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JOINT VENTURE AGREEMENT
between
FLINT RIVER XXXXX, INC.
and
XXXXXXX MILLING COMPANY
Dated as of April 7, 1995
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TABLE OF CONTENTS
1. Formation of Joint Venture ............................................ 1
2. Property Plant and Equipment, Receivables, Inventories ................ 1
a. Initial Property, Plant and Equipment ............................ 1
b. Initial Inventory and Receivables ................................ 1
c. Capital Additions to the Facility ................................ 2
d. Additional Property, Plant and Equipment ......................... 2
e. Ownership of Facility ............................................ 2
3. Trade Secrets ......................................................... 2
4. Trademarks, Etc ....................................................... 2
5. Working Capital ....................................................... 3
6. Direct Expenses; Administrative Services Fee .......................... 3
a. Reimbursement of Direct Expenses ................................. 3
b. Examples of Direct Expenses ...................................... 3
c. Administrative Services Fee ...................................... 3
7. Transactions with the Venture ......................................... 4
a. Purchases of Pet Food and Fish Food from the Venture ............. 4
b. Sales of Pet Food to the Venture ................................. 4
8. Management and Operation; Personnel; Ancillary Services ............... 4
a. Management Committee.............................................. 4
b. Day-to-Day Operations ............................................ 4
c. Limitations Upon Authority of Parties ............................ 5
d. Personnel ........................................................ 5
e. Management Personnel ............................................. 5
f. Employment Matters ............................................... 5
g. Ancillary Services ............................................... 5
9. Accounting Matters .................................................... 6
a. Fiscal Year ...................................................... 6
b. Books of Account ................................................. 6
c. Cash Accounts .................................................... 6
10. Distribution of Net Income ............................................ 6
11. Other Business Operations of Parties/Non-Compete ...................... 7
a. FRM .............................................................. 7
x. Xxxxxxx .......................................................... 7
12. Certain Labialities; Insurance ........................................ 7
13. Representations and Warranties ........................................ 8
a. Generally ........................................................ 8
b. Additional Representations and Warranties of Xxxxxxx ............. 8
14. Initial Term and Renewal Terms ........................................ 8
15. Early Termination ..................................................... 9
16. Disposition of Assets Following Termination ........................... 9
a. Generally ........................................................ 9
x. Xxxxxxx Option to Purchase Assets of Venture
Following Optional Termination ................................... 9
c. Option to Purchase Assets of Venture Following
Bankruptcy, Breach, Etc. ......................................... 10
d. Other Disposition of Assets ...................................... 10
e. Application of Cash .............................................. 10
17. Purchases of Products Following Termination ........................... 10
18. Assignment ............................................................ 11
19. Successors and Assigns ................................................ 11
20. Further Assurances .................................................... 11
21. Waivers and Amendments ................................................ 11
22. Arbitration ........................................................... 11
23. Indemnification, Etc. ................................................. 12
24. Liability of Parties to Venture ....................................... 12
25. Governing Law ......................................................... 12
26. Notices ............................................................... 12
27. Entire Agreement ...................................................... 12
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28. Headings .............................................................. 12
29. Counterparts .......................................................... 12
30. Announcements ......................................................... 13
31. Future Expansion ...................................................... 13
Exhibits
EXHIBIT A - Description of Facility
EXHIBIT B - Preliminary Construction and Equipment Budget
EXHIBIT C - Administrative Expense Categories
EXHIBIT D - Forms of Periodic Financial Statements
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JOINT VENTURE AGREEMENT
Joint Venture Agreement, dated April 7, 1995 by and between Flint River
Xxxxx, Inc., a Georgia corporation ("FRM"), and Xxxxxxx Milling Company, a
Minnesota corporation ("Xxxxxxx").
RECITALS
Xxxxxxx owns a pet food manufacturing facility in Cartersville, Georgia
more fully described in Exhibit A hereto (the "Facility").
Xxxxxxx is engaged in the pet food and fish food business throughout the
United States and, in connection therewith, has developed substantial expertise
in the pet food and fish food business and has implemented an extensive sales,
marketing and distribution structure for the pet food and fish food business
(the "Business").
FRM currently purchases pet food and fish food from other suppliers and
desires to obtain a source for all of its pet food and fish food requirements.
FRM and Xxxxxxx now desire to form a joint venture for the manufacture
of pet food and fish food and the expansion of the Facility to accommodate such
manufacturing.
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements herein contained, FRM and Xxxxxxx agree as follows:
1. Formation of Joint Venture. FRM and Xxxxxxx hereby form a joint
venture (the "Venture") for the manufacture of pet food and fish food at the
Facility and the sale, marketing and distribution of pet food and fish food in
the States of Mississippi, Alabama, Georgia, Florida, South Carolina, and North
Carolina (hereinafter the "Territory") in connection therewith. The Venture
shall constitute a special purpose general partnership governed by the Uniform
Partnership Act, as adopted in the State of Georgia. The name of the Venture
shall be: FRM/Xxxxxxx Pet Food Venture.
2. Property Plant and Equipment Receivables, Inventories.
a. Initial Property, Plant and Equipment. On May 1, 1995 or such
other date mutually agreed to by the parties (such date
hereinafter the "Closing Date"), Xxxxxxx will contribute the
Facility to the capital of the Venture, free and clear of all
liens, claims and encumbrances, by warranty deed and xxxx of
sale. For purposes of this Agreement, the Facility will be
treated as having a fair market value on the Closing Date equal
to Xxxxxxx'x current book value of the existing fixed assets of
the Facility, plus any capital additions in process.
b. Initial Inventory and Receivables. On the Closing Date, FRM will
contribute to the capital of the Venture all inventory and
receivables attributable to business done at the Facility and
acquired by FRM from Xxxxxxx pursuant to a separate Purchase
Agreement. For purposes of this Agreement, such inventory and
receivables will be treated as having a fair market value equal
to FRM's cost of acquiring such inventory and receivables.
c. Capital Additions to the Facility. The parties recognize that
substantial additional capital additions are necessary at the
Facility, including the installation of additional manufacturing
and building equipment. Attached hereto as Exhibit B is a
preliminary construction and equipment budget reflecting the
projected costs of such additions. The final budget, together
with plans and specifications for the renovation, shall be
prepared by Xxxxxxx subject to the approval of FRM, such approval
not to be unreasonably withheld. On the Closing Date, FRM shall
contribute to the capital of the Venture, in cash, an amount
equal to the amount by which the amount of Xxxxxxx'x capital
contribution pursuant to Section 2(a) hereof exceeds the amount
of FRM's capital contribution pursuant to Section 2(b) hereof. In
the event that the amount of the projected costs exceeds the
amount contributed by FRM pursuant to the preceding sentence,
each of Xxxxxxx and FRM shall contribute, in cash, an amount
equal to 50% of such excess.
d. Additional Property, Plant and Equipment. If the Management
Committee (as defined in Section 8(a) hereof) shall determine
after the date hereof that any additional property, plant and
equipment is required for the Venture, each of FRM and Xxxxxxx
shall contribute to the Venture an amount equal to 50% of the
costs thereof, when and as such costs are payable by the Venture.
e. Ownership of Facility. The Facility, as initially contributed to
the Venture pursuant to Section 2(a) hereof and as improved and
equipped pursuant to Section 2(c) hereof, together with any
additional property, plant and equipment acquired from time to
time pursuant to Section 2(d) hereof, shall constitute property
of the Venture and title thereto shall be in the name of the
Venture. The Facility will be open for inspection and review by
either party during normal business hours or at any time it is in
operation.
3. Trade Secrets. Proprietary manufacturing processes, customer lists
and other similar confidential information (collectively, "Trade Secrets")
constituting the property of a party hereto prior to the date hereof shall
remain the property and Trade Secrets of such party and shall not constitute
property of the Venture notwithstanding disclosure to the other party in
connection with the Venture. Any such Trade Secrets may be used by the Venture
but shall not be used by the other party, disclosed to others, or any other
advantage taken thereof by such party in its own separate business activities.
Trade Secrets developed by the Venture shall be and become the property and
Trade Secrets of the Venture, but may be used by either party in its own
separate business activities.
4. Trademarks. Etc. The Venture will employ the trademark(s), patent(s),
copyright(s), license(s) and other intellectual property rights presently being
used by FRM and Xxxxxxx in connection with their respective businesses, all of
which are hereby made available on a non-exclusive basis to the Venture. Such
trademarks, patents, copyrights and other intellectual property rights shall
remain the property of FRM or Xxxxxxx, as the case may be, and shall not
constitute property of the Venture. Each of FRM and Xxxxxxx shall establish
quality control standards
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for all products sold using its trademarks, and shall specify policies and
programs to monitor compliance with such standards.
5. Working Capital. FRM shall contribute to the initial working capital
of the Venture pursuant to Section 2(b) above. To the extent cash proceeds of
sales and collections on accounts receivable by the Venture from time to time do
not fund current working capital requirements, each of FRM and Xxxxxxx will
advance to the Venture on an interest-free basis an amount equal to 50% of such
working capital deficiency. The amount of any such additional advances shall be
established from time to time by the Management Committee.
6. Direct Expenses; Administrative Services Fee.
a. Reimbursement of Direct Expenses. Each of Xxxxxxx and FRM shall
on a monthly basis prepare and submit to the Management Committee
a written statement, the detail of which shall be determined by
the Management Committee, for the actual direct expenses incurred
by Xxxxxxx or FRM, as the case may be, in connection with the
Venture. The Venture shall reimburse Xxxxxxx or FRM, as the case
may be, for such expenses immediately upon receipt of any such
statement. In connection with the submission of written
statements for direct expenses to the Management Committee, each
of Xxxxxxx and FRM shall identify any material variances in such
expenses from the projected expenses reflected in any operating
budget for such period prepared by the Management Committee.
b. Examples of Direct Expenses. Direct expenses for which Xxxxxxx
and FRM shall be paid include, without limitation, all direct
manufacturing expenses (e.g., labor, utilities, maintenance and
insurance expenses) and all direct sales expenses. General
corporate overhead and corporate administrative expense, interest
or other indirect expenses shall not constitute direct expenses
for purposes of this Section 6.
c. Administrative Services Fee. In consideration of the accounting,
bookkeeping, computer and other administrative services to be
provided to the Venture by Xxxxxxx, the Venture shall pay to
Xxxxxxx an administrative services fee, the amount of which
shall be approved by the Management Committee on an annual
basis. Such expense categories are further defined in Exhibit C,
Administrative Expense Categories attached hereto.
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7. Transactions with the Venture.
a. Purchases of Pet Food and Fish Food from the Venture. FRM agrees
that during the term of this Agreement it will, and will cause
each of its Affiliates to purchase from the Venture, to the
extent available from the Venture, the entirety of their
respective pet food and fish food requirements. The price to be
charged FRM and its Affiliates for products purchased from the
Venture shall be established by the Management Committee so as to
yield to the Venture a per ton profit substantially equivalent to
the per ton profit then being realized by the Venture on sales of
products to others. The Venture shall invoice FRM and its
Affiliates for all products sold to FRM and its Affiliates, and
FRM and its Affiliates shall pay all such invoices at net terms
upon receipt thereof. "Affiliates" shall mean any corporation,
partnership or other entity which now or hereafter, directly or
indirectly, controls, or is controlled by, or is under common
control with FRM.
b. Sales of Pet Food to the Venture. In order to supplement the
product line of the Venture, Xxxxxxx will sell to the Venture pet
food products from time to time manufactured by Xxxxxxx but not
manufactured by the Venture ("Supplemental Products"). The price
to be charged to the Venture by Xxxxxxx for Supplemental Products
shall be established by Xxxxxxx, subject to the approval of the
Management Committee, and shall yield to the Venture a per ton
profit substantially equivalent to the average per ton profit of
other pet food products manufactured by the Venture. Xxxxxxx
shall invoice the Venture for all Supplemental Products sold to
the Venture, and the Venture shall pay all such invoices upon
receipt thereof.
8. Management and Operation; Personnel; Ancillary Services.
a. Management Committee. Management of the Venture shall be vested
in a committee (the "Management Committee") consisting of one
representative of FRM and one representative of Xxxxxxx. Each
party will designate a representative who will serve on the
Management Committee and one alternate who shall act in the
absence of such representative. FRM has designated Xxxxx Xxxxxxx
as its representative and Xxxx Xxxxxxxxx as its alternate.
Xxxxxxx has designated Xxxx Xxxxxxxxxx as its representative and
Xxxx Xxxxxxxx as its alternate. Each party may from time to time,
by written notice to the other, designate a new representative or
alternate.
b. Day-to-Day Operations. Xxxxxxx shall be responsible for
conducting the day-to-day operations of the Venture, subject to
the management authority of the Management Committee. In such
capacity, Xxxxxxx shall cause the Facility to be operated, and
supply all basic services to the Venture, including sales and
marketing, research and nutrition, quality assurance, purchasing
of packaging, production services and the like. Xxxxxxx shall
coordinate ingredient purchasing with FRM, with ingredient
purchases for the Venture to be made by the party that obtains
the lowest cost. The Management
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Committee will pre-approve credit policy for the Venture and
Xxxxxxx will administer credit consistent therewith.
c. Limitations Upon Authority of Parties. Neither party, without the
consent of the other, shall (i) borrow money for or in the name
of the Venture or utilize any property of the Venture as
collateral for any such borrowing, (ii) as a partner in the
Venture, make, execute or deliver any assignment for the benefit
of creditors, confession of judgment, chattel mortgage, deed,
guarantee, indemnity bond or surety bond; (iii) buy, sell,
encumber or lease any property of the Venture, or any interest
therein, other than in the ordinary course of the Venture, or any
interest therein, other than in the ordinary course of business;
or (iv) undertake or authorize any construction of any kind or
nature other than necessary or appropriate repairs in the
ordinary course of business.
d. Personnel. Subject to such changes as from time to time approved
by the Management committee, all employees at the Facility will
be employed by Xxxxxxx. The Venture shall reimburse Xxxxxxx in
accordance with Section 6 hereof as a direct expense of the
Venture for compensation and benefits to such employees.
e. Management Personnel. Each of FRM and Xxxxxxx shall devote the
attention of their management personnel to the Venture from time
to time as appropriate, but except as expressly provided in
Section 6(c) hereof, neither FRM nor Xxxxxxx shall charge a
management fee to the Venture or allocate to the Venture as a
direct expense any portion of the compensation and benefits paid
to its management personnel.
f. Employment Matters. Employees of FRM or Xxxxxxx who perform
services for Venture shall remain employees of their respective
employer, which shall remain solely responsible for establishing
the terms and conditions of their employment, including hiring,
discipline and discharge. Neither FRM nor Xxxxxxx (or any of
their respective employees) shall have any responsibility for the
development or approval of personnel policies with respect to the
employees of the other party performing services for the Venture.
FRM and Xxxxxxx shall remain solely liable for the payment of
compensation and any employment benefits to their respective
employees and for the payment of any taxes, charges or
assessments payable with respect to their respective employees,
including without limitation any such payments made to
governmental agencies or bodies. Neither the Venture nor FRM
shall be considered a successor employer of any employees of
Xxxxxxx, and neither the Venture nor Xxxxxxx shall be considered
a successor employer of any employees of FRM.
g. Ancillary Services. If the Management Committee shall from time
to time determine that ancillary services required for operation
of the Venture (e.g., lab analysis, engineering, environmental,
safety and training) can be provided to the Venture more
efficiently or more economically by FRM or Xxxxxxx than by having
such services provided by personnel regularly engaged in
operation of
5
the Venture or by a third party contractor, then FRM or Xxxxxxx,
as the case may be, agrees to provide such ancillary services to
the Venture on such terms as may be agreed by such party and the
Management Committee; provided, however, that neither FRM nor
Xxxxxxx shall have any obligation to provide such ancillary
services to the Venture if, in the reasonable judgment of such
party, to do so would materially interfere with its other
business operations or is not otherwise practicable under the
circumstances.
9. Accounting Matters.
a. Fiscal Year. The fiscal year of the Venture shall end on April
30, or such other date as determined by the Management Committee.
b. Books of Account. Xxxxxxx shall be responsible for maintaining
books of account for the Venture. In connection therewith,
Xxxxxxx shall prepare and distribute to the parties on or prior
to the 15th working day of each month an income statement and
balance sheet for the Venture for the preceding month
substantially in the form of Exhibit D hereto, with such changes
in form as may from time to time be approved by the Management
Committee. Xxxxxxx and FRM shall cause to be performed periodic
audits of the books of account as from time to time determined by
the Management Committee. Following completion and approval by
Xxxxxxx and FRM of any audit, no further audits shall be
performed on the books of account of the Venture for any period
prior to the end of the period to which such audit relates.
Details related to preparing the books shall be available for
review by both parties.
c. Cash Accounts. Xxxxxxx shall maintain such cash account or
accounts for funds of the Venture as the Management Committee
determines necessary. Such funds may be commingled with other
funds of Xxxxxxx, but Xxxxxxx shall separately account for such
funds. Interest on any such funds shall accrue to the benefit of
the Venture. In the event the Venture has a short-term cash
deficient in its account, Xxxxxxx may, subject to the right of
the Management Committee to require both parties to advance
additional funds to the Venture pursuant to Section 5 hereof,
advance funds to the Venture on a short-term basis and charge the
Venture an equivalent interest rate on such advances.
10. Distribution of Net Income. An amount equal to 50% of the
Distributable Net Income (as hereinafter defined) shall be distributed to each
party on a quarterly basis or from time to time, as determined by the Management
Committee. "Distributable Net Income" for any period shall mean the excess, if
any, of (i) the net income for such period over (ii) the aggregate net losses
for all prior periods to the extent not offset against net income for prior
periods in computing "Distributable Net Income" for such prior periods.
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11. Other Business Operations of Parties/Non-Compete.
a. FRM. FRM engages in a variety of other production activities.
During the term of the Venture and for a period of five years
thereafter, FRM covenants and agrees that it will not, and will
not permit any of its Affiliates, to own, control, manage or
operate, or participate in the ownership, control, management or
operation of, or otherwise engage in or have any interest in,
directly or indirectly, as principal, partner, stockholder of a
corporation, agent, or otherwise, in its own behalf or through
any person, firm, corporation, association, trust or other
entity, any business engaged in the Business or any component
thereof within the United States.
x. Xxxxxxx. Xxxxxxx engages in the pet food and fish food business
at other locations throughout the United States, which other
operations do not constitute part of the Venture. FRM recognizes
that such other operations of Xxxxxxx may compete with the
Venture. Xxxxxxx agrees, however, that in the conduct of such
other pet food and fish food operations during the term of this
Agreement it will not solicit customers traditionally serviced
primarily from the Facility so as to capture such sales for its
own account rather than the account of the Venture. Xxxxxxx
agrees that, during the term of this Agreement, it will send
orders from customers for pet food and fish food produced at the
Facility so long as such products can be produced economically at
the Facility, are of a quality satisfactory to such customers of
the Venture and can be produced consistent with the delivery
requirements. Absent these factors, it is anticipated that sales
of pet food and fish food within the Territory will be assigned
to the Venture. FRM acknowledges that decisions as to which
orders will be assigned by Xxxxxxx to the Facility are within the
discretion and control of Xxxxxxx, to be reasonably exercised
consistent with the above.
12. Certain Liabilities Insurance. Neither FRM nor Xxxxxxx shall, by
virtue of this Agreement, be deemed to have assumed any liability of any kind or
nature whatsoever arising with respect to activities or products of the other
not undertaken as part of the Venture. No party to this Agreement shall be
liable for workers' compensation or employment-related damages or actions
relating to the employees of the other party to this Agreement. The following
insurance coverages shall be obtained regarding the operations and assets of the
Venture:
(i) The Venture shall obtain property and casualty insurance with
respect to the Facility in such amounts and with such deductibles
as shall be determined by the Management Committee.
(ii) The Venture shall obtain property and casualty insurance with
respect to the inventory, packaging and supplies of the Venture
in such amounts and with such deductibles as shall be determined
by the Management Committee.
(iii) The Venture shall obtain comprehensive general and products
liability insurance with respect to the Venture. All such
policies shall name each party and the Venture as insureds
thereunder.
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(iv) Each party shall obtain appropriate workers' compensation
insurance with respect to such party's employees.
(v) The Venture shall obtain such other insurance coverage as the
Management Committee shall deem appropriate in connection with
the activities of the Venture.
The premiums of any such insurance shall constitute a direct expense
of the Venture for purposes of Section 6 hereof.
13. Representations and Warranties.
a. Generally. Each of FRM and Xxxxxxx represents and warrants to the
other that:
(i) it is a corporation duly organized and in good standing under the
laws of the state of its incorporation;
(ii) it is duly qualified to do business in the State of Georgia;
(iii) it has obtained all necessary corporate approval to execute,
deliver and perform this Agreement and to engage in operation of
the Venture as contemplated hereby;
(iv) the execution, delivery and performance of this Agreement and
operation of the Venture as contemplated hereby does not violate
the terms of any agreement to which it is a party or by which it
is bound;
(v) there are no suits or proceedings pending or to its knowledge,
threatened against it which, if decided adversely to such party,
would adversely affect its authority to execute, deliver and
perform this Agreement or to engage in operation of the Venture
in accordance herewith; and
(vi) it has all necessary licenses, permits and authorizations,
governmental or otherwise, necessary to execute, deliver and
perform this Agreement and to engage in operation of the Venture
as contemplated hereby.
b. Additional Representations and Warranties of Xxxxxxx. Xxxxxxx
has, and will convey to the Venture, good and marketable title to
the Facility, free and clear of all liens, claims and
encumbrances.
14. Initial Term and Renewal Terms. The Venture shall have a term
commencing on the date hereof and continuing to and including April 30, 2025.
Thereafter the term of the Venture shall be automatically extended for
successive two-year renewal terms unless either party elects by written notice
to the other party given not less than twelve (12) months prior to expiration
of the initial
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term or any renewal term, to terminate the Venture upon expiration of the
initial term or renewal term, as the case may be.
15. Early Termination. The Venture shall terminate prior to expiration
of the initial term or any renewal term, as follows:
(i) by the mutual written agreement of FRM and Xxxxxxx;
(ii) by either party upon not less than twelve (12) months written
notice of its election to terminate the Venture;
(iii) by either party upon written notice of its election to terminate
the Venture following the institution of any bankruptcy or
insolvency proceedings by or against the Venture or the other
party (whether voluntary or involuntary, and whether under
federal or state law), the dissolution, liquidation or winding up
of the other party or the assignment by the other party of any
significant portion of its property or assets for the benefit of
creditors or claimants;
(iv) by either party upon written notice of its election to terminate
the Venture if there is a willful breach by the other party of a
material term of this Agreement and such breach has not been
cured within sixty (60) days after written notice of such
breach;
(v) upon one hundred eighty (180) days prior written notice by either
party (or its assignee) following the assignment by a party of
its interest in the Venture in accordance with Section 18 hereof,
provided, however, that such notice of termination may not be
given more than ninety (90) days after the effective date of such
assignment or transfer; or
(vi) by Xxxxxxx in accordance with Section 31 hereof.
Nothing contained in this Section 15 shall affect or impair any rights
or obligations arising prior to or at the time of the termination of the
Venture, or which may arise by an event causing the termination of the Venture.
16. Disposition of Assets Following Termination.
a. Generally. Upon termination of the Venture, FRM and Xxxxxxx shall
proceed to wind up the affairs of the Venture in accordance with
this Section 16.
x. Xxxxxxx Option to Purchase Assets of Venture Following Optional
Termination. In the event either party gives notice of
termination pursuant to clause (ii) or (v) of Section 15 hereof,
or Xxxxxxx elects to terminate the Venture pursuant to Section 31
hereof, Xxxxxxx shall have the option to purchase the assets of
the Venture at a price equal to the then current book value, net
of accumulated depreciation
9
c. Option to Purchase Assets of Venture Following Bankruptcy,
Breach, Etc. In the event a party (the "Non-Defaulting Party")
gives notice of termination pursuant to clause (iii) or (iv) of
Section 15 hereof to the other party (the "Defaulting Party"),
the Non-Defaulting Party shall have the option to purchase the
assets of the Venture at a price equal to the then current book
value, net of accumulated depreciation.
d. Other Disposition of Assets. Absent exercise of the purchase
option set forth in Section 16(b) or (c) hereof, as the case may
be, upon termination of the Venture, the assets of the Venture
shall be sold in an orderly fashion in such manner or the
Management Committee shall determine; provided, however, that if
such termination of the Venture is pursuant to clause (ii) or (v)
of Section 15 hereof or pursuant to Section 31 hereof and Xxxxxxx
has not exercised its purchase option under Section 16(b) hereof,
or pursuant to clause (iii) or (iv) of Section 15 hereof and the
Non-Defaulting Party has not exercised its purchase option under
Section 16(c) hereof, then Xxxxxxx or Non-Defaulting Party, as
the case may be, shall have a right of first refusal with respect
to any sale of assets pursuant to this Section 16(d) on such
terms as shall be established by the Management Committee.
e. Application of Cash. Any cash of the Venture, including without
limitation the proceeds of assets sold pursuant to Sections
16(b), (c) or (d) hereof shall be applied and distributed in the
following order of priority:
(i) to the payment of debts and liabilities of the Venture
(other than outstanding advances pursuant to Section 5
hereof) and expenses of liquidation;
(ii) to the setting up of any reserves that the Management
Committee shall deem reasonably necessary for any
contingent or unforeseen liabilities or obligations of
the Venture arising out of or in connection with the
Venture, which reserves shall be paid over by FRM and
Xxxxxxx to a mutually designated party, as escrow agent,
to be held for the purpose of disbursing such reserves
in payment of any of the aforementioned contingencies;
provided, however, that at the expiration of such period
of time as FRM and Xxxxxxx shall deem mutually advisable,
said escrow agent shall distribute the balance thereof
remaining in the manner set forth in subparagraph (iv)
hereof;
(iii) to outstanding advances pursuant to Section 5 hereof;
and
(iv) any balance remaining after the application in accordance
with the foregoing subparagraphs, equally to FRM and
Xxxxxxx.
17. Purchases of Products Following Termination. In the event FRM elects
to terminate the Venture pursuant to Section 15 or Xxxxxxx elects to terminate
the Venture pursuant to Section l5(iv), and Xxxxxxx pursuant to Section 16(b) or
16(c) purchases the Facility upon
10
termination of the Venture, then FRM agrees that for a period of five years from
and after termination of the Venture, both it and its Affiliates will purchase
from Xxxxxxx, to the extent available from the Facility, their respective pet
food and fish food requirements consistent with purchases from the Facility made
prior to the termination of the Venture. The price for pet food and fish food
products purchased from Xxxxxxx shall be an amount that will yield to Xxxxxxx a
per ton profit substantially equivalent to the per ton profit then being
realized by Xxxxxxx on sales to others of products manufactured at the Facility.
Xxxxxxx shall provide invoices for all such pet food and fish food products and
such invoices shall be payable upon receipt thereof. In the event Xxxxxxx elects
to terminate the Venture pursuant to Section 15 (other than pursuant to Section
l5(iv)), FRM and its Affiliates shall be free to purchase their pet food and
food requirements from any source.
18. Assignment. Except as expressly permitted by this Section 18,
neither party shall assign or encumber its interest in the Venture. A party may
assign its interest in the Venture to another entity in connection with the sale
of substantially all of the assets of a division or component of its business to
another entity provided that (i) such party remains liable for observance and
performance of its obligations under this Agreement; (ii) the financial
condition of the transferee is reasonably satisfactory to the other party; and
(iii) the transferee specifically agrees to be bound by the terms of this
Agreement.
19. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto, their successors and permitted assigns.
20. Further Assurances. The parties agree that they will perform such
other acts and execute and deliver such other documents as may be necessary or
appropriate from time to time to carry out the intent and purpose of this
Agreement. The parties recognize that issues may arise in connection with the
Venture which are not provided for in this Agreement and cannot be resolved by
the Management Committee. Subject to the early termination provisions of Section
15 hereof, the parties agree to negotiate in good faith the resolution of such
issues by amendment or modification of this Agreement in accordance with Section
21 hereof.
21. Waivers and Amendments. This Agreement may be amended or modified,
and the terms hereof may be waived, only by a written instrument executed by the
parties hereto or in the case of a waiver, by the party waiving compliance. The
failure of either party at any time or times to require performance of any
provision hereof shall in no manner affect its right at a later time to enforce
the same. No waiver by either party of the breach of any term or covenant
contained in this Agreement or in any other such instrument, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any breach, or a waiver of the breach of
any other term or covenant contained herein.
22. Arbitration. All unresolved disputes or controversies arising out of
or in relation to this Agreement shall be determined and settled by arbitration
at a mutually convenient location in the State of Georgia in accordance with the
Commercial Rules of the American Arbitration Association in effect at the time
of said controversy, and judgment upon any award rendered by the arbitrator(s)
may be entered in any court of competent jurisdiction. The expenses of the
arbitration shall be borne by the Venture, provided that each of FRM and Xxxxxxx
shall pay for and bear the costs of its own experts, evidence, and legal
counsel. Whenever any action is required to be taken under this Agreement within
a specified period of time and the taking of such action is materially affected
by a
11
matter submitted to arbitration, such period shall automatically be extended for
ten (10) days plus the number of days that are taken for the determination of
that matter by the arbitrator(s). Nothing herein contained shall bar either
party from seeking equitable remedies in a court of competent jurisdiction.
23. Indemnification, Etc. The Venture shall indemnify and hold harmless
each of FRM and Xxxxxxx for and against all claims, actions, suits and
proceedings asserted against such party in connection with the Venture or any
act or omission of such party in its capacity as a party to the Venture;
provided, however, that neither FRM nor Xxxxxxx shall be indemnified and held
harmless for its gross negligence or willful misconduct.
24. Liability of Parties to Venture. Neither FRM nor Xxxxxxx shall be
liable to the Venture or the other party for any act or omission of such party
in its capacity as a party to the Venture unless such act or omission
constitutes gross negligence or willful misconduct of such party.
25. Governing Law. This Agreement shall be interpreted in accordance
with the laws of the State of Georgia.
26. Notices. Any notice given pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given if personally served or if
transmitted by registered or certified U.S. Mail, return receipt requested and
postage prepaid, addressed to the other party at its address hereinafter set
forth or at such other address as the other party shall theretofore have
designated by notice in accordance with this Section 26:
Flint River Milis, Inc.
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Attention: President
Xxxxxxx Milling Company
000 Xxxxx Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: President
The date of giving such notice shall be the date received, if served
personally, or the date on which the notice is delivered to the other party as
indicated by the return receipt.
27. Entire Agreement. This Agreement and the Exhibits hereto set forth
the entire understanding and agreement between the parties hereto with respect
to the subject matter hereof and supersede all prior agreements, arrangements
and understandings, written or oral, relating to the subject matter hereof.
28. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
29. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which taken
together shall be one document.
12
30. Announcements. Any public announcement of this Agreement or any of
the transactions contemplated by this Agreement, shall require the prior written
approval of both parties.
31. Future Expansion. Subject to the obligations of Xxxxxxx contained in
Section 11(b) hereof, nothing herein shall be deemed to limit or otherwise
impair the right of Xxxxxxx to expand its pet food and fish food business within
the Territory. If Xxxxxxx in its sole discretion determines that it requires
additional manufacturing facilities within the Territory, then Xxxxxxx shall be
free to build, purchase or otherwise acquire the use of such facilities;
provided that during the term of this Agreement, Xxxxxxx shall afford FRM the
opportunity to participate equally with Xxxxxxx in the ownership and/or
operation, as the case may be, of any facility for the manufacture of dry pet
foot or dry fish food. FRM shall have a reasonable time to determine whether to
participate with Xxxxxxx in the ownership and/or operation of such facilities,
but in no case longer than thirty (30) days following disclosure to FRM of the
material terms relating thereto. if FRM declines to participate in any new
facility, Xxxxxxx shall be free to purchase or otherwise acquire the use of such
facility for its own account, and to the extent Xxxxxxx'x ownership and/or
operation of the new facility conflict with its obligations under this
Agreement, the parties agree to amend this Agreement to pennit Xxxxxxx to own
and/or operate the new facility without financial or other penalty. if the
parties cannot agree to any such amendments, Xxxxxxx may terminate the Venture
and the affairs of the Venture shall be wound up in accordance with Sections 16
and 17 hereof. In the event that any new facility involves the expansion or
renovation of facilities owned by FRM, or the construction of new facilities on
property owned by FRM, and FRM elects to participate with Xxxxxxx in such
expansion, renovation or construction, FRM will contribute any existing assets
to the new venture for $1.00, and any new investment shall be shared by Xxxxxxx
and FRM on a 50/50 basis.
N WITNESS WHEREOF, the parties have executed this Agreement as of the
7th day of April, 1995.
FLINT RIVER XXXXX, INC.
By [ILLEGIBLE] Paint
--------------------------------
Its President
-------------------------------
XXXXXXX MILLNG COMPANY
By /s/ Xxxx X. Xxxxxxxxxx
--------------------------------
Its Group Vice President
-------------------------------
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EXHIBIT A
DESCRIPTION OF FACILITY
All that tract or parcel of land lying and being in Land Xxx 000 xx xxx
0xx Xxxxxxxx xxx 0xx Xxxxxxx, Xxxxxx Xxxxxx Georgia, and being in the City of
Cartersville, as shown by survey prepared for Xxxxxxx Milling Company by Xxxxxxx
X. Xxxxx, Georgia Registered Land Surveyor, plat dated December 21, 1983,
revised February 15, 1990, recorded in Plat Book 33 page 353, Clerk's Office,
Superior Court of Bartow County Georgia, for which reference is hereby made and
incorporated herein, property more particularly described as follows; BEGINNING
at an iron pin located at the intersection of the north right of way of
Xxxxxxx Street and the east right of way of River Road; thence along the east
right of way of River Road north 1 degree 29 minutes west 600.01 feet to an
iron pin; thence north 88 degrees 31 minutes 56 seconds east 398.63 feet to an
iron pin located at the centerline of CSX Railroad spur track; thence south 4
degrees 00 minutes east along the centerline of the CSX Railroad spur track
250.65 feet to a point; thence south 1 degree 31 minutes 45 seconds east 349.49
feet to a point located on the north right of way of Xxxxxxx Street; thence
along said right of way south 88 degrees 31 minutes west 409.92 feet to an iron
pin and the beginning point. Said tract containing 5.61l acres.
EXHIBIT B
PRELIMINARY CONSTRUCTION AND
EQUIPMENT BUDGET
1. Packing Room Heaters $ 7,500
2. Mixing Grinding Reflow 88,000
3. Receiving System Magnet 5,000
4. Dryer Cyclone 50,000
5. Compressed Air Dryer 10,000
6. Extruder Water Surge Tank 7,500
7. Fines Handling System 15,000
8. Revamp Corn Grinding 10,OOO
9. Install Delta-Wye System 10,000
10. Warehouse Addition 260,000
11. Upgrade Coating System 50,000
12. Warehouse Racks 12,000
13. New Forklift 18,000
14. Semi-automatic Palletizer 130,000
15. Computerize Batching 34,000
16. Large Pack Scale and Hanger 88,000
-------
$795,000
--------
EXHIBIT C
ADMINISTRATIVE EXPENSE
CATEGORIES
Customer Service
Purchasing
R & D/Quality
Tonnage Tax
Technicon Maintenance
Travel
Telephone
Kennel
Outside Research
Professional Fees
Laboratory Expense
Postage
Office Supplies
Accounting
Computer Service
Engineering
Airplane Expense (Actual)
Employee Relations
