Exhibit 10.99
VILLAGE FARMS OF PRESIDIO, L.P.
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of August 31, 1998
THE LIMITED PARTNERSHIP INTEREST REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS
OF CERTAIN STATES AND HAVE BEEN OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM
THE REGISTRATION REQUIREMENT OF THE ACT AND SUCH LAWS. THE LIMITED PARTNERSHIP
INTEREST IS SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY BE
TRANSFERRED ONLY IN A MANNER WHICH IS IN COMPLIANCE WITH THE PROVISIONS OF THIS
AGREEMENT, AND MAY ONLY BE TRANSFERRED IN A TRANSACTION THAT IS REGISTERED UNDER
THE ACT OR EXEMPT FROM SUCH REGISTRATION.
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ...................................................... 2
1.1 Certain Defined Terms................................ 2
1.2 Other Definitional Provisions........................ 12
ARTICLE II 12
GENERAL PROVISIONS .......................................................... 12
2.1 Formation of Partnership............................. 12
2.2 Name of the Partnership.............................. 12
2.3 Business of the Partnership.......................... 13
2.4 Registered Office of the Partnership................. 13
2.5 Liability of the Partners Generally.................. 13
2.6 Office of the Partnership............................ 13
2.7 Duration of the Partnership.......................... 13
ARTICLE III 14
CAPITAL CONTRIBUTIONS ....................................................... 14
3.1 Capital Contributions................................ 14
3.2 Representations...................................... 15
3.3 Interest............................................. 17
3.4 Withdrawals of Capital............................... 17
3.5 Additional Capital Contributions..................... 17
ARTICLE IV 17
ALLOCATION OF PROFITS AND LOSSES............................................. 17
4.1 Profits and Losses................................... 17
4.2 Capital Account Balances............................. 18
4.3 Minimum Gain Chargeback.............................. 18
4.4 Nonrecourse Deductions............................... 19
4.5 Partner Nonrecourse Deductions....................... 19
4.6 Qualified Income Offset.............................. 19
4.7 Curative Allocations................................. 19
4.8 Tax Allocations...................................... 19
4.9 Property Subject to 704(b) and 704(c)................ 19
4.10 Limitations.......................................... 19
ARTICLE V 20
DISTRIBUTIONS 20
5.1 Distribution of Net Distributable Cash............... 20
5.2 Default Allocations for Agrorent A. and Agrorent B... 20
5.3 Default Allocations for VF Delaware and VF........... 21
ARTICLE VI 23
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MANAGEMENT 22
6.1 Management of the Partnership........................ 22
6.2 Fundamental Matters.................................. 22
6.3 Officers of the Partnership.......................... 25
6.4 No Compensation; Reimbursement....................... 26
6.5 Insurance............................................ 26
6.6 Cooperation on Tax Matters........................... 26
ARTICLE VII 27
BOOKS, RECORDS AND BANK ACCOUNTS............................................. 27
7.1 Books and Records.................................... 27
7.2 Accounting Basis and Fiscal Year..................... 27
7.3 Reports.............................................. 27
7.4 Bank Accounts........................................ 28
7.5 Tax Returns.......................................... 28
7.6 Tax Elections........................................ 28
7.7 Tax Matters Partner.................................. 38
7.8 Withholdings......................................... 29
ARTICLE VIII 29
TRANSFER OF INTERESTS ....................................................... 29
8.1 Transfer of a Partner's Interest..................... 29
ARTICLE IX 31
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS.................................. 30
9.1 Additional Partners.................................. 30
9.2 Withdrawal of Partners............................... 31
ARTICLE X 32
DISSOLUTION AND LIQUIDATION ................................................. 32
10.1 Events of Dissolution................................ 32
10.2 Distributions Upon Liquidation....................... 33
ARTICLE XI 34
DISPUTE RESOLUTION .......................................................... 34
11.1 Arbitration.......................................... 34
11.2 Buy/Sell Option...................................... 35
ARTICLE XII 36
MISCELLANEOUS 36
12.1 Distributions and Notices............................ 36
12.2 Disclosure Obligations............................... 36
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12.3 Successors and Assigns............................... 36
12.4 Amendments........................................... 36
12.5 Partition............................................ 37
12.6 No Waiver............................................ 37
12.7 Entire Agreement..................................... 37
12.8 Captions............................................. 37
12.9 Counterparts......................................... 37
12.10 Applicable Law....................................... 37
12.11 Severability......................................... 37
LIST OF SCHEDULES
Schedule 1.1(a) Calculation of Internal Rate of Return
Schedule 1.1(a) Project Budget
Schedule 1.1(b) Project Documents
Schedule 1.1(c) Site
Schedule 6.3 Initial Officers of the Partnership
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AGREEMENT OF LIMITED PARTNERSHIP
This Agreement of Limited Partnership dated as of August 31, 1998 of
VILLAGE FARMS OF PRESIDIO, L.P. (the "Partnership") is by and among VILLAGE
FARMS OF DELAWARE, LLC, a Delaware Limited Liability Company ("VF Delaware" and
a "General Partner"), Agrorent B, LLC, a Delaware Limited Liability Company,
("Agrorent B" and a "Limited Partner"), Agrorent A, LLC, a Delaware limited
liability company ("Agrorent A" and a "General Partner") and VILLAGE FARMS,
L.L.C., a Delaware Limited Liability Company ("VF" and a "Limited Partner").
VF Delaware is a Delaware limited liability company owned 99% by Agro Power
Development, Inc., a New York corporation ("Agro Power"), and 1% by Village
Farms, L.L.C., ("VF"). VF is a Delaware limited liability company owned 99% by
Agro Power and 1% by VF Delaware. Agro Power has entered into agreements and
instruments (as more fully defined hereafter, the "Project Documents") related
to the development and operation of a venlo style greenhouse located in the
vicinity of Marfa, Texas for the purpose of producing and selling peppers (as
more fully defined hereafter, the "Project"). In order to continue with the
development of the Project and obtain financing for construction and working
capital needs, Agro Power desires that Agrorent A and Agrorent B contribute in
the aggregate $999,999.14 to the Project. In order to encourage Agrorent A and
Agrorent B to contribute such funds to the Project, Agro Power has agreed (1) to
assign to VF the agreement for electrical services between Agro Power and West
Texas Utilities (the "Electrical Agreement" or the "Assigned Document") and VF
will contribute the assigned documents and $6,199,994.65 to the Partnership, in
exchange for a 85.25% interest in the Partnership. VF Delaware will contribute
$72,727.21 to the Partnership in exchange for a 1% interest in the Partnership.
In exchange for a contribution to the capital of the Partnership of $927,271.93
by Agrorent B, Agrorent B will receive a 12.75% interest in the Partnership, and
in exchange for a contribution to the capital of the Partnership of $72,727.21
by Agrorent A , Agrorent A will receive a 1% interest in the Partnership.
Agrorent A and Agrorent B have agreed to make such contributions to the capital
of the Partnership in accordance with the aforesaid and on the terms and
conditions set forth herein.
Accordingly, in consideration of the covenants and agreements contained
herein and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and intending to be legally bound, the parties
hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms.
As used in this Agreement, the following terms have the following meanings
(such definitions to be equally applicable to both singular and plural forms of
the terms defined):
"Abandonment" has the meaning set forth in subsection 6.2(e).
"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 the penultimate sentence of
Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) debit to such Capital Account the items described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
"Adverse Consequence" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, Taxes, liens, losses, expenses and
fees, including, but not limited to, court costs, arbitration costs, costs of
investigation, and attorneys' fees.
"Affiliate" of any designated Person, means each Person which, directly or
indirectly, controls or is controlled by or is under common control with such
designated Person and, without limiting the generality of the foregoing, shall
include (a) any Person which beneficially owns or holds ten percent (10%) or
more of any class of voting securities of such designated Person or ten percent
(10%) or more of the equity interest in such designated Person and (b) any
Person of which such designated Person beneficially owns and holds ten percent
(10%) or more of any class of voting securities or in which such designated
Person beneficially owns or holds ten percent (10%) or more of the equity
interest. For the purposes of this definition, the terms "controls", "controlled
by" and "under common control with," as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise. Notwithstanding the
foregoing, neither Agrorent A
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or Agrorent B, on the one hand, nor VF Delaware or VF, on the other hand, shall
be deemed to be Affiliates of one another.
"Agreement" means this Agreement of Limited Partnership, as amended,
supplemented or otherwise modified and in effect from time to time.
"Agro Power" means Agro Power Development, Inc., a New York corporation
with offices at 00 Xxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000.
"Agrorent" means Agrorent A and Agrorent B collectively.
"Agrorent Designee" has the meaning set forth in Section 6.1(a).
"Agrorent A" means Agrorent A, L.L.C., a Delaware limited liability
company.
"Agrorent B" means Agrorent B, L.L.C. a Delaware limited liability company.
"Appraisal Procedure" means a procedure whereby two independent appraisers,
one chosen by each General Partner, shall agree upon the determinations then the
subject of appraisal. Each General Partner shall deliver a written notice to the
other appointing its appraiser within 15 days after receipt from the other of a
written notice appointing its appraiser. Each appraiser then shall prepare a
written appraisal with respect to the determinations which then are the subject
of appraisal. If within 30 days after appointment of the two appraisers they are
unable to agree upon the amount in question, a third independent appraiser shall
be chosen within 10 days thereafter by the mutual consent of such first two
appraisers or, if such first two appraisers fail to agree upon the appointment
of a third appraiser, such appointment shall be made by the American Arbitration
Association, or any organization successor thereto, from a panel of arbitrators
having experience in the business of operating a hydroponic hot house and
marketing the product produced therein and a familiarity with equipment used or
operated in such business. The decision of the third appraiser so appointed and
chosen shall be given within 30 days after the selection of such third
appraiser. If three appraisers shall be appointed and the determination of one
appraiser is disparate from the median by more than twice the amount by which
the other determination is disparate from the median, then the determination of
such appraiser shall be excluded, the remaining two determinations shall be
averaged and such average shall be binding and conclusive on the General
Partners; otherwise the average of all three determinations shall be binding and
conclusive on the General Partners. (For example, if the two appraisers
appointed by the General Partners determine a value of $100 and $ 200, and the
third appraiser determines a value of $150, then the value in question shall be
conclusively determined to be $150 ($100 + $200 + $150 divided by 3). As a
further example, consider the first example but the third appraiser places a
value of $190. In this case, the $100 valuation shall be disregarded and the
value shall be conclusively determined to be $195 ($190 + $200 divided by 2).
The $100 valuation is disregarded because the median of the three appraisers was
$190 and the difference between $100 and $190 is $90, which is more than twice
the difference between $200 and $190 which is $10, which multiplied by two is
$20.) If a General Partner shall
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appoint an appraiser and the other Person shall fail to appoint an appraiser in
the manner specified herein, the determination of the appraiser so appointed
shall be binding and conclusive on the General Partners. The expenses of the
appraisal procedure shall be borne solely by the Partnership.
"Assigned Document" has the meaning set forth in the preamble to this
Agreement.
"Budgets" has the meaning set forth in subsection 6.2(i).
"Business Day" means a day other than a Saturday, a Sunday or any other day
on which commercial banks in New York or New Jersey are authorized or required
by law or executive order to be closed.
"Buy-Out Offer" has the meaning set forth in Section 11.2.
"Buy-Out Offeree" has the meaning set forth in Section 11.2.
"Buy-Out Offeror" has the meaning set forth in Section 11.2.
"Capital Account" means, with respect to any Partner, the capital account
maintained for such Partner in the Partnership Books in accordance with the
following provisions:
(a) To each Partner's Capital Account there shall be credited such
Partner's Capital Contributions, such Partner's distributive share of
Profits and any other items in the nature of income or gain which are
allocated under this Agreement.
(b) To each Partner's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any property (other than money)
(net of any liabilities assumed by such Partner or to which the property is
subject) distributed to such Partner pursuant to any provision of this
Agreement, and such Partner's distributive share of Losses and any other
items in the nature of deductions or losses which are allocated under this
Agreement.
(c) In the event all or a portion of an interest in the Partnership is
transferred in accordance with the terms of this Agreement in a transaction
that does not result in a termination of the Partnership under Code Section
708(b)(1)(B), the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred interest.
(d) In determining the amount of any liability for purposes of clause
(a) and clause (b) hereof, there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and the Regulations.
(e) If a Partner owns more than one Partnership Interest, one Capital
Account shall be maintained for the Partnership Interests of the Partner.
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(f) Each Partner's Capital Account shall in all other respects be
maintained in accordance with the provisions of Regulations Section
1.704-1(b).
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of capital accounts are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner consistent
with such Regulations.
"Capital Contribution" means, with respect to any Partner, the amount of
money and the initial Gross Asset Value of any property (other than money) (net
of any liabilities assumed by the Partnership or to which the property is
subject) contributed to the Partnership with respect to any Partnership Interest
held by such Partner pursuant to the terms of this Agreement.
"Capital Lease" means any lease of property, real or personal, which in
accordance with GAAP, would be required to be capitalized on a balance sheet of
the lessee.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commonly Controlled Entity" means, with respect to any Person, an entity,
whether or not incorporated, which is under common control with such Person
within the meaning of Section 414(b) or (c) of the Code.
"Construction Agreement" means the Commercial Design and Construction
Contract dated as of the date hereof between the Partnership and Agro Power for
the construction of the Project, as it may be amended, supplemented or otherwise
modified and in effect from time to time.
"Construction/Term Facility" means a loan facility in the amount of
$6,841,029.00 provided by the Construction/Term Lender pursuant to the Project
Loan Documents.
"Construction/Term Lender" means Village Farms International Finance
Association or its successor under the Construction/Term Facility.
"Delaware Act" means the Delaware Revised Uniform Limited Partnership Act,
6 Del.C. ss.ss.17101, et seq., as it may be amended from time to time and any
successor to such Act.
"Depreciation" means, for each fiscal year or other period, an amount equal
to the deprecation, amortization, or other cost recovery deduction allocable
with respect to an asset for such period, except that if the Gross Asset Value
of an asset differs from its adjusted basis for Federal tax purposes at the
beginning of such period, Depreciation shall be an amount which bears the same
ratio to such beginning Gross Asset Value as the Federal income tax
depreciation, amortization or other cost recovery deduction for such period
bears to such beginning adjusted tax basis; provided that if the Federal income
tax depreciation, amortization, or other cost recovery deduction for such period
is zero, Depreciation shall be determined with reference to
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such beginning Gross Asset Value using any reasonable method selected by the
Management Committee.
"Dollars" and "$" means dollars in lawful currency of the United States of
America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means, with respect to any Person, any corporation or
trade or business which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as such Person or is under
common control (within the meaning of Section 414(c) of the Code) with such
Person.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States.
"General Partner" means each of Agrorent A and Village Farms of Delaware,
LLC and any Person admitted to the Partnership as an additional General Partner
in accordance with the provisions of this Agreement, until such time as such
Person ceases to be a general partner of the Partnership as provided herein or
in the Delaware Act.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Gross Asset Value" means, with respect to any asset, the asset's adjusted
basis for Federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as determined by agreement of the Partners;
(b) The Gross Asset Value of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as determined by
agreement of the Partners, and in the event the Partners fail to so agree,
as determined by the Appraisal Procedure, as of the following times: (i)
The acquisition of an additional interest in the Partnership by any new or
existing Partner in exchange for more than a de minimis Capital
Contribution; (ii) the distribution by the Partnership to a Partner of more
than a de minimis amount of 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 (iii) the liquidation of
the Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g);
(c) The Gross Asset 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
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by agreement of the Partners and, in the event the Partners fail to so
agree, as determined by the Appraisal Procedure;
(d) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments 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);
provided, however, that Gross Asset Values shall be adjusted to the extent
the Partners agree (and in the event the Partners fail to so agree, as
determined by the Appraisal Procedure) that an adjustment pursuant to
clause (b) of this definition is necessary or appropriate in connection
with a transaction that would otherwise result in an adjustment pursuant to
clause (d) of this definition. If the Gross Asset Value of an asset has
been determined or adjusted pursuant to clauses (a) and (b) of this
definition or clause (d) of this definition, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect
to such asset; and
(e) The Gross Asset Value of any asset owned indirectly by the
Partnership through a subsidiary partnership shall be determined pursuant
to the terms of the partnership agreement for such subsidiary partnership.
"Indebtedness" means, with respect to any Person, (a) indebtedness of such
Person for borrowed money or for the deferred purchase price of property or of
services (other than obligations under agreements for the purchase of goods and
services in the normal course of business which are not more than 30 days past
due; (b) obligations of such Person under Capital Leases; (c) obligations of
such Person pursuant to interest hedging transactions; (d) obligations of such
Person in respect of letters of credit; (e) obligations of such Person under
direct and indirect guarantees in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clause (a), (b), (c) or (d) above (other than endorsements of
negotiable instruments in the ordinary course of business); and (f) any
obligations of such Person or a Commonly Controlled Entity to a Multi-Employer
Plan. For purposes of clarity, "Indebtedness" includes the obligations of the
Partnership to repay amounts borrowed under, and to pay other amounts owing
under, the Project Loan Documents.
"Initial Capital Contribution" means, (a) with respect to Agrorent A, the
amount of $72,727.21 and, with respect to Agrorent B, means the amount of
$927,271.93. Said Initial Capital Contributions to be paid directly to Dalsem
Kassenbouw, B.V. in partial satisfaction of the payment obligation of the
Partnership to Agro Power under the Construction Agreement; (b) with respect to
VF Delaware, the amount of $72,727.21 and, with respect to VF, the Assigned
Document and $6,199,994.65. Said initial capital contribution shall be made by
the satisfaction by VF Delaware and VF of $6,272,721.86 of the obligation owned
by the Partnership to Agro Power under the Construction Agreement.
"Lien" means any mortgage, deed of trust, security interest, pledge,
hypothecation, encumbrance or lien (statutory or other) of any kind or nature
whatsoever (including, without
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limitation, any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any such agreement, and the filing of any statement
under the Uniform Commercial Code or comparable law of any jurisdiction).
"Limited Partner" means each of Agrorent B and VF and any Person who
becomes a limited partner of the Partnership in accordance with the terms of
this Agreement and is shown as such on the books and records of the Partnership.
"Losses" has the meaning given to it in the definition of "Profits."
"Management Agreement" means the Management Agreement dated the same date
as this Agreement by and between the Partnership and New Amsterdam Joint
Venture, L.L.C., as it may be amended, supplemented or otherwise modified and in
effect from time to time, pursuant to which New Amsterdam Joint Venture, L.L.C.
will provide operation and maintenance services to the Partnership.
"Management Committee" means the Management Committee of the Partnership
referred to in Section 6.1.
"Marketing Agreement" means the Marketing Agreement dated the same date as
this Agreement by and between the Partnership and VF, as it may be amended,
supplemented or otherwise modified and in effect from time to time, pursuant to
which VF will agree to market products produced by the Partnership.
"Multi-Employer Plan" means, with respect to any Person, a Multi-Employer
Plan as defined in Section 3(37) of ERISA to which contributions have been made
by such Person or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Distributable Cash" means for any period, an amount equal to all cash
received by the Partnership during such period, including but not limited to,
cash from operations, reductions in reserves, casualty proceeds, rebates and
other extraordinary items, less (a) principal, interest and other payments made
under or pursuant to the Construction/Term Facility, (b) all cash expenditures
of and payments made by the Partnership, and (c) any reserves established by the
Management Committee of the Partnership, and subject to the limitations on
distributions, if any, imposed pursuant to the terms of the Project Loan
Documents.
"Nonrecourse Deductions" shall have the meaning set forth in Regulations
Sections 1.704-2(b) and (c). The amount of Nonrecourse Deductions for a
Partnership fiscal year equals the excess, if any, of the net increase, if any,
in the amount of Partnership minimum gain during the fiscal year over the
aggregate amount of any distributions during that fiscal year of proceeds of a
non-recourse liability that are allocable to an increase in Partnership minimum
gain, determined according to the provisions of Regulations Section 1.704-2(c).
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"Operating Budget" means the business plan and budget required to be
provided to the Partnership pursuant to the Management Agreement.
"Operating Management Fee" means a management fee to be paid to New
Amsterdam Joint Venture, LLC in accordance with the Management Agreement.
"Partner" means any of the General Partners or the Limited Partners.
"Partner Nonrecourse Deductions" shall have the meaning specified in
Regulations Section 1.704-2(i)(2).
"Partnership" means Village Farms of Presidio, L.P., the limited
partnership formed pursuant to this Agreement and the filing of the Certificate
of Limited Partnership with the Delaware Secretary of State.
"Partnership Books" means the books and records maintained by the
Partnership and reviewed within sixty (60) days of each fiscal year end by the
Management Committee, in which records and information relating to the ownership
of the Partnership, the constituency of the Management Committee and actions
taken by the Management Committee or the Partners is maintained, including but
not limited to, a register of the Partners, each Partner's Capital Account, each
Partner's Percentage Interest, actions taken by the Management Committee and the
Partners, and this Agreement and any amendments hereto.
"Partnership Interest" means, with respect to any Partner, the interest of
such Partner in the Partnership, whether general or limited, at any particular
time, including the rights and obligations of such Partner as provided in this
Agreement and the Delaware Act.
"Partnership Percentage" means, with respect to any Partner, at any time,
the percentage specified as such Partner's "Partnership Percentage" at the time
such Partner was admitted to the Partnership, as adjusted in accordance with the
terms of this Agreement. The initial Partnership Percentages are as follows:
Agrorent A 1%
Agrorent B 12.75%
VF Delaware 1%
VF 85.25%
Unless Agrorent A and Agrorent B's respective contributions are made no later
than Friday, September 4, 1998, and evidenced by a written receipt of said
contribution from Dalsem Kassenbouw, B.V., Agrorent A's and Agrorent B's rights
and duties under this agreement shall be deemed to be void ab initio and
Agrorent A and Agrorent B shall not be deemed to be a party to this Agreement
and the initial Partnership Percentages shall be as follows:
VF Delaware 2%
VF 98%
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"Permitted Liens" means Liens in favor of any Person other than the
Partners or any of their respective Affiliates, that (a) arise in the ordinary
course of business of the Partnership (including, without limitation, landlord's
materialmen's, mechanic's, worker's, repairmen's and employee's Liens and
similar Liens which arise in connection with any tax, assessment, governmental
charge or levy) and (b) do not secure Indebtedness.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Profits" and "Losses" mean, for any period, an amount equal to the
Partnership's taxable income or loss for such 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:
(a) Income of the Partnership that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;
(b) 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 or Losses pursuant to this definition shall be
subtracted from such taxable income or loss;
(c) gain and loss with respect to the disposition of any Partnership
asset (both directly owned assets and assets owned indirectly through a
subsidiary partnership) shall be computed with respect to the Gross Asset
Value rather than adjusted tax basis of such asset;
(d) in lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing taxable income or loss, there
shall be taken into account Depreciation for such fiscal year or other
period; and
(e) in the event of an adjustment in the Gross Asset Value of any
Partnership asset pursuant to clause (b) of the definition of "Gross Asset
Value" herein, 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.
"Project" means an approximately 26 acre greenhouse to be located on the
Site on which the Partnership will produce peppers or other produce for sale
under the Marketing Agreement.
"Project Assets" has the meaning set forth in Section 3.1(a).
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"Project Budget" means the pro forma budget of total Project costs attached
hereto as Schedule 1.1(a), as amended or modified from time to time in
accordance with subsection 6.2(i).
"Project Credit Facility" means the Construction/Term Facility.
"Project Documents" means the agreements and instruments listed on Schedule
1.1(b) attached hereto and incorporated herein by reference entered into in
connection with the Project as the same may be amended, supplemented or
otherwise modified in accordance with Section 6.2 hereof and in effect from time
to time.
"Project Loan Documents" means the agreements and instruments executed by,
between or among the Partnership, the Construction/Term Lender and any other
party relating to the Construction/Term Facility as the same may be amended,
supplemented or otherwise modified in accordance with Section 6.2 hereof and in
effect from time to time.
"Regulations" means the temporary, proposed and final regulations under the
Code and any successor provisions thereto.
"Requirement of Law" means, as to any Person, (a) the certificate of
incorporation and bylaws or partnership agreement or other organizational or
governing documents of such Person, and (b) any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its properties or
to which such Person or any of its properties is subject and the violation of
which, or which determination, could reasonably be expected to (i) have a
material adverse effect on the business, operations, properties, condition
(financial or otherwise) or prospects of such Person or (ii) materially
adversely affect the ability of such Person to perform its obligations under the
Project Loan Documents or the Project Documents to which it is a party.
"Site" means a parcel of approximately 55 acres located in the vicinity of
Marfa, Texas and more fully described on Schedule 1.1(c) attached hereto and
incorporated herein by reference.
"Subsidiary" means with respect to any Person, an Affiliate that is
controlled (directly or indirectly through one or more intermediaries) by that
Person.
"Taxes" means any and all income or gross receipt taxes, franchise taxes,
levies, imposts, duties, assessments, fees, charges and withholdings of any
nature whatsoever, whether or not presently in existence, imposed by any
Governmental Authority.
"VF" means Village Farms, L.L.C., a Delaware limited liability company, 99%
of which is owned by Agro Power and 1% of which is owned by VF Delaware.
"VF Delaware" means Village Farms of Delaware, L.L.C., a Delaware limited
liability company, 99% of which is owned by Agro Power and 1% of which is owned
by VF.
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"Withdraw" or "Withdrawal", with respect to any Partner, means a Partner
ceasing to be a partner of the Partnership for any reason, whether voluntary or
involuntary, and "Withdrawn", with respect to a Partner, means a Partner who has
ceased to be a partner of the Partnership.
"Withdrawal Date" means the date of the Withdrawal from the Partnership of
a Withdrawn Partner.
1.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto, unless otherwise defined therein.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto, accounting terms not defined in Section 1.1, and
accounting terms partly defined in Section 1.1 to the extent not defined,
shall have the respective meanings given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and section,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(d) Unless the context requires otherwise, any reference in this
Agreement to any of the Project Documents or the Project Loan Documents
shall mean any of such documents as amended, supplemented or modified and
in effect from time to time.
ARTICLE II
GENERAL PROVISIONS
2.1 Formation of Partnership. The Partners hereby confirm the formation and
establishment of a limited partnership under the terms and provisions of this
Agreement and the provisions of the Delaware Act, and the rights and liabilities
of the Partners shall be as provided in this Agreement and in the Delaware Act.
Concurrently with or prior to the execution of this Agreement by Agrorent A ,
and VF Delaware, Agrorent A and VF Delaware shall or shall have executed and
filed with the Office of Secretary of State of the State of Delaware a
Certificate of Limited Partnership in accordance with Section 17201 of the
Delaware Act, in form and substance satisfactory to both Agrorent A and VF
Delaware.
2.2 Name of the Partnership. The name of the Partnership shall be Village
Farms of Presidio, L.P., or such other name as the Partners from time to time
may designate.
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2.3 Business of the Partnership. The business of the Partnership is to
develop, construct, and operate the Project. In furtherance of its business, the
Partnership shall have and may exercise all the powers now or hereafter
conferred by the laws of the State of Delaware on partnerships formed under the
laws of that state, and shall do any and all things necessary or desirable for
the accomplishment of the above purposes. The Partnership shall engage in no
other business except as permitted by the Management Committee in accordance
with Section 6.2 below.
2.4 Registered Office of the Partnership. The Partnership shall maintain a
registered office at, and the name and address of the Partnership's registered
agent in Delaware is, The Corporation Trust Company, 0000 Xxxxxx Xxxxxx, Xxx
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
2.5 Liability of the Partners Generally.
(a) Except as otherwise provided in the Delaware Act, each General
Partner shall have the liabilities of a partner in a partnership without
limited partners to Persons other than the Partnership and the Limited
Partners.
(b) Except as otherwise provided in this Agreement or the Delaware
Act, no Limited Partner (or former Limited Partner) shall be obligated to
make any contribution of capital to the Partnership or have any liability
for the debts and obligations of the Partnership.
2.6 Office of the Partnership. The Partnership shall maintain an office and
principal place of business in Marfa, Texas. Pursuant to the Management
Agreement, the books of account and other records with respect to the operations
of the Partnership shall be maintained at 00 Xxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx
Xxxxxx 00000. The Partnership shall not have or maintain any office or other
place of business outside of Marfa, Texas.
2.7 Duration of the Partnership. The Partnership shall commence on the
effective date set forth in the Certificate of Limited Partnership referred to
in Section 2.1, above and shall continue until its termination in accordance
with the provisions of Article X.
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ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Capital Contributions.
(a) Simultaneously with the execution of the Agreement by Agrorent A
and Agrorent B, VF shall convey, grant, transfer the assign (or cause to be
conveyed, granted, transferred and assigned) to the Partnership the
Assigned Document
If any consent or approval is required in connection with the
assignment and contribution to the Partnership pursuant to this subsection
3.1(a) of any Assigned Document VF shall have obtained such consent or
approval prior to such assignment and contribution.
(b) Agrorent A shall make a contribution of $72,727.21 by wire
transfer of immediately available funds to Dalsem Kassenbouw, B.V. in
partial satisfaction of the payment obligation of the Partnership to Agro
Power under the Construction Agreement no later than Friday, September 4,
1998. Unless the $72,727.21 contribution is made no later than Friday,
September 4, 1998 and evidenced by a written receipt of said contribution
from Dalsem Kassenbouw, B.V., Agrorent A's rights and duties under this
Agreement shall be deemed void ab initio and Agrorent A shall not be a
party to this Agreement and VF Delaware will be deemed to be become a 2%
general partner in the Partnership.
(c) Agrorent B shall make a contribution of $927,271.95 by wire
transfer of immediately available funds to Dalsem Kassenbouw, B.V. in
partial satisfaction of the payment obligation of the Partnership to Agro
Power under the Construction Agreement no later than Friday, September 4,
1998. Unless the $927,271.95 contribution is made no later than Friday,
September 4, 1998 and evidenced by a written receipt of said contribution
from Dalsem Kassenbouw, B.V., Agrorent B's rights and duties under this
Agreement shall be deemed void ab initio and Agrorent B shall not be a
party to this Agreement and VF will be deemed to be a 98% limited partner
in the Partnership.
(d) VF shall contribute to the Partnership on execution of this
agreement by all the Partners the Assigned Document and $6,199,994.65. The
cash portion of said capital contribution to be made by VF's satisfaction
of $6,199,994.65 of the obligation owed by the Partnership to Agro Power
under the Construction Agreement.
(e) VF Delaware shall contribute to the Partnership $72,727.21. Said
capital contribution to be made by VF Delaware's satisfaction of $72,727.21
of the obligation owed by the Partnership to Agro Power under the
Construction Agreement.
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3.2 Representations.
(a) The following representations or warranties shall be true and
correct in all respects, and are hereby made to Agrorent A and Agrorent B
by VF Delaware and VF as an inducement to their making capital
contributions to the Partnership:
(i) VF Delaware is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware,
the ownership of which is 99% by Agro Power and 1% by VF, and (B) has
full power and authority and the legal right to incur the obligations
provided for in this Agreement.
(ii) VF (A) is a Limited Liability Company duly organized, validly existing
and in good standing under the Laws of the State of Delaware, the
ownership of which is 99% by Agro Power and 1% by VF Delaware.
(iii) This Agreement, Project Documents, the Assigned Document and Project
Loan Documents to which any Agro Power Commonly Controlled Entity is a
party has been duly authorized, executed and delivered by such entity
and constitute the legal, valid and binding obligations of such entity
enforceable against it in accordance with their terms, except as
enforceability may be limited by general equitable principles and by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally.
(iv) Neither the execution, delivery or performance by any Agro Power
Commonly Controlled Entity of this Agreement, the Project Documents,
the Assigned Document or Project Loan Documents to which any such
entity is a party, nor compliance by it with the terms and provisions
hereof or thereof, including, without limitation, the assignment of
the Assigned Document and Project Assets to the Partnership, requires
the consent or authorization of any other party (except such as have
been duly obtained), or conflicts or will conflict with or result in a
breach or violation of its charter documents or bylaws or any of the
terms, conditions or provisions of any Requirement of Law applicable
to it or its assets or business.
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(v) It is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(vi) The representations and warranties of any Agro Power Commonly
Controlled Entity in or pursuant to any of the Project Documents,
Assigned Document or Project Loan Documents to which such entity is a
party are true and correct as of the date hereof (unless stated to
relate solely to an earlier date) and are hereby deemed to be made to
Agrorent A and Agrorent B, mutatis mutandis, as if fully set forth
herein.
(b) The following representations or warranties shall be true and
correct in all respects, and are hereby made to VF Delaware and VF by
Agrorent A and Agrorent B as an inducement to their making capital
contributions to the Partnership:
(i) Each of Agrorent A and Agrorent B (A) is a limited liability company
duly organized, validly existing and in good standing under the laws
of the State of Delaware , (B) has full power and authority and the
legal right to incur the obligations provided for in this Agreement,
and (C) has taken all necessary action to authorize the execution,
delivery and performance of this Agreement.
(ii) This Agreement has been duly authorized, executed and delivered by
Agrorent A and Agrorent B and constitutes the legal, valid and binding
obligation of each of Agrorent A and Agrorent B enforceable against it
in accordance with its terms, except as enforceability may be limited
by general equitable principles and by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally.
(iii) Neither the execution, delivery or performance by Agrorent A and
Agrorent B of this Agreement, nor compliance by it with the terms and
provisions hereof, requires the consent or authorization of any other
party (except such as have been duly obtained), or conflicts or will
conflict with or result in a breach or violation of its charter
documents or bylaws or any of the terms, conditions or provisions of
any Requirement of Law applicable to it or its assets or business.
(iv) It is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
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3.3 Interest. No interest shall accrue on any contribution to the capital
of the Partnership.
3.4 Withdrawals of Capital. No Partner shall have the right to withdraw or
to be repaid or returned any capital contributed by it, except as otherwise
provided herein.
3.5 Additional Capital Contributions. Unless otherwise unanimously agreed
by the Management Committee, no Partner shall be required to make any
contribution to the capital of the Partnership other than its capital
contributions set forth in this Article III.
ARTICLE IV
ALLOCATION OF PROFITS AND LOSSES
4.1 Profits and Losses.
(a) After giving effect to the special allocations set forth in
Sections 4.3, 4.4, 4.5, 4.6, 4.7 and 4.10 hereof, the Partners shall share
Profits and Losses as follows:
(i) Profits shall be allocated among the Partners as follows:
(A) Profits shall first be allocated to the General Partners to
offset any prior allocations of Loss made to the General Partners
under Section 4.1(a)(ii)(B) hereof which have not previously been
offset.
(B) Thereafter, Profits shall be allocated to the Partners to
offset any prior allocations of Loss made to the Partners under
Section 4.1(a)(ii)(A) which have not previously been offset.
(C) Thereafter, Profits shall be allocated among the Partners in
proportion to their Partnership Percentages.
(ii) Losses shall be allocated among the Partners as follows:
(A) Losses shall first be allocated to the Partners in accordance
with their positive Capital Accounts.
(B) Thereafter, Losses shall be allocated to the General Partners
in the proportion of their Partnership Percentages.
For Federal income tax purposes, each item of income, gain, loss,
deduction or credit entering into the computation of the Partnership's
taxable income shall be allocated in the same proportion.
(b) The Profits and Losses of the Partnership shall be unanimously
determined by the Management Committee and shall be allocated as described
in Section 4.1(a) (i) at
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the end of each fiscal quarter, (ii) upon the transfer of the Partnership
Interest of any Partner pursuant to Article VIII, (iii) upon the Withdrawal
of any Partner pursuant to Article IX, (iv) upon the admission of any
Partner to the Partnership pursuant to Article IX and (vi) at such other
times that the Management Committee may determine.
4.2 Capital Account Balances. Each Partner's Capital Account shall be
maintained in accordance with the principles of applicable Treasury Regulations
promulgated under Section 704(b) of the Code and as otherwise provided in the
definition of "Capital Accounts" and in this Article IV.
4.3 Minimum Gain Chargeback.
(a) Notwithstanding any other provision in this Agreement, if there is
a net decrease in Partnership minimum gain (determined in accordance with
the principles of Regulations Sections 1.704-2(b)(2) and 1.704-2(d)) during
any Partnership taxable year, the Partners who would otherwise have an
Adjusted Capital Account Deficit at the end of such year shall be specially
allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount and manner sufficient to
eliminate as quickly as possible such Adjusted Capital Account Deficit. The
items to be so allocated shall be determined in accordance with Regulations
Section 1.7042(g). This subsection 4.3(a) is intended to comply with the
minimum gain charge-back requirements in such Regulation Sections and shall
be interpreted consistently therewith.
(b) Notwithstanding any other provision in this Agreement, if there is
a net decrease in Partnership minimum gain attributable to a partner
non-recourse debt of the Partnership (within the meaning of Regulations
Sections 1.704-2(b)) during any Partnership fiscal year, each Person who
has a share of the Partnership minimum gain attributable to such
non-recourse debt of the Partnership, determined in accordance with
Regulation Section 1.704-02(i)(5), shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent
years) in an amount equal to the greater of (i) the portion of such
Person's share of the net decrease in minimum gain of the Partnership
attributable to such non-recourse debt of the Partnership, determined in
accordance with Regulations Section 1.704-2(i)(b), that is allocable to the
disposition of property of the Partnership subject to such non-recourse
debt of the Partnership, determined in accordance with Regulations Section
1.704-2(i)(4), or (ii) if such Person would otherwise have an Adjusted
Capital Account Deficit at the end of such year, an amount sufficient to
eliminate such Adjusted Capital Account Deficit. Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items to be
so allocated shall be determined in accordance with Regulations Section
1.704-2(i)(4). This subsection 4.3(b) is intended to comply with the
minimum gain charge-back requirement in such Regulations Section and shall
be interpreted consistently therewith. Solely for purposes of this
subsection 4.3(b), each Person's Adjusted Capital Account Deficit shall be
determined prior to any other allocations pursuant to this Article IV with
respect to such fiscal year, other than allocations pursuant to subsection
4.3(a) hereof.
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4.4 Nonrecourse Deductions. Nonrecourse Deductions for any taxable year
shall be specifically allocated among the Partners in proportion to their
Percentage Interests.
4.5 Partner Nonrecourse Deductions. Nonrecourse Deductions attributable to
otherwise non-recourse debt with respect to which a Partner or a related person
of a Partner described in Regulations Section 1.752-2(c) is the creditor or
otherwise bears the "economic risk of loss" as defined in Regulations Section
1.752-2(b) shall be allocated to such Partner.
4.6 Qualified Income Offset. Notwithstanding anything in this Agreement to
the contrary, in the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in paragraphs (b)(2)(ii)(d)(4), (5) or
(6) of Regulations Section 1.704-1, there shall be specially allocated to such
Partner such items of Partnership income and gain, at such times and in such
amounts as will eliminate as quickly as possible that portion of its Adjusted
Capital Account Deficit caused or increased by such adjustments, allocations or
distributions.
4.7 Curative Allocations. The allocations set forth in Sections 4.3, 4.4,
4.5, 4.6 and 4.10 hereof are intended to comply with certain requirements of
Regulations Section, 1.704-1(b). Notwithstanding any other provisions of this
Article IV (other than Sections 4.3, 4.4, 4.5, 4.6 and 4.10), allocations that
have taken place pursuant to Sections 4.3, 4.4, 4.5, 4.6 and 4.10 shall be taken
into account in allocating other items of income, gain, loss, deduction and
credit so that, to the extent possible, the net amount of such other allocations
and the Sections 4.3, 4.4, 4.5, 4.6, and 4.10 allocations to each Partner shall
equal the net amount that would have been allocated to each Partner if the
Sections 4.3, 4.4, 4.5, 4.6, and 4.10 allocations had not occurred.
4.8 Tax Allocations. Except as provided in Sections 4.7 and 4.9 hereof, for
income tax purposes each item of income, gain, loss and deduction shall be
allocated in the same manner as the corresponding book item is allocated for
Capital Account purposes.
4.9 Property Subject to 704(b) and 704(c). In the case of any Partnership
asset (directly or indirectly owned) the Gross Asset Value of which differs from
its adjusted tax basis, income, gain, loss and deduction with respect to such
asset shall, solely for tax purposes, be allocated in accordance with the
principles of Code Sections 704(b) and 704(c) to take account of such
difference.
4.10 Limitations. Notwithstanding anything to the contrary in this Article
IV, no allocation under this Article IV shall be made to a Limited Partner that
would cause such Limited Partner to have, or that would increase, an Adjusted
Capital Account Deficit. Any amount not allocated as a result of this limitation
shall be reallocated to the General Partners pro rata in accordance with their
relative Partnership Interests.
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ARTICLE V
DISTRIBUTIONS
5.1 Distribution of Net Distributable Cash. Subject to the restrictions
contained in the Project Loan Documents and subject to Sections 5.2 and 5.3
hereof, Net Distributable Cash for each fiscal quarter shall be distributed to
the Partners within thirty (30) days after the end of such quarter as follows:
(a) 1 % to Agrorent A, 12.75% to Agrorent B, 1 % to VF Delaware, and
85.25% to VF.
5.2 Default Allocations for Agrorent A. and Agrorent B. In the event VF
Delaware or Agro Power or any Agro Power Commonly Controlled Entity defaults or
breaches any of its obligations under this Agreement, the Management Agreement,
the Marketing Agreement or the Construction Agreement and such default or breach
has not been remedied within any applicable cure period, or any representation
or warranty made by VF Delaware, VF, or any Agro Power Commonly Controlled
Entity under this Agreement or any such other agreement or document proves to
have been untrue when made and (a) as a result thereof the Partnership, Agrorent
A and Agrorent B (or any of them) incurs or suffers an Adverse Consequence and
(b) Agrorent A or Agrorent B gives written notice of such Adverse Consequence to
the Partnership and, if the amount thereof is unknown, its good faith estimate
of the amount of such Adverse Consequence, then the Partnership shall thereafter
refrain from making any distributions to VF Delaware under this Agreement (any
such distribution that would have been made but for this Section 5.2 is
hereinafter referred to as a "Blocked Distribution") and shall take the
following steps:
(i) The Partnership shall distribute to Agrorent A or Agrorent B from such
Blocked Distributions an aggregate amount equal to 100% of any such
Adverse Consequence suffered or actually incurred by Agrorent A and
Agrorent B or either of them (or, if the amount thereof is not known,
100% of Agrorent A's or Agrorent B's written good faith estimate
thereof). Any such distribution made by the Partnership under this
subsection 5.2(i) shall satisfy pro tanto the obligation of the
Partnership to make distributions to VF --- ----- Delaware or VF with
respect to the Blocked Distributions. For the purposes of this
Agreement, any Adverse Consequence suffered or incurred by the
Partnership shall be deemed to have been suffered or incurred, on a
dollar-for-dollar basis, 7.272% by Agrorent A and 92.727% by Agrorent
B.
(ii) Upon distribution to Agrorent A and Agrorent B of 100% of the
aggregate amount of any such Adverse Consequence (or their good faith
estimate thereof) from Blocked Distributions, the Partnership may
thereafter make distributions to VF Delaware and VF under Section 5.1,
unless and until it receives a subsequent notification from Agrorent A
or Agrorent B under this Section 5.2.
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5.3 Default Allocations for VF Delaware and VF. In the event Agrorent A, GP
or Agrorent B as any Nic Poot Commonly Controlled Entity defaults or breaches
any of its obligations under this Agreement or the Management Agreement and such
default or breach has not been remedied within any applicable cure period, or
any representation or warranty made by Agrorent A or Agrorent B as any Nic Poot
Commonly Controlled Entity under this Agreement proves to have been untrue when
made and (a) as a result thereof the Partnership, VF Delaware or VF incurs or
suffers an Adverse Consequence and (b) VF Delaware or VF gives written notice of
such Adverse Consequence to the Partnership and, if the amount thereof is
unknown, its good faith estimate of the amount of such Adverse Consequence, then
the Partnership shall thereafter refrain from making any distributions to
Agrorent A and Agrorent B (or either of them) under this Agreement (any such
distribution that would have been made but for this Section 5.3 is hereinafter
referred to as a "Blocked Distribution") and shall take the following steps:
(i) The Partnership shall distribute to VF Delaware and VF from such
Blocked Distributions an aggregate amount equal to 100% of any such
Adverse Consequence suffered or actually incurred by VF Delaware and
VF (or, if the amount thereof is not known, 100% of VF Delaware's and
VF's written good faith estimate thereof). Any such distribution made
by the Partnership under this subsection 5.3(i) shall satisfy pro
tanto the obligation of the Partnership to make distributions to
Agrorent A or Agrorent B (or either of them) with respect to the
Blocked Distributions. For purposes of this Agreement, any adverse
consequence suffered or incurred by the partnership shall be deemed to
have been suffered or incurred, on a dollar for dollar basis, 1.159%
by VF Delaware and 98.840% by VF.
(ii) Upon distribution to VF Delaware and VF of 100% of the aggregate
amount of any such Adverse Consequence (or their good faith estimate
thereof) from Blocked Distributions, the Partnership may thereafter
make distributions to Agrorent A and Agrorent B under Section 5.1,
unless and until it receives a subsequent notification from VF
Delaware or VF under this Section 5.3.
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ARTICLE VI
MANAGEMENT
6.1 Management of the Partnership.
(a) The overall management and control of the business affairs of the
Partnership shall be vested in the Management Committee, subject to the
limitations contained in Section 6.2 or elsewhere in this Agreement. The
Management Committee shall consist of four members, one designated by
Agrorent A and three designated by VF Delaware (each a "VF Delaware
Designee"), and a quorum of the Management Committee shall require at least
three members of the Management Committee. No action at any meeting may be
taken by the Management Committee unless a quorum is present (acting in
person or by proxy). The Management Committee shall meet not less
frequently than quarterly. Members of the Management Committee may
participate in a meeting of the Management Committee by means of conference
telephone. No action may be taken by the Management Committee with respect
to any of the matters described in Section 6.2 hereof unless such action is
in the form of a writing signed by all members of the Management Committee.
All meetings of the Management Committee shall take place at Agro Power's
offices in East Brunswick, New Jersey or such other place as the Management
Committee may unanimously agree.
(b) Except as set forth in Section 6.2, any action by the Management
Committee shall require the approval of a majority of the members of the
Management Committee.
(c) Any General Partner may, at any time, replace any of its
respective Designees to the Management Committee with a new Designee and,
upon such change, or upon the death or resignation of any Designee, a
successor shall be designated in writing by the party that appointed the
Designee being replaced.
(d) Any General Partner or member of the Management Committee may, at
any time, request a meeting of the Management Committee by sending written
notice specifying in reasonable detail the purpose(s) of such meeting to
all other Partners and to the members of the Management Committee at least
ten (10) days in advance of the proposed date for the meeting, which notice
may be waived by all members of the Management Committee and all Partners.
Any member of the Management Committee may propose that an action be
submitted to the Management Committee for approval, and there shall be no
requirement of notice of the issues to be addressed at any meeting of the
Management Committee.
6.2 Fundamental Matters. The following matters shall require the prior
unanimous authorization and approval of the Management Committee:
(a) Any transaction, or series of transactions in the aggregate,
(other than those approved by any Budget) in which the Partnership (i)
acquires, purchases or leases
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any capital asset or right for consideration having a fair market value in
excess of $25,000, (ii) consolidates or merges with or into any other
Person, (iii) sells, assigns, leases or otherwise transfers any asset or
right having a fair market value in excess of $25,000, or (iv) assumes any
liability or obligation in excess of $25,000.
(b) The approval, execution and delivery of any contract, lease or
agreement following the date of this Agreement, including without
limitation, the Project Loan Documents, the Marketing Agreement, the
Management Agreement and the Project Documents; provided, that no such
approval shall be required for (i) any contracts and permit applications in
existence prior to the date of this Agreement and listed on Schedule 1.1(b)
hereto, or (ii) any other contract, lease or agreement which is expressly
non-recourse to the Partners so long as the amounts to be paid by the
Partnership thereunder, together with all other amounts to be paid by the
Partnership pursuant to contracts, leases or agreements that have not been
unanimously approved or ratified by the Management Committee, does not
exceed $50,000 in the aggregate excluding contracts, leases or agreements
for supplies used in the ordinary course of business and contemplated in
the Operating Budget.
(c) The approval, execution or delivery of any amendments to,
modification or termination of, enforcement of rights under, or any
consents or waivers in connection with any contract, lease or agreement,
other than contracts entered into without prior unanimous approval of the
Management Committee pursuant to subsection 6.2(a) or clause (ii) of
subsection 6.2(b) above.
(d) The sale or issuance by the Partnership of any interest, or of any
option, warrant or similar right to acquire any interest, of any kind in
the Partnership.
(e) Any decision to (i) terminate all or any substantial part of the
Project (an "Abandonment") or (ii) engage in any activity not contemplated
by this Agreement.
(f) The incurrence or assumption of any Indebtedness by the
Partnership, except for (i) Indebtedness which, when the principal amount
thereof is aggregated with the principal amount of Indebtedness previously
incurred pursuant to this subsection 6.2(f) which remains outstanding, does
not exceed $25,000 and (ii) the Indebtedness represented by the Project
Loan Documents.
(g) The granting of any Lien (other than Permitted Liens) on the
assets or rights of the Partnership.
(h) The repayment (other than repayments in accordance with scheduled
maturity), voluntary prepayment or redemption of, or any refinancing or
other modification of the terms of, any Indebtedness.
(i) The adoption and modification of the Operating Budget or the
Project Budget (collectively, the "Budgets").
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(j) The initiation of any legal proceedings or arbitration on behalf
of the Partnership, or the settlement of any claim by or against the
Partnership with respect to claims in excess of $25,000 or which include
requests for an injunction, specific performance or other equitable relief.
(k) The selection, removal, or determination of authority and
responsibility of the officers of the Partnership, general or special
counsel for the Partnership, accountants and auditors for the Partnership
and the Project and the approval of any change in the accounting or tax
policy of the Partnership or the Project.
(l) To the extent not specified in this Agreement, (i) any
distribution of income or any assets or rights of the Partnership or (ii)
the redemption, purchase or other acquisition of any interest in the
Partnership.
(m) Except as contemplated in Article X of this Agreement, liquidating
or dissolving, or proposing to liquidate or dissolve, or effecting, or
proposing to effect, a recapitalization in any form of transaction, of the
Partnership.
(n) (i) Commencing any case, proceeding or other action (A) under any
existing or future law or any jurisdiction, domestic or foreign, relating
to bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for All or any substantial part of its assets;
(ii) making, or proposing to make, a general assignment for the benefit of
its creditors; (iii) admitting or proposing to admit in writing its
inability to pay its debts as they become due; (iv) filing or proposing to
file any plan of reorganization pursuant to 11 U.S.C. ss. 101 et seq.; (v)
taking, or proposing to take, any action in furtherance of, or indicating
its consent to, approval of or acquiescence in, any of the acts set forth
in clause (i) or (ii) above.
(o) Establishing any operating or capital reserves other than those
required by the Project Loan Documents.
(p) Establishing committees of the Management Committee and delegating
voting authority to such committees.
(q) The approval, execution or delivery of any amendments to,
modification or termination of, or any waivers of any rights under, or the
grant of any consents under or in connection with any Project Document, any
Project Loan Document, the Marketing Agreement or the Management Agreement.
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(r) The approval or taking of any action that would be an event of
default or that would give rise to a right of termination under any Project
Document or any Project Loan Document.
(s) The approval or taking with any action that would give rise to an
event of default under any Project Loan Document or that would give rise to
a right of acceleration or termination under any Project Loan Document.
(t) The reimbursement by the Partnership of any General Partner under
Section 6.4(b) hereof of any expenses incurred thereby in an amount in
excess of $5,000 during any fiscal quarter (other than those contemplated
by any Budget).
(u) Any change in or termination of any insurance policies maintained
by the Partnership.
(v) Any agreement to undertake any action that would require the
approval of the Management Committee under this Section 6.2.
(w) Any act in contravention of this Agreement or the Act.
(x) Any act which would make it impossible to carry on the ordinary
business of the Partnership.
(y) Possession of Partnership property by any Partner, or the
assignment, transfer or pledge of rights of the Partnership in specific
Partnership property for other than a Partnership purpose or other than for
the benefit of the Partnership, or any commingling the funds of the
Partnership with the funds of any other person.
(z) Any action which would cause the Partnership to be treated as
other than a partnership for Federal income tax purposes.
(aa) Any confession of a judgment against the Partnership or any
Partner.
(ab) The grant of any power of attorney or appointment of any agent or
attorney (other than customs brokers).
(ac) The grant of signature authority to any Person with respect to
any of the Partnership's bank or investment accounts.
(ad) The change of the principal crop produced by the Partnership from
peppers to some other form of produce.
6.3 Officers of the Partnership. The Partnership may have such officers as
may be designated by the Management Committee from time to time. Such officers
shall (a) serve at the pleasure of the Management Committee, (b) subject to
Section 6.3 and to the instructions and
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directions of the Management Committee, have such powers as are usually
exercised by comparable designated officers of a Delaware corporation and (c)
have the power to bind the Partnership through the exercise of such powers to
the extent consistent with the terms hereof. The initial officers of the
Partnership shall be those persons listed on Schedule 6.3 attached hereto and
incorporated herein by reference. Following the execution hereof, officers shall
be appointed or removed only by action of the Management Committee in accordance
with the provisions of Section 6.1.
6.4 No Compensation; Reimbursement.
(a) Except as expressly provided herein, the General Partners, members
of the Management Committee and officers shall receive no compensation for
performing their duties as General Partners, members of the Management
Committee or officers under this Agreement; provided, however, that this
provision shall not affect any Partners' right to receive its share of
distributions as set forth in Article V hereof.
(b) Subject to the limitation, if any, imposed by the Project Loan
Documents and subject to subsection 6.2(u), each General Partner shall be
entitled to receive, out of any Partnership funds available therefor,
reimbursement of all amounts expended by such General Partner in payment of
properly incurred and documented Partnership obligations paid by such
General Partner out of its own funds so long as such expenditures are made
in accordance with the Budgets.
6.5 Insurance. The Partnership shall (a) maintain, with insurers or
underwriters of good repute, in the name of the Partnership, such insurance
relating to the operations of the Partnership as is customary for comparable
businesses to that of the Partnership to maintain, against such risks and
pursuant to such terms (including deductible limits or self-insured retentions)
as are customary for such businesses, and (b) pay all premiums and other sums
payable in order to maintain such insurance. For purposes of clarity, it is
hereby agreed that the Partnership shall maintain the insurance required by the
Project Loan Documents and all insurance policies shall name Agrorent A as an
additional insured and provided that they may not be cancelled or terminated
except with 30 days' prior written notice to Agrorent A.
6.6 Cooperation on Tax Matters. The Partnership shall cooperate fully as
and to the extent reasonably requested by Agrorent A or VF Delaware in
connection with the preparation and filing of any Tax return, statement, report
or form, and any audit, litigation or other proceeding with respect to Taxes
relating to or arising out of the Project. Such cooperation shall include the
retention and, upon request by either Agrorent A or VF Delaware, the provision
of records and information that are reasonably relevant to any such audit,
litigation or other proceeding. The Partnership agrees to (a) retain all books
and records with respect to Tax matters pertinent to the Project and (b) give
Agrorent A and VF Delaware reasonable written notice prior to destroying or
discarding any such books and records. The Partnership shall retain any records
requested by either Agrorent A or VF Delaware to be retained.
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ARTICLE VII
BOOKS, RECORDS AND BANK ACCOUNTS
7.1 Books and Records. In addition to the Partnership Books, the
Partnership shall also keep such books of account and other records with respect
to the operations of the Partnership as will sufficiently explain the
transactions and financial position of the Partnership and enable financial
statements to be prepared in accordance with GAAP and shall cause such books and
other records to be kept in such manner as will enable them to be properly
audited. The Partnership Books and such other books and records shall be
maintained at the principal places of business of the Partnership and all
Partners and their duly authorized representatives shall at all times have
access to and the right to review and copy such books and records.
7.2 Accounting Basis and Fiscal Year. The books of the Partnership (a)
shall be kept on an accrual basis in accordance with GAAP, (b) shall reflect all
Partnership transactions, (c) shall be appropriate and adequate for the
Partnership's business and for the carrying out of all provisions of this
Agreement, and (d) shall be closed and balanced as of the end of each fiscal
year, as soon as practicable after the end of such fiscal year. The fiscal year
of the Partnership shall be January 1 through December 31 of each year or such
other fiscal year that may be selected with the unanimous approval of the
Management Committee.
7.3 Reports.
(a) Unless otherwise required by the Management Committee, the
Partnership shall cause to be delivered to each Partner, within 120 days
after the end of each fiscal year, an annual report containing the
following:
(i) A balance sheet as of the end of the Partnership's fiscal year and
statements of income, Partners' equity and cash flows for the year
then ended, each of which shall be audited and reported on by Xxxxxx
Xxxxxxxx & Co. or such other independent certified public accountants,
which shall be a nationally recognized accounting firm, as may be
selected by the Management Committee;
(ii) a general description of the activities of the Partnership during such
year; and
(iii) a report of any material transaction between the Partnership and any
Partner or any of its Affiliates, including fees and compensation and
reimbursements paid by the Partnership and the products supplied and
services performed by such Partner or any such Affiliate for such fees
or compensation and the expenses so reimbursed; provided, however,
that no report shall be required for any products supplied and
services performed if such products and services are provided pursuant
to the terms of a Project Document, the Management Agreement, the
Marketing Agreement, an
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agreement unanimously approved by the Management Committee or set out
in any Budget and the compensation therefor is in accordance with the
terms of such agreement.
(b) Within 45 days after the end of each quarter of each fiscal year,
the Partnership shall cause to be delivered to each Partner a quarterly
report containing a balance sheet as of the end of such quarter and a
statement of income for such quarter, each of which may be unaudited but
which shall be certified by the chief financial officer of the Partnership
as fairly presenting the financial position of the Partnership at the end
of such quarter and results of operations of the Partnership for such
quarter and as having been prepared in accordance with the accounting
methods followed by the Partnership for Federal income tax purposes and
otherwise in accordance with GAAP applied on a basis substantially
consistent with that of the Partnership's audited financial statements
(subject to normal year end adjustments).
(c) Within 120 days of the end of each fiscal year, the Partnership
will cause to be delivered to each Partner all information necessary for
the preparation of such Partner's Federal income tax returns, including a
statement showing such Partner's share of income, gains, losses, deductions
and credits for such year for Federal income tax purposes and the amount of
any distributions made to or for the account of such Partner pursuant to
this Agreement.
7.4 Bank Accounts. The Partnership shall maintain one or more accounts in
one or more banks located in Marfa, Texas and such other locations as may be
approved by the Management Committee, each of which shall be a member the
Federal Deposit Insurance Corporation. In addition, the Partnership shall
establish such other accounts and deposit amounts as required by the Project
Loan Documents. All such amounts shall be and remain the property of the
Partnership, and shall be received, held and disbursed by the Partnership for
the purposes specified in this Agreement. There shall not be deposited in any of
said accounts any funds other than funds belonging to the Partnership, and no
other funds shall in any way be commingled with such Partnership funds.
7.5 Tax Returns. The Management Committee shall cause income tax returns
for the Partnership to be prepared and timely filed with the appropriate
authorities.
7.6 Tax Elections. The Management Committee shall, from time to time, make
such tax elections as it deems necessary or advisable to carry out the business
of the Partnership or the purposes of this Agreement.
7.7 Tax Matters Partner. VF Delaware shall be the Partnership's "tax
matters partner" for purposes of the Code and with respect to all other Federal,
state and local Taxes. The approval of the tax matters partner shall be required
before the Partnership or any Partner (with respect to Partnership matters)
files any document with any Governmental Authority including, but not limited
to, returns, amendments, requests for refunds, appeals, or waivers or extensions
of statutes of limitations. The tax matters partner shall take such actions as
the Management
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Committee may lawfully require in connection with the Partnership's Federal,
state and local Tax matters.
7.8 Withholdings. Except and only to the extent required by applicable law
and except as permitted hereunder, the Partnership will not deduct or withhold
any amount in respect of any tax from any payment or distribution by the
Partnership to any Partner unless the Partnership has first received written
authorization from such Partner so to withhold or to deduct.
ARTICLE VIII
TRANSFER OF INTERESTS
8.1 Transfer of a Partner's Interest.
(a) No Partner may sell, transfer, participate, assign or otherwise
dispose of (whether voluntarily or by operation of law) (collectively,
"transfer") all or any part of its Partnership Interest without the prior
written consent of the non-transferring General Partner(s).
(b) The non-transferring General Partner(s) may condition its (their)
consent to any transfer on compliance by the Partner desiring to transfer
its Partnership Interest with all or any of the following:
(i) The transferring Partner must give written notice to the General
Partners identifying in reasonable detail the proposed transferee(s)
and the terms and conditions of the proposed transfer and the
non-transferring General Partner(s) shall have a period of twenty (20)
Business Days from the date of such notice either to consent in
writing to the proposed transferee(s), or to give written notice that
it does not consent to such transferee(s);
(ii) within ten (10) Business Days after the non-transferring General
Partner(s) gives written notice that it does not consent to a proposed
transferee, it shall provide to the transferring Partner a written
explanation of the reasons therefor;
(iii) such transfer does not release the transferring Partner from its
obligations hereunder;
(iv) the transferee shall not have the right to be separately represented
on the Management Committee unless the transferring Partner is a
General Partner that previously had the right to appoint Designee's to
the Management Committee and the transfer involves all of such General
Partner's Partnership Interest;
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(v) the non-transferring General Partner(s) shall notify each other
Partner in writing of its decision to consent to the transfer within
five (5) Business Days of its grant of such consent (which notice
shall include a copy of the notice sent to the non-transferring
General Partner(s) by the transferring Partner) and, prior to any such
transfer, each Partner (which term, for purposes of clarity, includes
for purposes of this subsection (v) the non-transferring General
Partner and excludes the transferring Partner) shall have the right
for thirty (30) Business Days following such notice to purchase the
Partnership Interest being sold by the transferring Partner pursuant
to this Article VIII on the same terms and conditions as were set
forth in such notice. In the event that none of the non-transferring
Partners exercises its right to purchase such Partnership Interest
being sold, then the transferring Partner shall have forty-five (45)
days thereafter to complete the sale in accordance with the terms of
the notice, after which time the transferring Partner must again
comply with the procedures set forth in this Article VIII. In the
event more than one Partner exercises its right to purchase such
Partnership Interest proposed to be transferred, then such exercising
Partners shall exercise such right on a prorate basis based on their
respective Partnership Percentages (without considering the
Partnership Percentage of the transferring Partner or the Partners (if
any) not electing to exercise such right); or
(vi) such transferee shall not have the right to sell, transfer,
participate, assign or otherwise dispose of all or a portion of such
party's Partnership Interest except in accordance with the terms of
this Section 8.1; and
(vii) the transferee shall execute documents satisfactory to the Management
Committee sufficient to make the transferee a party to and be bound by
the terms of this Agreement and the transferee shall expressly assume
all obligations of the transferring Partner hereunder.
ARTICLE IX
ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS
9.1 Additional Partners. Persons other than the undersigned may from time
to time be admitted to the Partnership as General Partners or Limited Partners
only with the unanimous consent of the Management Committee and only on such
terms and conditions as may be prescribed by the Management Committee.
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9.2 Withdrawal of Partners.
(a) No Partner may withdraw from the Partnership except as provided in
this Section 9.2.
(b) A Partner shall immediately cease to be a Partner and shall be
deemed to have Withdrawn from the Partnership, in the event:
(i) Such Partner shall commence a voluntary case or other proceedings
seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of creditors,
or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing; or
(ii) an involuntary case or other proceeding shall be commenced against
such Partner seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, and such involuntary case
or other proceeding shall remain undismissed and unstayed for a period
of sixty (60) days, or an order for relief shall be entered against
such Partner under the federal bankruptcy laws as now or hereafter in
effect; or
(iii) such Partner defaults in its obligation to make a capital
contribution pursuant to Sections 3.1 and 3.2 (and such default is not
cured within two (2) days of written notice of such default from a
General Partner); or
(iv) it is required to Withdraw as a Partner pursuant to the Delaware Act.
Such Partner's Withdrawal Date shall be the day such Withdrawal occurs.
(c) Any Partner may Withdraw voluntarily from the Partnership on not
less than thirty (30) days' prior written notice by such Partner to the
other Partners with the
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prior unanimous consent of the Management Committee. Such Partner's
Withdrawal Date shall be the date on which a written notice of Withdrawal
is made.
(d) Upon the Withdrawal of any Partner pursuant to subsections 9.2(b)
or (c), such Partner's Capital Account and Partnership Percentage shall be
allocated, as of the Withdrawal Date, among the other Partners in
proportion to their respective Partnership Percentages on such Withdrawal
Date (it being understood that such allocation shall not result in a
Limited Partner becoming a General Partner). After its Withdrawal Date, a
Withdrawn Partner shall not have any rights with respect to the profits,
capital or affairs of the Partnership (including, but not limited to, any
rights of representation on the Management Committee or any committee
thereof or any rights on liquidation of the Partnership pursuant to Article
X).
(e) On the Withdrawal Date for any Partner that Withdraws pursuant to
Section 9.2(b) or Section 9.2(c)(ii), such Partner shall pay to the
Partnership in cash any negative balance in such Partner's capital account.
If the sum of such Partner's capital account has a positive balance on the
Withdrawal Date, the Partnership shall pay such amount to such Partner upon
its withdrawal.
ARTICLE X
DISSOLUTION AND LIQUIDATION
10.1 Events of Dissolution.
(a) The Partnership shall be dissolved upon:
(i) an Abandonment pursuant to subsection 6.2(e);
(ii) the occurrence of an event requiring dissolution under the
Delaware Act;
(iii) the unanimous consent of the General Partners; and
(iv) at the election of Agrorent A , if Agro Power ceases, at any
time, to control (as defined in the definition of "Affiliate") VF
Delaware.
(b) Dissolution of the Partnership shall be effective on the day on
which the event occurs giving rise to the dissolution, but the Partnership
shall not terminate until the assets and rights of the Partnership shall
have been distributed as provided herein. Notwithstanding the dissolution
of the Partnership, prior to the termination of the Partnership, as
aforesaid, the business of the Partnership and the affairs of the Partners,
as such, shall continue to be governed by this Agreement. Upon dissolution,
the Management Committee shall liquidate the assets of the Partnership and
apply and distribute the proceeds thereof as contemplated by this
Agreement.
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10.2 Distributions Upon Liquidation.
(a) After payment of liabilities owing to creditors (but excluding any
liabilities payable with respect to the Management Agreement or the
Marketing Agreement other than amounts then due and owing), the Management
Committee or the liquidator, if any, shall set up such reserves as it deems
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Partnership (other than liability and obligation owing
with respect to the Management Agreement and the Marketing Agreement). Said
reserves may be paid over by the Management Committee or the liquidator to
a bank, to be held in escrow for the purpose of paying any such contingent
or unforeseen liabilities or obligations and, at the expiration of such
period as the Management Committee or the liquidator may deem advisable,
such reserves shall be distributed to the Partners or their assigns in the
manner set forth in subsection (c) below.
(b) If any General Partner has a negative Capital Account at the time
of dissolution of the Partnership, such General Partner shall be required
to restore to the Partnership the amount of the negative balance in its
Capital Account. If any Limited Partner has a negative Capital Account
balance at the time of dissolution of the Partnership, such Limited Partner
shall have no obligation to restore to the Partnership the amount of the
negative balance in its Capital Account.
(c) After paying the liabilities and providing for the reserves
referred to in subsection 10.2(a) and the payment of any restoration
amounts under subsection 10.2(b), the Management Committee or the
liquidator shall, by the end of the Partnership's taxable year in which the
Partnership dissolves (or, if later, within 90 days after the date of such
termination), cause the net assets of the Partnership to be distributed in
accordance with Article V hereof, provided, however, that no distribution
shall be made pursuant to this sentence that creates or increases a Capital
Account deficit for any Partner which exceeds such Partner's obligation to
restore such deficit (under subsection 10.2(b) above), determined as
follows:
Distributions shall be first determined provisionally without
regard to Capital Accounts, and the allocation provisions of Article
IV hereof shall also be applied provisionally. If as a result of such
provisional calculations and allocations, any Partner would thereby
have a Capital Account deficit which exceeds its obligation to restore
such deficit under subsection 10.2(b) above, the actual distributions
pursuant to this subsection (c) shall be equal to such provisional
distribution less the amount of such excess and actual allocations
shall be made in accordance with Article IV taking into account such
actual distributions.
Any remaining net assets shall be allocated among the Partners in
accordance with their positive Capital Accounts.
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If such distributions are insufficient to return to any Partner the full amount
of its capital contributions, it shall have no recourse against any other
Partner. Each Partner shall receive its share of the net assets in cash or in
kind, and the proportion of such share that is received in cash shall be the
same for each Partner. In the event that any part of such net assets consists of
notes or accounts receivable or other non-cash assets, the Management Committee
or the liquidator shall take whatever steps it deems appropriate to convert such
assets into cash or into any other form which would facilitate the distribution
thereof. If any assets of the Partnership are to be distributed in kind, such
assets shall be distributed on the basis of their fair market value, as
determined by the Management Committee or the liquidator, if any, acting in its
sole discretion.
ARTICLE XI
DISPUTE RESOLUTION
11.1 Arbitration.
(a) In the event a dispute arises between or among any Partners
relating to the terms of this Agreement and any Partner gives written
notice of such dispute to the Management Committee, then each of the
Partners involved in such dispute shall refer the dispute to its senior
management. The senior management of each Partner involved in such dispute
shall meet and confer regarding the resolution of the dispute. In the event
a resolution of such dispute is not reached within 30 days of the written
notice, then any of the Partners involved in such dispute may submit the
dispute to arbitration in accordance with Section 11.1(a).
(b) Arbitration of disputes pursuant to this Section 14.1(b) shall be
held in New Jersey under the commercial arbitration rules of the American
Arbitration Association, and shall be heard by three arbitrators selected
in accordance with such rules. Each arbitrator shall have at least five
years experience in the United States in a profession or professions
related to the subject matter involved in the dispute and shall not be a
past or present officer, director or employee of, or have any interest in
or material relationship with, any Partner or any Affiliate of any Partner.
Any arbitral award shall be final and binding and may be entered by any
Partner in any state or Federal court having jurisdiction thereof. Costs of
arbitration (including reasonable attorney's fees and costs) shall be paid
in accordance with the decision of the arbitrators.
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11.2 Buy/Sell Option.
(a) In the event that the Management Committee is unable to reach a
unanimous decision with respect to any matter set forth in Section 6.2,
either of the General Partners (such Partner herein referred to as a
"Buy-Out Offeror") shall have the right to make a written offer to buy (a
"Buy-Out Offer") all (but not less than all) of the Partnership Interests
of the other General Partner and its Affiliates. The Buy-Out Offer shall be
at a price determined in accordance with the Appraisal Procedure (the
"Aggregate Purchase Price") which shall be payment for all of the assets,
liabilities and business of the Partnership, and the amount to be paid to
any selling Partner under this Section 11.2 shall be equal to the amount
such selling Partner would receive if all the assets, liabilities and
business of the Partnership were sold at the Aggregate Purchase Price on
the date the Buy-Out Offer was made and the Partnership were then
immediately dissolved in accordance with Section 10.2. The General Partners
hereby agree to use their best efforts to cause the Appraisal Procedure to
be completed within ninety (90) days after it has been initiated. The
General Partner receiving a Buy-Out Offer (a "Buy-Out Offeree") shall,
within 30 days of the determination of the Aggregate Purchase Price in
accordance with the Appraisal Procedure, either (a) accept the Buy-Out
Offer on behalf of itself and its Affiliates who own Partnership Interests
or (b) agree to purchase all (but not less than all) of the Partnership
Interests of the Buy-Out Offeror and its Affiliates upon the foregoing
terms and using the same Aggregate Purchase Price as was determined in
accordance with the Appraisal Procedure to determine the amount owing to
each selling Partner. The failure of any Partner receiving a Buy-Out Offer
to respond to such Buy-Out Offer within such 30 day deadline of its receipt
thereof, either agreeing to accept such Buy-Out Offer on behalf of itself
and its Affiliates or by agreeing to purchase all (but not less than all)
of the Partnership Interest of the Buy-Out Offeror and its Affiliates on
the foregoing terms, shall constitute (without any further action by the
Buy-Out Offeror, the receiving General Partner or any other Partner) an
irrevocable acceptance of such Buy-Out Offer by the receiving General
Partner binding on and enforceable against such General Partner and its
Affiliates.
(b) Any purchase of Partnership Interests required pursuant to
subsection 11.2(a) shall be made through the redemption of such Partnership
Interests by the Partnership; provided, however, that if such redemption is
prohibited by the Project Loan Documents, such purchase shall be made
directly by the purchasing General Partner. The closing date for any such
purchase shall be on the date set by the purchasing General Partner which
may be at any time within 180 days of the acceptance of a Buy-Out Offer or
agreement to purchase, as the case may be. In the event the purchasing
General Partner does not close the purchase within such 180 day period,
then the purchasing General Partner's right to purchase Partnership
Interests under Section 11.2(a) shall at the close of business on such
180th day terminate and the other General Partner shall thereafter have the
right to purchase the Partnership Interests of the purchasing General
Partner and its Affiliates at a price determined by using the same
Aggregate Purchase Price and such other General Partner shall have 180 days
immediately following the expiration of the initial 180 day period in which
to close such purchase. The price to be
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paid to each selling Partner shall be paid by the purchasing General
Partner in immediately available funds at the closing.
ARTICLE XII
MISCELLANEOUS
12.1 Distributions and Notices. Distributions hereunder shall be sent, and
notices required or permitted hereunder shall be in writing and shall be sent,
to the address set forth for each Partner in signature pages hereof, or at such
other address as may be supplied by written notice given in conformity with the
terms of this Section 12.1. Notices to the Management Committee shall be sent
care of all Partners who have a right to designate members of the Management
Committee. Any notice required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given and/or delivered (a) when
personally delivered, (b) when sent by telefax and receipt is acknowledged via
telephone or otherwise as confirmation of such receipt but only if the sender
obtains a printed confirmation of the receipt by the recipient of the entire
document, (c) the second day following the day on which the same has been
delivered prepaid to a reputable overnight courier service providing proof of
receipt but only if sent for next business day delivery or (d) five (5) days
after the deposit in the United States mails, registered or certified, return
receipt requested and postage prepaid, in each case addressed to the party to
whom such notice is to be given at the address set forth on the signature pages
hereof), or at the most recent address(es) specified by written notice given to
the other party in the same manner provided in this section; provided, however,
that notice of an address change shall not be effective until actually received.
Distributions shall be deemed given only upon the receipt thereof by a Partner.
12.2 Disclosure Obligations. The Partnership hereby covenants and agrees
for the benefit of Agrorent A and VF Delaware that it shall (a) notify Agrorent
A and VF Delaware of any material fact necessary in order to make any of the
representations, warranties or other statements made by it in the Project
Documents, or any other written statement provided to Agrorent A or VF Delaware
not misleading and (b) disclose in writing to Agrorent A and VF Delaware any
fact which materially adversely affects, or which could reasonably be expected
in the future to materially adversely affect Agrorent A , VF Delaware or the
Project, in each case under clause (a) or (b) above promptly upon receiving
knowledge of any such fact.
12.3 Successors and Assigns. Subject to the restrictions on transfer set
forth herein, this Agreement, and, each and every provision hereof, shall be
binding upon and shall inure to the benefit of the Partners, their respective
successors, successors in title, heirs and assigns, and each and every successor
in interest to any Partner, whether such successor acquires such interest by way
of gift, purchase, foreclosure or by any other method, shall hold such interest
subject to all of the terms and provisions of this Agreement.
12.4 Amendments. This Agreement may not be released, discharged, amended or
modified in any manner except by an instrument in writing signed by a duly
authorized officer of each party hereto.
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12.5 Partition. The Partners hereby agree that no Partner, nor any
successor in interest to any Partner, shall have the right while this Agreement
remains in effect to have the property of the Partnership partitioned, or to
file a complaint or institute any proceeding at law or in equity to have the
property of the Partnership partitioned, and each Partner, on behalf of itself,
its successors, representatives, heirs and assigns, hereby waives any such
right. It is the intention of the Partners that during the term of this
Agreement, the rights of the Partners and their successors in interest, as among
themselves, shall be governed by the terms of this Agreement, and that the right
of any Partner or successor in interest to assign, transfer, sell or otherwise
dispose of its interest in the Partnership shall be subject to the limitations
and restrictions of this Agreement.
12.6 No Waiver. No waiver of any right under this Agreement shall be deemed
effective unless contained in a writing signed by the party charged with such
waiver. The failure of any Partner to insist upon strict performance of a
covenant hereunder or of any obligation hereunder, irrespective of the length of
time for which such failure continues, shall not be a waiver of such Partner's
right subsequently to demand strict compliance. No consent or waiver to or of
any branch or default in the performance of any obligation hereunder, shall
constitute a consent or waiver to or of any other breach or default in the
performance of the same or any other obligation hereunder.
12.7 Entire Agreement. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof and
supersedes any and all prior agreements, understandings, promises and
representations made by either party to the other concerning the subject matter
hereof and the terms applicable hereto, including, without limitation, the
Original Agreement.
12.8 Captions. Titles or captions of articles, sections and subsections
contained in this Agreement are inserted only as a matter of convenience and for
reference, and in no way are intended to define, limit, extend or describe the
scope of this Agreement or the intent of any provision hereof.
12.9 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall for all purposes constitute one
Agreement, binding upon the Partners notwithstanding that all Partners may not
have signed the same counterpart.
12.10 Applicable Law. This Agreement shall be deemed to have been entered
into and shall be construed and enforced in accordance with the laws of the
State of Delaware as applied to contracts made and to be performed entirely
within Delaware.
12.11 Severability. If any provision of this Agreement is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction, (a) such provision
shall be construed or deemed amended to conform to applicable laws so as to be
valid and enforceable, or, if it cannot be so construed or deemed amended
without materially altering the intention of the parties hereto, it shall be
stricken, (b) the validity, legality and enforceability of such provision will
not
-37-
in any way be affected or impaired thereby in any other jurisdiction and (c) the
remainder of this Agreement shall remain in full force and effect.
-38-
IN WITNESS WHEREOF, the Partners have executed this Agreement as of the
date first above mentioned.
AGRORENT A, L.L.C.,
as General Partner
By
--------------------------------------------
Printed Name: Xxxx Xxxx
Title: President
Address for Notices:
Agrorent B.V.
2623 AV Schipluiden
Woridewey 33, The Netherlands
Attention: Xxxx Xxxx
Address for Distributions:
Agrorent B.V.
2623 AV Schipluiden
Woridewey 33, The Netherlands
Attention: Xxxx Xxxx
VILLAGE FARMS OF DELAWARE, L.L.C.,
as General Partner
By: Agro Power Development, Inc., its Managing
Member
By
--------------------------------------------
Printed Name: Xxxxxxx XxXxxxxx
Title: Chief Executive Officer
Address for Notices:
00 Xxxxx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attn. Chief Financial Officer
Address for Distributions:
00 Xxxxx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attn. Chief Financial Officer
-39-
VILLAGE FARMS, L.L.C.,
as Limited Partner
By: Agro Power Development, Inc., its Managing
Member
By
--------------------------------------------
Printed Name: Xxxxxxx XxXxxxxx
Title: Chief Executive Officer
Address for Notices:
00 Xxxxx Xxxxx
Xxxx Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Address for Distributions:
00 Xxxxx Xxxxx
Xxxx Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
AGRORENT B, L.L.C.,
as Limited Partner
By
--------------------------------------------
Printed Name: Xxxx Xxxx
Title: President
Address for Notices:
Agrorent, B.V.
2623 AV Schipluiden
Woridewey 33, The Netherlands
Attention: Xxxx Xxxx
Address for Distributions:
Agrorent, B.V.
2623 AV Schipluiden
Woridewey 33, The Netherlands
Attention: Xxxx Xxxx
-40-
Schedule 1.1(a)
Project Budget
Greenhouse Construction Contract 9,800,000
Headhouse Construction Contract 1,500,000
Land Gading Contract 450,000
Access Roads 100,000
Floor Prep Concrete 50,000
Packing & Grading 250,000
Cold Storage 150,000
Picking Trolleys 200,000
Fresh Water supply (Xxxxx) 150,000
----------
Subtotal 12,650,000
Contingency, Startup & Testing 316,250
Construction Management Fees 250,000
Total Turnkey Contract 13,216,250
----------
Engineering & Design 25,000
Insurance 97,500
Administrative Fee 15,000
Legal 50,000
Bank's Local Counsel 10,000
Bank's Upfront Fee 125,000
Title Insurance 75,000
Interest During Constr 500,000
Other Transaction Costs 897,500
Total Construction & Transaction Costs 14,113,750
==========
Equity Contribution 51.53% 7,272,721
Constructino/Term Facility Loan Amount 48.47% 6,841,029
Total Sources of Funds 14,113,750
==========
-41-
Schedule 1.1(b)
Project Documents
The Agreement for Electrical Services between Agro Power Development Inc. and
West Texas Utilities dated June 19, 1998.
Marketing Contract between The Greenery International and Agro Power Development
Inc.
The Loan Agreement between Village Farms International Finance Association and
Village Farms of Presidio, L.P. dated August 31, 1998.
The Security Agreement between Village Farms of Presidio, L.P. and Village Farms
International Finance Association dated August 31, 1998.
The Management, Operations and Maintenance Contract between New Amsterdam Joint
Venture, L.L.C. and Village Farms of Presidio, L.P. dated August 31, 1998
The Marketing and Sales Agreement between Village Farms, Inc. and Village Farms
of Presidio, L.P. dated August 31, 1998.
The Natural Gas Purchase and Sale Agreement between Dynegy, Inc. and Village
Farms of Presidio, L.P. dated August 31, 1998.
The Commercial Design and Contract between Village Farms of Presidio, L.P. and
Agro Power Development Inc. dated August 31, 1998.
The Commercial Greenhouse Design and Construction Contract between Dalsem
Horticultural Projects, B.V. and Agro Power Development dated May 11, 1998.
The Commercial Packing House Design and Construction Contract between N.C.
Xxxxxxxx, Inc. and Agro Power Development Inc. dated July 10, 1998.
The Sub Ground Lease between Village Farms of Marfa, L.P. and Village Farms of
Presidio, L.P. dated August 27, 1998.
The NonDisturbance Agreement between the County of Presidio and Village Farms of
Presidio, L.P. dated August 20, 1998.
The Standby Supplemental Water Contract between the City of Marfa and Agro Power
Development Inc. dated September 1, 1997.
-42-
Schedule 1.1(c)
Site
FIELD NOTES DESCRIBING A 58.07 ACRE TRACT OF LAND, IN SECTION 249 AND SECTION
000, XXXXX 0, XX&XX XX XXXXXXX XXXXXX, XXXXXXXX XXXXXX, XXXXX. THE 58.07 ACRE
TRACT IS LOCATED IN THE SOUTHWEST PART OF A 155.72 ACRE TRACT AS DESCRIBED IN
VOLUME 303, PAGE 153, DEED RECORDS, SAID 58.07 ACRE TRACT IS MORE PARTICULARLY
DESCRIBED AS FOLLOWS:
BEGINNING at a 5/8 inch rebar set for the Southeast corner of this tract, in the
South boundary line of a 155.72 acre tract described in volume 303, page 153,
deed records, whence a 1/2 inch pipe with aluminum cap marked "PIPER SURVEYING
COMPANY, 249, 250, 251, 252, XXX 0, PLS 1974", found at the common corner of
Xxxxxxx 000, 000, 000, xxx 000, Xxxxx 0, XX&XX RR Company Survey. Presidio
County, Texas, bears North 89(degree)56'24" East 581.59 feet and North
00(degree)08' West 559.15 feet.
THENCE South 89(degree)56'24" West, with said South boundary line, 2602.59 feet
to a 5/8 inch rebar set for the Southwest corner of this tract in the Southeast
BRL of runway 321 of Marfa Municipal Airport:
THENCE North 45(degree)01'32" East, with said BRL, at 794.65 feet pass the
common line of said Section 249 and Section 252, continuing for a total distance
of 2105.37 feet to a 5/8 inch rebar set for the Northwest corner of this tract;
THENCE North 89(degree)56'24" East 518.29 feet to a 5/8 inch rebar set for the
most Northerly Northeast corner of this tract;
THENCE South 00(degree)03'36" East 389.24 feet to a 5/8 inch rebar set for an
interior corner of this tract;
THENCE North 89(degree)56'24" East 593.36 feet to a 5/8 inch rebar set for the
most Easterly Northeast corner of this tract;
THENCE South 00(degree)03'36" East at 537.88 feet pass said section common line,
continuing for a total distance of 1097.26 feet to the "Point of Beginning".
-43-
Schedule 6.3
Initial Officers of the Partnership
Name Title
---- -----
Xxxxxxx XxXxxxxx President
Nic Poot Vice President
Xxxxxx XxxXxxxx Vice President
J. Xxxxx Xxxx Vice President
Xxxxxxx Xxxxxxx Vice President
Xxxxxxxx Xxxxxx Secretary
Xxxx Xxxxxxxx Treasurer
