UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File
February 28, 1997 Number 0000927536
ALLIANCE FARMS COOPERATIVE ASSOCIATION
(Exact name of registrant as specified in its charter)
Colorado 84-1270685
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
302 Idlewild Street, Yuma, Colorado 80759
(Address of principal executive offices)
970-848-3231
(Issuers telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [X] No [ ]
At April 14, 1997, there were 102 shares of the issuers common stock
outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
ALLIANCE FARMS COOPERATIVE ASSOCIATION
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
February 28, 1997
unaudited August 31, 1996
<S> <C> <C>
ASSETS
Current Assets:
Receivables $ 81,664 $ 72,448
Inventory (Note 4) 2,749,075 2,435,477
Other current assets 63,718 48,273
Total current assets 2,894,457 2,556,198
Property, plant and equipment, at cost 18,487,977 16,491,601
Less accumulated depreciation 1,744,283 1,333,291
16,743,694 15,158,310
Breeding stock 3,748,486 3,928,215
Less accumulated depreciation 1,244,087 1,013,872
2,504,399 2,914,343
Other assets, net of $66,502 and $51,568
accumulated amortization 201,828 216,762
$22,344,378 $20,845,613
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Bank Overdraft 287,900 575,749
Current maturities of long-term debt (Note 5) 1,038,300 870,000
Accounts payable (Note 3) 1,846,953 526,193
Accrued Rebates (Note 2) 670,167 670,167
Accrued expenses 190,178 171,791
Total current liabilities 4,033,498 2,813,900
Long-term debt (Note 5) 13,700,124 13,425,424
Shareholders' equity
Common stock of $.01 par value; authorized
10,000 shares, issued and outstanding 102 shares 1 1
Additional paid-in capital 7,487,653 7,487,653
Accumulated deficit (2,876,898) (2,881,365)
Total shareholders' equity 4,610,756 4,606,289
Commitments (Note 6) ------ ------
$22,344,378 $20,845,613
<FN>
See accompanying notes to condensed financial statements
</TABLE>
ALLIANCE FARMS COOPERATIVE ASSOCIATION
CONDENSED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
Three Month Periods Ended Six Month Periods Ended
February 28 February 28
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales (Note 2) $3,316,983 $1,443,563 $6,519,998 $2,871,276
Cost of goods sold 2,969,586 1,430,954 5,549,049 3,008,706
Gross income (loss) 347,397 12,609 970,949 (137,430)
Expenses related to start-up
of new production facilities 0 0 75,668 0
Administrative expenses 122,027 96,898 214,996 170,565
Loss on sale of breeding stock 21,362 96,146 81,020 170,537
Operating income (loss) $204,008 ($180,435) $599,265 ($478,532)
Other income (expense):
Interest expense (357,932) (222,744) (680,584) (439,320)
Other 43,254 5,409 85,786 7,574
(314,678) (217,335) (594,798) (431,746)
Net income (loss) ($110,670) ($397,770) $4,467 ($910,278)
<FN>
See accompanying notes to condensed financial statements
</TABLE>
ALLIANCE FARMS COOPERATIVE ASSOCIATION
STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Six Month Periods Ended
February 28
1997 1996
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) 4,467 (910,278)
Adjustment to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Provision for depreciation and amortization 1,046,591 764,849
Loss on sale of breeding stock 81,020 170,537
Changes in assets and liabilities:
Receivables (9,216) (9,183)
Inventory (313,598) (397,012)
Other current assets (15,444) (18,587)
Other assets 0 36,116
Accounts payable 1,320,760 13,094
Accrued expenses 18,387 63,959
Net cash provided by (used in)
operating activities 2,132,967 (286,505)
Cash flows from investing activities:
Capital expenditures (2,681,508) (5,085,248)
Proceeds from sale of breeding stock 393,390 175,170
Net cash used in investing activities (2,288,118) (4,910,078)
Cash flows from financing activities
Proceeds from issuance of long term debt 211,000 0
Net increase in revolving term credit 487,000 1,735,000
Payments on long term debt (435,000) (145,000)
Increase in note payable to Farmland 180,000 636,424
Issuance of common shares, net of offering cost 0 1,321,683
Loan origination fees 0 (42,000)
Increase (decrease) in bank overdraft (287,849) 213,263
Net cash provided by financing activities 155,151 3,719,370
Decrease in cash and cash equivalents 0 (1,477,213)
Cash and cash equivalents at beginning of period 0 1,477,213
Cash and cash equivalents at end of period 0 0
<FN>
See accompanying notes to condensed financial statements
</TABLE>
Alliance Farms Cooperative Association
Notes to Condensed Financial Statements
(Unaudited)
1. Interim Financial Statements
The accompanying condensed unaudited financial statements reflect all
adjustments (consisting of only normal recurring adjustments) which in the
opinion of management, are necessary for a fair presentation of the
financial position, results of operations and cash flows for the interim
periods presented. Income taxes have not been provided because Alliance
Farms Cooperative Association (Alliance) expects to derive 100% of its net
income principally from the sale of feeder pigs to its members which will
be apportioned and distributed to members of Alliance on a patronage basis
in accordance with its by-laws.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. The accompanying unaudited
condensed financial statements should be read in conjunction with the
financial statements and notes in Alliance's August 31, 1996 Annual Report
on Form 10-KSB.
2. Sales
Alliance sold 100% of its feeder pigs to its members for the three and six
month periods ended February 28, 1997 and February 29, 1996 at a
contractual price which is based on Alliance's operating costs (which are
based on a twelve month rolling average), debt service and an additional
$4.50 per pig sold.
Alliance accrued a rebate of $670,167 as of February 28, 1997 and August
31, 1996. Such rebate was accrued in fiscal 1996 and is payable to
Alliance's members. Alliance intends to pay the accrued rebate in fiscal
1997 when sufficient cash and working capital is available. Alliance has
not accrued a rebate in fiscal 1997 as it does not intend to pay a rebate
to its members on fiscal 1997 sales.
Because the contractual price for the sale of a feeder pig is determined
based upon, among other things, a twelve month historical rolling average
of operating costs and to the extent that current operating costs per pig
exceed the historical average operating costs, Alliance may incur a
negative gross margin on the sale of its feeder pigs during periods of
rising costs.
Alliance's average net sales price and the average industry market price
were as follows:
Three Months Ended Six Months Ended
February 28 February 28
1997 1996 1997 1996
Average Net Sales
Price 57.44 43.36 57.80 43.07
Average Industry
Market* 56.20 34.66 53.99 35.73
*As published by the USDA's Market News Service
3. Transactions with Farmland and Yuma
Alliance purchased feed from Yuma Farmers' Milling and Mercantile
Cooperative (Yuma), and animal health supplies and breeding stock from
Farmland Industries, Inc. (Farmland) based on market prices. Yuma and
Farmland are members of Alliance. Alliance also sold feeder pigs to
Farmland and Yuma. Such purchases and sales were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
February 28 February 28
1997 1996 1997 1996
<S>...............................<S> <C> <C> <C>
Feed Purchases....................$ 983,028 $ 681,697 $ 2,095,440 $ 1,268,134
Animal Health Purchases........... 165,698 33,056 377,247 93,256
Breeding Stock.................... 351,062 381,333 494,756 457,950
Feeder Pig Sales.................. 1,956,704 972,066 3,961,082 1,945,808
</TABLE>
Farmland also pays Alliance a royalty for any pigs raised by Alliance and
sold to a Farmland finisher that are then selected as breeding stock for
Farmland's contract herds pursuant to the swine production services
agreement. The royalty, which is $10 per head selected, paid to Alliance
under such agreement was as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
February 28 February 28
1997 1996 1997 1996
<S>...............................<C> <C> <C> <C>
Royalty Income....................$ 40,000 $ 0 $ 72,600 $ 0
</TABLE>
Farmland also performs administrative, advisory and consulting services on
behalf of Alliance pursuant to a contractual agreement. The agreement
provides that Farmland will be compensated for such services in an amount
equal to one dollar per pig shipped adjusted annually for inflation for a
term of ten years commencing July 13, 1994. Amounts paid by Alliance to
Farmland under such agreement were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
February 28 February 28
1997 1996 1997 1996
<S>...............................<S> <C> <C> <C>
Management Fee $ 63,980 $ 33,956 $ 121,596 $ 68,586
</TABLE>
Alliance owed $222,590 and $203,624 at February 28, 1997 and $36,850 and
$137,722 at August 31, 1996 to Farmland and Yuma respectively, for goods
and services.
4. Major components of inventories as of February 28, 1997 and August 31, 1996
are as follows:
February 28 August 31
1997 1996
Feeder Pigs............$ 2,502,303 $ 2,265,056
Other.................. 246,772 170,421
$ 2,749,075 $ 2,435,477
5. Long-Term Debt
On May 19, 1995, Alliance entered into a $23,600,000 secured credit
facility with CoBank. This agreement provides for $18,850,000 of term
loans and $4,750,000 of revolving term credit. Proceeds from the term
loans are used for construction of feeder pig production facilities and are
advanced by CoBank as Alliance incurs construction costs. Proceeds from
revolving term credit may be used for working capital and other purposes.
The expiration date for the unused commitments for the term loans has been
extended from February 28, 1997 to August 31, 1997. The unused revolving
term credit expires June 20, 2006. Interest accrues on the outstanding
principle balance of the loan at a rate equal to CoBank's national variable
rate, plus 1.25% (9.5% at February 28, 1997).
Long term debt at February 28, 1997 and August 31, 1996 consisted of the
following:
February 28 August 31
1997 1996
CoBank Term Loan.......$ 11,294,000 $ 11,518,000
CoBank Revolving
Term Credit........$ 2,628,000 $ 2,141,000
Note Payable,
Farmland.........$ 816,424 636,424
$ 14,738,424 $ 14,295,424
Less Current Maturities $ 1,038,300 $ 870,000
$ 13,700,124 $ 13,425,424
At February 28, 1997, no additional term loans were immediately available,
$211,000 of term loans will be available upon acceptance by CoBank of a
feeder pig production facility and $142,000 of revolving term credit was
immediately available.
Additional amounts of term loans of $6,330,000 and revolving term credit of
$1,830,000 are restricted and available only as additional shares of common
stock are sold ($2,110,000 of term loans and $610,000 of revolving term
credit for every $1,360,000 of common stock sold).
Alliance is required to comply with various covenants, including, but not
limited to (i) maintaining at least $3,350,000 of shareholder's equity,
(ii) maintaining modified working capital (calculated as current assets
plus the available revolving term credit minus current liabilities
excluding the current portion of term debt payments) of at least $406,000,
(iii) restrictions on the occurrence of additional indebtedness, (iv)
restrictions on the declaration and payment of the cash portion of
patronage distributions and other distributions or allocations of earnings,
surplus or assets. As of February 28, 1997 Alliance was in compliance with
all covenants except for the modified working capital covenant, for which
Alliance has obtained a waiver from CoBank. Alliance may be required to
make equity investments in CoBank in an amount not to exceed 1% of the
average five-year principal loan balance until Alliance meets CoBank's
target level of equity investment, which is currently 11.5% of the average
five-year principal loan balance. As of February 28, 1997, substantially
all assets of Alliance were pledged to CoBank.
At February 28, 1997, $816,424 had been borrowed from Farmland pursuant to
a $760,000 loan agreement and a $200,000 loan agreement. The $760,000 loan
agreement provides for interest at CoBank's prime rate and requires
repayment in 2005. The $200,000 loan agreement provides for interest at
CoBank's prime rate plus 1.25% and requires repayment in November 2006, or
upon the sale of an additional 17 shares of common stock by Alliance if
that occurs prior to November 2006.
Long-term debt as of February 28, 1997 matures during the fiscal years
ending August 31 in the following amounts:
1997........$ 870,000
1998........ 1,262,700
1999........ 1,318,800
2000........ 1,318,800
2001........ 1,318,800
Thereafter.. 7,611,024
$ 13,700,124
6. Alliance Farms is currently operating six 2,450 sow feeder pig production
units and has an additional unit under construction in Wayne County,
Illinois. As of February 28, 1997, commitments for construction of this
facility totaled approximately $2,109,900.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE STATEMENTS MADE IN
THIS REPORT ON FORM 10-QSB ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. ALLIANCE'S ACTUAL RESULTS, FINANCIAL CONDITION OR BUSINESS COULD
DIFFER MATERIALLY FROM ITS HISTORICAL RESULTS, FINANCIAL CONDITION OR BUSINESS,
OR THE RESULTS OF OPERATIONS, FINANCIAL CONDITION OR BUSINESS CONTEMPLATED BY
SUCH FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN ALLIANCE FARMS'
AUGUST 31, 1996 ANNUAL REPORT ON FORM 10-KSB UNDER THE CAPTION "FACTORS THAT MAY
AFFECT FUTURE RESULTS OF OPERATIONS, FINANCIAL CONDITION OR BUSINESS", AS WELL
AS THOSE DISCUSSED ELSEWHERE IN ALLIANCE'S REPORTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At February 28, 1997, Alliance reported a working capital deficit of
$1,139,041 and total assets of $22,344,378. Alliance issued 17 shares of common
stock in October 1995 for net proceeds of approximately $1,324,461. Alliance
used these funds, in combination with $3,219,899 of net proceeds from previous
sales of common stock and borrowings of $14,738,424 through February 28, 1997,
for the development, population, and start-up of five feeder pig production
facilities in Yuma County, Colorado and one feeder pig production facility in
Wayne County, Illinois.
Alliance has issued 102 shares of common stock and has under its credit
facility $142,000 immediately available as of February 28, 1997. An additional
$211,000 is to become available approximately 90 days following completion of
construction of the first facility in Illinois (anticipated to occur in April
1997). In the event that an additional 51 shares of Alliance common stock are
issued and sold prior to the August 31, 1997 expiration of the CoBank loan
commitment, another $8,160,000 would be eligible for borrowing. The net
proceeds from the sale of such additional shares and additional bank borrowings
would be used for future capital expansion of up to three additional feeder pig
production facilities, including Alliance's second facility in Wayne County,
Illinois. However; there is no assurance that additional shares of common stock
will be sold and that the additional debt required for such expansion would be
available.
The availability of non-revolving term debt and revolving term credit under
the CoBank credit facility is subject to specified equity investment levels in
the Company being satisfied. The availability of $6,330,000 of unused term
loans and $1,830,000 of revolving term credit under the CoBank credit facility
is restricted and may be made available to the Company only to the extent that
additional equity investment is made in the Company. With respect to each
additional equity investment of $1,360,000 obtained by the Company (e.g., 17
shares of Common Stock sold for at least $80,000 each) prior to the August 31,
1997 expiration of the CoBank loan commitment, the Company is entitled to obtain
advances under the credit facility of $2,720,000 ($2,110,000 of term loans and
$610,000 of revolving term credit), up to an aggregate of $8,160,000. The
Company has agreed with CoBank and Farmland that it may obtain an advance under
the CoBank credit facility of $2,720,000 and a loan from Farmland of $1,360,000
(including $200,000 previously loaned by Farmland to Alliance), without the
necessity of satisfying the additional equity investment requirement. In the
opinion of management, these arrangements for debt capital are adequate for
Alliance's present operating and capital plans.
As of February 28, 1997, Alliance has borrowed $816,424 from Farmland,
including $200,000 borrowed for the acquisition of certain real property in
Wayne County, Illinois on which the second Illinois facility is under
development.
During the six month period ended February 28, 1997, Alliance incurred
capital expenditures of $900,271 for construction of its second feeder pig unit
in Wayne County, Illinois in addition to $516,764 for construction of its fifth
feeder pig unit in Yuma County, Colorado and its first feeder pig unit in Wayne
County, Illinois, as well as capital expenditures of $399,650 for the
acquisition of real property on which additional facilities could be developed.
The remaining capital expenditures were for replacement breeding stock and
building construction for the first four units.
For the six month period ended February 28, 1997, cash provided by
operating activities was $2,132,967 as compared to a use of $286,505 for the
prior year period. This increase in cash resulted from an improvement in
operations and an increase in accounts payable.
THREE MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
Shipments of feeder pigs were higher for the three months ended February
28, 1997 than in the prior year's period. Alliance shipped 57,746 feeder pigs
for the quarter ended February 28, 1997 compared to 33,290 feeder pigs shipped
for the quarter ended February 29, 1996 for an increase of 73%. Net sales for
the quarter ended February 28, 1997 increased to $3,316,983 from $1,443,563 for
the prior year period, an increase of $1,873,420, or 130%. The selling price
per pig is determined pursuant to the formula established under Alliance's
Feeder Pig Purchase Agreement with its members. The selling price is based on
Alliance's operating costs (which are based on a twelve month rolling average),
debt service and an additional $4.50 per pig. The above increase in volume and
sales dollars is a result of having six units in production for the quarter
ended February 28, 1997 as compared to four units in production for the quarter
ended February 29, 1996. The sales price per pig pursuant to the Feeder Pig
Purchase Agreement also was higher due to an increase in the twelve month
rolling average of operating costs. This increase in the rolling average of
operating costs resulted from a decline in feeder pigs shipped per unit.
Additionally, a sales rebate of $148,230 was accrued during the quarter ended
February 29, 1996 which reduced net sales. During the three months ended
February 28, 1997, Alliance did not accrue the sales rebate of $4.50 per pig
shipped due to Alliance's decision to no longer pay a sales rebate. Average net
sales price was $57.44 and $43.36 during the quarter ended February 28, 1997 and
February 29, 1996, respectively.
Alliance incurred positive gross margins of $347,397 and $12,609 for the
three month periods ended February 28, 1997 and February 29, 1996, respectively.
This improvement in gross margin is primarily due to the nature of the
contractual pricing arrangements applicable to Alliance's sale of feeder pigs to
its members. As previously described, the selling price is based on, among
other things, Alliance's operating costs on a twelve month historical rolling
average. For the second quarter of fiscal 1997, Alliance's net sales price
exceeded then current operating costs (at the time pigs were shipped) by $14.37
per pig sold. For the second quarter of fiscal 1996, the net sales price
exceeded then current operating costs (at the time pigs were shipped) by $7.19
per pig sold.
Sales to Farmland for the three month periods ended February 28, 1997 and
February 29, 1996 were $1,956,704 and $972,066, respectively. The average net
sales price per head was $57.44 and $43.36 and the average industry market price
per head was $56.20 and $34.66 during 1997 and 1996, respectively.
Loss on sale of breeding stock was $21,362 for the three months ended
February 28, 1997 as compared to $96,146 for the prior year period. This
decrease is attributable to the existence of more newly developed facilities
culling animals during the second quarter of fiscal 1996 as compared to more
mature facilities culling animals during the second quarter of fiscal 1997.
Administrative expenses were $122,027 for the three months ended February
28, 1997 compared to $96,898 for the prior year period. This increase reflects
the increased operations and includes higher administrative, payroll and
professional fees.
Interest expense of $357,932 for the three months ended February 28, 1997
as compared to $222,744 for the prior year period, was incurred in financing the
development of four existing and two new feeder pig facilities. This increase
is primarily due to the increase in the outstanding loan balance. As of
February 28, 1997, Alliance had borrowed $13,922,000 from CoBank for
construction and start up costs and $816,424 from Farmland for the purchase of
land which is intended to be used for future expansion.
Alliance incurred a net loss of $110,670 for the three months ended
February 28, 1997 compared to a net loss of $397,770 for the prior year period.
The net loss for the second quarter of fiscal 1997 was attributable to the
current costs exceeding the rolling average cost that per pig sales prices are
based on, caused by a decrease in productivity from the first quarter of fiscal
1997 due to herd health issues, partially offset by decreasing corn prices. The
net loss for the second quarter of fiscal 1996 was attributable primarily to
then current costs exceeding the rolling average cost that per pig sales prices
are based on, caused in part by high death loss due to herd health issues, as
well as rising corn prices. In addition to operating risks and uncertainties
associated with any business, Alliance's ability to generate net income is
limited by any start-up expenses that are incurred with respect to facilities
development and by the selling price formula for feeder pigs that contains a
$4.50 production margin.
SIX MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29, 1996
Shipments of feeder pigs were higher for the six months ended February 28,
1997 than in the prior year's period. Alliance shipped 112,800 feeder pigs for
the six months ended February 28, 1997 compared to 67,241 feeder pigs shipped
for the six months ended February 29, 1996 for an increase of 68%. Net sales
for the six months ended February 28, 1997 increased to $6,519,998 from
$2,871,276 for the prior year period, an increase of $3,648,722, or 127%. The
selling price per pig is determined pursuant to the formula established under
Alliance's Feeder Pig Purchase Agreement with its members. The selling price is
based on Alliance's operating costs (which are based on a twelve month rolling
average), debt service and an additional $4.50 per pig. The above increase in
volume and sales dollars is primarily due to six units operating at full
capacity for the six months ended February 28, 1997 as compared to four units
operating at full capacity for the six months ended February 29, 1996. The
sales price per pig pursuant to the Feeder Pig Purchase Agreement also was
higher due to an increase in the twelve month rolling average of operating
costs. Additionally, a sales rebate of $301,010 was accrued during the six
months ended February 29, 1996 which reduced net sales. During the six months
ended February 28, 1997, Alliance did not accrue the sales rebate of $4.50 per
pig shipped due to Alliance's decision to no longer pay a sales rebate. Average
net sales price was $57.80 and $43.07 during the six months ended February 28,
1997 and February 29, 1996, respectively.
Alliance incurred a positive gross margin of $970,949 and a negative gross
margin of $137,430 for the first half of fiscal 1997 and fiscal 1996,
respectively. This improvement in gross margin is primarily due to the nature
of the contractual pricing arrangements applicable to Alliance's sale of feeder
pigs to its members. As previously described, the selling price is based on,
among other things, Alliance's operating costs on a twelve month historical
rolling average. For the first half of fiscal 1997, Alliance's net sales price
exceeded then current operating costs (at the time pigs were shipped) by $14.73
per pig sold. For the first half of fiscal 1996, the net sales price exceeded
then current operating costs (at the time pigs were shipped) by $6.90 per pig
sold.
Sales to Farmland for the first half of fiscal 1997 and 1996 were
$3,961,082 and $1,945,808, respectively. The average net sales price per head
was $57.80 and $43.07 and the average industry market price per head was $53.99
and $35.73 during 1997 and 1996, respectively.
Loss on sale of breeding stock was $81,020 for the six months ended
February 28, 1997 as compared to $170,637 for the prior year period. This
decrease is attributable to the existence of more newly developed facilities
culling animals during the first half of fiscal 1996 as compared to more mature
facilities culling animals during the first half of fiscal 1997.
Administrative expenses were $214,996 for the six months ended February 28,
1997 compared to $170,565 for the prior year period. This increase reflects the
increased operations and includes higher administrative, payroll and
professional fees.
Interest expense of $680,584 for the six months ended February 28, 1997 as
compared to $439,320 for the prior year period, was incurred in financing the
development of four existing and two new feeder pig facilities. This increase is
primarily due to the increase in the outstanding loan balance.
Alliance incurred net income of $4,467 for the six months ended February
28, 1997 compared to net loss of $910,278 for the prior year period. The small
net income for the first half of fiscal 1997 was partially attributable to an
improvement in productivity at the beginning of the fiscal year which decreased
throughout the first half of fiscal 1997 due to herd health issues, offset by
decreasing corn prices. The net loss for the first half of fiscal 1996 was
attributable primarily to then current costs exceeding the rolling average cost
that per pig sales prices are based on, caused in part by high death loss due to
herd health issues, as well as rising corn prices. Additionally, Alliance's net
sales price for pigs exceeded current operating costs in the first half of
fiscal 1997 by $7.83 more than in the first half of fiscal 1996. Alliance also
accrued a $301,010 rebate in the first half of fiscal 1996 that it did not
accrue in the first half of fiscal 1997.
PART II. OTHER INFORMATION
Item 6. Exhibits and Report on Form 8-K
(a) Exhibits
The exhibits listed below are filed as part of Form 10-QSB for the quarter
ended February 28, 1997.
10.1 First Amendment to Swine Production Services Agreement, dated
as of July 26, 1996, between Farmland Industries, Inc. and
the Registrant
10.2 Camborough-22 Closed Herd Multiplier Agreement, dated March
1, 1996, between Pig Improvement Company, Inc. and the
Registrant
10.3 Option Contract, dated November 20, 1996, between Bill L.
Bailey and Norma Jean Bailey, and the Registrant
10.4 The Registrant's Promissory Note, dated November 27, 1996, to
Farmland Industries, Inc.
10.5 Illinois Mortgage, dated as of November 27, 1996, from the
Registrant to Farmland Industries, Inc.
10.6 Correction Deed of Trust, dated October 23, 1996, between the
Public Trustee of the County of Yuma, State of Colorado and
the Registrant
10.7 Master Construction Agreement, dated November 22, 1996
(Illinois #2 sow unit), between the Registrant and Central
Confinement Service, Ltd.
10.8 Master Construction Agreement, dated November 22, 1996
(Illinois #2 nursery), between the Registrant and Central
Confinement Service, Ltd.
10.9 Master Construction Agreement, dated November 22, 1996
(Illinois #2 isolation building), between the Registrant and
Central Confinement Service, Ltd.
10.10 Illinois Mortgage, dated February 23, 1996, from the
Registrant to CoBank, ACB
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended February 28,
1997.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ALLIANCE FARMS COOPERATIVE ASSOCIATION
(Registrant)
/s/ WAYNE SNYDER
Wayne Snyder
Chairman of the Board, President
and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
Dated: April 14, 1997
EXHIBIT 99
EXHIBIT INDEX
The following exhibits are filed as a part of this Form 10-QSB.
Exhibit No. Description
10.1 First Amendment to Swine Production Services Agreement, dated
as of July 26, 1996, between Farmland Industries, Inc. and
the Registrant
10.2 Camborough-22 Closed Herd Multiplier Agreement, dated March
1, 1996, between Pig Improvement Company, Inc. and the
Registrant
10.3 Option Contract, dated November 20, 1996, between Bill L.
Bailey and Norma Jean Bailey, and the Registrant
10.4 The Registrant's Promissory Note, dated November 27, 1996, to
Farmland Industries, Inc.
10.5 Illinois Mortgage, dated as of November 27, 1996, from the
Registrant to Farmland Industries, Inc.
10.6 Correction Deed of Trust, dated October 23, 1996, between the
Public Trustee of the County of Yuma, State of Colorado and
the Registrant
10.7 Master Construction Agreement, dated November 22, 1996
(Illinois #2 sow unit), between the Registrant and Central
Confinement Service, Ltd.
10.8 Master Construction Agreement, dated November 22, 1996
(Illinois #2 nursery), between the Registrant and Central
Confinement Service, Ltd.
10.9 Master Construction Agreement, dated November 22, 1996
(Illinois #2 isolation building), between the Registrant and
Central Confinement Service, Ltd.
10.10 Illinois Mortgage, dated February 23, 1996, from the
Registrant to CoBank, ACB
27 Financial Data Schedule
EXHIBIT 10.1
FIRST AMENDMENT TO
SWINE PRODUCTION SERVICES AGREEMENT
THIS FIRST AMENDMENT TO SWINE PRODUCTION SERVICES AGREEMENT is entered
into effective as of the 26th day of July, 1996, by and between ALLIANCE FARMS
COOPERATIVE ASSOCIATION (hereinafter "Association") and FARMLAND INDUSTRIES,
INC. (hereinafter "Farmland").
WHEREAS, Association and Farmland are parties to a Swine Production
Services Agreement, dated as of July 13, 1994 (the "Agreement");
WHEREAS, Association and Farmland desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree that the Agreement be amended as follows:
1. Effective March 1, 1996, Section 10(d)(ii) of the Agreement
hereby is amended by deleting the reference to "$20.00" therein and
inserting in lieu thereof "$10.00" such that said Section 10(d)(ii) shall
read in its entirety as follows:
(ii) HANDLING FEE. A handling fee of $10.00 per head, which
shall be increased, on an annual basis, by a percentage rate equal to
the annual rate of inflation, as disclosed by the Consumer Price Index
- Retail Index as published by the United States Department of
Commerce using the Index for 1994 as the base year for purposes of the
calculations required by this subsection (d)(ii).
2. Effective September 1, 1995, Section 10 of the Agreement hereby
is further amended by inserting a new Section 10(j) immediately following
the existing Section 10(i) of the Agreement, which new Section 10(j) shall
read in its entirety as follows:
(i) UNPURCHASED GILTS. With respect to any gilts that survive
finishing by Farmland for use as breeding stock by the Association and
are not repurchased by the Association as contemplated by subsection
(a) of this Section, Farmland shall either (i) market such gilts for
slaughter or (ii) retain such gilts for use as breeding stock.
Farmland shall pay to the Association a $10.00 per head fee for the
gilts retained by Farmland for use as breeding stock, which fee shall
be payable promptly upon the gilts being placed in service as breeding
stock.
3. Except as expressly amended hereby, all of the terms, conditions
and provisions of the Agreement shall remain unamended and in full force
and effect in accordance therewith and are hereby ratified and confirmed.
The amendments provided herein shall be limited precisely as drafted and
shall not constitute an amendment of any other term, condition or provision
of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Swine Production Services Agreement as of the day and year first
above written.
ALLIANCE FARMS COOPERATIVE
ASSOCIATION
By:
Name:
Title:
FARMLAND INDUSTRIES, INC.
By:
Name:
Title:
EXHIBIT 10.2
CAMBOROUGH-22 CLOSED HERD MULTIPLIER AGREEMENT
ALLIANCE FARM
THIS AGREEMENT, entered into this first day of March, 1996, is by and between
PIG IMPROVEMENT COMPANY, INC., hereafter "PIC", a Wisconsin Corporation, and
ALLIANCE FARM COOPERATIVE ASSOCIATION, a Colorado Corporation, hereafter
"Multiplier".
RECITALS
1. PIC has established and maintained herds of Breeding Pigs which serve
as Genetic Nucleus Herds for the production of female and male
Breeding Pigs which have selective and unique traits and
characteristics, including, but not limited to, favorable reproduction
and growth performance of their offspring; and
2. Animals identified above and hereinafter defined, are the principal
products sold and distributed by PIC, its agents and employees, and
have been the principal product of said company for many years; and
3. PIC has developed a uniform method of operation, has compiled a body
of technical knowledge, skills and operating experience as it relates
to the genetic improvement and performance of swine sold by PIC to
Multipliers, and has developed Multiplier lists and other valuable
information used in conjunction with Multipliers' production and
marketing of Slaughter Animals; and
4. PIC has instituted and maintains certain breeding programs which seek
to standardize and maximize the genetic benefit to Multipliers using
PIC products and services in raising animals for slaughter through the
specific breeding programs unique to PIC and its breeding animals; and
5. Such Breeding Pigs, their offspring, as hereinafter defined, and the
breeding programs used by PIC result in animals and products
hereinafter defined, which are unique to PIC and which also include
the "Camborough" which is registered as a trademark in the U.S.A. and
exclusively owned by Dalgety, PLC, the parent company of PIC; and
6. Multiplier wishes to engage in the business of swine production and
avail itself of PIC's expertise, exclusive products, breeding
programs, technical knowledge and skills; and
7. This Multiplier Agreement has as its express purposes the production
of Parent Animals suitable for production of Slaughter Animals (said
Parent Animals representing PIC's principal products identified
herein); and
8. Multiplier wishes to artificially inseminate certain animals purchased
from PIC, or the progeny of those animals; and
9. PIC is willing, under certain terms and conditions, to allow
Multiplier to artificially inseminate certain animals purchased from
PIC, or the progeny of those animals; and
10. PIC is willing to permit Multiplier to use PIC's expertise, products,
breeding programs, technical knowledge, and skills to produce Parent
for sale and/or transfer only to Multiplier-owned Commercial Herds, to
Members who have signed a Member Commercial Production Agreement and
who are identified in Schedule 3, and other entities by written
permission of PIC, subject to the controls and protection of PIC's
exclusive property as provided herein; and
11. Multiplier recognizes the value to it of such exclusive products and
programs and wishes to establish Multiplier Herd(s) and to produce and
transfer animals, strictly in accordance with the restrictions,
limitations, terms and conditions set forth in this Agreement.
In consideration of the mutual promises and the covenants and agreements
hereinafter set forth, it is agreed as follows:
I. DEFINITIONS
For the purpose of this Agreement, the following terms shall have the
following meanings:
A. AI BOARS - Breeding Males produced by PIC or on farms under contract
with PIC.
B. AI STUD - the buildings and facilities owned by PIC, or under contract
with PIC, where Great-Grandparent, Grandparent, and Parent Males are
housed for collection of semen.
C. ARTIFICIAL INSEMINATION (AI) - introduction of semen into the uterus
or oviduct by other than natural means.
D. BREEDING FEMALES - gilts and/or sows to be used for reproductive
purposes.
E. BREEDING MALES - boars to be used for reproductive purposes.
F. BREEDING PIGS - pigs selected to be used for breeding purposes.
G. COMMERCIAL HERDS - herds utilizing Breeding Animals and/or AI to
produce only Slaughter Animals.
H. COMMERCIAL BOARS - Parent Boars intended to be used for the production
of Slaughter Animals only.
I. COMMERCIAL FEMALES - Parent Females intended to be used for the
production of Slaughter Animals only.
J. DAUGHTER NUCLEUS HERDS - breeding herds that receive Great-Grandparent
Animals from a PIC Genetic Nucleus Herd and produce Grandparent
Animals.
K. GENETIC NUCLEUS HERD - one of a few selected PIC farms wherein animals
of particular and unique genetic characteristics are produced.
L. GRANDPARENT ANIMALS (FEMALES AND MALES) - direct offspring of Great-
Grandparent Animals used to produce Parent Animals.
M. GREAT-GRANDPARENT ANIMALS (FEMALES AND MALES) - selected animals of
unique genetic characteristics resulting in superior animals produced
from selected nucleus herds.
N. ISOWEAN7 - animals weaned using PIC's registered Isowean7 technology
and sold at weights between 6 and 15 pounds.
O. MULTIPLIER'S COMMERCIAL FARMS - farms consisting of Commercial Herds
that fall into any of the following categories:
1. Multiplier has sole ownership interest in the commercial farm and
herd.
2. Multiplier leases the commercial farm production facility and has
sole ownership interest in the Commercial Herd.
3. The commercial farm production facility is owned by another
party, but that party is under contract with Multiplier and the
contract requires the owner of the facility to comply with the
restrictions on sale and use of the breeding stock and its
progeny that are incorporated in this agreement.
P. MULTIPLIER'S CLOSED HERD MULTIPLIER (CHM) - that portion of the
Multiplier's herd(s) consisting of PIC Grandparent Animals devoted to
the production of Parent Animals for use as replacements in
Multiplier's Commercial Farms.
Q. MULTIPLIER UNIT(S) - the physical location, buildings, and facilities,
which have been authorized by PIC for the location of a Multiplier
Herd.
R. NATURAL SERVICE - the introduction of semen into the uterus or oviduct
by natural means.
S. NECESSARY REPLACEMENTS - any and all Grandparent Animals needed by
Multiplier to maintain the Multiplier Herd(s) at the levels indicated
in Schedule 2.
T. PARENT ANIMALS (FEMALES AND MALES) - direct offspring of Grandparent
Animals.
U. PARENT BOARS - direct male offspring of Grandparent Animals.
V. PARENT GILTS - direct female offspring of Grandparent Animals.
W. PERMITTED FEEDLOTS - facilities identified in Schedule 3, to which
Slaughter Animals may be transferred for finishing prior to slaughter.
X. PIC BOARS - Breeding Males owned by PIC or produced on farms under
contract with PIC.
Y. PIC GILTS - Breeding Females owned by PIC or produced on farms under
contract with PIC.
Z. PIC SEMEN - semen collected from AI Boars.
AA. SLAUGHTER ANIMALS - animals intended to be slaughtered instead of used
for breeding purposes.
II. TERM
This Agreement will continue, subject to termination as set out in Section
VI below, for seven (7) years from the date of this Agreement. After the
31st day of March, 2003, this Agreement will automatically be renewed for
successive two (2) year terms, unless either party gives written notice of
termination not less than twelve (12) months prior to the end of the then
current term.
III. ESTABLISHMENT AND MAINTENANCE OF HERDS
A. PIC shall sell to Multiplier and Multiplier shall buy from PIC
Grandparent Gilts and Grandparent Boars and all Necessary Replacement
Grandparent Gilts and Grandparent Boars to establish and maintain the
Multiplier Herd(s) listed in Schedule 2 of this Agreement.
B. Multiplier will maintain the Multiplier Herds and Commercial Herds at
the sizes set out in this Agreement by periodically purchasing animals
from PIC. Prices for animals purchased by Multiplier from PIC will be
adjusted, as provided in Schedule 1, attached, if ratios in the Herds
set out in Schedules 2 and 3, attached, exceed 25 Sows per Boar.
Herds will not be considered to have exceeded the allowed ratio if,
within 5 days after the ratio is exceeded in the Herds, Multiplier
places orders which, when filled, will bring the actual Sow to Boar
ratio in the Herds to below 25 Sows per Boar.
C. Herd sizes will be determined by counting only animals which have
reached a weight of at least 200 pounds. Herd sizes may vary by plus
or minus five percent (5%) without Multiplier being considered in
breach of this Agreement, so long as Multiplier otherwise complies
with the requirements of this Agreement.
IV. SUPPLY AND PURCHASE OF BREEDING PIGS
During the term of this Agreement and any extension of it, the following
will apply:
A. All sales by PIC to Multiplier, provided in Section III above, shall
be at the prices specified in Schedule 1 attached hereto. Breeding
Pigs sold hereunder shall not include pigs produced by transgenic
technology. PIC agrees to offer Multiplier breeding stock produced in
the future by transgenic technology, if available, and if the parties
agree to terms at the time such technology is determined by PIC to be
available for sale.
B. Multiplier shall purchase all Necessary Replacement Grandparent
Animals only from PIC or Farmland.
C. Sales of all Breeding Pigs supplied by PIC shall be in accordance
with, and subject to, the Conditions of Sale set forth in Schedule 4
attached hereto. Multiplier agrees to be bound by the provisions of
Schedule 4.
V. COVENANTS OF THE PARTIES
A. PIC covenants and agrees:
1. To sell Grandparent Animals, if available, to Multiplier at the
prices specified in Schedule 1, for use to produce Parent Animals
for Multiplier's Commercial Herds.
2. To provide the Multiplier with production and technical
assistance at Multiplier's reasonable request, and at such
charges, to be paid by Multiplier, as PIC may determine and
Multiplier may accept. If the parties are unable to agree in
advance on the rate to be charged and paid for such assistance,
PIC shall have no obligation to provide it.
3. To permit Multiplier to transfer to Multiplier's Commercial Farms
the Parent Animals produced by the PIC Grandparent Animals sold
to Multiplier, or by the use of Grandparent semen collected by or
sold to Multiplier, subject to the restrictions on use provided
herein.
4. To sell PIC Commercial Boars, if available, to Multiplier for use
to produce Slaughter Animals in the Multiplier's Commercial
Farms.
5. To sell to Multiplier PIC Parent Gilts, if available and if
Multiplier is in compliance with terms of this Agreement, at the
price listed in Schedule 1.
6. To permit Multiplier to transfer to Permitted Feedlots the
Slaughter Animals produced by the Parent Animals in the
Multiplier's Commercial Farms, subject to the restrictions on use
provided herein.
B. Multiplier covenants and agrees:
1. To transfer Parent Animals produced by Multiplier and selected as
suitable for breeding ONLY to Multiplier's Commercial Farms
identified in Schedule 3 for use to produce Slaughter Animals,
and to sell only for slaughter all Parent Animals in excess of
the needs of Multiplier's Commercial Farms, unless PIC in its
sole discretion shall determine and direct otherwise.
2. Allow no pigs other than those delivered by PIC, or their
progeny, to come into the Multiplier Unit and to include only
Grandparent Animals, delivered pursuant to PIC instructions, in
the Multiplier Herd(s). This provision will not preclude
Multiplier from using non-PIC Parent Boars in Multiplier's
Commercial Herds.
3. To sell only for slaughter any and all Grandparent Animals
removed from the Multiplier's CHM.
4. To follow the Genetic Program as set forth in Schedule 5.
5. To pay all veterinary costs associated with, and incurred by, the
Multiplier, including, without limitation, costs directly
associated with the production and distribution of Selects to
permitted feedlots (e.g., veterinarian visits, diagnostic work,
blood testing, health papers and the cost of vaccines,
anthelmintics, and antibiotics).
6. To sell only for slaughter all Parent Animals produced by the
Multiplier's CHM and not transferred to Multiplier's Commercial
Farms and not to dispose of them in any other manner except with
the specific prior written consent of PIC. In no circumstances
shall the Multiplier sell or use the female progeny of the
Grandparent Animals for breeding purposes other than by transfer
to Multiplier's Commercial Farms, unless the Multiplier has,
prior to each such sale or use, obtained the specific written
consent of PIC therefor, nor shall Multiplier use the male
progeny of said Grandparent Animals for any breeding purpose
whatsoever. The foregoing restrictions on the disposition of
stock of the Multiplier Herd(s) shall survive termination of this
Agreement and remain in full force and effect until PIC is
satisfied that any and all Grandparent Animals provided by PIC as
the initial herd and/or Necessary Replacements, as well as Parent
Gilts produced by Multiplier from PIC Grandparent Animals are no
longer on the premises and that only Commercial Boars and Females
remain. The parties hereto acknowledge and agree that
irreparable damage may result to PIC and its reputation if
Multiplier violates this Subsection 6, and that no adequate
remedy at law exists for such a breach. Accordingly, in addition
to any other rights or remedies or damages available to PIC at
law or equity, in the event of a breach or threatened breach of
the terms of this Subsection 6 PIC shall be entitled to
appropriate injunctive relief, including temporary and permanent,
mandatory and prohibitive injunctive relief, without the
necessity of posting bond or other security. Nothing herein
shall be construed as prohibiting PIC from pursuing other
remedies available to PIC for such breach or threatened breach,
including the recovery of money damages.
7. To sell the progeny of the Parent Animals only to Permitted
Feedlots or for slaughter, and not retain the progeny for use for
breeding purposes or permit the use of the progeny for breeding
purposes.
8. To require that any Permitted Feedlots to which Slaughter Animals
are sold or transferred for finishing comply in all respects with
the restrictions on the use of genetics contained in this
Agreement.
9. TO INDEMNIFY FULLY AND DEFEND PIC FROM ANY AND ALL LIABILITY,
CLAIM, SUIT, ADMINISTRATIVE PROCEEDING, OR OTHER CAUSE OF ANY
NATURE WHATSOEVER BROUGHT BY ANY PERSON, FIRM OR ENTITY, IF SAID
CLAIM, SUIT OR CAUSE IS BROUGHT AS A RESULT OF ANIMALS SOLD OR
TRANSFERRED BY MULTIPLIER TO ITS MEMBERS OR THE PROGENY OF SAID
ANIMALS, AND TO PAY ANY AND ALL REASONABLE LEGAL FEES INCURRED BY
PIC IN DEFENDING ANY SUCH CLAIM AND TO INDEMNIFY FULLY AND DEFEND
PIC FROM AND AGAINST CLAIMS, LOSSES AND SUITS (INCLUDING
REASONABLE ATTORNEY FEES) ARISING FROM PERSONAL INJURIES TO THIRD
PARTIES OR PROPERTY DAMAGE CAUSED BY THE NEGLIGENT ACTS OR
OMISSIONS OF MULTIPLIER, ITS AGENTS, EMPLOYEES OR CONTRACTORS.
This provision will not apply to claims, suits, or causes arising
out of any intentionally wrongful, reckless, or grossly negligent
acts of PIC, its employees or agents.
10. To maintain the Multiplier Herd(s) listed in Schedule 2 of this
Agreement at the sizes listed in Schedule 2.
11. Notify PIC of any changes of plus or minus five percent (5%) or
more in the sizes of the Multiplier Herd(s) and Commercial Herds
as they occur and certify in writing to PIC the accuracy of
Schedules 2 and 3 annually on the anniversary date of this
Agreement.
12. To be responsible for all credit replacements of Breeding Pigs
produced in the Multiplier's CHM and used by the Multiplier's
Commercial Farms or permitted feedlots. It is agreed and
understood that PIC shall have no replacement responsibility to
Multiplier or any other person, firm or entity, for the Parent
Animals produced at the Multiplier's CHM.
13. To purchase all Parent Boar replacements for Multiplier's
Commercial Farms from PIC.
14. To keep all records and make all reports specified by PIC in
writing and to report to PIC, without limitation, the monthly
disposition of all Parent Gilts leaving the Multiplier Unit(s),
including the number sold to slaughter.
15. To subscribe to PIGTALES, PIG CHAMP, or another data system
acceptable to PIC.
16. To castrate all male progeny of the Grandparent Animals at less
than 10 weeks of age.
17. To give PIC staff the right of access to the Multiplier Unit(s)
for the purpose of inspecting the Multiplier Herd(s) Multiplier
Commercial Herds and herd records at all reasonable times. This
right to inspect the above herds will include, but is not limited
to, the right to obtain blood samples from the herds for the
purpose of monitoring the use, or presence of specific breeds,
lines, genetics, or DNA in the herds. This provision shall
survive termination of this Agreement for a period of six (6)
months after the last breeding pigs provided by PIC have been
removed from the herds so that PIC has adequate means of assuring
compliance with the covenants restricting disposition of animals.
18. Not disclose to any person (other than an employee or contractor
of Multiplier directly involved in the management of the
Multiplier Herd), PIC breeding techniques, feeding programs or
other information furnished by PIC in connection with the
development and maintenance of the Multiplier Herd, which has
been supplied and specified in writing as confidential, by PIC.
19. Unless authorized in advance by PIC in writing, not collect or
use germplasm, embryos, or other non-natural means of reproducing
PIC animals, with the exception of fresh semen, which Multiplier
may collect from the Grandparent Boars in the Multiplier Herd(s)
and use on Multiplier's Grandparent Females. Multiplier may also
use semen for artificial insemination if Multiplier is in
compliance with the terms and conditions of an Agreement of Sale
for Semen or Agreement of Sale for AI Boars between Multiplier
and PIC, or if semen is purchased from an AI Stud under contract
with PIC. Following termination of this Agreement, Multiplier
may not collect or use germplasm, embryos, Grandparent Boar semen
or other non-natural means of reproducing PIC animals.
Multiplier agrees that no semen, collected from Grandparent or
Parent Boars or purchased from PIC or from an AI Stud under
contract with PIC, will be transferred to any other party without
PIC's written consent.
VI. TERMINATION
This Agreement may be terminated under the following circumstances:
A. Immediately, upon written notice from PIC to Multiplier following the
occurrence of any substantial breach of this Agreement. Breach of any
one of the following sections of this Agreement is a substantial
breach of this Agreement: Section V, B. 1, 2, 3, 4, 5, 6, 7 and 8;
Sections IX and X.
B. Thirty days after written notice to Multiplier by PIC of Multiplier's
breach of any other provision of this Agreement, if said breach
remains uncured to PIC's satisfaction, or immediately, upon notice of
termination, if the breach is one that has occurred a second time in a
six month period following notice of breach. Termination hereunder
shall be effective upon written notice of termination by PIC to the
other party hereto, which notice shall specify the breach, the date of
notice thereof and the reasons cure is not satisfactory to PIC.
C. Thirty days after written notice by Multiplier to PIC of breach of any
of PIC's covenants, if said breach remains uncured to Multiplier's
satisfaction, or immediately, upon notice of termination, if the
breach is one that has occurred a second time in a six month period
following notice of breach. Termination hereunder shall be effective
upon written notice of termination by Multiplier to PIC, which notice
shall specify the breach, the date of notice thereof and the reasons
cure is not satisfactory to Multiplier.
D. Thirty days after written notice from Multiplier to PIC, if PIC fails
to deliver orders placed by Multiplier for animals under this
Agreement and which orders have been confirmed by PIC, for a period of
120 consecutive days.
E. If either Multiplier or PIC shall generally not pay its debts as they
become due or shall admit in writing its inability to pay its debts,
or shall make a general assignment for the benefit of creditors; or
shall commence any case, proceeding or other action seeking to have an
order for relief entered on its behalf as debtor or to adjudicate it
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts
under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors or seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any
substantial part of its property; or shall take any corporate action
to authorize or in contemplation of any of the actions set forth above
in this paragraph; or any case, proceeding or other action against any
party hereto shall be commenced seeking to have an order for relief
entered against it as debtor or to adjudicate it bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts under any
law relating to bankruptcy, insolvency, reorganization or relief of
debtors, or seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of
its property, and such case, proceeding or other action (i) result sin
the entry of an order for relief against it which is not fully stayed
within seven (7) business days after the entry thereof or (ii) shall
remain undismissed for a period of forty-five (45) days.
F. After expiration of the original seven (7) year term or any extension
of it, provided either party gives written notice of termination not
less than twelve (12) months prior to the end of the then current
term.
G. At any time, by mutual consent of the parties, which shall be in
writing and signed by both parties hereto.
VII. PROCEDURES AFTER TERMINATION
In the event of termination for any reason, the following will apply:
A. Multiplier shall change the mating pattern of the Multiplier Herd(s),
as directed by PIC, to commercial production; shall not dispose of any
Grandparent Breeding Animals, male or female, other than directly to
PIC or for slaughter; shall sell to slaughter all Grandparent Males
within six (6) months and all Grandparent Females within eighteen (18)
months after termination, unless the parties have agreed in writing on
an alternative procedure within three (3) months after termination.
PIC may, at its sole option, repurchase the PIC Grandparent Males at
fair market value, which shall be determined by agreement of the
parties, taking into account their age, condition and productivity, or
if the parties cannot agree, by arbitration, under the rules for
commercial arbitration of the American Arbitration Association.
B. Multiplier may continue to transfer Parent Females to Multiplier's
Commercial Farms until Multiplier's inventory of said Parent Gilts is
exhausted, so long as Multiplier continues to comply fully with
Multiplier Covenants 1, 3, 5, 7, 8, 10, 11, 13, 15, 16, and 17 until
all Parent Gilt inventory has been transferred or sold for slaughter.
If Multiplier breaches any of these covenants, all Parent Gilts
remaining on the farm shall immediately be sold to PIC at slaughter
price or for slaughter, at PIC's option.
C. Multiplier shall provide PIC with documentation that the provisions of
the above subsections A - B have been complied with and shall continue
to permit PIC access to the Multiplier Herd(s) and to Multiplier's
records to assure compliance.
VIII. CLOSURE OF MULTIPLIER HERDS
The parties anticipate and intend that the Multiplier Herd(s) established
hereunder shall remain in operation during the entire term of this
Agreement. However, both parties are familiar with the risks involved in
swine management and the possibility that economically significant disease
may occur in well-managed herds and that steps to correct a health problem
may vary depending on the nature and extent of the problem. Therefore, the
parties agree as follows:
A. During a period of not more than 90 days, the full use of the progeny
from one or more of the Multiplier Herd(s) may be interrupted as a
result of a health problem, without there being a breach of this
Agreement, so long as Multiplier immediately advises PIC of the
situation, takes all reasonable steps to clean up the herd, and
recommence shipping and continues to be bound by all provisions of
this Agreement.
B. If the health problem is such that resolution in the period set out
above is not possible, Multiplier shall make a decision with 90 days
of discovery of the health problem on whether to attempt de-population
and re-population of the affected Multiplier Herd(s) or to close said
Herd(s).
C. In case of de-population and re-population, Multiplier shall purchase
within 12 months of the decision to re-populate, all animals for the
re-population program from PIC, at the prices specified in Schedule 1,
and during the period of de-population and re-population:
1. Multiplier shall buy all Parent Gilts used by Multiplier to
maintain Multiplier's Commercial Farms during the de-
population/re-population period only from PIC; or
2. Multiplier may continue to transfer, if available, Parent Gilts
produced in the affected Multiplier Herd(s) if Multiplier elects
to transfer them in spite of the health problem; and
3. Multiplier shall continue to be bound by all the provisions of
this Agreement.
D. If Multiplier elects not to de-populate and re-populate the affected
Herd(s), but instead to close it permanently, all provisions of this
Agreement shall continue to apply to Multiplier with respect to the
unaffected Multiplier Herd(s); and
1. Multiplier shall use the Parent Gilts produced by the unaffected
Multiplier Herd(s); or
2. Multiplier shall buy, if available, all Parent Gilts for use in
Multiplier's Commercial Farms only from PIC.
E. If PIC is unable to deliver confirmed orders for GPS for more than 30
consecutive days due to health concerns, Multiplier may temporarily
convert such portion of its Multiplier Herds to commercial production
as are reasonably necessary to maintain pig flows through Multiplier's
units. Such introduction of parent gilts shall end within 60 days
after shipment of GPS to Multiplier from PIC are restored.
IX. COVENANT NOT TO COMPETE
Multiplier covenants and agrees that Multiplier, and owners and/or
shareholders with more than a ten percent (10%) interest in Multiplier,
will not, jointly or severally, establish, engage in, or become involved
in, directly or indirectly as an owner, partner, or shareholder with more
than 20% interest, employee or otherwise, the business of selling swine as
Breeding Pigs, using PIC animals, PIC semen, PIC genetics, or PIC
proprietary technology obtained from Multiplier, or the progeny thereof,
except as specifically permitted herein. Multiplier further covenants and
agrees that Multiplier, will not, establish, engage in, or become involved
in, directly or indirectly as an owner, partner, shareholder with more than
20% interest, employee or otherwise, the business of selling swine as
Breeding Pigs. Further, Multiplier shall not participate in any business
offering Breeding Pigs of special or unique genetic characteristics for a
period of twelve (12) months after the date of termination of this
Agreement, at any location within a radius of 250 miles of any of the
Multiplier Unit(s) identified in Schedule 2 of this Agreement. Nothing in
this Section shall prevent Multiplier, or its owners or shareholders, from
becoming a contract multiplier for other commercial swine breeding stock
companies, using Units other than those identified in this Agreement, or
from selling the Breeding Pigs produced by such non-PIC Units only to such
commercial swine breeding stock companies.
X. ASSIGNMENT
PIC may not assign its interest in this Agreement, except to an affiliated
company, and Multiplier may not assign or otherwise transfer its interest
in this Agreement to any other party, without the written consent of PIC.
This Agreement may be terminated, at PIC's option, if any one or more
shareholders, members, or owners, with effective control of more than 20%
of Multiplier, assigns or otherwise transfers such shares, memberships, or
ownership interest in the Multiplier to any person or entity other than
another shareholder, member, or owner of the Multiplier.
XI. PROFITABILITY
PIC does not guarantee any level of profitability as part of this
Agreement. Multiplier understands that pig breeding and feeding operations
are subject to risks associated with the industry, and that profitability
may be adversely affected by fluctuation in hog, pork and feed prices, by
disease and accident, and that the present demand in breeding animals and
pork may decline.
XII. MISCELLANEOUS PROVISIONS
A. Addresses
Should either party change its business address, it shall notify the
other party within thirty (30) days of the date of such change.
B. Notice
1. All notices required by this Agreement shall be in writing and
shall be sent by Registered or Certified Mail to the business
address of the other party. All notices, unless otherwise
stated, shall be deemed to be effective forty-eight (48) hours
after the date of postmark.
2. The current business addresses of the parties, subject to change
under Section XII. A. above, are:
PIG IMPROVEMENT COMPANY, INC.
P.O. Box 348
Franklin, KY 42135-0348
ALLIANCE FARM COOPERATIVE ASSOCIATION, INC.
P.O. Box 7305
Department 189
Kansas City, MO 64116
C. Governing Law
The terms of this Agreement shall be interpreted under the laws of the
State of Iowa.
D. Total Agreement
This Agreement constitutes the entire Agreement of the parties and
supersedes all prior agreements, representations, or negotiations
between or by the parties hereto. Multiplier acknowledges that it has
read and understands this Agreement, that its entering into this
Agreement is voluntary and not done in reliance of any representation
of PIC except as herein provided.
E. Additional Herds
This Agreement does not restrict in any way PIC's right at its sole
discretion to establish additional multiplier herds at any time or
place or with any individual or company.
F. AI Parent Boars
If Multiplier wishes to purchase AI Parent Boars or Semen from PIC,
Multiplier will be required to sign a separate Agreement of Sale
governing such purchase.
G. Effect of Invalid Provisions
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof and the
Agreement shall be construed in all respects as if such invalid or
unenforceable provisions were omitted.
H. Benefit
This Agreement shall be binding upon the parties, their heirs,
personal representatives, and permitted successors or assigns.
I. Non-Waiver Provision
Failure by PIC to enforce any covenant or provision hereof or to
require Multiplier to abide by any provision or requirement shall not
be deemed a waiver of said covenant, provision or requirement and
shall not affect in any way PIC's subsequent right to enforcement.
J. Incorporation of Schedules
Schedules 1 through 5, referred to in various locations in this
Agreement and attached to it, are incorporated into this Agreement as
though they were fully set forth in it, and are binding on the
parties. Multiplier acknowledges receipt of Schedules 1 through 5.
K. Authority
Each individual executing this Agreement represents that he has full
authority to bind the entity for which he signs to all terms and
conditions of this Agreement. Each of the parties hereto represents
that he has full individual, partnership or corporate authority to
enter into this Agreement. Each party agrees to provide evidence of
such authority upon request by the other party.
L. Recitals
The Recitals stated at the beginning of this Agreement are
incorporated herein and by this reference made part of this Agreement.
M. Situs of Contract
This Agreement will not be deemed completed until it is signed by PIC.
This Agreement may be signed by PIC only at its offices in Franklin,
Simpson County, Kentucky.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
ALLIANCE FARM COOPERATIVE ASSOCIATION, INC.
By: By:
Title: Title:
Date: Date:
PIG IMPROVEMENT COMPANY, INC.
By: By:
Title: Title:
Date: Date:
SCHEDULE 1
PRICES AND FEES
MULTIPLIER #14733
I. Grandparent Animals
A. Open PIC Line 1050 Grandparent Gilts at 200-220
lbs.
$360 per head
B. Open Isowean\ PIC Line 1050 Grandparent Gilts
$210 per head
C. Natural Service PIC Line 1075 Grandparent Boars
at 230-260 lbs.
$935 per head
D. AI Grandparent Boars at 230-260 lbs.
Current List Price
E. PIC Line 1075 or PIC Line 1030 Grandparent Semen
$7 per dose,
plus transportation
II. Parent Animals
A. Open Camborough 22 Parent Gilts at 200-220 lbs.
List Less $30
B. Natural Service Parent Boars
List Less $100
C. AI Parent Boars, effective July 1, 1996:
Line 327 or 419
$5,000 less 15%
Line 420
$6,000 less 15%
III. Selection Fees and Grandparent Female Use Fees
The monthly fees payable to PIC will be determined as follows:
A. If Multiplier and Members mate no more than the equivalent of 10% of
PIC Parent Gilts genetics with non-PIC Parent Male genetics in all
Multiplier and Member Commercial herds, then:
Year 1 $35 per select, no minimum selects required.
Year 2 $35 per select, no minimum selects required.
Year 3 $35 per select, 3 selects minimum per Grandparent Female.
Years 4 - 7 $12 per month Grandparent Female Use Fee for each Grandparent
Female in the Multiplier Herd.
B. If Multiplier and Members mate more than the equivalent of 10% of PIC
Parent Gilts genetics with non-PIC Parent Male genetics in all
Multiplier and Member Commercial Herds, then:
Year 1 $40 per select, no minimum selects required.
Year 2 $40 per select, no minimum selects required.
Year 3 $40 per select, 3 selects minimum per Grandparent
Female.
Years 4 - 7 $15 per month Grandparent Female Use Fee for each Grandparent
Female in the Multiplier Herd.
C. If Multiplier Herd is closed for health reasons, Multiplier will pay
PIC $15 per month Grandparent Female Use Fee for each Grandparent
Female in the Multiplier Herd, so long as no more than the equivalent
of 10% of the PIC Parent Females are used with non-PIC Parent Boar
genetics in all Multiplier and Member Commercial Herds. The fee will
be $18 if more than the equivalent of 10% of the PIC Parent Females
are used with non-PIC Parent Boars in all Multiplier and Member
Commercial Herds.
D. Minimum Selection Fees: The minimum Selection Fees, as provided above,
will be computed every six months, and will be credited against fees
due from actual transfers of Selects during the previous six months.
The first minimum Selection Fees will be due 36 months after delivery
of the first Grandparent Female to the Multiplier Herd and will
consist of one-half of the annual minimum Selection Fees, or 1.5 Per
Select Fees for each Grandparent Female in the Multiplier Herd. This
Minimum Selection Fee will be paid every six months during year three
of this Agreement. The minimum fee will be prorated during periods
when distribution of Selects is halted due to temporary or permanent
closure of the Multiplier Unit, as provided for in Section VIII of
this Agreement, if PIC is immediately notified in writing of such
temporary or permanent closure.
ALL PRICING LISTED IN THIS SECTION III. IS SUBJECT TO PRICE REVIEW AS SET
OUT IN SECTION V. BELOW.
IV. Payment Due Date
A. Grandparent or Parent Purchases: Payment due on delivery, as provided
in the Conditions of Sale, Schedule 4.
B. Selection Fees: Multiplier will account for all Parent Gilts delivered
to the Multiplier and Member Commercial Herds on Gilt Movement Report
forms provided by PIC. The accounting will be made within 10 days
after the end of each calendar month. Payment of such fees must
accompany the monthly reports filed with PIC. PIC may withhold
delivery of subsequent shipments of breeding stock to the Multiplier
until outstanding Selection Fee payments are made. A delinquency
charge of 1 1/2% per month will be charged on all delinquent accounts.
C. Grandparent Female Use Fees: The Use Fee will be paid monthly, based
on the number of Grandparent Females in the Multiplier Herd, on the
last day of the calendar month. Multiplier will report monthly on
forms provided by PIC. The accounting will be made at the end of each
month. Payment of such fees must accompany the monthly reports filed
with PIC. PIC may withhold delivery of subsequent shipments of
breeding stock to the Multiplier until outstanding Selection Fee
payments are made. A delinquency charge of 1 1/2% per month will be
charged on all delinquent accounts.
V. Price and Fee Revisions
A. Beginning on the first day of the 25th month following execution of
this Agreement, and no more often than biannually thereafter, PIC may
revise the prices and fees established herein. No upward revision
will exceed the percentage change in the Agricultural Production
Index, as published in the Agriculture Outlook Economic Research
Service of the United States Department of Agriculture during the 24-
months preceding the revision, as shown in the most current report
available, and no upward revision will exceed twenty percent (20%) of
the applicable price or fee in effect at the time of the revision.
All revisions will be effective sixty (60) days after written notice
to the Multiplier.
B. Boar-to-Sow Ratios
(1) If Multiplier uses Natural Service Boars and, if the number of
Natural Service Boars in any of the herds established hereunder
falls below one boar for every 25 sows in the herd, PIC shall
increase the price for animals sold or transferred to that herd
or require Multiplier to restore the boar population to the
required number as a condition for continuation of this
Agreement.
(2) If multiplier uses artificial insemination or other means of
reproducing PIC animals in any of the herds established hereunder
and said use results in a boar to sow ratio less than one boar to
every 25 sows, PIC shall increase the prices for boars sold to
that herd by the same percentage as the boar to sow ratio
changes. For example, if Multiplier is using one boar to 50
sows, the animal price shall double.
(3) If PIC has received written notice of intent to close permanently
any herd in compliance with the terms of Section VII.D., hereof,
the herd covered by the notice of closure shall be exempted from
the minimum boar requirement.
VI. Conditions of Sale
The Conditions of Sale, Schedule 4, apply to all sales of breeding stock
and semen.
SCHEDULE 2
AUTHORIZED BREEDING HERDS
FARM NAME SHIP TO HERD SIZE ADDRESS AT PHYSICAL
Boars Gilts LOCATION OF HERD
Alliance Farm #9110 18 2400, plus or , IL
minus 5%
Multiplier will purchase sufficient GP Gilts to maintain a ratio of one GP
Female in the Multiplier Herd for every 15 Parent Females in the Authorized
Commercial Herds listed in Schedule 3.
SCHEDULE 3
AUTHORIZED COMMERCIAL HERDS
I. MULTIPLIER COMMERCIAL HERDS:
FARM NAME SHIP TO HERD SIZE ADDRESS AT PHYSICAL
Boars Gilts LOCATION OF HERD
Alliance Farm , Illinois
II. PERMITTED FEEDLOTS:
FARM NAME SHIP TO HERD SIZE ADDRESS AT PHYSICAL
Boars Gilts LOCATION OF HERD
SCHEDULE 4
CONDITIONS OF SALE
FOR NATURAL SERVICE BOARS AND GILTS
A. WARRANTIES OF PIC REGARDING THE SALE OF ANIMALS. Except as otherwise
provided in these Conditions of Sale, including but not limited to Section
H. (DISEASE STATEMENT), PIC gives the following warranties:
1. Animals supplied under these Conditions of Sale have been inspected
and certified in accordance with applicable federal and state animal
health regulations.
2. Animals supplied under these Conditions of Sale will be of the line,
type and Halothane gene status indicated.
3. Animals delivered by PIC either:
a. Will have been owned by PIC for at least thirty (30) days, or
b. Will have been acquired by PIC from a farm that is operated in
accordance with standards established by PIC.
4. All Gilts sold by PIC under these Conditions of Sale at over five
months of age will be physically capable of breeding after proper
isolation and acclimatization.
5. All Natural Service Boars sold by PIC under these Conditions of Sale
at over six months of age will be physically capable of breeding after
proper isolation and acclimatization.
B. WARRANTIES OF MEMBER MULTIPLIER: Member Multiplier warrants:
1. Member Multiplier will use the animals purchased under these
Conditions of Sale only in Member Multiplier's own herds, and on
Member Multiplier's own animals.
2. Except as otherwise specifically allowed under this Agreement, Member
Multiplier will not use, sell or transfer the animals purchased under
these Conditions of Sale for the production of pigs to be used by
Member Multiplier or any other person or entity as breeding animals or
for sale as breeding animals.
3. Member Multiplier will not use, sell or transfer the progeny of the
animals purchased under these Conditions of Sale except for slaughter.
4. Member Multiplier will not use Natural Service Boars purchased under
these Conditions of Sale for artificial insemination.
C. ISOLATION AND ACCLIMATIZATION.
1. Member Multiplier will completely isolate all animals in a clean
facility, physically separate from other swine for at least 30 days,
will follow the recommendations of a licensed veterinarian for
isolation and for release of animals after the isolation period, and
will not begin acclimatization procedures for 30 days after delivery.
PIC encourages Member Multiplier to test animals, at Member
Multiplier's expense, for pathogens or disease which are of concern to
Member Multiplier while animals are in isolation. Member Multiplier
agrees and understands that PIC will have no duty to credit Member
Multiplier for animals due to the presence of economically significant
infectious agents unless Member Multiplier complies with this
isolation procedure.
2. Member Multiplier will acclimatize animals in a separate facility
alongside existing stock for at least 30 days after isolation, and
will follow the recommendations of a licensed veterinarian for the
release of animals from acclimatization.
D. CREDITS AND PROCEDURES.
1. In case of complaint, Member Multiplier must call or write to PIC,
stating delivery date, invoice number, pig tag and/or ear tattoo
number, and the exact nature of the complaint. If the animals do not
meet the warranties set out in these Conditions of Sale, PIC may
authorize slaughter following notification and/or may issue a credit
for the invoiced cost of the animal, less slaughter value. PIC will
not issue credit for dead animals or any slaughtered animals before
the complaint process described above has been followed, unless a
postmortem certified by Member Multiplier's veterinarian reveals a
defect that rendered the animal infertile or incapable of breeding
after the required isolation and acclimatization period.
2. In case of complaint based on the presence of economically significant
infectious agents in the animals, if the isolation procedures above
have been followed, if Member Multiplier's veterinarian provides PIC
with evidence satisfactory to PIC of the existence of the agent, and
if PIC receives from Member Multiplier the notice and complaint
required by the complaint process before the animals carrying the
agent are removed from isolation, PIC will credit to Member Multiplier
the invoiced cost of the animals less slaughter value.
3. PIC will issue credits only if the complaint is received within 30
days after delivery for complaints based on structural soundness or
based on the presence of economically significant infectious agents,
and within 150 days for any other complaint; and PIC will issue
credits only if the complaint procedures are followed. Credits will
be offset against any debt owned by Member Multiplier to PIC, and any
balance will be credited to Member Multiplier's account.
E. LIMITATION OF LIABILITY. PIC will have no liability for risk of loss of
animals from and after delivery. PIC's liability for losses due to
economically significant infectious agents, or due to advice and
information given by PIC, whether oral or written, will be limited to the
procedure provided in Section D (Credits and Procedures) above. PIC will
have no liability for losses resulting or allegedly resulting from failure
of female animals to conceive, settle, farrow, or produce progeny after
mating. PIC will not be liable for incidental or consequential losses,
including, without limitation, veterinarian's fees, lost profits, or other
incidental or consequential damages of any nature.
F. While PIC makes every effort to deliver animals on time, specified or
suggested delivery dates will not be of the essence of these Conditions of
Sale. PIC will have no liability for any loss caused by late delivery.
G. LIMITATION PERIOD. Any lawsuit or litigation, alleged to arise out of the
purchase of animals from PIC by Member Multiplier, must be brought not
later than one year after delivery.
H. DISEASE STATEMENT. Member Multiplier is experienced in swine breeding, and
knows that organisms which cause swine diseases (called pathogens) are
present in virtually every swine herd, including PIC's swine herds. NEW OR
DIFFERENT PATHOGENS OR DISEASES MAY ARISE AT ANY TIME. (See also PIC's
Isolation and Acclimatization recommendations, which identify pathogens for
which PIC administers vaccines). The outbreak of diseases however is
caused by many factors in addition to the presence of pathogens within a
swine or swine herd. Although PIC attempts to minimize the presence of
pathogens and diseases in its herds and in the swine breeding stock it
sells, PIC CANNOT AND DOES NOT WARRANT THE ABSENCE OF ANY PATHOGENS OR
DISEASE IN THE ANIMALS SOLD BY PIC. PATHOGENS OR DISEASES MAY BE PRESENT
AT TIME OF SALE OR MAY APPEAR LATER.
I. DISCLAIMER OF OTHER WARRANTIES. These Conditions of Sale contain all of
the warranties made by PIC to Member Multiplier. No other warranties,
expressed or implied are given. Except as otherwise set out in these
Conditions of Sale, all animals sold under these Conditions of Sale are
sold "AS IS". PIC SPECIFICALLY GIVES NO WARRANTY OF MERCHANTABILITY,
HEALTH, OR FITNESS FOR A PARTICULAR PURPOSE EXCEPT AS SPECIFICALLY STATED
IN THESE CONDITIONS OF SALE. PIC specifically disclaims any warranty of
the genetic make-up of animals, the performance of animals, or the
characteristics or performance of their progeny, except as otherwise set
out in these Conditions of Sale. There are no warranties which extend
beyond these Conditions of Sale.
J. NON-WAIVER. Failure to enforce any provision in these Conditions of Sale
will not be deemed a waiver of PIC's future right to enforcement of that
provision or any other provision in these Conditions of Sale.
K. EXCLUSIVE REMEDY. MEMBER MULTIPLIER'S REMEDY OF CREDIT FOR THE INVOICED
COST OF AN ANIMAL, LESS SLAUGHTER VALUE, AS PROVIDED IN SECTION D., CREDITS
AND PROCEDURES, OF THESE CONDITIONS OF SALE, IS THE EXCLUSIVE REMEDY
AGAINST PIC FOR ANY CLAIM ARISING OUT OF THE PURCHASE OF ANIMALS FROM PIC
BY MEMBER MULTIPLIER. ALL OTHER REMEDIES, WHETHER UNDER STATUTE,
REGULATION, CONTRACT, TORT, WARRANTY, NEGLIGENCE, OR ANY OTHER LEGAL THEORY
OF ANY NATURE, ARE EXPRESSLY WAIVED BY MEMBER MULTIPLIER. MEMBER
MULTIPLIER IS AWARE OF THE RISKS OF SWINE PRODUCTION AND THEREFORE THIS
WAIVER IS NEITHER UNREASONABLE NOR UNCONSCIONABLE.
L. CANCELLATION. Cancellations of any orders made under these Conditions of
Sale will be effective only if made more than five (5) days before the
requested delivery date. Cancellations will be effective when received by
PIC at its Franklin, KY., office.
M. PAYMENT. Payment for each animal or shipment of animals will be made in
full ON DELIVERY, and payment of all other fees will be made within 10 days
of the reporting date. A late-payment service charge of 1 1/2% per month
(18% per year) will be added to any amount unpaid within ten (10) days.
PIC may withhold future deliveries if Member Multiplier fails to make
payments as set out in these Conditions of Sale.
N. APPLICABLE LAW. These Conditions of Sale will be interpreted under the
laws of the State of Kentucky. The parties consent that any dispute
hereunder will be tried in the Kentucky Circuit Court, that they will
consent to the Kentucky Circuit Court's jurisdiction over them, and that
venue for such dispute will be in the Kentucky Circuit Court for Simpson
County.
O. ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT OF THE
PARTIES REGARDING THE MATTERS COVERED BY THESE CONDITIONS OF SALE AND THE
ATTACHED AGREEMENT, AND SUPERSEDES ALL OTHER AGREEMENTS, REPRESENTATIONS,
OR NEGOTIATIONS BETWEEN OR BY THE PARTIES HERETO, WHETHER ORAL OR WRITTEN,
REGARDING SUCH MATTERS. THIS AGREEMENT MAY NOT BE AMENDED EXCEPT BY A
WRITTEN DOCUMENT SIGNED BY BOTH PARTIES. MEMBER MULTIPLIER ACKNOWLEDGES
THAT MEMBER MULTIPLIER HAS READ AND UNDERSTANDS THESE CONDITIONS OF SALE
AND THE AGREEMENT TO WHICH THEY ARE ATTACHED, AND THAT MEMBER MULTIPLIER'S
ENTERING INTO THESE CONDITIONS OF SALE AND THE ATTACHED AGREEMENT IS
VOLUNTARY AND NOT DONE IN RELIANCE OF ANY REPRESENTATION OF PIC EXCEPT AS
HEREIN PROVIDED.
MEMBER MULTIPLIER AGREES, BY SIGNING BELOW, THAT PIC HAS GIVEN MEMBER MULTIPLIER
NO PROMISES, WARRANTIES, GUARANTEES, OR REPRESENTATIONS EXCEPT AS SPECIFICALLY
STATED IN THESE CONDITIONS OF SALE AND THE ATTACHED AGREEMENT.
ALLIANCE FARM COOPERATIVE ASSOCIATION, INC.
By:
Title:
Date:
SCHEDULE 5
PIC GENETIC PROGRAM
Multiplier shall at all times comply strictly with the PIC Genetic Program set
forth in this Schedule, by mating the animals, whether by natural service or AI,
in the Multiplier Herds only in compliance with the required mating programs set
forth below. Multiplier shall not mate animals except in compliance with this
Schedule.
MATING PROGRAM
Male x Female = Product
Genetic Genetic Genetic
Status Status Sex Status
L19 x L42 = Gilt C-22 Parent
PIC shall have the right to change the Genetic Program set forth above. Upon
written notice by PIC to Multiplier of any change in the Genetic Program,
Multiplier shall comply therewith.
Exhibit 10.3
OPTION CONTRACT
THIS CONTRACT is made and entered into this 20th day of November,
1996, by and between Bill L. Bailey and Norma Jean Bailey, husband and wife,
hereinafter referred to as "Seller", and Alliance Farms Cooperative Association,
a Colorado cooperative association, hereinafter referred to as "Buyer".
WITNESSETH:
1. Seller hereby grants to Buyer, subject to the terms and
conditions hereinafter set forth, an option to purchase (the "Option") certain
real property (the "Property") in Wayne County, Illinois, legally described on
Exhibit A, attached hereto and incorporated herein by this reference.
2. The Option term (the "Term") shall commence upon the execution of
this Agreement, and shall terminate on November 1, 1998. If all of Buyer's
conditions and contingencies contained herein have been satisfied on or prior to
the expiration of the Term, and Buyer shall fail to exercise the Option, or any
part thereof, prior to the expiration of the Term, and Seller shall have
satisfied all of their conditions to this Contract, then this Option shall
lapse, expire and become null and void, and Seller shall be entitled to
liquidated damages in an amount equal to One Hundred Fifty Thousand and No/100
Dollars ($150,000.00), and the parties hereby agree that this amount is a fair
and reasonable estimate of the damages sustained by Seller and is not a penalty
or forfeiture (the "Liquidated Damages Payment"). At or prior to the execution
of this agreement, Buyer shall deposit with Seller an original irrevocable
standby letter of credit in the amount of One Hundred Fifty Thousand and No/100
Dollars ($150,000.00) issued by CoBank; ACB and in substantially the form and
substance set forth in Exhibit B attached hereto and incorporated herein by this
reference. Said letter of credit shall give Seller the right to draw upon the
full amount of said Letter of Credit upon seller's delivery to Co Bank, ACB of
the original Letter of Credit and Seller's written certification as to the
satisfaction of all conditions on the face of the Letter of Credit entitling
Seller to payment. The letter of credit shall be released by Seller and
delivered to Buyer (or Buyer's assigns) upon closing of the transaction as
provided for herein which results in all remaining unpurchased tracts of
Property being sold as provided herein (other than any tracts that are excluded
form Buyer's obligation to purchase as provided herein). During the term of
this agreement the original Letter of Credit shall be held by Croegaert, Clark &
Hough, Ltd. in its fireproof safe at 305 East Main Street, Olney, Illinois, and
Seller shall defend, indemnify and hold harmless Buyer from and against any
loss, liability or expense suffered as a result of the loss, theft, improper
drawing upon, or improper failure to release said Letter of Credit.
3. Concurrently with the execution hereof, Buyer shall pay to Seller
the sum of One Hundred Dollars ($100.00) (the "Initial Term Deposit") in
consideration of Seller's grant of the Option.
4. A. Buyer must exercise the Option granted herein to purchase
the following-described property (the "90.5 Acre Tract") by written
notice to Seller within fourteen (14) days of the execution of this
Contract:
A tract of land located in Section 1, Township 1 North,
Range 8 East of the Third Principal Meridian located in
Wayne County, Illinois and legally described as follows:
Commencing at the Southeast Corner of the Northeast Quarter
of said Section 1, thence in a northerly direction along the
east section line of Section 1 a distance of 1,970 feet to a
point, thence westerly parallel with the south line of said
Section 1 a distance of 2,000 feet to a point, thence
southerly parallel with the east line of said Section 1 a
distance of 1,970 feet to the south line of the Northeast
Quarter of said Section 1, thence easterly along said
quarter section line a distance of 2,000 feet to the point
of beginning, containing 90.5 acres, more or less.
Upon Buyer's giving of written notice of exercise, this Contract shall
immediately operate as a real estate sale contract for the purchase of the
90.5 Acre Tract on the terms herein set forth. Buyer may elect to divide
this 90.5 Acre Tract into two separate tracts for the purpose of allowing
separate closings. The total purchase price for this tract shall be Three
Hundred Ninety-Nine Thousand Six Hundred Forty-Nine and 84/100 Dollars
($399,649.84). Should Buyer elect to divide the 90.5 Acre Tract into two
separate tracts with separate closings, the purchase price for each tract
shall be the sum of One Hundred Ninety-Nine Thousand Eight Hundred
Twenty-Four and 92/100 Dollars (199,824.92). The date of closing for the
entire 90.5 Acre Tract shall be on or before thirty (30) days after
Seller's receipt of Buyer's notice of exercise of the option granted in
this paragraph 4.A (except to the extent that the closing is delayed by
Seller).
B. At any time prior to the expiration of the Term, Buyer may
exercise the Option granted herein to purchase an additional sixty (60)
acres of the Property in accordance with the following provisions for each
tract purchased:
(1) Buyer may elect to divide the sixty (60) acres into two
separate tracts for the purpose of allowing separate
closings.
(2) Buyer shall deliver written notice to Seller ("Buyer's
Notice") of Buyer's election to purchase one or more
identified tracts of Property (the "Purchase Parcel"), the
legal description of said Purchase Parcel to be determined
by a survey conducted by a licensed surveyor of the State of
Illinois, with the costs of said survey to be borne by
Buyer. Upon delivery of any such Buyer's Notice, this
Contract shall immediately operate as a real estate sale
contract for the purchase of each such Purchase Parcel on
the terms hereinafter set forth. The date of closing for
any identified tract shall be on or before thirty (30) days
after Seller's receipt of Buyer's notice of exercise of the
option granted in this paragraph 4.B (except to the extent
that the closing is delayed by Seller).
(3) The purchase price for each such Purchase Parcel shall be
equal to the sum of One Thousand Eight Hundred Fifty and
No/100 Dollars ($1,850.00) per acre, plus the cost of any
grading, terracing, excavating and other earthmoving
improvements made to the real estate by Seller at the
written request of Buyer. Seller shall have the exclusive
right to perform all labor and to provide all equipment
required for the grading, terracing, excavating and other
earthmoving improvements requested by Buyer. The cost of
any such improvements shall be calculated and determined as
follows:
Seller shall provide the following equipment and operator at
rates determined under the following schedule:
Per Hour Rates
Tractor and disk - $70.00
Road Grader - $65.00
Compactor - $60.00
Single Pull 613 - $80.00
Single Pull with Laser - $100.00
Single Pull 615 - $125.00
Double Pull 29 yd. - $140.00
Double Pull 28 yd. with Laser $160.00
Trackhoe - $85.00
Bulldozer (D-8, D-9, 21-C) - $90.00
Land Leveler - $65.00
Land Leveler with Laser - $85.00
Disk Roller - $65.00
C. Notwithstanding the foregoing, the Buyer shall not be
entitled to exercise the Option granted herein as to the balance of the
Property until October 15, 1998 and must exercise said Option by
written notice on or before November 1, 1998. The total purchase price
for the balance of the Property shall be One Thousand Eight Hundred
Fifty and No/100 Dollars ($1,850.00) per acre plus the cost of a dam
and lake previously constructed by Seller in the amount of $38,056.67.
The date of closing for the balance of the Property shall be on or
before November 15, 1998 or such other date as Buyer and Seller shall
mutually agree (except to the extent that the closing is delayed by
Seller).
D. Seller shall convey to Buyer merchantable fee simple
title to the property, subject only to Permitted Exceptions (as
hereinafter defined). Possession of such tract shall be delivered to
Buyer at closing.
E. (1) Seller excepts and reserves all oil, gas, coal or other
minerals for a period of twenty-five (25) years from the date
of closing on any portion of the Property and as long
thereafter as oil, gas, coal or other minerals are produced
from the Property. Any conveyance shall be subject to
mineral reservations, exceptions and conveyances of record.
Notwithstanding the foregoing, under no circumstances shall
Seller's exercise and enjoyment of the rights reserved in
this paragraph be permitted to create a nuisance or otherwise
disturb Buyer's business and operations on the Property, and
Seller shall defend, indemnify and hold harmless Buyer from
and against any loss, liability or expense suffered as a
result of Seller's exercise and enjoyment of the rights
reserved in this paragraph.
(2) Seller reserves exclusive hunting and fishing rights on
the property during the term of his natural life. Buyer
hereby grants an irrevocable license to Seller for such
purposes.
F. In connection with any tax-free exchange pursuant to
Section 1031 of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder, involving the Property and other
property owned or to be acquired by Seller, Seller may, without the
consent of Buyer, assign this Agreement and their rights hereunder to
any qualified intermediary (an "Intermediary") participating with
Seller in such exchange as contemplated by Treasury Regulation Section
1.1031(k)-1(g)(4) and related regulations. In the event of any such
assignment to an Intermediary: (i) Seller shall give written notice of
such assignment and the identity of the Intermediary to the Buyer at
least ten (10) days prior to the date of closing; (ii) except to the
extent of any liabilities expressly assumed by the Intermediary in
writing in connection with such assignment, the Intermediary shall have
no personal liability to the Buyer or any other person or entity under
this Agreement, or under any other document or instrument at any time
executed by Seller or the Intermediary in connection herewith or
pursuant hereto (each such document or instrument being referred to
herein as "Related Document@), and neither the Buyer nor any other
person or entity shall have any recourse against the Intermediary or
any of its assets on account of any breach or default hereunder or
under any Related Document; (iii) the Intermediary shall have all of
the rights and remedies of Seller provided for herein or in any Related
Documents; (iv) there shall be no diminution of the Buyer's rights or
remedies, and no increase of the Buyer's liabilities or obligations,
hereunder or under any Related Documents on account of such assignment;
(v) notwithstanding anything to the contrary contained herein, Seller
shall continue to be liable for all obligations imposed upon Seller
under this Agreement and under any Related Document executed by Seller.
G. Seller shall pay all taxes and assessments, general and
special, which are a lien upon each tract of Property purchased by
Buyer and can be paid at the Closing and Buyer shall assume all taxes
and assessments, general and special, which become a lien after the
Closing except that (a) as to any assessments payable in installments,
Seller shall be liable only for those instruments payable with respect
to the years prior to the year in which the Closing occurs, and (b) all
taxes and assessments, general and special, and all installments of any
assessments, which are due and payable for the year in which the
Closing occurs shall be prorated as of the Closing. In the event that
the amount of any such tax or assessment for the year in which the
Closing occurs cannot be determined, then such proration shall be based
upon the amount of such tax or assessment for the preceding year.
H. For each tract of Property purchased by Buyer, Seller
shall furnish to Buyer, at Seller's cost, an Owner's Title Insurance
Policy, ALTA Form B-1970 (amended 10-17-70 and 10-17-84) (the "Policy@)
in the amount of the Purchase Price, from a company reasonably
acceptable to Buyer authorized to insure titles in the State of
Illinois (the "Title Company") insuring a merchantable fee simple title
in such Purchase Parcel in Buyer as of the date and time of the
recording of the Deed. Permitted Exceptions to title shall include
only:
(1) The lien of general taxes not yet payable;
(2) Zoning laws and building ordinances;
(3) Easements of record for utilities, drainage and public roads,
highways and improvements;
(4) Covenants and restrictions of record that do not interfere
with Buyer's current and contemplated business; and,
(5) Reservation of mineral title as set forth above.
Seller shall, within fifteen (15) days from the date of
delivery of each Buyer's Notice, deliver to Buyer a commitment for
the Policy (the "Commitment"). Within fifteen (15) days of
receipt of each Commitment, Buyer shall notify Seller of any
defect or exception to title to which Buyer objects ("Buyer's
Objections"). If Buyer fails to notify Seller within said fifteen
(15) day period of any such exception or defect, Buyer shall be
deemed to have accepted the exceptions noted on the Commitment,
and such exceptions shall constitute the "Permitted Exceptions",
as said term is used herein. Seller shall use their best efforts
to eliminate or modify Buyer's Objections to the satisfaction of
Buyer. If Seller is unable to eliminate or modify Buyer's
Objections to the satisfaction of Buyer, Buyer (a) may terminate
and cancel Buyer's obligation to purchase the affected tract of
Property by notice in writing to Seller by the earlier to occur of
(i) the Closing Date, or (ii) five (5) business days following
notice from Seller that it is unable to so eliminate or modify
Buyer's Objections, and thereupon Buyer's failure to purchase said
tract of Property shall not entitle Seller to the Liquidated
Damages Payment or (b) shall accept such title to such Purchase
Parcel as Seller can deliver with a reasonable reduction in the
Purchase Price, with said reduction determined by a qualified real
estate appraiser, appointed by Buyer, with a minimum of ten (10)
years of experience in appraising rural property. The title
commitment shall be conclusive of title as therein shown as to all
matters insured by the policy, subject to exceptions as therein
stated.
I. (1) Buyer has already taken possession of the 90.5 Acre
Tract of real estate described in paragraph 4.A. above on or
about May 1, 1996 and has been conducting a hog confinement
operation on the tract since said date. As a results of such
uses and activities, physical and other changes may have
occurred on the tract. Prior to taking possession, Buyer had
full right of access to the 90.5 Acre Tract to enable it to
conduct any independent environmental audits and tests for
the existence of environmental conditions in violation of
environmental laws, as a result of which Buyer determined
that there existed prior to its possession of the tract no
adverse physical or environmental condition on the tract.
Accordingly, Buyer waives, releases, covenants not to sue and
forever discharges Sellers, their agents and employees and
other persons acting on behalf of Seller, of and from any and
all claims, actions, causes of actions, demands, rights,
damages, costs, expenses or compensation whatsoever, direct
or indirect, known or unknown, foreseen or unforeseen, which
Buyer now has or which may arise in the future on account of
or growing out of or in connection with any physical
characteristics or existing condition, including without
limitation, subsurface conditions, solid and hazardous waste,
and hazardous materials on, under, or related to the 90.5
acres, or any applicable law or regulation. Buyer
acknowledges that this clause is a negotiated part of this
Agreement and serves as an essential component of
consideration for the property. The release contained under
this clause includes, but is not limited to, the release of
Seller from all claims pursuant to the Illinois Responsible
Property Transfer Act S.H.A., 765 ILCS 90/1 et seq. and the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
(2) As additional consideration in determining the purchase
price of the tract, Buyer assumes and covenants to undertake
and discharge all liabilities of Seller or Buyer arising
from:
(i) Any condition which now exists or may be found to exist
in, on, under or about the 90.5 Acre Tract,
(ii) A determination that the 90.5 Acre Tract or any portion
violates any applicable environmental or health or
safety law, ordinance, regulation or ruling, and
(iii) The presence, use, generation, storage, release,
threatened release, or containment, treatment or
disposal of any hazardous materials on the 90.5 Acre
Tract. Such liabilities include without limitation any
losses, damages or expenses, including attorney fees and
related expenses arising from any matters relating to
the existence of hazardous substances or hazardous
wastes as defined in the Comprehensive Environmental
Response, Compensation and Liability Act, as amended,
482 U.S.C. 9601, et seq. or the Resource, Conservation
and Liability Act, 42 U.S.C. 6901, et seq., or similar
state environmental laws or subsequent federal or state
legislation of a similar nature which may be enacted
from time to time.
(3) Buyer shall defend, indemnify and hold Seller harmless
from and against any and all damage, costs, loss, liability
and expense, which may be incurred by Seller by reason of,
resulting from, or in connection with or arising in any
manner whatsoever from any breach of the covenant of Buyer
contained in this paragraph. The covenants and agreements of
Buyer in this paragraph shall survive the closing and
consummation of the transactions contemplated in this
Contract.
(4) Buyer shall have the right to have access to the
remainder of the Property (approximately 410 acres) to enable
an independent environmental consultant chosen by Buyer and
approved in advance by Seller, which approval shall not be
unreasonably withheld or delayed, to inspect, audit and test
the Property for the existence of environmental conditions
and violations of environmental laws ("environmental
assessment"). The scope, sequence and timing of the
environmental assessment shall be at the sole discretion of
the Buyer but shall be conducted in a manner which will
minimize disruption to the farming operations to be conducted
on the Property.
Buyer may terminate this agreement no later than five
(5) business days after receipt of any environmental
assessment by so notifying the Seller if the environmental
assessment reveals the existence of any violation of
environmental law which Buyer is unwilling to accept. The
notification to Seller shall include a copy of the
environmental assessment. Seller shall have the option to
elect to remove or remediate any condition which has caused
any violation of an environmental law in which event Buyer
shall have no right to terminate this agreement. If Buyer
elects to remove or remediate any environmental concerns, he
shall so notify Seller within five (5) days of receipt of the
Buyer's notification and a copy of the environmental
assessment. Seller shall have ninety (90) days from receipt
of notification from Buyer of said violation within which to
remove or remediate the condition which resulted in the
violation of environmental law at the Seller's sole cost and
expense. Seller shall not be obligated to remove or
remediate non-compliance with any environmental law and shall
not be liable to Buyer for their failure or refusal to do so,
it being understood that Buyer's sole remedy will be the
option to terminate this agreement, in which event it shall
be entitled to the prompt return of the earnest money and the
Letter of Credit as its full remedy, or Buyer may close this
transaction without abatement of the purchase price in which
case Seller shall not be obligated to remove or remediate any
non-compliance with any environmental laws.
J. Subject to the other terms and provisions of this Contract,
the closing hereunder shall take place as follows: Seller shall
deliver to Buyer, at the office of the Title Company, a General
Warranty Deed (the "Deed"), properly executed and conveying each tract
of Property purchased free and clear of all liens and encumbrances
whatsoever, except as herein provided, and reserving for Seller any and
all mineral rights on the tract of Property purchased; Buyer shall then
and there pay the balance of the Purchase Price for said tract of
Property purchased. It is agreed that Seller and Buyer shall each
deliver the Deed, the original Letter of Credit (at the final closing,
if applicable), the money and other instruments to be delivered by them
to the Title Company to be held by the Title Company under instructions
that the same not be delivered unless and until the requirements of
this Contract have been satisfied.
K. Subject to the rights of termination otherwise contained
herein, if Seller has complied with all the terms and conditions
contained herein and Buyer thereafter fails to perform by failing to
deliver the balance of the Purchase Price on any tract on or before the
Closing Date or Buyer fails to perform any other agreement contained
herein and such default continues for five (5) days after notice in
writing to Buyer, then Seller shall be entitled to declare this
Contract null and void and forfeit and retain the Liquidated Damages
Payment and enforce collection of such damages by presentment of the
irrevocable letter of credit as their sole and exclusive remedy. If
Buyer has complied with all the terms and conditions contained herein,
and thereafter Seller fails to perform any of the covenants or
conditions contained herein prior to the Closing Date and such default
continues for five (5) days after notice in writing to Seller, Buyer,
may at its option, terminate this Contract and obtain the prompt return
of the original Letter of Credit and this contract shall be considered
canceled, null and void, or Buyer may seek specific performance of this
Contract. If this Contract is terminated prior to closing, Buyer shall
not be entitled to damages of any type, direct or consequential, it
being expressly understood and agreed that the remedies specifically
described herein shall constitute Buyer's sole remedies hereunder for
Seller's default prior to closing, and that Buyer hereby waives any and
all remedies not expressly provided herein.
L. The parties hereto shall negotiate in good faith a lease for
the growing and harvesting of crops by Seller on each tract purchased
and an additional three hundred fifty (350) acre tract previously
purchased from Seller, utilizing that certain standard Farm Lease
entitled "Illinois Crop-Share Cash Farm Lease" prepared by the
Department of Agricultural Economics, Cooperative Extension Service,
College of Agriculture, University of Illinois at Champaign, Urbana.
5. Seller and Buyer represent to, and agree with, each other that
neither has dealt with any real estate broker or agent or any other party who
may claim or be entitled to a commission in connection with the sale of the
Property, or any part thereof.
6. All notices and other communications required hereunder shall be
in writing and shall be considered as given when delivered personally or when
deposited in the U.S. mails, registered or certified, return receipt requested,
postage prepaid, addressed (a) if to Seller, at Rural Route 1, Box 89, Xenia,
Illinois 62899, and (b) if to Buyer, at Alliance Farms Cooperative Association,
c/o Farmland Industries, Inc., 3315 North Oak Trafficway, P.O. Box 7305, Kansas
City, Missouri 64116-0005. Either party may by notice as aforesaid designate a
different address for notices or other communications intended for it. All
notices given as aforesaid shall be deemed given as of the second day after the
date upon which such notice is placed in the U. S. mail.
7. Seller hereby covenants and agrees to defend (with counsel of
Buyer's choice), indemnify and hold Buyer harmless from and against all claims,
suits, orders, judgments and decrees, losses, damages, fines, penalties, liens,
liabilities and expenses (including Buyer's personnel and overhead costs and
attorney's fees and other costs incurred in connection therewith, regardless of
whether they or any of them involve litigation) resulting from any actual or
alleged injury (including death) to any person or from any actual or alleged
loss of or damage to any property alleged to be attributable to Seller or
Seller's operation or occupation (including through its agents, employees,
guests, invitees and independent contractors) of the Property, or any part
thereof, or alleged to be or have been caused by or resulting from any act or
omission of Seller or any agent, employee or independent contractor thereof, or
any licensee, guest or invitee or independent contractor of any such entity in
or about the Property, or any part thereof.
8. Buyer hereby covenants and agrees to defend (with counsel of
Seller's choice), indemnify and hold Seller harmless from and against all
claims, suits, orders, judgments and decrees, losses, damages, fines, penalties,
liens, liabilities and expenses (including Seller's personnel and overhead costs
and attorney's fees and other costs incurred in connection therewith, regardless
of whether they or any of them involve litigation) resulting from any actual or
alleged injury (including death) to any person or from any actual or alleged
loss of or damage to any property, alleged to be attributable to Seller or
Seller's operation or occupation (including through its agents, employees,
guests, invitees and independent contractors) of the Property prior to Closing,
or to Seller's breach of any of its obligations under this Contract, alleged to
be or have been caused by or resulting from any act or omission of Seller or any
agent, employee or independent contractor thereof, or any licensee, guest or
invitee or independent contractor of any such entity in or about the Property,
or any part thereof.
9. Seller and Buyer each warrant and represent to the other that it
has all requisite power and authority to enter into this Contract and to carry
out its obligations hereunder, and that its entering into this Contract and
carrying out its obligations hereunder shall not be violative of any statute,
law, ordinance or regulation or of any agreement to which it is a party.
10. Seller and Buyer shall execute, concurrently with the execution of
this Contract, a memorandum (the "Memorandum") of this Contract in form
sufficient for recording. Buyer shall cause the Memorandum to be recorded at
its cost and expense.
11. This Contract contains the entire agreement between the parties
respecting the matters set forth, and expressly supersedes all previous or
contemporaneous agreements, understandings, representations or statements
between the parties respecting such matters.
12. Any covenants and agreements which this Contract does not require
to be fully performed prior to the Closing of each Purchase Parcel shall survive
said Closing and shall be fully enforceable thereafter in accordance with their
terms.
13. This Contract and any of its terms may only be altered, amended,
waived, discharged or terminated by a written instrument signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought.
14. If any provision of this Contract, or any instrument to be
delivered by either of the parties at the Closing of each such Purchase Parcel
pursuant to this Contract, is declared invalid or is unenforceable for any
reason, such provision shall be deleted from such document and shall not
invalidate any other provision contained in the document.
15. Nothing in this Contract, express or implied, is intended to
confer upon any person, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Contract.
16. Headings at the beginning of each section and subsection are
solely for the convenience of the parties and are not a part of and shall not be
used to interpret this Contract. The singular form shall include plural and the
masculine shall include the feminine and vice versa. This Contract shall not be
construed as if it had been prepared by one of the parties, but rather as if
both parties had prepared the same. Unless otherwise indicated, all references
to sections are to this Contract.
17. This Contract shall be binding upon and inure to the benefit of
the parties, and their respective heirs, personal representatives, successors
and assigns.
18. This Contract shall be governed and construed in accordance with
the laws of the State of Illinois.
19. Time is of the essence of this Agreement. If the date for
performance of a condition hereof shall fall on a Saturday, Sunday or a holiday,
it may be performed on the next business day.
20. This Agreement supersedes all previous agreements, negotiations,
statements and undertakings which are merged herein and its terms and
conditions, including all representations, indemnities, covenants and
warranties, shall remain in full force and effect and shall not merge or
terminate on the closing.
This Agreement may be signed in counterparts, all of which shall be deemed
originals.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed in two or more counterparts and dated as of the date first above written.
SELLER:
BILL L. BAILEY
NORMA JEAN BAILEY
BUYER:
Alliance Farms Cooperative Association, a Colorado
cooperative association.
By
Typed Name:
Title:
EXHIBIT A
TRACT 1: The North Half of Section 1, EXCEPT a part of the Northwest Quarter of
Section 1, Township 1 North, Range 8 East of the Third Principal Meridian, more
particularly described as follows: Commencing at the Northeast corner of said
Section 1; thence North 89 Degrees 45 Minutes 10 Seconds West, 2897.43 feet
along the north line of Section 1 to the point of beginning; thence North 89
Degrees 45 Minutes 10 Seconds West, 208.88 feet along the North line of
Section 1; thence
South 0 Degrees 43 Minutes 05 Seconds East, 205.93 feet; thence South 88 Degrees
49 Minutes 30 Seconds East, 199.79 feet; thence North 0 Degrees 23 Minutes 30
Seconds West, 209.04 feet to a point on the North line of Section 1 being the
point of beginning, and FURTHER EXCEPT a tract more particularly described as
beginning at a point 8 chains East of the Northwest corner of the Northeast
Quarter of Section 1, Township 1 North, Range 8 East of the Third Principal
Meridian, thence South 4 chains, thence East 2.50 chains, thence North 4 chains,
thence West 2.50 chains to the point of beginning;
and
The North Half of the North Half of the South Half of Section 1;
and
The Northeast Quarter (known as the East Half of Lot 2) of the Northeast Quarter
of Section 2;
and
All in Township 1 North, Range 8 East to Third Principal Meridian.
EXHIBIT B
APPLICANT:
ALLIANCE FARMS COOPERATIVE ASSOCIATION
3315 NORTH OAK TRAFFICWAY
P. O. BOX 7305
KANSAS CITY, MO 64116-0005
BENEFICIARY;
BILL L. BAILEY AND NORMA JEAN BAILEY
R R 1, BOX 89
XENIA, IL 62899
IRREVOCABLE LETTER OF CREDIT NO.
AT THE REQUEST, AND FOR THE ACCOUNT, OF ALLIANCE FARMS COOPERATIVE ASSOCIATION,
WE HEREBY ESTABLISH THIS IRREVOCABLE LETTER OF CREDIT NUMBER
IN THE AMOUNT OF ONE HUNDRED FIFTY THOUSAND U.S. DOLLARS ($150,000.00)
EXPIRATION DATE NOVEMBER 30, 1998 IN DENVER, COLORADO WHICH IS AVAILABLE FOR
PAYMENT UPON PRESENTATION OF YOUR SIGHT DRAFT AND THE FOLLOWING DOCUMENTS:
THIS ORIGINAL LETTER OF CREDIT.
2. A WRITTEN CERTIFICATE, SIGNED BY THE BENEFICIARY AND ACKNOWLEDGED BY A
NOTARY PUBLIC, WHICH CERTIFIES AS FOLLOWS:
A. AS OF NOVEMBER 1, 1998, ALL OF THE CONDITIONS AND CONTINGENCIES
SPECIFIED IN THE OPTION CONTRACT DATED NOVEMBER 20,1996 BETWEEN
APPLICANT AND BENEFICIARY HAVE BEEN SATISFIED.
B. AS OF NOVEMBER 1, 1998, APPLICANT HAS FAILED TO EXERCISE THE OPTION
GRANTED TO IT UNDER SAID OPTION CONTRACT.
C. NOT LESS THAN FIVE NOR MORE THAN 26 BUSINESS DAYS PRIOR TO
BENEFICIARY'S PRESENTMENT OF THIS ORIGINAL LETTER OF CREDIT AND
BENEFICIARY'S CERTIFICATE TO COBANK BENEFICIARY HAS NOTIFIED APPLICANT
OF BENEFICIARY'S INTENTION TO DRAW ON THIS LETTER OF CREDIT.
WE HEREBY ENGAGE WITH THE BENEFICIARY THAT DOCUMENTS DRAWN UNDER AND IN
COMPLIANCE WITH THE TERMS OF THIS CREDIT WILL BE DULY HONORED UPON PRESENTATION
IN OUR OFFICES, AS SPECIFIED.
THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICES FOR
DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE,
PUBLICATION NO. 600 (THE "UCP").
AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE
EXHIBIT 10.4
PROMISSORY NOTE
$200,000.00 November 27, 1996
FOR VALUE RECEIVED, the undersigned, Alliance Farms Cooperative
Association, a Colorado corporation ("Borrower"), hereby promises to pay to the
order of Farmland Industries, Inc. a Kansas cooperative corporation ("Lender"),
the principal sum of Two Hundred Thousand and No/100 DOLLARS ($200,000.00).
Interest will be charged and compounded annually on the outstanding
principal balance of this Note or so much thereof as shall be advanced, at the
per annum rate equal to the sum of (a) one and one-quarter percent (1.25% or 125
basis points), plus (b) the National Variable Rate (collectively, the
"Applicable Rate") with the understanding that the National Variable Rate shall
be the rate most recently announced by CoBank, ACB (the "Bank") as its "National
Variable Rate." The National Variable Rate is one of the Bank's base rates and
serves as a basis upon which effective rates of interest are calculated for
those loans making reference thereto, and is evidenced by the recording thereof
after its announcement in such internal publication or publications as the Bank
may designate. The Applicable Rate shall be adjusted annually based on the
Base Rate in effect on the anniversary date of this Note. Interest shall be
computed on the basis of a 360-day year.
It is acknowledged that the Applicable Rate effective on the date of
the execution of this Note is nine and one-half percent (9.5%) per annum, and
this Note will initially bear interest at the rate of nine and one-half percent
(9.5%) per annum.
Principal and interest shall be payable as follows:
In installments of interest only on the 1st day of January, 1996, and
on the 1st day of each successive month thereafter until this Note is repaid in
full, and (b) a final payment of all outstanding principal and accrued but
unpaid interest due hereunder on the first to occur of (i) the closing date with
respect to Borrower's next issuance and sale of a block of at least seventeen
(17) shares of its common stock, $.01 par value, and (ii) the 27th day of
November, 2006; provided, however, that as of each anniversary of the date of
this Note, Lender shall adjust the amount of the monthly interest installments
to an amount calculated to be the interest payment sufficient to amortize the
then outstanding principal at the then Applicable Rate as if the outstanding
principal were to be fully amortized in equal monthly installments at the
Applicable Rate over the then remaining portion of an assumed original repayment
term of ten (10) years. Lender shall provide written notice to Borrower of the
amount of such adjusted interest payment promptly upon completing the
calculation thereof.
If any installment of this Note becomes due and payable on a Saturday,
Sunday or business holiday in the State of Missouri, payment shall be made on
the next successive business day with the same effect as though made on the due
date.
The Borrower reserves the right to prepay all or any portion of this
Note at any time and from time to time without premium or penalty of any kind.
All payments made hereunder shall be made in lawful currency of the
United States of America at Farmland Industries, P.O. Box 7305, Kansas City,
Missouri 64116, Attn: Paul Miller, or at such other place as the Lender may
designate in writing. All payments made hereunder, whether a scheduled
installment, prepayment, or payment as a result of acceleration, shall be
allocated first to accrued but unpaid interest, next to premiums, penalties, or
liquidated damage amounts, if any, due hereunder, next to installments of
principal overdue or currently due, and then to installments of principal
remaining outstanding hereunder in the inverse order of their maturity.
For the purposes of this Note, the following terms shall have the
following meanings:
(a) "Borrower" shall mean, jointly and severally, Alliance Farms
Cooperative Association, a Colorado corporation, its successors and assigns, and
all other persons or entities succeeding to the interest of the named Borrower
in the property encumbered by the Deed of Trust and any person or entity
becoming liable on this Note, the Deed of Trust, or any of the other Loan
Documents.
(b) "Default" shall mean the failure of Borrower to pay or perform as
required hereunder or as required under the Deed of Trust or the Loan Documents.
(c) "Event of Default" shall mean a Default for which there is no
opportunity to cure or for which all opportunities to cure have expired.
(d) "Lender" shall mean Farmland Industries, Inc., a Kansas
cooperative corporation, and its successors and assigns.
(e) "Loan Documents" shall mean collectively this Note, the Mortgage
and any and all other instruments, agreements and documents now or hereafter
evidencing, securing or otherwise relating to the debt evidenced by this Note.
(f) "Mortgage" shall mean those certain Illinois Mortgages executed
by Borrower, securing this Note and granting Lender a security interest in and
to Buyer's right, title and interest in certain property described therein.
Each person liable hereon agrees, to the extent permitted by law, to
pay all reasonable costs of collection, including attorneys' fees, paid or
incurred by the Lender in enforcing this Note or the rights and remedies herein
provided.
This Note is secured by the Mortgage. It is expressly agreed that all
of the covenants, conditions and agreements contained in those Mortgage and the
Loan Documents are hereby made part of this Note. This Note will be considered
in default (1) upon failure to pay any installment of principal or interest as
required herein on the due date thereof, or (2) upon any default under the
Mortgage or the Loan Documents, or (3) upon the occurrence of any event by which
under the terms of the Mortgage or the Loan Documents this Note may or shall
become due and payable. Upon the occurrence of an Event of Default, and after
expiration of the applicable cure period, Lender may, at its option, declare all
unpaid indebtedness, evidenced by this Note, and any modifications thereof, plus
any other sums owed by Borrower to Lender at the time of such declaration, to be
accelerated and immediately due and payable without notice regardless of the
date of maturity.
Failure at any time to exercise the foregoing or any other options
shall not constitute a waiver of the right to exercise the same or any other
option at any other time in respect of the same event or any other event.
The Borrower, for itself and/or any other entity or persons now or
hereafter liable hereon, hereby waives demand of payment, presentment for
payment, protest, notice of nonpayment or dishonor and any and all other notices
and demands whatsoever, and any and all delays or lack of diligence in the
collection hereof, and expressly consents and agrees to any and all extensions
or postponements of the time of payment hereof from time to time at or after
maturity and any other indulgence and waives all notice thereof.
By executing this Note on behalf of the Borrower, any individual
and/or entity which has signed this Note in a representative capacity on behalf
of Borrower does hereby represent to the Lender that such individual and/or
entity is duly authorized and empowered to execute and deliver this Note on
behalf of the Borrower and that this Note constitutes the legal and binding
obligation of the Borrower, enforceable against the Borrower in accordance with
its terms.
This Note shall be governed by and construed and enforced in
accordance with the laws of the State of Missouri (without reference to conflict
of laws principles of such state), except to the extent preempted by United
States federal law.
IN WITNESS WHEREOF, the undersigned has duly caused this Note to be
executed and delivered at the place specified above and as of the date first
written above.
ALLIANCE FARMS COOPERATIVE ASSOCIATION, a Colorado
corporation
By
Printed Name:
Title:
BORROWER
EXHIBIT 10.5
ILLINOIS MORTGAGE
THIS ILLINOIS MORTGAGE (the "Mortgage"), dated as of the 27th day of
November, 1996, is from Alliance Farms Cooperative Association, a Colorado
cooperative association, whose address is c/o Farmland Industries, Inc., 3315
North Oak Trafficway, P.O. Box 7305, Kansas City, Missouri 64116-0005,
Attention: Wayne Snyder, Dept. 122 ("Mortgagor"), to Farmland Industries, Inc.,
a Kansas corporation, whose address is 3315 North Oak Trafficway, P.O. Box
7305, Kansas City, Missouri 64116-0005, Attention: Paul Miller, Dept. 189 (the
"Mortgagee");
GRANTING CLAUSE:
Mortgagor, in consideration of the debt hereinafter mentioned and
created, and the sum of Ten Dollars ($10.00) and other good and valuable
considerations to it paid by Mortgagee, the receipt and sufficiency of which are
hereby acknowledged, does by these presents MORTGAGE AND WARRANT to Mortgagee
all of that real property, legally described on Exhibit A hereto (the "Land"),
and all air space above the surface of the Land, with the tenements,
hereditaments, appurtenances, privileges, easements, franchises, rights,
appendages and immunities thereunto belonging or appertaining (said property,
rights and interests being hereinafter called the "Mortgaged Property")
TO HAVE AND TO HOLD the Mortgaged Property to Mortgagee, its
successors and assigns, in accordance with the provisions contained herein.
NOW, THEREFORE, the condition of this Mortgage is such that if
Mortgagor shall well and truly pay and perform the Secured Obligations (as
hereinafter defined), and shall perform, comply with and abide by each and every
of the agreements, conditions and covenants contained and set forth in this
Mortgage, the Note (as hereinafter defined), and the Loan Documents (as
hereinafter defined), then this Mortgage shall be released, without warranty, in
compliance with Illinois law.
AND, Mortgagor does hereby covenant and agree as follows:
ARTICLE ONE: SECURED OBLIGATIONS
This Mortgage is given to secure the payment of indebtedness in the
aggregate principal sum of One Million Three Hundred Sixty Thousand Dollars
($1,360,000), according to the terms of the Promissory Note, dated of even date
herewith, made by Mortgagor to the order of Mortgagee (the "Note"), and the
terms of any and all other instruments, agreements and documents now or
hereafter evidencing, securing or otherwise relating to the indebtedness
evidenced by the Note (the ALoan Documents@), and the performance and discharge
of each and every obligation of Mortgagor now or hereafter set forth in the Note
and the Loan Documents (the "Secured Obligations").
ARTICLE TWO: GENERAL COVENANTS, REPRESENTATIONS AND WARRANTIES
2.1 Payment and Performance. Mortgagor covenants and agrees to pay
and perform the Secured Obligations and to perform, comply with and abide by
each and every one of the agreements, conditions and covenants contained and set
forth in this Mortgage, the Note and the Loan Documents.
2.2 Title to Mortgaged Property. Mortgagor covenants, agrees and
warrants that it has good and marketable fee simple title to the Mortgaged
Property, free and clear of liens and encumbrances, and that Mortgagor has good
right and lawful authority to mortgage and convey the same in the manner and
form herein set forth.
2.3 Representations and Warranties. As a material inducement to
Mortgagee to enter into the transaction evidenced by the Note and the Loan
Documents, Mortgagor hereby unconditionally represents and warrants that (a)
there are no actions, suits or proceedings of a material nature pending or, to
the knowledge of Mortgagor, threatened against or affecting the Mortgagor or the
Mortgaged Property, or involving the validity or enforceability of this
Mortgage, the Note or the Loan Documents, or the priority of the lien and
security interest created by this Mortgage; and (b) no event has occurred
(including specifically Mortgagor's execution of the Mortgage and its
consummation of the transaction evidenced thereby) which will violate, be in
conflict with, result in the breach of or constitute (with due notice or lapse
of time or both) a default under any statute, regulation, rule, order or
limitation, or any mortgage, deed of trust, lease, contract, bylaws, articles of
incorporation, articles of partnership, partnership certificate or agreement,
declaration of trust or other agreement or document to which Mortgagor is a
party or by which Mortgagor or any of the Mortgaged Property may be bound or
affected, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever on the Mortgaged Property other than the
liens and security interests created by, or otherwise permitted by, this
Mortgage.
ARTICLE THREE: TRANSFERS, ENCUMBRANCES AND LIENS
3.1 Sale or Transfer. If, at any time prior to the release of this
Mortgage of record, Mortgagor shall terminate its existence, liquidate or
dissolve, or shall sell all or substantially all of its assets, the same shall,
unless made with Mortgagee's prior written consent, be deemed an unauthorized
assignment, and shall constitute a Default under this Mortgage.
3.2 Claims Against Mortgaged Property. Mortgagor will pay, from time
to time when the same shall become due, all claims and demands of mechanics,
materialmen, laborers and others which, if unpaid, might result in, or permit
the creation of, a lien on the Mortgaged Property or any part thereof, or on the
revenues, rents, issues, income and profits arising therefrom, whether paramount
or subordinate to this Mortgage, and in general will do or cause to be done
everything necessary so that the first lien of this Mortgage shall be fully
preserved, at the cost of Mortgagor, without expense to Mortgagee.
Notwithstanding the foregoing, Mortgagor shall have the right to contest in good
faith any such liens, claims and demands by appropriate proceedings timely
commenced and diligently conducted.
ARTICLE FOUR: TAXES AND PUBLIC CHARGES
Mortgagor, from time to time when the same shall become due and
payable, will pay and discharge all taxes of every kind and nature (including
real and personal property taxes and income, franchise, withholding, profits and
gross receipts taxes), all general and special assessments, levies, permits,
inspection and license fees, all water and sewer rents and charges, and all
other public charges, whether of a like or different nature, imposed upon or
assessed against Mortgagor or the Mortgaged Property or any part thereof or upon
the revenues, rents, issues, income and profits of the Mortgaged Property, or
arising in respect of the occupancy, use or possession thereof. Mortgagor will,
within five (5) days of receipt of a written request from Mortgagee, deliver
receipts evidencing the payment of all such taxes, assessments, levies, fees,
rents and other public charges imposed or assessed against Mortgagor or the
Mortgaged Property or the revenues, rents, issues, income or profits thereof.
ARTICLE FIVE: INSURANCE
Mortgagor shall, at its sole cost and expense, but for the benefit of
Mortgagee and Mortgagor, maintain comprehensive general liability insurance
against claims for personal injury, death or property damage occurring upon, in
or about the Mortgaged Property, which insurance shall afford protection of not
less than $1,000,000 with respect to injury or death to a single person, of not
less than $1,000,000 with respect to injuries or deaths from any one accident,
and of not less than $1,000,000 with respect to property damage.
ARTICLE SIX: CONDEMNATION
If all or any part of the Mortgaged Property hereunder be taken or
damaged by the exercise of the power of eminent domain, Mortgagor may contest
the same in good faith so long as there is no Default under this Mortgage, the
Note or the Loan Documents, but the award for any property so taken is hereby
assigned to Mortgagee, and Mortgagee, upon such award becoming final, is hereby
authorized, in the name of Mortgagor, to execute and deliver acquaintances for,
and release of, any such award and to collect and apply the proceeds to the
payment of the Secured Obligations (such application to be to such portions of
the Secured Obligations, and in such order, as Mortgagee may elect), whether
matured or unmatured, and the remainder, if any, shall be paid to Mortgagor or
such other party or parties as may be legally entitled thereto. In the event of
a partial condemnation, Mortgagor covenants and agrees to commence promptly the
restoration and repair of the remaining Mortgaged Property to as nearly as
possible the same condition as existed prior to such taking, and to prosecute
diligently such restoration and repair to completion. Mortgagor will submit
plans for such restoration and repair to Mortgagee for Mortgagee's written
approval prior to the commencement of such restoration and repair.
ARTICLE SEVEN: DEFAULT AND REMEDIES
7.1 Default. Failure of Mortgagor to comply with any of the
covenants and requirements of this Mortgage, within thirty (30) days after
receipt of written notification thereof, or with any of the covenants and
requirements of the Note or the Loan Documents within the time period specified
therein (including any applicable cure period), shall constitute a "Default"
hereunder.
7.2 Remedies Upon a Default. At any time after a Default has
occurred, the whole of the Note shall become due at Mortgagee's option forthwith
or thereafter at the continuing option of Mortgagee, and this Mortgage shall
remain in force, and Mortgagee may exercise any right, power or remedy permitted
to it by law or by contract, and in particular, without limiting the generality
of the foregoing, Mortgagee shall have the absolute right, at its option and
election, to pursue one or more of the following rights:
(a) Mortgagee shall be entitled thereupon or thereafter without
notice or demand, to the extent permitted by the laws of the State of
Illinois, (i) to institute suit at law or in equity to enforce the
rights of Mortgagee and (ii) to enforce, at Mortgagee's continuing
option, payment of all sums secured hereby by action at law or by suit
in equity to foreclose this Mortgage, either or both, concurrently or
otherwise; and one action or suit shall not abate or be a bar to or
waiver of Mortgagee's right to institute or maintain the other,
provided Mortgagee shall have only one payment and satisfaction of the
Secured Obligations;
(b) Mortgagee shall have the right from time to time to take
action to recover any portion of the Secured Obligations, as the same
becomes due, without regard to whether or not any other portion of the
Secured Obligations shall be due, and without prejudice to the right
of Mortgagee thereafter to bring an action of foreclosure, or any
other action, with respect to any Default existing at the time such
earlier action was commenced.
7.3 Right of Mortgagee to Credit Sale. Upon any sale or sales made
hereunder, Mortgagee may bid for and acquire the Mortgaged Property or any part
thereof and, in lieu of paying cash therefor, may make settlement for the
purchase price by crediting upon the Secured Obligations the net sales price
after deducting therefrom the expenses of sale and the cost of the action and
any other sums which Mortgagee is authorized to deduct under this Mortgage, and,
in such event, this Mortgage, the Note, the Loan Documents and any other
evidence of Secured Obligations may be presented to the person or persons
conducting the sale in order that the amount so used or applied may be credited
upon the Secured Obligations as having been paid.
7.4 Entry by Mortgagee. During the continuance of any Default,
Mortgagee personally, or by its agents or attorneys, may enter into and upon and
take possession of all or any part of the Mortgaged Property, and each and every
part thereof, and may exclude Mortgagor, its agents and servants wholly
therefrom and, having and holding the same, may use, occupy and control the
Mortgaged Property or any part thereof, either personally or by its
superintendents, managers, agents, servants, attorneys or receivers.
7.5 Remedies Cumulative. No remedy conferred upon or reserved to
Mortgagee herein or in the Note or the Loan Documents is intended to be
exclusive of any other remedy or remedies, and each and every such remedy shall
be cumulative and shall be in addition to every remedy given to Mortgagee or now
or hereafter existing at law or in equity or by statute. No delay or omission
by Mortgagee in the exercise of any right or power accruing upon any Default
shall impair any such right or power, or shall be construed to be a waiver of
any such Default or any acquiescence therein; and every power and remedy given
in this Mortgage, the Note, or the Loan Documents, to Mortgagee may be exercised
from time to time as often as may be deemed expedient by Mortgagee. Nothing in
this Mortgage, the Note, or the Loan Documents shall affect the obligation of
Mortgagor to pay the Secured Obligations in the manner and at the time and place
therein respectively expressed. In the event of foreclosure, Mortgagor shall be
fully liable for any deficiency.
7.6 No Waiver. Any failure by Mortgagee to insist upon the strict
performance by Mortgagor of any of the terms and provisions of this Mortgage,
the Note, or the Loan Documents shall not be deemed to be a waiver of any of the
terms and provisions of this Mortgage, the Note, or the Loan Documents, and
Mortgagee, notwithstanding any such failure, shall have the right thereafter to
insist upon the strict performance by Mortgagor of any and all of the terms and
provisions of this Mortgage, the Note or the Loan Documents to be performed by
Mortgagor; and Mortgagee may resort for the payment of the Secured Obligations
to the Mortgaged Property or to any other security therefor held by Mortgagee in
such order and manner as Mortgagee may elect.
7.7 Waiver of Redemption and Other Rights. To the extent permitted
by the laws of the State of Illinois, Mortgagor will not at any time (a) insist
upon, or plead, or in any manner whatever claim or take any benefit or advantage
of, any stay or extension or moratorium law, any exemption from execution or
sale of the Mortgaged Property or any part thereof, wherever enacted, now or at
any time hereafter in force, which may affect the covenants and terms of
performance of this Mortgage, nor (b) claim, take or insist upon any benefit or
advantage of any law now or hereafter in force providing for the valuation or
appraisal of the Mortgaged Property, or any part thereof, prior to any sale or
sales thereof which may be made pursuant to any provision herein, or pursuant to
the decree, judgment or order of any court of competent jurisdiction, nor (c)
after any such sale or sales, claim or exercise any right under any laws
wherever enacted, now or at any time hereafter in force, to redeem the property
so sold or any part thereof. Mortgagor, to the extent permitted by the laws of
the State of Illinois, hereby expressly waives all benefit or advantage of any
such law or laws, and covenants not to hinder, delay or impede the execution of
any power herein granted or delegated to Mortgagee, but to suffer and permit the
execution of every power as though no such law or laws had been made or enacted.
ARTICLE EIGHT: MISCELLANEOUS
8.1 Protection of Mortgagee's Security. Mortgagee may, at its
option, after prior notice is given to Mortgagor by Mortgagee if feasible in
Mortgagee=s reasonable judgment under the circumstances, and without waiving its
right to accelerate the Secured Obligations or any part thereof and to foreclose
the same, pay either before or after delinquency any or all of those certain
obligations required by the terms hereof to be paid by Mortgagor for the
protection of the Mortgage security or for the collection of any of the Secured
Obligations if not paid by Mortgagor at least two (2) days prior to the due date
thereof. The good faith decision of Mortgagee upon any question of fact,
necessity or expediency shall be binding on Mortgagor. All sums so advanced or
paid by Mortgagee shall become Secured Obligations and become an integral part
thereof, subject in all respects to the terms, conditions and covenants of this
Mortgage, as fully and to the same extent as though a part of the original
indebtedness evidenced by the Note and secured by this Mortgage, excepting,
however, that said sums shall be repaid to Mortgagee upon demand by Mortgagee to
Mortgagor for said payment.
8.2 Successors and Assigns. All of the grants, covenants, terms,
provisions and conditions herein shall run with the Mortgaged Property, shall,
subject to the provisions of Section 4 of this Mortgage, apply to and bind the
successors and assigns of Mortgagor, and shall inure to the benefit of the
successors and assigns of Mortgagor and Mortgagee.
8.3 Notices. Except as may otherwise be required by applicable law,
all notices, approvals, waivers, consents, demands, requests and declarations
given or required to be given by either party hereto to the other party shall be
in writing and shall be deemed to have been effectively given when delivered
personally or sent by United States certified or registered mail, return receipt
requested, postage prepaid, to the Mortgagor or the Mortgagee, as the case may
be, at their respective address set forth in the preamble of this Mortgage,
and/or to such other (or additional) address(es) requested by a notice given in
accordance with this Section.
8.4 Corrections and Future Acts. Mortgagor will, upon the reasonable
request of Mortgagee, promptly correct any defect, error, or omission which may
be discovered in the contents of this Mortgage or in the execution or
acknowledgment hereof, and will execute, acknowledge, and deliver such further
instruments and do such further acts as may be necessary or as may be reasonably
requested by Mortgagee to carry out more effectively the purposes of this
Mortgage, to subject to the lien and security interest hereby created any of
Mortgagor's properties, rights, or interest covered or intended to be covered
hereby, and to perfect and maintain such lien and security interest.
8.5 Governing Law. This Mortgage shall be governed by and enforced
according to the laws of the State of Illinois, without reference to the
conflicts of laws principles thereof.
8.6 Severability. If any provision or clause of this Mortgage shall
be held or deemed to be or shall, in fact, be inoperative, invalid or
unenforceable as applied in any particular case or in all cases because it
conflicts with any provisions of any constitution or statute or rule of public
policy, or for any other reason, such determination shall not affect in any way
any other provision or clause herein which can be given effect without the
inoperative, invalid or unenforceable provision or clause.
8.7 Amendments. No alteration or amendment of this Mortgage shall be
effective unless in writing signed by the parties sought to be charged or bound
thereby.
8.8 Counterparts. This Mortgage may be executed in multiple copies,
each of which when so executed and acknowledged shall be deemed to be an
original.
IN WITNESS WHEREOF, Mortgagor has executed and delivered this Mortgage
as of the day and year first above written.
ALLIANCE FARMS COOPERATIVE ASSOCIATION, a Colorado
cooperative association
By:
Name:
Title:
MORTGAGOR
STATE OF )
) SS.
COUNTY OF )
I, the undersigned, a Notary Public, in and for said County, in the State
aforesaid, do hereby certify, that , personally known to
me to be the of said corporation, whose name is subscribed to the
foregoing instrument, appeared before me this day in person and acknowledged
that as an officer of the corporation, he signed and delivered the said
instrument, pursuant to the authority given by the Board of Directors of said
corporation, as their free and voluntary act, and as the free and voluntary act
and deed of said corporation, for the uses and purposes therein set forth.
Given under my hand and notarial seal, this day of
, 1996.
NOTARY PUBLIC
EXHIBIT A: THE LAND
A tract of land located in Section 1, Township 1 North, Range 8 East of the
Third Principal Meridian located in Wayne County, Illinois and more
particularly described as follows:
Commencing at the Southeast corner of the Northeast Quarter of said
Section 1, thence in a northerly direction along the east section line
of Section 1, a distance of 1,970 feet to a point, thence westerly
parallel with the South line of said Section 1, a distance of 1,000
feet to a point, thence southerly parallel with the east line of said
Section 1, a distance of 1,970 feet to the South line of the Northeast
Quarter of said Section 1, thence easterly along said quarter section
line a distance of 1,000 feet to the point of beginning, containing
45.25 acres, more or less.
EXHIBIT 10.6
CORRECTION
DEED OF TRUST
(WITH FUTURE ADVANCE CLAUSE)
DATE
THIS CORRECTION DEED OF TRUST is made this 24th day of January, 1997.
PARTIES
The parties to this Correction Deed of Trust are ALLIANCE FARMS COOPERATIVE
ASSOCIATION, a cooperative corporation duly organized and existing under and by
virtue of the laws of the State of Colorado, whose mailing address is 101 South
Detroit, Yuma, Colorado 80759, (hereinafter referred to as "the Borrower"), and
the Public Trustee of the County of Yuma, State of Colorado, (hereinafter
referred to as the "Public Trustee").
PROMISSORY NOTES
The Borrower has made the following described Promissory Notes, whether
listed below or whether evidencing a future advance (hereinafter referred to as
the "Note", whether one or more), payable to the order of CoBANK, ACB, a
corporation organized and existing under the Farm Credit Act of 1971, as
amended, whose mailing address is P.O. Box 2940, City of Wichita, State of
Kansas 67201-2940 (hereinafter referred to as "CoBank"), as beneficiary of this
Correction Deed of Trust. The terms and provisions of the Note are fully
incorporated herein by this reference. The Note is evidence of actual loan(s)
made or to be made to the Borrower by CoBank. The Borrower also has executed in
favor of CoBank one or more Loan Agreement(s) (hereunder referred to as the
"Loan Agreement(s)"). The Note bears interest at the rate or rates provided
therein and in the Loan Agreement(s), such interest being payable at the time(s)
as provided therein and in the Loan Agreement(s), until the loan(s) are paid in
full.
DATE OF NOTE AMOUNT FINAL DUE DATE
May 19, 1995 $8,300,000.00 July 20, 2005
May 19, 1995 4,750,000.00 February 20, 2010
May 19, 1995 10,550,000.00 March 20, 2008
Any additional sums advanced to the Borrower are limited insofar as the
balance outstanding at any one time is concerned to $ 10,550,000.00, such
additional sums being evidenced by the Borrower's Note, whether one or more, and
bearing interest as provided in said Note and Loan Agreement(s).
SECURED LOANS; PROPERTY CONVEYED
This Correction Deed of Trust is given by Borrower for the benefit of
CoBank in order to secure the payment of said Note, and all renewals,
amendments, modifications, and replacements of said Note, all sums advanced on
the Note and all sums repaid and then re-advanced on the Note, whether required
or discretionary, together with all interest and all additional sums advanced to
the Borrower or its successors by CoBank, and all advances, charges, fees,
recoverable expenses, and attorneys' fees, and to secure the performance and
observation of the covenants and conditions contained in this Correction Deed of
Trust and in the Loan Agreement(s).
The Borrower, in consideration of the premises, and for the purpose
aforesaid, hereby grants and conveys to the Public Trustee, with power of sale,
in trust, the following described Property whether now owned or hereafter
acquired, situated in the County of Yuma, State of Colorado:
PARCEL I
The Southeast Quarter of Section 19, Township 3 North, Range 46 West of the 6th
P.M., Yuma County, Colorado, consisting of 160 acres, more or less.
PARCEL II
The Southwest Quarter of Section 1, Township 2 North, Range 47 West of the 6th
P.M., Yuma County, Colorado, consisting of 160 acres, more or less.
PARCEL III
A parcel of land located in the Northwest Quarter of Section 21, Township 3
North, Range 47 West of the 6th P.M., Yuma County, Colorado, described as
follows: Beginning at the Northeast corner of said quarter; thence along the
North line thereof North 90E00' West 1,100.0 feet; thence South 0E00' East 30.0
feet to a curve which bears Southeasterly, concave to the Southwest, from an
initial radial bearing North 10E09' East, with a radius of 1,310.00 feet,
through a central angle of 56E13'20" for an arc distance of 1,285.45 feet;
thence South 25E20' East 254.4 feet to a power pole in a fence corner; thence
along a fence accepted to be the East line of possession of the Northwest
Quarter, North 1E13' E 1,024.6 feet to the point of beginning.
AND
A parcel in the Northeast Quarter of Section 21, beginning at the Northwest
corner of said quarter; thence along a fence accepted to be the West line of
possession of the Northeast Quarter, South 1E13' West 1,024.6 feet to a power
pole at a fence corner; thence along a fence South 90E00' East 297.6 feet;
thence North 1E13' East 1,024.6 feet to the North line of said quarter; thence
along said North line North 90E00' West 297.6 feet to the point of beginning.
PARCEL IV
A parcel of land located in the North Half of Section 16, Township 1 South,
Range 47 West of the 6th P.M., Yuma County, Colorado, more particularly
described as beginning at the Northeast corner of the Northwest Quarter of
Section 16; thence, along the North line thereof, South 88E57' West 651.75 feet
to its intersection with a road running West and South; thence along said
centerline of said road, South 03E08' East 1,296.18 feet; thence, along a fence
and its Easterly prolongation, North 88E02' East 1,675.52 feet; thence North
01E04' West 1,268.77 feet to the North line of the Northeast Quarter; thence,
along said North line, South 88E56' West 1,070.30 feet to the point of
beginning, containing 50.00 acres of land, together with and subject to an
easement for access across a strip of land, 60 feet wide, the centerline of
which is the West line of this parcel.
PARCEL V
A parcel of land located in the East Half of Section 7, Township 3 North, Range
46 West of the 6th P.M., Yuma County, Colorado, described as beginning at a
point on the East line of Section 7 at a distance of North 0E00' East 1,825.00
feet from the Southeast corner thereof; thence North 90E00' West 30.00 feet;
thence North 34E15'30" West 445.02 feet; thence North 47E26'28" West 381.19
feet; thence North 61E57'23" West 402.47 feet; thence North 62E30'49" East
391.84 feet; thence North 49E10'47" East 385.84 feet; thence North 31E57'53"
East 466.40 feet; thence North 90E00' East 30.00 feet to said East line; thence
along said East line South 0E00' West 1,643.60 feet to the point of beginning.
PARCEL VI
A parcel of land located in the Southwest Quarter of Section 8, Township 1
South, Range 47 West of the 6th P.M., Yuma County, Colorado, described as
beginning at the Southwest corner of Section 8; thence along the West line
thereof North 1E21' West 650 feet; thence parallel with the South line thereof,
North 89E29' East 1,550 feet; thence parallel with said West line South 1E21'
East 650 feet to said South line; thence, along said South line South 89E29'
West 1,550 feet to the point of beginning.
PARCEL VII
A parcel of land located in the Southeast Quarter of Section 6, Township 1
South, Range 47 West of the 6th P.M., Yuma County, Colorado, described as
beginning at the Southwest corner of the Southeast Quarter of Section 6; thence,
along the South line thereof, North 89E25' East 1,245 feet; thence parallel with
the West line of said Quarter North 1E29' West 700 feet; thence parallel with
said South line South 89E29' West 1,245 feet to the West line of said quarter;
thence along said West line South 1E29' East 700 feet to the point of beginning.
(hereinafter referred to as the "Property")
THIS IS A CORRECTION DEED OF TRUST AND IS INTENDED TO CORRECT CERTAIN PROPERTY
DESCRIPTIONS AS FOUND IN THAT CERTAIN DEED OF TRUST DATED MARCH 12, 1996, AS
RECORDED BY RECEPTION NO. 481287 IN BOOK 762, PAGES 407-416 OF THE DEED OF TRUST
RECORDS OF YUMA COUNTY, COLORADO, SO THAT THE "TITLE" TRACT IS CHANGED TO PARCEL
AND THE DESCRIPTIONS OF TRACTS VI AND VII IN SAID DEED OF TRUST SHALL READ AS
INDICATED ABOVE.
and including, whether or not owned by the Borrower on the date of this
Deed of Trust, or acquired by the Borrower after the date of this Deed of Trust,
or whether now or later located on or appurtenant to the real estate described
above, including but not limited to all replacements, substitutions, and
additions:
All improvements, structures, buildings and facilities of any kind and
character; all equipment, and fixtures; all easements, rights of way and
reversionary rights; all privileges, hereditaments and appurtenances; all
water, irrigation and drainage rights; and all abstracts or other evidence
of title; all right, title, and interest of Borrower as lessee in, to, or
under any and all leases, leaseholds, and leased premises identified
herein; and in the event Borrower acquires an ownership interest in the
land and any related property presently leased by Borrower, this Deed of
Trust shall be a lien on the land and any related property acquired by
Borrower, all of which shall be considered to be a part of the security
under this Deed of Trust.
(hereinafter referred to as the "Property"),
DECLARING A VIOLATION AND TERMS OF SALE BY PUBLIC TRUSTEE
The Public Trustee will have and hold all the Property conveyed by this
Deed of Trust in trust, so that in the event there is a default in the payment
of the Note, or any part of the Note, or of the interest due on the Note, or in
case the promises and conditions set out in or incorporated into this Deed of
Trust are not performed, CoBank may declare a violation of such promise or
condition and may file notice with the Public Trustee declaring such default or
violation and that CoBank elects and demands that the Property be advertised for
sale and sold in accordance with the laws of the State of Colorado. The Public
Trustee may sell all of the Property, en masse, or may sell a part of the
Property in accordance with applicable law. The Public Trustee shall advertise,
and sell the Property, in the manner provided by law. Notices shall be provided
in accordance with the laws of Colorado governing sales of Property by a Public
Trustee. Out of the proceeds of the sale the Public Trustee shall first pay or
retain all fees, charges and costs for the sale, then all amounts due for taxes
or other assessments, and then pay to CoBank the principal and interest due on
its Note according to the terms of the Note and all amounts advanced by or owed
to CoBank pursuant to the terms of the Note, the Loan Agreement(s), this Deed of
Trust, or allowed by law, including but not limited to charges, fees, insurance,
taxes, assessments, and other amounts advanced pursuant to law or owed to
CoBank, with interest thereon, at the rate or rates provided in the Note and
Loan Agreement(s), and reasonable attorneys' fees. Following the period of
redemption, if any, the Public Trustee shall issue to the holder of the
Certificate of Purchase a deed to the Property sold. CoBank may purchase any
Property sold under this Deed of Trust at the sale, and may use as its bid the
amount due under the terms of its Note, Loan Agreement(s) and this Deed of
trust. CoBank shall not be obligated to see to the application of proceeds from
the sale.
PROMISES BY BORROWER
The Borrower promises as follows:
1. Title. To be the owner of absolute fee simple title to the Property
and to be the owner of unconditional title to all of the Property conveyed by
this Deed of Trust; to have a good right to convey said Property; that all
Property is free and clear of all liens and encumbrances; and to guarantee and
defend title to all of the Property against the claims or demands of all
persons.
2. Truthfulness of Loan Application; Use of Loan Proceeds. That the
statements contained in the Borrower's application or applications are true and
that the proceeds of the loan or loans secured by this Deed of Trust will be
used solely for the purposes set forth in the Loan Agreement(s) between the
Borrower and CoBank.
3. Covenant against Encumbrances. That the Borrower shall not execute any
mortgages, deeds of trust, financing statements or security agreements covering
the Property, except in favor of CoBank, nor shall Borrower permit any
involuntary liens against the Property, including but not limited to judgment
liens, materialmens' or mechanics' liens.
4. Security Agreements and Financing Statements. That the Borrower will
execute security agreements and financing statements and such further and
additional documents or instruments as CoBank may require in order to secure
fixtures or other collateral, and will see that such instruments are properly
filed or recorded, in order to attach and perfect CoBank's interest in such
collateral pursuant to applicable law.
5. Payment. That the Borrower will pay when due all sums due under the
Note secured by this Deed of Trust, including but not limited to interest and
future advances, and all sums due under the terms of and provisions of this Deed
of Trust and the Loan Agreement(s), together with interest thereon.
6. Compliance with Laws; Repair, Waste, Removal. To comply with all laws,
ordinances, regulations, covenants, conditions and restrictions which affect the
Property; to keep the Property in good condition and repair at all times; not to
commit or permit waste of or nuisance on the Property, nor to permit
unreasonable depreciation of the physical condition or value of the Property
through any cause; or, unless prior written consent of CoBank is first obtained,
not to remove or permit removal of any improvements, except for appropriate
replacement.
7. Evidence of Title. That the Borrower will furnish, at its own expense,
any abstracts of title, Uniform Commercial Code lien searches, title insurance,
Torrens certificates or other evidence of title required by CoBank.
8. Insurance and Its Proceeds. To insure the buildings and improvements
now on, or which may be placed on, the Property, and to keep such buildings and
improvements insured against such hazards and in such amounts as CoBank may
require. The policy of insurance shall contain a loss-payable clause in favor
of CoBank, as its interest may appear. If there is a loss, and if the payments
on the Note secured by this Deed of Trust are current and if there is no
violation of the terms of this Deed of Trust or Loan Agreement(s) by the
Borrower, any sums received by CoBank for loss under the policy may be used to
pay for reconstruction of the destroyed building or improvement(s); if not so
applied, or if there is a violation of the terms of this Deed of Trust or Loan
Agreement(s) by Borrower, then, at CoBank's option, any sums received by CoBank
may be applied in payment of matured debt, or as extra payments on unmatured
debt in a manner acceptable to CoBank.
9. Taxes and Other Payments. That the Borrower will pay when due all
taxes, levies, assessments, or claims which are or may become liens against the
Property and all rental or lease payments required for the location of the
Property. In the event CoBank pays any rents, taxes, lease payments, levies,
charges, insurance premiums or other charges affecting the said Property, the
same shall become a part of the debt secured by this Deed of Trust and shall be
payable on demand with interest thereon at the rate or rates as set forth in the
Note and Loan Agreement(s), all in accordance with the provisions of this Deed
of Trust relating to "Advances".
10. Compliance with Loan Agreements. That the Borrower will perform and
observe all of the terms and conditions of all Loan Agreement(s) entered into
between the Borrower and CoBank which are incorporated herein by reference.
11. Eligibility as Borrower. That the Borrower will, at all times during
the existence of any part of the debt secured by this Deed of Trust, maintain
its corporate existence and operate its business as an eligible borrower of
CoBank under the Farm Credit Act of 1971, as amended.
12. Transfers. That the Borrower will not voluntarily transfer, sell or
convey, or lease, nor allow an involuntary transfer by way of attachment, levy,
garnishment or other judicial process, of any of the Property without the prior
express written consent of CoBank.
13. Performance. That the Borrower will perform all of the acts, terms
and covenants under this Deed of Trust, the Note, and the Loan Agreement(s).
NO OBLIGATION FOR FUTURE ADVANCES
Nothing contained in this Deed of Trust shall be construed to obligate
CoBank to make any additional loan or advances to the Borrower. The sole
purpose of this Deed of Trust is to provide security for presently existing
indebtedness, and for loans and advances which may in the absolute discretion of
CoBank be made hereafter.
INSPECTION
CoBank may examine any of the Property at any reasonable time and may at
the Borrower's expense examine the books, records, and documents of the
Borrower, or require the same to be examined by an auditor approved by CoBank.
ADVANCES
In the event Borrower fails to pay when due, CoBank may make advances for
1) general or special taxes or ditch or water assessments levied or accruing
against the property secured under this Deed of Trust, 2) premiums on any
insurance necessary to properly protect the improvements on the Property, 3)
interest, principal or sums due upon any prior lien or encumbrance against the
Property, 4) if the Property is a leasehold or is subject to a lease, all sums
due under such lease, 5) the reasonable costs and expenses of defending,
protecting, and maintaining the Property and CoBank's interest in the Property,
including but not limited to repair and maintenance costs and expenses, costs
and expenses of protecting and securing the property, receiver's fees and
expenses, inspection fees, and appraisal fees, 6) court costs, attorneys' fees,
costs and expenses as provided herein; 7) any other advances allowed under the
terms of the Note, or Loan Agreement(s) or under the terms of this Deed of
Trust, and 8) any other advances allowed by law. Advances made by CoBank shall
become a part of the indebtedness evidenced by the Note and secured by this Deed
of Trust. However, any sum so paid by CoBank shall immediately be payable by
the Borrower, upon demand, and shall bear interest from the date CoBank advances
such sums until the date the Borrower pays them, as provided for in the Note and
Loan Agreement(s). CoBank shall be the sole judge of the legality, necessity or
propriety of making any such payment or providing any such insurance, and shall
be held harmless and incur no liability for so doing.
BREACH OF PROMISES; ACCELERATION OF DEBT
In the event 1) the Borrower defaults in the payment of any principal sum,
interest, future advances or any other terms or provisions of the Note or the
Loan Agreement(s), or 2) the Borrower does not comply with any of the promises,
covenants, or conditions contained in this Deed of Trust, or 3) the Borrower
does not do any of the acts which the Borrower agrees to do under the terms of
this Deed of Trust, or 4) the Borrower makes an assignment for the benefit of
Borrower's creditors, or 5) a receiver or trustee is appointed to take charge of
the Borrower's Property, or 6) any proceedings are commenced which might result
in loss or reduction of the use and enjoyment of the Property for the loan(s),
or 7) at any time CoBank shall deem itself insecure, then CoBank may, without
notice to the Borrower except such notice as may be provided for in the Loan
Agreement(s), declare a default and the debt secured by this Deed of Trust shall
immediately become fully due and payable and bear interest as provided for in
the Note and Loan Agreement(s) and this Deed of Trust shall become immediately
subject to foreclosure. CoBank may, however, at its sole option and without
notice, waive such acceleration, but no waiver shall prevent CoBank from again
accelerating the debt based on a later breach of the promises contained in this
Deed of Trust.
CHANGE OF OWNERSHIP
In the event of a change of ownership of the Property, CoBank may declare a
default and the debt secured by this Deed of Trust shall become immediately due
and payable and bear interest as provided for in the Note and Loan Agreement(s),
and this Deed of Trust shall become immediately subject to foreclosure, unless
CoBank has given its prior written consent before such change. "Change of
Ownership" means a voluntary or involuntary transfer of title to the Property,
or any part of it or interest in it, and includes any change in the entity
structure, control, operation or ownership which would make the Borrower
ineligible to borrow from CoBank.
RIGHT TO ENTER UNOCCUPIED PREMISES IN TIME OF EMERGENCY AND MAKE REPAIRS;
ADVANCES FOR REPAIRS
If this Deed of Trust is subject to foreclosure, and if the Property
reasonably appears unoccupied to CoBank and if CoBank determines that an
emergency exists, CoBank may enter the Property for the sole purpose of
repairing, preserving or protecting its security without becoming a mortgagee-
in-possession. Any advances made for these purposes shall become a part of the
debt secured by this Deed of Trust, and become immediately due and payable in
accordance with the provisions of this Deed of Trust relating to "Advances".
CoBank shall be held harmless in, and incur no liability for doing the things
provided for in this paragraph, and shall be the sole judge of the necessity and
propriety of so doing.
ATTORNEYS' FEES AND COSTS
The Borrower will pay on demand all costs of collection and all reasonable
attorneys' fees, costs and expenses, incurred or paid by CoBank in enforcing the
Note, Loan Agreement(s), and this Deed of Trust upon default, whether or not a
lawsuit or foreclosure is commenced, and including but not limited to all
attorneys' fees, costs and expenses 1) incurred in any Public Trustee or
judicial action to foreclose this Deed of Trust 2) incurred in any Bankruptcy
proceeding, voluntary or involuntary, including but not limited to efforts to
modify or vacate any automatic stay or injunction, and 3) incurred in any
appeals and in any post-judgment actions or proceeding. The Borrower will also
pay on demand all costs and expenses in any suit or proceeding in which CoBank
may be obligated to defend or protect its interest, including but not limited to
reasonable attorneys' fees, costs and expenses. Any advances made for these
purposes shall become a part of the debt secured by this Deed of Trust, and
become immediately due and payable in accordance with the provisions of this
Deed of Trust relating to "Advances".
CONDEMNATION OR CONVEYANCE IN LIEU OF CONDEMNATION
The proceeds of any award, compensation or claim for damages, direct or
consequential, in connection with any condemnation or other taking of the
Property, or any part of it, or for a conveyance in lieu of condemnation, are
hereby assigned and shall be paid to CoBank. Any money so received may, at the
option of CoBank, be applied, in part or in total, on the debt secured by this
Deed of Trust, whether due or not, and any money not so applied will be returned
to the Borrower.
RIGHT TO RENTS, ISSUES, AND PROFITS; RECEIVERSHIP
In case of any default, CoBank shall, at its option, at once become
entitled to the possession, custody, control, use and enjoyment of the Property,
and to the rents, issues and profits thereof, from the accruing of such right
and during the pendency of any foreclosure proceedings and the period of
redemption, if any. Such possession, custody and control shall at once be
delivered to CoBank on request, and upon refusal, the delivery of such
possession, custody and control may be enforced by CoBank by any appropriate
civil suit or proceeding. CoBank shall be entitled to a Receiver for said
Property to take possession, custody and control of the Property, and to collect
the rents, issues and profits thereof, after any such default, including the
time covered by foreclosure proceedings and the period of redemption, if any.
Such entitlements shall exist as a matter of right without regard to the
solvency or insolvency of the Borrower or of the then owner of the Property, and
without regard to the value of the Property. Such Receiver may be appointed by
any court of competent jurisdiction upon ex parte application, and without
notice--notice being hereby expressly waived--and all rents, issues and profits,
income and revenue of the Property shall be applied to the payment of the
indebtedness secured by this Deed of Trust, according to law and the orders and
directions of the court. The Receiver shall have full and complete right and
authority to operate, manage, preserve and protect the Property, and any and all
other authority allowed the Receiver under law, all in the Receiver's sole
discretion.
COBANK'S RIGHTS IN LOAN SERVICING
CoBank shall have the right, at any time and without notice, to grant
extensions, deferments, renewals, or reamortizations of all or any part of the
debt secured by this Deed of Trust, to release from personal liability any party
now or hereafter personally liable for repayment of the debt secured by this
Deed of Trust, and to request the Public Trustee to release all or any part of
the Property, all without affecting the provisions or priority of this Deed of
Trust on the Property which remains or the personal liability of any party not
specifically released from liability.
ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Borrower further makes the following representations, covenants and
warranties, all of which are subject to any exceptions that Borrower may have
previously disclosed in writing to CoBank, and which, to the extent that they
deal with representations of fact, are based on Borrower's present knowledge,
arrived at after reasonable inquiry.
(a) Use of Property and Facilities. (i) Borrower (1) use, handle,
transport or store Hazardous Material as defined under any Environmental Law or
(2) store or treat nonhazardous wastes (a) in a good and prudent manner in the
ordinary course of business, and (b) in compliance with all applicable
Environmental Laws. (ii) Borrower will not conduct or allow to be conducted,
in violation of any Environmental Law, any business, operations or activity on
the Property, or employ or use the Property to generate, use, handle,
manufacture, treat, store, process, transport or dispose of any Hazardous
Materials, or any other substance which is prohibited, controlled or regulated
under applicable law, or which poses a threat or nuisance to public safety,
health or the environment or cause, or allow to be caused, a known or suspected
release of Hazardous Materials on, under or from the Property. (iii) Borrower
will not do or permit any act or thing, business or operation, that poses an
unreasonable risk of harm, or impairs, or may impair, the value of the Property,
or any part thereof.
(b) Condition of Property. (i) Borrower shall take all appropriate
response action, including any removal and remedial action, in the event of a
release, emission, discharge or disposal of Hazardous Materials in, on, under or
about the Property so as to remain in compliance with Environmental Law as
hereinafter defined. (ii) Underground tanks, wells (except domestic water
wells), septic tanks, ponds, pits, or any other storage tanks (whether currently
in use or abandoned) on the Property, if any, are maintained in compliance with
applicable Environmental Law.
(c) Notice of Environmental Problem or Litigation. Neither Borrower nor
any of its tenants have given, nor were they required to give, nor have they
received, any notice, letter, citation, order, warning, complaint, inquiry,
claim or demand that: (i) Borrower and/or any tenants have violated, or are
about to violate, any Environmental Law, judgment or order; (ii) there has been
a release, or there is a threat of release, of Hazardous Materials from the
Property; (iii) Borrower and/or any tenants may be or are liable, in whole or in
part, for the costs of cleaning up, remediating, removing or responding to a
release or threatened release of Hazardous Materials; (iv) the Property is
subject to a lien in favor of any governmental entity or any liability, costs or
damages, under any Environmental Law arising from or costs incurred by such
governmental entity in response to a release or a threatened release of a
Hazardous Material. Borrower further represents and warrants that no conditions
currently exist or are currently reasonably foreseeable, that would subject
Borrower to any such investigation, litigation, administrative enforcement or
any damages, penalties, injunctive relief, or cleanup cost under any
Environmental Law. In the event of such notice, Borrower and any tenants shall
immediately provide a copy to CoBank.
(d) Right of Inspection. Borrower hereby grants, and will cause any
tenants to grant, to CoBank, its agents, attorneys, employees, consultants,
contractors, successors and assigns, an irrevocable license and authorization,
upon reasonable notice, to enter upon and inspect the Property and facilities
thereon, and perform such tests, including without limitation, sub-surface
testing, soils and groundwater testing, and other tests which may physically
invade the Property thereon, as CoBank, in its sole discretion, determines are
necessary to protect its security interest, provided however, that under no
circumstances shall CoBank be obligated to perform such inspections or tests.
(e) Indemnity. Borrower agrees to indemnify and hold CoBank, its
directors, employees, agents, and its successors and assigns, harmless from and
against any and all claims, losses, damages, liability, fines, penalties,
charges, judgments, administrative orders, remedial action requirements,
enforcement actions of any kind, and all costs and expenses incurred in
connection therewith (including, but not limited to, attorneys' fees and
expenses) arising directly or indirectly, in whole or in part, out of any
failure of Borrower to comply with the environmental representations, warranties
and covenants contained herein.
(f) Continuation of Representations, Warranties, Covenants and
Indemnities. Borrower's representations, warranties, covenants and indemnities
contained herein shall survive the occurrence of any event whatsoever, including
without limitation, the satisfaction of the Note secured hereby, the partial
release or release or foreclosure of this Deed of Trust, the acceptance by
CoBank of a deed in lieu of foreclosure, or any transfer or abandonment of the
Property.
(g) Corrective Action. In the event the Borrower is in breach of any of
its representations, warranties or agreements as set forth above, Borrower, at
its sole expense, shall take all action required, including environmental
cleanup of the Property, to comply with the representations, warranties and
covenants herein or applicable legal requirements and, in any event, shall take
all action deemed necessary under all applicable Environmental Laws.
(h) Hazardous Materials Defined. The term "Hazardous Materials" shall
mean dangerous, toxic, or hazardous pollutants, contaminants, chemicals, wastes,
materials or substances, as defined in or governed by the provisions of any
Environmental Law.
(i) Environmental Law Defined. The term "Environmental Law" shall mean
any federal, state or local law, statute, ordinance, rule, regulation,
administrative order and permit now in effect or hereinafter enacted, pertaining
to the public health, safety, industrial hygiene, or the environmental
conditions on, under or about the Property.
WAIVER OF ELECTION, STAY, VALUATION AND HOMESTEAD LAWS
Borrower, by signing this Deed of Trust, waives notice of election to
declare the debt due, except such notice as may be provided for in the Loan
Agreement(s) and also waives the benefit of all stay, valuation and homestead
laws.
NOTICE
In any instance in which notice to the Borrower is required under this Deed
of Trust, such notice shall be deemed sufficient when either mailed by first
class mail to the Borrower at the address given in this Deed of Trust or when
provided pursuant to the terms of the Loan Agreement(s). All arrangements for
forwarding such notice, if necessary, and all failure on the part of the postal
authorities shall be the responsibility of the Borrower.
REMEDIES CUMULATIVE; NO WAIVER OF REMEDIES
Each remedy provided to CoBank in the Note, this Deed of Trust, and Loan
Agreement(s), is distinct from and cumulative to all other rights and remedies
under the Note, this Deed of Trust and Loan Agreement(s) or afforded by law or
equity, now or hereafter existing, and may be exercised concurrently,
independently or successively.
OTHER SECURITY
If the payment of the indebtedness secured hereby is now or hereafter
further secured by assignments of leases or rentals, security agreements,
financing statements, mortgages, deeds of trust, collateral assignments,
pledges, contracts of guaranty, or other additional security documents, any
default under the provisions of any such other security documents shall
constitute and be a default under this Deed of Trust and CoBank may, at its
option, exhaust its remedies under any one or more of the said security
documents and the security thereunder, as well as the Property, either
concurrently or independently and in such order and manner as CoBank may elect,
and CoBank may apply the proceeds received therefrom upon the indebtedness
secured without waiving or affecting CoBank's rights and remedies under this
Deed of Trust or exercised hereunder or whether contained in or exercised under
any other such security documents.
RELATIONSHIP OF THE PARTIES
This Deed of Trust is given as part of a lending transaction between CoBank
and Borrower, and in no event shall CoBank be construed or held to be a partner
or associate of the Borrower in the conduct of the business, as landlord or
otherwise, on or about the Property, nor shall CoBank be liable for any debts or
obligations incurred by the Borrower in the conduct of such business, it being
understood and agreed that the relationship of the Borrower and CoBank is and at
all times shall remain that of borrower and lender.
SUCCESSORS AND ASSIGNS BOUND; CAPTIONS
All of the covenants and agreements of the Borrower shall extend to and
bind its successors and assigns. All rights and privileges of CoBank under this
Deed of Trust shall inure to the benefit of its successors and assigns. The
captions and headings of the paragraphs in this Deed of Trust are for
convenience only and are not to be used to interpret or define the provisions
hereof.
GOVERNING LAW; SEVERABILITY
The Note and this Deed of Trust shall be governed by the laws of the State
of Colorado. In the event that any provision or clause of this Deed of Trust or
the Note conflicts with the law, such conflict shall not affect other provisions
of this Deed of Trust or the Note which can be given effect without the
conflicting provision, and to this end the provisions of the Deed of Trust and
Note are declared to be severable.
This Deed of Trust is executed by the Borrower pursuant to the duly adopted
resolution of its Board of Directors.
IN WITNESS WHEREOF, this Deed of Trust is executed by the proper officers
of the Borrower and its corporate seal is affixed hereto.
ALLIANCE FARMS COOPERATIVE ASSOCIATION
By:
(SEAL) Its President
ATTEST:
Secretary
CORPORATE ACKNOWLEDGMENT
STATE OF COLORADO )
) ss:
COUNTY OF YUMA )
On this day of , 199 , before me appeared
, to me personally known, who being by me duly sworn did say that he is the
President of >, that the seal affixed to said instrument is the corporate seal
of said corporation and that said instrument was signed and sealed in behalf of
said corporation by authority of its Board of Directors, and acknowledged to me
that he executed the same as his free and voluntary act and deed as the free and
voluntary act and deed of said corporation for the uses and purposes therein set
forth.
Witness my hand and notarial seal the day and year in this certificate
above written.
(SEAL)
Notary Public
My commission expires:
EXHIBIT 10.7
ALLIANCE FARMS COOPERATIVE ASSN.
2500 Sow Unit
an agreement in progress with
Central Confinement Service, Ltd.
11/22/96
THIS AGREEMENT made effective this 22nd day of November, 1996, by and
between Alliance Farms Cooperative Association hereinafter referred to as Owner,
and Central Confinement Service, Ltd., P.O. Box 1332, Columbus, NE 68602-1332,
hereinafter to as Contractor, which is duly licensed as a Contractor in the
State of Illinois.
SECTION I
Description of Work
Contractor shall perform the following described work in accordance with
the contract documents: Construction of buildings and other improvements for 1-
2500 Farrow to Wean Sow unit to be located in Wayne County, Illinois.
SECTION II
Base Contract Price
Owner agrees to pay Contractor for the work described the total price of
($1,508,897.00) One-Million, Five-hundred Eight Thousand, Eight-Hundred ninety-
seven and 00/100 Dollars).
Payment of this amount is subject to additions or deductions in accordance
with the provisions of this contract and of the other documents to which this
contract is subject.
SECTION III
Progress Payments
Owner shall make progress payments on account of the contract price to
Contractor, as shown on Exhibit A attached hereto, on the basis of invoices for
payment submitted to Owner by Contractor as the work progresses. Subject to the
provisions of Subsection B hereof, and to the written approval of each progress
payment by the Project Manager designated by Owner based on the Project
Manager's inspection of progress of the work, Owner shall pay Contractor's
invoice within ten (10) calendar days following receipt thereof. Contractor
shall supply to the Project Manager a release or waiver of liens signed by the
Contractor with each invoice or application for payment with respect to the
work, materials and equipment for which payment is requested, and, prior to the
next payment being made, shall supply, with respect to the work, materials and
equipment for which payment has previously been made, separate releases or
waivers of liens for all subcontractors and separate releases or waivers of
liens from material and equipment suppliers for material and equipment. Until
further notice, Owner designates Mr. Burl Moody as the Project Manager for
purposes of this contract. Owner shall have the right from time to time to
replace the Project Manager by giving written notice to Contractor.
Progress payments may be withheld if:
work is found defective and not promptly remedied.
Contractor does not make prompt and proper payments for labor,
materials, or equipment furnished it.
another contractor is damaged by an act for Contractor is responsible,
or
claims or liens are filed on the job; or
Contractor is otherwise in default under this agreement in material
respect.
SECTION IV
Final Payment
Owner shall make final payment to Contractor within ten (10) calendar days
after the work is completed, or occupation of facility on substantial
completion, subject to the provisions of this paragraph for establishing a
holdback for incomplete or defective items, and also subject to the condition
that final payment shall not be due until Contractor has delivered to Owner a
complete release of liens arising out of the contract, or in the alternative, a
bond satisfactory to Owner indemnifying it against any and all such liens. The
expense of the bond will be that of the Contractor. At the time of substantial
completion, the Project Manager and Contractor shall jointly inspect the work
and develop a list of incomplete or defective items and establish a date for all
items to be completed or corrected. Owner shall have the right to withhold a
sum equal to 150% of the estimated cost of completing and correcting such items,
as reasonably determined by the Project Manager, to be released on a pro rata
basis as the items are completed or corrected to the reasonable satisfaction of
the Project Manager. In the event that any items listed have not been completed
or corrected to the satisfaction of the Project Manager by the date established,
Owner shall have the option thereafter to cause the items to be completed or
corrected, and Contractor shall be liable for the cost incurred.
Owner, by making payment, waives all claims except those arising out of:
work that does not comply with the contract documents,
outstanding claims of lien; or
failure of the work to comply with the requirements of the contract
documents.
Contractor, by accepting final payment, waives all claims except those that
it has previously made in writing and which remain unsettled at the time of
acceptance.
SECTION V
Starting and Completion Dates
Construction under this contract shall begin upon notice to proceed by the
Owner and be completed in the following stages shown as additions to the notice
to proceed date in calendar days:
Starting Date 10 days after notice to proceed
Office Area 140 calendar days after notice to proceed
Breeding 150 calendar days after notice to proceed
Gestation 180 calendar days after notice to proceed
Farrowing 220 calendar days after notice to proceed
SECTION VI
Contract Documents
The Contract documents on which the agreement between Owner and Contractor
is based are:
this agreement, and the exhibits identified in and attached to this
agreement,
the drawings, plans and specifications, with addenda attached to such
drawings, plans and specifications, issued before execution of this
agreement and identified in the exhibits attached to this agreement,
and any written amendments made after the effective date of this
agreement and signed by Owner and Contractor, and
written work change orders issued or to be issued, but only if signed
by Owner and Contractor.
The Contract documents together form the contract for the work described in
this agreement. The parties intend that the documents include provisions for
all labor, materials, equipment, supplies, and other items necessary for the
execution and completion of the work, and all terms and conditions of payment.
The documents also include all work and procedures not expressly indicated in
such documents necessary for proper execution of the above-described project.
Contractor, by executing the documents, represents that it has inspected
and is familiar with the work site and the local conditions under which the work
is to be performed.
SECTION VII
Responsibilities of Owner
Owner shall furnish all necessary surveys for the work and shall secure and
pay for any required easements.
Owner reserves the right to let other contracts in connection with the
project. Contractor shall cooperate with all other contractors to the effect
that their work shall not be impeded by Contractor, and shall give such other
contractor access to the work site necessary to perform their contracts.
Coordination of the work of all contractors shall be through the Project
Manager.
Owner will provide roadway and will be responsible for the cost of towing
any concrete or delivery trucks.
Owner will provide building sites to the proper grade and fill materials
necessary for that purpose. Contractor is responsible for footings and all
other excavation.
Owner will bring power to the line side of the initial main service panel
or double throw in Generator facility.
Owner will provide all utilities during construction including two
telephone lines, water during construction, temporary electrical service and
(porta-potties)..
Owner will be responsible for all plumbing into facilities including septic
system, water well and pressure system. Also all gas lines outside of
facilities.
Owner responsible for additional costs due to underground obstructions or
damage to facility or equipment from same.
Owner responsible for final grading work.
Owner will provide a gate at the entry of the site to secure the site and
builder's risk insurance, including Contractor's interest in the work, from the
first day of construction.
Owner will be responsible for all sewer and recycle lines in excess of the
lengths listed in the specifications.
SECTION VIII
Responsibilities of Contractor
Contractor's duties and rights in connection with the above-described project
are as follows:
Responsibility For and Supervision of Construction. Contractor shall be
solely responsible for all construction under this contract, including the
techniques, sequences, procedures, and means for all coordination of all work.
Contractor shall supervise and direct the work to the best of its ability and
give all attention necessary for proper supervision and direction.
Discipline and Employment. Contractor shall maintain at all times strict
discipline among its employees, and Contractor agrees not to employ for work on
the project any person unfit or without sufficient skill to perform the job for
which he or she was employed.
Furnishing of Labor, Materials, Etc. Contractor shall provide and pay for
all labor, materials, and equipment, including tools, construction equipment,
and machinery, transportation, and all other facilities and services necessary
for the proper completion of work on the project in accordance with the contract
documents. Contractor shall prepare and submit to the Project Manager for
approval shop drawings and any other design details required for the completion
of the work covered by this agreement prior to commencing any portion of the
work requiring shop drawings or additional details not provided by the existing
drawings, plans and specifications. Approval of such items by the Project
Manager or Owner shall not relieve Contractor of its obligations and
responsibilities under this agreement.
Payment of Taxes; Procurement of Licenses and Permits. Contractor shall
pay all State taxes required by law in connection with work on the project in
accordance with this agreement including sales, use, and similar taxes. Owner
shall secure all permits necessary for proper start-up and completion of the
work, paying the fees for such licenses and permits. Owner will be responsible
for any County or Local Sales Taxes.
Compliance with Construction Laws and Regulations. Contractor shall comply
with all laws and regulations, and the rules, regulations, or orders of all
public authorities relating to the performance of the work under and pursuant to
this agreement.
Responsibility for Negligence of Employees. Contractor shall assume full
responsibility for acts, negligence, or omissions of all of its employees on the
project, for those of all other persons doing work under a contract with
Subcontractor.
Warranty of Fitness of Materials. Contractor shall represent and warrant
to Owner that all materials used in the work, and made a part of the structures
on such work, or placed permanently in connection with such work, will be new
unless otherwise specified in the Contract document, of good quality, free of
defects, and in conformity with the Contract documents. It is understood and
agreed between the parties of this agreement that all equipment and materials
not so in conformity will be considered defective.
Clean Up. Contractor shall agree to keep the work premises and adjoining
ways free of waste material and rubbish caused by its work or that of its
employees. Contractor shall further agree to remove all such waste and material
and rubbish on termination of the project, together with all of its tools,
equipment, machinery, and surplus materials.
Indemnity and Hold Harmless Agreement. To the fullest extent permitted by
law, Contractor shall indemnify and hold harmless Owner and Owner's officers,
consultants, agents and employees from and against all claims, damages, losses
and expenses, including but not limited to attorney's fees, arising out of or
resulting from performance of Contractor's work, provided that such claim,
damage, loss or expense is attributable to bodily injury, sickness, disease or
death, or to injury to or destruction of tangible property (other than the work
itself) including loss of use resulting therefrom, but only to the extent caused
in whole or in part by tortuous or negligent acts or omissions of Contractor, a
subcontractor, anyone directly or indirectly employed by them or anyone for
whose acts they may be liable, regardless of whether or not such claim, damage,
loss or expense is caused in part by the tortuous or negligent acts or omissions
of a party indemnified hereunder. Subject to Owner's obligation to make
payments to Contractor in accordance with this agreement, as hereby
supplemented, Contractor shall also indemnify and hold harmless Owner from and
against all claims, damages, losses and expenses, including but not limited to
attorney's fees, arising out of any assertion of claims for mechanics' liens by
subcontractors, sub-subcontractors or material suppliers and against any
assertion of security interests by suppliers of goods or materials.
Safety Precautions and Programs. Contractor has the duty of providing for
and overseeing all safety orders, precautions, and programs necessary to the
reasonable safety of the work. In this connection, Contractor shall take
reasonable precautions for the safety of all employees and other persons whom
the work might effect, all work and materials incorporated in the project, and
all property and improvements on the construction site and adjacent to the
construction site, complying with all applicable laws, ordinances, rules,
regulations, and orders.
On-Site Supervision. Contractor shall have an experienced superintendent
to supervise construction. The superintendent shall represent Contractor, and
all communications given to the superintendent shall be as binding as if given
to Contractor. The superintendent shall have the power to represent Contractor
in all matters encompassed by this agreement, except as much authority may
hereafter be restricted by notice in writing from Contractor to the Project
Manager. The Project Manager shall have the right for reasonable cause to
require Contractor to remove the superintendent and to employ a suitable
replacement.
Limited Warranty. Contractor will warrant all workmanship for the period
of one (1) year after completion of the facility. The standard manufacturer's
warranty or Contractor's warranty on materials, either furnished by
manufacturers or by Contractor is for a period of one (1) year after the date of
completion of the project. Contractor will not be liable for ground settlement
or damage to structure or equipment from settlement unless attributable to the
failure of Contractor to perform the work in accordance with the plans and
specifications or standards of sound construction. Labor to remove and replace
defective equipment shall be that of the Owner's after Contractor has initially
completed the work under this Agreement on site unless the defect is the fault
of Contractor.
SECTION IX
Time of Essence; Extension of Time
All times stated in this agreement or in the Contract documents are of the
essence hereof.
The time stated in this agreement or in the Contract documents may be
extended by a change order from Owner for such reasonable time as Owner may
determine when in Owner's opinion Contractor is delayed in work progress by
changes ordered, labor disputes, fire, prolonged transportation delays,
injuries, inclement weather, or other causes beyond Contractor's control or
which justify the delay.
SECTION X
Subcontractors
Contractor shall agree to furnish Owner with a list of names of any
Subcontractors to whom contractor proposes to award the principle portions of
the work to be subcontracted by Contractor.
A Subcontractor, for the purposes of this agreement, shall be the person
with whom the contractor has a direct contract for work at the project site.
Contractor shall agree not to employ a Subcontractor to whose employment
Owner reasonably objects.
All contracts between Contractor and Subcontractor shall conform to the
provisions of the Contract Documents, and shall incorporate in them the relevant
provisions of this agreement.
SECTION XI
Arbitration
All claims and disputes relating to this agreement shall be subject to
arbitration at the option of either Owner or Contractor in accordance with the
arbitration rules of the American Arbitration Association for the Construction
Industry then obtaining. The arbitration shall be conducted in Wayne County,
Illinois. Judgment on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof.
SECTION XII
Contractors Liability Insurance
Contractor shall purchase and maintain such insurance as will protect Contractor
and Owner from claims set forth below which may arise out of or result from
Contractor's operations under this agreement, whether such operation is by
Contractor or by any subcontractor or by anyone for whose acts any of them may
be liable:
Claims under workers compensation, disability benefit and other
similar employee benefit acts;
Claims for damages because of bodily injury, occupational sickness or
disease, or death of employees, and claims insured by usual personal
injury liability coverage;
Claims for damages because of bodily injury, sickness or disease, or
death of any person other than employees and claims insured by usual
personal injury liability coverage;
Claims for damages insured by usual personal injury liability coverage
which are sustained (1) by person as a result of an offense directly
or indirectly related to employment of such person by Contractor, or
(2) by another person;
Claims for damages because of injury to or destruction of tangible
property, including loss of use resulting therefrom;
Claims for damages because of bodily injury or death of any person or
property damage arising out of the operation, maintenance or use of
any motor vehicle (including owned, not-owned and hired); and
Claims involving contractual liability insurance applicable to
Contractor's obligations under paragraph I of Section VII of this
agreement.
The liability insurance shall be written on an occurrence basis and shall, where
applicable, be for limits not less than $1,000,000 combined single limit bodily
injury and property damage for each occurrence, $1,000,000 aggregate, and shall
include contractual liability insurance as applicable to Contractor's
obligations hereunder. Coverage shall include Commercial General Liability
insurance including premises-operations (including explosion, collapse and
underground coverage as applicable), elevators (if applicable), independent
contractors, products and completed operations, and blanket liability on all
written contracts, all including broad form property damage coverage and
personal injury liability, with employment exclusion deleted and for not less
than any limits of liability required by law. Certificates of insurance
acceptable to Owner shall be filed with the Project Manager prior to
commencement of the work. These certificates shall contain a provision that
coverage afforded under the policies will not be canceled or modified until at
least thirty (30) days' prior written notice has been given to the Project
Manager. Owner shall be named as an additional insured on Contractor's public
liability policy. Contractor shall provide to Owner renewal or replacement
certificates to evidence the continuation of all required coverage's before the
expiration or termination of any policy. Owner shall be given a waiver of
subrogation against any suit by Contractor's workers compensation underwriter.
SECTION XIII
Correction Work
In addition to all other obligations of Contractor under this agreement, when it
appears to the Project Manager during the course of construction that any work
does not conform to the provisions of the Contract Documents, Contractor shall
make necessary corrections so that such work will so conform, and in addition
will correct any defects caused by faulty materials, equipment, or quality of
performance in work, appearing within one year (1 year) from the date of final
payment or within such longer period as may be prescribed by law or may be
provided for by applicable special guarantees in the Contract Documents.
SECTION XIV
Work Changes
Owner reserves the right to order work changes in the nature of additions,
deletions, or modifications, without invalidating this agreement, and agrees to
make corresponding adjustments in the contract price and in time for completion.
All changes will be authorized by a written change order signed by Project
Manager or a duly authorized officer of Owner, which shall define the change and
shall set forth any change to the contract price and completion dates.
Work shall be changed and the contract price and completion shall be
modified only as set out in the written change order.
Any adjustment in the purchase price resulting in a credit or a charge to
Owner shall be determined by mutual agreement of the parties or by arbitration
before starting the work involved in the change.
SECTION XV
Termination
Contractor's Termination. Contractor may, on seven (7) days' written
notice to Owner, terminate this agreement before the completion date specified
in this agreement when for a period of ten (10) days after a progress payment is
due, through no fault of Contractor, Owner fails to make the payment, unless
Owner, within seven (7) days after Contractor's written notice, pays to
Contractor all amounts then due that are not subject to an unresolved, bona fide
dispute concerning Contractor's right to payment. On such termination,
Contractor may recover from Owner payment for all work completed and for any
loss sustained by Contractor for materials, equipment, tools, machinery to the
extent of actual loss thereon plus loss of a reasonable profit, provided
Contractor can prove such loss and damages.
Owner's Termination. Owner may, on seven (7) days' written notice to
Contractor, terminate this agreement before the completion date specified in
this agreement, and without prejudice to any other remedy it may have, when
Contractor defaults in performance of any provision of this agreement, or fails
to carry out the construction in accordance with the provisions of the Contract
Documents. On such termination, Owner may take possession of the work site and
finish the work in whatever way Owner deems expedient. If the unpaid balance on
the contract price at the time of such termination exceeds the expense of
finishing the work, Owner will pay such excess to Contractor. If the expense of
finishing the work exceeds the unpaid balance at the time of termination,
Contractor shall agree to pay the difference to Owner.
On any such default by Contractor, Owner may elect not to terminate this
agreement, and in such event, Owner may make good the deficiency of which the
default consists and deduct the cost from the progress payment then or to become
due to Contractor.
SECTION XVI
Governing Law: Attorneys' Fees
This agreement shall be governed and construed in accordance of Illinois law.
In the event that any action is filed or any arbitration proceeding is commenced
in relation to this agreement, the unsuccessful party in the action or
proceeding shall pay to the successful party, in addition to all amounts the
unsuccessful party may be otherwise required to pay, a reasonable sum for the
successful party's attorneys' fees.
SECTION XVII
Entire Agreement
This agreement shall constitute the entire agreement between the parties and any
prior understanding or representation of any kind preceding the date of this
agreement shall not be binding upon either party except to the extent
incorporated into this agreement.
SECTION XVIII
Modification of Agreement
Any modification of this agreement or additional obligation assumed by either
part in connection with this agreement shall be binding only if evidenced in
writing and signed by each party or an authorized representative of each party.
SECTION XIX
Notices
Any notice provided for or concerning this agreement shall be in writing and be
deemed sufficiently given when sent by certified or registered mail if sent to
the respective address of each party as set forth at the beginning of this
agreement or to such other address as a party shall hereafter specify as its
notice address in a written notice to the other party.
SECTION XX
Assignment of Rights
The rights of each party under this agreement are personal to that party and may
not be assigned or transferred to any other person, firm, corporation, or other
entity without the prior, express, and written consent of the other party.
SECTION XXI
Paragraph Headings
The titles to the paragraphs of this agreement are solely for the
convenience of the parties and shall not be used to explain, modify, simplify,
or aid in the interpretation of the provisions of this agreement.
SECTION XXII
Performance of Animals and Indemnity of loss
Owner agrees to hold Contractor harmless and indemnify Contractor from any
action relative to loss of animal life due to suffocation, power failure,
failure of ventilation systems or control systems or any other loss of life of
animals or loss of performance relative to design or any action of the
Contractor.
SECTION XXIII
Notice to proceed
This agreement is contingent upon Owner receiving all required permits
authorizations from governmental entities, satisfactory water at site, closing
of property with prior owner and closing of Owners' loan providing financing for
the work covered by this agreement. Upon satisfaction or waiver by Owner of
these conditions, Owner agrees to provide immediate payment to Contractor for
balance of down payment and provide notice to proceed. If Contractor has not
received notice to proceed within 30 days from the date of this agreement,
Contractor reserves the right to pass on any additional price increase to Owner
at exactly the additional cost to the Contractor.
IN WITNESS WHEREOF, each party to this agreement has caused it to be executed on
the date indicated below.
Dated:
Alliance Farms Cooperative Association
By
Wayne Snyder
Dated: 11/22/96
CENTRAL CONFINEMENT SERVICE, LTD.
By
Mark Gearhart, President
LIST OF EXHIBITS
Exhibit "A" Progress Payments
Exhibit "B" List of facilities.
Exhibit "B-1" Office Specifications and Equipment Listing
Exhibit "B-4" Generator Shed Specifications and Equip. Listing
Exhibit "B-5" Breeding Specifications and Equipment Listing
Exhibit "B-6" Gestation Specifications and Equip. Listing
Exhibit "B-7" Farrowing Specifications and Equipment Listing
Exhibit "B-8" Walkway Specifications
Exhibit "B-9" General Specifications and Equip.
Exhibit "C" Escalation and options.
EXHIBIT "A"
CCS SCHEDULE OF PROGRESS PAYMENTS:
(a) Five percent (5%) of total agreement upon signature.
(b) Five percent (5%) of total Contract amount upon notice to proceed by OWNER.
(c) Monthly billings will be made based on the amount of material on site and
completed.
(d) The final 5% of agreement will be paid within 10 days of substantial
completion** of project.
(e) CONTRACTOR will provide any reasonable required lien waivers prior to final
payment.
Above listed payments will be due within 10 days of billing date.
A service charge of one and one-half percent (1 1/2%) per month on the
unpaid balance, or the highest rate allowed by law, will be charged on any
overdue accounts. The OWNER agrees by signature to pay the above service
charges on delinquent balances.
**Substantial completion is to be interpreted as completion to the point which
will allow the OWNER to use the facility for the purpose intended. OWNER,
agrees not to populate facilities until CONTRACTOR has been paid to date and
work is completed same to OWNER'S satisfaction.
EXHIBIT "B" List of Facilities.
BUILDINGS:
Office 36' X 56' with 6' X 14' front extension
Generator Shed 10' X 12'
Breeding 77' 8" X 312'
Gestation 77' 8" X 312' 6"
Farrowing 76' X 296'
Standard Walkways 4' X 170'
Loadout area off breeding 12' X 16' with 6' X 4' hallway
EXHIBIT "B-1" Office specifications and Equipment listing.
BUILDING:
36' x 56' office with 14' x 6' front extension.
GENERAL SPECIFICATIONS:
Side walls 2 x 6' x 8' framed construction on 2' centers with
treated sil and sil saver insulation.
Trusses 20-5-5 Pre-designed and built wooden trusses 2' on
centers.
Purlins 2 x 4 purlins on 30" centers.
Interior finish, Office,
rest room and hallway
to be drywall taped, textured and painted.
Interior finish, Work Room, rest room and utility room
to be drywall taped.
Shower area be glass board walls and ceilings with stainless
nails and plastic trims.
Side wall insulation R-17 fiberglass batt.
Ceiling insulation (R-30) insulation in roof areas
Ext. side wall sheeting 29 ga. colored steel with colored steel trims.
Roof sheeting 29 ga. Galvanized.
Attic ventilation Ridge vents and vented soffit 12" overhang.
Floor covering Commercial tile OWNER'S color choice-Office Vinyl
base trims. All front office areas and rest rooms
and shower areas.
Floor covering Storage area, AI lab and utility room unpainted
concrete.
CONCRETE SPECIFICATIONS:
Footings 6" x 36" Footing. Two horizontal rebar one below and one above
grade. Vertical rebar to be 3' OC #3. Floors 3 1/2" to 4" thick All
concrete to be 3500PSI concrete. One exterior 6' x 4' stoop areas with
boot scraper.
ELECTRICAL SPECIFICATIONS:
150 amp main interior 30 space panel to handle office area. 14-4' 4 tube
fluorescent lights in office/AI area. 2-8' 2 tube fluorescent lights in
boot room. 14-4' 2 tube fluorescent lights in bathroom, shower rooms,
utility room and rest rooms. Incandescent lights in storage/utility areas.
1-exterior 175w security fixture at building entrance. All electrical
outlets in shower areas and bathrooms to be ground fault interruption
style. Standard residential wiring codes.
PLUMBING SPECIFICATIONS:
All plumbing to be PVC installed and vented as required to meet codes.
Larger Shop drain with grate 12" x 12". Septic system and drain field by
OWNER.
EQUIPMENT LISTINGS:
Heating & AC Central 1
ducts to Storage area.
ELECTRICAL 1
PLUMBING 1
Counters + Cabinets As Shown
Refrigerator 1
Washer 1
Dryer Electric 2
Laundry Counter 8' 1
Laundry Base Unit 8' 1
Water heaters 40 gallon gas 2
Grate for storage area 1
Kitchen sink SS Double 1
Kitchen Countertop 8' 1
Kitchen Base Unit 8' 1
Shower curtains-By Owner
Lavs 3
Toilets 3
Desk Counter 1
Desk Base Unit 1
Ceiling fans (50 CFM) 7
Toilet paper holders 3
Medicine cabinets 3
Mirrors 8
Shelves 4' 8
Benches-4' 8
Telephone jacks 3
Boot Scraper-At Entrance 1
Coat Hooks 20
Lockers 12
Microwave 1
Series 88 Plyco doors with glass 3
Plyco series 99 doors for AI 2
lab with glass
Pre finished wood doors 12
Electric locksets 8
Insulated 7'H x 8'W garage door 1
Plyco windows 3x3 2
Plyco windows 3x4 5
All changes made to prior unit 1
#201 Office and furnished
by contractor.
EXHIBIT "B-2" Generator shed specifications and Equipment Listing.
BUILDING:
10' x 12' Free standing generator shed.
GENERAL SPECIFICATIONS:
Side walls 2 x 6' x 8' framed construction on 2' centers
Trusses 20-5-5 Pre-designed and built wooden trusses 2' on
centers.
Purlins 2 x 4 purlins on 24" centers.
Interior ceiling None
Interior side walls No covering
Side wall insulation None
Ceiling insulation None
Ext. side wall sheeting 29 ga. colored steel with colored steel trims.
Roof sheeting 29 ga. Galvanized.
Attic ventilation 1-ridge vent
Floor covering None
CONCRETE SPECIFICATIONS:
Shallow footings 12" x 6" mechanically trenched. Two horizontal rebar one
below and one above grade. Vertical rebar to be 3' OC #3. Floors 5" thick.
All concrete to be 3500PSI concrete. Wire mesh in all floor areas.
ELECTRICAL SPECIFICATIONS:
From office area. 1-115 Volt receptacle and 2-100w lights.
PLUMBING SPECIFICATIONS:
Not applicable
EQUIPMENT LISTINGS:
Plyco Series 99 Double door-6' 1
3 x 3 shutter automatic 2
EXHIBIT "B-3" Breeding specifications and Equipment Listing.
BUILDING
77'8" x 312' Breeding facility Shallow pull plug system.
GENERAL SPECIFICATIONS:
Side walls 2 x 6' x 6' treated framed construction on 2'
centers
Trusses 20-5-5 Pre-designed and built wooden trusses 4' on
centers.
Purlins 2 x 4 purlins on 30" centers.
Interior ceiling Aluminum attached with aluminum screws.
Interior End walls PPD 3/8" backer SS nails and trims.
Side wall insulation Where applicable R-19 fiberglass batt.
Ceiling insulation (R-30) insulation in roof areas
Ext. side wall sheeting 29 ga. colored steel with colored steel trims.
Roof sheeting 29 ga. Galvanized.
Attic ventilation Ridge vents and solid soffit 16" overhang.
Air chamber inlet room As per standard specifications
Curtain openings Screened but bird wire and interior base of hog
panel galvanized.
CONCRETE SPECIFICATIONS:
Shallow footings 6" x 36" trenched. 24" x 6" perimeter stem wall with 3'
OC vertical #3 rebar and 2 horizontal #3 rebar. Two horizontal rebar one
below and one above grade. Vertical rebar to be 3' OC #3. Floors 3 1/2"
to 4" thick Footings and pit walls and floors to be 3000PSI concrete and
walk floors to be 3500PSI concrete. Wire mesh in all floor areas. All
flush pits 16" -24" in depth sloped as per customer request.
ELECTRICAL SPECIFICATIONS:
1-200 amp main interior 42 space panel. 100 22W McGill lights with
florescent fixtures 4 rows of 12, 3 120V receptacles at Owner's option and
1-220V receptacles at Owner's option. Other electrical to ventilation,
heaters and feed systems as required. All electrical in carlon or equal.
PLUMBING SPECIFICATIONS:
All plumbing to be PVC. 2" PVC mainline. Soaker system in breeding
squares. 6 runs of 1" high volume line with 4 drops per line. 2 boiler
drains. 6" recycle line with one drop per pit.
EQUIPMENT LISTINGS:
SF 4' x 8' Slats 6352
SF 4' x 10' Slats 4280
Manhole Grate 4
Troughs Linear feet-All concrete no stainless 1912
Building 1
24" x 7' Un-Painted Straight Front/AI Rear Gestation 752
Stalls W/Quick Latch (Anchors & SS Strip Included)
24" x 7' Un-Painted Straight Front/Rear Gestation 240
Stalls W/Quick Latch (Anchors & SS Strip Included)
RF Un-Painted Penning (Anchors & SS Strip Included) 880
Un-Painted Chase Gates (24" front gestation stall gates) 48
Cables in rear of G stalls for cards 1/8" SS 992
SS Waterers Boar stalls-Singles 32
SS Waterers Pens-Singles 20
Curtain & Hardware
6' 1Hem Clear Herculite Curtain North 312
6' 1Hem Clear Herculite Curtain South 312
7' 1 Hem Clear Herculite Curtain End wall 77.50
Curtain Installation kit 3
1/8" SS curtain cable 702
red pulleys 147
Azuma nuts 147
1/2" conduit 702
1/8" white rope 1620
3/16 black rope 4209
Top 4 1/2" Open I-hooks 117
Top 5" Closed I-hooks 175
Bottom 6" Open I-hooks 175
6' PVC Coated Wire Birdnetting 702
Handwinches 5
Handwinch Brackets 5
Handwinch 1/8" SS cable 100
Counterweights 5
Anti-cable twist balls 10
Hired Hand Curtain Drops W/Thermostat 2
4' Hired Hand Curtain Opener 1
Hired Hand PVR-2 Relay W/Switches 1
Hired Hand Photohelic Control 1
Airstream Cool Cell 1
One 6' x 76' on end wall
Cool Cell Thermostat 1
24 Hour Timer 1
Cool Cell Install Kit 1
Varifan MSC-10 Control with accessories 1
Multi Fan 36" fan 4
Multi Fan 48" fan 8
Back up Fan Thermostat 1
LL 2000CFM Ceiling Inlets 20
PSI 225,000BTU Heater W/Tduct Gal 3
Back up Thermostat Heater 1
PSI Heater Suspension Kit 3
AP 9' 3-ring 14.38 ton bins with ladders 2
AP 6' 3-ring 5.73 ton bins with ladders-boar area 2
AP drop feed system with auto trip (2) all stalls 1
Feed System Supports 8
Plumbing W/2" Mainline 1
High Volume Lines W/4 Drops Per cross run 1" 6
6" Recycle Line W/4Drops
Trough Watering
Solenoids 8
24 Hour Timer 2
Galv. Trough Drops 12
Plyco Series 88 walk doors with Heavy Latches 6
EXHIBIT "B-4" Gestation Specifications and Equipment Listing.
BUILDING:
77'8" x 312.5' Gestation facility Shallow pull plug system.
GENERAL SPECIFICATIONS:
Side walls 2 x 6'x6' treated framed construction on 2'
centers
Trusses 20-5-5 Pre-designed and built wooden trusses 4' on
centers.
Purlins 2 x 4 purlins on 30" centers.
Interior ceiling Aluminum Ceiling attached with Aluminum screws.
Interior End walls PPD 3/8" backer SS nails and trims.
Side wall insulation Where applicable R-19 fiberglass batt.
Ceiling insulation (R-30) insulation in roof areas
Ext. side wall sheeting 29 ga. colored steel with colored steel trims.
Roof sheeting 29 ga. Galvanized Attic ventilation Ridge
vents and solid soffit 16" overhang.
Air chamber inlet room As per standard specifications
Curtain openings Screened with bird wire and interior base of hog
panel galvanized.
CONCRETE SPECIFICATIONS:
Shallow footings 6" x 36" trenched. 24" x 6" perimeter stem wall with 3'
OC vertical #3 rebar and 2 horizontal #3 rebar. Two horizontal rebar one
below and one above grade. Vertical rebar to be 3' OC #3. Floors 3 1/2"
to 4" thick Footings and pit walls and floors to be 3000PSI concrete and
walk floors to be 3500PSI concrete. Wire mesh in all floor areas. All
flush pits 16"-24" in depth sloped as per customer request.
ELECTRICAL SPECIFICATIONS:
1-200 amp main interior 42 space panel. 100 22W McGill lights with
florescent fixtures 4 rows of 12, 3 120V receptacles at Owner's option and
1-220V receptacles at Owner's option. 1-3way switch for personnel. Other
electrical to ventilation, heaters and feed systems as required. All
electrical in carlon or equal.
PLUMBING SPECIFICATIONS:
All plumbing to be PVC. 2" PVC mainline. Soaker system in breeding
squares. 6 runs of 1" high volume line with 4 drops per line. 2 boiler
drains. 6" recycle line with one drop per pit
EQUIPMENT LISTINGS: (PER BUILDING)
SF 4' x 8' Slats 9600
Manhole Grate 4
Troughs 2380
Building 1
24" x 7' Un-Painted Straight Front/Slope Rear Gestation1200
Stalls W/Clip (Anchors & SS Strip Included)
Painted Chase Gates (24" front gestation stall gates) 48
Cables in rear of G stalls for cards 1/8" SS 1200
Curtain & Hardware
6' 1Hem Clear Herculite Curtain North 312
6' 1Hem Clear Herculite Curtain South 312
7' 1 Hem Clear Herculite Curtain End wall 77.50
Curtain Installation kit 3
1/8" SS curtain cable 710
red pulleys 149
Azuma nuts 149
1/2" conduit 710
1/8" white rope 1639
3/16 black rope 4257
Top 4 1/2" Open I-hooks 118
Top 5" Closed I-hooks 177
Bottom 6" Open I-hooks 177
6' PVC Coated Wire Birdnetting 710
Handwinches 5
Handwinch Brackets 5
Handwinch 1/8" SS cable 100
Counterweights 5
Anti-cable twist balls 10
Hired Hand Curtain Drops W/Thermostat 2
4' Hired Hand Curtain Opener 1
Hired Hand PVR-2 Relay W/Switches 1
Hired Hand Photohelic Control 1
Airstream Cool Cell 1
One 6' x 76' on end wall
Cool Cell Thermostat 1
24 Hour Timer 1
Cool Cell Install Kit 1
Varifan MSC-10 Control with accessories 1
Multi Fan 36" fan 4
Multi Fan 48" fan 8
Back up Fan Thermostat 1
LL 2000CFM Ceiling Inlets 20
PSI 225,000BTU Heater W/Tduct Gal 3
Back up Thermostat Heater 1
PSI Heater Suspension Kit 3
AP 9' 3-ring 14.38 ton bins with ladders 2
AP drop feed system with auto trip (2) all stalls 1
Feed System Supports 8
Plumbing W/2" Mainline 1
High Volume Lines W/4 Drops Per cross run 1" 6
6" Recycle Line W/4Drops
Trough Watering
Solenoids 8
24 Hour Timer 2
Galv. Trough Drops 12
Plyco Series 88 walk doors with Heavy Latches 6
EXHIBIT "B-6" Farrowing Specifications and Equipment Listing
BUILDING:
76' X 296' Farrowing facility with pull plug flush system. 7 rooms of 52
crates. Motel style special 6' hallway layout with 6'4" cross hall area
for loadout and 6'4" Attic air inlet/cool cell room on east.
GENERAL SPECIFICATIONS:
Side walls 2 x 6'x8' framed construction on 2' centers
Trusses 20-5-5 Pre-designed and built wooden trusses 4' on
centers.
Purlins 2 x 4 purlins on 30" centers.
Interior ceiling Tri Ply with wood lathe and plastic strips.
Side wall insulation R-19 fiberglass batt.
Roof insulation 1/2" Thermax
Ceiling insulation (R-20) insulation in roof areas
Ext. side wall sheeting 29 ga. colored steel with colored steel trims.
Roof sheeting 29 ga. Galvanized.
Attic ventilation None and solid soffit with 6" overhang.
Interior divide walls 2 x 8 T&G PVC Planking
Hallway walls 2 x 4 Frame with PPD with 3/8" backing and SS
nails and trims.
CONCRETE SPECIFICATIONS:
Shallow footings 8" x 12" Footer. 6" perimeter stem wall with 3' OC
vertical #3 rebar and 2 horizontal #3 rebar. Two horizontal rebar one
below and one above grade. Vertical rebar to be 3' OC #3. Floors 3 1/2"
to 4" thick Footings and pit walls and floors to be 3000PSI concrete and
walk floors to be 3500PSI concrete. All flush pits 16" in depth sloped as
per customer request.
ELECTRICAL SPECIFICATIONS:
1-200 amp main interior 42 space panel. 206 22W McGill lights 206-120V
duplex receptacles at Owner's option and 2-220V receptacles at Owner's
option. Other electrical to ventilation, heaters and feed systems as
required. All electrical in carlon or equal.
PLUMBING SPECIFICATIONS:
All plumbing to be PVC. One run of 2" mainline with pressure reducers for
nipple drops and 1" hi-volume line with 4 drops per room.
EQUIPMENT LISTINGS:
Try Ply Ceiling (Rooms & Cross Hall Only) 20300
Plastic Banding & Wood Lathe (Rooms & Cross 20300
Hall Only)
SF 1/2" Thermax 24080
Xtra charge for longer roof screws 24080
PVC Plank 4200
PVC Channel 700
Sampson Style Farrowing crate 364
Wire to support heat lamp cords in rear 1/8" SS 364
Painted Deck 5' x 7' 364
Waterer, Nipples, Backplate 364
OO Woven Wire 364
OO Woven Wire Freight 2
Heat lamp arms 364
Feeder 364
Galvanized creep panels 16 Ga 364
SS Channels 728
Corner Posts 112
Heat Lamps - 9' Chord, 125W Bulb, Clamp 364
Creep Mats 182
Curtain & Hardware
6' 1Hem Clear Herculite Curtain For cool cel 70
Curtain Installation kit 1
1/8" SS curtain cable 96
red pulleys 20
Azuma nuts 20
1/2" conduit 70
1/8" white rope 222
3/16 black rope 576
Top 4 1/2" Open I-hooks 16
Top 5" Closed I-hooks 24
Bottom 6" Open I-hooks 24
6' Vinyl Covered Wire Birdnetting 96
Handwinches 1
Handwinch Brackets 1
Handwinch 1/8" SS cable 40
Counterweights 1
Anti-cable twist balls 2
Hall Ventilation
PSI 60,000BTU Galv. Case Model 1100 3
PSI Brackets 3
Heater Thermostat 3
Two Airstream Cool Cells 6' x 70' 1
Cool Cell Thermostat 1
24 Hour Timer 1
Cool Cell Install Kit 1
Room Ventilation-Per room
LL C2000 14
16" Multi fan system 1 2
24" Multi fan system 1 4
Varifan ESC-5 controls 1
PSI 150,000BTU gal heaters 2
B/U thermostats per room 2
Thermostats for heat lamps-With relays 7
Feed systems
2-AP 8.4 ton bins in tandem with single model 300 1
flex throughout rear of farrowing rooms
AP Feed carts 14
Feed System Supports 4
Plumbing W/11/2" mainline 1
4" Recycle Line W/24 Drops
Soaker System
Pressure Washer Line
RF 3/4" pipe for entry line & mainline 294
RF 1/2" pipe for branch lines 504
1/2" Room pressure washer drops 14
3/4" Hallway pressure washer drops 2
1/2" Hallway pressure washer drops 1
Fittings & mounting hardware 200
Plyco Series 88 walk doors With Glass with Heavy 7
Latches
Plyco Series 88 walk doors with Heavy Latches 5
EXHIBIT "B-6" Walkway and loadout Specifications and Equipment Listing.
BUILDING: PER LINEAR FOOT.
176' x 4' and 12' x 16' loadout off of breeding
GENERAL SPECIFICATIONS:
Side walls 2 x 6 x 8' treated framed construction on 2'
centers wind braces
Trusses None
Purlins 2 x 4 purlins on 24" centers.
Interior ceiling None
Base wall 36" Hog panel
Side wall insulation None
Ceiling insulation Double bubble
Ext. side wall sheeting 29 ga. colored steel with colored steel trims.
Roof sheeting 29 ga. Galvanized.
Attic ventilation NONE
NOTE: Hallways to have 3' curtains on both sides for summer air flow.
Hand winches as required. Opening screened.
CONCRETE SPECIFICATIONS:
Shallow footings 12" x 4" mechanically trenched or post and beam
construction. 6" x 4" perimeter stem wall with 3' OC vertical #3 rebar and
2 horizontal #3 rebar. Two horizontal rebar one below and one above grade.
Vertical rebar to be 3' OC #3. Floors 3 1/2" to 4" thick Footings and pit
walls and floors to be 3000PSI concrete and walk floors to be 3500PSI
concrete. Wire mesh in all floor areas. Drains in walkways not to exceed
30' and drained to closest pit or sewer line.
ELECTRICAL SPECIFICATIONS:
Lighted from closest facility and lights not to exceed 20' OC. 100W
McGills.
PLUMBING SPECIFICATIONS:
None
EQUIPMENT LISTINGS:
Hallway drains not to exceed 30' as needed
main hallways to have 8' sliding doors 4
both sides to allow for mowing
EXHIBIT "B-7" General Specifications.
GENERATOR SYSTEM- 200KW Katolite with auto 600 Amp double throw. 120-208
volt three phase. Installed in generator building with inlet as required.
Includes charger and flex adapter for installation-as well as peak shaving
JD Diesel-Fuel tank and lines by Owner.
MAIN PANEL BOARD-Main panel to be 600 Amp 120-208 volt three phase. Main
breaker and sub breakers for all mains in other buildings. All underground
electrical to other facilities furnished-sleeved in carlon under concrete
areas-UF wire other areas.
POWER WASHERS-Allowance of $6,000 cost to contractor for power washers and
chimneys. Placement in farrowing cross hall.
SORTING GATE ALLOWANCE FOR FARM $5000.00 this will go toward materials,
labor and sales taxes.
LUMBER All #2 or equal DF, HF or SYP. All treated #2 SYP.
FASTENERS All interior and exterior sheeting to be attached with screws.
MAIN WATER LINES. All main water lines furnished between facilities.
Owner to bring water to office area.
SEWER LINES-All sewer lines under and between buildings furnished up to a
maximum of 630 LF of sewer line.
RECYCLE LINES AND VALVES There is 700lf of 6" recycle and 630lf of 4"
recycle line
FENCE-Not in contract
LOADING CHUTES 2 EACH. One 3' x 20' enclosed and one 3' x 28' enclosed
both furnished with chain hoist.
CENTRAL ALARM SYSTEM- Phone dialer and RCM-40 furnished in office area
EXHIBIT "B-8" Escalation and Options.
ESCALATION:
Lumber costs in this agreement are based on the Random Lengths prices published
10/18/95 per grade and species.
CCS will credit or charge for any variation of 10% or more, plus or minus based
on lumber costs in effect at time of delivery.
OPTIONS:
Owner may change the farrowing building on this site and change contract price
to:
Owner may elect to use white painted liner panel steel sheeting for entire site
ceilings including farrowing facility in leiu of aluminum sheet in the B-G barns
and tri ply in farrowing.
EXHIBIT 10.8
Alliance Farms Cooperative Assn.
Nursery Expansion
an agreement in progress with
Central Confinement Service, Ltd.
11/22/96
THIS AGREEMENT made effective this 22nd day of November, 1996, by and
between Alliance Farms Cooperative Association, hereinafter referred to as
Owner, and Central Confinement Service, Ltd., P.O. Box 1332,Columbus, NE 68602-
1332, hereinafter to as Contractor, which is duly licensed as a Contractor in
the State of Illinois.
SECTION I
Description of Work
Contractor shall perform the following described work in accordance with
the contract documents: Construction of buildings and other improvements for 3-
2000 head Nursery facilities to be located in Wayne County, Illinois.
SECTION II
Contract Price
Owner agrees to pay Contractor for the work described the total price of
(Five-hundred and one Thousand, Two-Hundred and 00/100 Dollars); ($501,200.00)
Payment of this amount is subject to additions or deductions in accordance
with the provisions of this contract and of the other documents to which this
contract is subject.
SECTION III
Progress Payments
Owner shall make progress payments on account of the contract price to
Contractor, as shown on Exhibit A attached hereto, on the basis of invoices for
payment submitted to Owner by Contractor as the work progresses. Subject to the
provisions of Subsection B hereof, and to the written approval of each progress
payment by the Project Manager designated by Owner based on the Project
Manager's inspection of progress of the work, Owner shall pay Contractor's
invoice within ten (10) calendar days following receipt thereof. Contractor
shall supply to the project Manager a release or waiver of liens signed by the
Contractor with each invoice or application for payment with respect to the
work, materials and equipment for which payment is requested, and, prior to the
next payment being made, shall supply, with respect to the work, materials and
equipment for which payment has previously been made, separate releases or
waivers of liens from all subcontractors and separate releases or waivers of
liens from material and equipment suppliers for material and equipment. Until
further notice, Owner designates Mr. Burl Moody as the Project Manager for
purposes of this contract. Owner shall have the right from time to time to
replace the Project Manager by giving written notice to Contractor.
Progress payments may be withheld if:
work is found defective and not promptly remedied.
Contractor does not make prompt and proper payments for labor,
materials, or equipment furnished it.
another contractor is damaged by an act for Contractor is responsible,
or
claims or liens are filed on the job; or
Contractor is otherwise in default under this agreement in material
respect.
SECTION IV
Final Payment
Owner shall make final payment to Contractor within ten (10) calendar days
after the work is completed, or occupation of facility on substantial
completion, subject to the provisions of this paragraph for establishing a
holdback for incomplete or defective items, and also subject to the condition
that final payment shall not be due until Contractor has delivered to Owner a
complete release of liens arising out of the contract, or in the alternative, a
bond satisfactory to Owner indemnifying it against any and all such liens. The
expense of the bond will be that of the Contractor. At the time of substantial
completion, the Project Manager and Contractor shall jointly inspect the work
and develop a list of incomplete or defective items and establish a date for all
items to be completed or corrected. Owner shall have the right to withhold a
sum equal to 150% of the estimated cost of completing and correcting such items,
as reasonably determined by the Project Manager, to be released on a pro rata
basis as the items are completed or corrected to the reasonable satisfaction of
the Project Manager. In the event that any items listed have not been completed
or corrected to the satisfaction of the Project Manager by the date established,
Owner shall have the option thereafter to cause the items to be completed or
corrected, and Contractor shall be liable for the cost incurred.
Owner, by making payment, waives all claims except those arising out of:
work that does not comply with the contract documents,
outstanding claims of lien; or
failure of the work to comply with the requirements of the contract
documents.
Contractor, by accepting final payment, waives all claims except those that
it has previously made in writing and which remain unsettled at the time of
acceptance.
SECTION V
Starting and Completion Dates
Construction under this contract shall begin upon notice to proceed by the
Owner and be completed in the following stages shown as additions to the notice
to proceed date in calendar days:
Starting Date 20 days after signature of agreement and receipt of down payment
Nursery #1 +45 Days after starting date
Nursery #2 +52 Days after starting date
Nursery #3 +59 Days after starting date
SECTION VI
Contract Documents
The Contract documents on which the agreement between Owner and Contractor
is based are:
this agreement, and the exhibits identified in and attached to this
agreement, the drawings, plans and specifications, with addenda attached to
such drawings, plans and specifications, issued before execution of this
agreement and identified in the exhibits attached to this agreement, and
any written amendments made after the effective date of this agreement and
signed by Owner and Contractor, and written work change orders issued or to
be issued, but only if signed by Owner and Contractor.
The Contract documents together form the contract for the work described in
this agreement. The parties intend that the documents include provisions for
all labor, materials, equipment, supplies, and other items necessary for the
execution and completion of the work, and all terms and conditions of payment.
The documents also include all work and procedures not expressly indicated in
such documents necessary for proper execution of the above-described project.
Contractor, by executing the documents, represents that it has inspected
and is familiar with the work site and the local conditions under which the work
is to be performed.
SECTION VII
Responsibilities of Owner
Owner shall furnish all necessary surveys for the work and shall secure and
pay for any required easements.
Owner reserves the right to let other contracts in connection with the
project. Contractor shall cooperate with all other contractors to the effect
that their work shall not be impeded by Contractor, and shall give such other
contractor access to the work site necessary to perform their contracts.
Coordination of the work of all contractors shall be through the Project
Manager.
Owner will provide roadway and will be responsible for the cost of towing
any concrete or delivery trucks.
Owner will provide building sites to the proper grade and fill materials
necessary for that purpose. Contractor is responsible for footing excavation.
Owner will bring power to the line side of the transfer switch in the
generator building. Owner will also be responsible for the power run to each
facility main panel from generator building.
Owner will provide fuel tank and lines to generator system.
Owner will provide all utilities during construction including two
telephone lines, water during construction, temporary electrical service and
(porta-potties).
Owner will be responsible for all plumbing into facilities including septic
system, water well and pressure system. Also all gas lines outside of
facilities.
Owner responsible for additional costs due to underground obstructions or
damage to facility or equipment from same.
Owner responsible for final grading work.
Owner will provide a gate at the entry of the site to secure the site.
Owner will provide builder's risk insurance, including Contractor's
interest in the work, from the first day of construction and name contractor as
also insured on the binder for said insurance.
Owner will be responsible for all sewer lines in excess the amount of
exterior sewer line run listed in the specifications.
SECTION VIII
Responsibilities of Contractor
Contractor's duties and rights in connection with the above-described project
are as follows:
Responsibility For and Supervision of Construction. Contractor shall be
solely responsible for all construction under this contract, including the
techniques, sequences, procedures, and means for all coordination of all work.
Contractor shall supervise and direct the work to the best of its ability and
give all attention necessary for proper supervision and direction.
Discipline and Employment. Contractor shall maintain at all times
discipline among its employees, and Contractor agrees not to employ for work on
the project any person unfit or without sufficient skill to perform the job for
which he or she was employed.
Furnishing of Labor, Materials, Etc. Contractor shall provide and pay for
all labor, materials and equipment, including tools, construction equipment, and
machinery, transportation, and all other facilities and services necessary for
the proper completion of work on the project in accordance with the contract
documents. Contractor shall prepare and submit to the Project Manager for
approval shop drawings and any other design details required for the completion
of the work covered by this agreement prior to commencing any portion of the
work requiring shop drawings or additional details not provided by the existing
drawings, plans and specifications. Approval of such items by the Project
Manager or Owner shall not relieve Contractor of its obligations and
responsibilities under this agreement.
Payment of Taxes; Procurement of Licenses and Permits. Contractor shall
pay all State taxes required by law in connection with work on the project in
accordance with this agreement including sales, use, and similar taxes. Owner
shall secure all permits necessary for proper start-up and completion of the
work, paying the fees for such licenses and permits. Owner will be responsible
for any County or Local Sales Taxes.
Compliance with Construction Laws and Regulations. Contractor shall comply
with all laws and regulations, and the rules, regulations, or orders of all
public authorities relating to the performance of the work under and pursuant to
this agreement.
Responsibility for Negligence of Employees. Contractor shall assume full
responsibility for act, negligence, or omissions of all of its employees on the
project, for those of all other persons doing work under a contract with
Subcontractor.
Warranty of Fitness of Materials. Contractor shall represent and warrant
to Owner that all materials used in the work, and made a part of the structures
on such work, or placed permanently in connection with such work, will be new
unless otherwise specified in the Contract document, of good quality, free of
defects, and in conformity with the Contract documents. It is understood and
agreed between the parties of this agreement that all equipment and materials
not so in conformity will be considered defective.
Clean Up. Contractor shall agree to keep the work premises and adjoining
ways free of waste material and rubbish caused by its work or that of its
employees. Contractor shall further agree to remove all such waste and material
and rubbish on termination of the project, together with all of its tools,
equipment, machinery, and surplus materials.
Indemnity and Hold Harmless Agreement. To the fullest extent permitted by
law, Contractor shall indemnify and hold harmless Owner and Owner's officers,
consultants, agents and employees from and against all claims, damages, losses
and expenses, including but not limited to attorney's fees, arising out of or
resulting from performance of Contractor's work, provided that such claim,
damage, loss or expense is attributable to bodily injury, sickness, disease or
death, or to injury to or destruction of tangible property (other than the work
itself) including loss of use resulting therefrom, but only to the extent caused
in whole or in part by tortuous or negligent acts or omissions of Contractor, a
subcontractor, anyone directly or indirectly employed by them or anyone for
whose acts they may be liable, regardless of whether or not such claim, damage,
loss or expense is caused in part by the tortuous or negligent acts or omissions
of a party indemnified hereunder. Subject to Owner's obligation to make
payments to Contractor in accordance with this agreement, as hereby
supplemented, Contractor shall also indemnify and hold harmless Owner from and
against all claims, damages, losses and expenses, including but not limited to
attorney's fees, arising out of any assertion of claims for mechanics' liens by
subcontractors, sub-subcontractors or material suppliers and against any
assertion of security interests by suppliers of goods or materials.
Safety Precautions and Programs. Contractor has the duty of providing for
and overseeing all safety orders, precautions, and programs necessary to the
reasonable safety of the work. In this connection, Contractor shall take
reasonable precautions for the safety of all employees and other persons whom
the work might effect, all work and materials incorporated in the project, and
all property and improvements on the construction site and adjacent to the
construction site, complying with all applicable laws, ordinances, rules,
regulations, and orders.
On-Site Supervision. Contractor shall have an experienced superintendent
to supervise construction. The superintendent shall represent Contractor, and
all communications given to the superintendent shall be as binding as if given
to Contractor. The superintendent shall have the power to represent Contractor
in all matters encompassed by this agreement, except as much authority may
hereafter be restricted by notice in writing from Contractor to the Project
Manager. The Project Manager shall have the right for reasonable cause to
require Contractor to remove the superintendent and to employ a suitable
replacement.
Limited Warranty. Contractor will warrant all workmanship for the period
of one (1) year after completion of the facility. The standard manufacturer's
warranty or Contractor's warranty on materials, either furnished by
manufacturers or by Contractor is for a period of one (1) year after date of
completion of the project. Contractor will not be liable for ground settlement
or damage to structure or equipment from settlement unless attributable to the
failure of Contractor to perform the work in accordance with the plans and
specifications or standards of sound construction. Labor to remove and replace
defective equipment shall be that of the Owner's after Contractor has initially
completed the work under this Agreement on site unless the defect is the fault
of Contractor.
SECTION IX
Time of Essence; Extension of Time
All times stated in this agreement or in the Contract documents are of the
essence hereof.
The time stated in this agreement or in the Contract documents may be
extended by a change order from Owner for such reasonable time as Owner may
determine when in Owner's opinion Contractor is delayed in work progress by
changes ordered, labor disputes, fire, prolonged transportation delays,
injuries, inclement weather, or other causes beyond Contractor's control or
which justify the delay.
SECTION X
Subcontractors
Contractor shall agree to furnish Owner with a list of names of any
Subcontractors to whom contractor proposes to award the principle portions of
the work to be subcontracted by Contractor.
A Subcontractor, for the purposes of this agreement, shall be the person
with whom the contractor has a direct contract for work at the project site.
Contractor shall agree not to employ a Subcontractor to whose employment
Owner reasonably objects.
All contracts between Contractor and Subcontractor shall conform to the
provisions of the Contract Documents, and shall incorporate in them the relevant
provisions of this agreement.
SECTION XI
Arbitration
All claims and disputes relating to this agreement shall be subject to
arbitration at the option of either Owner or Contractor in accordance with the
arbitration rules of the American Arbitration Association for the Construction
Industry then obtaining. The arbitration shall be conducted in Yuma County
Illinois. Judgment on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof.
SECTION XII
Contractors Liability Insurance
Contractor shall purchase and maintain such insurance as will protect Contractor
and Owner from claims set forth below which may arise out of or result from
Contractor's operations under this agreement, whether such operation is by
Contractor or by any subcontractor or by anyone for whose acts any of them may
be liable:
Claims under workers compensation, disability benefit and other similar
employee benefit acts;
Claims for damages because of bodily injury, occupational sickness or
disease, or death of employees, and claims insured by usual personal injury
liability coverage;
Claims for damages because of bodily injury, sickness or disease, or death
of any person other than employees and claims insured by usual personal
injury liability coverage;
Claims for damages insured by usual personal injury liability coverage
which are sustained (1) by person as a result of an offense directly or
indirectly related to employment of such person by Contractor, or (2) by
another person;
Claims for damages because of injury to or destruction of tangible
property, including loss of use resulting therefrom;
Claims for damages because of bodily injury or death of any person or
property damage arising out of the operation, maintenance or use of any
motor vehicle (including owned, not-owned and hired); and
Claims involving contractual liability insurance applicable to Contractor's
obligations under paragraph I of Section VII of this agreement.
The liability insurance shall be written on an occurrence basis and shall, where
applicable, be for limits not less than $1,000,000 combined single limit bodily
injury and property damage for each occurrence, $1,000,000 aggregate, and shall
include contractual liability insurance as applicable to Contractor's
obligations hereunder. Coverage shall include Commercial General Liability
insurance including premises-operations (including explosion, collapse and
underground coverage as applicable), elevators (if applicable), independent
contractors, products and completed operations, and blanket liability on all
written contracts, all including broad form property damage coverage and
personal injury liability, with employment exclusion deleted and for not less
than any limits of liability required by law. Certificates of insurance
acceptable to Owner shall be filed with the Project Manager prior to
commencement of the work. These certificates shall contain a provision that
coverage afforded under the policies will not be canceled or modified until a
least thirty (30) days' prior written notice has been given to the Project
Manager. Owner shall be named as an additional insured on Contractor's public
liability policy. Contractor shall provide to Owner renewal or replacement
certificates to evidence the continuation of all required coverage's before the
expiration or termination of any policy. Owner shall be given a waiver of
subrogation against any suit by Contractor's workers compensation underwriter.
SECTION XIII
Correction Work
In addition to all other obligations of Contractor under this agreement,
when it appears to the Project Manager during the course of construction that
any work does not conform to the provisions of the Contract Documents,
Contractor shall make necessary corrections so that such work will so conform,
and in addition will correct any defects caused by faulty materials, equipment,
or quality of performance in work, appearing within one year (1 year) from the
date of final payment or within such longer period as may be prescribed by law
or may be provided for by applicable special guarantees in the Contract
Documents.
SECTION XIV
Work Changes
Owner reserves the right to order work changes in the nature of additions,
deletions, or modifications, without invalidating this agreement, and agrees to
make corresponding adjustments in the contract price and in time for completion.
All changes will be authorized by a written change order signed by Project
Manager or a duly authorized officer of Owner, which shall define the change and
shall set forth any change to the contract price and completion dates.
Work shall be changed and the contract price and completion shall be
modified only as set out in the written change order.
Any adjustment in the purchase price resulting in a credit or a charge to
Owner shall be determined by mutual agreement of the parties or by arbitration
before starting the work involved in the change.
SECTION XV
Termination
Contractor's Termination. Contractor may, on seven (7) days' written
notice to Owner, terminate this agreement before the completion date specified
in this agreement when for a period of ten (10) days after a progress payment is
due, through no fault of Contractor, Owner fails to make the payment, unless
Owner, within seven (7) days after Contractor's written notice, pays to
Contractor all amounts than due that are not subject to an unresolved, bona fide
dispute concerning Contractor's right to payment. On such termination,
Contractor may recover from Owner payment for all work completed and for any
loss sustained by Contractor for materials, equipment, tools, machinery to the
extent of actual loss thereon plus loss of a reasonable profit, provided
Contractor can prove such loss and damages.
Owners Termination. Owner may, on seven (7) days' written notice to
Contractor, terminate this agreement before the completion date specified in
this agreement, and without prejudice to any other remedy it may have, when
Contractor defaults in performance of any provision of this agreement, or fails
to carry out the construction in accordance with the provisions of the Contract
Documents. On such termination, Owner may take possession of the work site and
finish the work in whatever way Owner deems expedient. If the unpaid balance on
the contract price at the time of such termination exceeds the expense of
finishing the work, Owner will pay such excess to Contractor. If the expense of
finishing the work exceeds the unpaid balance at the time of termination,
Contractor shall agree to pay the difference to Owner.
On any such default by Contractor, Owner may elect not to terminate this
agreement, and in such event, Owner may make good the deficiency of which the
default consists and deduct the cost from the progress payment then or to become
due to Contractor.
SECTION XVI
Governing Law: Attorneys' Fees
This agreement shall be governed and construed in accordance of Illinois
law. In the event that any action is filed or any arbitration proceeding is
commenced in relation to this agreement, the unsuccessful party in the action or
proceeding shall pay to the successful party, in addition to all amounts the
unsuccessful party may be otherwise required to pay, a reasonable sum for the
successful party's attorneys' fees.
SECTION XVII
Entire Agreement
This agreement shall constitute the entire agreement between the parties
and any prior understanding or representation of any kind preceding the date of
this agreement shall not be binding upon either party except to the extent
incorporated into this agreement.
SECTION XVIII
Modification of Agreement
Any modification of this agreement or additional obligation assumed by
either part in connection with this agreement shall be binding only if evidenced
in writing and signed by each party or an authorized representative of each
party.
SECTION XIX
Notices
Any notice provided for or concerning this agreement shall be in writing
and be deemed sufficiently given when sent by certified or registered mail if
sent to the respective address of each party as set forth at the beginning of
this agreement or to such other address as a party shall hereafter specify as
its notice address in a written notice to the other party.
SECTION XX
Assignment of Rights
The rights of each party under this agreement are personal to that party
and may not be assigned or transferred to any other person, firm, corporation,
or other entity without the prior, express, and written consent of the other
party.
SECTION XXI
Paragraph Headings
The titles to the paragraphs of this agreement are solely for the
convenience of the parties and shall not be used to explain, modify, simplify,
or aid in the interpretation of the provisions of this agreement.
SECTION XXII
Performance of Animals and Indemnity of loss
Owner agrees to hold Contractor harmless and indemnify Contractor from any
action relative to loss of animal life due to suffocation, power failure,
failure of ventilation systems or control systems or any other loss of life of
animals or loss of performance relative to design or any action of the
Contractor.
SECTION XXIII
Notice to proceed
This agreement is contingent upon Owner receiving all required permits
authorizations from governmental entities, satisfactory water at site, closing
of property with prior owner and closing of Owner's loan providing financing for
the work covered by this agreement. Upon satisfaction or waiver by Owner of
these conditions, Owner agrees to provide immediate payment to Contractor for
balance of down payment and provide notice to proceed. If Contractor has not
received notice to proceed within 30 days from the date of this agreement,
Contractor reserves the right to pass on any additional price increases to Owner
at exactly the additional cost to the Contractor.
IN WITNESS WHEREOF, each party to this agreement has caused it to be executed on
the date indicated below.
Dated:
Alliance Farms Cooperative Association
By:
Wayne Snyder, President
Dated:
CENTRAL CONFINEMENT SERVICE, LTD.
By:
Mark Gearhart, President
LIST OF EXHIBITS
Exhibit "A" Progress Payments
Exhibit "B" List of facilities.
Exhibit "B-1" Nursery Specifications and Equipment Listing
Listing
Exhibit "C" Escalation and options.
EXHIBIT "A"
CCS Schedule of Progress Payments:
(a) Five percent (5%) of total agreement upon signature.
(b) Five percent (5%) of total Contract amount upon notice to proceed by
OWNER.
(c) Monthly billings will be made based on the amount of material on site
and completed.
(d) The final 5% of agreement will be paid within 10 days of substantial
completion** of project.
(e) CONTRACTOR will provide any reasonable required lien waivers prior to
final payment.
Above listed payments will be due within 10 days of billing date.
A service charge of one and one-half percent (1 1/2%) per month on the
unpaid balance, or the highest rate allowed by law, will be charged on any
overdue accounts. The OWNER agrees by signature to pay the above service
charges on delinquent balances.
**Substantial completion is to be interpreted as completion to the point which
will allow the OWNER to use the facility for the purpose intended. OWNER agrees
not to populate facilities until CONTRACTOR has been paid to date and work is
completed same to OWNER'S satisfaction.
EXHIBIT "B" List of Facilities.
BUILDINGS:
Nursery 1-3 50'2" x 134'
EXHIBIT "B-1" Nursery Specifications and Equipment Listing
BUILDING: FOUR IDENTICAL BUILDINGS
50'2" x 134' Nursery facility Shallow pull plug system. 4 rooms of 24-5' x
11 decks. With special 8' cross hallway.
GENERAL SPECIFICATIONS:
Sidewalls 2x6'x8' framed construction on 2' centers
with treated sil and sil saver.
Trusses 20-5-5 Pre-designed and built wooden trusses
4' on centers.
Purlins 2 x 4 purlins on 30" centers.
Interior ceiling Mill finished aluminum
Sidewall insulation R-19 fiberglass batt.
Ceiling insulation (R-30) insulation in roof areas
Ext. sidewall sheeting 29 ga. colored steel with colored steel
trims.
Roof sheeting 29 ga. Painted steel over 1/2" thermax-fire
rated
Attic ventilation None-all air enters through air room to attic
Interior divide walls 2 per building-2 x 8 T&G PVC Planking
Interior sidewall sheeting 060 glass board with SS nails and SS trims
Hallway walls and utility room PPD with 3/8" backing and SS nails and trims.
CONCRETE SPECIFICATIONS:
10" x 12" spread footer. 4" x 6" stem wall above pit. Perimeter stem wall
with 3' OC vertical #3 rebar and 2 horizontal #3 rebar. Two horizontal
rebar one below and one above grade. Vertical rebar to be 3' OC #3.
Floors 3 1/2" to 4" thick Footings and pit walls and floors to be 3000PSI
concrete and walk floors to be 3500PSI concrete. Wire mesh in all floor
areas. All pits 24" deep with 2 pull plug per gutter one each end.
ELECTRICAL SPECIFICATIONS: PER BUILDING
1-150 amp main interior 30 space panel. 59 28W florescent lights 2 rows of
7 per room, three in hallway. On 100 wat mcgill light in air room. 4 120V
receptacles at Owner's option and 2-220V receptacles at Owner's option.
Other electrical to ventilation, heaters and feed systems as required. All
electrical in carlon or equal.
PLUMBING SPECIFICATIONS:
All plumbing to be PVC. Pressure power washer line. Three floor drains in
utility room and three in Air inlet room.
EQUIPMENT LISTINGS: quantities per building
WORK ROOM ITEMS
Fiberglass utility sink and Hardware 1
3KW electric heater with 1
thermostat for utility room
BUILDING
Air Chamber Package 1
Loadout Covered 1
RF PVC Planking 1561
RF PVC Channel 286
PVC Wall Silicone 36
Metal Wind Braces 70
SF 1/2" Roof Insulation 7654
Roof Insulation Fasteners 7654
Longer Roof Screws 7654
DECKS, FLOORING, FEEDERS AND ACC.
SF Double LL Plastic Flooring 5280
SF CCS Painted Floor supports 5280
RF CCS Painted Horizontal Penning 1008
W / Anchors
Portable Crowd Panel 1
Lean machine feeders 48
Creep Mats W/3/4" Lip 96
SS 24" Double Pinchspring Waterer 104
Lixit Nipples 208
CURTAIN & HARDWARE-AIR ROOM
Super Polylite Curtain 50
Curtain Installation kit 1
1/8" SS curtain cable 50
red pulleys 11
Azuma nuts 11
1/2" conduit 50
1/8" white rope 116
3/16 black rope 300
Top 4 1/2" Open I-hooks 8
Top 5" Closed I-hooks 13
Bottom 6" Open I-hooks 13
Birdnetting 50
Handwinches 1
Handwinch brackets 1
Garage Door Spring and accessories 1
Anti-cable twist balls 2
Fans, controls and heaters
MF Control 4
MF Temp Sensors 12
MF Backup Heater Thermostat 4
MF Backup Fan Thermostat 4
MF16 W/Hood 4
MF24 W/Hood 4
MF24 W/Hood 8
Double LL C2000 Ceiling Inlets 32
Double LL C1000 Ceiling Inlets 1
Detroit Radiant Heat Systems 4
Interior Gas Lines 100
Two GSI M300 Twin Tandem Feed 1
Sytems
Four 10.67T Tanks
Includes Telescopic Detachable Feed
Tubes
PLUMBING
One 1" Fire Hose W/Valve For
Recharge Per Room
One Water Filter Per Room
One Pressure Regulator Per Room
One Soaker Line W/Six Nozzles Per
Room
One Medicator Manifold
W/Medicator Per Building
3/4" Black Pressure Washer Line 273
Pressure Drops W/Disconnects 8
Fittings & Mounting Hardware 1
DOORS
Interior doors with 20 x 20 glass 4
with barn latch
Exterior doors to air room 2
with barn latch
Exterior doors with locksets 6
EXHIBIT "B-4" General Specifications.
LUMBER All #2 or equal DF, HF or SYP. All treated #2 SYP.
FASTENERS All interior and exterior sheeting to be attached with screws.
MAIN WATER LINES. By Owner to facilities.
SEWER LINES-All sewer lines under and between buildings furnished up to a
maximum of 600 1f of sewer line outside of buildings.
FENCE-Not in contract
LOADING CHUTES EACH. One 3' x 20' enclosed loadout shute per nursery building.
CENTRAL ALARM SYSTEM-Central Confinement Service, Ltd. will attache the controls
from the buildings to the Nursery office existing RCM-40 and phone dialer.
Contractor will attach lines between buildings to office allowance of distance
of underground cable is 600lf.
EXHIBIT "C" Escalation and Options.
ESCALATION:
Lumber costs in this agreement are based on the Random Lengths prices published
10/25/96 per grade and species.
CCS will credit or charge for any variation of 10% or more, plus or minus based
on lumber costs in effect at time of delivery.
OPTIONS:
Deductions:
Owner may deduct from this agreement $9,790.00 for use of Tri-ply ceilings in
lieu of Aluminum ceilings in all nurserys.
Owner may deduct from this Agreement $1,175 for use of painted steel ceilings in
lieu of Aluminum Ceilings.
Owner may deduct from this agreement $3,065 for use of galvanized steel roofs in
lieu of painted steel roofs on all buildings.
Additions:
Owner may add to this agreement $584 for water meters in each building.
Owner may add to this agreement $597 for the addition of each emergency door
that would automatically open on power failure.
EXHIBIT 10.9
ALLIANCE FARMS COOPERATIVE ASSN.
Isolation Building
an agreement in progress with
Central Confinement Service, Ltd.
11/22/96
THIS AGREEMENT made effective this 22nd day of November, 1996, by and
between Alliance Farms Cooperative Association, hereinafter referred to as
Owner, and Central Confinement Service, Ltd., P.O. Box 1332, Columbus, NE 68602-
1332, hereinafter to as Contractor, which is duly licensed as a Contractor in
the State of Illinois.
SECTION I
Description of Work
Contractor shall perform the following described work in accordance with
the contract documents: Construction of buildings and other improvements for 1-
Isolation Building to be located in Wayne County, Illinois.
SECTION II
Base Contract Price
Owner agrees to pay Contractor for the work described the total price of
($98,789.00) Ninty-eight Thousand, Seven-Hundred Eighty-nine and 00/100
Dollars).
Payment of this amount is subject to additions or deductions in accordance
with the provisions of this contract and of the other documents to which this
contract is subject.
SECTION III
Progress Payments
Owner shall make progress payments on account of the contract price to
Contractor, as shown on Exhibit A attached hereto, on the basis of invoices for
payment submitted to Owner by Contractor as the work progresses. Subject to the
provisions of Subsection B hereof, and to the written approval of each progress
payment by the Project Manager designated by Owner based on the Project
Manager's inspection of progress of the work, Owner shall pay Contractor's
invoice within ten (10) calendar days following receipt thereof. Contractor
shall supply to the Project Manager a release or waiver of liens signed by the
Contractor with each invoice or application for payment with respect to the
work, materials and equipment for which payment is requested, and, prior to the
next payment being made, shall supply, with respect to the work, materials and
equipment for which payment has previously been made, separate releases or
waivers of liens from all subcontractors and separate releases or waivers of
liens from material and equipment suppliers for material and equipment. Until
further notice, Owner designates Mr. Burl Moody as the Project Manager for
purposes of this contract. Owner shall have the right from time to time to
replace the Project Manager by giving written notice to Contractor.
Progress payments may be withheld if:
work is found defective and not promptly remedied.
Contractor does not make prompt and proper payments for labor,
materials, or equipment furnished it.
another contractor is damaged by an act for Contractor is responsible,
or
claims or liens are filed on the job; or
Contractor is otherwise in default under this agreement in material
respect.
SECTION IV
Final Payment
Owner shall make final payment to Contractor within ten (10) calendar days
after the work is completed, or occupation of facility on substantial
completion, subject to the provisions of this paragraph for establishing a
holdback for incomplete or defective items, and also subject to the condition
that final payment shall not be due until Contractor has delivered to Owner a
complete release of liens arising out of the contract, or in the alternative, a
bond satisfactory to Owner indemnifying it against any and all such liens. The
expense of the bond will be that of the Contractor. At the time of substantial
completion, the Project Manager and Contractor shall jointly inspect the work
and develop a list of incomplete or defective items and establish a date for all
items to be completed and corrected. Owner shall have the right to withhold a
sum equal to 150% of the estimated cost of completing and correcting such items,
as reasonably determined by the Project Manager, to be released on a pro rata
basis as the items are completed or corrected to the reasonable satisfaction of
the Project Manager. In the event that any items listed have not been completed
or corrected to the satisfaction of the Project Manager by the date established,
Owner shall have the option thereafter to cause the items to be completed or
corrected, and Contractor shall be liable for the cost incurred.
Owner, by making payment, waives all claims except those arising out of:
work that does not comply with the contract documents,
outstanding claims of lien; or
failure of the work to comply with the requirements of the contract
documents.
Contractor, by accepting final payment, waives all claims except those that
it has previously made in writing and which remain unsettled at the time of
acceptance.
SECTION V
Starting and Completion Dates
Construction under this contract shall begin upon notice to proceed by the
Owner and be completed in the following stages shown as additions to the notice
to proceed date in calendar days:
Starting Date 10 days after notice to proceed
Isolation 60 calendar days after notice to proceed
SECTION VI
Contract Documents
The Contract documents on which the agreement between Owner and Contractor
is based are:
this agreement, and the exhibits identified in and attached to this
agreement,
the drawings, plans and specifications, with addenda attached to such
drawings, plans and specifications, issued before execution of this
agreement and identified in the exhibits attached to this agreement,
and any written amendments made after the effective date of this
agreement and signed by Owner and Contractor, and
written work change orders issued or to be issued, but only if signed
by Owner and Contractor.
The Contract documents together form the contract for the work described in
this agreement. The parties intend that the documents include provisions for
all labor, materials, equipment, supplies, and other items necessary for the
execution and completion of the work, and all terms and conditions of payment.
The documents also include all work and procedures not expressly indicated in
such documents necessary for proper execution of the above-described project.
Contractor, by executing the documents, represents that it has inspected
and is familiar with the work site and the local conditions under which the work
is to be performed.
SECTION VII
Responsibilities of Owner
Owner shall furnish all necessary surveys for the work and shall secure and
pay for any required easements.
Owner reserves the right to let other contracts in connection with the
project. Contractor shall cooperate with all other contractors to the effect
that their work shall not be impeded by Contractor, and shall give such other
contractor access to the work site necessary to perform their contracts.
Coordination of the work of all contractors will be through the Project Manager.
Owner will provide roadway and will be responsible for the cost of towing
any concrete or delivery trucks.
Owner will provide building sites to the proper grade and fill materials
necessary for that purpose. Contractor is responsible for footings and all
other excavation.
Owner will bring power to the line side of the initial main service panel
or double throw in Generator facility.
Owner will provide all utilities during construction including two
telephone lines, water during construction, temporary electrical service and
(porta-potties).
Owner will be responsible for all plumbing into facilities including septic
system, water well and pressure system. Also all gas lines outside of
facilities.
Owner responsible for additional costs due to underground obstructions or
damage to facility or equipment from same.
Owner responsible for final grading work.
Owner will provide a gate at the entry of the site to secure the site and
builder's risk insurance, including Contractor's interest in the work, from the
first day of construction.
Owner will be responsible for all sewer and recycle lines in excess of the
lengths listed in the specifications.
SECTION VIII
Responsibilities of Contractor
Contractor's duties and rights in connection with the above-described
project are as follows:
Responsibility For and Supervision of Construction. Contractor shall be
solely responsible for all construction under this contract, including the
techniques, sequences, procedures, and means for all coordination of all work.
Contractor shall supervise and direct the work to the best of its ability and
give all attention necessary for proper supervision and direction.
Discipline and Employment. Contractor shall maintain at all times strict
discipline among its employees, and Contractor agrees not to employ for work on
the project any person unfit or without sufficient skill to perform the job for
which he or she was employed.
Furnishing of Labor, Materials, Etc. Contractor shall provide and pay for
all labor, materials, and equipment, including tools, construction equipment,
and machinery, transportation, and all other facilities and services necessary
for the proper completion of work on the project in accordance with the contract
documents. Contractor shall prepare and submit to the Project Manager for
approval shop drawings and any other design details required for the completion
of the work covered by this agreement prior to commencing any portion of the
work requiring shop drawings or additional details not provided by the existing
drawings, plans and specifications. Approval of such items by the Project
Manager or Owner shall not relieve Contractor of its obligations and
responsibilities under this agreement.
Payment of Taxes; Procurement of Licenses and Permits. Contractor shall
pay all State taxes required by law in connection with work on the project in
accordance with this agreement including sales, use, and similar taxes. Owner
shall secure all permits necessary for proper start-up and completion of the
work, paying the fees for such licenses and permits. Owner will be responsible
for any County or Local Sales Taxes.
Compliance with Construction Laws and Regulations. Contractor shall comply
with all laws and regulations, and the rules, regulations, or orders of all
public authorities relating to the performance of the work under and pursuant to
this agreement.
Responsibility for Negligence of Employees. Contractor shall assume full
responsibility for acts, negligence, or omissions of all of its employees on the
project, for those of all other persons doing work under a contract with
Subcontractor.
Warranty of Fitness of Materials. Contractor shall represent and warrant
to Owner that all materials used in the work, and made a part of the structures
on such work, or placed permanently in connection with such work, will be new
unless otherwise specified in the Contract document, of good quality, free of
defects, and in conformity with the Contract documents. It is understood and
agreed between the parties of this agreement that all equipment and materials
not so in conformity will be considered defective.
Clean Up. Contractor shall agree to keep the work premises and adjoining
ways free of waste material and rubbish caused by its work or that of its
employees. Contractor shall further agree to remove all such waste and material
and rubbish on termination of the project, together with all of its tools,
equipment, machinery, and surplus materials.
Indemnity and Hold Harmless Agreement. To the fullest extent permitted by
law, Contractor shall indemnify and hold harmless Owner and Owner's officers,
consultants, agents and employees from and against all claims, damages, losses
and expenses, including but not limited to attorney's fees, arising out of or
resulting from performance of Contractor's work, provided that such claim,
damage, loss or expense is attributable to bodily injury, sickness, disease or
death, or to injury to or destruction of tangible property (other than the work
itself) including loss of use resulting therefrom, but only to the extent caused
in whole or in part by tortuous or negligent acts or omissions of Contractor, a
subcontractor, anyone directly or indirectly employed by them or anyone for
whose acts they may be liable, regardless of whether or not such claim, damage,
loss or expense is caused in part by the tortuous or negligent acts or omissions
of a party indemnified hereunder. Subject to Owner's obligation to make
payments to Contractor in accordance with this agreement, as hereby
supplemented, Contractor shall also indemnify and hold harmless Owner from and
against all claims, damages, losses and expenses, including but not limited to
attorney's fees, arising out of any assertion of claims for mechanics' liens by
subcontractors, sub-subcontractors or material suppliers and against any
assertion of security interests by suppliers of goods or materials.
Safety Precautions and Programs. Contractor has the duty of providing for
and overseeing all safety orders, precautions, and programs necessary to the
reasonable safety of the work. In this connection, Contractor shall take
reasonable precautions for the safety of all employees and other persons whom
the work might effect, all work and materials incorporated in the project, and
all property and improvements on the construction site and adjacent to the
construction site, complying with all applicable laws, ordinances, rules,
regulations, and orders.
On-Site Supervision. Contractor shall have an experienced superintendent
to supervise construction. The superintendent shall represent Contractor, and
all communications given to the superintendent shall be as binding as if given
to Contractor. The superintendent shall have the power to represent Contractor
in all matters encompassed by this agreement, except as much authority may
hereafter be restricted by notice in writing from Contractor to the Project
Manager. The Project Manager shall have the right for reasonable cause to
require Contractor to remove the superintendent and to employ a suitable
replacement.
Limited Warranty. Contractor will warrant all workmanship for the period
of one (1) year after completion of the facility. The standard manufacturer's
warranty or Contractor's warranty on materials, either furnished by
manufacturers or by Contractor is for a period of one (1) year after date of
completion of the project. Contractor will not be liable for ground settlement
or damage to structure or equipment from settlement unless attributable to the
failure of Contractor to perform the work in accordance with the plans and
specifications or standards of sound construction. Labor to remove and replace
defective equipment shall be that of the Owner's after Contractor has initially
completed the work under this Agreement on site unless the defect is the fault
of Contractor.
SECTION IX
Time of Essence; Extension of Time
All times stated in this agreement or in the Contract documents are of the
essence hereof.
The time stated in this agreement or in the Contract documents may be
extended by a change order from Owner for such reasonable time as Owner may
determine when in Owner's opinion Contractor is delayed in work progress by
changes ordered, labor disputes, fire, prolonged transportation delays,
injuries, inclement weather, or other causes beyond Contractor's control or
which justify the delay.
SECTION X
Subcontractors
Contractor shall agree to furnish Owner with a list of names of any
Subcontractors to whom contractor proposes to award the principle portions of
the work to be subcontracted by Contractor.
A Subcontractor, for the purposes of this agreement, shall be the person
with whom the contractor has a direct contract for work at the project site.
Contractor shall agree not to employ a Subcontractor to whose employment
Owner reasonably objects.
All contracts between Contractor and Subcontractor shall conform to the
provisions of the Contract Documents, and shall incorporate in them the relevant
provisions of this agreement.
SECTION XI
Arbitration
All claims and disputes relating to this agreement shall be subject to
arbitration at the option of either Owner or Contractor in accordance with the
arbitration rules of the American Arbitration Association for the Construction
Industry then obtaining. The arbitration shall be conducted in Wayne County,
Illinois. Judgment on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof.
SECTION XII
Contractors Liability Insurance
Contractor shall purchase and maintain such insurance as will protect Contractor
and Owner from claims set forth below which may arise out of or result from
Contractor's operations under this agreement, whether such operation is by
Contractor or by any subcontractor or by anyone for whose acts any of them may
be liable:
Claims under workers compensation, disability benefit and other similar
employee benefit acts;
Claims for damages because of bodily injury, occupational sickness or
disease, or death of employees, and claims insured by usual personal injury
liability coverage;
Claims for damages because of bodily injury, sickness or disease, or death
of any person other than employees and claims insured by usual personal
injury liability coverage;
Claims for damages insured by usual personal injury liability coverage
which are sustained (1) by person as a result of an offense directly or
indirectly related to employment of such person by Contractor, or (2) by
another person;
Claims for damages because of injury to or destruction of tangible
property, including loss of use resulting therefrom;
Claims for damages because of bodily injury or death of any person or
property damage arising out of the operation, maintenance or use of any
motor vehicle (including owned, not-owned and hired); and
Claims involving contractual liability insurance applicable to Contractor's
obligations under paragraph I of Section VII of this agreement.
The liability insurance shall be written on an occurrence basis and shall, where
applicable, be for limits not less than $1,000,000 combined single limit bodily
injury and property damage for each occurrence, $1,000,000 aggregate, and shall
include contractual liability insurance as applicable to Contractor's
obligations hereunder. Coverage shall include Commercial General Liability
insurance including premises-operations (including explosion, collapse and
underground coverage as applicable), elevators (if applicable), independent
contractors, products and completed operations, and blanket liability on all
written contracts, all including broad form property damage coverage and
personal injury liability, with employment exclusion deleted and for not less
than any limits of liability required by law. Certificates of insurance
acceptable to Owner shall be filed with the Project Manager prior to
commencement of the work. These certificates shall contain a provision that
coverage afforded under the policies will not be canceled or modified until at
least thirty (30) days' prior written notice has been given to the Project
Manager. Owner shall be named as an additional insured on Contractor's public
liability policy. Contractor shall provide to Owner renewal or replacement
certificates to evidence the continuation of all required coverage's before the
expiration or termination of any policy. Owner shall be given a waiver of
subrogation against any suit by Contractor's workers compensation underwriter.
SECTION XIII
Correction Work
In addition to all other obligations of Contractor under this agreement, when it
appears to the Project Manager during the course of construction that any work
does not conform to the provisions of the Contract Documents, Contractor shall
make necessary corrections so that such work will so conform, and in addition
will correct any defects caused by faulty materials, equipment, or quality of
performance in work, appearing within one year (1 year) from the date of final
payment or within such longer period as may be prescribed by law or may be
provided for by applicable special guarantees in the Contract Documents.
SECTION XIV
Work Changes
Owner reserves the right to order work changes in the nature of additions,
deletions, or modifications, without invalidating this agreement, and agrees to
make corresponding adjustments in the contract price and in time for completion.
All changes will be authorized by a written change order signed by Project
Manager or a duly authorized officer of Owner, which shall define the change and
shall set forth any change to the contract price and completion dates.
Work shall be changed and the contract price and completion shall be
modified only as set out in the written change order.
Any adjustment in the purchase price resulting in a credit or a charge to
Owner shall be determined by mutual agreement of the parties or by arbitration
before starting the work involved in the change.
SECTION XV
Termination
Contractor's Termination. Contractor may, on seven (7) days' written
notice to Owner, terminate this agreement before the completion date specified
in this agreement when for a period of ten (10) days after a progress payment is
due, through no fault of Contractor, Owner fails to make the payment, unless
Owner, within seven (7) days after Contractor's written notice, pays to
Contractor all amounts than due that are not subject to an unresolved, bona fide
dispute concerning Contractor's right to payment. On such termination,
Contractor may recover from Owner payment for all work completed and for any
loss sustained by Contractor for materials, equipment, tools, machinery to the
extent of actual loss thereon plus loss of a reasonable profit, provided
Contractor can prove such loss and damages.
Owner's Termination. Owner may, on seven (7) days' written notice to
Contractor, terminate this agreement before the completion date specified in
this agreement, and without prejudice to any other remedy it may have, when
Contractor defaults in performance of any provision of this agreement, or fails
to carry out the construction in accordance with the provisions of the Contract
Documents. On such termination, Owner may take possession of the work site and
finish the work in whatever way Owner deems expedient. If the unpaid balance on
the contract price at the time of such termination exceeds the expense of
finishing the work, Owner will pay such excess to Contractor. If the expense of
finishing the work exceeds the unpaid balance at the time of termination,
Contractor shall agree to pay the difference to Owner.
On any such default by Contractor, Owner may elect not to terminate this
agreement, and in such event, Owner may make good the deficiency of which the
default consists and deduct the cost from the progress payment then or to become
due to Contractor.
SECTION XVI
Governing Law: Attorneys' Fees
This agreement shall be governed and construed in accordance of Illinois law.
In the event that any action is filed or any arbitration proceeding is commenced
in relation to this agreement, the unsuccessful party in the action or
proceeding shall pay to the successful party, in addition to all amounts the
unsuccessful party may be otherwise required to pay, a reasonable sum for the
successful party's attorneys' fees.
SECTION XVII
Entire Agreement
This agreement shall constitute the entire agreement between the parties and any
prior understanding or representation of any kind preceding the date of this
agreement shall not be binding upon either party except to the extent
incorporated into this agreement.
SECTION XVIII
Modification of Agreement
Any modification of this agreement or additional obligation assumed by either
part in connection with this agreement shall be binding only if evidenced in
writing and signed by each party or an authorized representative of each party.
SECTION XIX
Notices
Any notice provided for or concerning this agreement shall be in writing and be
deemed sufficiently given when sent by certified or registered mail if sent to
the respective address of each party as set forth at the beginning of this
agreement or to such other address as a party shall hereafter specify as its
notice address in a written notice to the other party.
SECTION XX
Assignment of Rights
The rights of each party under this agreement are personal to that party
and may not be assigned or transferred to any other person, firm, corporation,
or other entity without the prior, express, and written consent of the other
party.
Paragraph Headings
The titles to the paragraphs of this agreement are solely for the
convenience of the parties and shall not be used to explain, modify, simplify,
or aid in the interpretation of the provisions of this agreement.
SECTION XXII
Performance of Animals and Indemnity of loss
Owner agrees to hold Contractor harmless and indemnify Contractor from any
action relative to loss of animal life due to suffocation, power failure,
failure of ventilation systems or control systems or any other loss of life of
animals or loss of performance relative to design or any action of the
Contractor.
SECTION XXIII
Notice to proceed
This agreement is contingent upon Owner receiving all required permits
authorizations from governmental entities, satisfactory water at site, closing
of property with prior owner and closing of Owners' loan providing financing for
the work covered by this agreement. Upon satisfaction or waiver by Owner of
these conditions, Owner agrees to provide immediate payment to Contractor for
balance of down payment and provide notice to proceed. If Contractor has not
received notice to proceed within 30 days from the date of this agreement,
Contractor reserves the right to pass on any additional price increases to Owner
at exactly the additional cost to the Contractor.
IN WITNESS WHEREOF, each party to this agreement has caused it to be executed on
the date indicated below.
Dated:
Alliance Farms Cooperative Association
By
Wayne Snyder
Dated:
CENTRAL CONFINEMENT SERVICE, LTD.
By
Mark Gearhart, President
LIST OF EXHIBITS
Exhibit "A" Progress Payments
Exhibit "B" List of facilities.
Exhibit "B-1" Isolation Specifications and Equipment Listing
Exhibit "C" Escalation and options.
EXHIBIT "A"
CCS Schedule of Progress Payments:
(a) Five percent (5%) of total agreement upon signature.
(b) Five percent (5%) of total Contract amount upon notice to proceed by
OWNER.
(c) Monthly billings will be made based on the amount of material on site
and completed.
(d) The final 5% of agreement will be paid within 10 days of substantial
completion** of project.
(e) CONTRACTOR will provide any reasonable required lien waivers prior to
final payment.
Above listed payments will be due within 10 days of billing date.
A service charge of one and one-half percent (1 1/2%) per month on the
unpaid balance, or the highest rate allowed by law, will be charged on any
overdue accounts. The OWNER agrees by signature to pay the above service
charges on delinquent balances.
**Substantial completion is to be interpreted as completion to the point which
will allow the OWNER to use the facility for the purpose intended. OWNER agrees
not to populate facilities until CONTRACTOR has been paid to date and work is
completed same to OWNER'S satisfaction.
EXHIBIT "B" List of Facilities.
BUILDINGS:
Isolation one each 153' x 41'2"
EXHIBIT "B-1" Isolation Specifications and Equipment Listing
BUILDING:
1)-41'2" x 153' Isolation facility with pull the plug shallow (24") pit
system.
GENERAL SPECIFICATIONS:
Side walls 2" x 6"x 6' framed construction on 2' centers of
treated lumber.
End walls 2" x 6"x 4' framed construction on 2' centers of
untreated lumber.
Cross walls 2" x 4"x 4' framed construction on 2' centers of
untreated lumber.
Trusses 25-5-0-5 Pre-designed and built wooden trusses 4'
on centers.
Purlins 2 x 4 purlins on 30" centers.
Interior ceiling 0155 mil finished aluminum attached with aluminum
screws.
Interior side walls
above concrete base wall 3/8" plywood backed PPD attached with stainless
nails and stainless steel trims
Side wall insulation R-19 fiberglass batt.
Ceiling insulation (R-30) insulation in roof areas
Ext. side wall sheeting 29 ga. colored steel with colored steel trims.
Roof sheeting 29 ga. galvanized sheeting.
Attic ventilation Ridge vents not to exceed 40' on center
12"overhang with 6" screened inlet on both eaves.
CONCRETE SPECIFICATIONS:
Shallow footings 18" x 8" spread footer as part of slab on grade
construction. 3000 PSI with two perimeter runs of
#3 rebar.
Pit Floor 3 1/2" to 4" thick 3000 PSI Concrete.
Pit Depth 24" pit depth.
Vertical walls Side Poured concrete 8" base wall 24" high with 6" wall
continuing up 24" additional. 3500 PSI concrete
with 3 horizontal rebar #3 and vertical rebar 3'
on center.
Vertical walls Ends Poured concrete 6" base 24" high with 6"w 48"h
wall. 3500 PSI
and Cross Walls concrete. 4 horizontal rebar #3 and vertical
rebar 3' on center.
Intermediate pit walls Poured concrete 6" base wall 24" high 3500 PSI
concrete with 2 horizontal rebar #3 and vertical
rebar 3' on center.
Bin Pads (1 ea) 10' x 20' bin pads 6" thick with 16" rodent
footings. Bin Pads to use 3000 PSI concrete and
#3 rebar 2' on center crossed.
ELECTRICAL SPECIFICATIONS:
Main Panel 100 amp interior 30 space panel.
Lights (20 total) 100W McGill plastic fixtures with incandescent
bulbs. 12' OC.
Miscellaneous Other electrical to ventilation, heaters and feed
systems as required. All electrical in carlon or
equal.
SEWER SPECIFICATIONS:
10" cross sewer lines 4 runs with 8" risers and pull plugs in each pit.
Cleanouts on upstream side of facility.
All plumbing to be PVC installed and vented as required to meet codes.
Septic system and drain field by OWNER. Two floor drains in work area.
Sewer lines run out of building 10' on downstream side and additional
responsibility by Owner.
PLUMBING SPECIFICATIONS:
All plumbing in PVC. 3/4" main water line run through facility. Drops to
feeders garden hose. Two boiler drains per room and one in work room
placed at owners option. Medicator manifold in work room to allow each
room to be individually medicated. 1 Run of 1/2" pressure washer line run
through facility to within 25' of each end with 5 drops-one in work room
and two in each room.
EQUIPMENT SPECIFICATIONS:
Concrete 1
SF Slats 5760
Slat Freight (loads) 4
Slat Crane 1
Building 1
RF Black Finish Penning 864
T Bolts 96
24" MaxiMat feeders full 16
24" MaxiMat feeders 2 4
36" Galv. Pinchspring Waterers doubles 36
Curtain & Hardware
5'Net 1Hem Super poply lite 150
5'Net 1Hem Super poply lite 150
Curtain Installation kit 4
1/8" SS curtain cable 300
red pulleys 63
Azuma nuts 63
1/2" conduit 300
1/8" white rope 693
3/16 black rope 1800
Top 4 1/2" Open I-hooks 50
Top 5" Closed I-hooks 75
Bottom 6" Open I-hooks 75
Birdnetting 300
Handwinches 4
Handwinch Brackets 4
Handwinch 1/8" SS cable 80
Counterweights 4
HH Curtain Drop 240V 2
CCS Curtain Drop Kit 2
Esc-5 Varifan Control 2
MF 24" System 1 fans 4
MF 36" System 3 fans 4
PSI Galv. 150,000 BTU Heater 4
Double LL C2000 Ceiling Inlets 28
Plumbing 1
3/4" Main Line 1
Medicator Hookup 1
Pressure Washer Line
1/2" Line 150
Pressure Drops 5
Fittings & Mounting Hardware 1
Cooling System
Solonoids 2
Spray Kits 4
AP 2-11T Feed tanks with 3" PVD tandem 1
System
Electrical 1
Walk doors
Plyco walk doors with locksets 4
Plyco walk doors with barn latches 2
General Specifications.
LUMBER All #2 or equal DF, HF or SYP. All treated #2 SYP.
FASTENERS All interior and exterior sheeting to be attached with screws.
MAIN WATER LINES. By Owner to facility
LOADING CHUTES 1 EACH. One 3' x 20' furnished with chain hoist.
EXHIBIT "C" Escalation and Options.
ESCALATION:
Lumber costs in this agreement are based on the Random Lengths prices published
10/25/96 per grade and species.
CCS will credit or charge for any variation of 10% or more, plus or minus based
on lumber costs in effect at time of delivery.
OPTIONS:
Owner may add 1/2' thermax tuff-R under roof sheeting for the additional price
of $1836.00
EXHIBIT 10.10
COBANK, ACB
ILLINOIS MORTGAGE
THIS ILLINOIS MORTGAGE (this "Mortgage") is made on February 23, 1996, by
ALLIANCE FARMS COOPERATIVE ASSOCIATION, a Colorado cooperative corporation with
an address of 3315 North Oak Trafficway, Kansas City, Missouri 64116 (herein
sometimes called "Mortgagor"), in favor of CoBANK, ACB, a federally chartered
corporation with an address of P.O. Box 2940, Wichita, Kansas 67201-2940,
(herein sometimes called "Mortgagee").
WITNESSETH:
WHEREAS, Mortgagor has this day borrowed from and is indebted to Mortgagee
in the principal amount of $10,550,000.00, as evidenced by a certain promissory
note of Mortgagor dated May 19, 1995, and payable to the order of Mortgagee in
the original principal amounts of $10,550,000.00, (the "Note"), a copy of which
is attached hereto; and
WHEREAS, Mortgagor may now be or hereafter become obligated or indebted to
Mortgagee, and Mortgagee may make future advances to Mortgagor, and Mortgagor
may incur future obligations to Mortgagee whether pursuant to the Note(s) or
pursuant to any other evidences of indebtedness or obligation hereafter executed
by Mortgagor in favor of Mortgagee and any and all amendments, modifications,
extensions or renewals thereof; and
WHEREAS, the parties intend that this Mortgage shall secure the payment of
the Note(s), any other promissory notes which may subsequently evidence
indebtedness by the Mortgagor to the Mortgagee, and any and all other present
and future indebtedness (principal, interest, fees and other amounts),
liabilities and obligations of Mortgagor to Mortgagee now existing or made or
incurred within twenty (20) years after the date of execution hereof, in the
maximum principal amount of $10,550,000.00 (not including sums spent for the
reasonable protection of the security of this Mortgage) and any and all
amendments, modifications, extensions and renewals thereof (hereinafter
collectively referred to as the "Indebtedness");
NOW, THEREFORE, in order to secure the payment of all of the Indebtedness
and the performance and observance by Mortgagor of every covenant and condition
herein contained, and for and in consideration of the premises and of the debt
above described, and the sum of One Dollar ($1.00) duly paid by Mortgagee on or
before the execution of this Mortgage, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Mortgagor, Mortgagor by these presents does hereby grant, bargain and sell,
mortgage, warrant, convey and confirm, assign, transfer and set over unto
Mortgagee, and unto its successors and assigns, forever, the following described
real estate, chattels real, personal property and other properties, interests
and rights (herein collectively sometimes referred to as "Mortgaged Property"),
situated in the County of Wayne, State of Illinois, to-wit:
The real estate more particularly described on Exhibit A attached hereto
and made a part hereof;
TOGETHER with (1) all buildings, improvements and structures at any time, now or
hereafter, erected, situated or placed thereon; (2) all rights, privileges,
easements, hereditaments, appendages and appurtenances; (3) all right, title,
interest and estate of Mortgagor in and to streets, roads, ways, sidewalks,
curbs, alleys and areas adjoining said real estate and portions thereof, and
whether vacated by law or ordinance (conditionally or otherwise); (4) all rents,
revenues, income, issues and profits, which are hereby specifically assigned,
transferred and pledged primarily and on a parity with said real estate; and
(5) all fixtures, fixed assets and personalty now or at any time hereafter
annexed, affixed or attached to said real estate or said buildings, improvements
or structures thereon.
TO HAVE AND TO HOLD the said Mortgaged Property and every part thereof unto
said Mortgagee, and unto its successors and assigns, forever, to secure the
payment of all of the Indebtedness and the performance and observance by
Mortgagor of every covenant and condition herein contained.
As of the date hereof, the maximum principal amount of all Indebtedness
secured by this Mortgage is $10,550,000.00. All of the Indebtedness secured by
this Mortgage matures, in accordance with the terms and provisions of the
respective agreements, documents and instruments creating, evidencing or
securing the same, not later than twenty (20) years after the date of this
Mortgage. All of the Indebtedness secured by this Mortgage, including, without
limitation, all future advances, shall have the same priority, to the same
extent as if such Indebtedness secured by this Mortgage, including, without
limitation, all future advances, were made on the date of this Mortgage. This
Mortgage shall constitute a lien even if there is no outstanding Indebtedness
under this Mortgage from time to time.
NON-ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES
Mortgage represents and warrants: (i) that it is lawfully seized and
possessed of a good and indefeasible title and estate in fee simple to the
Mortgaged Property and Mortgagor will forever warrant and defend the title to
the Mortgaged Property and every part thereof unto Mortgagee against the claims
and demands of all persons; (ii) that the Mortgaged Property and every part
thereof is free and clear of any and all liens, encumbrances and charges of
every kind and character, including liens of general and special taxes and
assessments, excepting taxes for the current year which are not yet due, and
excepting the lien of this Mortgage; (iii) if Mortgagor is identified as a
corporation, that Mortgagor is a corporation duly organized and lawfully
existing under the laws of the State of Illinois and has full corporate power
and authority to execute the Note(s) and this Mortgage and that the execution
and delivery thereof by the officers of the Mortgagor who are executing and
delivering the same have been duly authorized by all necessary corporate action
and that all corporate acts and proceedings necessary or proper in the premises
have been duly done, performed and taken.
NON-ENVIRONMENTAL COVENANTS
Mortgagor hereby expressly covenants and agrees with Mortgagee that:
(1) Payment of Obligations. Mortgagor will duly pay all of the Indebtedness
and interest thereon, when the same shall become due and payable.
(2) Due on Sale or Encumbrance. Mortgagor will not, without the prior written
consent of Mortgagee, transfer, convey or otherwise part with title to any
of the Mortgaged Property, or create or permit or allow to exist or to be
created any mortgage, deed of trust, pledge or other lien or encumbrance on
any of the Mortgaged Property, other than this Mortgage, and Mortgagor will
not suffer or permit any mechanic's or materialmen's lien or any other lien
or any nature whatsoever to attach to any of the Mortgaged Property or to
remain outstanding against the same or any part thereof.
(3) Insurance.
(a) Mortgagor shall at all times at the cost and expense of Mortgagor keep
all of the Mortgaged Property of an insurable nature constantly insured
against loss or damage by fire, lightening, explosion, tornado and
windstorm, and such other risks as Mortgagee may reasonably request, in an
amount equal to the full insurable value thereof, or equal to the unpaid
Indebtedness secured hereby, whichever is greater, and such insurance shall
also be in a sum equal to such percentage of the insurable value of the
property insured as may be required to prevent Mortgagor from being
considered as coinsurer thereof; such insurance to be in companies
satisfactory to Mortgagee, and all such policies of insurance shall be so
written as to make any loss occurring thereunder payable by standard
mortgage clause attached thereto to Mortgagee as its interest may appear,
irrespective of, and which may not be invalidated by, any act or default of
Mortgagor, and all such policies, or a certificate or certificates of the
insurers or of an insurance agency satisfactory to Mortgagee, showing that
such policies, with such mortgage clauses, are in force, shall be deposited
with Mortgagee as additional security hereunder; and Mortgagor shall also
maintain at the cost and expense of Mortgagor such public liability and
other insurance as Mortgagee may reasonably request, insuring Mortgagor and
Mortgagee against liabilities, claims, damages and losses to persons and
property arising by reason of the use or occupation of the Mortgaged
Property;
(b) All insurance moneys received on account of any loss or damage to the
Mortgaged Property, after deducting therefrom the reasonable charges and
expenses paid or incurred in connection with the collection and
disbursement of said moneys, may be used and applied, at the option of
Mortgagee, either for the purpose of paying the cost of repair, restoration
or replacement of the Mortgaged Property damaged or destroyed, or applied
to the prepayment, or partial prepayment, of the Indebtedness secured
hereby in such order and manner as Mortgagee may elect; and
(c) Mortgagor grants to Mortgagee full power and authority to make proof
of loss under any and all insurance policies, either in the name of
Mortgagor or in the name of Mortgagee, and to adjust, settle, collect and
receipt for all insurance, and to endorse for and in behalf and in the name
of Mortgagor any check, draft or other instrument received therefor, and to
collect the proceeds thereof, and also, if an Event of Default shall have
occurred hereunder, to collect and receipt for any unearned premiums and to
apply same on the Indebtedness secured hereby in such order and manner as
Mortgagee may elect. In the event of foreclosure sale, any and all
insurance policies may be assigned without consent of Mortgagor, and
Mortgagor authorizes Mortgagee to assign said policies to the purchaser or
purchasers at such foreclosure sale, or if Mortgagee elects so to do,
Mortgagee may collect any unearned premiums and apply the same on the
Indebtedness secured hereby in such order and manner as Mortgagee may
elect.
(4) Indemnity. Mortgagor will protect, save harmless and indemnify Mortgagee
from and against any and all claims, demands, losses, liabilities, costs
and expenses, of whatever nature, which may arise or result, directly or
indirectly by reason of the use or occupation of the Mortgaged Property or
any part thereof.
(5) Repairs. Mortgagor will at all times keep the Mortgaged Property and every
part thereof in good repair and condition, without any liability of
Mortgagee to any person for damage for failure to repair or for any other
cause, and Mortgagor will from time to time make all needful and proper
repairs, restorations, renewals and replacements thereof, so that at all
times the value of the security and the efficiency of the Mortgaged
Property and every part thereof shall be fully preserved and maintained,
and Mortgagor will not permit or allow the Mortgaged Property, or any part
thereof, to depreciate in value by any act or neglect.
(6) Compliance. Mortgagor will not use or permit the Mortgaged Property or any
part thereof to be used in any manner inconsistent with the rights of
Mortgagee hereunder, or in violation of the provisions of any insurance
policy or any rules or regulations of insurance underwriters, and in the
use of said Mortgaged Property will comply with, all laws, ordinances,
rules, regulations, orders and directions of any legislative, executive,
administrative or judicial body, officer or department applicable to the
Mortgaged Property or to the uses and purposes thereof, and will maintain
and use the Mortgaged Property in full compliance therewith.
(7) Condemnation. In the event the Mortgaged Property, or any part thereof, be
taken through condemnation proceedings or by virtue of the exercise of the
right of eminent domain or pursuant to governmental action, any and all
amounts awarded in any such condemnation proceeding for the taking of the
Mortgaged Property, or any part thereof, are hereby assigned to and shall
be paid to Mortgagee, and when received by Mortgagee, after deducting all
reasonable charges and expenses paid or incurred in connection with the
collection thereof, the same may be applied to the Indebtedness secured
hereby in such order and manner as Mortgagee may elect, or, at the option
of Mortgagee, the same may be applied in whole or in part to the
replacement of that part of the Mortgaged Property so taken, or to the
repair or restoration of that part of the Mortgaged Property not so taken.
(8) Destruction. In the event any part of the Mortgaged Property or any
additions, betterments, substitutions or replacements shall be destroyed or
damaged by any party or from any cause whereby Mortgagor becomes entitled
to indemnity therefor from any third person or persons, Mortgagor, for the
considerations named, does hereby sell, assign, and transfer to Mortgagee
all of such sum or sums so due from any such third person or persons, and
Mortgagee is hereby authorized to receive, collect and sue for the same and
Mortgagor hereby authorizes and directs that such sum or sums be paid to
Mortgagee upon presentation of a duly certified copy hereof. Any and all
sums received by Mortgagee hereunder, after deducting therefrom the
reasonable charges and expenses paid or incurred in connection with the
collection and disbursement of said monies, may be used and applied at the
option of Mortgagee either for the purpose of paying the cost of repair,
restoration or replacement of the Mortgaged Property damaged or destroyed,
or applied to the prepayment, or partial prepayment, of the Indebtedness
secured hereby in such order and manner as Mortgagee may elect.
(9) Taxes. Mortgagor hereby covenants and agrees to pay all taxes,
assessments, liens and other charges that may be levied or assessed against
the Mortgaged Property, or any part thereof. If Mortgagor shall fail to
pay any tax, assessment, lien or other charge levied or assessed against
the Mortgaged Property, or any part thereof, or shall fail to keep and
perform any of the covenants and conditions herein contained, Mortgagee
shall be privileged, but shall not be obligated, to pay any such tax,
assessment, lien, rent or other charge, or to redeem such property from any
sale or foreclosure for taxes or assessments or liens, and may effect and
pay such insurance, pay any such obligations and make such other
disbursements as are necessary or advisable in the opinion of Mortgagee to
cure any such default of Mortgagor hereunder, or to protect the lien or the
rights of Mortgagee hereunder; any and all such sums of money advanced for
such purposes, or any of them, by Mortgagee, shall be deemed an additional
principal sum secured by this Mortgage and shall be payable on demand with
interest at the post-maturity rate per annum applicable under the Note(s)
secured hereby from the time so advanced, and failure on the part of
Mortgagor to repay the amounts so advanced on demand shall constitute an
Event of Default hereunder; provided, however, nothing herein contained
shall be construed as requiring Mortgagee to effect such insurance or to
advance or expend money for any of the purposes aforesaid.
(10) Inspections. Mortgagee, or its agents, representatives or workmen, are
hereby authorized to enter at any reasonable time upon or in any part of
the Mortgaged Property for the purpose of inspecting the same and for the
purpose of performing any of the acts it is authorized to perform
hereunder.
ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Mortgagor further makes the following representations, warranties, and
covenants, all of which are subject to any exceptions that Mortgagor may have
previously disclosed in writing to Mortgagee, and which, to the extent that they
deal with representations of fact, are based on Mortgagor's present knowledge,
arrived at after reasonable inquiry.
(1) Use of Property and Facilities. (a) Mortgagor will (i) use, handle,
transport or store Hazardous Materials as defined under any Environmental
Law or (ii) store or treat nonhazardous wastes (a) in a good and prudent
manner in the ordinary course of business, and (b) in compliance with all
applicable Environmental Laws.
(b) Mortgagor will not conduct or allow to be conducted, in violation of
any Environmental Law, any business, operations or activity on the
property, or employ or use the property to generate, use, handle,
manufacture, treat, store, process, transport or dispose of any Hazardous
Materials, or any other substance which is prohibited, controlled or
regulated under applicable law, or which poses a threat or nuisance to
public safety, health or the environment or cause, or allow to be caused, a
known or suspected release of Hazardous Materials, on, under or from the
property.
(c) Mortgagor will not do or permit any act or thing, business or
operation, that poses an unreasonable risk of harm, or impairs, or may
impair, the value of the property, or any part thereof.
(2) Condition of Property. (a) Mortgagor shall take all appropriate response
action, including any removal and remedial action, in the event of a
release, emission, discharge or disposal of Hazardous Materials in, on,
under or about the property, so as to remain in compliance with
Environmental Law as hereinafter defined.
(b) Underground tanks, wells (except domestic water wells), septic tanks,
ponds, pits, or any other storage tanks (whether currently in use or
abandoned) on the property, if any, are maintained in compliance with
applicable Environmental Law.
(3) Notice of Environmental Problem or Litigation. Neither Mortgagor nor any
of its tenants have given, nor were they required to give, nor have they
received, any notice, letter, citation, order, warning, complaint, inquiry,
claim or demand that: (i) Mortgagor and/or any tenants have violated, or
are about to violate, any Environmental Law, judgment or order; (ii) there
has been a release, or there is a threat of release, of Hazardous Materials
from the property; (iii) Mortgagor and/or tenants may be or are liable, in
whole or in part, for the costs or cleaning up, remediating, removing or
responding to a release or threatened release of Hazardous Materials; (iv)
the property is subject to a lien in favor of any governmental entity or
any liability, costs or damages, under any Environmental Law arising from
or costs incurred by such governmental entity in response to a release or a
threatened release of a Hazardous Material. Mortgagor further represents
and warrants that no conditions currently exist or are currently reasonably
foreseeable, that would subject Mortgagor to any such investigation,
litigation, administrative enforcement or any damages, penalties,
injunctive relief, or cleanup costs under any Environmental Law. In the
event of such notice, Mortgagor and any tenants shall immediately provide a
copy to the Mortgagee.
(4) Right of Inspection. Mortgagor hereby grants, and will cause any tenants
to grant, to Mortgagee, its agents, attorneys, employees, consultants,
contractors, successors and assigns, an irrevocable license and
authorization, upon reasonable notice, to enter upon and inspect the
property and facilities thereon, and perform such tests, including without
limitation, subsurface testing, soils and groundwater testing, and other
tests which may physically invade the property thereon, as the Mortgagee,
in its sole discretion, determines are necessary to protect its security
interest, provided however, that under no circumstances shall the Mortgagee
be obligated to perform such inspections or tests.
(5) Indemnity. Mortgagor agrees to indemnify and hold Mortgagee, its
directors, employees, agents, and its successors and assigns, harmless from
and against any and all claims, losses, damages, liabilities, fines,
penalties, charges, judgments, administrative orders, remedial action
requirements, enforcement actions of any kind, and all costs and expenses
incurred in connection therewith (including, but not limited to, attorney's
fees and expenses) arising directly or indirectly, in whole or in part, out
of any failure of Mortgagor to comply with the environmental
representations, warranties and covenants contained herein.
(6) Continuation of Representations, Warranties, Covenants and Indemnities.
Mortgagor's representations, warranties, covenants and indemnities
contained herein shall survive the occurrence of any event whatsoever,
including without limitation, the satisfaction of the promissory note(s)
secured hereby, the reconveyance or foreclosure of this mortgage, the
acceptance by Mortgagee of a deed in lieu of foreclosure, or any transfer
or abandonment of the property.
(7) Corrective Action. In the event the Mortgagor is in breach of any of its
representations, warranties or agreements as set forth above, Mortgagor at
its sole expense, shall take all action required, including environmental
cleanup of the property, to comply with the representations, warranties and
covenants herein or applicable legal requirements and, in any event, shall
take all action deemed necessary under all applicable Environmental Laws.
(8) Hazardous Materials Defined. The term "Hazardous Materials" shall mean
dangerous, toxic, or hazardous pollutants, contaminants, chemicals, wastes,
materials or substances, as defined in or governed by the provisions of any
Environmental Law.
(9) Environmental Law Defined. The term "Environmental Law" shall mean any
federal, state or local law, statute, ordinance, rule, regulation,
administrative order and permit now in effect or hereinafter enacted,
pertaining to the public health, safety, industrial hygiene, or the
environmental conditions on, under or about the property.
EVENTS OF DEFAULT: REMEDIES
It is expressly provided and agreed by Mortgagor that in the event any one
or more of the following events, each of which shall be, and is hereby defined
as an "Event of Default," shall occur, to-wit:
(a) If default shall be made in the payment of any principal of or
interest on any of the Indebtedness secured hereby as and when the same
shall become due and payable, whether by reason of acceleration or
otherwise;
(b) If default shall be made by Mortgagor in the due performance or
observance of any covenant, agreement or condition herein contained or
required to be performed or observed by Mortgagor and such default shall
continue unremedied for a period of fifteen (15) days after the date of the
mailing of a written notice addressed to Mortgagor at the address
hereinabove set forth, or to such other address as may be designated by
Mortgagor in written notice delivered to Mortgagee;
(c) If any representation or warranty of Mortgagor contained herein shall
prove to be in any material respect incorrect or if there shall be any
other breach of any such representation or warranty;
(d) If Mortgagor should become insolvent either in the equity or
bankruptcy definition of the term, or if a voluntary or involuntary
petition in bankruptcy or reorganization of Mortgagor is filed, or if
Mortgagor makes an assignment for the benefit of creditors, or an
arrangement with its creditors or if a receiver or trustee is appointed for
Mortgagor's business or property or if Mortgagor's interest in the
Mortgaged Property shall pass by operation of law as the result of any
creditor's action, suit or proceeding;
(e) If any of the Mortgaged Property is sold, transferred, assigned or in
any manner conveyed without the prior written consent of Mortgagee;
(f) If a default or event of default shall occur under or within the
meaning of any other deed of trust or mortgage covering any of the
Mortgaged Property;
(g) If a default or event of default shall occur under or within the
meaning of any agreement, document or instrument evidencing or securing any
of the Indebtedness secured hereby; or
(h) If Mortgagor shall be declared by Mortgagee to be in default on, or
pursuant to the terms of, (i) any other present or future obligation to
Mortgagee, including, without limitation, any other loan, line of credit,
revolving credit, guaranty or reimbursement obligation relating to any
letter of credit issued by Mortgagee for the account of Mortgagor, or (ii)
any other present or future obligation purporting to convey to Mortgagee a
lien or encumbrance upon, or a security interest in, any of the property or
assets of Mortgagor;
THEN, AND IN EACH AND EVERY SUCH EVENT:
(1) The entire outstanding principal balance of all of the Indebtedness secured
hereby and all accrued and unpaid interest thereon shall, at the option of
Mortgagee, become and be due and payable immediately, anything in the
Note(s) or in this Mortgage to the contrary notwithstanding;
(2) Mortgagee shall have the right immediately to foreclose this Mortgage. In
any foreclosure proceeding the court shall, upon application, at once, and
without notice to Mortgagor, or any party claiming under said Mortgagor,
and without giving bond on such application (such notice and bond being
hereby expressly waived) and also without reference to the then value of
the Mortgaged Property, to the use of said Mortgaged Property as a
homestead, or to the solvency or insolvency of any person liable for any of
the Indebtedness secured hereby, appoint a receiver for the benefit of the
legal holder of the Indebtedness secured hereby, to take possession of the
Mortgaged Property, with power to collect rents, issues, and profits of the
Mortgaged Property, then due or to become due, during the pendency of such
foreclosure suit, and until the time to redeem the same shall expire (such
rents, issues and profits being hereby expressly assigned and pledged as
additional security for the payment of the Indebtedness secured by this
Mortgage); this provision for appointment of a receiver being expressly a
condition upon which the loan hereby secured was made; and Mortgagor hereby
further consents that said receiver may, out of the said rents, pay prior
or coordinate liens, the taxes, assessments, water rates and insurance on
Mortgaged Property, then due or unpaid or accruing whether before or after
the filing of such bill, and for any necessary repairs thereon, and
management and rental fees and any other proper charges, and the amount of
any deficiency decree; provided that, in case of any default or breach, as
aforesaid, as a concurrent (and not alternative or exclusive) remedy and
measure for making effective the terms, provisions and purposes hereof, it
shall be lawful for Mortgagee, its agent or attorney forthwith (either with
or without process of law, forcibly or otherwise) to enter upon and take
possession of said Mortgaged Property and to expel and remove any person,
goods or chattels, occupying or upon the same, to collect and to receive
all the rents, issues and profits therefrom, from time to time, to manage
and control the same and make all necessary repairs, and lease the same or
any part thereof at such rentals as in its sole discretion it may deem just
and reasonable, and after deducting all reasonable attorneys' fees and all
expenses incurred in the protection, care, repair and management of said
Mortgaged Property, apply the remaining income upon the Indebtedness hereby
secured in the same manner as is hereafter provided upon the sale of said
mortgage property under foreclosure; and said Mortgagor hereby expressly
releases and waives any and all right to possession, control or management
of the Mortgaged Property, or to the rents, issues and profits therefrom,
after any default or breach of the terms or provisions of this Mortgage and
said Mortgagor hereby further expressly releases and waives any and all
damages and claims for damages occasioned by such expulsion; and
(3) Mortgagee may exercise all other right and remedies it has at law or in
equity or hereunder.
In the case of foreclosure of the lien of this Mortgage by the Mortgagee,
in any court of law or equity, there shall be allowed all court costs and
expenses incurred by the Mortgagee, including reasonable attorneys' fees
and expenses, stenographers' charges, cost of procuring a complete abstract
of title to said Mortgaged Property and continuations thereof, opinions of
title or title guaranty policies and continuations thereof covering said
foreclosure proceedings, cost of procuring testimony and evidence and all
costs and expenses incurred by the Mortgagee in and about any such suit or
proceeding, or in the preparation therefor; and in case Mortgagee shall be
made party to any suit or legal proceedings by reason of this Mortgage, its
costs, expenses and reasonable attorneys' fees and expenses in such suit or
proceedings shall be paid by Mortgagor on demand and if not paid shall
become so much additional Indebtedness hereunder and shall be a further
lien or charge upon said Mortgaged Property.
All fees and expenses allowable pursuant to the provisions hereof shall be
additional Indebtedness secured hereby and shall be a charge upon said Mortgaged
Property and shall constitute a lien thereon prior and paramount to the
Indebtedness secured hereby, and whenever possible shall be provided for in any
judgment or decree entered in any such proceedings. There shall be included in
any decree foreclosing the lien of this Mortgage and be paid out of the rents or
proceeds of any sale made in pursuance of any such decree in the following
order: (i) all costs of such suit or suits, advertising, sale and conveyance,
reasonable attorneys' fees of attorneys for the Mortgagee, stenographers' fees,
outlays for documentary evidence and costs of abstract and examination of title,
title opinions and title guaranty policies; (ii) all moneys advanced by the
Mortgagee for any purpose authorized in the Mortgage, with interest on such
advances at the highest post-maturity rate of interest applicable under the
Note(s) secured hereby; (iii) all the accrued interest remaining unpaid on the
Indebtedness secured hereby; and (iv) all of the Indebtedness secured hereby
remaining unpaid. The overplus of the proceeds of the sale, if any, shall then
be paid to the party entitled thereto. In case, after legal proceedings are
instituted to foreclose the lien of this Mortgage, tender is made of the entire
Indebtedness due hereunder, Mortgagee shall be entitled to reimbursement for
expenses incurred in connection with such legal proceedings, including such
expenditures as are enumerated above, and such expenses shall be so much
additional Indebtedness secured by this Mortgage, and no such suit or
proceedings shall be dismissed or otherwise disposed of until such fees,
expenses and charges shall have been paid in full.
Mortgagor, on behalf of itself and all persons now or hereafter interested
in the Mortgaged Property or the collateral secured hereby, to the fullest
extent permitted by applicable law hereby waives all rights under all
appraisement, homestead, moratorium, valuation, exemption, stay, extension,
reinstatement and redemption statutes, laws or equities now or hereafter
existing, and hereby further waives the pleading of any statute of limitations
as a defense to any and all of the Indebtedness secured by this Mortgage, and
Mortgagor agrees that no defense, claim or right based on any thereof will be
asserted, or may be enforced, in any action enforcing or relating to this
Mortgage or any of the collateral secured hereby. Without limiting the
generality of the preceding sentence, Mortgagor, on its own behalf and on behalf
of each and every person acquiring any interest in or title to the Mortgaged
Property subsequent to the date of this Mortgage, hereby irrevocably waives any
and all rights of reinstatement and rights of redemption from sale under any
order or decree of foreclosure of this Mortgage or under any powers contained
herein or under any sale pursuant to any statute, order, decree or judgment of
any court. Mortgagor, for itself and for all persons hereafter claiming through
or under it or who may at any time hereafter become holders of liens junior to
the lien of this Mortgage, hereby expressly waives and releases all rights to
direct the order in which any of the collateral secured hereby shall be sold in
the event of any sale or sales pursuant hereto and to have any of the collateral
secured hereby or any other property now or hereafter constituting security for
any of the Indebtedness secured hereby marshalled upon any foreclosure of this
Mortgage or of any other security for any of said Indebtedness.
Upon the foreclosure and sale of the Mortgaged Property, or any part
thereof, the proceeds of such sale or sales shall be applied as follows: First,
to the cost and expense of executing this Mortgage, including reasonable
compensation of Mortgagee and reasonable attorneys' fees, outlays for
documentary stamps, cost of procuring title certificates, continuing abstracts,
title searches or examinations reasonably necessary or proper; and, next, to the
payment of any and all advances made by Mortgagee with interest thereon as
hereinabove provided; next to the payment of the balance of the Indebtedness
secured hereby, with interest thereon as therein provided; and any surplus
thereafter shall be paid to Mortgagor; provided that in the event the net
proceeds of such sale or sales shall not be sufficient to pay in full the
Indebtedness hereby secured, Mortgagor hereby promises and agrees to pay any
deficiency thereon on demand with interest.
No remedy herein conferred upon or reserved to Mortgagee is intended to be
exclusive of any other remedy, but every remedy herein provided shall be
cumulative, and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity, or by statute; and every power
and remedy given by this Mortgage to Mortgagee may be exercised from time to
time and as often as may be deemed expedient. No delay or omission by Mortgagee
to exercise any right or power arising from any default shall impair any such
right or power or shall be construed to be a waiver of any default or an
acquiescence therein. In case Mortgagee shall have proceeded to enforce any
right under this Mortgage by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned because of waiver or for
any other reason, or shall have been determined adversely, then, and in such and
every such case, Mortgagor and Mortgagee shall severally and respectively be
restored to their former positions and rights hereunder in respect of the
Mortgaged Property, and all rights, remedies and powers of Mortgagee shall
continue as though no such proceedings had been taken. The unenforceability or
invalidity of any provision or provisions hereof shall not render any other
provision or provisions herein contained unenforceable or invalid.
If any additional sum or sums shall become due and owing, by Mortgagor to
Mortgagee, pursuant to the provisions hereof, the affidavit of Mortgagee shall
be sufficient evidence of the fact that such additional sums are secured hereby
in the amount set forth in such affidavit.
GENERAL PROVISIONS
Should Mortgagee, or its successors or assigns, be made defendant in any
suit involving the title to any of the properties hereby conveyed, or involving
the validity or priority of the lien of this Mortgage, then it is agreed that
attorneys' fees and expenses in a reasonable amount shall be fixed by the court
in which said suit may be pending, and may be adjudged in favor of the attorney
or attorneys of record representing the said parties, which fee shall be
adjudged against the Mortgagor, and that such reasonable costs and expenses of
the said parties, or any of them shall also be fixed and adjudged as costs
therein by the court, and it is agreed that all such fees, costs and expenses of
every such proceeding shall be adjudged against said Mortgagor, and when so
adjudged shall be secured by this Mortgage.
This Mortgage and all provisions hereof shall extend to and be binding upon
Mortgagor and all parties claiming by, through or under Mortgagor. The term
"Mortgagee" shall be deemed to mean and include the endorsee(s), transferee(s)
or the holder(s) at the time being of the Note(s) or any of the other
Indebtedness secured hereby, and the successors and assigns of Mortgagee; and
the covenants and agreements shall bind and inure to the benefit of the heirs,
executors, personal representatives, successors and assigns of Mortgagor and the
endorsee(s), transferee(s), successors and assigns of Mortgagee. All of the
grants, covenants, terms, agreements, provisions and conditions herein contained
shall run with the land. Time is of the essence of all Mortgagor's obligations
hereunder. The captions or headings used herein are for the convenience of the
parties and are not a part of this Mortgage.
To the extent that proceeds of the Indebtedness secured hereby or advances
under this Mortgage are used to pay any outstanding lien, charge or prior
encumbrance against the Mortgaged Property, Mortgagee shall be subrogated to any
and all rights and liens held by any owner or holder of such outstanding liens,
charges and prior encumbrances, irrespective of whether said liens, charges or
encumbrances are released.
If Mortgagor shall well and truly pay or cause to be paid to Mortgagee all
of the Indebtedness secured hereby as and when the same shall become due and
payable and Mortgagee shall have no further commitment or obligation to lend or
advance any additional moneys to Mortgagor, then this Mortgage shall cease and
be void and the Mortgaged Property hereinbefore conveyed shall be released at
the cost of Mortgagor, otherwise to remain in full force and effect.
This Mortgage cannot be changed, modified, amended, supplemented or varied
except by an agreement in writing signed by Mortgagor and Mortgagee.
This Mortgage, the Note(s) and any related loan documents shall be governed
by and construed in accordance with the internal laws of the State of Illinois.
IN THE EVENT ANY OF THE INDEBTEDNESS SECURED HEREBY IS PAYABLE UPON DEMAND,
NEITHER THIS MORTGAGE NOR ANYTHING CONTAINED HEREIN SHALL BE DEEMED TO ALTER OR
IMPINGE UPON THE DEMAND CHARACTER OF SUCH INDEBTEDNESS.
IN WITNESS WHEREOF, Mortgagor has executed this Illinois Mortgage the day
and year first above written.
(Seal)
ATTEST: ALLIANCE FARMS COOPERATIVE ASSOCIATION
By By
Title Title
ACKNOWLEDGMENT
STATE OF MISSOURI )
) SS.
COUNTY OF CLAY )
I, Janice C. Harper, a Notary Public in and for said County in the State
aforesaid, do hereby certify that Wayne N. Snyder, not personally but as
Chairman of the Board, President of ALLIANCE FARMS COOPERATIVE ASSOCIATION, a
Colorado cooperative corporation, personally known to me to be the same person
whose name is subscribed to the foregoing instrument as such, Chairman of the
Board, President, appeared before me this day in person and acknowledged that he
signed and delivered the said instrument as his own free and voluntary act, and
as the free and voluntary act of said cooperative corporation, for the uses and
purposes therein set forth.
GIVEN under my hand and NOTARIAL SEAL this 28th day of February, 1996.
/s/ Janice C. Harper
Notary Public
My Commission Expires .
EXHIBIT A
ALLIANCE FARMS COOPERATIVE ASSOCIATION
KANSAS CITY, MISSOURI
WAYNE COUNTY, ILLINOIS
TRACT I
The South 31.66 acres of the Northeast Quarter of the Southwest Quarter of
Section 36, Township 2 North, Range 8 East of the Third Principal Meridian,
Wayne County, Illinois.
The South Half of the South Half of Section 36; the South Half of the Northeast
Quarter of Section 36; the North Half of the Southeast Quarter of Section 36;
All in Township 2 North, Range 8 East of the Third Principal Meridian, Wayne
County, Illinois.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Form 10-QSB
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 81,664
<ALLOWANCES> 0
<INVENTORY> 2,749,075
<CURRENT-ASSETS> 2,894,457
<PP&E> 18,487,977
<DEPRECIATION> (1,744,283)
<TOTAL-ASSETS> 22,344,378
<CURRENT-LIABILITIES> 4,033,498
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 4,610,756
<TOTAL-LIABILITY-AND-EQUITY> 22,344,378
<SALES> 3,316,983
<TOTAL-REVENUES> 3,316,983
<CGS> 2,969,586
<TOTAL-COSTS> 3,112,975
<OTHER-EXPENSES> (43,254)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 357,932
<INCOME-PRETAX> (110,670)
<INCOME-TAX> 0
<INCOME-CONTINUING> (110,670)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (110,670)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
