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Exhibit 10.8
SERVICES AGREEMENT
This Services Agreement ("Agreement") made and entered as of the _____
day of October, 1998 (the "Effective Date") between PREMIUM STANDARD FARMS,
INC., a Delaware corporation ("PSF") and CONTINENTAL GRAIN COMPANY, a Delaware
corporation ("Continental").
WHEREAS, on the Effective Date, Continental acquired 51% of the issued
and outstanding shares of PSF Group Holdings, Inc. ("Holdings");
WHEREAS, PSF is a wholly-owned subsidiary of Holdings;
WHEREAS, Continental is willing to provide certain professional and
administrative services to PSF and PSF desires Continental to provide such
services to PSF;
WHEREAS, the senior management team for Continental's Pork Division has
now joined the management team of PSF, and Continental is in need of certain
management services, and PSF is willing to provide such management services,
with regard to the pork production operations now or hereafter owned by
Continental, which currently include: Xxxx Farms swine operations located in
Harveyville, Kansas ("Xxxx Farms"), Carolina Farms swine operation located in
Tarboro, North Carolina ("Carolina Farms"), ContiTraining Center swine
operations located in Xxxxxxxx, Kansas ("CTC"), F&R Swine swine operations
located in Dwight, Kansas ("F&R Swine"), Southern Maid Farms swine operations
located in Cordele, Georgia ("Southern Maid") and 3-W Farms swine operations
located in Nodaway, Iowa ("3-W Farms"). Xxxx Farms, Carolina Farms, CTC, F&R
Swine, Southern Maid and 3-W Farms are hereinafter referred to individually and
collectively as the "Continental Pork Operations";
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth, the parties agree as follows:
1. Provision of Services by Continental to PSF.
Subject to the terms and conditions of this Agreement, during the term
of the Agreement, Continental agrees to provide to PSF the following services
(individually, a "Continental Service" and collectively, "Continental
Services").
(a) Purchasing. Continental agrees to make the purchasing and risk
management staff of its industrial operations available to PSF
for assistance in evaluating lowest cost purchases of
commodities and feed ingredients, transportation and logistics
and futures coverage. Continental agrees to use reasonable
efforts, when possible, to aggregate purchases for PSF with
purchases for itself and its subsidiaries in combined purchase
orders in order to achieve volume price discounts whenever
mutually advantageous.
(b) Legal Services. Continental agrees to provide legal services
to PSF to internally manage PSF's legal and regulatory
affairs. Such services shall be provided by the lawyers and
legal staff employed by Continental.
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(c) Environmental Services. Continental agrees to make management
employees of its environmental department available to PSF to
provide strategic and operational environmental consulting to
the PSF operations.
(d) Treasury Services. Continental agrees to provide services of
its Treasurer's Department with regard to strategic planning
for long term debt and financing, as well as the
implementation of such strategy.
(e) Human Resources. Continental agrees to make available to PSF
the services of a human resources manager and the personnel
department to assist in the areas of personnel, benefit
administration and payroll.
(f) Financial and Administrative Services. Continental agrees to
make available to PSF the services of its controllers office
to transition and coordinate policies and procedures.
(g) Payroll Services.
i. Hourly. Continental and PSF have identified
approximately 55 Continental hourly employees
("Transferred Hourly Employees") who became employees
of PSF as of the Effective Date. Continental shall
administer the payroll and benefits for the
Transferred Hourly Employees and report the same
under the FEIN of PSF from the Effective Date through
December 31, 1998. As of January 1, 1999, PSF shall
assume the responsibility for payroll and benefits
for the Transferred Hourly Employees.
ii. Salaried. Continental and PSF have identified certain
Continental salaried employees identified on SCHEDULE
1(G)(II) ("Transferred Salaried Employees") who
became employees of PSF as of the Effective Date.
Continental shall administer the payroll and benefits
for the Transferred Salaried Employees and continue
to report the same under the FEIN of Continental
through December 31, 1998. As of January 1, 1999, PSF
shall assume the responsibility for payroll and
benefits for the Transferred Salaried Employees.
(h) Strategic Planning. Continental will make available
appropriate members of its senior management to assist in
developing, implementing and controlling the Company's
business obligations and strategies to further profitable
growth, including but not limited to the formation of
strategic alliances.
2. Provision of Services by PSF to Continental.
Subject to the terms and conditions of this Agreement, during the term
of this Agreement, PSF agrees to provide the following services to the
Continental Pork Operations (as such definition may change from time to time)
(individually, a "PSF Service" and collectively, "PSF Services"):
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(a) Management. PSF agrees to provide management and human
resources services to Continental with respect to the
Continental Pork Operations.
(b) Production. PSF agrees to provide hog and feed production
services to Continental in the areas of genetics, breeding,
feed conversion, quality assurance, nutrition, herd health,
transportation and marketing.
(c) Environmental Services. PSF agrees to make management
employees of its environmental department available to
Continental to provide strategic and operational consulting to
the Continental Pork Operations.
3. Availability; Conflict; Service Providers.
(a) Notwithstanding anything herein to the contrary, Continental
may, in its sole discretion, decline to provide any
Continental Service or Continental Services hereunder if:
(b) Availability. Facilities or personnel of Continental are not
reasonably available to provide such Continental Service or
Continental Services on a non-discriminatory basis;
(c) Interference. Providing such Continental Service or
Continental Services would interfere (other than in an
insignificant manner) with Continental's conduct of its
businesses;
(d) Disadvantage or Conflict. Continental, in its good faith
reasonable judgment, believes that providing such Continental
Service or Continental Services could reasonably result in
significant tax disadvantages for Continental, could
reasonably conflict with any applicable law, regulation,
ordinance or policies (provided that such policies apply
generally to substantially all of Continental's subsidiaries
receiving similar services from Continental) or could
reasonably result in a conflict of interest; or
(e) Violation. Providing such Continental Service or Continental
Services would violate any agreement with any third party
provided, however, that Continental shall not and shall cause
its subsidiaries not to enter into any agreement which is
intended to frustrate the provisions of this Agreement. The
Continental Services to be provided by Continental hereunder
may be provided by employees of Continental or any of its
subsidiaries, or by third parties selected by Continental.
(f) Notwithstanding anything herein to the contrary, PSF may, in
its sole discretion, decline to provide any PSF Service or PSF
Services hereunder if:
iv. Availability. Facilities or personnel of PSF are not
reasonably available to provide such PSF Service or
PSF Services on a non-discriminatory basis;
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v. Interference. Providing such PSF Service or PSF
Services would interfere (other than in an
insignificant manner) with PSF's conduct of its
businesses;
vi. Disadvantage or Conflict. PSF, in its good faith
reasonable judgment, believes that providing such PSF
Service or PSF Services could reasonably result in
significant tax disadvantages for PSF, could
reasonably conflict with any applicable law,
regulation, ordinance or policies (provided that such
policies apply generally to substantially all of
PSF's subsidiaries receiving similar services from
PSF) or could reasonably result in a conflict of
interest; or
vii. Violation. Providing such PSF Service or PSF Services
would violate any agreement with any third party
provided, however, that PSF shall not and shall cause
its subsidiaries not to enter into any agreement
which is intended to frustrate the provisions of this
Agreement. The PSF Services to be provided by PSF
hereunder may be provided by employees of PSF or any
of its subsidiaries, or by third parties selected by
PSF.
4. Term.
The term of this Agreement commences on the Effective Date and shall
terminate upon the earliest to occur of: (a) the date upon which Continental no
longer beneficially owns directly or indirectly any interest in the capital
stock of PSF; and (b) the mutual written consent of the parties. Upon
termination of this Agreement, each party shall promptly pay any and all accrued
but unpaid fees pursuant to Section 5 hereof.
5. Price.
(a) Continental Services. The fee for Continental Services shall
be the sum of $800,000 annually plus reasonable travel
expenses, payable in equal monthly installments. The fee shall
be reviewed and amended or confirmed in writing on or before
March 31st of each year during the term of this Agreement or
otherwise amended upon mutual written agreement of the
parties. In addition, the payroll, benefits and payroll taxes
relative to the Transferred Hourly Employees and the
Transferred Salaried Employees shall be priced at actual cost
paid or incurred by Continental.
(b) PSF Services. The fee for PSF Services shall be $.75 per cwt
of hogs marketed, plus reasonable travel expenses, payable on
a monthly basis. The fee shall be reviewed and amended or
confirmed in writing on or before March 31st of each year
during the term of this Agreement or otherwise amended upon
mutual written agreement of the parties.
(c) Third Party Services. Continental Services which are provided
by third parties shall be invoiced at actual cost.
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6. Billing and Payment.
(a) Continental Billing. Continental shall invoice PSF for
Continental Services rendered by Continental to PSF on a
monthly basis in advance of the first day of each month.
Continental Services rendered by a third party shall be
invoiced to PSF upon or, if reasonably possible, prior to
payment by Continental to such third party.
(b) PSF Billing. PSF shall invoice Continental for PSF Services
rendered by PSF to Continental on a monthly basis in advance
of the first day of each month.
(c) Payment Due. Invoices shall be due and payable within 30 days
of the date of such invoice, provided that PSF shall pay
Continental in full for the amount of any third party costs
within ten days of the date of such invoice.
7. Limitation on Authority.
(a) Continental shall have no responsibility to provide any
services to PSF which are not expressly set forth in this
Agreement, unless subsequently agreed in writing by the
parties hereto. Further, Continental shall have no
responsibility for compliance by PSF or any of its facilities
or equipment with the requirements of any ordinances, laws,
rules or regulations (including those relating to the disposal
of solid, liquid and gaseous wastes) of the city, county,
state or federal government, or any public authority or
official thereof having jurisdiction over it, except to notify
PSF promptly, or to forward to PSF promptly, any complaints,
warnings, or notices of summons received by Continental
relating to such matters. PSF represents, that, to the best of
its knowledge, that PSF, its facilities and equipment, comply
with all such requirements, and authorizes Continental to
disclose the ownership and assets of PSF to any such
officials. PSF shall indemnify and hold harmless Continental,
its affiliates, successors, assigns, agents, representatives,
and employees from all loss, cost, expense and liability
whatsoever which may be imposed on them or any of them by
reason of any present or future violation or alleged violation
of such laws, ordinances, rules or regulations;
(b) In the event it is alleged or charged that PSF, its facilities
or equipment or any act or failure to act by PSF, fails to
comply with, or is in violation of, any of the requirements of
any constitutional provision, statute, ordinance, law or
regulation of any governmental body or any order or ruling of
any public authority or official thereof having or claiming to
have jurisdiction thereover, and Continental in its sole and
absolute discretion considers that the action or position of
PSF with respect thereto may result in damage or liability to
Continental, Continental shall have the right to cancel this
Agreement at any time by written notice to PSF of its election
so to do, which cancellation shall be effective upon the
service of such notice. Such cancellation shall not release
the indemnities of PSF set forth in this Agreement and shall
not terminate any liability or obligation of PSF to
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Continental for any payment, reimbursement or other sum of
money then due and payable to Continental hereunder;
(c) PSF shall have no responsibility to provide any services to
Continental which are not expressly set forth in this
Agreement, unless subsequently agreed in writing by the
parties hereto. Specifically, PSF shall have no responsibility
for compliance by Continental or any of its facilities or
equipment with the requirements of any ordinances, laws, rules
or regulations (including those relating to the disposal of
solid, liquid and gaseous wastes) of the city, county, state
or federal government, or any public authority or official
thereof having jurisdiction over it, except to notify
Continental promptly, or to forward to Continental promptly,
any complaints, warnings or notices of summons received by PSF
relating to such matters. Continental represents, to the best
of its knowledge, that Continental, its facilities and
equipment, comply with all such requirements, and authorizes
PSF to disclose the ownership and assets of Continental to any
such officials. Continental shall indemnify and hold harmless
PSF, its affiliates, successors, assigns, agents,
representatives, and employees from all loss, cost, expense
and liability whatsoever which may be imposed on them or any
of them by reason of any present or future violation or
alleged violation of such laws, ordinances, rules or
regulations; and
(d) In the event it is alleged or charged that Continental, its
facilities or equipment or any act or failure to act by
Continental, fails to comply with, or is in violation of, any
of the requirements of any constitutional provision, statute,
ordinance, law or regulation of any governmental body or any
order or ruling of any public authority or official thereof
having or claiming to have jurisdiction thereover, and PSF in
its sole and absolute discretion considers that the action or
position of Continental with respect thereto may result in
damage or liability to PSF, PSF shall have the right to cancel
this Agreement at any time by written notice to Continental of
its election so to do, which cancellation shall be effective
upon the service of such notice. Such cancellation shall not
release the indemnities of Continental set forth in this
Agreement and shall not terminate any liability or obligation
of Continental to PSF for any payment, reimbursement or other
sum of money then due and payable to PSF hereunder.
8. Limitation on Remedies.
IN NO EVENT SHALL CONTINENTAL OR PSF, THEIR RESPECTIVE SUBSIDIARIES AND
AFFILIATES (INCLUDING THEIR DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS) BE LIABLE
FOR ANY DIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION,
LOSS OF ANTICIPATED PROFITS, IN CONNECTION WITH OR ARISING OUT OF THE SERVICES
PROVIDED UNDER OR RELATING TO THIS AGREEMENT. Notwithstanding the forum in which
any claim or action may be brought or asserted, each party's liability for acts
or omissions arising from or relating to its obligation to provide the services
under this Agreement shall be limited to repayment, as general damages, of
payments received for services rendered pursuant to this Agreement unless such
act or omission resulted from the gross negligence or willful
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misconduct by such party, in which case liability shall be limited to the amount
reasonably necessary to procure a substitute provider of such service or
services. For purposes of this Section, "services" shall be deemed to refer
interchangeably to Continental Services or PSF Services.
9. Indemnification.
(a) PSF shall hold harmless and indemnify Continental (and its
directors, officers, employees, stockholders, successors and
assigns) from and against any and all claims, costs,
liabilities, losses, damages, deficiencies, judgments,
assessments, fines, settlements, costs and expenses (including
interest, penalties and fees, expenses and disbursements of
attorneys, experts, personnel and consultants incurred by any
such indemnified party in any action or proceeding between PSF
and such indemnified party and any third party, or otherwise
("Losses")) occasioned by, arising out of, based upon or
otherwise in respect or in connection with this Agreement or
the performance by PSF of its obligations hereunder, including
without limitation employment related claims, including
workers compensation and Title VII claims, and any Loss
resulting from any accident or other occurrence that causes a
Loss, personal injury or death to any person or property;
provided, that in the event a final, non-appealable judgment
by a court of competent jurisdiction establishes that such a
Loss was caused by the intentional misconduct or gross
negligence of such indemnified party, then such indemnified
party shall reimburse PSF for any indemnification amounts
received by it for such Loss pursuant to this Section 9(a).
(b) Continental shall hold harmless and indemnify PSF (and its
directors, officers, employees, stockholders, successors and
assigns) from and against any and all claims, costs,
liabilities, losses, damages, deficiencies, judgments,
assessments, fines, settlements, costs and expenses (including
interest, penalties and fees, expenses and disbursements of
attorneys, experts, personnel and consultants incurred by any
such indemnified party in any action or proceeding between
Continental and such indemnified party and any third party, or
otherwise ("Losses")) occasioned by, arising out of, based
upon or otherwise in respect or in connection with this
Agreement or the performance by Continental of its obligations
hereunder, including without limitation employment related
claims, including workers compensation and Title VII claims,
and any Loss resulting from any accident or other occurrence
that causes a Loss, personal injury or death to any person or
property; provided, that in the event a final, non-appealable
judgment by a court of competent jurisdiction establishes that
such a Loss was caused by the intentional misconduct or gross
negligence of such indemnified party, then such indemnified
party shall reimburse Continental for any indemnification
amounts received by it for such Loss pursuant to this Section
9(b).
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10. General Provisions.
(a) Notices. All communications to any party hereunder shall be in
writing and shall be delivered in person or sent by facsimile,
telegram, telex, by registered or certified mail (postage
prepaid, return receipt requested) or by reputable overnight
courier to the respective parties at the following addresses
(or at such other address for a party as shall be specified in
a notice given in accordance with this Section 10) (and shall
be deemed to have been given as of the date so delivered or
sent):
If to PSF, to:
Premium Standard Farms, Inc.
000 X. 0xx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxx
If to Continental, to:
Continental Grain Company
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
(b) Definitions. As used herein, unless the context otherwise
requires,
"Subsidiaries" means, as to any specified person, any
corporation or other entity of which at least a majority of
the securities or other ownership interests having ordinary
voting power for the election of directors or other persons
performing similar functions are at the time owned directly or
indirectly by such specified person.
"Travel Expenses" means reasonable costs of travel for
business related for the providers of each of the Continental
Services and the PSF Services which includes economy airfare,
lodging, local travel, meals and miscellaneous expenses as
would be approved for such individual's business travel
pursuant to the travel policies of its employer.
(c) Force Majeure. A party shall not be deemed to have materially
breached this Agreement to the extent that performance of its
obligations or attempts to cure any breach are delayed or
prevented by reason of any act of God, fire, natural disaster,
accident, act of government, shortage of materials or
supplies, or any other cause beyond the reasonable control of
such party (a "Force Majeure"); provided that the party whose
performance is delayed or prevented promptly notifies the
other party of the Force Majeure cause of such prevention or
delay; and provided further, that if the prevention or delay
of such party's performance of this Agreement continues for
more than sixty (60) days, then the other party may terminate
this Agreement by giving written notice of termination.
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(d) Independent Contractors. The parties shall operate as, and
have the status of, independent contractors and shall not act
as or be an agent, partner, co-venturer or employee of the
other party. Neither party shall have any right or authority
to assume or create any obligations or to make any
representations or warranties on behalf of any other party,
whether express or implied, or to bind the other party in any
respect whatsoever.
(e) Amendment and Waiver. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing
by both of the parties. No waiver of this Agreement or of any
provision hereof shall be effective unless in writing and
signed by the party against whom such waiver is sought to be
enforced. Any waiver of any right or default hereunder shall
be effective only in the instance given and shall not operate
as or imply a waiver of any other or similar right or default
on any subsequent occasion.
(f) Assignment. Except as permitted under Section 3(d), neither
party shall be entitled to assign its rights or delegate its
obligations under this Agreement to any third party without
the prior written consent of the other party. Except as
permitted under Section 3(a)(iv) or 3(b)(iv), any attempted or
purported assignment or delegation without such required
consent shall be void. Subject to the foregoing, this
Agreement shall be binding upon and shall inure to the benefit
of the parties and their respective permitted successors and
assigns.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New
York, without regard to principles of conflicts of laws.
(h) Severability. If any provision of this Agreement (or portion
thereof) is determined by a court of competent jurisdiction to
be invalid, illegal, or otherwise unenforceable, then such
provision shall, to the extent permitted by the court, not be
voided but shall instead be construed to give effect to its
intent to the maximum extent permissible under applicable law
and the remainder of this Agreement shall remain in full force
and effect according to its terms.
(i) Sections and Headings. The headings contained herein are for
the convenience of reference only and are not intended to
define, limit, expand, or describe the scope or intent of any
clause or provision of this Agreement.
(j) Entire Agreement. This Agreement, together with all schedules
hereto, constitutes the entire agreement and understanding of
the parties relating to the subject matter hereof and
supersedes all prior negotiations and understandings among the
parties, both oral and written, regarding such subject matter.
(k) Counterparts. This Agreement may be signed in counterparts and
all signed copies of this Agreement shall together constitute
one original of this Agreement.
(l) No Third Party Beneficiaries. Nothing contained in this
Agreement, express or implied, is intended to or shall confer
upon anyone other than the parties hereto
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(and their permitted successors and assigns and persons
entitled to the benefit of Section 9) any right, benefit or
remedy of any nature whatsoever under or by reason of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement effective as of the day and year first written above.
CONTINENTAL GRAIN COMPANY
By: /s/ Xxxxxxx Xxxxxxxxx
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Its: Senior Vice President
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PREMIUM STANDARD FARMS, INC.
By: /s/ Xxxx Xxxxx
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Its: CEO
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