EXHIBIT 10.8(a)
January 7, 1998
Xx. Xxxx Xxxxxx
Vice President, Crops Division
Southern States Cooperative, Inc.
P. O. Xxx 00000
Xxxxxxxx, Xxxxxxxx 00000
Subject: MEMBER PRODUCT PURCHASE AGREEMENT
Schedules of Product Purchases
Contract Year 2001-2002
Dear Xxxx:
As is required by the Member Product Purchase Agreement (Section III, Paragraph
3.2) we are enclosing Schedules of Product Purchases for designation of your
company's product requirements.
The foundation of that Agreement is the execution of a mutually agreeable
schedule of purchases for the next five (5) years. Because the Member Product
Agreement is an integral part of the CF Industries, Inc. long-term financing, it
is essential that designations thereunder be kept current.
In accordance with the provisions of the Agreement, at the end of each year a
mutually agreeable supplement to the Schedules of Product Purchases covering the
fifth (5th) year hence is to be executed by each Member and by CF.
It is imperative that supplements to the Schedules of Product Purchases for
contract year 2001-2002 be executed formally by each Member and by CF. To allow
both the Members and CF, respectively, adequate time to prepare and analyze
these product requirements, the timetable on the following page is suggested.
Xx. Xxxx Xxxxxx
Vice President, Crops Division
Southern States Cooperative, Inc.
January 7, 1998
Page 2
February 16, 1998 - Member product requirements for contract year 2001-2002 should be submitted to
CF, in duplicate, both copies to be signed and dated by an appropriate officer
of the Member.
February 27, 1998 - CF and the Members are to agree mutually to product requirements for contract
year 2001-2002.
March 9, 1998 - All Schedules of Product Purchases are to be executed by appropriate officers
of both CF and the Member, and one (1) copy is to be returned to Member.
We recognize that a substantial amount of effort will be needed by Members to
prepare these forecast product requirements. To assist Members in this regard,
if we are so requested CF will be pleased to make available assistance from our
Marketing and Member Services personnel.
We look forward to working with you to make the Member Product Purchase
Agreement a successful tool for Members and CF to meet the plant food
requirements of your xxxxxx patrons.
Sincerely yours,
/s/ Xxxx X. Xxxxxxxxxx
---------------------------
Xxxx X. Xxxxxxxxxx
Senior Vice President
Marketing and Sales
JHS:DJB
Attachments
cc: X.X. Xxxxx
CF INDUSTRIES, INC.
MEMBER PRODUCT PURCHASE AGREEMENT
October 18, 1974
CF INDUSTRIES, INC.
MEMBER PRODUCT PURCHASE AGREEMENT
Contents
Section Page
------- ----
I Nature of Agreement 2
II Definitions 2
III Term 3
IV Price and Patronage 4
V Payments 6
VI Taxes 6
VII Specifications 7
VIII Quantity 7
IX Damages 10
X Allocation 12
XI Delivery 15
XII Force Majeure 15
XIII Default and Waiver 17
XIV Assignment 18
XV Warranties 18
XVI Modifications 19
XVII Cooperation 20
XVIII Disputes 20
XIX Notices 21
XX Law 21
MEMBER PRODUCT PURCHASE AGREEMENT
This Agreement made and entered into by and between CF INDUSTRIES, INC., an
agricultural cooperative association organized under the laws of the State of
Illinois ("Co-op"), and ________________________________________, an
agricultural cooperative association organized under the laws of
______________________________________________ ("Member"),
WITNESSETH
WHEREAS, Co-op has undertaken at the instance and request of its
members to develop and operate plants and equipment for the production and
distribution of fertilizer materials for the benefit of its members; and
WHEREAS, Co-op has committed a substantial financial investment in
production and distribution facilities for the benefit of its members and in
reliance on the Agreement will commit additional funds for expansion of such
facilities to meet the requirements of its members; and
WHEREAS, Member wishes to participate in the benefits of a dependable
long-term supply of fertilizers and to cooperate with other members of Co-op in
the development and operation of production and distribution facilities by the
execution of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained it is hereby agreed as follows:
I
NATURE OF AGREEMENT
Nature of 1.1 This Agreement is generally intended to provide
Agreement for the sale and purchase by Member of fertilizer
materials produced, purchased and distributed by Co-op.
II
DEFINITIONS
Definitions As used in this Agreement the following terms
shall have the following respective meanings:
2.1 "Facilities" shall mean the plants and
equipment operated by Co-op for the manufacture, storage
and distribution of fertilizer materials.
2.2 "Ton" shall mean two thousand pounds
avoirdupois.
2.3 "Year" shall mean a fiscal year of twelve
(12) consecutive months commencing July 1st and ending
June 30th.
2.4 "Month" shall mean a calendar month.
2.5 "Product" shall mean any fertilizer materials
(in dry, liquid or gaseous form) sold and purchased or
to be sold and purchased hereunder.
2.6 "Nutrient" shall mean the nitrogen,
phophorous or potassium content of Product, expressed as
N, P2O5 and K2O respectively.
2.7 "Available Supply" shall mean the quantity of
all Product or Nutrient secured by Co-op for
distribution to its members from assured sources,
whether by manufacture, or (except for "spot purchases")
by purchase or barter, during each Year; it shall not
mean Product processed or exchanged with or sold to
other persons in connection with contracts with
non-members for the general benefit of all members.
2.8 "Shipping Point" shall mean the place
designated by Co-op for the delivery of Product within
the relevant market area.
III
TEAM
Term 3.1 The term of this Agreement shall be as
follows:
(a) Base Period - The Base Period of this
Agreement shall be a term of ten Years commencing on the
first day of July, 1975.
(b) Evergreen Period - After the expiration of
the Base Period this Agreement shall remain in force for
an indefinite term until the Product sales and purchases
provided in the Schedule of Product Purchases and all
supplements thereto have been completed as required by
this Agreement.
3.2 At the end of the first Year of this
Agreement and each Year thereafter, the parties shall
execute a mutually agreeable supplement to the schedule
of Product Purchases covering the fifth Year hence, as
further provided in Section 8.5. The parties agree that
the supplements to the Schedule of Product Purchases for
the sixth through tenth Years of the Base Period shall
provide for the sale and purchase of Product in an
aggregate quantity not less than the aggregate quantity
to be sold and purchased during the first through fifth
years of the Base Period.
IV
PRICE AND PATRONAGE
Price and 4.1 The parties to this Agreement have
Patronage intentionally left the purchase price to be paid by Member
to Co-op for Product open for later determination. It is
the intention of the parties that they be bound by this
Agreement from the date of signing of the Agreement, even
though the price is not determined at that time. Each Year
pricing policies of Co-op shall be reviewed and
established by its Board of Directors at the time of
adoption of the annual budget.
4.2 The price applicable to each shipment of
Product shall be generally competitive with fair market
prices in effect for sales to independent purchasers by
producers of like Products of the same grade and quality
(excluding prices for spot sales on an isolated or
irregular basis) for shipment to the same class of trade,
or absent such market, the price to dealers with
appropriate discounts, the same date, after appropriate
adjustment for the allowances and discounts customarily
granted for freight (as appropriate to Co-op's established
distribution system in the relevant market) and for prompt
payment.
4.3 Co-op shall from time to time publish
effective prices for each type of Product.
4.4 Co-op may from time to time offer as an
allowance to induce Member to accept delivery of certain
Product during each Year in substantially equal quantities
each Month an amount representative of the cost savings
realized by Co-op as a consequence of such uniform
delivery (as compared with normal seasonal delivery
patterns which would be expected to occur in a free market
in a period of adequate supply).
4.5 Subject to the Articles of Incorporation and
Bylaws of Co-op, each Year Co-op shall distribute to
Member on a fair and equitable basis that part of the net
earnings remaining after setting aside reasonable and
adequate reserves recognized from business transacted with
all members of Co-op during such Year as patronage
dividends in the form of cash, shares of stock,
certificates of interest, or such other notification of
patronage participation as Co-op shall determine; and
Member hereby consents and agrees to include in the gross
income of Member all patronage dividends in the taxable
year received.
4.6 In the event of Force Majeure, or other
contingency as provided in Article XII hereof, including,
without limitation, governmental action, resulting in a
substantial increase in the estimated costs of operation
of Co-op, the minimum price for any or all Product
effected by such event shall be appropriately increased.
V
PAYMENTS
Payments 5.l Payment for Product shall be made by Member
to Co-op within thirty days after Member takes delivery of
Product.
5.2 Payments shall be made in U.S. dollars.
5.3 Payment shall be made at the office of Co-op
at Long Grove, Illinois, or as otherwise specified by
Co-op.
VI
TAXES
Taxes 6.1 The Price established pursuant to this
Agreement shall not include excise, transfer, sales or
other taxes, or charges payable to governments, imposed,
levied, assessed or collected for the transfer or sale, of
Product. Member shall pay and be responsible for the
amount of all such taxes or other charges and shall pay
directly as due or advance the amount due to Co-op for
timely payment.
6.2 Member shall be entitled to contest the
imposition of any such taxes or charges and Co-op shall
render full cooperation to Member in this behalf.
VII
SPECIFICATIONS
Specifi- 7.1 All Products shall conform to quality
cations specifications generally accepted in the industry.
7.2 In theevent any Product delivered deviates
from the foregoing specifications, Member shall be
entitled to a rice adjustment to the extent of any loss
on the resale f the Product resulting from the granting
of actual and reasonable credits or cost reductions to
purchasers; provided notice of such deviation and
adequateopportunity to inspect and to accept a return of
such Product shall have been given to Co-op prior to
resale.
7.3 Member shall have the right to inspect
Product either at the time of delivery or at the time of
unloading from the carrier and within ten business days
after such inspection must give notice to Co-op of any
claim for damages on account of condition, quality or
grade of the Product, specifying in detail the basis of
such claim. The failure of Member to comply with these
conditions shall constitute acceptance of the Product by
Member, except in the event of latent defects not readily
discoverable in the ordinary routine of business.
VIII
QUANTITY
Quantity 8.1 Member shall purchase from Co-op and Co-op
shall sell to Member during each Year the quantity of
nutrient (contained in Product of various types) as set
forth in the Schedule of Product Purchases hereto
attached.
8.2 Co-op reserves the right to adjust production
of a particular Product and to substitute other Product
containing in the aggregate the same Nutrient content as
the curtailed Product when appropriate to the best
interests of the Product needs of substantially all of its
members after giving due consideration to the effect of
such adjustment of production upon each of its members;
provided, Co-op shall give to member reasonable notice and
opportunity to cancel its commitment for the Product to be
curtailed.
8.3 The quantity of Product delivered hereunder
shall be governed by weights and measurements taken by
Co-op at the time of delivery to carrier. Member may call
for an examination of any weighing or measuring devices to
be made by an independent qualified examiner at Member's
cost. If such examination discloses any inaccuracy in the
weighing or measuring equipment of 1% or more, the cost of
examination and correction shall be reimbursed by Co-op to
Member and all invoices for shipments of Product during
the period of such inaccuracy, but not more than thirty
days prior to the examination, shall be adjusted
appropriately.
8.4 Co-op will use its best efforts to ship and
Member will use its best efforts to accept delivery of
Product in approximately equal weekly quantities.
8.5 During each Year this Agreement is in force,
and not later than three Months prior to the end of such
Year, Member shall furnish to Co-op a proposed supplement
(commonly referred to as "intents") to the Schedule of
Product Purchases setting forth the types and quantities
of Product, if any, Member desires to purchase from Co-op
during the succeeding fifth Year; provided, however, that
Member and Co-op must mutually agree on the quantities of
Nutrient to be sold and purchased pursuant to such
supplement and Co-op may decline to accept changes in
quantities of Nutrient to the extent appropriate to
equitably supply all members of Co-op. In determining
whether a proposed supplement is acceptable Coop shall
consider, among other factors, the ability of Co-op to
produce, acquire and distribute Products and Member's
ability to provide storage and distribute Products. The
proposed purchases ("intents") as accepted by Co-op shall
become a permanent index for purposes of applying the
allocation formulas described in Section 10.2 hereof.
Member may make reasonable amendments to the Schedule of
Product Purchases to change the Product mix, but not to
change the quantity of Nutrient, after reasonable prior
notice and within the practical constraints of Co-op's
productive capacities and its commitments to other
members.
8.6 Co-op shall use its best efforts to make
available 110% of the quantity of N and P2O5, and 100% of
the quantity of K2O agreed to be sold to Member in the
form of Product needed by Member in each Year.
IX
DAMAGES
Damages 9.1 If any Nutrient Co-op agreed to sell
hereunder during each Year remains unshipped one month
after the end of such Year by reason of a breach or
default of Member, Coop shall be entitled to recover
liquidated damages calculated as follows:
If the Nutrient shipped is less than the
percentage in column A but not less than the
percentage in column B the amount of such damages
shall be the percentage in column C (on a
non-cumulative basis) of the highest price
published by Co-op applicable to Member for such
Nutrient (determined in proportion to the types
of Product not taken) during the Year of default
for the quantity of Nutrient unshipped.
A B C
100% 90% -- %
90 89 5
89 88 7.5
88 87 10
87 86 12.5
86 0 15
9.2 If any Nutrient Member agreed to purchase
hereunder during each Year remains unshipped one Month
after the end of such Year by reason of a breach or
default of Co-op, Member shall be entitled to recover
liquidated damages calculated as follows: If the Nutrient
shipped is less than the percentage in column A, abut not
less than the percentage in column B, the amount of such
damages shall be the percentage in column C (on a
noncumulative basis) of the highest price published by
Co-op applicable to Member for such Nutrient (determined
in proportion to the types of Product not shipped) during
the Year of default for the Nutrient unshipped.
A B C
100% 96% -- %
96 95 5
95 94 7.5
94 93 10
93 92 12.5
92 O 15
9.3 Member may from time to time waive its rights
to purchase Nutrient in order to permit other members to
purchase said Nutrient; in such event, Member waiving
rights to purchase shall not be liable for liquidated
damages if an actual sale of such Nutrient is made to
another member at the current published price to the
extent of such sale.
9.4 Upon the request of Member Co-op will act as
agent for Member and assist Member to dispose of any
Nutrient which Member agreed to purchase, but which
exceeds Member's need for such Nutrient.
X
ALLOCATION
10.1 All allocations of Product shall be determined in equivalent tons
of Nutrient (N, P2O5 or K2O); for example, the N and P2O5 content of diammonium
phosphate shall be considered separately.
10.2 In the event Co-op, for any reason, shall be unable to supply the
needs of all members as expressed in their proposals for purchases of Product
and supplements ("intents") thereto, Co-op shall allocate the Available Supply
of Product among all members on the following basis:
(a) During the Year commencing July l, 1975, Member shall be
entitled to purchase that part of the Available Supply of
Nutrient which bears the same proportion to the total
Available Supply of Nutrient as the quantity of Nutrient
shipped to Member during the prior Year bears to the total
quantity of Nutrient shipped from Co-op to all members of
Co-op during the prior Year.
(b) During the Year commencing July l, 1976, Member shall be
entitled to purchase that part of the Available Supply of
Nutrient which bears the same proportion to the total
Available Supply of Nutrient as a number determined by adding
three times the quantity of Nutrient shipped to Member in the
prior Year to the quantity of Nutrient Member proposed to
purchase in the current Year and dividing the sum by four,
bears to a number determined by adding three times the total
quantity of Nutrient shipped by Co-op to all members of Coop
during the prior Year to the quantity of Nutrient all members
of Co-op proposed to purchase in the current Year and dividing
the sum by four.
(c) During the Year commencing July 1, 1977, Member shall be
entitled to purchase that part of the Available Supply of
Nutrient which bears the same proportion to the total
Available Supply of Nutrient as a number determined by adding
the quantity of Nutrient shipped to Member in the prior Year
to the quantity of Nutrient Member proposed to purchase in the
current Year and dividing the sum by two, bears to a number
determined by adding the total quantity of Nutrient shipped by
Co-op to all members of Co-op during the prior Year to the
quantity of Nutrient all members of Co-op proposed to purchase
in the current Year and dividing the sum by two.
(d) During the Year commencing July 1, 1978, Member shall be
entitled to purchase that part of the Available Supply of
Nutrient which bears the same proportion to the total
Available Supply of Nutrient as a number determined by adding
the quantity of Nutrient shipped to Member in the prior Year
to three times the quantity of Nutrient Member proposed to
purchase in the current Year and dividing the sum by four,
bears to a number determined by adding the total quantity of
Nutrient shipped by Co-op to all members of Co-op during the
prior Year to three times the quantity of Nutrient all members
of Co-op proposed to purchase in the current Year and dividing
the sum by four.
(e) During the Year commencing July 1, 1979, and each Year
thereafter, Member shall be entitled to purchase that part of
the Available Supply of Nutrient which bears the same
proportion to the total Available Supply of Nutrient as the
quantity of Nutrient Member proposed to purchase in the
current Year, bears to the total quantity of Nutrient all
members of Co-op proposed to purchase from Co-op during the
current Year.
XI
DELIVERY
Delivery 11.1 All Products shall be delivered to Member
and risk of loss shall pass at the Shipping Point.
11.2 Delivery by Co-op to carrier shall
constitute delivery to Member, and if Member requires that
the Product be shipped to the order of Member or freight
prepaid or allowed, after delivery of the Product to
carrier, Co-op shall be deemed to be acting for the
account and the accommodation of Member.
11.3 Co-op shall not be obligated to deliver in
any Month more than twelve percent of the annual quantity
of any Product, other than anhydrous ammonia and nitrogen
solutions, to be sold and purchased during that Year.
11.4 Delivery orders shall be placed by Member in
accordance with reasonable procedures established from
time to time by Co-op after adequate prior notice to
Member.
XII
FORCE MAJEURE
Force l2.l In the event of either party being rendered
Majeure unable by Force Majeure to perform any of its obligations
in receiving or delivering Product hereunder, the
obligations of such party shall be suspended, to the
extent it is unable, in whole or in part, to receive or
deliver Product by reason of Force Majeure, during the
continuance of any inability so caused and the cause of
such inability shall, so far as possible, be remedied with
reasonable diligence.
12.2 The term "Force Majeure" as used in this
Agreement shall mean natural catastrophy, strikes,
lockouts, or other industrial disturbances, acts of the
public enemy, wars, declared or undeclared, blockades,
insurrections, riots, fires, civil disturbances,
explosions, curtailment of power or natural gas,
compliance with laws, governmental regulations, orders and
requests, whether valid or not, curtailment or other
inability to obtain equipment, supplies, materials, or
transportation Facilities, breakdown of Facilities,
machinery or equipment and any other cause whether of the
kinds herein enumerated or otherwise, not within the
reasonable control of the party claiming suspension, all
of which by the exercise of due diligence such party could
not have reasonably foreseen and provided against;
provided, however, that the settlement of strikes or
lockouts shall be entirely within the discretion of the
party having the difficulty.
12.3 In addition to all other contingencies, the
obligations to make future deliveries of Product hereunder
are contingent upon the construction of additional
production and distribution Facilities. If such additional
Facilities are not completed as planned for reasons beyond
the reasonable control of Co-op, then Co-op shall be
excused from delivery of so much of the Product as would
have been available if the Facilities were completed.
12.4 During any period of shortage of Product
caused by any of the foregoing causes, Co-op may prorate
the Available Supply of Product among its members and
customers under this and other agreements on a fair and
equitable basis. The parties hereby agree that in the
event of a Force Majeure it may not be feasible to
implement the provisions of Article X hereof relating to
Allocations.
12.5 It is expressly understood and agreed that
in no event shall the provisions of this Article XII be
construed to excuse or suspend the obligations of Member
under this Agreement so as to enable Member to purchase
Product from other Sources at more favorable prices, or on
more favorable credit terms, or to honor other purchase
agreements or to first exhaust supplies of Product
available from productive Facilities owned, directly or
indirectly, by Member, whether now or hereafter existing.
XIII
DEFAULT AND WAIVER
Default 13.1 If either party shall fail to perform any
and of the and covenants or obligations imposed upon it in
Waiver this Agreement (except where such failure shall be excused
under Article XII hereof) , the other party shall notify
the party in default in writing of the alleged default and
if the party in default shall not undertake with all due
diligence to correct the same to comply with the
obligations and covenants hereof within thirty (30) days
from and after receiving such notice, then,
notwithstanding any other provision of this Agreement, the
complaining party shall have the right to terminate this
Agreement on notice in writing to the party in default,
and such termination shall not constitute a waiver of any
other remedy to which the party not in default may be
entitled for breach of the contract.
13.2 Waiver by either party of any breach of the
terms and conditions herein contained shall not be
construed as a waiver of any subsequent breach of the same
or any other provision of this Agreement.
XIV
ASSIGNMENT
Assignment 14.1 This Agreement shall not be assignable by
either party without the prior written consent of the
other party, except by merger or consolidation of Member
with agricultural cooperative association and except that
Co-op shall have full right and power to assign the
benefit of all or any part of this Agreement, and either
party shall have the right to grant a security interest
herein to any financial institution in connection with any
agreement made for the benefit of the party.
XV
WARRANTIES
Warranties 15.1 Co-op makes no warranty, express or implied,
concerning any Product other than that it shall conform to
the specifications set forth in Article VII hereof. All
other warranties of any kind, express or implied in fact
or by law, including, but not limited to, implied
warranties of merchantability or fitness for any
particular purpose or any implied warranty arising from
course of dealing or usage of any trade, are expressly
excluded from this warranty and from this Agreement.
MODIFICATION
Modifica- 16.1 This Agreement constitutes the entire
tion Agreement between the parties hereto for the sale and
purchase of Product from Agreements, understandings,
representations, conditions and warranties by and between
the parties.
16.2 Neither party shall be liable for any
representation or warranty of any kind, express or
implied, not expressly set forth in this Agreement.
16.3 This Agreement may not be modified or
amended except by written instrument signed by both of the
parties and shall not be modified or altered by any
subsequent course of performance by either of the parties,
except as expressly otherwise herein provided.
XVI
COOPERATION
17.1 The parties agree to cooperate fully with
one another and to carry out the intents and purposes of
this Agreement and whenever consent may be required of
either party with respect hereto such consent shall not
be unreasonably withheld.
XVIII
DISPUTES
Disputes 18.1 The parties agree that as a condition
precedent to commencement of any suit, all disputes and
controversies of every kind and nature between the parties
hereto arising out of or in connection with this
Agreement, its construction, validity, interpretation,
performance, operation, enforcement, breach, continuance,
or termination, which is not disposed of by agreement of
the parties, shall be submitted for decision by the full
Board of Directors of Co-op by presentation of a concise
statement of the matter in controversy in sufficiently
comprehensive form to express the nature of the
controversy and the issues to be decided. The Board of
Directors shall promptly render a decision on the issues
at its regular meeting next after the submission.
18.2 If either party is not satisfied with the
result of such decision such party shall be entitled to
pursue all other available lawful remedies.
XIX
NOTICES
Notices 19.1 Unless otherwise provided herein, any notice
required under the terms hereof shall be in writing and
shall be deemed delivered when deposited in the United
States or Canadian mails, postage prepaid, addressed as
follows:
To Co-op CF Industries, Inc.
Xxxxx Xxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx
To Member
or to such other address as either party may designate in
writing.
XX
LAW
Law 20.1 This Agreement shall be construed and governed in
accordance with the laws of the State of Illinois, U.S.A.
IN WITNESS WHEREOF, this Agreement has been
executed by the parties pursuant to authorization of their
respective Boards of Directors this 16th day of September,
1974.
"Co-op" CF INDUSTRIES, INC,
By /s/
--------------------------
"Member"
Southern States Cooperative, Inc.
By /s/
-----------------------------
June 30, 1975
