1
EXHIBIT 10.3
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
SUIZA FLUID DAIRY GROUP, L.P.
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AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
SUIZA FLUID DAIRY GROUP, L.P.
TABLE OF CONTENTS
PAGE
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ARTICLE I ORGANIZATIONAL MATTERS..........................................................................1
1.1 Formation..............................................................................................1
1.2 Name...................................................................................................1
1.3 Registered Office and Principal Office of Partnership; Addresses of Partners...........................1
1.4 Term...................................................................................................2
1.5 Assumed Name Certificate...............................................................................2
1.6 Ownership..............................................................................................2
1.7 No Individual Authority................................................................................2
1.8 Title to Partnership Property..........................................................................2
1.9 Limits of Partnership..................................................................................2
ARTICLE II DEFINITIONS...................................................................................2
ARTICLE III PURPOSE......................................................................................11
3.1 Purposes and Scope....................................................................................11
ARTICLE IV CAPITAL CONTRIBUTIONS........................................................................11
4.1 Initial Capital Contributions.........................................................................11
4.2 Non-Contemplated Contributions........................................................................12
4.3 New Investment Contributions..........................................................................13
4.4 Capital Accounts......................................................................................14
4.5 Interest..............................................................................................17
4.6 No Withdrawal.........................................................................................17
4.7 Limitation on Capital Contributions and Loans.........................................................17
ARTICLE V ALLOCATIONS..................................................................................18
5.1 Allocation of Profits and Losses......................................................................18
5.2 Special Allocations...................................................................................20
5.3 Curative Allocations..................................................................................21
5.4 Tax Allocations: Code Section 704(c)..................................................................21
5.5 Other Allocation Rules................................................................................22
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ARTICLE VI DISTRIBUTIONS................................................................................22
6.1 Distributions of Available Cash.......................................................................22
6.2 Amounts Withheld......................................................................................23
6.3 Excess Distributions..................................................................................23
6.4 Tax Distributions.....................................................................................24
6.5 Payments Not Deemed Distributions.....................................................................24
ARTICLE VII MANAGEMENT OF THE PARTNERSHIP..............................................................25
7.1 Management Committee..................................................................................25
7.2 Major Decisions.......................................................................................25
7.3 Approval of Major Decisions...........................................................................26
7.4 Officers..............................................................................................27
7.5 Certificate of Limited Partnership; Qualifications to do Business.....................................28
7.6 Compensation and Reimbursement of Partner Expenses;
Other Agreements with Partners........................................................................28
7.7 Outside Activities; Noncompetition....................................................................28
7.8 Partnership Funds.....................................................................................30
7.9 Transactions with Affiliates..........................................................................30
7.10 Indemnification......................................................................................30
7.11 Liability of the Partnership.........................................................................30
7.12 Suiza Foods Board Seat...............................................................................31
ARTICLE VIII RIGHTS AND OBLIGATIONS OF PARTNERS.........................................................31
8.1 Limitation of Liability...............................................................................31
8.2 Return of Capital.....................................................................................31
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS.......................................................31
9.1 Records and Accounting................................................................................31
9.2 Fiscal Year...........................................................................................31
9.3 Reports...............................................................................................32
9.4 Documents.............................................................................................32
ARTICLE X TAX MATTERS..................................................................................32
10.1 Tax Matters Partner..................................................................................32
10.2 Annual Tax Returns...................................................................................32
10.3 Notice and Limitations on Authority..................................................................33
10.4 Tax Elections........................................................................................34
10.5 Actions in Event of Audit............................................................................34
10.6 Organizational Expenses..............................................................................34
10.7 Taxation as a Partnership............................................................................34
ARTICLE XI TRANSFERS OF PARTNER INTERESTS...............................................................34
11.1 Transfer Restrictions................................................................................34
11.2 Consent of the Management Committee..................................................................35
11.3 Tax Opinion..........................................................................................35
11.4 Registration.........................................................................................35
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11.5 Prohibited Transfers.................................................................................35
11.6 Rights of Assignee...................................................................................35
11.7 Admission as a Partner...............................................................................36
11.8 Distributions and Allocations in Respect of Transferred Partner Interests............................36
11.9 Suiza Buy-Out Option.................................................................................37
11.10 DFA Registration Right...............................................................................37
ARTICLE XII DISSOLUTION AND LIQUIDATION.................................................................38
12.1 Dissolution..........................................................................................38
12.2 Continuation of the Partnership......................................................................38
12.3 Liquidation..........................................................................................39
12.4 Reserves.............................................................................................40
12.5 Distribution in Kind.................................................................................40
12.6 Disposition of Documents and Records.................................................................40
12.7 Negative Capital Accounts............................................................................40
12.8 Filing of Certificate of Cancellation................................................................41
12.9 Return of Capital....................................................................................41
12.10 Waiver of Partition..................................................................................41
ARTICLE XIII AMENDMENT OF AGREEMENT.....................................................................41
13.1 Amendment Procedures.................................................................................41
ARTICLE XIV GENERAL PROVISIONS.........................................................................41
14.1 Addresses and Notices................................................................................41
14.2 Titles and Captions..................................................................................42
14.3 Pronouns and Plurals.................................................................................42
14.4 Further Action.......................................................................................43
14.5 Binding Effect.......................................................................................43
14.6 Integration..........................................................................................43
14.7 No Third Party Beneficiary...........................................................................43
14.8 Waiver...............................................................................................43
14.9 Counterparts.........................................................................................43
14.10 Applicable Law.......................................................................................43
14.11 Invalidity of Provisions.............................................................................43
14.12 Confidentiality......................................................................................44
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AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
SUIZA FLUID DAIRY GROUP, L.P.
This AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of SUIZA FLUID
DAIRY GROUP, L.P. (the "Agreement") is entered into as of the ___ day of
___________, 2000, by and among Suiza Fluid Dairy Group GP, L.L.C., a Delaware
limited liability company, as the General Partner ("Suiza GP" or the "General
Partner"), and Suiza Fluid Dairy Group Holdings, Inc., a Nevada corporation
("SFDG Holdings"), Dairy Farmers of America, Inc., a Kansas cooperative
marketing association ("DFA"), Mid-Am Capital, L.L.C., a Delaware limited
liability company ("Mid-Am") as Limited Partners (together, the "Limited
Partners," and with Suiza Management, the "Partners"), together with any Person
who becomes a Partner as provided herein.
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 Formation. The Partnership was formed as a limited partnership in
accordance with the Delaware Act on September 20, 1999, pursuant to the
provisions of the Delaware Act. The Partners hereby enter into this Agreement in
order to set forth the rights and obligations of the Partners and certain
matters related thereto. Except as expressly provided and permitted herein to
the contrary, the rights and obligations of the Partners and the administration
and termination of the Partnership shall be governed by the Delaware Act.
1.2 Name. The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of, "Suiza Fluid Dairy Group,
L.P." The Partnership's business may also be conducted under any additional name
or names approved by the Management Committee from time to time.
1.3 Registered Office and Principal Office of Partnership; Addresses of
Partners.
(a) The registered office of the Partnership in the State of
Delaware shall be 0000 Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000, and the
registered agent for service of process on the Partnership at such
registered office shall be Corporation Service Partnership, 0000 Xxxxxx
Xxxx, Xxxxxxxxxx, XX 00000. The principal place of business of the
Partnership shall be at 0000 XxXxxxxx Xxx., LB 30, Xxxxx 0000, Xxxxxx,
Xxxxx 00000, or such other location as determined by the Management
Committee. The Partnership may also maintain offices at such additional
locations as the Management Committee deems advisable.
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(b) The addresses of the Partners as of the Closing Date are
set forth in Section 14.1. The address of a Partner may be changed in
accordance with the requirements set forth in Section 14.1.
1.4 Term. The existence of the Partnership commenced on the
Commencement Date, and the Partnership shall continue in existence until the
dissolution of the Partnership pursuant to the express provisions of Article XII
hereof (other than a dissolution that is followed by the reconstitution of the
Partnership pursuant to Section 12.2).
1.5 Assumed Name Certificate. The Partners shall execute and file any
assumed or fictitious name certificate or certificates or any similar documents
required by law to be filed in connection with the formation and operation of
the Partnership.
1.6 Ownership. The interest of each Partner in the Partnership shall be
personal property for all purposes. All property and interests in property, real
or personal, owned by the Partnership shall be deemed owned by the Partnership
as an entity, and no Partner, individually, shall have any ownership of such
property or interest except by having an ownership interest in the Partnership
as a Partner. Each of the Partners irrevocably waives, during the term of the
Partnership and during any period of its liquidation following any dissolution,
any right that it may have to maintain any action for partition with respect to
any of the assets of the Partnership.
1.7 No Individual Authority. No Partner, acting alone, shall have any
authority to act for, or to undertake or assume, any obligation, debt, duty or
responsibility on behalf of any other Partner or the Partnership except as
otherwise expressly provided in this Agreement.
1.8 Title to Partnership Property. It is the desire and intention of
the Partners that legal title to all property of the Partnership shall be held
and conveyed in the name of the Partnership.
1.9 Limits of Partnership. The relationship between the parties hereto
shall be limited to the carrying on of the business of the Partnership in
accordance with the terms of this Agreement. Such relationship shall be
construed and deemed to be a limited partnership for the sole and limited
purpose of carrying on such business. Except as otherwise provided for or
contemplated in this Agreement, nothing herein shall be construed to create a
partnership between the Partners or to authorize any Partner to act as general
agent for any other Partner.
ARTICLE II
DEFINITIONS
The following definitions shall for all purposes, unless otherwise
clearly indicated to the contrary, apply to the terms used in this Agreement.
"Adjusted Capital Account" means, with respect to any Partner, a
special account maintained for such Partner, the balance of which shall equal
such Partner's Capital Account
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balance, increased by the amount (if any) of such Partner's share of the
Partnership Minimum Gain and Partner Minimum Gain of the Partnership.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such
Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to
Regulations Section 1.704-1(b)(2)(iv)(c), the penultimate sentence of
Regulations Section 1.704-2(g)(1), or the penultimate sentence of
Regulations Section 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
"Affiliate" means, with respect to a particular Person, any other
Person directly or indirectly Controlling, Controlled by, or under common
Control with such Person.
"Agreement" means this Limited Partnership Agreement of Suiza Fluid
Dairy Group, L.P., as it may be further amended, supplemented or restated from
time to time in accordance with the terms of this Agreement.
"Available Cash" of the Partnership as of any date means all cash funds
of the Partnership on hand as of such date after: (a) payment of all
expenditures of any kind, including operating expenses and capital expenditures,
that are due and payable as of such date or that are expected to become due and
payable in the next 30 days; and (b) provision for adequate reserves (working
capital and capital), with the amount of such reserves to be determined by the
Management Committee (acting reasonably and in good faith).
"Book Depreciation" has the meaning set forth in Section 4.4(b)(v).
"Book Value" has the meaning set forth in Section 4.4(c).
"Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States shall
not be regarded as a Business Day.
"Capital Account" means the capital account maintained for a Partner
pursuant to Section 4.4.
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"Capital Contribution" means, with respect to any Partner, the amount
of money and the initial Book Value of any property (other than money)
contributed to the Partnership with respect to the interest in the Partnership
held by such Partner, reduced by the amount of any liabilities of the Partner
assumed by the Partnership or which are secured by any property contributed by
such Partner to the Partnership.
"Capital Transaction" means any transaction in which the Partnership
(a) sells, assigns or otherwise conveys one or more of its Dairy Operations, or
(b) refinances all, substantially all or a material portion of the Partnership's
debt which is secured by assets of the Partnership.
"Certificate" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of Delaware, as it may be amended
or restated from time to time.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. All references herein to the Code shall include any
corresponding provision or provisions of succeeding law.
"Commencement Date" means the date that the Certificate of Limited
Partnership was filed with the Secretary of State of Delaware.
"Contribution Agreement" means the Contribution Agreement, Plan of
Merger, and Purchase Agreement dated as of September 20, 1999, by and among
Suiza Foods, Suiza SoCal Holdings, Inc., a Nevada corporation, Suiza GTL
Holdings, Inc., a Delaware corporation, LOS Holdings, Inc., a Delaware
Corporation, SFDG Holdings, Suiza Management Corporation, a Delaware
corporation, Suiza GP, the Suiza Companies, Suiza GTL, Suiza SoCal, Xxxxxxxx
Dairy, DFA, DFA Investment, SFG, SFG Management, SFG Capital, the Partnership,
Xxxx Xxxxxxxx, and, for the limited purposes indicated on the signature pages
thereto, Mid-Am.
"Contributions" means the Contributions, as defined in the Contribution
Agreement.
"Control" (and derivations thereof) means, with respect to a particular
Person, the ownership, directly or indirectly, of more than 50% of the equity or
voting interests in such Person.
"Dairy Operation" means any fluid milk processing operation, other than
any fluid milk processing operation where the primary product or products in
terms of sales or production is UHT milk or any other ultra pasteurized or
extended shelf-life fluid milk product, or bottled water operation located in
the Territory.
"Default Rate" means a per annum interest rate equal to the lesser of:
(a) ten percent (10%) per annum, compounded annually; and (b) the maximum rate
of interest permitted to be charged by applicable law.
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"Delaware Act" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del. C. Sections 17-101, et seq., as amended from time to time.
"DFA" means Dairy Farmers of America, Inc., a Kansas cooperative
marketing association.
"DFA Companies" means SFG, SFG Management and SFG Capital.
"DFA Interests" has the meaning set forth in Section 11.9 hereof.
"DFA Investment" means DFA Investment Company, a Kansas cooperative
marketing association.
"DFA Manager" means the member of the Management Committee designated
by DFA pursuant to Section 7.1.
"DFA Parents" means DFA, DFA Investment and Mid-Am.
"DFA Partners" means DFA, Mid-Am and any assignees or transferees of
their Partner Interests, to the extent each holds any Partner Interest in the
Partnership. Any right or power granted to DFA or the DFA Partners may be
exercised by DFA or, if DFA no longer owns any Partner Interests, then by any
group of DFA Partners holding a majority of the Percentage Interests held by all
DFA Persons.
"DFA Price" means, as of any date, the sum of (a) the aggregate
Preferred Returns plus the aggregate Preferred Capital Balance for all DFA
Partners, plus (b) the aggregate Formula Value of the DFA Partners.
"DFA Veto" means any occasion on which the Management Committee fails
to approve a Major Decision proposed by Suiza due solely to a vote (or failure
to vote) by the DFA Manager.
"Dissolution Event" has the meaning set forth in Section 12.1(b).
"EBITDA" means, for any period, the sum, for the Partnership and its
subsidiaries on a consolidated basis, without duplication in accordance with
generally accepted accounting principles of the following: (a) Net Income, plus
(b) income taxes, interest expense, depreciation and amortization, to the extent
deducted in calculating Net Income, plus (c) any Unusual Items of loss included
in calculating Net Income, minus (d) any Unusual Items of income included in
calculating Net Income.
"Event of Bankruptcy" means, with respect to any Partner or the
Partnership, any of the following acts or events:
(a) making an assignment for the benefit of creditors;
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(b) filing a voluntary petition in bankruptcy;
(c) becoming the subject of an order for relief or being
declared insolvent or bankrupt in any federal or state bankruptcy or
insolvency proceeding;
(d) filing a petition or answer seeking a reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or
similar relief under any statute, law, or regulations;
(e) filing an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in a
proceeding of the type described in parts (a) through (d) of the
definition;
(f) seeking, consenting to, or acquiescing in the appointment
of a trustee, receiver, or liquidator of all or any substantial part of
its properties; or
(g) the expiration of 90 days after the date of the
commencement of a proceeding against such Person seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any statute, law, or regulation if
the proceeding has not been previously dismissed or the expiration of
60 days after the date of the appointment, without such Person's
consent or acquiescence, of a trustee or receiver for the liquidation
of such Person or of all or any substantial part of such Person's
properties, if the appointment has not been previously vacated or
stayed, or the expiration of 60 days after the date of expiration of a
stay, if the appointment has not been previously vacated.
"Fiscal Year" means the 12-month period ending December 31 of each
year; provided that the initial Fiscal Year shall be the period beginning on the
Commencement Date and ending December 31, 1999, and the last Fiscal Year shall
be the period beginning on January 1 of the calendar year in which the final
liquidation and termination of the Partnership is completed and ending on the
date such final liquidation and termination is completed (to the extent any
computation or other provision hereof provides for an action to be taken on a
Fiscal Year basis, an appropriate proration or other adjustment shall be made in
respect of the initial and final Fiscal Years to reflect that such periods are
less than full calendar year periods).
"Formula Value" for a particular Partner as of a particular date means
(a) the Percentage Interest of such Partner, multiplied by (b) the sum of (i)
7.5 times the EBITDA of the Partnership over the 12 full calendar months
immediately preceding such date, minus (ii) any indebtedness for borrowed money
of the Partnership, including the Preferred Interests, as of such date;
provided, that the Formula Value shall not be less than the average annual
EBITDA computed over the 24 months preceding the date of determination.
"Indemnitee" has the meaning set forth in Section 7.10.
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"Independent Accountants" means any of the five largest nationally
recognized accounting firms in the United States, as selected by the Management
Committee. Deloitte & Touche LLP shall be the initial Independent Accountant.
"Limited Partner" means XXXX Xxxxxxxx, XXX, Xxx-Xx, and any other
Person who is admitted as a Limited Partner in the Partnership on and after the
Closing Date and whose admission has been reflected on the books and records of
the Partnership.
"Liquidator" has the meaning set forth in Section 14.3.
"Losses" has the meaning set forth in Section 4.4(b).
"Major Decision" has the meaning set forth in Section 7.2.
"Management Committee" means the management committee of the General
Partner, whose members will be designated by Suiza and DFA in accordance with
Section 7.1 hereof.
"Mergers" means the Mergers, as defined in the Contribution Agreement,
pursuant to which the Suiza Companies will be merged into the Partnership or
into one or more limited liability companies owned, directly or indirectly, by
the Partnership.
"Mid-Am" means Mid-Am Capital, L.L.C., a Delaware limited liability
company.
"Net Income" of a Person means the net income of such Person,
determined in accordance with generally accepted accounting principles, applied
in a manner consistent with the manner in which Suiza Foods (or its successor)
calculates its consolidated net income at such time.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
"Partner" means SFDG Holdings, DFA, Mid-Am, and any other Person who is
admitted as a Partner in the Partnership on and after the Closing Date and whose
admission has been reflected on the books and records of the Partnership.
"Partner Interest" means the interest of a Partner in the Partnership,
including, without limitation, such Partner's right: (a) to a distributive share
of the Profits, Losses, and other items of income, gain, loss, deduction, and
credit of the Partnership; (b) to a distributive share of the assets of the
Partnership; and (c) with respect to certain Partners, to participate in the
management and operation of the Partnership as provided in this Agreement.
"Partner Minimum Gain" shall mean partner nonrecourse debt minimum gain
as determined under the rules of Regulations Section 1.704-2(i).
"Partner Nonrecourse Deduction" has the meaning set forth in
Regulations Section 1.704-2(i)(1) and (2).
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"Partnership" means Suiza Fluid Dairy Group, L.P., a Delaware limited
partnership established by filing of the Certificate with the Secretary of State
of Delaware.
"Partnership Estimated Net Taxable Income" has the meaning set forth in
Section 6.4(a).
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(d).
"Percentage Interest" means the percentage interest of a Regular
Partner in certain allocations of Profits, Losses, and other items of income,
gain, loss, or deduction and certain distributions of cash and property. The
initial Percentage Interest of each Regular Partner is set forth below:
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REGULAR PARTNER INITIAL PERCENTAGE INTEREST
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SFDG Holdings 66.1%
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DFA 33.8%
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Suiza Management 0.1%
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TOTAL 100.0%
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The Percentage Interest of a Regular Partner may be adjusted pursuant
to Section 4.3 hereof. After such adjustment, the Percentage Interest of such
Regular Partner, as adjusted, shall constitute such Regular Partner's Percentage
Interest for all purposes under this Agreement. Neither Mid-Am nor Suiza
Preferred Partner shall have a Percentage Interest.
"Person" means an individual, corporation, partnership, limited
liability company, trust, estate, unincorporated organization, association, or
other entity.
"Preferred Capital Balance" means: (a) with respect to Suiza Preferred
Partner, the excess of (i) $176,272,000 plus the amount of the Preferred Capital
Balance of any additional Partner Interests issued to Suiza Preferred Partner
pursuant to Section 4.3(a), over (ii) total Preferred Capital Balance
Distributions to Suiza Preferred Partner since the Closing Date; and (b) with
respect to Mid-Am, the excess of (i) $90,000,000, over (ii) total Preferred
Capital Balance Distributions to Mid-Am since the Closing Date.
"Preferred Capital Balance Distribution" means any distribution of cash
to the Priority Partners which reduces their respective Preferred Capital
Balances. Each Preferred Capital Balance Distribution shall (a) be made to the
Priority Partners in proportion to their Preferred Capital Balances, and (b) be
identified by the Managers as a Preferred Capital Balance Distribution and not a
distribution under Section 6.1(a) or (b) hereof. With the approval of the
Management Committee in accordance with the provisions of Section 7.3 hereof, a
Preferred Capital Balance Distribution may be made at any time.
"Preferred Return" means, with respect to a particular Priority
Partner, an aggregate amount, computed like simple interest, compounded
annually, at a rate equal to 10% per annum
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on such Priority Partner's Preferred Capital Balance, or as contemplated by
Section 4.3(a), reduced by distributions made to such Priority Partner pursuant
to Section 6.1(a) below.
"Priority Partner" means Suiza Preferred Partner and Mid-Am, and any
permitted successors and assigns thereof.
"Profits" has the meaning set forth in Section 4.4(b).
"Regular Partner" means the Suiza Regular Partners, DFA, and any other
Partner with a Percentage Interest greater than zero that may be admitted to the
Company in accordance with this Agreement.
"Regulations" means the Treasury Regulations promulgated under the
Code, as amended and in effect (including corresponding provisions of any
succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section 5.3.
"Xxxxxxxx Dairy" means Xxxxxxxx Dairy, Inc., a Colorado corporation.
"Settlement Notice" has the meaning set forth in Section 7.10(c).
"Xxxxxxxx" means Xxxx Xxxxxxxx.
"SFG" means Southern Foods Group, L.P., a Delaware limited partnership.
"SFG Management" means SFG Management Limited Liability Company, a
Delaware limited liability company.
"SFG Capital" means SFG Capital Corporation, a Delaware corporation.
"Suiza" means Suiza Management and any assignees or transferees of its
Partner Interests, to the extent each holds any Partner Interest in the
Partnership. Any right or power granted to Suiza Management or Suiza may be
exercised by Suiza Management or, if Suiza Management no longer owns any Partner
Interests, then by any Persons included within the foregoing definition of
"Suiza" holding a majority of the Percentage Interests held by all Persons
included within such definition.
"SFDG Holdings" means Suiza Fluid Dairy Group Holdings, Inc., a Nevada
corporation.
"Suiza Common Stock" means the common stock, $.01 par value per share,
of Suiza Foods, or any securities issued in exchange for or in substitution of
such common stock in connection with any merger, consolidation, recapitalization
or similar event.
"Suiza Companies" means the following companies and any additional
dairy operations contributed by the Suiza Parents pursuant to the Contribution
Agreement: Xxxxxxxxx Foods
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Company, an Ohio corporation; Burger Dairy Company, an Indiana corporation;
CFI-TMP, Inc., a Michigan corporation; Country Delite Farms, Inc., a Delaware
corporation; Country Fresh, Inc., a Michigan corporation; Country Fresh Xxxxxx,
Inc., a Michigan corporation; Dairy Fresh, Inc., a Delaware corporation; Dairy
Products of Michigan, Inc., a Michigan corporation; East Coast Ice Cream, LLC, a
Michigan limited liability company; Frostbite Brands, Inc., a Michigan
corporation; Land-O-Sun Dairies, LLC, a Delaware limited liability company, LFD
Holding Company, a Delaware corporation; London Farms Dairy, Inc., a Delaware
corporation; Xxxxx Xxxxxx Dairy, Inc., a Delaware corporation; Model Dairy,
Inc., a Delaware corporation; Northern Falls Water Company, Inc., a Delaware
corporation; Oberlin Farms Dairy, Inc., an Ohio corporation; Southeastern Juice
Packers, Inc., a Michigan corporation; and Xxxxx Farms, Inc., a Delaware
corporation.
"Suiza Foods" means Suiza Foods Corporation, a Delaware corporation.
"Suiza GP" means Suiza Fluid Dairy Group GP, LLC, a Delaware limited
liability company.
"Suiza GTL" means Suiza GTL, LLC, a Delaware limited liability company.
"Suiza Managers" means the members of the Management Committee
designated by Suiza pursuant to Section 7.1.
"Suiza Parents" means Suiza Foods, Suiza SoCal Holdings, Inc., a Nevada
corporation, Suiza GTL Holdings, Inc., a Delaware corporation, LOS Holdings,
Inc., a Delaware Corporation, and SFDG Holdings.
"Suiza Preferred Partner" means SFDG Holdings as the holder of a
Preferred Capital Balance and as the owner of rights to distributions in respect
thereof under Section 6.1(a), and allocations of Profits and Losses in
connection therewith.
"Suiza Regular Partners" means Suiza Management and SFDG Holdings as
the holders of Percentage Interests greater than zero and as the owner of rights
to distributions under Section 6.1(b) hereof, and allocations of Profits and
Losses in connection therewith.
"Suiza SoCal" means Suiza SoCal, LLC, a Delaware limited liability
company.
"Tax Matters Partner" has the meaning set forth in Section 11.1.
"Territory" means the continental United States, Alaska and Hawaii.
"Territory Dairy Investment" means any acquisition after the Closing
Date of a Dairy Operation located in the Territory, whether through asset
purchase, stock purchase, merger or otherwise.
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"Unusual Items" of income or loss mean any extraordinary items of
income or loss, any nonoperating gains or losses resulting from the sale of
assets, any merger or acquisition expenses and any restructuring charges.
ARTICLE III
PURPOSE
3.1 Purposes and Scope. Subject to the provisions of this Agreement,
the purposes of the Partnership are to:
(a) acquire (i) the operations of the DFA Companies, the Suiza
Companies, Suiza GTL, Suiza SoCal and Xxxxxxxx Dairy through the
Mergers and the Contributions and (ii) such other assets and
liabilities as are contemplated to be acquired by the Partnership
pursuant to the terms of the Contribution Agreement;
(b) own, operate, manage, maintain, improve, develop,
purchase, sell, exchange, and otherwise acquire or dispose of Dairy
Operations in the Territory;
(c) borrow money in furtherance of any or all of the
objectives of the Partnership business, and to secure the same by
mortgage, pledge, or other liens; and
(d) do any and all other acts or things which may be
incidental or necessary to carry on the business of the Partnership as
herein contemplated. The Partnership shall not engage in any other
business or activity not intended to implement the foregoing without
the prior written consent of the Management Committee.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Initial Capital Contributions. Prior to the date of this Agreement,
the Suiza Parents owned, directly or indirectly, all of the outstanding equity
interests in each of the Suiza Companies (except Land-O-Sun Dairies, LLC) and
Xxxxxxxx Dairy, 75% of the outstanding common member interests and $120 million
aggregate stated amount of preferred member interests in Suiza GTL, 75% of the
outstanding common member interests and $95 million aggregate stated amount of
preferred member interests in Suiza SoCal, and, together with DFA Investment,
all of the outstanding equity interests in Land-O-Sun Dairies, LLC. Prior to the
date of this Agreement, the DFA Parents owned, directly or indirectly, all of
the outstanding limited partner interests in the Partnership, 25% of the
outstanding common member interests and $40 million aggregate stated amount of
preferred member interests in Suiza GTL, 25% of the outstanding common member
interests and $21 million aggregate stated amount of preferred member interests
in Suiza SoCal, and $20 million stated amount of preferred interests in
Land-O-Sun Dairies, LLC. Prior to the date of this Agreement, Suiza Management
has been the sole general partner of the Partnership. The DFA Parents and
Xxxxxxxx own, directly or indirectly, all
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of the outstanding equity interests in SFG, SFG Management and SFG Capital.
Pursuant to the Contribution Agreement, (i) the Partnership purchased from
Xxxxxxxx the entire equity interests in SFG held by Xxxxxxxx for the sum of $99
million in cash; (ii) Suiza Management purchased from Xxxxxxxx all of the member
interests in SFG Management owned by Xxxxxxxx for the sum of $1 million in cash;
(iii) DFA contributed its member interest in SFG Management to the Partnership;
(iv) the DFA Parents contributed, or caused the contribution of, their equity
interests in SFG, their membership interests in Suiza GTL and in Suiza SoCal,
the SFG Subordinated Notes held by them, and their preferred interests in
Land-O-Sun Dairies, LLC to the Partnership in exchange for common and preferred
limited partner interests in the Partnership; (v) the Suiza Parents contributed
or merged the Suiza Companies and Xxxxxxxx Dairy into, and contributed their
membership interests in Suiza GTL and Suiza SoCal to, the Partnership in
exchange for common and preferred limited partner interests in the Partnership;
(vi) Suiza Management contributed 90% of the member interests in SFG Management
it purchased from Xxxxxxxx to the Partnership in respect of its .1% general
partner interest in the Partnership; and (vii) DFA made an additional cash
contribution to, or Suiza Foods received an additional cash distribution from, a
loan from, or additional preferred interests in, the Partnership in respect of
certain additional fluid dairy operations contributed by the Suiza Parents as
contemplated therein, including, without limitation, the operations of Xxxxxxxx
Dairy. The Partners hereby agree that they will take all reasonable steps to
determine each Partner's Capital Account as of the Closing Date within 30 days
after the Closing Date; provided that it is hereby agreed that (a) Mid-Am's
Capital Account as of the Closing Date shall be equal to $90 million, (b) Suiza
Preferred Partner's Capital Account as of the Closing Date shall be equal to
$176.272 million, and (c) SFDG Holdings' Capital Account plus Suiza Management's
Capital Account as of the Closing Date shall be equal to .662 times, and DFA's
Capital Account as of the Closing shall be equal to .338 times, the aggregate
Capital Accounts of all of the Partners.
4.2 Non-Contemplated Contributions.
(a) If the Management Committee approves (in accordance with
the Major Decision provisions of Section 7.3) any additional Capital
Contributions beyond those described in Section 4.1, the Partnership
shall deliver a written notice to all of the Partners (although only
Partners shall be required to make, and can make, such additional
Capital Contributions) (a "Contribution Notice") requesting such
additional Capital Contributions. Each Contribution Notice shall
specify the following information:
(i) the aggregate amount of Capital Contributions
requested in the Contribution Notice;
(ii) the amount of additional cash funds each Partner
is required to contribute to the Partnership (which Capital
Contributions shall be made by the Partners in proportion to
their Percentage Interests);
(iii) the date on which such additional Capital
Contributions are due, which date shall be approved in advance
by the Management Committee; and
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(iv) wiring or other instructions for the bank
account into which the required Capital Contribution is to be
deposited.
(b) Any Capital Contributions made pursuant to Section 4.2(a)
shall be spent by the Partnership in accordance with the general
directions of the Management Committee, as approved in connection with
the approval of such Capital Contributions.
(c) Except as provided in Sections 4.1 and 4.3 hereof and in
the foregoing provisions of this Section 4.2, no Partner shall be
required to make any Capital Contribution.
4.3 New Investment Contributions.
(a) If the Management Committee decides to make a Territory
Dairy Investment and determines that it is desirable to purchase the
target business (i) in a qualified stock purchase (within the meaning
of Section 338 of the Code) followed by a Section 338(h)(10) election,
(ii) in a transaction taxed as taxable purchase of the target's stock,
or (iii) in a transaction qualifying as a reorganization under Section
368 of the Code, Suiza Foods shall carry out the purchase and shall
transfer the assets and liabilities of the acquired business to the
Partnership. If the acquisition is effected by a transaction as to
which a Section 338(h)(10) election is made, the Partnership shall loan
the purchase price (including the related acquisition costs and
expenses recorded as purchase price) to Suiza Foods, and the transfer
of the assets and liabilities of the acquired business shall constitute
repayment of the loan that funded the acquisition. If the acquisition
is effected by a transaction taxed as a taxable purchase of the
target's stock, the Partnership shall loan the purchase price
(including the related acquisition costs and expenses recorded as
purchase price) to Suiza Foods, and Suiza Foods shall transfer the
assets and liabilities of the acquired business in exchange for a
preferred Partner Interest with a Preferred Capital Balance equal to
the amount of the loan and a Preferred Return equal to the interest
rate on the loan from the Partnership to Suiza Foods. If the
acquisition is effected by a transaction qualifying as a reorganization
under Section 368 of the Code, Suiza Foods, through SFDG Holdings,
shall transfer the assets and liabilities of the acquired business to
the Partnership as a capital contribution. In such event, DFA shall
elect (i) whether to contribute to the Partnership an amount of cash
equal to DFA's Percentage Interest multiplied by the value (determined
using the closing trading price on the date issued) of the Suiza Common
Stock transferred to the stockholders of the acquired corporation, plus
the related acquisition costs and expenses recorded as purchase price,
and divided by the SFDG Holdings' Percentage Interests, or (ii)
whether, with the mutual agreement of the Partners, the Partnership
shall loan the purchase price (including the related acquisition costs
and expenses recorded as purchase price) to Suiza Foods, and Suiza
Foods shall transfer the assets and liabilities of the acquired
business in exchange for a preferred Partner Interest with a Preferred
Capital Balance equal to the amount of the loan and a Preferred Return
equal to the interest rate on the loan from the Partnership to Suiza
Foods. If DFA elects not to contribute such amount of cash and the
Partnership does not make a loan to Suiza Foods in exchange for such
additional preferred Partner Interest,
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SFDG Holdings' Percentage Interest shall be increased to equal the
quotient (expressed as a percentage) of (i) the Formula Value for SFDG
Holdings immediately prior to the acquisition, plus the value
(determined using the closing trading price on the date issued) of the
Suiza Common Stock transferred to the stockholders of the acquired
corporation, plus the related cash purchase price, if any, acquisition
costs and expenses recorded as purchase price, divided by (ii) the
total Formula Value for all Partners immediately prior to the
Partnership's participation in the relevant Territory Dairy Investment,
plus the value (determined using the closing trading price on the date
issued) of the Suiza Common Stock transferred to the stockholders of
the acquired corporation, plus the related cash purchase price, if any,
acquisition costs and expenses recorded as purchase price, and DFA's
Percentage Interest shall be correspondingly reduced.
(b) Notwithstanding any provision in this Agreement to the
contrary, if Suiza desires for the Partnership to participate in a
Territory Dairy Investment and the Management Committee rejects such
Territory Dairy Investment due solely to a DFA Veto, then, in addition
to any other options available to Suiza as a result of such DFA Veto
(i.e., its rights under Sections 7.7(b)(iii) and 11.9), Suiza may, in
its sole discretion, cause the Partnership to participate in such
Territory Dairy Investment if Suiza (and any other Partners who agree
to participate) make any and all Capital Contributions necessary to
enable the Partnership to participate in such Territory Dairy
Investment (a "New Investment Contribution") (which New Investment
Contribution shall be treated as being made by SFDG Holdings). Each
time SFDG Holdings (and any other Partners) makes a New Investment
Contribution, the Percentage Interest of each Partner shall be adjusted
to equal the quotient (expressed as a percentage) of (i) the Formula
Value for such Partner immediately prior to the Partnership's
participation in the relevant Territory Dairy Investment, plus the
amount of the New Investment Contributions (if any) made by such
Partner with respect to the relevant Territory Dairy Investment,
divided by (ii) the total Formula Value for all Partners immediately
prior to the Partnership's participation in the relevant Territory
Dairy Investment, plus the total amount of the total New Investment
Contributions made by all Partners with respect to the relevant
Territory Dairy Investment.
4.4 Capital Accounts.
(a) Maintenance Rules. The Partnership shall maintain for each
Partner a separate Capital Account in accordance with this Section 4.4,
which shall control the division of assets upon liquidation of the
Partnership as provided in Section 12.3. The Capital Account shall be
maintained in accordance with the following provisions:
(i) Such Capital Account shall be increased by the
cash amount or Book Value of any property contributed by such
Partner to the Partnership pursuant to this Agreement, such
Partner's allocable share of Profits and any items in the
nature of income or gain which are specially allocated to such
Partner pursuant to Section 5.2 or Section 5.3 hereof, and the
amount of any Partnership
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liabilities assumed by such Partner or which are secured by
any property distributed to such Partner.
(ii) Such Capital Account shall be decreased by the
cash amount or Book Value of any property distributed to such
Partner pursuant to this Agreement, such Partner's allocable
share of Losses and any items in the nature of deductions or
losses which are specially allocated to such Partner pursuant
to Section 5.2 or Section 5.3 hereof, and the amount of any
liabilities of the Partner assumed by the Partnership or which
are secured by any property contributed by such Partner to the
Partnership.
(iii) In the event all or a portion of an interest in
the Partnership is transferred in accordance with the terms of
this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the
transferred interest; provided, however, that if the transfer
causes a termination of the Partnership under Section
708(b)(1)(B) of the Code, then the Partnership shall be deemed
to have contributed its assets to a new limited partnership in
exchange for interests in the new limited partnership,
followed by a distribution of the interests in the new limited
partnership to the Partnership and liquidation of the
Partnership. Such deemed liquidation and reconstitution shall
not cause the Partnership to be dissolved or reconstituted for
purposes other than maintenance of the Capital Accounts and
federal income tax, unless otherwise provided in Article XII.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts generally are intended
to comply with Section 1.704-1(b) of the Regulations and shall be
interpreted and applied in a manner consistent with such Regulations.
If the Management Committee reasonably determines that it is prudent to
modify the manner in which the Capital Accounts, or any increases or
decreases to the Capital Accounts, are computed in order to comply with
such Regulations, the Management Committee may authorize such
modifications, provided that it does not have any effect on the amounts
distributable to any Person pursuant to Section 12.3 hereof upon the
dissolution of the Partnership.
(b) Definition of Profits and Losses. "Profits" and "Losses"
mean, for each Fiscal Year or other period, an amount equal to the
Partnership's taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(i) Income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in
computing Profits and Losses pursuant to this Section 4.4(b)
shall be added to such taxable income or loss;
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(ii) Any expenditures of the Partnership described in
Code Section 705(a)(2)(B), or treated as Code Section
705(a)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits and Losses pursuant to this Section 4.4(b)
shall be subtracted from such taxable income or loss;
(iii) In the event the Book Value of any Partnership
asset is adjusted pursuant to Section 4.4(c)(ii) or Section
4.4(c)(iii), the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for
purposes of computing Profits and Losses;
(iv) Gain or loss resulting from any disposition of
property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to
the Book Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its
Book Value;
(v) In lieu of the deduction for depreciation, cost
recovery or amortization taken into account in computing such
taxable income or loss, there shall be taken into account
"Book Depreciation" as defined in this Section 4.4(b)(v).
"Book Depreciation" for any asset means for any Fiscal Year or
other period an amount that bears the same ratio to the Book
Value of that asset at the beginning of such Fiscal Year or
other period as the federal income tax depreciation,
amortization or other cost recovery deduction allowable for
that asset for such year or other period bears to the adjusted
tax basis of that asset at the beginning of such year or other
period. If the federal income tax depreciation, amortization,
or other cost recovery deduction allowable for any asset for
such year or other period is zero, then Book Depreciation for
that asset shall be determined with reference to such
beginning Book Value using any reasonable method selected by
the Management Committee; and
(vi) Notwithstanding any other provision of this
Section 4.4(b), any items that are specially allocated
pursuant to Section 5.2 or Section 5.3 shall not be taken into
account in computing Profits and Losses.
(c) Definition of Book Value. "Book Value" means for any asset
the asset's adjusted basis for federal income tax purposes, except as
follows:
(i) The initial Book Value of any asset contributed
by a Partner to the Partnership shall be the gross fair market
value of such asset, as determined by the Management
Committee.
(ii) The Book Values of all Partnership assets shall
be adjusted to equal their respective gross fair market
values, as determined by the Management Committee, as of the
following times: (A) the acquisition of an additional interest
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in the Partnership by any new or existing Partner in exchange
for more than a de minimis capital contribution if the
Management Committee reasonably determines that such
adjustment is necessary or appropriate to reflect the relative
economic interests of the Partners in the Partnership; (B) the
distribution by the Partnership to a Partner of more than a de
minimis amount of Partnership property as consideration for an
interest in the Partnership if the Management Committee
reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the
Partners in the Partnership; and (C) the liquidation of the
Partnership within the meaning of Regulation Section
1.704-1(b)(2)(ii)(g);
(iii) The Book Value of any Partnership asset
distributed to any Partner shall be the gross fair market
value of such asset on the date of distribution, as determined
by the Management Committee.
(iv) The Book Values of Partnership assets shall be
increased (or decreased) to reflect any adjustment to the
adjusted basis of such assets pursuant to Code Section 734(b)
or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)
and Section 5.2(d) hereof; provided, however, that Book Values
shall not be adjusted pursuant to this Section 4.4(c)(iv) to
the extent the Management Committee determines that an
adjustment pursuant to Section 4.4(c)(ii) is necessary or
appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this Section
4.4(c)(iv).
(v) If the Book Value of an asset has been determined
or adjusted pursuant to Section 4.4(c)(i), Section 4.4(c)(ii),
or Section 4.4(c)(iv) hereof, such Book Value shall thereafter
be adjusted by the Book Depreciation taken into account with
respect to such asset for purposes of computing Profits and
Losses.
4.5 Interest. Except as otherwise provided in this Agreement, no
interest shall be paid by the Partnership on Capital Contributions or on
balances in Capital Accounts.
4.6 No Withdrawal. No Partner shall be entitled to withdraw any part of
its Capital Contribution or its Capital Account or to receive any distribution
from the Partnership, except as provided in Articles IV, VI, and XII.
4.7 Limitation on Capital Contributions and Loans. Except as
specifically provided in this Article IV, Article VIII, or Article XII hereof,
no Partner may contribute capital, loan, or advance money to the Partnership.
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ARTICLE V
ALLOCATIONS
5.1 Allocation of Profits, Losses and Certain Deductions.
(a) Allocation of Profit Generally. After giving effect to the
allocations set forth in Section 5.2 and Section 5.3, and after giving
effect to all distributions of cash or property (other than cash or
property to be distributed pursuant to Article XII), Profits for any
Fiscal Year shall be allocated to the Partners in the following manner:
(i) First, to each Partner with a negative balance in
its Adjusted Capital Account, pro rata in accordance with such
negative Adjusted Capital Account balances, until such
negative Adjusted Capital Account balances have been
eliminated;
(ii) Next, to SFDG Holdings and from DFA in an amount
equal to (W) DFA's Percentage Interest multiplied by (X) the
amount of any income or gain allocated to SFDG Holdings during
the Fiscal Year pursuant to Section 5.4 arising out of a
Territory Dairy Investment effected by either a transaction
taxed as a taxable acquisition of the target corporation's
stock or a transaction qualifying as a reorganization under
Section 368 of the Code ("COB Acquisition"), plus any loss or
deduction allocated to SFDG Holdings pursuant to Section 5.4
arising out of a COB Acquisition that has not previously been
taken into account in a computation pursuant to this Section
5.1(a)(ii), multiplied by (Y) the sum of the highest marginal
federal income tax rate applicable to corporations for the
Fiscal Year and the highest marginal state income tax rate
applicable to Suiza Foods for the Fiscal Year, expressed as a
percentage, divided by (Z) one minus the sum of the highest
marginal federal income tax rate applicable to corporations
for the Fiscal Year and the highest marginal state income tax
rate applicable to Suiza Foods for the Fiscal Year, expressed
as a percentage.
(iii) Next, to each Priority Partner in the minimum
amount necessary to cause such Priority Partner's positive
Adjusted Capital Account balance to equal the sum of such
Priority Partner's (A) Preferred Return plus (B) Preferred
Capital Balance, in proportion to such deficiencies;
(iv) Next, to the Partners in proportion to their
Percentage Interests.
(b) Allocation of Losses.
(i) After giving effect to the provisions of Section
5.2 and Section 5.3, and subject to the limitation set forth
in Section 5.1(b)(ii), Losses for any Fiscal Year shall be
allocated to the Partners in the following manner:
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(A) First, to the Partners until each of
their Adjusted Capital Account balances is reduced to
zero dollars ($0), in proportion to their Adjusted
Capital Account balances;
(B) Next, in the minimum amount necessary to
cause each Priority Partner's positive Adjusted
Capital Account balance to equal the sum of such
Priority Partner's Preferred Return and Preferred
Capital Balance, in proportion to the excess of each
such Priority Partner's Adjusted Capital Account over
the amount of its Preferred Return and Preferred
Capital Balance;
(C) Next, to each Priority Partner, in
proportion to their positive Adjusted Capital Account
balances, until such positive Adjusted Capital
Account balances have been eliminated; and
(D) Next, to the Partners in proportion to
their Percentage Interests.
(ii) Notwithstanding anything to the contrary in
Section 5.1(b)(i):
(A) The Losses allocated pursuant to Section
5.1(b)(i) hereof to any Partner for any Fiscal Year
shall not exceed the maximum amount of Losses that
may be allocated to such Partner without causing such
Partner to have an Adjusted Capital Account Deficit
at the end of such Fiscal Year.
(B) If some but not all of the Partners
would have an Adjusted Capital Account Deficit as a
consequence of an allocation of Losses pursuant to
Section 5.1(b)(i) hereof, the limitations set forth
in this Section 5.1(b)(ii) shall be applied by
allocating Losses pursuant to this Section 5.1(b)(ii)
only to those Partners who would not have an Adjusted
Capital Account Deficit as a consequence of receiving
such an allocation of Losses (with the allocation of
such Losses among such Partners to be determined by
the Management Committee, based on the allocation
that is most likely to effectuate the distribution
priorities set forth in Section 6.1 hereof).
(C) If no Partner may receive an additional
allocation of Losses pursuant to Section
5.1(b)(ii)(B) above, such additional Losses not
allocated pursuant to Section 5.1(b)(ii)(B) shall be
allocated solely to the Partners in proportion to
their Percentage Interests.
(c) Allocation of Certain Deductions. Any deductions allocated
to the Partnership by SFG that arise out of payment of bond tender
premiums by SFG with respect to the SFG Subordinated Notes (as defined
in the Contribution Agreement) shall
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be allocated to DFA in an amount equal to the amount of such bond
tender premium economically borne by DFA pursuant to Section 2.6 of the
Contribution Agreement.
5.2 Special Allocations.
(a) Minimum Gain Chargeback--Partnership Nonrecourse
Liabilities. If there is a net decrease in Partnership Minimum Gain
during any Fiscal Year, certain items of income and gain shall be
allocated (on a gross basis) to the Partners in the amounts and manner
described in Regulations Section 1.704-2(f) and (j)(2)(i) and (ii),
subject to the exemptions set forth in Regulations Section
1.704-2(f)(2), (3), (4), and (5). This Section 5.2(a) is intended to
comply with the minimum gain chargeback requirement (set forth in
Regulations Section 1.704-2(f)) relating to Partnership nonrecourse
liabilities (as defined in Regulations Section 1.704-2(b)(3)) and shall
be so interpreted.
(b) Minimum Gain Chargeback--Partner Nonrecourse Debt. If
there is a net decrease in Partner Minimum Gain during any Partnership
Fiscal Year, certain items of income and gain shall be allocated (on a
gross basis) as quickly as possible to those Partners who had a share
of the Partner Minimum Gain (determined pursuant to Regulations Section
1.704-2(i)(5)) in the amounts and manner described in Regulations
Section 1.704-2(i)(4), (j)(2)(ii), and (j)(2)(iii). This Section 5.2(b)
is intended to comply with the minimum gain chargeback requirement (set
forth in Regulations Section 1.704-2(i)(4)) relating to partner
nonrecourse debt (as defined in Regulations Section 1.704-2(b)(4)) and
shall be so interpreted.
(c) Qualified Income Offset. If, after applying Section 5.2(a)
and Section 5.2(b), any Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain shall be specially
allocated (on a gross basis) to each such Partner in an amount and
manner sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of such Partner as
quickly as possible.
(d) Optional Basis Adjustments. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Code
Sections 734(b) or 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall
be treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are required
to be adjusted pursuant to such Section of the Regulations.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any
Fiscal Year shall be specially allocated among the Partners in
proportion to their Percentage Interests.
(f) Partner Nonrecourse Deductions. Partner nonrecourse
deductions shall be allocated pursuant to Regulations Section
1.704-2(b)(4) and (i)(1) to the Partner who bears the economic risk of
loss with respect to the deductions.
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(g) Special Allocation: Economic Sharing Arrangement.
Notwithstanding anything to the contrary in this Article V, the
Partners acknowledge and agree that the manner in which distributions
are to be made pursuant to Section 6.1 correctly reflects the Partners'
economic sharing arrangement in the Partnership. To the extent that
allocations of Profits, Losses, and other items of income, gain, loss,
and deduction set forth in this Article V (other than this Section
5.2(g)) could produce an economic sharing arrangement among the
Partners different than that described in Section 6.1, then the
Partnership shall specially allocate items of gross income, gain, loss,
and deduction among the Partners in any manner that may be required to
cause the allocations of Profits, Losses, and other items of income,
gain, loss, and deduction described in Article V to be consistent with
the economic sharing arrangement described in Section 6.1.
5.3 Curative Allocations. The allocations set forth in Section
5.1(b)(ii) and Section 5.2(a) through Section 5.2(f) hereof (the "Regulatory
Allocations") are intended to comply with certain requirements of the
Regulations. It is the intent of the Partners that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Partnership income, gain, loss, or
deduction pursuant to this Section 5.3. Therefore, notwithstanding any other
provisions of this Article V (other than the Regulatory Allocations), the
Management Committee shall make such offsetting special allocations of
Partnership income, gain, loss, or deduction in whatever manner it determines
appropriate so that, after such offsetting allocations are made, each Partner's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Partner would have had if the Regulatory Allocations were not part
of the Agreement and all Partnership items were allocated pursuant to Section
5.1(a), Section 5.1(b)(i), and Section 5.2(g) hereof. In exercising its
discretion under this Section 5.3, the Management Committee shall take into
account future Regulatory Allocations under Sections 5.2(a) and 5.2(b) that,
although not yet made, are likely to offset other Regulatory Allocations
previously made under Sections 5.2(e) and 5.2(f).
5.4 Tax Allocations: Code Section 704(c).
(a) In accordance with Code Section 704(c) and the Regulations
thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall, solely
for tax purposes, be allocated among the Partners so as to take account
of any variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and its initial Book Value
(computed in accordance with Section 4.4(c)(i) hereof).
(b) If the Book Value of any Partnership asset is adjusted
pursuant to Section 4.4(c)(ii) hereof, subsequent allocations of
income, gain, loss, and deduction with respect to such asset shall take
account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Book Value in the same manner as
under Code Section 704(c) and the Regulations thereunder.
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(c) Any elections or other decisions relating to such
allocation shall be made by the Management Committee.
(d) Allocations pursuant to this Section 5.4 are solely for
purposes of federal, state, and local taxes and shall not affect or in
any way be taken into account in computing any Person's Capital
Account, Adjusted Capital Account, or share of Profits, Losses, and
other items or distributions pursuant to any provision of this
Agreement.
(e) It is intended that the allocations in Sections 5.1, 5.2,
5.3 and 5.4 effect an allocation for federal income tax purposes
consistent with Section 704 of the Code and comply with any limitations
or restrictions therein.
5.5 Other Allocation Rules.
(a) For purposes of determining the Profits, Losses, or any
other item allocable to any period, Profits, Losses, and any such other
item shall be determined on a daily, monthly, or other basis, as
determined by the Management Committee using any permissible method
under Code Section 706 and the Regulations thereunder.
(b) For federal income tax purposes, every item of income,
gain, loss and deduction shall be allocated among the Partners in
accordance with the allocations under Sections 5.1, 5.2, 5.3, and 5.4.
(c) The Partners are aware of the income tax consequences of
the allocations made by this Article V and hereby agree to be bound by
the provisions of this Article V in reporting their shares of
Partnership income and loss for income tax purposes.
(d) The Partners agree that the Partners' Percentage Interests
represent the Partners' respective interests in Partnership profits for
purposes of allocating excess nonrecourse liabilities (as defined in
Regulations Section 1.752-3(a)(3)) pursuant to Regulations Section
1.752-3(a)(3).
ARTICLE VI
DISTRIBUTIONS
6.1 Distributions of Available Cash. The Management Committee shall
review the Partnership's accounts at the end of each calendar quarter to
determine whether distributions are appropriate. Subject to Sections 17-607 of
the Delaware Act, the Management Committee shall authorize such distributions of
Available Cash as it may determine in its sole discretion; provided, however, to
the extent there is sufficient Available Cash to make distributions under
Section 6.1(a) hereof, such distributions shall be made. All such distributions
of cash shall be made in the manner set forth below:
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(a) First, to SFDG Holdings in an amount equal to (W) DFA's
Percentage Interest multiplied by (X) the amount of any income or gain
allocated to SFDG Holdings during the Fiscal Year pursuant to Section
5.4 arising out of a Territory Dairy Investment effected by either a
transaction taxed as a taxable acquisition of the target corporation's
stock or a transaction qualifying as a reorganization under Section 368
of the Code ("COB Acquisition"), plus any loss or deduction allocated
to SFDG Holdings pursuant to Section 5.4 arising out of a COB
Acquisition that has not previously been taken into account in a
computation pursuant to Section 5.1(a)(ii), multiplied by (Y) the sum
of the highest marginal federal income tax rate applicable to
corporations for the Fiscal Year and the highest state income tax
applicable to Suiza Foods during the Fiscal Year, expressed as a
percentage, divided by (Z) one minus the sum of the highest marginal
federal income tax rate applicable to corporations for the Fiscal Year
and the highest state income tax rate applicable to Suiza Foods during
the Fiscal Year, expressed as a percentage.
(b) First, to each Priority Partner with a Preferred Return,
in proportion to the Preferred Return of each such Priority Partner, in
an amount up to the Preferred Return of each such Priority Partner; and
(c) Next, to the Partners in proportion to their Percentage
Interests.
(d) Notwithstanding anything to the contrary above, (i) any
Preferred Capital Account Balance Distribution made by the Partnership
shall be treated as a distribution by the Partnership in reduction of
the Priority Partners' Preferred Capital Balances but shall not be made
or taken into account under clause (a) or (b) above; and (ii) if
Available Cash is derived from a transaction that occurs in connection
with the dissolution, termination and liquidation of the Partnership,
any Available Cash that is derived from or attributable to such a
transaction shall be distributed to the Partners in accordance with
Section 12.3 hereof.
6.2 Amounts Withheld. Notwithstanding any other provision of this
Agreement to the contrary, each Partner hereby authorizes the Partnership to
withhold and to pay over, or otherwise pay, any withholding or other taxes
payable by the Partnership with respect to such Partner as a result of such
Partner's participation in the Partnership. If and to the extent that the
Partnership shall be required to withhold or pay any such taxes, such Partner
shall be deemed for all purposes of this Agreement to have received a payment
from the Partnership as of the time such withholding or tax is paid, which
payment shall be deemed to be a distribution with respect to such Partner's
Partner Interest to the extent that the Partner (or any successor to such
Partner's Partner Interest) is entitled to receive a distribution. Any
withholdings authorized by this Section 6.2 shall be made at the maximum
applicable statutory rate under the applicable tax law unless the Partnership
shall have received an opinion of counsel or other evidence satisfactory to the
Management Committee to the effect that a lower rate is applicable, or that no
withholding is applicable.
6.3 Excess Distributions. To the extent that the aggregate of actual
and deemed distributions to a Partner under this Article VI for any period
exceeds the distributions to which
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such Partner is entitled for such period, the amount of such excess shall be
considered a loan from the Partnership to such Partner. Such loan shall bear
interest (which interest shall be treated as an item of income to the
Partnership) at the Default Rate, accruing from and after the date which is ten
(10) days after a Partner, on behalf of the Partnership, makes demand for
repayment of any such excess, and such interest shall accrue until discharged by
such Partner by repayment, which shall be made out of distributions to which
such Partner would otherwise be subsequently entitled if the Partner does not
otherwise repay such loan.
6.4 Tax Distributions.
(a) Notwithstanding anything to the contrary in Section 6.1,
the Managers shall cause the Partnership from time to time to
distribute to each Partner an amount equal to the excess of (i) the
Partnership's Estimated Net Taxable Income (defined below) for the
applicable Fiscal Year (or portion thereof) to which such distribution
relates which is allocable to such Partner, multiplied by the maximum
marginal federal income and the state tax rate applicable to the
relevant corporation in effect during the Fiscal Year to which such
distribution relates, over (ii) the sum of distributions already made
to such Partner during the relevant Fiscal Year. For these purposes,
"Partnership Estimated Net Taxable Income" means the excess of (Y) the
estimate of the aggregate amount of items of taxable income and gain of
the Partnership for the applicable Fiscal Year (or portion thereof) to
which such distribution relates, over (Z) the estimate of the aggregate
amount of items of taxable deduction and loss for such Fiscal Year (or
portion thereof) to which such distribution relates. The Managers shall
determine the Partnership Estimated Net Taxable Income and each
Partner's allocable share of Partnership Estimated Net Taxable Income.
The Partners acknowledge and agree that the sole purpose of this
Section 6.4(a) is to enable the Partnership to distribute sufficient
cash to each Partner to permit each Partner to timely satisfy its
estimated income tax obligations, if any, arising from the Partner's
allocable share of the Partnership's taxable income. The Manager shall
make such distributions on or about April 15, June 15, September 15 and
December 15 of each year and/or on any other date that similarly
coincides with the due date of any estimated income tax obligation of
any Partner.
(b) Notwithstanding any provision in this Section 6.4 to the
contrary, no distributions shall be made pursuant to this Section 6.4
to the extent there is not sufficient Available Cash to make such
distributions.
(c) For purposes of this Agreement, amounts distributed to the
Partners pursuant to Section 6.4 shall be deemed to be advance
distributions of amounts to be distributed pursuant to Section 6.1.
6.5 Payments Not Deemed Distributions. Any amounts paid pursuant to
Section 7.6 shall not be considered distributions for purposes of this
Agreement.
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ARTICLE VII
MANAGEMENT OF THE PARTNERSHIP
7.1 Management Committee.
(a) The Partnership shall be managed by the Management
Committee of the General Partner, which will consist of three
individuals (the "Managers"). Two Managers shall be designated by
Suiza, and one Manager shall be designated by DFA, and the General
Partner shall cause such persons to be elected to the Management
Committee. Suiza and DFA shall have the right to designate replacements
of those Managers designated by them. Each Manager designated by Suiza
must be a director, officer or employee of Suiza, and each Manager
designated by DFA must be a director, officer or employee of DFA. The
initial Suiza Managers shall be Xxxxx X. Xxxxxx and Xxxxx X. Xxxx, and
the initial DFA Manager shall be Xxxx X. Xxxxxx. Suiza may designate
one of the Suiza Managers as the Chairman of the Management Committee,
and such Manager will preside (when present) at all meetings of the
Management Committee.
(b) The limited liability company agreement of the General
Partner shall be in substantially the form attached hereto as Exhibit
A.
7.2 Major Decisions. The term "Major Decision" means any decision by
the Management Committee with respect to any of the following matters:
(a) admitting any Person as a Partner of the Partnership;
(b) accepting or requiring any Partner to make any additional
Capital Contribution to the Partnership or otherwise issuing additional
equity interests in the Partnership except for Capital Contributions
specified in Section 4.3 of less than $100 million;
(c) incurring indebtedness for borrowed money (which expressly
excludes trade payables incurred in the ordinary course of business) in
excess of $250 million;
(d) selling, leasing, pledging or granting a security interest
or encumbrance in all or substantially all of the Partnership's assets,
except in connection with the incurrence of indebtedness for borrowed
money that does not involve a Major Decision under the preceding
paragraph;
(e) approving an increase in the annual capital expenditure
budget of $50 million or more over the previous annual capital
expenditure budget for the Partnership or making any capital
expenditure, or series of related capital expenditures, in excess of
$50 million that are not contemplated by a previously approved capital
expenditure budget;
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(f) acquiring (whether through an asset purchase, merger,
equity purchase or otherwise) any Dairy Operations or other assets
(excluding acquisitions of raw materials and supplies in the ordinary
course of business) having a value, individually or in the aggregate
for any series of related transactions, in excess of $250 million;
(g) selling or otherwise disposing of any Dairy Operations or
other assets (excluding sales or other dispositions of inventory in the
ordinary course of business) having a value, individually or in the
aggregate for any series of related transactions, in excess of $250
million;
(h) consenting to the transfer of a Partner Interest pursuant
to Section 11.2;
(i) except as otherwise permitted in Section 7.6(b) or Section
7.9, entering into any transaction or agreement between the Partnership
and a Partner or an Affiliate of a Partner, including any change in the
percentage used to determine the Management Fee in Section 7.6(b),
except for loans specified in Section 4.3 of less than $100 million
between the Partnership and a Partner or an Affiliate of a Partner;
(j) making any material election or other decision pursuant to
Section 5.4(c), which relates to Code Section 704(c);
(k) any change in the purpose or scope of the Partnership
pursuant to Article III;
(l) amending or granting a waiver with respect to this
Agreement;
(m) authorizing any consolidation, dissolution, or liquidation
of the Partnership or any merger in which the Partnership does not
survive;
(n) executing or delivering any assignment for the benefit of
creditors of the Partnership;
(o) filing any voluntary petition in bankruptcy or
receivership with respect to the Partnership; or
(p) making a Preferred Capital Balance Distribution, and the
amount of any such Preferred Capital Balance Distribution.
7.3 Approval of Major Decisions. Notwithstanding any contrary
provisions of Section 7.1, the limited liability company agreement of the
General Partner shall provide the following with respect to approval of Major
Decisions:
(a) Any Major Decision must be approved by unanimous vote of
the Managers present and entitled to vote at a meeting of the
Management Committee at which a quorum is present.
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(b) The Management Committee may not approve any Major
Decision unless at least one Suiza Manager and one DFA Manager are
present at the meeting; provided that the Suiza Manager entitled to
vote may approve any Major Decision at a meeting at which no DFA
Manager is present if the following provisions have been satisfied with
respect to such meeting:
(i) the notice of such meeting included a statement
indicating that a Major Decision would be addressed at such
meeting and describing in general terms the nature of such
Major Decision; and
(ii) if no DFA Manager is present at the originally
scheduled meeting, the meeting is adjourned, and a second
notice is delivered to DFA and to the DFA Manager, marked
"CONFIDENTIAL/URGENT" indicating the time at which the meeting
will be reconvened and including a statement notifying DFA and
the DFA Manager that if the DFA Manager fails to attend the
reconvened meeting specified in the second notice, then the
Major Decision to be considered at such meeting may be
approved without any vote by the DFA Manager. This second
notice shall be delivered at least two Business Days prior to
the date of the reconvened meeting. At such reconvened
meeting, the only business that may be conducted is that
described in the notice of such meeting.
7.4 Officers. The officers of the General Partner shall include a
President, a Secretary and such other officers as the Management Committee in
its discretion may appoint, and such officers will have any powers delegated to
them by the Management Committee (subject to any limitations on the authority of
the Management Committee set forth in this Agreement). The initial President of
the General Partner shall be Xxxx Xxxxxxxx. The President of the General Partner
and certain other key employees of the General Partner and Partnership, as
determined from time to time by the Management Committee, shall be entitled to
receive options (the "New Options") to purchase Suiza Common Stock on terms
consistent with Suiza Foods' stock option program for executives then in effect.
At the time that any New Options are granted, the Partnership shall pay to Suiza
Foods in cash the value of such New Options determined under the Black-Scholes
formula using the closing trading price of Suiza Common Stock on the date upon
which such New Options are granted (the "Black-Scholes Prepayment"). Certain
current employees of the Suiza Companies, Suiza GTL, Suiza SoCal and Xxxxxxxx
Dairy hold options to purchase Suiza Common Stock (the "Existing Options"). When
any New Options or Existing Options are exercised, the Partnership shall
purchase from Suiza Foods for cash the number of shares of Suiza Common Stock
that the persons exercising such options are entitled to receive at a price
equal to the closing trading price of Suiza Common Stock on the date upon which
such options are exercised, minus the amount of any Black-Scholes Prepayment
made with respect to such options, and shall transfer such shares to the
exercising optionees. If any New Options expire without being exercised, Suiza
Foods shall repay to the Partnership the amount of any Black-Scholes Prepayment
made with respect to such New Options.
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7.5 Certificate of Limited Partnership; Qualifications to do Business.
The President or another officer of the General Partner shall cause to be filed
on behalf of and at the Partnership's expense such certificates or documents
(including, without limitation, copies, renewals, amendments or restatements of
the Certificate) as may be determined by such officer to be reasonable and
necessary or appropriate for the qualification and operation of a limited
partnership in the State of Delaware and in any other state in which the
Partnership may elect to do business.
7.6 Compensation and Reimbursement of Partner Expenses; Other
Agreements with Partners.
(a) Except as provided in Section 7.6(b) and Section 7.10, no
Partner shall be compensated for any services rendered to the
Partnership by such Partner or its designees on the Management
Committee. Notwithstanding anything to the contrary in this Agreement,
each Partner shall be reimbursed for out-of-pocket expenses that such
Partner makes for or on behalf of the Partnership, to the extent such
expenses are authorized by the Management Committee.
(b) Suiza Management and DFA will perform corporate overhead
services for the Partnership of substantially the same type and to
substantially the same extent provided by Suiza Management to the Suiza
Companies, Suiza GTL, Suiza SoCal and Xxxxxxxx Dairy, and by DFA to SFG
and to SFG Management, prior to the date hereof (the "Services"). In
consideration for the Services, the Partnership shall pay Suiza
Management and DFA a quarterly management fee (the "Management Fee"),
payable within 45 days after the end of each calendar quarter. From the
Closing Date through December 31, 2000, the quarterly Management Fee
payable to Suiza Management and to DFA will be $7,500,000 and $250,000,
respectively (pro rated for any partial quarter). Thereafter, the
quarterly Management Fee payable to Suiza Management and to DFA will be
an amount equal to .164% and .005%, respectively, of the Partnership's
budgeted gross revenues for that quarter, which percentage will be
reviewed annually by the Management Committee and may be changed
annually, which changes, other than changes caused by a material change
in the duties and responsibilities of a party providing services or by
a material increase in the costs of providing services, may be made
only in accordance with Section 7.2(i).
(c) Suiza Foods, the Partnership and DFA will enter into one
or more milk supply agreements pursuant to which DFA will provide raw
milk to certain Dairy Operations of the Partnership and to The
Morningstar Group, Inc.
7.7 Outside Activities; Noncompetition.
(a) Subject to Section 7.7(b), a Partner, any Affiliates of a
Partner, and any director, officer, partner, or employee of a Partner
or any Affiliate thereof, may have business interests and engage in
business activities in addition to those relating to the Partnership
and may engage in any businesses and activities for its own account and
for
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the accounts of others without having or incurring any obligation to
offer any interest in or funds from such properties, businesses or
activities to the Partnership or any Partner, and no other provision of
this Agreement shall be deemed to prohibit the Partners or any such
other Person from conducting such other businesses and activities.
Neither the Partnership nor any Partner shall have any rights by virtue
of this Agreement or the limited liability Partnership relationship
created hereby in any business Partnerships of the other Partner or any
Affiliate of such Partner or any director, officer, partner, or
employee of the other Partner or any Affiliate thereof.
(b) No Partner may, directly or indirectly, engage or
participate in any Dairy Operations within the Territory; provided
that:
(i) nothing in this Section 7.7(b) shall restrict the
business operations of any current affiliate of DFA that is
not Controlled by DFA;
(ii) nothing in this Section 7.7(b) shall be
construed as preventing any Partner from (A) engaging in any
business after the Closing Date that it engaged in within the
Territory prior to the Closing Date solely through entities
other than the DFA Companies, or the Suiza Companies and
Xxxxxxxx Dairy, (as applicable), including without limitation
the business operations of The Morningstar Group, Inc. and its
subsidiaries, Continental Can Company, Inc. and its
subsidiaries, and Horizon Organic Holding Corporation; (B)
engaging in any business outside the Territory, including
Suiza Foods' dairy operations in Puerto Rico; (C) engaging in
any business within the Territory in products and services not
provided by the Partnership; or (D) being a passive investor
or security holder of an interest constituting less than 5% of
the equity ownership, voting rights or debt of any of the
foregoing; and
(iii) if Suiza desires for the Partnership to
participate in a Territory Dairy Investment and the Management
Committee rejects such Territory Dairy Investment due to a DFA
Veto, then Suiza or any of its Affiliates may engage or
participate in such Territory Dairy Investment on terms which
are no more favorable to Suiza or such Affiliate than those
rejected by the Management Committee due to such DFA Veto, and
thereafter Suiza or such Affiliate may operate the Dairy
Operations acquired in such Territory Dairy Investment.
(c) The Partners acknowledge and agree that their respective
obligations under Section 7.7(b) are a material inducement and
condition to this Agreement and the obligations of the parties
hereunder and that the restrictions and remedies contained in this
Section 7.7 are reasonable as to time, geographic area and scope of
activity and do not impose a greater restraint than is necessary to
protect the goodwill and other legitimate business interests of the
Partnership. It is the intent of all parties hereto that the foregoing
restrictions against unlawful and unfair competitive activities be
given the fullest effect consistent with applicable law.
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(d) If the provisions of Section 7.7(b) are found by a court
of competent jurisdiction to contain unreasonable or unnecessary
limitations as to time, geographic area or scope of activity, then such
court is hereby directed to reform such provisions to the minimum
extent necessary to cause the limitations contained therein as to time,
geographical area and scope of activity to be reasonable and
enforceable.
(e) The Partners acknowledge and agree that the Partnership
would be irreparably harmed by any violation of their respective
obligations under Section 7.7(b) and that, in addition to all other
rights or remedies available at law or in equity, the parties will be
entitled to injunctive and other equitable relief to prevent or enjoin
any such violation, without posting any bond whatsoever.
7.8 Partnership Funds. The funds of the Partnership shall be deposited
in such segregated money-market Partnership account or Partnership accounts as
are designated by the President. The officers of the Partnership shall be
authorized to sign checks or drafts against any Partnership account, and
representatives of Suiza shall be listed as an alternate signatory with respect
to any such account. Any withdrawals from or charges against such accounts may
be made by officers or agents of the Partnership in accordance with the terms of
the Agreement.
7.9 Transactions with Affiliates. Except as otherwise permitted in
Section 4.3, Section 7.6(b) and Section 7.6(c) and except for any transaction or
agreement approved as a Major Decision pursuant to Section 7.3, the Partnership
may not enter into any transaction or agreement with any Partner or any
Affiliate of a Partner if the terms of such transaction or agreement are
materially less favorable to the Partnership than the terms that could be
obtained by the Partnership through an arms-length transaction or agreement with
an unrelated party.
7.10 Indemnification. The Partnership shall indemnify and hold harmless
the General Partner and any director, officer, employee, agent, or
representative of the General Partner, against all liabilities, losses, and
damages incurred by any of them by reason of any act performed or omitted to be
performed in the name of or on behalf of the Partnership, or in connection with
the Partnership's business, including attorneys' fees and any amounts expended
in the settlement of any claims or liabilities, losses, or damages, to the
fullest extent permitted by the Delaware Act. The Partnership shall indemnify
and hold harmless any Limited Partner, employee, agent, or representative of the
Partnership, any Person who is or was serving at the request of the Partnership
acting through the General Partner as a director, officer, partner, trustee,
employee, agent, or representative of another corporation, partnership, joint
venture, trust, or other enterprise, but in no event shall such indemnification
exceed the indemnification permitted by the Delaware Act. Notwithstanding
anything to the contrary in this Section 7.10, in no event shall Limited
Partners be subject to personal liability by reason of the indemnification
provisions of this Agreement.
7.11 Liability of the Partners.
(a) Neither the Partners nor their respective owners,
directors, officers, employees, or agents nor their designated Managers
shall be liable to the Partnership or to
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the other Partners for errors in judgment or for any acts or omissions
that do not constitute gross negligence or willful or wanton
misconduct.
(b) Each Partner may exercise any of the powers granted to
them by this Agreement and perform any of the duties imposed upon them
hereunder either directly or by or through agents.
7.12 Suiza Foods Board Seat. For so long as the DFA Partners own at
least 10 % of the Partner Interests, Suiza shall nominate an individual
designated by DFA for election to the Board of Directors of Suiza Foods.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF PARTNERS
8.1 Limitation of Liability. The Limited Partners shall have no
liability under this Agreement except as provided in Article IV and Sections
6.3, 7.7, 11.9, 11.10 and 14.12 of this Agreement.
8.2 Return of Capital. No Partner shall be entitled to the withdrawal
or return of its Capital Contribution, except to the extent, if any, that
distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement.
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1 Records and Accounting. The officers of the Partnership shall keep
or cause to be kept appropriate books and records with respect to the
Partnership's business (including without limitation, any books, records,
statements, or information required to be maintained by the Partnership under
the Delaware Act), which shall at all times be kept at the principal office of
the Partnership or such other office as the Management Committee may approve for
such purposes. Any books and records maintained by the Partnership in the
regular course of its business, including books of account and records of
Partnership proceedings, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, micrographics or any other information storage
device, provided that the books and records so kept are convertible into clearly
legible written form within a reasonable period of time. The books of the
Partnership shall be maintained for financial reporting purposes on the accrual
basis of accounting.
9.2 Fiscal Year. The Fiscal Year of the Partnership shall be the
calendar year for tax and accounting purposes.
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9.3 Reports.
(a) The officers of the Partnership shall deliver to each
Partner, not later than 90 days following the end of each Fiscal Year,
a balance sheet, an income statement, and an annual statement of source
and application of funds of the Partnership for such Fiscal Year.
(b) No later than 45 days after the last day of each fiscal
quarter during the term of this Agreement, the officers of the
Partnership shall use reasonable efforts to cause the Partnership to
prepare, or cause to be prepared and delivered to each Partner a
balance sheet together with a profit and loss statement for such fiscal
quarter together with a cumulative profit and loss statement for the
year- end with comparative statements for the previous year if
applicable.
9.4 Documents. Each Partner shall have the right to inspect, review and
make copies (with such copies at Partnership expense) of documents relating to
the business of the Partnership.
ARTICLE X
TAX MATTERS
10.1 Tax Matters Partner. Suiza shall be the "Tax Matters Partner" for
Federal income tax purposes pursuant to Section 6231 of the Code with respect to
each applicable taxable year of the Partnership. Suiza is authorized to do
whatever is necessary to qualify as such.
10.2 Annual Tax Returns.
(a) Suiza shall prepare or cause the Independent Accountants
to prepare, at the Partnership's expense, and shall timely file, or
cause the timely filing of, all tax returns and shall, on behalf of the
Partnership, timely file, or cause the timely filing of, all other
writings required by any governmental authority having jurisdiction to
require such filing. Suiza shall submit the proposed returns to each
Partner for its review and approval no later than 15 days prior to the
due date of the returns, after giving effect to any extensions of time
unless an extension would effectively make or make unavailable a
material tax election.
(b) If a Partner disagrees with the treatment of any
partnership item (within the meaning of Section 6231(a)(3) of the Code
and Regulations) on a tax return of the Partnership, then such Partner
shall give written notice to Suiza. If, after good faith consultation,
an agreement regarding the treatment of such item cannot be reached
within ten (10) days after the receipt of notice, the Partnership shall
seek written advice from a mutually agreed upon independent tax counsel
or mutually agreed upon Independent Accountants. Such advice shall
recommend the treatment which is consistent with the terms of this
Agreement, the respective interests of the Partners, and for which
there exists
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substantial authority in support thereof. Such recommended treatment
shall be the one reported on the return.
(c) Without the prior approval of the Management Committee, no
Partner shall file an amended return of the Partnership or a request
for an administrative adjustment under Section 6227 of the Code, nor
shall any Partner (other than the Tax Matters Partner, as provided
herein) commence any administrative or judicial proceeding relating to
a return of the Partnership. If, after good faith consultation, such
approval is not provided, no Partner shall file such return or request,
or commence such proceeding unless a mutually agreed upon independent
tax counsel renders an opinion that there is substantial authority for
the proposed treatment of the tax items with respect to which such
return, request, or proceeding relates. Nothing herein shall be
construed to prevent a Partner from undertaking any administrative or
judicial proceeding with respect to its own return.
10.3 Notice and Limitations on Authority.
(a) Each Partner shall notify the other Partners upon receipt
of any notice regarding a material audit or tax examination of the
Partnership and upon any request for material information by United
States federal, state, local, or other tax authorities.
(b) Suiza shall, within ten (10) days after the receipt
thereof, forward to each Partner a photocopy of any material
correspondence relating to the Partnership received from the Internal
Revenue Service. Suiza shall, within ten (10) days thereof, advise each
Partner in writing of the substance of any material conversation
affecting the Partnership held with any representative of the Internal
Revenue Service.
(c) Suiza shall have all the authority granted by the Code and
Regulations to the Tax Matters Partner, including the authority:
(i) to enter into a settlement agreement with the
Internal Revenue Service which purports to bind Partners other
than the Tax Matters Partner;
(ii) to file a petition as contemplated in Section
6226(a) or 6228 of the Code;
(iii) to intervene in any action as contemplated in
Section 6226(b)(5) of the Code;
(iv) to file any request contemplated in Section
6227(b) of the Code; and
(v) to enter into an agreement extending the period
of limitations as contemplated in Section 6229(b)(1)(B) of the
Code.
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10.4 Tax Elections. Suiza shall do all acts, make all elections and
take whatever reasonable steps are required to maximize, in the aggregate, the
federal, state, and local income tax advantages available to the Partnership and
shall defend all tax audits and litigation with respect thereto at the expense
of the Partnership. Suiza shall maintain the books, records, and tax returns of
the Partnership in a manner consistent with the acts, elections and steps taken
by the Partnership. In making any election for each Fiscal Year for tax
purposes, Suiza shall make such election, to the extent reasonably possible, in
a manner that maximizes the benefit and minimizes the detriment of each such
election to each Partner.
10.5 Actions in Event of Audit. If an audit of the Partnership's tax
returns occurs, Suiza shall, at the expense of the Partnership, notify the
Partners thereof, participate in the audit and contest, and settle or otherwise
compromise assertions of the auditing agent which may be adverse to the
Partnership in accordance with this Article X. Suiza may, if it determines that
the retention of accountants or other professionals would be in the best
interests of the Partnership, retain such accountants or other professionals to
assist in such audits. The Partnership shall indemnify and reimburse Suiza for
all reasonable expenses, including legal and accounting fees, claims,
liabilities, losses and damages borne by Suiza or its Affiliates which were
incurred in connection with any administrative or judicial proceeding with
respect to any audit of the Partnership's tax returns, except to the extent
caused by the gross negligence or willful misconduct of Suiza.
10.6 Organizational Expenses. The Partnership shall elect to deduct
expenses incurred in organizing the Partnership ratably over a 60-month period
as provided in Section 709 of the Code.
10.7 Taxation as a Partnership. No election shall be made by the
Partnership or any Partner for the Partnership to be excluded from the
application of any of the provisions of Subchapter K, Chapter 1 of Subtitle A of
the Code or from any similar provisions of any state tax laws.
ARTICLE XI
TRANSFERS OF PARTNER INTERESTS
11.1 Transfer Restrictions. A Partner may not transfer any portion of
its Partner Interest unless such Partner has otherwise complied with the
provisions of Sections 11.2, 11.3, and 11.4 hereof; provided that the provisions
of Sections 11.2, 11.3 and 11.4 will not apply to (a) a transfer pursuant to
Section 11.9 or 11.10; or (b) a pledge by a Partner of its Partner Interest to
secure bona fide indebtedness to such Partner or its Affiliates or any transfer
of such Partner Interest to or by the pledgee in connection with or following
foreclosure of such pledge. For purposes of this Article XI, the term
"transfer," when used with respect to a Partner Interest, includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange, or any
other disposition.
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11.2 Consent of the Management Committee. Except for a transfer by a
Partner to an Affiliate of such Partner, the Partner Interest of a Partner may
not be transferred without the written consent of the Management Committee,
which consent may be unreasonably withheld.
11.3 Tax Opinion. The transferor of any Partner Interests shall provide
an opinion of counsel, satisfactory to the other Partner, that the proposed
assignment, transfer, or sale would not cause the termination of the Partnership
for federal income tax purposes.
11.4 Registration. If any Partner Interest is to be assigned,
transferred or sold, either: (a) such Partner Interest shall be registered under
the Securities Act of 1933, as amended, and any applicable state securities
laws; or (b) the transferor shall provide an opinion of counsel that the
proposed assignment, transfer, or sale is exempt from such registration
requirements, which opinion shall not be deemed provided unless and until it is
accepted by the Management Committee. Except as otherwise provided in Section
11.10, the Partnership and the Partners have no obligation or intention
whatsoever either to register Partner Interests for resale under any federal or
state securities laws or to take any action which would make available to any
Person any exemption from the registration requirements of such laws.
11.5 Prohibited Transfers. Any transfer or purported transfer, whether
by operation of law or otherwise, of a Partner Interest shall be null and void
and of no legal effect if such transfer is prohibited by this Article XI or by
other provisions of this Agreement.
11.6 Rights of Assignee.
(a) Except as provided in this Article XI, and as required by
operation of law, the Partnership shall not be obligated for any
purpose whatsoever to recognize the transfer by any Partner of a
Partner Interest if such transfer violates the terms of this Article
XI.
(b) Any transfer of Partner Interests must be in writing, may
not contravene any of the provisions of this Agreement or the Delaware
Act, and must be executed by the transferor and delivered to the
Partnership and recorded on the books of the Partnership. Any transfer
which contravenes any of the provisions of this Agreement or the
Delaware Act shall be of no force and effect and shall not be
recognized by the Partnership.
(c) A transferee of Partner Interests who is not already a
Partner or is not admitted as a Partner pursuant to Section 11.7 shall
have no right to require any information or account of the
Partnership's transactions or to inspect the Partnership books or to
vote, but shall only be entitled to receive the allocations and
distributions to which his transferor would otherwise be entitled under
this Agreement.
(d) Any transferee who does not become a Partner and desires
to make a further transfer of such Partner Interest shall be subject to
all of the provisions of this Article XI to the same extent and in the
same manner as any Partner desiring to transfer his Partner Interest.
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11.7 Admission as a Partner.
(a) Subject to the other provisions of this Article XI, a
permitted transferee of a Partner Interest (if such transferee is not
already a Partner) shall be admitted as a Partner only after the
satisfactory completion of items (i) through (iv) below, and if
applicable, item (v):
(i) The transferee accepts and agrees to be bound by
the terms and provisions of this Agreement;
(ii) a counterpart of this Agreement and such other
documents or instruments as the Management Committee may
reasonably require is executed by the transferee to evidence
such acceptance and agreement;
(iii) the transferee pays or reimburses the
Partnership for all reasonable legal fees, filing, and
publication costs incurred by the Partnership in connection
with the admission of the transferee as a Partner;
(iv) the Management Committee approves the admission
of such permitted transferee, which approval may be withheld
in the unreasonable discretion of such Management Committee;
and
(v) if the transferee is not an individual, the
transferee provides the Partnership with evidence satisfactory
to counsel for the Partnership of the authority of such
transferee to become a Partner under the terms and provisions
of this Agreement.
(b) The Management Committee or officers of the Partnership
shall make all official filings and publications as promptly as
practicable after the satisfaction by the transferee of the conditions
contained in this Article XI to the admission of such transferee as a
Partner.
11.8 Distributions and Allocations in Respect of Transferred Partner
Interests. If any Partner Interest is sold, assigned, or transferred during any
Fiscal Year without violating the provisions of this Article XI, Profits,
Losses, and all other items attributable to the transferred (or adjusted)
interest for such period shall be divided and allocated between the affected
Persons by taking into account their varying interests during the period in
accordance with Code Section 706(d), using any conventions permitted by law and
approved by the Management Committee. All distributions on or before the date of
such transfer shall be made to the transferor. Solely for purposes of making
such allocations and distributions in the case of a transfer, the Partnership
shall recognize such transfer not later than the end of the calendar month
during which it is given notice of such transfer, provided that if the
Partnership does not receive a notice stating the date such Partner Interest was
transferred and such other information as the Management Committee may
reasonably require within 30 days after the end of the Fiscal Year during which
the transfer occurs, then all of such items shall be allocated, and all
distributions
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shall be made, to the Person who, according to the books and records of the
Partnership, on the last day of the Fiscal Year during which the transfer
occurs, was the owner of the Partner Interest. Neither the Partnership nor any
Partner shall incur any liability for making allocations and distributions in
accordance with the provisions of this Section 11.8, whether or not any Partner
or the Partnership has knowledge of any transfer of ownership of any interest.
11.9 Suiza Buy-Out Option.
(a) If Suiza proposes any Major Decision and the Management
Committee rejects such Major Decision solely due to a DFA Veto, then
Suiza, or an Affiliate of Suiza, shall have the option, exercisable by
written notice to DFA (the "Buy-Sell Notice") within thirty (30)
Business Days following the date of the DFA Veto, to purchase all the
Partner Interests held by the DFA Partners (the "DFA Interests") in
exchange for the DFA Price, calculated as of the date of the Buy-Sell
Notice. Any portion of the DFA Price may, at the election of Suiza, be
paid in shares of Suiza Common Stock; provided such Suiza Common Stock
is then traded on a national securities exchange or the Nasdaq Stock
Market. For purposes of this paragraph, each share of Suiza Common
Stock shall be deemed to have a value equal to the average closing
price of the Suiza Common Stock over the twenty (20) trading days
commencing ten (10) business days preceding the date of the Buy-Sell
Notice. The DFA Price will be allocated among the DFA Partners as
follows: (i) first to Priority Partners, in an amount equal to their
aggregate Preferred Returns plus their aggregate Preferred Capital
Balances, and (ii) second, to all DFA Partners, in proportion to their
Percentage Interests.
(b) If Suiza timely elects to acquire the DFA Interests in
connection with any DFA Veto, the closing of the transfer of the DFA
Interests shall occur within 45 days after the date of the Buy-Sell
Notice or such longer period as may be necessary to satisfy applicable
legal requirements. At the closing, the DFA Partners shall assign all
of their DFA Interests to Suiza, or any designated Affiliate of Suiza,
by written assignment with special warranty of title in a form
reasonably acceptable to Suiza. The DFA Partners shall convey their
entire interest in the Partnership, free and clear of all liens,
claims, and encumbrances, and the DFA Partners shall execute and
deliver to Suiza, or any designated Affiliate of Suiza, all documents
which may be reasonably required to give effect to the sale and
purchase of such DFA Interests. The DFA Partners shall have a right to
demand a shelf registration of any Suiza Common Stock issued in payment
of the DFA Price as set forth in the Registration Rights Agreement
(Suiza Common Stock) of even date herewith.
11.10 DFA Registration Right. DFA shall have a right to demand
registration of its Percentage Interest as set forth in the Registration Rights
Agreement (Venture Interests) of even date herewith.
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ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution.
(a) Except as set forth in this Agreement, no Partner shall
have the right to terminate this Agreement or to dissolve the
Partnership by its express will or by withdrawal without the consent of
the other Partners.
(b) The Partnership shall be dissolved upon the first to occur
of any of the following events: (each such event is referred to as a
"Dissolution Event"):
(i) the expiration of its term as provided in
Section 1.4;
(ii) any Partner suffers an Event of Bankruptcy or is
otherwise liquidated and dissolved;
(iii) an election to dissolve the Partnership is
unanimously approved in writing by the Partners;
(iv) any other event occurs that, under the Delaware
Act, would cause the Partnership's dissolution; or
(v) any pledgee or transferee of a pledgee of Partner
Interests having the right to vote more than 50% of the
Percentage Interests elects in writing to dissolve the
Partnership.
12.2 Continuation of the Partnership. Upon the occurrence of an event
described in Section 12.1(b)(ii) or Section 12.1(b)(iv), the Partnership shall
be carried on without dissolution if approved by Partners holding 50% or more of
the Percentage Interests. In all other cases, upon the occurrence of an event
described in Section 12.1(b), the Partnership shall be deemed to be dissolved
and reconstituted only if Partners holding 100% of the Percentage Interests
(excluding for these purposes any Percentage Interests held by the Partner with
respect to which such Dissolution Event occurred) elect to continue the
Partnership within 90 days of such event. If no election to continue the
Partnership is made within 90 days of such event, the Partnership shall conduct
only those activities necessary to wind up its affairs. If an election to
continue the Partnership is made upon the occurrence of an event described in
Section 12.1(b), then:
(a) the Partnership shall be deemed to be reconstituted and
shall continue until the end of the term for which it is formed unless
earlier dissolved in accordance with this Article XII; and
(b) all necessary steps shall be taken to amend or restate
this Agreement and the Certificate of Limited Partnership, provided
that the right of Partners holding 100% of
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the Percentage Interests (excluding for these purposes any Percentage
Interests held by a Partner with respect to which such Dissolution
Event occurred) to continue the Partnership shall not exist and may not
be exercised unless the Partnership has received an opinion of counsel
acceptable to the Management Committee that (i) the exercise of the
right would not result in the loss of limited liability of any Partner;
and (ii) neither the Partnership nor the reconstituted Partnership
would be treated as an association taxable as a corporation for federal
income tax purposes upon the exercise of such right to continue.
12.3 Liquidation.
(a) Upon the dissolution of the Partnership, unless an
election to continue the Partnership is made pursuant to Section 12.2,
Suiza shall serve as liquidator ("Liquidator") of the Partnership.
(b) Upon dissolution or resignation of the Liquidator, a
successor and substitute Liquidator (who shall have and succeed to all
rights, powers and duties of the original Liquidator) shall within 30
days thereafter be approved by the Partners holding 60% of the
Percentage Interests. The right to appoint a successor or substitute
Liquidator in the manner provided herein shall be recurring and
continuing for so long as the functions and services of the Liquidator
are authorized to continue under the provisions hereof, and every
reference herein to the Liquidator will be deemed to refer also to any
such successor or substitute Liquidator appointed in the manner herein
provided.
(c) Except as expressly provided in this Article XII, the
Liquidator appointed in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the
parties hereto, all of the powers conferred upon the Management
Committee under the terms of this Agreement (but subject to all of the
applicable limitations, contractual and otherwise, upon the exercise of
such powers, including the limitations set forth in Section 7.3) to the
extent necessary or desirable in the good faith judgment of the
Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during such period of time as shall be reasonably
required in the good faith judgment of the Liquidator to complete the
winding up and liquidation of the Partnership as provided for herein.
(d) Except as otherwise provided in this Article XII
(including Section 12.5 below), the Liquidator shall liquidate the
assets of the Partnership, and, after making all allocations and
distributions otherwise required by this Agreement, shall apply and
distribute the net proceeds of such liquidation in the following order
of priority:
(i) to the creditors of the Partnership, including
Partners, in the order of priority provided by applicable law;
(ii) then, to each Priority Partner with a Preferred
Return, in proportion to the Preferred Return of each such
Priority Partner, in an amount up to the Preferred Return of
each Priority Partner;
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(iii) then, to each Priority Partner, in proportion
to the Preferred Capital Balance of each such Priority
Partner, in an amount up to the Preferred Capital Balance of
each Priority Partner; and
(iv) finally, the remaining balance of the
liquidation proceeds, if any, to the Partners in accordance
with their respective positive Capital Account balances, after
taking into account all allocations of Profit, Loss and other
items of income, gain, loss and deduction, and distributions
for all periods, including prior distributions made pursuant
to this Article XII; provided, however, that, notwithstanding
anything in this Article XII to the contrary, the Liquidator
may place in escrow a reserve of cash or other assets of the
Partnership for contingent liabilities in an amount determined
by the Liquidator to be appropriate for such purposes.
12.4 Reserves. After all of the assets of the Partnership have been
distributed, the Partnership shall terminate. If at any time thereafter any
funds in any cash reserve fund referred to in Section 12.3(d) are released
because the need for such cash reserve fund has ended, such funds shall be
distributed to the Partners in the same manner as if such distribution had been
made pursuant to Section 12.3(d).
12.5 Distribution in Kind. Notwithstanding the provisions of Section
12.3 which require the liquidation of the assets of the Partnership, but subject
to the order of priorities set forth therein and subject also to Section 12.4,
if upon the dissolution of the Partnership the Management Committee determines
that an immediate sale of part or all of the Partnership's assets would be
impractical or would cause undue loss to the Partners, the Liquidator may, in
good faith, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (other than those to
Partners). The Liquidator may distribute to the Partners, in lieu of cash, such
Partnership assets as the Liquidator deems not suitable for liquidation. Any
distributions in kind shall be subject to such conditions relating to the
disposition and management thereof as the Liquidator and the Management
Committee deem reasonable and equitable. The Liquidator shall value any property
distributed in kind based upon such property's fair market value as determined
using such reasonable method of valuation as it may adopt.
12.6 Disposition of Documents and Records. All documents and records of
the Partnership, including, without limitation, all financial records, vouchers,
canceled checks and bank statements, shall be delivered to Suiza upon
termination of the Partnership. Suiza shall retain such documents and records
for a period of not less than six (6) years and shall make such documents and
records available during normal business hours to any other Partner for
inspection and copying at the other Partner's cost and expense.
12.7 Negative Capital Accounts. If, after the allocations of Profit,
Loss, and other items of income, gain, loss, deduction or credit under Article V
and after distributions of cash under Article VI, any Partner shall ever have a
negative balance in such Partner's Capital Account, no Partner shall have any
obligation to restore such negative balance, or to make any
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contribution to the capital of the Partnership by reason thereof, and such
negative balance shall under no circumstances be considered a liability of the
Partnership or of any Partner.
12.8 Filing of Certificate of Cancellation. Upon the completion of the
distribution of Partnership property as provided in Sections 12.3, 12.4, and
12.5, the Partnership shall be terminated, and the Liquidator (or the Partners
if necessary) shall cause the Certificate to be canceled and will take such
other actions as may be necessary to terminate the Partnership.
12.9 Return of Capital. No Partner shall be personally liable for the
return of the Capital Contributions of any other Partners, or any portion
thereof, it being expressly understood that any such return shall be made solely
from Partnership assets.
12.10 Waiver of Partition. Each Partner hereby waives any rights to
partition of the Partnership property.
ARTICLE XIII
AMENDMENT OF AGREEMENT
13.1 Amendment Procedures.
(a) Amendments to this Agreement may be proposed by any
Partner, which shall give written notice to all Partners of the text of
such amendment, together with a statement of the purpose of such
amendment.
(b) Proposed amendments to this Agreement shall be adopted if
they have been approved in writing by Partners holding 90% of the
Percentage Interests; provided that any amendment that affects the
Preferred Partners in any material respect must also be approved in
writing by Partners with aggregate Preferred Capital Balances equal to
at least 90% of the aggregate Preferred Capital Balances of all
Priority Partners. The President shall, within a reasonable time after
the adoption of any amendment to this Agreement, make official filings
or publications required or desirable to reflect such amendment,
including any required filing for recordation of any parallel amendment
to the Certificate.
ARTICLE XIV
GENERAL PROVISIONS
14.1 Addresses and Notices. Any notice provided in or permitted under
this Agreement shall be made in writing and may be given or served by: (a)
delivering the same in person to the party to be notified; (b) depositing the
same in the mail, postage prepaid, registered or certified with return receipt
requested, and addressed to the party to be notified at the address herein
specified; (c) delivering the same on a prepaid basis via a nationally
recognized courier service, such as Federal Express; or (d) sending the same by
facsimile transmission, followed by delivery
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of a hard copy via a nationally recognized courier service, such as Federal
Express. If notice is deposited in the mail pursuant to this Section 14.1, it
will be deemed received on the third (3rd) Business Day after it is so
deposited. Notice given in any other manner shall be deemed received only if and
when actually received by the party to be notified. For the purpose of notice,
the address of the parties shall be, until changed as hereinafter provided for,
as follows:
If to any DFA Partner: with a copy to:
Dairy Farmers of America, Inc. XxXxxxxxx, Will & Xxxxx
Northpointe Tower, Suite 1000 227 West Monroe Street
00000 X. Xxxxxxxxx Xxxxx X-0 Xxxxxxx, Xxxxxxxx 00000-0000
Xxxxxx Xxxx, XX 00000 Attention: Xxxxxxx X. Xxxxxx
Attention: President and General Counsel Telecopy: (000) 000-0000
Telecopy: 000-000-0000
If to any Suiza Parent: with a copy to:
Suiza Foods Corporation Xxxxxx & Xxxx, L.L.P.
0000 XxXxxxxx Xxx., XX 00, Xxxxx 0000 0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000
Attention: Chief Executive Officer Attention: Xxxxxxx X. XxXxxxxxx
and General Counsel
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
The parties shall have the right from time to time and at any time to change
their respective addresses and each shall have the right to specify as its
address any other address by at least 15 days' prior written notice to the other
parties. Each party shall have the right from time to time to specify additional
parties (not to exceed two additional parties) to whom notice hereunder must be
given by delivering to the other party 15 days' prior written notice thereof,
setting forth the address of such additional parties. Notice required to be
delivered hereunder to any party shall not be deemed to be effective until the
additional parties, if any, designated by such party have been given notice in a
manner deemed effective pursuant to the terms of this Section 14.1.
14.2 Titles and Captions. All article and section titles and captions
in this Agreement are for convenience only. They shall not be deemed part of
this Agreement and in no way define, limit, extend or describe the scope or
intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
14.3 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa. The locative adverbs "hereof,"
"herein," "hereafter," etc. refer to this Agreement as a whole.
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14.4 Further Action. The parties shall execute all documents, provide
all information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
14.5 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives, and permitted assigns.
14.6 Integration. This Agreement constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
14.7 No Third Party Beneficiary. This Agreement is made solely and
specifically between and for the benefit of the parties hereto, and their
respective successors and assigns subject to the express provisions hereof
relating to successors and assigns, and no other Person whatsoever shall have
any rights, interest, or claims hereunder or be entitled to any benefits under
or on account of this Agreement as a third party beneficiary or otherwise. It is
expressly understood that the right of the Partnership or the Partners to
require any additional Capital Contributions under the terms of this Agreement
shall not be construed as conferring any rights or benefits to or upon any
Person not a party to this Agreement, or the holder of any obligations secured
by a mortgage, deed of trust, security interest or other lien or encumbrance
upon or affecting the Partnership or any interest of a Partner therein.
14.8 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
14.9 Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute one agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a
transferee, upon executing and delivering such documents as required by the
Management Committee.
14.10 APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW.
14.11 Invalidity of Provisions. If any provision of this Agreement is
declared or found to be illegal, unenforceable or void, in whole or in part,
then the parties shall be relieved of all obligations arising under such
provision, but only to extent that it is illegal, unenforceable or void, it
being the intent and agreement of the parties that this Agreement shall be
deemed amended by modifying such provision to the extent necessary to make it
legal and enforceable while preserving
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its intent or, if that is not possible, by substituting therefor another
provision that is legal and enforceable and achieves the same objectives.
14.12 Confidentiality. Each party to this Agreement agrees to keep
confidential the terms of this Agreement and any materials provided in
connection with this Agreement. Notwithstanding the foregoing, each party to
this Agreement may disclose the terms, and any and all materials provided in
connection with this Agreement (a) to its counsel, accountants, auditors or
other agents whose custom it is to hold such information confidential, (b) as
may be required by any statute, court order, administrative order or decree of
governmental ruling or regulation of the United States or other applicable
jurisdiction, including Internal Revenue Service auditors, or as may be
requested by the Internal Revenue Service or any other governmental entity, or
(c) to such other Persons as are reasonably deemed necessary by such party to
protect the interests of such party or for the purposes of enforcing such
documents.
SIGNATURE PAGES ARE ATTACHED HERETO
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the day and year first above written.
PARTNERS:
SUIZA FLUID DAIRY GROUP HOLDINGS,
INC., a Nevada corporation
By: /s/ XXXXX X. XXXXXX
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
DAIRY FARMERS OF AMERICA, INC., a
Kansas cooperative marketing association
By: /s/ XXXX X. XXXXXX
--------------------------------------
Name:
-------------------------------------
Title: President & Chief Executive Officer
------------------------------------
MID-AM CAPITAL, L.L.C., a Delaware
limited liability company
By: /s/ XXXXXX X. XXX
--------------------------------------
Name:
-------------------------------------
Title: Chief Executive Officer
------------------------------------
GENERAL PARTNER:
SUIZA FLUID DAIRY GROUP GP, LLC,
a Delaware limited liability company
By: /s/ XXXXX X. XXXXXX
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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