SUPERIOR TOMATO ASSOCIATES, L.L.C.
OPERATING AGREEMENT
February 19, 1996
TABLE OF CONTENTS
Page
Article I Certain Definitions. . . . . . . . . . . . . . . . . . . . . . 2
1.1 Certain Definitions. . . . . . . . . . . . . . . . . . . . . . 2
(a) Accounting Period. . . . . . . . . . . . . . . . . . . . 2
(b) Additional Member. . . . . . . . . . . . . . . . . . . . 2
(c) Adjusted Asset Value . . . . . . . . . . . . . . . . . . 2
(d) Affiliate. . . . . . . . . . . . . . . . . . . . . . . . 2
(e) Capital Account. . . . . . . . . . . . . . . . . . . . . 2
(f) Capital Commitment . . . . . . . . . . . . . . . . . . . 3
(g) Code . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(h) Company Income Or Loss . . . . . . . . . . . . . . . . . 3
(i) Company Percentage . . . . . . . . . . . . . . . . . . . 3
(j) Depreciation . . . . . . . . . . . . . . . . . . . . . . 3
(k) Development And Marketing Agreement. . . . . . . . . . . 3
(l) Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . 3
(m) in interest; Majority In Interest. . . . . . . . . . . . 3
(n) Manager. . . . . . . . . . . . . . . . . . . . . . . . . 3
(o) Member . . . . . . . . . . . . . . . . . . . . . . . . . 3
(p) Members' Council . . . . . . . . . . . . . . . . . . . . 4
(q) Officers . . . . . . . . . . . . . . . . . . . . . . . . 4
(r) Treasury Regulations . . . . . . . . . . . . . . . . . . 4
Article II Name, Purposes And Place Of Business Of Company. . . . . . . . 4
2.1 Company Name . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Company Purposes . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Principal Place Of Business. . . . . . . . . . . . . . . . . . 4
2.4 Registered Agent And Office. . . . . . . . . . . . . . . . . . 4
Article III Period Of Duration . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Period Of Duration . . . . . . . . . . . . . . . . . . . . . . 5
Article IV Names, Admission, Rights And Obligations . . . . . . . . . . . 5
4.1 Names And Addresses. . . . . . . . . . . . . . . . . . . . . . 5
4.2 Admission Of Members . . . . . . . . . . . . . . . . . . . . . 5
4.3 Limitation Of Liability. . . . . . . . . . . . . . . . . . . . 5
4.4 Company Debt Liability . . . . . . . . . . . . . . . . . . . . 5
4.5 Restrictions On Transfers Of Company Interests . . . . . . . . 5
4.6 Withdrawal Of Member . . . . . . . . . . . . . . . . . . . . . 6
i
TABLE OF CONTENTS
(continued)
Article V Management, Duties And Restrictions. . . . . . . . . . . . . . 6
5.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 The Members' Council . . . . . . . . . . . . . . . . . . . . . 6
5.4 Resignation Of Manager, Officers And Members Of Members'
Council; Removal of Manager. . . . . . . . . . . . . . . . . . 6
5.5 Determination By The Manager. . . . . . . . . . . . . . . . . 6
5.6 Restrictions On The Members. . . . . . . . . . . . . . . . . . 7
5.7 Manager's And Officers' Standard Of Care . . . . . . . . . . . 7
5.8 No Exclusive Duty To Company . . . . . . . . . . . . . . . . . 7
5.9 Indemnity Of The Manager And Officers. . . . . . . . . . . . . 7
Article VI Capital Accounts; Capital Commitment . . . . . . . . . . . . . 8
6.1 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . 8
6.2 Initial Capital Contributions. . . . . . . . . . . . . . . . . 8
6.3 Additional Capital Commitments . . . . . . . . . . . . . . . . 8
6.4 Noncontributing Members. . . . . . . . . . . . . . . . . . . . 9
6.5 Additional Capital Contributions; Right Of First Refusal . . . 9
6.6 Allocations To New Members . . . . . . . . . . . . . . . . . . 10
Article VII Allocations. . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.1 Allocation Of Company Income Or Loss . . . . . . . . . . . . . 10
7.2 Income Tax Allocations . . . . . . . . . . . . . . . . . . . . 10
Article VIII Fees And Expenses. . . . . . . . . . . . . . . . . . . . 10
8.1 Management Compensation. . . . . . . . . . . . . . . . . . . . 10
Article IX Distributions To And Withdrawals By Members. . . . . . . . . . 10
9.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.2 Withdrawals By Members . . . . . . . . . . . . . . . . . . . . 10
9.3 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . 11
9.4 Members' Obligation To Repay Or Restore. . . . . . . . . . . . 11
ii
TABLE OF CONTENTS
(continued)
Article X Protective Rights. . . . . . . . . . . . . . . . . . . . . . . 11
10.1 Approval By Members. . . . . . . . . . . . . . . . . . . . . . 11
10.2 Approval By Other Members. . . . . . . . . . . . . . . . . . . 12
Article XI Dissolution Of Company . . . . . . . . . . . . . . . . . . . . 12
11.1 Early Termination Of The Company . . . . . . . . . . . . . . . 12
11.2 Dissolution Procedures . . . . . . . . . . . . . . . . . . . . 12
Article XII Reports And Financial Accounting . . . . . . . . . . . . . . . 13
12.1 Financial Records. . . . . . . . . . . . . . . . . . . . . . . 13
12.2 Annual Reports . . . . . . . . . . . . . . . . . . . . . . . . 13
12.3 Tax Matters Member . . . . . . . . . . . . . . . . . . . . . . 13
12.4 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12.5 Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Article XIII Amendment. . . . . . . . . . . . . . . . . . . . . . . . 14
13.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Article XIV Other Provisions . . . . . . . . . . . . . . . . . . . . . . . 14
14.1 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
14.2 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
14.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 14
14.4 Binding Agreement. . . . . . . . . . . . . . . . . . . . . . . 14
14.5 Entire Agreement; Captions . . . . . . . . . . . . . . . . . . 15
14.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 15
14.7 Waiver Of Action For Partition . . . . . . . . . . . . . . . . 15
14.8 Execution Of Additional Instruments. . . . . . . . . . . . . . 15
14.9 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
14.10 Rights And Remedies Cumulative . . . . . . . . . . . . . . . . 15
14.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 15
14.12 Heirs, Successors And Assigns. . . . . . . . . . . . . . . . . 15
14.13 Creditors. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
iii
INDEX OF DEFINITIONS
Defined Term Page
Accounting Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Member. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Adjusted Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Capital Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Capital Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Income Or Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Delaware Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Development And Marketing Agreement. . . . . . . . . . . . . . . . . . . . . 3
Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
In Interest; Majority In Interest. . . . . . . . . . . . . . . . . . . . . . 3
Indemnitee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Initial Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Internal Revenue Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Members' Council . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Tax Matters Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Treasury Regulations . . . . . . . . . . . . . . . . . . . . . . . .. . . . .4
iv
SUPERIOR TOMATO ASSOCIATES, L.L.C.
OPERATING AGREEMENT
This Operating Agreement (the "Agreement") is made as of the 19th day of
February, 1996, by and among Agritope, Inc., a Delaware corporation
("Agritope"), Sunseeds Company, a --------------- corporation ("Sunseeds"), and
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ Sales Company, Inc., a --------------- corporation ("A&W")
with respect to the operation of Superior Tomato Associates, L.L.C., a Delaware
limited liability company (the "Company").
Whereas, Superior Tomato Associates is being formed, pursuant to the
provisions of the Delaware Limited Liability Company Act (the "Delaware Act"),
upon the filing of a Certificate of Formation with the Secretary of State of the
State of Delaware;
Whereas, the purpose of the Company is to combine Sunseeds' tomato seed
genetics and know-how with Agritope's SAMase technology and know-how and A&W's
growing, packing and distribution know-how to produce and commercialize in North
America economically superior tomatoes for the fresh market; the product (the
"Product") shall be fresh market cherry, roma and vine ripened large fruited
tomato varieties using seed developed by the Company;
Whereas, the Members have entered into this Agreement, setting forth their
respective ownership interests in the Company and the principles by which it
will be operated and governed;
Whereas, concurrently with the execution and delivery of this Agreement,
the parties are entering into a Development and Marketing Agreement, under
which:
Agritope will grant to the Company a non-exclusive license to Agritope's
proprietary technology of regulating ethylene production in tomato
(hereinafter "SAMase");
Sunseeds will grant to the Company a non-exclusive license to Sunseeds'
proprietary tomato germplasm and associated know-how;
Agritope and Sunseeds will collaborate to develop seed for the Product;
and
A&W will supply the production acreage and distribution infrastructure for
the development and testing of the Product, will arrange for the growing
of the Product and will pack and distribute the Product.
Whereas, the parties recognize that there exist significant risks
associated with the business to be carried on by the Company, including without
limitation: the risk that the
Product might not be successfully developed, or if successfully developed, might
not receive regulatory approval, the risk that the Product might not generate
savings, the risk that the Product might not achieve market acceptance, the risk
of crop failure, the risk associated with the highly volatile tomato market, the
credit risk that growers may not make the payments due from the growers with
respect to the Product, the risk created by the existence of numerous patents
held by different parties in the field of plant genetics and the possibility
that development or marketing of the Product might be impinged by the existence
of any of such patents.
Now, Therefore, in consideration of mutual covenants and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. For purposes of this Agreement, certain terms
used in this Agreement shall be defined as follows:
(a) Accounting Period. An Accounting Period shall be (i) the Fiscal
Year, if there are no changes in the Members' respective interests in Company
income, gain, loss or deductions during such Fiscal Year except on the first day
thereof, or (ii) any other period beginning on the first day of a Fiscal Year,
or any other day during the Fiscal Year upon which occurs a change in such
respective interests, and ending on the last day of a Fiscal Year, or on the day
preceding an earlier day upon which any change in such respective interest shall
occur.
(b) Additional Member. Additional Member shall mean any person or
entity, other than Agritope, Sunseeds or A&W, who or which is admitted to the
Company as a Member pursuant to the terms of this Agreement.
(c) Adjusted Asset Value. Adjusted Asset Value is defined in Exhibit
B to this Agreement.
(d) Affiliate. An Affiliate of a Member is a person or entity
controlling, controlled by, or under common control with, a Member.
(e) Capital Account. The Capital Account of each Member shall
consist of such Member's original capital contribution (i) increased by any
additional capital contribution, such Member's share of Company Income that is
allocated to it pursuant to this Agreement, and the amount of any Company
liabilities that are assumed by such Member or that are secured by any Company
property distributed to such Member, and (ii) decreased by the amount of any
distributions to, or withdrawals by, such Member, such Member's share of any
Company Loss that is allocated pursuant to this Agreement, and the amount of any
liabilities of such Member that are assumed by the Company or that are secured
by any property contributed by such Member to the Company. The foregoing
provision relating to the maintenance of Capital
2.
Accounts is intended to comply with Treasury Regulation Section
1.704-1(b)(2)(iv) and shall be interpreted and applied in a manner consistent
with such Regulations. Capital contributions may be made in cash or, to the
extent agreed to by a Majority in Interest of the Members, by an in kind
contribution of property or services at the value agreed to by such Members.
(f) Capital Commitment. A Member's Capital Commitment, if any, shall
mean the amount that such Member has agreed to contribute to the capital of the
Company upon such Member's admission to the Company and from time to time
thereafter, as set forth opposite such Member's name on Exhibit A hereto.
(g) Code. The Code, or the Internal Revenue Code, is the Internal
Revenue Code of 1986, as amended from time to time (or any corresponding
provisions of succeeding law).
(h) Company Income Or Loss. Company Income or Loss is defined on
Exhibit B to this Agreement.
(i) Company Percentage. The Company Percentage for each Member shall
be as set forth on Exhibit A hereto, as amended from time to time in accordance
with the terms of this Agreement.
(j) Depreciation. Depreciation is defined on Exhibit B to this
Agreement.
(k) Development And Marketing Agreement. Development and Marketing
Agreement means the agreement referred to in the fourth Whereas clause of the
Agreement.
(l) Fiscal Year. The Company's Fiscal Year for the period between
the date hereof and March 1, 1996 shall be such period, and for all years
thereafter shall commence on March 1 of each year and end on February 28 or
February 29, as the case may be, of the following year except for the final
Fiscal Year of the Company, which shall begin on March 1 of such final Fiscal
Year and end on the date of termination of the Company.
(m) in interest; Majority In Interest. The term "in interest" shall
mean a specified fraction or percentage of the Company Percentages of all
Members (including the Manager) or of designated Members (including the Manager
if within the class of designated Members). A Majority in Interest shall mean
more than 50% in interest.
(n) Manager. Manager shall mean a Member designated or elected by
the Members as Manager pursuant to the terms of this Agreement. As of the
effective date of this Agreement, Agritope is hereby designated as the Manager
pursuant to Section 18-101(10) of the Delaware Act.
(o) Member. Member shall mean each of the Initial Members and
Additional Members as of a given time.
3.
(p) Members' Council. Members' Council shall mean a council
comprised of three individuals, one of whom is appointed by each Initial Member,
for the purpose of providing advice and counsel on the management of the Company
to the Manager. As of the effective date of this Agreement, the three members of
the Members' Council are ▇▇▇▇▇▇ ▇▇▇▇▇, who is appointed by Agritope, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, who is appointed by Sunseeds, and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Sr., who is
appointed by A&W, or their respective designees. Each member of the Members'
Council may be removed and replaced at any time by the Member that appointed
such individual.
(q) Officers. Officer shall mean one or more individuals designated
as such by the Manager pursuant to this Agreement.
(r) Treasury Regulations. Treasury Regulations shall mean the Income
Tax Regulations promulgated under the Code, as such Regulations may be amended
from time to time (including corresponding provisions of succeeding
Regulations).
ARTICLE II
NAME, PURPOSES AND PLACE OF BUSINESS OF COMPANY
2.1 Company Name. The Company shall conduct its activities under the name
Superior Tomato Associates, L.L.C. or such other name as the Manager may
designate.
2.2 Company Purposes. The purpose of the Company is to (i) combine
Sunseeds' tomato seed genetics and know-how with Agritope's SAMase technology
and know-how and A&W's growing, packing and distribution know-how to produce and
commercialize in North American economically superior tomatoes for the fresh
market; the Product shall be fresh market cherry, roma and vine ripened large
fruited tomato varieties using seed developed by the Company, (ii) engage in any
lawful act or activity for which a limited liability company may be organized
under the laws of the State of Delaware and (iii) engage in all activities
necessary, customary, convenient or incident to any of the foregoing. The
Company shall have the power to make and perform all contracts and to engage in
all actions and transactions necessary or advisable to carry out the purposes of
the Company and shall possess all other powers available to it as a limited
liability company under the laws of the State of Delaware.
2.3 Principal Place Of Business. The principal place of business of the
Company shall be at ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, or at such
other place or places as the Manager may from time to time determine.
2.4 Registered Agent And Office. The name of the registered agent for
service of process of the Company and the address of the Company's registered
office in the State of Delaware shall be The ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation Services,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other agent or office in
the State of Delaware as a Majority in Interest of the Members may from time to
time designate.
4.
ARTICLE III
PERIOD OF DURATION
3.1 Period Of Duration. The Company's existence commences upon of the
filing with the Secretary of State of the State of Delaware of the Company's
Certificate of Formation and shall continue for a period of thirty (30) years,
unless sooner dissolved as provided in Section 11.1 below.
ARTICLE IV
NAMES, ADMISSION, RIGHTS AND OBLIGATIONS
4.1 Names And Addresses. The names and addresses of the Members, the
amount of their respective Capital Commitments to the Company, if any, and their
respective Company Percentages are set forth on Exhibit A hereto. The Manager
shall cause Exhibit A to be amended from time to time to reflect the admission
of any Additional Member, the withdrawal of any Member, receipt by the Company
of notice of any change of address of a Member, the change in any Member's
Capital Commitment, the change in any Member's Company Percentage, or the
occurrence of any other event requiring amendment of Exhibit A.
4.2 Admission Of Members. Additional Members may be admitted to the
Company upon the written consent of the Manager and with the approval of a
Majority in Interest of the Members.
4.3 Limitation Of Liability. Each Member's liability shall be limited as
set forth in the Delaware Act and other applicable law.
4.4 Company Debt Liability. No Member shall personally be liable for any
debts or losses of the Company beyond such Member's respective Capital
Commitment.
4.5 Restrictions On Transfers Of Company Interests.
(a) Without the written consent of a Majority in Interest of the
non-transferring Members, no Member shall sell, assign, transfer, or otherwise
dispose of such Member's share in the Company.
(b) In the event of any voluntary or involuntary transfer of a
Member's interest in the Company, or any part thereof, the transferee shall
receive only the transferor's economic interest in the Company, and the
transferee shall not be admitted as a Member or have any right as a result of
such transfer to participate in the affairs of the Company, except as provided
by written consent of a Majority in Interest of the non-transferring Members
which consent may be withheld for any reason or for no reason.
5.
4.6 Withdrawal Of Member. A Member may not withdraw or resign without the
consent of a Majority in Interest of the non-resigning or non-withdrawing
Members to such withdrawal and the terms thereof.
ARTICLE V
MANAGEMENT, DUTIES AND RESTRICTIONS
5.1 Management. Except as otherwise set forth herein, the Manager shall
have the sole right to manage, control, and conduct the affairs of the Company
and to do any and all acts on behalf of the Company, subject to the provisions
of this Agreement which may require the consent of the Members.
5.2 Officers. Subsequent to the date of this Agreement, one or more
Officers may be designated and appointed by the Manager, in consultation with
the members of the Members' Council. The Manager may delegate a portion of its
day-to-day management responsibilities to any such Officers, and such Officers
shall have the authority to execute documents for, contract for, negotiate on
behalf of and otherwise represent, the interests of the Company as authorized by
the Manager in any job description created by the Manager.
Any number of offices may be held by the same person.
5.3 The Members' Council.
(a) The purpose of The Member's Council is to review and advise
concerning the direction and progress of the Company.
(b) Meetings of the Members' Council may be held at any time and
place within or without the State of Delaware whenever called by the Manager or
any Member.
(c) Written notice of the time and place of all meetings of the
Members' Council shall be given by the Manager (or any Member) upon ten (10)
day's notice, unless the Manager, in its sole discretion, determines that a
lesser period of notice is appropriate.
(d) Any member of the Members' Council may participate in a meeting
thereof by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other.
5.4 Resignation Of Manager, Officers And Members Of Members' Council;
Removal of Manager. Any Manager, Officer or member of the Members' Council may
resign at any time by giving written notice to each of the Members. The Manager
may be removed, with or without cause, upon the written direction of a Majority
in Interest of the Members.
5.5 Determination By The Manager. All matters concerning allocations,
distributions and tax elections (except as may otherwise be required by the
income tax laws) and accounting procedures not expressly and specifically
provided for by the terms of this Agreement
6.
shall be determined in good faith by the Manager. Such determination shall be
final and conclusive as to all of the Members.
5.6 Restrictions On The Members. Members other than the Manager shall not
have any power or authority to act for or on behalf of the Company.
5.7 Manager's And Officers' Standard Of Care. In discharging duties, the
Manager or an Officer shall be fully protected in relying in good faith upon any
such records and upon such information, opinions, reports or statements by any
other person, as to matters the Manager or any Officer reasonably believes are
within such other person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Company, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits or losses of the Company or any other facts
pertinent to the existence and amount of assets from which distributions to
Members might properly be paid. Unless fraud, deceit or a wrongful taking shall
be proved by a nonappealable court order, judgment, decree or decision, neither
the Manager nor an Officer shall be liable or obligated to the Members for any
mistake of fact or judgment or for the doing of any act or the failure to do any
act by the Manager or any Officer in conducting the business, operations and
affairs of the Company, which may cause or result in any loss or damage to the
Company or its Members. The Manager or an Officer does not, in any way,
guarantee the return of the Member's Capital Commitment or a profit for the
Members from the operations of the Company. Neither the Manager nor an Officer
shall be responsible to any Member because of a loss of investments or a loss in
operations, unless the loss shall have been the result of fraud, deceit or a
wrongful taking by the Manager or an Officer proved as set forth in this Section
5.7. Neither the Manager nor an Officer shall incur liability to the Company or
to any of the Members as a result of engaging in any other business or venture.
5.8 No Exclusive Duty To Company. Neither the Manager nor an Officer shall
be required to manage the Company as such party's sole and exclusive function,
and such party and any Member may have other business interests and may engage
in other activities (including, without limitation, activities in development,
production and marketing of tomatoes) in addition to those relating to the
Company. Neither the Company nor any Member shall have any right, by virtue of
this Agreement, to share or participate in such other investments or activities
of the Manager or other Member or to the income or proceeds derived therefrom.
5.9 Indemnity Of The Manager And Officers.
(a) The Manager (and the directors, officers, employees and agents
of such Manager) or an Officer of the Company (and the heirs, executors,
personal representatives or administrators of such Manager or Officer) who was
or is made a party to, or is involved in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a Manager (or a
person acting on behalf of such Manager) or an Officer of the Company
("Indemnitee"), shall be indemnified and held harmless by the Company to the
fullest extent permitted under Section 18-108 of the Delaware Act, as the same
exists or may hereafter be amended. In addition to the
7.
indemnification conferred in this Article, the Indemnitee shall also be entitled
to have paid directly by the Company the expenses reasonably incurred in
defending any such proceeding against such Indemnitee in advance of its final
disposition, to the fullest extent authorized by applicable law, as the same
exists or may hereafter be amended. The right to indemnification conferred in
this Article shall be a contract right.
(b) The rights and authority conferred in this Article shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the articles of organization or operating
agreement of the Company, agreement, vote of Members, or otherwise.
(c) Any repeal or amendment of this Article by the Members of the
Company shall not adversely affect any right or protection of a Manager or
Officer existing at the time of such repeal or amendment.
ARTICLE VI
CAPITAL ACCOUNTS; CAPITAL COMMITMENT
6.1 Capital Accounts. An individual Capital Account shall be maintained on
the Company's books for each Member.
6.2 Initial Capital Contributions.
(a) Agritope and Sunseeds will each make capital contributions to
the Company up to $100,000. Said contributions shall be made in the form of
invoices submitted to the Company by Agritope and Sunseeds with Agritope and
Sunseeds receiving capital account credits for the amount of such invoices up to
$100,000 each. Each invoice shall represent the cost of Agritope or Sunseeds, as
applicable, of performing its assigned work under the Development and Marketing
Agreement as determined based on generally accepted cost accounting principles,
to include: (i) direct labor, payroll and related costs, including taxes and
benefits, (ii) direct material costs, and (iii) an additional amount, not to
exceed 30% of direct labor costs, for indirect costs (i.e., overhead). Invoices
submitted in excess of $100,000 by either Agritope or Sunseeds shall be paid out
of contributions made by A&W to the extent provided for in subsection (b).
(b) A&W will contribute capital to the Company at the level of
$8,000 per month, with the first contribution due on the signing of this
Agreement, and each subsequent contribution due on the fifteenth day of each
month thereafter (the final contribution being $4,000) up to a total of
$100,000. Invoices submitted in excess of $100,000 by either Agritope or
Sunseeds shall be reimbursed out of cash contributions made by A&W as per the
budget approved by the Members' Council.
6.3 Additional Capital Commitments. Within ten (10) days of a written
notice of the Manager, each Member shall contribute to the Company by wire
transfer or check the
8.
amount set forth opposite such Member's name under the heading "Additional
Capital Commitment" on Exhibit A hereto, which amount shall be credited to each
Member's Capital Account. The Manager may give the notice for the first $100,000
of each Members's Additional Capital Commitment at any time after January 1,
1997 and may give the notice for the second $100,000 of each Member's Additional
Capital Commitment at any time after January 1, 1998.
6.4 Noncontributing Members. The Company will be entitled to enforce the
obligations of each Member to make the contributions to capital specified in
Sections 6.2 and 6.3 above, including the obligations of Agritope and Sunseeds
to perform their assigned work under the Development and Marketing Agreement and
submit invoices therefor, and the Company will have all remedies available at
law or in equity in the event any such contribution is not so made. If any legal
proceedings relating to the failure of a Member to make such a contribution are
commenced, such Member shall pay all costs and expenses incurred by the Company,
including attorneys' fees, in connection with such proceedings, but the payment
of such costs and expenses shall not be treated as a capital contribution to the
Company. Without limiting the foregoing remedies, if a Member fails to make a
Capital Contribution within the time period set forth in Sections 6.2 above,
then, at the election of a Majority in Interest of the other Members, the
Company Percentage of the defaulting Member shall be reduced to zero (0) and the
Company Percentages of the non-defaulting Members shall be increased by an equal
amount and in proportion to their Company Percentages prior to the default. In
addition, a defaulting Member whose Company Percentage has been so reduced to
zero (0) shall no longer be entitled to receive distribution pursuant to this
Agreement, except distribution as provided in Article XI upon dissolution of the
Company.
6.5 Additional Capital Contributions; Right Of First Refusal.
(a) Each Member shall have a right of first refusal to make its pro
rata share of all capital contributions that the Company may, from time to time,
propose to accept after the date of this Agreement from any other Member, or
from a proposed new Member. Each Member's pro rata share of capital
contributions is the Member's Company Percentage immediately prior to such new
capital contribution.
(b) If the Company proposes to accept additional capital
contributions, it shall give each Member written notice of its intention, the
amount of the capital contribution and the Company Percentage that will be
allocated to the contributor(s) in consideration of such capital contribution.
Each other Member shall have twenty (20) days from the giving of such notice to
agree to contribute its pro rata share of such capital contribution upon the
terms and conditions specified in the notice by giving written notice to the
Company and stating therein the amount to be contributed.
(c) If any Member fails to exercise in full the rights of first
refusal within such twenty (20) day period, (i) the Company shall have sixty
(60) days thereafter to accept the capital contributions in respect of which
such Member's rights were not exercised upon terms and conditions no more
favorable to the contributors thereof than specified in the Company's notice to
the Members pursuant to this Section 6.5. If the Company has not accepted the
capital
9.
contributions within such sixty (60) days, the Company shall not thereafter
accept any additional capital contributions, without first offering such
interests to the Member in the manner provided above.
6.6 Allocations To New Members. No Additional Member shall be entitled to
any retroactive allocation of losses, income or expense deductions incurred by
the Company. The Manager may, at its option, at the time an Additional Member is
admitted, close the Company books (as though the Company's tax year had ended)
or make pro rata allocations of loss, income and expense deductions to an
Additional Member for that portion of the Company's tax year in which an
Additional Member was admitted, in accordance with the provisions of Section
706(d) of the Code and the Treasury Regulations promulgated thereunder.
ARTICLE VII
ALLOCATIONS
7.1 Allocation Of Company Income Or Loss. Subject to the "Qualified Income
Offset" provisions set forth in Exhibit B, Company Income or Loss for each
Accounting Period shall be allocated one hundred percent (100%) to the Capital
Accounts of the Members in proportion to their respective Company Percentages.
7.2 Income Tax Allocations. Except as otherwise required by the Code and
the rules and Treasury Regulations promulgated thereunder, a Member's
distributive share of Company income, gain, loss, deduction, or credit for
income tax purposes shall be the same as is entered in the Member's Capital
Account pursuant to this Agreement.
ARTICLE VIII
FEES AND EXPENSES
8.1 Management Compensation. The Manager shall be entitled to compensation
on the basis of its reasonable costs for all management services it provides to
the Company as Manager, as approved by a Majority in Interest of the Members.
ARTICLE IX
DISTRIBUTIONS TO AND WITHDRAWALS BY MEMBERS
9.1 Interest. No interest shall be paid to any Member on account of its
interest in, or Capital Commitment to, the Company.
9.2 Withdrawals By Members. Except as provided herein, no Member may
withdraw any amount from the Company without the consent of all of the other
Members, except upon dissolution of the Company.
10.
9.3 Distributions. At the end of each Fiscal Year, each Member shall
promptly (and in no event later than ninety (90) days after the end of each
Fiscal Year) be paid in cash, fifty percent (50%) of the Company's taxable
income allocable to such Member for the Fiscal Year then ended; provided,
however, the foregoing percentage can be changed by the Manager with the consent
of a Majority in Interest of the Members. In addition to the foregoing
distributions, the Company may ratably distribute cash, securities and other
assets to each of the Members at such times and on such terms and conditions as
the Manager shall deem appropriate if the Manager determines that such assets
are not needed for use (or retained for reasonable reserves) in the business of
the Company. Any such distributions shall be distributed to the Members pro rata
in accordance with Company Percentages, but in no event shall exceed the
cumulative undistributed net income from operations. A Member's right to
participate in distributions under this Section 9.3 shall be restricted to the
extent provided for in Sections 6.4 and 6.5(c).
9.4 Members' Obligation To Repay Or Restore. Except as required by law, no
Member shall be obligated at any time to repay or restore to the Company all or
any part of any distribution made to it from the Company in accordance with the
terms of this Article IX.
ARTICLE X
PROTECTIVE RIGHTS
10.1 Approval By Members. The following will require approval by two-
thirds in interest of the Members.
(a) Any amendment of the Certificate of Formation of the Company or
this Agreement;
(b) The filling of a vacancy in the position of the Manager;
(c) Admission of a new Member;
(d) Approval of the budget on an annual basis, and any modification
to the budget;
(e) Any agreement committing the Company to an obligation in excess
of $10,000;
(f) Any single expenditure or related expenditures in excess of
$5,000;
(g) Creation of any lien or encumbrance on the assets of the
Company;
(h) An alteration of the primary purpose of the Company;
(i) A vote to dissolve the Company;
11.
(j) The sale, exchange or other disposition of all, or substantially
all, of the Company's assets as part of a single transaction or plan;
(k) The merger of the Company with another limited liability
company, a limited partnership, a general partnership or other entity;
(l) Determination of transfer prices or royalties to be paid to the
Company; and
(m) Approval of growers.
10.2 Approval By Other Members.
(a) A transaction between the Company and any Member, or any party
related to that Member, will require approval of a Majority in Interest of other
Members; and
(b) A decision to compromise the obligation of a Member to return
money or property paid or distributed unlawfully will require approval of a
Majority in Interest of other Members.
ARTICLE XI
DISSOLUTION OF COMPANY
11.1 Early Termination Of The Company. The Company shall dissolve and the
affairs of the Company shall be wound up prior to the term provided in Section
3.1
(a) one hundred eighty (180) days following the death, dissolution,
insanity, retirement, resignation, bankruptcy or expulsion of any Member or the
occurrence of any other event which terminates the continued membership of a
Member, unless two-thirds in interest of the remaining Members, within ninety
(90) days of such event, agree to continue the Company;
(b) upon the vote or written consent of all the Members; or
(c) upon the entry of a decree of judicial dissolution under Section
18-802 of the Delaware Act;
11.2 Dissolution Procedures. Upon dissolution of the Company at the
expiration of the Company term or as set forth in Section 11.1:
(a) The affairs of the Company shall be wound up and terminated
under the direction of the Manager or the remaining Members in event of the
withdrawal of the Manager. All matters relating to the dissolution and
liquidation of the Company shall be determined by the Manager, or the remaining
Members, as the case may be.
12.
(b) The proceeds of liquidation shall be distributed by the Company
in payment of its liabilities in the following order:
(i) to creditors, other than Members, in the order of priority
established by law;
(ii) to Members in repayment of loans made to the Company; and
(iii) to all the Members in accordance with the positive balances in their
Capital Accounts and if any Member's Capital Account has a deficit balance such
Member shall not be required to contribute capital to the Company with respect
to such deficit balance.
ARTICLE XII
REPORTS AND FINANCIAL ACCOUNTING
12.1 Financial Records. The books of the Company shall be kept in
accordance with the terms of this Agreement and otherwise in accordance with
generally accepted accounting principles. The records and books of account of
the Company shall be kept at the principal place of business of the Company.
12.2 Annual Reports.
(a) The Company shall transmit to each Member and to each person (or
such Member's or person's legal representative) who was a Member during any part
of the Fiscal Year in question within ninety (90) days after the end of each
Fiscal Year of the Company the following: (1) a balance sheet for the Company as
of the close of the Fiscal Year and a profit and loss statement for the Fiscal
Year then ended, all in reasonable detail; and (2) a report setting forth the
Capital Accounts of each Member and a description of the manner of their
calculation.
(b) The Company shall also transmit within such ninety (90) day
period to each Member then a member of the Company and to each person (or such
Member's or person's legal representative) who was a Member during any part of
the Fiscal Year in question a Schedule K-1 showing such Member's taxable income
from the Company for such Fiscal Year.
(c) The Manager will be responsible to prepare such reports, at the
expense of the Company.
12.3 Tax Matters Member. The Manager shall be the Company's tax matters
member under the Code and under any comparable provision of state law (the "Tax
Matters Member"). A Majority in Interest of the Members may remove, with or
without cause, the Tax Matters Member, and may appoint a new Tax Matters Member.
The Tax Matters Member shall have the same rights and obligations as the Manager
pursuant to Sections 5.7, 5.8 and 5.9 hereof.
13.
12.4 Inspection. Each Member will have the right, at its own expense, to
inspect the books and records of the Company during reasonable business hours at
any time, provided that inspections in excess of once per fiscal year will be at
the inspecting Member's expense.
12.5 Audit. The Manager will arrange, at the Company's expense, for an
audit of the books of the Company as a Majority in Interest of the Members shall
instruct the Manager in writing, and with such accounting firm as a Majority in
Interest of the Members shall approve in writing.
ARTICLE XIII
AMENDMENT
13.1 Amendment. This Agreement may be amended by two-thirds in interest of
the Members, provided that, except as provided in Section 6.3 (1) any reduction
of a Member's Company Percentage, except in connection with the contribution of
additional capital by one or more Members or addition of a new Member, (2) any
increase in the Capital Commitment of any Member or other increase in the
liabilities, duties, obligations or responsibility of any member, (3) any
modification to the allocation provisions of this Agreement or (4) any reduction
of a Member's Capital Account may only be made with the consent of such Member.
ARTICLE XIV
OTHER PROVISIONS
14.1 Loans. Subject to Section 10.2 of this Agreement, Members may make
loans to the Company upon such terms and conditions as the Manager may
prescribe.
14.2 Notice. All notices given hereunder shall be in writing. Any notice
herein required to be given to the Company by any of the Members shall be deemed
to have been given when delivered by hand or upon transmission by telefax or
receipt by U.S. Mail or upon confirmed delivery by commercial air courier at the
address set forth in Section 2.3. Any written notice herein required to be given
to a Member shall be deemed to have been given when delivered by hand or upon
transmission by telefax or receipt by U.S. mail or upon confirmed delivery by
commercial air courier at such Member's address set forth on the signature page
hereof, or such other address as may subsequently be recorded in the records of
the Company.
14.3 Counterparts. This Agreement may be executed in more than one
counterpart with the same effect as if the Members executing the several
counterparts had all executed one counterpart.
14.4 Binding Agreement. This Agreement shall be binding on the assignees
and legal successors of the Members.
14.
14.5 Entire Agreement; Captions. This Agreement constitutes the entire
agreement of the parties and supersedes all prior written and verbal agreements
among the Members with respect to the Company. Descriptive titles are used
herein for convenience only and shall not be considered in the interpretation of
this Agreement.
14.6 Governing Law. This Agreement, and the application and interpretation
hereof, shall be governed exclusively by the terms of the Delaware Limited
Liability Company Act.
14.7 Waiver Of Action For Partition. Each Member irrevocably waives during
the term of the Company any right that it may have to maintain any action for
partition with respect to the property of the Company.
14.8 Execution Of Additional Instruments. Each Member hereby agrees to
execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply with
any laws, rules or regulations.
14.9 Waivers. The failure of any party to seek redress for violation of or
to insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
14.10 Rights And Remedies Cumulative. The rights and remedies provided by
this Agreement are cumulative, and the use of any one right or remedy by any
party shall not preclude or waive the right to use any or all other remedies.
Such rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
14.11 Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid, illegal or unenforceable
to any extent, the remainder of this Agreement and the application thereof shall
not be affected and shall be enforceable to the fullest extent permitted by law.
14.12 Heirs, Successors And Assigns. Each and all of the covenants, terms,
provisions and agreements herein contained shall be binding upon and inure to
the benefit of the parties hereto and, to the extent permitted by the Agreement,
their respective heirs, legal representatives, successors and assigns.
15.
14.13 Creditors. None of the provisions of this Agreement shall be for the
benefit of or enforceable by any creditor of the Company.
In Witness Whereof, the parties hereto have executed this Agreement as of
the date first above written.
MEMBERS:
AGRITOPE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President/CEO
Address: ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
SUNSEEDS COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President/CEO
Address: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇▇▇ SALES COMPANY, INC.
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President/CEO
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Exhibit A
SCHEDULE OF MEMBERS
Name Initial Additional
and Capital Capital Company
Address Contribution Commitment* Percentage
Agritope, Inc. $100,000 $200,000 33 1/3%
Sunseeds Company $100,000 $200,000 33 1/3%
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ $100,000 $200,000 33 1/3%
-------- -------- -------
Total $300,000 $600,000 100%
* Exclusive of initial capital contribution
Exhibit B
CERTAIN DEFINITIONS AND ALLOCATION PROVISIONS
Adjusted Asset Value. The Adjusted Asset Value with respect to any Company
asset shall be the asset's adjusted basis for federal income tax purposes,
except as follows:
(i) The initial Adjusted Asset Value of any asset contributed by a Member
to the Company shall be the gross fair market value of such asset at the time of
contribution, as determined by the contributing Member and the Company.
(ii) In the discretion of the Manager, the Adjusted Asset Values of all
Company assets may be adjusted to equal their respective gross fair market
values and the resulting unrecognized Company Income or Loss allocated to the
Capital Accounts of the Members, as of the following times: (i) the acquisition
of an additional interest in the Company by any new or existing Member in
exchange for more than a de minimis capital contribution; and (ii) the
distribution by the Company to a Member of more than a de minimis amount of
Company assets, unless all Members receive simultaneous distributions of either
undivided interests in the distributed property or identical Company assets in
proportion to their interests in Company distributions as provided in Sections
9.3 and 11.2.
(iii) The Adjusted Asset Values of all Company assets shall be adjusted to
equal their respective gross fair market values and the resulting unrecognized
Company Income or Loss allocated to the Capital Accounts of the Members, as of
the following times: (i) the termination of the Company for federal income tax
purposes pursuant to Code Section 708(b)(1)(B); and (ii) the termination of the
Company, either by expiration of the Company's term or in accordance with
Section 10.1.
Company Income or Loss. Company Income or Loss shall be an amount computed
for each Accounting Period as of the last day thereof that is equal to the
Company's taxable income or loss for such Accounting Period, determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) of the Code shall be included in taxable income or loss),
with the following adjustments:
(i) Any income of the Company that is exempt from federal income tax and
not otherwise taken into account in computing Company Income or Loss pursuant to
this paragraph shall be added to such taxable income or loss;
(ii) Any expenditures of the Company described in Section 705(a)(2)(B) of
the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into
account in computing Company Income or Loss pursuant to this paragraph shall be
subtracted from such taxable income or loss.
B-1.
(iii) In the event the Adjusted Asset Value of any Company asset is
adjusted to clause (ii) or (iii) of this definition of Adjusted Asset Value, the
amount of such adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Company Income or Loss.
(iv) Gain or loss resulting from any disposition property with respect to
which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Adjusted Asset Value of the property disposed of;
and
(v) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such Accounting Period.
Depreciation. Depreciation means, for each Accounting Period, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such Accounting Period, except that if
the Adjusted Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such Accounting Period, Depreciation
shall be an amount which bears the same ratio to such beginning Adjusted Asset
Value as the federal income tax depreciation, amortization, or other cost
recovery deduction for such Accounting Period bears to such beginning adjusted
tax basis; provided, however, that if the adjusted basis for federal income tax
purposes of an asset at the beginning of such Accounting Period is zero,
Depreciation shall be determined with reference to such beginning Adjusted Asset
Value using any reasonable method selected by the Manager.
Qualified Income Offset. The allocations provided for in Article VII shall
be subject to the following exceptions:
(i) Any loss or expense otherwise allocable to a Member that exceeds the
balance in such Member's Capital Account shall instead be allocated first to all
Members who have positive balances in their Capital Accounts in proportion to
such positive balances, and when all Members' Capital Accounts have been reduced
to zero (0), then to all Members in proportion to Company Percentages.
(ii) In the event any Member unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(4) through (d)(6), that causes the balance in such Member's
Capital Account to be reduced below zero (0), items of Company income and gain
shall be specially allocated to such Member in an amount and manner sufficient
to eliminate the deficit balance in its Capital Account created by such
adjustments, allocations, or distributions as quickly as possible.
(iii) For purposes of the foregoing, the balance in a Member's Capital
Account shall take into account the adjustments provided in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(4) through (d)(6).
B-2.
(iv) Any special allocations of items of profit, income, gain, loss or
expense pursuant to subparagraphs (i) and (ii) shall be taken into account in
computing subsequent allocations, so that the net amount of any items so
allocated and the profit, gain, loss, income, expense, and all other items
allocated to each Member shall, to the extent possible, be equal to the net
amount that would have been allocated to each such Member if such special
allocations pursuant to subparagraphs (i) and (ii) had not occurred.
B-3.
DEVELOPMENT AND MARKETING AGREEMENT
THIS AGREEMENT ("Agreement") between SUPERIOR TOMATO ASSOCIATES, L.L.C., a
Delaware limited liability company ("STA"), AGRITOPE, INC., a Delaware
corporation ("Agritope"), SUNSEEDS COMPANY, a _______________ corporation
("Sunseeds"), and ▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇▇▇ SALES COMPANY, INC., a _______________
corporation ("A&W") is effective as of the 19th day of February, 1996
("Effective Date").
1. BACKGROUND.
1.1 Concurrently with this Agreement, Agritope, Sunseeds and A&W are
entering into an Operating Agreement of even date (the "Operating Agreement")
for Superior Tomato Associates, L.L.C.
1.2 The parties desire to combine Sunseeds' tomato seed genetics and
know-how with Agritope's SAMase technology and know-how and A&W's growing,
packing and distribution know-how to produce and commercialize in North America
economically superior tomatoes for the fresh market; the product shall be fresh
market cherry, roma and vine-ripened large fruited tomato varieties using seed
developed by STA.
2. DEFINITION OF TERMS.
The words appearing in capitalized form throughout this Agreement shall have
the meanings assigned to them in this Section 2.
Affiliate means, for the company, an entity controlling, controlled by, or
under common control with such company. "Control" for the purposes of this
definition shall mean ownership of fifty percent (50%) or more of voting
securities.
Agritope Know-How means unpatented inventions, data, processes,
compositions, techniques and other technical information proprietary to
Agritope, which is solely owned by Agritope or which Agritope has the right to
control the use of, relating to methods for ethylene regulation in the Field.
Agritope Licensed Know-How means all Agritope Know-How in existence as of
the Effective Date or created or acquired during the term of the Cooperative
Development Work.
Agritope Licensed Patents means all Agritope Patents in existence as of the
Effective Date of this Agreement, or claiming an invention conceived or
discovery made, or which are acquired, during the term of the Cooperative
Development Work.
Agritope Patents means all those United States and foreign patent
applications and patents (a) listed on Schedule B to this Agreement to the
extent of claims reading on methods for regulation of ethylene production, (b)
all United States and foreign patent applications and
1.
patents, including continuations and divisions, claiming an invention conceived
or discovery made (including any discovery or breeding of a Novel Variety)
solely by employees and/or agents of Agritope pursuant to the Cooperative
Development Work, that is necessary or useful to apply inventions in clause (a)
to the Field, and (c) any reissues, re-examinations and foreign counterparts of
the foregoing. As used in this definition, the word "patent" includes a
certificate issued under the U.S. Plant Protection Act (and foreign counterparts
thereof) and the words "patent application" includes an application for such
certificate.
Applicable Royalty Percentage for a particular variety of Product means
the royalty percentage established pursuant to Section 6.1 of this Agreement as
a function of the Savings Per Box for such variety of Product that is determined
pursuant to Section 3.2 of this Agreement.
Approved Grower means a grower approved pursuant to Section 10.1 of the
Operating Agreement.
Box means, for any variety of tomatoes, a box of a size in which such
variety of tomatoes is most customarily packed.
Comparison Tomato has the meaning set forth in Section 3.2.
Cooperative Development Work means the Cooperative Development Work
described in Section 3 of this Agreement.
Cost of Goods for a product means the full cost of producing or acquiring
the product, as determined by generally accepted cost accounting procedures.
Cost of Goods shall not include general corporate allocations or other
allocations which are not directly related to production of the item and shall
not include amortization of development expenditures. In the event any item is
acquired by a party from an Affiliate of such party, "cost of manufacturing or
acquiring" shall be deemed to mean such Affiliate's cost of manufacturing or
acquiring.
The Field means seeds and fruit for fresh market cherry, roma and
vine-ripened large fruited tomato varieties, which seeds and fruit contain
recombinant genetic material that regulates production of ethylene.
Joint Patents means all United States and foreign patent applications and
patents, including continuations and divisions, claiming an invention conceived
or discovery made (including any discovery or breeding of a Novel Variety)
jointly by employees and/or agents of both Agritope and Sunseeds, including any
reissues, re-examinations and all foreign counterparts thereof. Ownership of an
invention shall conclusively be considered "joint" when one or more employees or
agents from Agritope and one or more employees or agents from Sunseeds must be
indicated as co-inventors or joint breeders under United States laws on the
patent application. As used in this definition, the word "patent" includes a
certificate issued under the U.S. Plant Protection Act (and foreign counterparts
thereof) and the words "patent application" includes an application for such
certificate.
2.
Net Sales means the gross invoice price of each variety of Product sold by
A&W or its agents, on A&W's own behalf or on behalf of any growers, less the
following items, but only insofar as such items are separately invoiced and
included in the gross selling prices: (i) customs duties, import, export,
excise, and sales taxes directly imposed with reference to particular sales;
(ii) costs of transportation; and (iii) credit for returns of defective
Products. In the event of any transfer of Product in other than a bona fide
arm's-length transaction exclusively for money, or any transfer of Product which
otherwise does not result in customary sales revenue, such transfer shall be
(unless the parties agree otherwise) deemed to constitute a sale at the then
current average selling price for the Product.
Novel Variety shall mean "novel variety", as such term is defined in the
U.S. Plant Protection Act (7 U.S.C. Section 2541), as the same may be amended
from time to time.
Product means any product in the Field developed through the Cooperative
Development Work under this Agreement.
Project means the Cooperative Development Work performed by the Parties to
develop, obtain regulatory approval and market a particular variety within the
Field.
Regulatory Approval means (1) in the United States, deregulation from the
U.S.D.A. (or successor agency) and completion of food safety consultations with
the FDA (or successor agency) for production and sales of the Product, or (2)
outside of the United States, analogous order(s) by non-U.S. governmental
agencies which require regulatory approval prior to production and sales of a
Product in such non-U.S. country.
Savings Per Box has the meaning set forth in Section 3.2.
Sharing Payment means any payment provided for in Section 6 hereof.
Sunseeds Know-How means unpatented inventions, data, processes,
compositions, techniques and other technical information proprietary to
Sunseeds, and biological material, which is solely owned by Sunseeds or which
Sunseeds has the right to control the use of, relating to use of tomato
varieties potentially applicable to the Field, including without limitation
proprietary germplasm.
Sunseeds Licensed Know-How means all Sunseeds Know-How in existence as of
the Effective Date or created or acquired during the term of the Cooperative
Development Work.
Sunseeds Licensed Patents means all Sunseeds Patents in existence as of
the effective date of this Agreement, or claiming an invention created, or
discovery made, or which are acquired, during the term of the Cooperative
Development Work.
Sunseeds Patents means all those United States and foreign patent
applications and patents (a) listed on Schedule C to this Agreement, (b) all
United States and foreign patent applications and patents, including
continuations and divisions, claiming an invention conceived
3.
or discovery made (including any discovery or breeding of a Novel Variety)
solely by employees and/or agents of Sunseeds pursuant to the Cooperative
Development Work that is necessary or useful to apply the inventions in clause
(a), and any other matter included within the definition of Sunseeds Patents, to
the Field, and (c) any reissues, re-examinations and foreign counterparts of the
foregoing. Sunseeds Patents also includes Sunseeds' biological material,
including proprietary germplasm, to the extent it is covered by a patent or
patent application. Without limiting the foregoing, Sunseeds Patents shall
include all patent applications and patents on those varieties of tomatoes that
may become the subject of Projects under this Agreement. As used in this
definition, the word "patent" includes a certificate issued under the U.S. Plant
Protection Act (and foreign counterparts thereof) and the words "patent
application" includes an application for such certificate.
Territory means the United States and Canada.
3. COOPERATIVE DEVELOPMENT WORK.
3.1 Period; Objective. From the Effective Date, Agritope, Sunseeds and A&W
shall work together to develop and obtain any required Regulatory Approval for
Products for STA. STA shall from time-to-time approve specific Projects for
different varieties of Product within the Field. In connection with such
efforts, Sunseeds will furnish to Agritope tomato germplasm for the particular
varieties to be developed in the Projects. Agritope will implant its genetic
material into such germplasm. Sunseeds will make the foundation seed and hybrid
seed. Sunseeds will conduct the breeding activities. Agritope and A&W will
participate in the breeding activities, including selection of hybrid seed from
foundation seed. A&W will supply the production acreage and distribution
infrastructure for the development and testing of the Product.
3.2 Production Testing; Agreement On Cost Savings. At such time as Agritope
and Sunseeds conclude that a particular variety of Product is ready for
production testing, they will so notify A&W. Using seeds provided by Sunseeds,
A&W will then provide approximately 3-5 acres for production testing of such
variety (covering as broad a range of growers and as many locations as possible)
and will grow, or cause Approved Growers to grow, fruit under conditions
resembling as nearly as possible the conditions of large scale commercial
growing. STA will keep detailed records of the cost of growing, picking and
packing such fruit, of the quantity produced, and of shrinkage, and will furnish
such records to Agritope and Sunseeds. A&W will cooperate, and will obtain the
cooperation of each Approved Grower, to furnish to STA information that STA may
reasonably require for such record keeping. A&W will also grow, or cause
Approved Growers to grow, and furnish to STA the same information concerning the
cost of growing, picking and packing, and shrinkage of, an equivalent quantity
of fruit of similar variety using seeds of the type A&W is then using most
commonly in its commercial operations (the "Comparison Tomato"). Based upon such
information (and other industry information as is available concerning growing,
picking and packing of such tomato varieties) STA will determine in good faith
the dollar amount per Box that may be reasonably expected to be saved by use of
such Product, instead of the Comparison Tomato, in large scale commercial
growing, picking and packing. Such dollar amount per Box, will be referred to in
this Agreement as the
4.
"Savings Per Box." STA will inform Agritope, Sunseeds and A&W of such
determination and provide them with the data supporting such determination.
3.3 Exchange Of Information. During the term of the Cooperative
Development Work, Agritope and Sunseeds will exchange with each other and share
with STA all material information developed pursuant to the Cooperative
Development Work, excluding the exchange of Agritope Know-How and information
concerning Agritope Patents and Sunseeds Know-How and information concerning
Sunseeds Patents, relating to the Field. Agritope and Sunseeds will also furnish
to A&W all information concerning the Product that is pertinent to its
production testing. A&W will share with STA and the other parties all material
information concerning the Product developed by A&W in the course of growing,
picking and packing the Product, including quantity and cost.
3.4 Funding.
(a) STA shall fund the Cooperative Development Work for each Project
on a full cost-reimbursement basis in accordance with budgets pre-approved by
STA. STA will have no obligations to fund any expenditures that are not within
such approved budgets. STA will not reimburse parties for any costs incurred
prior to the date of this Agreement.
(b) Each party shall maintain detailed records which accurately
identify costs and expenses incurred and paid in connection with the Cooperative
Development Work for each specific Project. Each party shall submit this
information to STA as of the last day of each month (or such alternative dates
as STA may establish) for the preceding month and shall submit to STA on January
15 and July 15 of each year an estimate of expenses to be incurred during the
current six months.
4. PRODUCTION AND SUPPLY OF SEEDS.
4.1 Sunseeds Responsibilities. Sunseeds will produce and store seeds for
Product and ship such seeds on behalf of and at the direction of STA. STA will
remit to Sunseeds Sunseeds' Cost of Goods for such seeds from STA's proceeds of
sale of such seeds. Sunseeds shall at all times use its best efforts to supply
STA's demand for seeds for Product.
4.2 Seed Allocations.
(a) A&W will have the first right each season to obtain its
requirements of seeds for Product. A&W will provide to STA A&W's forecasts for
seed six months prior to anticipated shipment, and firm orders for seed (which
will not deviate from forecast by more than twenty percent (20%)) 60 days prior
to shipment, which orders must be placed by June 1 and December 1 of each year.
To the extent firm orders are not received by such dates, STA may allocate
available seeds to third parties. A&W will pay to STA, no later than thirty (30)
days after invoice, STA's Cost of Goods for such seeds, plus fifteen percent
(15%) of such Cost of Goods.
5.
(b) If seeds remain in excess of A&W's requirements, STA may supply
such seeds to third party Approved Growers on the such terms as STA deems
advisable.
4.3 Seed Specifications. Sunseeds shall supply seed for Product that shall
meet the specifications for such seed as approved in writing by STA.
4.4 Failure Of Sunseeds To Meet STA Requirements. To the extent that
Sunseeds cannot meet STA's requirements for seed for Product, STA shall be free
to obtain such seeds from a third party or parties. Sunseeds agrees to provide
the third party that STA selects with the necessary information and Sunseeds
Know-How to allow the third party to produce the seeds. As a condition to the
disclosure to the third party, the third party will execute a non-disclosure
agreement substantially in the form of Exhibit A of this Agreement.
4.5 Restricted Rights; Labels. A&W will have the right to use the seed
furnished under this Agreement solely to produce fruit in accordance with the
terms of this Agreement and shall require Approved Growers not to propagate the
seed or use it for other purposes. Sunseeds and A&W shall insure that all seeds
provided under Section 4 and under Section 3.2 shall be provided under a label
containing either the words "Unauthorized Propagation Prohibited" or
"Unauthorized Seed Multiplication Prohibited" and, after a certificate issues
under the U.S. Plant Protection Act, words such as "U.S. Protected Variety".
Seeds transferred outside the United States will be transferred under comparable
labels appropriate in the country to which the seeds are transferred.
5. MARKETING AND DISTRIBUTION RIGHTS.
5.1 Commercialization. A&W shall use best efforts to arrange for Approved
Growers to grow fresh tomato Product, and to market and sell fresh tomato
Product in the Territory. STA will not fund or reimburse any growing, picking,
packing or distribution costs for production or sale of Product (including those
expenses incurred pursuant to Section 3.2). A&W will market and sell all tomato
Product under a trade name and ▇▇▇▇ to be determined by STA, which trade name
and ▇▇▇▇ will be owned solely by STA.
5.2 Reserved Right To Compete. Each party expressly reserves the right to
research, develop and market products (expressly including tomato products)
which compete indirectly or directly with the Products developed and marketed
under this Agreement.
6. SHARING OF SAVINGS AND PREMIUM.
6.1 Applicable Royalty Percentage. STA, in consultation with the other
parties to this Agreement, and with the concurrence of at least two of the three
other parties, will establish an Applicable Royalty Percentage for each variety
of Product based on the Savings Per Box established pursuant to Section 3.2. In
conjunction with its commercialization efforts, A&W will require each Approved
Grower to agree in writing to pay to STA, the Applicable Royalty Percentage. Any
exceptions to the standard Applicable Royalty Percentage must be approved in
writing by STA. In the event that A&W desires to act as an Approved Grower, the
6.
Applicable Royalty Percentage for A&W will be the Applicable Royalty Percentage
established by STA or such other Applicable Royalty Percentage as STA and A&W
shall negotiate. Notwithstanding any other provision hereof, no Approved Grower
(including A&W) will receive any seed for Product, until such Approved Grower
has entered into an agreement in form and substance satisfactory to STA
committing to pay the Applicable Royalty Percentage.
6.2 Sharing Payments. In consideration of the Cooperative Development Work
to be undertaken and other obligations set forth herein, A&W agrees to pay STA
as follows: No later than thirty (30) days after the first and all subsequent
calendar months following the first sale of Product, A&W shall pay to STA for
each variety of Product an amount equal to the Applicable Royalty Percentage
multiplied by Net Sales of such variety of Product shipped in such month by A&W
and by Approved Growers arranged by A&W. The Sharing Payments due and payable
hereunder shall be computed for each calendar month in the currency in which the
sale was made, but shall be definitively discharged by payment to STA in U.S.
dollars converted from such currency using the closing spot exchange rate
between the two currencies quoted in the Wall Street Journal (or, if not
available, such other mutually agreeable financial publication of international
circulation) in effect on the last business day of the calendar quarter to which
the payment relates.
7. PATENTS, KNOW-HOW, LICENSE GRANTS.
7.1 Agritope Sole Ownership. Agritope shall own all Agritope Patents and
Agritope Know-How.
7.2 Sunseeds Sole Ownership. Sunseeds shall own all Sunseeds Patents and
Sunseeds Know-How.
7.3 A&W Sole Ownership. A&W shall own all A&W patents, trademarks and
labels.
7.4 Joint Patents; Rights In Product.
(a) STA shall own, and is hereby assigned, all Joint Patents on
inventions created or discoveries made in the Cooperative Development Work.
(b) Within the Field STA shall use any Joint Patents solely for the
development and sale of Products pursuant to this Agreement.
(c) Whether or not any Product qualifies as a Joint Patent, the
Product shall be owned by STA, and each party hereby assigns all rights in the
Product to STA.
7.5 Agritope License To STA. Subject to the terms and conditions of this
Agreement, for Product whose production or sale is covered by a claim of an
Agritope Licensed Patent, or which use Agritope Licensed Know-How, Agritope
hereby grants STA a non-exclusive, paid-up, royalty free (except as provided
herein), license, with the right to
7.
sublicense with the prior written approval of Agritope (not to be unreasonably
withheld), under Agritope Licensed Patents and Agritope Licensed Know-How to
produce or have produced and use, sell or have sold such Products, in the
Territory.
7.6 Sunseeds License To STA. Subject to the terms and conditions of this
Agreement, for Product whose production or sale is covered by a claim of a
Sunseeds Licensed Patent, or which use Sunseeds Licensed Know-How, Sunseeds
hereby grants STA a non-exclusive, paid-up, royalty free (except as provided
herein), license, with the right to sublicense with the prior written approval
of Sunseeds (not to be unreasonably withheld), under Sunseeds Licensed Patents
and Sunseeds Licensed Know-How to produce or have produced and use, sell or have
sold such Products, in the Territory.
7.7 Notice Of Sole Rights. After the Effective Date of this Agreement, a
party asserting sole ownership of any patent rights or know-how in the Field
developed pursuant to the Cooperative Development Work shall provide reasonable
notice to STA of its intention to seek patent protection or to assert
proprietary interest in such Know-How. STA shall have the right to a reasonable
opportunity to review and comment on such assertions prior to patent
applications being filed. Any dispute among the parties to this Agreement
concerning such assertion shall be resolved by arbitration pursuant to Section
17.8 hereof.
7.8 Regulatory Files. STA, Agritope and Sunseeds shall each have full
access to all materials filed and correspondence with the U.S.D.A., FDA and
other regulatory agencies in connection with the Cooperative Development Work
and each Product, and shall be entitled to use and rely on such materials with
respect to any regulatory approvals for a product sought by either, whether or
not such product relates to this Agreement.
7.9 Cooperation In Filings, Prosecution and Enforcement. Each party agrees
to take such action and execute such documents as shall be necessary or
appropriate for the filing of notices, certificates and acknowledgments of the
licenses granted and assignments made hereunder, for the prosecution of all
Joint Patents, and for the enforcement against third parties of all intellectual
property rights of STA arising under this Agreement. Each party hereby grants to
STA an irrevocable power-of-attorney coupled with an interest to undertake such
activities and to execute and file all instruments necessary or appropriate in
connection with such activities.
8. PROSECUTION OF PATENT RIGHTS.
8.1 Agritope Patents. Agritope shall have the right, but no obligation, to
timely prepare, file, prosecute and maintain, under its exclusive control and at
its expense, Agritope Patents.
8.2 Sunseeds Patents. Sunseeds shall have the right, but no obligation, to
timely prepare, file, prosecute and maintain, under its exclusive control and at
its expense, Sunseeds patents.
8.
8.3 Joint Patents. STA shall employ counsel acceptable to Agritope and
Sunseeds for the purpose of timely preparing, filing, prosecuting and
maintaining Joint Patents. The reasonable expenses of preparing, filing,
prosecuting and maintaining corresponding Joint Patents shall be borne by STA.
8.4 Prior Art; Review And Comment. Agritope and Sunseeds shall each
cooperate with the other to ensure that all prior art that is pertinent to the
examination of a Joint Patent is brought to the attention of the other party.
Each of the parties shall have the right to review and comment on substantive
documents prepared in connection with the preparation, filing, prosecution and
maintenance of the Joint Patents prior to the filing of such papers; however,
such review and comment shall be performed expeditiously so as not to negatively
affect patent rights.
9. TRADEMARKS.
No party to this Agreement shall have the right to use any trademark of
any other party without such party's prior written consent.
10. CONFIDENTIAL INFORMATION.
10.1 Confidentiality Agreement. The use and disclosure of proprietary
information shall be governed by the attached Schedule A Non-Disclosure
Agreement. The Schedule A Non-Disclosure Agreement shall survive termination of
this Agreement.
10.2 Use Of Consultants. The parties contemplate that from time to time
during the term of this Agreement third party technical consultants may be
employed by either party in connection with the development of Products. The
parties agree that information designated as confidential may be disclosed to
such consultants provided that the other party is given reasonable notice of the
circumstances and nature of the intended disclosure and that the disclosure is
limited to information necessary to enable the technical consultant to provide
technical consulting services. The consultant will be required to sign an
agreement committing the consultant to protect such confidential information.
11. REPORTS.
11.1 Quarterly Sales Reports. Each monthly payment made to STA under
Section 6 shall be accompanied by a full and accurate accounting by A&W. Each
such report shall include at least the following information for each type of
Product as to each country during the month:
(a) The gross invoice price of each variety of Product shipped;
(b) The applicable deductions from such invoice price to yield Net
Sales for each variety of Product shipped; and
9.
(c) Computation of the sharing payment due to STA pursuant to
Section 6.1 of this Agreement.
11.2 Cost Of Goods. Sunseeds will furnish to STA, and STA will furnish
A&W, reports on such party's Cost of Goods for seed Product shipped to such
party.
12. BOOKS AND RECORDS.
12.1 Records. Each party shall keep full and accurate books of account
containing all particulars that may be necessary for the purpose of calculating
all amounts owing to the other parties. Books of account maintained by the
parties shall be kept at their principal place of business. All such reports and
data shall be open for inspection on a confidential basis at all reasonable
times and either Party may conduct at its own expense, once every year during
normal business hours through an independent certified public accountant, an
examination of the accounts contemplated above. If any audit shall show that the
selling party underpaid the amounts due under this Agreement herein as to the
period subject of the audit, then the party which underpaid shall immediately
pay such deficiency with interest thereon in accordance with Section 12.3. If
the underpayment shall exceed five percent (5%) of the amount owed for any
calendar year, the party underpaying shall also reimburse the other for costs
related to such audit.
12.2 Retention. Books and records required to be maintained by the Parties
hereunder shall be retained for at least three (3) years from the date of the
payment to which they pertain.
12.3 Interest. All payments due hereunder that are not paid when due and
payable hereunder shall bear interest at an annual rate equal to 4% (four
percent) above the U.S. dollar reference rate ("prime rate") charged from time
to time by Bank of America N.T. & S.A. from the date due until paid or at such
lower rate as shall be the maximum rate permitted by law.
13. TERM.
This Agreement shall continue so long as any Product is being developed or
marketed under this Agreement, unless terminated earlier pursuant to Section 14.
14. BREACH.
14.1 Material Breach. STA may terminate this Agreement as to any party for
any material breach by such party of this Agreement or the Operating Agreement
thirty (30) days after providing the other party with written details of the
breach if the breach remains uncured at the end of the thirty (30) day notice
period. Any party may terminate its obligations under this Agreement for any
material breach by STA thirty (30) days after providing STA with written details
of the breach if the breach remains uncured at the end of such thirty (30) day
notice period. In the event of any such termination as to a party, except
arising from a material breach by STA, such party shall immediately deliver to
STA all information and work in process developed under the Cooperative
Development Work.
10.
15. REPRESENTATIONS AND INDEMNITIES.
15.1 Agritope Representations. Agritope represents and warrants that as of
the Effective Date:
(a) It has granted no prior license or assignment of rights under
the Agritope Patents in the Field.
(b) There are no foreign or United States administrative, judicial
or Patent and Trademark Office proceedings contesting the inventorship or
ownership of any Agritope Patent that is likely to be embodied or used in a
Product;
(c) Neither the execution and delivery of this Agreement, nor the
performance of the obligations of Agritope hereunder shall result in a
violation, breach or event of default (or any event or condition which with
notice or the passage of time or both would constitute an event of default) of
or with respect to any agreement, mortgage, indenture or order of any court of
competent jurisdiction binding upon Agritope or upon the property of Agritope;
(d) It is party to no contract materially adverse to the obligations
undertaken and rights granted in this Agreement;
(e) It holds a patent to the SAMase gene and has obtained a license
to the binary vector system to be used in developing the Product; it has
consulted with patent counsel concerning the patent rights of third parties and,
to the best of its knowledge, it is free to operate using its technology as
contemplated in this Agreement without infringement of the rights of third
parties. There is no assurance, however, that rights of third parties will not
impinge on such freedom to operate.
EXCEPT AS SET FORTH IN THIS SECTION 15.1, AGRITOPE MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
ANY WARRANTY OF NON-INFRINGEMENT.
15.2 Agritope Indemnification -- Representations And Warranties. Agritope
shall indemnify STA for any losses sustained or expenses incurred by STA as a
result of a breach by Agritope of any of the foregoing representations and
warranties.
15.3 Sunseeds Representations. Sunseeds represents and warrants to STA
that as of the Effective Date:
(a) It has granted no prior license or assignment of rights under
the Sunseeds Patents that would materially impair its ability to develop,
manufacture or sell Products.
(b) There are no foreign or United States administrative, judicial
or Patent and Trademark Office proceedings contesting the inventorship or
ownership of any Sunseeds Patent that is likely to be embodied or used in a
Product.
11.
(c) Neither the execution and delivery of this Agreement, nor the
performance of the obligations of Sunseeds hereunder shall result in a
violation, breach or event of default (or any event or condition which with
notice or the passage of time or both would constitute an event of default) of
or with respect to any agreement, mortgage, indenture, or order of any court of
competent jurisdiction binding upon Sunseeds or upon the property of Sunseeds.
(d) It is party to no contract materially adverse to the obligations
undertaken in this Agreement.
(e) It owns all rights in the tomato varieties and germplasm to be
used in developing the Product; it has consulted with patent counsel concerning
the patent rights of third parties and, to the best of its knowledge, it is free
to operate using its technology as contemplated in this Agreement without
infringement of the rights of third parties. There is no assurance, however,
that rights of third parties will not impinge on such freedom to operate.
EXCEPT AS SET FORTH IN THIS SECTION 15.3, SUNSEEDS MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
ANY WARRANTY OF NON-INFRINGEMENT OF THE RIGHTS OF THIRD PARTIES.
15.4 Sunseeds Indemnification -- Representations And Warranties. Sunseeds
shall indemnify STA for losses sustained or expenses incurred by STA as a result
of a breach by Sunseeds of the foregoing representations and warranties.
15.5 A&W Representations. A&W represents and warrants to STA that as of
the Effective Date:
(a) Neither the execution and delivery of this Agreement, nor the
performance of the obligations of A&W hereunder shall result in a violation,
breach or event of default (or any event or condition which with notice or the
passage of time or both would constitute an event of default) of or with respect
to any agreement, mortgage, indenture, or order of any court of competent
jurisdiction binding upon A&W or upon the property of A&W.
(b) It is party to no contract materially adverse to the obligations
undertaken in this Agreement.
EXCEPT AS SET FORTH IN THIS SECTION 15.5, A&W MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
15.6 A&W Indemnification -- Representations And Warranties. A&W shall
indemnify STA for losses sustained or expenses incurred by STA as a result of a
breach by A&W of the foregoing representations and warranties.
12.
15.7 STA Warranty Disclaimer. STA MAKES NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF NON-INFRINGEMENT OR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
16. INFRINGEMENT; THIRD PARTY LICENSES.
16.1 Defense Of Third Party Infringement Suits. In the event that a third
party shall make any claim or ▇▇▇ any party alleging that the production or sale
of a Product (including, without limitation, seeds), infringes a patent of such
third party, then STA shall have the option to control the defense of such suit.
The parties shall provide reasonable cooperation in the defense of such suit and
furnish all evidence in their control. All attorneys' fees as well as any
judgments, settlements, or damages payable with respect to such claim or suit
shall be the responsibility of STA. Notwithstanding the foregoing, if the claim
or suit alleges that the third party's rights are infringed solely by technology
licensed to STA by one of the three other parties to this Agreement, such party
will indemnify, hold harmless and defend the other two of such parties from and
against any judgments, settlements or damages they may be required to pay with
respect to such suit. The indemnifying party will have the sole right to control
the defense of such claim or suit. No party shall enter into any settlement that
materially affects the other party's rights or interests without such other
party's prior written consent, which consent shall not be unreasonably withheld.
16.2 Suits For Infringement By Others. In the event any party becomes
aware of any actual or threatened infringement in the Field of the Agritope
Licensed Patents or the Agritope Licensed Know-How, or the Sunseeds Licensed
Patents or Sunseeds Licensed Know-How, that party shall promptly notify STA and
STA shall determine the most appropriate action to take. In the event STA does
not take action against such alleged infringer within a reasonable period, not
to exceed one hundred eighty (180) days, the owner of such patent rights or
know-how shall be entitled to take action against the alleged infringer.
16.3 Third Party Licenses. In the event that STA determines that it is
necessary or advisable to obtain a license from a third party with respect to
development, production or sale of Products, Agritope, Sunseeds and A&W will
make equal contributions to the capital of STA to pay the amount of any lump sum
license fee payable to such third party and the Applicable Royalty Percentage
will be increased by the amount of royalty payable to such third party on the
sale of Products.
17. GENERAL.
17.1 Entire Agreement. This Agreement, the Operating Agreement and the
Schedules hereto and thereto contain the entire agreement between the parties
relating to the subject matter hereof and all prior understandings,
representations and warranties between the parties are superseded; provided,
however, that this Agreement does not limit any agreement restricting disclosure
or use of confidential or proprietary information previously entered into
between the parties. None of the terms of this Agreement shall be deemed to be
waived or amended by any
13.
party unless such a waiver or amendment specifically references this Agreement
and is in writing signed by the party to be bound.
17.2 Relationship Of Parties. Each party acknowledges that it is not an
agent of any other party to this Agreement and has no authority to speak for,
represent, or obligate such other party in any way (except in the case of
Agritope, acting in its capacity as Manager of STA). This Agreement does not and
shall not be deemed to create any relationship of a joint venture or a
partnership.
17.3 Severability. The parties do not intend to violate any public policy
or statutory or common law. However, if any sentence, paragraph, clause or
combination of this Agreement is in violation of any law or is found to be
otherwise unenforceable by a court from which there is no appeal, or no appeal
is taken, such sentence, paragraph, clause, or combination of the same shall be
deleted and the remainder of this Agreement shall remain binding, provided that
such deletion does not alter the basic structure of this Agreement. In such
event, the parties shall renegotiate this Agreement in good faith, but should
such negotiations not result in a new agreement with ninety (90) days of the
initiation of such negotiations, then this Agreement may be terminated by any
party by thirty (30) days notice to the other.
17.4 Force Majeure. Any party shall be excused from the performance of its
obligations under this Agreement and shall not be liable for damages to the
other if such performance is prevented by circumstances beyond its effective
control. Such excuse from performance shall continue so long as the condition
responsible for such excuse continues and for a thirty (30) day period
thereafter. For the purposes of this Agreement, circumstances beyond the control
of a party which excuse that party from performance shall include, but shall not
be limited to, acts of God, acts, regulations or laws of any government
including currency controls, war, civil commotion, commandeer, destruction of
facility or materials by fire, earthquake, storm or other casualty, labor
disturbances, judgment or injunction of any court, epidemic, and failure of
public utilities or common carrier.
17.5 Notices. All notices and demands required or permitted to be given or
made pursuant to this Agreement shall be in writing and shall be effective when
personally given or made or when placed in an envelope and deposited in the
United States certified mail postage prepaid, return receipt requested,
addressed as follows:
If to STA: If to Agritope, in care of:
c/o Agritope, Inc. Agritope, Inc.
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer Attention: Chief Executive Officer
with a copy to: with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ Godward ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Godward ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
14.
& ▇▇▇▇▇ & ▇▇▇▇▇
One Maritime Plaza, 20th Floor ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to Sunseeds: If to A&W:
Sunseeds Company ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ Sales Company,
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
or to such other address as to which either party may notify the other.
17.6 Binding. This Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns. This Agreement shall be
assignable: (1) by either party without the consent of the other to any
Affiliate of the party or more of the voting securities); (2) by either party
with the written consent of the other; or (3) by either party without the
consent of the other in connection with the purchase of substantially all the
assets of its business to which this Agreement relates. Any attempted assignment
which does not comply with the terms of this Section shall be void.
17.7 Governing Law. This Agreement is deemed to have been executed in and
shall be governed by and construed according to the laws of the State of
California.
17.8 Arbitration. Any disputes under this Agreement will be resolved by
binding arbitration in San Francisco, California, in accordance with the
commercial arbitration rules of the American Arbitration Association. Full
discovery will be accorded in accordance with the California Code of Civil
Procedure. The parties shall bear equally the costs and fees of the arbitration;
however, the arbitrator shall be authorized to determine whether a party is the
prevailing party, and if so, to award to that prevailing party reimbursement for
its reasonable
15.
attorneys' fees, disbursements (including, for example, expert witness fees and
expenses, photocopy charges, travel expenses, etc.), and costs arising from the
arbitration.
IN WITNESS WHEREOF, this Agreement is signed by duly authorized
representatives of each party as of the Effective Date.
SUPERIOR TOMATO ASSOCIATES, L.L.C. AGRITOPE, INC.
By: Agritope, Inc.
Its Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President/CEO President/CEO
Date: February 19, 1996 Date: February 19, 1996
▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇▇▇ SALES COMPANY,
SUNSEEDS COMPANY INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
President/CEO Pres.
Date: February 21, 1996 Date: February 29, 1996
16.
Exhibit A
NON-DISCLOSURE AGREEMENT
(MUTUAL DISCLOSURE)
This Agreement is incorporated by reference in the Development and
Marketing Agreement by and among, Superior Tomatoes Association, L.L.C. ("STA"),
Agritope, Inc., Sunseeds, Inc. and ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ Sales Company, Inc. to
assure the protection and preservation of the confidential and or proprietary
nature of information to be disclosed or made available to each other in
connection with the activities under such Development and Marketing Agreement
and the business of STA.
Whereas, the parties desire to assure the confidential status of the
information which may be disclosed to each other;
Now Therefore, in reliance upon and in consideration of the following
undertakings, the parties agree as follows:
1. Subject to the limitations set forth in Paragraph 2, all information
disclosed to another party to this Agreement shall be deemed to be "Proprietary
Information." The term "Proprietary Information" shall include trade secrets,
confidential knowledge, data or any other proprietary information. By way of
illustration but not limitation, "Proprietary Information" includes (a)
inventions, trade secrets, ideas, processes, formulas, source and object codes,
data, programs, other works of authorship, compounds, cell lines, know-how,
improvements, discoveries, developments, test results, designs and techniques;
and (b) information regarding plans for research, development, new products,
marketing and selling, business plans, budgets and unpublished financial
statements, licenses, prices and costs, suppliers and customers; and information
regarding the skills and compensation of employees of a party.
2. The term "Proprietary Information" shall not be deemed to include
information which the receiving party can demonstrate by competent written
proof: (i) is now, or hereafter becomes, through no act or failure to act on the
part of the receiving party, generally known or available; (ii) is known by the
receiving party at the time of receiving such information as evidenced by its
records; (iii) is hereafter furnished to the receiving party by a third party,
as a matter of right and without restriction on disclosure; or (iv) is
independently developed by the receiving party without any breach of this
Agreement.
3. Each party shall maintain in trust and confidence and not disclose to
any third party, or use for any purpose other than activities under such
Development and Marketing Agreement and the business of STA, any Proprietary
Information received from the other party. Proprietary Information shall not be
used for any purpose or in any manner that would constitute a violation of any
laws or regulations, including without limitation the export control laws of the
1.
United States. No other rights or licenses to trademarks, inventions,
copyrights, or patents are implied or granted under this Non-Disclosure
Agreement.
4. Proprietary Information supplied shall not be reproduced in any form
except as required to accomplish the intent of this Agreement.
5. The responsibilities of the parties are limited to using their
reasonable and best efforts to protect the Proprietary Information received with
the same degree of care used to protect their own Proprietary Information from
unauthorized use or disclosure. Each party shall advise its employees or agents
who might have access to such Proprietary Information of the confidential nature
thereof. No Proprietary Information shall be disclosed to any officer, employee
or agent of either party who does not have a need for such information.
6. All Proprietary Information (including all copies thereof) shall remain
the property of the disclosing party, and shall be returned to the disclosing
party after the receiving party's need for it has expired, or upon request of
the disclosing party, and in any event, upon completion or termination of this
Agreement.
7. Notwithstanding any other provision of this Agreement, disclosure of
Proprietary Information shall not be precluded to the extent such disclosure is
required to be disclosed by the Receiving Party by judicial action provided that
the receiving party shall immediately notify the disclosing party of any such
action and the disclosing party shall have the opportunity to pursue all
reasonable legal remedies to maintain such information in secret.
8. This Agreement shall continue in full force and effect for so long as
the parties continue to exchange Proprietary Information. The termination of
this Agreement shall not relieve either party of the obligations imposed by this
Agreement with respect to Proprietary Information disclosed prior to the
effective date of such termination, and the provisions of these paragraphs shall
survive the termination of this Agreement.
9. This Agreement shall be governed by the laws of the State of California
as those laws are applied to contracts entered into and to be performed entirely
in California by California residents.
10. This Agreement contains the entire agreement of the parties concerning
use and protection of Proprietary Information and may not be changed, modified,
amended or supplemented except by a written instrument signed by each party.
11. Each party hereby acknowledges and agrees that in the event of any
breach of this Agreement by another party, including, without limitation, the
actual or threatened disclosure of a disclosing party's Proprietary Information
without the prior express written consent of the disclosing party, the
disclosing party will suffer an irreparable injury, such that no remedy at law
will afford it adequate protection against, or appropriate compensation for,
such injury. Accordingly, each party hereby agrees that such other party shall
be entitled to specific
2.
performance of a receiving party's obligations under this Agreement, as well as
such further injunctive relief as may be granted by a court of competent
jurisdiction.
3.
ASSIGNMENT AND ASSUMPTION AGREEMENT
For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ Sales, Co., a
California corporation ("A&W"), hereby confirms the assignment, transfer, and
conveyance to Agritope, Inc., an Oregon corporation ("Agritope"), on February
28, 1997, of its 331/3 percent membership interest and any other interest it may
have in Superior Tomato Associates, L.L.C., a Delaware limited liability company
("STA").
In connection with the assignment of A&W's interest in STA,
Agritope hereby assumes and agrees to perform A&W's obligations, if any, under
the STA Operating Agreement dated February 19, 1996.
IN WITNESS WHEREOF, the undersigned have duly executed this
agreement as of May 27, 1997.
▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇▇▇ SALES, CO.
By: [illegible]
Title: V.P. Operations
AGRITOPE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President