comprising its fertilizer locations set forth on Exhibit
"C" attached hereto, Buyer shall provide Seller with notice of such intended
sale and the first opportunity to negotiate the purchase of such assets from
Buyer at prices and on terms and conditions as may be mutually acceptable to the
parties.
16. Notices. All notices provided for hereunder shall be given in writing
and personally delivered or sent by United States Registered or Certified Mail
or by facsimile to the addresses below, and shall be deemed effective for all
purposes hereof on the date of delivery in the case of personal service or
facsimile or on the second (2/nd/) business day following postmark, except that
a notice of change of address must actually be received to be effective:
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Seller: ConAgra International Fertilizer Company
Five Skidaway Xxxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Attn: Xx. Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
With a copy to: ConAgra Foods, Inc.
Xxx XxxXxxx Xxxxx
Xxxxx, XX 00000
Attn: Vice President/Controller
Fax: (000) 000-0000
Buyer: United Agri Products, Inc.
0000 Xxxx 0/xx/ Xxxxxx
Xxxxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxxx
Fax: (000) 000-0000
With a copy to: United Agri Products, Inc.
0000 Xxxx 0/xx/ Xxxxxx
Xxxxxxx, XX 00000
Attn: Legal Department
Fax: (000) 000-0000
17. Incorporation. This Agreement incorporates all the understandings of
the parties in regard to the subject matter hereof and supersedes all prior
negotiations or communications, however given, regarding the subject matter
hereof.
18. Amendment. This Agreement may be amended or modified only by a writing
which specifically refers to this Agreement, expressly recites that it
constitutes an amendment to this Agreement, and is subscribed by both parties
hereto. No terms of any purchase order, order confirmation, or similar
instrument shall be deemed to alter, amend or supplement the terms and
conditions of this Agreement.
19. Headings. The section, subsection and paragraph headings in this
Agreement are for convenience only and shall not be considered in the
interpretation or construction of any provision of this Agreement.
20. Governing Law. This Agreement, its interpretation, performance and
enforcement, shall be governed by the laws of the State of Delaware.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first above written.
BUYER: SELLER:
UNITED AGRI PRODUCTS, INC. CONAGRA FOODS, INC.
By: Xxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
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Its: Authorized Signatory Its: Authorized Signatory
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EXHIBIT "A"
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Nitrogen:
. Urea
. Ammonium Nitrate
. 32% UAN Solution
. 30% UAN Solution
. 28% UAN Solution
Phosphates:
. Dap
. Map
. Triple Super Phosphate
. Nitric Phosphate
. 11-37-0 Solution
. 10-34-0 Solution
. Super Phosphoric Acid
Potash:
. Granular MOP
. Standard Grade MOP
. Soluble MOP
. K-Mag
Sulfur:
. Ammonium Sulfate
. Ammonium Thiosulfate Solution
. 90% Dry Sulfur
Zinc:
. Dry Zinc Sulfate
. Liquid Zinc
Boron:
. Granular Boron
. Liquid Boron
Homogenized Fertilizers:
. Various Analysis (Example - dry 16-16-16)
Anhydrous Ammonia
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EXHIBIT "B"
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DATE:
TO:
ATTN:
RE: Supply Agreement Between ConAgra International Fertilizer Company and
United Agri Products, Inc., dated _____________, 2003
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CONFIRMING OUR PHONE CONVERSATION, CONAGRA INTERNATIONAL FERTILIZER COMPANY
("SELLER") HAS SOLD AND UNITED AGRI PRODUCTS, INC. ("BUYER") HAS PURCHASED UNDER
THE FOLLOWING TERMS AND CONDITIONS:
PRODUCT:
QUALITY:
QUANTITY:
SHIPPING PERIOD: MONTHLY
PRICE:
PACKAGING:
TRANSFER OF TITLE: TITLE TO PRODUCT SHALL PASS FROM SELLER TO BUYER
PROGRESSIVELY UPON LOADING OF PRODUCT INTO BARGE OR
TRANSPORTATION VEHICLE
TRANSPORTATION: SELLER TO ARRANGE BARGE.
BUYER HAS UP TO ___ FREE DAYS TO DISCHARGE BARGE AT
DESTINATION; DEMURRAGE CHARGES OF USD $_____/DAY APPLY
THEREAFTER.
BUYER TO EMPTY BARGE ENTIRELY. ANY EXCESS CLEANING
CHARGES OVER $_____ THAT ARE ASSESSED TO SELLER DUE TO
PRODUCT REMAINING IN THE BARGE WILL BE FOR THE ACCOUNT
OF THE BUYER.
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PAYMENT TERMS: NET CASH DUE AFTER BUYER'S RECEIPT OF INVOICE IN
ACCORDANCE WITH ___________, 2003 SUPPLY AGREEMENT
BETWEEN THE PARTIES.
TERMS: THIS SALE AND ANY SUBSEQUENT CONTRACT IS SUBJECT TO
DEFINITIONS AS CONTAINED IN INCOTERMS 2000 EDITION.
OUR HARD COPY CONFIRMATION IS TO FOLLOW. WE APPRECIATE THE OPPORTUNITY TO HAVE
CONCLUDED THIS BUSINESS WITH YOU.
BEST REGARDS,
CONAGRA INTERNATIONAL UNITED AGRI PRODUCTS, INC.
FERTILIZER COMPANY (BUYER)
(SELLER)
By: By:
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Its: Its:
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EXHIBIT "C"
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.. Xxxxx Xxxxx, XX
.. Xxxxxx Xxxx, XX
.. Pasco, WA
.. Xxxxx Xxxx, XX
00
