EXHIBIT 10.7(b)
MANAGEMENT/OPERATING AGREEMENT
THIS AGREEMENT is made as of this 1st day of March, 1991, by and between
Orange-Madison Cooperative Farm Service, Inc. ("Orange-Madison"), a nonstock
corporation organized pursuant to the Virginia Agricultural Association Act, and
Southern States Cooperative, Inc. ("Southern States"), a corporation organized
pursuant to the Virginia Agricultural Cooperative Association Act.
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Orange-Madison is an agricultural cooperative
association organized and operated for the mutual help and
benefit of the members thereof.
Orange-Madison owns and operates three retail stores
located in Madison, Orange, and Gordonsville, Virginia and
various other facilities and equipment.
Southern States is an agricultural cooperative
association organized and operated for the mutual help and
benefit of the members thereof.
Southern States, among other services that it
provides to its members, has the ability and the expertise to
provide management and related services to independent local
agricultural cooperative associations in an efficient and
cost-effective manner.
Orange-Madison has experienced operating losses for
the past several operating years and has been exploring and
investigating various alternatives to eliminate future
operating losses while continuing to provide a full range of
services to its member-patrons.
In an effort, and with the intention, to (i) retain
ownership of its assets, (ii) retain its status as an
independent local agricultural cooperative association, (iii)
eliminate future operating losses, and (iv) continue to
provide a full range of services to its member-patrons,
Orange-Madison has discussed with Southern States various
arrangements whereby Southern States would furnish supplies
and render certain management and related services to certain
activities of Orange-Madison.
Southern States is willing to furnish supplies and to
render management and related services to certain activities
of Orange-Madison as set forth in this Agreement.
Orange-Madison desires to retain Southern States to
furnish supplies and to render management and related services
for certain activities of Orange-Madison as set forth in this
Agreement.
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NOW, THEREFORE, in consideration of the mutual obligations and
covenants contained herein, Orange-Madison and Southern States agree as follows:
1. Definitions. As used herein, the following terms shall
have the following meanings:
a. Advance Account Rate. The term "Advance Account
Rate" shall mean the Co-Bank National Seasonal Variable Rate (as it exists from
time to time), plus one-quarter percent (1/4%).
b. Business. The term "Business" shall mean the
activities and business directly associated with or relating to Managed Assets,
including the operations relating to the retail stores and the facilities
included among the Managed Assets but excluding the operations relating to the
facilities included among the Excluded Assets.
c. Claims. The term "Claims" shall include, without
limitation, claims, demands, suits, causes of action for personal injury or
property damage (including any depreciation of property values, lost use of
property, consequential damages arising directly or indirectly out of
Environmental Conditions); actual or threatened damages to natural resources;
claims for the recovery of response costs or administrative or judicial orders
directing the performance of investigations, response or remedial actions under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986
("CERCLA"), 42 U.S.C. ss. 9601, et seq.; the Toxic Substance Control Act
("TSCA"), 15 U.S.C. ss. 2601, et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1802, et seq.; the Resources Conservation and Recovery Act
("RCRA"), 42 U.S.C. ss. 9601, et seq.; the Clean Water Act ("CWA"), 33 U.S.C.
ss. 1251, et seq.; the Safe Drinking Water Act, 42 U.S.C. ss. 300(f), et seq.;
the Clean Air Act ("CAA"), 42 U.S.C. ss. 7401, et seq. or other Environmental
Laws, including the laws and regulations promulgated by the Commonwealth of
Virginia; a requirement to implement "corrective action" pursuant to any order
or permit issued pursuant to RCRA; claims for restitution, contribution or
equitable indemnity from third parties or any governmental agency; fines,
penalties, liens against property; claims for injunctive relief or other orders
or notices of violation from federal, state or local agencies or courts; and,
with regard to any present or former employees, exposure to or injury from
Environmental Conditions or Environmental Noncompliance.
d. Effective Date. The term "Effective Date" shall
mean March 1, 1991, on which date Southern States shall assume its duties with
respect to the management of the Business and the Managed Assets.
e. Environmental Conditions. The term "Environmental
Conditions" shall mean conditions of the environment, including the natural
resources (including flora and fauna), soil, surface water, ground water, any
present or potential drinking water supply, subsurface strata or the ambient
air, relating to or arising out of the use, handling, storage, treatment,
recycling, generation, transportation, off-site shipment, release, spilling,
leaking, pumping, pouring, emptying, discharging, injecting, escaping, leaching,
disposal, dumping or threatened release of Hazardous Materials by Orange-Madison
or Orange-Madison's predecessors in interest, agents, representatives, employees
or independent contractors.
f. Environmental Expenses. The term "Environmental
Expenses" shall include any liability, loss, cost or expense including, without
limitation, costs of investigation, cleanup, remedial or response action, the
costs associated with posting financial assurances for the completion of
response, remedial or corrective actions, the preparation of any closure or
other necessary or required plans or analyses or other reports or analyses
submitted to or prepared by regulating agencies, including the cost of health
assessments, epidemiological studies and the like, retention of engineers and
other expert consultants, legal counsel, capital improvements, operation and
maintenance testing and monitoring costs, power and utility costs and pumping
taxes or fees, and administrative costs incurred by governmental agencies.
g. Environmental Laws. The term "Environmental Laws"
shall mean CERCLA, TSCA, the Hazardous Materials Transportation Act, 49 U.S.C.
ss. 1802, et seq., RCRA, CWA, the Safe Drinking Water Act, 42 U.S.C. ss. 300(f),
et seq., CAA, and the plans, rules, regulations or ordinances adopted, or other
criteria and guidelines promulgated pursuant to the preceding laws or other
similar laws, regulations, rule or ordinance now or hereafter in effect,
including laws and regulations promulgated by the Commonwealth of Virginia.
h. Environmental Noncompliance. The term
"Environmental Noncompliance" means, but is not limited to: (i) the release or
threatened release of any Hazardous Materials into the environment, any storm
drain, sewer, septic system or publicly owned treatment works, in violation of
any effluent or emission limitations, standards or other criteria or guidelines
established by any federal, state or local law, regulation, rule, ordinance,
plan or order; (ii) any noncompliance of physical structure, equipment, process
or facility with the requirements of building or fire codes, zoning or land use
regulations or ordinance, conditional use permits and the like; (iii) any
noncompliance with federal, state or local requirements governing occupational
safety and health; (iv) any facility operations, procedures designs, etc., which
do not conform to the statutory or regulatory requirements of CERCLA, CAA, CWA,
TSCA, RCRA or any other Environmental Laws, including the laws and regulations
promulgated by the Commonwealth of Virginia, intended to protect public health,
welfare and the environment; (v) the failure to have obtained permits, variances
or other authorizations necessary for the legal operation of any equipment,
process, facility or any other activity; and (vi) the operation of any facility
or equipment in violation of any permit condition, schedule or compliance,
administrative or court order and the like.
i. Escrow Agreement. The term "Escrow Agreement"
shall have the meaning ascribed to it in Section 5 hereof.
j. Excluded Assets. The term "Excluded Assets" shall
mean those assets and that property, plant, and equipment owned and/or operated
by Orange-Madison on the Effective Date and listed or described on Appendix I
attached hereto and incorporated herein by reference.
k. Existing Current Assets. The term "Existing
Current Assets" shall mean all cash, inventory, and accounts receivable on hand
or otherwise owned or held by Orange-Madison on the Effective Date; provided,
however, that such term shall not include the Excluded Assets.
l. Fixed Capital Requirements. The term "Fixed
Capital Requirements" shall mean payments for repairs, improvements, or
additions to property, plant, and equipment (which repairs, improvements, and
additions relate to the Business and the Managed Assets and are capitalized in
accordance with Southern States' policies and procedures as they exist from time
to time).
m. Hazardous Materials. The term "Hazardous
Materials" shall mean hazardous substances, hazardous constituents, toxic
substances or related materials, whether solids, liquids or gases, including but
not limited to substances defined as "hazardous wastes," "hazardous substances,
"toxic substances," "pollutants," "contaminants," "chemicals known to the State
to cause cancer or reproductive toxicity," "petroleum, crude oil or any fraction
thereof" or other similar designations in, or otherwise subject to regulation
under CERCLA, TSCA, the Hazardous Materials Transportation Act, 49 U.S.C. ss.
1802, et seq., RCRA, CWA, the Safe Drinking Act, 42 U.S.C. ss. 300(f), et seq.,
CAA, and in the plans, rules, regulations or ordinances adopted, or other
criteria and guidelines promulgated pursuant to the preceding laws or other
Environmental Laws; and any other substances, constituents or wastes subject to
environmental regulations under any applicable federal, state or local law,
regulation or ordinance now or hereafter in effect.
n. Managed Assets. The term "Managed Assets" shall
mean all assets and/or all property, plant, and equipment owned and/or operated
by Orange-Madison on the Effective Date other than the Excluded Assets.
o. Notice. The term "Notice" shall have the meaning
ascribed to it in Section 19(e) hereof.
p. Savings or Loss Before Taxes. The term "Savings or
Loss Before Taxes" shall mean the annual results derived from the operations of
Orange-Madison, prior to any (i) provision for income taxes, (ii) provision for
loss reimbursement under Section 6 hereof, and (iii) any patronage
distributions, and as reported to members or shareholders in reports compiled
and presented using generally accepting accounting principles ("GAAP").
q. Adjustments to Savings or Loss Before Taxes. The
term "Adjustments to Savings or Loss Before Taxes" shall mean the sum of (s) the
excess of (i) calculated earnings on the proceeds of Existing Current Assets,
computed at the Advance Account Rate over (ii) any actual earnings from
investing the proceeds of the sale or disposition of the Existing Current
Assets, (t) any loss, cost, expense, gain, or earnings associated with or
relating, attributable, or allocable to Excluded Assets, (u) any loss, cost,
expense, gain or earnings not directly associated with or directly relating,
attributable, or allocable to the conduct of the Business or the Managed Assets,
(v) any loss resulting from any Environmental Expenses or Claims of the Managed
Assets (to the extent such Environmental Expenses or Claims relate to
Environmental Conditions or Environmental Noncompliance existing at the
Effective Date) or of the Excluded Assets, (w) any loss or gain resulting from
the sale or disposition of Excluded Assets, (x) any write-off or recoveries of
accounts receivable (to the extent such accounts receivable are included in
Existing Current Assets), (y) any other loss, cost, expense, gain, or earnings
of a non-operating nature, or (z) any other loss, cost, expense, gain, or
earnings that are associated with or relating, attributable, or allocable to
operations prior to the Effective Date or subsequent to the Termination Date,
and not previously adjusted in (s) through (y) hereof.
r. Operating Losses. "Operating Losses" shall mean
Savings or Loss Before Taxes reduced or increased by Adjustments to Savings or
Loss Before Taxes.
s. Term. The term "Term" shall have the meaning
ascribed to it in Section 16 hereof.
t. Termination Date. The term "Termination Date"
shall have the meaning ascribed to it in Section 16 hereof.
u. Working Capital Requirements. The term "Working
Capital Requirements" shall mean the funds required for, or invested in,
accounts receivable, inventory, cash on hand, or other current assets required
for, associated with, or relating to the conduct of the Business; provided,
however, that the term "Working Capital Requirements" shall not include funds
required for retirement of Orange-Madison patron equity.
2. Management and Services Generally.
a. Southern States is hereby retained, under the
direction of the Board of Directors of Orange-Madison, to manage and operate the
Business and the Managed Assets. Southern States shall render the following
services in connection with its management and operation of the Business and the
Managed Assets: (i) management, management supervision, credit administration,
accounting, internal auditing, procurement and training of personnel, (ii)
general assistance in legal, real estate, engineering, traffic, information and
publicity, and merchandising matters, (iii) special marketing services, (iv)
distribution of patronage refunds and other patronage notices, and (v) such
other services as are expressly described herein, including, but not limited to,
services relating to Environmental Expenses, Claims, Environmental Conditions
and Environmental Noncompliance as provided in the Agreement or in the Escrow
Agreement.
b. Southern States shall compile financial data
generated from its management and operation of the Business and the Managed
Assets and from Orange-Madison's management and operation of the Excluded Assets
for the preparation of periodic financial reports and the preparation of tax
returns for the combined operations of Orange-Madison. Southern States will not
be responsible for the generation, analysis or review of such financial
information regarding the Excluded Assets and will have no control over the
management of the Excluded Assets in order to achieve certain accounting or tax
results. Based on and subject to the foregoing, Southern States shall make
periodic reports regarding the status of its compilation of such financial data
to the Board of Directors of Orange-Madison and shall prepare tax returns and
periodic and/or annual reports for Orange-Madison.
c. For the calendar year ended December 31, 1991, and
in consideration of the management of and the services provided to the Business
and Managed Assets by Southern States hereunder (including the employment by
Southern States of the General Manager described in Section 2(g) hereof),
Orange-Madison shall pay to Southern States an annual fee (the "Management Fee")
of $150,000.00, which fee shall be payable in equal monthly installments. At the
beginning of each calendar year thereafter, Southern States shall advise the
Board of Directors of Orange-Madison in writing of the charge to be made by
Southern States for the ensuing year as Southern States' management fee for such
year; provided, however, that in no event shall such fee be increased from year
to year by a percentage greater than the percentage increase in the similar fee
charged by Southern States to its managed local cooperatives.
d. In addition to the Management Fee described in
Section 2(c) hereof, Orange-Madison shall pay to Southern States (i) an annual
fee (the "RSS Rental Fee") estimated at $27,420.00 in connection with the rental
by Orange-Madison of certain retail support systems owned by Southern States and
to be installed at the Orange-Madison retail stores, and (ii) an annual fee (the
"RSS Maintenance Fee") estimated at $9,360.00 in connection with the agreement
by Southern States to service and maintain the retail support systems owned by
Southern States and to be installed at the Orange-Madison retail stores.
e. The Management Fee, the RSS Rental Fee, and the
RSS Maintenance Fee, which shall be included in the calculation of Savings or
Loss Before Taxes as such term is defined in Section 1 hereof, constitute all of
the fees payable by Orange-Madison to Southern States pursuant to this
Agreement.
f. Special charges, such as local legal fees, local
consulting fees, appraisals, fees or expenses relating to permitting,
advertising, etc., shall be for the account of Orange-Madison, are not included
in the Management Fee, and shall be included in the calculation of Savings or
Loss Before Taxes as such term is defined in Section 1 hereof; provided,
however, that all such charges, as a condition to their inclusion in the
calculation of Savings or Loss Before Taxes, must be (i) reasonable in amount,
(ii) related to the operation of the Business and the Managed Assets, (iii)
unrelated to the Excluded Assets, and (iv) reasonably acceptable in all respects
(including the incurrence thereof) to Southern States. All other special
charges, including without limitation those described in Section 2(i) hereof,
shall be for the account of Orange-Madison and shall be paid from the proceeds
of the sale or other disposition of the Excluded Assets or of the Existing
Current Assets. In the event that special charges of the type described in the
immediately preceding sentence and reasonable in amount are incurred by
Orange-Madison at the direction of the Board of Directors of Orange-Madison
after the proceeds of the sale or other disposition of the Excluded Assets have
been expended and the proceeds of the sale or other disposition of the Excluded
Assets have been expended and the proceeds of the sale or other disposition of
Existing Current Assets have been expended in accordance with the provisions of
Section 5 hereof, such special charges shall be paid by Orange-Madison;
provided, however, that such special charges shall not be included in Working
Capital Requirements or in the calculation of Saving or Loss Before Taxes as
such terms are defined in Section 1 hereof.
g. Following nomination by Southern States and
approval by the Board of Directors of Orange-Madison, Southern States shall
employ, for and on behalf of Orange-Madison, a general manager of the Business
and the Managed Assets. Such general manager shall secure such cooperation and
working relations between Orange-Madison and Southern States as is necessary for
efficient and satisfactory operations of the Business and the Managed Assets. If
such general manager is found by Southern States and the Board of Directors of
Orange-Madison to have mismanaged the Business and the Managed Assets, Southern
States, following consultation with the Board of Directors of Orange-Madison,
shall replace such general manager with another person nominated and approved in
the manner provided in this Section 2(g).
h. During the Term of this Agreement, in connection
with the presentation and discussion of the annual budget for the Business and
the Managed Assets, the Board of Directors of Orange-Madison, following
consultation with Southern States, shall determine and establish a merit fund to
be used by Southern States to effect compensation increases to the employees of
the Business and the Managed Assets. The compensation (including any increase in
compensation) of each of the employees of the Business and the Managed Assets
shall, with the advice of the Board of Directors of Orange-Madison, be
determined by Southern States.
i. Notwithstanding anything herein to the contrary,
the Board of Directors of Orange-Madison shall retain all corporate powers
granted to them by the Articles of Incorporation and By-laws of Orange-Madison
or by applicable law, including without limitation the power to retain
attorneys, auditors, engineers, and similar advisors.
3. Working Capital and Fixed Asset Requirements.
a. All Working Capital Requirements in connection
with the Business and Managed Assets shall be provided by Southern States at the
Advance Account Rate, which shall be the same rate of interest charged by
Southern States to other affiliated local cooperatives. All capital provided by
Southern States shall be, at Southern States' sole discretion, on open account
or on the basis of negotiable notes executed by Orange-Madison, and
Orange-Madison, through its officers and directors, agrees to furnish from time
to time any collateral for such advances that may be required by Southern
States, including without limitation a first lien security interest in inventory
(other than that included in Excluded Assets) and proceeds therefrom financed by
working capital provided by Southern States. Orange-Madison at all times shall
have the privilege of raising a part of all of its capital requirements by the
sale of its own investment stock or securities.
b. All Fixed Capital Requirements shall be advanced
by Southern States, upon the recommendation of the general manager and the
approval of the Board of Directors of Orange-Madison, provided that no year
shall the amount committed for, or advanced with respect to, Fixed Capital
Requirements exceed Orange-Madison's prior year depreciation expense associated
with the Managed Assets.
4. Calculation of Savings or Loss Before Taxes and Operating
Losses.
a. Pursuant to, and in accordance with the provisions
and restrictions of Section 2(b) hereof, Southern States shall calculate Savings
or Loss Before Taxes and Operating Losses for each year during the Term and
shall submit such calculations for the review and approval of the Board of
Directors of Orange-Madison, or their duly appointed representative, within 120
days following the end of each calendar year during the Term hereof. Southern
States will consult with the Board of Directors or its duly appointed
representative and provide them with such information as is reasonably necessary
to permit such a review of such calculations.
b. In the event that the Board of Directors of
Orange-Madison, or their duly authorized representative, in good faith
reasonably dispute the calculation of Savings of Loss Before Taxes and Operating
Losses submitted by Southern States pursuant to Section 4(a) hereof, such
calculations shall be submitted to an independent accounting firm, mutually
acceptable to the Board of Directors of Orange-Madison and to Southern States,
with the cost being borne equally by Southern States and Orange-Madison. The
findings of such independent accounting firm shall be conclusive and binding on
both Southern States and the Board of Directors of Orange-Madison.
5. Proceeds of Existing Current Assets.
a. As soon after the Effective Date as shall be
practicable, not to exceed ten (10) days from the Effective Date, Southern
States and representatives of Orange-Madison shall take a physical inventory of
the merchandise inventory of Orange-Madison, other than that inventory which is
a part of the Excluded Assets (the "Inventory"). Only items that are normally
merchandised for resale are to be included in the Inventory. Southern States and
Orange-Madison shall value such Inventory that is in good, saleable condition at
cost or market (in quantities purchased by Orange-Madison), whichever is lower,
plus freight in. All damaged, obsolete, or unsaleable Inventory shall be
discounted and valued in accordance with its conditions, age, and potential
resale value.
b. On the Effective Date, Southern States shall
advance to Orange-Madison, pursuant to and in accordance with the provisions of
Section 3 hereof (including without limitation the provisions thereof requiring
the execution of Orange-Madison of notes and such other documents as shall be
necessary to create a first lien security interest in favor of Southern States),
an amount equal to the sum of the following: (i) the amount of cash on hand or
otherwise owned or held by Orange-Madison on the Effective Date; and (ii) the
amount determined by multiplying the book value of the accounts receivable of
Orange-Madison on the Effective Date by .85. Following completion of the
inventory described in Section 5(a) hereof, Southern States shall advance to
Orange-Madison an amount equal to the value of the Inventory of Orange-Madison
as determined pursuant to Section 5(a) hereof. The amounts thus advanced shall,
in addition to all proceeds from the sale or other disposition of Existing
Current Assets, be held and applied in accordance with Section 5(c) hereof. The
valuations determined for Inventory and accounts receivable shall be reflected
in the financial statements of Orange-Madison immediately prior to the Effective
Date.
c. All proceeds derived form the sale or other
disposition of Existing Current Assets (except for proceeds of those Existing
Current Assets with respect to which Southern States has made an advance
pursuant to Section 5(b) hereof which proceeds have been set aside pursuant to
Section 5(b) hereof) shall be set aside and held in escrow pursuant to, and in
accordance with the terms of the Escrow Agreement attached hereto as Appendix II
and incorporated herein by reference (the "Escrow Agreement"). The Escrow
Agreement generally shall provide that the proceeds derived from the sale or
disposition of Existing Current Assets shall be set aside and applied to (i)
provide a $50,000.00 fund for such purposes as the Board of Directors of
Orange-Madison shall direct pursuant to Section 2(i) hereof, (ii) pay down by
$1,000,000.00 the working capital loan extended to Orange-Madison by CoBank,
(iii) pay down trade creditors of Orange-Madison other than Southern States,
(iv) provide a fund for Environmental Expenses and Claims associated with the
Managed Assets. Following expiration or termination of the Escrow Agreement, the
proceeds derived from the sale or disposition of Existing Current Assets shall
continue to be set aside by Orange-Madison. Orange-Madison shall be solely
responsible for applying such proceeds (w) to provide a fund for Environmental
Expenses and Claims associated with the Excluded Assets, (x) repairs and
improvements to property, plant, and equipment (which repairs, improvements, and
additions relate to the Excluded Assets and are capitalized in accordance with
Southern States' policies and procedures as they exist from time to time) (y) to
pay for all other costs or expenses not described in, or funded pursuant to,
Section 3 above, up to the cumulative amount of $100,000.00, and thereafter (z)
to pay down any loans extended to Orange-Madison by CoBank.
6. Operating Losses. In the event Orange-Madison experiences
Operating Losses during the Term of this Agreement, Southern States shall cover,
bear, or otherwise absorb such losses. As defined in Section 1 hereof,
"Operating Losses" do not include Environmental Expenses and/or Claims relating
to any Environmental Conditions or Environmental Noncompliance existing at the
Effective Date or any Environmental Expenses and/or Claims relating directly or
indirectly to the Excluded Assets.
7. Commodities and Supplies.
a. Southern States shall make available to
Orange-Madison all commodities and supplies manufactured, processed, assembled,
handled, or distributed by it. Orange-Madison agrees to use the wholesale
facilities and services of Southern States as its principal source of supply for
all such commodities and supplies, recognizing that farmers can perform such
services for themselves through their own wholesale plants at cost to
Orange-Madison and its members. Southern States' commodities and supplies shall
be sold or furnished to Orange-Madison at "service guide" prices (as established
from time to time by Southern States) or less.
b. This section shall in no way preclude
Orange-Madison from handling commodities and supplies manufactured, processed,
assembled, handled, or distributed by others or performing local custom services
that may be beneficial to local patrons.
8. Services and Operations of Orange-Madison. No new services
or operations shall be undertaken or existing services or operations
discontinued by, or on behalf of, Orange-Madison until the same have been
approved by the Board of Directors of Orange-Madison. In addition, no
indebtedness secured by any interest in the Managed Assets shall be incurred by
Orange-Madison without Southern States' prior written consent.
9. Purchases and Commodities. Southern States shall supervise
and/or make purchases of commodities and supplies for the Business and Managed
Assets, which purchases shall be for the account of Orange-Madison and shall be
charged to Orange-Madison's account. Southern States may make contracts for the
account of the Business and Managed Assets of Orange-Madison in the regular
course of its Business, including contracts for marketing its products or the
products of members or patrons marketing through Orange-Madison, and contracts
of agency, including agreements whereby Orange-Madison shall act as agent for
the sale of farm machinery, farm, garden, orchard, and other supplies,
materials, and equipment used by farmers, and arrange all the terms thereof, all
in accordance with policies previously determined by the Board of Directors of
Orange-Madison, but without the necessity of specific authority from the Board
for any individual transaction or any series of transactions.
10. Operating Expenses and Accounts. Southern States shall be
authorized to draw upon funds of Orange-Madison (other than the funds described
in Section 5 above) as shall be required to properly carry on the operations of
the Business and Managed Assets of Orange-Madison, and Southern States shall at
all times keep accurate accounts of its receipts and disbursements with respect
to the Business and Managed Assets of Orange-Madison and shall repay any
advances made by Orange-Madison and not expended in its behalf by Southern
States in connection with the Business and Managed Assets within thirty (30)
days after demand by Orange-Madison, less any amount that may be due Southern
States from Orange-Madison.
11. Insurance. Unless Orange-Madison already has in full force
and effect coverage satisfactory to Southern States covering all identifiable
known exposures, Orange-Madison authorizes and directs Southern States to obtain
or attempt to obtain, for and on behalf of Orange-Madison, all insurances and
bonds with respect to the Business and the Managed Assets usually carried by
like businesses providing local farm supply or petroleum services. Such
insurance or bonds will include, but not be limited to:
a. All risk or specified perils property
insurance covering the physical assets of
buildings, machinery and equipment,
furniture and fixtures, and stocks of
merchandise on an actual cash value or
replacement cost basis;
b. Workmen's Compensation;
c. All fidelity, license, and permit bonds;
d. Comprehensive general and automotive
liability in limits not less than $1,000,000
single limit bodily injury and property
damage;
e. Crime coverages to include burglary
(merchandise and/or safe) and robbery;
f. Automobile physical damage comprehensive and
collision;
g. Owned cargo while being transported;
h. Director and officer liability; and
i. Such other coverages as needed for data
processing equipment or other unique
exposures.
Specific coverage shall be effected promptly by Southern
States upon notification of the necessity for same to the Board of Directors of
Orange-Madison. Southern States is hereby granted wide discretion in arranging
for insurance and bond coverage for Orange-Madison with respect to the Business
and Managed Assets and the selection of insurance or indemnity companies or
other means of effecting insurance coverage shall be also in the sole discretion
of Southern States. Orange-Madison agrees to pay all premiums and other costs of
said insurance coverage promptly upon receipt of the notice of the same, which
premiums and other costs shall be included in the calculation of Savings or Loss
Before Taxes as such term is defined in Section 1 hereof.
12. Payment of Patronage Refunds. Orange-Madison agrees that
payment of patronage refunds to patrons can have an important bearing upon the
operations of Orange-Madison, and that it will, therefor, first consult with
Southern States before such patronage refunds are authorized by the Board of
Directors of Orange-Madison.
13. Accounting. Pursuant to, and in accordance with, the
provisions and restrictions of Section 2(b) hereof, Orange-Madison agrees (i) to
follow all accounting practices prescribed by Southern States with respect to
the Business and the Managed Assets, (ii) to conform its accounting practices
with respect to the Excluded Assets to those prescribed by Southern States with
respect to the Business and the Managed Assets, and (iii) to permit accountants,
or other persons designated by Southern States to audit and inspect its books
and records at such times as Southern States may deem advisable. Southern States
shall be required to make at least one audit of the affairs of the Business and
the Managed Assets (an "Internal Compliance Audit") during the Term of this
Agreement. Southern States shall review the results of such Internal Compliance
Audits with the Board of Directors of Orange-Madison from time to time. Any
audits other than the Internal Compliance Audits desired by the Board of
Directors of Orange-Madison shall be paid by Orange-Madison and the cost thereof
shall not be included in the calculation of Savings or Loss Before Taxes as such
term is defined in Section 1 hereof.
14. Policy Against Conflicts of Interest. It shall be the
policy of Orange-Madison to enter into no contract or agreement with any officer
or director whereby such officer or director would receive any financial
benefits, direct or indirect, differing in any way from the business relations
accorded regular members of Orange-Madison, or any other kind of contract
differing from terms generally current. Neither shall Orange-Madison purchase
goods or services from any officers or directors (except farm products produced
by such officer or director), nor shall it employ any spouse, parent, son or
son-in-law, daughter or daughter-in-law, of any officers or directors.
15. Credit Policy. Orange-Madison agrees that at the first
meeting of its Board of Directors following the execution of this Agreement, the
credit policy described on Appendix III attached hereto and incorporated herein
by reference shall be duly adopted.
16. Term and Termination.
a. Term. The term of this Agreement (the "Term")
shall commence on the Effective Date, and shall terminate, unless sooner
terminated as provided in Section 16(b) hereof on December 31, 1993 (the
"Termination Date").
b. Termination. This Agreement may be terminated by
mutual consent of Orange-Madison and Southern States. In addition, either party
may immediately terminate this Agreement if the other party (i) is in default of
any material provision of this Agreement and continues in default for a period
of ten (10) days following notice by the nondefaulting party, or (ii) files a
petition for bankruptcy or reorganization under the Federal Bankruptcy Act or
makes an assignment for the benefit of creditors, or (iii) is guilty of any
fraudulent act or of willful withholding of any funds, payments or property of
the other party or to which the other party lawfully is entitled.
c. On or before the Termination Date or any sooner
termination hereof, all amounts and monies that may be due and owing to Southern
States by Orange-Madison shall be and become immediately due and payable.
d. As soon as practicable following the Termination
Date, Southern States shall use its reasonable efforts to deliver to
Orange-Madison all material records generated or maintained by Southern States
with respect to the Business and the Managed Assets during the Term hereof.
17. Treatment/Handling of Excluded Assets.
a. Orange-Madison shall retain all responsibility for
the management and operation of the Excluded Assets. Such management and
operation shall include the following: (i) management, management supervision,
credit administration, accounting (including tax accounting), internal auditing,
procurement and training of personnel; (ii) general management for legal, real
estate, engineering, traffic, information and publicity, marketing and
merchandising matters; and (iii) other activities in the management and
operation of the Excluded Assets.
b. Any and all costs associated with the activities
and responsibilities described in Section 17(a) shall be paid, after the
expiration or termination of the Escrow Agreement, from the proceeds from the
sale or other disposition of the Existing Current Assets and shall not be
included in the calculation of Savings or Loss Before Taxes as such term is
defined in Section 1 hereof.
c. Southern States shall have no control or authority
over the activities of the Excluded Assets and shall not participate in the
management or operation of the Excluded Assets. Upon request by Southern States,
Orange-Madison shall provide information to Southern States regarding
Orange-Madison's management and operation of the Excluded Assets for information
purposes. Such communication shall not be construed as control or authority by
Southern States over the Excluded Assets.
18. Treatment/Handling of Environmental Conditions and
Environmental Noncompliance Relating to the Managed Assets.
a. The parties acknowledge that the Managed Assets,
which will be operated henceforth by Southern States by this Agreement, have
certain Environmental Conditions and/or Environmental Noncompliance as of the
Effective Date of this Agreement. With respect to existing Environmental
Conditions or Environmental Noncompliance, and without in any way limiting the
scope of Orange-Madison's obligations under Sections 19(a) and (b) hereof,
Orange-Madison will be responsible for all investigations, studies, cleanup,
corrective action or response or remedial action, including defense costs,
required by any local, state or federal government agency now or hereafter
authorized to regulate environmental matters (hereinafter "Governmental
Entities"), or by any consent decrees or court or administrative order now or
hereafter applicable to the Business and Managed Assets, or by any federal,
state or local law, regulation, rule or ordinance now or hereafter in effect.
b. Orange-Madison shall pay all costs in connection
with any investigations, studies, cleanup, repair and remedial action relating
to the matters acknowledged in 18(a) including, without limitation, all capital
improvements, installation, operation, maintenance, testing, monitoring costs,
preparation of plans, designs, applications, studies and reports by or for
Governmental Entities or other regulating agencies, the preparation of closure
or other required plans, the retention of legal counsel, engineers and other
expert consultants. The parties acknowledge that the proceeds held in escrow
pursuant to the Escrow Agreement shall be used, in part, to pay the costs listed
in the preceding sentence but further acknowledge that such proceeds shall not
limit or be deemed to limit the liability of Orange-Madison to pay all such
costs.
c. Southern States shall have the right to control
and manage all investigations and any environmental cleanup, remediation or
related activities relating to matters acknowledged in 18(a).
d. In the event that Environmental Conditions or
Environmental Noncompliance (other than that described in Section 18(a) hereof)
arise at the Managed Assets subsequent to the date hereof, Southern States shall
promptly notify Orange-Madison of any such Environmental Conditions or
Environmental Noncompliance, but Southern States shall have the exclusive right
to control and manage the resolution of such issues. Orange-Madison will pay all
reasonable costs incurred by Southern States in defending and correcting the
conditions that constitute Environmental Conditions or Environmental
Noncompliance, which costs shall be included in the calculation of Savings or
Loss Before Taxes as such term as defined in Section 1 hereof. The provisions of
this Section 18 do not diminish Orange-Madison's obligations under Section 19(a)
and (b) hereof.
19. Miscellaneous.
a. General Indemnification. Orange-Madison shall
indemnify and hold Southern States and its officers, directors, employees,
agents, members, and affiliates harmless from and against any and all losses,
damages, costs, and out-of-pocket expenses, including reasonable attorney's and
other expert's fees, incurred by them and arising out of or resulting from (i)
the ownership or operation of the Excluded Assets, (ii) the ownership or
operation of the Managed Assets either before or after the term of this
Agreement, or (iii) the business and operations of Orange-Madison, the
management of which business and operations are not expressly assumed by
Southern States hereunder.
b. Environmental Indemnification. Orange-Madison
agrees to indemnify, defend by counsel acceptable to Southern States and hold
harmless Southern States, its subsidiaries, affiliates, successors and assigns
and their respective directors, officers, employees, shareholders,
representatives and agents (hereinafter for the purposes of this Section
referred to collectively as "Southern States") from and without limitation,
diminution in value, losses, liabilities and expenses, lawsuits, deficiencies,
interest, penalties, attorneys' fees and all amounts paid in defense or
settlement of the foregoing whether or not arising out of third-party claims,
which may be imposed upon or incurred by Southern States or asserted against
Southern States by any other party or parties (including Governmental Entities),
in connection with any Environmental Conditions or Environmental Noncompliance
arising out of, resulting from or attributable to, the assets, business or
operations of Orange-Madison, Orange-Madison's predecessors in interest,
including, without limitation, any Claims, Expenses, losses, liabilities, etc.,
resulting from the alleged exposure of any person to Environmental Conditions or
Environmental Noncompliance, regardless of whether such Environmental Conditions
or Environmental Noncompliance or exposure resulted from activities of
Orange-Madison or Orange-Madison's agents, representatives, employees or
independent contractors and the breach of any of Southern States'
representatives and warranties. Orange-Madison's obligations pursuant to this
Section shall exist regardless of whether Southern States is alleged or held to
be strictly or jointly and severally liable.
c. Southern States' Indemnification. Southern States
shall indemnify and hold Orange-Madison and its officers, directors, employees,
agents, members, and affiliates harmless from and against any and all losses,
damages, costs, and out-of-pocket expenses, including reasonable attorney's and
other expert's fees, incurred by them and arising out of or resulting from (i)
Southern States' willful and continued failure to substantially perform its
obligations hereunder, or (ii) any willful conduct by Southern States pursuant
to this Agreement that is unlawful, illegal, or otherwise prohibited by law. For
purposes, hereof, no conduct shall be deemed "willful" unless done or omitted to
be done not in good faith and without reasonable belief that the action or
omission was in the best interests of the Business or the Managed Assets.
d. Retail Support System. Upon the expiration or
termination of this Agreement, in the event that Orange-Madison is and remains
an independent, unaffiliated local cooperative and a customer of Southern
States, Southern States shall grant to Orange-Madison a non-exclusive,
non-transferable license for the use of the software associated with the retail
support system described in Section 2 hereof and shall sell, lease, or otherwise
transfer to Orange-Madison the hardware or other equipment associated therewith
on substantially the same terms as such software, hardware, or other equipment
is made available to other independent, unaffiliated, local cooperatives that
are customers of Southern States.
e. Notices. All notices, requests, demands, and other
communications required or permitted to be given hereunder (a "Notice") shall be
deemed to have been duly given if in writing, signed by or on behalf of the
party giving them, and delivered by hand, or sent by first class, certified, or
registered mail, postage prepaid (and such Notice will be deemed to have been
given as of the date delivered by hand or as of the third (3rd) business day
after the date mailed), addressed:
(1) If to Orange-Madison, to:
X. X. Xxxxxxx, III
Xxxx Xxxxxx Xxx 000
Xxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxxxx X. Xxxxxxxxx, Esquire
Xxxxxxx, Aldhizer & Xxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
(2) If to Southern States, to:
Southern States Cooperative, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: X. Xxxxxx Xxxxxxxx, Jr., Esquire
Such names and addresses may be changed by such a Notice.
f. Assignment. This Agreement and all rights and
obligations hereunder may not be sold, assigned, or transferred by Southern
States or Orange-Madison.
g. Entire Agreement Modification. This Agreement,
including the Appendices referred to herein and which form a part hereof,
contains the entire understanding of the parties hereto with respect to the
subject matter contained herein. This Agreement may not be changed except by a
writing signed by each of the parties.
h. Governing Law. The interpretation and enforcement
of this Agreement will be in accordance with the laws of the Commonwealth of
Virginia.
i. Waiver. The failure of any party to this Agreement
at any time or times to require performance of any provisions of this Agreement
shall in no matter affect the right to enforce the same. No waiver by any party
to this Agreement of any condition, or of the breach of any term, provision,
warranty, representation, agreement, or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances shall be deemed or
construed as a further or continuing waiver of any such condition or breach or a
waiver of any other condition or of the breach of any other term, provision,
warranty, representation, agreement, or covenant contained in this Agreement.
j. Severability. In the event that any court of
competent jurisdiction shall determine that any provision of this Agreement is
invalid, such determination shall not affect the validity of any other provision
of this Agreement which shall remain in full force and effect and which shall be
construed as to be valid under applicable law.
k. Section Headings: Gender. The section headings or
captions contained herein are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement. The use of any
gender herein shall be deemed to be or include other genders and the use of the
singular herein shall be deemed to be or include the plural (and vice versa).
l. Counterparts. This Agreement may be executed by
each party upon a separate copy, and in such case one counterpart of this
Agreement shall consist of enough of such copies to reflect the signature of all
of the parties to this Agreement.. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or the terms of this Agreement to
produce or account for more than one of such counterparts.
IN WITNESS WHEREOF, the parties hereof have caused
this Agreement to be executed on the day and year first above written.
SOUTHERN STATES COOPERATIVE,
INCORPORATED
(Corporate Seal) By: /s/ Xxxx Xxxxxxx
--------------------------------------
Its: Sr. Vice President and Treasurer
ORANGE-MADISON COOPERATIVE FARM
SERVICE, INC.
(Corporate Seal) By: /s/ X. X. Xxxxxxx, III
--------------------------------------
Its: President
APPENDIX I
EXCLUDED ASSETS
1. Real estate and improvements, including grain bins, known as "Old
Orange Feed Mill Property," which property is more specifically
described as follows:
All those four certain lots or parcels of land lying and being situate
in the Town of Orange, Spotswood Magistrial District, Orange County,
Virginia, at the southern Terminus of Mill Street, all as shown and
described as lot #1 containing 0.6175 acres, more or less, Lot #2
containing 0.4054 acres, more or less, Lot #3 containing 0.9175 acres,
more or less, and Lot #4 containing 0.6293 acres, more or less, as
containing 1.693 acres by a plat of a survey thereof by Xxxxxxx X.
Xxxxxxx, C.L.S., dated December 17, 1990.
The said property as described includes the former Orange Milling
Company property, with the flour mill and "tile warehouse" buildings
still standing thereon in 1986, plus a tract of railroad property,
shown on the plat appended to its deed of conveyance to the Cooperative
to be 0.849 acre. Also conveyed but not shown or described above is all
that right, title and interest of the Cooperative in and to all that
strip of adjoining land lying between the car clearance line on the
north side of the C & O Ry, siding noted in the description of the
tract of land hereinabove described and the center line of the said C
and O Ry, siding.
Being the same tracts or parcels of land, title to which vested in
Orange-Madison Cooperative Farm Service, Incorporated, together with
and subject to certain rights of way, easements and covenants, under
and by virtue of the following deeds:
(1) Deed from X. X. Xxxxxxxxxxx and Peachy Xxxx
Xxxxxxxxxxx, his wife, dated February 19, 1937, and recorded
in Orange County Deed Book 110 at page 45. (Orange-Madison
Cooperative Farm Bureau, Incorporated, the named Grantee in
said deed, having changed its name by amendments to its
charter filed with the State Corporation Commission of
Virginia on October 15, 1951, to Orange-Madison Cooperative
Farm Service, Incorporated.)
(2) Deed from X. X. Xxxxxxxxxxx and Peachy Xxxx
Xxxxxxxxxxx, his wife, dated January 15, 1946, and recorded in
Orange County Deed Book 125 at page 321. (Orange-Madison
Cooperative Farm Bureau, Incorporated, the Grantee in said
deed, having changed its name as noted in (1) above.)
(3) Deed from the Chesapeake and Ohio Railway Company
dated May 14, 1958, and recorded in Orange County Deed Book
181 at page 137.
(4) Deed from Xxxxx X. XxXxxxxxxx, et ux, dated March
28, 1969, and recorded in Orange County Deed Book 238 at page
392.
This tract is subject to the reservation of a 10' easement
along the northern portion of the land so conveyed, said
reservation made and described in a deed from the said Xxxxx
X. XxXxxxxxxx to Xxxx Xxxx in a deed dated June 15, 1936, and
recorded in Orange County Deed Book 108 at page 238.
2. Inventories consisting primarily of fee, grains and feed ingredients,
which inventories are in amounts usual and customary and are located at
the "Old Orange Feed Mill Property" on the Effective Date.
3. Rapidan Mill note receivable (Xxx Xxxx note) or the proceeds therefrom.
RECLASSIFICATION AGREEMENT
THIS AGREEMENT is made as of this 1st day of September, 1991,
by and between ORANGE-MADISON COOPERATIVE FARM SERVICE, INC. ("Orange-Madison"),
a nonstock corporation organized pursuant to the Virginia Agricultural
Cooperative Association Act, and SOUTHERN STATES COOPERATIVE, INC. ("Southern
States"), a corporation organized pursuant to the Virginia Agricultural
Cooperative Association Act.
RECITALS
WHEREAS, Orange-Madison and Southern States are parties to a
certain Management/Operating Agreement, dated March 1, 1991 (the "Operating
Agreement"), through which Southern States renders management and related
services with respect to the Managed Assets but not with respect to the Excluded
Assets.
WHEREAS, the Excluded Assets are identified on Appendix 1 to
the Operating Agreement.
WHEREAS, in accordance with the terms and conditions set forth
herein, the parties desire (i) to reclassify as a Managed Asset that parcel of
real property (and improvements thereon) lying and being situate in the Town of
Orange, Spotswood Magisterial District, Orange County, Virginia at the southern
Terminus of Mill Streets, shown and described as lot #1 containing 0.6175 acres
more or less, and more specifically described on Appendix 1 to the Operating
Agreement (the "Grain Facility"), and (ii) to grant Southern States a security
interest in the feed, grain, and feed ingredients, which Orange-Madison owns and
stores in the Grain Facility.
WHEREAS, the parties desire that the Operating Agreement
continue in full force and effect in accordance with its terms in all other
respects.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual obligations and
covenants contained herein, Orange-Madison and Southern States agree as follows:
1. Reclassification. Notwithstanding the provisions of the
Operating Agreement, (i) the parties hereby reclassify the Grain Facility as a
Managed Asset, effective September 1, 1991 (the "Effective Date"), to be
operated by Southern States in accordance with the Operating Agreement, and (ii)
Orange-Madison hereby grants Southern States a security interest in the
inventory at such facility, which inventory includes but is not limited to feed,
grains, and feed ingredients, which security interest the parties acknowledge is
evidence and perfected by the following financing statements: (a) financing
statement number 910310406, which was filed with the State Corporation
Commission of the Commonwealth of Virginia, on Xxxxx 0, 0000, (x) financing
statement number 45081, which was filed with the Circuit Court Clerk's Office in
Madison County, Virginia on March 1, 1991, and (c) financing statement number
910075, which was filed with the Circuit Court Clerk's Office in Orange County,
Virginia on March 1, 1991.
2. Term. The Grain Facility shall remain a Managed Asset and
this Agreement shall remain in effect for a period of twelve (12) months from
the Effective Date (the "Initial Term"). At the end of such Initial Term, this
Agreement shall be automatically renewed from year to year (each, a "Renewal
Term") until and unless terminated as provided herein. Notwithstanding the
foregoing, this Agreement shall not be renewed for any Renewal Term and shall
expire and terminate at and as of the end of the Initial Term if Southern States
shall have notified Orange-Madison, in writing, of its intent to terminate the
Agreement at the expiration of the Initial Term at least sixty (60) days prior
to the expiration of such Initial Term.
3. Termination. This Agreement may be terminated, effective at
the end of the current Renewal Term, if any, by Southern States notifying
Orange-Madison, in writing, of its intent to terminate the Agreement at least
sixty (60) days prior to the expiration of such Renewal Term. In addition, this
Agreement will terminate immediately upon the termination of the Operating
Agreement as provided in Paragraph 16b thereof, without any notice or other
action by the parties hereunder.
4. Effect of Expiration or Termination.
a. Upon the expiration of the Initial Term or, if applicable,
a Renewal Term, the Grain Facility shall cease being a Managed Asset and shall
convert back to an Excluded Asset.
b. In the event this Agreement is terminated, prior to the
expiration hereof, pursuant to Paragraph 3 above, the parties rights hereunder
shall be determined in accordance with Paragraph 16 of the Operating Agreement.
5. Miscellaneous.
a. Defined Terms. All capitalized terms used herein and not
otherwise defined shall have the meaning assigned to them in the Operating
Agreement.
b. Notices. All notices, requests, demands, and other
communications required or permitted to be given hereunder shall be deemed to
have been duly given if given in accordance with Section 19e of the Operating
Agreement.
c. Assignment. This Agreement and all rights and obligations
hereunder may not be sold, assigned, or transferred by Southern States or
Orange-Madison.
d. Entire Agreement: Modification. This Agreement contains the
entire understanding of the parties hereof with respect to the subject matter
contained herein. This Agreement may not be changed except by a writing signed
by each of the parties.
e. Governing Law. The interpretation and enforcement of this
Agreement will be in accordance with the laws of the Commonwealth of Virginia.
f. Waiver. The failure of any party to this Agreement at any
time or times to require performance of any provisions of this Agreement shall
in no manner affect the right to enforce the same. No waiver by any part of this
Agreement of any condition, or of the breach of any term, provision, warranty,
representation, agreement or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed or construed
as a further or continuing waiver of any such condition or breach or a waiver of
any other condition or of the breach of any other term, provision, warranty,
representation, agreement, or covenant contained in this Agreement.
g. Severability. In the event that any court of competent
jurisdiction shall determine that any provision of this Agreement is invalid,
such determination shall not affect the validity of any other provision of this
Agreement which shall remain in full force and effect and which shall be
construed as to be valid under applicable law.
h. Section Headings: Gender. The section headings or captions
contained herein are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement. The use of any gender herein
shall be deemed to be or include other genders and the use of the singular
herein shall be deemed to be or include the plural (and vice versa).
i. Counterparts. This Agreement may be executed by each party
upon a separate copy, and in such case one counterpart of this Agreement shall
consist of enough of such copies to reflect the signature of all of the parties
to this Agreement. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement or the terms of this Agreement to produce or
account for more than one of such counterparts.
IN WITNESS WHEREOF, the parties hereof have caused their duly
authorized representatives to execute this Agreement on the day and year first
above written.
SOUTHERN STATES COOPERATIVE,
INCORPORATED
(Corporate Seal)
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-----------------------------------
Its: Vice President Retail Division II
ORANGE-MADISON COOPERATIVE FARM
SERVICE, INC.
(Corporate Seal)
By: /s/ X. X. Xxxxxxx, III
-----------------------------------
Its: President
AMENDMENT TO MANAGEMENT/OPERATING AGREEMENT
THIS AGREEMENT is made as of this 20th day of November, 1992, by and
between ORANGE-MADISON COOPERATIVE FARM SERVICE, INC. ("Orange-Madison"), a
nonstock corporation organized pursuant to the Virginia Agricultural Cooperative
Association Act, and SOUTHERN STATES COOPERATIVE, INC. ("Southern States"), a
corporation organized pursuant to the Virginia Agricultural Association Act.
WHEREAS, Orange-Madison and Southern States are parties to a certain
Management/Operating Agreement, dated March 1, 1991 (the "Operating Agreement"),
through which Southern States renders management and related services with
respect to the managed assets and provides all Working Capital Requirements in
connection with the Business and Managed Assets; and
WHEREAS, the Operating Agreement excludes funds required for retirement
of Orange-Madison patron equity from the term Working Capital Requirements; and
WHEREAS, the parties desire to amend the provisions of the Operating
Agreement (i) to permit a limited retirement of Orange-Madison patron equity
from Working Capital Requirements, and (ii) to require the repayment to Southern
States of all Working Capital Requirements used to retire Orange-Madison patron
equity from the proceeds derived from the sale of Existing Current Assets as a
cost under Section 5(c)(y) of the Operating Agreement; and
WHEREAS, the parties desire that the Operating Agreement continue in
full force and effect in accordance with its terms in all other respects.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual obligations and
covenants contained herein, Orange-Madison and Southern States agree as follows:
1. Notwithstanding the definition of Working Capital Requirements
contained in Section 1(u) of the Operating Agreement or any other provision of
the Operating Agreement, Working Capital Requirements shall include a maximum of
$30,000 in the aggregate to retire Orange-Madison patron equity to settle
estates during the Term, and any extensions or renewals thereof, of the
Operating Agreement. It is the intent of the parties that the funds available
for such retirements be limited to a maximum of $30,000 which shall be a
cumulative ceiling for the full term of the Operating Agreement, beginning March
1, 1991, and extending through December 31, 1993.
2. Section 5(c)(y) of the Operating Agreement is amended to require
that all Working Capital Requirements utilized for the retirement of patron
equity shall be repaid to Southern States out of the proceeds available from the
termination of the Escrow Agreement derived from the sale or other disposition
of Existing Current Assets. Working Capital Requirements advanced for the
retirement of patron equity shall be evidenced by a negotiable promissory note
in the amount of $30,000 which shall be executed by Orange-Madison and against
which existing and future advances for said retirements shall be made. The
parties agree that said note shall be repaid from funds remitted to
Orange-Madison pursuant to Section 8(b) of the Escrow Agreement dated as of
March 1, 1991, by and between Southern States and Orange-Madison and applied by
Orange-Madison as permitted by Paragraph 2 of the Management of Excluded Asset
Fund Agreement dated as of March 1, 1991, by and between National Bank for
Cooperatives ("CoBank") and Orange-Madison.
IN WITNESS WHEREOF, the parties hereof have caused their duly
authorized representatives to execute this Agreement on the day and year first
above written.
SOUTHERN STATES COOPERATIVE,
INCORPORATED
(Corporate Seal)
By: /s/ Xxxx Xxxxxxx
--------------------------------
Its: Sr. Vice President & Treasurer
ORANGE-MADISON COOPERATIVE FARM SERVICE, INC.
(Corporate Seal)
By: /s/
-------------------------------
Its: Chairman
National Bank for Cooperatives joins in the execution of the above and
within Amendment to evidence its consent to same and to evidence its written
consent to the application of funds as required by Paragraph 2 of the Management
of Excluded Asset Fund Agreement, dated as of March 1, 1991, between National
Bank for Cooperatives and Orange-Madison.
NATIONAL BANK FOR COOPERATIVES
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Its: Assistant Vice President
THIRD AMENDMENT TO MANAGEMENT/OPERATING AGREEMENT
THIS AGREEMENT is made as of this 1st day of April, 1993, by and
between ORANGE-MADISON COOPERATIVE FARM SERVICE, INC. ("Orange-Madison"), a
nonstock corporation organized pursuant to the Virginia Agricultural Cooperative
Association Act, and SOUTHERN STATES COOPERATIVE, INC. ("Southern States"), a
corporation organized pursuant to the Virginia Agricultural Cooperative
Association Act.
WHEREAS, Orange-Madison and Southern States are parties to a certain
Management/Operating Agreement, dated March 1, 1991, as amended in September
1991 and November 1992, (the "Operating Agreement"), through which Southern
States renders management and related services with respect to the managed
assets and provides all Working Capital Requirements in connection with the
Business and Managed Assets; and
WHEREAS, the parties desire to amend the provisions of the Operating
Agreement (i) to provide for the adoption by Orange-Madison of certain of the
Southern States benefit plans and employee vacation and sick leave policies, and
(ii) to provide for the automatic renewal of the Operating Agreement from year
to year after December 31, 1993; and
WHEREAS, the parties desire that the Operating Agreement, as amended,
continue in full force and effect in accordance with its terms in all other
respects.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual obligations and
covenants contained herein, Orange-Madison and Southern States agree as follows:
1. The Operating Agreement is amended to add the following provisions
in Section 19, to be designated as Sections 19(m), (n), and (p):
19. Miscellaneous.
m. Welfare Benefit Plans. Effective as of the dates set forth
below, the Southern States Employee Welfare Benefit Plans heretofore adopted by
Southern States for the benefit of its employees shall be, and hereby are,
adopted (together with all the included plans) as the Employee Welfare Benefit
Plans of Orange-Madison for the benefit of its employees, (and Directors, in the
case of the Travel Accident Plan), and all amendments and modifications of said
Plans hereafter approved by the Board of Directors of Southern States (or where
appropriate, the Employee Benefits Administrative Committee [the "EBAC"]) shall
apply automatically to the employees (and Directors, where applicable) of
Orange-Madison; and Southern States shall advise Orange-Madison of any such
amendment hereafter adopted. Southern States is authorized to execute such
instruments and to perform any and all acts as may be necessary on behalf of
Orange-Madison to accept, continue in force, or amend said Plans. As of the date
of this Agreement, the following are included plans and the effective dates of
adoption by Orange-Madison are set forth below.
Orange-Madison
Name of Plan Effective Date
------------ --------------
Southern States Medical Plan April 1, 1993
Southern States Dental Plan April 1, 1993
Southern States Term Life Plan July 1, 1993
Southern States Special Accidental April 1, 1993
Death and Dismemberment Plan
Southern States Travel Accident Plan April 1, 1993
Southern States Long Term April 1, 1993
Southern States Health Care January 1, 1994
Spending Account
Southern State Dependent Care January 1, 1994
Spending Account
Southern States Flexible Benefit Plan April 1, 1993
Southern States Employee Assistance Plan - April 1, 1993
(if applicable in geographic area)
Southern States Severance Plan January 1, 1994
(n) Retirement Plan. Effective January 1, 1994, the Retirement Plan for
Employees of Southern States Cooperative, Incorporated, as amended and restated
effective July 1, 1989, heretofore adopted by Southern States for the benefit of
its employees shall be and hereby is, adopted as the Retirement Plan of
Orange-Madison for the benefit of its employees, and all amendments and
modifications of said Plan hereafter approved by the Board of Directors of
Southern States (or where appropriate, the Employee Benefits Administrative
Committee [the "EBAC"] or the Employee Benefits Investment Committee [the
"EBIC"]) shall apply automatically to the employees of Orange-Madison; and
Southern States shall advise Orange-Madison of any such amendment hereafter
adopted. Southern States is authorized to execute such instruments and to
perform any and all acts as may be necessary on behalf of Orange-Madison to
accept, continue in force, or amend said Plan.
(o) Thrift Plan. Effective January 1, 1994, the Southern
States Thrift Plan and Trust, as amended and restated effective January 1, 1987,
heretofore adopted by Southern States for the benefit of its employees shall be
and hereby is, adopted as the Thrift Plan of Orange-Madison for the benefit of
its employees, and all amendments and modifications of said Plan hereafter
approved by the Board of Directors of Southern States (or where appropriate, the
Employee Benefits Administrative Committee [the "EBAC"] or the Employee Benefits
Investment Committee [the "EBIC"]) shall apply automatically to the employees of
Orange-Madison; and Southern States shall advise Orange-Madison of any such
amendment hereafter adopted. Southern States is authorized to execute such
instruments and to perform any and all acts as may be necessary on behalf of
Orange-Madison to accept, continue in force, or amend said Plan.
(p) Vacation and Sick Leave Policies. Effective January 1,
1994, the vacation and sick leave policies of Orange-Madison shall be the same
as the present vacation and sick leave policies of Southern States effective
January 1, 1994. Changes to these policies shall be subject to the approval of
the Board of Directors of Orange-Madison.
2. Section 16(a) of the Operating Agreement is amended to read as
follows:
(a) Term. The term of this Agreement (the "Term") shall
commence on the Effective Date and continue in full force and effect through
December 31, 1993, and shall continue, unless sooner terminated as provided in
Section 16(b) hereof, from year to year thereafter until terminated by either
party hereto by the giving of at least sixty (60) days' prior written notice to
the other party of its intention to terminate at the end of the then current
calendar year (the "Termination Date").
IN WITNESS WHEREOF, the parties hereof have caused their duly
authorized representatives to execute this Agreement on the day and year first
above written.
SOUTHERN STATES COOPERATIVE,
INCORPORATED
(Corporate Seal)
By: /s/ M. T. Xxxxxxxx
--------------------------------------
Its: Executive Vice President and Chief
Operating Officer
ORANGE-MADISON COOPERATIVE FARM
SERVICE, INC.
(Corporate Seal)
By: /s/
-------------------------------------
Its: Chairman of Board
FOURTH AMENDMENT TO MANAGEMENT/OPERATING AGREEMENT
THIS AGREEMENT is made as of this 1st day of February, 1994, by and
between ORANGE-MADISON COOPERATIVE FARM SERVICE, INC. ("Orange-Madison"), a
nonstock corporation organized pursuant to the Virginia Agricultural Cooperative
Association Act, and SOUTHERN STATES COOPERATIVE, INC. ("Southern States"), a
corporation organized pursuant to the Virginia Agricultural Cooperative
Association Act.
WHEREAS, Orange-Madison and Southern States are parties to a certain
Management/Operating Agreement, dated March 1, 1991, as amended in September
1991, November 1992, and April 1993 (the "Operating Agreement"), through which
Southern States renders management and related services with respect to the
managed assets and provides all Working Capital Requirements in connection with
the Business and Managed Assets; and
WHEREAS, the parties desire to amend the provisions of the Operating
Agreement to remove Southern States' obligation to cover, bear, or otherwise
absorb the Orange-Madison Operating Losses, as defined in the Operating
Agreement, after December 31, 1993; and
WHEREAS, the parties desire that the Operating Agreement, as amended,
continue in full force and effect in accordance with its terms in all other
respects.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual obligations and
covenants contained herein, Orange-Madison and Southern States agree as follows:
1. The Operating Agreement is amended to delete in its entirety the
provisions of Section 6, effective January 1, 1994.
IN WITNESS WHEREOF, the parties hereof have caused their duly
authorized representatives to execute this Agreement on the day and year first
above written.
SOUTHERN STATES COOPERATIVE,
INCORPORATED
(Corporate Seal)
By: /s/ Xxxx Xxxxxxx
---------------------------------
Its: Sr. Vice President & CFO
ORANGE-MADISON COOPERATIVE FARM
SERVICE, INC.
(Corporate Seal)
By: /s/
-------------------------------
Its: Board Chairman
FIFTH AMENDMENT TO MANAGEMENT/OPERATING AGREEMENT
THIS AGREEMENT is made as of this 1st day of May, 1994, by and between
ORANGE-MADISON COOPERATIVE FARM SERVICE, INC. ("Orange-Madison"), a nonstock
corporation organized pursuant to the Virginia Agricultural Cooperative
Association Act, and SOUTHERN STATES COOPERATIVE, INC. ("Southern States"), a
corporation organized pursuant to the Virginia Agricultural Cooperative
Association Act.
WHEREAS, Orange-Madison and Southern States are parties to a certain
Management/Operating Agreement, dated May 1, 1991, as amended in September 1991,
November 1992, April 1993, and February 1994 (the "Operating Agreement"),
through which Southern States renders management and related services with
respect to the Managed Assets and provides all Working Capital Requirements in
connection with the Business and Managed Assets; and
WHEREAS, the parties desire to amend the provisions of the Operating
Agreement to reclassify as a Managed Asset that parcel of real property,
together with the improvements thereon, lying and being situate in the Town of
Orange, Spotswood Magisterial District, Orange County, Virginia, at the southern
terminus of Mill Street, shown and described as Lot #2 containing 0.4054 acres,
more or less; Lot #3 containing 0.917 acres, more or less; and Lot #4 containing
0.6293 acres, more or less, as shown on a plat of survey thereof by Xxxxxxx X.
Xxxxxxx, dated December 17, 1990, and described in Appendix 1 to the Operating
Agreement (the "Mill Street Facility"). Said Mill Street Facility being adjacent
to the Grain Facility which was reclassified as a Managed Asset by a
Reclassification Agreement, effective as of September 1, 1991; and
WHEREAS, the parties desire that the Operating Agreement, as amended,
continue in full force and effect in accordance with its terms in all other
respects.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual obligations and
covenants contained herein, Orange-Madison and Southern States agree as follows:
1. The Operating Agreement is amended to reclassify the Mill Street
Facility as a Managed Asset to be managed by Southern States in accordance with
the Operating Agreement, effective May 1, 1994.
IN WITNESS WHEREOF, the parties hereof have caused their duly
authorized representatives to execute this Agreement on the day and year first
above written.
SOUTHERN STATES COOPERATIVE,
INCORPORATED
(Corporate Seal)
By: /s/ Xxxx Xxxxxxx
-------------------------------------
Its: Sr. Vice President & CFO
ORANGE-MADISON COOPERATIVE FARM
SERVICE, INC.
(Corporate Seal)
By: /s/
-----------------------------------
Its: Board Chairman
SIXTH AMENDMENT TO MANAGEMENT/OPERATING AGREEMENT
THIS AGREEMENT is made as of this 2nd day of March, 1995, by and
between ORANGE-MADISON COOPERATIVE FARM SERVICE, INC. ("Orange-Madison"), a
nonstock corporation organized pursuant to the Virginia Agricultural Cooperative
Association Act, and SOUTHERN STATES COOPERATIVE, INC. ("Southern States"), a
corporation organized pursuant to the Virginia Agricultural Cooperative
Association Act.
WHEREAS, Orange-Madison and Southern States are parties to a certain
Management/Operating Agreement, dated March 1, 1991, as amended in September
1991, November 1992, April 1993, February 1994, and May 1994 (the "Operating
Agreement"), through which Southern States renders management and related
services with respect to the Managed Assets and provides all Working Capital
Requirements in connection with the Business and Managed Assets; and
WHEREAS, the Operating Agreement and the Amendment to
Management/Operating Agreement, dated November 20, 1992, limit and restrict
funds required for retirement of Orange-Madison patron equity from Working
Capital Requirements; and
WHEREAS, the parties desire to amend the provisions of the Operating
Agreement to permit retirement of Orange-Madison patron equity in order to
settle estates (without limiting the aggregate maximum of such retirements to
settle patron estates); and
WHEREAS, the parties desire that the Operating Agreement, as amended,
continue in full force and effect in accordance with its terms in all other
respects.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual obligations and
covenants contained herein, Orange-Madison and Southern States agree as follows:
1. The $30,000 limitation on the retirement of Orange-Madison patron
equity to settle estates is removed. (Said $30,000 limitation was set forth in
the Amendment to Management/Operating Agreement, dated November 20, 1992.)
2. Section 1(u) of the Operating Agreement is amended to add the
following clause to the end of the section: ". . . except for redemptions to
settle estates of deceased patrons."
IN WITNESS WHEREOF, the parties hereof have caused their duly
authorized representatives to execute this Agreement on the day and year first
above written.
SOUTHERN STATES COOPERATIVE,
INCORPORATED
(Corporate Seal)
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Its: Sr. Vice President & CFO
ORANGE-MADISON COOPERATIVE FARM
SERVICE, INC.
(Corporate Seal)
By: /s/
-------------------------------
Its: Board Chairman
