EXHIBIT 10.1
PIG PURCHASE AGREEMENT
THIS PIG PURCHASE AGREEMENT (this "Agreement") is entered into as of this
____ day of _______________, 199__, by and between ALLIANCE FARMS COOPERATIVE
ASSOCIATION (hereinafter "Association"), and ___________________________________
______________________________________________ (hereinafter "Purchaser").
WHEREAS, Association is engaged in the production and sale of feeder pigs
and weaned pigs; and
WHEREAS, Purchaser is a purchaser of pigs, possesses expertise in swine
production and management, and desires to enter into this Agreement for
membership purposes of Association;
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties hereto agree as follows:
1. PURCHASE/SALE OF PIGS.
(A) GENERAL. This Agreement provides for the sale by Association to
Purchaser of feeder pigs or weaned pigs, as the case may be, as determined by
reference to the class of capital stock of Association identified below from
which the right of Purchaser to purchase Lots (as defined below) of Qualifying
Pigs (as defined in Section 2) under this Agreement derives (check one box
only):
G Class A Common Stock. If this box is checked, (i) the class of
capital stock of Association from which the right of Purchaser to
purchase Lots under this Agreement derives is Class A Common Stock (as
defined in Article SIXTH of Association's Articles of Incorporation),
(ii) the Lots to which such right extends shall consist solely of
feeder pigs, and (iii) this Agreement shall constitute a "Feeder Pig
Purchase Agreement", as such term is used in Association's Bylaws.
G Class B Common Stock. If this box is checked, (i) the class of
capital stock of Association from which the right of Purchaser to
purchase Lots under this Agreement derives is Class B Common Stock (as
defined in Article SIXTH of Association's Articles of Incorporation),
(ii) the Lots to which such right extends shall consist solely of
weaned pigs, and (iii) this Agreement shall constitute a "Weaned Pig
Purchase Agreement", as such term is used in Association's Bylaws.
G Class C Common Stock. If this box is checked, (i) the class of
capital stock of Association from which the right of Purchaser to
purchase Lots under this Agreement derives is Class C Common Stock (as
defined in Article SIXTH of Association's Articles of Incorporation),
(ii) the Lots to which such right extends shall consist solely of
weaned pigs, and (iii) this Agreement shall constitute a "Class C
Weaned Pig Purchase Agreement", as such term is used in Association's
Bylaws.
Upon and subject to all terms and conditions set forth in this Agreement,
Purchaser shall purchase from Association, and Association shall sell to
Purchaser, Qualifying Pigs produced by Association during the term of this
Agreement in lots (hereinafter "Lot" or "Lots") of (A) feeder pigs of no less
than 900, and no more than 1,000, Qualifying Pigs per Lot (as determined by
Association), if the right of Purchaser to purchase Lots under this Agreement
derives from Class A Common Stock, or (B) weaned pigs of no less than 925, and
no more than 1,025, Qualifying Pigs per Lot (as determined by Association), if
the right of Purchaser to purchase Lots under this Agreement derives from Class
B Common Stock or Class C Common Stock, which Lots of feeder pigs or weaned
pigs, as the case may be, shall be made available to Purchaser on a rotating
schedule with other members of Association owning the class of capital stock of
Association from which the right of Purchaser to purchase Lots under this
Agreement derives, as such rotating schedule is determined and implemented by
Association on any reasonable basis.
(B) SCHEDULE. Purchaser acknowledges that Association intends to
conduct a blind drawing, immediately following the consummation of each and
every offering of the class of capital stock of Association from which the right
of Purchaser to purchase Lots under this Agreement derives, for purposes of
adjusting such rotating schedule as warranted by the resulting changes in the
members of Association.
(C) AVAILABILITY. The number of Lots made available to Purchaser and
the frequency of availability of such Lots will be based upon Purchaser's
proportionate equity interest in Association with respect to the class of
capital stock of Association from which the right of Purchaser to purchase Lots
under this Agreement derives. Purchaser acknowledges that Lots will not be
made available to Purchaser under this Agreement until Qualifying Pigs are
produced and available from the facilities constructed or acquired using the
proceeds of the issuance of the capital stock of Association (including the
capital stock of Association assigned or transferred to Purchaser) from which
the right of Purchaser to purchase such Lots under this Agreement derives, and
that the number of Lots made available to Purchaser and the frequency of
availability of such Lots will be subject to actual production of Qualifying
Pigs from all facilities of Association; provided, however, that any increased
production of Qualifying Pigs attributable to the addition of a Production Unit
constructed or acquired by Association with the proceeds of a facilities
expansion loan (and not the proceeds of Association's issuance of capital stock)
may be made available by Association exclusively to the provider of such loan,
as determined by Association in its discretion. Association shall give notice
to Purchaser when a Lot is available for purchase by Purchaser hereunder, which
notice shall specify the anticipated number of Qualifying Pigs in such Lot and
the scheduled shipment date.
(D) EXCESS PRODUCTION. The production of Qualifying Pigs is
anticipated to produce, on a prospective rolling 12-month basis, (i)
approximately two and seven-tenths (2.7) Lots of feeder pigs per share of Class
A Common Stock of Association owned by members of Association for which Lots are
to be made available for purchase hereunder, (ii) approximately two and seven-
tenths (2.7) Lots of weaned pigs per share of Class B Common Stock of
Association owned by members of Association for which Lots are to be made
available for purchase hereunder, and (iii) approximately two and one-tenths
(2.1) Lots of weaned pigs per share of Class C Common Stock of Association owned
by members of Association for which Lots are to be made available for purchase
hereunder. To the extent that the production of pigs exceeds such anticipated
production, Association shall either sell such excess production to any person
(including a member of Association), at a price as shall be determined by
Association in good faith, or retain such excess production for Association's
own purposes, in lieu of selling such excess production to the members of
Association pursuant to the Pig Purchase Agreements between Association and the
members of Association.
2. QUALIFYING PIGS. For purposes of this Agreement, the term "Qualifying
Pig" shall mean an individual pig, of the type (feeder or weaned) to which this
Agreement relates, that has the genetic characteristics described in Section 6,
that has been managed in accordance with Section 7, and that (a) in the case of
weaned pigs, is not utility grade, has a minimum weight of at least six (6)
pounds at point in time of delivery, and has a significant likelihood to perform
economically and reach market weight efficiently, and (b) in the case of feeder
pigs, has a minimum weight of 30 pounds and is free of the following defects
(with terms used in reference to defects being given the meaning generally
utilized in the swine industry) at the time of loading:
(i) uncastrated or freshly castrated males;
(ii) ruptures, umbilical or scrotal hernia larger than a two-inch
diameter;
(iii) unthrifty, poor-doing pigs;
(iv) observable signs of lameness, stiffness, or other locomotor
disorders evidenced by swelling or malformed joints;
(v) transmissible gastroenteritis;
(vi) observable abscesses; and
(vii) anal prolapse.
3. PURCHASE PRICE OF PIGS.
(A) PRICE. The purchase price for each Qualifying Pig purchased by
Purchaser under this Agreement shall be an amount equal to the sum of the
following:
Financing Cost Per Pig, plus
Operating Cost Per Pig, plus
Production Margin.
Purchaser acknowledges that Association has constructed or acquired, or is in
the process of constructing or acquiring, or both, Production Units as a result
of previous offers and sales of shares of its capital stock and that Association
from time to time may construct additional Production Units as a result of
additional offers and sales of shares of its capital stock. In light of the
foregoing, the determination of the Financing Cost Per Pig portion of the
purchase price for a Qualifying Pig hereunder shall be made separately with
respect to each Lot in relation to the Production Unit(s) that were constructed
or acquired using the proceeds of the issuance of the capital stock of
Association (including the capital stock of Association assigned or transferred
to Purchaser) from which Purchaser's right to purchase such Lot under this
Agreement derives.
(B) DEFINITIONS. As used in this Section 3, the following terms
shall have the following meanings:
FINANCING COST PER PIG shall be determined on a prospective rolling 12-
month basis and shall mean an amount equal to the quotient of (i) the sum
of the required payments of interest and principal (including any scheduled
sinking fund payments) to be made during the upcoming 12-month period with
respect to Purchaser's Debt, divided by (ii) Pigs Shipped.
OPERATING COST PER PIG shall be determined on a rolling five-month
historical basis and shall mean an amount equal to the quotient of (i) the
sum of (A) all direct and indirect production, operating, selling, general,
administrative, and other expenses incurred by Association in producing the
type of pigs (feeder or weaned) to which this Agreement relates during the
five months preceding the then present month of shipment as determined by
Association's accountants utilizing generally accepted accounting
principles consistently applied (excluding any provision for interest
expense or depreciation or amortization of the cost of buildings,
equipment, breeding stock or other capitalized costs which were purchased
as a result of Purchaser's Debt or as a result of the issuance of any
capital stock of Association to any third party), plus (B) the net cash
flow cost of all capital expenditures by Association (including any capital
sinking fund payments) for production facility and breeding stock
improvements and replacements incurred by Association in producing the type
of pigs (feeder or weaned) to which this Agreement relates during the five
months preceding the then present month of shipment as determined by
Association's accountants, divided by (ii) Pigs Shipped. The direct and
indirect production and operating expenses attributable to a Production
Unit which is in the process of commencing production shall not be included
in the determination of Operating Cost Per Pig, and shipments of pigs
attributable to such Production Unit shall not be included in Pigs Shipped,
until such Production Unit has completed one entire month of full
production, shipping pigs in each week thereof. The net cash flow with
respect to capital expenditures for production facility and breeding stock
improvements and replacements (which net cash flow shall be determined
after taking into account the breeding stock and production facility
retirements attributable to a Production Unit which is in the process of
commencing production) shall not be included in the determination of
Operating Cost Per Pig until the respective Production Unit has completed
one entire month of full production, shipping pigs in each week thereof.
PIGS SHIPPED shall mean (a) for purposes of determining the Operating Cost
Per Pig, the total number of Qualifying Pigs produced and shipped from
Association over the same five-month period used in determining the
Operating Cost Per Pig, and (b) for purposes of determining the Financing
Cost Per Pig, the product of (i) Association's total estimated number of
Qualifying Pigs to be produced and shipped by Association from all
Production Units during the 12-month period used in determining the
Financing Cost Per Pig, multiplied by (ii) a fraction, the numerator of
which shall be the number of Production Units constructed or acquired by
Association with respect to the issuance of the capital stock of
Association (including the capital stock of Association assigned or
transferred to Purchaser) from which the right of Purchaser to purchase
Lots of Qualifying Pigs under this Agreement derives, and the denominator
of which shall be the number of Production Units constructed or acquired by
Association with respect to all issuances of any class of capital stock of
Association. All estimates relating to Pigs Shipped shall be made by
Association using such historical data and projections as are available to
Association.
PRODUCTION MARGIN shall mean an amount of up to $4.50, as determined by the
Board of Directors of Association, from time to time, in its sole and
absolute discretion.
PRODUCTION UNIT shall mean the land and facilities necessary to house, feed
and care for a group of 2,450 sows and the attendant offspring thereof and
which land and facilities are used in the production of the type of pigs
(feeder or weaned) to which this Agreement relates. A Production Unit may
exist on a stand-alone basis or as a part of a multi-Production Unit
complex.
PURCHASER'S DEBT shall mean (i) the debt incurred by Association for the
Production Unit(s) constructed or acquired by Association with respect to
the issuance of the capital stock of Association (including the capital
stock of Association assigned or transferred to Purchaser) from which the
right of Purchaser to purchase Lots of Qualifying Pigs under this Agreement
derives, including any debt incurred for purposes of financing the
acquisition of land for, and construction or acquisition of, such
Production Unit(s), (ii) any debt incurred for the initial working capital
requirements with respect to the operation of such Production Unit(s), and
(iii) any debt incurred for purposes of refinancing any such debt.
4. PAYMENT OF PURCHASE PRICE. Association shall furnish to Purchaser, at
the time Association notifies Purchaser that a Lot is available for purchase by
Purchaser hereunder, an estimate of the total purchase price of the Qualifying
Pigs included in the Lot, and Purchaser shall, not less than one day prior to
the scheduled shipment date as specified in the notice by Association to
Purchaser, pay such estimated total purchase price to Association in cash, or by
such other means as may be acceptable to Association in its sole and absolute
discretion. Association shall have no obligation to commence transportation of
such Qualifying Pigs to Purchaser prior to receiving full payment of such
estimated total purchase price for such Qualifying Pigs as herein provided. The
actual total purchase price of all Qualifying Pigs included in a Lot shall be
based upon weight at the time of loading and settlement of any adjustments shall
be made within five days following delivery.
5. WEIGHT ADJUSTMENT. The purchase price for each Qualifying Pig as
provided in Section 3 is for a Lot of Qualifying Pigs having an average weight
of (i) 45 pounds, in the case of feeder pigs, and (ii) between 8 pounds and 12
pounds, in the case of weaned pigs. In the event that this Agreement relates to
feeder pigs and the average weight of a Lot of feeder pigs is more or less than
45 pounds, the purchase price for such Lot of feeder pigs is subject to
adjustment pursuant to subsection (a) of this Section 5. In the event that this
Agreement relates to weaned pigs and the average weight of a Lot of weaned pigs
is less than 8 pounds or more than 12 pounds, the purchase price for such Lot of
weaned pigs is subject to adjustment pursuant to subsection (b) of this
Section 5.
(A) FEEDER PIG PRICE ADJUSTMENT. In the event that the average
weight of the Qualifying Pigs in a Lot of feeder pigs sold to Purchaser exceeds
45 pounds, Purchaser shall pay Association an additional twenty-five cents
($0.25) per pound per Qualifying Pig on the number of pounds (not to exceed five
pounds) that the Lot's average shipping weight per feeder pig exceeds 45 pounds,
and an additional twenty cents ($0.20) per pound per Qualifying Pig on the
number of pounds (not to exceed ten pounds) that the Lot's average shipping
weight per feeder pig exceeds 50 pounds. To the extent that the average weight
of the Qualifying Pigs in a Lot of feeder pigs sold to Purchaser is less than 45
pounds, twenty-five cents ($0.25) per pound on the number of pounds that the
Lot's average shipping weight per feeder pig is less than 45 pounds shall be
deducted from the purchase price that Purchaser is to pay to Association for
each Qualifying Pig. Purchaser shall have the right to, but shall not be
obligated to, purchase a Lot of Qualifying Pigs hereunder at an average weight
of less than 35 pounds per feeder pig.
(B) WEANED PIG PRICE ADJUSTMENT. In the event that the average
weight of the Qualifying Pigs in a Lot of weaned pigs sold to Purchaser exceeds
12 pounds, Purchaser shall pay Association an additional one dollar ($1.00) per
pound per Qualifying Pig on the number of pounds that the Lot's average shipping
weight per weaned pig exceeds 12 pounds. To the extent that the average weight
of the Qualifying Pigs in a Lot of weaned pigs sold to Purchaser is less than 8
pounds, one dollar ($1.00) per pound on the number of pounds that the Lot's
average shipping weight per weaned pig is less than 8 pounds shall be deducted
from the purchase price that Purchaser is to pay to Association for each
Qualifying Pig. Purchaser shall have the right to, but shall not be obligated
to, purchase a Lot of Qualifying Pigs hereunder at an average weight of less
than 8 pounds per weaned pig.
6. GENETIC QUALITY. Qualifying Pigs produced by Association will be
progeny from genetic stock selected by Association, from time to time, in its
sole and absolute discretion. Such selection of such genetic stock will be
determined and implemented by Association on a basis that reasonably would be
expected to produce Qualifying Pigs that are capable of producing market hogs
having carcasses that are responsive to consumer demand and thereby maximize the
sales price to be received therefore.
7. MANAGEMENT OF HEALTH AND NUTRITION. Association agrees to comply with
the following health and nutrition programs with respect to all pigs to be
purchased under this Agreement:
(a) Association shall dock tails within 48 hours of a pig's
birth.
(b) Association shall castrate male pigs within ten days of the pig's
birth.
(c) Association shall administer all vaccines and antibiotic
treatments and perform such other procedures that are reasonably determined
by Association to be necessary or advisable with respect to a herd health
program.
(d) Association shall maintain Association's swine free from the
pseudorabies virus ("PRV") or any swine disease that would prohibit
interstate shipment of pigs produced by Association, or that might
otherwise materially impair Purchaser's ability to utilize the pigs to be
purchased under this Agreement. If, in the opinion of two veterinarians
selected by Association and reasonably acceptable to Purchaser, any of the
swine produced by Association or used in the production of pigs for
delivery hereunder contracts PRV, Association shall have the opportunity to
cure such impairment within a reasonable period of time and to suspend, at
any time and from time to time, the sale and purchase of pigs hereunder
until such time as said veterinarians determine that PRV no longer exists.
(e) Association shall use a feeding regimen, feed products, and herd
health products developed or marketed by Farmland Industries, Inc., or any
of its affiliates.
8. RIGHT OF INSPECTION. Upon reasonable notice to Association, Purchaser
or its representative shall have the right to inspect Association's production
records to verify the genetic quality and management of nutrition and health
programs prescribed by this Agreement during normal business hours.
9. ADJUSTMENT FOR NON-QUALIFYING PIGS. Purchaser shall have the right to
inspect Purchaser's Lot of Qualifying Pigs prior to loading. In the event that,
after delivery of such Lot, Purchaser believes that any pig was not a Qualifying
Pig prior to loading (a "Subject Pig"), Purchaser shall notify Association by
telephone of such belief within one (1) business day following delivery as well
as promptly notify Association of such belief in the manner provided in Section
19 hereof. Association shall have the right to inspect any and all Subject Pigs
in investigation of Purchaser's belief, and thereafter Association and Purchaser
shall agree in good faith upon an appropriate adjustment, if any, with respect
to such Subject Pigs. Purchaser hereby acknowledges and agrees that such
adjustment described above shall be Purchaser's sole and exclusive remedy as
against Association arising out of the purchase hereunder of a pig that was not
a Qualifying Pig at the time of loading and that the failure of Association to
deliver Qualifying Pigs as otherwise required hereunder shall not give rise to a
right of Purchaser to terminate this Agreement. Furthermore, in no event shall
Purchaser reject delivery of a Lot of pigs hereunder, but in lieu thereof
Purchaser shall accept each delivery of a Lot of pigs hereunder and, with
respect to any and all pigs that Purchaser believes were not Qualifying Pigs
prior to loading, shall comply with the provisions of this Section 9 and, until
such adjustment, if any, is agreed upon by Association and Purchaser, shall, at
Purchaser's expense, feed, water, treat and care for any and all such pigs as if
Purchaser believed such pigs were Qualifying Pigs prior to loading.
10. HEALTH PERMITS. Association shall provide Purchaser, at Association's
expense, all health permits necessary to qualify all Qualifying Pigs for
interstate shipment.
11. WEIGHING CONDITIONS. All Lots of Qualifying Pigs shall be weighed at
Association's expense at a state-inspected scale in close proximity to
Association's production facility. A copy of all scale tickets will be provided
to Association and to Purchaser.
12. IDENTIFICATION. Association shall appropriately identify, prior to
shipment, all Qualifying Pigs in accordance with the rules that will allow
interstate shipment to the states to which the pigs are being shipped.
13. TRANSPORTATION OF PIGS. Qualifying Pigs shall be shipped to Purchaser
FOB shipping point. Association shall at Purchaser's expense arrange for
transportation of Qualifying Pigs from any of Association's production
facilities as determined by Association; provided, however, that Purchaser shall
pay such transportation costs no later than the time of delivery. Trucks shall
be thoroughly cleaned and disinfected prior to hauling any pigs from
Association's production facilities and after any previously hauled pigs.
14. TERM OF AGREEMENT. The term of this Agreement shall commence on the
date first written above and shall continue for 120 months after the month in
which the first Lot of Qualifying Pigs is shipped by Association to Purchaser
(or Purchaser's direct or indirect assignor or transferor) with respect to each
share of the capital stock of Association (including the capital stock of
Association assigned or transferred to Purchaser) from which the right of
Purchaser to purchase Lots of Qualifying Pigs under this Agreement derives,
subject to the following:
(a) In the event that Purchaser fails to purchase, pay for, and take
delivery of any two Lots (as defined herein or in any other agreement
between Purchaser and Association) when and as made available to Purchaser
in accordance with the terms of this Agreement, or any other Pig Purchase
Agreement between Purchaser and Association, this Agreement shall terminate
and Association shall have the right to exercise its remedies as provided
in Section 17 hereof; provided, however, that in the event Purchaser owns
ten or more shares of capital stock of Association, this Agreement shall
terminate and Association shall have the right to exercise its remedies as
provided in Section 17 hereof only upon Purchaser failing to purchase, pay
for, and take delivery of a number of Lots (as defined herein or in any
other agreement between Purchaser and Association) when and as made
available to Purchaser in accordance with the terms of this Agreement, of
any other Pig Purchase Agreement between Purchaser and Association equal to
the sum of (i) the quotient (rounded down to the nearest whole number) of
(A) the number of shares of capital stock owned by Purchaser, divided by
(B) ten (10), plus (ii) two (2).
(b) In the event of a material breach of any agreement or covenant of
Association contained in this Agreement, Purchaser may give written notice
of such breach to Association and, in the event that such breach is not
cured within a period (the "Cure Period") of thirty (30) days following
such notice of breach by Purchaser to Association, Purchaser shall have the
right to terminate this Agreement upon notice to Association, provided that
such notice of termination is given by Purchaser to Association within
thirty (30) days following the Cure Period.
(c) If the first Lot of Qualifying Pigs is not shipped to Purchaser
hereunder within twenty-four (24) months of the date of this Agreement,
Purchaser shall have the right to terminate this Agreement upon notice to
Association, provided that such notice of termination is given by Purchaser
to Association within three (3) months after the expiration of such twenty-
four (24) month period; provided, however, that any such termination shall
not terminate or otherwise affect any other Pig Purchase Agreement between
Purchaser and Association.
(d) In the event Purchaser assigns or transfers, in accordance with
the Articles of Incorporation and Bylaws of Association, all shares of the
capital stock of Association from which Purchaser's right to purchase Lots
under this Agreement derives, this Agreement automatically shall terminate.
(e) This Agreement shall be extended automatically for
succeeding and consecutive twelve (12) month terms unless Purchaser
gives to Association, not less than twelve (12) months prior to the
expiration of the initial term or any extended term hereof, notice
that Purchaser desires to terminate this Agreement as of the
expiration of such initial or extended term.
Notwithstanding the foregoing, however, the rights of Association to collect
damages and to exercise its remedies under Section 17 hereunder shall survive
any termination of this Agreement.
15. WARRANTIES. ASSOCIATION MAKES NO WARRANTIES EITHER EXPRESS OR IMPLIED
TO PURCHASER OTHER THAN AS HEREIN EXPRESSLY PROVIDED, AND SPECIFICALLY (A) MAKES
NO WARRANTY AS TO ANY SPECIFIC LEVEL OF PERFORMANCE WITH RESPECT TO ANY PIGS
SOLD HEREUNDER, AND (B) DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY OR OF
FITNESS FOR A PARTICULAR PURPOSE.
16. FORCE MAJEURE. Either party to this Agreement shall be relieved of
its responsibility and obligations hereunder during any period when performance
is commercially impossible because of reasons beyond its control such as, but
not limited to, fire, explosion, strike, accident, governmental regulations or
intervention, and acts of God.
17. DEFAULT BY PURCHASER; GRANT OF SECURITY INTEREST. Purchaser
acknowledges that the damages suffered by Association in the event of any
failure by Purchaser to purchase, pay for, and take delivery of any Lot when and
as made available to Purchaser in accordance with the terms hereof shall equal,
and Purchaser shall be liable to Association for and shall pay to Association
upon demand, the sum of the following: (a) the difference between the price
payable by Purchaser hereunder for Qualifying Pigs included in such Lot and the
then current market price (as of the scheduled shipment date for such Lot) for
Qualifying Pigs as quoted in any independent industry publication or source
selected by Association, multiplied by the number of Qualifying Pigs in such Lot
that Purchaser has failed to purchase, pay for, and take delivery of, in
accordance with the terms hereof; plus (b) administrative and other costs and
expenses relating to such Lot, which are hereby agreed to equal the amount of
$3,000; plus (c) costs of collection, enforcement, and prosecution of
Association's rights and remedies hereunder or otherwise arising, whether or not
involving a case, action, or other proceeding before any state or federal court
or other body, including, but not limited to, reasonable attorney's fees,
collection agency fees, and other costs of collection; provided, however, that
to the extent applicable law prohibits collection of attorney's fees and/or
costs, this subsection (c) shall be null and void to the extent of such
prohibition, except to preserve Association's rights pursuant to 11 U.S.C.
' 506(b). During any period in which Purchaser has been notified that it is
obligated to pay an amount for damages pursuant to the immediately preceding
sentence and has not paid such amount within three days of such demand,
Association shall not make any future Lots available to Purchaser for purchase
hereunder or under any other Pig Purchase Agreement between Purchaser and
Association until Purchaser has paid such amount. In the event that Purchaser
is not made available any Lot for purchase hereunder pursuant to the immediately
preceding sentence that Association otherwise would have made available to
Purchaser for purchase hereunder, then Purchaser shall be deemed to have failed
to purchase, pay for, and take delivery of such Lot, and Purchaser shall be
liable for damages with respect to such Lot computed in accordance with the
first sentence of this Section. Upon any termination of this Agreement,
Purchaser's liability for damages incurred by Association with respect to
Purchaser's obligation to purchase, pay for and take delivery of Lots made
available to the Purchaser shall be limited to the damages with respect to such
Lots computed in accordance with the preceding provisions of this Section 17,
and Purchaser shall not be liable for any other damages for the failure to
purchase, pay for or take delivery of Lots hereunder after the termination of
this Agreement.
As security for the due and punctual performance of all of Purchaser's
obligations under this Agreement, Purchaser hereby pledges and grants to
Association, its successors and assigns, a security interest in and lien upon
any and all interest (the "Coop Interest") Purchaser now has or hereafter may
have in Association, including, without limitation, any capital stock or other
rights or interests owned or held by Purchaser, or to which Purchaser is
entitled, as a stockholder of Association and any interest of Purchaser in and
to any dividends, capital or other credits, patronage or other distributions, or
participations arising therefrom. Purchaser shall also deliver and endorse such
stock or other certificates and execute and deliver such financing statements
and other instruments (including, without limitation, stock powers duly endorsed
in blank), and take such other action, as Association may request for purposes
of perfecting or protecting the security interest granted under this Section 17.
Purchaser represents, warrants and agrees that the pledge of the Coop Interest
pursuant to this Section 17 creates a valid and perfected first priority
security interest in the Coop Interest in favor of Association, subordinate only
to any permissible pledge or other security interest granted by Purchaser to any
financial institution for purposes of securing a loan by such financial
institution to Purchaser, the proceeds of which are used to finance Purchaser's
acquisition of the Coop Interest. Notwithstanding the foregoing, however,
Association may release such pledge and grant of a security interest for good
cause, as determined in Association's sole and absolute discretion.
If Purchaser shall be in default under this Agreement, Association may
exercise any and all rights and remedies available to Association hereunder,
under the Articles of Incorporation or Bylaws of Association, under any
applicable Uniform Commercial Code, or otherwise at law or in equity. The
rights and remedies afforded to Association hereunder shall be cumulative and in
addition to, and not in limitation of, any rights and remedies which Association
may otherwise have under the Articles of Incorporation or Bylaws of Association
or under applicable law, including any applicable Uniform Commercial Code. The
exercise or partial exercise of any right or remedy of Association hereunder or
under the Articles of Incorporation or Bylaws of Association or under applicable
law shall not preclude or prejudice the further exercise of that right or remedy
or the exercise of any other right or remedy of Association. No delay or
omission on the part of Association in exercising any right hereunder or
otherwise shall operate as a waiver of such right. A waiver on any one occasion
shall not be construed as a bar or waiver of any right or remedy on any future
occasion.
18. ARBITRATION. In the event of any controversy arising out of or
relating to this Agreement, or any breach hereof, other than any controversy
arising out of or relating to Section 17 hereof or the exercise of any rights or
remedies thereunder, the parties agree to submit the dispute to binding
arbitration in accordance with the Commercial Arbitration Rules then in force of
the American Arbitration Association. 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, which
arbitrators shall be individuals skilled in the legal and business aspects of
the subject matter of this Agreement and of the dispute. Alternate strikes
shall be made to the panel commencing with the party requesting the arbitration
until one individual remains. Such individual shall be the arbitrator for the
controversy. The party requesting the arbitration shall notify the arbitrator
who shall hold a hearing(s) within 60 days of the notice. Any hearing(s) shall
take place in Denver, Colorado, or such other location as the parties may agree
upon. The arbitrator shall render a decision, including a written opinion in
support thereof, within 30 days after the conclusion of the hearing(s), which
decision shall be final and binding upon the parties without right of appeal.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Costs of the arbitration will be assessed by the
arbitrator against either or both of the parties, and will be paid promptly by
the party or parties so assessed.
19. NOTICES. Any notice given or required to be given hereunder shall be
deemed to have been effectively given when delivered personally or sent by
United States certified or registered mail, return receipt requested, postage
prepaid, addressed or transmitted to Association at Alliance Farms Cooperative
Association, c/o Farmland Industries, Inc., 0000 Xxxxx Xxx Xxxxxxxxxx,
Xxxxxxxxxx 00, Xxxxxx Xxxx, Xxxxxxxx 00000, Attention: Xx. Xxxxx X. Xxxxxx, and
to Purchaser at the address set forth below Purchaser's signature, and/or to
such other (or additional) address(es) requested by a notice given in accordance
with this Section.
20. ENTIRE AGREEMENT. This Agreement contains all of the terms agreed
upon by the parties with respect to the subject matter hereof and supersedes all
prior agreements of the parties as to the subject matter hereof; provided,
however, any and all other Pig Purchase Agreements between Purchaser and
Association, shall not be superseded, modified or otherwise affected by this
Agreement. This Agreement may not be modified except in writing, signed by the
parties hereto, that specifically references this Agreement.
21. ASSIGNMENT. This Agreement may not be assigned by either party
without prior written consent of the other party; provided, however, that
Association may assign Association's rights herein and hereto to any lender that
may provide financing to Association in connection with the construction of
facilities or the operation thereof, or both. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
heirs, legal representatives, successors, and permitted assigns.
22. CONSTRUCTION. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Colorado (without reference to
conflict of laws principles) applicable to agreements made and to be performed
entirely within such State. The parties hereto hereby agree that if any part,
term or provision of this Agreement is held by a court of competent jurisdiction
to be illegal or unenforceable or in conflict with any controlling state law,
the validity of the remaining parts, terms and provisions of this Agreement
shall not be affected, and the rights and obligations of the parties shall be
construed and enforced as if this Agreement did not contain the particular part,
term or provision held to be illegal or unenforceable or in conflict with any
controlling state law. This Agreement and the transactions contemplated
hereunder constitute commercial, and not consumer, transactions.
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THIS AGREEMENT CONTAINS A BINDING ARBITRATION CLAUSE THAT MAY BE ENFORCED
BY THE PARTIES.
IN WITNESS WHEREOF, the parties have executed this Agreement effective the
day and year first above written.
ASSOCIATION: PURCHASER:
ALLIANCE FARMS COOPERATIVE
ASSOCIATION
By: By:
Name: Name:
Title: Title:
Purchaser's Address:
