Exhibit 10.72
Execution Draft
MANAGEMENT, OPERATION AND
MAINTENANCE CONTRACT
BETWEEN
VILLAGE FARMS OF DELAWARE, L.L.C.
AND
VILLAGE FARMS OF MARFA, L.P.
JUNE 4, 1997
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS........................................................................................ 1
ARTICLE II
SCOPE OF DUTIES.................................................................................... 3
Section 2.01. Performance of Start-up, Operation and Maintenance...................... 3
Section 2.02. Personnel............................................................... 4
Section 2.03. Facility Manager........................................................ 4
Section 2.04. Business Plan and Budget................................................ 4
Section 2.05. Performance Standards................................................... 4
ARTICLE III
OPERATION.......................................................................................... 4
Section 3.01. Operation............................................................... 4
Section 3.02. Compliance With Governmental Rules...................................... 5
Section 3.03. Obligations of Owner.................................................... 5
Section 3.04. Greenhouse Products..................................................... 5
Section 3.05. Maintenance............................................................. 5
Section 3.06. No Obstruction.......................................................... 6
ARTICLE IV
COMPENSATION AND PAYMENT........................................................................... 6
Section 4.01. Basic Compensation...................................................... 6
Section 4.02 Debt Service Coverage Ratio Test........................................ 7
ARTICLE V
REPRESENTATIONS AND WARRANTIES..................................................................... 7
Section 5.01. Representations and Warranties of the Manager........................... 7
ARTICLE VI
COVENANTS OF THE MANAGER........................................................................... 7
Section 6.01. Operating Logs: Records and Audits...................................... 7
Section 6.02. Insurance of the Owner.................................................. 7
Section 6.03. Employment Practices.................................................... 8
Section 6.04. Nondisclosure........................................................... 8
Section 6.05. Compliance With Governmental Rules...................................... 9
ARTICLE VII
GENERAL LIABILITY.................................................................................. 9
Section 7.01. Indemnification......................................................... 9
ARTICLE VIII
DEFAULTS AND REMEDIES.............................................................................. 9
Section 8.01. Defaults................................................................ 10
Section 8.02. Damages for Termination Without Cause................................... 10
ARTICLE IX
TERM............................................................................................... 10
Section 9.01. Term.................................................................... 10
ARTICLE X
MISCELLANEOUS...................................................................................... 10
Section 10.01. Notices................................................................. 10
Section 10.02. Severability............................................................ 11
Section 10.03. Amendment............................................................... 11
Section 10.04. Assignment.............................................................. 11
Section 10.05. Relationship of the Parties............................................. 11
Section 10.06. Headings; Etc........................................................... 12
Section 10.07. Governing Law........................................................... 12
Section 10.08. Parties in Interest; Limitation and Rights of Others.................... 12
Section 10.09. Arbitration............................................................. 12
MANAGEMENT, OPERATION AND MAINTENANCE CONTRACT
Village Farms of Marfa, L.P. (the "Owner") intends to construct and operate
an approximate 41 acre greenhouse (the "Greenhouse"). The Greenhouse will be
manufactured and constructed by Dalsem Kasenbouw B.V. (the "Contractor"), Agro
Power Development, Inc. (the "General Contractor") and the Owner. Village Farms
of Delaware, L.L.C. (the "Manager") and the Owner have entered into this
Management, Operation and Maintenance Contract dated as of June 4, 1997 to
operate, maintain and manage the Greenhouse.
In consideration of the mutual agreements herein contained and other good
and valuable consideration, receipt of which is hereby acknowledged, and in
reliance upon the representations and warranties of each party set forth herein,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following terms when used herein shall have the following meanings:
"Affiliate" of any Person shall mean each Person which, directly or
indirectly, controls or is controlled by or is under common control with such
designated Person and, without limiting the generality of the foregoing, shall
include (a) any Person which beneficially owns or holds ten percent (10%) or
more of any class of voting securities of such designated Person or ten percent
(10%) or more of the equity interest in such designated Person and (b) any
Person of which such designated Person beneficially owns and holds ten percent
(10%) or more of any class of voting securities or in which such designated
Person beneficially owns or holds ten percent (10%) or more of the equity
interest. For the purposes of this definition, the terms "controls", "controlled
by", and "under common control with", as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person whether through the
ownership of voting securities or by contract or otherwise.
"Business Day" shall mean any day other than Saturday, Sunday or other day
on which banks are authorized to be closed in Texas, New York, North Carolina,
or New Jersey.
"Business Plan and Budget" shall mean the business plan and budget prepared
annually or more often by Manager setting forth the items described in Section
2.04.
"Capital Assets" shall mean all reusable equipment and components used in
the operation of the Greenhouse.
"Codes and Standards" shall mean the applicable national, state and local
engineering construction, building and safety codes and standards from time to
time in effect governing the construction and operation of the Greenhouse.
"Contract" shall mean this document and any exhibits and appendices hereto
as amended from time to time.
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"Contract Year" initially shall be the period ending on December 31 next
following the Date of Initial Services and each calendar year thereafter.
"Credit Agreement" shall mean the Credit Agreement to be entered into
between Owner and the Lender, as the same may be amended, modified or
supplemented from time to time.
"Date of Initial Services" shall mean that date, as agreed upon by the
Manager and the Owner, which is sixty (60) days prior to the date of Phase I
Substantial Completion under the Commercial Greenhouse Design and Construction
Contract, dated March 31, 1997, by and between Contractor and General
Contractor, as same may be amended, modified or supplemented from time to time.
"Facility Manager" shall mean the person described in Section 2.03.
"Governmental Rule" shall mean any law, rule, regulation, ordinance, order,
code, interpretation, judgment or similar norm or decision of any Federal,
state, local or foreign government, authority, agency, court or other body or
entity having jurisdiction over the Site including the Codes and Standards.
"Greenhouse Construction Agreement" shall mean the Commercial Greenhouse
Design and Construction Contract, dated March 31, 1997, for the construction of
the Greenhouse by and between the Contractor and the General Contractor as
assigned to the Owner and as supplemented, modified and amended through the date
hereof.
"Lender" shall mean Village Farms International Finance Association and its
successors and assigns.
"Marketing Agent" shall be Village Farms, L.L.C. for the term and to such
extent as described in the Marketing and Sales Agreement between the Owner and
Village Farms, L.L.C., dated of even date herewith.
"Marketing and Sales Agreement" shall mean the Marketing and Sales
Agreement between the Owner and Village Farms, L.L.C., dated of even date
herewith.
"Operating Costs" shall mean the sum (without duplication) of (a) direct
labor costs paid, (b) seed expense paid, (c) packaging supplies expense paid,
(d) fertilizer and chemical expenses paid, (e) biological control, including
bees, expense paid, (f) freight expense paid, (g) growing medium and supplies
expense paid, (h) carbon dioxide expense paid, (i) utility (including hot water,
electricity and natural gas) expense paid, (j) compensation paid to the Manager
hereunder, (k) insurance premiums and property taxes paid, (1) principal and
interest paid with respect to the Credit Agreement and (m) all other cash
expenses paid relating to the operation of the Greenhouse, to the extent
contained in the Business Plan and Budget.
"Party" shall mean Owner or the Manager, or any of them, as appropriate,
and their successors and permitted assignees.
"Payroll Costs" shall mean the salaries payable to employees of the Manager
performing the Work at the Site.
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"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization or
government or agency or political subdivision thereof.
"Product" shall mean all production derived from the Greenhouse, which
shall initially consist of tomatoes.
"Revenues" shall mean the gross proceeds derived from the sale of the
Product, plus interest income, and any and all other types of income received by
the Owner, less allowances, returns, and amounts received with respect to
freight and transportation charges, and excluding insurance proceeds.
"Site" shall mean the Greenhouse and its grounds located at the Southern
Quadrant of the Marfa Municipal Airport, Marfa, Presidio County, Texas.
"Term" shall mean the period provided for in Section 9.01 hereof.
"Uncontrollable Force" shall mean any of the following which are beyond the
reasonable control of a Party and which materially impairs the performance by
such Party of its duties and obligations hereunder and such material impairment
continues for a period of more than thirty (30) days: (a) severe weather, flood,
fire, lightning or other natural disaster or act of God, (b) earthquake or
subsidence, whatever its cause, (c) strikes or other labor disturbances, whether
or not involving employees of a Party, (d) action or inaction by, or inability
to obtain authorization or approval from, any governmental agency or authority,
which a Party is unable, after its best efforts, to overcome, (e) compliance
with any Governmental Rule, (f) war (whether declared or not), sabotage, act of
a public enemy, insurrection, riot or civil disturbance, (g) defects in material
equipment necessary for performance of the Contract, (h) any act by another
party (other than the Party claiming Uncontrollable Force, any Affiliate of such
Party or the respective agents, servants or employees of such Party or
Affiliates) or (i) any other similar act.
"Work" shall mean all duties and responsibilities of the Manager under this
Contract.
ARTICLE II
SCOPE OF DUTIES
Section 2.01. Performance of Start-up, Operation and Maintenance. As more
specifically described in Articles III and IV, the Manager shall furnish, manage
and supervise all personnel necessary in connection with the design, start-up,
operation, maintenance, service and repair of the Greenhouse. Commencing on the
Date of Initial Services, the Facility Manager (as defined herein in Section
2.03) shall be available on the Site to provide consulting services to the
Contractor in its construction of the Greenhouse and to prepare the Greenhouse
for production. Prior to the Date of Initial Services and upon witnessing all
performance testing, the Manager shall inspect the Greenhouse, and unless the
manager submits in writing to Owner a report setting forth any defects in the
design or construction of the Greenhouse within thirty (30) days after the Date
of Initial Services and upon witnessing all performance testing, the Manager
will be deemed to have accepted the Greenhouse. Any defects in the design or
construction of the Greenhouse or in any equipment therein reasonably
discoverable by the Manager through such inspection shall not be grounds for
claiming Uncontrollable Force after acceptance of the
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Greenhouse by the Manager. The marketing and distribution of the Product shall
be the primary responsibility of Village Farms, L.L.C. as defined in the
Marketing and Sales Agreement.
Section 2.02. Personnel. The Manager shall dedicate to the performance of
the Contract such administrative, technical and supervisory personnel (each of
whom will be properly trained and qualified to undertake their respective
assigned duties) and support systems and services as are necessary or desirable
to (i) assure start-up and commissioning of the Greenhouse, (ii) instruct the
Owner and its employees in the proper operation of the Greenhouse, and (iii)
perform Manager's responsibilities under this Contract.
Section 2.03. Facility Manager. The Manager shall identify one competent
individual to act in the capacity of Facility Manager. The Facility Manager
shall be responsible on a day-to-day basis for the operations and performance of
the Greenhouse. The selection and continued employment of the Facility Manager
in the performance of the Greenhouse Operations shall be subject to the approval
of Owner, which approval shall not be unreasonably withheld. The Facility
Manager shall be an employee of the owner.
Section 2.04. Business Plan and Budget. Prior to the date of Phase I
Substantial Completion under the Greenhouse Construction Agreement, the Manager
will provide to the Owner a preliminary Business Plan and Budget for the first
year of operations setting forth such information as the Owner shall reasonably
request. In addition, within forty-five (45) days prior to the Date of Initial
Services and within forty-five (45) days prior to December 31 of each year
thereafter, the Manager shall submit to the Owner the Business Plan and Budget
for the initial Contract Year and each Contract Year thereafter. The Business
Plan and Budget shall set forth in form and detail reasonably satisfactory to
Owner, the Manager's best estimate of Revenues and Operating Costs of the
Greenhouse for such Contract Year. Each Business Plan and Budget delivered
hereunder shall be subject to the approval of Owner. In the event the Owner does
not notify the Manager of its approval or disapproval of the Business Plan and
Budget within fourteen (14) days of its receipt of same, the Owner shall be
deemed to have approved such Business Plan and Budget.
Section 2.05. Performance Standards. The Manager shall be responsible for
the operating performance of the Greenhouse in accordance with the Business Plan
and Budget and in conformity with industry, professional and safety standards
and in a prudent and businesslike manner. The Manager shall be responsible for
the means, methods and techniques used in the operation of the Greenhouse. The
Manager shall maintain good order and discipline at the Greenhouse at all times
and shall take all reasonable precautions to protect the Greenhouse and its
contents (including, but not limited to, the Product) from damage and to protect
employees of Lender, Owner and the Manager and members of the public from injury
at the Site.
ARTICLE III
OPERATION
Section 3.01. Operation. During the period beginning on the Date of Initial
Services and ending at the expiration of the Term of this Contract, the Manager
shall use its best efforts to operate the Greenhouse (including, but not limited
to, the sowing, growing, harvesting and packaging of the Product) at its fullest
productive capacity in accordance with the Business Plan
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and Budget and in accordance with prudent agricultural economic practices and to
assist the Marketing Agent in its efforts to market the Product to derive the
greatest possible revenue therefrom. The Manager warrants that, during each
Contract Year, beginning with the Second Contract Year, that the operating
performance of the Greenhouse will be on a basis consistent with similar
greenhouses operated by the Manager in consideration of differences in size and
location of the other greenhouses.
Section 3.02. Compliance With Governmental Rules. The Manager shall at all
times operate the Greenhouse in accordance with all applicable Governmental
Rules (including, but not limited to, all environmental protection, hazardous or
toxic substances, pollution, waste, material handling, disposal, sanitary,
health, and safety laws, rules and regulations). The Manager shall be liable for
all fines, fees, penalties, damages or other costs imposed by a governmental
authority attributable to its willful acts or negligence (and the negligence of
its agents and employees) in connection with the operation, use or maintenance
of the Greenhouse.
Section 3.03. Obligations of owner. Throughout the Term of this Contract,
Owner shall supply to the Manager of the Greenhouse such personnel and Operating
Supplies as shall be mutually agreed upon by the Manager and Owner in the
Business Plan and Budget. The Manager shall be responsible for overseeing and
recording the use of all Operating Supplies and shall give owner reasonable
notice of its requirements for additional personnel and Operating Supplies not
set forth in the Business Plan and Budget, along with the reasons therefor. The
Manager shall be responsible for inspecting Operating Supplies furnished by
Owner, and any defects in such Operating Supplies reasonably discoverable by
Manager through such inspection, and which are capable of being corrected in a
reasonable timeframe, shall not be grounds for claiming Uncontrollable Force.
All personnel of the Greenhouse operation shall at all times be employees of
Owner. The Manager shall have the right to direct and instruct the employees of
Owner, and subject to Owner's approval, which will not be unreasonably withheld,
to hire and fire Owner's employees, as Manager considers necessary and desirable
for the operation of the Greenhouse.
Section 3.04. Greenhouse Products. It is contemplated by this Contract that
the Manager will use its best efforts to produce tomatoes in the Greenhouse in
accordance with the Business Plan and Budget. However, if in the opinion of the
Manager the Greenhouse operation can be made more profitable by the production
of produce more profitable than tomatoes, then the Manager, with the prior
written consent of Owner and the Lender, may produce a substitute product.
Section 3.05. Maintenance. The Manager shall have the responsibility of
directing the maintenance, service and repair of the Greenhouse (a) in material
accordance with industry standards of prudence, (b) in accordance with
specifications, directions, instructions and recommendations of the
manufacturers of the components thereof, (c) in accordance with all applicable
Governmental Rules (including, but not limited to, all environmental protection,
hazardous or toxic substances, pollution, waste, material handling, disposal,
sanitary, health, and safety laws, rules and regulations) and (d) to the extent
materially necessary to (i) maintain the Greenhouse in good operating condition
and repair, ordinary wear and tear excepted, (ii) cause the Greenhouse to
continue to have the capacity and functional ability to perform, on a continuing
basis, in normal commercial operation, the function for which it was
specifically
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designed, (iii) comply with any standards imposed by any insurer who has issued
any insurance policy or policies in effect at any time during this Contract with
respect to the Greenhouse or any part thereof and (iv) keep in full force and
effect any warranty with respect to the Greenhouse or any part thereof. The
Manager shall operate the Greenhouse in such a manner that at all times (a) the
Greenhouse and its surrounding grounds shall be free of litter (both organic and
non-organic), (b) waste materials (both organic and non-organic) will be
confined to areas designed and maintained for their storage and processing, (c)
the exterior appearance of the buildings and the landscaping surrounding the
Greenhouse shall be neat and orderly and (d) the interior of the Greenhouse will
be neat and clean. The Manager will identify potential maintenance problems and
recommend corrective actions in the Business Plan and Budget. All costs
associated with performing the aforementioned maintenance services will be the
responsibility of the Owner. The Manager will include its best estimate of such
costs in the Business Plan and Budget.
Section 3.06. No Obstruction. Until the termination of this Contract, Owner
shall not, either through its agents or employees, take any action that would
prevent the Manager from operating the Greenhouse in accordance with the
Contract nor take any action that would materially obstruct the Site or the
Greenhouse, unless such prevention or obstruction is caused by Uncontrollable
Force or by the Manager or any of its Affiliates or any of their respective
employees, servants or agents.
ARTICLE IV
COMPENSATION AND PAYMENT
Section 4.01. Basic Compensation. In consideration of the performance of
Manager's obligations under the Contract, Owner shall pay to the Manager the sum
of THREE HUNDRED THOUSAND DOLLARS ($300,000.00) per Contract Year (the
"Compensation") in twelve equal monthly installments beginning on the 1st day of
the second month following the Date of Initial Services and on each anniversary
thereafter. For the period from the Date of Initial Services through the first
day of the month following the Date of Initial Services, the Manager shall be
entitled to a fee equal to the product of (i) the Compensation and (ii) a
fraction which shall be the number of weeks of such period divided by 52, such
amount to be payable on the first day of the month following the Date of Initial
Services. Such compensation will be adjusted each January 1 of each Contract
Year by the same percentage change in the Consumer Price Index ("CPI"), provided
the adjustment shall not cause the Compensation to be less than the current
Contract Year's Compensation. If for any reason the Manager is unable to perform
its obligations hereunder except as a result of termination of this Contract
because of a default by the Manager hereunder, then the Manager shall be
entitled to the continuation of the Compensation as though the Contract had been
performed by the Manager, provided however, that in the event that the Manager
or owner is unable to perform its obligations under this Contract because of an
Uncontrollable Force, then the Compensation shall be discontinued at any time
after the later of, the first anniversary of the event creating the
Uncontrollable Force or the date on which the Manager's continued performance
was disrupted. In the event this Agreement has been terminated, and in the event
the Manager may have received Compensation to which it was not entitled, said
overpayment of Compensation shall be immediately due and payable to the Owner,
upon the determination of such overpayment.
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Section 4.02. Debt Service Coverage Ratio Test. The provisions of this
Section 4.02 shall remain in effect only for so long as the Owner is party to
any loan agreement with the Lenders. In the event Owner's debt service coverage
ratio as defined in the Credit Agreement ("DSCR") for any calendar year falls
below 1.5, then, in that event, no Compensation shall be paid for any portion of
that calendar year, however, the right to Compensation shall accrue, provided
the DSCR is greater than 1.0, and shall be paid to the Manager in one sum,
immediately following Owner's achievement of a DSCR of at least 1.5. In the
event that Compensation was paid for any portion of the calendar year during
which Owner's actual DSCR fell below 1.5 those payments shall be deducted from
future payments due the Manager hereunder, until the Owner has recouped same.
Immediately upon the Owner achieving a DSCR of 1.5, any payments which were
withheld or recouped by Owner due to a DSCR between 1.0 and 1.5, shall be paid
to the Manager in one sum. The Owner's DSCR shall be measured as of December 31
of each year during the term of this Contract.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Representations and Warranties of the Manager. The Manager
represents and warrants to Owner that both it and the Facility Manager have
substantial experience in the start-up, operation and management of the
maintenance, service and repair of facilities similar to the Greenhouse. The
Manager is a limited liability company organized and validly existing under the
laws of the State of Delaware. The Manager's execution and delivery of this
Contract and the performance of its obligations hereunder have been duly
authorized by all requisite action on the part of the Manager and this Contract
constitutes the Manager's legal, valid and binding obligation, enforceable
against the Manager in accordance with its terms. The Manager's execution and
delivery of this contract and the performance of its obligations hereunder will
not conflict with, violate or result in a default under the Manager's
certificate of formation or operating agreement or any mortgage, indenture,
agreement, instrument or other contract to which the Manager is a party or by
which the Manager is bound.
ARTICLE VI
COVENANTS OF THE MANAGER
Section 6.01. Operating Logs: Records and Audits. The Manager shall
maintain for the benefit of Owner daily operating logs showing the production
and sales from the Greenhouse and shall prepare maintenance and repair reports
in detail sufficient to indicate the nature of all maintenance and repairs
performed. The Manager shall also maintain such records and books of accounts as
are appropriate for the proper management of the Greenhouse and all transactions
related thereto. All such books, records and reports shall be the sole and
exclusive property of the Owner, and the Manager shall keep such books and
records in such place or places so as to provide Owner (and its authorized
representatives) with maximum access thereto and the ability to make copies
thereof.
Section 6.02. Insurance of the Manager. At all times during the operation
of the Greenhouse, the Manager shall maintain the following types and amounts of
insurance, with insurers acceptable to the Owner and the Lender:
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(a) Workers' Compensation Insurance (including employer's liability
insurance) covering personnel of the Manager in connection with this contract,
subject to the laws of Texas;
(b) Primary Comprehensive General Liability Insurance for bodily injury
and/or property damage arising from the Work, subject to a combined single limit
of $1,000,000 per occurrence;
All insurance policies procured and maintained pursuant to this Section
6.02 shall contain a clause requiring the insurer and the Manager to notify
Owner and the Lender in writing 45 days prior to any cancellation or expiration
thereof or any amendment thereto. Prior to the Date of Initial Services the
Manager shall furnish Owner and the Lender a certificate of insurance certifying
that the insurance coverage required pursuant to this Section 6.02 is in effect.
During the Term of this Contract, Owner shall keep the Facility (including
the Greenhouse and all equipment therein) and the Site insured against such
risks and in such amounts as are reasonably required by the Lender.
The cost of insurance required pursuant to this Section 6.02 shall be born
solely by the manager. Each such policy shall name the Lender and the Owner (in
the case of (a) and (b) above) as an additional insured.
Section 6.03. Employment Practices. The Manager shall comply with the
applicable requirements of Executive Orders Nos. 11246 (Equal Opportunity and
Certification of Nonsegregated Facilities), 11701 (Affirmative Action for
Disabled Veterans and Handicapped of the Viet Nam Era), 11758 (Affirmative
Action for Handicapped Workers), 11458 and 11625 (Minority Business Enterprise)
and all other Governmental Rules relating to employment practices to the extent
applicable.
Section 6.04. Nondisclosure. All reports, records and other information
related to the Site, the Greenhouse, the operations of the Owner, and the
performance of the Manager of its duties hereunder shall not be used by the
Manager for any purposes other than those contemplated hereby or pursuant to the
written consent of the Owner and shall not be disclosed by the Manager to any
other party or any other person or entity except with the prior written consent
of the Owner. Furthermore, the Manager shall not copy or reproduce any such
information without the written consent of the Owner (other than such reasonable
copies as may be necessary to perform its duties and obligations under this
Agreement). The Manager shall also take reasonable precautions to ensure against
any breach of the obligations contained herein which shall be no less stringent
than the precautions and procedures that it uses to protect its own proprietary
information and which shall, at a minimum, be deemed to include, without
limitation, taking precautions to ensure that it will only make such information
available to those of its employees who have a need to know it. Upon the
expiration or termination of this Agreement, Manager shall immediately return to
the Owner all such information and all whole or partial copies thereof and all
other materials that may include, in whole or in part, such information. All
rights, whether arising under copyright, patent, trade secret, or other laws, to
such information are hereby reserved by the Owner.
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Section 6.05. Compliance With Governmental Rules. The Manager shall at all
times perform its other duties and obligations hereunder in accordance with all
applicable Governmental Rules. The Manager shall be liable for all fines, fees,
penalties, damages or other costs imposed by a governmental authority
attributable to its and/or its agents, servants and employees) in connection
with the performance of its other duties and obligations hereunder.
ARTICLE VII
GENERAL LIABILITY
Section 7.01. Indemnification. The Manager shall indemnify and save
harmless Owner and Lender, and their respective directors, officers, agents, and
employees from and against (i) any and all loss, damage, injury, liability and
claims thereof for injury to or death of a person, including, but not limited
to, personnel of the Manager, Lender and Owner, (ii) any and all loss of or
damage to property and (iii) any and all loss of income by the Owner, resulting
from the Manager's performance of this Contract to the extent the same is caused
by the negligence or willful misconduct of the Manager, any of its Affiliates,
or any of their respective directors, officers, agents or employees. Owner shall
indemnify and save harmless the Manager and Lender, and their respective
directors, officers, agents, and employees from and against (i) any and all
loss, damage, injury, liability and claims thereof for injury to or death of a
person, including personnel of Owner, Lender and the Manager, (ii) any and all
loss of or damage to property, and (iii) any and all loss of income by the
Manager, resulting from the Owner's performance of this Contract to the extent
the same is caused by the negligence or willful misconduct of the Owner, any of
its Affiliates, or any of its directors, officers, agents or employees.
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.01. Defaults. Upon the failure of any Party to substantially
comply with any of the obligations of such Party hereunder and continued
noncompliance for a period of 30 days (except in the case where such failure
will result in injury to or damage or loss of perishable Product, in which case
the cure period shall be five (5) days) after written notice of the
noncompliance is sent to such Party, the non-defaulting Party may, at its
option, by written notice to the defaulting Party, declare this Contract to be
in default and at any time thereafter the non-defaulting Party may, at its sole
discretion, (a) exercise any right or pursue any remedy that may be available
under applicable law or proceed by appropriate court action to enforce the terms
hereof or to recover damages for the breach hereof and (b) terminate this
Contract. The exercise of any rights or pursuit of any remedies pursuant to this
Contract shall not relieve the defaulting Party of any of its obligations and
liabilities hereunder, all of which shall survive such exercise or pursuit. To
the extent permitted by law, and subject to any mandatory requirements of
applicable law, and further subject to Section 8.02 herein, each and every
right, power and remedy herein specifically given to the non-defaulting Party or
otherwise in this Contract shall be cumulative and shall be in addition to every
other right, power and remedy herein specifically given, or now or hereafter
existing at law, equity or by statute and each and every right, power and remedy
whether specifically herein given or otherwise existing may be exercised or
pursued from time to time and as of ten in such order as may be deemed expedient
by the non-defaulting Party, and the exercise or pursuit or the beginning of the
exercise or pursuit of any right, power
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or remedy shall not be construed to be a waiver of the right to exercise or to
pursue at any time or thereafter any other right, power or remedy. No delay or
admission by a Party in the exercise of any right or power or in the pursuit of
any remedy may impair any such right, power or remedy or be construed to be a
waiver of any default on the party of the other Party or to be an acquiescence
therein. No expressed or implied waiver by a Party of any default hereunder
shall in any way be, or be construed to be, a waiver of any future or subsequent
default hereunder. Neither Party shall be considered to be in default for
failure to perform, or delay in performing, any obligation under this Contract
if performance is prevented, hindered or delayed by an Uncontrollable Force (but
only for so long as such Uncontrollable Force continues unabated). In such
event, the Party which is unable, or anticipates being unable, to perform shall
(a) promptly notify the other Party in writing of the nature, cause, date of
commencement and expected duration of any such delay, (b) indicate to what
extent it will be prevented from performing and (c) exercise due diligence to
overcome such inability to perform with all reasonable dispatch. In the event a
Party claims excuse of performance as a result of an Uncontrollable Force which
continues unabated for more than one hundred twenty (120) days, the Party that
is not affected by such Uncontrollable Force shall have the option to terminate
this Agreement on written notice to the other Party.
Section 8.02. Damages for Termination Without Cause. Notwithstanding
anything to the contrary in Sections 4.01 or 8.01, the Parties agree that should
Owner elect to terminate the Agreement without cause at any time, pursuant to
Section 9.01 herein, then Owner shall pay as liquidated damages to the Manager a
sum equal to one-fourth (1/4) of the annual amount of Compensation in effect at
such early termination, which shall be Owner's sole and exclusive liability and
Manager's sole and exclusive remedy, for such early termination without cause.
ARTICLE IX
TERM
Section 9.01. Term. Subject to Article VIII and Section 3.01, this Contract
shall continue to be in effect for fifteen (15) years from the Date of Initial
Services; provided, however that the Term may be extended for additional periods
on terms acceptable to both Parties, such terms to be agreed upon not later than
three months prior to the expiration of the Term. Notwithstanding the foregoing,
the Owner shall be permitted to terminate this Contract, with or without cause,
upon ninety (90) days written notice to the Manager, subject to the terms of the
Credit Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.01. Notices. Unless otherwise specifically provided herein, all
notices, requests and demands and other communications hereunder must be in
writing and shall be deemed to have been duly given (i) when delivered
personally, (ii) when sent by telefax to the telefax number below and followed
by a confirmation transmitted by an additional mode of communication provided
for herein, (iii) the second day following the day on which the same has been
delivered prepaid to a national (only in the case of notices within the
continental United States) or an international air courier service, or (iv) when
received if sent by the mails, certified
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or registered, postage prepaid, in each case addressed to the party to whom such
notice is being given at the following addresses:
OWNER: Village Farms of Marfa, L.P.
c/o Agro Power Development, Inc. 00 Xxxxx Xxxxx
Xxxx Xxxxxxxxx, XX 00000
Attention: President
Telefax: 000-000-0000
and
Village Farms of Marfa, L.P.
c/o Cogentrix of Marfa, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Telefax: 000-000-0000
MANAGER: Village Farms of Delaware, L.L.C.
00 Xxxxx Xxxxx
Xxxx Xxxxxxxxx, XX 00000
Attention: President
Telefax: 000-000-0000
Any party may change the address(es) to which notices to it are to be sent by
giving notice of such change to the other parties in accordance with this
Section.
Section 10.02. Severability. Any provision of this Contract that shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction. To the extent permitted
by applicable law, the Manager and Owner hereby waive any provision by law that
renders any provision hereof prohibited or unenforceable in any respect.
Section 10.03. Amendment. Neither this Contract nor any other terms hereof
may be terminated, amended, supplemented, waived or modified orally, but only by
an instrument in writing signed by the Party against which enforcement of the
termination, amendment, supplement, waiver or modification shall be signed.
Section 10.04. Assignment. Neither Party may assign any of their respective
rights under this Contract without the prior written consent of the other Party;
provided, however, that Owner may assign its rights hereunder to the Lender. Any
assignment not permitted by this Section 10.04 shall be void.
Section 10.05. Relationship of the Parties. It is agreed and understood by
the Parties that the Manager is an independent contractor with respect to Owner.
No action, admission or
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instruction shall be deemed to make the Manager an employee, agent or partner of
Owner or to create any other relationship among the Parties.
Section 10.06. Headings; Etc. The Table of Contents and headings of the
various articles and sections of this Contract are for the convenience of
reference only and shall not modify, define or limit any other terms and
provisions of this Contract.
Section 10.07. Governing Law. This Contract shall in all respects,
including all matters of construction, validity and performance, be governed by
and construed in accordance with the laws of the State of New York.
Section 10.08. Parties in Interest; Limitation and Rights of Others. The
provisions of this Contract shall be binding upon, and inure to the benefit of,
the Parties hereto and their respective successors and permitted assignees.
Nothing in this Contract, whether expressed or implied, shall be construed to
give any Person (other than the parties hereto and their respective successors
and permitted assignees) any legal or equitable right, remedy or claim under or
in respect of this Contract or any covenants, conditions or provisions contained
herein.
Section 10.09. Arbitration. (a) In the event a dispute arises between or
among the Parties relating to the terms of this Agreement and any Party gives
written notice of such dispute to the other Party, then each of the Parties
involved in such dispute shall refer the dispute to its senior management. The
senior management of each Party shall meet and confer regarding the resolution
of the dispute. In the event a resolution of such dispute is not reached within
30 days of the written notice, then either of the Parties may submit the dispute
to arbitration in accordance with Section 10.09.(b).
(b) Arbitration of disputes pursuant to this Section 10.09.(b) shall be
held in New York, New York unless otherwise agreed to by the Parties, under the
commercial arbitration rules of the American Arbitration Association, and shall
be heard by three arbitrators selected in accordance with such rules. Each
arbitrator shall have at least five years experience in the United States in a
profession or professions related to the subject matter involved in the dispute
and shall not be a past or present officer, director or employee of, or have any
interest in or material relationship with, any Partner or any Affiliate of any
Partner. Any arbitral award shall be final and binding and may be entered by any
Party in any state or Federal court having jurisdiction thereof. Costs of
arbitration (including reasonable attorney's fees and arbitration costs) shall
be paid either equally or by the Parties to the arbitration or in accordance
with the decision of the arbitrators.
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IN WITNESS WHEREOF, the Parties have caused this Contract to be duly
executed by the respective officers thereunto duly authorized as of the date and
year first above written.
VILLAGE FARMS OF DELAWARE, L.L.C.
By: Agro Power Development, Inc.,
its Managing Member
By:______________________________
Name: J. Xxxxx Xxxx
Title: Senior Vice President
VILLAGE FARMS OF MARFA, L.P.
By:______________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
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