EXHIBIT 10.1
LIMITED LIABILITY COMPANY AGREEMENT
OF
FOODMASTER INTERNATIONAL L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT ("Agreement") is made
and entered into as of this 3rd day of March, 1997 by and between (i) API DAIRY
PARTNERS L.P. ("API I") and AGRIBUSINESS PARTNERS INTERNATIONAL ▇.▇. ▇▇ ("API
II"), both of which are limited partnerships organized and existing under the
laws of the State of Delaware, with their principal offices at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ (API I and API II hereinafter collectively
referred to as "API"), and (ii) DEVELOPED TECHNOLOGY RESOURCE, INC, a Minnesota
corporation organized and existing under the laws of the State of Minnesota with
its principal office at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ (hereinafter referred to as "DTR"), for the purpose of forming
a limited liability company under the laws of the State of Delaware.
WITNESSETH
WHEREAS, API I is a holding company formed to hold dairy
investments made by Agribusiness Partners International, L.P., which is an
investment fund formed for the purpose of investing in agribusiness in the
former Soviet Union and which is guaranteed by the Overseas Private Investment
Corporation ("OPIC") and governed by an OPIC financing agreement;
WHEREAS, API II is an affiliate of API I and has also been
formed for the purpose of investing in agribusiness in the former Soviet Union,
but which is not guaranteed by OPIC;
WHEREAS, DTR owns certain interests in dairy and food related
businesses in the former Soviet Union; and
WHEREAS, API and DTR desire to jointly own, operate and
develop certain dairy and food related businesses in the former Soviet Union.
NOW, THEREFORE, for and in consideration of the premises and
mutual covenants set forth herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. In addition to the other terms defined in
this Agreement, the following terms shall have the respective meanings set forth
below:
(a) "Capital Contribution" means, with respect to any Member, the
amount of capital contributed by such Member to the Company in accordance with
Article 3 hereof.
(b) "Certificate of Formation" means the certificate of formation of
the Company as filed in the Office of the Secretary of State of the State of
Delaware on February 27, 1997, as amended from time to time.
(c) "Current Ratio" means current assets divided by current
liabilities.
(d) "Debt Ratio" means the sum of total current liabilities and long
term debt divided by total assets.
(e) "Dollars" means the lawful currency of the United States of
America.
(f) "GAAP" means generally accepted accounting principles as used in
the United States.
(g) "Interest" means the ownership interest of a Member in the Company
(which shall be considered personal property for all purposes), consisting of
(i) such Member's right to receive profits, losses, allocations, and
distributions, (ii) such Member's right to vote or grant or withhold consents
with respect to Company matters as provided herein or in the Delaware Act, and
(iii) such Member's other rights and privileges as herein provided.
(h) "Members" means API and DTR and all other persons who may become
Members of the Company as provided herein.
(i) "Percentage Interest" means (i) sixty percent(60%) with respect to
API (fifty-seven percent (57%) with respect to API I and three percent (3%) with
respect to API II), and (ii)forty percent (40%) with respect to DTR, subject to
adjustment in accordance with Section 5.2.
1.2 Other Definitional Provisions. Unless the context of this Agreement
clearly requires otherwise, references to the plural include the singular;
references to the singular include the plural; and references to the masculine
gender include the feminine and neuter genders. The words "hereof", "herein",
and similar terms refer to this Agreement as a whole. The term "including" is
not limiting and the term "or" has the inclusive meaning represented by the term
"and/or."
ARTICLE II
ORGANIZATION
2.1 Formation and Name. Subject to the terms and conditions of this
Agreement, the Members hereby agree to establish and operate a limited liability
company under the laws of the State of Delaware to be named FoodMaster
International L.L.C. (the "Company"). The Company shall be formed upon the
filing of the Certificate of Formation with the Secretary of State of Delaware.
The Members hereby adopt the Certificate of Formation filed with the Secretary
of State of Delaware on February 27, 1997 as the Certificate of Formation of the
Company.
2.2 Purposes and Activities. The business and purpose of the Company
shall be to produce, package and distribute dairy, juice and other food related
products in the former Soviet Union.
2.3 Principal Office. The principal place of business of the Company
shall be located at the offices of DTR at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ or such other place as the Members may from time to
time determine. The registered office of the Company in the State of Delaware
shall be located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, and the
registered agent of the Company for service of process at such address shall be
The Corporation Trust Company (or such other registered office and registered
agent as the Members may from time to time select).
2.4 Term. The Company shall dissolve in accordance with the provisions
of Section 7.1.
2.5 Closing. The closing (the "Closing") shall occur on March 3, 1997
ARTICLE III
CAPITAL STRUCTURE
3.1 Capital Contributions.
(a) DTR shall make a Capital Contribution to the Company of up to Four
Million Dollars ($4,000,000) by transferring certain rights and properties to
the Company. The rights and properties to be transferred to the Company and the
fair market value thereof as agreed to by the Members for the purposes of
determining the amount of DTR's Capital Contribution are as follows:
(i) DTR's fifty percent (50%) interest in the Kazakstan limited
liability partnership FoodMaster TOO and certain other property identified in
the Share Transfer attached as Exhibit A-1 hereto and the ▇▇▇▇ of Sale attached
as Exhibit A-2 hereto (collectively, the "FoodMaster Interest ") valued at One
Million Nine Hundred and Seventy Five Thousand Dollars ($1,975,000) to be
contributed by signing appropriate acts of transfer and acceptance at Closing;
(ii) DTR's right to purchase eighty percent (80%) of the
shareholding in the Ak Bulak Dairy in Kazakstan ("Ak Bulak Dairy Interest")
valued at One Million Five Hundred and Seventy Five Thousand Dollars
($1,575,000) to be contributed by assignment to the Company immediately upon the
shares being properly registered with the Ministry of Justice and National
Securities Commission and made available for purchase from the State Committee
for Privatization of State Property of the Republic of Kazakstan; and
(iii) The opportunity to purchase all of the newly issued shares
of the Hincesti Dairy in Moldova (constituting fifty percent (50%) of the total
shares of the Hincesti Dairy) (the "Hincesti Dairy Interest") and the benefit of
certain equipment, materials and services acquired by DTR pursuant to a grant
from the United States Agency for International Development (the "USAID
Property"), valued collectively at Four Hundred and Fifty Thousand Dollars
($450,000). DTR further agrees that the USAID Property shall be used exclusively
for the benefit of the Company and DTR shall assign the USAID Property to the
Company upon DTR acquiring legal title thereto;
(b) API shall make a Capital Contribution to the Company of up to Six
Million Dollars ($6,000,000) (the percentage of each Capital Contribution to be
made by API pursuant to this Agreement shall be contributed by API I and API II
based on their respective Percentage Interests) which shall be contributed in
installments by bank transfer to the Company's Dollar-denominated bank account
maintained at First Bank, International Moscow Bank or another bank acceptable
to API, in amounts and subject to conditions as follows:
(i) API shall contribute to the Company One Million Three Hundred
Thousand Dollars ($1,300,000) upon transfer of the FoodMaster Interest;
(ii) API shall contribute to the Company Seven Hundred Thousand
Dollars ($700,000) upon satisfaction of all conditions to the transfer to the
Company of the AK Bulak Dairy Interest;
(iii) API shall contribute to the Company Nine Hundred Forty-Five
Thousand Dollars ($945,000) upon the Company obtaining the right to acquire the
Hincesti Dairy Interest; and
(iv) API shall contribute the balance of its Capital Contribution
to finance additional projects as approved by the Members.
(c) If DTR is unable to contribute to the Company the properties
identified in Section 3.1(a)(iii), DTR may, subject to the approval of the
Members, contribute other property in lieu thereof.
3.2 Additional Capital Contributions.
(a) Except as provided in this Section 3.2 or otherwise unanimously
agreed to by the Members, no Member shall be required or permitted to make any
additional capital contributions to the Company except as specified in Section
3.1.
(b) If, as of the second anniversary of the Closing or the liquidation
of the Company, whichever occurs first, the amount of capital contributed to the
Company by API is less than sixty percent (60%) of the total amount of capital
contributed by both API and DTR as of such date ("Total Capital"), API shall
make an additional Capital Contribution ("Additional Contribution") to the
Company which the Company shall distribute to DTR as a reduction of its Capital
Contribution. The amount of the Additional Contribution shall be equal to the
difference between (i) sixty percent (60%) of the Total Capital, and (ii) the
amount of the Total Capital contributed by API.
3.3 Failure to Contribute.
(a) In the event that the Company does not obtain full legal title to
(i) the properties identified in Section 3.2(a)(i) prior to the date that is
ninety (90) days after the Closing, or (ii) the property identified in Section
3.2(a)(ii) within one year after the Closing (in either case, a "Non-Transferred
Property"), API may terminate this Agreement and liquidate THE Company. In the
event that API elects to liquidate the Company pursuant to this Section 3.3, the
Company shall take any steps reasonably necessary to return parties to their
original position.
(b) In the event that API is required to make a Capital Contribution
pursuant to Sections 3.1 or 3.2(b) and fails to make such Contribution, the
number of Directors that API and DTR shall each be entitled to appoint pursuant
to Article IV shall be adjusted to reflect actual Capital Contributions as of
such date, provided that the rights contained in Article IV shall be restored
upon the making of such contribution by API.
3.4 Return of Capital. No Member has a right to withdraw its Capital
Contribution except upon liquidation of the Company or as otherwise provided for
in this Agreement. No interest shall accrue or be paid by the Company with
respect to any Capital Contribution.
ARTICLE IV
MANAGEMENT
4.1 Management. The management of the Company shall be vested in a
Board of Directors (the "Board") consisting of five (5) members, three (3) of
whom shall be appointed by API and two (2) of whom shall be appointed by DTR.
The Board may appoint, employ, or otherwise contract with any persons or
entities for the transaction of the business of the Company or the performance
of services for or on behalf of the Company, and the Board may delegate to any
such person (who may be designated an officer of the Company) or entity such
authority to act on behalf of the Company as the Board may from time to time
deem appropriate. The Company shall enter into a management agreement with DTR,
in the form of Exhibit B hereto (the "Management Agreement"), pursuant to which
DTR shall manage the business of the Company.
4.2 Appointment of Directors. The initial members of the Board of
Directors shall be appointed by Members prior to the first meeting. Any Director
may be removed by the Member appointing such Director. Upon the death,
retirement or removal of any Director, the Member appointing such Director may
appoint a replacement.
4.3 Actions by the Board. Except as otherwise specified in this
Agreement, any action to be taken or approved by the Board requires the approval
of a majority of the Directors.
4.4 Committees of the Board. The Directors may appoint from among their
number one or more committees and may delegate to such committee any of the
powers of the Directors.
4.5 Meetings of Board. Meetings of the Board may be called by any
Director provided that the Board shall meet at least once during each calendar
quarter. Three (3) Directors shall constitute a quorum for the transaction of
business and notwithstanding any vacancy on the Board, a quorum may exercise all
powers of the Board. Meetings of the Board shall be held at such time and place
as determined by the Board. Notice of such meetings shall be provided to each
Director at least ten (10) days prior to the meeting. The Board may act without
a meeting provided that such action is consented to in writing by each Director
then in office. Directors may participate in any meeting of the Board by
conference call or similar communications equipment by means of which all
persons can hear each other, and participation by such means shall constitute
attendance at such meeting.
4.6 Distribution. Distributions to Members shall be made in such
amounts and at such times as determined by the Board based on the budget and
business plan in effect and on the current and expected cash flow needs of the
Company.
4.7 Financial Statements. The Company shall cause annual financial
statements for the Company to be prepared in accordance with GAAP and provided
to Members within ninety (90) days of the end of the Company's fiscal year. The
Company shall also cause an audit to be performed on an annual basis of each
entity controlled by the Company which audit shall be performed in accordance
with GAAP and in accordance with any applicable local accounting principles and
practices.
4.8 Extraordinary Actions. In addition to other actions identified
herein requiring unanimous approval of the Members, the Company shall not (i)
sell or otherwise dispose of all or substantially all of its assets unless such
sale or disposition is unanimously approved by the Members provided that such
approval shall not be unreasonably withheld, (ii) undertake any new investment
projects unless such projects are unanimously approved by the Members, or (iii)
terminate the Management Agreement unless such termination is unanimously
approved by the Members.
ARTICLE V
ALLOCATIONS
5.1 Allocations. All items of Company income, gain, loss, deduction,
credit, or the like shall be allocated among the Members in accordance with
their respective Percentage Interests (as adjusted pursuant to Section 5.2) as
of the end of the fiscal year with respect to which such items were incurred.
5.2 Adjustment of Percentage Interests. It is the intent of the Members
that DTR's Percentage Interest shall be increased to the extent that API earns
an actual Internal Rate of Return over the term of its investment in the Company
("IRR") in excess of thirty-five percent (35%), provided that the adjustment of
Percentage Interests shall not alter the voting/management provisions contained
in this Agreement. To effect the foregoing, API's estimated IRR on its
investment in the Company shall be calculated as of the end of each fiscal year.
The calculation of API's estimated IRR shall be based on all actual cash flows
received to date and an estimated terminal value of API's Interest based on the
book value of the Company determined in accordance with GAAP. If API's estimated
IRR as calculated at the end of any fiscal year is greater than thirty-five
percent (35%), DTR's Percentage Interest shall be set at the percentage set
forth in Appendix A corresponding to such IRR, and API's Percentage Interest
shall be correspondingly adjusted. If API's IRR as calculated at the end of any
fiscal year is thirty-five percent (35%) or less, DTR's Percentage Interest
shall be set at forty percent (40%). Notwithstanding the provisions of Section
5.1 or the adjustments of the respective Percentage Interests pursuant to this
Section 5.2, the amount of income allocated to DTR for any fiscal year shall be
reduced to the extent that the allocation of such income would result in DTR
being allocated a percentage of the Company's income over the term of API's
investment in the Company that is greater than the percentage identified in
Appendix A which corresponds to API's IRR as of such date. For the purposes of
this Section 5.2, "terminal value,, means the proceeds from the sale of API's
Interest. A final non- estimated calculation of API's IRR shall be calculated,
and Percentage Interest calculated thereon, upon the sale, transfer or
liquidation by API of its Interest, based on cash flows to date and the actual
terminal value of API's Interest.
ARTICLE VI
TRANSFERS
6.1 New Members. Additional Members shall not be admitted in the
absence of unanimous consent of the existing Members except as provided herein.
6.2 Transfers to Third Parties. No Member may sell, assign, pledge, or
otherwise transfer or encumber (collectively "transfer") all or any part of its
Interest and no transferee of all or any part of any Member's Interest shall be
admitted as a substituted Member, without the unanimous consent of all Members.
provided that if DTR refuses to consent to a transfer proposed by API, the
put-right provided pursuant to Section 6.4 shall become immediately exercisable.
6.3 Transfer by API After Five Years by Sale or IPO. If after five
years from the Closing, API has not sold its Interest in the Company, then at
API's election, DTR will, at the request of API, either assist API in the sale
of its Interest to a third party, subject to the consent provisions set forth in
Section 6.2, or assist in an initial public offering ("IPO") of Interests in the
Company.
6.4 Put Right. If any time after five years from the Closing, API has
not sold or otherwise liquidated its Interest in the Company, then API may elect
to require the Company to purchase API's Interest at its fair market value at
the time of election determined as:
(a) The Members shall select a qualified independent third party who
shall provide the Members with an appraisal of the fair market value of API's
Interest.
(b) Based upon the appraisal provided pursuant to Section 6.4(a), the
Members shall agree on a fair market value of API's Interest.
(c) If the Members fail to reach an agreement on the fair market value
of API's Interest, then the fair market value shall be determined by arbitration
pursuant to Article X, except that each Member shall select an arbitrator
qualified to provide an appraisal of the fair market value of API's Interest. If
the highest valuation does not exceed the lowest valuation by ten percent (10%)
of each other, then the fair market value will be the average of the values
provided by both of the arbitrators. If the highest valuation exceeds the lowest
valuation by 10% or greater, then an additional qualified arbitrator shall be
selected by the original arbitrators. The additional arbitrator shall set the
fair market value of API's Interest at a value between the appraised values
provided by the first two arbitrators.
(d) The Company shall pay API cash in full payment within forty-five
(45) days of the Company's purchase of API's Interest unless the Current Ratio
of the Company is less than 2 to 1 and the Debt Ratio of the Company is greater
than 30%. The Company may then elect to pay for the purchase of API's Interest
with a senior note (or combination of cash and senior note). The senior note
will be superior in right of payment to all debt obligations of the Company
except for debt obligations of the Company existing at the time of issuance of
the note which cannot by their terms be subordinated to such note. Interest will
accrue on the unpaid principal amount of the senior note at a rate of
twenty-five percent (25%) per annum. Principal and interest shall be amortized
and payable in equal monthly installments over a term of twenty-four (24)
months. The Company shall have the right to prepay any principal due under the
senior note without penalty.
ARTICLE VII
TERMINATION OF AGREEMENT/LIQUIDATION
7.1 Termination of Agreement. This Agreement shall terminate and the
Company shall be liquidated (i) in accordance with Section 3.3(a) of this
Agreement, (ii) upon the unanimous agreement of the Members, (iii) on the date
that is thirty (30) years after the filing of the Certificate of Formation with
the Delaware Secretary of State, or (iv) upon the withdrawal, bankruptcy, or
dissolution of any Member or the occurrence of any other event that terminates
the continued membership of any Member in the Company under Delaware law unless
the remaining Members unanimously agree to continue the business of the Company
within ninety (90) days of such event. Upon termination, this Agreement shall be
of no further force and effect provided that the indemnification provisions of
Section 12.1 and the confidentiality provision contained in Section 8.2 shall
continue in full force and effect.
7.2 API Priority Distribution. If the Company is liquidated for any
reason, sold or refinanced prior to API's receipt of distributions in an amount
equivalent to its Capital Contributions to the Company (after giving effect to
Section 3.2(b)), then API shall have priority over DTR's right to receive any
distribution of the assets of the Company in an amount equal to the amount of
API's Capital Contribution less distributions to API after the payment of all
amounts owed by the Company to creditors. Proceeds in excess of such amount
shall be distributed in accordance with the following priority: (i) to DTR to
the extent of its Capital Contribution (after giving effect to Section 3.2(b))
less distributions received, and (ii) to the members in proportion to their
Percentage Interests. The priority payment set forth in this Section 7.2 is not
intended to prohibit the making of distributions to Members.
ARTICLE VIII
NON-COMPETITION/CONFIDENTIALITY
8.1 Non-competition.
(a) Neither DTR, nor any affiliate thereof, shall directly or
indirectly own, manage, invest or participate in any corporation, partnership,
joint venture or other enterprise involved in the production or distribution of
dairy, juice or food-related projects in the former Soviet Union except through
the Company unless (i) the proposed project has a projected five year IRR,
calculated based on reasonable assumptions mutually agreed to by API and DTR, of
not less than thirty-five percent (35%), (ii) DTR has provided notice of the
proposed project to the Company, which notice shall contain reasonable details
regarding such project, and (iii) the Company has not, within thirty (30) days
of the receipt of notice pursuant to clause (ii) of this sentence, elected to
undertake such project or, revoked such election within sixty (60) days thereof
because of unsatisfactory results from the Company's due diligence of the
project.
(b) Neither API, nor any affiliate thereof, shall directly or
indirectly own, manage, invest or participate in any corporation, partnership,
joint venture or other enterprise involved in the production or distribution of
dairy products in the former Soviet Union except through the Company unless (i)
the proposed project has a projected five year IRR, calculated based on
reasonable assumptions mutually agreed to by API and DTR, of not less than
thirty-five percent (35%), and (ii) API has provided notice of the proposed
project to the Company, which notice shall contain reasonable details regarding
such project, and (iii) the Company has not, within thirty (30) days of the
receipt of notice pursuant to clause (ii) of this sentence, elected to undertake
such project or, revoked such election within sixty (60) days of such election
because of unsatisfactory results from the Company's due diligence of the
project. The provisions of this Section 8.1(b) shall not apply to API's
investment in the Borisoglebsk project.
(c) As used in this Section 8.1, the term "affiliate,' with respect to
either DTR or API shall mean any person or entity directly or indirectly
controlling, controlled by, or under common control with DTR or API, as the case
may be.
8.2 Confidentiality.
(a) Unless otherwise specifically agreed by API and DTR, during the
term of this Agreement and for a period of five (5) years thereafter, the
Company and each Member shall maintain in confidence, and shall refrain from
using or disclosing, all Confidential Information. For the purposes of this
Section 8.2, "Confidential Information" means all know-how, financial data,
technical data (including the terms of the transactions contemplated in this
Agreement), trade secrets or other confidential information that the Company has
disclosed to any Member, or that a Member has disclosed to any other Member or
the Company, under or in connection with this Agreement. The Company and each
Member shall cause its directors, current and past employees, agents and
contractors to refrain from using or disclosing any Confidential Information in
any manner, except as expressly permitted by this Section 8.2.
(b) Notwithstanding the foregoing, this Section 8.2 shall not restrict
the use or disclosure of Confidential Information to the extent that:
(i) the information becomes generally available to the public
without breach of this Section 8.2;
(ii) the recipient lawfully obtains the information from a third
party who is not subject to the terms of this Agreement;
(iii) the recipient has independently developed the information
prior to disclosure; or
(iv) applicable law requires disclosure of the information to
governmental, legislative or judicial authorities, provided that the recipient
shall give prior notice to the disclosing party and use its best efforts to
require such authorities to continue to accord confidential treatment to the
information.
(c) Notwithstanding the foregoing, this Section 8.2 shall not restrict
the use or disclosure of Confidential Information to the extent necessary to
permit either API or DTR to undertake a project pursuant to Section 8.1.
ARTICLE IX
FORCE MAJEURE
9.1 Force Majeure Defined. "Force Majeure" means the occurrence of
circumstances beyond the reasonable control of the Member affected, and which
such Member could not have prevented by the exercise of reasonable diligence.
Events of Force Majeure include:
(a) earthquakes, floods, fires or other natural physical disasters;
wars or hostilities; riots or civil disturbances; acts of terrorism or sabotage;
governmental regulations, decrees or actions; and legislative or judicial
actions; or
(b) actions of any persons or groups of persons (i) with the purpose of
obtaining money or property from the Company or from employees or
representatives of the Company by coercion or intimidation; (ii) threatening the
life and/or health of employees or representatives of the Company or (iii)
causing or threatening to cause material loss to the Company, provided that
adequate evidence of such circumstances is presented to the satisfaction of the
other Members; or
(c) actions of any governmental authority to seize, confiscate,
expropriate or nationalize the Interest of any Member or its share in the
Company or any property of the Company, or otherwise to prevent any Member from
exercising its rights with respect to the Company as set forth in this Agreement
or applicable law in force on the date hereof.
9.2 Effect of Force Majeure. If an event of Force Majeure causes a
Member's failure or delay in its performance of any obligations under this
Agreement, then such failure or delay shall be excused (and thus shall not
constitute a breach of this Agreement for as long as the Force Majeure remains
in effect).
9.3 Notice of Force Majeure. A Member that fails or delays to perform
any obligations under this Agreement due to Force Majeure shall so notify the
other Members in writing, as promptly as possible after such occurrence. The
notice shall describe the nature of the Force Majeure, furnish adequate evidence
of the existence and circumstances of the event of Force Majeure and, to the
extent possible, estimate its duration and its likely effects on the Member's
performance of its obligations under this Agreement.
9.4 Cessation of Force Majeure. A Member whose performance is affected
by a Force Majeure shall use its best efforts to terminate the effects of such
Force Majeure. Upon the cessation of the Force Majeure, the affected Member
shall resume performance of its obligations as soon as possible. The affected
Member shall notify the other Members as soon as it learns that the Force
Majeure has ceased or appears likely to cease.
ARTICLE X
RESOLUTION OF DISPUTES
10.1 Arbitration. Any dispute, claim or grievance arising out of or
relating to the interpretation or application of this Agreement, or to the
breach, termination of validity thereof, shall be settled by arbitration in
accordance with the then- current Center for Public Resources Rules of
Non-Administered Arbitration of Business Disputes, by a sole arbitrator. The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
▇▇.▇▇. et seq. Judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. The place of the arbitration shall be
a neutral city in the midwestern United States.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
11.1 API. API I and API II each represent and warrant to DTR:
(a) It is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware. It has the power and
authority to own, lease, and operate its assets, properties, and businesses and
to enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery, and performance of this Agreement by it have been duly
authorized by all necessary action on its part, and this Agreement is legally
binding upon it in accordance with its terms.
(b) The execution, delivery, and performance by it of this Agreement
and the transactions contemplated hereby will not (i) violate the provisions of
any order, judgment, or decree of any court or other governmental agency or any
arbitrator applicable to it, (ii) result in a material breach of or constitute
(with due notice or lapse of time or both) a material default under any contract
or agreement to which it is a party or by which it is bound; or (iii) violate
any provision of law applicable to it, the violation of which is likely to have
a material adverse effect on the business, operations or condition (financial or
otherwise) of it or the Company.
11.2 DTR. DTR represents and warrants:
(a) DTR is a corporation duly organized, validly existing and in good
standing under the laws of the State of Minnesota. DTR has the corporate power
and authority to own, lease and operate its assets, properties, and business and
to enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery, and performance of this Agreement by DTR have been duly
authorized by all necessary corporate actions on the part of DTR, and this
Agreement is legally binding upon DTR in accordance with its terms.
(b) The execution, delivery, and performance by DTR of this Agreement
and the transactions contemplated hereby will not (i) violate the provisions of
any order, judgment, or decree of any court or other governmental agency or any
arbitrator applicable to DTR or the Articles of Incorporation or Bylaws of DTR;
(ii) result in a material breach of or constitute (with due notice or lapse of
time or both) a material default under any contract or agreement to which DTR is
a party or by which DTR is bound; or (iii) violate any provision of law
applicable to DTR, the violation of which is likely to have a material adverse
effect on the business, operations or condition (financial or otherwise) of DTR
or the Company.
(c) DTR has or will have at the time of contribution, full legal right
to transfer and assign all rights and properties to be contributed to the
Company as Capital Contributions pursuant to the terms of this Agreement, free
and clear mortgage, pledge, claim, lien charge, obligation, liability (including
liability for taxes) or other encumbrances, and the Company will receive full
legal and beneficial title to all such rights and properties.
ARTICLE XII
INDEMNIFICATION
12.1 Extent of Responsibility for Damages. Each Member shall indemnify
and hold harmless the other Member for losses, claims, damages, liabilities,
including without limitation reasonable legal and other expenses incurred in
connection with investigating any loss, claim, damage or liability, that such
Member may incur or suffer by reason of (i) any inaccuracy in any representation
or the breach of any warranty made by the Member hereunder, or (ii) the failure
of such Member to fully perform or observe any term, provision, covenant,
agreement to be performed under this Agreement.
12.2 Indemnification of Members and Directors. The Company shall
indemnify and hold harmless each Member and its Affiliates and each Director
(each an "Indemnified Person") against any and all losses, claims, damages,
expenses and liabilities of any kind whatsoever that such Indemnified Person may
at any time become subject to or liable for by reason of the formation,
operation, or termination of the Company, or the Indemnified Person acting as a
Member or Director of the Company, or the authorized actions of such Indemnified
Person in connection with the conduct of the affairs of the Company, provided
that no Indemnified Person shall be entitled to indemnification to the extent
that liability otherwise indemnified for results from (i) any act or omission of
such Indemnified Person that involves actual fraud or willful misconduct, or
(ii) any transaction from which such Indemnified Person derived improper
personal benefit.
12.3 Limitation of Liability. No Member shall have any personal
liability whatsoever to the Company or any other Member on account of such
Member's status as a Member or by reason of such Member's acts or omissions in
connection with the conduct of the business of the Company; provided, however,
that nothing contained herein shall protect any Member against any liability to
the Company or the Members to which such Member would otherwise be subject by
reason of (i) any act or omission of such Manager that involves actual fraud or
willful misconduct or (ii) any transaction from which such Member derived
improper personal benefit.
ARTICLE XIII
GENERAL PROVISIONS
13.1 Limitation on Liability. The debts, obligations, and liabilities
of the Company, whether arising in contract, tort, or otherwise, shall be solely
the debts, obligations, and liabilities of the Company, and no Member of the
Company shall be obligated personally for any such debt, obligation, or
liability of the Company solely by reason of being a Member.
13.2 Tax Treatment. It is the intention of the Members that the Company
shall be taxed as a "partnership" for federal, state, local, and foreign income
tax purposes. The Members agree to take all reasonable actions, including the
amendment of this Agreement and the execution of other documents, as may
reasonably be required in order for the Company to qualify for and receive
"partnership" treatment for federal, state, local, and foreign income tax
purposes.
13.3 Cooperation. The parties hereto shall in good faith undertake to
perform their obligations under this Agreement. Upon execution of this Agreement
and thereafter, each party shall do such things as may be reasonably requested
by the other party hereto in order to more effectively carry out the intent of
this Agreement.
13.4 Notices. Except as otherwise provided in this Agreement, any and
all notices, consents, waivers, directions, requests, votes or other instruments
or communications among the Members, Member representatives and the Company
under this Agreement shall be communicated and be effective only if the original
is sent in writing by hand or by registered mail, and a copy is sent by telex or
facsimile. Any notice so given shall be deemed to have been received as of the
date the original is received, or as of the date on which a copy was sent by
telex or facsimile and a confirmation of receipt indicated on the sending telex
or facsimile machine, whichever is earlier.
13.5 Applicable Law. This Agreement shall be governed by and
interpreted in accordance with the substantive law of the State of Delaware. The
Company shall be governed by and operate in accordance with the applicable
legislation of Delaware.
13.6 Severability. In case one or more of the provisions contained in
this Agreement, or any application thereof, shall be invalid, illegal or
unenforceable in any respect under applicable law, the validity, legality and
enforceability of the remaining provisions contained therein and any other
application thereof shall not be affected or impaired in any way.
13.7 Entire Agreement. This Agreement sets forth the entire agreement
among the Members relating to the subject matter contained herein and shall
create binding rights and obligations of the Members, and between the Members
and the Company. All other prior agreements or understandings, both written and
oral, are of no further force or effect. This Agreement shall not be amended or
replaced except by unanimous written agreement of the Members.
13.8 Headings. The headings contained in this Agreement are for
convenience only and shall not be used to construe or interpret the substantive
meaning or intent of any provision thereof.
13.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which is an original but all of which shall constitute one
instrument.
IN WITNESS WHEREOF, the undersigned have caused this
Agreement to be signed in four (4) originals on the date first written above.
FOR AND ON BEHALF OF:
DEVELOPED TECHNOLOGY RESOURCE, INC.
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: President
FOR AND ON BEHALF OF:
API DAIRY PARTNERS L.P.
By Agribusiness Holding Company L.L.C.
its general partner
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
FOR AND ON BEHALF OF:
AGRIBUSINESS PARTNERS INTERNATIONAL ▇.▇. ▇▇
By C.I.S. Management Company L.L.C.
its general partner
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
APPENDIX A
DTR Ownership Table**
IRR DTR DTR
to API Economic Control
Ownership Ownership
35% 40% 40%
37 41 40
39 42 40
41 43 40
43 44 40
45 45 40
47 46 40
49 47 40
51 48 40
53 49 40
55 50 40
57 51 40
59 52 40
61 53 40
63 54 40
65 55 40
-----
66 56 40
67 57 40
68 58 40
69 59 40
70 60 40
71 61 40
72 62 40
73 63 40
74 64 40
75 65 40
76 66 40
77 67 40
78 68 40
79 69 40
80 70 40
** The DTR Ownership Table is set up using a ratio of 2 units of IRR
increase for 1 unit of economic ownership increase until API's IRR reaches 65%
thereafter, the ratio will be 1 unit of IRR increase for 1 unit of economic
ownership increase.
A