MANAGEMENT SERVICES AGREEMENT
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THIS AGREEMENT made and entered into this 8th day of May, 1998, by and
between ORGANIC FOOD PRODUCTS, INC., a California corporation (hereinafter
referred to as "Company") and GLOBAL NATURAL BRANDS, LTD., an Illinois
corporation (hereinafter referred to as "Manager"), effective as of the 15th day
of April, 1998.
W I T N E S S E T H
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WHEREAS, Company is in the business of manufacturing and distributing
organic and natural food and beverage products;
WHEREAS, Manager is experienced in the management of food and beverage
product manufacture, marketing and sales;
WHEREAS, Company desires to arrange by contract for the management,
administration and day-to-day operation of Company on the terms and conditions
set forth herein; and
WHEREAS, Manager desires to enter into an agreement to provide strategic,
operations and administrative management services to Company;
NOW, THEREFORE, in consideration of the mutual promises, and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
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MANAGEMENT
1.1. Agreement to Manage and Operate. Manager shall have the sole and
exclusive right and obligation to administer, maintain, manage, and operate
Company, including the authority and responsibility to supervise all aspects of
the operation of Company, as an independent contractor, during the term of this
Agreement, and on and subject to the terms, covenants and conditions herein
contained.
1.2. Retention of Authority by Board of Directors. Company, acting through
its board of directors, shall at all times, maintain and exercise absolute
control over the assets and operation of Company. Manager shall perform the
functions described in this Agreement to be performed by it in accordance with
the policies, directives and by-laws adopted from time to time by Company's
board of directors. By entering into this Agreement, Company does not delegate
to Manager or to the employees of Manager who provide services in accordance
with this Agreement, any of the powers, duties or responsibilities vested in the
board of directors. The board of directors of Company may, in accordance with
the terms of this Agreement, direct Manager to implement policy and may adopt as
policy of Company recommendations and/or proposals made by Manager. The
relationship created by this Agreement is one of principal (Company) and agent
(Manager) and nothing to the contrary shall be suggested by or interpreted into
the terms of this Agreement.
ARTICLE II
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DUTIES OF MANAGER
2.1. Planning and Operation. Except as Company and Manager shall otherwise
agree, during the term of this Agreement, Manager shall be responsible for the
operation of the business of Company on a day-to-day basis ("Services"). Manager
shall have the authority to take whatever action it deems reasonably necessary
or appropriate to fulfill its duties. Manager's responsibilities are broadly
defined to ensure that all matters necessary and appropriate for the successful
management and operation of Company are performed. Manager's responsibilities
include, but are not limited to, performance of the following activities to be
conducted at the sole expense of Company:
(a) To obtain and maintain such approvals under applicable law as may
be necessary to operate Company;
(b) To develop and implement a program for marketing Company's
products, including public relations and advertising;
(c) To manage the food manufacturing and distribution operations of
Company;
(d) To keep Company's facilities in good order and repair, and in a
clean, safe and sanitary condition and to arrange for any and all necessary
repair, maintenance and replacement of any necessary aspect of such
facilities as Manager deems necessary and appropriate;
(e) To make any and all necessary alterations or improvements to
Company's facilities as Manager deems necessary or appropriate for the
successful operation of a food products manufacturing facility;
(f) To develop and implement strategic plans on behalf of Company;
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(g) To hire and supervise all personnel and outside services and
recruit such personnel and services as Manager deems necessary or
appropriate for operation of Company's facilities;
(h) To provide for and purchase all necessary equipment, inventory,
supplies, materials and services, necessary or appropriate for the
operation of Company's facilities; provided, however, that any capital
purchase in excess of $50,000 which has not been specifically approved in a
capital budget shall require approval of the board of directors of Company;
(i) To arrange payment of any and all taxes when same are due and
payable for the operation of Company's facilities;
(j) To manage billing functions and collect accounts receivables;
(k) To arrange payment, on a timely basis, of all costs associated
with the day-to-day operation of Company's facilities;
(l) To ensure that financial systems and services, including the
preparation of necessary and appropriate operating and capital budgets and
other financial reports, are developed and maintained;
(m) To obtain and maintain insurance for Company including, where
appropriate, public liability, product liability, directors and officers
liability, reinsurance, stop-loss protection, catastrophic loss insurance
and casualty and extended coverage insurance in such amounts and with such
insurers as Manager deems appropriate;
(n) To develop and perform all other matters necessary or appropriate
for the successful operation of Company's business; and
(o) To prepare such reports for the board of directors of Company as
appropriate for the successful operation of Company's business and as
required by the board of directors of Company to properly perform its
duties.
2.2. Expenses. Company shall bear full responsibility for all expenses
incurred in connection with the discharge of the Services hereunder, including,
specifically, all costs related to the manufacture and distribution of food
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products, materials, supplies, personnel, insurance costs, taxes, maintenance
and repairs, fees of outside accountants, legal expenses, and administrative
expenses incurred in connection with Company's business. Manager's compensation
for performing its duties hereunder, as set forth in Article IV hereof, reflects
that Company bears the expense of matters related to the operation of Company's
business. Company shall bear such expenses whether or not the business of
Company generates sufficient revenues to cover such expenses.
ARTICLE III
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MANAGERS AND OTHER PERSONNEL
3.1 Initial Key Personnel. Manager's recommendations regarding the types of
key positions which are critical in the opinion of Manager to the delivery of
the Services are set forth in Exhibit A. The persons initially appointed to fill
said key positions are set forth in Exhibit A. Company agrees to the engagement
of such key personnel and their appointment and election to the offices of
Company set forth in Exhibit A, and said key personnel shall assume their
respective duties on the date hereof. Said key personnel shall perform their
respective duties at the primary executive office of Company as designated by
the board of directors of Company. Messrs. Swallow, X'Xxxxxx and Xxxxxxx shall
relocate, as soon as practicable, to the greater metropolitan area at which the
primary executive office of Company is located. Each of these positions shall be
filled by properly qualified individuals continually during the term of this
Agreement. If an unanticipated vacancy (whether due to resignation, disability
or death) occurs, Manager shall act to fill such vacancy as soon as practicable,
subject to the approval of the board of directors of Company.
3.2 Compensation of Manager's Personnel. All key personnel and other
personnel providing Services pursuant to this Article III shall be and remain
employees of Manager and shall be compensated by Manager; provided, however,
that Manager's personnel shall participate in the medical, life and disability
insurance programs of Company, subject to reimbursement by Manager.
ARTICLE IV
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COMPENSATION TO MANAGER
4.1. Definitions. For purposes of this Article IV, the following terms
shall have the definitions set forth below:
"EBITDA" shall mean, with respect to any fiscal year,
the excess of total revenues over total expenses for such
period, on a consolidated basis, before provision for interest
expense, income taxes, depreciation and amortization for such
period and after elimination of intercompany items, and
excluding therefrom any compensation (other than expenses) to
Manager hereunder, any extraordinary item and any gain
resulting from the sale, exchange or other disposition of
assets not made in the ordinary course of business, all
calculated in accordance with generated accepted accounting
principles consistently applied.
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"EBITDA Improvement" shall mean, for any fiscal year,
the cumulative increase in EBITDA of the Company over the
Normalized 1998 EBITDA through the last day of such fiscal
year based upon the audited financial statements of Company
prepared in accordance with generally accepted accounting
principles consistently applied.
"Normalized 1998 EBITDA" shall mean EBITDA of Company
for the fiscal year ending June 30, 1998, based upon the
audited financial statements of Company, prepared in
accordance with generally accepted accounting principles
consistently applied, adjusted (i) by an amount agreed to by
Manager and Company, and (ii) with respect to each acquisition
completed by Company after the date hereof, by adjusting
Normalized 1998 EBITDA by an amount equal to the trailing
twelve-month EBITDA of the acquired entity calculated in a
manner consistent with the Normalized 1998 EBITDA of Company.
4.2. Base Fee. From the date hereof through June 30, 1999, Company shall
pay to Manager for the Services to be rendered hereunder a base fee of ("Base
Fee") of $300,000. Such fee shall be payable in equal monthly payments. Company
shall receive a credit against payment of the Incentive Fee (as defined in
Section 4.3 below) in an amount equal to the Base Fee payments made to Manager.
4.3 Incentive Fee. Company shall also pay to Manager for the Services to be
rendered hereunder, an additional fee based upon the financial performance of
the Company ("Incentive Fee"). Incentive Fee shall be payable in equal monthly
payments as a draw against forecasted EBITDA Improvement for the relevant fiscal
year. The Incentive Fee for each fiscal year shall be reconciled with actual
EBITDA Improvement for such fiscal year, based upon Company's audited financial
statements for such fiscal year, prepared in accordance with generally accepted
accounting principles consistently applied. Any under-payment of the Incentive
Fee during any fiscal year shall be paid within thirty (30) days of the
reconciliation prepared for such fiscal year. Any over-advance paid during a
fiscal year shall ratably reduce the Incentive Fee payments scheduled to be paid
(based upon forecasted EBITDA Improvement) in the immediately following fiscal
year. The Incentive Fee shall be calculated as follows:
a. April 15, 1998 Through June 30, 1999. Subject to a
minimum of $300,000 and a maximum of $1,200,000, (i) prior
to the completion of the first acquisition transaction of
Company exceeding $14,000,000 of annual revenues acquired
("Acquisition Transaction"), the Incentive Fee shall equal
fifty percent (50%) of the first $1,000,000 of EBITDA
Improvement, plus twenty-five percent (25%) of the next
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$1,000,000 of EBITDA Improvement, plus fifteen percent (15%)
of the remaining EBITDA Improvement and (ii) after an
Acquisition Transaction, the Incentive Fee shall equal
fifteen percent (15%) of EBITDA Improvement, prorated for
the period following the Acquisition Transaction through
June 30, 1999. In addition, with respect to the period prior
to an Acquisition Transaction, the aggregate monthly draws
against forecasted EBITDA Improvement for such period shall
be limited to $500,000 and shall be made in equal monthly
amounts. With respect to the periods subsequent to an
Acquisition Transaction, the aggregate monthly draws against
forecasted EBITDA Improvement shall be equal to the greater
of (i) the Incentive Fee based upon the forecasted EBITDA
Improvement for such periods or (ii) $990,000, and such
draws shall be made in equal monthly amounts and shall be
prorated for partial fiscal years.
(b) After June 30, 1999. Ten percent (10%) of EBITDA
Improvement.
(c) To the extent that the aggregate Base Fee and
Incentive Fee scheduled to be paid during the period ending
June 30, 1999 (based upon forecasted EBITDA Improvement)
shall be less than $990,000, Manager shall secure such
projected overadvance with a pledge to Company of 140,000
shares of Company stock owned by Manager. Manager shall pay
interest at the annual interest rate generally available to
Company under its commercial line of credit on the actual
shortfall amount, if any, determined upon the fiscal year
end Incentive Fee reconciliation.
4.4 Stock Options.
(a) In addition to the Base Fee and Incentive Fee paid
hereunder, Company shall issue to Manager on the date hereof
options for the purchase of common stock of Company at a
strike price equal to $2.50 per share provided, however,
that if the average closing bid price for the twenty (20)
trading days immediately following the release of the
lock-up referred to in Section 7.3 hereof shall be less than
$2.50 per share, then the strike price shall be equal to
such average price, but in no event shall the strike price
be lower than $2.25 per share. Such stock options shall be
issued in an amount equal to twenty-five percent (25%) of
the currently outstanding shares of capital stock of
Company, to equal twenty percent (20%) of the outstanding
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shares of capital stock of Company after issuance of the
stock options. Twenty-five percent (25%) of such stock
options shall vest each fiscal year over a four (4) fiscal
year period, subject to achievement of the share price
improvement and EBITDA Improvement performance objectives
agreed to by Company and Manager each fiscal year, which
performance objectives shall be reasonable and attainable.
Each such performance objective shall determine the vesting
of fifty percent (50%) of the stock options in each fiscal
year Share price improvement objectives shall be measured
based upon the average closing bid price as reported on
NASDAQ for the twenty (20) trading days immediately
following the release of the lock-up referred to in Section
7.3 hereof and shall be measured against the highest closing
bid price sustained or surpassed for ten (10) consecutive
trading days as reported on NASDAQ for the respective fiscal
year. Any vested stock options may be exercised by Manager
at any time for a four-year period following the date of
vesting. The stock options issued hereunder shall be subject
to customary documentation applicable to similar
transactions, or to a stock option plan approved by the
board of directors of Company.
(b) Except for the product recall undertaken by Company
in the third fiscal quarter of the fiscal year ending June
30, 1998, if any matter or condition which has existed or
occurred prior to the effective date of this Agreement,
which matter or condition results in a material adverse
effect on the market price of Company's shares after the
effective date of this Agreement, but prior to July 1, 1999,
the stock options subject to the achievement of share price
improvement performance objectives for the fiscal year
ending June 30, 1999, shall automatically vest for such
fiscal year.
4.5 Reimbursement of Expenses. Company shall reimburse Manager for all
actual out-of-pocket expenses of any nature or type incurred in providing the
Services to Company and preparation, negotiation and completion of this
Agreement. Such expenses include, but are not limited to, travel expenses such
as lodging, meals, equipment and vehicle rental. When travel is necessary or
required, Manager's employees shall be entitled to travel expense reimbursement
in accordance with Manager's travel policy. Company shall reimburse Manager for
all such charges actually incurred by Manager. Manager shall maintain receipts
to document expenses charged to Company, and shall provide copies of those
receipts attached to his expense report to Company within a reasonable period of
time. Company shall pay such expenses within fifteen (15) days of receipt of the
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expense report. Manager shall be reimbursed for use of its automobiles in
connection with the Services, at a mileage rate of 31.5 cents per mile, or the
maximum mileage rate allowed by the Internal Revenue Service, whichever is
greater. In the event that it becomes reasonably necessary for Manager or its
employees to relocate in order for Manager to perform its obligations hereunder,
Company shall pay all associated moving and relocating expenses not to exceed
$225,000. Company shall also pay Manager the amount of $15,000 to reimburse
Manager its reasonable out-of-pocket expenses incurred prior to the effective
date of this Agreement in connection with each completed acquisition transaction
in the amount of $15,000.
ARTICLE V
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CAPITAL INVESTMENT BY MANAGER
5.1. Initial Stock Purchase. Company shall sell and Manager or its
affiliate shall purchase common stock of Company at an aggregate purchase price
of $1,000,000. The price per share shall be $2.50 per share. If the average
closing bid price as reported on NASDAQ for the twenty (20) trading days
immediately following the release of the lock-up referred to in Section 7.3
hereof shall be less than $2.50 per share, the purchase price shall be adjusted
to equal such average price, but in no event shall the purchase price be lower
than $2.25 per share. Said shares shall be subject to a twelve (12) month
lock-up on public trading.
5.2. Purchase Schedule. $500,000 of said purchase shall be completed on or
before the later to occur of: (i) approval of the strategic plan set forth in
Article VI hereof, or (ii) thirty (30) days after the execution of this
Agreement; and $500,000 of said purchase shall be completed on or before the
earlier to occur of (i) thirty (30) days after the completion of the first
Acquisition Transaction, or (ii) twelve (12) months after the execution of this
Agreement.
ARTICLE VI
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ADOPTION OF STRATEGIC PLAN
6.1. Strategic Plan. On or before May 31, 1998 Manager shall develop and
present to the board of directors of Company for approval a strategic plan for
Company substantially derived from Manager's "Integration and Growth Strategy"
presentation previously presented to the board of directors of Company.
ARTICLE VII
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ORGANIZATION OF COMPANY
7.1. Representation on Board of Directors. The Company agrees that, at all
times during the term hereof, subject to shareholder approval, the board of
directors of Company shall consist of seven (7) directors, one of whom shall be
the President / Chief Executive Officer of Company. The other members of the
board of directors shall be elected by the shareholders as set forth in the
organizational documents of Company; provided, however, that, subject to
shareholder approval, no shareholder who votes for the election of himself or
herself to the board of directors, shall vote for the election of any other
candidate for membership on the board of directors and, provided further, that
all directors shall be required to have a direct or indirect monetary investment
in Company in excess of $25,000.
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7.2. Amendment to Organizational Documents. To the extent permitted by
applicable law, Company shall amend the corporate organizational documents of
Company to fully implement the provisions of this Article. To the extent said
corporate organizational documents are not permitted by applicable law to be so
amended, Company shall cause each person holding in excess of five percent (5%)
of the outstanding capital stock of Company to execute and deliver a
shareholders agreement which fully implements the provisions of this Agreement.
7.3. Release of Lock-Up. Company represents and warrants that the lock-up
established by Sentra Securities Corporation on the private and public sale of
the common stock of Company held by Sentra Securities Corporation and its
clients shall expire on or before August 11, 1998.
7.4. Registration. Company shall file, as promptly as practicable after
August 11, 1998 and in no event later than September 30, 1998, a registration
statement under the United States Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, covering the sale and resale (if
necessary to permit the unrestricted resale of the shares to be purchased
pursuant to Section 5.1 hereof and the shares underlying the stock options
granted Manager pursuant to Section 4.4 hereof).
7.5. Change in Control. A Change in Control (as hereinafter defined) shall
constitute cause to terminate this Agreement pursuant to Section 9.2(b) hereof.
Upon such termination, all Base Fees, Incentive Fees and other amounts due or to
be paid Manager during the Initial Term of this Agreement shall become
immediately due and payable, and all stock options granted hereunder shall
immediately vest and be immediately exercisable without further action. For the
purposes of this Section, a Change in Control shall mean the acquisition,
whether directly or indirectly, by any person or "group" (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) of more than fifty
percent (50%) of the capital stock of Company, and the termination of this
Agreement pursuant to Section 9.3(c) hereof.
ARTICLE VIII
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RECORDS, CONFIDENTIALITY AND NON-SOLICITATION
8.1. Ownership of Records. All business records relating to Company's
business shall be the sole property of Company.
8.2. Confidentiality. Manager shall hold in confidence and not disclose to
any party without the prior written consent of Company any proprietary or
confidential information of Company. Proprietary or confidential information
refers to any information not generally known among Company's competitors and
that has commercial value to Company ("Confidential Information"). By way of
illustration, but not limitation, Confidential Information includes (a)
developments, improvements, trade secrets, formulae, processes, techniques,
know-how and data; (b) plans for research, development, new products, marketing
and selling; information related to business plans, acquisitions, strategic
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plans, budgets and unpublished financial statements; prices and costs;
information regarding suppliers and customers; and (c) any information
designated by Company as confidential. Manager may disclose Confidential
Information to its employees who agree to sign a confidentiality and
non-solicitation agreement with Company. Manager may also disclose Confidential
Information to its and Company's advisors and consultants as necessary to
fulfill Manager's obligations under this Agreement, provided that each recipient
is informed of the nature of the Confidential Information and agrees to act in
accordance with the terms of this paragraph. The obligation under this paragraph
shall survive termination of this Agreement.
8.3. Non-solicitation and Non-competition. During the term of this
Agreement and for a period of 18 months thereafter, neither Manager nor its
employees shall, directly or indirectly, solicit for employment or hire any
employee of Company. During the term of this Agreement, neither Manager nor its
employees shall, directly or indirectly, engage in any activity, or have any
interest in any firm, corporation or business, that engages in any activity, in
any of the counties of the State of California, any state of the United States,
or any country in which Company conducts business, in the manufacturing or
distribution of organic or natural food or beverage consumer products, as long
as Company shall engage in material activity in such jurisdiction.
ARTICLE IX
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TERM AND TERMINATION
9.1. Term. The term of this Agreement shall commence on the date hereof and
continue through the period ending June 30, 2002 ("Initial Term") , unless
sooner terminated by the written agreement of the parties or as set forth in
this Article IX. This Agreement shall be thereafter automatically renewed for
additional one (1) year terms, unless sooner terminated by the written agreement
of the parties or as set forth in this Article IX. Any such renewal shall be on
the terms and conditions herein set forth.
9.2. Termination by Manager. Manager may terminate this Agreement:
(a) If Company fails to pay any monies due to Manager
pursuant to this Agreement within thirty (30) days after
receipt of an invoice or otherwise becoming due and such
failure continues uncured for a period of thirty (30) days
after receipt by the board of directors of Company of
written notice specifying such failure;
(b) If Company shall fail to keep, observe or perform
any material covenant, obligation, agreement, term or
provision of this Agreement to be kept, observed or
performed by it, and such default shall continue for a
period of thirty (30) days after written notice; provided,
however, if any such default is of a nature that it cannot
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reasonably be remedied within such thirty (30) day period,
Company shall not be in default hereunder if it commences to
correct such default within thirty (30) day period and
continually exercises diligence thereafter to correct such
default; or
(c) For any reason, upon giving nine (9) month's prior
written notice to Company.
c. Termination by Company. Company may terminate this Agreement:
(a) If, upon the second anniversary date of this
Agreement and every subsequent anniversary date thereafter,
Manager has failed to meet the minimum threshold performance
requirements agreed to by Company and Manager each fiscal
year, and Company gives Manager six (6) months' written
notice of its intent to terminate with respect to such
second anniversary date and three (3) months' written notice
with respect to each anniversary date thereafter;
(b) If Manager shall fail to keep, observe or perform
any material covenant, obligation, agreement, term or
provision of this Agreement to be kept, observed or
performed by it, and such default shall continue for a
period of thirty (30) days after written notice; provided,
however, if any such default is a nature that it cannot
reasonably be remedied within such thirty (30) day period,
Manager shall not be in default hereunder if it commences to
correct such default within the thirty (30) day period and
continually exercises diligence thereafter to correct such
default; or
(c) For any reason, as of the last day of any fiscal
quarter, upon giving nine (9) months' prior written notice
to Manager; provided, however, that the Incentive Fee shall
be reconciled for the relevant period prior to the effective
date of such termination; and further provided that if this
Agreement is terminated pursuant to this Section 9.3(c), all
stock options earned and vested hereunder, on a pro rata
basis to the last day of such fiscal quarter, shall
immediately become exercisable.
9.4. Rights Upon Termination. Except as otherwise specifically stated in
this Agreement, and except as set forth in Section 7.5 hereof, all rights,
duties and obligations of the parties under this Agreement shall cease upon the
effective date of termination, and all stock options not yet exercisable shall
immediately terminate. Upon any termination of this Agreement, Manager shall
repay Company any over-advance of the Incentive Fee under Section 4.3 hereof. If
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this Agreement is terminated under Sections 9.2(a) or (b), or 9.3(c), Company
shall pay Manager any shortfall of the Incentive Fee earned up to the
termination date on a pro rata basis. Upon any such termination, the payment
required to be made by Company or Manager, as applicable, shall be paid within
thirty (30) days of the prompt and reasonable determination of the over-advance
or shortfall by the independent certified public accountants of Company, subject
to final reconciliation with actual EBITDA Improvement for the subject fiscal
year based upon Company's audited financial statements for such fiscal year,
prepared in accordance with generally accepted accounting purposes consistently
applied. Any final reconciliation of amounts due shall be paid by Company or
Manager, as applicable, within thirty (30) days of delivery of such
reconciliation.
ARTICLE X
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INDEMNIFICATION
10.1. Indemnification. Company agrees to indemnify, defend and hold
harmless Manager and all its officers, directors, shareholders, employees
(including, without limitation, the key personnel set forth in Exhibit A hereto)
affiliates and agents (the "Indemnified Parties") from and against all losses,
damages, claims, liability and expenses (including attorneys' fees and costs),
whether based on contract or tort, arising out of or in any way relating to: (a)
the performance of the Services pursuant to this Agreement; provided, however,
Company's responsibility to indemnify an Indemnified Party shall not apply to
such Indemnified Party's intentional malfeasance, acts or omissions that such
Indemnified Party knew were unlawful or which did not reasonably believe to be
in Company's best interest, or which were grossly negligent; (b) Company's
failure to comply with the terms of this Agreement; or (c) arising from or
related to matters occurring prior to the effective date of this Agreement.
10.2. Directors and Officers Insurance. During the term of this Agreement,
Company shall obtain and maintain policies of insurance providing directors' and
officers' liability coverage with such limits of coverage as are prudent for
incorporated businesses similar in nature to the business of Company, as
approved by the board of directors of Company.
ARTICLE XI
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MEDIATION AND ARBITRATION
11.1. Mediation. Except as otherwise provided in this Agreement, all
claims, disputes and other matters requiring resolution and arising out of or
relating to this Agreement or any breach thereof, and which are not resolved
informally between the parties, may be submitted by either party to the American
Arbitration Association for non-binding arbitration at San Francisco,
California, in accordance with the Commercial Mediation Rules of the American
Arbitration Association. Either party may request mediation by written notice to
the other party. The request shall be made within a reasonably time after the
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claim, dispute or other matter in question has arisen, and in no event shall
such notice be given after legal or equitable proceedings based on such claim,
dispute or other matter in questions would be barred by the applicable statute
of limitations. The parties agree, notwithstanding the provisions of this
Section 11.1, that a party shall be entitled to pursue remedies for emergency or
preliminary injunctive or equitable relief in any court of competent
jurisdiction, provided that there shall be a stay of such judicial proceedings
with regard to the merits of the dispute arising out of or relating to this
Agreement pending mediation of all underlying claims between the parties
immediately following the issuance of any such emergency or preliminary
injunctive or other equitable relief.
11.2 Arbitration. Except as otherwise provided in this Agreement, all
claims, disputes and other matters requiring resolution and arising out of or
relating to this Agreement or any breach thereof, and which are not resolved
through mediation pursuant to Section 11.1 above, may be submitted by either
party to the American Arbitration Association for binding and confidential
arbitration at San Francisco, California, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Either party may
demand arbitration by written notice to the other party. The request shall be
made within sixty (60) days after mediation proceedings have been terminated.
The award rendered by the arbitrator(s) shall be final, and judgment may be
entered upon it in accordance with applicable law in any court having
jurisdiction thereof. The arbitrator(s) may require discovery and render
equitable types of relief and, in such event, any court having jurisdiction
thereof may enter an order to enforce certain provisions of this Agreement. The
parties agree that the parties shall be entitled to pursue remedies for
emergency or preliminary injunctive or equitable relief in any court of
competent jurisdiction, provided that there shall be a stay of such judicial
proceedings with regard to the merits of the dispute arising out of or relating
to this Agreement pending arbitration of all underlying claims between the
parties immediately following the issuance of any such emergency or preliminary
injunction or other equitable relief.
ARTICLE XII
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CONSTRUCTION AND EFFECT
12.1. Notices. Any notice, request, demand, statement or consent made
hereunder shall be in writing and sent to Manager and Company by registered or
certified mail, return receipt requested and postage prepaid, to the following
addresses:
To Manager: Global Natural Brands, Ltd.
000 Xxxxxx Xxxx
Xxxxx Xx. 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: President and Chief
Executive Officer
To Company: Organic Food Products, Inc.
000 Xxxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chairman of the Board
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Notices and demands shall be deemed to have been given when so mailed. Either
party may change the address to which notices and demands to it are to be given
by notifying the other party thereto in writing of a new address to be used for
such purposes
12.2. Assignment. Neither party may assign this Agreement or any right or
obligation under this Agreement without the prior written consent of the other
party. Any purported assignment without such consent, shall be void and
ineffective.
12.3. Independent Relationship. Manager is an independent contractor and
not an employee, joint venturer or partner of Company, and nothing in this
Agreement shall be construed as creating any other relationship between Company
and Manager, or between any employee or agent of Manager and Company.
Accordingly, unless expressly provided to the contrary herein, neither Manager
nor any of its employees will participate in or be entitled to any benefit under
Company's benefit programs or plans now existing or hereafter created,
including, without limitation, Company's pension plan, savings plan and medical,
life, disability and accidental death insurance plans. Manager's employees
shall, at all times, remain employees of Manager, which shall be solely
responsible for all aspects of their employment, including, without limitation,
compensation, benefits, payment or withholding of taxes, social security,
medicare, unemployment or other insurance, and workers' compensation. Manager
agrees to comply with all laws, rules, regulations and ordinances applicable to
it as an employer, including, without limitation, the withholding and
contribution provisions of any law affecting the income or payroll of its
employees, as well as any state unemployment or worker's compensation acts.
12.4. Governing Law. All of the terms and provisions of this Agreement and
the rights and obligations of the parties hereunder shall be interpreted and
enforced in accordance with the laws of the State of California.
12.5. Warranty and Disclaimer. Manager warrants to Company that the Manager
and Manager's personnel will utilize their best efforts to furnish reasonably
required services and that, in doing so, they will exercise such skills and
diligence as Company might reasonably expect of individuals with comparable
qualifications employed in similar positions. IN THE EVENT THAT MANAGER FAILS TO
MEET ITS WARRANTY OBLIGATIONS AS SET OUT HEREIN OR OTHERWISE FAILS TO MEET ITS
OBLIGATIONS UNDER THIS AGREEMENT PURSUANT TO ARTICLE IX HEREOF, COMPANY'S ONLY
REMEDIES SHALL BE TO TERMINATE THIS AGREEMENT. THE FOREGOING WARRANTY IS MADE TO
COMPANY ONLY, AND IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, WHETHER
WRITTEN, ORAL OR IMPLIED (INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR PURPOSE). NO CONSEQUENTIAL DAMAGES, INCIDENTAL DAMAGES OR OTHER INDIRECT OR
SPECIAL DAMAGE OR LOSS, SUCH AS, BUT NOT LIMITED TO, LOSS OF PROFITS, LOSS OF
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GOOD WILL, LOSS OF BUSINESS OPPORTUNITY OR LOSS OF EXECUTIVE OR EMPLOYEE TIME
SHALL BE RECOVERABLE BY COMPANY AND ARE SPECIFICALLY DISCLAIMED. THE FOREGOING
LIMITATIONS OF LIABILITY AND REMEDIES REPLACE ANY AND ALL THEORIES OF ACTION,
CAUSES OF ACTION OR THEORIES OF DAMAGE WHICH MAY OTHERWISE BE BROUGHT BY COMPANY
INCLUDING, WITHOUT LIMITATION, ACTIONS BASED ON STATUTE, CONTRACT, BREACH OF
WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT THEORY.
12.6. Separability. Should one or more of the provisions hereof or any
given application of any particular provision hereof be found invalid or
unenforceable by a court of appropriate jurisdiction, the parties hereto
recognize and agree that the remainder of this Agreement shall remain in full
force and effect and be enforceable in accordance with its terms.
12.7. Survival. The provisions of Articles X and XI and Section 12.5 shall
survive any termination of this Agreement.
12.8. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto, and no representations or agreement, oral or
otherwise, between the parties not embodied herein or attached hereto shall be
of any force and effect. Any additions or amendments to this Agreement
subsequent hereto shall be of no force and effect unless in writing and signed
by the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the year
and date first above written.
ORGANIC FOOD PRODUCTS, INC.
By:
---------------------------------------
Name:
---------------------------------
Its:
---------------------------------
GLOBAL NATURAL BRANDS, LTD.
By:
---------------------------------------
Name:
---------------------------------
Its:
---------------------------------
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EXHIBIT A
Key Personnel
-------------
Name Title
---- -----
Xxxxx X. Xxxxxxx Chief Executive Officer
J. Xxxxxxx Xxxxxxx Vice-President of Marketing
Xxxxx X. X'Xxxxxx Chief Financial Officer
Xxxxxx X. Xxxxxxxxx Vice-President of Sales and
Distribution
A-1
