EXHIBIT 10.4
MANAGEMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of the 3rd day of
March, 1997, by and between DEVELOPED TECHNOLOGY RESOURCE, INC., a corporation
organized under the laws of the State of Minnesota (hereinafter the "Manager"),
and FOODMASTER INTERNATIONAL L.L.C., a limited liability company organized under
the laws of the State of Delaware (hereinafter the "Company").
WITNESSETH:
WHEREAS, the Company has been formed by the Manager and certain other parties
(collectively the "Members") for the purpose of producing, packaging and
distributing high-quality, branded dairy, juice and other food related products
in the former Soviet Union; and
WHEREAS, as an inducement to the Members to form the Company, the Manager has
agreed to manage the business of the Company.
NOW, THEREFORE, for and in consideration of the foregoing and the premises and
mutual covenants hereinafter contained, the parties hereto hereby agree as
follows:
1. Engagement of Manager. The Company hereby engages the Manager to develop,
manage and operate all business activities of the Company and to do and perform
any and all things in the management of those business activities customarily
performed by managers of similar businesses, subject to the terms and conditions
imposed by this Agreement.
2. Acceptance by Manager/Priority of Resources. Manager hereby agrees to manage
the business of the Company on the terms and conditions provided herein. It is
understood and agreed that the Manager will devote all resources necessary to
the performance of its obligations under this Agreement and shall not undertake
any other projects or commitments which may adversely affect its ability to
perform its obligations under this Agreement.
3. Control by the Company. Notwithstanding any other provision of this
Agreement, the Manager shall be subject to the direction and control of the
Company with respect to all aspects of the performance of its obligations under
this Agreement
4. Duties of Manager. Subject to the provisions of Section 3, Manager agrees to
perform all actions reasonably necessary to develop, manage and operate the
business activities of the Company, including without limitation the following:
a. Manage all business activities of the Company.
b. Conduct all business activities of the Company's FoodMaster operations in
Kazakstan and its prospective operations in Moldova.
c. Investigate other dairy and food operations in the former Soviet Union for
possible investment by the Company.
d. Establish and maintain bank accounts for the Company, provided that such
accounts shall be approved by the Company prior to being established, and keep
the books and records of all business activities of the Company, to pay all
debts and obligations, to execute contracts as authorized by the Company.
e. Engage accountants for the Company and for the businesses owned and
controlled by the Company, provided that such accountants shall be approved by
the Company prior to engagement. Select, employ, supervise, direct, pay and
discharge all employees or independent contractors necessary, in Manager's
opinion, for the development, management, and operation of the Company's
businesses in the former Soviet Union, and all such persons shall be employees
or agents of Manager and not of the Company. Manager shall carry workers'
compensation insurance, written in such manner as also to protect the Company in
an appropriate amount, covering all such employees, and shall withhold for tax
purposes and make all deductions and file all reports required under all
applicable laws and regulations.
f. Such other duties and responsibilities reasonably requested from time to time
by the Company.
5. Employee Non-Competes. The Manager shall cause each of its key employees to
enter into non-competition agreements pursuant to which each of its employees
shall agree that during their employment with the Manager and for a period of
one year after termination thereof (whether voluntary or involuntary), such
employee shall not (i) directly or indirectly maintain an ownership interest in,
operate, or work for any entity which produces, packages or distributes dairy,
juice or other food related products in any of the Republics of the former
Soviet Union in which the Company engages, or proposes to engage, in such
activities, (ii) solicit, do business with, or deliver products or services to
any person or entity who was a client or customer of the Company, or (iii)
employ or offer to employ any individual who was employed by the Manager or the
Company or in any way associated with the Manager or the Company. For purposes
of this Agreement, the term "key employees" shall refer to Xxxx X. Xxxx, Erlan
Sagadiev, Xxxxx Xxxxxxxx, and Xxxxx X. Xxxxx, and any other individuals employed
by the Manager during the term of this Agreement to perform duties for the
Manager similar to those performed by the four foregoing individuals.
6. Independent Contractor. The Manager shall operate as an independent
contractor and neither Manager nor its employees shall be considered employees
of the Company.
7. Property of the Company. It is understood and agreed that all books, records,
files, reports, business products, discoveries, improvements, know-how or
techniques made, developed or created by the Manager (or its agents or
employees) in connection with the performance of the Manager's obligations under
this Agreement, shall be the property of the Company and shall be assigned to
the Company upon request. Nothing in this Agreement is intended to preclude the
Manager from using (i) any products, discoveries, improvements, know-how or
techniques in connection with projects which the Company has declined to pursue
under the Company's Limited Liability Company Agreement, or (ii) products,
discoveries, improvements, know-how or techniques unrelated to the production,
packaging or distribution of dairy, juice or other food related products in the
former Soviet Union.
8. Insurance. The Company shall provide liability insurance in an amount
satisfactory to the Manager. The Manager shall be named insured on such
liability insurance policies and certificates of insurance shall be provided to
the Manager.
9. Reports. The Manager will submit to the Company monthly financial statements
for all businesses in which the Company has an investment and will provide such
other information and reports as may be requested from time to time by the
Company.
10. Preparation of Annual Budget. Manager shall prepare a preliminary annual
budget forty-five (45) days prior to the end of each fiscal year. The Company
shall provide the Manager with an approved budget for each fiscal year prior to
the beginning of that fiscal year. The Company must approve any expenses
incurred by the Manager in excess of amounts specified in the approved budget.
11. Indemnification.
(a) The Company shall indemnify and hold harmless the Manager from and against
any and all claims or liabilities for damage or injury to property or persons or
death of persons occurring on or about the premises of any businesses owned or
controlled by the Company and managed by the Manager, except for such claims as
arise due to the negligent act or omission of Manager, its agents or employees.
(b) The Manager shall indemnify and hold harmless the Company against any and
all claims or liabilities for damage or injury to property or persons or death
of persons resulting or arising from the negligent acts or omissions of the
Manager, its agents or employees, except for such claims as arise due to the
negligent acts of omissions of the Company which do not involve any negligent
acts or omissions of the Manager, its agents or employees.
12. Compensation and Expense Reimbursement.
(a) As consideration for performing the services identified in this Agreement,
the Company shall reimburse the Manager for all expenses reasonably incurred by
the Manager in connection with the performance of services under this Agreement
provided that such expenses are specified in the budget approved pursuant to
Section 10 or have been pre-approved by the Company. The Manager shall provide
the Company with monthly invoices (in form and detail as reasonably acceptable
to the Company) of expenses to be reimbursed under this Agreement. The Company
shall pay the Manager for expenses identified in such invoice within thirty (30)
days of the receipt of an invoice.
(b) Upon execution of this Agreement, the Company shall reimburse the Manager
for the expenses identified on Exhibit A hereto which were for equipment
purchases, consulting fees, and travel and other expenses incurred from November
15, 1996 through the date of this Agreement, which the Manager represents were
necessary to implement the Dairy Proposal, dated December 1996, provided by the
Manager to the Members (the "Dairy Proposal"). Subsequent to the date of this
Agreement, the Company shall reimburse the Manager for other expenses incurred
prior to the date of this Agreement that are not identified on Exhibit A which
the Manager represents were necessary to implement the Dairy Proposal.
13. Contracts. Contracts and agreements entered into in accordance with Section
4 of this Agreement in connection with the development, management or operation
of the businesses owned or controlled by the Company and managed by the Manager
shall be executed by the Manager as agent of the Company, and the Company agrees
to indemnify and hold harmless the Manager from and against all existing and
future liabilities under such contracts and agreements, provided that the
Manager shall have no authority to incur any obligation on behalf of the Company
that exceeds [U.S.]$25,000 unless (i) the amount of such obligation, the
identity of the party to whom the obligation is to be incurred, and the purpose
for which the obligation is to be incurred is specified in a budget approved by
the Company, or (ii) such obligation is otherwise specifically approved by the
Company.
14. Term. This Agreement shall be effective as of the date hereof and shall
remain in effect until terminated in accordance with the following sentence.
This Agreement shall not terminate except (i) by mutual consent of the parties
hereto, (ii) by either party for cause, (iii) by the Company upon sixty (60) day
prior written notice, or (iv) upon the liquidation of the Company. For purposes
of this Agreement, "cause" shall mean the breach of any term hereof which breach
is not cured within thirty (30) days of the delivery of notice of such breach by
the party seeking termination.
15. Cooperation Between Parties. The parties agree to give each other full
cooperation and assistance to the end that both parties may discharge their
responsibilities hereunder.
16. Notices. Wherever in this Agreement it shall be required or permitted that
notice or demand be given or served by either party to this Agreement to or on
the other, such notice or demand shall be given or served either personally or
forwarded by registered or certified mail, postage prepaid, and a copy 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. The addresses for the parties
are as follows:
To the Manager:
To the Company:
Development Technology, Inc.
00000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy: 000-000-0000
c/o Agribusiness Management Co.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
Telecopy: 000-000-0000
Such addresses may be changed from time to time by either party by serving
notice as above provided.
17. Assignment. This Agreement shall be binding upon the successors and assigns
of the parties hereto and may not be assigned by Manager, except to an entity
controlled by Manager, without the prior written consent of the Company.
18. Amendment or Modification. This Agreement constitutes the entire agreement
between the parties hereto, and no variance or modification hereof shall be
valid or enforceable, except by an amendment or supplemental agreement in
writing executed by the parties hereto.
19. Choice of Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, without giving effect to
principles of conflicts of laws.
20. 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 parties hereof have caused this instrument to be duly
executed as of the day and year first above written.
FOODMASTER INTERNATIONAL L.L.C.
By API Dairy Partners L.P.,
Member
By Agribusiness Holding Company L.L.C., its general partner
By
Xxxx X. Xxxxxxxx, Chief
Financial Officer
DEVELOPED TECHNOLOGY RESOURCE, INC.
By _________________________________
Xxxx X. Xxxx, President
Expenses for Reimbursement
Data Vendor Description Amount
-------------------------------------------------------------------------------------------------------
2/1 5/97 Payroll $ 8,542.08
2/3/97 Kinko's Investment proposal copy 12.27
2/3/97 Ceridian Payroll processing 36.00
2/3/97 American Medical Security Dental premium 102.15
2/4/97 Xxxxxxx, Inc. Rent-Feb 97 2,967.64
2/4/97 Medica Medical insurance-Feb 97 833.75
2/1 0/97 Fed of Trade Union Chisinau Office Rent-Feb 97 600.00
2/13/97 Office Max Office supplies 110.43
2/28/97 Payroll-2/28/97 8,542.08 $21,746.40
00/00/00 Xxxxx Xxxxxxxx Xxxxxxxxx & Xx. Xxxxxxxxxx
proiects 5,392.21
l/20/97 Xxxxx Xxxxxxxx Hinchesti project 3,691.00
2/13/97 Xxxxx Xxxxxxxx Kazakhstan 3,091.00 12,174.21
12/18/96 Xx. Xxxxxxxxxx Airline ticket 1,931.22
1/6/97 Xxxx Xxxx Xx. Xxxxxxxxxx'x visit
expenses 2,161.33
1/7/97 Xxxxx Xxxxxxxx Xx. Xxxxxxxxxx'x visit
expenses 113.03
2/18/97 Xxxx Xxxx Xx. Xxxxxxxxxx'x visit
expenses 478.92
2/18/97 Xxxx Xxxx NY/DC Trip for AID
Xxxxxxxx, Sagad 2,083.13 6,767.63
2/26/97 Xxxxxx Half Xxxxx Xxxxx Placement fees 15,000.00 15,000.00
00/00-00/00 Xxxxx Xxxxxxxx Xxxxxxx travel expenses 7,366.17
1/97 Xxxxx Xxxxxxxx Flight from Moscow
to Moldova 1,139.95 8,506.12
Ak Bulak Debt Payments 157,729.58 157,729.58
ACCOUNT RECEIVABLES TO FOODMASTER LLC
Cargill $4,451.36
Alliance Food Equipment 2,373.60
Germantown USA 834
Germantown USA 4,004.00
International Dairy Equipment 880
MO Air 10,000.00
Label Makers ,Inc. 7,075.00
NiMCO Corporation 2,698.38
Xxxxxx Plastics 39,331.70
Phoenix Engineering 99.72
Xxxxx-Xxxxxx, Inc. 2,805.11
Advance to FoodMaster for Powdered Milk 35,000.00
Subtotal: 109,552.87
EQUIPMENT PURCHASED
1 NiMCO 350 QL form fill and seal machine 19,078.94
1 NiMCO 550 QL form fill and seal machine 29,613.69
1 Used rebuilt Hamba Yogurt filling 11,470.00
-shipping 443.21
-repair parts 297.40
1 Vitaline ice cream machine and wrapper 120,000.00
Subtotal: 180,903.24
Grand Total: $512,380.05
