EXHIBIT 10.4
MARKETING AGREEMENT
THIS AGREEMENT, is made and entered into effective as of June 1, 1998
by and between ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, a Delaware corporation with principal
offices and place of business at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("Cargill"), and THE ANDERSONS, INC., an Ohio corporation with principal
offices and place of business at ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ ("TAI").
WHEREAS, Cargill has leased its two grain handling facilities located
in Toledo and Maumee, Ohio (the "Leased Facilities") to TAI by lease agreement
dated June 1, 1998 (the "Lease Agreement");
WHEREAS, TAI intends to use TAI's existing two grain handling
facilities at Toledo and Maumee, Ohio (the "TAI Facilities") and the Leased
Facilities (collectively, the "Facilities") for the primary purpose of
originating grain in the Toledo and Maumee, Ohio area (the "Toledo Grain"); and
WHEREAS, TAI intends to sell the Toledo Grain to Cargill, and Cargill
intends to purchase from TAI and merchandise the Toledo Grain;
NOW, THEREFORE, in consideration of the foregoing and the mutual terms
and conditions hereinafter set forth, Cargill and TAI mutually agree as follows:
ARTICLE I
TERM AND TERMINATION
1.1 TERM. The initial term of this Agreement shall commence on June 1,
1998 (the "Effective Date") and shall continue through May 31, 2003 (the
"Initial Term"), subject to the termination provisions below. This Agreement
shall automatically renew for consecutive five (5) year periods unless either
party provides notice to the other party at least six (6) months prior to the
expiration of the then current term of such party's intent to terminate or
modify this Agreement. If a party provides such notice of its intent to modify
the Agreement for purposes of renewal, the parties shall negotiate in good faith
a renewal of this Agreement. In the event that the parties are unable to
negotiate a mutually agreeable renewal prior to the expiration of the Initial
Term or the then current term, this Agreement shall terminate without further
notice at the expiration of such term.
1.2 TERMINATION.
(a) If the Lease Agreement is terminated for any reason, the
Initial Term of this Agreement or renewal term, if any, shall automatically
terminate without notice. The Lease Agreement, which is incorporated herein by
this reference, is attached hereto as Exhibit A.
(b) Either party may terminate this Agreement prior to the
expiration of the Initial Term or renewal term, if any, following any material
breach of this Agreement by the other party if the breaching party fails to
remedy such breach within thirty (30) days after receiving from the
non-breaching party written notice of the breach specifying the basis on which
such breach is claimed.
(c) This Agreement shall terminate upon written notice by
either party to the other in the event that the notified party shall file a
voluntary petition in bankruptcy, or shall be adjudicated as a bankrupt pursuant
to an involuntary petition, or shall suffer appointment of a temporary or
permanent receiver, custodian, or trustee for its business or for all or
substantially all of its assets, or shall make an assignment for the benefit of
creditors.
(d) In the event that one or more third parties purchases
TAI's stock in an amount sufficient to significantly affect or change control of
TAI, or one or more third parties takes any action that does significantly
affect the control of TAI, Cargill may in its sole discretion either continue or
terminate this Agreement. For purposes of this Agreement, "control" shall mean
(a) the direct or indirect ownership of more than fifty percent (50%) of the
total voting securities of every class or other voting evidences of ownership
interest of TAI, or (b) the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of TAI. If Cargill
elects to terminate this Agreement under this provision, Cargill must provide
written notice to TAI of its election to terminate not more than fifteen (15)
days after public announcement or after TAI has provided written notice to
Cargill of any public filing with the Securities Exchange Commission. TAI shall
have no right to terminate this Agreement under this Section 1.2 (d) herein.
(e) Termination of this Agreement shall not affect any
obligation of either party accrued prior to the effective date of such
termination.
1.3 CONTINUING OBLIGATIONS. Upon the expiration or termination of this
Agreement, for a period of two (2) years from the date of such expiration or
termination, Cargill shall have both a right of first refusal and a right of
last refusal to purchase from TAI at a mutually agreed market price, 50% of the
grain put through the TAI Facilities for the first year of the two year period,
and 25% of the grain put through the TAI Facilities for the second year of the
two year period; provided, however, that this provision shall not apply to grain
sold to those customers with whom TAI maintains direct trading relationships
during the term of this Agreement. If the parties cannot mutually agree to the
market price, the market price shall be determined by an independent third
party, mutually agreeable to both parties.
ARTICLE II
GRAIN ORIGINATION AND MERCHANDISING
2.1 OBLIGATION OF BOTH PARTIES. Both parties have the obligation to
maximize net income of the Facilities. As a means to this, Cargill will maintain
control of the grain merchandising function, while TAI will maintain control of
the grain origination and facility operation functions. Communications between
the parties regarding such obligation of both parties shall be conducted in
accordance with the Guidelines as defined in Section 8.1 herein.
2.2 ORIGINATION. TAI shall use its best efforts throughout the duration
of the Initial Term and all subsequent renewal terms, if any, to maximize
origination of the Toledo Grain. TAI shall use the Facilities for the primary
purpose of originating the Toledo Grain. Any other intended use by TAI of the
Facilities to generate income shall be promptly communicated to Cargill and
shall be subject to Cargill's approval, which shall not be unreasonably
withheld. For purposes of this Section 2.2, it shall not be unreasonable for
Cargill to withhold approval if TAI's intended use may cause a default in the
IRB Lease as defined in the Lease Agreement. TAI shall have sole discretion to
establish the price at which TAI purchases the Toledo Grain in connection with
TAI's origination activities.
2.3 SALE/PURCHASE OF THE TOLEDO GRAIN. Subject to the terms and
conditions set forth in this Agreement, TAI agrees to sell to Cargill and
Cargill agrees to purchase from TAI the Toledo Grain for the duration of the
Initial Term and all subsequent renewal terms, if any. Cargill shall have sole
discretion to determine when Cargill shall purchase and at what price Cargill
shall purchase the Toledo Grain from TAI. These decisions shall be made with
full consideration of origination, logistic and grain quality factors as
represented in good faith by TAI. During the term of this Agreement, TAI will
not sell the Toledo Grain to any person or entity other than Cargill pursuant to
the terms of this Agreement. Cargill and TAI shall execute Cargill's standard
purchase contract ("Purchase Contract") to effectuate each respective sale of
the Toledo Grain. The terms and conditions on the front and back sides of the
Purchase Contract shall govern the transaction to the extent that such terms and
conditions do not conflict with the terms of this Agreement in which case this
Agreement shall govern. A copy of the Purchase Contract is attached hereto as
Exhibit B.
2.4 TOLEDO GRAIN EXCEPTIONS. TAI will remain fully active in the NS
rail markets as such markets relate to facilities other than the Facilities
which are the subject of this Agreement, and no NS rail sales will be offered by
TAI for the Toledo Grain. Should an opportunity arise wherein TAI desires to
purchase certain amounts of Toledo Grain, TAI may contact Cargill's
merchandising contact for this Agreement with a bid. Further, TAI may direct
trading relationships with certain customers as mutually agreed by the parties.
2.5 GRAIN MERCHANDISING. Cargill shall use its best efforts throughout
the duration of the Initial Term and all subsequent renewal terms, if any, to
promote the sale of and to merchandise the Toledo Grain. Except as otherwise
provided herein, Cargill shall have sole authority to merchandise the Toledo
Grain into both export and domestic markets, and accordingly TAI shall not
communicate with any of Cargill's customers regarding the sale of the Toledo
Grain except as provided herein, or as mutually agreed by the parties.
ARTICLE III
OPEN CONTRACTS
3.1 Cargill agrees to assign, deliver, and transfer to TAI on the
Effective Date, and TAI agrees to accept from Cargill, on the Effective Date,
all right, title, and interest of Cargill in and to all executory contracts for
the purchase of grain (the "Open Contracts") by Cargill from various sellers,
which Open Contracts are in existence on the Effective Date. TAI shall purchase
the Open Contracts at the TAI truck bid on the Effective Date. If the parties
cannot mutually agree to the TAI truck bid, the price shall be determined by an
independent third party, mutually agreeable to both parties. Cargill shall
indemnify and hold harmless TAI against all claims, damages, liabilities, costs,
suits, obligations or penalties (including attorneys' fees) arising from
Cargill's breach of or negligent administration or handling of any open
hedge-to-arrive grain contracts which are assigned from Cargill to TAI ("HTA
Contracts"), or arising from any questions of legality of such HTA Contracts to
the extent that such questions of legality do not arise from TAI's breach of or
negligent administration or handling of the HTA Contracts. TAI shall indemnify
and hold harmless Cargill against all claims, damages, liabilities, costs,
suits, obligations, or penalties (including attorneys' fees) arising from TAI's
breach of or negligent administration or handling of the HTA Contracts.
ARTICLE IV
DISPOSITION OF THIRD PARTY GRAIN
4.1 ASSIGNMENT. On the Effective Date, Cargill anticipates having in
storage at the Leased Facilities certain quantities of grain belonging to third
parties (the "Cargill Third Party Grain"). The Cargill Third Party Grain is
stored in the Leased Facilities under warehouse receipts, storage receipts or
scale tickets ("Cargill Receipt Obligations"). On the Effective Date, Cargill
shall assign to TAI the Cargill Receipt Obligations and warrants that sufficient
quantity and quality of grain will remain in the Leased Facilities over and
above the Cargill Inventory (as defined in Section 5.1 herein) on the Effective
Date to satisfy the Cargill Receipt Obligations.
4.2 PRORATION. Cargill and TAI agree that storage charges due under the
Cargill Receipt Obligations shall be apportioned between them, Cargill to
receive all storage charges accrued up to the Effective Date, TAI to receive all
charges accruing thereafter, which charges shall be included on the P&L as
defined in Section 6.3 herein. Any prepaid storage or other charges shall be
prorated between Cargill and TAI as of the Effective Date. If TAI should receive
payment for storage charges to which Cargill is entitled, TAI shall promptly
forward such amounts to Cargill. Should it be necessary for either party to
execute an assignment to the other to collect such charges, it shall do so.
4.3 TAI THIRD PARTY GRAIN. On the Effective Date, TAI anticipates having
in storage at the TAI Facilities certain quantities of grain belonging to third
parties (the "TAI Third Party Grain"). The TAI Third Party Grain is stored in
the TAI Facilities under warehouse receipts, storage receipts or scale tickets
("TAI Receipt Obligations"). All storage charges due under the TAI Receipt
Obligations accrued on or after the Effective Date shall be included in the P&L.
Any prepaid storage or other charges shall be prorated accordingly as of the
Effective Date.
ARTICLE V
INVENTORY
5.1 LEASED FACILITIES. On the Effective Date, Cargill will have in
storage at the Leased Facilities inventories of grain (the "Cargill Inventory").
TAI will purchase the Cargill Inventory at the FOB Toledo value LESS * on the
Effective Date (the "Inventory Price"). Prior to or on the Effective Date,
representatives of Cargill and TAI shall determine by weigh-up/measurement the
quantity and quality of the Cargill Inventory (and thereby the Cargill Third
Party Grain). Quality of grain will be at market scale of discount. The cost of
said weigh-up/measurement and grading shall be borne equally by Cargill and TAI.
Should the representatives of Cargill and TAI be unable to agree on the quantity
or quality of the Cargill Inventory or any portion thereof or the Third Party
Grain, the matter shall be resolved in accordance with Article XIV of this
Agreement. If the parties cannot mutually agree to the FOB Toledo value less *
such value shall be determined by an independent third party, mutually agreeable
to both parties.
5.2 TAI FACILITIES. On the Effective Date, TAI will have in storage at
the TAI Facilities inventories of grain (the "TAI Inventory"). The parties shall
mutually agree to a FOB Toledo value less * of the TAI Inventory as of the
Effective Date, which amount shall be included on the P&L as defined in Section
6.3 herein. Prior to or on the Effective Date, representatives of Cargill and
TAI shall determine by weigh-up/measurement the quantity and quality of the TAI
Inventory. Quality of
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SEC
grain will be at market scale of discount. The cost of said weigh-up/measurement
and grading shall be borne equally by Cargill and TAI, of which TAI's respective
cost shall not be included on the P&L. Should the representatives of Cargill and
TAI be unable to agree on the quantity or quality of the TAI Inventory or any
portion thereof, the matter shall be resolved in accordance with Article XIV of
this Agreement. If the parties cannot mutually agree to the FOB Toledo value
less * , such value shall be determined by an independent third party, mutually
agreeable to both parties.
ARTICLE VI
FINANCIAL MATTERS
6.1 EARNINGS THRESHOLD. The parties hereby establish a five-year
cumulative earnings before long-term interest and income tax ("EBIT") threshold
* (the "Threshold"). In the event that the actual five-year cumulative EBIT of
the Facilities is greater than the Threshold, the amount over the Threshold
shall be distributed equally between the parties. If the actual five-year
cumulative EBIT is below the Threshold, Cargill shall pay TAI the difference
between the Threshold and the actual five-year cumulative EBIT, less all
absorbed losses as described herein. TAI shall absorb fifty percent (50%) of
each individual year's loss where the EBIT for the individual year is less than
zero. In no event shall the sum of TAI's absorbed losses exceed the total actual
five-year cumulative EBIT shortfall from the Threshold. If this Agreement is
terminated before the expiration of the Initial Term, or before the expiration
of the then current term, the Threshold shall be adjusted on a prorated basis.
By way of example, if this Agreement is terminated 3 years 3 months into the
Initial Term, the Threshold would be adjusted from * to * .
6.2 SETTLEMENT. In order to reconcile the distributions to which each
party is entitled pursuant to Section 6.1 herein, the parties shall conduct
interim tentative settlements on an annual basis as of May 31. Such settlements
shall be based on interim annual thresholds of * , and * for years one through
five of this Agreement, respectively. Annual settlement payments shall be
treated as a purchase price adjustment to all grain sold and purchased pursuant
to Section 2.3 of this Agreement.
By way of example, settlement would occur in the following manner:
Example One
Year One: P&L states a profit of * . The interim threshold for year one
is * . The parties split equally the excess over the interim threshold, which
excess is * in this example; therefore, TAI pays Cargill * . Accordingly, at end
of year one, TAI's account is * , and Cargill's account is * .
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SEC
Year Two: P&L states a loss of * . The interim threshold for year two
is * . Because of the * loss, TAI's account is at * , and consequently requires
an additional * to match the interim threshold. However, because TAI and Cargill
absorb the * loss on an equal basis, Cargill pays TAI * . Accordingly, at end of
year two, TAI's account is * , and Cargill's account is negative * .
Year Three: P&L states a profit of * . The interim threshold for year
three is * . TAI's account is now at * , while Cargill's account is at negative
* . In order to reconcile the accounts to the interim threshold, TAI pays
Cargill * . Accordingly, at end of year three, TAI's account is * , and
Cargill's account is * .
Year Four: P&L states a loss of * . The interim threshold is * .
Because of the * loss, TAI's account is now at * , and consequently requires an
additional * to match the interim threshold. However, because TAI and Cargill
absorb the cumulative losses on an equal basis, Cargill pays TAI * less * in
cumulative losses). Accordingly, at end of year four, TAI's account is * , and
Cargill's account is negative * .
Year Five: P&L states a profit of * . The final threshold is * . TAI's
account is now at * , while Cargill's account is at negative * . In order to
reconcile the accounts to the final threshold, TAI pays Cargill * . Accordingly,
at end of year five, TAI's account is * , and Cargill's account is negative * .
Example Two
(All dollar figures are in millions)
PAYMENT ▇▇▇▇▇▇▇ ▇▇▇
ACTUAL INTERMIN TO/(FROM) CUMULATIVE CUMULATIVE
YEAR EARNINGS THRESHOLD CARGILL ACCOUNT ACCOUNT
---- -------- --------- ------- ------- -------
1 * * * * *
2 * * * * *
3 * * * * *
4 * * * * *
5 * * * * *
6.3 PROFIT AND LOSS STATEMENT. TAI shall include the Leased Facilities
in TAI's profit and loss statement currently dedicated by TAI to the TAI
Facilities (the "P&L").
The P&L SHALL INCLUDE the following items:
(a) Rent paid by TAI pursuant to the Lease Agreement for
the Leased Facilities;
(b) TAI's purchases of the Toledo Grain;
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SEC
(c) Sales of the Toledo Grain by TAI to Cargill;
(d) Certain allocated administrative and general
operating costs mutually agreeable to the parties,
including identified and quantified costs that relate
specifically to the parties' origination, operation,
and merchandising functions under this Agreement;
(e) Storage and other charges for Cargill Third Party
Grain and TAI Third Party Grain pursuant to Article
IV herein accrued on or after the Effective Date;
(f) The market value of the TAI Inventory as of the
Effective Date;
(g) Such other items as may be mutually agreed by the
parties.
The P&L SHALL NOT INCLUDE the following items:
(a) Claims, damages, liabilities, costs, expenses, suits,
obligations or penalties (including attorneys' fees
and costs of defense) of any and every nature
whatsoever arising out of or in any manner connected
with any grossly negligent act or omission by TAI or
Cargill, including without limitation TAI's grossly
negligent operation of the Facilities;
(b) Claims, damages, liabilities, costs, expenses, suits,
obligations or penalties (including attorneys' fees
and costs of defense) of any and every nature
whatsoever arising out of or in any manner connected
with TAI's or Cargill's failure or alleged failure to
comply with all applicable laws, rules, regulations,
orders and decrees of the United States and the State
of Ohio;
(c) Claims, damages, liabilities, costs, expenses, suits,
obligations or penalties (including attorneys' fees
and costs of defense) of any and every nature
whatsoever arising out of or in any manner connected
with TAI's or Cargill's failure or alleged failure to
comply materially with its contractual obligations;
(d) Claims, damages, liabilities, costs, expenses, suits,
obligations or penalties (including attorneys' fees
and costs of defense) of any and every nature
whatsoever arising out of or in any manner connected
with any environmental condition at the Facilities to
the extent that such environmental condition arises
from, relates to or results from (i) the use,
operation or ownership of the Facilities and the
conduct of business therein, thereon, thereabout or
with regard thereto at all times prior to the
Effective Date, (ii) any deviation by TAI from
standard business practices, or (iii) any violation
of the law.
(e) Claims, damages, liabilities, costs, expenses, suits,
obligations or penalties (including attorneys' fees
and costs of defense) of any and every nature
whatsoever arising out of or in any manner connected
with TAI's or Cargill's deviations from grain
industry standards;
(f) Such other items as may be mutually agreed by the
parties.
6.4 CAPITAL IMPROVEMENTS.
(a) Each party is entering into this business venture
agreement with a solid trust in the respective condition of the other's
facilities, as well as the past operating standards that each party employed in
the operation of each party's respective facilities. The Lease Agreement
represents a strong vote of confidence by Cargill in TAI's ability to operate
the Cargill facilities in conformance with high standards for safety,
maintenance and recapitalization.
In defining the guidelines for capital spending and
depreciation recovery, neither party should benefit at the expense of the other
party. While each party retains absolute accountability for its asset
investment, Cargill is entrusting TAI with oversight responsibility as the
Lessee, to manage the Cargill assets with the same degree of vigilance as
extended to their own assets, and in accordance with the Lease Agreement.
TAI will annually assemble a Capital Spending Plan for each of
the Facilities. The Capital Spending Plan ("Plan") shall be submitted to Cargill
for review in advance of the June-July fiscal year. Review and approval by each
party is required. This will establish the basic framework for capital spending
against which each party can measure and decide on appropriate deviations from
the Plan.
(b) MINOR CAPITAL SPENDING:
"Minor Capital Spending" is defined as any project with a
total project cost of less than * but greater than * and considered an
acceptable and appropriate expenditure to be capitalized under the Internal
Revenue Tax Code.
"Profit Maintaining Minor Capital Spending" is defined as any
capital expenditures necessary to maintain the continued operating standards and
serviceability of the Facilities.
"Profit Adding Minor Capital Spending" is defined as any
capital expenditures that add minor amounts of revenue and profit to the P&L.
Minor Capital Spending may also include expenditures for
safety and/or environmental facility upgrades in order to comply with state and
federal regulations and/or best operating standards and practices.
(c) MAJOR CAPITAL SPENDING:
"Major Capital Spending" is defined as any project with a
total cost equal to or greater than * .
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SEC
"Profit Maintaining Major Capital Spending" is defined as any
capital expenditure equal to or in excess of * that serves to return the
facility to its original operating level of serviceability and does not increase
revenues and operating net income by a marked degree. Profit Maintaining Major
Capital Spending may also include expenditures on Safety and Environmental
projects required by State or Federal law or best operating practices.
"Profit Adding Major Capital Spending" is defined as any
capital expenditure equal to or in excess of * that will increase operating
revenues, net income and EBIT by a marked degree.
(d) RULES AND GUIDELINES:
(i) TAI shall be required to pay for all Capital
Spending related to or affecting the
Facilities.
(ii) Depreciation is for the account of the
business venture.
(iii) TAI has authority to approve all Minor
Capital Spending in the Plan less than * per
project, so long as such expenditures are
consistent with the Plan.
(iv) Proposed expenditures of * per project or
more related to or affecting the Cargill
Facilities will be submitted to Cargill for
prior approval, including all expenditures
within the Plan.
(v) TAI's capital spending approval procedures
will govern TAI's decision-making process
for Minor Capital Spending.
(vi) Substitutions within the framework of the
Plan will be allowed for expenditures less
than * . Substituted expenditures of amounts
greater than * will require the approval of
the owner of the affected Facility.
(vii) All Major Capital Spending in excess of *
per project will require prior approval by
both parties regardless of the affected
Facility.
(viii) All capital spending in excess of or outside
of the Plan will require prior approval by
both parties.
(ix) Upon termination of the Lease Agreement,
Cargill shall purchase from TAI, and TAI
shall sell to Cargill, all alterations,
additions and improvements to the Cargill
Facilities at the then current book value of
such alterations, additions and
improvements, consistent with Section 7(b)
of the Lease Agreement.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SEC
6.5 RIGHT TO AUDIT DOCUMENTS. Both parties shall have the right at any
time and upon reasonable notice to the other party to audit the other party's
financial records relating to and generated pursuant to this Agreement. Such
review shall be subject, however, to the Guidelines (as defined in Section 8.1
herein) provided to the parties by joint legal counsel.
6.6 EFFECT OF DEFICIENCY ON THRESHOLD. In the event that TAI's
capability to maximize origination pursuant to this Agreement is materially
restricted, limited or in any way deficient in any respect as a result of a
force majeure, any grossly negligent act or omission by TAI, or by any
significant event that substantially interferes with all or part of the normal
business activities of the Facilities, which event could not reasonably be
foreseen by the parties (including by way of example, but not limited to, an
explosion, a shutdown of the Great Lakes market, or a facility-related weather
disaster), the Threshold shall be renegotiated to reflect such deficiency. The
parties shall assign a percentage to the loss in capability, and the Threshold
shall be reduced accordingly by such percentage for the duration of the
deficiency. If the parties are unable to agree on a percentage loss in
capability, the matter will be resolved pursuant to Article XIV herein.
ARTICLE VII
RELATIONSHIP BETWEEN THE PARTIES
7.1 TAI shall conduct its business under this Agreement in the purchase
and sale to Cargill of the Toledo Grain as a principal for its own account and
at its own expense and risk, subject to the terms and conditions of this
Agreement. Cargill shall conduct its business under this Agreement in the
purchase from TAI and the merchandising of the Toledo Grain as a principal for
its own account and at its own expense and risk, subject to the terms and
conditions of this Agreement
7.2 TAI shall have no power to make, and shall not make, any
representations on behalf of Cargill. TAI warrants that it will not act or
attempt to act as agent for or representative of Cargill, and will not create or
attempt to create any obligation binding upon Cargill, or assert or compromise
or attempt to assert or compromise any right of Cargill. Cargill shall have no
power to make, and shall not make, any representations on behalf of TAI. Cargill
warrants that it will not act or attempt to act as agent for or representative
of TAI, and will not create or attempt to create any obligation binding upon
TAI, or assert or compromise or attempt to assert or compromise any right of
TAI.
ARTICLE VIII
COMMUNICATION
8.1 GENERAL. Prior to the Effective Date, joint legal counsel for the
parties shall furnish the parties with specific guidelines relating to future
communications between the parties and each party's right to audit the other
party's financial records pursuant to Section 6.5 herein (the "Guidelines"). The
parties shall strictly follow the Guidelines in all future communications
between the parties and in conducting all audits pursuant to Section 6.5 herein.
8.2 ADVISORY PANEL. An advisory panel consisting of approximately three
(3) representatives, unless the parties otherwise mutually agree, from each
party (the "Panel") shall be established as soon as reasonably practicable after
commencement of the Initial Term. The Panel shall meet on a quarterly basis,
unless otherwise agreed, to address issues relating to the origination and
merchandising of the Toledo Grain; provided, however, that the parties shall
strictly follow the Guidelines in all communications between representatives of
the Panel.
ARTICLE IX
CONFIDENTIAL INFORMATION
9.1 Cargill and TAI hereby agree that they each will keep the terms and
conditions of this Agreement confidential and proprietary, will only disclose
the contents of this Agreement with those of their employees and others who are
on a need-to-know basis, and will ensure that reasonable procedures are
implemented to maintain the confidential nature of this Agreement with care
equal to that given to confidential information of its own respective business,
but in no event less than a reasonable degree of care. Cargill and TAI assume
liability for any breach of this Article by it or any of its employees, agents
or representatives. The obligations set forth in this Article shall survive any
termination of this Agreement.
9.2 TAI shall keep confidential any Cargill information (whether
business marketing, technical or other data) known to it to be, or designated by
Cargill as being, confidential ("Confidential Information"), and shall use such
care as TAI would use in maintaining the confidentiality of its own confidential
information. TAI shall use such information only to the extent needed and for
the purpose of performing its obligations under this Agreement. TAI's
obligations under this Section 9.02 shall survive any termination of this
Agreement, except that the obligation of confidentiality under this Section 9.02
shall not apply:
(a) to information known to TAI, as evidenced by TAI, at the
time of TAI's receipt thereof from Cargill; or
(b) to information received by TAI from a third party under
no obligation of confidentiality to Cargill.
9.3 Cargill shall keep confidential any TAI information (whether
business marketing, technical or other data) known to it to be, or designated by
TAI as being, confidential ("Confidential Information"), and shall use such care
as Cargill would use in maintaining the confidentiality of its own confidential
information. Cargill shall use such information only to the extent needed and
for the purpose of performing its obligations under this Agreement. Cargill's
obligations under this Section 9.03 shall survive any termination of this
Agreement, except that the obligation of confidentiality under this Section 9.03
shall not apply:
(a) to information known to Cargill, as evidenced by Cargill,
at the time of Cargill's receipt thereof from TAI; or
(b) to information received by Cargill from a third party
under no obligation of confidentiality to TAI.
ARTICLE X
EMPLOYMENT MATTERS
10.1 Any persons who are employed by Cargill at the Leased Facilities
immediately prior to the Effective Date and who are terminated in anticipation
of this Agreement shall be considered for employment by TAI. It is mutually
understood and agreed, however, that TAI is under no obligation to hire and
provide employment for any such employees.
10.2 Cargill has terminated any employment relationship it previously
had with certain of its employees at the Leased Facilities. Cargill shall have
no further supervisory function whatsoever with respect to any of such former
employees at the Leased Facilities. TAI has sole authority to operate the Leased
Facilities for the purposes of the relationship contemplated in this Agreement.
Accordingly, TAI shall be solely responsible for the direction of its agents,
servants and employees, including all former employees of Cargill hired by TAI.
In particular and without limitation, TAI shall be solely responsible for its
employees' selection, hiring, firing, supervision, wages and benefits, hours,
performance standards, training and discipline. TAI shall also be solely
responsible for compliance with all applicable local, state and federal laws and
regulatory requirements relating to its employees.
10.3 Notwithstanding the foregoing, if TAI hires any Cargill employees,
TAI shall recognize past service of such employees for vacation and sick pay
eligibility purposes only. TAI will also waive the one year waiting period for
participation in its RSIP (401K Plan). Further, such employees shall be subject
to the applicable vesting schedules under the pension benefit plans, based on
the employment date of such employees with TAI. Health insurance coverage will
commence on the date of hire of such employees as TAI employees, and there will
be no exclusions for pre-existing conditions. Such former employees'
participation in Cargill's employee welfare, pension, fringe benefit and profit
sharing plans shall terminate on the Effective Date.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
11.1 REPRESENTATIONS AND WARRANTIES OF CARGILL. Cargill represents and
warrants as follows to TAI, such representations and warranties to be true and
correct on the Effective Date, that:
(a) ORGANIZATION, QUALIFICATION AND GOOD STANDING. Cargill is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is registered to do business in and is in good
standing under the laws of the State of Ohio. All corporate proceedings required
to be taken by Cargill to authorize the execution, delivery and consummation of
this Agreement have been duly and validly taken and will be in full force and
effect on the Effective Date.
(b) AUTHORITY; BINDING EFFECT. Cargill has full power and
authority to execute and perform this Agreement, and this Agreement constitutes
a legal, valid and binding obligation of Cargill enforceable against Cargill in
accordance with its terms, subject to applicable bankruptcy or insolvency laws.
(c) COMPLIANCE WITH OTHER INSTRUMENTS. Cargill is neither a
party to, nor otherwise subject to, any agreement or other instrument which
would prevent or prohibit Cargill from or require any consent to, the execution
or consummation hereof.
11.2 SURVIVAL OF WARRANTIES AND INDEMNIFICATION. All the warranties and
representations given by Cargill in Section 11.1 herein or elsewhere in this
Agreement, all of which are relied upon by the TAI, shall survive the Effective
Date hereof. Cargill agrees to indemnify and hold TAI harmless from and against
any loss, damage, claim, liability, cost, expense or penalty (including
reasonable attorneys' fees) which TAI may incur or sustain after the Effective
Date resulting from or arising out of any breach of any of said representations
and warranties.
11.3 REPRESENTATIONS AND WARRANTIES OF TAI. TAI represents and warrants
as follows to Cargill, such representations and warranties to be true and
correct on the Effective Date, that:
(a) ORGANIZATION, QUALIFICATION AND GOOD STANDING. TAI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio and is registered to do business in and is in good standing
under the laws of the State of Ohio. All corporate proceedings required to be
taken by TAI to authorize the execution, delivery and consummation of this
Agreement have been duly and validly taken and will be in full force and effect
on the Effective Date.
(b) AUTHORITY; BINDING EFFECT. TAI has full power and
authority to execute and perform this Agreement, and this Agreement constitutes
a legal, valid and binding obligation of TAI enforceable against TAI in
accordance with its terms, subject to applicable bankruptcy or insolvency laws.
(c) COMPLIANCE WITH OTHER INSTRUMENTS. TAI is neither a party
to, nor otherwise subject to, any agreement or other instrument which would
prevent or prohibit TAI from or require any consent to, the execution or
consummation hereof.
(d) CORPORATE DOCUMENTS. TAI has provided Cargill with all
corporate documents evidencing the provisions that TAI has in place which limit
potential changes in control of TAI.
11.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATION. All the warranties and
representations given by TAI in Section 11.3 herein or elsewhere in this
Agreement, all of which are relied upon by the Cargill, shall survive the
Effective Date hereof. TAI agrees to indemnify and hold Cargill harmless from
and against any loss, damage, claim, liability, cost, expense or penalty
(including reasonable attorneys' fees) which Cargill may incur or sustain after
the Effective Date resulting from or arising out of any breach of any of said
representations and warranties.
ARTICLE XII
INDEMNIFICATION
12.1 INDEMNIFICATION BY CARGILL. Cargill shall defend, exonerate,
indemnify and hold harmless TAI, its officers, directors, employees and agents
from and against all claims, damages, liabilities, costs, and expenses, suits,
obligations or penalties (including attorneys' fees and costs of defense) of any
and every nature whatsoever arising out of or in any manner connected with (a)
any breach of this Agreement by Cargill; and (b) the operation or ownership of
the Leased Facilities and the conduct of its business therein, thereon,
thereabout or with regard thereto at all times prior to the Effective Date,
including without limiting the generality of the foregoing all environmental
liabilities.
12.2 INDEMNIFICATION BY TAI. TAI shall defend, exonerate, indemnify and
hold harmless Cargill, its officers, directors, employees and agents from and
against all claims, damages, liabilities, costs, expenses, suits, obligations or
penalties (including attorneys' fees and costs of defense) of any and every
nature whatsoever arising out of or in any manner connected with (a) any breach
of this Agreement by TAI; (b) the operation or ownership of the TAI Facilities
and the conduct of business therein, thereon, thereabout or with regard thereto
at all times prior to the Effective Date, including without limiting the
generality of the foregoing all environmental liabilities; (c) the grossly
negligent operation or ownership of the TAI Facilities and the grossly
negligent conduct of business therein, thereon, thereabout or with regard
thereto at all times on and after the Effective Date, including without limiting
the generality of the foregoing all environmental liabilities; (d) the grossly
negligent use, operation or occupancy of the Leased Facilities and the grossly
negligent conduct of business therein, thereon, thereabout or with regard
thereto at all times on and after the Effective Date, including without limiting
the generality of the foregoing all environmental liabilities; and (e) any
grossly negligent act or omission or willful misconduct by TAI.
Notwithstanding the foregoing or anything to the contrary in the Lease
Agreement, the parties intend that the P&L shall include all customary items,
except as otherwise provided by Section 6.3 of this Agreement. TAI's failure to
follow, use, adopt, implement or recognize standard business practices,
including, without limitation, standard business practices of a grain handling
business, may be a factor in determining whether TAI is grossly negligent for
purposes of this Agreement; provided, however, that the mere fact that TAI is
found liable for negligence against a third party shall not be determinative in
and of itself as to whether TAI is grossly negligent for purposes of this
Agreement for the same conduct giving rise to TAI's negligence against such
third party.
12.3 NOTICE. Each party agrees to promptly give the other party notice
of any claim or indemnification arising under this Section.
12.4 SURVIVAL. The obligations of each party under the foregoing
indemnification provisions shall survive the termination of this Agreement.
ARTICLE XIII
FORCE MAJEURE
13.1 The obligations of each party under this Agreement may be delayed
or suspended in the event of Act of God, war, riot, fire, explosion, accident,
flood, sabotage, inability to obtain fuel, power, raw material, labor,
containers or transportation, facilities, governmental laws, regulations, order
or action, breakage or failure of machinery or apparatus, national defense
requirements or any other event beyond the reasonable control of such party or
in the event of labor trouble, strike, lockout or injunction (whether or not
such labor event is within the reasonable control of such party), any of which
events prevents the sale, purchase or merchandising of the Toledo Grain. For
purposes of this Section 13.1, ordinary variations in weather conditions,
including without limitation prolonged periods of dryness or wetness, shall not
be considered an event of force majeure. If, because of any such event, either
party is unable to meet its obligations in part or in whole under this
Agreement, the obligations of the affected party shall be abated during the
period in which its performance is prevented by the event of force majeure upon
giving prompt notice of such event to the other party. The other party's
performance shall likewise be abated during such period, but this Agreement
shall otherwise remain unaffected.
ARTICLE XIV
DISPUTE RESOLUTION
14.1 In the event a dispute arises under this Agreement that cannot be
resolved by those with direct responsibility for the matter in dispute, such
dispute shall be resolved by way of the following process:
(a) The Panel shall meet to discuss the basis for the dispute
and shall use its best efforts to reach a reasonable resolution to the dispute.
(b) If the Panel fails to resolve the dispute within 10 days
of its receipt of written notice of the dispute, the matter in dispute shall be
brought to the attention of senior management at Cargill and TAI. Said
management shall meet in person to negotiate a good faith resolution to the
dispute within 20 days of their receipt of written notice of the dispute.
(c) If such negotiations are unsuccessful, the matter may
promptly be submitted by either party to an individual or organization
recognized in the field of alternate dispute resolution as may be agreed upon by
the parties (collectively referred to as the "Mediator"). The Mediator shall,
within thirty (30) days after its receipt of a party's request for assistance,
recommend to the parties, in writing, a procedure for non-binding mediation
("Mediation") for resolving such matter. The Mediator's recommendation shall
also set forth rules for the recommended process including without limitation:
(i) a schedule for the exchange of documents and short narrative statements
summarizing each party's position on the matter; (ii) if appropriate in the
Mediator's view, an expedited discovery schedule; (iii) the format and location
of the Mediation; and (iv) the time period in which the Mediation is to be
completed. The Mediator shall conduct the Mediation.
(d) At the conclusion of the Mediation, the representatives
shall meet and attempt to resolve the matter. If the matter cannot be resolved
within such period as the Mediator deems reasonable (but not later than ninety
(90) days after the Mediator has issued its procedural recommendation for the
Mediation), the Mediator shall (upon request of either party) certify to the
parties that the matter is incapable of resolution through the Mediation process
and the matter shall, thereafter, promptly be submitted to and settled by
arbitration in accordance with the Commercial Arbitration Rules, then in effect,
of the American Arbitration Association ("AAA"), except to the extent modified
herein. The arbitration shall be held in Ohio. Judgment on the award rendered
may be entered in any court having jurisdiction thereof.
(e) Each party shall within thirty (30) days of receipt of
notice that the matter has been referred to arbitration, appoint one arbitrator
and, within thirty (30) days of the appointment of the last of such two
arbitrators, the two arbitrators shall appoint a third arbitrator. If either
party or the two arbitrators fail to timely appoint an arbitrator, the said
arbitrator shall be appointed by AAA. The arbitrators shall not be empowered to
award punitive or exemplary damages.
(f) Unless otherwise determined by the arbitration panel, the
parties shall bear their respective costs incurred in connection with the
procedures described in this Section, except that the parties shall share
equally the fees and expenses of any Mediation or arbitration.
(g) Notwithstanding any other provision of this Agreement,
each party shall still be entitled to access the courts to obtain appropriate
injunctive relief.
(h) During the pendency of any dispute resolution procedure
pursuant to this Section, the effectiveness of any notice of termination given
pursuant to this Agreement shall be suspended.
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 ASSIGNMENT. Neither Cargill nor TAI may assign this Agreement
without the prior written consent of the other party.
15.2 WAIVER. Failure by either party at any time to require performance
by the other party or to claim a breach of any provision of this Agreement will
not be construed as a waiver of any right accruing hereunder, nor will it affect
any subsequent breach or the effectiveness of this Agreement or any part hereof,
or prejudice either party as regards any subsequent action. A waiver of any
right accruing to either party pursuant to this Agreement shall not be effective
unless given in writing.
15.3 NOTICES. Whenever notice is required by the terms hereof, it shall
be given in writing by delivery in person, by recognized overnight delivery
service, or by certified or registered mail addressed to the other party at the
following address or such other address as a party shall designate by
appropriate notice:
If to Cargill: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇
With a copy to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: CGD Attorney
If to TAI: The Andersons, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
` ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇
With a copy to: The Andersons, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
` ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
If notice is given by mail, it shall be effective three (3) days after mailing.
15.4 CONSTRUCTION OF TERMS OF AGREEMENT; MODIFICATION. The language in
all parts of this Agreement shall be constructed as a whole according to its
fair meaning and not strictly for or against any party hereto. Headings in this
Agreement are for convenience only and are not construed as a part of this
Agreement or in any defining, limiting or amplifying the provisions hereof. This
Agreement contains the entire agreement, and supersedes and replaces any prior
agreements (either written or oral), between the parties with respect to the
subject matter hereof and shall not be modified in any manner except by an
instrument in writing executed by the parties hereto. In the event any term,
covenant or condition herein contained is held to be invalid or void by
any court of competent jurisdiction, the invalidity of any such term, covenant
or condition shall in no way affect any other term, covenant or condition herein
contained.
15.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of each of the parties hereto; provided, however, that
this Agreement shall not be assigned, transferred or sold by either party
without the prior written consent.
15.6 COMPLIANCE WITH LAWS. Cargill and TAI each agrees to perform its
obligations under this Agreement in material compliance with all applicable
laws, rules, regulations, orders and decrees of the United States and the State
of Ohio.
15.7 NO THIRD PARTY BENEFICIARY. No person or entity shall be deemed to
be a third party beneficiary of this Agreement and nothing expressed or implied
in this Agreement shall be deemed to confer upon any person or entity, or any
heir, successor, assign or legal representative thereof, any rights or remedies
of any nature or kind whatsoever, including without limitation any right to
contract or any right to employment or continued employment.
15.8 GOVERNING LAW. This Agreement is to be governed by, and construed
in accordance with, the laws of the State of Ohio, without reference to its
conflicts of law rules.
15.9 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ and The Andersons, Inc. have
executed this Agreement effective the day and year first above written.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ THE ANDERSONS, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇ By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its: Vice President, Grain Division Its: President, Agriculture Group
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