ROYSTER-CLARK INC
10-K, 2000-04-19
MISCELLANEOUS NONDURABLE GOODS
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<PAGE>

    As filed with the Securities and Exchange Commission on April 19, 2000

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                ---------------
                                   FORM 10-K

                 FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
          SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

                  For the Fiscal Year Ended December 31, 1999

                                      or

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

                 For the Transition Period from       to

                       Commission File Number: 333-81235

                                ---------------
                              ROYSTER-CLARK, INC.
            (Exact name of registrant as specified in its charter)

        Delaware                     2875                     76-0329525
    (State or other      (Primary Standard Industrial      (I.R.S.Employer
      jurisdiction        Classification Code Number)    Identification No.)
  of incorporation or
     organization)

                                ---------------

                         600 Fifth Avenue--25th Floor
                           New York, New York 10020
                                (212) 332-2965
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                                ---------------

                            Francis P. Jenkins, Jr.
               Chairman of the Board and Chief Executive Officer
                              Royster-Clark, Inc.
                         600 Fifth Avenue--25th Floor
                           New York, New York 10020
                                (212) 332-2965
(Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                ---------------

                                With Copies to:
                           Peter A. Basilevsky, Esq.
                     Satterlee Stephens Burke & Burke LLP
                          230 Park Avenue, Suite 1130
                         New York, New York 10169-0079
                                (212) 818-9200

                                ---------------

                SPECIAL FINANCIAL REPORT PURSUANT TO RULE 15d-2

  In accordance with the provisions of Rule 15d-2(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), this Annual Report on
Form 10-K only contains audited financial statements for the fiscal year ended
December 31, 1999 and an associated Management's Discussion and Analysis of
Financial Condition and Results of Operations

                              Title of Each Class

                     10 1/4% First Mortgage Notes Due 2009

  Securities to be registered pursuant to Section 12(b) of the Exchange Act:
                                     None

  Securities to be registered pursuant to Section 12(g) of the Exchange Act:
                                     None

                                ---------------

  Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [_]   No [X] Initial filing

  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

                                Not Applicable

  State the aggregate market value of the voting and non-voting common equity
held by non-affiliates of the Registrant. The aggregate market value shall be
computed by reference to the price at which the common equity was sold, or the
average bid and asked prices of such common equity, as of a specified date
within 60 days prior to the date of filing. (See definition of affiliate in
Rule 12b-2 of the Exchange Act.)

                                Not Applicable

  Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.

                                Not Applicable

                      DOCUMENTS INCORPORATED BY REFERENCE

                                     None

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

                              ROYSTER-CLARK, INC.

                                    PART II

  THIS SPECIAL REPORT ON FORM 10-K INCLUDES "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED (THE "EXCHANGE ACT"). ALL STATEMENTS OTHER THAN STATEMENTS OF
HISTORICAL FACT INCLUDED IN THIS SPECIAL REPORT, INCLUDING, WITHOUT
LIMITATION, THOSE REGARDING THE COMPANY'S FINANCIAL POSITION, BUSINESS,
MARKETING AND PRODUCT INTRODUCTION AND DEVELOPMENT PLANS AND OBJECTIVES OF
MANAGEMENT FOR FUTURE OPERATIONS, ARE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE
COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS
WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS ARE DISCLOSED
UNDER "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS" INCLUDING THE SECTION ENTITLED "FORWARD-LOOKING STATEMENTS" SET
FORTH THEREIN AND ELSEWHERE IN THE SPECIAL REPORT.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

(Dollars in Thousands)

General

  Royster-Clark, Inc. (together with its subsidiaries, the "Company" or
"Royster-Clark") is a retail and wholesale distributor of mixed fertilizer,
seed, crop protection products and agronomic services to farmers, primarily in
the East, South and Midwest. The Company's operations consist of retail farm
centers, granulation, blending and seed processing plants, and an integrated
network of storage and distribution terminals and warehouses. In addition, the
Company operates two nitrogen manufacturing plants that supply the retail and
wholesale distribution businesses with some of the nitrogen fertilizer
products. Our business is affected by a number of factors, including weather
conditions and prevailing prices for fertilizer and other crop production
inputs.

  Weather conditions can significantly impact our results of operations.
Adverse weather conditions during the planting season may force farmers to
either delay or abandon their planting, which may lead to lower use of
fertilizer, seed and crop protection products. During 1999, weather conditions
were extremely poor due to drought in several of our operating areas, followed
by unusually destructive flooding in North Carolina brought about by
hurricanes Dennis and Floyd.

  Another factor affecting our business is the price for fertilizers. We
purchase nitrogen materials, phosphates, and potash and resell these nutrients
in either their original form or in the form of multi-nutrient fertilizers.
Prices for phosphates have recently experienced some price volatility while
potash has been relatively stable over the past several years. Nitrogen
fertilizers, on the other hand, have exhibited significant volatility in which
prices tend to follow cycles driven by steadily growing demand not matched by
immediate increases in supply due to the scale of investment required. In
1995, nitrogen prices reached a peak and have been steadily declining since.
During 1999, nitrogen prices reached their lowest levels in over ten years.
The decline in nitrogen prices is primarily the result of capacity additions,
a lack of demand from China, the largest consumer of nitrogen fertilizer and
economic uncertainty associated with production in the countries comprising
the former Soviet Union, as many producers are selling at prices below the
current market in order to obtain hard currency. Since most of the fertilizer
products that we sell include some nitrogen, our net sales are impacted by the
prevailing market price of nitrogen fertilizer. We sell most of our fertilizer
products based on a margin above raw materials input prices. As a result, as
market prices decline in response to prevailing global pricing conditions, the
gross profit margin

                                       1
<PAGE>

we realize on each ton sold declines. In addition, the level of nitrogen
prices directly impacts the profitability of our two nitrogen-manufacturing
plants.

  During 1999, we completed the acquisition and integration of the operations
of Royster-Clark and IMC AgriBusiness, Inc. and subsidiaries, Hutson's AG
Service, Inc. and IMC Nitrogen Company, which were acquired from IMC Global,
Inc. on April 22, 1999 with an effective date of April 1, 1999. These three
entities are collectively referred to as "AgriBusiness". Our management has
implemented strategies that have proven successful in the past, such as the
use of teams to organize field sales and an incentive structure based on
return on assets.

  We are in the process of finalizing insurance claims arising from the damage
done to our business in the Southeast, especially in North Carolina, as a
result of the unprecedented flooding triggered by hurricanes Dennis and Floyd.
We believe that our direct losses are adequately covered by insurance and that
by the spring planting season activity will have returned to normal. However,
we cannot be certain that there will not be material adverse consequences
arising from this catastrophe.

Acquisitions

  During the first quarter of 2000, the Company completed a series of small
acquisitions mostly consisting of several retail farm supply centers and
terminals for approximately $33.1 million in cash. These acquisitions will be
accounted for using the purchase method of accounting. One acquisition
included 13 retail farm supply centers and one terminal in southeastern
Virginia and northeastern North Carolina. Two additional acquisitions
including 11 retail farm supply centers, a grain operation and a warehouse for
seed and crop protection products concentrated in Kentucky and Tennessee and
three retail farm supply centers in Iowa and Minnesota. We believe these
acquisitions should strengthen and expand our position in local market areas
where we do not have a strong presence, and should provide opportunities for
cost savings while requiring little or no incremental administrative staff.

Results of Operations

  The following table provides information regarding Royster-Clark's statement
of operations as a percentage of net sales. The nine months ended December 31,
1999 represent the operations of Royster-Clark subsequent to the acquisition
of its stock by Royster-Clark Group, Inc. (Royster-Clark Group) and includes
post acquisition operations of AgriBusiness. Both transactions had effective
dates of April 1, 1999. The years ended December 31, 1998 and 1997 represent
the operations of Royster-Clark prior to the acquisition by Royster-Clark
Group.

<TABLE>
<CAPTION>
                                                                                       Successor            Predecessor
                                                                                   ----------------- --------------------------
                                                                                   Nine Months Ended Years Ended December 31,
                                                                                     December 31,    --------------------------
                                                                                         1999            1998          1997
                                                                                   ----------------- ------------  ------------
   <S>                                                                             <C>               <C>           <C>
   Net sales......................................................................       100.0%            100.00%       100.00%
   Cost of sales..................................................................        79.8               84.9          84.6
                                                                                         -----       ------------  ------------
   Gross profit...................................................................        20.2               15.1          15.4
   Selling, general and administrative expenses...................................        15.4               11.2          10.2
                                                                                         -----       ------------  ------------
   Operating income...............................................................         4.8                3.9           5.2
   Interest expense...............................................................         3.2                2.5           2.1
                                                                                         -----       ------------  ------------
   Income before income taxes.....................................................         1.6                1.4           3.1
   Income tax expense.............................................................         0.7                0.6           1.2
                                                                                         -----       ------------  ------------
   Net income.....................................................................         0.9                0.8           1.9
                                                                                         =====       ============  ============
</TABLE>

                                       2
<PAGE>

 Nine Months Ended December 31, 1999 Compared to Year Ended December 31, 1998

  Net sales. Royster-Clark's net sales were $715.2 million for 1999 compared
to $218.7 million for 1998, an increase of $496.5 million, or 227.0%. Net
sales increased due to the contribution from the operations of AgriBusiness,
which was acquired effective April 1, 1999, and Lebanon, which was acquired in
December 1998. Partially offsetting this increase was lower sales of nitrogen
products due to price deflation of approximately 16% versus 1998, resulting
from production over capacity in the industry and low grain commodity prices.
Sales of granulated mixed goods also declined due to reduced tobacco acreage
resulting from tobacco quota cutbacks announced by the government and low
commodity prices as farmers attempted to save on their production costs by
switching to lower price blended mixed goods.

  Gross profit. Gross profit was $144.2 million for 1999 compared to $33.0
million for 1998, an increase of $111.2 million, or 337.0%, primarily due to
higher sales attributable to the acquired businesses described above and
higher gross margins from certain product groups discussed below. Gross
margins were 20.2% for 1999 compared to 15.1% for 1998. Higher gross margin
predominantly resulted from the change in overall product sales mix related to
the AgriBusiness purchase. Sales of product from AgriBusiness locations have a
higher proportion of fertilizer, carrying higher gross margin percentages,
versus lower margin percentages for seed and crop protection products. Higher
gross margin rates also resulted from the firming of prices of certain
fertilizer materials.

  Selling, general and administrative expenses. Selling, general and
administrative expenses were $109.9 million for 1999 compared to $24.5 million
for 1998, an increase of $85.4 million, or 348.6%, primarily due to the
acquisitions described above. Higher selling, general and administrative
expenses as a percent of net sales resulted from higher labor and equipment
costs of spreading and application equipment used in the Midwest to generate
service income.

  Operating income. Operating income was $34.3 million for 1999 compared to
$8.5 million for 1998, an increase of $25.8 million, or 303.5%, as the result
of higher gross profit partially offset by higher operating expenses.
Operating margins were 4.8% for 1999 compared to 3.9% for 1998.

  Interest expense. Interest expense was $23.2 million for 1999 compared to
$5.5 million for 1998, an increase of $17.7 million, or 321.8%, primarily due
to interest on borrowings against our Senior Secured Credit Facility and
interest associated with the issuance of $200 million of First Mortgage Notes
in conjunction with the acquisition of Agribusiness.

  Income tax expense. Income tax expense was $4.6 million for 1999 compared to
$1.2 million for 1998, an increase of $3.4 million attributable to the
increase in income before taxes in 1999. The effective tax rate in 1999 was
40.8% compared to 40.0% in 1998 due to nondeductible goodwill generated in
conjunction with the acquisition of Royster-Clark by Royster-Clark Group.

  Net income. Net income was $6.6 million for 1999 compared to $1.8 million
for 1998, an increase of $4.8 million or 266.7%, due to the fluctuations noted
above.

 Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

  Net sales. Royster-Clark's net sales were $218.7 million for 1998 compared
to $227.6 million for 1997, a decrease of $8.9 million, or 3.9%. Fertilizer
sales declined $9.0 million, or 7.6%, primarily because of decreased sales of
nitrogen solutions driven by lower prices. Fertilizer volumes increased due to
the full-year contribution from the operations of Weaver Fertilizer by
approximately $6.0 million, which was acquired in September 1997, offset by
wet field conditions in most of Royster-Clark's markets during the spring
planting season in 1998. Sales of crop protection products decreased $3.1
million as the result of lower prices, while seed sales increased $2.0
million.


                                       3
<PAGE>

  Gross profit. Gross profit was $33.0 million for 1998 compared to $35.0
million for 1997, a decline of $2.0 million, or 5.7%, due primarily to lower
sales. Gross margins were 15.1% for 1998 compared to 15.4% for 1997.

  Selling, general and administrative expenses. Selling, general and
administrative expenses were $24.5 million for 1998 compared to $23.2 million
for 1997, an increase of $1.3 million, or 5.6%, primarily due to the addition
of the Weaver granulation plant which added $1.6 million in additional
expenses in 1998 compared to 1997.

  Operating income. Operating income was $8.5 million for 1998 compared to
$11.8 million for 1997, a decline of $3.3 million, or 28.0%, as the result of
lower gross profit and higher operating expenses. Operating margins were 3.9%
for 1998 compared to 5.2% for 1997.

  Interest expense. Interest expense was $5.5 million for 1998 compared to
$4.7 million for 1997, an increase of $0.8 million, or 17.0%, primarily due to
increased bank revolver balances as the result of slower inventory turns and
collections from poor market conditions in 1998.

  Income tax expense. Income tax expense was $1.2 million for 1998 compared to
$2.8 million for 1997, a decline of $1.6 million attributable to the decline
in income before taxes in 1998. The effective tax rate in 1998 was 40.0%
compared to 39.1% in 1997.

  Net income. Net income was $1.8 million for 1998 compared to $4.3 million
for 1997, a decline of $2.5 million, or 58.1%.

Environmental Matters

  At December 31, 1999, we had accruals of $2,917 for future costs associated
with remediation of certain environmental matters. Accruals of $335 were
recorded in conjunction with the 1998 acquisition of Lebanon, by Royster-Clark
in 1998 and $2,582 relates to accruals recorded in conjunction with the
AgriBusiness acquisition. Costs charged against these accruals for the nine
months ended December 31, 1999 were not significant.

  Environmental remediation projects related to the cleanup of regulated
substances are in the progress at approximately forty sites. The cleanup
efforts primarily involve remediation of excess nitrates, phosphorous and
pesticides in soils and/or groundwater at these sites, or costs to be incurred
in the cleanup and monitoring of old underground storage tanks. Certain of
these remediation efforts are of a long-term nature.

Merger-Related Accruals

  In connection with the acquisitions, Royster-Clark recorded accruals of
$9,461 for future costs to be incurred related to the closure of certain
facilities, severance and termination benefits, and relocation costs of
employees. These costs represent management's estimates of the ultimate
obligations associated with executing its plans for the combined entity. In
accordance with management's plans, the closed locations and the individuals
to be terminated were specifically identified.

  The following table shows the merger-related accruals and the remaining
liability as of December 31, 1999:

<TABLE>
<CAPTION>
                                       Costs incurred
                         Balance as of    through                  Balance as of
                           April 1,     December 31,  Revisions to December 31,
                             1999           1999       estimates       1999
                         ------------- -------------- ------------ -------------
<S>                      <C>           <C>            <C>          <C>
Costs to exit certain
 facilities.............    $1,197        $  (491)       $  177       $  883
Severance and
 termination related
 accruals...............     7,167         (4,427)        1,391        4,131
Relocation costs........     1,097           (840)         (157)         100
                            ------        -------        ------       ------
  Total merger-related
   costs................    $9,461        $(5,758)       $1,411       $5,114
                            ======        =======        ======       ======
</TABLE>


                                       4
<PAGE>

  The costs to exit certain facilities represent the costs to close an office
building which was redundant with an existing facility and eleven retail
locations that were evaluated to be unprofitable due to their proximity to
existing Royster-Clark locations. All facilities identified were closed as of
September 30, 1999. A change in estimate during the year resulted from
additional costs associated with the closing of the specified facilities
partially offset by the decision to continue to operate a production plant
scheduled to be closed and disposed of as a terminal and storage facility.

  After the initial estimate of merger-related accruals, 102 more employees
were identified for termination because their positions were redundant with
existing personnel. The change in estimate represents the additional severance
accrued for those employees. The additional positions to be eliminated include
positions in sales, administration and production. As of December 31, 1999, a
total of 188 employees were included in the severance and termination plan, of
which 185 had been terminated. The remaining employees will be terminated by
June 2000. The severance paid to date represents partial payments to the 185
individuals terminated to date. Severance obligations are being paid out over
periods ranging from 1 to 36 months. Management does not expect the
termination of employees or closure of facilities to have a material impact on
other areas of operations.

  The relocation costs paid represent payments to 22 individuals in the third
and fourth quarters for expenses incurred while relocating. These expenses
included moving, house hunting and travel related costs. The remaining
relocation costs are expected to be paid out over the next year.

Liquidity and Capital Resources

  Our primary capital requirements are for working capital, debt service,
capital expenditures and possible acquisitions. For day-to-day liquidity
requirements, we operate with a $275.0 million senior secured credit facility
with a consortium of banks. At December 31, 1999, the collateral in hand under
this facility supported a borrowing availability of $124.2 million, from which
we had drawn $92.5 million. This facility includes up to $10.0 million for
letters of credit. This facility contains financial and operational covenants
and other restrictions with which we must comply, including a requirement to
maintain financial ratios and limitations on our ability to incur additional
indebtedness. As of December 31, 1999, we were not in compliance with the
interest coverage and leverage ratio covenants as set forth agreement
governing the senior secured credit facility. In February 2000, the consortium
of lenders agreed to waive the covenant violations as of December 31, 1999 and
amend the covenants for the quarterly measurement dates in 2000 and
thereafter. We believe that cash generated from operations and borrowings
available under the senior secured credit facility will be sufficient to meet
our capital needs in the foreseeable future.

  Capital expenditures were $17.0 million for the nine months ended December
31, 1999 compared with $2.1 million for the year ended December 31, 1998.
These capital expenditures were primarily for facilities improvements and
environmental improvement projects. We estimate that total capital
expenditures for 2000 will amount to approximately $19.6 million.

  Net cash provided by operating activities for the nine months ended December
31, 1999 was $94.4 million. The most significant component of cash flows
provided by operating activities was movement in operating assets and
liabilities due to the seasonality of our business. Net cash used in investing
activities amounted to $275.7 million, the majority of which is due to the
acquisition of AgriBusiness. Net cash provided by financing activities totaled
$186.0 million. Proceeds were received in the amount of $23.1 million from a
capital contribution by Royster-Clark Group, $200.0 million from the issuance
of the First Mortgage Notes and net borrowings of $93 million from the senior
secured credit facility. These additions were offset by a decrease in customer
deposits, refinancing of long-term debt and the payment of deferred financing
costs of $46.5 million, $67.8 million and $15.7 million respectively.

  Net working capital, excluding bank revolver and current debt maturities at
December 31, 1999 totaled $166.5 million versus $32.9 million at December 31,
1998, an increase of $133.6 million, or 406.1%. This increase resulted
primarily due to the acquisition of AgriBusiness. Increase in working capital
components

                                       5
<PAGE>

resulted from increases in receivables and inventories of $88.3 million and
$103.5 million, respectively, partially offset by increases in accounts
payable of $23.6 million, customer deposits of $25.5 million and accrued
expenses of $21.1 million. The increase in customer deposits relates primarily
to the addition of AgriBusiness, however, higher customer deposits have been
received due to the strengthening of nitrogen product prices. The increase in
accrued expenses relates primarily to accrued interest payable on the First
Mortgage Notes due semi-annually, accrued vacation accruals and medical
reserves recorded related to the purchase of Agribusiness, transaction and
restructuring costs.

Seasonality

  Our business is highly seasonal. Approximately 73% of the Company's sales
are made between March and July. As a result, our needs for working capital
financing vary widely throughout the year peaking with our sales in the second
quarter. Our inventories increase during the period from December through
March as we prepare for the spring planting season.

Market Risks Relating to Operations

  Our market risks relating to our operations result primarily from changes in
interest rates. The interest rates that we pay for borrowings under our credit
facility are based on the LIBOR rate of interest charged by our lender. Our
First Mortgage Notes bear interest at a fixed rate of 10.25%. This rate was
established upon the issuance of the notes in April 1999 and as a result, we
believe it approximates a market rate. Our customer deposits also bear
interest at a fixed rate, which is established on an annual basis at the
beginning of each farming season based on prevailing market rates for similar
programs in each of the regions in which we operate. The Company also engages
in certain commodity hedging activities with respect to its natural gas, grain
and seed purchases. Given the current economic climate, we believe that the
rates in force approximate market rates. We do not hold or issue derivative
financial instruments for trading purposes.

  The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. In June
1999, the FASB issued SFAS No. 137, Accounting for Derivative Instruments and
Hedging Activities--Deferral of the Effective Date of SFAS No. 133, an
Amendment of SFAS No. 133, which defers the effective date of SFAS No. 133 to
all fiscal quarters of fiscal years beginning after June 15, 2000. Management
is currently in the process of assessing the effect, if any, on the Company's
financial condition and results of operations of the adoption of SFAS No. 133.

Description of Other Indebtedness

  See footnotes 9 and 10 of the consolidated financial statements for
descriptions of the senior secured credit facility and First Mortgage Notes,
respectively.

Year 2000 Compliance

  Royster-Clark did not experience any disruption to its operations resulting
form the transition to year 2000. Royster-Clark completed its year 2000
readiness program ("Y2K Plan") in December 1999. Systems will continue to be
monitored throughout the upcoming year. The total cost of the Y2K Plan,
including internal labor as well as incremental costs such as consulting and
contract costs, was approximately $150. All expenditures by the Company
relating to the Y2K Plan were funded by cash flows from operations and
borrowings under the Company's senior secured credit facility and did not
materially impact other operating or investment plans. No material information
technology projects were deferred as a result of the implementation of the Y2K
Plan.

                                       6
<PAGE>

Impact of Deflation

  As set forth above, our nitrogen fertilizer business has been adversely
affected by price deflation in nitrogen products. In addition, net sales in
our remaining business have also been adversely affected by declining prices
in the past year as well. While price deflation has impacted dollar sales and
dollar margin, gross margin percentages for other products have not
experienced significant changes.

Forward-Looking Statements

  All statements regarding our and our subsidiaries' expected financial
position, business and financing plans are forward-looking statements. We have
based these forward-looking statements on our current expectations and
projections about future events. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot assure
you that the expectations will prove to have been correct. These forward-
looking statements are subject to risks, uncertainties and assumptions about
us, including, among other things, those relating to:

  .  conditions in and policies affecting the agriculture industry;

  .  weather;

  .  our high degree of leverage;

  .  our anticipated growth strategies, including future acquisitions;

  .  anticipated trends and conditions in our business, including changing
     prices and other trends in the market;

  .  our ability to integrate acquired entities and achieve synergies;

  .  our ability to continue to control costs and maintain quality; and

  .  our ability to compete.

  Readers are cautioned that other factors discussed in this report, although
not enumerated here, also could materially impact Royster-Clark's future
earnings.

                                       7
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   Index to Consolidated Financial Statements

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Independent Auditors' Report...............................................   9

Consolidated Balance Sheets................................................  10

Consolidated Statements of Income..........................................  11

Consolidated Statements of Stockholders' Equity............................  12

Consolidated Statements of Cash Flows......................................  13

Notes to Consolidated Financial Statements.................................  14
</TABLE>

                                       8
<PAGE>

                         INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Royster-Clark, Inc.:

  We have audited the accompanying consolidated balance sheets of Royster-
Clark, Inc. and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income, stockholders' equity and cash flows for the
nine months ended December 31, 1999 and each of the years in the two-year
period ended December 31, 1998. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Royster-
Clark, Inc. and subsidiaries as of December 31, 1999 and 1998, and the results
of their operations and their cash flows for the nine months ended December
31, 1999 and for each of the years in the two-year period ended December 31,
1998, in conformity with generally accepted accounting principles.

                                          /s/ KMPG LLP
April 12, 2000
Norfolk, Virginia


                                       9
<PAGE>

                      ROYSTER-CLARK, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                           December 31, 1999 and 1998
           (Dollars in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                                           Successor Predecessor
                                                                                                           --------- -----------
                                                                                                             1999       1998
                                                                                                           --------- -----------
<S>                                                                                                        <C>       <C>
                                             ASSETS (note 9)
Current assets:
  Cash...................................................................................................  $  4,670   $     42
  Trade accounts receivable, net of allowance for doubtful accounts of $7,032 and $1,800 at December 31,
   1999 and 1998, respectively (note 14).................................................................   114,466     26,130
  Inventories (note 5)...................................................................................   158,667     55,205
  Prepaid expenses.......................................................................................     1,148      2,720
  Refundable income taxes................................................................................     4,402        307
  Deferred income taxes (note 8).........................................................................     5,112        269
                                                                                                           --------   --------
    Total current assets.................................................................................   288,465     84,673
Property, plant and equipment, net (notes 6 and 10)......................................................   187,894     29,106
Goodwill, net of accumulated amortization of $880 and $1,132 at December 31, 1999 and 1998, respectively
 (note 4)................................................................................................    14,584      5,831
Deferred income taxes (note 8)...........................................................................    11,868        --
Deferred financing costs, net of accumulated amortization of $1,161......................................    14,516        --
Other assets, net........................................................................................     4,180        787
                                                                                                           --------   --------
                                                                                                           $521,507   $120,397
                                                                                                           ========   ========
                                  LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.......................................................................................  $ 47,693   $ 24,140
  Customer deposits (note 7).............................................................................    49,880     24,362
  Accrued expenses (note 4)..............................................................................    24,353      3,263
  Current installments of long-term debt (note 11).......................................................     2,705      2,182
                                                                                                           --------   --------
    Total current liabilities............................................................................   124,631     53,947
Senior secured credit facility (note 9)..................................................................    92,545        --
10 1/4% First Mortgage Notes due 2009 (note 10)..........................................................   200,000        --
Long-term debt, excluding current installments (notes 11)................................................     4,835     33,817
Deferred income taxes (note 8)...........................................................................       --       3,323
Other long-term liabilities (note 15)....................................................................     4,274        293
                                                                                                           --------   --------
    Total liabilities....................................................................................   426,285     91,380
                                                                                                           --------   --------
Cumulative redeemable preferred stock, Series B, $.01 par value, $1,000 liquidation value; 500,000 shares
 authorized, 12,000 shares issued and outstanding (note 4)...............................................       --      12,000
Common stock subject to ESOP put option..................................................................       --       1,864
Stockholders' equity (note 4):
  Common stock, $.01 par value; authorized 1,000,000 shares;
   120,497 shares issued and 116,975 outstanding at December 31, 1998....................................       --           1
  Common stock, no par value; authorized 350,000 shares;
   1 share issued and outstanding at December 31, 1999...................................................       --         --
  Additional paid-in capital.............................................................................    88,599     10,220
  Retained earnings......................................................................................     6,623      7,364
  Common stock subject to put option, 10,078 shares at $185 per share in 1998............................       --      (1,864)
                                                                                                           --------   --------
                                                                                                             95,222     15,721
  Less treasury stock, 3,522 common shares at December 31, 1998, at cost.................................       --        (568)
                                                                                                           --------   --------
    Total stockholders' equity...........................................................................    95,222     15,153
Commitments, contingencies and subsequent event (notes 4, 11, 12, 15, 16 and 19).........................
                                                                                                           --------   --------
                                                                                                           $521,507   $120,397
                                                                                                           ========   ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       10
<PAGE>

                      ROYSTER-CLARK, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME

 Nine Months Ended December 31, 1999 and Years Ended December 31, 1998 and 1997
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                       Successor            Predecessor
                                                                                   ----------------- -------------------------
                                                                                   Nine Months Ended Years Ended December 31,
                                                                                     December 31,    -------------------------
                                                                                         1999            1998         1997
                                                                                   ----------------- ------------ ------------
                                                                                       (note 1)
<S>                                                                                <C>               <C>          <C>
Net sales.........................................................................     $715,160      $    218,672 $    227,613
Cost of sales (notes 14 and 16)...................................................      570,939           185,646      192,617
                                                                                       --------      ------------ ------------
  Gross profit....................................................................      144,221            33,026       34,996
Selling, general and administrative expenses......................................      109,889            24,482       23,215
                                                                                       --------      ------------ ------------
  Operating income................................................................       34,332             8,544       11,781
Interest expense..................................................................       23,150             5,489        4,672
                                                                                       --------      ------------ ------------
  Income before income taxes......................................................       11,182             3,055        7,109
Income tax expense (note 8).......................................................        4,559             1,223        2,778
                                                                                       --------      ------------ ------------
  Net income......................................................................     $  6,623      $      1,832 $      4,331
                                                                                       ========      ============ ============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       11
<PAGE>

                      ROYSTER-CLARK, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

 Nine Months Ended December 31, 1999 and Years Ended December 31, 1998 and 1997
           (Dollars in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
                            Successor    Predecessor
                          Common Stock   Common Stock
                          ------------- --------------
                                                                             Common     Treasury
                             Issued         Issued     Additional            Stock        Stock           Total
                          ------------- --------------  paid-in   Retained subject to --------------  stockholders'
                          Shares Amount Shares  Amount  capital   earnings put option Shares  Amount     equity
                          ------ ------ ------- ------ ---------- -------- ---------- ------  ------  -------------
<S>                       <C>    <C>    <C>     <C>    <C>        <C>      <C>        <C>     <C>     <C>
Predecessor:
Balance at December 31,
 1996...................                117,293 $   1     9,804     3,601    (1,715)  (1,353) $(186)     11,505
Dividends declared--
 Series B preferred
 stock, $100 per share
 from January 1, 1997 to
 December 31, 1997......                    --    --        --     (1,200)      --       --     --       (1,200)
Exercise of stock
 options................                  3,194   --        414       --        --       --     --          414
Change in common stock
 subject to put option..                    --    --        --        --       (146)     --     --         (146)
Treasury stock--Purchase
 of terminated employee
 shares in the Employee
 Stock Ownership Plan...                    --    --        --        --        --      (967)  (159)       (159)
Net income for year
 ended December 31,
 1997...................                    --    --        --      4,331       --       --     --        4,331
                                        ------- -----    ------    ------    ------   ------  -----      ------
Balance at December 31,
 1997...................                120,487     1    10,218     6,732    (1,861)  (2,320)  (345)     14,745
Dividends declared--
 Series B preferred
 stock, $100 per share
 from January 1, 1998 to
 December 31, 1998......                    --    --        --     (1,200)      --       --     --       (1,200)
Exercise of stock
 options ...............                     10   --          2       --        --       --     --            2
Change in common stock
 subject to put option..                    --    --        --        --         (3)     --     --           (3)
Treasury stock--Purchase
 of terminated employee
 shares in the Employee
 Stock Ownership Plan...                    --    --        --        --        --    (1,202)  (223)       (223)
Net income for year
 ended December 31,
 1998...................                    --    --        --      1,832       --       --     --        1,832
                                        ------- -----    ------    ------    ------   ------  -----      ------
Balance at December 31,
 1998...................                120,497 $   1    10,220     7,364    (1,864)  (3,522) $(568)     15,153
                                        ======= =====    ======    ======    ======   ======  =====      ======
- -------------------------------------------------------------------------------------------------------------------
Successor:
Cash capital contributed
 by Royster-Clark
 Group..................     1    --        --    --     59,043       --        --       --     --       59,043
Capital contribution of
 Royster-Clark Group
 securities issued to
 predecessor
 stockholders in the
 acquisitions of the
 Company by Royster-
 Clark Group............   --     --        --    --     19,556       --        --       --     --       19,556
Capital contribution of
 junior subordinated
 notes from Royster-
 Clark Group used as
 consideration in the
 Agribusiness
 transaction............   --     --        --    --     10,000       --        --       --     --       10,000
Net income for the nine
 months ended December
 31, 1999...............   --     --        --    --        --      6,623       --       --     --        6,623
                           ---    ---   ------- -----    ------    ------    ------   ------  -----      ------
Balance at December 31,
 1999...................     1    --        --  $ --     88,599     6,623       --       --   $ --       95,222
                           ===    ===   ======= =====    ======    ======    ======   ======  =====      ======
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       12
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                          December 31, 1999 and 1998
                            (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                               Successor      Predecessor
                                                                                              ------------ ------------------
                                                                                              Nine Months     Years Ended
                                                                                                 Ended       December 31,
                                                                                              December 31, ------------------
                                                                                                  1999       1998      1997
                                                                                              ------------ --------  --------
                                                                                                (note 1)
<S>                                                                                           <C>          <C>       <C>
Cash flows from operating activities:
 Net income..................................................................................  $   6,623   $  1,832  $  4,331
 Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 Provision for doubtful accounts.............................................................      1,649        451       688
 Depreciation and amortization...............................................................     15,819      2,678     2,305
 Loss (gain) on sale of fixed assets.........................................................        326        (25)     (132)
 Deferred income tax expense (benefit).......................................................      4,559        370      (531)
 Changes in operating assets and liabilities increasing (decreasing) cash:
  Trade accounts receivable..................................................................      3,060      3,289    (2,633)
  Inventories................................................................................    142,948     (3,401)   (7,770)
  Prepaid expenses...........................................................................      3,294        (33)       (1)
  Income taxes receivable....................................................................     (4,402)      (307)      --
  Other assets...............................................................................     (2,250)        49      (567)
  Accounts payable...........................................................................    (74,257)     8,860    (1,500)
  Accrued expenses...........................................................................     (3,657)        76      (286)
  Income taxes payable.......................................................................        --        (384)     (743)
  Other long-term liabilities................................................................        666       (298)      258
                                                                                               ---------   --------  --------
   Total adjustments.........................................................................  $  87,755   $ 11,325  $(10,912)
                                                                                               ---------   --------  --------
   Net cash provided by (used in) operating activities.......................................  $  94,378   $ 13,157  $ (6,581)
                                                                                               ---------   --------  --------
Cash flows from investing activities:
 Proceeds from sale of property, plant and equipment.........................................  $     970   $    130  $    773
 Purchases of property, plant and equipment..................................................    (17,040)    (2,145)   (2,029)
 Acquisitions, net of cash acquired of $40...................................................   (259,676)   (24,517)     (810)
                                                                                               ---------   --------  --------
   Net cash used in investing activities.....................................................  $(275,746)  $(26,532) $ (2,066)
                                                                                               ---------   --------  --------
Cash flows from financing activities:
 Net borrowings on senior secured credit facility............................................  $  92,963   $  1,357  $ 10,567
 Proceeds from issuance of First Mortgage Notes..............................................    200,000
 Capital contribution by RCG.................................................................     23,088
 Long-term debt refinanced...................................................................    (67,750)
 Principal payments on long-term debt........................................................       (154)    (2,042)   (2,187)
 Proceeds from long-term debt................................................................        --      11,625       --
 Net increase (decrease) in customer deposits................................................    (46,474)     4,055     1,235
 Payment of deferred financing costs.........................................................    (15,677)      (291)      --
 Dividend payments...........................................................................        --      (1,095)   (1,223)
 Stock options exercised.....................................................................        --           2       414
 Payments to acquire treasury stock..........................................................        --        (223)     (159)
                                                                                               ---------   --------  --------
   Net cash provided by financing activities.................................................  $ 185,996   $ 13,388  $  8,647
                                                                                               ---------   --------  --------
Net increase in cash.........................................................................      4,628         13       --
Cash at beginning of year/period.............................................................         42         29        29
                                                                                               ---------   --------  --------
Cash at end of year/period...................................................................  $   4,670   $     42  $     29
                                                                                               =========   ========  ========
Supplemental disclosure of cash flow information:
 Cash paid during the year/period for interest...............................................  $  17,762   $  5,546  $  4,625
                                                                                               =========   ========  ========
 Cash paid during the year/period for income taxes...........................................  $   4,491   $  1,544  $  4,035
                                                                                               =========   ========  ========
</TABLE>

Supplemental disclosure of noncash investing and financing activities:

 As discussed in note 4 to the consolidated financial statements, in 1999 the
 Company completed an acquisition of the business unit of IMC Global known as
 IMC AgriBusiness, Inc. In conjunction with this transaction, the Company
 assumed liabilities of $183,537 and $10,000 of the purchase price was
 financed by an equity contribution from Royster Clark Group. Also in
 conjunction with the acquistion of Royster-Clark, Inc by Royster Clark Group,
 $152,903 of liabilities were assumed.

 As discussed in note 4 to the consolidated financial statements, in 1998 the
 Company completed an acquisition of the division of Lebanon Chemical
 Corporation known as Lebanon Agricorp. In conjunction with this transaction,
 the Company assumed accrued liabilities of $677.

 In 1997 the Company purchased certain assets of Weaver Fertilizer Company
 (Weaver). Part of the purchase price was settled with a note payable to
 Weaver of $1,890.

         See accompanying notes to consolidated financial statements.


                                      13
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)

(1) Description of Business and Basis of Presentation

  Royster-Clark, Inc. (herein referred to as Royster-Clark, Inc. or the
Company) is a retail and wholesale distributor of mixed fertilizer, fertilizer
materials, seed, crop protection products and agronomic services to farmers,
primarily in the East, South and Midwest. The Company's operations consist of
retail farmer centers, granulation, blending and seed processing plants, and
an integrated network of storage and distribution terminals and warehouses. In
addition, the Company operates two nitrogen manufacturing plants that supply
the retail and wholesale distribution businesses with nitrogen fertilizer
products.

  As discussed further in notes 3 and 4, effective April 1, 1999, Royster-
Clark Group, Inc. (herein referred to as RCG) a newly formed holding company
capitalized with approximately $59,000 in cash, acquired all of the then
outstanding stock of Royster-Clark, Inc. As a result, the accompanying audited
consolidated financial statements of Royster-Clark, Inc. and subsidiaries as
of and for the nine months ended December 31, 1999 reflect the acquisition by
RCG as of April 1, 1999.

  These financial statements also reflect the Company's acquisitions of IMC
AgriBusiness, Inc. and subsidiaries (now a wholly owned subsidiary known as
Royster-Clark AgriBusiness, Inc.), Hutson's AG Service, Inc. (a wholly owned
subsidiary until September 29, 1999, known as Royster-Clark Hutson, Inc. that
was merged into Royster-Clark AgriBusiness, Inc. on September 29, 1999) and
IMC Nitrogen Company (now a wholly owned subsidiary known as Royster-Clark
Nitrogen, Inc.) (These three entities are collectively referred to as
AgriBusiness) from IMC Global, Inc. which was consummated on April 22, 1999
with an effective date of April 1, 1999.

  The accompanying audited consolidated financial statements for the years
ended December 31, 1998 and 1997 represent the results of operations and cash
flows of the predecessor company prior to acquisition by RCG, and are not
presented on a basis comparable with the audited consolidated financial
statements as of and for the nine months ended December 31, 1999.

(2) Summary of Significant Accounting Policies

 (a) Consolidation

  The consolidated financial statements include the accounts of Royster-Clark,
Inc. and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

 (b) Cash

  The Company transmits, on a daily basis, substantially all available cash to
pay balances related to the Senior Secured Credit Facility (note 9). Cash on
the balance sheets represents funds which are deposited in the Company's
accounts but are not available to transmit to the administrator of the Senior
Secured Credit Facility.

 (c) Concentration of Credit Risk

  The Company sells its products and services to farmers and retail dealers
primarily in the midwestern and southeastern United States. Approximately 73%
of the Company's sales are made between March and July. No single customer or
group of affiliated customers accounted for more than 10% of the Company's net
sales.

  In addition to the concentration of sales between March and July, the
Company is impacted by a number of other factors, including weather conditions
and prevailing prices for fertilizer and other crop production inputs.

                                      14
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


  Weather conditions can significantly impact the results of operations.
Adverse weather conditions during the planting season may force farmers to
either delay or abandon their planting, which may lead to lower use of
fertilizer, seed and crop protection products.

 (d) Trade Accounts Receivable

  Trade accounts receivables include vendor rebates on chemical and seed
products under programs with suppliers. Vendor rebates are accrued when
earned, which is typically at the time of sale of the related product.

 (e) Inventories

  Inventories are stated at the lower of cost or market, with cost being
determined by the weighted-average cost method, in which a first-in, first-out
flow is assumed. Costs directly associated with warehousing and distribution
are capitalized into crop protection and seed inventories. Total warehousing
and distribution costs capitalized into inventories amounted to $1,242 and
$680 at December 31, 1999 and 1998, respectively.

 (f) Derivatives

  The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statements establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. In June
1999, the FASB issued SFAS No. 137, Accounting for Derivative Instruments and
Hedging Activities--Deferral of the Effective Date of SFAS No. 133, an
Amendment of SFAS No. 133, which defers the effective date of SFAS No. 133 to
all fiscal quarters of fiscal years beginning after June 15, 2000. Management
is in the process of determining the impact, if any, that the adoption of SFAS
No. 133 will have on the results of operations or the financial position of
the Company.

 (g) Property, Plant and Equipment

  Property, plant and equipment are stated at cost. All assets are depreciated
using the straight-line method using the following estimated useful lives:

<TABLE>
<CAPTION>
                                                    Years of life Years of life
                                                       if new        if used
                                                    ------------- -------------
     <S>                                            <C>           <C>
     Buildings and land improvements...............     7-20          7-20
     Machinery and equipment.......................      10           7-10
     Furniture, fixtures and office equipment......     3-10           3-5
</TABLE>

 (h) Goodwill

  Goodwill represents the excess purchase price over the estimated fair value
at the date of acquisition of the net assets acquired and is being amortized
using the straight-line method over a period of 15 years.

 (i) Deferred Financing Costs

  Deferred financing costs are related to the acquisitions discussed in notes
3 and 4. These costs are being amortized over the term of the debt facility.

                                      15
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


 (j) Other Assets

  Other assets are primarily comprised of capitalized software costs and non-
compete agreements. The capitalized software costs are being amortized on a
straight-line basis over 5 years, and the non-compete agreements are being
amortized on a straight-line basis over their estimated useful lives, which
range from 1 to 5 years.

 (k) Income Taxes

  The Company uses the asset and liability method of accounting for income
taxes. Deferred income tax assets and liabilities are recognized for the
estimated future tax consequences of "temporary differences" by applying
enacted statutory tax rates applicable to future years to differences between
the financial statement carrying amounts and the tax bases of existing assets
and liabilities. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment
date.

 (l) Stock-Based Employee Compensation

  SFAS No. 123, Accounting for Stock-Based Compensation, encourages, but does
not require, companies to record compensation cost for stock-based employee
compensation plans at fair value. The Company has chosen to continue to
account for stock-based compensation using the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees, and provide the pro forma disclosure provisions of SFAS
123. Accordingly, compensation cost for stock options is measured as the
excess, if any, of the estimated fair value of the Company's stock at the date
of the grant over the amount an employee must pay to acquire the stock.

 (m) Impairment of Long-Lived Assets

  The Company reviews long-lived assets and certain identifiable intangible
assets for impairment when events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Estimated future
undiscounted cash flows associated with the asset are compared to the asset's
carrying amount to determine if a write-down to market or discounted cash flow
value is required. Assets and certain identifiable intangibles to be disposed
of are reported at the lower of carrying amount or fair value less costs to
sell.

 (n) Accrued Environmental Costs

  The Company's activities include the manufacture, blending and sale of crop
nutrient and crop protection products. These operations are subject to
extensive federal, state and local environmental regulations, including laws
related to air and water quality, management of hazardous and solid wastes and
management and handling of raw materials and crop protection products.
Expenditures that relate to an existing condition caused by past operations of
the Company or prior owners, and which do not contribute to current or future
revenue generation, are charged to operations.

 (o) Use of Estimates

  Management of the Company has made a number of estimates and assumptions
that affect the reported amount of assets and liabilities at the date of the
financial statements, the reported amounts of revenues and expenses during the
reported period and the disclosure of contingent assets and liabilities to
prepare these financial statements in conformity with generally accepted
accounting principles. Actual results could differ from these estimates.

                                      16
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


 (p) Reclassifications

  Certain reclassifications have been made to the financial statements for the
years ended December 31, 1998 and 1997 in order to conform to the financial
statement presentation as of and for the nine months ended December 31, 1999.

(3) Capitalization of RCG

  RCG was formed for the purpose of acquiring all of the outstanding stock of
Royster-Clark, Inc. and to enable the Company to purchase AgriBusiness. RCG is
a holding company with no operations independent of those of Royster-Clark,
Inc. Although Royster-Clark, Inc. is not legally liable for the obligations of
RCG, the ability of RCG to meet its obligations is dependent on Royster-Clark,
Inc.'s ability to pay dividends to RCG in an amount sufficient to service
these obligations, including dividend payments on RCG's preferred stock, and
principal and interest payments on RCG's junior subordinated notes. The
following paragraphs summarize the terms of RCG's outstanding securities.

  RCG has issued $20,000 of junior subordinated notes, $10,000 of which were
issued to IMC Global, Inc. (herein referred to as IMC Global) in conjunction
with the acquisition of AgriBusiness. The notes bear interest at an annual
rate of 12%. Through maturity, RCG may elect to pay interest due in the form
of additional junior subordinated notes. The notes, including additional notes
issued in lieu of interest, are due April 2010. Of these notes, $10,000, which
represents the notes issued to IMC Global, are exchangeable after three years
for unregistered notes with rights similar to those of the Royster-Clark, Inc.
10 1/4% First Mortgage Notes due 2009 (herein referred to as the First
Mortgage Notes), subject to compliance with the terms of the debt obligations
of Royster-Clark, Inc. The terms of the indenture and the other debt
obligations currently prohibit such exchange and are expected to prohibit this
exchange for the foreseeable future.

  RCG has also issued 60,714 shares of 12% Series A Senior Cumulative
Compounding Preferred Stock (herein referred to as the Senior Preferred
Stock), 13,264 of which were issued to former stockholders of Royster-Clark,
Inc. in conjunction with the acquisition of Royster-Clark, Inc., with a $0.01
per share par value and a liquidation value of $1,000 per share. Dividends are
payable annually at the rate of $120 per share per annum when, as and if
declared by the Board of Directors. Additional dividends accrue on unpaid
dividends. In the event that RCG shall be liquidated, dissolved or wound up,
whether voluntarily or involuntarily, after all creditors of RCG shall have
been paid in full, the holders of the Senior Preferred Stock shall be entitled
to receive an amount equal to $1,000 in cash per share plus an amount equal to
full cumulative dividends accrued and unpaid before any proceeds are paid to
the holders of the Series B Junior Preferred Stock (herein referred to as the
Junior Preferred Stock) or the RCG common stock.

  RCG has issued 7,487 shares of Junior Preferred Stock, all of which were
issued to former stockholders of Royster-Clark, Inc. in conjunction with the
acquisition of Royster-Clark, Inc., with a $0.01 per share par value and a
liquidation value of $1,000 per share. The holders of the Junior Preferred
Stock shall not be entitled to receive any dividends until 2004. Thereafter,
the holders of the Junior Preferred Stock shall be entitled to receive, when,
as and if declared by the Board of Directors, cash dividends at the rate of
$120 per share. Dividends, when entitled, shall be cumulative. In the event
that RCG shall be liquidated, dissolved or wound up, whether voluntarily or
involuntarily, after all creditors of RCG have been paid in full and the
holders of any Senior Preferred Stock have been paid, the holders of the
Junior Preferred Stock shall be entitled to receive an amount equal to $1,000
in cash per share plus an amount equal to cumulative dividends accrued and
unpaid before any proceeds are paid to the holders of the RCG common stock.

                                      17
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)

  RCG has issued a total of 768,426 shares of Class A and 1,191,600 of Class B
no par common stock, of which 368,426 of the Class A common stock was issued
to former stockholders of Royster-Clark, Inc. in conjunction with the
acquisition of Royster-Clark, Inc. The common stock was issued in two series,
Class A and Class B, with 2,000,000 shares of each class authorized. The
rights and privileges are identical between the two classes except with
regards to voting rights. The holders of Class A common stock have the general
right to vote for all purposes while the holders of Class B common stock have
no voting rights.

(4) Acquisitions

  The following paragraphs describe the acquisition of Royster-Clark, Inc. by
RCG and the acquisition of AgriBusiness by Royster-Clark, Inc., both
transactions having an effective date of April 1, 1999 and other acquisitions
effected during the year ended December 31, 1998. The acquisitions made in
1998 by Royster-Clark, Inc. are also described.

 (a) Acquisition of Royster-Clark Inc. by RCG

  RCG acquired all of the outstanding stock of Royster-Clark, Inc. for
$55,511, including $1,433 in direct costs of the acquisition, consisting of
$35,955 in cash; 13,264 shares of Senior Preferred Stock valued at $13,264;
7,487 shares of Junior Preferred Stock valued at $4,535, 368,426 shares of
Common Stock valued at $368 and 7,284 options to purchase additional RCG
securities valued at $1,389. Each option entitles the holder to purchase 5.5
shares of Common Stock, 2.0 shares of Senior Preferred Stock and 1.1 shares of
Junior Preferred Stock. The acquisition was accounted for as a purchase. As a
result, the assets and liabilities were adjusted to their fair values, with
the excess purchase price over the fair value assigned to goodwill. Goodwill
of $15,264 is being amortized over 15 years under the straight-line method.

  The following summarizes the allocation of the purchase price.

<TABLE>
     <S>                                                               <C>
     Assets purchased:
       Cash........................................................... $     42
       Receivables, net...............................................   40,011
       Inventories....................................................   91,831
       Prepaid expenses...............................................    3,987
       Deferred income taxes..........................................      440
       Property and equipment.........................................   56,241
       Goodwill.......................................................   15,264
       Other assets...................................................      598
                                                                       --------
         Total assets purchased.......................................  208,414
                                                                       --------
     Liabilities assumed:
       Customer deposits..............................................   23,326
       Accounts payable...............................................   44,486
       Accrued expenses...............................................    5,379
       Long-term debt.................................................   67,926
       Deferred income taxes..........................................   11,492
       Other liabilities..............................................      294
                                                                       --------
         Total liabilities assumed....................................  152,903
                                                                       --------
         Purchase price paid.......................................... $ 55,511
                                                                       ========
</TABLE>


                                      18
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)

  Subsequent to the acquisition, RCG contributed $23,088 in cash to Royster-
Clark, Inc. which, along with borrowings under the newly established senior
secured credit facility described in note 9, was used to refinance $67,750 of
the long-term debt assumed above.

  Holders of the shares of the Royster-Clark, Inc. cumulative redeemable
preferred stock Series B $.01 par value converted their shares to Common Stock
which were redeemed or exchanged for securities of RCG as a result of the
transaction. Prior to the transaction, $300 of dividends were paid on the
preferred stock.

 (b) Acquisition of AgriBusiness

  Royster-Clark, Inc. acquired AgriBusiness through the acquisition of all of
the outstanding common stock of its component entities for $269,716 in cash,
including $4,825 in direct costs of the acquisition. The acquisition was
financed with proceeds from the senior secured credit facility (note 9), the
issuance of $200,000 in First Mortgage Notes (note 10) and $10,000 contributed
to the company by RCG in the form of RCG Junior Subordinated Notes issued to
IMC Global.

  The acquisition has been accounted for as a purchase, and as a result, all
of the assets and liabilities have been adjusted to their fair values. Because
the fair values of the assets purchased and the liabilities assumed exceed the
purchase price, the fair value of the property and equipment have been
reduced. The following summarizes the preliminary allocation of the purchase
price:

<TABLE>
     <S>                                                               <C>
     Assets purchased:
       Cash........................................................... $     40
       Receivables, net...............................................   79,164
       Inventories....................................................  209,784
       Prepaid expenses...............................................      762
       Property and equipment.........................................  128,563
       Deferred taxes.................................................   32,591
       Other assets...................................................    2,349
                                                                       --------
         Total assets purchased.......................................  453,253
                                                                       --------
     Liabilities assumed:
       Accounts payable...............................................   77,464
       Customer deposits..............................................   73,028
       Accrued expenses...............................................   22,631
       Long-term debt.................................................    7,100
       Other liabilities..............................................    3,314
                                                                       --------
         Total liabilities assumed....................................  183,537
                                                                       --------
         Purchase price paid.......................................... $269,716
                                                                       ========
</TABLE>

  Royster-Clark, Inc and IMC Global, Inc. are in negotiations over potential
adjustments to the purchase price paid for AgriBusiness related to the amount
of working capital acquired. Currently, management does not believe the
ultimate resolution of the negotiations will result in a material adjustment
to the purchase price paid.

 (c) Restructuring Liabilities

  In connection with the acquisitions, Royster-Clark, Inc. recorded accruals
of $9,461 for future costs to be incurred related to the closure of certain
facilities, severance and termination benefits and relocation costs of

                                      19
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)

employees. These costs represent management's estimates of the ultimate
obligations associated with executing its plans for the combined entity. In
accordance with management's plans, the closed locations and the individuals
to be terminated were specifically identified.

  The following table shows the merger-related accruals and the remaining
liability as of December 31, 1999:

<TABLE>
<CAPTION>
                                       Costs incurred
                         Balance as of    through                  Balance as of
                           April 1,     December 31,  Revisions to December 31,
                             1999           1999       estimates       1999
                         ------------- -------------- ------------ -------------
<S>                      <C>           <C>            <C>          <C>
Costs to exit certain
 facilities.............    $1,197        $  (491)       $  177       $  883
Severance and
 termination related
 accruals...............     7,167         (4,427)        1,391        4,131
Relocation costs........     1,097           (840)         (157)         100
                            ------        -------        ------       ------
  Total merger-related
   costs................    $9,461        $(5,758)       $1,411       $5,114
                            ======        =======        ======       ======
</TABLE>

  The costs to exit certain facilities represents the costs to close an office
building which was redundant with an existing facility and eleven retail
locations that were evaluated to be unprofitable to reopen due to their
proximity to existing Royster-Clark, Inc. locations. All facilities identified
were closed as of September 30, 1999. A change in estimate during the year
resulted from additional costs associated with the closing of the specified
facilities partially offset by the decision to continue to operate a
production plant scheduled to be closed and disposed of as a terminal and
storage facility.

  After the initial estimate of merger-related accruals, 102 more employees
were identified for termination due to their positions being redundant with
existing personnel. The change in estimate represents the additional severance
accrued for those employees. The additional positions to be eliminated include
positions in sales, administration and production. As of December 31, 1999, a
total of 188 employees were included in the severance and termination plan, of
which 185 had been terminated. The remaining employees will be terminated by
June 2000. The severance paid to date represents partial payments to the 185
individuals terminated to date. Severance obligations are being paid out over
periods ranging from 1 to 36 months. Management does not expect the
termination of employees or closure of facilities to have a material impact on
other areas of operations.

  The relocation costs paid represent payments to 22 individuals in the third
and fourth quarters for expenses incurred while relocating. These expenses
included moving, house hunting, and travel related costs. The remaining
relocation costs are expected to be paid out over the next year.

 (d) 1998 Acquisitions

  Lebanon

  On December 14, 1998, the Company acquired substantially all of the
property, plant and equipment, inventories and accounts receivable of the
division of Lebanon Chemical Corporation known as Lebanon Agricorp (herein
referred to as Lebanon), which owned and operated fertilizer retail and
wholesale outlets as well as distribution and storage facilities primarily in
Maryland, Virginia, Delaware and North Carolina. The acquisition was accounted
for by the purchase method of accounting and the accompanying financial
statements include the operating results of Lebanon from the date of
acquisition. The acquisition cost for the purchase was allocated on the basis
of the estimated fair value of assets acquired and liabilities assumed, as
well as certain intangible assets of $341 which are being amortized over their
estimated useful lives, ranging from five to fifteen years. In conjunction
with the acquisition, debt issuance costs of $141 were incurred.

                                      20
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


  The acquisition can be summarized as follows:

<TABLE>
     <S>                                                               <C>
     Assets purchased:
       Receivables, net............................................... $11,055
       Inventories....................................................   5,806
       Property and equipment.........................................   5,484
       Goodwill.......................................................     100
       Non-compete agreement..........................................     100
       Liabilities assumed............................................    (677)
                                                                       -------
       Purchase price paid............................................ $21,868
                                                                       =======
</TABLE>

  Dixie Guano

  On July 16, 1998, the Company acquired certain assets from Dixie Guano, Inc.
(herein referred to as Dixie), which owned and operated two retail outlets in
southern Virginia. The acquisition price paid was $2,543. The acquisition was
accounted for by the purchase method of accounting, and the accompanying
financial statements include the operating results of Dixie from the date of
acquisition. Assets purchased included accounts receivable, inventory,
property, plant and equipment. In addition, a portion of the purchase price
was allocated to intangible assets including a noncompete agreement. The
noncompete agreement is being amortized over the period of the agreement.

  Harmony

  Effective January 1, 1998, the Company purchased certain assets of Harmony,
Inc., a retail fertilizer outlet in North Carolina, for $106. The acquisition
was accounted for by the purchase method of accounting, and the accompanying
financial statements include the operating results from the date of
acquisition. Assets purchased included inventory and equipment.

 (e) Pro Forma Results of Operations

  The following unaudited pro forma summary presents the consolidated income
statement information as if the aforementioned transactions had been
consummated on January 1, 1998, and do not purport to be indicative of what
would have occurred had the acquisitions been made at that date or of the
results which may occur in the future.

<TABLE>
<CAPTION>
                                                      Years Ended December 31,
                                                      --------------------------
                                                         1999          1998
                                                      ------------ -------------
     <S>                                              <C>          <C>
     Net sales....................................... $   896,247  $   1,019,827
                                                      ===========  =============
     Net income...................................... $    (4,620) $       7,941
                                                      ===========  =============
</TABLE>

  The unaudited pro forma information reflects adjustments made to the
historical statements of operations of Royster-Clark, Inc. and of IMC
AgriBusiness for:

  i. The impact on depreciation and amortization of adjusting to the fair
     values of property, plant and equipment, goodwill and other intangibles,
     including amortization of the deferred financing costs incurred in the
     establishment of the senior secured credit facility and the issuance of
     the First Mortgage Notes;

  ii. The impact on the results of operations of IMC AgriBusiness related to
      the transfer of wholesale purchasers of fertilizer materials from IMC
      AgriBusiness to IMC Global, Inc. in the third quarter of 1998;

                                      21
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


  iii. The impact on interest expense to reflect the refinancing of Royster-
       Clark, Inc.'s existing long-term debt, and borrowings on the senior
       secured credit facility and issuance of the First Mortgage Notes in
       conjunction with the acquisition of AgriBusiness;

  iv. Pro forma adjustments to cost of sales and selling, general and
      administrative expenses representing the elimination of certain
      historical costs and expenses. These adjustments, summarized in the
      tables below, for the years ended December 31, 1999 and 1998,
      respectively, include elimination of payroll costs and benefits
      associated with the elimination of 89 positions identified as of April
      1, 1999; and the elimination of incremental employee benefit and
      insurance costs as compared to the cost of coverage after integration
      into Royster-Clark, Inc.'s programs, including the elimination of the
      administrative allocation from IMC Global and the rollback to 1997
      benefit levels as provided in the purchase agreement. The effect has
      been allocated between cost of sales and selling, general and
      administrative expenses. Management does not expect the closure of the
      production plant and termination of employees to have a material impact
      on any other aspect of the pro forma results of operations.

    Summary pro forma adjustments to cost of sales and selling, general and
    administrative expenses are as follows:

<TABLE>
     <S>                                                                <C>
     December 31, 1999:

     Cost of sales:
     Elimination of incremental employee benefit and insurance costs... $  170
                                                                        ======
     Selling, general and administrative expenses:
     Elimination of costs associated with 89 eliminated positions......  1,200
     Elimination of incremental employee benefit and insurance costs...    339
                                                                        ------
     Total adjustments to other selling, general and administrative
      expenses......................................................... $1,539
                                                                        ======
     December 31, 1998:

     Cost of sales:
     Elimination of incremental employee benefit and insurance costs... $1,411
                                                                        ======
     Selling, general and administrative expenses:
     Elimination of costs associated with 89 eliminated positions......  6,516
     Elimination of incremental employee benefit and insurance costs...  2,823
                                                                        ------
     Total adjustments to other selling, general and administrative
      expenses......................................................... $9,339
                                                                        ======
</TABLE>

  v. In addition, in connection with the acquisition of Agribusiness,
     management identified six AgriBusiness locations for closure. Pro forma
     adjustments to sales, cost of sales, and other expenses are also
     required to eliminate the operating results for these locations for
     1998. These adjustments can be summarized as follows:

<TABLE>
     <S>                                                                <C>
     Net Sales......................................................... $7,544
                                                                        ======
     Cost of Sales..................................................... $6,399
                                                                        ======
     Selling, general and administrative expense....................... $1,579
                                                                        ======
     Loss before income taxes.......................................... $ (434)
                                                                        ======
</TABLE>

  vi. The impact on income tax expense, which represents the tax effect of
      the pro forma adjustments described above, calculated to yield an
      estimated composite tax rate of 39%.

                                      22
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


(5) Inventories

  Inventories at December 31, 1999 and 1998, consist of the following:

<TABLE>
<CAPTION>
                                                                                                          Successor Predecessor
                                                                                                          --------- -----------
                                                                                                            1999       1998
                                                                                                          --------- -----------
     <S>                                                                                                  <C>       <C>
     Crop protection products............................................................................ $ 68,787    $31,084
     Fertilizers.........................................................................................   31,617      7,621
     Raw materials.......................................................................................   41,613     11,490
     Seeds...............................................................................................    5,956      2,198
     Sundries and other..................................................................................   10,694      2,812
                                                                                                          --------    -------
                                                                                                          $158,667    $55,205
                                                                                                          ========    =======
</TABLE>

(6) Property, Plant, and Equipment

  Property, plant and equipment at December 31, 1999 and 1998 consist of the
following:
<TABLE>

<CAPTION>
                                                                                                          Successor Predecessor
                                                                                                          --------- -----------
                                                                                                            1999       1998
                                                                                                          --------- -----------
     <S>                                                                                                  <C>       <C>
     Land................................................................................................ $ 12,196    $ 6,742
     Buildings and land improvements.....................................................................   50,039     13,935
     Machinery and equipment.............................................................................  134,091     18,723
     Construction-in-progress............................................................................    4,235        761
                                                                                                          --------    -------
                                                                                                           200,561     40,161
     Less accumulated depreciation.......................................................................   12,667     11,055
                                                                                                          --------    -------
       Net property, plant, and equipment................................................................ $187,894    $29,106
                                                                                                          ========    =======
</TABLE>

  Included in land and buildings above are assets held for sale which are
carried at their estimated net realizable value, less estimated costs to sell.
The carrying value of these assets was $1,844 and $810 at December 31, 1999
and 1998, respectively.

(7) Customer Deposits

  The Company accepts customer deposits as interest-bearing deposits. Customer
deposits are refundable upon demand either in cash or product. Interest rates
paid on customer accounts vary based on economic conditions and are posted at
the locations where the Company accepts customer deposits. The interest rate
accruing on customer deposits for the nine months ended December 31, 1999 and
the years ended December 31, 1998 and 1997 was approximately 8.5%. Interest
expense on customer deposits totaled $1,073, $920 and $764 for the nine months
ended December 31, 1999 and the years ended December 31, 1998 and 1997,
respectively.

  Certain customer deposits are from officers or employees of the Company. At
December 31, 1999 and 1998, these deposits from related parties totaled $2,435
and $1,366, respectively.

                                      23
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


(8) Income Taxes

  Components of income tax expense (benefit) for the nine months ended
December 31, 1999 and the years ended December 31, 1998 and 1997 include:

<TABLE>
<CAPTION>
     Successor                                          Current Deferred Total
     ---------                                          ------- -------- ------
     <S>                                                <C>     <C>      <C>
     Nine months ended December 31, 1999:
       Federal......................................... $  --    $3,831  $3,831
       State...........................................    --       728     728
                                                        ------   ------  ------
                                                        $  --    $4,559  $4,559
                                                        ======   ======  ======
<CAPTION>
     Predecessor
     -----------
     <S>                                                <C>     <C>      <C>
     Year ended December 31, 1998:
       Federal......................................... $  697   $  299  $  996
       State...........................................    156       71     227
                                                        ------   ------  ------
                                                        $  853   $  370  $1,223
                                                        ======   ======  ======
     Year ended December 31, 1997:
       Federal......................................... $2,668   $ (429) $2,239
       State...........................................    641     (102)    539
                                                        ------   ------  ------
                                                        $3,309   $ (531) $2,778
                                                        ======   ======  ======
</TABLE>

  The effective income tax rate for 1999, 1998 and 1997 of 40.8%, 40.0% and
39.1%, respectively, differs from the "expected" federal statutory income tax
rate of 34% due to the following:

<TABLE>
<CAPTION>
                                                                                                     Successor    Predecessor
                                                                                                    ------------ -------------
                                                                                                    Nine Months   Years Ended
                                                                                                       Ended     December 31,
                                                                                                    December 31, -------------
                                                                                                        1999      1998   1997
                                                                                                    ------------ ------ ------
     <S>                                                                                            <C>          <C>    <C>
     Expected income tax expense...................................................................    $3,767    $1,039 $2,417
     Nondeductible goodwill........................................................................       291        59     72
     State taxes, net of federal benefit...........................................................       481       113    356
     Other.........................................................................................        20        12    (67)
                                                                                                       ------    ------ ------
       Income tax expense..........................................................................    $4,559    $1,223 $2,778
                                                                                                       ======    ====== ======
</TABLE>

                                      24
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


  The tax effects of temporary differences between the financial statement
carrying amounts and tax basis of assets and liabilities that give rise to
significant portions of deferred taxes at December 31, 1999 and 1998, relate
to the following:

<TABLE>
<CAPTION>
                                                                                                          Successor Predecessor
                                                                                                          --------- -----------
                                                                                                            1999       1998
                                                                                                          --------- -----------
<S>                                                                                                       <C>       <C>
Deferred tax assets:
  Trade accounts receivable, due to allowance for doubtful accounts and discounts........................  $ 2,291    $   702
  Accrued expenses, due to accrued vacation and certain other accruals for financial statement purposes..    6,566        352
  Property, plant and equipment..........................................................................    8,885        --
  Other..................................................................................................      422        114
                                                                                                           -------    -------
                                                                                                            18,164      1,168
                                                                                                           -------    -------
Deferred tax liabilities:
  Other receivables, due to accrual for financial statement purposes for product rebates.................      --        (710)
  Property, plant and equipment..........................................................................      --      (2,707)
  Other assets...........................................................................................   (1,184)      (805)
                                                                                                           -------    -------
                                                                                                            (1,184)    (4,222)
                                                                                                           -------    -------
    Net deferred tax assets..............................................................................  $16,980    $(3,054)
                                                                                                           =======    =======
</TABLE>

  Net deferred taxes are included in the consolidated balance sheets in the
following captions:

<TABLE>
<CAPTION>
                                                                                                          Successor Predecessor
                                                                                                          --------- -----------
                                                                                                            1999       1998
                                                                                                          --------- -----------
<S>                                                                                                       <C>       <C>
Deferred income tax asset--current.......................................................................  $ 5,112    $   269
Deferred income tax asset--long-term.....................................................................   11,868
Deferred income tax liability--long-term.................................................................      --      (3,323)
                                                                                                           -------    -------
                                                                                                           $16,980    $(3,054)
                                                                                                           =======    =======
</TABLE>

  It is management's belief that the results of future operations are more
likely than not to generate sufficient taxable income to realize the deferred
tax assets.

(9) Senior Secured Credit Facility

  In connection with the acquisitions, the Company established a senior
secured credit facility (credit facility) that allows it to borrow up to
$275,000, subject to certain borrowing base limitations. The credit facility
expires in five years and bears interest at LIBOR plus 2.75% (weighted average
rate of 8.7% at December 31, 1999). The credit facility is secured by (1) a
lien on all accounts receivable, inventory, general intangibles and all other
assets of the Company and its subsidiaries (except for the collateral securing
the First Mortgage Notes, as discussed below), (2) all of the common stock of
the Company, and (3) all of the common stock of the Company's subsidiaries,
except for the equity interests of certain subsidiaries pledged to secure the
First Mortgage Notes. Amounts outstanding under the credit facility totaled
$92,545 at December 31, 1999.

                                      25
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


  The credit facility is subject to certain covenants, including limitations
on additional indebtedness, limitations on liens, limitations on capital
expenditures and maintenance of certain required financial ratios. The credit
facility also restricts the payment of dividends by the Company to RCG.
Dividends are restricted to (1) amounts necessary to enable RCG to pay
overhead expenses in an amount not to exceed $2,000; (2) amounts necessary to
enable RCG to pay income and other taxes; and (3) $1,000 over the life of the
agreement for the purpose of repurchasing, redeeming or otherwise acquiring
and retiring any capital stock, stock warrants, stock options or other rights
to acquire capital stock of RCG. Dividends made under the third provision are
further restricted in that such dividends may not be made if a default has
occurred (or would occur if the dividend payment were made), or such dividend
payments would result in noncompliance with any financial covenants.

  As of December 31, 1999, the Company was not in compliance with the interest
coverage and leverage ratio covenants. In February 2000, the consortium of
lenders agreed to waive the covenant violations as of December 31, 1999 and
amended the covenants for the quarterly measurement dates in 2000 and
thereafter.

  In connection with the establishment of the credit facility, the Company
incurred $6,980 of deferred financing costs, which are being amortized on a
straight-line basis over the life of the credit facility.

(10) Royster-Clark, Inc. 10 1/4% First Mortgage Notes Due 2009

  As discussed in note 4, the Company issued $200,000 of 10 1/4% First
Mortgage Notes due April 2009 (herein referred to as the First Mortgage Notes)
on April 22, 1999 to partially finance the acquisition of AgriBusiness. The
First Mortgage Notes mature in ten years and bear interest at 10.25% payable
semi-annually in arrears. The First Mortgage Notes are secured by 17 principal
properties, related fixtures and equipment and other related assets and a
pledge of equity of certain subsidiaries. RCG and certain subsidiaries also
unconditionally guarantee the First Mortgage Notes. The First Mortgage Notes
are not redeemable prior to April 1, 2004 except in the case of a change of
control or a public offering in the first three years after the issue date.
Thereafter, the First Mortgage Notes are redeemable in whole or in part, at
the Company's option, at a 5.125% premium, declining ratably to par on April
1, 2007, plus accrued and unpaid interest, if any, to the date of redemption.

  The First Mortgage Notes are subject to certain covenants, including
restrictions on dividend payments and retirement of equity interests, issuance
of new indebtedness or preferred stock and certain transactions with
affiliates. Dividends may not be made if a default has occurred (or would
occur if the dividend payment were made), or such dividend payments would
result in noncompliance with any financial covenants. Dividend payments are
further restricted in amount to at most 50% of consolidated net income of the
Company from the date of origination of the First Mortgage Notes to the end of
the most recently completed fiscal quarter.

  In connection with the issuance of the First Mortgage Notes, the Company
incurred $8,697 of deferred financing costs, which are being amortized using
the interest method over the term of the First Mortgage Notes.

                                      26
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


(11) Long-Term Debt

  Long-term debt at December 31, 1999 and 1998, consists of the following:

<TABLE>
<CAPTION>
                                                                                                          Successor Predecessor
                                                                                                          --------- -----------
                                                                                                            1999       1998
                                                                                                          --------- -----------
   <S>                                                                                                    <C>       <C>
   Industrial revenue bond...............................................................................  $2,100     $   --
   Note payable to former stockholder of Hutson..........................................................   5,000         --
   Bank revolving loan, interest due monthly at prime plus 0.25%
    (8.0% at December 31, 1998); repaid in full in 1999..................................................     --       19,220
   Bank term loan, interest due monthly at prime plus 0.75%
    (8.5% at December 31, 1998); repaid in full in 1999..................................................     --       15,000
   Note payable, bearing interest at prime rate (7.75% at December 31, 1998); repaid in full in 1999.....     --        1,350
   Other notes payable...................................................................................     440         429
                                                                                                           ------     -------
     Total long-term debt................................................................................   7,540      35,999
   Less current installments.............................................................................   2,705       2,182
                                                                                                           ------     -------
     Long-term debt, excluding current installments......................................................  $4,835     $33,817
                                                                                                           ======     =======
</TABLE>

  In connection with the AgriBusiness's purchase of Hutson Company, Inc. in
1997, the Company entered into a $5.0 million note payable, due in June 2002,
bearing interest at an annual rate of 7.25%. The note payable contains
provisions which allow the holder to demand payment in full if a change in the
Company's ownership occurs or demand payment for 50% of the note's balance if
the individual federal long-term capital gains tax rate is reduced below 28%.
Because the capital gains tax rate has been reduced below 28%, $2.5 million of
the note payable has been classified as a current liability in the
accompanying consolidated balance sheet.

  The industrial revenue bond was issued by Decatur County, Bainbridge Georgia
Industrial Development Authority Variable Rate Industrial Development Revenue
Bonds Series 1985, due December 1, 2002. Interest on the industrial revenue
bond is variable and based on short-term rates for tax-exempt securities (3.9%
at December 31, 1999). The bond is secured by a letter of credit that is
renewed annually by the Company. Amounts outstanding under the letters of
credit totaled $2,803 at December 31, 1999.

  Other notes payable include seven notes incurred for the purchase of various
property, plant and equipment. Interest rates vary from 7.5% to 10.94%. No
individual note exceeds $175.

  Aggregate annual principal payments due under the terms of the long-term
debt for the five fiscal years subsequent to December 31, 1999 and thereafter
are as follows:

<TABLE>
<CAPTION>
                                                                          Amount
                                                                          ------
     <S>                                                                  <C>
     Year ending December 31,
        2000............................................................. $2,705
        2001.............................................................     85
        2002.............................................................  4,620
        2003.............................................................     12
        2004.............................................................     14
        Thereafter.......................................................    104
                                                                          ------
          Total.......................................................... $7,540
                                                                          ======
</TABLE>

                                      27
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


(12) Operating Leases

  The Company leases office facilities, rail cars and various types of
equipment under operating leases whose terms range from 3 to 15 years. Future
minimum lease payments under noncancelable operating leases as of December 31,
1999 are as follows:

<TABLE>
<CAPTION>
                                                                        Amount
                                                                        -------
     <S>                                                                <C>
     Year ending December 31,
        2000........................................................... $10,153
        2001...........................................................   7,603
        2002...........................................................   4,885
        2003...........................................................   3,441
        2004...........................................................   1,998
        Subsequent years...............................................   1,778
                                                                        -------
          Total minimum lease payments................................. $29,858
                                                                        =======
</TABLE>

  Rental expense for all operating leases was approximately $12,578, $2,999
and $2,341 for the nine months ended December 31, 1999 and the years ended
December 31, 1998 and 1997, respectively.

(13) Employee Benefit Plans

 (a) Retirement Plans

  The Company maintains defined contribution Employee Savings and Investment
Plan (ESIP) covering substantially all full-time employees of the Company.
Participants are allowed to contribute to the ESIP up to 18% of their salary
on a pre-tax basis, up to the maximum allowed under Internal Revenue Service
regulations. The Company makes contributions to the ESIP at the discretion of
the Board of Directors. The Company also maintains three other defined
contribution plans for union employees under collective bargaining agreements
at six locations covering approximately 120 employees. Company contributions
are based on the applicable provisions of each plan and totaled $855, $208 and
$206 to the ESIP and other defined contribution plans during the nine months
ended December 31, 1999 and the years ended December 31, 1998 and 1997,
respectively.

 (b) Employee Stock Ownership Plan

  Prior to the acquisition by RCG, Royster-Clark, Inc. maintained an Employee
Stock Ownership Plan (ESOP). All shares owned by the ESOP were redeemed in
conjunction with the acquisition of Royster-Clark by RCG and the proceeds were
rolled over into the ESIP accounts for the employees involved.

 (c) 1999 Restricted Stock Purchase and Option Plan

  Upon the acquisition of the Company by RCG, RCG created the 1999 Restricted
Stock Purchase and Option Plan (herein referred to as the 1999 Stock Option
Plan). Under the terms of the 1999 Stock Option Plan, 200,000 shares of RCG
common stock have been reserved for issuance in the form of restricted share
grants to current and future employees of RCG. Shares issued under the 1999
Stock Option Plan are subject to certain restrictions on transfer of shares.

  In addition, 39,980 shares of Common Stock, 14,795 shares of Senior
Preferred Stock and 8,319 shares of Junior Preferred Stock have been reserved
for issuance pursuant to the exercise of stock options rolled over from

                                      28
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)

the 1992 Stock Option Plan (herein referred to as the 1992 Plan) previously
maintained by Royster Clark, Inc. All options granted under the 1992 Plan were
either cashed out at the merger consideration of $285 per share less the
exercise price under the 1992 Plan or exchanged for an option to purchase 5.5
shares of Common Stock, 2.0 shares of Senior Preferred Stock and 1.1 shares of
Junior Preferred Stock at the same exercise price as under the 1992 Plan. At
December 31, 1999, the options described above are the only options vested and
outstanding under the 1999 Stock Option Plan. No options were issued, vested
or exercised during the nine months ended December 31, 1999.

(14) Related Party Transactions

  During the years ended December 31, 1998 and 1997, the Company purchased,
under normal terms, approximately $3,620 and $3,540 of product from a supplier
who is a stockholder in the Company. This stockholder's shares were redeemed
as part of the RCG purchase of Royster-Clark, Inc.

  At December 31, 1999, there was $203 due from officers or employees, which
was included in accounts receivable in the accompanying consolidated balance
sheet. There were no amounts due from officers or employees at December 31,
1998.

(15) Environmental Matters

  The Company is subject to a wide variety of federal, state and local
environmental laws and regulations. The Company has been identified as a
potentially responsible party concerning the release of certain hazardous
substances at five locations. While the current law potentially imposes joint
and several liability upon each party named as a potentially responsible
party, the Company's contribution to clean up these sites is expected to be
limited, given the number of other companies which have also been named as
potentially responsible parties and the nature and amount of cleanup involved.
A number of the Company's facilities have been evaluated as having excess
nitrates, phosphorous and pesticides in the surrounding soil or groundwater.
In addition, several underground storage tanks have been removed or closed at
some facilities and these sites have been evaluated for possible
contamination. In total, cleanup of hazardous or potentially hazardous
substances has been planned or is being performed at approximately 40 sites.

  In connection with the acquisitions of AgriBusiness and Royster Clark, Inc.,
the Company obtained indemnities for certain claims related to environmental
matters that existed or arose prior to the acquisitions. The indemnities
related to AgriBusiness are subject to a $4,500 deductible, an overall cap on
all indemnities, and certain time limitations. The indemnities related to Old
Royster Clark are subject to a deductible of $2,000, certain time limitations
and an overall cap of $5,000 on all indemnities. In addition, Old Royster
Clark had obtained indemnities from Lebanon Chemical Corporation (LCC) for
certain claims related to environmental matters that existed at sites acquired
from LCC in December 1998.

  The Company has recorded environmental liabilities at December 31, 1999 for
the estimated cost of cleanup efforts of identified contamination or site
characterization totaled $2,917, and is included in other long-term
liabilities in the accompanying consolidated balance sheet. Actual cash
expenditures during the nine months ended December 31, 1999 were $10. These
liabilities do not take into account any claims for recoveries from insurance
or third parties and are not discounted. Actual costs to be incurred at
identified sites in future periods may vary from the estimates, given inherent
uncertainty in evaluating environmental exposures. While the Company's
potential exposure cannot be estimated, in the opinion of management the final
disposition of such matters will not have a material adverse effect on the
financial position or results of operations of the Company.


                                      29
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)

(16) Commitments and Contingencies

 (a) Supply Agreement

  In conjunction with the acquisition of AgriBusiness, the Company has entered
into a ten-year supply agreement with IMC Kalium Ltd. (Kalium) and IMC-Agrico
Company (Agrico), both of which are subsidiaries of IMC Global, Inc. Under the
terms of the supply agreement, the Company is required to purchase (and Agrico
and Kalium are required to supply) certain products from Kalium or Agrico in
an amount equal to its estimated normal business requirements of the former
AgriBusiness locations. The purchase prices of the products covered by the
agreement are determined and fixed annually and approximate market prices. The
agreement automatically renews for subsequent periods of five years unless
otherwise canceled by either party. In addition, the agreement specifies
remedies available to the parties in the event of noncompliance, which include
compensatory damages in the event of a failure to purchase (or supply) the
required quantities of the covered products.

 (b) Purchase Commitment

  The Company also purchases natural gas under fixed-price and index-price
contracts, which range from three to ten years. The indexed-price contracts
commit the Company to quantities of natural gas (daily MMBTU's) although they
are denominated under a scheduled price associated with a natural gas index.
Natural gas purchases related to these fixed price and indexed long-term
purchase commitments were $21.2 million for the nine months ended December 31,
1999. The indexed-price commitments were denominated at the current estimated
cost of natural gas as of December 31, 1999. This price is subject to market
fluctuations in the future, resulting in fluctuating purchase commitments in
the future. These contracts were assumed in conjunction with the acquisition
of AgriBusiness and as a result, no amounts were incurred by the predecessor.

  Summarized below is a schedule of future minimum long-term purchase
commitments for both fixed-price and index-price contracts at December 31,
1999:

<TABLE>
<CAPTION>
                                                          Purchase commitments
                                                         -----------------------
                                                          Fixed
                                                          price  Indexed  Total
                                                         ------- ------- -------
     <S>                                                 <C>     <C>     <C>
     2000............................................... $ 6,136 $16,867 $23,003
     2001...............................................     918   8,454   9,372
     2002...............................................     918   4,044   4,962
     2003...............................................     919   1,003   1,922
     2004...............................................     918   1,004   1,922
     Subsequent years...................................   1,067   1,166   2,233
                                                         ------- ------- -------
                                                         $10,876 $32,538 $43,414
                                                         ======= ======= =======
</TABLE>

  Under the terms of the Lebanon Purchase & Sale Agreement (note 4), the
Company is required to purchase ammoniated fertilizer products from Lebanon at
prices approximating market rates ranging from $145 to $155 per ton in the
following quantities:

<TABLE>
<CAPTION>
     Year ending                                                           Tons
     -----------                                                          ------
     <S>                                                                  <C>
      2000............................................................... 15,000
      2001...............................................................  9,000
                                                                          ------
        Total minimum purchases.......................................... 24,000
                                                                          ======
</TABLE>


                                      30
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)

 (c) Legal and Regulatory Matters

  From time to time, the Company has had claims asserted against it by
regulatory agencies or private parties for environmental matters and has
incurred obligations for investigation or remedial actions with respect to
certain of such matters. In addition, the Company is subject to various claims
and legal matters that have arisen in the ordinary course of its business.
Although there can be no assurance as to the ultimate disposition of these
matters, it is the opinion of the Company's management that any such claims
asserted or obligations incurred to date will not result in a material adverse
effect on the results of operations or financial position of the Company.

(17) Condensed Financial Data of Guarantor Subsidiaries

  As discussed further in note 4, the First Mortgage Notes are guaranteed on a
full, unconditional and joint and several basis, by each of the subsidiaries
of Royster-Clark, Inc., including:

    Royster-Clark Realty LLC
    Royster-Clark Resources LLC
    Royster-Clark AgriBusiness, Inc.
    Royster-Clark AgriBusiness Realty LLC
    Royster-Clark Nitrogen, Inc.

  There are currently no restrictions on the ability of Royster-Clark, Inc. to
obtain funds from its guarantor subsidiaries through dividends or loans.

                                      31
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


  The following table presents the condensed financial data of Royster-Clark,
Inc. and its guarantor subsidiaries as of December 31, 1999 and for the nine
months then ended.

<TABLE>
<CAPTION>
                                              Guarantor
                         Royster-Clark, Inc. Subsidiaries Eliminations Consolidated
                            December 31,     December 31, December 31, December 31,
                                1999             1999         1999         1999
                         ------------------- ------------ ------------ ------------
<S>                      <C>                 <C>          <C>          <C>
BALANCE SHEET:
Cash....................      $    344         $  4,326    $     --      $  4,670
Accounts receivable,
 net....................        32,121          203,661     (121,316)     114,466
Inventories.............           --           158,667          --       158,667
Prepaid expenses........            94            1,054          --         1,148
Income taxes
 receivable.............         4,402              --           --         4,402
Deferred tax assets.....         5,112              --           --         5,112
                              --------         --------    ---------     --------
  Current assets........        42,073          367,708     (121,316)     288,465
                              --------         --------    ---------     --------
Property, plant and
 equipment, net.........        16,996          170,898          --       187,894
Goodwill, net...........        14,584              --           --        14,584
Deferred income taxes...        11,868              --           --        11,868
Deferred financing
 costs, net ............        14,516              --           --        14,516
Other assets, net.......           162            4,018          --         4,180
Investment in
 subsidiaries...........       285,364              --      (285,364)         --
                              --------         --------    ---------     --------
  Total assets..........      $385,563         $542,624    $(406,680)    $521,507
                              ========         ========    =========     ========
Accounts payable........      $    255         $168,754    $(121,316)    $ 47,693
Customer deposits.......           --            49,880          --        49,880
Accrued expenses........        13,446           10,907          --        24,353
Current installments of
 long-term debt.........            79            2,626          --         2,705
                              --------         --------    ---------     --------
  Current liabilities...        13,780          232,167     (121,316)     124,631
                              --------         --------    ---------     --------
Senior secured credit
 facility...............        92,545              --           --        92,545
10 1/4% First Mortgage
 Notes..................       200,000              --           --       200,000
Long-term debt..........            51            4,784          --         4,835
Other long-term
 liabilities............           491            3,783          --         4,274
                              --------         --------    ---------     --------
  Total liabilities.....       306,867          240,734     (121,316)     426,285
                              --------         --------    ---------     --------
Common stock............           --               --           --           --
Additional paid-in
 capital................        78,599          295,364     (285,364)      88,599
Retained earnings.......            97            6,526          --         6,623
                              --------         --------    ---------     --------
  Total stockholders'
   equity...............        78,696          301,890     (285,364)      95,222
                              --------         --------    ---------     --------
  Total liabilities and
   stockholders'
   equity...............      $385,563         $542,624    $(406,680)    $521,507
                              ========         ========    =========     ========
</TABLE>

                                      32
<PAGE>

                      ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                        December 31, 1999, 1998 and 1997
           (Dollars in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                              Guarantor
                         Royster-Clark, Inc. Subsidiaries Eliminations Consolidated
                            December 31,     December 31, December 31, December 31,
                                1999             1999         1999         1999
                         ------------------- ------------ ------------ ------------
<S>                      <C>                 <C>          <C>          <C>
INCOME STATEMENT:
Net sales...............      $  32,017        $714,336     $(31,193)   $ 715,160
Cost of sales...........            119         570,820          --       570,939
                              ---------        --------     --------    ---------
  Gross profit..........         31,898         143,516      (31,193)     144,221
Selling, general and
 administrative
 expense................         28,918         112,164      (31,193)     109,889
                              ---------        --------     --------    ---------
  Operating income......          2,980          31,352          --        34,332
Interest expense........          2,816          20,334          --        23,150
                              ---------        --------     --------    ---------
  Income before income
   taxes................            164          11,018          --        11,182
Income tax expense......             67           4,492          --         4,559
                              ---------        --------     --------    ---------
  Net income............      $      97        $  6,526     $    --     $   6,623
                              =========        ========     ========    =========

CASH FLOWS:
Net cash provided by
 operating activities...      $  27,375        $ 67,003     $    --     $  94,378
                              ---------        --------     --------    ---------
Cash flows from
 investing activities:
  Proceeds from sale of
   property, plant and
   equipment............            --              970          --           970
  Purchases of property,
   plant and equipment..            --          (17,040)         --       (17,040)
  Acquisition of
   AgriBusiness.........       (259,676)            --           --      (259,676)
                              ---------        --------     --------    ---------
  Net cash used in
   investing
   activities...........       (259,676)        (16,070)         --      (275,746)
                              ---------        --------     --------    ---------
Cash flows from
 financing activities:
  Net borrowings on
   senior secured credit
   facility.............         92,963             --           --        92,963
  Proceeds from issuance
   of First Mortgage
   Notes................        200,000             --           --       200,000
  Capital contribution
   by RCG...............         23,088             --           --        23,088
  Long-term debt
   refinanced...........        (67,750)            --           --       (67,750)
  Principal payments on
   long-term debt.......            --             (154)         --          (154)
  Net decrease in
   customer deposits....            --          (46,474)         --       (46,474)
  Payment of deferred
   financing costs......        (15,677)            --           --       (15,677)
                              ---------        --------     --------    ---------
    Net cash provided by
     (used in) financing
     activities.........        232,624         (46,628)         --       185,996
                              ---------        --------     --------    ---------
    Net increase in
     cash...............            323           4,305          --         4,628
Cash at beginning of
 period.................             21              21          --            42
                              ---------        --------     --------    ---------
Cash at end of period...      $     344        $  4,326     $    --     $   4,670
                              =========        ========     ========    =========
</TABLE>

                                       33
<PAGE>

                     ROYSTER-CLARK, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                       December 31, 1999, 1998 and 1997
          (Dollars in thousands, except share and per share amounts)


(18) Fair Value of Financial Instruments

  The following methods and assumptions were used to estimate the fair value
of the Company's financial instruments at December 31, 1999 and 1998. FASB
Statement No. 107, Disclosures about Fair Value of Financial Instruments,
defines the fair value of a financial instrument as the amount at which the
instrument could be exchanged in a current transaction between willing
parties.

    Cash, trade accounts receivables, accounts payable, customer deposits,
  and accrued expenses: The carrying amounts approximate fair value because
  of the short maturity of those instruments.

    Long-term debt: The fair value of the Company's long-term debt is
  estimated by discounting the future cash flows of each instrument at rates
  currently offered to the Company for similar debt instruments of comparable
  maturities by the Company's bankers. Based on these criteria, the carrying
  amounts approximate fair value.

    Senior secured credit facility: The fair value of the Company's senior
  secured credit facility is estimated by discounting the future cash flows
  of each instrument at rates currently offered to the Company for similar
  debt instruments of comparable maturities by the Company's bankers. Based
  on these criteria, the carrying amounts approximate fair value.

    First mortgage notes: The fair value of the Company's first mortgage
  notes is estimated by discounting the future cash flows of each instrument
  at rates currently offered to the Company for similar debt instruments of
  comparable maturities by the Company's bankers. Based on these criteria,
  the carrying amounts approximate fair value.

(19) Subsequent Events

  During the first quarter of 2000, the Company completed a series of small
acquisitions consisting of several retail farm supply centers and terminals
for approximately $33.1 million in cash. These acquisitions will be accounted
for by the purchase method of accounting.

                                      34
<PAGE>

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

<TABLE>
 <C> <C>  <S>
 (a) (1)  Financial Statements. See Index to Financial Statements at page 8 of
          this Form 10-K.

     (2)  Financial Statement Schedules. Except as set forth below, all other
          schedules required by Form 10-K Annual Report have been omitted
          because they were not applicable, were included in the notes to the
          financial statements or were not required under the instructions
          contained in Regulation S-X

     (3)  Exhibits. See Exhibit Index at page 36 of this Form 10-K.

 (b) None
</TABLE>

ITEM 21.01 SUBSIDIARIES OF THE COMPANY

  Royster-Clark Realty LLC
  Royster-Clark Resources LLC
  Royster-Clark Agribusiness, Inc.
  Royster-Clark Agribusiness Realty LLC
  Royster-Clark Nitrogen, Inc.
  Alliance Agronomics, Inc.

                                       35
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
 Number                       Title of Document                        Location
 -------                      -----------------                        --------
 <C>     <S>                                                           <C>
   2.01  Stock Purchase Agreement dated January 21, 1999 by and
         among IMC Global Inc., The Vigoro Corporation and R-C
         Delaware Acquisition Inc.*+

   2.02  First Amendment to the Stock Purchase Agreement dated as of
         April 13, 1999 among IMC Global Inc., The Vigoro
         Corporation and R-C Delaware Acquisition Inc.+

   3.01  Restated Certificate of Incorporation of the Company.+

   3.02  Certificate of Amendment of Restated Certificate of
         Incorporation of the Company.+

   3.03  Amended and Restated Bylaws of the Company.+

   4.01  Indenture dated as of April 22, 1999 by and among the
         Company, the Guarantors, and the United States Trust
         Company of New York, as Trustee.+

   4.02  Form of 10 1/4% First Mortgage Note Due 2009 (Included in
         Exhibit 4.01)+

   4.03  Exchange Agreement dated as of April 22, 1999 among 399
         Venture Partners, Inc., Francis P. Jenkins, Jr., Royster-
         Clark Inc. and Royster-Clark Group Inc.+

   4.04  Securities Purchase and Holders Agreement dated as of April
         22, 1999 by and among 399 Venture Partners, Inc. and
         certain management stockholders.+

   4.05  Preferred Stockholders' Agreement dated as of April 22,
         1999 by and among 399 Venture Partners, Inc. and certain
         management stockholders.+

  10.01  Credit Agreement dated as of April 22, 1999 by and among
         the Company, the Guarantors, various lenders, DLJ Capital
         Funding, as arranger and syndication agent, J. P. Morgan
         Securities Inc., as documentation agent and U.S. Bancorp Ag
         Credit, Inc., as administrative agent.+

  10.02  Amendment Agreement dated February 25, 2000 amending Credit
         Agreement.++

  10.03  Purchase Agreement dated April 15, 1999 among the Company,
         the Guarantors and the Initial Purchasers.+

  10.04  Supply Agreement dated as of April 22, 1999 among IMC
         Kalium Ltd., IMC-Agrico Company and the Company. Portions
         of this exhibit have been omitted pursuant to a request for
         confidential treatment.**+

  10.05  Company Employee Savings and Investment Plan.+

  10.06  Royster-Clark Group, Inc. 1999 Restricted Stock Purchase
         and Option Plan.+

  10.07  Employment Agreement dated as of April 22, 1999 by and
         among Francis P. Jenkins, Jr., Royster-Clark Group, Inc.
         and Royster-Clark, Inc.+

  10.08  Master Conveyance Agreement dated as of April 22, 1999 by
         and among IMC Global Inc., the Vigoro Corporation, the
         Company and the United States Trust Company of New York.+

  10.09  Agreement for the Sale and Purchase of Assets among
         Royster-Clark, Inc. ("RCI"), American Crop Services, Inc.
         ("ACS") and Chickasaw Chemical Company, Inc. ("CCC") dated
         as of January 27, 2000, as amended by an Amendment to Asset
         Purchase Agreement among RCI, Royster-Clark Resources LLC,
         ACS and CCC dated February 16, 2000.*

  10.10  Form of Stock Purchase Agreement among Royster-Clark
         Resources, LLC, as Buyer, and the persons and entities
         identified therein as Sellers, for the Shares of Alliance
         Agronomics, Inc. dated as of March 17, 2000.*++

  10.11  Form of Purchase Agreement between Royster-Clark Resources,
         LLC and G. Waddy Garrett dated March 17, 2000.*++
</TABLE>


                                       36
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number                       Title of Document                       Location
 -------                      -----------------                       --------
 <C>     <S>                                                          <C>
  10.12  Agreement for the Sale and Purchase of Assets between Crop
         Builders, Inc., as Seller and Royster-Clark, Inc., as
         Purchaser dated January 28, 2000.*++

  10.13  Agreement for the Sale and Purchase of Assets between
         Armstrong Ag Center, Inc., as Seller and Royster-Clark,
         Inc., as Purchaser dated January 28, 2000.*++

  25.01  Statement of Eligibility and Qualification of the United
         States Trust Company of New York on Form T-1.+

  27.1   Financial Data Schedule.++
</TABLE>
- --------
 * Pursuant to Item 601 (b) (2) of Regulation S-K, the schedules to this
   Agreement are omitted.
** Portions of this exhibit have been omitted pursuant to a request for
   confidential treatment.
 + Incorporated by reference to Registration Statement on Form S-4 (Reg.
   No.:333-81235) where it has been filed as an Exhibit.
 ++Filed herewith.

                                      37
<PAGE>

         INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE

The Board of Directors and Stockholders
Royster-Clark, Inc.:

  Under date of April 12, 2000, we reported on the consolidated balance sheets
of Royster-Clark, Inc. and subsidiaries as of December 31, 1999 and 1998, and
the related consolidated statements of income, stockholders, equity and cash
flows for the nine months ended December 31, 1999 and each of the years in the
two-year period ended December 31, 1998, which are included herein. In
connection with our audits of the aforementioned financial statements, we also
audited the related financial statement schedule. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule based on our
audits.

  In our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly,
in all material respects, the information set forth therein.

                                          /s/ KPMG LLP

Norfolk, Virginia
April 12, 2000

                                      38
<PAGE>

                                                                     Schedule II

                              ROYSTER-CLARK, INC.

                        Allowance for Doubtful Accounts
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                 Amounts
                                        Balance  charged                Balance
                                       beginning   to                   end of
                                       of period expense Deductions (1) period
                                       --------- ------- -------------- -------
<S>                                    <C>       <C>     <C>            <C>
Year ended December 31, 1997..........  $1,417      688        (305)     1,800
Year ended December 31, 1998..........  $1,800      451        (451)     1,800
Nine months ended December 31, 1999...  $8,245    1,703      (2,916)     7,032
</TABLE>
- --------
(1) Amounts determined not to be collectible, net of recoveries.

                                       39
<PAGE>

                                  SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.

Dated: April 19, 2000                     Royster-Clark, Inc.

                                              /s/ Francis P. Jenkins, Jr.
                                          By: _________________________________
                                                  Francis P. Jenkins, Jr.
                                                  Chief Executive Officer

  Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated

<TABLE>
<CAPTION>
              Signature                          Title                   Date
              ---------                          -----                   ----

<S>                                    <C>                        <C>
   /s/ Francis P. Jenkins, Jr.         Chairman of the Board        April 19, 2000
______________________________________
       Francis P. Jenkins, Jr.

     /s/ Charles E. Corpening          Director                     April 19, 2000
______________________________________
         Charles E. Corpening

     /s/ Thomas F. McWilliams          Director                     April 19, 2000
______________________________________
         Thomas F. McWilliams

      /s/ Randolph G. Abood            Director                     April 19, 2000
______________________________________
          Randolph G. Abood

       /s/ Walter R. Vance             Chief Financial and          April 19, 2000
______________________________________  Accounting Officer
           Walter R. Vance
</TABLE>

  SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE EXCHANGE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE EXCHANGE ACT.

  (a) (i) No annual report is provided to the Noteholders other than copies of
Registrant's Annual Report on Form 10-K

  (a) (ii) No Proxy Statement, form of proxy or other proxy soliciting
material has been sent to any Noteholder with respect to any annual or other
meeting of Registrant's security holders.

                                      40

<PAGE>

                                                                   EXHIBIT 10.02


                 FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
                 ---------------------------------------------
          AMONG ROYSTER-CLARK, INC., VARIOUS FINANCIAL INSTITUTIONS,
          ----------------------------------------------------------
           DLJ CAPITAL FUNDING, INC., J.P. MORGAN SECURITIES, INC.,
           --------------------------------------------------------
                       AND U.S. BANCORP, AG CREDIT INC.
                       --------------------------------
                             DATED APRIL 22, 1999
                             --------------------


     This First Amendment to Revolving Credit Agreement is made as of the 25/th/
day of February, 2000 between Royster-Clark, Inc. a Delaware corporation
(hereinafter referred to as "Borrower"), and the various financial institutions
signatory hereto (being at least the "Required Lenders," as defined in the
Credit Agreement)(the "Lenders").

                                    RECITAL
                                    -------

     Borrower has requested Lenders waive compliance with certain covenants and
requirements under the Revolving Credit Agreement between Borrower and Lenders
dated April 22, 1999 (as amended, replaced, restated and/or supplemented from
time to time, the "Credit Agreement"), and that Lenders amend and modify the
Credit Agreement with respect to certain defined terms and covenants and Lenders
are willing to do so on the terms and conditions herein contained.

     NOW THEREFORE, in consideration of the foregoing and of the terms and
conditions contained in the Credit Agreement and this First Amendment and of any
loans or other financial accommodations heretofore, now or hereafter made to or
for the benefit of Borrower by Lenders, Borrower and Lenders agree as follows:

     1.   Acknowledgment of Specific Defaults.  Borrower acknowledges the
          -----------------------------------
existence of the following Events of Default: (a) Borrower has failed to comply
with Section 7.2.4 of the Credit Agreement as of fiscal year end December 31,
     -------------
1999 inasmuch as Borrower has not maintained compliance with regard to its Fixed
Charge Coverage Ratio, Interest Coverage Ratio, and Leverage Ratio.

     2.   Waiver of Specific Defaults. Lenders waive the specific Events of
          ---------------------------
Default enumerated in Section 1 above as of and through the date of this
                      ---------
Amendment. Notwithstanding the foregoing waiver, it is expressly understood and
agreed that Lenders' failure, at any time or times hereafter, to require strict
performance by Borrower of any provision of the Credit Agreement, shall not
waive, affect or diminish any right of Lenders thereafter to demand strict
compliance and performance therewith, and shall not suspend, waive or affect any
other Event of Default, whether the same is prior or subsequent thereto and
whether of the same or a different kind or character.
<PAGE>

     3.   The definitions of Base Net Worth and Net Worth Amount are hereby
deleted in their entirety from Section 1.1 of the Credit Agreement, Defined
                               -----------                          -------
Terms.
- -----

     4.   A new defined term, Adjusted Leverage Ratio, shall be added to Section
                              -----------------------                    -------
1.1 of the Credit Agreement, Defined Terms, to read in full as follows:
- ---                          -------------

          "Adjusted Leverage Ratio" means, at the end of any Fiscal Quarter, the
           -----------------------
     ratio of:

          (a)  Total Debt (less all obligations of Borrower related to the First
     Mortgage Notes)*

          to
          --

          (b)  EBITDA for the period of four consecutive Fiscal Quarters ended
     on such date.

          *For the purposes of the definition of Adjusted Leverage Ratio, the
     components of Total Debt shall be deemed to equal the average monthly
     outstanding balances thereof as of the last day of each month for the
     preceding 12 months.

     5.   With regard to the definition of Compliance Certificate set forth in
                                           ----------------------
Section 1.1 of the Credit Agreement, Defined Terms, Borrower shall amend the
- -----------                          -------------
form of Exhibit E1 and the attachments thereto to conform with the amendments
        ----------
set forth herein, as applicable.

     6.   The definition of Current Ratio in Section 1.1 of the Credit
                            -------------    -----------
Agreement, Defined Terms, shall be amended to read in full as follows:
- -------------

          "Current Ratio" means, at any time, the ratio of (a) Current Assets to
           -------------
     (b) Current Liabilities plus current maturities of Indebtedness, plus,
                             ----                                     ----
     without duplication, the amount of outstanding Loans and Letter of Credit
     Outstandings at such time.

     7.   The definition of Fixed Charge Coverage Ratio in Section 1.1 of the
                            ---------------------------    -----------
Credit Agreement, Defined Terms, shall be amended to read in full as follows:
                  -------------

          "Fixed Charge Coverage Ratio" means, at the close of any Fiscal
           ---------------------------
     Quarter, the ratio computed for the period consisting of such Fiscal
     Quarter and each of the three immediately prior Fiscal Quarters of:

          (a)  EBITDA for all such Fiscal Quarters,

          less
          ----

                                       2
<PAGE>

          (b)  the sum of Capital Expenditures (less any expenditures related to
     the Proposed Acquisitions) for all such Fiscal Quarters,

          less
          ----

          (c)  the sum of Taxes paid in cash by the Borrower and its Restricted
          Subsidiaries for all such Fiscal Quarters,

          to
          --

          (d)  the sum of Interest Expense and Long Term Debt Payments paid in
     cash for all such Fiscal Quarters.

     8.   A new defined term, Long Term Debt Payments, shall be added to
                              -----------------------
Section 1.1 of the Credit Agreement, Defined Terms, to read in full as follows:
- -----------                          -------------

          "Long Term Debt Payments" means, all scheduled or unscheduled
           -----------------------
     principal payments on all long term obligations of Borrower and the
     Restricted Subsidiaries for borrowed money or advances and all obligations
     of Borrower and the Restricted Subsidiaries evidenced by bonds, debentures,
     notes, or other similar instruments, and all long term payments on
     Capitalized Leases and Synthetic Leases.

     9.   A new defined term, Proposed Acquisitions, shall be added to
                              ---------------------
Section 1.1 of the Credit Agreement, Defined Terms, to read in full as follows:
- -----------                          -------------

          "Proposed Acquisitions" means, the proposed purchase of certain
           ---------------------
     business and fixed assets (including rolling stock and capitalized leased
     equipment) of three independent retail and wholesale distributors of
     fertilizer, seed, crop protection products and agronomic service companies
     with operations in Minnesota, Tennessee and Virginia for an aggregate
     purchase price of approximately $13.850 million to be completed not later
     than April 20, 2000; wherein two of the acquisitions will be via asset
     purchase and one will be via the stock purchase of a new subsidiary; and
     wherein the acquisitions will include approximately 25 physical locations
     (3 in Minnesota, 11 in Tennessee and 11 Virginia).

     10.  A new defined term, Working Capital, shall be added to Section 1.1 of
                              ---------------                    -----------
the Credit Agreement, Defined Terms, to read in full as follows:
                      -------------

          "Working Capital" means, at any time (a) Current Assets minus (b)
           ---------------
     Current Liabilities plus current maturities of Indebtedness, plus, without
                         ----                                     ----
     duplication, the amount of outstanding Loans and Letter of Credit
     Outstandings at such time.

                                       3
<PAGE>

     11.  Section 7.2.4.(a) of the Credit Agreement, Financial Covenants, shall
          -----------------                          --------------------
be modified and amended to read as follows:

          Interest Coverage Ratio.  The Borrower will not permit the Interest
          -----------------------
     Coverage Ratio as of the last day of any Fiscal Quarter occurring during
     any period set forth below to be less than the ratio determined below
     opposite such period:

<TABLE>
<CAPTION>
          Period                                    Interest Coverage Ratio
          ------                                    -----------------------
     <S>                                            <C>
     March 31, 2000                                        1.05:1
     June 30, 2000                                         1.40:1
     September 30, 2000                                    1.50:1
     December 31, 2000 through September 30, 2001          1.60:1
     December 31, 2001 and thereafter                      1.70:1
</TABLE>

     12.  Section 7.2.4.(b) of the credit Agreement shall be modified and
          -----------------
amended to read as follows:

          Current Ratio.  The Borrower will not permit the Current Ratio as of
          -------------
     the last day of any Fiscal Quarter occurring during any period set forth
     below to be less than the ratio set forth opposite such period:

<TABLE>
<CAPTION>
          Period                            Current Ratio
          ------                            -------------
     <S>                                    <C>
     March 31, 2000                             1.00:1

     June 30, 2000 and thereafter               1.15:1
</TABLE>

     13.  Section 7.2.4(c) of the Credit Agreement shall be modified and
          ----------------
amended to read as follows:

          Adjusted Leverage Ratio.  The Borrower will not permit the Adjusted
          -----------------------
     Leverage Ratio as of the last day of any Fiscal Quarter occurring during
     any period set forth below to be greater than the ratio set forth opposite
     such period:

<TABLE>
<CAPTION>
          Period                        Adjusted Leverage Ratio
          ------                        -----------------------
     <S>                                <C>
     March 31, 2000                           3.50:1

     June 30, 2000                            2.75:1
</TABLE>

                                       4
<PAGE>

<TABLE>
     <S>                                      <C>
     September 30, 2000 and thereafter        2.50:1
</TABLE>

     14.  Section 7.2.4.(d) of the Credit Agreement shall be modified and
          -----------------
amended to read as follows:

          Minimum Net Worth. The Borrower will not permit Net Worth during any
          -----------------
     period set forth below to be less than the amount set forth opposite such
     period:

<TABLE>
<CAPTION>
     Period                                  Net Worth
     ------                                  ---------
     <S>                                     <C>
     March 31, 2000                          $70,000,000

     June 30, 2000-December 31, 2000         $90,000,000

     March 31, 2001 and thereafter           $90,000,000 plus 50% of positive
                                             Net Income as of each fiscal year
                                             beginning with fiscal year end
                                             December 31, 2000.
</TABLE>

     15.  Section 7.2.4.(e) of the Credit Agreement shall be modified and
          -----------------
amended to read as follows:

          Fixed Charge Coverage Ratio. The Borrower will not permit the Fixed
          ---------------------------
     Charge Coverage Ratio as of the last day of any Fiscal Quarter occurring
     during any period set forth below to be less than the ratio set forth
     opposite such period:

<TABLE>
<CAPTION>
          Period                             Fixed Charge Coverage Ratio
          ------                             ---------------------------
     <S>                                     <C>
     March 31, 2000                                      0.35:1

     June 30, 2000                                       0.60:1

     September 30, 2000                                  0.70:1

     December 31, 2000 through September 30, 2001        1.00:1

     December 31, 2001 and thereafter                    1.10:1
</TABLE>

                                       5
<PAGE>

     16.  Section 7.2.4. of the Credit Agreement, Financial Covenants, shall be
          --------------                          --------------------
modified and amended by the addition of a new subsection (f) to read as follows:

          (f)  Working Capital.  The Borrower will not permit Working Capital as
               ---------------
     of the last day of any Fiscal Quarter occurring during any period set forth
     below to be less than the amount determined below opposite such period:

<TABLE>
<CAPTION>
     Period                                    Working Capital
     ------                                    ---------------
     <S>                                       <C>
     March 31, 2000                            $30,000,000

     June 30, 2000                             $65,000,000

     September 30, 2000 and thereafter         $50,000,000
</TABLE>

     17.  Section 7.2.7, of the Credit Agreement, Capital Expenditures, is
          --------------                          ---------------------
hereby modified with regard to the Capital Expenditure Covenant for the fiscal
year end 2000 to read:

<TABLE>
<CAPTION>
     Fiscal Year                   Capital Expenditure Amount
     -----------                   --------------------------
     <S>                           <C>
     2000                          $23,000,000 excluding any expenditures
                                   related to the Proposed Acquisitions.
</TABLE>

     18.  Waiver of Requirements with Regard to the Proposed Acquisitions.
          ---------------------------------------------------------------
Notwithstanding anything to the contrary set forth in the Credit Agreement, the
conditions set forth in Subsections (b)(i), (b)(ii) and (b)(iii) of the
definition of Permitted Acquisitions, set forth in Section 1.1 of the Credit
              ----------------------               -----------
Agreement, shall not be required to be satisfied with respect to the Proposed
Acquisitions.

     19.  Amendment Fee.  Borrower shall pay an Amendment Fee of five one
          -------------
hundredths of one percent (.05%), pro-rata based on Lender Commitment, to each
Lender that has responded in writing to the request to execute this Amendment,
on or before March 1, 2000.

                                       6
<PAGE>

     20.  Incorporation of Credit Agreement.  The parties hereto agree that
          ---------------------------------
this First Amendment shall be an integral part of the Credit Agreement executed
by the parties on the 22/nd/ day of April, 1999, and that all of the terms set
forth therein are hereby incorporated in this First Amendment by reference, and
that all terms of this First Amendment are hereby incorporated into said Credit
Agreement, as if made an original part thereof. All of the terms and conditions
of the Credit Agreement, which are not modified in this First Amendment shall
remain in full force and effect. To the extent the terms of this First Amendment
conflict with the terms of the Credit Agreement, the terms of this First
Amendment shall control.

     IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of the day and year first hereinabove written.

                                    ROYSTER-CLARK, INC., Borrower
                                    10 Rockefeller Plaza, 11th Floor
                                    New York, New York 10020

                                    By  /s/ Francis P. Jenkins, Jr.
                                      ------------------------------------
                                    Its Chairman & CEO
                                       -----------------------------------

                                    LENDERS

                                    U.S. BANCORP AG CREDIT, INC., as
                                    Administrative Agent and as a Lender
                                    950 17th Street, Suite 350
                                    Denver, Colorado  80202


                                    By  /s/ Al Schuler
                                      ------------------------------------
                                    Its Vice President
                                       -----------------------------------

                                    COOPERATIVE CENTRALE
                                    RAITTEISEN-BOERENLEENBANK B.A.,
                                    "RABOBANKNEDERLAND," NEW
                                    YORK BRANCH
                                    300 South Wacker Drive, Suite 3500
                                    Chicago, Illinois 60406

                                    By
                                      ------------------------------------
                                    Its
                                       -----------------------------------

                                    TRANSAMERICA BUSINESS CREDIT
                                    CORPORATION

                                       7
<PAGE>

                                    8750 West Bryn Mawr, Suite 720
                                    Chicago, Illinois 60631

                                    By  /s/ Robert Heinz
                                      ------------------------------------
                                    Its Senior Vice President
                                       -----------------------------------


                                    WELLS FARGO BANK
                                    8405 North Fresno Street
                                    Fresno, California 93720

                                    By
                                      ------------------------------------
                                    Its
                                       -----------------------------------

                                    HARRIS TRUST AND SAVINGS BANK
                                    111 West Monroe Street
                                    Chicago, Illinois 60690

                                    By  /s/ Christopher Fisher
                                      ------------------------------------
                                    Its Vice President
                                       -----------------------------------

                                    LaSALLE BUSINESS CREDIT, INC.
                                    477 Madison Avenue, 20th Floor
                                    New York, New York 10022

                                    By  /s/ Lawrence P. Garni
                                      ------------------------------------
                                    Its First Vice President
                                       -----------------------------------

                                    BANK OF AMERICA
                                    600 Peachtree Street, 13th Floor
                                    Atlanta, Georgia 30308

                                    By  /s/ J. P. Holloway
                                      ------------------------------------
                                    Its Senior Vice President
                                       -----------------------------------

                                    FINOVA CAPITAL CORPORATION
                                    311 South Wacker Drive, Suite 4440
                                    Chicago, Illinois 60406-4618

                                    By
                                      ------------------------------------
                                    Its
                                       -----------------------------------


                                       8
<PAGE>

                                    PNC BUSINESS CREDIT
                                    Two PNC Plaza-18/th/ Floor
                                    620 Liberty Avenue
                                    Pittsburgh, Pennsylvania 15222

                                    By  /s/ Daniel Paull
                                        ----------------------------------
                                    Its Vice President
                                        ----------------------------------


                                    IBJ WHITEHALL BUSINESS CREDIT
                                    CORPORATION
                                    One State Street
                                    New York, New York 10004

                                    By  /s/ Andrew C. Sepe
                                        ----------------------------------
                                    Its Assistant Vice President
                                        ----------------------------------


                                    MERCANTILE BANK NATIONAL
                                    ASSOCIATION
                                    One Mercantile Center
                                    7th and Washington, Tram 12-3
                                    St. Louis, Missouri 63101

                                    By  /s/ Curtis A. Schriber
                                        ----------------------------------
                                    Its Vice President
                                        ----------------------------------

                                    ORIX BUSINESS CREDIT, INC.
                                    846 East Algonquin Road
                                    Schaumburg, Illinois 60173

                                    By
                                        ----------------------------------
                                    Its
                                        ----------------------------------


                                    THE PROVIDENT BANK
                                    One East Fourth Street, 249 A
                                    Cincinnati, Ohio 45202

                                    By  /s/ Joseph N. Garde
                                        ----------------------------------
                                    Its Vice President
                                        ----------------------------------

                                       9

<PAGE>

                                                                   Exhibit 10.09


                 AGREEMENT FOR THE SALE AND PURCHASE OF ASSETS

                                     Among

                              ROYSTER-CLARK, INC.,
                                    AS BUYER

                                      And

                          AMERICAN CROP SERVICES, INC.
                                      and
                       CHICKASAW CHEMICAL COMPANY, INC.,
                                   AS SELLERS




                             Dated January 27, 2000
<PAGE>

     THIS ASSET PURCHASE AGREEMENT (together with all Schedules, Exhibits,
amendments and supplements thereto, the "Agreement") is made as of January 27,
2000, by and among Royster-Clark, Inc., a Delaware corporation ("Buyer"),
American Crop Services, Inc., a Tennessee corporation ("ACS") and Chickasaw
Chemical Company, Inc., a Tennessee corporation ("CCC").

                                    RECITALS:

     WHEREAS, Sellers (as hereinafter defined) own certain assets used by
Sellers in the business of manufacturing, selling, blending, reconditioning,
storing and distributing fertilizer, grain, seed and related chemical products
for and to farmers and others (the "Business");

     WHEREAS, the Sellers desire to sell to Buyer, and Buyer desires to purchase
from Sellers certain assets of Sellers, together with the business associated
therewith, that are used by Sellers in connection with the Business, and Sellers
are willing to sell the same to Buyer, upon the terms and conditions hereinafter
set forth in this Agreement; and

     WHEREAS, as a condition to entering into this Agreement, Buyer requires
that Sellers commence a bankruptcy case by filing a voluntary petition for
relief under applicable provisions of the United States Bankruptcy Code, and
that Sellers seek the prior approval of the United States Bankruptcy Court for
the Western District of Tennessee (the "Bankruptcy Court") of this Agreement and
of the sale of the Purchased Assets (as hereinafter defined) to Buyer hereunder
free and clear of all liens, claims, interests and encumbrances, and Sellers are
willing to file such a voluntary petition and seek such Bankruptcy Court
approval.

     NOW, THEREFORE, in consideration of the premises and of the respective
representations and warranties hereinafter set forth, the covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Buyer and Sellers
hereby agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

     For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article I:

     1.1  "ACS" -- as defined in the first paragraph of this Agreement.

     1.2  "Agreement" -- as defined in the first paragraph hereof.

     1.3  "Ancillary Agreements" -- shall mean all the agreements and other
documents required to be executed and delivered by the Sellers under this
Agreement.

                                       2
<PAGE>

     1.4  "Assumed Contracts" -- shall mean those Contacts that are assigned to
and assumed by Buyer at the Closing under Section 3.1, as listed on Schedule 3.1
as the same may be amended from time to time before the Sale Approval Date.

     1.5  "Balance Sheet" -- the unaudited consolidated balance sheet of the
Sellers as at November 30, 1999 (including the notes thereto) previously
delivered to Buyer.

     1.6  "Bankruptcy Code" -- shall mean Title 11 of the United States Code (11
U.S.C. (S) 101 et. seq.) as in effect from time to time.

     1.7  "Bankruptcy Court" -- as defined in Section 7.10.

     1.8  "Breach" -- a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement, any Ancillary Agreement or any
other instrument delivered pursuant to this Agreement will be deemed to have
occurred if there is or has been (a) any inaccuracy in or breach of, or any
failure to perform or comply with, such representation, warranty, covenant,
obligation, or other provision, or (b) any claim (by any Person) or other
occurrence or circumstance that is or was inconsistent with such representation,
warranty, covenant, obligation, or other provision, and the term "Breach" means
any such inaccuracy, breach, failure, claim, occurrence, or circumstance.

     1.9  "Break-Up Fee" --as defined in Section 7.10.

     1.10 "Business" shall have the meaning ascribed to such term in the
Recitals.

     1.11 "Business Day" --  any day (other than a Saturday, Sunday or public
holiday in the Borough of Manhattan, City of New York) on which banking
institutions in New York City are not required or permitted by law or executive
order to close.

     1.12 "Buyer"--as defined in the first paragraph of this Agreement.

     1.13 "CCC"--as defined in the first paragraph of this Agreement.

     1.14 "Closing" --as defined in Section 4.1.

     1.15 "Closing Date" --the date and time as of which the Closing actually
takes place.

     1.16 "Competing Business"-- as defined in Section 5.1.17.

     1.17 "Contemplated Transactions" -- all of the transactions contemplated
by this Agreement, including, without limitation, the sale of the Purchased
Assets by the Sellers to Buyer; Buyer's acquisition and ownership of the
Purchased Assets; the execution, delivery and performance of the Ancillary
Agreements; and the performance by the parties hereto of their respective
covenants, agreements and obligations hereunder and thereunder.

                                       3
<PAGE>

     1.18  "Contracts" -- all agreements, contracts, and obligations of Sellers
relating to the Business.

     1.19  "Control Person" -- as to any entity, any Person who controls such
entity within the meaning of the Securities Act of 1933, as amended, or the
Securities and Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

     1.20  "Eligible Expenses" -- those disbursements set forth in the Sellers'
Operating Budget that are specifically identified as "Eligible Expenses"
therein.

     1.21  "Encumbrance"--any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.

     1.22  "Environment" -- soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwater, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.

     1.23  "Environmental Claim"-- means any claim, action, cause of action,
investigation or written notice, order, direction or requirement by any Person
alleging potential liability or remedy, whether civil, administrative, criminal
or quasi-criminal (including, without limitation, potential liability for
investigatory costs, cleanup, remediation or preventive costs, governmental
response costs, natural resources damages, property damages, personal injuries,
fines, penalties or monetary and non-monetary sanctions) arising out of, based
on or resulting from (a) the presence or Release of any Hazardous Materials at
any location or (b) circumstances forming the basis of any violation of any
Environmental Laws.

     1.24  "Environmental, Health, and Safety Liabilities" -- any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Laws or Occupational Safety and Health Laws and consisting of or
relating to:

     (a)   any environmental, health, or safety matters or conditions (including
on-site or off-site contamination, occupational safety and health, and
regulation of chemical substances or products);

     (b)   fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Laws or Occupational Safety and Health Laws;

     (c)   financial responsibility under Environmental Laws or Occupational
Safety and Health Laws for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Laws or Occupational
Safety and Health Laws (whether or not such Cleanup has

                                       4
<PAGE>

been required or requested by any Governmental Body or any other Person) and for
any natural resource damages; or

     (d)   any other compliance, corrective, investigative, or remedial measures
required under Environmental Laws or Occupational Safety and Health Laws.

The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ' 9601 et seq., as amended
("CERCLA").

     1.25  "Environmental Laws" -- means all United States federal, interstate,
state, and local laws, common law, guidelines, permits, agreements, licenses,
by-laws, regulations and restrictions by any Governmental Body relating to
pollution or protection of human health or the environment, including, without
limitation, laws relating to Releases or threatened Releases of Hazardous
Materials or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, transport or handling of Hazardous Materials or the
clean-up thereof and the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, but not including the Occupational Safety and
Health Act of 1970, as amended.

     1.26  "Equipment" -- shall mean all of Sellers' equipment, machinery,
furniture, fixtures, motor vehicles or rolling stock and other tangible personal
property (other than Inventory) owned by the Sellers and located at the
Facilities and otherwise used in the Business or for the manufacture and
marketing of the Products, and all spare parts for the above described machinery
and equipment, including, for this purpose, spare parts for leased machinery and
equipment.

     1.27  "ERISA" -- the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.

     1.28  "ERISA Affiliate" -- as defined in Section 5.1.6.

     1.29  "Excluded Assets" -- shall mean Cash and other liquid investments of
Sellers (other than Hedging Account balances and margin collateral deposited in
such Accounts), Sellers' Accounts and all other properties and assets owned by
Sellers identified on Schedule 1.29.

     1.30  "Expense Sharing Payment" - as defined in Section 2.4.

     1.31  "Facilities" -- any real property, leaseholds, or other interests
owned or operated by any Seller and any buildings, plants, and structures owned
or operated by any Seller.

     1.32  "GAAP"-- generally accepted United States accounting principles
consistently applied.

     1.33  "Governmental Authorization" -- any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.

                                       5
<PAGE>

     1.35  "Governmental Body" -- any nation, state, county, city, town,
village, district, or other jurisdiction of any nature; federal, state, local,
municipal, foreign, or other government; governmental or quasi-governmental
authority of any nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal); multi-national
organization or body; or body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.

     1.36  "Hazardous Activity" -- the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the damages, or risk of
damages, or poses an unreasonable risk of harm to Persons or property on or off
the Facilities or that may affect the value of the Facilities or the Business or
that may result in an Environmental, Health, and Safety Liability.

     1.37  "Hazardous Materials"-- means (i) all substances defined as Hazardous
Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R.300.5, or defined as such by, or
regulated as such under, any Environmental Law or (ii) wastes, pollutants,
contaminants and substances listed, classified or regulated as such and that
form the basis for an Environmental Claim under any Environmental Law.

     1.38  "Hedging Accounts" -- means Sellers' commodity trading accounts
described on Schedule 1.38, including government securities, cash or other
margin collateral deposited therein.

     1.39  "Indemnity Escrow" - as defined in Section 4.2.

     1.40  "Indemnity Escrow Agreement" - as defined in Section 4.5.
"Intangible Assets" -- shall mean (a) all permits, licenses, and approvals
utilized by Sellers in connection with the Business, (b) all Intellectual
Property Assets, (c) all Cash and other assets held in the Hedging Accounts, and
(d) all other intangible assets of Sellers used in the Business that are not
included in the Excluded Assets.

     1.41  "Intellectual Property Assets" -- as defined in Section 5.1.14.

     1.42  "Inventory" -- shall mean all of Sellers' (a) finished goods products
manufactured or held by them for sale for the Business, (b) grain and seed held
by them for sale, and (c) raw materials, work-in-process, pallets and supplies
on hand or on order as of the Closing Date for use in the Business, as
determined by the physical count provided for in Section 4.4(b).

     1.43  "Inventory Value" -- shall mean (a) as to grain, the wholesale
marked-to-market value thereof as of the close of business on the day before the
Closing Date as listed on the applicable commodities exchange for that grain;
(b) as to unreconditioned seed in bulk form, Sellers' direct cost thereof; (c)
as to reconditioned seed not in bagged form, Sellers' direct cost thereof plus
$1.25 per bushel (based on a good faith estimate reasonably acceptable to Buyer
and Sellers) and as to

                                       6
<PAGE>

reconditioned seed in bagged form, an additional charge of $2.00 per bag; and
(e) as to all other Inventory, the lesser of Sellers' direct cost or the
wholesale fair market value thereof as of the Closing Date, determined in
accordance with GAAP; provided, however, that all Inventory that is not of good
and saleable quality or is obsolete, or is not in readily usable condition, or
consists of empty pallets, shall be valued for this purpose at zero.

     1.44  "IRC" -- the Internal Revenue Code of 1986, as amended to the date
hereof and regulations issued by the IRS pursuant to the IRC.

     1.45  "IRS"  -- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.

     1.46  "Knowledge"-- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter. A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving as a director, executive officer, partner, executor, or trustee of such
Person (or in any similar capacity) has Knowledge of such fact or other matter.

     1.47  "Legal Requirement" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative Order, constitution, law,
ordinance, principle of common law, regulation, rule, statute, or treaty.

     1.48  "Material Adverse Effect" -- shall mean a material adverse effect on
(i) the ability of the Sellers to perform their obligations under this Agreement
or any Ancillary Agreement, (ii) the Business as conducted by Sellers prior to
the Closing or the legality or validity of the conduct of the Business by Buyer
after the Closing, or (iii) the capacity of Sellers prior to the Closing or of
Buyer after the Closing to use or operate any of the Purchased Assets.

     1.49  "Material Contract" -- any Contract which, if breached or terminated,
will or is reasonably likely to result in a Material Adverse Effect.

     1.50  "Miscellaneous Assets" -- shall mean all of Sellers promotion and
advertising materials and literature, business records and books of account
relating to the Business, records relating to the research and development of
Products sold or being developed for sale and all other assets related to the
Business or identified on Schedule 1.50.

     1.51  "Occupational Safety and Health Laws" -- any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.

     1.52  "Order" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.

                                       7
<PAGE>

     1.53  "Ordinary Course of Business" -- an action taken any Sellers will be
deemed to have been taken in the "Ordinary Course of Business" only if (a) such
action is consistent with the past practices of the Sellers and is taken in the
ordinary course of its normal day-to-day operations; and (b) such action is
similar in nature and magnitude to actions customarily taken, without any
authorization by the board of directors or stockholders, in the ordinary course
of the normal day-to-day operations of other Persons that are in the same line
of business as the Sellers.

     1.54  "Organizational Documents" --(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.

     1.55  "PBGC"  -- as defined in Section 5.1.6(c).

     1.56  "Person" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.

     1.57  "Plan" -- as defined in Section 5.1.6.

     1.58  "Proceeding" --any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.

     1.59  "Proceeding" -- as defined in Section 5.1.20.

     1.60  "Purchased Assets" shall mean all of the Sellers' right, title,
interest and estate owned on the Closing Date in and to all of the following
assets intended to be sold to Buyer hereunder:
                    the Facilities;
                    the Contracts;
                    the Equipment;
                    the Intangible Assets;
                    the Inventory; and
                    the Miscellaneous Assets;
exclusive, however, of the Excluded Assets.

     1.61  "Purchase Price" -- as defined in Section 2.2.

     1.62  "Related Person" -- with respect to an individual: (a) each other
member of such individual's Family; (b) any Person that is directly or
indirectly controlled by such individual or one or more members of such
individual's Family; (c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and (d) any

                                       8
<PAGE>

Person with respect to which such individual or one or more members of such
individual's Family serves as a director, officer, partner, executor, or trustee
(or in a similar capacity).

     With respect to a Person other than an individual: (a) any Person that
directly or indirectly controls, is directly or indirectly controlled by, or is
directly or indirectly under common control with such specified Person; (b) any
Person that holds a Material Interest in such specified Person; (c) each Person
that serves as a director, officer, partner, executor, or trustee of such
specified Person (or in a similar capacity); (d) any Person in which such
specified Person holds a Material Interest; (e) any Person with respect to which
such specified Person serves as a general partner or a trustee (or in a similar
capacity); and (f) any Related Person of any individual described in clause (b)
or (c).

     For purposes of this definition, (a) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse and former spouses, (iii) any
other natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 5% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 5% of the outstanding equity securities or
equity interests in a Person.

     1.63  "Release" -- means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, dispersal, leaching or migration into the
environment (including, without limitation, ambient air, surface water,
groundwater and surface or subsurface strata) or into or out of any property,
including the movement of Hazardous Materials through or in the air, soil,
surface water, groundwater, environment or property.

     1.64  "Representative" -- with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.

     1.65  "Secured Lenders" -- shall mean Mercantile Bank of St. Louis National
Association ("Mercantile"), First American National Bank ("FANB"), and Harris
Trust and Savings Bank ("Harris", and, together with Mercantile and FANB,
collectively the "Secured Lenders"), as Agent for itself and the other Secured
Lenders.

     1.66  "Sellers" -- means ACS and CCC and their respective Subsidiaries.

     1.67  "Sellers' Accounts" -- shall mean the Sellers' trade accounts
receivable, rebates receivable and notes receivable from the Business on
Sellers' books as of the Closing Date, excluding the Hedging Accounts.

     1.68  "Seller's Closing Documents" -- means as to each Seller the documents
to be executed and delivered at the Closing by such Seller.

                                       9
<PAGE>

     1.69  "Sellers' Operating Budget" - the operating budget for the Business
formulated by Sellers as set forth on Schedule 1.69.

     1.70  "Subsidiary" -- with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of a Seller.

     1.71  "Tax" -- any federal, state, local or foreign tax, including income,
gross receipts, windfall profits, value added, ad valorum, profits, payroll,
stamp, occupational, premium, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes.

     1.72  "Tax Return" -- any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.

     1.73  "Threatened" --a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing),
or if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.

     1.74  "Threat of Release" --a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.

     1.75  "Trade Secrets" --as defined in Section 5.1.14.

                                   ARTICLE II
                      PURCHASE AND SALE OF PURCHASED ASSETS

     2.1  Purchase of Assets.  Subject to the terms and conditions herein set
forth, on the Closing Date, Buyer will purchase and acquire, and Sellers will
sell, assign, convey and transfer to Buyer, the Purchased Assets and the
Business.

     2.2  Consideration.  The consideration for the purchase of the Purchased
Assets and the Business as provided herein and Sellers' other obligations under
this Agreement is Seven Million Dollars ($7,000,000.00), plus Buyer's
obligations under Article III, plus the Inventory Value as determined in
accordance with Sections 1.3 and 4.4(b), plus the sum of the net equity balances
of the Hedging Accounts, plus the Expense Sharing Payment (the "Purchase
Price").  The cash portion

                                       10
<PAGE>

of the Purchase Price shall be allocated in accordance with Schedule 2.2. The
parties will follow and use such allocation on all Tax Returns, filings or other
related reports made by either of them to any governmental agencies. To the
extent that disclosures of such allocation are required to be made by the
parties to the IRS under any provisions of the IRC or any regulations
thereunder, each of the parties will disclose such reports to the others prior
to filing the same with the IRS.

     2.3  Expenses and Taxes of Transfer.  All Taxes and recording fees arising
out of or relating to the Purchased Assets shall be borne and paid for by the
party who pursuant to applicable law bears (or who is deemed to bear) the cost,
fee or Tax.   Nothing contained in this Agreement shall be construed to obligate
or require the Buyer to pay, or be liable for, any business, occupation, real or
personal property, use, withholding, income or similar Taxes or any Tax of any
kind related to any period prior to the Closing Date.

     2.4  Sharing of Operating Expenses.  As a part of the Purchase Price, Buyer
agrees to pay Sellers at the Closing, in immediately available funds, the lesser
of (a) one-half (1/2) of those items identified as Eligible Expenses on Sellers'
Operating Budget, or (b) $600,000.00 (the "Expense Sharing Payment").

                                   ARTICLE III
                               ASSUMED LIABILITIES

     3.1 Assumed Liabilities.

     (a) Subject to the terms and conditions of this Agreement, and except as
set forth in Section 3.1(c), Sellers shall assign or cause to be assigned, and
Buyer shall assume, pay, perform and discharge all of Sellers' undischarged
obligations incurred or arising under the Assumed Contracts, with respect to the
period commencing on the day following the Closing Date. Except as set forth in
Section 3.1(c), Buyer shall not assume, nor shall Buyer be obligated to pay,
perform or discharge, any debts, obligations, contracts or liabilities of
Sellers, whether fixed, unliquidated, absolute, contingent or otherwise, not
arising under an Assumed Contract, or not expressly set forth in Schedule 3.1
including, without limitation, any Tax liabilities, any indebtedness for monies
borrowed, or any other liability.  Sellers represent, warrant and covenant that
the Assumed Contracts listed on Schedule 3.1 (as such Schedule exists on the
date hereof, prior to any amendment pursuant to Sections 3.1(b) or (c)) are not
currently in monetary default, and that sufficient funds are set forth in the
Operating Budget to prevent any such monetary default through the Closing Date.

     (b) Schedule 3.1 may, at Buyer's sole discretion, be amended to delete any
item set forth therein by written notice to Sellers at any time up to two (2)
days before issuance of the Sale Approval Order.

     (c) Schedule 3.1 may, at Buyer's sole discretion, be amended to add
items thereto by written notice to Sellers at any time up to two (2) days before
issuance of the Sale Approval Order; provided, however, that as between Buyer
and Sellers, Buyer shall be responsible for any undischarged obligations
incurred or arising under such Assumed Contracts, whether such obligations arose
before or after the Closing Date

                                       11
<PAGE>

                                   ARTICLE IV
                                   THE CLOSING

          4.1  Time and Place.  The consummation of the transactions
contemplated by this Agreement shall take place on the Closing Date at 12:01
a.m. local time at the offices of Waring Cox, 1300 Morgan Keegan Tower, 50 North
Front Street, Memphis, TN  38103-1190 or at such other time and place as may be
mutually agreed upon in writing between Buyer and Sellers (the "Closing").

          4.2  Deliveries at Closing by Buyer.  At the Closing, Buyer shall pay
to or on behalf of the Sellers (or to or on behalf of the Secured Lenders as
will be set forth in the Sale Approval Order), by wire or other transfer,  (i)
the sum of Six Million Six Hundred Fifty Thousand Dollars ($6,650,000.00) plus
the Closing Inventory Payment, plus the Expense Sharing Payment in current and
immediately available funds, to a bank account or bank accounts as shall have
been previously designated in writing to Buyer plus the sum of the net equity
balances of the Hedging Accounts and (ii) Three Hundred Fifty Thousand Dollars
($350,000.00) to the escrow account described in Section 4.5 below (the
"Indemnity Escrow").  Buyer shall execute and deliver to Sellers such instrument
or instruments reasonably satisfactory to Sellers and its counsel as shall be
reasonably necessary to effect the assumption by Buyer of the obligations and
liabilities of Sellers which Buyer has agreed to assume in accordance with the
provisions of Article III hereof.

          4.3  Deliveries at Closing by Sellers.  At the Closing, Sellers shall,
subject to the terms and conditions of this Agreement, sell, assign, convey and
transfer the Purchased Assets or cause the same to be assigned, conveyed and
transferred to Buyer by delivery to Buyer of all such Bankruptcy Court orders,
bills of sale, deeds, endorsements, assignments and other good and sufficient
instruments of transfer and conveyance as shall be effective, in light of the
Bankruptcy Case, to vest in Buyer good and marketable title to the Purchased
Assets and as shall be reasonably satisfactory in form and substance to Buyer
and its counsel.

          4.4  Closing Inventory Payment.  (a) No later than four (4) Business
Days and no earlier than ten (10) days before the Closing Date, Sellers shall
calculate in good faith an estimate of the Inventory Value as of the Closing
Date, based upon the historical and year-to date experience of the Business (the
"Estimated Inventory Value"), and shall deliver to Buyer a written statement of
such calculation. At the Closing, Buyer shall pay to Sellers in current and
immediately available funds an amount equal to the Estimated Inventory Value
(the "Closing Inventory Payment"), against receipt by Buyer of a written
undertaking, in form and substance reasonably satisfactory to Buyer, of the
Secured Lenders to pay Buyer any and all amounts due it from Sellers under
Section 4.4(b) below.

          (b) Within five (5) days after the Closing Date, Buyer shall, together
with Sellers' representatives, conduct a physical count of the Inventory as of
the Closing Date and based upon such physical count, Buyer shall calculate the
Inventory Value as of the Closing Date and shall deliver to Sellers a written
statement of such calculation. If within ten (10) days after their receipt

                                       12
<PAGE>

of such statement, Sellers shall not have notified Buyer in writing of their
objection to such calculations setting forth in reasonable detail a reasonable
basis for such objection, such calculation of the Inventory Value shall be final
and binding upon the parties, absent manifest error. If Sellers shall give
timely written notice of their objection as aforesaid, the parties shall
negotiate in good faith to resolve the dispute. If, within ten (10) days after
Buyer's receipt of such notice of objection from Sellers, such dispute shall not
have been resolved, the matter shall be submitted to PricewaterhouseCoopers,
independent accountants, for a final and binding determination of the Inventory
Value. All fees and charges of PricewaterhouseCoopers for such services shall be
borne by the parties equally. Within five (5) days after the final and binding
determination of the Inventory Value as provided herein, (i) Buyer shall pay to
Sellers in current and immediately available funds, the amount, if any, by which
the Inventory Value, as so determined, exceeds the Closing Inventory Payment; or
(ii) Sellers (or Secured Lenders, pursuant to their undertaking as described in
Section 4.4(a)) shall pay to Buyer in current and immediately available funds,
the amount, if any, by which the Closing Inventory Payment exceeds the Inventory
Value, as so determined.

     4.5  Indemnity Escrow. To provide funding for any obligations of
Sellers to indemnify Buyer pursuant to Article X hereof, at the Closing Buyer
and Sellers shall enter into an escrow agreement in the form attached hereto as
Exhibit A (the "Escrow Agreement") with an escrow agent to be mutually
acceptable to the Buyer and the Secured Lenders, and shall create the Indemnity
Escrow thereunder by depositing with such Escrow Agent the sum of $350,000.00
pursuant to Section 4.2 above.

                                    ARTICLE V
                  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

     5.1 Representations And Warranties As To The Sellers. The Sellers hereby
jointly and severally represent and warrant to Buyer as follows:


          5.1.1  Organization And Good Standing

          (a) Schedule 5.1.1 contains a complete and accurate list for each
Seller of its name, its jurisdiction of incorporation, other jurisdictions in
which it is authorized to do business, and its capitalization (including the
identity of each stockholder and the number of shares held by each).  Each
Seller is a corporation duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation, with full corporate power
and authority to conduct its business as it is now being conducted, to own or
use the properties and assets that it purports to own or use, and to perform all
its obligations under the Contracts.  Each Seller is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
state or other jurisdiction where the failure so to qualify would have a
material adverse effect on the financial condition, business, assets or results
of operations of such Seller.

          (b) Each Seller has made available to Buyer copies of its
Organizational Documents, as currently in effect.

                                       13
<PAGE>

     5.1.2  Authority; No Conflict

          (a) This Agreement has been duly executed and delivered by the
     Sellers.

          (b) Except as shown on Schedule 5.1.2(b), neither the execution and
     delivery of this Agreement nor the consummation or performance of any of
     the Contemplated Transactions (subject to compliance with HSR, as defined
     in Section 7.9) will, directly or indirectly (with or without notice or
     lapse of time or both):

               (i)    contravene, conflict with, or result in a violation of (A)
          any provision of the Organizational Documents of any of the Sellers,
          or (B) any resolution adopted by the board of directors or the
          stockholders of any of the Sellers;

               (ii)   contravene, conflict with, or result in a violation of, or
          give any Governmental Body or other Person the right to challenge any
          of the Contemplated Transactions or to exercise any remedy or obtain
          any relief under, any Legal Requirement or any Order to which any
          Seller, or any of the assets owned or used by any Seller, may be
          subject;

               (iii)  contravene, conflict with, or result in a violation of any
          of the terms or requirements of, or give any Governmental Body the
          right to revoke, withdraw, suspend, cancel, terminate, or modify, any
          Governmental Authorization that relates to the business of any Seller
          or that otherwise relates to any assets owned or used by, any Seller;

               (iv)   contravene, conflict with, or result in a violation or
          breach of any provision of, or give any Person the right to declare a
          default or exercise any remedy under, or to accelerate the maturity or
          performance of, or to cancel, terminate, or modify, any Material
          Contract; or

               (v)    result in the imposition or creation of any Encumbrance
          upon or with respect to any of the Purchased Assets owned or used by
          any Seller.

          (c) Except as set forth in Schedule 5.1.2(c), and subject to
     compliance with HSR, no Seller is or will be required to give any notice to
     or obtain any Consent from any Person in connection with the execution and
     delivery of this Agreement or the consummation or performance of any of the
     Contemplated Transactions which has not been previously given or obtained.

     5.1.3  Books And Records; Bank And Brokerage Accounts, Etc.; Access

     The books of account and other records of the Sellers, all of which have
been made available to Buyer, are complete and correct in all material respects.
On the Closing Date, all of those books and records will be in the possession of
the Sellers.  Sellers have and have caused their Representatives to, (a) afford
Buyer and its Representatives full and free access to each Sellers'

                                       14
<PAGE>

personnel, Facilities, properties, contracts, books and records, and other
documents and data, (b) furnish Buyer and Buyer's Representatives with copies of
all such Contracts, books and records, and other existing documents and data as
Buyer may have reasonably requested, and (c) furnished Buyer and Buyer's
Representatives with such additional financial, operating, and other data and
information (including, without limitation, accountant's work papers) as Buyer
may reasonably request.

     5.1.4  Title To Properties; Encumbrances

     Schedule 5.1.4 contains a complete and accurate list of all Facilities, or
other interests therein owned or operated by any Seller. Sellers have delivered
or made available to Buyer copies of the deeds, leases and other instruments (as
recorded, where applicable) by which the Sellers acquired such Facilities, real
property, leaseholds and interests, and copies of all title insurance policies,
opinions, abstracts, and surveys in the possession of Sellers and relating to
such Facilities, property, leaseholds or interests.  The Sellers own (with good
and marketable title in the case of real property, subject only to the matters
permitted by the following sentence) all the properties and assets (whether
real, personal, or mixed and whether tangible or intangible) that they purport
to own located in the Facilities owned or operated by the Sellers or reflected
as owned in the books and records of the Sellers (except for assets held under
capitalized leases disclosed or not required to be disclosed in Schedule 5.1.4
and personal property acquired or sold since the date of the Balance Sheet in
the Ordinary Course of Business), and such properties, leaseholds and assets
constitute all of the properties, leaseholds and assets owned or used by the
Sellers.  All of the properties and assets purchased or otherwise acquired by
the Sellers since the date of the Balance Sheet (except for personal property
acquired and sold since the date of the Balance Sheet in the Ordinary Course of
Business, Inventory and short-term investments) are listed in Schedule 5.1.4.
All properties and assets reflected in the Balance Sheet are free and clear of
all Encumbrances and are not, in the case of real property, subject to any
rights of way, building use restrictions, exceptions, variances, easements,
Encumbrances, reservations, or limitations of any nature except, with respect to
all such properties and assets, (a) mortgages or security interests shown on the
Balance Sheet as securing specified liabilities or obligations, (b) mortgages or
security interests incurred in connection with the purchase of property or
assets after the date of the Balance Sheet (such mortgages and security
interests being limited to the property or assets so acquired), (c) liens for
current taxes not yet due, and (d) with respect to real property, (i) minor
imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value or impairs the use of the property subject
thereto, or impairs the operations of any Seller, (ii) zoning laws and other
land use restrictions that do not impair the present or anticipated use of the
property subject thereto, and (iii) the matters described in Schedule 5.1.4. All
Facilities, buildings, plants, and structures owned by the Sellers lie wholly
within the boundaries of the real property owned by the Sellers and do not
encroach upon the property of, or otherwise conflict with the property rights
of, any other Person.

     5.1.5  Taxes

     (a) The Sellers have filed or caused to be filed (on a timely basis since
January 1, 1996) all Tax Returns that are or were required to be filed by or
with respect to any of them, either separately or as a member of a group of
corporations, pursuant to applicable Legal Requirements. Sellers have delivered
or made available to Buyer copies of all such Tax Returns filed for years

                                       15
<PAGE>

ending after December 31, 1996. Except as shown in Schedule 5.1.5, the Sellers
have paid, or made provision for the payment of, all Taxes that have become due
as shown in those Tax Returns, or otherwise.

     (b) Schedule 5.1.5 contains a complete and accurate list of all audits of
all such Tax Returns, including a reasonably detailed description of the nature
and outcome of each audit.  All deficiencies proposed as a result of such audits
have been paid, reserved against, settled, or, as described in Schedule 5.1.5,
are being contested in good faith by appropriate proceedings.  Except as
described in Schedule 5.1.5, no Seller has given or been requested to give
waivers or extensions (or is or would be subject to a waiver or extension given
by any other Person) of any statute of limitations relating to the payment of
Taxes of any Seller or for which any Seller may be liable.

     (c) The charges, accruals, reserves and receivables with respect to Taxes
on the books of each Seller are adequate (determined in accordance with GAAP)
and are at least equal to that Seller's liability for Taxes.  There exists no
proposed tax assessment against any Seller except as disclosed in the Balance
Sheet or Schedule 5.1.5 and Sellers have no Knowledge of any basis for any such
assessment.  No consent to the application of Section 341(f)(2) of the IRC has
been filed with respect to any material property or assets held, acquired, or to
be acquired by any Seller.  All Taxes that any Seller is or was required by
Legal Requirements to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Governmental Body or
other Person.

     (d) All Tax Returns filed by (or that include on a consolidated basis) any
Seller are true, correct and complete.  Except as disclosed in Schedule 5.1.5,
there is no tax sharing agreement that will require any payment by any Seller
after the date of this Agreement.  None of the Sellers has given a power of
attorney to any Person, which is still in effect.

     5.1.6  Employee Benefits

     (a) Schedule 5.1.6 contains a true and complete list of each deferred
compensation and each bonus or other incentive compensation, stock purchase,
stock option and other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance and other "welfare" plan, fund or program
(within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or other
"pension" plan, fund or program (within the meaning of Section 3(2) of ERISA);
each employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by any
Seller or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with any Seller would be deemed a "single employer"
within the meaning of Section 4001 (b) of ERISA, or to which any Seller or an
ERISA Affiliate is party, whether written or oral, for the benefit of any
employee or former employee of any Seller  (the "Plans").  No Plan is subject to
Section 302 or Title IV of ERISA or Section 412 of the IRC.  Neither any Seller
nor any ERISA Affiliate has any commitment or formal plan, whether legally
binding or not, to create any additional employee benefit plans or modify or
change any existing Plan that would affect any employee or former employee of
any

                                       16
<PAGE>

Seller. At no time has any Seller maintained or been a party to a multi-
employer plan as defined in ERISA.

     (b) With respect to each Plan, the Sellers have heretofore delivered or
made available to Buyer true and complete copies of each of the following
documents:

          (i)    a copy of the Plan and any amendments thereto (or if the Plan
     is not a written Plan, a description thereof);

          (ii)   a copy of the two most recent annual reports and actuarial
     reports, if required under ERISA, and the most recent report prepared with
     respect thereto in accordance with Statement of Financial Accounting
     Standards No. 87;

          (iii)  a copy of the most recent summary plan description required
     under ERISA with respect thereto;

          (iv)   if the Plan is funded through a trust or any third party
     funding vehicle, a copy of the trust or other funding agreement and the
     latest financial statements thereof; and

          (v)    the most recent determination letter received from the Internal
     Revenue Service with respect to each Plan intended to qualify under Section
     401 of the IRC.

     (c) No liability under Title IV or Section 302 of ERISA has been incurred
by any Seller or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to any Seller or any ERISA
Affiliate of incurring any such liability, other than liability for premiums due
the Pension Benefit Guaranty Corporation ("PBGC") (which premiums have been paid
when due).

     (d) All contributions required to be made with respect to any Plan on or
prior to the Closing Date have been timely made.

     (e) Each Plan has been operated and administered in all material respects
in accordance with its terms and applicable law, including but not limited to
ERISA and the IRC.

     (f) Each Plan intended to be "qualified" within the meaning of Section
401(a) of the IRC is so qualified and the trusts maintained thereunder are
exempt from taxation under Section 501(a) of the IRC.  Each Plan intended to
satisfy the requirements of Section 501(c)(9) has satisfied such requirements.

     (g) No Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of any
Seller for periods extending beyond their retirement or other termination of
service, other than (i) coverage mandated by applicable law, (ii) death benefits
under any "pension plan", or (iii) benefits the full cost of which is borne by
the current or former employee (or his beneficiary).

                                       17
<PAGE>

     (h) No amounts payable under the Plans will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the IRC.

          (i)  The consummation of the transactions contemplated by this
     Agreement will not, either alone or in combination with another event, (i)
     entitle any current or former employee or officer of any Seller or any
     ERISA Affiliate to severance pay, unemployment compensation or any other
     payment, except as expressly provided in this Agreement, or

          (ii) accelerate the time of payment or vesting, or increase the amount
     of compensation due any such employee or officer.

     (j) No prohibited transaction as defined in Section 406 of ERISA or in
Section 4975 of the IRC or breach of fiduciary duty has occurred with respect to
any Plan, and there are no pending, threatened or anticipated claims by or on
behalf of any Plan, by any employee or beneficiary covered under any such Plan,
or otherwise involving any such Plan (other than routine claims for benefits).

     5.1.7  Compliance With Legal Requirements; Governmental Authorizations

     (a)    Except as set forth in Schedule 5.1.7:

            (i)   each Seller is, and at all times since December 31, 1997 has
     been, in material compliance with each Legal Requirement that is or was
     applicable to it or to the conduct or operation of its business or the
     ownership or use of any of its assets;

            (ii)  no event has occurred or circumstance exists that (with or
     without notice or lapse of time or both) (A) shall constitute or result in
     a violation by any Seller of, or a failure on the part of any Seller to
     comply with, any Legal Requirement in all material respects, or (B) shall
     give rise to any obligation on the part of any Seller to undertake, or to
     bear all or any portion of the cost of, any remedial action of any nature;
     and

            (iii) none of the Sellers has received any notice or other
     communication from any Governmental Body or any other Person regarding (A)
     any violation of, or failure to comply with, any Legal Requirement, or (B)
     any obligation on the part of the Sellers to undertake, or to bear all or
     any portion of the cost of, any remedial action of any nature.

     (b) Schedule 5.1.7 contains a complete and accurate list of each
Governmental Authorization that is held by any Seller or that otherwise relates
to the business of, or to any of the assets owned or used by, any Seller.  Each
Governmental Authorization listed or required to be listed in Schedule 5.1.7 is
valid and in full force and effect. Except as set forth in Schedule 5.1.7:

            (i)   each of the Sellers is, and at all times since December 31,
     1997 has been, in material compliance with the terms and requirements of
     each Governmental Authorization identified or required to be identified in
     Schedule 5.1.7;

                                       18
<PAGE>

            (ii)   no event has occurred or circumstance exists that shall (A)
     constitute or result directly or indirectly in a violation of, or a failure
     to comply with, any term or requirement of any Governmental Authorization
     listed or required to be listed in Schedule 5.1.7 in all material respects,
     or (B) result in the revocation, withdrawal, suspension, cancellation, or
     termination of, or any modification to, any Governmental Authorization
     listed in Schedule 5.1.7;

            (iii)  no Seller has received, at any time since December 31, 1997,
     any notice or other communication from any Governmental Body or any other
     Person regarding (A) any violation of, or failure to comply with, any term
     or requirement of any Governmental Authorization in any material respect,
     or (B) any revocation, withdrawal, suspension, cancellation, termination
     of, or modification to any Governmental Authorization listed in Schedule
     5.1.7; and

            (iv)   all applications required to have been filed for the renewal
     of the Governmental Authorizations listed in Schedule 5.1.7 have been duly
     filed on a timely basis with the appropriate Governmental Bodies, and all
     other filings required to have been made with respect to such Governmental
     Authorizations have been duly made on a timely basis with the appropriate
     Governmental Bodies.

     (c)    The Governmental Authorizations listed in Schedule 5.1.7
collectively constitute all of the Governmental Authorizations necessary to
permit the Sellers to lawfully conduct and operate their businesses in the
manner they currently conduct and operate such businesses and to permit the
Sellers to own and use their assets in the manner in which they currently own
and use such assets.

     5.1.8  Legal Proceedings; Orders

     (a)    Except as set forth in Schedule 5.1.8, there is no pending
Proceeding:

            (i)    that has been commenced by or against any Seller or that
     otherwise relates to or may affect the business of, or any of the assets
     owned or used by, any Seller; or

            (ii)   that challenges, or that may have the effect of preventing,
     delaying, making illegal, or otherwise interfering with, any of the
     Contemplated Transactions.

     (b)    Sellers have delivered to Buyer copies of all pleadings,
correspondence, and other documents, if any, relating to each Proceeding listed
in Schedule 5.1.8.

     (c)    Except as set forth in Schedule 5.1.8:

            (i)    there is no Order to which any Seller, or any of the
     Purchased Assets owned or used by any Seller, is subject;

            (ii)   none of the Sellers is subject to any Order that relates to
     the Business; and

                                      19
<PAGE>

            (iii)  to the Knowledge of Sellers, no officer, director, agent, or
     employee of any Seller is subject to any Order that prohibits such officer,
     director, agent, or employee from engaging in or continuing any conduct,
     activity, or practice relating to the Business as it is presently being
     conducted.

     (d)    Except as set forth in Schedule 5.1.8:

            (i)    each Seller is, and at all times since December 31, 1997 has
     been, in material compliance with all of the terms and requirements of each
     Order to which it, or any of the assets owned or used by it, is or has been
     subject;

            (iii)  no event has occurred or circumstance exists that shall
     constitute or result in a violation of or failure to comply with any term
     or requirement of any Order to which any Seller, or any of the assets owned
     or used by any Seller, is subject; and

            (iv)   no Seller has received, at any time since December 31, 1997,
     any notice or other communication (whether oral or written) from any
     Governmental Body or any other Person regarding any violation of, or
     failure to comply with, any term or requirement of any Order to which any
     Seller, or any of the assets owned or used by any Seller, is or has been
     subject.

     5.1.9  Absence Of Certain Changes And Events

     (a)    Except as set forth in Schedule 5.1.9 or pursuant to the
Contemplated Transactions, since December 31, 1998, the Sellers have conducted
their businesses in the Ordinary Course of Business and there has not been any:

            (i)    amendment to the Organizational Documents of any Seller;

            (ii)   damage to or destruction or loss of any asset or property of
     any Seller including without limitation, any of the Purchased Assets,
     whether or not covered by insurance, materially and adversely affecting the
     properties, assets, business, financial condition, or prospects of any
     Seller; or

            (iii)  material change in the accounting methods used by any Seller.

     5.1.10 Contracts; No Defaults

     (a)    Schedule 5.1.10 contains a complete and accurate list, and Sellers
have delivered to Buyer true and complete copies, of

            (i)    each Contract that involves performance of services or
     delivery of goods or materials by one or more Sellers of an amount or value
     in excess of $50,000;

                                      20
<PAGE>

            (ii)   each Contract that involves performance of services or
     delivery of goods or materials to one or more Sellers of an amount or value
     in excess of $50,000;

            (iii)  each Contract that was not entered into in the Ordinary
     Course of Business and that involves expenditures or receipts of one or
     more Sellers in excess of $50,000;

            (iv)   each lease, rental or occupancy agreement, license,
     installment and conditional sale agreement, and other Contract affecting
     the ownership of, leasing of, title to, use of, or any leasehold or other
     interest in, any real or personal property (except personal property leases
     and installment and conditional sales agreements having a value per item or
     aggregate payments of less than $50,000 and with terms of less than one
     year);

            (v)    each licensing agreement or other Contract with respect to
     Intellectual Property Assets, including agreements with current or former
     employees, consultants, or contractors regarding the appropriation or the
     non-disclosure of any of the Intellectual Property Assets;

            (vi)   each collective bargaining agreement and other Contract to or
     with any labor union or other employee representative of a group of
     employees;

            (vii)  each joint venture, partnership, and other Contract (however
     named) involving a sharing of profits, losses, costs, or liabilities by any
     Seller with any other Person;

            (viii) each Contract containing covenants that in any way purport to
     restrict the business activity of any Seller or any Affiliate of any Seller
     or limit the freedom of any Seller or any affiliate of any Seller to engage
     in any line of business or to compete with any Person;

            (ix)   each Contract providing for payments to or by any Person
     based on sales, purchases, or profits, other than direct payments for
     goods;

            (x)    each power of attorney that is currently effective and
     outstanding; each Contract entered into other than in the Ordinary Course
     of Business that contains or provides for an express undertaking by any
     Seller to be responsible for special, exemplary or consequential damages;

            (xi)   each Contract for capital expenditures in excess of $50,000;
     each written warranty, guaranty, and or other similar undertaking with
     respect to contractual performance extended by any Seller other than in the
     Ordinary Course of Business;

            (xii)  each warehouse, safety deposit box and other storage rental
     or lease agreement to which any Seller is a party or pursuant to which any
     assets of any Seller are stored; and

            (xiii) each amendment, supplement, and modification (whether oral or
     written) in respect of any of the foregoing.


                                      21
<PAGE>

     (b)    Schedule 5.1.10(b) sets forth reasonably complete details concerning
the Contracts listed therein, including the parties to such Contracts, the
amount of the remaining commitment of the Sellers under such Contracts, and the
Sellers' office where details relating to such Contracts are located which will
be delivered to Buyer at least ten days prior to the Bid Deadline.

     (c)    Except as set forth in Schedule 5.1.10:

            (i)    no Related Person of any Seller has or may acquire any rights
     under, and no such Related Person has or may become subject to any
     obligation or liability under, any Contract that relates to the business
     of, or any of the assets or rights owned, used or exercised by, any Seller;
     and

            (ii)   to the Knowledge of Sellers, no officer, director, agent,
     employee, consultant, or contractor of any Seller is bound by any Contract
     that purports to limit the ability of such officer, director, agent,
     employee, consultant, or contractor to (A) engage in or continue any
     conduct, activity, or practice relating to the business of any Seller, or
     (B) assign to any Seller or to any other Person any rights to any
     invention, improvement, or discovery.

            (iii)  Except as set forth in Schedule 5.1.10, and except for
     defaults by Sellers in their monetary obligations, each Contract identified
     or required to be identified in Schedule 5.1.10 is in full force and effect
     and is valid and enforceable in accordance with its terms.

     (d)    Except as set forth in Schedule 5.1.10 and except for defaults by
Sellers in their monetary obligations:

            (i)    each Seller is, and at all times since June 30, 1999 has
     been, in full compliance with all applicable terms and requirements of each
     Contract under which such Seller has or had any obligation or liability or
     by which such Seller or any of the assets owned or used by such Seller is
     or was bound;

            (ii)   no event has occurred or circumstance exists that (with or
     without notice or lapse of time or both) may contravene, conflict with, or
     result in a violation or breach of, or give any Seller (or, to Sellers'
     Knowledge, any other Person) the right to declare a default or exercise any
     remedy under, or to accelerate the maturity or performance of, or to
     cancel, terminate, or modify, any Contract;

            (iii)  no Seller has given to or received from any other Person, at
     any time since June 30, 1999, any notice or other communication (whether
     oral or written) regarding any actual, alleged, possible, or potential
     violation or breach of, or default under, any Contract;

            (iv)   the Contracts relating to the sale, design, manufacture, or
     provision of products or services by the Sellers have been entered into in
     the Ordinary Course of Business and have been entered into without the
     commission of any act alone or in concert with any

                                      22
<PAGE>

     other Person, or any consideration having been paid or promised, that is or
     would be in violation of any Legal Requirement.

     5.1.11 Insurance

     Sellers have delivered to Buyer:

            (i)    true and complete copies of all policies of insurance to
     which any Seller is a party or under which any Seller, or any director of
     any Seller, is or has been covered at any time within the three years
     preceding the date of this Agreement; and

            (ii)   true and complete copies of all pending applications for
     policies of insurance.

     5.1.12 Employees

     (a)    Sellers' have previously delivered to Buyer the following
information for each employee and director of the Sellers, including each
employee on leave of absence or layoff status: employer; name; job title;
current compensation paid or payable and any change in compensation since
January 1, 1999; vacation accrued; and service credited for purposes of vesting
and eligibility to participate under any Seller's pension, retirement, profit-
sharing, thrift-savings, deferred compensation, stock bonus, stock option, cash
bonus, employee stock ownership (including investment credit or payroll stock
ownership), severance pay, insurance, medical, welfare, or vacation plan, other
Employee Pension Benefit Plan or Employee Welfare Benefit Plan, or any other
employee benefit or other Plan or any Director Plan.

     (b)    No employee of any Seller is a party to, or is otherwise bound by,
any agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such employee or director and any other
Person ("Proprietary Rights Agreement") that in any way adversely affects or
will affect (i) the performance of his duties as an employee of the Sellers, or
(ii) the ability of any Seller to conduct the Business, or (iii) the ownership
of its assets, including, without limitation, the Purchased Assets.  As of the
date of this Agreement, to the Knowledge of the President or Chief Financial
Officer of Sellers, no officer (other than the Chief Financial Officer of
Sellers), location manager, Hedging Account manager, grain facility manager or
employee performing research and development functions for any Seller has given
any Seller notice that he or she intends to terminate his employment with such
Sellers.

     (c)    Sellers have previously delivered to Buyer a complete and accurate
list of the following information for each retired employee or director of the
Sellers, or their dependents, receiving benefits or scheduled to receive
benefits in the future: name, pension benefit, pension option election, retiree
medical insurance coverage, retiree life insurance coverage, and other benefits.

     5.1.13 Labor Relations; Compliance

                                      23
<PAGE>

     No Seller has been or is a party to any collective bargaining or other
labor contract.  There has not been, there is not presently pending or existing,
and to Sellers' Knowledge, there is not Threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) any Proceeding
against or affecting any Seller relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment dispute
against or affecting any of the Sellers or their  premises, or (c) any
application for certification of a collective bargaining agent.  There is no
lockout of any employees by any Seller, and no such action is contemplated by
any Seller.  The Sellers have complied in all material respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closings.  No Seller is liable for the payment of any material
compensation, damages, Taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements
in all material respects.

     5.1.14 Intellectual Property

     (a)    The term "Intellectual Property Assets", as to each Seller,
includes:

            (i)    the name of each Seller, all fictional business names,
trading names, registered and unregistered trademarks, service marks, and
applications;

            (ii)   all patents, patent applications, and inventions and
discoveries that may be patentable;

            (iii)  all copyrights in both published works and unpublished works;
and

            (iv)   all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process technology,
plans, drawings, and blue prints (collectively, "Trade Secrets"); owned, used,
or licensed by any Seller as licensee or licensor.

     (b)    Schedule 5.1.14(b) contains a complete and accurate list and summary
description, including any royalties paid or received by any Seller, of all
Material Contracts relating to the Intellectual Property Assets to which any
Seller is a party or by which any Seller is bound. There are no outstanding and,
to the Sellers' Knowledge, no Threatened disputes or disagreements with respect
to any such agreement.

     (c)    The Intellectual Property Assets are all those necessary for the
operation of the Sellers' businesses as they are currently conducted. One or
more of the Sellers is the owner of all right, title, and interest in and to
each of the Intellectual Property Assets, free and clear of all Encumbrances, or
has the right to use without payment to a third party all of the Intellectual
Property Assets. To the Sellers' Knowledge, no employee of any Seller has
entered into any contract or other arrangement with anyone other than the
Sellers that restricts or limits in any way the scope or type

                                      24
<PAGE>

of work in which the employee may be engaged or requires the employee to
transfer, assign, or disclose information concerning his work to anyone other
than the Sellers.

     (d)    The Sellers have good and valid title and the Sellers have an
absolute right to use the Trade Secrets. The Trade Secrets are not in the public
domain or part of the public literature, and, to the Sellers' Knowledge, have
not been used, divulged, or appropriated either for the benefit of any Person
(other than the Sellers) or to the detriment of the Sellers. To the Sellers'
Knowledge, no Trade Secret is subject to any adverse claim or has been
challenged or threatened in any way.

     5.1.15 Certain Payments

     No Seller nor any director, officer, agent, or employee of any Seller, or
any other Person associated with or acting for or on behalf of any Seller, has
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of any Seller, or (iv) in
violation of any Legal Requirement, or (b) established or maintained any fund or
asset that has not been recorded in the books and records of the Sellers.

     5.1.16 Disclosure

     No representation or warranty of the Sellers in this Agreement and no
statement in any Schedule or in any other information furnished to Buyer in
connection with the Contemplated Transactions omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading in any material respect.

     5.1.17 Relationships With Related Persons

     Except as set forth in Schedule 5.1.17, no Related Person of any Seller has
any interest in any property (whether real, personal, or mixed and whether
tangible or intangible), used in or pertaining to any Seller's business. Except
as set forth in Schedule 5.1.17, no Related Person of any Seller owns or has
since December 31, 1998, owned (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in, a Person that has (a) had
business dealings or a material financial interest in any transaction with any
Seller, or (b) engaged in competition with any Seller with respect to any line
of services of any Seller (a "Competing Business"), other than for non-material
interests in a publicly traded company, in any market presently served by any
Seller. Except as set forth in Schedule 5.1.17, no Related Person of any Seller
is a party to any Material Contract with, or has any claim or right against, any
Seller.

     5.1.18 Brokers Or Finders

     None of the Sellers has incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement, except pursuant to an
arrangement with ECDI Capital Corporation, for which Sellers


                                      25
<PAGE>

shall be solely responsible, and whose fees, expenses and other charges shall be
paid by Sellers from the net proceeds of sale of the Purchased Assets hereunder.

     5.1.19 Environmental Matters

     (a)    Except as set forth in Schedule 5.1.19:

            (i)    Each Seller is, and at all times has been, in full compliance
with, and has not been and is not in violation of or liable under, any
Environmental Laws or any Occupational Safety and Health Laws. No Seller has any
basis to expect, nor has any of them or any other Person for whose conduct they
are or may be held to be responsible received, any actual or Threatened Order,
notice, or other communication from (i) any Governmental Body or private citizen
acting in the public interest, or (ii) the current or prior owner or operator of
any Facilities, of any actual or potential violation or failure to comply with
any Environmental Laws or any Occupational Safety and Health Laws, or of any
actual or Threatened obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which any Seller has had an interest, or with respect to any property or
facility at or to which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used, or processed by any Seller, or any other
Person for whose conduct they are or may be held responsible, or from which
Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, Released, recycled, or received.

            (ii)   There are no pending or Threatened claims, Encumbrances, or
other restrictions of any nature, resulting from any Environmental, Health, and
Safety Liabilities or arising under or pursuant to any Environmental Laws or
Occupational Safety and Health Laws, with respect to or affecting any of the
Facilities or any other properties and assets (whether real, personal, or mixed)
in which Sellers or any Seller has an interest.

            (iii)  No Seller has any basis to expect, nor has any of them or any
other Person for whose conduct they are or may be held responsible, received,
any citation, directive, inquiry, notice, Order, summons, warning, or other
communication that relates to Hazardous Activity, Hazardous Materials, or any
alleged, actual, or potential violation or failure to comply with any
Environmental Laws or Occupational Safety and Health Laws, or of any alleged,
actual, or potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which any Seller has an interest, or with respect to any property or facility
to or on which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by any Seller, or any other Person for
whose conduct they are or may be held responsible, have been transported,
treated, stored, handled, transferred, disposed, Released, recycled, or
received.

            (iv)   No Seller, or any other Person for whose conduct they are or
may be held responsible, has any Environmental, Health, and Safety Liabilities
with respect to the Facilities or with respect to any other properties and
assets (whether real, personal, or mixed) in which any Seller, has an interest,
or at any property geologically or hydrologically adjoining the Facilities or
any such other property or assets in which any seller has an interest.

                                      26
<PAGE>

            (v)    Except for Inventory items sold in the Ordinary Course of
Business, there are no Hazardous Materials present on or in the Environment at
the Facilities or at any geologically or hydrologically adjoining property,
including any Hazardous Materials contained in barrels, above or underground
storage tanks, landfills, land deposits, dumps, equipment (whether moveable or
fixed) or other containers, either temporary or permanent, and deposited or
located in land, water, sumps, or any other part of the Facilities or such
adjoining property, or incorporated into any structure therein or thereon.
Except for Inventory items sold in the Ordinary Course of Business, no Seller,
any other Person for whose conduct any Seller is or may be held responsible, has
permitted or conducted, or is aware of, any Hazardous Activity conducted with
respect to the Facilities or any other properties or assets (whether real,
personal, or mixed) in which any Seller has an interest.

            (vi)   There has been no Release or Threatened Release, of any
Hazardous Materials at or from the Facilities or at any other locations where
any Hazardous Materials were generated, manufactured, refined, transferred,
produced, imported, used, or processed from or by the Facilities, or from or by
any other properties and assets (whether real, personal, or mixed) in which any
Seller has an interest, or any geologically or hydrologically adjoining
property, whether by any Seller or any other Person.

            (vii)  Sellers have delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by any Seller pertaining to Hazardous Materials or Hazardous
Activities in, on, or under the Facilities, or concerning compliance by any
Seller or any other Person for whose conduct any Seller is or may be held
responsible, with Environmental Laws or Occupational Safety and Health Laws.

     5.1.20 Product Compliance

     (a)    The labeling of all products currently being sold by the Sellers in
connection with the Business (the "Products") is in full compliance with all
Legal Requirements with respect to product labeling.

     (b)    No promotional or advertising materials relating to any of the
Products make claims inconsistent with the label of any of the Products.

     (c)    The Sellers have complied in all material respects with all Legal
Requirements applicable to the manufacture, advertising, sale and delivery of
the Products.

     (d)    No Inventory is subject to any stop sale, use or removal order under
any Legal Requirement.

     (e)    All manufacturing processes used by the Sellers to produce the
Products are in material compliance with all Legal Requirements applicable to
the Products. If applicable, all requisite Governmental Bodies have been
notified of any change in any such manufacturing process and have cleared any
such change in accordance with their rules and regulations.

                                      27
<PAGE>

     (f) Sellers have in their possession all raw data supporting the
registration of the Products required to be maintained by all applicable Legal
Requirements.

     (g) All relevant representations and warranties which the Sellers have made
to any Governmental Body with respect to the Products and which are in effect as
of the date hereof are herein adopted in all material respects as part of this
Agreement and Sellers hereby confirm to the Buyer that such representations and
warranties are true and correct in all material respects as of the date hereof.

     5.1.21  Product Warranties

     Except as set forth in Schedule 5.1.21 and for warranties under applicable
Legal Requirements, (a) there are no warranties express or implied, written or
oral, with respect to the Products and (b) there are no pending or, to the
Knowledge of any Seller, Threatened claims with respect to any such warranty,
except for any such pending or Threatened claims which would not result in a
material adverse change in the business, financial condition, operations or
prospects of any Seller.  Schedule 5.1.21 contains a complete and accurate
description of each Seller's standard terms and conditions of sale.

     5.1.22  Territorial Restrictions

     Buyer, solely as a result of its purchase of the Purchased Assets and the
Business from Sellers pursuant hereto, will not thereby become restricted in
carrying on the Business anywhere in the world.

     5.1.23  Substantial Customers and Suppliers

     (a) Sellers have previously furnished Buyer with lists of the top
fifteen (15) customers of the Sellers, by dollar volume and showing both dollar
and unit sales volumes and percentage of total dollar and unit sales volumes
during the twelve-month periods ending December 31, 1997 and 1998 and the 11-
month period ending November 30, 1999.  Sellers have also previously furnished
Buyer with a statement of the total amount of trade promotion spending for all
customers, in the aggregate, (including all customer allowances and performance-
based promotion spending).

     (b) Sellers have previously furnished Buyer with lists of the ten (10)
suppliers of the Sellers that were paid the greatest amount for Products and
services supplied to the Sellers during the twelve-month period ending December
31, 1999, and the aggregate amount the Sellers paid to each such supplier during
each such period and the Product(s) or service(s) purchased from each supplier
during each such period.

     5.1.24  Trade Inventories

     During the twelve months preceding the Closing Date, the Sellers have
operated the Business in the Ordinary Course of Business with respect to
Inventories and have not taken any action designed to or which would have the
effect of (i) causing Inventories to exceed historical levels, in

                                      28
<PAGE>

any material respect, or (ii) inducing customers to defer making product returns
or claims for refunds after November 30, 1999, or to make seasonal allowance
claims after November 30, 1999.


                                   ARTICLE VI
                     REPRESENTATIONS AND WARRANTIES OF BUYER

6.1  Buyer represents and warrants to Sellers as follows

     6.1.1  Organization And Good Standing

     Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware.

     6.1.2  Authority; No Conflict; Competing Business

     (a) This Agreement has been duly executed and delivered by Buyer.
This Agreement constitutes a legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to bankruptcy,
insolvency, moratorium or other laws affecting creditors' rights and general
equitable principles. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and the entry into this Agreement has been duly authorized by all
necessary action on the part of Buyer.

     (b) Except as previously disclosed to Sellers in writing, neither the
execution and delivery of this Agreement by Buyer nor (subject to compliance
with HSR) the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to:

         (i)   any provision of Buyer's Organizational Documents;

         (ii)  any resolution adopted by the board of directors or the
               stockholders of Buyer;

         (iii) any Legal Requirement or Order to which Buyer may be subject;
               or

         (iv)  any contract to which Buyer is a party or by which Buyer may be
               bound.

     (c) Except as set forth in Schedule 6.1.2, Buyer is not and will not
be required to obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.

     6.1.3  Certain Proceedings

                                      29
<PAGE>

     There is no pending Proceeding that has been commenced against Buyer and
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.

     6.1.4  Brokers Or Finders

     Buyer and its officers, directors or shareholders have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.

                                   ARTICLE VII
                       ADDITIONAL COVENANTS AND AGREEMENTS

     7.1  Conduct of the Business.  During the period from the date hereof
through the Closing Date, except as otherwise consented to by Buyer, which
consent shall not be unreasonably or untimely withheld, and except as
contemplated in, and consistent with the limitations set forth in the Operating
Budget, the Bankruptcy Case or otherwise contemplated herein, Sellers will use
all commercially reasonable efforts to conduct the Business in the Ordinary
Course of Business.

     7.2  Investigation by Buyer.  During the period from the date hereof
through the Closing Date, Buyer and its Representatives shall, upon reasonable
notice and at Buyer's cost, have access during normal business hours to all
Facilities, books, financial and operating data, records, contracts and
documents related to the Business or the Purchased Assets and Sellers shall
furnish or cause to be furnished to Buyer and its Representatives, at Buyer's
cost, such information relating to the Business or the Purchased Assets as Buyer
may reasonably request.

     7.3  Consents.  As soon as practicable after the date hereof, Sellers and
Buyer shall use their best efforts to obtain such consents, waivers and
approvals, in form and substance reasonably acceptable to Buyer, as are or may
be necessary to permit the assignment of the Contracts and the transfer of the
Purchased Assets to the Buyer, and otherwise to consummate the Contemplated
Transactions.  To the extent that any Contract intended to be assigned to the
Buyer hereunder is not assignable without the consent of another Person, this
Agreement shall not constitute an assignment or an attempted assignment thereof
to Buyer or an assumption of Sellers' obligations thereunder by Buyer if such
assignment or attempted assignment and assumption would constitute a Breach
thereof.  If any such consent cannot be obtained, Sellers will cooperate with
Buyer in any commercially reasonable effort designed to secure for Buyer the
benefits heretofore available to Sellers under the relevant Contract.

     7.4  Regulatory Authorization.   Sellers and Buyer shall use all
commercially reasonable efforts to obtain as soon as practicable all consents,
waivers, and approvals of and by all Governmental Bodies that are necessary for
the consummation of the Contemplated Transactions.

                                      30
<PAGE>

     7.5  Fulfillment of Conditions.  Each of Sellers and Buyer shall take all
commercially reasonable actions within its control to fulfill as soon as
practicable the conditions set forth in Articles VIII and IX hereof,
respectively.

     7.6  Announcements.  Sellers and Buyer agree that no announcement or press
release shall be made by either Sellers or Buyer relating to the transactions
contemplated hereby unless approved in writing in advance by the other party
hereto, except that any party hereto may, upon not less than three (3) business
days notice to the other party hereto, make such announcement, press release or
other report as may be required by any applicable Legal Requirement.

     7.7  Further Assurances; Access to Records.  (a) Sellers hereby agree that
they will at any time and from time to time during the four (4) month period
following the Closing Date, upon request of and at the expense of Buyer,
execute, acknowledge and deliver, or will cause to be executed, acknowledged and
delivered, all such further acknowledgments, deeds, assignments, transfers,
conveyances and assurances as may be reasonable and necessary for the better
assigning, conveying and transferring to Buyer and to its successors and
assigns, or for aiding and assisting in collecting and reducing to possession,
any and all of the Purchased Assets to be conveyed to Buyer as provided herein.

     (b) Buyer hereby agrees that from and after the Closing, Sellers, their
Representatives, and representatives of federal and state Taxing authorities
shall have full access during normal business hours and upon reasonable advance
notice to all books, records and documents delivered to Buyer by Sellers at
Closing or which otherwise concern transactions related to the Business prior to
the Closing for purposes of inspection and copying thereof. Buyer shall maintain
such books, records and documents for a period of not less than four (4) years
following the Closing. Buyer will cooperate with Sellers and will, at Sellers'
cost, produce such personnel, documents and other data at its disposal which
Sellers may reasonably request pertinent to any claim or action by or against
Sellers in connection with the Business. Buyer will similarly cooperate with
Sellers in investigating and pursuing any matter concerning Taxes or Claims (as
hereinafter defined) and will use its best efforts to aid Sellers in securing
such cooperation of others as may be needed in connection with any such matter.

     7.8  [omitted]

     7.9  HSR Filings. Subject to the terms and conditions hereof, each of the
parties hereto agrees to use all reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, making all required filings and applications under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended ("HSR") and complying with
or responding to any requests by the U.S. Federal Trade Commission, Department
of Justice or other domestic or foreign governmental agencies.  The costs of the
HSR Filings shall be borne equally by Sellers and Buyers.

     7.10 Tax Cooperation and Proration.  (a) Real and personal property and
use taxes attributable to the Purchased Assets and rents relating to Assumed
Contracts shall be allocated

                                      31
<PAGE>

between Sellers and Buyers on the basis of the number of days in the applicable
tax year of Sellers elapsed through and including the Closing Date (which
portion shall be allocated to Sellers) as compared with the number of days in
such tax year elapsing after the Closing Date (which portion shall be allocated
to Buyer).

     (b)  Buyer and Sellers agree, for a period of four (4) years following the
Closing Date, to retain and furnish or cause to be furnished to each other, upon
the request and at the expense of the requesting party, as promptly as
practicable, all working papers and information relating to the Purchased
Assets, the Business, the allocation determined pursuant to Section 2.2 and
transfer Taxes, and to provide at the expense of the requesting party such
assistance as is readily available and reasonably necessary for the preparation
and filing of all Tax Returns, the making of any election related to Taxes, the
preparation of any audit by any taxing authority and the prosecution or defense
of any claim, suit or proceeding relating to any Tax Return.

     7.11  Bankruptcy Filing; Bankruptcy Court Approval; Break-Up Fee and
Bidding Procedures.

     (a)  Within five (5) days of the date hereof, Sellers shall commence a
bankruptcy case (the "Bankruptcy Case") by filing a voluntary petition for
relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. (S)(S)
101 et seq (the "Code"), in the Bankruptcy Court for the Western District of
Tennessee (the "Bankruptcy Court");

     (b)  Within five (5) days of the date of commencement of the Bankruptcy
Case (the "Filing Date") Sellers shall file a motion or application (the "Sale
Motion") with the Bankruptcy Court pursuant to inter alia, Code sections 105(a),
363 and 365 and Bankruptcy Rules 2002, 6004 and 6006, in form and substance
satisfactory to Buyer and Sellers, seeking entry of an order incorporating the
following provisions  (the "Sale Approval Order"):

          (i)   pursuant to Code sections 105(a) and 363(b), (f) and (m), (A)
approving the terms and conditions of this Agreement, and (B) authorizing and
empowering the Sellers to enter into this Agreement and to sell to Buyer (or any
other successful bidder) all of the Purchased Assets, free and clear of any and
all  Encumbrances, with all such Encumbrances to attach to the net proceeds of
the sale of the Purchased Assets in the order of their priority and having the
same validity, force and effect (if any) which they now have against the
Purchased Assets (a "Sale");

          (ii)  finding that the Buyer is a good faith purchaser of the
Purchased Assets within the meaning of section 363(m) of the Code and conferring
the benefits of that section upon Buyer; and

          (iii) granting other and related relief consistent with the Sale
Motion.

     (c)  Sellers shall cause the Sale Approval Order to be entered by the
Bankruptcy Court not later than February 22, 2000 (the "Sale Approval
Deadline"), it being expressly agreed that this Agreement will not be binding
upon the Buyer if the Sale Approval Order is not entered prior to the Sale
Approval Deadline;

                                      32
<PAGE>

     (d)  Within five (5) days of the filing of the Sale Motion, Sellers shall
obtain from the Bankruptcy Court (x) an order setting forth a date which shall
be at least five (5) days prior to the Bid Deadline on which any claims in
respect of Sellers' leases and executory contracts will be heard and adjudicated
and thereafter be barred of assertion and (y) an order (the "Bidding Order")
approving a break-up fee of $250,000.00 that shall become due and payable,
without further order of the Bankruptcy Court, in the event that the Purchased
Assets are sold to a party or parties other than the Buyer (the "Break-Up Fee")
as well as setting forth the following bidding procedures:

          (i)   All bids for the Purchased Assets shall be on the same terms and
subject to the same conditions as Buyer's bid (except for bids for individual
assets as set forth below), shall not have any contingencies beyond the date of
the hearing on the Sale Motion, which shall be held on or between February 18
and February 22, 2000 (the "Auction Date") and must offer an aggregate price for
the Purchased Assets of not less than the sum of (a) the value of the
consideration to be provided by the Buyer under this Agreement, plus (b)
$500,000.00 (the "Minimum Upset Bid").

          (ii)  The Bidding Order shall provide that, on the Auction Date, the
Bankruptcy Court will first accept higher and better bids for all of the
Purchased Assets as a single lot from parties that have already submitted bids
and that, following the completion of such bids, the Sellers, with the consent
of the Secured Lenders, may request that the Bankruptcy Court take bids from any
interested parties for individual assets of the Sellers in separate lots.
Following the completion of such bids, if any, the Sellers shall make a
recommendation at the hearing of the Sale Motion to the Bankruptcy Court (on
which recommendation any party in interest shall be entitled to be heard by the
Court at such hearing) concerning whether a sale of all of the Purchased Assets,
or a sale of individual assets, would be in the best interests of the estate.
If a sale of the Sellers' individual assets is approved by the Bankruptcy Court,
the Buyer shall be entitled to payment of the Break-Up Fee, even if it is the
winning bidder for some (but not all) of the Sellers' assets.  Competing bids
(including bids for individual assets) must be submitted by not later than two
(2) Business Days prior to the Auction Date (the "Bid Deadline"), must be
accompanied by a cash deposit of at least $500,000.00 or in the case of
individual asset sales, 10% of the purchase price offered therefor, and must
contain sufficient written information (by way of bank statements, commitment
from a reputable financial institution, evidence of outstanding credit lines or
otherwise) to demonstrate the potential bidder's ability to consummate a
purchase of the Purchased Assets upon becoming the successful bidder (as defined
below).

          (iii) All competing bidders for the Purchased Assets shall complete
their due diligence on the Purchased Assets by no later than the Bid Deadline.
After the Bid Deadline, any and all due diligence with respect to the Purchased
Assets shall be deemed waived by all bidders, and all bids shall be non-
contingent and unconditional.

          (iv)  If the Sellers receive bids from one or more qualified bidders
for all of the Purchased Assets, the Seller will conduct the Auction for the
Purchased Assets on the Auction Date.  Subject to the foregoing, the Sellers
will consider any initial bid for some or all of the Purchased Assets provided
that such bid, when aggregated with all other initial bids for the Purchased
Assets, has a value equal to or greater than the Minimum Upset Bid, and any
subsequent overbids shall in the aggregate be in minimum increments of
$100,000.00 over the proceeding aggregate bid; and

                                      33
<PAGE>

provided further that such bids shall be in the form of this Agreement, shall
set forth the terms upon which the bidder or bidders are willing to purchase the
Purchased Assets and shall be made by qualified bidders who demonstrate to the
Seller an ability to consummate the proposed transaction promptly.

          (v)   The party or parties prevailing at the Auction (if other than
the Buyer) (collectively, the "Successful Bidder") will be required to execute
immediately and deliver to counsel to the Sellers a copy of this Agreement if it
is a transaction involving all of the Purchased Assets. The purchase price in
respect of the successful bid, which must be made in cash or readily available
funds, shall be paid by wire transfer concurrently with execution and delivery
of the closing documents.

     (e)  Sellers shall pay Buyer the Break-Up Fee if all or part of the
Purchased Assets are sold hereunder to any person other than the Buyer.

     (f)  At the discretion of Buyer, the closing of a Sale to Buyer can occur
at any time up to ten (10) days after entry of the Sale Approval Order;
provided, however, that unless stayed, Buyer may compel Seller to close such
Sale within 72 hours of entry of the Sale Approval Order, provided further that
Buyer shall have no obligation to do so, and that in the event that the Sale
Approval Order does not become a final order on or before the tenth (10th) day
after the Sale Approval Deadline, Buyer may declare this Agreement to be a
nullity, and upon such declaration this Agreement shall be deemed to be and
shall be null and void and of no force or effect (except that such declaration
shall not impact Buyer's right hereunder to receive a Break-Up Fee).

     (g)  Buyer acknowledges that the sale of the Purchased Assets under this
Agreement is subject the terms and conditions of the Bidding Order and approval
by the Bankruptcy Court. Seller shall provide Buyer with prompt written notice
of the terms of any other offer received by Seller for the Purchased Assets that
are the subject of this Agreement.

     7.12 Collection of Sellers' Accounts

     Commencing on the Closing Date, Sellers and Secured Lenders shall retain
Buyer as agent to use commercially reasonable efforts to collect Sellers'
Accounts that are on Sellers' books as of the Closing Date, pursuant to a
collection services agreement to be entered into at the Closing and to be in a
form mutually acceptable to Buyer and the Secured Lenders.

                                  ARTICLE VIII
               CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE

     Buyer's obligation to purchase the Purchased Assets and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):

     8.1  Accuracy of Representations

                                      34
<PAGE>

     All of Sellers' representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date, without giving effect to any
supplement to this Agreement or the Schedules hereto.

     8.2  Sellers' Performance

     (a)  All of the covenants and obligations that Sellers are required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.

     (b)  Each Ancillary Agreement or other document required to be delivered by
Sellers at Closing must have been duly executed and delivered.

     8.3  Consents

     Each of the Consents identified in Schedule 5.1.2(c), must have been
obtained and must be in full force and effect.

     8.4  Additional Documents

Each of the following documents must have been delivered to Buyer:

     (a)  estoppel certificate(s) with respect to the Assumed Contracts executed
in favor of the Buyer dated as of a date not more than three (3) days prior to
the Closing Date in form and substance satisfactory to Buyer; and

     (b)  such other documents as Buyer may reasonably request for the purpose
of (i) evidencing the accuracy of any of Sellers' representations and
warranties, (ii) evidencing the performance by any Seller of, or the compliance
by any Seller with, any covenant or obligation required to be performed or
complied with by such Seller, (iii) evidencing the satisfaction of any condition
referred to in this Section 8, or (iv) otherwise facilitating the consummation
or performance of any of the Contemplated Transactions.

     8.5  No Proceedings

     There must not have been commenced or Threatened against Buyer or any
Seller, or against any Person affiliated with Buyer or any Seller, any
Proceeding (other than the Bankruptcy Case) (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the Contemplated Transactions.

     8.6  No Claims

                                      35
<PAGE>

     There must not have been made or Threatened by any Person (other than the
Secured Lenders) any claim asserting that such Person (a) is the holder or the
beneficial owner of, or has the right to acquire or to obtain beneficial
ownership of, any of the Purchased Assets or any interest in the Business, or
(b) is entitled to all or any portion of the Purchase Price payable for the
Purchased Assets; provided, however, that the Secured Lenders are recognized as
having the first priority liens upon and Security interest in the Purchased
Assets.

     8.7  No Prohibition

     Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any Person affiliated with Buyer to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise formally proposed by or before any Governmental Body.

     8.8  Bankruptcy Case

     Sellers shall have successfully commenced the Bankruptcy Case and the Sale
Approval Order directing the sale of the Purchased Assets to Buyer in accordance
with the provisions of this Agreement shall have been duly entered no later than
the Sale Approval Deadline.

     8.9  HSR Compliance

     All filings, if required under HSR, and any other applicable competition
laws shall have been made and any required waiting period under such laws
applicable to the Contemplated Transactions shall have expired or been earlier
terminated.

     8.10 Satisfactory Completion of Buyer's Due Diligence

     Buyer shall have completed its due diligence investigation to its
satisfaction, shall have approved the Schedules hereto and Buyer's Board of
Directors shall authorize and approved this Agreement and the consummation of
the Contemplated Transactions two days prior to the date of entry of the Sale
Approval Order.


                                   ARTICLE IX
              CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE

     Sellers' obligation to sell the Purchased Assets, and to take the other
actions required to be taken by them at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Sellers, in whole or in part):

     9.1  Accuracy of Representations

                                      36
<PAGE>

     All of Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.

     9.2  Buyer's Performance

     (a) All of the covenants and obligations that Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.

     (b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 4.2 and must have made the cash payments
required to be made by Buyer pursuant to Section 4.2.

     9.3  Consents

     Each of the Consents identified in of Schedule 6.1.2(c) must have been
obtained and must be in full force and effect.

     9.4  No Injunction

     Since the date of this Agreement, there shall not have been adopted or
issued, and there shall not otherwise be in effect, any injunction, Order or
other Legal Requirement that prohibits the sale of the Shares by Sellers to
Buyer, or the consummation of any of the other Contemplated Transactions
hereunder.

     9.5  Sale Approval Order

     The Sale Approval Order directing the sale of the Purchase Assets to Buyer
in accordance with the provisions of this Agreement shall have been duly entered
no later than the Sale Approval Deadline.

     9.6  HSR Compliance

     All filings, if required under HSR, and any other applicable competition
laws shall have been made and any required waiting period under such laws
applicable to the Contemplated Transactions shall have expired or been earlier
terminated.

                                    ARTICLE X
                            INDEMNIFICATION; REMEDIES

     10.1  Survival

                                       37
<PAGE>

     All representations, warranties, covenants, and obligations in this
Agreement, the Schedules, the Ancillary Agreements and any other certificate or
document delivered pursuant to this Agreement will survive the Closing.

     10.2  Indemnification And Payment Of Damages By The Sellers

     The Sellers, jointly and severally, will indemnify and hold harmless Buyer,
and its Representatives, stockholders, Control Persons, and affiliates
(collectively, the "Buyer Indemnified Persons") for, and will pay to Buyer
Indemnified Persons the amount of, any loss, liability, claim, damage (excluding
incidental and consequential damages), expense (including costs of investigation
and defense and reasonable attorneys' fees), whether or not involving a third-
party claim (collectively, "Damages"), actually suffered or incurred by such
Buyer Indemnified Person arising from or in connection with:

     (a) any Breach of any representation or warranty made by any Seller in this
Agreement, the Ancillary Agreements the Schedules or any other certificate or
document delivered by any Seller pursuant to this Agreement;

     (b) any Breach by any Seller of any covenant or obligation of any Seller in
this Agreement;

     (c) any Product sold or shipped by, or any services provided by any Seller
prior to the Closing Date;

     (d) any Taxes (accrued or unaccrued) owed by any Seller in respect of any
Seller's operations prior to the Closing; or

     (e) any claim by any Person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding alleged to have
been made by any such Person with any Seller (or any Person acting on their
behalf) in connection with any of the Contemplated Transactions.

     (f) the adjustment to the Purchase Price contemplated by Section 4.5.

The remedies provided in this Section 10.2 will be not be exclusive of or limit
any other remedies that may be available to Buyer or the other Buyer Indemnified
Persons.

     10.3  Indemnification And Payment Of Damages By Buyer

     Buyer will indemnify and hold harmless the Sellers for, and will pay to the
Sellers the amount of any Damages arising from or in connection with, (a) any
Breach of any representation or warranty made by Buyer in this Agreement or in
any certificate delivered by Buyer pursuant to this Agreement, (b) any Breach by
Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any claim
by any Person for brokerage or finder's fees or commissions or similar payments
based

                                       38
<PAGE>

upon any agreement or understanding alleged to have been made by such Person
with Buyer (or any Person acting on its behalf) in connection with any of the
Contemplated Transactions.

     10.4  Time Limitations

     The Sellers will have no liability (for indemnification or otherwise) with
respect to any representation or warranty, or covenant or obligation, unless on
or before the last day of the fourth (4th) month following the Closing Date,
Buyer notifies the Sellers in writing of a Claim (as hereinafter defined)
specifying the factual basis of that Claim in reasonable detail to the extent
then known by Buyer.  Buyer will have no liability (for indemnification or
otherwise) with respect to any such representation, warranty, covenant or
obligation, unless on or before the last day of the fourth (4th) month following
the Closing Date, the Sellers notify Buyer of a Claim specifying the factual
basis of that Claim in reasonable detail to the extent then known by such
Seller.

     10.5  Limitations On Amount - The Sellers

  The Sellers will not have any liability for indemnification with respect to
the matters described in clause (a), clause (b) or clause (c) of Section 10.2
(other than matters that are also described in other clauses of Section 10.2)
unless the aggregate of all Damages for which Sellers would, but for this
Section 10.5 (a), be liable exceeds on a cumulative basis the sum of thirty five
thousand dollars ($35,000) (the "Cumulative Basket"), and then only to the
extent of such excess up to a maximum amount of three hundred fifty thousand
dollars ($350,000.00) (the "Cap"); and no such matter individually which
involves Damages in an amount less than   five thousand dollars ($5,000) (the
"Individual Basket") shall be included in determining whether the Cumulative
Basket amount has been reached.

     10.6  Limitations On Amount - Buyer

     Buyer will have no liability (for indemnification or otherwise) with
respect to the matters described in clause (a) or clause (b) of Section 10.3
(other than matters that are also described in other clauses of Section 10.3)
unless the aggregate of all Damages for which Buyer would, but for this Section
10.6, be liable exceeds on a cumulative basis the Cumulative Basket amount, and
then only to the extent of such excess up to the amount of the Cap; and no such
matter individually which involves Damages in an amount less than the Individual
Basket amount  shall be included in determining whether the Cumulative Basket
amount has been reached.

     10.7  Procedure For Indemnification--Third Party Claims

     (a) Promptly after receipt by an indemnified party under Section 10.2 or
10.3 of notice of the assertion of a claim or of the commencement of any
Proceeding against it (a "Claim"), such indemnified party will, if a Claim is to
be made against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such Claim (with a copy to the Secured
Lenders and their counsel), but the failure to notify the indemnifying party (or
to provide a copy to the Secured Lenders and their counsel) will not relieve the
indemnifying party of any liability that it may have to any indemnified party,
except to the extent that the indemnifying party

                                       39
<PAGE>

demonstrates that the defense of such action is prejudiced by the indemnified
party's failure to give such notice. The indemnified party shall deliver to the
indemnifying party (with a copy to the Secured Lenders and their counsel),
within five business days after the indemnified party's receipt thereof, copies
of all notices and documents (including court papers) received by the
indemnified party relating to the Claim.

     (b) If any Claim referred to in Section 10.7(a) is asserted or brought
against an indemnified party and it gives notice to the indemnifying party of
the Claim, the indemnifying party (and the Secured Lenders) will be entitled to
participate in the defense of the Claim and, to the extent that they wish,
exercisable by written notice to the indemnified party within 10 days of receipt
of notice from the indemnified party of a Claim (unless (i) the indemnifying
party (or any Secured Lender) is also a party to a Proceeding involving a Claim
and the indemnified party determines in good faith that joint representation
would be inappropriate, or (ii) the indemnifying party fails to provide
reasonable assurance to the indemnified party of its financial capacity to
defend such Claim and provide indemnification with respect to such Claim), to
assume the defense of such Claim with counsel satisfactory to the indemnified
party and, after such notice from the indemnifying party or the Secured Lenders
to the indemnified party of their election to assume the defense of such Claim,
the indemnifying party (or the Secured Lenders) will not, as long as it
diligently conducts such defense, be liable to the indemnified party under this
Article 10 for any fees of other counsel or any other expenses with respect to
the defense of such Claim, in each case subsequently incurred by the indemnified
party in connection with the defense of such Claim, other than reasonable costs
of investigation or if the indemnified party has assumed the defense as provided
in Section 10.7(c).  In any event, the indemnified party shall have the right to
participate in the defense of the Claim.  If the indemnifying party (or the
Secured Lenders) assume the defense of a Claim, (i) it will be conclusively
established for purposes of this Agreement that the claims made in that Claim
are within the scope of and subject to indemnification; (ii) no compromise or
settlement of such Claims may be effected by the indemnifying party (or the
Secured Lenders) without the indemnified party's consent unless (A) there is no
finding or admission of any violation of Legal Requirements or any violation of
the rights of any Person and no effect on any other claims that may be made
against the indemnified party, and (B) the sole relief provided is monetary
damages that are paid in full by the indemnifying party (or the Secured
Lenders); and (iii) the indemnified party will have no liability with respect to
any compromise or settlement of such claims effected without its consent.  If
notice is given to an indemnifying party (and the Secured Lenders) of the
assertion of or commencement of any Proceeding involving a Claim and the
indemnifying party (or the Secured Lenders) do not, within ten days after the
indemnified party's notice is given, give notice to the indemnified party of
their election to assume the defense of such Claim, the indemnified party shall
have the right to undertake the defense of such claim on behalf of the
indemnifying party and the indemnifying party (and, if applicable, the Secured
Lenders) will be bound by any determination made in such Proceeding or any
compromise or settlement effected by the indemnified party.

     (c) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a Claim may adversely
affect it or its affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the indemnified
party may, by notice to the indemnifying party (with a copy to the Secured
Lenders and their counsel), assume the exclusive right to defend, compromise, or
settle such Claim but the

                                       40
<PAGE>

indemnifying party will not be bound by any determination of a Claim so defended
or any compromise or settlement effected without its consent (which may not be
unreasonably withheld).

     (d) Each indemnifying party hereby consents to the non-exclusive
jurisdiction of any court in which a Claim is brought against any indemnified
party for purposes of any claim that an indemnified party may have under this
Agreement with respect to such Claim or the matters alleged therein, and agrees
that process may be served on the indemnifying party with respect to such a
Claim anywhere in the world provided a reasonable period of time is allowed to
respond to such process.

     10.8  Procedure For Indemnification--Other Claims

     A Claim for indemnification for any matter not involving a third-party may
be asserted by notice to the party from whom indemnification is sought.

     10.9  Claim Against Escrow

     Buyer may make a Claim against the Indemnity Escrow in any amount to which
it may be entitled under this Article 10. Neither the making of nor the failure
to make such a Claim will constitute an election of remedies or limit Buyer in
any manner in the enforcement of any other remedies that may be available to it.


                                   ARTICLE XI
                               GENERAL PROVISIONS

     11.1  Expenses

     Each of the parties hereto will bear the expenses incurred by them in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants.

     11.2  Notices

     All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):

The Sellers:           American Crop Services, Inc.
                       P.O. Box 40
                       203 W. Church Street

                                       41
<PAGE>

                       Union City, TN  38281
                       Attention: Gary Hancock, President & CEO
                       Facsimile No.: (901) 885-1795

with a copy to:        Waring Cox
                       1300 Morgan Keegan Tower
                       50 North Front Street
                       Memphis, TN  38103-1190
                       Attention:  William T. Mays, Esq.
                       Facsimile No.: (901) 543-8036

and a copy to:         Harris Trust and Savings Bank
                       111 W. Monroe - 4 East
                       Chicago, Illinois  60603
                       Attention:  Diana Williams, Senior Vice President
                       Facsimile No.: (312) 765-1724

and a copy to:         Chapman and Cutler
                       111 W. Monroe - 18th Floor
                       Chicago, Illinois  60603
                       Attention:  James Spiotto, Esq.
                       Facsimile No.: (312) 516-1900

Buyer:                 Royster-Clark, Inc.
                       600 Fifth Avenue, 25th Floor
                       New York, NY 10020
                       Attention: Francis P. Jenkins
                       Facsimile No.:  (212) 332-2999

with a copy to:        Satterlee Stephens Burke & Burke LLP
                       230 Park Avenue, Suite 1130
                       New York, NY  10169
                       Attention:   Peter A. Basilevsky, Esq.
                       Facsimile No.: (212) 818-9606

     11.3  Further Assurances

     Each of the parties agrees (a) to furnish upon request to each other party
such further information, (b) to execute and deliver to each other party such
other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.

     11.4  Waiver

                                       42
<PAGE>

     The rights and remedies of the parties to this Agreement are cumulative and
not alternative.  Neither the failure nor any delay by any party in exercising
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right, power, or privilege,
and no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege.  To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.

     11.5  Entire Agreement And Modification

     This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter.  This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.

     11.6  Schedules

     In the event of any inconsistency between the statements in the body of
this Agreement and those in the Schedules (other than an exception expressly set
forth as such in the Schedules with respect to a specifically identified
representation or warranty), the statements in the body of this Agreement will
control.

     11.7  Assignments, Successors, And Third-Party Rights

     None of the parties may assign any of their rights under this Agreement
without the prior consent of the other parties, except that Buyer may assign all
of its rights under this Agreement to one or more Related Persons of Buyer and
Sellers may assign their rights hereunder to the Secured Lenders.  This
Agreement will apply to, be binding in all respects upon the parties hereto and
their assigns and inure to the benefit of the successors and permitted assigns
of the parties hereto.  Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the parties to this Agreement any
legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement; provided, however, the parties
hereto hereby recognize and agree that the Secured Lenders are third party
beneficiaries under this Agreement with the right to assert legal and equitable
rights, remedies and claims hereunder.  This Agreement and all of its provisions
and conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and permitted assigns (and, to the extent
provided, the Secured Lenders).

                                       43
<PAGE>

     11.8  Severability

     If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect.  Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

     11.9  Section Headings; Construction

     The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number, as the circumstances require. Unless otherwise expressly
provided, the word "including" shall mean "including, without limitation" and
does not limit the preceding words or terms. The words "hereof", "hereunder" and
"herein" shall refer to the entire Agreement.

     11.10  Time Of Essence

     With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.

     11.11  Governing Law

     This Agreement will be governed by the laws of the State of Delaware
without regard to conflicts of laws principles.

     11.12  Counterparts

     This Agreement may be executed and delivered in counterparts with facsimile
signatures (provided, originally executed copies are couriered to the parties as
soon as practicable thereafter), each of which will be deemed to be an original
copy of this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.

                                       44
<PAGE>

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.


                                   BUYER:

                                   ROYSTER-CLARK, INC.

                                   By: /s/ Francis P. Jenkins, Jr.
                                      --------------------------------
                                   Title:  Chairman & CEO
                                         -----------------------------


                                   THE SELLERS:

                                   AMERICAN CROP SERVICES, INC.


                                   By: /s/ Gary T. Hancock
                                      ------------------------------
                                   Title: President & CEO
                                         ---------------------------


                                   CHICKASAW CHEMICAL COMPANY, INC.

                                   By: /s/ Gary T. Hancock
                                      --------------------------------
                                   Title: President & CEO
                                         -----------------------------
                                       45
<PAGE>


                                  AMENDMENT TO
                            ASSET PURCHASE AGREEMENT
                            ------------------------


     THIS AMENDMENT TO ASSET PURCHASE AGREEMENT (the "Amendment") is entered
into as of the 16th day of February, 2000 by and among Royster-Clark, Inc., a
Delaware corporation ("RCI"), Royster-Clark Resources LLC, a Delaware limited
liability company ("RCR"), American Crop Services, Inc., a Tennessee corporation
("ACS") and Chickasaw Chemical Company, Inc., a Tennessee corporation ("CCC" and
together with ACS, the "Sellers").

                                  WITNESSETH:

     WHEREAS, RCI and Sellers have entered into that certain Asset Purchase
Agreement (together with all Schedules, Exhibits, amendments and supplements
thereto, the "Agreement") as of January 27, 2000; and

     WHEREAS, RCI and the Sellers now desire to amend certain provisions of the
Agreement to reflect certain events that have occurred since the date of the
Agreement, and, pursuant to the authority granted under the Agreement to RCI to
approve the Schedules to the Agreement, to amend the Schedules to the Agreement
based upon the results of RCI's due diligence.

     NOW, THEREFORE, in consideration of the premises and of the mutual
agreements of the parties hereto hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confirmed, the parties hereto, intending to be legally bound,
hereby agree as follows:

     1.  Definitions. Terms defined in the Agreement which are used herein shall
         -----------
         have the same meanings as set forth in the Agreement for such terms
         unless otherwise defined herein.

     2.  Amendments to Agreement.  The Agreement is hereby amended as follows:
         -----------------------

         (A) Section 1.42 is hereby amended to add at the end of such Section
         the following language: "...;provided, however, the term "Inventory"
         shall not include any finished goods, raw materials, work-in-process or
         supplies which have been consigned to or are held by Sellers as to
         which Sellers do not have clear title as of the Closing Date, free and
         clear of all Encumbrances."

         (B) The first sentence of Section 2.2 is hereby amended to read in its
         entirety as follows:

         "The consideration for the purchase of the Purchased Assets and the
         Business as

                                       1
<PAGE>

          provided herein and Sellers' other obligations under this Agreement is
          Seven Million Dollars ($7,000,000.00), subject to adjustment as
          hereinafter provided in Section 2.5, plus Buyer's obligations under
          Article III, plus the Inventory Value as determined in accordance with
          Sections 1.3 and 4.4(b), plus the sum of the net equity balances of
          the Hedging Accounts, plus the Expense Sharing Payment (the "Purchase
          Price")."

          (C) A new Section 2.5 is hereby added to Article II to read in its
          entirety as follows:

          "2.5  Casualty Loss . The portion of the Purchase Price allocated to
                the Facilities acquired hereunder shall be adjusted as follows:
                the portion of the Purchase Price allocated to the Facility
                located at Union City, Tennessee on Schedule 2.2 shall be
                reduced by the cost to be incurred in repairing the grain
                storage facility and associated machinery at the facility
                damaged by the explosion occurring on or about February 8, 2000,
                the amount of such reduction (the "Repair Amount") to be
                determined by Buyer in its reasonable judgement (and to be
                communicated to Sellers at least two Business Days prior to the
                Closing Date) based upon bids secured by Sellers at least three
                Business Days prior to the Closing Date from at least two
                reputable contractors to repair such storage facility and such
                machinery to a state and working condition at least equivalent
                to its state and working condition prior to such explosion. At
                the Closing the Repair Amount shall be deposited in an escrow
                account to be established by Buyer under terms to be mutually
                agreed upon by Buyer and Sellers, with the consent of the
                Secured Lenders, and shall be used solely to pay the costs of
                repairing such facility and machinery. Any portion of the Repair
                Amount not utilized to pay such costs of such repairs shall be
                forwarded to the Secured Lenders upon receipt by Buyer and the
                Secured Lenders of a certificate from the contractor of the
                completion of the work in accordance with the repair contract
                entered into by Sellers. "

          (D) Section 4.2 is hereby amended to add thereto the words...",
          subject to adjustment as provided in Section 2.5 hereof..."
          immediately after the words "...(i) the sum of Six Million Six Hundred
          Fifty Thousand Dollars ($6,650,000.00)...." appearing in the first
          sentence thereof.

          (E) Section 7.10(a) is hereby amended by adding language at the end
          thereof to read in its entirety as follows:

          "At least two Business Days prior to the Closing Date, Sellers shall
          deliver to Buyer a schedule setting forth their calculation of any
          payments to be made pursuant to the aforementioned allocation. All
          such payments shall be made at the Closing.  The parties agree to
          resolve any dispute regarding any such allocation in

                                       2
<PAGE>

          good faith. Absent agreement on such allocation, the matter will be
          referred to PricewaterhouseCoopers for determination, its
          determination being final and binding on the parties hereto. "

          (F) Subsection 7.11(b)(i) is hereby amended to add thereto at the end
          of such subsection the following: "...and any Damages incurred by the
          Buyer arising out of or attributable to a challenge to the validity or
          enforceability of the Sale Approval Order or the Sale being free and
          clear of any and all Encumbrances pursuant to the Sale Approval Order
          shall be covered by the indemnity provisions of Article X hereof,
          including but not limited to, the provisions of Sections 10.5 and 10.7
          hereof;"

          (G) RCI hereby acknowledges and represents that the condition to
          Closing set forth in Section 8.10 has been satisfied.  Accordingly,
          Article VIII is hereby amended to delete therefrom existing Section
          8.10 and to add thereto a new Section 8.10 to read in its entirety as
          follows:

          "8.10  No Material Adverse Effect

                 Nothing has occurred since February 18, 2000 to the Knowledge
                 of Sellers that would reasonably be likely to result in a
                 Material Adverse Effect."

     3.   Amendments to Schedules. Attached hereto and made a part hereof are
          -----------------------
          amended Schedules 2.2 and 3.1.

     4.   Assignment. RCI hereby assigns all of its right, title and interest in
          ----------
          and to the Agreement to RCR, which, for purposes of the Agreement,
          shall be defined as the "Buyer"; provided, however, in no event shall
          RCI be relieved of its obligations under the Agreement by virtue of
          such assignment and RCR hereby assumes and agrees to perform all such
          obligations. Accordingly, Section 1.12 is hereby amended to read in
          its entirety as follows:

          "1.12  "Buyer"-- Royster-Clark Resources LLC, a Delaware limited
                 liability company."

     5.   Reference to the Effect on the Agreement.
          ----------------------------------------

          (A) (i) each reference in the Agreement to "this Agreement,"
          "hereunder," "hereof," "herein" or words of like import shall mean and
          be a reference to the Agreement as amended hereby, and (ii) each
          reference to the Agreement in all Ancillary Agreements shall mean and
          be a reference to the Agreement, as amended hereby.

          (B) Except as specifically amended above, the Agreement, and all
          Ancillary

                                       3
<PAGE>

          Agreements, shall remain in full force and effect and are hereby
          ratified and confirmed.

          (C) The execution, delivery and effectiveness of this Amendment shall
          not, except as expressly provided herein, operate as an amendment to
          any provision of the Agreement nor a waiver of any right, power or
          remedy of any party thereto, nor constitute a waiver of, or consent to
          any departure from, any provision of the Agreement or any Ancillary
          Agreement.  Except as expressly provided herein, this Amendment shall
          not operate as a waiver of any Breach of the Agreement that has
          occurred and is continuing on the date hereof or limit any party's
          rights, power or remedies under the Agreement in respect of any such
          Breach.

     6.   Governing Law.  This Amendment shall be governed by and construed in
          -------------
          accordance with the internal laws (as opposed to conflicts of law
          provisions) of the State of Delaware.

     7.   Headings. Section headings in this Amendment are included herein for
          --------
          convenience of reference only and shall not constitute a part of this
          Amendment for any other purpose.

     8.   Counterparts, Etc.  This Amendment may be executed by one or more of
          -----------------
          the parties to this Amendment on any number of separate counterparts
          and all of said counterparts taken together shall be deemed to
          constitute one and the same instrument. Delivery of a duly executed
          counterpart copy of this Amendment may be made by telecopy.

                        [Signatures are on the next page]
                        ---------------------------------

                                       4
<PAGE>

          IN WITNESS WHEREOF, this Amendment has been duly executed as of the
day and year first above written by the representatives of the parties hereto,
thereunto duly authorized.

                         ROYSTER-CLARK, INC.

                         By: /s/ Francis P. Jenkins, Jr.
                            --------------------------------

                         Title:  Chairman & CEO
                               -----------------------------


                         ROYSTER-CLARK RESOURCES LLC

                         By: /s/ Francis P. Jenkins, Jr.
                            --------------------------------

                         Title:  Chairman & CEO
                               -----------------------------



                         THE SELLERS:

                         AMERICAN CROP SERVICES, INC.


                         By: /s/ Gary T. Hancock
                            ---------------------------------

                         Title: President & CEO
                               ------------------------------



                         CHICKASAW CHEMICAL COMPANY, INC.


                         By: /s/ Gary T. Hancock
                            ---------------------------------

                         Title: President & CEO
                               ------------------------------


                                       5

<PAGE>

                                                                   EXHIBIT 10.10

================================================================================

                                    FORM OF

                           STOCK PURCHASE AGREEMENT

                                     AMONG

                    ROYSTER-CLARK RESOURCES LLC, as Buyer,

                                      AND

             The persons and entities identified as Sellers on the
                      Signature pages hereof, as Sellers

                               FOR THE SHARES OF

                           ALLIANCE AGRONOMICS, INC.









                          Dated as of March 17, 2000
================================================================================
<PAGE>

                               Table of Contents
<TABLE>
<CAPTION>
                                                                                Page
<S>                                                                             <C>
EXHIBITS

     Exhibit 1               Mutual Release
     Exhibit 2               Noncompetition Agreement
     Exhibit 3               Consulting Agreement
     Exhibit 4               Escrow Agreement
     Exhibit 5               Environmental Obligations Agreement

SCHEDULES

     Schedule 1              List of Shareholders of the Company
     Schedule 2.3            Adjustment Amount Accounting Principles
     Schedule 2.4(b)(i)      Closing Payment Allocation
     Schedule 3.1.1          Foreign Qualification Jurisdictions of the Company
     Schedule 3.1.2          Required Sellers' Consents
     Schedule 3.1.5          Bank Accounts, Etc.
     Schedule 3.1.6          Real Property Owned or Leased
     Schedule 3.1.7          Subleases, etc.
     Schedule 3.1.8          Accounts Receivable
     Schedule 3.1.9          Other Material Liabilities
     Schedule 3.1.10         Tax Return Audits
     Schedule 3.1.12         Employee Benefit Plans
     Schedule 3.1.13         Noncompliance with Legal Requirements; Government
                             Authorizations
     Schedule 3.1.14         Legal Proceedings
     Schedule 3.1.15         Material Changes or Events
     Schedule 3.1.16         Material Contracts
     Schedule 3.1.17(b)      Alternative Insurance Arrangements
     Schedule 3.1.17(c)      Exceptions to Insurance Representations
     Schedule 3.1.18         Employee Information
     Schedule 3.1.20(b)      Material Intellectual Property Rights Contracts
     Schedule 3.1.23         Interests of Related Persons
     Schedule 3.1.25         Exceptions to Environmental Representations
     Schedule 3.1.27         Product Warranties, Terms and Conditions
     Schedule 3.1.29(a)(i)   Substantial Customers
     Schedule 3.1.29(a)(ii)  Track Promotions
     Schedule 3.1.29(b)      Changes in Customers
     Schedule 3.1.29(c)      Substantial Suppliers
     Schedule 3.1.29(d)      Changes in Suppliers
     Schedule 3.1.31         Distributions
</TABLE>
<PAGE>

<TABLE>
     <S>                     <C>
     Schedule 4.2            Exceptions to Buyer's Representations
     Schedule 5.6(a)         Excluded Assets
     Schedule 5.6(d)         Severance payments
</TABLE>
<PAGE>

          THIS STOCK PURCHASE AGREEMENT (together with all Schedules, Exhibits,
amendments and supplements thereto, the "Agreement") is made as of March 17,
2000, by and among Royster-Clark Resources LLC, a Delaware limited liability
company ("Buyer"), and the persons listed as Shareholders in Schedule 1
                                                             ----------
(collectively, the "Sellers").

                                   RECITALS

          The Sellers desire to sell to Buyer, and Buyer desires to purchase
from Sellers,  100% of the issued and outstanding shares (the "Shares") of the
capital stock of Alliance Agronomics, Inc. (the "Company") for the consideration
and on the terms and conditions set forth in this Agreement.

                                   AGREEMENT

          The parties, intending to be legally bound, agree as follows:

          ARTICLE 1.  DEFINITIONS

          For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article 1:

          "Acquired Companies" -- the Company and its Subsidiaries,
           ------------------
collectively.

          "Agreement" -- as defined in the first paragraph hereof.
           ---------

          "Applicable Contract" -- any Contract (a) under which any Acquired
           -------------------
Company has or may acquire any rights, (b) under which any Acquired Company has
or may become subject to any obligation or liability, or (c) by which any asset
owned or used by any Acquired Company is or may become bound.

          "Balance Sheet" -- the audited consolidated balance sheet of the
           -------------
Acquired Companies as at December 31, 1999 (including the notes thereto)
delivered to Buyer as provided in Section 3.1.4.

          "Breach" -- a "Breach" of a representation, warranty, covenant,
           ------
obligation, or other provision of this Agreement or any certificate delivered
pursuant to this  Agreement will be deemed to have occurred if there is or has
been any breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision.

          "Business Day" -- any day (other than a Saturday, Sunday or public
           ------------
holiday in the Borough of Manhattan, City of New York) on which banking
institutions in New York City are not required or permitted by law or executive
order to close.

          "Buyer" -- as defined in the first paragraph of this Agreement.
           -----
<PAGE>

          "Buyer's Closing Documents" - the documents to be executed and
           -------------------------
delivered to Sellers at the Closing by Buyer.

          "Claim" -- as defined in Section 10.7.
           -----

          "Closing" -- as defined in Section 2.4.
           -------

          "Closing Balance Sheet" - means the closing balance sheet of the
           ---------------------
Company prepared pursuant to Section 3.1.4.

          "Closing Date" -- the date and time as of which the Closing actually
           ------------
takes place.

          "Common Stock" -- means the Class A shares, par value $1.00 per share
           ------------
and the Class B shares, par value $1.00 per share, of the Company.

          "Company" -- as defined in the Recitals of this Agreement.
           -------

          "Competing Business" -- as defined in Section 3.1.23.
           ------------------

          "Consulting Agreement" -- as defined in Section 2.5(c)(ii).
           --------------------

          "Contemplated Transactions" -- all of the transactions contemplated by
           -------------------------
this Agreement, including, without limitation, the sale of the Shares by the
Sellers to Buyer; Buyer's acquisition and ownership of the Shares and exercise
of control over the Company; the execution, delivery and performance of the
Consulting Agreements, the Noncompetition Agreements, the Mutual Release, the
Environmental Obligations Agreement and the Indemnity Escrow Agreement; and the
performance by the parties hereto of their respective covenants, agreements and
obligations hereunder and thereunder.

          "Contract" -- any agreement, contract, obligation, promise, or
           --------
undertaking (whether written or oral and whether express or implied).

          "Control Person" -- as to any entity, any Person who controls such
           --------------
entity within the meaning of the Securities Act  of 1933, as amended, or the
Securities and Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

          "Damages" -- as defined in Section 7.2.
           -------

          "Encumbrance" -- any mortgage, easement, servitude, right of way,
           -----------
charge, claim, equitable interest, lien, option, pledge, security interest,
right of first refusal, or restriction of any kind, including any restriction on
use, voting, transfer, or exercise of any other attribute of ownership.

          "Environment" -- soil, land surface or subsurface strata, surface
           -----------
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands),

                                       2
<PAGE>

groundwaters, drinking water supply, stream sediments, ambient air (including
indoor air), plant and animal life, and any other environmental medium or
natural resource.

          "Environmental Claim" -- means any actual or reasonably anticipated
           -------------------
claim, action, cause of action, investigation or written notice, order,
direction or requirement by any Person alleging potential liability or remedy,
whether civil, administrative, criminal or quasi-criminal (including, without
limitation, potential liability for investigatory costs, cleanup, remediation or
preventive costs, governmental response costs, natural resources damages,
property damages, personal injuries, fines, penalties or monetary and non-
monetary sanctions) arising out of, based on or resulting from (a) the presence
or Release or Threat of Release of any Hazardous Materials at any location or
(b) circumstances forming the basis of any violation of any Environmental Laws.

          "Environmental, Health, and Safety Liabilities" -- any cost, damages,
           ---------------------------------------------
expense, liability, obligation, or other responsibility arising from or under
Environmental Laws or Occupational Safety and Health Laws and consisting of or
relating to:

          (a)  any environmental, health, or safety matters or conditions
(including, without limitation, on-site or off-site contamination, pollution
control, occupational safety and health, natural resources, and regulation of
chemical substances or products);

          (b)  fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Laws or Occupational Safety and Health Laws;

          (c)  financial responsibility under Environmental Laws or Occupational
Safety and Health Laws for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by or pursuant to applicable Environmental Laws or
Occupational Safety and Health Laws (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages; or

          (d)  any other compliance, corrective, investigative, or remedial
measures required under Environmental Laws or Occupational Safety and Health
Laws.

          The terms "removal," "remedial," "response action," and "corrective
action" include the types of activities covered by the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. (S)9601 et
seq., as amended ("CERCLA"), and the Resource Conservation and Recovery Act, 42
U.S.C. (S)6901 et seq., as amended ("RCRA").

          "Environmental Laws" -- means all United States federal, interstate,
           ------------------
state, and local laws, common law, guidelines, permits, agreements, licenses,
Orders, by-laws, rules, regulations and restrictions of any kind by any
Governmental Body relating to pollution or protection of human health or the
environment, including, without limitation, laws relating to

                                       3
<PAGE>

Releases or Threatened Releases of Hazardous Materials, pollution control, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, transport, handling, or disposal of Hazardous Materials or the clean-up
thereof and the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended, but not including the Occupational Safety and Health
Act of 1970, as amended.

          "Environmental Obligations Agreement" -- as defined in Section 2.2(g).
           -----------------------------------

          "ERISA" -- the Employee Retirement Income Security Act of 1974, as
           -----
amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.

          "ERISA Affiliate" -- as defined in Section 3.1.12.
           ---------------

          "Escrow Agreement" -- as defined in Section 2.5(g).
           ----------------

          "Excluded Assets" - Those items listed as "Excluded Assets" on
           ---------------
Schedule 2.1(b) and Schedule 3.1.31(a).
- ---------------     ------------------

          "Facilities" -- any real property, leaseholds, or other interests
           ----------
currently or formerly owned or operated by any Acquired Company and any
buildings, plants or structures, currently or formerly owned or operated by any
Acquired Company.

          "GAAP" -- generally accepted United States accounting principles
           ----
consistently applied.

          "Governmental Authorization" -- any approval, consent, license,
           --------------------------
permit, waiver, or other authorization issued, granted or given pursuant to any
Legal Requirement.

          "Governmental Body" -- any nation, state, county, city, town, village,
           -----------------
district, or other jurisdiction of any nature; federal, state, local, municipal,
foreign, or other government; governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal); multi-national organization or body; or
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.

          "Hazardous Activity" -- the distribution, generation, handling,
           ------------------
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, disposal, or use
(including any withdrawal or other use of groundwater) of Hazardous Materials
in, on, under, about, or from the Facilities or any part thereof into or in the
Environment, and any other act, business, operation, or thing that increases the
damages, or risk of damages, or poses an unreasonable risk of harm to Persons or
property on or off the Facilities or that may affect the value of the Facilities
or the Acquired Companies or that may result in an Environmental, Health, and
Safety Liability.

                                       4
<PAGE>

          "Hazardous Materials" -- means (i) substances that are defined as,
           -------------------
listed, regulated or otherwise classified as "Hazardous Substances," "Hazardous
Materials," "Hazardous Wastes," "Toxic Substances," "Pesticides," "Oils,"
"Pollutants" or "Contaminants" in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R.300.5, or under any other Environmental
Law, or (ii) wastes, pollutants, contaminants and substances listed, classified
or regulated as such and that could form the basis for an Environmental Claim
under any Environmental Law or (iii) petroleum or petroleum-derived substances,
methane, natural gas, any flammable substances or explosives, radioactive
materials, asbestos or asbestos - containing material, polychlorinated biphenyls
("PCB") or PCB - containing materials, or (iv) nitrogen or phosphorus containing
substances.

          "Indemnity Escrow" -- as defined in Section 2.5(g).
           ----------------

          "Intellectual Property Assets" -- as defined in Section 3.1.20.
           ----------------------------

          "IRC" -- the Internal Revenue Code of 1986, as amended to the date
           ---
hereof and regulations issued by the IRS pursuant to the IRC.

          "IRS" -- the United States Internal Revenue Service or any successor
           ---
agency, and, to the extent relevant, the United States Department of the
Treasury.

          "Knowledge" -- an individual will be deemed to have "Knowledge" of a
           ---------
particular fact or other matter if such individual is actually aware of such
fact or other matter. An Acquired Company will be deemed to have "Knowledge" of
a particular fact or other matter if any individual listed on Schedule 1.1 has
                                                              ------------
Knowledge of such fact or other matter.

          "Legal Requirement" -- any federal, state, local, municipal, foreign,
           -----------------
international, multinational, or other administrative Order, constitution, law,
ordinance, principle of common law, rule, regulation, statute, or treaty, and
specifically including Environmental Laws and Occupational Safety and Health
Laws.

          "Material Contract" -- any Applicable Contract which, if breached or
           -----------------
terminated, will or is reasonably likely to result in a change or effect which
is or is likely to be materially adverse to the business, financial condition,
or results of operations of any of the Acquired Companies.

          "Mutual Release" -- as defined in Section 2.2(a)(ii).
           --------------

          "Noncompetition Agreements" -- as defined in Section 2.4(a)(iii).
           -------------------------

          "Occupational Safety and Health Laws" -- any Legal Requirement
           -----------------------------------
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards.

                                       5
<PAGE>

          "Order" -- any award, decision, injunction, judgment, order, ruling,
           -----
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.

          "Ordinary Course of Business" -- an action taken by any Acquired
           ---------------------------
Company will be deemed to have been taken in the "Ordinary Course of Business"
only if (a) such action is consistent with the past practices of the Acquired
Company and is taken in the ordinary course of its normal day-to-day operations;
and (b) such action is not required to be authorized by the board of directors
or stockholders of the Acquired Company.

          "Organizational Documents" -- (a) the articles or certificate of
           ------------------------
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.

          "Partnership" -- as defined in Section 6.8.
           -----------

          "Partnership Interest" -- as defined in Section 6.8.
           --------------------

          "PBGC" -- as defined in Section 3.1.12(c).
           ----

          "Person" -- any individual, corporation (including any non-profit
           ------
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.

          "Plan" -- as defined in Section 3.1.12.
           ----

          "Proceeding" -- any action, arbitration, audit, hearing,
           ----------
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.

          "Proprietary Rights Agreement" -- as defined in Section 3.1.18.
           ----------------------------

          "Purchase Agreement" -- as defined in Section 6.8.
           ------------------

          "Purchase Price" -- as defined in Section 2.1.
           --------------

          "Redemption Shares" -- the shares of Class A stock of the Company
           -----------------
redeemed by the Company pursuant to Section 2.1(b).

          "Related Person" -- with respect to an individual: (a) each other
           --------------
member of such individual's Family; (b) any Person that is directly or
indirectly controlled by such individual or one or more members of such
individual's Family; (c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;

                                       6
<PAGE>

and (d) any Person with respect to which such individual or one or more members
of such individual's Family serves as a director, officer, partner, executor, or
trustee (or in a similar capacity).

          With respect to a Person other than an individual: (a) any Person that
directly or indirectly controls, is directly or indirectly controlled by, or is
directly or indirectly under common control with such specified Person; (b) any
Person that holds a Material Interest in such specified Person; (c) each Person
that serves as a director, officer, partner, executor, or trustee of such
specified Person (or in a similar capacity); (d) any Person in which such
specified Person holds a Material Interest; (e) any Person with respect to which
such specified Person serves as a general partner or a trustee (or in a similar
capacity); and (f) any Related Person of any individual described in clause (b)
or (c).

          For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse and former spouses,
(iii) any other natural person who is related to the individual or the
individual's spouse within the second degree, and (iv) any other natural person
who resides with such individual, and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of voting securities or other voting interests
representing at least 5% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 5% of the outstanding
equity securities or equity interests in a Person.

          "Release" -- means any release, spill, emission, discharge, leaking,
           -------
pumping, injection, deposit, disposal, dispersal, leaching or migration into the
environment (including, without limitation, ambient air, surface water,
groundwater and surface or subsurface strata) or into or out of any property,
including the movement of Hazardous Materials through or in the air, soil,
surface water, groundwater, environment or property.

          "Representative" -- with respect to a particular Person, any director,
           --------------
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.

          "Sellers" -- as defined in the first paragraph of this Agreement.
           -------

          "Seller's Closing Documents" -- means as to each Seller the documents
           --------------------------
to be executed and delivered at the Closing by such Seller.

          "Separation Agreement" -- as defined in Section 3.1.31(d).
           --------------------

          "Shares" -- as defined in the Recitals of this Agreement.
           -------

          "Subsidiary" -- with respect to any Person (the "Owner"), any
           ----------
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than

                                       7
<PAGE>

securities or other interests having such power only upon the happening of a
contingency that has not occurred) are held by the Owner or one or more of its
Subsidiaries; when used without reference to a particular Person, "Subsidiary"
means a Subsidiary of the Company.

          "Tax" -- any federal, state, local or foreign tax, including income,
           ---
gross receipts, windfall profits, value added, ad valorum, profits, payroll,
stamp, occupational, premium, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes.

          "Tax Return" -- any return (including any information return), report,
           ----------
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.

          "Threatened" -- a claim, Proceeding, dispute, action, or other matter
           ----------
will be deemed to have been "Threatened" if any demand, statement or notice has
been given (orally or in writing) or other overt indication has been made, that
would lead a reasonably prudent business Person to conclude that such a claim,
Proceeding, dispute, action, or other matter is reasonably likely to be
asserted, commenced, taken, or otherwise pursued in the future.

          "Threat of Release" -- a substantial likelihood of a Release that may
           -----------------
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.

          "Trade Secrets" -- as defined in Section 3.1.20(a)(iv).
           -------------

          ARTICLE 2.  SALE AND TRANSFER OF SHARES; CLOSING

          2.1  SALE OF SHARES

          (a)  At the Closing, the Sellers shall sell and transfer the Shares to
Buyer, and Buyer shall purchase the Shares from the Sellers, upon the terms set
forth in this Agreement. The purchase price (the "Purchase Price") for the
Shares shall be $4,191,489.

          (b)  Immediately prior to the Closing, the Company shall have redeemed
the Redemption Shares as set forth on Schedule 2.1(b) and shall have distributed
                                      ---------------
to the Sellers in exchange for the Redemption Shares the Excluded Assets set
forth on Schedule 2.1(b).
         ---------------

          2.2  CLOSING

                                       8
<PAGE>

          The Contemplated Transactions will be consummated at a closing (the
"Closing") to be held at the offices of McGuire, Woods, Battle & Boothe LLP, One
James Center, 901 East Cary Street, Richmond, VA  23219 at 10:00 AM on March 17,
2000 or at such other time and place as the parties may agree.  At the Closing:

          (a)   The Sellers will deliver to Buyer:

                (i)   certificates representing the Shares duly endorsed (or
accompanied by duly executed stock powers), for transfer to Buyer;

                (ii)  a mutual release in the form attached as Exhibit 1 hereto
                                                               ---------
executed by each of the Sellers ("Mutual Release"); and

                (iii) a noncompetition agreement in the form attached as Exhibit
                                                                         -------
2 hereto executed by G. Waddy Garrett (the "Noncompetition Agreement").
- -

          (b)   Buyer will deliver to each of the Sellers:

                (i)  a bank cashier's or certified check payable to the order
of, or confirmation of wire transfer to any account which was specified in
writing to the Buyer by such Seller prior to the Closing, in the amount
appearing opposite such Seller's name on Schedule 2.4(b)(i) hereto; and
                                         ------------------

                (ii) the Mutual Release executed by the Buyer and the Company.

          (c)   The Company will enter into a consulting agreement with G. Waddy
Garrett, residing at 11 Old Bridge Lane, Richmond, VA 23229 ("Garrett") in the
form attached as Exhibit 3 hereto (the "Consulting Agreement").
                 ---------

          (d)   Buyer and Sellers will enter into an escrow agreement in the
form attached as Exhibit 4 hereto (the "Escrow Agreement") with First Union
                 ---------
National Bank as Escrow Agent and Buyer will deliver the sum of $500,000.00 (the
"Indemnity Escrow") to the Escrow Agent by bank cashier's check or wire transfer
to the account specified by such Escrow Agent by notice to Buyer in writing
prior to the Closing.

          (e)   Buyer shall pay or cause the Company to pay to G. Waddy Garrett
$10,000.00 in consideration of his obligations under the Noncompetition
Agreement.

          (f)   Buyer shall pay or cause the Company to pay G. Waddy Garrett
$711,864.00 and Robert R. McDonald $47,458.00 (less applicable withholding and
other payroll taxes) by wire transfer to the account(s) previously designated by
them in writing in full payment and satisfaction of all obligations of the
Company to them under their respective Deferred Compensation Agreements set
forth on Schedule 3.1.18.
         ---------------

                                       9
<PAGE>

          (g)    Buyer and GWG Financial LLC shall enter into an Environmental
Obligations Agreement in the form attached as Exhibit 5 hereto (the
                                              ---------
"Environmental Obligations Agreement").

          ARTICLE 3.  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

          3.1    REPRESENTATIONS AND WARRANTIES AS TO THE COMPANY

           The Sellers hereby jointly and severally represent and warrant to
Buyer as follows:

           3.1.1 ORGANIZATION AND GOOD STANDING

          (a)    Schedule 3.1.1 contains a complete and accurate list for each
                 --------------
Acquired Company of its name, its jurisdiction of incorporation, other
jurisdictions in which it is authorized to do business, and its capitalization
(including the identity of each stockholder and the number of shares held by
each). Each Acquired Company is a corporation duly organized, validly existing,
and in good standing under the laws of its jurisdiction of incorporation, with
full corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts. Each
Acquired Company is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction where the
failure so to qualify would have a material adverse effect on the financial
condition, business, assets or results of operations of such Acquired Company.

          (b)    Each Acquired Company has made available to Buyer copies of its
Organizational Documents, as currently in effect.

           3.1.2 AUTHORITY; NO CONFLICT

          (a)    This Agreement has been duly executed and delivered by the
Sellers.

          (b)    Except as set forth or Schedule 3.1.2, neither the execution
                                        --------------
and delivery of this Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time or both):

                 (i)  contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of any of the Acquired Companies,
or (B) any resolution adopted by the board of directors or the stockholders of
any of the Acquired Companies;

                                      10
<PAGE>

               (ii)  contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which any Acquired Company, or any of the
assets owned or used by any Acquired Company, may be subject;

               (iii) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify any Governmental
Authorization that relates to the business of any Acquired Company or that
otherwise relates to any assets owned or used by any Acquired Company;

               (iv)  contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Material Contract; or

               (v)   result in the imposition or creation of any Encumbrance
upon or with respect to any of the Shares or any of the assets owned or used by
any Acquired Company.

          (c)  Except as set forth in Schedule 3.1.2, no Seller or Acquired
                                      --------------
Company is or will be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions which
has not been previously given or obtained.

            3.1.3  CAPITALIZATION

          The authorized equity securities of the Company consist of 20,000
Class A Shares of common stock, par value $1.00 per share, of which 7,638 shares
are issued and outstanding and 20,000 Class B shares of common stock, par value
$1.00 per share, of which no shares have been issued.  Such issued and
outstanding Class A Shares constitute all of the Shares, and all such Shares
have been duly authorized, validly issued and are fully paid and non-assessable.
Sellers are and will be on the Closing Date the record and beneficial owners and
holders of the Shares, free and clear of all Encumbrances.  Garrett owns 3,047
of the Shares constituting approximately 39.9% of the total outstanding.  With
the exception of the Shares (all of which are owned by Sellers), all of the
outstanding equity securities and other securities of each Acquired Company are
owned of record and beneficially by one or more of the Acquired Companies, free
and clear of all Encumbrances.  Except as set forth on Schedule 3.1.3, no legend
                                                       --------------
or other reference to any purported Encumbrance appears upon any certificate
representing equity securities of any Acquired Company.  All of the outstanding
equity securities of each Acquired Company have been duly authorized and validly
issued and are fully paid and nonassessable.  There are no Contracts relating to
the issuance, sale, or transfer of any equity securities or other securities of
any Acquired Company.  None of the outstanding equity securities or other
securities of any Acquired Company was issued in violation of the Securities Act
of 1933, as

                                       11
<PAGE>

amended, or any other Legal Requirement. Except as set forth on Schedule 3.1.3,
                                                                --------------
no Acquired Company owns, or has any Contract to acquire, any equity securities
or other securities of any Person (other than Acquired Companies) or any direct
or indirect equity or ownership interest in any other business.

          3.1.4  FINANCIAL STATEMENTS

          Sellers have delivered to Buyer: (a) audited consolidated balance
sheets of the Acquired Companies as at December 31 in each of the fiscal years
1996 through 1999, and the related audited consolidated statements of income,
changes in stockholders' equity, and cash flow for each of the fiscal years then
ended, together with the report thereon of Mitchell, Wiggins & Company LLP,
independent certified public accountants; and (b) unaudited interim consolidated
balance sheets of the Acquired Companies as of February 29, 2000 (the "Closing
Balance Sheet") and related unaudited consolidated statements of income, changes
in stockholders' equity and cash flow for the two(2) months then ended. The
audited and unaudited financial statements and notes referred to in this Section
3.1.4 fairly present the financial condition and the results of operations,
changes in stockholders' equity, and cash flow of the Acquired Companies as of
the respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP (as to the audited statements only), and
reflect the consistent application of such accounting principles throughout the
periods involved. No financial statements of any Person other than the Acquired
Companies are required by GAAP to be included in the consolidated financial
statements of the Company.

          3.1.5  BOOKS AND RECORDS; BANK AND BROKERAGE ACCOUNTS, ETC.; ACCESS

          Except as set forth in Schedule 3.1.5, the books of account, minute
                                 --------------
books, stock record books, and other records of the Acquired Companies, all of
which have been made available to Buyer, are complete and correct.  The minute
books of the Acquired Companies contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders and the boards
of directors of the Acquired  Companies, and no meeting of any such stockholders
or board of directors has been held for which minutes have not been prepared and
are not contained in such minute books.  On the Closing Date, all of those books
and records will be in the possession of the Acquired Companies.  Schedule 3.1.5
                                                                  --------------
sets forth a complete list of all bank, brokerage, mutual fund, money market and
other financial services accounts maintained by each of the Acquired Companies
and the identity of all authorized signatories thereon. Sellers have and have
caused the Company and its Representatives to, (a) afford Buyer and its
Representatives full and free access to each Acquired Company's personnel,
properties, contracts, books and records, and other documents and data, (b)
furnish Buyer and Buyer's Representatives with copies of all such Contracts,
books and records, and other existing documents and data as Buyer may have
reasonably requested, and (c) furnished Buyer and Buyer's Representatives with
such additional financial, operating, and other data and information (including,
without limitation, accountants' work papers)  as Buyer may reasonably request.

                                       12
<PAGE>

          3.1.6  TITLE TO PROPERTIES; ENCUMBRANCES

          Schedule 3.1.6 contains a complete and accurate list of all real
          --------------
property, leaseholds, or other interests therein owned or operated by any
Acquired Company. Sellers have  delivered or made available to Buyer copies of
the deeds, leases and other instruments (as recorded, where applicable) by which
the Acquired  Companies acquired such real property, leaseholds and interests,
and copies of all title insurance policies, opinions, abstracts, and surveys in
the possession of Sellers or the Acquired Companies and relating to such
property, leaseholds or interests.  The Acquired Companies own (with good and
marketable title in the case of real property , subject only to the matters
permitted by the following sentence)  all the properties and assets (whether
real, personal, or mixed and whether tangible or intangible) that they  purport
to own located in the Facilities owned or operated by the Acquired Companies or
reflected as owned in the books and records of the Acquired Companies, including
all of the properties and assets reflected in the Balance Sheet (except for
assets held under capitalized leases disclosed or not required to be disclosed
in Schedule 3.1.6 and personal property acquired or sold since the date of the
   --------------
Balance Sheet in the Ordinary Course of Business), and such properties,
leaseholds and assets constitute all of the properties, leaseholds and assets
owned or used by the Acquired Companies.  All of the properties and assets
purchased or otherwise acquired by the Acquired Companies since the date of the
Balance Sheet (except for personal property acquired and sold since the date of
the Balance Sheet in the Ordinary Course of Business, inventory and short-term
investments) are listed in Schedule 3.1.6.  All properties and assets reflected
                           --------------
in the Balance Sheet are free and clear of all Encumbrances and are not, in the
case of real property, subject to any rights of way, building use restrictions,
exceptions, variances, easements, Encumbrances, reservations, or limitations of
any nature except, with respect to all such properties and assets, (a) mortgages
or security interests shown on the Balance Sheet as securing specified
liabilities or obligations, with respect to which no default (or event that,
with notice or lapse of time or both, would constitute a default) exists, (b)
mortgages or security interests incurred in connection with the purchase of
property or assets after the date of the Balance Sheet (such mortgages and
security interests being limited to the property or assets so acquired), with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (c) liens for current taxes not yet
due, and (d) with respect to real property, (i) minor imperfections of title, if
any, none of which is substantial in amount, materially detracts from the value
or materially impairs the use of the property subject thereto, or materially
impairs the operations of any Acquired Company, (ii) zoning laws and other land
use restrictions that do not impair the present use of the property subject
thereto, (ii) mechanics', carriers', workers', repairers' and other similar
liens arising as a matter of law, which are not material in nature or amount,
(iv) encumbrances of record that are disclosed in title commitments and title
documents provided to Buyer, and (v) exceptions shown on surveys provided by
Sellers or the Acquired Companies to Buyer, or otherwise obtained by Buyer,
prior to the Closing Date; and (e) those items listed on Schedule 3.1.6.  All
                                                         --------------
buildings, plants, and structures owned by the Acquired Companies lie wholly
within the boundaries of the real property owned by the Acquired Companies and
do not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.

                                       13
<PAGE>

           3.1.7 CONDITION AND SUFFICIENCY OF ASSETS

          (a)    The buildings, plants, structures, and equipment owned, leased
or otherwise used or operated by the Acquired Companies are structurally sound,
are in good operating condition and repair, and are adequate for the uses to
which they are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The building,
plants, structures, and equipment owned, leased or otherwise used or operated by
the Acquired Companies are sufficient for the continued conduct of the Acquired
Companies' business after the Closing in substantially the same manner as
conducted prior to the Closing. Except as set forth in Schedule 3.1.7, there are
                                                       --------------
no subleases, space-sharing agreements or other similar arrangements giving or
purporting to give any Person other than the Acquired Companies any rights
relating to any of the Acquired Companies' real property, whether owned or
leased, that are not terminable by the Acquired Companies without cause on less
than 6 months notice.

          (b)    All inventory of the Acquired Companies, whether or not
reflected in the Balance Sheet is of merchantable quality, of the grade
specified and consists of a quality, quantity and age usable and salable in the
Ordinary Course of Business without discount, except for obsolete items and
items of below-standard quality, all of which have been written off or written
down to net realizable value in the Balance Sheet or on the accounting records
of the Acquired Companies as of the date of the Closing Balance Sheet, as the
case may be. All inventories not written off have been priced at the lower of
cost or market on a first in, first out basis. The quantities of each item of
inventory (whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable in the present circumstances of the Acquired
Companies.

           3.1.8 ACCOUNTS RECEIVABLE

          (a)    The accounts receivable of the Acquired Companies that are
reflected on the Closing Balance Sheet or on the accounting records of the
Acquired Companies as of the date of the Closing Balance Sheet (collectively,
the "Accounts Receivable"), together with those other accounts receivable of the
Acquired Companies that are Excluded Assets, constitute all of the accounts
receivable of the Acquired Companies as of such date. The Accounts Receivable
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business.

          (b)    The parties agree that Sellers make no representation or
warranty with respect to the collectibility of the Accounts Receivable listed on
Schedule 3.1.8 under the heading "Accounts Receivable Not Collectible prior to
- --------------
December 31, 2000," and that the collection and/or repurchase of such Accounts
Receivable shall be made pursuant to the provisions of Section 5.5 below. The
parties further agree that Sellers make no representation or warranty with
respect to the notes listed on Schedule 3.1.8 under the heading "Non-Collectible
                               --------------
Notes," and that such notes shall not be considered "Accounts Receivable"
hereunder.

                                      14
<PAGE>

          3.1.9  NO UNDISCLOSED LIABILITIES

          Except as set forth in Schedule 3.1.9, as of February 29, 2000 the
                                 --------------
Acquired Companies had no liabilities or obligations in excess of $10,000, in
the aggregate, except for liabilities or obligations reflected or reserved
against in the Closing Balance Sheet and liabilities incurred in the Ordinary
Course of Business (taking into account ordinary seasonal fluctuations) since
the date thereof.

           3.1.10  TAXES

          (a)  The Acquired Companies have filed or caused to be filed (on a
timely basis since January 1, 1996) all Tax Returns that are or were required to
be filed by or with respect to any of them, either separately or as a member of
a group of corporations, pursuant to applicable Legal Requirements. Sellers have
delivered or made available to Buyer copies of all such Tax Returns filed since
December 31, 1997. The Acquired Companies have paid, or made provision for the
payment of, all Taxes that have become due as shown in those Tax Returns, or
otherwise.

          (b)  The United States federal and state Tax Returns of each Acquired
Company have been audited by the IRS or relevant state tax authorities or are
closed by the applicable statute of limitations for all taxable years through
December 31, 1995. Schedule 3.1.10 contains a complete and accurate list of all
                   ---------------
audits of all such Tax Returns, including a reasonably detailed description of
the nature and outcome of each audit since December 31, 1990. All deficiencies
proposed as a result of such audits have been paid, reserved against, settled,
or, as described in Schedule 3.1.10, are being contested in good faith by
                    ---------------
appropriate proceedings. Except as described in Schedule 3.1.10, no Seller or
                                                ---------------
Acquired Company has given or been requested to give waivers or extensions (or
is or would be subject to a waiver or extension given by any other Person) of
any statute of limitations relating to the payment of Taxes of any Acquired
Company or for which any Acquired Company may be liable.

          (c)  The charges, accruals, reserves and receivables with respect to
Taxes on the books of each Acquired Company as of the date of the Closing
Balance Sheet are adequate and are at least equal to that Acquired Company's
liability for Taxes as of such date. There exists no proposed tax assessment
against any Acquired Company except as disclosed in the Balance Sheet, the
Closing Balance Sheet or Schedule 3.1.10 and Sellers have no Knowledge of any
                         ---------------
basis for any such assessment. No consent to the application of Section
341(f)(2) of the IRC has been filed with respect to any material property or
assets held, acquired, or to be acquired by any Acquired Company. All Taxes that
any Acquired Company is or was required by Legal Requirements to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Body or other Person.

          (d)  All Tax Returns filed by ( or that include on a consolidated
basis) any Acquired Company are true, correct and complete. There is no tax
sharing agreement that will

                                       15
<PAGE>

require any payment by any Acquired Company after the date of this Agreement.
None of the Acquired Companies has given a power of attorney to any Person,
which is still in effect.

          3.1.11  NO MATERIAL ADVERSE CHANGE

          Since the date of the Closing Balance Sheet, there has not been any
material adverse change in the business, operations, properties, prospects,
assets, or condition of any Acquired Company and no event has occurred or
circumstance exists that is reasonably likely to  result in such a material
adverse change or which may materially impair or impede the ability of the
Acquired Companies to conduct their business in the Ordinary Course of Business
after the Closing Date and no Seller has Knowledge of any basis for any such
material adverse change or event or circumstances.

           3.1.12 EMPLOYEE BENEFITS

          (a)  Schedule 3.1.12 contains a true and complete list of each
               ---------------
deferred compensation and each bonus or other incentive compensation, stock
purchase, stock option and other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance and other "welfare" plan, fund or program
(within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or other
"pension" plan, fund or program (within the meaning of Section 3(2) of ERISA);
each employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by any
Acquired Company or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with any Acquired Company would be deemed a
"single employer" within the meaning of Section 4001 (b) of ERISA, or to which
any Acquired Company or an ERISA Affiliate is party, whether written or oral,
for the benefit of any employee or former employee of any Acquired Company (the
"Plans"). No Plan is subject to Section 302 or Title IV of ERISA or Section 412
of the IRC. Neither any Acquired Company nor any ERISA Affiliate has any
commitment or formal plan, whether legally binding or not, to create any
additional employee benefit plans or modify or change any existing Plan that
would affect any employee or former employee of any Acquired Company. At no time
has any Acquired Company maintained or been a party to a multi-employer plan as
defined in (S) 4001(a)(3) of ERISA.

          (b)  With respect to each Plan, the Acquired Companies have heretofore
delivered or made available to Buyer true and complete copies of each of the
following documents:

              (i)  a copy of the Plan and any amendments thereto (or if the Plan
is not a written Plan, a description thereof);

                                       16
<PAGE>

               (ii)  a copy of the two most recent annual reports and actuarial
reports, if required under ERISA, and the most recent report prepared with
respect thereto in accordance with Statement of Financial Accounting Standards
No. 87; and

               (iii) a copy of the most recent summary plan description required
under ERISA with respect thereto.

               (iv)  if the Plan is funded through a trust or any third party
funding vehicle, a copy of the trust or other funding agreement and the latest
financial statements thereof; and

               (v)   the most recent determination letter received from the
Internal Revenue Service with respect to each Plan intended to qualify under
Section 401 of the IRC.

          (c)  No liability under Title IV or Section 302 of ERISA has been
incurred by any Acquired Company or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to any
Acquired Company or any ERISA Affiliate of incurring any such liability, other
than liability for premiums due the Pension Benefit Guaranty Corporation
("PBGC") (which premiums have been paid when due).

          (d)  All contributions required to be made with respect to any Plan on
or prior to the Closing Date have been timely made.

          (e)  Each Plan has been operated and administered in all material
respects in accordance with Plan terms and applicable law, including but not
limited to ERISA and the IRC.

          (f)  Each Plan intended to be "qualified" within the meaning of
Section 401(a) of the IRC has received a favorable determination letter from the
IRS that it is so qualified and each trust created thereunder has been
determined by the IRS to be exempt from tax under the provisions of Section
501(a) of the IRC, and nothing has occurred since the date of such letter that
could be reasonably be expected to cause any such Plan or trust to fail to
qualify under Sections 401(a) or 501(a) of the IRC. Each Plan intended to
satisfy the requirements of Section 501(c)(9) has satisfied such requirements.

          (g)  No Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for employees or former employees of
any Acquired Company for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits under any "pension plan," or (iii) benefits the full cost of
which is borne by the current or former employee (or his beneficiary).

          (h)  No amounts payable under the Plans will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the IRC.

          (i)  The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former

                                       17
<PAGE>

employee or officer of any Acquired Company or any ERISA Affiliate to severance
pay, unemployment compensation or any other payment, except as expressly
provided in this Agreement, or (ii) accelerate the time of payment or vesting,
or increase the amount of compensation due any such employee or officer.

          (j)  No prohibited transaction as defined in Section 406 of ERISA or
in Section 4975 of the IRC has occurred with respect to any Plan for which no
exemptions exists under Section 408 of ERISA or Sections 4975(c)(2) or (d) of
the IRC and no breach of fiduciary duty has occurred with respect to any Plan,
and there are no pending, threatened or anticipated claims by or on behalf of
any Plan, by any employee or beneficiary covered under any such Plan, or
otherwise involving any such Plan (other than routine claims for benefits).

           3.1.13 COMPLIANCE WITH LEGAL REQUIREMENTS;
                  GOVERNMENTAL AUTHORIZATIONS

          (a)  Except as set forth in Schedule 3.1.13:
                                      ---------------
               (i)   each Acquired Company is, and at all times since December
31, 1993 has been, in material compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;

               (ii)  no event has occurred or circumstance exists that (with or
without notice or lapse of time or both) (A) shall constitute or result in a
violation by any Acquired Company of, or a failure on the part of any Acquired
Company to comply with, any Legal Requirement in all material respects, or (B)
shall give rise to any obligation on the part of any Acquired Company to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature; and

               (iii) none of the Acquired Companies has received any notice or
other communication from any Governmental Body or any other Person regarding (A)
any violation of, or failure to comply with, any Legal Requirement, or (B) any
obligation on the part of the Acquired Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.

          (b)  Schedule 3.1.13 contains a complete and accurate list of each
               ---------------
Governmental Authorization that is held by any Acquired Company or that
otherwise relates to the business of, or to any of the assets owned or used by,
any Acquired Company. Each Governmental Authorization listed or required to be
listed in Schedule 3.1.13 is valid and in full force and effect. Except as set
          ---------------
forth in Schedule 3.1.13:
         ---------------
               (i)   each of the Acquired Companies is, and at all times since
December 31, 1993 has been, in material compliance with the terms and
requirements of each Governmental Authorization identified or required to be
identified in Schedule 3.1.13.
              ----------------

                                       18
<PAGE>

               (ii)  no event has occurred or circumstance exists that shall (A)
constitute or is reasonably likely to result directly or indirectly in a
violation of, or a failure to comply with, any term or requirement of any
Governmental Authorization listed or required to be listed in Schedule 3.1.13 in
                                                              ---------------
all material respects, or (B) result in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any Governmental
Authorization listed in Schedule 3.1.13;
                        ---------------

               (iii) no Acquired Company has received, at any time since
December 31, 1993, any notice or other communication from any Governmental Body
or any other Person regarding (A) any violation of, or failure to comply with,
any term or requirement of any Governmental Authorization in any material
respect, or (B) any revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization listed in
Schedule 3.1.13; and
- ---------------

               (iv)  all applications required to have been filed for the
renewal of the Governmental Authorizations listed in Schedule 3.1.13 have been
                                                     ---------------
duly filed on a timely basis with the appropriate Governmental Bodies, and all
other filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental Bodies.

          (c)  The Governmental Authorizations listed in Schedule 3.1.13
                                                         ---------------
collectively constitute all of the Governmental Authorizations necessary to
permit the Acquired Companies to lawfully conduct and operate their businesses
in the manner they currently conduct and operate such businesses and to permit
the Acquired Companies to own and use their assets in the manner in which they
currently own and use such assets.

           3.1.14 LEGAL PROCEEDINGS; ORDERS

          (a)  Except as set forth in Schedule 3.1.14, there is no pending
                                      ---------------
Proceeding:

               (i)  that has been commenced by or against any Acquired Company
or that otherwise relates to or may affect the business of, or any of the assets
owned or used by, any Acquired Company; or

               (ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions.

          To the Knowledge of the Sellers and the Acquired Companies, no such
Proceeding has been Threatened. Sellers have delivered  to Buyer copies of all
pleadings, correspondence, and other documents, if any, relating to each
Proceeding listed in Schedule 3.1.14.
                     ---------------

          (b)  Except as set forth in Schedule 3.1.14:
                                      ---------------

                                       19
<PAGE>

               (i)   there is no Order to which any Acquired Company, or any of
the assets owned or used by any Acquired Company, is subject;

               (ii)  none of the Sellers is subject to any Order that relates to
the business of, or any of the assets owned or used by, any Acquired Company;
and

               (iii) to the Knowledge of Sellers and the Acquired Companies, no
officer, director, agent, or employee of any Acquired Company is subject to any
Order that prohibits such officer, director, agent, or employee from engaging in
or continuing any conduct, activity, or practice relating to the business of any
Acquired Company as it is presently being conducted.

          (c)  Except as set forth in Schedule 3.1.14:
                                      ---------------

               (i)   each Acquired Company is, and at all times since December
31, 1993 has been, in material compliance with all of the terms and requirements
of each Order to which it, or any of the assets owned or used by it, is or has
been subject;

               (ii)  no event has occurred or circumstance exists that shall
constitute or is reasonably likely to result in a violation of or failure to
comply with any term or requirement of any Order to which any Acquired Company,
or any of the assets owned or used by any Acquired Company, is subject; and

               (iii) no Acquired Company has received, at any time since
December 31, 1993, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding any violation of, or
failure to comply with, any term or requirement of any Order to which any
Acquired Company, or any of the assets owned or used by any Acquired Company, is
or has been subject.

          3.1.15  ABSENCE OF CERTAIN CHANGES AND EVENTS

          Except as set forth in Schedule 3.1.15 or pursuant to the Contemplated
                                 ---------------
Transactions, since December 31, 1999, the Acquired Companies have conducted
their businesses in the Ordinary Course of Business and there has not been any:

          (a)  change in any Acquired Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
any Acquired Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any Acquired Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock other than regular dividends paid
in accordance with prior practice;

          (b)  amendment to the Organizational Documents of any Acquired
Company;

                                       20
<PAGE>

          (c)  payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;

          (d)  adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, employee benefit or other Plan for or with any employees of any
Acquired Company;

          (e)  damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
any Acquired Company;

          (f)  sale, lease, or other disposition of any material asset or
property of any Acquired Company or mortgage, pledge, or imposition of any
Encumbrance on any material asset or property of any Acquired Company, including
the sale, lease, or other disposition of any of the Intellectual Property
Assets;

          (g)  material change in the accounting methods used by any Acquired
Company;

          (h)  material change in any Acquired Company's policies or practices
concerning customer credit, collection of accounts , inventory amounts, shipping
or purchasing; or

          (i)  agreement, whether oral or written, by any Acquired Company to do
any of the foregoing.

          3.1.16  CONTRACTS; NO DEFAULTS

          (a)  Schedule 3.1.16 contains a complete and accurate list, and
               ---------------
Sellers have delivered to Buyer true and complete copies, of

               (i)   each Applicable Contract that involves performance of
services or delivery of goods or materials by one or more Acquired Companies of
an amount or value in excess of $1,000;

               (ii)  each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of one or
more Acquired Companies in excess of $1,000;

               (iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property (except

                                       21
<PAGE>

personal property leases and installment and conditional sales agreements having
a value per item or aggregate payments of less than $1,000 and with terms of
less than one year);

               (iv)   each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual property,
including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;

               (v)    each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a group
of employees;

               (vi)   each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by any Acquired Company with any other Person;

               (vii)  each Applicable Contract containing covenants that in any
way purport to restrict the business activity of any Acquired Company or any
Affiliate of an Acquired Company or limit the freedom of any Acquired Company or
any Affiliate of an Acquired Company to engage in any line of business or to
compete with any Person;

               (viii) each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct payments for
goods;

               (ix)   each power of attorney that is currently effective and
outstanding;

               (x)    each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express undertaking
by any Acquired Company to be responsible for special, exemplary or
consequential damages;

               (xi)   each Applicable Contract for capital expenditures in
excess of $1,000;

               (xii)  each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by any Acquired
Company other than in the Ordinary Course of Business;

               (xiii) each warehouse, safety deposit box and other storage
rental or lease agreement to which any Acquired Company is a party or pursuant
to which any assets of any Acquired Company are stored; and

               (xiv)  each amendment, supplement, and modification (whether oral
or written) in respect of any of the foregoing.

          (b)  Except as set forth in Schedule 3.1.16:
                                      ---------------

                                      22
<PAGE>

               (i)  none of the Sellers (and no Related Person of any Seller)
has or may acquire any rights under, and no Seller has or may become subject to
any obligation or liability under, any Contract that relates to the business of,
or any of the assets or rights owned, used or exercised by, any Acquired
Company; and

               (ii) to the Knowledge of Sellers and the Acquired Companies, no
officer, director, agent, employee, consultant, or contractor of any Acquired
Company is bound by any Contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor to (A) engage in
or continue any conduct, activity, or practice relating to the business of any
Acquired Company, or (B) assign to any Acquired Company or to any other Person
any rights to any invention, improvement, or discovery.

          (c)  None of the Sellers and no Acquired Company has taken any action
that could result in the termination, or could materially impair the validity or
enforceability of any Contract identified or required to be identified in
Schedule 3.1.16 and none of the Sellers and no Acquired Company has any
- ---------------
Knowledge or any such action having been taken by any other Person.

          (d)  Except as set forth in Schedule 3.1.16:
                                      ---------------

               (i)   each Acquired Company is, and at all times since December
31, 1999 has been, in compliance in all material respects with all applicable
terms and requirements of each Contract under which such Acquired Company has or
had any obligation or liability or by which such Acquired Company or any of the
assets owned or used by such Acquired Company is or was bound;

               (ii)  each other Person that has or had any obligation or
liability under any Contract under which an Acquired Company has or had any
rights is, and at all times since December 31, 1999 has been, in compliance in
all material respects with all applicable terms and requirements of such
Contract;

               (iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time or both) may contravene, conflict with, or is
reasonably likely to result in a violation or breach of, or give any Acquired
Company or other Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Applicable Contract; and

               (iv) no Acquired Company has given to or received from any other
Person, at any time since December 31, 1999, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any Contract.

          (e)  There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to any
Acquired Company under

                                       23
<PAGE>

current or completed Contracts with any Person and no such Person has made
written demand for such renegotiation.

          (f)  The Contracts relating to the sale, design, manufacture, or
     provision of products or services by the Acquired Companies have been
     entered into in the Ordinary Course of Business and have been entered into
     without the commission of any act alone or in concert with any other
     Person, or any consideration having been paid or promised, that is or would
     be in violation of any Legal Requirement.

           3.1.17   INSURANCE

          (a)  Sellers have delivered  to Buyer:

               (i)   true and complete copies of all policies of insurance to
which any Acquired Company is a party or under which any Acquired Company, or
any director of any Acquired Company, is presently covered; and

               (ii)  true and complete copies of all pending applications for
policies of insurance.

          (b)  Schedule 3.1.17(b) lists:
               ------------------

               (i)   any self-insurance arrangement by or affecting any Acquired
Company, including any reserves established thereunder;

               (ii)  any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by any Acquired Company; and

               (iii) all obligations of any Acquired Company to third parties
with respect to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is provided.

          (c)  Except as noted on Schedule 3.1.17(c):
                                  ------------------

               (i)   All insurance policies to which any Acquired Company is a
party or that provide coverage to any Acquired Company, or any director or
officer of any Acquired Company:

                     (A)  are valid and outstanding;

                     (B)  are issued by an insurer that, to any Acquired
Company's Knowledge, is financially sound and reputable;

                                       24
<PAGE>

                     (C)  are sufficient for compliance with all Legal
Requirements and Applicable Contracts to which any Acquired Company is a party
or by which it is bound; and

                     (D)  will continue in full force and effect following the
consummation of the Contemplated Transactions.

               (ii)  No Seller or Acquired Company has received (A) any refusal
of coverage or any notice that a defense will be afforded with reservation of
rights, or (B) any notice of cancellation or any other indication that any
insurance policy is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to perform its obligations
thereunder.

               (iii) The Acquired Companies have paid all premiums due, and have
otherwise performed all of their respective obligations, under each policy to
which any Acquired Company is a party or that provides coverage to any Acquired
Company or any director thereof.

               (iv)  The Acquired Companies have given timely notice to the
insurer of all existing and Threatened claims that may be insured thereby.

           3.1.18   EMPLOYEES

          (a)  Schedule 3.1.18 contains a complete and accurate list of the
               ---------------
following information for each employee and director of the Acquired Companies,
including each employee on leave of absence or layoff status: employer; name;
job title; current compensation paid or payable and any change in compensation
since December 31, 1999; and vacation accrued. Sellers have previously furnished
Buyer with sufficient data to permit the calculation of service credited to
employees and directors of each Acquired Company for purposes of vesting and
eligibility to participate under any Acquired Company's pension, retirement,
profit-sharing, thrift-savings, deferred compensation, stock bonus, stock
option, cash bonus, employee stock ownership (including investment credit or
payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or any other employee benefit or other Plan or any Director Plan. All such
data as furnished to Buyer is complete and accurate in all material respects.

          (b)  No employee or director of any Acquired Company is a party to, or
is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights Agreement") that
in any way adversely affects or will affect (i) the performance of his duties as
an employee or director of the Acquired Companies, or (ii) the ability of any
Acquired Company to conduct its business, or (iii) the ownership of its assets,
including any Proprietary Rights Agreement with Sellers or the Acquired
Companies by any such employee or director. Except as set forth on Schedule
                                                                   --------
3.1.18 to Sellers' Knowledge, no
- ------

                                       25
<PAGE>

officer or other key employee of any Acquired Company intends to terminate his
employment with such Acquired Company.

          (c)  Schedule 3.1.18 also contains a complete and accurate list of the
               ---------------
following information for each retired employee or director of the Acquired
Companies, or his dependents, receiving benefits or scheduled to receive
benefits in the future: name, pension benefit, pension option election, retiree
medical insurance coverage, retiree life insurance coverage, and other benefits.

          (d)  The payment by Buyer or the Company of the amounts provided in
Section 2.2(f) to G. Waddy Garrett and Robert R. McDonald under their respective
Deferred Compensation Agreements as provided in Section 2.2(f) constitutes
satisfaction and payment in full of all obligations of the Company under such
Deferred Compensation Agreements.

           3.1.19   LABOR RELATIONS; COMPLIANCE

           No Acquired Company has been or is a party to any collective
bargaining or other labor Contract. There has not been, there is not presently
pending or existing, and to Sellers' Knowledge, there is not Threatened, (a) any
strike, slowdown, picketing, work stoppage, or employee grievance process, (b)
any Proceeding against or affecting any Acquired Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity Commission,
or any comparable Governmental Body, organizational activity, or other labor or
employment dispute against or affecting any of the Acquired Companies or their
premises, or (c) any application for certification of a collective bargaining
agent. To Sellers' Knowledge, no event has occurred or circumstance exists that
could provide the basis for any work stoppage or other labor dispute. There is
no lockout of any employees by any Acquired Company, and no such action is
contemplated by any Acquired Company. The Acquired Companies have complied in
all material respects with all Legal Requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closings. No Acquired Company is
liable for the payment of any material compensation, damages, Taxes, fines,
penalties, or other amounts, however designated, for failure to comply with any
of the foregoing Legal Requirements in all material respects.

           3.1.20   INTELLECTUAL PROPERTY

          (a)  The term "Intellectual Property Assets", as to each Acquired
Company, includes:

               (i)   the name of each Acquired Company, all fictional business
names, trading names, registered and unregistered trademarks, service marks, and
applications;

                                       26
<PAGE>

               (ii)  all patents, patent applications, and inventions and
discoveries that may be patentable;

               (iii) all copyrights in both published works and unpublished
works; and

               (iv)  all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process technology,
plans, drawings, and blue prints (collectively, "Trade Secrets"); owned, used,
or licensed by any Acquired Company as licensee or licensor.

          (b)  Schedule 3.1.20(b) contains a complete and accurate list and sets
               ------------------
forth any royalties paid or received by any Acquired Company, of all Material
Contracts relating to the Intellectual Property Assets to which any Acquired
Company is a party or by which any Acquired Company is bound. There are no
outstanding and, to the Sellers' Knowledge, no Threatened disputes or
disagreements with respect to any such agreement.

          (c)  The Intellectual Property Assets are all those necessary for the
operation of the Acquired Companies' businesses as they are currently conducted.
Except as set forth on Schedule 3.1.20(c), one or more of the Acquired Companies
                       ------------------
is the owner of all right, title, and interest in and to each of the
Intellectual Property Assets, free and clear of all Encumbrances, or has the
right to use without payment to a third party all of the Intellectual Property
Assets. To the Sellers' Knowledge, no employee of any Acquired Company has
entered into any Contract with anyone other than the Acquired Company that
restricts or limits in any way the scope or type of work in which the employee
may be engaged or requires the employee to transfer, assign, or disclose
information concerning his work to anyone other than the Acquired Company.

          (d)  The Acquired Companies have good and valid title and the Acquired
Companies have an absolute right to use the Trade Secrets. The Trade Secrets are
not in the public domain or part of the public literature, and, to the Sellers'
Knowledge, have not been used, divulged, or appropriated either for the benefit
of any Person (other than the Acquired Companies) or to the detriment of the
Acquired Companies. To the Sellers' Knowledge, no Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way.

           3.1.21   CERTAIN PAYMENTS

          (a)  No Acquired Company nor any director, officer, agent, or employee
of any Acquired Company, or any other Person associated with or acting for or on
behalf of any Acquired Company, has directly or indirectly (a) made in violation
of any Legal Requirement any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, or (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of any Acquired Company, or (b)
established or maintained any fund or asset that has not been recorded in the
books and records of the Acquired Company.

                                       27
<PAGE>

           3.1.22   DISCLOSURE

           No representation or warranty of the Sellers or of any Acquired
Company in this Agreement and no statement in any Schedule omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading. There does not exist
any item or matter involving the internal operations or conditions of any of the
Acquired Companies of a material nature that has either not been disclosed to
Buyer in this Agreement, the Schedules attached hereto or any other information
furnished to Buyer in connection with the Contemplated Transactions or has been
disclosed in a manner that is intended to or is likely to mislead Buyer, the
result of which could have a material adverse effect on the business,
operations, financial condition or prospects of the Acquired Companies.

           3.1.23   RELATIONSHIPS WITH RELATED PERSONS

           Except as set forth in Schedule 3.1.23, no Related Person of any
                                  ---------------
Seller or Acquired Company has any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining to
any Acquired Company's business.  Except as set forth in Schedule 3.1.23, no
                                                         ---------------
Related Person of any Seller or Acquired Company owns or has since December 31,
1997, owned (of record or as a beneficial owner) an equity interest or any other
financial or profit interest in, a Person that has (a) had business dealings or
a material financial interest in any transaction with any Acquired Company, or
(b) engaged in competition with any Acquired Company with respect to any line of
services of any Acquired Company (a "Competing Business") , other than for non-
material interests in a publicly traded company, in any market presently served
by any Acquired Company. Except as set forth in Schedule 3.1.23, no Related
                                                ---------------
Person of any Seller or Acquired Company is a party to any Material Contract
with, or has any claim or right against, any Seller or Acquired Company. Except
as set forth in Schedule 3.1.23, no Related Person of any Seller or Acquired
                ---------------
Company has any outstanding loans from any Acquired Company (other than travel
and expense advances which do not exceed $1,000 in the aggregate).

           3.1.24   BROKERS OR FINDERS

           None of the Acquired Companies or Sellers has incurred any obligation
or liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement, except
pursuant to an arrangement with Harris Williams & Co., for which Sellers shall
be solely responsible, and whose fees, expenses and other charges shall be paid
by Sellers.

                                       28
<PAGE>

           3.1.25   ENVIRONMENTAL MATTERS

           Except as set forth in Schedule 3.1.25:
                                  ---------------

          (a)  Each Acquired Company is, and at all times since January 1, 1995
has been, in full compliance with, and has not been and is not in violation of
or liable under, any Environmental Laws or any Occupational Safety and Health
Laws. No Seller or Acquired Company has any basis to expect, nor has any of them
or any other Person for whose conduct they are or may be held to be responsible
received, any actual or Threatened Order, notice, or other communication from
(i) any Governmental Body or private citizen acting in the public or a private
interest, or (ii) the current or prior owner or operator of any Facilities, of
any actual or potential violation or failure to comply with any Environmental
Laws or any Occupational Safety and Health Laws, or of any actual or Threatened
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which Sellers or any Acquired
Company has had an interest, or with respect to any offsite property or facility
to which any of the Sellers or Acquired Companies sent or caused to be sent
Hazardous Materials for treatment, storage or disposal that could reasonably be
expected to cause any of the Sellers or Acquired Companies to have any
Environmental Health and Safety Liability.

          (b)  There are no pending or Threatened claims, Encumbrances, or other
restrictions of any nature, resulting from any Environmental, Health, and Safety
Liabilities or arising under or pursuant to any Environmental Laws or
Occupational Safety and Health Laws, with respect to or affecting the Company,
any of the Facilities or any other properties and assets (whether real,
personal, or mixed) in which Sellers or any Acquired Company has or had an
interest, that could reasonably be expected to cause any of the Sellers or
Acquired Companies to have any Environmental Health and Safety Liability.

          (c)  No Seller or Acquired Company has any basis to expect, nor has
any of them or any other Person for whose conduct they are or may be held
responsible, received, any citation, directive, inquiry, notice, Order, summons,
warning, or other communication that relates to Hazardous Activity, Hazardous
Materials, or any alleged, actual, or potential violation or failure to comply
with any Environmental Laws or Occupational Safety and Health Laws, or of any
alleged, actual, or potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which Sellers or any Acquired Company had an interest, or with respect to any
off-site property or facility to which any of the Sellers or Acquired Companies
sent or caused to be sent Hazardous Materials for treatment, storage, or
disposal.

          (d)  No Seller or Acquired Company, or any other Person for whose
conduct they are or may be held responsible, has any Environmental, Health, and
Safety Liabilities with respect to the Facilities or with respect to any other
properties and assets (whether real, personal, or mixed) in which Sellers or any
Acquired Company (or any predecessor), has or had an

                                       29
<PAGE>

interest, or at any property hydrologically adjoining the Facilities or any such
other property or assets.

          (e)  There are no Hazardous Materials present on or in the Environment
at the Facilities or any adjoining property, including any Hazardous Materials
contained in barrels, above or underground storage tanks, landfills, land
deposits, dumps, equipment (whether moveable or fixed) or other containers,
either temporary or permanent, or deposited or located in land, water, sumps, or
any other part of the Facilities or such adjoining property, or incorporated
into any structure therein or thereon. No Seller, Acquired Company, any other
Person for whose conduct they are or may be held responsible, or any other
Person, has permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to the Facilities or any other properties or assets
(whether real, personal, or mixed) in which Sellers or any Acquired Company has
or had an interest, that could reasonably be expected to cause any of the
Sellers or Acquired Companies to have any Environmental Health and Safety
Liability.

          (f)  There has been no Release or Threatened Release, of any Hazardous
Materials at, from or to the Facilities or at any other locations where any
Hazardous Materials were generated, manufactured, refined, transferred,
produced, imported, used, or processed from or by the Facilities, or from or by
any other properties and assets (whether real, personal, or mixed) in which
Sellers or any Acquired Company has or had an interest, or any adjoining
property, whether by Sellers, any Acquired Company, or any other Person.

          (g)  Sellers have made available to Buyer true and complete copies and
results of any written communications, reports, studies, analyses, tests, or
monitoring possessed or initiated by Sellers or any Acquired Company pertaining
to Hazardous Materials or Hazardous Activities in, on, or under the Facilities,
or concerning compliance by Sellers, any Acquired Company, or any other Person
for whose conduct they are or may be held responsible, with Environmental Laws
or Occupational Safety and Health Laws.

           3.1.26   PRODUCT COMPLIANCE

          (a)  To the Knowledge of Sellers, the labeling of all products
currently being sold by the Acquired Companies (the "Products") is in full
compliance with all Legal Requirements with respect to product labeling.

          (b)  No promotional or advertising materials relating to any of the
Products make claims inconsistent with the label of any of the Products.

          (c)  The Acquired Companies have complied in all material respects
with all Legal Requirements applicable to the manufactured, advertising, sale
and delivery of the Products.

          (d)  No inventory is subject to any stop sale, use or removal order
under any Legal Requirement.

                                       30
<PAGE>

          (e)  All manufacturing processes used by the Acquired Companies to
produce the Products are in material compliance with all Legal Requirements
applicable to the Products. If applicable, all requisite Governmental Bodies
have been notified of any change in any such manufacturing process and have
cleared any such change in accordance with their rules and regulations.

          (f)  Seller has in its possession all raw data supporting the
registration of the Products required to be maintained by all applicable Legal
Requirements.

          (g)  All relevant representations and warranties which the Acquired
Companies have made to any Governmental Body with respect to the Products and
which are in effect as of the date hereof are herein adopted in all material
respects as part of this Agreement and Sellers hereby confirm to the Buyer that
such representations and warranties are true and correct in all material
respects as of the date hereof.

           3.1.27   PRODUCT WARRANTIES

          Except as set forth in Schedule 3.1.27 and for warranties under
                                 ---------------
applicable Legal Requirements, (a) there are no warranties express or implied,
written or oral, with respect to the Products and (b) there are no pending or,
to the Knowledge of any Seller, Threatened claims with respect to any such
warranty, except for any such pending or Threatened claims which would not
result in a material adverse change in the business, financial condition,
operations or prospects of any Acquired Company. Schedule 3.1.27 contains a
                                                 ---------------
complete and accurate description of each Acquired Company's standard terms and
conditions of sale.

           3.1.28   TERRITORIAL RESTRICTIONS

          Except as set forth on Schedule 3.1.28, no Acquired Company is
                                 ---------------
restricted by any written agreement or understanding with any other Person from
carrying on its business anywhere in the world. Buyer, solely as a result of its
purchase of the Shares from Sellers pursuant hereto, will not thereby become
restricted in carrying on the business of the Acquired Companies anywhere in
the world.

           3.1.29   SUBSTANTIAL CUSTOMERS AND SUPPLIERS

          (a)  Schedule 3.1.29(a)(i) lists the top fifteen (15) customers of the
               ---------------------
Acquired Companies, by dollar volume and shows dollar volumes and percentage of
total dollar volumes during the twelve-month periods ending December 31, 1998
and December 31, 1999. Schedule 3.1.29(a)(ii) sets for the total amount of trade
                       ----------------------
promotion spending for all customers, in the aggregate, (including all customer
allowances and performance-based promotion spending).

          (b)  Except as disclosed in Schedule 3.1.29(b), since December 31,
                                      ------------------
1999 no duly authorized representative of any customer listed in Schedule
                                                                 --------
3.1.29(a)(i):
- ------------

                                       31
<PAGE>

               (i)   has cancelled or otherwise terminated, or to the Knowledge
of any Seller or Acquired Company, Threatened to cancel or otherwise terminate,
in any material respect, its relationship with any Acquired Company; or

               (ii)  has decreased materially, or to the Knowledge of any Seller
or any Acquired Company, Threatened to decrease or limit materially, its volume
of business with any Acquired Company, or materially adversely modified any
other terms or conditions of sale.

          (c)  Schedule 3.1.29(c) lists the ten (10) suppliers of the Acquired
               ------------------
Companies that were paid the greatest amount for Products and services supplied
to the Acquired Company during the twelve-month period ending December 31, 1999,
and the approximate aggregate amount the Acquired Companies paid to each such
supplier during each such period and the Product(s) or service(s) purchased from
each supplier during each such period.

          (d)  Except as disclosed on Schedule 3.1.29(d), since December 31,
                                      ------------------
1999 no duly authorized representative of any supplier listed on Schedule
                                                                 --------
3.1.29(c):
- ---------

               (i)   has increased materially, or to the Knowledge of any Seller
or any Acquired Company, Threatened to increase materially, the prices charged
to any Acquired Company for such Products and services; or

               (ii)  has decreased materially, or to the Knowledge of any Seller
or any Acquired Company has Threatened to decrease materially, its volume or
business with any Acquired Company, or materially adversely modified any other
terms or conditions of sale.

           3.1.30   TRADE INVENTORIES

          During the twelve months preceding the Closing Date, the Acquired
Companies have operated their businesses in the Ordinary Course of Business with
respect to trade inventories and have not taken any action designed to or which
would have the effect of (i) causing trade inventories to exceed historical
levels, in any material respect, or (ii) inducing customers to defer making
product returns or claims for refunds after the Closing Date.

           3.1.31   EXCLUDED ASSETS; PAYMENT OF CERTAIN INDEBTEDNESS;
                    ACQUISITION OF MINORITY INTERESTS

          (a)  The Acquired Companies have distributed the Excluded Assets to
the Sellers, including any and all Encumbrances associated therewith and have
redeemed the Redemption Shares as contemplated in Section 2.1(b).

          (b)  All indebtedness owed to any Acquired Company as of the Closing
Date by any Seller or any Related Person of any Seller shall have been paid in
full or distributed to Sellers as an Excluded Asset at or prior to the Closing.

                                       32
<PAGE>

          (c)    All shares of the outstanding capital stock of Plant Food
Products, Incorporated, a Virginia corporation, owned beneficially or of record
by any Person other than the Company have been redeemed by Plant Foods Products,
Incorporated for an aggregate redemption price of $641,847.00.

          (d)    The Company has made payments ("Separation Payments") to the
employees listed on Schedule 3.1.31(d), in the respective amounts set forth
                    ------------------
therein, aggregating $521,058.00, pursuant to separation and waiver agreements
between the Company and such employees in the form attached as Annex A to
                                                               -------
Schedule 3.31.(d) ("Separation Agreements"), such payments having been made in
- -----------------
lieu of severance and all other obligations of any Acquired Company to such
employees relating to their employment.

          3.2    SELLERS' SEPARATE REPRESENTATIONS AND WARRANTIES

           3.2.1 SELLERS' REPRESENTATIONS AND WARRANTIES

           Each of the Sellers hereby severally, and not jointly, represents and
warrants to Buyer as to himself and the Shares owned by him:

          (a)    that (i) he has the absolute and unrestricted power, authority
and capacity to execute, deliver, and perform this Agreement and the Seller's
Closing Documents and to endorse and deliver the certificates representing the
Shares owned by him (the "Individual Shares"); (ii) this Agreement has, and the
certificates representing the Individual Shares (or stock powers) have been,
duly executed or endorsed and delivered by him; (iii) this Agreement
constitutes, and each of such Seller's Closing Documents, upon execution and
delivery by such Seller at the Closing, will constitute his valid and binding
obligation enforceable against him in accordance with its terms, except as such
enforcement may be limited by (A) bankruptcy, insolvency or any other laws
affecting creditor's rights generally, or (B) limitations on the availability of
equitable remedies; and (iv) upon the payment for the Individual Shares pursuant
to this Agreement, Buyer will acquire good and marketable title to and become
the legal and beneficial owner of the Individual Shares, free and clear of all
Encumbrances; and

          (b)    that the execution, delivery, and performance of this Agreement
and of the Seller's Closing Documents, the endorsement and delivery of the
certificates representing the Individual Shares, and the consummation of the
Contemplated Transactions by him will not, with or without the giving of notice
or the passage of time or both (i) violate any Legal Requirement, currently in
effect, applicable to him; (ii) violate any Order applicable to him; or (iii)
result in a breach or default under any Contract to which he is a party or by
which he is bound.

                                       33
<PAGE>

          3.3    EXCLUSIVITY OF REPRESENTATIONS

           3.3.1 NO OTHER REPRESENTATIONS.

          Except for the representations and warranties contained in this
Article III (including the Schedules and disclosures made thereon), no Seller
makes any express or implied representation or warranty, and Sellers disclaim
any such express or implied representation or warranty, whether by the Company
or any of its Representatives or any other Person, with respect to the execution
and delivery of this Agreement or the consummation of the Contemplated
Transactions or the Shares or the business or assets of the Acquired Companies,
notwithstanding the delivery or disclosure to Buyer or any of its
Representatives or any other Person of any documentation or other information
with respect to the foregoing.

          ARTICLE 4.  REPRESENTATIONS AND WARRANTIES OF BUYER

           Buyer represents and warrants to Sellers as follows:

          4.1    ORGANIZATION AND GOOD STANDING

          Buyer is a limited liability company duly organized, validly existing,
and in good standing under the laws of the State of Delaware.

          4.2    AUTHORITY; NO CONFLICT; COMPETING BUSINESS

          (a)    This Agreement has been duly executed and delivered by Buyer.
This Agreement constitutes a legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. Buyer has the absolute
and unrestricted right, power, and authority to execute and deliver this
Agreement and the Buyer Closing Documents and to perform its obligations
hereunder and thereunder and to consummate the Contemplated Transactions. The
entry into this Agreement and the consummation of the Contemplated Transactions
have been duly authorized by all necessary action on the part of Buyer.

          (b)    Except as set forth on Schedule 4.2, neither the execution and
                                        ------------
delivery of this Agreement by Buyer nor the consummation or performance of any
of the Contemplated Transactions by Buyer will directly or indirectly, with or
without notice or lapse of time or both, contravene, conflict with or result in
a violation of or give any Person or Governmental Body the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to:

                 (i)   any provision of Buyer's Organizational Documents;

                                       34
<PAGE>

                 (ii)  any resolution adopted by the board of directors or the
stockholders of Buyer;

                 (iii) any Legal Requirement or Order to which Buyer may be
subject; or

                 (iv)  any Contract to which Buyer is a party or by which Buyer
may be bound.

          (c)    Except as set forth in Schedule 4.2, Buyer is not and will not
                                        ------------
be required to give any notice or to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.

          4.3    CERTAIN PROCEEDINGS

          There is no Order and no pending Proceeding has been commenced against
Buyer, that challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated Transactions.
To Buyer's knowledge, no such Proceeding has been Threatened.

          4.4    BROKERS OR FINDERS

          Buyer and its officers, directors or shareholders have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.

          4.5    INVESTMENT REPRESENTATION

          Buyer is acquiring the Shares for investment and not with a view to
their sale or distribution other than in a sale or distribution which is
registered under applicable securities laws or is exempt from such registration,
and will accept certificates for the Shares with a legend thereon indicating
this fact.

          ARTICLE 5.  ADDITIONAL AGREEMENTS

          5.1    BOOKS AND RECORDS

          Buyer shall, and shall cause the Acquired Companies to, retain all of
the books and records of the Acquired Companies existing as of the Closing Date
that relate to Taxes for a period of seven (7) years after the Closing Date or
such longer time as may be required by law

                                       35
<PAGE>

and shall make such books and records (or copies thereof) available to Sellers
or their Representatives, at reasonable times and upon reasonable notice, after
the Closing Date to the extent reasonably required by Sellers.

          5.2    EMPLOYEE MATTERS

          Buyer will permit each Acquired Company employee who remains employed
by an Acquired Company after the Closing to participate, on the same basis that
Buyer's employees participate, in the employee benefit plans and programs
regularly made available to the employees of Buyer and its Subsidiaries who hold
similar positions. Buyer will treat service with an Acquired Company by any
Acquired Company employee prior to the Closing as service with a Subsidiary of
Buyer for purposes of eligibility and vesting (but not for purposes of accrual
of benefits under) such plans and programs. The accrual of benefits by Acquired
Company employees under plans and programs covering employees of Buyer and its
Subsidiaries shall be based solely on their service with the Acquired Company
after the Closing.

          5.3    COBRA OBLIGATIONS

          After the Closing each Acquired Company shall continue to be liable
(to the same extent as they were liable on the Closing Date) for all of such
Acquired Company's group health plan continuations of coverage obligations under
Section 4980B of the IRC and Sections 601 through 609 of ERISA for all persons
receiving or entitled to receive such coverage under such Acquired Company's
group health plans prior to the Closing or as a result of the Contemplated
Transactions, including those persons who are "M&A qualified beneficiaries"
(within the meaning of Proposed Treasury Regulation Section 54.4980B-9, Q&A-
4(b)).

          5.4    CERTAIN OBLIGATIONS OF SELLERS

          (a)    The parties intend that the Sellers' transfer of the Redemption
Shares to the Company in exchange for the Excluded Assets as set forth on
Schedule 2.1(b) qualify as a transaction described in IRC Section 302(b)(3), and
- ---------------
the parties agree to report such transaction for federal and state income tax
purposes in accordance with Schedule 2.1(b) and in a manner wholly consistent
with the parties' intent. In the event that the Company shall incur any Tax in
excess of $30,000.00 in the aggregate as a result of its acquisition of the
Redemption Shares or distribution of the Excluded Assets, Sellers shall pay the
Company the full amount of such excess Tax, plus any penalties and interest
levied in connection therewith.

          (b)    In the event that pursuant to the Separation Agreements
executed by the Company and certain employees as described in Section 3.1.31(d),
any of such employees elects to revoke such Separation Agreement within the
revocation period provided for therein, G. Waddy Garrett shall reimburse the
Company for the amount of the Separation Payment made to such revoking employee
to the extent not recovered by the Company directly from such employee upon
receipt of such employee's notice of revocation.

                                       36
<PAGE>

          5.5  REPURCHASE OF UNCOLLECTED ACCOUNTS RECEIVABLE

          G. Waddy Garrett shall repurchase from Buyer all Accounts Receivable
listed on Schedule 3.1.8 as "Accounts Receivable Not Collectible on or prior to
          --------------
December 31, 2000" that shall remain uncollected as of December 31, 2000 for the
full face amount thereof, such amount to be paid to Buyer by wire transfer of
immediately available funds within three (3) Business Days after G. Waddy
Garrett's receipt at any time on or after January 6, 2001 of a written notice
from Buyer listing such uncollected Accounts Receivable and demanding payment of
the aggregate face value thereof pursuant to this Section 5.5; provided that
Buyer shall, during the period from the Closing Date through December 31, 2000,
use its best commercial efforts to collect such Accounts Receivable consistent
with its own collection and credit practices and that all partial payments
received on any such Accounts Receivable shall be applied first against the
amounts thereof that have been past due for the longest time.

          5.6  KNOWLEDGE OF BREACH

          Each party hereto, in entering into this Agreement and performing at
the Closing, agrees and acknowledges that it shall not be entitled to rely on
the accuracy and completeness of any representation or warranty of any other
party, including any matter set forth in any Schedule hereto, and shall not be
entitled under Article 8 to assert a Claim for Damages for Breach thereof, if
and to the extent that it shall have discovered any fact contrary to such
representation or warranty during its due diligence investigation or otherwise
and shall not have given to the parties (or in the case of Sellers, to G. Waddy
Garrett) notice thereof prior to the Closing Date.

          ARTICLE 6.  CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE

          6.1  ACQUISITION OF PARTNERSHIP INTEREST

          Buyer shall have acquired and shall be the record and beneficial
owner, free and clear of any and all Encumbrances, of the partnership interest
owned by G. Waddy Garrett in Petersburg Agri-Terminal Associates, a Virginia
general partnership (the "Partnership Interest") owned approximately 91% by G.
Waddy Garrett and approximately 9% by the Company or another of the Acquired
Companies (the "Partnership"), pursuant to a Purchase Agreement between Buyer
and Garrett of even date herewith (the "Purchase Agreement").

                                       37
<PAGE>

          ARTICLE 7.  CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE

          7.1  ACQUISITION OF PARTNERSHIP INTEREST

          Buyer shall have acquired and shall be the record and beneficial
owner, free and clear of any and all Encumbrances, of the Partnership Interest
pursuant to the Purchase Agreement.

          ARTICLE 8.  INDEMNIFICATION; REMEDIES

          8.1  SURVIVAL

          All representations, warranties, covenants, and obligations in this
Agreement, the Schedules and any other certificate delivered pursuant to this
Agreement will survive the Closing in accordance with the provisions of Section
8.4.

          8.2  INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE SELLERS

          Subject to the provisions of Section 8.5 below, the Sellers, jointly
and severally, up to the amount of the Indemnity Escrow, will indemnify and hold
harmless Buyer, and its stockholders, Control Persons, and affiliates and their
respective permitted assigns (collectively, the "Buyer Indemnified Persons")
for, and will pay to Buyer Indemnified Persons the amount of, any loss,
liability, claim, damage (excluding incidental or consequential damages or
damages for lost profits), expense (including reasonable costs of investigation
and defense and reasonable attorneys' fees), whether or not involving a third-
party claim (collectively, "Damages"), actually suffered or incurred by such
Buyer Indemnified Person arising from or in connection with:

          (a)  any Breach of any representation or warranty made by any Seller
in this Agreement or the Schedules hereto delivered by any Seller pursuant to
this Agreement;

          (b)  any Breach by any Seller of any covenant or obligation of any
Seller in this Agreement;

          (c)  any product sold or shipped by, or any services provided, by any
Acquired Company prior to the Closing Date;

          (d)  the Breach by Sellers of any of their respective obligations
under Section 5.4;

                                       38
<PAGE>

          (e)  (i) any Taxes (accrued or unaccrued) as of February 29, 2000
(other than those described in Section 5.4(a)) in excess of the reserves for
Taxes set forth on the Closing Balance Sheet owed by any Acquired Company or any
of the Sellers in respect of any Acquired Company's operations prior to the date
of the Closing Balance Sheet; and (ii) any Breach of any of the representations
made in Sections 3.1.3 or 3.2.1(a)(iv) hereof (but only to the extent related to
the Company's ownership of its Subsidiaries or Sellers' title to the Shares); or

          (f)  any breach by GWG Financial LLC or by G. Waddy Garrett, as
guarantor, of their respective obligations under the Environmental Obligations
Agreement; and any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with any Seller or any Acquired
Company (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions;

          8.3  INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER

          Buyer will indemnify and hold harmless the Sellers and their
respective heirs, executors, successors, legal representatives and permitted
assigns (collectively, the "Company Indemnified Persons") for, and will pay to
the Company Indemnified Persons the amount of any Damages arising from or in
connection with (a) any Breach of any representation or warranty made by Buyer
in this Agreement or in any certificate delivered by Buyer pursuant to this
Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer in
this Agreement, (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions; or (d) Buyer
and/or the Acquired Companies conducting the Acquired Companies' business after
the Closing except that (i) such Damages arise from or in connection with any
actions taken by G. Waddy Garrett after the Closing Date in the name or
purportedly on behalf of any of the Acquired Companies outside the scope of his
authority or duties under the Consulting Agreement; and (ii) such Damages shall
be reduced to the extent that they are directly attributable to the operation of
such business prior to Closing.

          8.4  TIME LIMITATIONS

          The Sellers will have no liability for indemnification with respect to
any representation or warranty made by it herein (other than those in Sections
3.2.1(a)(iv) or 3.1.3 relating to Sellers' title to the Shares or the Company's
ownership of its Subsidiaries, respectively, and in Section 3.1.10, subject in
each case to the provisions of Section 8.5), unless on or before the last day of
the eighteenth (18/th/) month following the Closing Date, the Buyer Indemnified
Person notifies the Sellers in writing of a Claim (as hereinafter defined)
specifying the factual basis of that Claim in reasonable detail to the extent
then known by such Buyer Indemnified Person.  Buyer will have no liability (for
indemnification or otherwise) with respect to any such representation or
warranty made by it herein unless on or before the last day of the

                                       39
<PAGE>

eighteenth (18/th/) month following the Closing Date, the Company Indemnified
Person notifies Buyer in writing of a Claim specifying the factual basis of that
Claim in reasonable detail to the extent then known by such Company Indemnified
Person. A Claim with respect to Section 3.2.1(a)(iv) (relating only to Seller's
title to the Shares) or Section 3.1.3 (relating only to the Company's ownership
of its Subsidiaries) or Section 3.1.10 may be made at any time prior to the
expiration of any statute of limitations applicable to the actions or causes of
action which are attributable to the matters discussed in such Sections.

          8.5  LIMITATIONS ON AMOUNT - AND THE SELLERS

          (a)  The Sellers will not have any liability for indemnification with
respect to the matters described in clause (a), clause (b) or clause (c) of
Section 8.2 (other than matters that are also described in other clauses of
Section 8.2 ) unless the aggregate of all Damages with respect thereto for which
Sellers would, but for this Section 8.5 (a), be liable, exceeds on a cumulative
basis the sum of Seventy-Five Thousand Dollars ($75,000) (the "Cumulative
Basket"), and then only to the extent of such excess; and no such matter
individually which involves Damages in an amount less than Five Thousand Dollars
($5,000) (the "Individual Basket") shall be included in determining whether the
Cumulative Basket amount has been reached. The Sellers will not have any
liability for indemnification with respect to the matters described in clause
(e)(i) of Section 8.2 unless the aggregate of all Damages for which any Acquired
Company would but for this Section 8.5(a) be liable, exceeds on a cumulative
basis the sum of Ten Thousand Dollars ($10,000.00), and only to the extent of
such excess. For purposes of this Section 8.5(a), Damages shall be calculated
after taking into account any tax benefits and tax costs (including tax costs
resulting from reduction in basis, and resulting reduction in depreciation and
amortization, and increase in taxable gain recognized on a sale) realized by,
and insurance proceeds paid to, Buyer (net of any related cost incurred by it
due to retrospective premium adjustments, experience based premium adjustments
and indemnification obligations), the Buyer Indemnified Persons or the Acquired
Companies.

          (b)  The sole source of payment of any indemnification obligations of
Sellers with respect to Section 8.2(a), (b) and (c) of this Agreement shall be
the Indemnity Escrow, and Buyer agrees that the payment of any claim made by any
Buyer Indemnified Person with respect to such clauses, for whatever reason,
shall be limited to, and shall only be made from, the Indemnity Escrow. If any
indemnification obligation arises as a result of Damages resulting from a Breach
of Section 3.1.3 (to the extent relating to ownership by the Company of its
Subsidiaries), Section 3.1.10 or Section 5.4 hereof and if the amount of such
Damages exceeds the balance (if any) available in the Indemnity Escrow therefor,
G. Waddy Garrett shall be solely liable for the amount of Damages resulting from
such Breach in excess of such Indemnity Escrow balance, but in no event shall
such liability for indemnification exceed the portion of the Purchase Price
hereunder actually received by G. Waddy Garrett (net of his prorated share in
the Indemnity Escrow) and no other Seller shall have any liability whatsoever
for any such excess Damages. If any indemnification obligation arises as a
result of Damages resulting from a Breach of Section 3.2.1 (a)(iv) hereof and if
the amount of such Damages exceeds the balance (if any) available in the
Indemnity Escrow therefor, the Breaching Seller shall be solely liable for

                                       40
<PAGE>

the amount of Damages resulting from such Breach in excess of such Indemnity
Escrow balance, but in no event shall such liability for indemnification exceed
the portion of the Purchase Price hereunder actually received by such Seller
(net of his prorated share in the Indemnity Escrow) and no other Seller shall
have any liability whatsoever for any such excess Damages.

          (c)  The limitations of this Section 8.5 will not apply to the extent
any liability for Damages arises due to fraud on the part of any Seller, in
which case the Seller or Sellers committing such fraud shall be solely liable
for all Damages with respect to such Breaches.

          8.6  LIMITATIONS ON AMOUNT - BUYER

          Buyer will have no liability for indemnification with respect to the
matters described in clause (a) clause (b) or clause (d) of Section 8.3 (other
than matters that are also described in other clauses of Section 8.3)  unless
the aggregate of all Damages for which Buyer would, but for this Section 8.6, be
liable exceeds on a cumulative basis the Cumulative Basket amount, and then only
to the extent of such excess; and no such matter individually which involves
Damages in an amount less than the Individual Basket amount  shall be included
in determining whether the Cumulative Basket amount has been reached. However,
the limitations set forth in this Section 8.6 will not apply to the extent any
liability for Damages arises due to fraud on the part of Buyer, and Buyer will
be liable for all Damages with respect to such Breaches.  For purposes of this
Section 8.6, Damages shall be calculated after taking into account any tax
benefits and tax costs (including tax costs resulting from reduction in basis,
and resulting reduction in depreciation and amortization, and increase in
taxable gain recognized on a sale) realized by, and insurance proceeds paid to,
Seller (net of any related cost incurred by it due to retrospective premium
adjustments, experience based premium adjustments and indemnification
obligations), the Seller Indemnified Persons.

          8.7  PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS

          (a)  Promptly after receipt by an indemnified party under Section 8.2
or 8.3 of notice of the assertion of a claim or of the commencement of any
Proceeding against it (a "Claim"), such indemnified party will, if a Claim is to
be made against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such Claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced by
the indemnified party's failure to give such notice. The indemnified party shall
deliver to the indemnifying party, within five Business Days after the
indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the
Claim.

          (b)  If any Claim referred to in Section 8.7(a) is asserted or brought
against an indemnified party and it gives notice to the indemnifying party of
the Claim, the indemnifying

                                       41
<PAGE>

party will be entitled to participate in the defense of the Claim and, to the
extent that it wishes, exercisable by written notice to the indemnified party
within 10 Business Days of receipt of notice from the indemnified party of a
Claim (unless (i) the indemnifying party is also a party to a Proceeding
involving a Claim and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Claim and provide indemnification with respect to such Claim), to
assume the defense of such Claim with counsel reasonably satisfactory to the
indemnified party and, after such notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Claim, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Article 8 for any fees of other
counsel or any other expenses with respect to the defense of such Claim, in each
case subsequently incurred by the indemnified party in connection with the
defense of such Claim, other than reasonable costs of investigation or if the
indemnified party has assumed the defense as provided in Section 8.7(c). In any
event, the indemnifying party shall have the right to participate in the defense
of the Claim. If the indemnifying party assumes the defense of a Claim, (i) it
will be conclusively established for purposes of this Agreement that the claims
made in that Claim are within the scope of and subject to indemnification; (ii)
no compromise or settlement of such Claims may be effected by the indemnifying
party without the indemnified party's consent (which shall not be unreasonably
withheld) unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (iii) the indemnified party will have no liability with respect to
any compromise or settlement of such claims effected without its consent (which
shall not be unreasonably withheld). If notice is given to an indemnifying party
of the assertion of or commencement of any Proceeding involving a Claim and the
indemnifying party does not, within ten Business Days after the indemnified
party's notice is given, give notice to the indemnified party of its election to
assume the defense of such Claim, the indemnified party shall have the right to
undertake the defense of such claim on behalf of the indemnifying party. The
indemnifying party will not be bound by any determination made in such
Proceeding or any compromise or settlement effected without the consent of the
indemnifying party (which shall not be unreasonably withheld).

          (c)  Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Claim may adversely
affect it or its affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such Claim but the indemnifying party will not be
bound by any determination of a Claim so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld).

          8.8  PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS

                                       42
<PAGE>

          A Claim for indemnification for any matter not based upon a claim
asserted or Proceeding commenced by a third-party may be asserted by notice to
the party from whom indemnification is sought in accordance with the provisions
of Section 8.4, and by following the procedures set forth in this Agreement and
the Indemnity Escrow Agreement.

          8.9  CLAIM AGAINST ESCROW; EXCLUSIVE REMEDY

          (a)  Any Buyer Indemnified Person may make a Claim against the
Indemnity Escrow in any amount to which it may be entitled under this Article 8.
The indemnification provided in this Article 8 shall constitute the exclusive
remedy for Breach of the representations and warranties in this Agreement,
regardless of whether any claims or causes of action asserted with respect to
such matters are brought in contract, tort or any other legal theory whatsoever;
provided, however, that only in the case of fraud, the indemnification
provisions in this Article 8 are in addition to, and not in derogation of, any
statutory, equitable or common law remedy any party may have for a Breach of
representation or warranty. All indemnification payments under this Article 8
shall be treated by the parties as adjustments to the Purchase Price hereunder.

          (b)  Notwithstanding any other provision of this Agreement, neither
Sellers nor Buyer shall be liable under this Article 8 for an amount to the
extent, if any, that any Breach giving rise to such Damages results from a
failure on the part of any Seller Indemnified Person or Buyer Indemnified
Person, as the case may be, to exercise good faith in not jeopardizing or
prejudicing the interest of Buyer or Sellers.

          ARTICLE 9.  GENERAL PROVISIONS

          9.1  EXPENSES

          Each of the parties hereto will bear the expenses incurred by them in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants.  Buyer shall pay all sales, transfer,
use, documentary stamp and other similar Taxes with respect to the Contemplated
Transactions.

          9.2  PUBLIC ANNOUNCEMENTS

          No public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions shall include any of the pricing or
other substantive terms hereof unless otherwise required by Legal Requirements.

                                       43
<PAGE>

          9.3  CONFIDENTIALITY

          Buyer and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and the Company to
maintain in confidence,  and not use to the detriment of another party or the
Company any written, oral, or other information obtained in confidence from
another party or  the Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by
legal proceedings.

          9.4  NOTICES

          All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):

            The Sellers:       G. Waddy Garrett
                               11 Old Bridge Lane
                               Richmond, VA 23229
                               Facsimile No.: (804) 228-1158

            with a copy to:    McGuire, Woods, Battle & Booth LLP
                               One James Center
                               901 East Cary Street
                               Richmond, VA 23219-4030
                               Attention: Thomas P. Rohman, Esq.
                               Facsimile No.: (804) 698-2154

            Buyer:             Royster-Clark Resources LLC.
                               600 Fifth Avenue, 25/th/ Flr.
                               New York, NY 10020
                               Attention: Francis P. Jenkins
                               Facsimile No.: (212) 332-2999

                                       44
<PAGE>

            with a copy to:    Satterlee Stephens Burke & Burke LLP
                               230 Park Avenue
                               New York, NY 10169
                               Attention:   William M. Jackson
                               Facsimile No.:  (212 ) 818-9606

          9.5  FURTHER ASSURANCES

          Each of the parties agrees (a) to furnish upon request to each other
party such further information, (b) to execute and deliver to each other party
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.

          9.6  WAIVER

          Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege.  To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.

          9.7  ENTIRE AGREEMENT AND MODIFICATION

          This Agreement supersedes all prior agreements between the parties
with respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter.  This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.

          9.8  SCHEDULES

          In the event of any inconsistency between the statements in the body
of this Agreement and those in the Schedules (other than an exception set forth
in the Schedules), the statements in the body of this Agreement will control.

                                       45
<PAGE>

          9.9  ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS

          None of the parties may assign any of their rights under this
Agreement without the prior written consent of the other parties, which shall
not be unreasonably withheld.  This Agreement will apply to, be binding in all
respects upon the parties hereto and their permitted assigns and inure to the
benefit of the successors and permitted assigns of the parties hereto.  Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement.  This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and permitted assigns.

          9.10 SEVERABILITY

          If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect.  Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

          9.11 SECTION HEADINGS; CONSTRUCTION

          The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation.  All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement.  All words used in this Agreement will be construed
to be of such gender or number as the circumstances require.  Unless otherwise
expressly provided, the word "including" shall mean "including, without
limitation" and does not limit the preceding words or terms.

          9.12 TIME OF ESSENCE

          With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.

          9.13 GOVERNING LAW

          This Agreement will be governed by the laws of the Commonwealth of
Virginia without regard to conflicts of laws principles.

                                       46
<PAGE>

          9.14 JURISDICTION; SERVICE OF PROCESS

          Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the Commonwealth of Virginia, or, if it has or can
acquire jurisdiction, in the United States District Court for the Eastern
District of Virginia, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein.  Process in any
action or proceeding referred to in the preceding sentence may be served on any
party anywhere in the world.

          9.15 COUNTERPARTS

          This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.

                                       47
<PAGE>

          IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.


BUYER:                              THE SELLERS

ROYSTER-CLARK RESOURCES LLC         ____________________________________
                                    G. Waddy Garrett

By: ___________________________     ____________________________________
                                    Cornelia W. Garrett
Title: ________________________
                                    ____________________________________
                                    Caroline S. Garrett

                                    ____________________________________
                                    Henry E. Richeson


                                    THE CHRISTOPHER GARLAND GARRETT
                                    REVOCABLE TRUST


                                    By: ________________________________
                                                            , Trustee


                                    THE LEETE PARKER GARRETT REVOCABLE
                                    TRUST


                                    By: ________________________________
                                                            , Trustee


                                    THE CAROLINE BACHE GARRETT REVOCABLE
                                    TRUST


                                    By: ________________________________
                                                            , Trustee

                                      48

<PAGE>

                                                                   EXHIBIT 10.11


================================================================================

                                    FORM OF

                              PURCHASE AGREEMENT

                                    Between

                         ROYSTER-CLARK RESOURCES, LLC

                                      And

                               G. WADDY GARRETT





                             Dated March 17, 2000

================================================================================
<PAGE>

                               Table of Contents

<TABLE>
<CAPTION>
                                                                                  Page
<S>                                                                               <C>
EXHIBITS

     Exhibit 1                Sellers Release
     Exhibit 2-1              Noncompetition Agreement
     Exhibit 3                Sellers Closing Certificate
     Exhibit 4                Buyer's Closing Certificate
     Exhibit 5                Consulting Agreement
     Exhibit 6                Escrow Agreement
     Exhibit 7                Sellers Legal Opinion
     Exhibit 8                Estoppel Certificate
     Exhibit 9                Buyer's Legal Opinion

SCHEDULES

                    (i)       Schedule 1     List of Shareholders of the Company

     Schedule 2.3             Adjustment Amount Accounting Principles
     Schedule 2.4(b)(i)       Closing Payment Allocation
     Schedule 3.1.1           Foreign Qualification Jurisdictions of the Company
     Schedule 3.1.2           Required Sellers Consents
     Schedule 3.1.5           Bank Accounts, Etc.
     Schedule 3.1.6           Real Property Owned or Leased
     Schedule 3.1.7           Subleases, etc.
     Schedule 3.1.8           Accounts Receivable
     Schedule 3.1.9           Other Material Liabilities
     Schedule 3.1.10          Tax Return Audits
     Schedule 3.1.12          Employee Benefit Plans
     Schedule 3.1.13          Noncompliance with Legal Requirements; Government
                              Authorizations
     Schedule 3.1.14          Legal Proceedings
     Schedule 3.1.15          Material Changes or Events
     Schedule 3.1.16          Material Contracts
     Schedule 3.1.17(b)       Alternative Insurance Arrangements
     Schedule 3.1.17(c)       Exceptions to Insurance Representations
     Schedule 3.1.18          Employee Information
     Schedule 3.1.20(b)       Material Intellectual Property Rights Contracts
     Schedule 3.1.23          Interests of Related Persons
     Schedule 3.1.25          Exceptions to Environmental Representations
</TABLE>
<PAGE>

<TABLE>
     <S>                      <C>
     Schedule 3.1.27          Product Warranties, Terms and Conditions
     Schedule 3.1.29(a)(i)    Substantial Customers
     Schedule 3.1.29(a)(ii)   Track Promotions
     Schedule 3.1.29(b)       Changes in Customers
     Schedule 3.1.29(c)       Substantial Suppliers
     Schedule 3.1.29(d)       Changes in Suppliers
     Schedule 3.1.31          Distributions
     Schedule 4.2             Exceptions to Buyer's Representations
     Schedule 5.6(a)          Excluded Assets
     Schedule 5.6(d)          Severance payments
</TABLE>
<PAGE>

          THIS PURCHASE AGREEMENT (together with all Schedules, Exhibits,
amendments and supplements thereto, the "Agreement") is made as of March 17,
2000, by and among Royster-Clark Resources, LLC., a Delaware limited liability
company ("Buyer"), and G. Waddy Garrett, an individual residing at  11 Old
Bridge Lane, Richmond, VA 23229 ("Seller").

                                   RECITALS

          The Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, all of Seller's equity interest (the "Interest") in Petersburg
Agri-Terminal Associates, a general partnership organized under the laws of the
Commonwealth of Virginia with its principal place of business c/o Alliance
Agronomics Corp., 7104 Mechanicsville Turnpike, Mechanicsville, VA 23111 (the
"Partnership"), for the consideration and on the terms and conditions set forth
in this Agreement.

                                   AGREEMENT

          The parties, intending to be legally bound, agree as follows:

          ARTICLE 1.  DEFINITIONS

          For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article 1:

          "Agreement" -- as defined in the first paragraph hereof.
           ---------

          "Assignment" -- as defined in Section 2.2.
           ----------

          "Applicable Contract" --  any Contract (a) under which the Partnership
           -------------------
has or may acquire any rights, (b) under which the Partnership has or may become
subject to any obligation or liability, or (c) by which any asset owned or used
by the Partnership is or may become bound.

          "Breach" -- a "Breach" of a representation, warranty, covenant,
           ------
obligation, or other provision of this Agreement or any certificate delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been any breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision.

          "Business Day" -- any day (other than a Saturday, Sunday or public
           ------------
holiday in the Borough of Manhattan, City of New York) on which banking
institutions in New York City are not required or permitted by law or executive
order to close.

          "Buyer" -- as defined in the first paragraph of this Agreement.
           -----
<PAGE>

          "Claim" -- as defined in Section 8.7.
           -----

          "Closing" -- as defined in Section 2.4.
           -------

          "Closing Date" -- the date and time as of which the Closing actually
           ------------
takes place.

          "Company" -- Alliance Agronomics, Inc., a Virginia corporation.
           -------

          "Contemplated Transactions" -- all of the transactions contemplated by
           -------------------------
this Agreement, including, without limitation, the sale of the Interest by the
Seller to Buyer; Buyer's acquisition and ownership of the Interest and exercise
of control over the Partnership; the execution, delivery and performance of the
Seller's Release, the Partnership Release, the Petersburg Environmental
Obligations Agreement and the Petersburg Escrow Agreement; and the performance
by the parties hereto of their respective covenants, agreements and obligations
hereunder and thereunder.

          "Contract" -- any agreement, contract, obligation, promise, or
           --------
undertaking (whether written or oral and whether express or implied).

          "Control Person" -- as to any entity, any Person who controls such
           --------------
entity within the meaning of the Securities Act  of 1933, as amended, or the
Securities and Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

          "Damages" -- as defined in Section 7.2.
           -------

          "Encumbrance" -- any mortgage, easement, servitude, right of way,
           -----------
charge, claim, equitable interest, lien, option, pledge, security interest,
right of first refusal, or restriction of any kind, including any restriction on
use, voting, transfer, or exercise of any other attribute of ownership.

          "Environment" -- soil, land surface or subsurface strata, surface
           -----------
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.

          "Environmental Claim" -- means any actual or reasonably anticipated
           -------------------
claim, action, cause of action, investigation or written notice, order,
direction or requirement by any Person alleging potential liability or remedy,
whether civil, administrative, criminal or quasi-criminal (including, without
limitation, potential liability for investigatory costs, cleanup, remediation or
preventive costs, governmental response costs, natural resources damages,
property damages, personal injuries, fines, penalties or monetary and non-
monetary sanctions) arising out of, based on or resulting from (a) the presence
or Release or Threat of Release of any Hazardous Materials at any location or
(b) circumstances forming the basis of any violation of any Environmental Laws.

                                       2
<PAGE>

          "Environmental, Health, and Safety Liabilities" -- any cost, damages,
           ---------------------------------------------
expense, liability, obligation, or other responsibility arising from or under
Environmental Laws or Occupational Safety and Health Laws and consisting of or
relating to:

          (a)  any environmental, health, or safety matters or conditions
(including, without limitation, on-site or off-site contamination, pollution
control, occupational safety and health, natural resources, and regulation of
chemical substances or products);


          (b)  fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Laws or Occupational Safety and Health Laws;

          (c)  financial responsibility under Environmental Laws or Occupational
Safety and Health Laws for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by or pursuant to applicable Environmental Laws or
Occupational Safety and Health Laws (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages; or

          (d)  any other compliance, corrective, investigative, or remedial
measures required under Environmental Laws or Occupational Safety and Health
Laws.

          The terms "removal," "remedial," "response action," and "corrective
action" include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
(S) 9601 et seq., as amended ("CERCLA") and the Resource Conservation and
Recovery Act, 42 U.S.C. (S) 6901 et. seq., as amended ("RCRA").

          "Environmental Laws" -- means all United States federal, interstate,
           ------------------
state, and local laws, common law, guidelines, permits, agreements, licenses,
Orders, by-laws, rules, regulations and restrictions of any kind by any
Governmental Body relating to pollution or protection of human health or the
environment, including, without limitation, laws relating to Releases or
Threatened Releases of Hazardous Materials, pollution control, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
transport, handling or disposal of Hazardous Materials or the clean-up thereof
and the Comprehensive Environmental Response Compensation and Liability Act of
1980, as amended, but not including the Occupational Safety and Health Act of
1970, as amended.

          "ERISA" -- the Employee Retirement Income Security Act of 1974, as
           -----
amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.

          "ERISA Affiliate" -- as defined in Section 3.1.12.
           ---------------

                                       3
<PAGE>

          "Facility" -- any real property, leaseholds, or other interests
           --------
currently or formerly owned or operated by the Partnership and any buildings,
plants or structures currently or formerly owned or operated by the Partnership
including, without limitation, all land, buildings and improvements at the
Partnership's Petersburg, Virginia terminal distribution and storage facility,
as more particularly described on Schedule 3.1.6 hereto.
                                  --------------

          "Governmental Authorization" -- any approval, consent, license,
           --------------------------
permit, waiver, or other authorization issued, granted, or given pursuant to any
Legal Requirement.

          "Governmental Body" -- any nation, state, county, city, town, village,
           -----------------
district, or other jurisdiction of any nature; federal, state, local, municipal,
foreign, or other government; governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal); multi-national organization or body; or
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.

          "Hazardous Activity" -- the distribution, generation, handling,
           ------------------
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, disposal or use
(including any withdrawal or other use of groundwater) of Hazardous Materials
in, on, under, about, or from the Facility or any part thereof into or in the
Environment, and any other act, business, operation, or thing that increases the
damages, or risk of damages, or poses an unreasonable risk of harm to Persons or
property on or off the Facility or that may affect the value of the Facility or
the Partnership or that may result in an Environmental, Health, and Safety
Liability.

          "Hazardous Materials" -- means (i) all substances defined, listed,
           -------------------
regulated or otherwise classified as "Hazardous Substances", "Hazardous
Materials", "Hazardous Wastes", "Toxic Substances", "Pesticides", "Oils",
"Pollutants" or "Contaminants" in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R.300.5, or under any other Environmental
Law, or (ii) wastes, pollutants, contaminants and substances listed, classified
or regulated as such and that could form the basis for an Environmental Claim
under any Environmental Law, or (iii) petroleum or petroleum-derived substances,
methane, natural gas, any flammable substances or explosives, radioactive
materials, asbestos or asbestos - containing material, polychlorinated biphenyls
("PCB") or PCB - containing materials, or (iv) nitrogen or phosphorus containing
substances.

          "Intellectual Property Assets" -- as defined in Section 3.1.20.
           ----------------------------

          "Interest" -- as defined in the recitals.
           --------

          "IRC" -- the Internal Revenue Code of 1986, as amended to the date
           ---
hereof and regulations issued by the IRS pursuant to the IRC.

                                       4
<PAGE>

          "IRS" -- the United States Internal Revenue Service or any successor
           ---
agency, and, to the extent relevant, the United States Department of the
Treasury.

          "Knowledge" -- an individual will be deemed to have "Knowledge" of a
           ---------
particular fact or other matter if such individual is actually aware of such
fact or other matter. The Partnership will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is listed on Schedule 1.1
                                                                   ------------
has Knowledge of such fact or other matter.

          "Legal Requirement" -- any federal, state, local, municipal, foreign,
           -----------------
international, multinational, or other administrative Order, constitution, law,
ordinance, principle of common law, rule, regulation, statute, or treaty, and
specifically including Environmental Laws and Occupational Safety and Health
Laws.

          "Material Contract" -- any Applicable Contract which, if breached or
           -----------------
terminated, will or is reasonably likely to result in a change or effect which
is or is likely to be materially adverse to the business, financial condition,
or results of operations of the Partnership.

          "Occupational Safety and Health Laws" -- any Legal Requirement
           -----------------------------------
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards.

          "Order" -- any award, decision, injunction, judgment, order, ruling,
           -----
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.

          "Ordinary Course of Business" -- an action taken by the Partnership
           ---------------------------
will be deemed to have been taken in the "Ordinary Course of Business" only if
(a) such action is consistent with the past practices of the Partnership and is
taken in the ordinary course of its normal day-to-day operations; and (b)  such
action is not required to be specifically authorized by the partners of the
Partnership.

          "Organizational Documents" -- (a) the articles or certificate of
           ------------------------
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.

          "Partnership" -- as defined in the Recitals.
           -----------

          "Partnership Agreement" -- the Amended and Restated Partnership
           ---------------------
Agreement dated January 1, 1990, between Seller and the Company, a copy of which
is annexed hereto as Schedule 1.2.
                     ------------

                                       5
<PAGE>

          "Partnership Release" -- as defined in Section 2.2(b)(iii).
           -------------------

          "PBGC"  -- as defined in Section 3.1.12(c).
           ----

          "Person" -- any individual, corporation (including any non-profit
           ------
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.

          "Petersburg Environmental Obligations Agreement" -- as defined in
           ----------------------------------------------
Section 2.2(c).

          "Petersburg Escrow" -- as defined in Section 2.2(c).
           -----------------

          "Petersburg Escrow Agreement" -- as defined in Section 2.2(c).
           ---------------------------

          "Plan" -- as defined in Section 3.1.12.
           ----

          "Proceeding" -- any action, arbitration, audit, hearing,
           ----------
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.

          "Proprietary Rights Agreement" -- as defined in Section 3.1.18.
           ----------------------------

          "Purchase Price" -- as defined in Section 2.1.
           --------------

          "Related Person" -- with respect to an individual: (a) each other
           --------------
member of such individual's Family; (b) any Person that is directly or
indirectly controlled by such individual or one or more members of such
individual's Family; (c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and (d) any Person with respect to which such individual or one or more members
of such individual's Family serves as a director, officer, partner, executor, or
trustee (or in a similar capacity).

          With respect to a Person other than an individual: (a) any Person that
directly or indirectly controls, is directly or indirectly controlled by, or is
directly or indirectly under common control with such specified Person; (b) any
Person that holds a Material Interest in such specified Person; (c) each Person
that serves as a director, officer, partner, executor, or trustee of such
specified Person (or in a similar capacity); (d) any Person in which such
specified Person holds a Material Interest; (e) any Person with respect to which
such specified Person serves as a general partner or a trustee (or in a similar
capacity); and (f) any Related Person of any individual described in clause (b)
or (c).

          For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse and former spouses,
(iii) any other natural person who is

                                       6
<PAGE>

related to the individual or the individual's spouse within the second degree,
and (iv) any other natural person who resides with such individual, and (b)
"Material Interest" means direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of voting securities or
other voting interests representing at least 5% of the outstanding voting power
of a Person or equity securities or other equity interests representing at least
5% of the outstanding equity securities or equity interests in a Person.

          "Release" -- means any release, spill, emission, discharge, leaking,
           -------
pumping, injection, deposit, disposal, dispersal, leaching or migration into the
environment (including, without limitation, ambient air, surface water,
groundwater and surface or subsurface strata) or into or out of any property,
including the movement of Hazardous Materials through or in the air, soil,
surface water, groundwater, environment or property.

          "Representative" -- with respect to a particular Person, any director,
           --------------
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.

          "Seller" -- as defined in the first paragraph of this Agreement.
           ------

          "Seller's Release" -- as defined in Section 2.2(a)(ii).
           ----------------

          "Shares" -- as defined in Section 6.1.
           ------

          "Stock Purchase Agreement" -- as defined in Section 6.1.
           ------------------------

          "Subsidiary" -- with respect to any Person (the "Owner"), any
           ----------
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Partnership.

          "Tax" -- any federal, state, local or foreign tax, including income,
           ---
gross receipts, windfall profits, value added, ad valorem, profits, payroll,
stamp, occupational, premium, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes.

          "Tax Return" -- any return (including any information return), report,
           ----------
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.

                                       7
<PAGE>

          "Threatened" -- a claim, Proceeding, dispute, action, or other matter
           ----------
will be deemed to have been "Threatened" if any demand, statement or notice has
been given(orally or in writing) or other overt indication has been made, that
would lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is reasonably likely to be asserted, commenced, taken,
or otherwise pursued in the future.

          "Threat of Release" -- a substantial likelihood of a Release that may
           -----------------
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.

          "Trade Secrets" -- as defined in Section 3.1.20(a)(iv).
           -------------

          ARTICLE 2.  SALE AND TRANSFER OF INTEREST; CLOSING

          2.1  SALE OF INTEREST

          At the Closing, the Seller shall sell and transfer the Interest to
Buyer, and Buyer shall purchase the Interest from the Seller, upon the terms set
forth in this Agreement. The purchase price (the "Purchase Price") for the
Interest shall be Three Million Five Hundred Thousand Dollars ($3,500,000.00).

          2.2  CLOSING

          The Contemplated Transactions will be consummated at a closing (the
"Closing") to be held at the offices of McGuire, Woods, Battle & Boothe LLP at
10:00 AM on March 17, 2000 or at such other time and place as the parties may
agree. At the Closing:

          (a)  The Seller will deliver to Buyer:

               (i)  an assignment of the Interest in form and substance
satisfactory to Buyer and in compliance with the provisions of the Partnership
Agreement, for transfer to Buyer (the "Assignment"); and

               (ii) a mutual release in the form attached as Exhibit 1 hereto
                                                             ---------
("Mutual Release") executed by Seller.

          (b)  Buyer will deliver to Seller:

                                       8
<PAGE>

                (i)  a bank cashier's or certified check in the amount of the
Purchase Price, minus the Petersburg Escrow amount, payable to the order of, or
confirmation of wire transfer in such amount to any account which was specified
in writing to the Buyer by Seller at least three (3) Business Days prior to the
Closing; and

                (ii) a Mutual Release executed by Buyer.

          (c)   Buyer and Seller will enter into an escrow agreement in the form
attached as Exhibit 2 hereto (the "Petersburg Escrow Agreement") with First
            ---------
Union National Bank as Escrow Agent; and Buyer will deliver the sum of
$300,000.00 (the "Petersburg Escrow") to the Escrow Agent by bank cashier's
check or wire transfer to the account specified by such Escrow Agent by notice
to Buyer in writing prior to the Closing.

          (d)   Buyer and Seller will enter into an Environmental Obligations
Agreement in the form annexed hereto as Exhibit 3 (the "Petersburg Environmental
                                        ---------
Obligations Agreement").

          ARTICLE 3.  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

          3.1   REPRESENTATIONS AND WARRANTIES AS TO THE PARTNERSHIP

          The Seller hereby represents and warrants to Buyer as follows:

          3.1.1 ORGANIZATION AND GOOD STANDING

          (a)   The Partnership is a general partnership duly organized, validly
existing, and in good standing under the partnership laws of the Commonwealth of
Virginia, with full power and authority to conduct its business as it is now
being conducted, to own or use the properties and assets that it purports to own
or use, and to perform all its obligations under Applicable Contracts. The
Partnership is duly qualified to do business and is in good standing under the
laws of each state or other jurisdiction where the failure so to qualify would
have a material adverse effect on its financial condition, business, assets or
results of operations.

          (b)   The Partnership has made available to Buyer copies of all of its
Organizational Documents, as currently in effect.

          3.1.2 AUTHORITY; NO CONFLICT

                                       9
<PAGE>

          (a)   This Agreement has been duly executed and delivered by Seller.

          (b)   Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time or both):

                (i)   contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of the Partnership;

                (ii)  contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which the Partnership or any of the assets
owned or used by it, may be subject;

                (iii) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that relates to the business of the Partnership or that otherwise
relates to any assets owned or used by the Partnership;

                (iv)  contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Material Contract; or

                (v)   result in the imposition or creation of any Encumbrance
upon or with respect to the Interest or any of the assets owned or used by the
Partnership.

          (c)   Except as set forth in Schedule 3.1.2, neither Seller nor the
                                       --------------
Partnership is or will be required to give any notice to or obtain any Consent
from any Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the Contemplated Transactions which
has not been previously given or obtained.

          3.1.3 CAPITALIZATION

          Seller is and will be on the Closing Date the exclusive record and
beneficial owner and holder of the Interest, free and clear of all Encumbrances.
The Interest represents approximately a Ninety-One Percent (91%) equity interest
in the Partnership, all of the remaining equity interest in the Partnership
being owned beneficially and of record by a wholly-owned subsidiary of the
Company free and clear of all Encumbrances. There are no Contracts (other than
the Partnership Agreement) relating to the issuance, sale, or transfer of any
equity securities or other securities of the Partnership. Neither the Interest
nor any other outstanding partnership interest, equity securities or other
securities of the Partnership have been issued in

                                       10
<PAGE>

violation of the Securities Act of 1933, as amended, or any other Legal
Requirement. Upon Buyer's acquisition from Seller of all of the outstanding
capital stock of the Company as described in Section 5.8 below, Buyer and the
Company shall be the owners of 100% of the equity of the Partnership free and
clear of all Encumbrances. Except as set forth on Schedule 3.1.3, the
                                                  --------------
Partnership has no Subsidiaries and does not own, or have any Contract to
acquire, any equity securities or other securities of any Person, or any direct
or indirect equity interest in any other business.

          3.1.4 [Intentionally left blank]

          3.1.5 BOOKS AND RECORDS; BANK AND BROKERAGE ACCOUNTS, ETC.; ACCESS

          Except as set forth on Schedule 3.1.5, the books of account, record
                                 --------------
books, and other records of the Partnership, all of which have been made
available to Buyer, are complete and correct and contain accurate and complete
records of all meetings held of, and action taken by, the partners of the
Partnership requiring specific approval of the partners thereof under the
Partnership Agreement or under applicable law.  On the Closing Date, all of
those books and records will be in the possession of the Partnership.  Schedule
                                                                       --------
3.1.5 sets forth a complete list of all bank, brokerage, mutual fund, money
- -----
market and other financial services accounts maintained by the Partnership and
the identity of all authorized signatories thereon. Seller has and has caused
the Partnership and its Representatives to, (a) afford Buyer and its
Representatives full and free access to personnel, properties, contracts, books
and records, and other documents and data, (b) furnish Buyer and Buyer's
Representatives with copies of all such Contracts, books and records, and other
existing documents and data as Buyer may have reasonably requested, and (c)
furnish Buyer and Buyer's Representatives with such additional financial,
operating, and other data and information (including, without limitation,
accountants' work papers)  as Buyer may have reasonably requested.

          3.1.6 TITLE TO PROPERTIES; ENCUMBRANCES

          Schedule 3.1.6 contains a complete and accurate list of all real
          --------------
property, leaseholds, or other interests therein owned or operated by the
Partnership. Seller has delivered or made available to Buyer copies of the
deeds, leases and other instruments (as recorded, where applicable) by which the
Partnership acquired such real property, leaseholds and interests, and copies of
all title insurance policies, opinions, abstracts, and surveys in the possession
of Seller or the Partnership and relating to such property, leaseholds or
interests. The Partnership owns (with good and marketable title in the case of
real property , subject only to the matters permitted by the following sentence)
all the properties and assets (whether real, personal, or mixed and whether
tangible or intangible) that are located at the Facility, and such properties
and assets constitute all of the properties and assets owned or used by the
Partnership. All of the properties and assets owned by the Partnership are
listed in Schedule 3.1.6. All such properties and assets are free and clear of
          --------------
all Encumbrances and are not, in the case of real property, subject to any

                                       11
<PAGE>

rights of way, building use restrictions, exceptions, variances, easements,
Encumbrances, reservations, or limitations of any nature except, with respect to
all such properties and assets, (a) mortgages or security interests described on
Schedule 3.1.6 securing specified liabilities or obligations, with respect to
- --------------
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (b) liens for current taxes not yet due, and (c)
with respect to real property, (i) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value or materially
impairs the use of the property subject thereto, or materially impairs the
operations of the Partnership, (ii) zoning laws and other land use restrictions
that do not impair the present or anticipated use of the property subject
thereto, (iii) mechanics', carriers', workers', repairers' and other similar
liens arising as a matter of law, which are not material in nature or amount,
(iv) encumbrances of record that are disclosed in title commitments and title
documents provided to Buyer, and (v) exceptions shown on surveys provided by
Sellers or the Acquired Companies to Buyer, or otherwise obtained by Buyer,
prior to the Closing Date; and (e) those items listed on Schedule 3.1.6. All
                                                         --------------
buildings, plants, and structures owned by the Partnership lie wholly within the
boundaries of the real property owned by the Partnership and do not encroach
upon the property of, or otherwise conflict with the property rights of, any
other Person.

          3.1.7 CONDITION AND SUFFICIENCY OF ASSETS

          (a)   The buildings, plants, structures, and equipment owned, leased
or otherwise used or operated by the Partnership are structurally sound, are in
good operating condition and repair, and are adequate for the uses to which they
are being put, and none of such buildings, plants, structures, or equipment is
in need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The building, plants,
structures, and equipment owned, leased or otherwise used or operated by the
Partnership are sufficient for the continued conduct of the Partnership's
business after the Closing in substantially the same manner as conducted prior
to the Closing. Except as set forth in Schedule 3.1.7, there are no subleases,
                                       --------------
space-sharing agreements or other similar arrangements giving or purporting to
give any Person any rights relating to any of the Partnership's real property,
whether owned or leased, that are not terminable by the Partnership without
cause on less than 6 months' notice.

          (b)   The Partnership has no inventory of any kind.

          3.1.8 ACCOUNTS RECEIVABLE

          All accounts receivable of the Partnership on the accounting records
of the Partnership as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.

          3.1.9 NO UNDISCLOSED LIABILITIES

                                       12
<PAGE>

          Except as set forth in Schedule 3.1.9, as of the Closing Date the
                                 --------------
Partnership has no liabilities or obligations in excess of $10,000, in the
aggregate.

          3.1.10  TAXES

          (a)     The Partnership has filed or caused to be filed (on a timely
basis since January 1, 1996) all Tax Returns that are or were required to be
filed by or with respect to it, either separately or as a member of a group,
pursuant to applicable Legal Requirements. Seller has delivered or made
available to Buyer copies of all such Tax Returns filed since December 31, 1997.
The Partnership has paid, or made provision for the payment of, all Taxes that
have become due as shown in those Tax Returns, or otherwise.

          (b)     The United States federal and state Tax Returns of the
Partnership has been audited by the IRS or relevant state tax authorities or are
closed by the applicable statute of limitations for all taxable years through
December 31, 1995. Schedule 3.1.10 contains a complete and accurate list of all
                   ---------------
audits of all such Tax Returns, including a reasonably detailed description of
the nature and outcome of each audit. All deficiencies proposed as a result of
such audits have been paid, reserved against, settled, or, as described in
Schedule 3.1.10, are being contested in good faith by appropriate proceedings.
- ---------------
Except as described in Schedule 3.1.10, neither Seller nor the Partnership has
                       ---------------
given or been requested to give waivers or extensions (or is or would be subject
to a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of Taxes of any Partnership or for the any
Partnership may be liable.

          (c)     The charges, accruals, reserves and receivables with respect
to Taxes on the books of the Partnership are adequate and are at least equal to
the Partnership's liability for Taxes. There exists no proposed tax assessment
against the Partnership except as disclosed in the Closing Balance Sheet or
Schedule 3.1.10 and Seller has no Knowledge of any basis for any such
- ---------------
assessment. No consent to the application of Section 341(f)(2) of the IRC has
been filed with respect to any material property or assets held, acquired, or to
be acquired by the Partnership. All Taxes that the Partnership is or was
required by Legal Requirements to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper Governmental
Body or other Person.

          (d)     All Tax Returns filed by (or that include on a consolidated
basis) the Partnership are true, correct and complete. There is no tax sharing
agreement that will require any payment by the Partnership after the date of
this Agreement. The Partnership has not given a power of attorney to any Person,
which is still in effect.

          3.1.11  NO MATERIAL ADVERSE CHANGE

          Since December 31, 1999, there has not been any material adverse
change in the

                                       13
<PAGE>

business, operations, properties, prospects, assets, or condition of the
Partnership and no event has occurred or circumstance exists that is reasonably
likely to result in such a material adverse change or which may materially
impair or impede the ability of the Partnership to conduct its business in the
Ordinary Course of Business after the Closing Date and Seller has no Knowledge
of any basis for any such material adverse change or event or circumstances.

          3.1.12  EMPLOYEE BENEFITS

          (a)     There are no deferred compensation, bonus or other incentive
compensation plans, programs, agreements or arrangements; severance or
termination pay, medical, surgical, hospitalization, life insurance or other
"welfare" plans, funds or programs (within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), profit-
sharing or other "pension" plans, funds or programs (within the meaning of
Section 3(2) of ERISA), employment, termination or severance agreements, or
other employee benefit plans, funds, programs, agreements or arrangements that
are sponsored, maintained or contributed to or required to be contributed to by
the Partnership or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with the Partnership would be deemed a "single
employer" within the meaning of Section 4001 (b) of ERISA, or to which the
Partnership or an ERISA Affiliate is party, whether written or oral, for the
benefit of any employee or former employee of the Partnership. Neither the
Partnership nor any ERISA Affiliate has any commitment or formal plan, whether
legally binding or not, to create any employee benefit plans that would affect
any employee or former employee of the Partnership. At no time has the
Partnership maintained or been a party to a multi-employer plan as defined in
(S) 4001(a)(3) of ERISA.

          (b)     No liability under Title IV or Section 302 of ERISA has been
incurred by the Partnership or any ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a material risk to the
Partnership or any ERISA Affiliate of incurring any such liability.

          (c)     The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any Person affiliated with the Partnership or any ERISA Affiliate to
severance pay, unemployment compensation or any other payment, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such Person.

          3.1.13  COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
                  AUTHORIZATIONS

          (a)     Except as set forth in Schedule 3.1.13:
                                         ---------------

                                      14
<PAGE>

               (i)    the Partnership is, and at all times since December 31,
1993 has been, in material compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the ownership
or use of any of its assets;

               (ii)   no event has occurred or circumstance exists that (with or
without notice or lapse of time or both) (A) shall constitute or result in a
violation by the Partnership of, or a failure on the part of the Partnership to
comply with, any Legal Requirement in all material respects, or (B) shall give
rise to any obligation on the part of the Partnership to undertake, or to bear
all or any portion of the cost of, any remedial action of any nature; and

               (iii)  the Partnership has not received any notice or other
communication from any Governmental Body or any other Person regarding (A) any
violation of, or failure to comply with, any Legal Requirement, or (B) any
obligation on the part of the Partnership to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature.

          (b)  Schedule 3.1.13 contains a complete and accurate list of each
               ---------------
Governmental Authorization that is held by the Partnership or that otherwise
relates to the business of, or to any of the assets owned or used by, the
Partnership. Each Governmental Authorization listed or required to be listed in
Schedule 3.1.13 is valid and in full force and effect. Except as set forth in
- ---------------
Schedule 3.1.13:
- ---------------

               (i)    the Partnership is, and at all times since December 31,
1993 has been, in material compliance with the terms and requirements of each
Governmental Authorization identified or required to be identified in Schedule
                                                                      --------
3.1.13.
- ------

               (ii)   no event has occurred or circumstance exists that shall
(A) constitute or is reasonably likely to result directly or indirectly in a
violation of, or a failure to comply with, any term or requirement of any
Governmental Authorization listed or required to be listed in Schedule 3.1.13 in
                                                              ---------------
all material respects, or (B) result in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any Governmental
Authorization listed in Schedule 3.1.13;
                        ---------------

               (iii)  the Partnership has not received, at any time since
December 31, 1993, any notice or other communication from any Governmental Body
or any other Person regarding (A) any violation of, or failure to comply with,
any term or requirement of any Governmental Authorization in any material
respect, or (B) any revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization listed in
Schedule 3.1.13; and
- ---------------

               (iv)   all applications required to have been filed for the
renewal of the Governmental Authorizations listed in Schedule 3.1.13 have been
                                                     ---------------
duly filed on a timely basis with the appropriate Governmental Bodies, and all
other filings required to have been made with

                                       15
<PAGE>

respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.

          (c)     The Governmental Authorizations listed in Schedule 3.1.13
                                                            ---------------
collectively all of the Governmental Authorizations necessary to permit the
Partnership to lawfully conduct and operate its business in the manner it
currently conducts and operates such business and to permit the Partnership to
own and use its assets in the manner in which it currently owns and uses such
assets.

          3.1.14  LEGAL PROCEEDINGS; ORDERS

          (a)     Except as set forth in Schedule 3.1.14, there is no pending
                                         ---------------
Proceeding:

                  (i)    that has been commenced by or against the Partnership
or that otherwise relates to or may affect the business of, or any of the assets
owned or used by, the Partnership; or

                  (ii)   that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.

                  (iii)  To the Knowledge of the Seller and the Partnership, no
such Proceeding has been Threatened. Seller has delivered to Buyer copies of all
pleadings, correspondence, and other documents, if any, relating to each
Proceeding listed in Schedule 3.1.14.
                    ----------------

          (b)     Except as set forth in Schedule 3.1.14:
                                         ---------------

                  (i)    there is no Order to which the Partnership, or any of
the assets owned or used by the Partnership, is subject;


                  (ii)   Seller is not subject to any Order that relates to the
business of, or any of the assets owned or used by, the Partnership; and

                  (iii)  to the Knowledge of Seller and the Partnership, no
officer, director, agent, or employee of the Partnership is subject to any Order
that prohibits such officer, director, agent, or employee from engaging in or
continuing any conduct, activity, or practice relating to the business of the
Partnership as it is presently being conducted.

          (c)     Except as set forth in Schedule 3.1.14:
                                         ---------------


                                       16
<PAGE>

                  (i)    the Partnership is, and at all times since December 31,
1993 has been, in material compliance with all of the terms and requirements of
each Order to which it, or any of the assets owned or used by it, is or has been
subject;

                  (ii)   no event has occurred or circumstance exists that shall
constitute or is reasonably likely to result in a violation of or failure to
comply with any term or requirement of any Order to which the Partnership, or
any of the assets owned or used by the Partnership, is subject; and

                  (iii)  the Partnership has not received, at any time since
December 31, 1993, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding any violation of, or
failure to comply with, any term or requirement of any Order to which the
Partnership, or any of the assets owned or used by the Partnership, is or has
been subject.

          3.1.15  ABSENCE OF CERTAIN CHANGES AND EVENTS

          Except as set forth in Schedule 3.1.15 or pursuant to the Contemplated
                                 ---------------
Transactions, since December 31, 1999, the Partnership has conducted its
businesses in the Ordinary Course of Business and there has not been any:

          (a)     change in the Partnership's capitalization; grant of any
option or right to purchase any equity interest in the Partnership; or
declaration or payment of any distribution or payment in respect of Partnership
interests;

          (b)     amendment to the Organizational Documents of the Partnership;

          (c)     payment or increase by the Partnership of any bonuses,
salaries, or other compensation, except in the Ordinary Course of Business to
any partnership employee or entry into any employment, severance, or similar
Contract with any partner or employee;

          (d)     adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, employee benefit or other Plan for or with any partners or employees
of the Partnership;


          (e)     damage to or destruction or loss of any asset or property of
the Partnership whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Partnership;

          (f)     sale, lease, or other disposition of any material asset or
property of the Partnership or mortgage, pledge, or imposition of any
Encumbrance on any material asset or property of the Partnership;

                                       17
<PAGE>

          (g)     material change in the accounting methods used by the
Partnership;


          (h)     material change in the Partnership's policies or practices
concerning its operations; or

          (i)     agreement, whether oral or written, by the Partnership to do
any of the foregoing.

          3.1.16  CONTRACTS; NO DEFAULTS

          (a)     Schedule 3.1.16 contains a complete and accurate list, and
                  ---------------
Seller has delivered to Buyer true and complete copies, of

          (i)     each Applicable Contract that involves performance of services
or delivery of goods or materials by the Partnership of an amount or value in
excess of $1,000;

          (ii)    each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of the
Partnership in excess of $1,000;

          (iii)   each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property (except personal property
leases and installment and conditional sales agreements having a value per item
or aggregate payments of less than $1,000 and with terms of less than one
year);

          (iv)    each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual property,
including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;

          (v)     each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a group
of employees;

          (vi)    each joint venture, partnership, and other Applicable Contract
(however named) involving a sharing of profits, losses, costs, or liabilities by
the Partnership with any other Person;

          (vii)   each Applicable Contract containing covenants that in any way
purport to restrict the business activity of the Partnership or any Affiliate of
the Partnership or limit the freedom of the Partnership or any Affiliate of the
Partnership to engage in any line of business or to compete with any Person;

                                       18
<PAGE>

               (viii)  each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct payments for
goods;

               (ix)    each power of attorney that is currently effective and
outstanding;

               (x)     each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express undertaking
by the Partnership to be responsible for special, exemplary or consequential
damages;

               (xi)    each Applicable Contract for capital expenditures in
excess of $1,000;

               (xii)   each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by the Partnership
other than in the Ordinary Course of Business;

               (xiii)  each warehouse, safety deposit box and other storage
rental or lease agreement to which the Partnership is a party or pursuant to
which any assets of the Partnership are stored; and

               (xiv)   each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.

          (b)  Except as set forth in Schedule 3.1.16:
                                      ---------------

               (i)     neither the Seller nor any Related Person of Seller has
or may acquire any rights under, and Seller has not and may not become subject
to any obligation or liability under, any Contract that relates to the business
of, or any of the assets or rights owned, used or exercised by, the Partnership;
and

               (ii)    to the Knowledge of Seller and the Partnership, no
officer, director, agent, employee, consultant, or contractor of the Partnership
is bound by any Contract that purports to limit the ability of such officer,
director, agent, employee, consultant, or contractor to (A) engage in or
continue any conduct, activity, or practice relating to the business of the
Partnership or (B) assign to the Partnership or to any other Person any rights
to any invention, improvement, or discovery.

          (c)  Neither Seller nor the Partnership has taken any action that
could result in the termination, or could materially impair the validity or
enforceability of any Contract identified or required to be identified in
Schedule 3.1.16 and neither Seller nor the has any Knowledge of any such action
- ---------------
having  been taken by any other Person.

          (d)  Except as set forth in Schedule 3.1.16:
                                      ---------------

                                      19
<PAGE>

                 (i)    the Partnership is, and at all times since December 31,
1999 has been, in compliance in all material respects with all applicable terms
and requirements of each Contract under which the Partnership has or had any
obligation or liability or by which the Partnership or any of the assets owned
or used by the Partnership is or was bound;

                 (ii)   each other Person that has or had any obligation or
liability under any Contract under which the Partnership has or had any rights
is, and at all times since December 31, 1999 has been, in compliance in all
material respects with all applicable terms and requirements of such Contract;

                 (iii)  no event has occurred or circumstance exists that (with
or without notice or lapse of time or both) may contravene, conflict with, or is
reasonably likely to result in a violation or breach of, or give the Partnership
or other Person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or to cancel, terminate, or
modify, any Applicable Contract; and


                 (iv)   the Partnership has not given to or received from any
other Person, at any time since December 31, 1999 any notice or other
communication (whether oral or written) regarding any actual, alleged, possible,
or potential violation or breach of, or default under, any Contract.

          (e)    There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to the
Partnership under current or completed Contracts with any Person and no such
Person has made written demand for such renegotiation.

          (f)    The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Partnership have been entered into in
the Ordinary Course of Business and have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in violation of
any Legal Requirement.

          3.1.17 INSURANCE

          (a)    Seller has delivered  to Buyer:

                 (i)    true and complete copies of all policies of insurance to
which the Partnership is a party; and

                 (ii)   true and complete copies of all pending applications for
policies of insurance.

          (b)    Schedule 3.1.17(b) lists:
                 ------------------

                                      20
<PAGE>

                  (i)    any self-insurance arrangement by or affecting the
Partnership, including any reserves established thereunder;

                  (ii)   any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by the Partnership; and

                  (iii)  all obligations of the Partnership to third parties
with respect to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is provided.

          (c)     Except as noted on Schedule 3.1.17(c):
                                     ------------------

                  (i)    All insurance policies to which the Partnership is a
party or that provide coverage to the Partnership:

                         (A)  are valid and outstanding;

                         (B)  are issued by an insurer that, to the
Partnership's Knowledge, is financially sound and reputable;

                         (C)  are sufficient for compliance with all Legal
Requirements and Applicable Contracts to which the Partnership is a party or by
which it is bound; and

                         (D)  will continue in full force and effect following
the consummation of the Contemplated Transactions.

                  (ii)   Neither Seller nor the Partnership has received (A) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations thereunder.

                  (iii)  All premiums due under each policy to which the
Partnership is a party or that provides coverage to the Partnership have been
paid, and the Partnership has performed all of its obligations thereunder.

                  (iv)   The Partnership has given timely notice to the insurer
of all existing and Threatened claims that may be insured thereby.

                                      21
<PAGE>

          3.1.18  EMPLOYEES

          The Partnership has no employees and never has had any employees.

          3.1.19  LABOR RELATIONS; COMPLIANCE

          The Partnership has not and is not a party to any collective
bargaining or other labor Contract. There has not been, there is not presently
pending or existing, and to Seller's Knowledge, there is not Threatened, (a) any
strike, slowdown, picketing, work stoppage, or employee grievance process,
against or affecting the Partnership (b) any Proceeding against or affecting the
Partnership relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations Board,
the Equal Employment Opportunity Commission, or any comparable Governmental
Body, organizational activity, or other labor or employment dispute against or
affecting the Partnership or its premises, or (c) any application for
certification of a collective bargaining agent relating to the Partnership. To
Seller's Knowledge, no event has occurred or circumstance exists that could
provide the basis for any work stoppage or other labor dispute relating to the
Partnership. The Partnership has complied in all material respects with all
Legal Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closings. The Partnership is not liable for the payment of any
material compensation, damages, Taxes, fines, penalties, or other amounts,
however designated, for failure to comply with any of the foregoing Legal
Requirements in all material respects.

          3.1.20  INTELLECTUAL PROPERTY

          (a)     The term "Intellectual Property Assets", as to the Partnership
includes:

                  (i)    the name of the Partnership, all fictional business
names, trading names, registered and unregistered trademarks, service marks, and
applications;

                  (ii)   all patents, patent applications, and inventions and
discoveries that may be patentable;

                  (iii)  all copyrights in both published works and unpublished
works; and

                  (iv)   all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process technology,
plans, drawings, and blue prints (collectively, "Trade Secrets"); owned, used,
or licensed by the Partnership as licensee or licensor.

                                       22
<PAGE>

                  (b)    There are no Material Contracts relating to the
Intellectual Property Assets to which the Partnership is a party or by which the
Partnership is bound.

                  (c)    The Intellectual Property Assets are all those
necessary for the operation of the Partnership business as it is currently
conducted. The Partnership is the owner of all right, title, and interest in and
to each of the Intellectual Property Assets, free and clear of all Encumbrances,
or has the right to use without payment to a third party all of the Intellectual
Property Assets. To the Seller's Knowledge, no partner or employee of the
Partnership has entered into any Contract with anyone other than the Partnership
that restricts or limits in any way the scope or type of work in which the
partner or employee may be engaged or requires the partner or employee to
transfer, assign, or disclose information concerning his work to anyone other
than the Partnership.

                  (d)    The Partnership has good and valid title to the
absolute right to use the Trade Secrets. The Trade Secrets are not in the public
domain or part of the public literature, and, to Seller's Knowledge, have not
been used, divulged, or appropriated either for the benefit of any Person (other
than the Partnership ) or to the detriment of the Partnership. To Seller's
Knowledge, no Trade Secret is subject to any adverse claim or has been
challenged or Threatened in any way.

                  3.1.21 CERTAIN PAYMENTS

                  Neither the Partnership nor any partner, agent, or employee of
the Partnership or any other Person associated with or acting for or on behalf
of the Partnership has directly or indirectly (a) made, in violation of any
Legal Requirement, any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of any the Partnership, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Partnership

                  3.1.22 DISCLOSURE

                  No representation or warranty of Seller in this Agreement and
no statement in any Schedule omits to state a material fact necessary to make
the statements herein or therein, in light of the circumstances in which they
were made, not misleading. There does not exist any item or matter involving the
internal operations or conditions of the Partnership of a material nature that
has either not been disclosed to Buyer in this Agreement, the Schedules attached
hereto or any other information furnished to Buyer in connection with the
Contemplated Transactions or has been disclosed in a manner that is intended to
or is likely to mislead Buyer, the result of which could have a material adverse
effect on the business, operations, financial condition or prospects of the
Partnership.

                                       23
<PAGE>

          3.1.23  RELATIONSHIPS WITH RELATED PERSONS

          Except as set forth in Schedule 3.1.23, no Related Person of Seller or
                                 ---------------
the Partnership has any interest in any property (whether real, personal, or
mixed and whether tangible or intangible), used in or pertaining to the
Partnership business.  Except as set forth in Schedule 3.1.23, no Related Person
                                              ---------------
of Seller or the Partnership owns or has since December 31, 1993, owned (of
record or as a beneficial owner) an equity interest or any other financial or
profit interest in, a Person that has (a) had business dealings or a material
financial interest in any transaction with the Partnership or (b) engaged in
competition with the Partnership with respect to any line of services of the
Partnership (a "Competing Business"), other than for non-material interests in a
publicly traded company, in any market presently served by the Partnership.
Except as set forth in Schedule 3.1.23, no Related Person of Seller or the
                       ---------------
Partnership is a party to any Material Contract with, or has any claim or right
against Seller or the Partnership.  Except as set forth in Schedule 3.1.23, no
                                                           ---------------
Related Person of Seller or the Partnership has any outstanding loans from the
Partnership (other than travel and expense advances which do not exceed $1,000
in the aggregate).

          3.1.24  BROKERS OR FINDERS

          Neither the Partnership nor the Seller has incurred any obligation or
liability, contingent or otherwise, for brokerage or finder's fees or agent's
commissions or other similar payment in connection with this Agreement, except
pursuant to an arrangement with Harris Williams & Co., for which Seller shall be
solely responsible, and whose fees, expenses and other charges shall be paid by
Seller.

          3.1.25  ENVIRONMENTAL MATTERS

          Except as set forth in Schedule 3.1.25:
                                 ---------------

          (a)     The Partnership is, and at all times since January 1, 1995 has
been, in full compliance with, and has not been and is not in violation of or
liable under, any Environmental Laws or any Occupational Safety and Health Laws.
Neither Seller nor the Partnership has any basis to expect, nor has either of
them or any other Person for whose conduct they are or may be held to be
responsible received, any actual or Threatened Order, notice, or other
communication from (i) any Governmental Body or private citizen acting in the
public interest, or (ii) the current or prior owner or operator of the Facility,
of any actual or potential violation or failure to comply with any Environmental
Laws or any Occupational Safety and Health Laws, or of any actual or Threatened
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to the Facility or any other properties or
assets (whether real, personal, or mixed) in which Seller or the Partnership has
had an interest, or with respect to any offsite property or facility to which
Seller or the Partnership sent or caused to be sent Hazardous Materials for
treatment, storage or disposal that could reasonably be expected to cause Seller
or the Partnership to have any Environmental Health and Safety Liabilities.

                                       24
<PAGE>

          (b)  There are no pending or Threatened claims, Encumbrances, or other
restrictions of any nature, resulting from any Environmental, Health, and Safety
Liabilities or arising under or pursuant to Environmental Laws or Occupational
Safety and Health Laws, with respect to or affecting the Facility or any other
properties and assets (whether real, personal, or mixed) in which Sellers or the
Partnership has or had an interest, that could reasonably be expected to cause
Seller or the Partnership to have any Environmental Health and Safety Liability.

          (c)  Neither Seller nor the Partnership has any basis to expect, nor
has either of them or any other Person for whose conduct they are or may be held
responsible, received, any citation, directive, inquiry, notice, Order, summons,
warning, or other communication that relates to Hazardous Activity, Hazardous
Materials, or any alleged, actual, or potential violation or failure to comply
with any Environmental Laws or Occupational Safety and Health Laws, or of any
alleged, actual, or potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to the Facility or
any other properties or assets (whether real, personal, or mixed) in which
Seller or the Partnership had an interest, or with respect to any off-site
property or facility to which Hazardous Materials for treatment, storage or
disposal.

          (d)  Neither Seller, the Partnership, nor any other Person for whose
conduct they are or may be held responsible, has any Environmental, Health, and
Safety Liabilities with respect to the Facility or with respect to any other
properties and assets (whether real, personal, or mixed) in which Seller or the
Partnership (or any predecessor), has or had an interest, or at any property
hydrologically adjoining the Facility or any such other property or assets.

          (e)  There are no Hazardous Materials present on or in the Environment
at the Facility adjoining property, including any Hazardous Materials contained
in barrels, above or underground storage tanks, landfills, land deposits, dumps,
equipment (whether moveable or fixed) or other containers, either temporary or
permanent, and deposited or located in land, water, sumps, or any other part of
the Facility or such adjoining property, or incorporated into any structure
therein or thereon. Neither Seller, the Partnership nor any other Person for
whose conduct they are or may be held responsible, or any other Person, has
permitted or conducted, or is aware of, any Hazardous Activity conducted with
respect to the Facility or any other properties or assets (whether real,
personal, or mixed) in which Seller or the Partnership has or had an interest,
that could reasonably be expected to cause Seller or the Partnership to have any
Environmental Health or Safety Liability.

          (f)  There has been no Release or Threatened Release, of any Hazardous
Materials at or from the Facility or at any other locations where any Hazardous
Materials were generated, manufactured, refined, transferred, produced,
imported, used, or processed from or by the Facility, or from or by any other
properties and assets (whether real, personal, or mixed) in which Seller or the
Partnership has or had an interest, or any adjoining property, whether by
Seller, the Partnership or any other Person.

                                       25
<PAGE>

          (g)     Sellers has made available to Buyer true and complete copies
and results of any written reports, studies, analyses, tests, or monitoring
possessed or initiated by Seller or the Partnership pertaining to Hazardous
Materials or Hazardous Activities in, on, or under the Facility, or concerning
compliance by Seller, the Partnership, or any other Person for whose conduct
they are or may be held responsible, with Environmental Laws or Occupational
Safety and Health Laws.

          3.1.26  PRODUCTS

          (a)     The Partnership does not manufacture, advertise, market,
warehouse, distribute or sell any products and has never done so.

          3.1.27  WARRANTIES

          Except for warranties under applicable Legal Requirements, (a) there
are no warranties express or implied, written or oral, with respect to the
Partnership's business and (b) there are no pending or, to the Knowledge of
Seller, Threatened claims with respect to any such warranty.

          3.1.28  TERRITORIAL RESTRICTIONS

          The Partnership is not restricted by any written agreement or
understanding with any other Person from carrying on its business anywhere in
the world.  Buyer, solely as a result of its purchase of the Interest from
Seller hereunder, will not thereby become restricted in carrying on the business
of the Partnership anywhere in the world.

          3.1.29  SUBSTANTIAL CUSTOMERS AND SUPPLIERS

          The Partnership has no customers (other than the Company, as tenant)
     or suppliers.

          3.1.30  TRADE INVENTORIES

          The Partnership has no trade inventories.

          3.1.31  PAYMENT OF CERTAIN INDEBTEDNESS

          All indebtedness owed to the Partnership as of the Closing Date by
Seller or any Related Person of Seller has been paid in full.

                                       26
<PAGE>

     3.2  SELLER'S SEPARATE REPRESENTATIONS AND WARRANTIES

          3.2.1 SELLER'S  REPRESENTATIONS AND WARRANTIES

          Seller hereby represents and warrants to Buyer as to himself and the
Interest:

          (a)   that (i) he has the absolute and unrestricted power, authority
and capacity to execute, deliver, and perform this Agreement, the Petersburg
Escrow Agreement and his guarantee obligations under the Petersburg
Environmental Obligations Agreement and to execute and deliver the Assignment
and Seller's Release; (ii) this Agreement, the Assignment, the Petersburg Escrow
Agreement, the Petersburg Environmental Obligations Agreement and Seller's
Release have been duly executed or endorsed and delivered by him and will
constitute his valid and binding obligations enforceable against him in
accordance with their respective terms, except as such enforcement may be
limited by (A) bankruptcy, insolvency or any other laws affecting creditors'
rights generally, or (B) limitations on the availability of equitable remedies;
and (iii) upon execution and delivery of the Assignment and upon payment for the
Interest pursuant to this Agreement, Buyer will acquire good and marketable
title to and become the legal and beneficial owner of the Interest, free and
clear of all Encumbrances; and

          (b)   that the execution, delivery, and performance of this Agreement,
the execution and delivery of the Assignment, the Petersburg Environmental
Obligations Agreement, the Petersburg Escrow Agreement and Seller's Release and
the consummation of the Contemplated Transactions by him will not, with or
without the giving of notice or the passage of time or both (i) violate any
Legal Requirement, currently in effect, applicable to him; (ii) violate any
Order applicable to him; or (iii) result in a breach or default under any
Contract to which he is a party or by which he is bound.

     3.3  EXCLUSIVITY OF REPRESENTATIONS

          3.3.1 NO OTHER REPRESENTATIONS.

          Except for the representations and warranties contained in this
Article 3 (including the Schedules and disclosures made thereon) and in the
certificates delivered by Seller hereunder, Seller makes no express or implied
representation or warranty, and Seller disclaims any such express or implied
representation or warranty, whether by the Partnership or any of its
Representatives or any other Person, with respect to the execution and delivery
of this Agreement or the consummation of the Contemplated Transactions or the
Interest or the business or assets of the Partnership, notwithstanding the
delivery or disclosure to Buyer or any of its Representatives or any other
Person of any documentation or other information with respect to the foregoing.

                                      27
<PAGE>

          ARTICLE 4.  REPRESENTATIONS AND WARRANTIES OF BUYER

          Buyer represents and warrants to Seller as follows:

          4.1  ORGANIZATION AND GOOD STANDING

          Buyer is a limited liability company duly organized, validly existing,
and in good standing under the laws of the State of Delaware.

          4.2  AUTHORITY; NO CONFLICT; COMPETING BUSINESS

          (a)  This Agreement has been duly executed and delivered by Buyer.
This Agreement, the Petersburg Environmental Obligations Agreement, the
Petersburg Escrow Agreement and Buyer's Release constitute legal, valid, and
binding obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and Buyer's Release and to
perform its obligations hereunder and thereunder and to consummate the
Contemplated Transactions. The entry into this Agreement, the Petersburg
Environmental Obligations Agreement, the Petersburg Escrow Agreement and the
consummation of the Contemplated Transactions has been duly authorized by all
necessary action on the part of Buyer.

          (b)  Except as set forth on Schedule 4.2, neither the execution and
                                      ------------
delivery of this Agreement by Buyer nor the consummation or performance of any
of the Contemplated Transactions by Buyer will directly or indirectly, with or
without notice or lapse of time or both, contravene, conflict with or result in
a violation of or give any Person or Governmental Body the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to:

               (i)   any provision of Buyer's Organizational Documents;

               (ii)  any resolution adopted by the members or managers of Buyer;

               (iii) any Legal Requirement or Order to which Buyer may be
subject; or

               (iv)  any Contract to which Buyer is a party or by which Buyer
may be bound.

          (c)  Except as set forth in Schedule 4.2, Buyer is not and will not
                                      ------------
be required to give any notice or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions that has not already been
given or obtained.

                                       28
<PAGE>

          4.3  CERTAIN PROCEEDINGS

          There is no Order and no pending Proceeding that has been commenced
against Buyer that challenges, or may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions.  To Buyer's knowledge, no such Proceeding has been Threatened.

          4.4  BROKERS OR FINDERS

          Buyer and its officers, directors or shareholders have incurred no
obligation or liability, contingent or otherwise, for brokerage or finder's fees
or agent's commissions or other similar payment in connection with this
Agreement.

          4.5  INVESTMENT REPRESENTATION

          Buyer is acquiring the Interest for investment and not with a view to
its sale or distribution other than in a sale or distribution which is
registered under applicable securities laws or is exempt from such registration.

          ARTICLE 5.  ADDITIONAL AGREEMENTS

          5.1  BOOKS AND RECORDS

          Buyer shall retain all of the books and records of the Partnership
existing as of the Closing Date that relate to Taxes for a period of seven (7)
years after the Closing Date or such longer time as may be required by law and
shall make such books and records (or copies thereof) available to Seller or his
Representatives, at reasonable times and upon reasonable notice, after the
Closing Date to the extent reasonably required by Seller.

          5.2  KNOWLEDGE OF BREACH

          Each party hereto, in entering into this Agreement and performing at
the Closing, agrees and acknowledges that it shall not be entitled to rely on
the accuracy and completeness of any representation or warranty of any other
party, including any matter set forth in any Schedule hereto, and shall not be
entitled under Article 8 to assert a Claim for Damages for Breach thereof, if
and to the extent that it shall have discovered any fact contrary to such
representation or warranty during its due diligence investigation or otherwise
and shall not have given to the other party notice thereof prior to the Closing
Date.

          ARTICLE 6.  CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE

                                       29
<PAGE>

          6.1  ACQUISITION OF ALLIANCE AGRONOMICS INC.

          Buyer shall have acquired and shall be the record and beneficial
owner, free and clear of any and all Encumbrances, of all of the shares of the
outstanding capital stock of the Company (the "Shares") pursuant to a Stock
Purchase Agreement between Buyer and the persons identified therein as "Sellers"
of even date herewith (the "Stock Purchase Agreement").

          ARTICLE 7.  CONDITIONS PRECEDENT TO SELLER'S OBLIGATION  TO CLOSE

          7.1  ACQUISITION OF ALLIANCE AGRONOMICS INC.

          The purchase and sale of the Shares under the Stock Purchase Agreement
shall have been consummated.

          ARTICLE 8.  INDEMNIFICATION; REMEDIES

          8.1  SURVIVAL

          All representations, warranties, covenants, and obligations in this
Agreement, the Schedules and any other certificate delivered pursuant to this
Agreement will survive the Closing in accordance with the provisions of Section
8.4.

          8.2  INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE SELLERS

          Subject to the provisions of Section 8.5, the Seller will indemnify
and hold harmless Buyer, and its stockholders, Control Persons, and affiliates
(collectively, the "Buyer Indemnified Persons") for, and will pay to Buyer
Indemnified Persons the amount of, any loss, liability, claim, damage (excluding
incidental or consequential damages or damages for lost profits), expense
(including reasonable costs of investigation and defense and reasonable
attorneys' fees), whether or not involving a third-party claim (collectively,
"Damages"), actually suffered or incurred by such Buyer Indemnified Person
arising from or in connection with:

          (a)  any Breach of any representation or warranty made by Seller in
this Agreement or the Schedules delivered by the Partnership or Seller pursuant
to this Agreement;

          (b)  [Intentionally Left Blank];

          (c)  [Intentionally Left Blank];

                                       30
<PAGE>

          (d)  the Breach by Seller of any of his obligations under the
Petersburg Environmental Obligations Agreement;

          (e)  any breach of any of the representations made in Section 3.1.3
(but only to the extent related to Seller's title to the Interest); or

          (f)  any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Seller or the Partnership (or
any Person acting on their behalf) in connection with any of the Contemplated
Transactions.

          8.3  INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER

          Buyer will indemnify and hold harmless the Seller and his heirs,
executors, successors, legal representatives and permitted assigns
(collectively, the " Seller Indemnified Persons") for, and will pay to the
Seller Indemnified Persons the amount of any Damages arising from or in
connection with (a) any Breach of any representation or warranty made by Buyer
in this Agreement, (b) any Breach by Buyer of any covenant or obligation of
Buyer in this Agreement, (c) any claim by any Person for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Buyer (or any Person
acting on its behalf) in connection with any of the Contemplated Transactions,
or (d) Buyer and/or the Partnership conducting the Partnership's business after
the Closing except that such Damages shall be reduced to the extent that they
are directly attributable to the operation of such business prior to the
Closing.

          8.4  TIME LIMITATIONS

          The Seller will have no liability for indemnification with respect to
any representation or warranty made by him herein (other than those in Section
3.1.3 relating to Seller's title to the Interest, and in Section 3.1.10, subject
in each case to Section 8.5), unless on or before the last day of the eighteenth
(18th) calendar month following the Closing Date, the Buyer Indemnified Person
notifies Seller in writing of a Claim (as hereinafter defined) specifying the
factual basis of that Claim in reasonable detail to the extent then known by
such Buyer Indemnified Person.  Buyer will have no liability for indemnification
with respect to any such representation or warranty made by it herein  unless on
or before the last day of the eighteenth (18th) calendar month following  the
Closing Date, the Seller Indemnified Person notifies Buyer in writing of a Claim
specifying the factual basis of that Claim in reasonable detail to the extent
then known by such Seller Indemnified Person.  A Claim with respect to Section
3.1.3 (but only related to Seller's title to the Interest) or Section 3.1.10 may
be made at any time prior to the expiration of any statute of limitations
applicable to the actions or causes of action which are attributable to the
matters discussed in such Sections.

          8.5  LIMITATIONS ON AMOUNT - THE SELLER

                                       31
<PAGE>

          (a)  The Seller will not have any liability for indemnification with
respect to the matters described in clause (a) of Section 8.2 (other than
matters that are also described in other clauses of Section 8.2 ) unless the
aggregate of all Damages with respect thereto for which Seller would, but for
this Section 8.5 (a), be liable, exceeds on a cumulative basis the sum of
Twenty-Five Thousand Dollars ($25,000.00) (the "Cumulative Basket"), and then
only to the extent of such excess; and no such matter individually which
involves Damages in an amount less than Five Thousand Dollars ($5,000.00) (the
"Individual Basket") shall be included in determining whether the Cumulative
Basket amount has been reached. For purposes of this Section 8.5(a), Damages
shall be calculated after taking into account any tax benefits and tax costs
(including tax costs resulting from reduction in basis, and resulting reduction
in depreciation and amortization, and increase in taxable gain recognized on a
sale) realized by and insurance proceeds paid to Buyer (net of any related cost
incurred by it due to retrospective premium adjustments, experience based
premium adjustments and indemnification obligations), the Buyer Indemnified
Persons or the Partnership.

          (b)  The sole source of payment of any indemnification obligations of
Seller with respect to Section 8.2(a) of this Agreement shall be the Petersburg
Escrow, and Buyer agrees that the payment of any claim made by any Buyer
Indemnified Person with respect to such clauses, for whatever reason, shall be
limited to, and shall only be made from, the Petersburg Escrow. If any
indemnification obligation arises as a result of Damages resulting from a Breach
by Seller of Section 3.1.3 (but only to the extent related to Seller's title to
the Interest), Section 3.1.10 hereof or of the Petersburg Environmental
Obligations Agreement and if the amount of such Damages exceeds the balance (if
any) available in the Petersburg Escrow therefor, Seller shall be liable for the
amount of Damages resulting from such Breach in excess of such Petersburg Escrow
balance, but in no event shall such liability for indemnification exceed the
portion of the Purchase Price hereunder actually received by Seller (net of the
Petersburg Escrow).

          (c)  The limitations of this Section 8.5 will not apply to the extent
any liability for Damages arises due to fraud on the part of Seller, in which
case Seller shall be solely liable for all Damages with respect to such
Breaches.

          8.6  LIMITATIONS ON AMOUNT - BUYER

          Buyer will have no liability for indemnification with respect to the
matters described in clause (a) or clause (b) of Section 8.3 (other than matters
that are also described in other clauses of Section 8.3) unless the aggregate of
all Damages with respect thereto for which Buyer would, but for this Section
8.6, be liable exceeds on a cumulative basis the Cumulative Basket amount, and
then only to the extent of such excess; and no such matter individually which
involves Damages in an amount less than the Individual Basket amount shall be
included in determining whether the Cumulative Basket amount has been reached.
For purposes of this Section 8.6, Damages shall be calculated after taking into
account any tax benefits and tax costs (including tax costs resulting from
reduction in basis, and resulting reduction in depreciation and

                                       32
<PAGE>

amortization, and increase in taxable gain recognized on a sale) realized by and
insurance proceeds paid to Seller (net of any related cost incurred by it due to
retrospective premium adjustments, experience based premium adjustments and
indemnification obligations), the Seller Indemnified Persons. This Section 8.6
will not apply to the extent any liability for Damages arises due to fraud on
the part of Buyer, in which case Buyer will be solely liable for all Damages
with respect to such Breaches.

          8.7  PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS

          (a)  Promptly after receipt by an indemnified party under Section 8.2
or 8.3 of notice of the assertion of a claim or of the commencement of any
Proceeding against it (a "Claim"), such indemnified party will, if a Claim is to
be made against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such Claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced by
the indemnified party's failure to give such notice. The indemnified party shall
deliver to the indemnifying party, within five (5) Business Days after the
indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the
Claim.

          (b)  If any Claim referred to in Section 8.7(a) is asserted or brought
against an indemnified party and it gives notice to the indemnifying party of
the Claim, the indemnifying party will be entitled to participate in the defense
of the Claim and, to the extent that it wishes, exercisable by written notice to
the indemnified party within ten (10) Business Days of receipt of notice from
the indemnified party of a Claim (unless (i) the indemnifying party is also a
party to a Proceeding involving a Claim and the indemnified party determines in
good faith that joint representation would be inappropriate, or (ii) the
indemnifying party fails to provide reasonable assurance to the indemnified
party of its financial capacity to defend such Claim and provide indemnification
with respect to such Claim), to assume the defense of such Claim with counsel
reasonably satisfactory to the indemnified party and, after such notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such Claim, the indemnifying party will not, as long as it diligently
conducts such defense, be liable to the indemnified party under this Article 8
for any fees of other counsel or any other expenses with respect to the defense
of such Claim, in each case subsequently incurred by the indemnified party in
connection with the defense of such Claim, other than reasonable costs of
investigation or if the indemnified party has assumed the defense as provided in
Section 8.7(c). In any event, the indemnifying party shall have the right to
participate in the defense of the Claim. If the indemnifying party assumes the
defense of a Claim, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Claim are within the scope of and subject
to indemnification; (ii) no compromise or settlement of such Claims may be
effected by the indemnifying party without the indemnified party's consent
(which shall not be unreasonably withheld) unless (A) there is no finding or
admission of any violation of Legal Requirements or

                                       33
<PAGE>

any violation of the rights of any Person and no effect on any other claims that
may be made against the indemnified party, and (B) the sole relief provided is
monetary damages that are paid in full by the indemnifying party; and (iii) the
indemnified party will have no liability with respect to any compromise or
settlement of such claims effected without its consent (which shall not be
unreasonably withheld). If notice is given to an indemnifying party of the
assertion of or commencement of any Proceeding involving a Claim and the
indemnifying party does not, within ten (10) Business Days after the indemnified
party's notice is given, give notice to the indemnified party of its election to
assume the defense of such Claim, the indemnified party shall have the right to
undertake the defense of such claim on behalf of the indemnifying party. The
indemnifying party will not be bound by any determination made in such
Proceeding or any compromise or settlement effected without the consent of the
indemnifying party (which shall not be unreasonably withheld).

          (c)  Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Claim may adversely
affect it or its affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such Claim but the indemnifying party will not be
bound by any determination of a Claim so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld).

          8.8  PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS

          A Claim for indemnification for any matter not based on a claim
asserted or Proceeding commenced by a third-party may be asserted by notice to
the party from whom indemnification is sought in accordance with the provisions
of Section 8.4 and following the procedures set forth in this Agreement and the
Petersburg Escrow Agreement.

          8.9  CLAIM AGAINST ESCROW; EXCLUSIVE REMEDY

          (a)  Any Buyer Indemnified Person may make a Claim against the
Petersburg Escrow in any amount to which it may be entitled under this Article
8. The indemnification provided in this Article 8 shall constitute the exclusive
remedy for Breach of the representations and warranties in this Agreement,
regardless of whether any claims or causes of action asserted with respect to
such matters are brought in contract, tort or any other legal theory whatsoever;
provided, however, that only in the case of fraud, the indemnification
provisions in this Article 8 are in addition to, and not in derogation of, any
statutory, equitable or common law remedy any party may have for a Breach of
representation or warranty. All indemnification payments under this Article 8
shall be treated by the parties as adjustments to the Purchase Price hereunder.

          (b)  Notwithstanding any other provision of this Agreement, neither
Seller nor Buyer shall be liable under this Article 8 for an amount to the
extent, if any, that any Breach giving rise to such Damages results from a
failure on the part of any Seller Indemnified Person

                                       34
<PAGE>

or Buyer Indemnified Person, as the case may be, to exercise good faith in not
jeopardizing or prejudicing the interest of Buyer or Seller.

          ARTICLE 9.  GENERAL PROVISIONS

          9.1  EXPENSES

          Each of the parties hereto will bear the expenses incurred by them in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants.  Buyer shall pay all sales, transfer,
use, documentary stamp and other similar Tax with respect to the Contemplated
Transactions.

          9.2  PUBLIC ANNOUNCEMENTS

          Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Buyer mutually agree upon. Unless consented to in
advance in writing by both parties hereto,or required by Legal Requirements,
prior to the Closing the parties shall, and Seller shall cause the Partnership
to, keep this Agreement strictly confidential and may not make any disclosure of
this Agreement to any Person.  Seller and Buyer will consult with each other
concerning the means by which those having dealings with the Partnership will be
informed of the Contemplated Transactions, and Buyer will have the right to be
present for any such communication.

          9.3  CONFIDENTIALITY

          Buyer will maintain in confidence, and will cause the directors,
officers, employees, agents, and advisors of Buyer to maintain in confidence,
and Seller will maintain in confidence and not use to the detriment of another
party or of the Partnership any written, oral, or other information obtained in
confidence from another party or  the Partnership in connection with this
Agreement or the Contemplated Transactions, unless (a) such information is
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(b) the use of such information is necessary or appropriate in making any filing
or obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by legal proceedings.

          9.4  NOTICES

          All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received

                                       35
<PAGE>

by the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):

          The Partnership:         Petersburg Agri-Terminal Associates
                                   c/o Royster-Clark, Inc.
                                   600 Fifth Avenue
                                   New York, NY 10020
                                   Attention: Frederick I. Sharp
                                   Facsimile No: (202) 332-2999

           The Seller:             G. Waddy Garrett
                                   11 Old Bridge Lane
                                   Richmond, VA 23229
                                   Facsimile No.: (804) 228-1158

           with a copy to:         McGuire, Woods, Battle & Boothe, LLP
                                   901 East Cary Street
                                   One James Center
                                   Richmond, VA 23219
                                   Attention: Thomas P. Rohman, Esq.
                                   Facsimile No.: (804) 698-2154

           Buyer:                  Royster-Clark Resources LLC
                                   600 Fifth Avenue, 25th Floor
                                   New York, NY 10020
                                   Attention: Francis P. Jenkins
                                   Facsimile No.: (212) 332-2999

           with a copy to:         Satterlee Stephens Burke & Burke LLP
                                   230 Park Avenue
                                   New York, NY 10169
                                   Attention:  William M. Jackson
                                   Facsimile No.: (212) 818-9606

          9.5  FURTHER ASSURANCES

          Each of the parties agrees (a) to furnish upon request to each other
party such further information, (b) to execute and deliver to each other party
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.

                                       36
<PAGE>

          9.6  WAIVER

          Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege.  To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.

          9.7  ENTIRE AGREEMENT AND MODIFICATION

          This Agreement supersedes all prior agreements between the parties
with respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter.  This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.

          9.8  SCHEDULES

          In the event of any inconsistency between the statements in the body
of this Agreement and those in the Schedules (other than an exception set forth
in the Schedules), the statements in the body of this Agreement will control.

          9.9  ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS

          None of the parties may assign any of their rights under this
Agreement without the prior written consent of the other parties (which shall
not be unreasonably withheld).This Agreement will apply to, be binding in all
respects upon the parties hereto and their permitted assigns and inure to the
benefit of the successors and permitted assigns of the parties hereto.  Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement.  This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and permitted assigns.

          9.10 SEVERABILITY

                                       37
<PAGE>

          If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect.  Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

          9.11 SECTION HEADINGS; CONSTRUCTION

          The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation.  All
references to ASection" or ASections" refer to the corresponding Section or
Sections of this Agreement.  All words used in this Agreement will be construed
to be of such gender or number as the circumstances require.  Unless otherwise
expressly provided, the word "including" shall mean "including, without
limitation" and does not limit the preceding words or terms.

          9.12 TIME OF ESSENCE

          With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.

          9.13 GOVERNING LAW

          This Agreement will be governed by the laws of the Commonwealth of
Virginia without regard to conflicts of laws principles.

          9.14 JURISDICTION; SERVICE OF PROCESS

          Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the Commonwealth of Virginia, or, if it has or can
acquire jurisdiction, in the United States District Court for the Eastern
District of Virginia, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein.  Process in any
action or proceeding referred to in the preceding sentence may be served on any
party anywhere in the world.

          9.15 COUNTERPARTS

          This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.

                                       38
<PAGE>

          IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.

BUYER:
                                        SELLER:
ROYSTER-CLARK RESOURCES LLC


By:___________________________          _______________________________
Name:_________________________                   G. Waddy Garrett
Title:________________________

                                      39

<PAGE>

                                                                   EXHIBIT 10.12

                 AGREEMENT FOR THE SALE AND PURCHASE OF ASSETS
                 ---------------------------------------------


          AGREEMENT FOR THE SALE AND PURCHASE OF ASSETS, dated as of  January
28, 2000, by and between CROP BUILDERS, INC., a Minnesota corporation with its
principal place of business at 923 North State Street, Suite 160, Fairmont, MN
56301 ("Seller") and ROYSTER-CLARK, INC. , a Delaware corporation with its
principal place of business at 999 Waterside Drive, Suite 800, Norfolk, VA 23510
("Purchaser").

                              W I T N E S S E T H:
                              - - - - - - - - - -

          WHEREAS, Seller owns certain assets used by Seller in the manufacture
and sale of fertilizer and seed products and the sale of related chemical
products and agronomic and application services for and to farmers and others;
and

          WHEREAS, Purchaser desires to purchase such assets, together with the
business associated therewith, and Seller is willing to sell the same to
Purchaser, upon the terms and conditions hereinafter set forth.

          NOW, THEREFORE, in consideration of the premises and of the respective
representations and warranties hereinafter set forth, the covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Purchaser and Seller
hereby agree as follows:


                                   ARTICLE I
                              CERTAIN DEFINITIONS
                              -------------------

          As used herein, the following terms shall have the following meanings:

          1.1   "Agreement" shall mean this agreement as executed by the parties
                 ---------
hereto and all exhibits, schedules or other documents which are annexed hereto
and made a part hereof.

          1.2   "Business" shall mean the manufacture and sale of fertilizer and
                 --------
seed products and the sale of related chemical products and agronomic and
application services for and to farmers and others, as currently being conducted
by Seller.

          1.3   "Closing Date" shall mean February 1, 2000 or such adjourned
                 ------------
date not later than February 10, 2000 as Buyer and Seller may designate.

          1.4   "Contracts" shall mean the leases, rental agreements and other
                 ---------
agreements listed on Schedule 1.4.
                     ------------
<PAGE>

          1.5   "Disclosure Schedules" shall mean, collectively, the several
                 --------------------
Schedules

          1.6   "Equipment" shall mean all of the Seller's equipment, machinery,
                 ---------
furniture, fixtures, motor vehicles, other rolling stock, tanks, bins, pallets,
computers and related items, and all components thereof and spare parts therefor
and other tangible personal property owned by the Seller and used in the
Business, all as listed on Schedule 1.6
                           ------------

          1.7   "Excluded Assets" shall mean all of Seller's United Suppliers
                 ---------------
patronage dividends accrued through the Closing Date, and all other properties
and assets owned by Seller that are not used in the Business and are not
included in the definition of Purchased Assets herein.

          1.8   "Facilities" shall mean all land, buildings and improvements at
                 ----------
Seller's Guckeen, Minnesota and Welcom, Minnesota facilities, as more
particularly described on Schedule 1.8.
                          ------------

          1.9   "Intangible Property" shall mean (a) all United States
                 -------------------
Environmental Protection Agency and state and local environmental, land use and
zoning related permits, licenses and approvals utilized by Seller in connection
with the Business, (b) Seller's customer and vendor lists, files and sales and
marketing data related to the Business; and (c) all goodwill of the Business and
other intangible assets of Seller used in the Business.

          1.10  "Inventory" shall mean all of Seller's (a) finished goods
                 ---------
Products, and (b) raw materials, work-in-process and supplies on hand or on
order as of the Closing Date for use in the Business, as determined by the
physical count provided for in Section 2.3(a); provided, however, that
"Inventory" shall not include any finished goods that Purchaser reasonably deems
to be not of good and saleable quality or to be obsolete; and shall not include
any pallets or other supplies that Purchaser reasonably deems to be in excess of
the short- term needs of the Business after the Closing, or not to be in readily
usable condition.

          1.11  "Inventory Price" shall mean the lesser of Seller's direct cost
                 ---------------
of the Inventory as of the Closing Date, or the direct replacement cost thereof
as of the Closing Date, as reasonably determined by Purchaser's accountants in
accordance with generally accepted accounting principles consistently applied.

          1.12  "Material Adverse Effect" shall mean a material adverse effect
                 -----------------------
on (i) the ability of the Seller to perform its obligations under this
Agreement, (ii) the legality or validity of the conduct of the Business by
Seller prior to the Closing or by Purchaser after the Closing, or (iii) the
capacity of Seller prior to the Closing or of Purchaser after the Closing to use
or operate any of the Purchased Assets.

          1.13  "Miscellaneous Assets" shall mean all of Seller's promotion and
                 --------------------
advertising materials relating to the Business, business records and books of
accounting relating to Business and all other assets identified on Schedule
                                                                   --------
1.13.
- ----

          1.14  "Person" shall mean any individual or partnership, corporation,
                 ------
association, trust or other entity.

          1.15  "Prepayments" shall mean Seller's obligations, to the extent not
                 -----------
fulfilled as of the Closing Date, to deliver goods and/or services to customers
of the Business pursuant to cash prepayments or deposits received by  Seller on
or before the Closing Date, as set forth on Schedule 1.15 hereto.
                                            -------------

          1.16  "Purchased Assets" shall mean all of the Seller's right, title,
                 ----------------
interest and estate owned on the Closing Date in and to all of the following
assets intended to be sold to Purchaser hereunder:

                (i)   the Facilities;
<PAGE>

                (ii)  the Contracts;

                (iii) the Equipment;

                (iv)  the Intangible Property;

                (v)   the Inventory;

                (vi)  Seller's Accounts; and

                (vi)  the Miscellaneous Assets.


          1.17  "Real Estate Escrow" shall mean the escrow established pursuant
                to Section 2.5.

          1.18  "Real Estate Escrow Agreement" mean the escrow agreement
                described in Section 2.5.


          1.19  "Seller's Accounts" shall mean all of the Seller's accounts and
                 -----------------
notes receivable generated in connection with the Business, excluding rebates
receivable from chemical and seed manufacturers.

          1.20  "Seller's Accounts Purchase Price" shall be the amount to be
                 --------------------------------
paid by Purchaser hereunder for Seller's Accounts, calculated pursuant to
Section 2.3(b).


                                  ARTICLE II
                     PURCHASE AND SALE OF PURCHASED ASSETS
                     -------------------------------------

          2.1   Purchase of Assets.  Subject to the terms and conditions herein
                ------------------
set forth, on the Closing Date, Purchaser will purchase and acquire, and Seller
will sell, assign, convey and transfer to Purchaser, the Purchased Assets and
the Business.

          2.2   Consideration.  (a) The total consideration for the purchase of
                -------------
the Purchased Assets and the Business as provided herein and Seller's other
obligations under this Agreement shall be the Settlement Amount (as defined in
Section 2.2(b) below) plus the Real Estate Escrow Amount plus Purchaser's
obligations under Article III.

     (b)  The cash portion of the purchase price hereunder (the "Settlement
Amount")  shall be the sum of the Seller's Accounts Payable Purchase Price, plus
the Inventory Purchase Price, plus Five Hundred Thousand Dollars ($500,000.00),
minus the Real Estate Escrow Amount, and minus the dollar amount of the
- -----                                    -----
Prepayments shown on Schedule 1.15 that are to be assumed by Purchaser under
                     -------------
Section 3.1.

     (c)  The purchase price hereunder shall be allocated as shown on Schedule
                                                                     --------
2.2(c), which shall be updated on the Settlement Date to reflect the final
- ------
calculation of the Settlement Amount.  The parties will follow and use such
allocation on all income, sales, registration and other tax returns, filings or
other related reports made by either of them to any governmental agencies.  To
the extent that disclosures of such allocation are required to be made by the
parties to the Internal Revenue Service ("IRS") under any provisions of the
Internal Revenue Code or any regulations thereunder, each of the parties will
disclose such reports to the others prior to filing the same with the IRS.

          2.3   Purchase Price Calculations, Payments and Adjustments: (a)
                -----------------------------------------------------
Within  three (3) days after the Closing Date, Purchaser shall, together with
Seller's representatives, conduct a physical count of the Inventory as of the
Closing Date and based upon such physical count, Purchaser shall calculate the
Inventory Price and shall deliver to Seller a written statement
<PAGE>

of such calculation. If within ten (10) days after its receipt of such statement
Seller shall not have notified Purchaser in writing of its objection to such
calculations setting forth in reasonable detail a reasonable basis for such
objection, such calculation of the Inventory Price shall be final and binding
upon the parties, absent manifest error. If Seller shall give timely written
notice of its objection as aforesaid, the parties shall negotiate in good faith
to resolve the dispute. If, within ten (10) days after Purchaser's receipt of
such notice of objection from Seller, such dispute shall not have been resolved,
the matter shall be submitted to Roessler & Nuss & Co., PA, independent
accountants, for a final and binding determination of the Inventory Price. All
fees and charges of Roessler & Nuss for such services shall be borne by the
parties equally. On the third (3/rd/) day after the final and binding
determination of the Inventory Price as provided herein, or on such earlier date
as the parties may agree upon (the "Settlement Date"), the Settlement Amount
shall be paid as follows: (i) if the Settlement Amount is a positive number
(that is, if the sum of the Seller's Accounts Payable Purchase  Price, plus the
Inventory Purchase Price, plus Five Hundred Thousand Dollars ($500,000.00),
shall exceed the dollar amount of the Prepayments shown on Schedule 1.15),
                                                           -------------
Purchaser shall pay the amount of such excess to Seller; or (ii) if the
Settlement Amount is a negative number (that is, if the sum of the Seller's
Accounts Purchase Price, plus the Inventory Purchase Price, plus Five Hundred
Thousand Dollars ($500,000.00), shall be less than the dollar amount of the
Prepayments shown on Schedule 1.15), Seller shall pay the amount of such
                     -------------
shortfall to Purchaser; in either case by bank check or wire transfer of
immediately available funds to the account designated in writing by the party
entitled to receive such payment hereunder.

     (b)(i) The Seller's Accounts Purchase Price shall be calculated as of the
Closing Date as follows:

     (A)  all Seller's Accounts created within thirty (30) days before the
          Closing Date shall be valued at 100% of their face value;

     (B)  all Seller's Accounts created within thirty-one (31) to sixty (60)
          days before the Closing Date shall be valued at 85% of their face
          value;

     (C)  all Seller's Accounts created within sixty-one (61) to ninety (90)
          days before the Closing Date shall be valued at 70% of their face
          value; and

     (D)  all Seller's Accounts created more than ninety (90) days before the
          Closing Date shall be value at 25% of their face value.
<PAGE>

    (ii)  Following the Closing, the Seller's Accounts Purchase Price shall be
adjusted and paid as follows:

    (A)   All collections of Seller's Accounts during the ninety (90) day period
          commencing on the Closing Date (the "Collection Period"), up to an
          aggregate amount equal to the Seller's Accounts Purchase Price, shall
          be retained by Purchaser, and all such collections during the
          Collection Period in excess of that amount shall be promptly paid over
          to Seller; and

    (B)   Upon expiration of the Collection Period, all Seller's Accounts then
          unpaid and outstanding shall be reassigned to Seller, and if the total
          collections of Seller's Accounts during the Collection Period shall
          have been less than the Seller's Accounts Purchase Price, Seller shall
          pay Purchaser the amount of such shortfall by bank check or wire
          transfer of immediately available funds to Purchaser's account.

    (iii) During the Collection Period, Purchaser shall make commercially
reasonable efforts to collect Seller's Accounts, consistent with its normal
collection practices which may include, without limitation, a refusal to extend
further credit to customers whose accounts are in arrears.

          2.4   Expenses and Taxes of Transfer.  All sales, use and transfer
                ------------------------------
taxes and recording fees arising out of or relating to the Purchased Assets
shall be borne and paid for by the party who pursuant to applicable law incurs
the cost, fee or tax.  Nothing contained in this Agreement shall be construed to
obligate or require the Purchaser to pay, or be liable for, any business,
occupation, withholding, income or similar taxes or any tax of any kind related
to any period prior to the Closing Date.

          2.5   Real Estate Escrow.  To secure against any decrease in the value
                ------------------
of the Facilities resulting from any encumbrances, rights of way, easements,
encroachments or other exceptions or defects in title excluded from the coverage
of any title insurance policies on the Facilities obtained by Purchaser as of
the Closing Date but which may be revealed upon delivery to Purchaser of
property surveys covering the Facilities in form and substance satisfactory to
it, and from any costs or expenses incurred by Purchaser to remove, cure or
mitigate any such encumbrances, rights of way, easements, encroachments or other
exceptions or defects, at the Closing, Purchaser and Seller will enter into an
escrow agreement with Blethan, Gage & Krause, PLLP as escrow agent in the form
attached hereto as Exhibit 2 (the "Real Estate Escrow Agreement"), and Purchaser
will deliver the sum of $25,000.00 (the "Real Estate Escrow") to such escrow
agent by bank check or wire transfer of immediately available funds to the
account specified by such escrow agent for that purpose.


                                  ARTICLE III
                              ASSUMED LIABILITIES
                              -------------------

          Subject to the terms and conditions of this Agreement, Seller shall
assign or cause to be assigned, and Purchaser shall assume, pay, perform and
discharge all of Seller's obligations under the Prepayments that remain
unfulfilled as of the Closing Date, and all of Seller's obligations incurred or
arising under the Contracts, with respect to the period commencing on the day
following the Closing Date. Purchaser shall not assume, nor shall Purchaser be
obligated to pay, perform or discharge, any debts, obligations, contracts or
liabilities of Seller, whether fixed, unliquidated, absolute, contingent or
otherwise, not arising under a Prepayment or a Contract, or expressly set forth
in Schedule 3.1 including, without limitation, any federal, state or local tax
   ------------
liabilities, any indebtedness for monies borrowed, or any other liability.


                                   ARTICLE IV
<PAGE>

                      CLOSING AND POST-CLOSING DELIVERIES
                      -----------------------------------

          4.1   Time and Place.  The consummation of the transactions
                --------------
contemplated by this Agreement shall take place on the Closing Date at the
offices of Frundt & Johnson, 117 West Fifth, Blue Earth, MN 56031 or at such
other place as may be mutually agreed upon in writing between Purchaser and
Seller.

          4.2   Deliveries at Closing by Purchaser.  At the Closing, Purchaser
                ----------------------------------
shall execute and deliver to Seller such instrument or instruments reasonably
satisfactory to Seller and its counsel as shall be reasonably necessary to
effect the assumption by Purchaser of all of the undischarged obligations and
liabilities of Seller under the Contracts which Purchaser has agreed to assume
in accordance with the provisions of Section 3.1 hereof.

          4.3   Deliveries at Closing by Seller.  At the Closing, Seller shall,
                -------------------------------
subject to the terms and conditions of this Agreement, sell, assign, convey and
transfer the Purchased Assets or cause the same to be assigned, conveyed and
transferred to Purchaser by delivery to Purchaser of all such bills of sale,
warranty deeds, endorsements, assignments and other good and sufficient
instruments of transfer and conveyance as shall be effective to vest in
Purchaser title to the Purchased Assets and as shall be reasonably satisfactory
in form and substance to Purchaser and its counsel.

          4.4   Other Deliveries at Closing.  At the Closing, Purchaser and
                ---------------------------
Bruce Davison shall enter into an Employment and Noncompetition Agreement in
substantially the form attached hereto as Exhibit 1 and Purchaser and Seller
                                          ---------
shall enter into the Real Estate Escrow Agreement in substantially the form
attached hereto as Exhibit 2.

          4.5   Closing Document Escrow.  All documents delivered at the Closing
                -----------------------
pursuant to Section 4.2, 4.3  and 4.4 hereof shall be held in escrow by Frundt &
Johnson, LP until payment of the Settlement Amount pursuant to Section 2.3(a),
at which time they shall be released to their intended recipients.


                                   ARTICLE V
                    REPRESENTATIONS AND WARRANTIES OF SELLER
                    ----------------------------------------

          Seller represents and warrants to Purchaser as follows:

          5.1   Organization and Good Standing. Seller is a corporation, validly
                ------------------------------
existing and in good standing under the laws of the State of Minnesota and it
has all requisite power and authority to own, lease and operate the Purchased
Assets and to carry on the Business.

          5.2   Corporate Authority. Seller has full corporate authority and
                -------------------
power to execute, deliver and perform this Agreement in accordance with its
terms, this Agreement and all the transactions contemplated hereby on its part
to be performed have been duly authorized by all requisite action of Seller, and
no further authorization or approval of its stockholders or directors is
necessary in order to enable it to enter into and perform the same.

          5.3   No Breach. Subject to the granting of such consents, waivers and
                ---------
approvals by third parties to those Contracts identified on Schedule 5.3 or
                                                            ------------
otherwise required under any of the obligations or commitments described on
Schedule 5.8 in order to permit the assignment of such Contracts or the transfer
- ------------
of the Purchased Assets to the Purchaser or otherwise to consummate the
transactions contemplated by this Agreement, and the transactions contemplated
hereby, the execution and consummation of this Agreement will not result in a
breach, violation or default or give rise to an event which, either with or
without notice or the passage of time, or both, would result in a breach,
<PAGE>

violation or default of any of the terms or provisions of (i) its Certificate of
Incorporation or Bylaws, (ii) any statute, or governmental regulation or rule,
or (iii) any note, bond, mortgage, lease, license, permit, indenture, agreement,
judgment, decree, order or other instrument, obligation or restriction to which
Seller is a party or by which Seller or any of the Purchased Assets may be bound
or affected.

          5.4   Valid Agreement. This Agreement constitutes Seller's valid and
                ---------------
binding obligation, enforceable against it in accordance with its terms, except
that such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws affecting the
rights and remedies of creditors generally and to the effect of general
principles of equity (including the availability of equitable and other
discretionary remedies and equitable defenses), whether considered in an action
in law or in equity.

          5.5   Financial Statements. The Financial Statements of the Seller for
                --------------------
the years ended September 30, 1998 and 1999 included in Schedule 5.5, fairly
                                                        ------------
represent in all material respects the financial condition of the Business as of
the dates thereof and the results of operations for the periods then ended and
have been consistently prepared, in all material respects, in accordance with
generally accepted accounting principles.

          5.6   Conduct of Business. Except as and to the extent disclosed in
                -------------------
Schedule 5.6A, since September 30, 1999, Seller has:
- -------------

           (i)    conducted the Business in the ordinary course and has not
     acquired or sold, transferred, permitted to lapse or disposed of any of the
     Purchased Assets or made any capital expenditures with respect thereto
     except in the ordinary course of business;

           (ii)   not incurred any obligations or liabilities, absolute or
     contingent, for which Purchaser will be liable or otherwise responsible
     except obligations under Contracts incurred in the ordinary course of
     business;

           (iii)  not mortgaged, pledged or subjected any of the Purchased
     Assets to any lien, charge or any other encumbrance, other than the lien of
     current personal or real property taxes not yet due and payable, if any;

           (iv)   not materially changed its credit practices or other business
     policies or practices;

           (v)    neither created, incurred, assumed, guaranteed nor otherwise
     become liable with respect to any indebtedness for money borrowed relating
     to or otherwise affecting any of the Purchased Assets other than as
     provided in the Contracts;

           (vi)   not suffered any damage, destruction or loss, whether or not
     covered by insurance, materially adversely affecting the Purchased Assets;
     and

           (vii)  not experienced any materially adverse change in its
     relationships with customers or vendors of supplies used by Seller in the
     Business, except changes in the ordinary course of business which do not
     have a Material Adverse Effect.

Schedule 5.6B contains a complete and accurate list of the ten (10) largest
- -------------
customers and ten (10) largest suppliers of Seller, for the twelve (12) months
ended December 31, 1999.  To the Seller's best knowledge, except as described on
Schedule 5.6B, there has been no termination or cancellation of the business
- -------------
relationship of Seller with any material vendor  or any customer or group of
customers and none is threatened or reasonably anticipated.
<PAGE>

          5.7   Title to Purchased Assets. Except as and to the extent disclosed
                -------------------------
in Schedule 5.7, Seller has good and marketable title to the Purchased Assets
   ------------
free and clear of all mortgages, liens, pledges, charges, encumbrances or
restrictions of any nature whatsoever, except for minor imperfections of title
and liens and encumbrances not otherwise identified in the Disclosure Schedules
which do not materially detract from the value of or impair the use of the
Purchased Assets as such assets are currently utilized and the lien of current
taxes not yet due and payable, subject only to the obligation to perform the
executory obligations of the Seller under the Contracts after the Closing Date.

          5.8   Contracts. Except as set forth in the Contracts or on Schedule
                ---------                                             --------
5.8, neither the Seller nor any of the Purchased Assets is subject to or bound
- ---
by any agreement, contract, lease, license, commitment or restriction which in
any way affects, or after the Closing will affect, any of the Purchased Assets
or the use or operation thereof, or which requires the waiver of any term or
condition or the approval or consent of any third party to the consummation of
the transactions contemplated hereby or which would be violated or would result
in any liability or any acceleration of liability to the Seller or the Purchaser
without such waiver, approval or consent.  There is not, with respect to any
contract, agreement, commitment, restriction or other instrument or document to
which Seller is a party or by which any of the Purchased Assets is bound, any
existing default (or any event which, with or without notice or lapse of time,
or both, would constitute a default) on the part of the Seller that would have a
Material Adverse Effect, and the Seller has received no notice of any such
default (or event).  The Contracts include all agreements to which Seller is a
party or by which it or its properties are or may be bound, that relate to the
Business or the Purchased Assets.

          5.9   Compliance with Applicable Law
                ------------------------------

          (a)   The business, operations and activities of the Seller, insofar
as they relate to the Purchased Assets, are not in violation of any applicable
municipal, local, state or federal laws (excluding laws regulating the discharge
into the environment of toxic or otherwise hazardous substances that are
addressed exclusively in Section 5.10), ordinances, certificates of occupancy,
rules or regulations, which violation or the correction of which has resulted
in or might have a Material Adverse Effect. Except as disclosed on Schedule 5.9A
                                                                   -------------
or Schedule 5.10, the Seller is not presently operating under, subject to, in
   -------------
violation of or in default with respect to, any judgment, order, writ,
injunction or decree of any court or federal, state, municipal, or other
governmental department, commission, board, agency or instrumentality limiting
or adversely affecting the Seller's ability to conduct the Business.

          (b)   Except as disclosed in Schedule 5.9B or Schedule 5.10, Seller
                                       ------------------------------
possesses all permits, licenses, orders and approvals of all federal, state and
local governmental or regulatory bodies required for Seller to conduct the
Business and to use the Purchased Assets in connection therewith.  None of such
permits, licenses, orders or approvals will be affected by the consummation of
the transactions contemplated by this Agreement.  All such permits, licenses,
orders or approvals are included in the Intangible
<PAGE>

Properties to be transferred to Purchaser hereunder, all are transferable to
Purchaser at the Closing, and no approval or authorization of or filing with any
governmental authority on the part of Seller is required as a condition to the
execution and delivery of this Agreement, or the consummation by Seller of the
transactions contemplated hereby, except as otherwise contemplated hereby.

          5.10  Environmental Matters.  Except for such matters that are
                ---------------------
disclosed on Schedule 5.10,:
             -------------

          (a)   The Seller is in compliance with all applicable governmental
rules and regulations relating to environmental laws;

          (b)   The Seller does not generate, transport, treat, store, or
dispose of any hazardous wastes on any of the Facilities, and none of the
Facilities contains (including without limitation, containment by means of any
storage tank, drum, container or barrel) any Hazardous Substance;

          (c)   There are no present or past environmental conditions or
violations of any existing environmental law in any way relating to the Seller
or the Facilities caused by the Seller, or any other Person, that are likely to
lead to the imposition of any liability or that would give rise to any civil or
criminal litigation, suit, action, claim, proceeding or investigation by any
Person, including any governmental authority;

          (d)   The Seller has not sent, transported, caused the transportation
of or disposed of any Hazardous Substance at any site, location or facility;

          (e)   There are no above-ground or underground waste disposal units,
including landfills, surface impoundments, pits, ponds or lagoons, whether now
in use or formerly used and still containing contaminants, or any above-ground
or underground storage tanks, or subsurface disposal systems, including
injection wells, dry wells, leach fields or septic systems, on the Facilities;
and

          (f)   There is no pending or threatened civil or criminal litigation
or suit, action, claim, proceeding or investigation by any Person, including any
governmental authority, or written notice of violation of, or formal
administrative proceeding relating to, any environmental laws involving the
Seller, the Facilities or any of the other Purchased Assets, and there is no
basis for any such civil or criminal litigation, suit, action, claim, proceeding
or investigation.

          (g)   For purposes of this Agreement, "Hazardous Substance" shall
include, without limitation:  (i) "hazardous substances" as that term is defined
by the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. 9601 et seq., (ii) "hazardous waste" as that term is
defined by the Resource Conservation and Recovery Act of 1976, as amended, 42
U.S.C. 6901 et seq., or other applicable federal, state, or local law, rule,
regulation, ordinance or requirement, all as amended or hereafter amended; (iii)
any petroleum or petroleum derivatives which
<PAGE>

are liquid at ambient air temperature and pressure; (iv) any radioactive
material in any form or condition; and (v) asbestos in any form or condition.

          5.11  Legal Proceedings. Except as disclosed in Schedule 5.11, there
                -----------------                         -------------
are no civil, criminal, administrative or other proceedings or investigations
pending or, to the best of its knowledge, threatened, against it or relating to
the Purchased Assets, which, if adversely determined, might have a Material
Adverse Effect or which questions or challenges the validity of this Agreement,
any of the transactions contemplated hereby or any action taken or to be taken
by it in connection herewith, and it has no knowledge of any basis for any such
proceeding or investigation.

          5.12  ERISA: Labor Matters.
                --------------------

          (a)   Except as described on Schedule 5.12, Seller has no employee
                                       -------------
benefit or welfare plans.

          (b)   There are no violations by Seller of any applicable legal
requirements under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or any other similar laws, rules or regulations. No liability
to the Pension Benefit Guaranty Corporation or to any employees of Seller will
be incurred by the Purchaser upon consummation of the transactions contemplated
hereby.

          (c)   There is no complaint, strike, dispute, slow down or stoppage
involving Seller's employees pending or, to Seller's knowledge, threatened
against the Seller or any other Person which may affect any of the Purchased
Assets or the consummation of the transactions contemplated hereby.

          (d)   No person or party (including, but not limited to, any
governmental authority) has asserted any claim or to the Seller's best
knowledge, has any basis for any action or proceeding, against the Seller
arising out of any statute, ordinance or regulation relating to discrimination
in employment or employment practices, or occupational safety and health
standards (including, without limitation, The Fair Labor Standards Act, as
amended; Title VII of the Civil Rights Act of 1964, as amended; or the Age
Discrimination in Employment Act of 1967, as amended.

          5.13  Taxes. All federal, state, and local tax returns and reports
                -----
required by law to be filed by Seller,  the non-filing of which could have a
Materially Adverse Effect, have been filed and all taxes shown thereon to be due
and payable by it have been paid.

          5.14  Condition of Assets. Except as disclosed on Schedule 5.14:
                -------------------                         -------------

          (a)   The Purchased Assets constitute all the assets and other
properties necessary or appropriate for the conduct of the Business as currently
conducted by Seller.
<PAGE>

          (b)   The Facilities are structurally sound with no known material
defects, in substantially good operating condition and repair, are reasonably
adequate for the uses to which they are being put, and are in compliance with
all applicable health, fire, environmental, safety, zoning, building and other
laws and ordinances.

          (c)   All of the Equipment being acquired hereunder is and on the
Closing Date will be in good condition and repair, ordinary wear and tear
excepted, and free from defects.

          (d)   There are no patents, patent applications, trademarks, trademark
applications or registrations, pending or existing, owned by, registered in the
name of, or licensed by Seller or in which Seller has any rights that are
currently being utilized in the Business, there are no material infringing uses
of any intellectual property rights included in the Intangible Property and
Seller has not received any notice of any pending conflict with the rights of
any other Person with respect to such intellectual property rights.

          (e)   Each of the Contracts is in full force and effect as of the date
hereof. Seller and, to the best of Seller's knowledge, the other parties thereto
are in compliance with the material terms thereof. No event exists which, after
the passage of time or the giving of notice, or both, would give rise to a
material breach, violation or default under any of the Contracts, except as
otherwise noted herein or in the Disclosure Schedules.

          (f)   All information provided in the Financial Statements, this
Agreement and the Disclosure Schedules, is complete and correct in all material
respects and does not contain any misleading statement or omit any material
information, nor does there exist any item or matter involving the internal
operations or conditions of the Seller of a material nature that has either not
been disclosed to Purchaser in the Financial Statements, this Agreement or the
Disclosures Schedules or has been disclosed in a manner that is intended to or
is likely to mislead Purchaser.


                                  ARTICLE VI
                  REPRESENTATIONS AND WARRANTIES OR PURCHASER
                  -------------------------------------------

          Purchaser hereby represents and warrants to Seller as follows:

          6.1   Organization and Good Standing.  Purchaser is a corporation duly
                ------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business in the state of Minnesota.

          6.2   Corporate Authority.  Purchaser has full authority and power to
                -------------------
execute and to perform this Agreement in accordance with its terms.  This
Agreement and the transactions contemplated hereby have been duly authorized by
all requisite corporate action of Purchaser and no further authorization or
approval of the shareholders or directors of Purchaser is necessary in order to
enable Purchaser to enter into and perform the same.
<PAGE>

          6.3   No Breach.  The transactions contemplated hereby will not result
                ---------
in a breach, violation or default or give rise to an event which, either with or
without notice or the passage of time, or both would result in a breach,
violation or default of any of the terms or provisions of Purchaser's
Certificate of Incorporation or By-Laws, or of any statute, governmental rule or
regulation, note, bond, mortgage, license, permit, indenture, agreement,
judgment, decree or other instrument or restriction to which Purchaser is a
party or by which Purchaser may be bound.

          6.4   Valid Agreement.  This Agreement constitutes the valid and
                ---------------
binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms (except that enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar laws
affecting the rights and remedies of creditors generally and to the effect of
general principles of equity (including the availability of equitable and other
discretionary remedies and equitable defenses), whether considered in an action
in law or in equity.)


                                  ARTICLE VII
                                  -----------
                      ADDITIONAL COVENANTS AND AGREEMENTS
                      -----------------------------------

          7.1   Announcements.  Seller and Purchaser agree that no announcement
                -------------
or press release shall be made by either Seller or Purchaser relating to the
transactions contemplated hereby unless approved in writing in advance by both
parties hereto, except, however, that any party hereto may, upon not less than
three (3) business days notice having been given to the other party hereto, make
such announcement, press release or other report as may be required by any
applicable state or federal law or regulation without having to obtain the
advance written approval of the other party hereto.

          7.2   Seller's Employees. Effective as of the Closing Date, only those
                ------------------
employees listed on Schedule 7.2 shall be offered employment by the Purchaser.
                    ------------
Schedule 7.2 lists the dates of hire, dates of birth, current compensation and
- ------------
date and amount of salary raise and/or bonus of each such employee. Seller shall
be responsible for all benefits accrued through the Closing Date relating to
employees of the Business including, without limitation, all salary, pension,
bonus, medical and life insurance, severance, holiday, vacation and sick-pay
benefits, and shall indemnify Purchaser from and against any and all
liabilities, losses, damages, claims, costs and expenses incurred by or asserted
against Purchaser arising therefrom.

          7.3   Bulk Sales Act. Purchaser waives compliance by Seller with the
                --------------
provisions of the Uniform Bulk Sales Act as applicable in the State of
Minnesota; provided, however that Seller shall indemnify Purchaser for any loss,
cost, expense or other charge (including, without limitation reasonable legal
fees and expenses) of Purchaser resulting from or with respect to any liability
arising from Seller's noncompliance with the provisions of the Uniform Bulk
Sales Act as applicable in any jurisdiction to such transactions. The provisions
of this Section 7.3 shall survive the Closing for a period of three (3) years.

          7.4   Further Assurances and Access to Records. (a) Seller hereby
                ----------------------------------------
agrees that it will at any time and from time to time after the Closing Date,
upon request of and at the expense of Purchaser, execute, acknowledge and
deliver, or will cause to be
<PAGE>

done, executed, acknowledged and delivered all such further acknowledgments,
deeds, assignments, transfers, conveyances and assurances as may be reasonable
and necessary for the better assigning, conveying and transferring to Purchaser
and to its respective successors and assigns, or for aiding and assisting in
collecting and reducing to possession, any and all of the Purchased Assets to be
conveyed to Purchaser as provided herein.

          (b)   Purchaser hereby agrees that from and after the Closing, Seller,
its authorized representatives, and representatives of federal and state taxing
authorities shall have full access during normal business hours to all books and
records delivered to Purchaser by Seller pursuant to Sections 4.3 and 11.1 or
which otherwise concern transactions relating to the Purchased Assets.
Purchaser shall maintain such books and records for a period of not less than
six (6) years following the Closing.

          (c)   The provisions of this Section 7.4 shall survive the Closing and
the conveyance of the Purchased Assets to Purchaser hereunder for a period of
six (6) years.

          7.5   Post-Closing Environmental Indemnity.
                ------------------------------------

          Notwithstanding anything in this Agreement to the contrary, including
without limitation any disclosures or disclaimers contained in any of the
Disclosure Schedules, Seller agrees to be responsible for, and indemnify and
hold Purchaser harmless from and against, any and all liabilities, losses,
damages, claims, costs, and expenses of any nature, whether absolute,
contingent, or otherwise, arising out of or relating to: (i) hazardous waste
management program violations or alleged violations arising from Seller's
operation of either of the Facilities prior to Closing, (ii) any violation of or
liability pursuant to any environmental law (including common law), resulting
from any activities or operations of, or Hazardous Substances (as such term is
defined in Section 5.10(g)) used by or under the control of, Seller; (iii) any
pollution, contamination, or other environmental conditions at either of the
Facilities existing on or before the Closing Date; (iv) any physical or
operational condition at either of the Facilities existing on or before the
Closing Date that prevents such Facility from being able to operate consistently
in compliance with any law, regulation, order or permit condition in effect as
of the Closing Date; and (v) any breach of any representation, warranty or
covenant contained in Section 5.10 or this Section 7.5.  Seller's obligations
under this Section 7.5 shall survive the Closing and shall continue until the
expiration of all statutes of limitation applicable thereto.  Except as provided
herein, Purchaser agrees to be responsible for compliance with the laws
applicable to, and the environmental conditions created by, Purchaser's
operations and activities at the Facility after the Closing Date.

          7.6   Property Tax Proration.
                ----------------------

          Real and personal property taxes attributable to the Purchased Assets
shall be allocated between Seller and Purchaser on the basis of the number of
days in the
<PAGE>

applicable tax year of Seller elapsed through and including the Closing Date
(which portion shall be allocated to Seller) as compared with the number of days
in such tax year elapsing after the Closing Date (which portion shall be
allocated to Purchaser).


                                 ARTICLE VIII
                       CONDITIONS PRECEDENT OF PURCHASER
                       ---------------------------------

The obligation of Purchaser to consummate the transactions contemplated hereby
is, at the option of Purchaser, subject to the fulfillment prior to or on the
Closing Date of each of the following conditions, any one or more of which may
be waived in writing by Purchaser:

          8.1   Covenants Performed.  Seller shall have performed and complied
                -------------------
or shall have caused the performance and compliance in all material respects
with all covenants and agreements required by this Agreement on its respective
part to be performed or complied with prior to or on the Closing Date (including
delivery of all documents contemplated in Section 4.3), and Purchaser shall have
received a certificate to such effect executed by the President or a Vice
President and the Secretary or Treasurer or an Assistant Secretary of Seller
dated the Closing Date.

          8.2   Representations and Warranties True.  All of Seller's
                -----------------------------------
representations and warranties in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the Closing Date as if made on the Closing Date, without
giving effect to any supplement to this Agreement or the Disclosure Schedules.

          8.3   Resolution of Directors.  Seller shall have delivered to
                -----------------------
Purchaser copies of resolutions of its Board of Directors and stockholders
authorizing or ratifying the execution, delivery and performance by it of this
Agreement and authorizing or ratifying acts of its officers and employees in
carrying out the terms and provisions of this Agreement, certified by its
corporate Secretary.

          8.4   Confirmation of Title.  Purchaser shall have received from
                ---------------------
Seller, at Seller's expense, in form and substance satisfactory to Purchaser, in
its sole discretion, updated abstracts of title covering the Facilities,
together with such additional documentary evidence of title to the Facilities as
Purchaser may request in order to enable it to obtain an A.L.T.A. form of
extended title insurance covering the Facilities.

          8.5   Armstrong Ag Center Acqusition.  Purchaser shall have acquired,
                ------------------------------
on or as of the Closing Date, the agri-business assets of Armstrong Ag Center
Inc., an Iowa corporation, pursuant to an Asset Purchase Agreement in
substantially the form of this Agreement, for a purchase price (excluding
inventory and accounts receivable) not to exceed $350,000.00.
<PAGE>

          8.6   Consents Obtained.  All consents, waivers, authorizations and
                -----------------
approvals required for the sale and transfer of the Purchase Assets to Purchaser
at the Closing shall have been obtained.

          8.7   Other Deliveries Made.  The Employment Agreement, the Real
                ---------------------
Estate Escrow Agreement and the Noncompetition Agreement, each fully executed by
Bruce Davison, shall have been delivered to Purchaser pursuant to Section 4.4.


                                  ARTICLE IX
                        CONDITIONS PRECEDENT OF SELLER
                        ------------------------------

          The obligations of Seller to consummate the transactions contemplated
hereby are, at the option of Seller, subject to the fulfillment prior to or on
the Closing Date of each of the following conditions, any one or more of which
may be waived in writing by Seller:

          9.1   Covenants Performed. Purchaser shall have performed and complied
                -------------------
or shall have caused the performance and compliance in all material respects
with all covenants and agreements required by this Agreement to be performed or
complied with by Purchaser prior to or on the Closing Date (including the
deliveries contemplated in Section 4.2), and Seller shall have received a
certificate to such effect executed by the Chief Executive Officer or the Chief
Operating Officer and the Secretary or Chief Financial Officer or an Assistant
Secretary of Purchaser.

          9.2   Representation and Warranties True.  All of Purchaser's
                ----------------------------------
representations and warranties in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the Closing Date as if made on the Closing Date.

          9.3   Resolutions of Directors.  Purchaser shall have delivered to
                ------------------------
Seller copies of the resolutions of its Board of Directors authorizing or
ratifying the execution and performance of this Agreement and authorizing or
ratifying acts of its officers and employees in carrying out the terms and
provisions of this Agreement certified by the corporate Secretary or Assistant
Secretary of Purchaser.

          9.4   Instruments of Assumption.  Purchaser shall have delivered to
                -------------------------
Seller instruments, in form and substance satisfactory to Seller, whereby
Purchaser assumes or causes to be assumed all of the obligations Purchaser has
agreed to assume hereunder, as provided in Section 3.1.

                                   ARTICLE X
                         SURVIVAL AND INDEMNIFICATION
                         ----------------------------

          10.1  Survival of Representations, Etc.  All representations and
                ---------------------------------
warranties and agreements made by a party in this Agreement or pursuant hereto
shall not be affected by any investigation at any time made by or on behalf of
any other party
<PAGE>

hereto and shall survive the Closing hereunder but shall terminate and expire
upon the expiration of twenty-four (24) months after the Closing Date, except as
otherwise specifically provided in this Agreement.

          10.2  Indemnification by Seller.  Seller hereby agrees to indemnify
                -------------------------
and hold Purchaser harmless from and against the following:

           (1)    Any and all liabilities, losses, damages, claims, costs and
     expenses of Purchaser of any nature, whether absolute, contingent or
     otherwise relating to the conduct of the Business prior to the Closing Date
     or to the use or ownership of the Purchased Assets prior to the Closing
     Date which are not expressly assumed by Purchaser as herein provided;

           (2)    Any and all damages or deficiencies resulting from any
     misrepresentation, breach of any warranty, or non-fulfillment of any
     covenant or agreement on the part of Seller contained in this Agreement
     incurred by Purchaser prior to the expiration of the representation,
     warranty, covenant or agreement which has been breached or not fulfilled;
     and

           (3)    Any and all claims, actions, suits, proceedings, demands,
     assessments or judgments, costs and expenses (including reasonable
     attorneys fees) incident to any of the foregoing, including, without
     limitation, any action taken against Purchaser by any person under the
     provisions of the Uniform Bulk Sales Law of any state.

          10.3  Indemnification by Purchaser.  Purchaser hereby agrees to
                ----------------------------
indemnify and hold Seller and Subsidiary harmless from and against the
following:

           (1)    Any and all liabilities, losses, damages, claims, costs and
     expenses of Seller of any nature, whether absolute, contingent or otherwise
     relating to the Purchased Assets which (a) have been expressly assumed by
     Purchaser as herein provided or (b) relate to the use or ownership of the
     Purchased Assets after the Closing Date;

           (2)    Any and all damages or deficiencies resulting from any
     misrepresentation, breach of any warranty, or non-fulfillment of any
     covenant or agreement on the part of Purchaser contained in this Agreement
     incurred by Seller prior to the expiration of the representation, warranty,
     covenant or agreement which has been breached or not fulfilled; and

           (3)    Any and all claims, actions, suits, proceedings, demands,
     assessments or judgments, costs and expenses (including reasonable
     attorneys fees) incident to any of the foregoing.

          10.4  Indemnification Procedures.
                --------------------------
<PAGE>

          (a)   A party seeking indemnification hereunder ("Indemnitee") shall
give written notice to the party from which indemnification is sought (the
"Indemnitor") of any matter with respect to which Indemnitee seeks to be
indemnified (a "Claim") within one hundred twenty (120) days after Indemnitee
first has knowledge of such Claim, unless such Claim results from any action,
suit or proceeding against the Indemnitee (a "Litigation"), in which case such
notice shall be given promptly following Indemnitee's receipt of service of
process in such Litigation, stating in such notice the nature of the Claim, all
facts known to Indemnitee giving rise to such Claim, the amount or an estimate
of the amount of the liability arising therefrom and the status of settlement or
other negotiations, if any.

          (b)   a claim for indemnification may, at the option of the
Indemnitee, be asserted as soon as any Claim has been asserted by a third party
in writing, regardless of whether actual harm has been suffered or out-of-pocket
expenses incurred, provided that the Indemnitee shall have reasonably determined
                   --------
that it may be entitled to indemnification hereunder in respect to such Claim.

          (c)   After a Claim is made, the Indemnitee shall permit the
Indemnitor, at Indemnitor's option and expense, to assume the defense of such
action, suit, proceeding, claim, demand or assessment with full authority to
conduct such defense and the Indemnitee will cooperate fully in such defense.
Indemnitor and Indemnitee shall cooperate with each other in the defense of any
Claim and each shall have notice of, and access to, all discovery, trial or
other proceedings and all documents relating to any such Claim.

          (d)   Any delay or failure to notify the Indemnitor shall relieve the
Indemnitor of its obligations hereunder only to the extent, if at all, that it
is prejudiced by reason of such delay or failure.  The Indemnitee shall have the
right to employ separate counsel in any of the foregoing actions, claims or
proceedings and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the Indemnitee.  In the event that
the Indemnitor fails to assume the defense of any Claim within thirty (30) days
after the Indemnitee's notice of the Claim, the Indemnitee shall have the right
to undertake the defense, compromise or settlement of such action, claim or
proceeding for the account of the Indemnitor, subject to the right of the
Indemnitor to assume the defense of such action, claim or proceeding with
counsel reasonably satisfactory to the Indemnitee at any time prior to the
settlement, compromise or final determination thereof.  Anything in this Section
10.4 to the contrary notwithstanding, the Indemnitor shall not, without the
Indemnitee's prior written consent, settle or compromise any action or claim or
proceeding or consent to entry of any judgment with respect to any such action
or claim unless such settlement or compromise requires solely the payment of
money damages by the Indemnitor and includes as an unconditional term thereof
the release by the claimant or the plaintiff of the Indemnitee from all
liability in respect of such action, claim or proceeding.

          10.5  Indemnification Thresholds.  Notwithstanding the foregoing,
                --------------------------
neither the Purchaser nor the Seller shall have any indemnity obligation under
this
<PAGE>

Section 10 to the other party, unless the amount of loss or damage for any
single claim for which a party would be liable exceeds $5,000.00 and unless the
aggregate amount of loss or damage for all such claims for which a party would
be liable exceeds $10,000.00 in the aggregate, and then in such case, the
indemnification amount shall be to the full extent of the damage or losses.   In
addition, in the case of the Seller, any indemnity obligation under this Section
10 shall in no event exceed the purchase price for the Purchased Assets and the
Business.  The provisions of this Section 10.5 shall not apply to Seller's
indemnification obligations under Article VII.

          10.6  Claims Against Real Estate Escrow.  Purchaser may make a Claim
                ---------------------------------
against the Real Estate Escrow in any amount to which it may be entitled under
Section 2.5 or this Article 10. Neither the making of nor the failure to make
such a Claim will constitute an election of remedies or limit Purchaser in any
manner in the enforcement of any other remedies that may be available to it.


                                  ARTICLE XI
                                    GENERAL
                                    -------

          11.1  Books and Records.  On or promptly following the Closing Date,
                -----------------
Seller shall deliver into Purchaser's custody all books, records, and other
information of Seller relating to the Purchased Assets, including without
limitation the documents included among the Miscellaneous Assets.

          11.2  Notices.  All notices under this Agreement shall be in writing
                -------
and shall be effective (I) upon personal delivery against receipt therefor, or
(ii) if sent by mail, three (3) business days after deposit in the United States
Postal Service, first class, postage prepaid, registered or certified, return
receipt requested.  All notices given hereunder shall be addressed

                (a)        in the case of Seller, to:

                           Crop Builders, Inc.
                           PO Box 215
                           923 North State Street, Suite 160
                           Fairmont, MN 56031
                           Attention: Mr. Bruce Davison
          with a copy to

                           Frundt & Johnson, LP
                           117 West Fifth
                           PO Box 95
                           Blue Earth, MN 56031
                           Attention: Michael Johnson, Esq.

          and (b) in the case of Purchaser, to:

                           Royster-Clark, Inc.
<PAGE>

                           999 Waterside Drive, Suite 800
                           Norfolk, VA 23510
                           Attention: Paul Murphy

          with a copy to   Satterlee Stephens Burke & Burke LLP
                           230 Park Avenue
                           New York, NY 10169
                           Attention: William M. Jackson, Esq.

          And a copy to    Blethan Gage & Krause, PLLP
                           127 South Second Street
                           PO Box 3049
                           Mankato, MN 56002
                           Attention: Michael C. Karp, Esq.



or to such other address or to such other person as any party hereto shall have
last designated by notice to the other parties hereto in accordance with this
Section 11.2.

          11.3  Integration and Modification.  This Agreement contains the
                ----------------------------
entire agreement among the parties hereto with respect to the transactions
contemplated hereby and there are no agreements, warranties or representations
which are not set forth herein.  For purposes of any disclosure required
hereunder, disclosure of a matter on any Disclosure Schedule shall be considered
disclosure for all purposes of this Agreement.  All prior negotiations,
agreements and understandings are superseded hereby.  This Agreement may not be
modified or amended except by an instrument in writing signed by the party
against which such modification or amendment is sought to be enforced.

          11.4  Governing Law.  This Agreement shall be governed by and
                -------------
construed and enforced in accordance with the laws of the State of Delaware,
without giving effect to the principles of conflicts of laws thereof.

          11.5  Binding Effect; No Assignment.  This Agreement shall be binding
                -----------------------------
and inure exclusively to the benefit of the parties and the successors, assigns
and legal representatives of the parties hereto and no other Person shall be
entitled to claim the benefit of or the right to enforce any provision of this
Agreement which creates or may create any right or obligation between the
parties hereto; provided, however, that this Agreement and all rights hereunder
may not be assigned by either party hereto except by or with the written consent
of the other party hereto.

          11.6  Counterparts.  This Agreement may be executed simultaneously in
                ------------
any number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
<PAGE>

          11.7  Miscellaneous Rules of Construction.  The Article and Section
                -----------------------------------
headings in this Agreement are for convenience of reference only and shall not
be deemed to alter or affect any provision hereof.  References in this Agreement
to Sections, Schedules and Exhibits are to Sections of, and Schedules and
Exhibits to, this Agreement, unless otherwise indicated.  The words "hereof",
"herein", "hereunder" and comparable terms refer to the entirety of this
Agreement and not to any particular Article, Section or other subdivision hereof
or attachment hereto.  Words in the singular include the plural and words in the
plural include the singular.  This Agreement shall be construed without regard
to any presumption or other rule requiring construction against the party
causing this Agreement or any party thereof to be drafted.

          11.8  Expenses.
                --------

          (a)   Seller and Purchaser each represent and warrant to each other
that there is no broker, finder or similar person involved or in any way
connected with the transaction provided for herein and each agrees to hold the
other harmless from and against all claims based upon a relationship or alleged
relationship with it for brokerage or finder's fees or commissions of any such
person.

          (b)   Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall, except as otherwise specifically
provided herein, be paid by the party incurring such expenses.

          11.9  Waiver.  No delay on the part of any party hereto in exercising
                ------
any power or right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any power or right hereunder preclude other or
further exercise thereof or the exercise of any other power or right.  No waiver
shall be enforceable against any party hereto unless in writing, signed by the
party against whom such waiver is claimed, and shall be limited solely to the
one event.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.


                                             CROP BUILDERS, INC. (Seller)



                                             By: /s/ Bruce Davison
                                                ------------------------------
                                                  President
<PAGE>

                                             ROYSTER-CLARK, INC. (Purchaser)



                                             By: /s/ Paul M. Murphy
                                                ------------------------------
                                                  Managing Director-Financial
                                                   Planning

<PAGE>

                                                                   EXHIBIT 10.13


              AGREEMENT FOR THE SALE AND PURCHASE OF ASSETS
              ---------------------------------------------


          AGREEMENT FOR THE SALE AND PURCHASE OF ASSETS, dated as of January 28,
2000, by and between ARMSTRONG AG CENTER, INC., an Iowa corporation with its
principal place of business at 5650 205/th/ Street, Box 79, Armstrong, Iowa
50514 ("Seller") and ROYSTER-CLARK, INC. , a Delaware corporation with its
principal place of business at 999 Waterside Drive, Suite 800, Norfolk, VA 23510
("Purchaser").

                             W I T N E S S E T H:
                             - - - - - - - - - -

          WHEREAS, Seller owns certain assets used by Seller in the manufacture
and sale of fertilizer and seed products and the sale of related chemical
products and agronomic and application services for and to farmers and others;
and

          WHEREAS, Purchaser desires to purchase such assets, together with the
business associated therewith, and Seller is willing to sell the same to
Purchaser, upon the terms and conditions hereinafter set forth.

          NOW, THEREFORE, in consideration of the premises and of the respective
representations and warranties hereinafter set forth, the covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Purchaser and Seller
hereby agree as follows:


                                   ARTICLE I
                              CERTAIN DEFINITIONS
                              -------------------

          As used herein, the following terms shall have the following meanings:

          1.1   "Agreement" shall mean this agreement as executed by the parties
                 ---------
hereto and all exhibits, schedules or other documents which are annexed hereto
and made a part hereof.

          1.2   "Business" shall mean the manufacture and sale of fertilizer and
                 --------
seed products and the sale of related chemical products and agronomic and
application services for and to farmers and others, as currently being conducted
by Seller.

          1.3   "Closing Date" shall mean January 28, 2000 or such adjourned
                 ------------
date not later than February 10, 2000 as Buyer and Seller may designate.

          1.4   "Contracts" shall mean the leases, rental agreements and other
                 ---------
agreements listed on Schedule 1.4.
                     ------------
<PAGE>

          1.5   "Disclosure Schedules" shall mean, collectively, the several
                 --------------------
Schedules

          1.6   "Equipment" shall mean all of the Seller's equipment, machinery,
                 ---------
furniture, fixtures, motor vehicles, other rolling stock, tanks, bins, pallets,
computers and related items, and all components thereof and spare parts therefor
and other tangible personal property owned by the Seller and used in the
Business, all as listed on Schedule 1.6
                           ------------

          1.7   "Excluded Assets" shall mean all [of Seller's United Suppliers
                 ---------------
patronage dividends accrued through the Closing Date, and all other] properties
and assets owned by Seller that are not used in the Business and are not
included in the definition of Purchased Assets herein.

          1.8   "Facilities"  shall mean all land, buildings and improvements at
                 ----------
Seller's facilities at Armstrong, Iowa and Halfa, Iowa, as more particularly
described on Schedule 1.8.
             ------------

          1.9   "Intangible Property" shall mean (a) all United States
                 -------------------
Environmental Protection Agency and state and local environmental, land use and
zoning related permits, licenses and approvals utilized by Seller in connection
with the Business, (b) Seller's customer and vendor lists, files and sales and
marketing data related to the Business; and (c) all goodwill of the Business and
other intangible assets of Seller used in the Business.

          1.10  "Inventory" shall mean all of Seller's (a) finished goods
                 ---------
Products, and (b) raw materials, work-in-process and supplies on hand or on
order as of the Closing Date for use in the Business, as determined by the
physical count provided for in Section 2.3(a); provided, however, that
"Inventory" shall not include any finished goods that Purchaser reasonably deems
to be not of good and saleable quality or to be obsolete; and shall not include
any pallets or other supplies that Purchaser reasonably deems to be in excess of
the short- term needs of the Business after the Closing, or not to be in readily
usable condition.

          1.11  "Inventory Price" shall mean the lesser of Seller's direct cost
                 ---------------
of the Inventory as of the Closing Date, or the direct replacement cost thereof
as of the Closing Date, as reasonably determined by Purchaser's accountants in
accordance with generally accepted accounting principles consistently applied.

          1.12  "Material Adverse Effect" shall mean a material adverse effect
                 -----------------------
on (i) the ability of the Seller to perform its obligations under this
Agreement, (ii) the legality or validity of the conduct of the Business by
Seller prior to the Closing or by Purchaser after the Closing, or (iii) the
capacity of Seller prior to the Closing or of Purchaser after the Closing to use
or operate any of the Purchased Assets.

          1.13  "Miscellaneous Assets" shall mean all of Seller's promotion and
                 --------------------
advertising materials relating to the Business, business records and books of
accounting relating to Business and all other assets identified on Schedule
                                                                   --------
1.13.
- ----
          1.14  "Person" shall mean any individual or partnership, corporation,
                 ------
association, trust or other entity.

          1.15  "Prepayments" shall mean Seller's obligations, to the extent not
                 -----------
fulfilled as of the Closing Date, to deliver goods and/or services to customers
of the Business pursuant to cash prepayments or deposits received by Seller on
or before the Closing Date, as set forth on Schedule 1.15 hereto.
                                            -------------

          1.16  "Purchased Assets" shall mean all of the Seller's right, title,
                 ----------------
interest and estate owned on the Closing Date in and to all of the following
assets intended to be sold to Purchaser hereunder:

                (i)   the Facilities;

                (ii)  the Contracts;
<PAGE>

                (iii) the Equipment;

                (iv)  the Intangible Property;

                (v)   the Inventory;

                (vi)  Seller's Accounts; and

                (vii) the Miscellaneous Assets.

          1.17  "Real Estate Escrow" shall mean the escrow established pursuant
                to Section 2.5.

          1.18  "Real Estate Escrow Agreement" mean the escrow agreement
                described in Section 2.5.

          1.19  "Seller's Accounts" shall mean all of the Seller's accounts and
                 -----------------
notes receivable generated in connection with the Business, excluding rebates
receivable from chemical and seed manufacturers.

          1.20  "Seller's Accounts Purchase Price" shall be the amount to be
                 --------------------------------
paid by Purchaser hereunder for Seller's Accounts, calculated pursuant to
Section 2.3(b).


                                  ARTICLE II
                     PURCHASE AND SALE OF PURCHASED ASSETS
                     -------------------------------------

          2.1   Purchase of Assets.  Subject to the terms and conditions herein
                ------------------
set forth, on the Closing Date, Purchaser will purchase and acquire, and Seller
will sell, assign, convey and transfer to Purchaser, the Purchased Assets and
the Business.

          2.2   Consideration.  (a) The total consideration for the purchase of
                -------------
the Purchased Assets and the Business as provided herein and Seller's other
obligations under this Agreement shall be the Settlement Amount (as defined in
Section 2.2(b) below) plus the Real Estate Escrow amount plus Purchaser's
obligations under Article III.

     (b)  The cash portion of the purchase price hereunder (the "Settlement
Amount") shall be the sum of the Seller's Accounts Payable Purchase Price, plus
the Inventory Purchase Price, plus Three Hundred Fifty Thousand Dollars
($350,000.00), minus the Real Estate Escrow amount, minus the amount the dollar
               -----                                -----
amount of the Prepayments shown on Schedule 1.15 that are to be assumed by
                                   -------------
Purchaser under Section 3.1.

     (c)  The purchase price hereunder shall be allocated as shown on Schedule
                                                                      --------
2.2(c), which shall be updated on the Settlement Date to reflect the final
- ------
calculation of the Settlement Amount. The parties will follow and use such
allocation on all income, sales, registration and other tax returns, filings or
other related reports made by either of them to any governmental agencies. To
the extent that disclosures of such allocation are required to be made by the
parties to the Internal Revenue Service ("IRS") under any provisions of the
Internal Revenue Code or any regulations thereunder, each of the parties will
disclose such reports to the others prior to filing the same with the IRS.

          2.3   Purchase Price Calculations, Payments and Adjustments: (a)
                -----------------------------------------------------
Within  three (3) days after the Closing Date, Purchaser shall, together with
Seller's representatives, conduct a physical count of the Inventory as of the
Closing Date and based upon such physical count, Purchaser shall calculate the
Inventory Price and shall deliver to Seller a written statement of such
calculation.  If within ten (10) days after its receipt of such statement Seller
shall not have notified Purchaser in writing of its objection to such
calculations setting forth in reasonable detail a reasonable basis for such
objection, such calculation of the Inventory Price shall be final
<PAGE>

and binding upon the parties, absent manifest error. If Seller shall give timely
written notice of its objection as aforesaid, the parties shall negotiate in
good faith to resolve the dispute. If, within ten (10) days after Purchaser's
receipt of such notice of objection from Seller, such dispute shall not have
been resolved, the matter shall be submitted to Roessler & Nuss & Co., PA,
independent accountants, for a final and binding determination of the Inventory
Price. All fees and charges of Roessler & Nuss for such services shall be borne
by the parties equally. On the third (3rd) day after the final and binding
determination of the Inventory Price as provided herein, or on such earlier date
as the parties may agree upon (the "Settlement Date"), the Settlement Amount
shall be paid as follows: (i) if the Settlement Amount is a positive number
(that is, if the sum of the Seller's Accounts Payable Purchase Price, plus the
Inventory Purchase Price, plus Five Hundred Thousand Dollars ($500,000.00),
shall exceed the dollar amount of the Prepayments shown on Schedule 1.15),
                                                           -------------
Purchaser shall pay the amount of such excess to Seller; or (ii) if the
Settlement Amount is a negative number (that is, if the sum of the Seller's
Accounts Purchase Price, plus the Inventory Purchase Price, plus Five Hundred
Thousand Dollars ($500,000.00), shall be less than the dollar amount of the
Prepayments shown on Schedule 1.15), Seller shall pay the amount of such
                     -------------
shortfall to Purchaser; in either case by bank check or wire transfer of
immediately available funds to the account designated in writing by the party
entitled to receive such payment hereunder.

     (b)(i) The Seller's Accounts Purchase Price shall be calculated as of the
Closing Date as follows:

     (A)  all Seller's Accounts created within thirty (30) days before the
          Closing Date shall be valued at 100% of their face value;

     (B)  all Seller's Accounts created within thirty-one (31) to sixty (60)
          days before the Closing Date shall be valued at 85% of their face
          value;

     (C)  all Seller's Accounts created within sixty-one (61) to ninety (90)
          days before the Closing Date shall be valued at 70% of their face
          value; and

     (D)  all Seller's Accounts created more than ninety (90) days before the
          Closing Date shall be value at 25% of their face value.
<PAGE>

     (ii) Following the Closing, the Seller's Accounts Purchase Price shall be
adjusted and paid as follows:

     (A)  All collections of Seller's Accounts during the ninety (90) day period
          commencing on the Closing Date (the "Collection Period"), up to an
          aggregate amount equal to the Seller's Accounts Purchase Price, shall
          be retained by Purchaser, and all such collections during the
          Collection Period in excess of that amount shall be promptly paid over
          to Seller; and

     (B)  Upon expiration of the Collection Period, all Seller's Accounts then
          unpaid and outstanding shall be reassigned to Seller, and if the total
          collections of Seller's Accounts during the Collection Period shall
          have been less than the Seller's Accounts Purchase Price, Seller shall
          pay Purchaser the amount of such shortfall by bank check or wire
          transfer of immediately available funds to Purchaser's account.

  (iii) During the Collection Period, Purchaser shall make commercially
reasonable efforts to collect Seller's Accounts, consistent with its normal
collection practices which may include, without limitation, a refusal to extend
further credit to customers whose accounts are in arrears.

          2.4   Expenses and Taxes of Transfer.  All sales, use and transfer
                ------------------------------
taxes and recording fees arising out of or relating to the Purchased Assets
shall be borne and paid for by the party who pursuant to applicable law incurs
the cost, fee or tax.  Nothing contained in this Agreement shall be construed to
obligate or require the Purchaser to pay, or be liable for, any business,
occupation, withholding, income or similar taxes or any tax of any kind related
to any period prior to the Closing Date.

          2.5   Real Estate Escrow.  To secure against any decrease in the value
                ------------------
of the Facilities resulting from any encumbrances, rights of way, easements,
encroachments or other exceptions or defects in title excluded from the coverage
of any title insurance policies on the Facilities obtained by Purchaser as of
the Closing Date but which may be revealed upon delivery to Purchaser of
property surveys covering the Facilities in form and substance satisfactory to
it , and from any costs or expenses incurred by Purchaser to remove, cure or
mitigate any such encumbrances, rights of way, easements, encroachments or other
exceptions or defects, at the Closing, Purchaser and Seller will enter into an
escrow agreement with Blethan, Gage & Krause, PLLP as escrow agent in the form
attached hereto as Exhibit 2 (the "Real Estate Escrow Agreement"), and Purchaser
will deliver the sum of $25,000.00 (the "Real Estate Escrow") to such escrow
agent by bank check or wire transfer of immediately available funds to the
account specified by such escrow agent for that purpose.

                                  ARTICLE III
                              ASSUMED LIABILITIES
                              -------------------

          Subject to the terms and conditions of this Agreement, Seller shall
assign or cause to be assigned, and Purchaser shall assume, pay, perform and
discharge all of Seller's obligations under the Prepayments that remain
unfulfilled as of the Closing Date, and all of Seller's obligations incurred or
arising under the Contracts, with respect to the period commencing on the day
following the Closing Date. Purchaser shall not assume, nor shall Purchaser be
obligated to pay, perform or discharge, any debts, obligations, contracts or
liabilities of Seller, whether fixed, unliquidated, absolute, contingent or
otherwise, not arising under a Prepayment or a Contract, or expressly set forth
in Schedule 3.1 including, without limitation, any federal, state or local tax
   ------------
liabilities, any indebtedness for monies borrowed, or any other liability.


                                  ARTICLE IV
                      CLOSING AND POST-CLOSING DELIVERIES
                      -----------------------------------
<PAGE>

          4.1   Time and Place.  The consummation of the transactions
                --------------
contemplated by this Agreement shall take place on the Closing Date at the
offices of Frundt & Johnson, 117 West Fifth, Blue Earth, MN 56031 or at such
other place as may be mutually agreed upon in writing between Purchaser and
Seller.

          4.2   Deliveries at Closing by Purchaser.  At the Closing, Purchaser
                ----------------------------------
shall execute and deliver to Seller such instrument or instruments reasonably
satisfactory to Seller and its counsel as shall be reasonably necessary to
effect the assumption by Purchaser of all of the undischarged obligations and
liabilities of Seller under the Contracts which Purchaser has agreed to assume
in accordance with the provisions of Section 3.1 hereof.

          4.3   Deliveries at Closing by Seller.  At the Closing, Seller shall,
                -------------------------------
subject to the terms and conditions of this Agreement, sell, assign, convey and
transfer the Purchased Assets or cause the same to be assigned, conveyed and
transferred to Purchaser by delivery to Purchaser of all such bills of sale,
warranty deeds, endorsements, assignments and other good and sufficient
instruments of transfer and conveyance as shall be effective to vest in
Purchaser title to the Purchased Assets and as shall be reasonably satisfactory
in form and substance to Purchaser and its counsel.

          4.4   Other Deliveries at Closing.  At the Closing, Purchaser and
                ---------------------------
Robert Petersen shall enter into an Employment and Noncompetition Agreement in
substantially the form attached hereto as Exhibit 1, and Purchaser and Seller
                                          ---------
shall enter into the Real Estate Escrow Agreement in substantially the form
attached hereto as Exhibit 2.

          4.5   Closing Document Escrow.  All documents delivered at the Closing
                -----------------------
pursuant to Section 4.2, 4.3 and 4.4 hereof shall be held in escrow by Frundt &
Johnson, LP until payment of the Settlement Amount pursuant to Section 2.3(a),
at which time they shall be released to their intended recipients.


                                   ARTICLE V
                   REPRESENTATIONS AND WARRANTIES OF SELLER
                   ----------------------------------------

          Seller represents and warrants to Purchaser as follows:

          5.1   Organization and Good Standing. Seller is a corporation, validly
                ------------------------------
existing and in good standing under the laws of the State of Iowa and it has all
requisite power and authority to own, lease and operate the Purchased Assets and
to carry on the Business.

          5.2   Corporate Authority. Seller has full corporate authority and
                -------------------
power to execute, deliver and perform this Agreement in accordance with its
terms, this Agreement and all the transactions contemplated hereby on its part
to be performed have been duly authorized by all requisite action of Seller, and
no further authorization or approval of its stockholders or directors is
necessary in order to enable it to enter into and perform the same.

          5.3   No Breach. Subject to the granting of such consents, waivers and
                ---------
approvals by third parties to those Contracts identified on Schedule 5.3 or
                                                            ------------
otherwise required under any of the obligations or commitments described on
Schedule 5.8 in order to permit the assignment of such Contracts or the transfer
- ------------
of the Purchased Assets to the Purchaser or otherwise to consummate the
transactions contemplated by this Agreement, and the transactions contemplated
hereby, the execution and consummation of this Agreement will not result in a
breach, violation or default or give rise to an event which, either with or
without notice or the passage of time, or both, would result in a breach,
violation or default of any of the terms or provisions of (i) its Certificate of
Incorporation
<PAGE>

or Bylaws, (ii) any statute, or governmental regulation or rule, or (iii) any
note, bond, mortgage, lease, license, permit, indenture, agreement, judgment,
decree, order or other instrument, obligation or restriction to which Seller is
a party or by which Seller or any of the Purchased Assets may be bound or
affected.

          5.4   Valid Agreement. This Agreement constitutes Seller's valid and
                ---------------
binding obligation, enforceable against it in accordance with its terms, except
that such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws affecting the
rights and remedies of creditors generally and to the effect of general
principles of equity (including the availability of equitable and other
discretionary remedies and equitable defenses), whether considered in an action
in law or in equity.

          5.5   Financial Statements. The Financial Statements of the Seller for
                --------------------
the years ended December 31, 1998 and 1999 included in Schedule 5.5, fairly
                                                       ------------
represent in all material respects the financial condition of the Business as of
the dates thereof and the results of operations for the periods then ended and
have been consistently prepared, in all material respects, in accordance with
generally accepted accounting principles.

          5.6   Conduct of Business. Except as and to the extent disclosed in
                -------------------
Schedule 5.6A, since December 31, 1999, Seller has:
- -------------

           (i)   conducted the Business in the ordinary course and has not
     acquired or sold, transferred, permitted to lapse or disposed of any of the
     Purchased Assets or made any capital expenditures with respect thereto
     except in the ordinary course of business;

           (ii)  not incurred any obligations or liabilities, absolute or
     contingent, for which Purchaser will be liable or otherwise responsible
     except obligations under Contracts incurred in the ordinary course of
     business;

           (iii) not mortgaged, pledged or subjected any of the Purchased Assets
     to any lien, charge or any other encumbrance, other than the lien of
     current personal or real property taxes not yet due and payable, if any;

           (iv)  not materially changed its credit practices or other business
     policies or practices;

           (v)   neither created, incurred, assumed, guaranteed nor otherwise
     become liable with respect to any indebtedness for money borrowed relating
     to or otherwise affecting any of the Purchased Assets other than as
     provided in the Contracts;

           (vi)  not suffered any damage, destruction or loss, whether or not
     covered by insurance, materially adversely affecting the Purchased Assets;
     and

           (vii) not experienced any materially adverse change in its
     relationships with customers or vendors of supplies used by Seller in the
     Business, except changes in the ordinary course of business which do not
     have a Material Adverse Effect.

Schedule 5.6B contains a complete and accurate list of the ten (10) largest
- -------------
customers and ten (10) largest suppliers of Seller, for the twelve (12) months
ended December 31, 1999. To the Seller's best knowledge, except as described on
Schedule 5.6B, there has been no termination or cancellation of the business
- -------------
relationship of Seller with any material vendor or any customer or group of
customers and none is threatened or reasonably anticipated.
<PAGE>

          5.7   Title to Purchased Assets. Except as and to the extent disclosed
                -------------------------
in Schedule 5.7, Seller has good and marketable title to the Purchased Assets
   ------------
free and clear of all mortgages, liens, pledges, charges, encumbrances or
restrictions of any nature whatsoever, except for minor imperfections of title
and liens and encumbrances not otherwise identified in the Disclosure Schedules
which do not materially detract from the value of or impair the use of the
Purchased Assets as such assets are currently utilized and the lien of current
taxes not yet due and payable, subject only to the obligation to perform the
executory obligations of the Seller under the Contracts after the Closing Date.

          5.8   Contracts. Except as set forth in the Contracts or on Schedule
                ---------                                             --------
5.8, neither the Seller nor any of the Purchased Assets is subject to or bound
- ---
by any agreement, contract, lease, license, commitment or restriction which in
any way affects, or after the Closing will affect, any of the Purchased Assets
or the use or operation thereof, or which requires the waiver of any term or
condition or the approval or consent of any third party to the consummation of
the transactions contemplated hereby or which would be violated or would result
in any liability or any acceleration of liability to the Seller or the Purchaser
without such waiver, approval or consent.  There is not, with respect to any
contract, agreement, commitment, restriction or other instrument or document to
which Seller is a party or by which any of the Purchased Assets is bound, any
existing default (or any event which, with or without notice or lapse of time,
or both, would constitute a default) on the part of the Seller that would have a
Material Adverse Effect, and the Seller has received no notice of any such
default (or event).  The Contracts include all agreements to which Seller is a
party or by which it or its properties are or may be bound, that relate to the
Business or the Purchased Assets.

          5.9   Compliance with Applicable Law
                ------------------------------

          (a)   The business, operations and activities of the Seller, insofar
as they relate to the Purchased Assets, are not in violation of any applicable
municipal, local, state or federal laws (excluding laws regulating the discharge
into the environment of toxic or otherwise hazardous substances that are
addressed exclusively in Section 5.10), ordinances, certificates of occupancy,
rules or regulations, which violation or the correction of which has resulted in
or might have a Material Adverse Effect. Except as disclosed on Schedule 5.9A or
                                                                ----------------
Schedule 5.10, the Seller is not presently operating under, subject to, in
- -------------
violation of or in default with respect to, any judgment, order, writ,
injunction or decree of any court or federal, state, municipal, or other
governmental department, commission, board, agency or instrumentality limiting
or adversely affecting the Seller's ability to conduct the Business.

          (b)   Except as disclosed in Schedule 5.9B or Schedule 5.10, Seller
                                       ------------------------------
possesses all permits, licenses, orders and approvals of all federal, state and
local governmental or regulatory bodies required for Seller to conduct the
Business and to use the Purchased Assets in connection therewith. None of such
permits, licenses, orders or approvals will be affected by the consummation of
the transactions contemplated by this Agreement. All such permits, licenses,
orders or approvals are included in the Intangible
<PAGE>

Properties to be transferred to Purchaser hereunder, all are transferable to
Purchaser at the Closing, and no approval or authorization of or filing with any
governmental authority on the part of Seller is required as a condition to the
execution and delivery of this Agreement, or the consummation by Seller of the
transactions contemplated hereby, except as otherwise contemplated hereby.

          5.10  Environmental Matters.  Except for such matters that are
                ---------------------
disclosed on Schedule 5.10,:
             -------------

          (a)   The Seller is in compliance with all applicable governmental
rules and regulations relating to environmental laws;

          (b)   The Seller does not generate, transport, treat, store, or
dispose of any hazardous wastes on any of the Facilities, and none of the
Facilities contains (including without limitation, containment by means of any
storage tank, drum, container or barrel) any Hazardous Substance;

          (c)   There are no present or past environmental conditions or
violations of any existing environmental law in any way relating to the Seller
or the Facilities caused by the Seller, or any other Person, that are likely to
lead to the imposition of any liability or that would give rise to any civil or
criminal litigation, suit, action, claim, proceeding or investigation by any
Person, including any governmental authority;

          (d)   The Seller has not sent, transported, caused the transportation
of or disposed of any Hazardous Substance at any site, location or facility;

          (e)   There are no above-ground or underground waste disposal units,
including landfills, surface impoundments, pits, ponds or lagoons, whether now
in use or formerly used and still containing contaminants, or any above-ground
or underground storage tanks, or subsurface disposal systems, including
injection wells, dry wells, leach fields or septic systems, on the Facilities;
and

          (f)   There is no pending or threatened civil or criminal litigation
or suit, action, claim, proceeding or investigation by any Person, including any
governmental authority, or written notice of violation of, or formal
administrative proceeding relating to, any environmental laws involving the
Seller, the Facilities or any of the other Purchased Assets, and there is no
basis for any such civil or criminal litigation, suit, action, claim, proceeding
or investigation.

          (g)   For purposes of this Agreement, "Hazardous Substance" shall
include, without limitation: (i) "hazardous substances" as that term is defined
by the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. 9601 et seq., (ii) "hazardous waste" as that term is
defined by the Resource Conservation and Recovery Act of 1976, as amended, 42
U.S.C. 6901 et seq., or other applicable federal, state, or local law, rule,
regulation, ordinance or requirement, all as amended or hereafter amended; (iii)
any petroleum or petroleum derivatives which
<PAGE>

are liquid at ambient air temperature and pressure; (iv) any radioactive
material in any form or condition; and (v) asbestos in any form or condition.

          5.11  Legal Proceedings. Except as disclosed in Schedule 5.11, there
                -----------------                         -------------
are no civil, criminal, administrative or other proceedings or investigations
pending or, to the best of its knowledge, threatened, against it or relating to
the Purchased Assets, which, if adversely determined, might have a Material
Adverse Effect or which questions or challenges the validity of this Agreement,
any of the transactions contemplated hereby or any action taken or to be taken
by it in connection herewith, and it has no knowledge of any basis for any such
proceeding or investigation.

          5.12  ERISA: Labor Matters.
                --------------------

          (a)   Except as described on Schedule 5.12, Seller has no employee
                                       -------------
benefit or welfare plans.

          (b)   There are no violations by Seller of any applicable legal
requirements under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or any other similar laws, rules or regulations. No liability
to the Pension Benefit Guaranty Corporation or to any employees of Seller will
be incurred by the Purchaser upon consummation of the transactions contemplated
hereby.

          (c)   There is no complaint, strike, dispute, slow down or stoppage
involving Seller's employees pending or, to Seller's knowledge, threatened
against the Seller or any other Person which may affect any of the Purchased
Assets or the consummation of the transactions contemplated hereby.

          (d)   No person or party (including, but not limited to, any
governmental authority) has asserted any claim or to the Seller's  best
knowledge, has any basis for any action or proceeding, against the Seller
arising out of any statute, ordinance or regulation relating to discrimination
in employment or employment practices, or occupational safety and health
standards (including, without limitation, The Fair Labor Standards Act, as
amended; Title VII of the Civil Rights Act of 1964, as amended; or the Age
Discrimination in Employment Act of 1967, as amended.

          5.13  Taxes. All federal, state, and local tax returns and reports
                -----
required by law to be filed by Seller, the non-filing of which could have a
Materially Adverse Effect, have been filed and all taxes shown thereon to be due
and payable by it have been paid.

          5.14  Condition of Assets. Except as disclosed on Schedule 5.14:
                -------------------                         -------------

          (a)   The Purchased Assets constitute all the assets and other
properties necessary or appropriate for the conduct of the Business as currently
conducted by Seller.
<PAGE>

          (b)   The Facilities are structurally sound with no known material
defects, in substantially good operating condition and repair, are reasonably
adequate for the uses to which  they are being put, and are in compliance with
all applicable health, fire, environmental, safety, zoning, building and other
laws and ordinances.

          (c)   All of the Equipment being acquired hereunder is and on the
Closing Date will be in good condition and repair, ordinary wear and tear
excepted, and free from defects.

          (d)   There are no patents, patent applications, trademarks, trademark
applications or registrations, pending or existing, owned by, registered in the
name of, or licensed by Seller or in which Seller has any rights that are
currently being utilized in the Business, there are no material infringing uses
of any intellectual property rights included in the Intangible Property and
Seller has not received any notice of any pending conflict with the rights of
any other Person with respect to such intellectual property rights.

          (e)   Each of the Contracts is in full force and effect as of the date
hereof. Seller and, to the best of Seller's knowledge, the other parties thereto
are in compliance with the material terms thereof. No event exists which, after
the passage of time or the giving of notice, or both, would give rise to a
material breach, violation or default under any of the Contracts, except as
otherwise noted herein or in the Disclosure Schedules.

          (f)   All information provided in the Financial Statements, this
Agreement and the Disclosure Schedules, is complete and correct in all material
respects and does not contain any misleading statement or omit any material
information, nor does there exist any item or matter involving the internal
operations or conditions of the Seller of a material nature that has either not
been disclosed to Purchaser in the Financial Statements, this Agreement or the
Disclosures Schedules or has been disclosed in a manner that is intended to or
is likely to mislead Purchaser.


                                  ARTICLE VI
                  REPRESENTATIONS AND WARRANTIES OR PURCHASER
                  -------------------------------------------

          Purchaser hereby represents and warrants to Seller as follows:

          6.1   Organization and Good Standing.  Purchaser is a corporation duly
                ------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business in the state of Minnesota.

          6.2   Corporate Authority.  Purchaser has full authority and power to
                -------------------
execute and to perform this Agreement in accordance with its terms. This
Agreement and the transactions contemplated hereby have been duly authorized by
all requisite corporate action of Purchaser and no further authorization or
approval of the shareholders or directors of Purchaser is necessary in order to
enable Purchaser to enter into and perform the same.
<PAGE>

          6.3   No Breach.  The transactions contemplated hereby will not result
                ----------
in a breach, violation or default or give rise to an event which, either with or
without notice or the passage of time, or both would result in a breach,
violation or default of any of the terms or provisions of Purchaser's
Certificate of Incorporation or By-Laws, or of any statute, governmental rule or
regulation, note, bond, mortgage, license, permit, indenture, agreement,
judgment, decree or other instrument or restriction to which Purchaser is a
party or by which Purchaser may be bound.

          6.4   Valid Agreement.  This Agreement constitutes the valid and
                ----------------
binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms (except that enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar laws
affecting the rights and remedies of creditors generally and to the effect of
general principles of equity (including the availability of equitable and other
discretionary remedies and equitable defenses), whether considered in an action
in law or in equity.)


                                  ARTICLE VII
                                  -----------
                      ADDITIONAL COVENANTS AND AGREEMENTS
                      -----------------------------------

          7.1   Announcements.  Seller and Purchaser agree that no announcement
                --------------
or press release shall be made by either Seller or Purchaser relating to the
transactions contemplated hereby unless approved in writing in advance by both
parties hereto, except, however, that any party hereto may, upon not less than
three (3) business days notice having been given to the other party hereto, make
such announcement, press release or other report as may be required by any
applicable state or federal law or regulation without having to obtain the
advance written approval of the other party hereto.

          7.2   Seller's Employees. Effective as of the Closing Date, only those
                -------------------
employees listed on Schedule 7.2 shall be offered  employment  by the Purchaser.
                    ------------
Schedule  7.2  lists the dates of hire, dates of birth, current compensation
- -------------
and date and amount of salary raise and/or bonus of each such employee.  Seller
shall be responsible for all benefits accrued through the Closing Date relating
to employees of the Business including, without limitation, all salary, pension,
bonus, medical and life insurance, severance, holiday, vacation and sick-pay
benefits, and shall indemnify Purchaser from and against any and all
liabilities, losses, damages, claims, costs and expenses incurred by or asserted
against Purchaser arising therefrom.

          7.3   Bulk Sales Act. Purchaser waives compliance by Seller with the
                ---------------
provisions of the Uniform Bulk Sales Act as applicable in the State of Iowa;
provided, however that Seller shall indemnify Purchaser for any loss, cost,
expense or other charge (including, without limitation reasonable legal fees and
expenses) of Purchaser resulting from or with respect to any liability arising
from Seller's noncompliance with the provisions of the Uniform Bulk Sales Act as
applicable in any jurisdiction to such transactions.  The provisions of this
Section 7.3 shall survive the Closing for a period of three (3) years.

          7.4   Further Assurances and Access to Records.  (a) Seller hereby
                -----------------------------------------
agrees that it will at any time and from time to time after the Closing Date,
upon request of and at the expense of Purchaser, execute, acknowledge and
deliver, or will cause to be done, executed, acknowledged and delivered all such
further acknowledgments, deeds,
<PAGE>

assignments, transfers, conveyances and assurances as may be reasonable and
necessary for the better assigning, conveying and transferring to Purchaser and
to its respective successors and assigns, or for aiding and assisting in
collecting and reducing to possession, any and all of the Purchased Assets to be
conveyed to Purchaser as provided herein.

          (b)   Purchaser hereby agrees that from and after the Closing, Seller,
its authorized representatives, and representatives of federal and state taxing
authorities shall have full access during normal business hours to all books and
records delivered to Purchaser by Seller pursuant to Sections 4.3 and 11.1 or
which otherwise concern transactions relating to the Purchased Assets.
Purchaser shall maintain such books and records for a period of not less than
six (6) years following the Closing.

          (c)   The provisions of this Section 7.4 shall survive the Closing and
the conveyance of the Purchased Assets to Purchaser hereunder for a period of
six (6) years.

          7.5   Post-Closing Environmental Indemnity.
                -------------------------------------

          Notwithstanding anything in this Agreement to the contrary, including
without limitation any disclosures or disclaimers contained in any of the
Disclosure Schedules, Seller agrees to be responsible for, and indemnify and
hold Purchaser harmless from and against, any and all liabilities, losses,
damages, claims, costs, and expenses of any nature, whether absolute,
contingent, or otherwise, arising out of or relating to: (i) hazardous waste
management program violations or alleged violations arising from Seller's
operation of either of the Facilities prior to Closing, (ii) any violation of or
liability pursuant to any environmental law (including common law), resulting
from any activities or operations of, or Hazardous Substances (as such term is
defined in Section 5.10(g)) used by or under the control of, Seller; (iii) any
pollution, contamination, or other environmental conditions at either of the
Facilities existing on or before the Closing Date; (iv) any physical or
operational condition at either of the Facilities existing on or before the
Closing Date that prevents such Facility from being able to operate consistently
in compliance with any law, regulation, order or permit condition in effect as
of the Closing Date; and (v) any breach of any representation, warranty or
covenant contained in Section 5.10 or this Section 7.5.  Seller's obligations
under this Section 7.5 shall survive the Closing and shall continue until the
expiration of all statutes of limitation applicable thereto.  Except as provided
herein, Purchaser agrees to be responsible for compliance with the laws
applicable to, and the environmental conditions created by, Purchaser's
operations and activities at the Facility after the Closing Date.

          7.6   Property Tax Proration.
                ----------------------

          Real and personal property taxes attributable to the Purchased Assets
shall be allocated between Seller and Purchaser on the basis of the number of
days in the applicable tax  year of Seller elapsed through and including the
Closing Date (which portion shall be allocated to Seller) as compared
<PAGE>

with the number of days in such tax year elapsing after the Closing Date (which
portion shall be allocated to Purchaser).

                                 ARTICLE VIII
                       CONDITIONS PRECEDENT OF PURCHASER
                       ---------------------------------

The obligation of Purchaser to consummate the transactions contemplated hereby
is, at the option of Purchaser, subject to the fulfillment prior to or on the
Closing Date of each of the following conditions, any one or more of which may
be waived in writing by Purchaser:

          8.1   Covenants Performed.  Seller shall have performed and complied
                --------------------
or shall have caused the performance and compliance in all material respects
with all covenants and agreements required by this Agreement on its respective
part to be performed or complied with prior to or on the Closing Date (including
delivery of all documents contemplated in Section 4.3), and Purchaser shall have
received a certificate to such effect executed by the President or a Vice
President and the Secretary or Treasurer or an Assistant Secretary of Seller
dated the Closing Date.

          8.2   Representations and Warranties True.  All of Seller's
                ------------------------------------
representations and warranties in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the Closing Date as if made on the Closing Date, without
giving effect to any supplement to this Agreement or the Disclosure Schedules.

          8.3   Resolution of Directors.  Seller shall have delivered to
                ------------------------
Purchaser copies of resolutions of its Board of Directors and stockholders
authorizing or ratifying the execution, delivery and performance by it of this
Agreement and authorizing or ratifying acts of its officers and employees in
carrying out the terms and provisions of this Agreement, certified by its
corporate Secretary.

          8.4   Confirmation of Title.  Purchaser shall have received from
                ----------------------
Seller, at Seller's expense, in form and substance satisfactory to Purchaser, in
its sole discretion, updated abstracts of title  covering the Facilities,
together with such additional documentary evidence of title to the Facilities as
Purchaser may request in order to enable it to obtain an A.L.T.A. form of
extended title insurance covering  the Facilities.

          8.5   Crop Builders Acquisition.  Purchaser shall have acquired, on or
                --------------------------
as of the Closing Date, the agri-business assets of Crop Builders, Inc., a
Minnesota corporation, pursuant to an Asset Purchase Agreement in substantially
the form of this Agreement, for a purchase price (excluding inventory and
accounts receivable) not to exceed $500,000.00.

          8.6   Consents Obtained.  All consents, waivers, authorizations and
                ------------------
approvals required for the sale and transfer of the Purchase Assets to Purchaser
at the Closing shall have been obtained.
<PAGE>

          8.7   Other Deliveries Made.  The Employment Agreement and
                ----------------------
Noncompetition Agreement and the Real Estate Escrow Agreement, each  fully
executed by Robert Petersen, shall have been delivered to Purchaser pursuant to
Section 4.4.

                                  ARTICLE IX
                        CONDITIONS PRECEDENT OF SELLER
                        ------------------------------

          The obligations of Seller to consummate the transactions contemplated
hereby are, at the option of Seller, subject to the fulfillment prior to or on
the Closing Date of each of the following conditions, any one or more of which
may be waived in writing by Seller:

          9.1   Covenants Performed. Purchaser shall have performed and complied
                --------------------
or shall have caused the performance and compliance in all material respects
with all covenants and agreements required by this Agreement to be performed or
complied with by Purchaser prior to or on the Closing Date (including the
deliveries contemplated in Section 4.2), and Seller shall have received a
certificate to such effect executed by the Chief Executive Officer or the Chief
Operating Officer and the Secretary or Chief Financial Officer or an Assistant
Secretary of Purchaser.

          9.2   Representation and Warranties True.  All of Purchaser's
                -----------------------------------
representations and warranties in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in all
material respects as of the Closing Date as if made on the Closing Date.

          9.3   Resolutions of Directors.  Purchaser shall have delivered to
                -------------------------
Seller copies of the resolutions of its Board of Directors authorizing or
ratifying the execution and performance of this Agreement and authorizing or
ratifying acts of its officers and employees in carrying out the terms and
provisions of this Agreement certified by the corporate Secretary or Assistant
Secretary of Purchaser.

          9.4   Instruments of Assumption.  Purchaser shall have delivered to
                --------------------------
Seller instruments, in form and substance satisfactory to Seller, whereby
Purchaser assumes or causes to be assumed all of the obligations Purchaser has
agreed to assume hereunder, as provided in Section 3.1.

                                   ARTICLE X
                         SURVIVAL AND INDEMNIFICATION
                         ----------------------------

          10.1  Survival of Representations, Etc.  All representations and
                ---------------------------------
warranties and agreements made by a party in this Agreement or pursuant hereto
shall not be affected by any investigation at any time made by or on behalf of
any other party hereto and shall survive the Closing hereunder but shall
terminate and expire upon the expiration of twenty-four (24) months after the
Closing Date, except as otherwise specifically provided in this Agreement.
<PAGE>

          10.2  Indemnification by Seller.  Seller hereby agrees to indemnify
                --------------------------
and hold Purchaser harmless from and against the following:

           (1)   Any and all liabilities, losses, damages, claims, costs and
     expenses of Purchaser of any nature, whether absolute, contingent or
     otherwise relating to the conduct of the Business prior to the Closing Date
     or to the use or ownership of the Purchased Assets prior to the Closing
     Date which are not expressly assumed by Purchaser as herein provided;

           (2)   Any and all damages or deficiencies resulting from any
     misrepresentation, breach of any warranty, or non-fulfillment of any
     covenant or agreement on the part of Seller contained in this Agreement
     incurred by Purchaser prior to the expiration of the representation,
     warranty, covenant or agreement which has been breached or not fulfilled;
     and

           (3)   Any and all claims, actions, suits, proceedings, demands,
     assessments or judgments, costs and expenses (including reasonable
     attorneys fees) incident to any of the foregoing, including, without
     limitation, any action taken against Purchaser by any person under the
     provisions of the Uniform Bulk Sales Law of any state.

          10.3  Indemnification by Purchaser.  Purchaser hereby agrees to
                -----------------------------
indemnify and hold Seller and Subsidiary harmless from and against the
following:

           (1)   Any and all liabilities, losses, damages, claims, costs and
     expenses of Seller of any nature, whether absolute, contingent or otherwise
     relating to the Purchased Assets which (a) have been expressly assumed by
     Purchaser as herein provided or (b) relate to the use or ownership of the
     Purchased Assets after the Closing Date;

           (2)   Any and all damages or deficiencies resulting from any
     misrepresentation, breach of any warranty, or non-fulfillment of any
     covenant or agreement on the part of Purchaser contained in this Agreement
     incurred by Seller prior to the expiration of the representation, warranty,
     covenant or agreement which has been breached or not fulfilled; and

           (3)   Any and all claims, actions, suits, proceedings, demands,
     assessments or judgments, costs and expenses (including reasonable
     attorneys fees) incident to any of the foregoing.

          10.4  Indemnification Procedures.
                ---------------------------

          (a)   A party seeking indemnification hereunder ("Indemnitee") shall
give written notice to the party from which indemnification is sought (the
"Indemnitor") of any matter with respect to which Indemnitee seeks to be
indemnified (a "Claim") within one hundred twenty (120) days after Indemnitee
first has knowledge of such Claim, unless such Claim results from any action,
suit or proceeding against the Indemnitee (a "Litigation"), in which case such
notice shall be given promptly following Indemnitee's receipt of service of
process in such Litigation, stating in such notice the nature of the Claim, all
facts known to Indemnitee giving rise to such Claim, the amount or an estimate
of the amount of the liability arising therefrom and the status of settlement or
other negotiations, if any.
<PAGE>

          (b)   a claim for indemnification may, at the option of the
Indemnitee, be asserted as soon as any Claim has been asserted by a third party
in writing, regardless of whether actual harm has been suffered or out-of-pocket
expenses incurred, provided that the Indemnitee shall have reasonably determined
                   --------
that it may be entitled to indemnification hereunder in respect to such Claim.

          (c)   After a Claim is made, the Indemnitee shall permit the
Indemnitor, at Indemnitor's option and expense, to assume the defense of such
action, suit, proceeding, claim, demand or assessment with full authority to
conduct such defense and the Indemnitee will cooperate fully in such defense.
Indemnitor and Indemnitee shall cooperate with each other in the defense of any
Claim and each shall have notice of, and access to, all discovery, trial or
other proceedings and all documents relating to any such Claim.

          (d)   Any delay or failure to notify the Indemnitor shall relieve the
Indemnitor of its obligations hereunder only to the extent, if at all, that it
is prejudiced by reason of such delay or failure. The Indemnitee shall have the
right to employ separate counsel in any of the foregoing actions, claims or
proceedings and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the Indemnitee. In the event that the
Indemnitor fails to assume the defense of any Claim within thirty (30) days
after the Indemnitee's notice of the Claim, the Indemnitee shall have the right
to undertake the defense, compromise or settlement of such action, claim or
proceeding for the account of the Indemnitor, subject to the right of the
Indemnitor to assume the defense of such action, claim or proceeding with
counsel reasonably satisfactory to the Indemnitee at any time prior to the
settlement, compromise or final determination thereof. Anything in this Section
10.4 to the contrary notwithstanding, the Indemnitor shall not, without the
Indemnitee's prior written consent, settle or compromise any action or claim or
proceeding or consent to entry of any judgment with respect to any such action
or claim unless such settlement or compromise requires solely the payment of
money damages by the Indemnitor and includes as an unconditional term thereof
the release by the claimant or the plaintiff of the Indemnitee from all
liability in respect of such action, claim or proceeding.

          10.5  Indemnification Thresholds.  Notwithstanding the foregoing,
                ---------------------------
neither the Purchaser nor the Seller shall have any indemnity obligation under
this Section 10 to the other party, unless the amount of loss or damage for any
single claim for which a party would be liable exceeds $5,000.00 and unless the
aggregate amount of loss or damage for all such claims for which a party would
be liable exceeds $10,000.00 in the aggregate, and then in such case, the
indemnification amount shall be to the full extent of the damage or losses. In
addition, in the case of the Seller, any indemnity obligation under this Section
10 shall in no event exceed the purchase price for the Purchased Assets and the
Business. The provisions of this Section 10.5 shall not apply to Seller's
indemnification obligations under Article VII.

          10.6  Claims Against Real Estate Escrow.  Purchaser may make a Claim
                ----------------------------------
against the Real Estate Escrow in any amount to which it may be entitled under
<PAGE>

Section 2.5 or this Article 10. Neither the making of nor the failure to make
such a Claim will constitute an election of remedies or limit Purchaser in any
manner in the enforcement of any other remedies that may be available to it.


                                  ARTICLE XI
                                    GENERAL
                                    -------

          11.1  Books and Records.  On or promptly following the Closing Date,
                ------------------
Seller shall deliver into Purchaser's custody all books, records, and other
information of Seller relating to the Purchased Assets, including without
limitation the documents included among the Miscellaneous Assets.

          11.2  Notices.  All notices under this Agreement shall be in writing
                --------
and shall be effective (I) upon personal delivery against receipt therefor, or
(ii) if sent by mail, three (3) business days after deposit in the United States
Postal Service, first class, postage prepaid, registered or certified, return
receipt requested.  All notices given hereunder shall be addressed

                (a)       in the case of Seller, to:

                          Armstrong Ag Center, Inc.
                          5650 205/th/ Street
                          Box 79
                          Armstrong, Iowa 50514
                          Attention: Robert Petersen

          with a copy to

                          Frundt & Johnson, LP
                          117 West Fifth
                          PO Box 95
                          Blue Earth, MN 56031
                          Attention: Michael Johnson, Esq.

          and (b) in the case of Purchaser, to:

                          Royster-Clark, Inc.
                          999 Waterside Drive, Suite 800
                          Norfolk, VA 23510
                          Attention:  Paul Murphy

          with a copy to  Satterlee Stephens Burke & Burke LLP
                          230 Park Avenue
                          New York, NY 10169
                          Attention: William M. Jackson, Esq.

          And a copy to   Blethan Gage & Krause, PLLP
                          127 South Second Street
                          PO Box 3049
                          Mankato, MN 56002
<PAGE>

                      Attention: Michael C. Karp, Esq.


or to such other address or to such other person as any party hereto shall have
last designated by notice to the other parties hereto in accordance with this
Section 11.2.

          11.3  Integration and Modification.  This Agreement contains the
                -----------------------------
entire agreement among the parties hereto with respect to the transactions
contemplated hereby and there are no agreements, warranties or representations
which are not set forth herein.  For purposes of any disclosure required
hereunder, disclosure of a matter on any Disclosure Schedule shall be considered
disclosure for all purposes of this Agreement.  All prior negotiations,
agreements and understandings are superseded hereby.  This Agreement may not be
modified or amended except by an instrument in writing signed by the party
against which such modification or amendment is sought to be enforced.

          11.4  Governing Law.  This Agreement shall be governed by and
                --------------
construed and enforced in accordance with the laws of the State of Delaware,
without giving effect to the principles of conflicts of laws thereof.

          11.5  Binding Effect; No Assignment.  This Agreement shall be binding
                ------------------------------
and inure exclusively to the benefit of the parties and the successors, assigns
and legal representatives of the parties hereto and no other Person shall be
entitled to claim the benefit of or the right to enforce any provision of this
Agreement which creates or may create any right or obligation between the
parties hereto; provided, however, that this Agreement and all rights hereunder
may not be assigned by either party hereto except by or with the written consent
of the other party hereto.

          11.6  Counterparts.  This Agreement may be executed simultaneously in
                -------------
any number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

          11.7  Miscellaneous Rules of Construction.  The Article and Section
                ------------------------------------
headings in this Agreement are for convenience of reference only and shall not
be deemed to alter or affect any provision hereof. References in this Agreement
to Sections, Schedules and Exhibits are to Sections of, and Schedules and
Exhibits to, this Agreement, unless otherwise indicated. The words "hereof",
"herein", "hereunder" and comparable terms refer to the entirety of this
Agreement and not to any particular Article, Section or other subdivision hereof
or attachment hereto. Words in the singular include the plural and words in the
plural include the singular. This Agreement shall be construed without regard to
any presumption or other rule requiring construction against the party causing
this Agreement or any party thereof to be drafted.

          11.8  Expenses.
                ---------
<PAGE>

          (a)   Seller and Purchaser each represent and warrant to each other
that there is no broker, finder or similar person involved or in any way
connected with the transaction provided for herein and each agrees to hold the
other harmless from and against all claims based upon a relationship or alleged
relationship with it for brokerage or finder's fees or commissions of any such
person.

          (b)   Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall, except as otherwise specifically
provided herein, be paid by the party incurring such expenses.

          11.9  Waiver.  No delay on the part of any party hereto in exercising
                -------
any power or right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any power or right hereunder preclude other or
further exercise thereof or the exercise of any other power or right.  No waiver
shall be enforceable against any party hereto unless in writing, signed by the
party against whom such waiver is claimed, and shall be limited solely to the
one event.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.


                              ARMSTRONG AG CENTER, INC. (Seller)



                              By: /s/ Robert L. Peterson
                                 ------------------------------
                                    President



                              ROYSTER-CLARK, INC. (Purchaser)



                              By: /s/ Paul M. Murphy
                                 ------------------------------
                                    Managing Director-Financial Planning

<TABLE> <S> <C>

<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF ROYSTER-CLARK, INC. AS PRESENTED IN THE
FORM 10-K FOR THE NINE MONTHS ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED STATEMENTS' LEGEND.
</LEGEND>

<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                              APR-1-1999
<PERIOD-END>                               DEC-31-1999
<CASH>                                           4,670
<SECURITIES>                                         0
<RECEIVABLES>                                  121,489
<ALLOWANCES>                                   (7,023)
<INVENTORY>                                    158,667
<CURRENT-ASSETS>                               288,465
<PP&E>                                         200,561
<DEPRECIATION>                                  12,667
<TOTAL-ASSETS>                                 521,507
<CURRENT-LIABILITIES>                          124,631
<BONDS>                                        297,380
                                0
                                          0
<COMMON>                                             0
<OTHER-SE>                                      95,222
<TOTAL-LIABILITY-AND-EQUITY>                   521,507
<SALES>                                        715,160
<TOTAL-REVENUES>                               715,160
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