EXHIBIT 10.71
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT, ("Agreement") is entered into as of this
26th day of DECEMBER, 1997, by and between BIG 4 FARMING, LLC ("Farming") and
CECELIA PACKING CORPORATION ("Cecelia"), with reference to the following facts:.
WHEREAS, Farming has entered into a series of farming contracts (the "Farming
Contracts") with respect to the farming of certain property located in Kern
County commonly known as the Big 4 Ranch (the "Property") for the benefit of
three general partnerships (the "Partnerships") each of which owns fee title to
a separate and distinct portion of such Property (each of such separate
properties being referred to herein as without differentiation as a "Partnership
Property");
WHEREAS, Cecelia is experienced in the management of farming operations with
respect to properties similar to the Property, and has an existing management
and bookkeeping staff with the experience, capability and resources to assist
Farming with respect to the management and bookkeeping support required in order
for Farming to satisfy its obligations under the Farming Contracts;
WHEREAS, Farming desires Cecelia to perform such services and Cecelia is willing
to perform such services,
NOW THEREFORE, the parties hereto do hereby agree as follows:
1. Services:
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1.1. Management Consulting Services: Cecelia will provide, as reasonably
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requested by Farming from time to time, management consulting with respect to
the following matters:
a Cultural practices;
b. Selection of, negotiations with and evaluation of the performance
of packing houses for the handling of fruit under the Farming
Contracts;
c. Cultivation and improvement of open portions of the Property;
d. Hiring and evaluation of employees, consultants and contractors;
e. Apportionment of crops between domestic and export markets; and
f. Such other matters as the parties may from time to time agree.
Such services will be performed by experienced individuals reasonably
acceptable to Farming, including, at least initially, Mr. David R. Smith and
Mr. James J. Cotter; provided that it is understood that the unavailability of
such individuals will not be a breach of this Agreement, so long as their
services are replaced with the services of one or more similarly qualified
individuals.
1.2. Bookkeeping Services: Cecelia will provide, as reasonably requested by
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Farming from time to time, the following bookkeeping services:
a. Administration of such bank accounts as may be established from
time to time by Farming for the benefit of any one or more of the
Partnerships (which accounts will be in the name of and owned by
such Partnership(s)) including (i) the deposit therein of all
checks and other items drawn to the order of the Partnership(s)
having an ownership interest in such account, (ii) the drafting
and delivery of such checks and other items as may be authorized
from time to time by a duly designated agent of Farming, and
(iii) the monthly reconciliation of all such accounts;
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b. Administration of such bank accounts as may be established from
time to time by Farming with respect to the services provided by
Farming under the Farming Contracts, including (i) the deposit
there in of all checks and other items specified from time to
time, (ii) the drafting and delivery of all checks and other
items as may be authorized from time to time and (iii) the
monthly reconciliation of all such accounts;
c. Maintenance of books and records on a Partnership Property by
Partnership Property basis, showing all receipts, disbursements
and commitments with respect to such Partnership Properties, and
the retention of all such books and records for a period of six
years or such lesser period of time as Farming may approve;
d. Cooperate with and assist Farming and its consultants and
advisors in the preparation of monthly, quarterly and annual
financial reports with respect to Farming and each of the
Partnership Properties;
e. Cooperate with and assist Farming and the auditors from time to
time of Farming and/or the Partnerships with respect to the
annual audit of Farming and of each of the Partnership
Properties;
f. Cooperate with Farming and/or such tax advisors as may be
retained from time to time by Farming and/or the Partnerships
with respect to the preparation of tax returns pertaining to
operations on the Partnership Properties, including, without
limitation, those pertaining to the calculation and payment of
estimated taxes;
g. Administration of Farming payroll, withholding and workers
compensation responsibilities; and
h. The preparation for review by Farming and filing of such
governmental and agency reports as may be required from time to
time with respect to the farming of the Partnership Properties,
including, without limitation, those pertaining to environmental,
crop, labor and/or immigration matters.
1.3 Purchasing Services: Cecelia will provide purchasing and buying
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services to Farming. Whenever possible said services shall be employed to
provide Farming with the economics of scale that result from Cecelia purchasing
supplies and equipment for Farming as part of purchases by Cecelia for other
clients or Cecelia's own operations and the benefit of Cecelia's experience and
relationships in the marketplace. If Cecelia receives a discount or rebate that
is not reflected on the invoice for items purchased for Farming, Cecelia shall
disclose to Farming and credit Farming for such rebates and discounts. It is
the intent of the parties that Farming enjoy the lowest prices and best terms
that are available to Cecelia.
1.4. Certain Disbursements: Farming will provide to Cecelia from time to
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time a list of periodic disbursements, which list will be approved and executed
by each of the relevant Partnerships (the "Scheduled Disbursements"). Cecelia
will be authorized and obligated to cause each of such Scheduled Disbursements
to be timely made from funds available in the bank account to which such
Scheduled Disbursements List pertains. Scheduled Disbursements will include
payments such as, by way of example a) insurance, b) mortgage payments, c)
utilities, d) equipment lease payments, and e) payroll. If there are
insufficient funds in the bank account, or if Cecelia believes that there are
likely to be insufficient funds in the relevant bank account, it will give
prompt notice of such fact to Farming. Under no circumstances will Cecelia be
under any obligation to advance any funds to cover such insufficiency or to
permit the timely payment of Scheduled Disbursements or any other amounts.
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2. Nature of Relationship: The services hereunder are being performed on an
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independent contractor basis. Farming acknowledges and agrees that Cecelia is
not a fiduciary to Farming or to any of the Partnerships or to any of the
partners of any of the Partnerships. No partnership or joint venture
relationship exists between Cecelia and Farming, or between Cecelia and any of
the Partnerships or any of the partners of any of the Partnerships.
3. Reimbursement and Compensation:
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3.1. Reimbursement of Certain Costs and Expenses: Farming will promptly,
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and in any event within 30 days of receipt of invoice from Cecelia, reimburse
Cecelia for its out-of-pocket costs in providing services under this Agreement.
Where a precise apportionment is not possible, a representative of each of
Farming and Cecelia will meet and confer periodically to determine a reasonable
apportionment. Reimbursable costs will not include, however, general overhead
items such as employee salaries, rent and utilities (other than telephone and
other communications type utilities), compensation for such items being included
within the fee specified below.
3.2. Fee: In consideration of its management consulting services and
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bookkeeping services, Cecelia will be entitled to a monthly fee of $6,000,
payable in advance commencing January 1, 1998, provided that such fee will also
include a prorated amount for any services provided prior to January 1, 1998, if
any. The parties agree that the amount of acreage initially subject to this
Agreement is 940 acres. The amount of acreage may increase or decrease each
year, as determined by Farming, and as open land is, over time, improved with
additional citrus trees.
3.3. Agreement Interest Rate: Any payment not timely made will accrue
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interest at that fluctuating rate equal from time to time to the prime rate as
published in the Wall Street Journal (or such other equivalent published index
as the parties may from time to time select) plus 200 basis points, or the
maximum amount permitted by law, whichever is less.
4. Term:
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This contract will have an initial term of 2 years and thereafter will
continue on a year to year basis unless terminated by either party on not less
than 6 months notice. Either party may terminate this Agreement on 30 days
notice for default, provided that the party alleged to have been in default does
not cure such default within such period.
5. Indemnification:
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Farming agrees to indemnify Cecelia, its officers, directors, employees and
contractors, against any and all liabilities arising out of or relating to this
Agreement or from the performance by Cecelia and/or such other persons, of
services under this Agreement, except where such liability was the direct and
proximate result of willful misconduct or gross negligence on the part of the
person seeking such indemnity. This indemnity obligation includes, without
limitation, the obligation to advance all reasonable attorneys fees and other
costs incurred by any person indemnified under this Agreement in defending any
action or proceeding resulting from the performance of services under this
Agreement and/or in investigation of any claim by any person threatening any
such action or proceeding; provided , however, that such indemnified party will
be obligated to repay such advances, together with interest at the Agreement
Interest Rate, in the event that a court of competent jurisdiction ultimately
determines in a final and unappealable judgment that such liability was the
direct and proximate result of willful misconduct or gross negligence on the
part of such person.
6. Packing Services:
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In the event that Farming should select Cecelia to provide packing and
marketing services, such services will be provided to Farming and the
Partnerships on a most favored nations basis.
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7. Miscellaneous:
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7.1. Governing Law: Venue: This Agreement is to be governed by the
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laws of the State of California as such laws pertain to contracts made and to be
performed entirely within such state. Any action brought under this Agreement
may be brought only in the Federal District Court or the California Superior (or
Municipal) Court sitting in Los Angeles County, California. Each of the parties
hereto consent to the jurisdiction and venue of such courts.
7.2. Notices: Any notice to be given under this Agreement must be in
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writing, and will be deemed given when actually delivered, in the case of
Cecelia, to the President or any Vice President or Secretary of that company,
and in the case of Farming, to any member of the management committee of such
limited liability company.
7.3. No Third Party Beneficiaries: There are no third party
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beneficiaries to this Agreement. The indemnity provisions set forth hereinabove
may be asserted by individuals other than Cecelia only with the written approval
of Cecelia, which may be given or withheld in the absolute and sole discretion
of Cecelia.
7.4. Amendment: This Agreement can only be amended by a writing making
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specific reference to this Agreement and signed by both of the parties hereto.
7.5. Successors and Assigns: This Agreement will be binding upon any
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corporate successor to Cecelia and/or Farming, as the case may be; provided,
however, that the benefits and burdens of this Agreement can only be assigned in
connection with a merger or sale of all or substantially all of the assets of
the transferor (and then only provided that the transferee agrees in writing
addressed to the nontransfering party hereunder to be bound by this Agreement)
or otherwise with the written approval of the other party to this Agreement,
such approval not to be unreasonably withheld or delayed. Upon such transfer
and agreement of such approval, the obligations of the transferor hereunder will
terminate.
7.6. Interpretation: This Agreement is to be interpreted in an even
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handed manner and without reference to any rule of construction providing for
interpretation for or against the drafter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first set forth above.
BIG 4 FARMING, LLC CECELIA PACKING CORPORATION
a California limited liability company
/s/ S. Craig Tompkins /s/ Margaret Cotter
By:_________________________ By__________________________________
S. Craig Tompkins Margaret Cotter
Title: President Title: Vice President
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