Exhibit 10.36
COLORADO BREEDING FARM AGREEMENT
THIS AGREEMENT is made and entered into this 11 day of April, 1997 by and
between Alliance Farms Cooperative Association, of 3315 North Oak Trafficway,
Kansas City, Missouri 64116, (hereinafter "Alliance"); G & G Pork Producers,
LLC, (hereinafter "Producer"); and Farmland Industries, Inc. of 3315 North Oak
Trafficway, Kansas City, Missouri 64116 (hereinafter "Farmland").
WHEREAS, Producer has facilities suitable for the feeding of swine (the
"Facilities"),
WHEREAS, Farmland and Producer have entered into a Colorado Grow/Finish
Agreement, dated January 4, 1993, for the care and feeding of swine
("Grow/Finish Agreement"),
WHEREAS, Alliance desires to contract for the use of Producer's Facilities
for the feeding and care by Alliance of development gilts owned by Alliance.
NOW, THEREFORE, the parties agree as follows:
1. ACCESS. Producer specifically agrees that at all times during the term of
this Agreement, Alliance, its agents, employees and representatives shall have
the absolute and irrevocable right to enter upon the Facilities to conduct all
activities associated with the care and management of gilts. Producer further
agrees that Producer shall restrict the access of Producer, its agents,
employees and representatives to the Facilities to conduct only those limited
activities directly required by this Agreement. All parties agree that this
contract will not restrict access of Producer, its agents, employees and
representatives for the purposes of conducting activities on the Facilities as
it relates to the research, construction, management and maintenance of the
structures on the Facilities, and waste management system.
2. MANAGEMENT RESPONSIBILITIES. Alliance shall arrange for the delivery of
gilts to the Facilities at Alliance's expense. The gilts shall be delivered in
such numbers and in such intervals as determined by Alliance in its sole
discretion (each such delivery shall hereinafter be referred to as a "Lot").
Alliance shall be solely responsible for the daily management and care of the
gilts. Alliance shall provide and deliver to the Facilities all feed, grain,
proteins, minerals, and medications (hereinafter collectively referred to as
"Supplies"). All Supplies remain the property of Alliance and any Supplies
remaining after the gilts have been removed from the Facilities may be picked up
by Alliance. Alliance shall be responsible for the transfer fees of utilities
from Producer to Alliance and back from Alliance to Producer. Alliance shall be
responsible for the provision and payment of all utilities and labor necessary
for the operation of the Facilities. Such payment for utilities shall be
mutually determined in good faith by Alliance and Producer.
3. PRODUCER RESPONSIBILITIES. Producer shall be responsible for the following:
a) Disposal of waste as required by all applicable governmental
regulations and good management practices. This may include all assistance as
required by Agents of Producer, for the purposes of conducting research studies
regarding the facilities and waste management system.
b) Providing Alliance unrestricted access to the Facilities to conduct
activities associated with this Agreement.
c) Providing power washer for cleaning of Facilities.
d) Power washing and disinfecting the inside of the Facilities and
feeders prior to admittance of the first Lot.
e) At the request of Alliance, Producer agrees to assist in maintaining
access to facilities on the real property owned by Producer which does not
include county or state roads.
f) Producer shall not be responsible for maintenance of the Facilities
except that Producer will maintain the structural and mechanical systems,
provided that Alliance shall be responsible for repairing any structural or
mechanical failures due to their acts and neglect.
4. SUSPENSION OF GROW/FINISH AGREEMENT. During the term or earlier termination
of this Agreement, Farmland and Producer agree that:
a) all of Farmland's responsibilities to Producer, including, but not
limited to the obligation to make payment to Producer, under the Grow/Finish
Agreement shall be suspended;
b) all of Producer's performance obligations to Farmland under the
Grow/Finish Agreement shall be suspended;
c) Farmland shall not be required to pay the Minimum Annual Payment (as
said term is defined in the Grow/Finish Agreement) or any portion thereof, as
required under the Grow/Finish Agreement for any period attributable to the
term in which this Agreement is in effect;
d) a default or breach by Alliance of its responsibilities and
obligations under this Agreement shall not constitute a default or breach under
the Grow/Finish Agreement; and
e) a default or breach by Producer of its responsibilities and
obligations under this Agreement shall NOT constitute a default or breach under
the Grow/Finish Agreement.
The foregoing rights and responsibilities of Farmland and Producer as well as
all provisions provided under the Grow/Finish Agreement shall automatically
resume upon the termination of this Agreement, and the term of the Grow/Finish
Agreement shall be extended for a period of time equal to the Term of this
Agreement.
5. INSURANCE.
a) Alliance shall maintain at Alliance's expense, a general liability
insurance policy providing a minimum of $1,000,000 bodily injury and replacement
value property damage coverage for the Facilities and shall provide Producer
with a certificate of insurance evidencing such coverage.
b) Producer shall maintain, at Producer's expense, a general liability
insurance policy providing a minimum of $500,000 replacement value property
damage and bodily injury coverage as it relates to any injury to Producer and
its agents and for damage to Facilities due to Producer's actions, and Producer
shall provide Alliance with a certificate of insurance evidencing such coverage.
6. ALTERATIONS, ADDITIONS AND IMPROVEMENTS TO PROPERTY. Alliance may make such
alterations, additions, or improvements in such parts of the Facilities as
Alliance deems necessary for its purposes, provided, however, written consent
of Producer is first obtained. Any fixtures erected in or attached to premises
by Alliance may be removed by Alliance at the termination of this Agreement,
provided (i) Alliance shall not then be in default in the performance of any of
its agreements herein, (ii) that such removal shall not permanently injure the
building, and (iii) that removal shall be made before the expiration of the Term
of this Agreement.
7. PAYMENT TO PRODUCER. Alliance shall pay Producer, subject to Producer's
compliance with the terms and conditions of this Agreement, a monthly payment
determined by using the following payment calculation:
Monthly Payment = $32.55 x Pig Spaces
12
Such payments shall be paid to Producer on or before the 14th day of each month.
Failure to provide timely payment shall result in a late fee equivalent to the
accrual of interest on the monthly payment due at the rate of 1.5% per month
until paid, to be assessed to the amount due and payable by Alliance. Producer
and Alliance acknowledge and agree that for the Term (as defined herein),
Producer shall look solely to Alliance for any and all payments due hereunder;
provided, however, the parties hereto agree that any partial calendar month of
the Term shall be prorated according to the actual number of days said pig
spaces are available for use by Alliance. This Agreement is for four (4) units
of Nine Hundred (900) pig spaces each.
8. TERM AND TERMINATION.
a) This Agreement shall commence on April 14, 1997 and shall remain in
full force and effect, unless terminated earlier according to the terms hereof,
for a period of 14 months thereafter (the "Initial Term").
b) Possession and payment on the first two (2) units shall commence April
14, 1997. Possession and payment on the remaining two (2) units shall commence
April 21, 1997.
c) It is expressly understood that Producer may inform Alliance, by
written notice made to Alliance at least 90 days prior to the end of the Initial
Term, that Producer chooses to end this Agreement and resume the Grow/Finish
Agreement upon completion of the Initial Term. In such event, it shall be
Alliance's duty to inform Farmland that the Grow/Finish Agreement will resume at
the completion of the Initial Term. Otherwise, after the expiration of the
Initial Term, and with the consent of Farmland, this Agreement shall continue
thereafter on a month to month basis, upon the same terms and condition
provided herein, except that Alliance may terminate this Agreement at any time
after the tenth month of the Initial Term has expired, upon thirty (30) days
prior written notice (the Initial Term together with any subsequent extension
thereof shall hereinafter be defined as the "Term").
d) Upon termination of this Agreement, Alliance agrees to power wash and
disinfect the inside of the Facilities and feeders prior to admittance of the
first Lot under the Grow/Finish Agreement.
e) Upon termination of this Agreement and automatic resumption of the
Grow/Finish Agreement, Alliance promises that should Farmland fail to repopulate
the facility within seven (7) days, Alliance will continue to pay as
compensation to Producer, an amount equal to that which is contemplated under
paragraph 7 hereinabove. However, payment by Alliance contemplated under this
paragraph shall not apply if (i) this contract is terminated due to default by
Producer, or (ii) if there is a casualty of the Facilities.
9. EVENTS OF DEFAULT. Any party to this Agreement shall be in default upon the
happening of any of the following events:
a) Actual or attempted levy, seizure or attachment of any of the swine or
any of Alliance's property delivered to the Facilities or otherwise to Producer;
b) Insolvency or bankruptcy of any party;
c) The happening of any action which is not in conformance with industry
standards, which endangers or impairs the swine, Alliance's property or
Producer's property;
d) failure of any party to perform its obligations under this Agreement;
or
e) Any representation or warranty made by any party or on behalf of any
party which proves to be incorrect or otherwise misleading.
10. ACTION BY PARTIES UPON BREACH. This Agreement may be terminated by any
party in the event of any default by the other party(s), upon written notice by
the party to the Defaulting party of such default, and the default remains
uncured for a period of ten (10) days (or such longer period as required by law)
from the date of the notice of such default.
Notwithstanding the provisions of this Section, Alliance shall have the
right to immediately remove the swine, if, in its sole judgment, such removal is
reasonably necessary to protect the swine or Alliance's interest therein from
imminent danger, and Alliance shall have the right to terminate this Agreement
pursuant to paragraph 9 hereinabove.
11. CONDITION OF PREMISES UPON TERMINATION. Alliance agrees to give up
possession of the Facilities upon the expiration of the Term in as good as
condition as when the Term began, normal wear and tear, loss by fire, and other
casualty or inevitable accident excepted. Alliance agrees to pay for any damage
to the Facilities in violation of this provision.
12. WAIVER OF DEFAULT. No waiver by Alliance of any default shall operate as a
waiver of any other default or of the same default on a future occasion.
13. INDEPENDENT CONTRACTOR. The relationship created by this Agreement is that
of independent contractor and nothing contained herein is intended or shall be
construed as creating any agency, employer-employee or other relationship.
14. FACILITIES LOCATION. The Facilities are located at the same location or
locations as is designated in the Grow/Finish Agreement.
15. INDEMNIFICATION. Except as provided in paragraph 11 herein, Alliance
agrees to indemnify and hold Producer harmless from and against all loss,
liability, claims, fines, expenses, damage, costs and demands for loss or damage
arising out of or in connection with the use, acts and negligence of Alliance,
its employees and agents upon the Facilities. Alliance agrees to pay all
expenses, including costs and reasonable attorney's fees, which may be incurred
by Producer in defending any action for damages brought against Producer and
arising out of said use, acts and negligence of Alliance upon the Facilities.
16. COMPLIANCE WITH LAW. All parties agree to materially comply with the laws
of the United States, the State of Colorado, and County of Yuma, Colorado.
Additionally, should it become necessary now or in the future, that any type of
permit is required by law, for the activities directly or indirectly related to
the performance contemplated under paragraphs 2 and 3 of this Agreement, then
the party responsible for said performance agrees to pay costs regarding the
acquisition of said permits.
17. OWNERSHIP. Producer understands and agrees that all swine delivered to the
Facilities during the term of this Agreement are the property of Alliance, and
the swine and all increase thereof, if any, shall be and at all times remain the
property of Alliance. Producer shall have no ownership interest of any kind in
any of the swine.
18. NOTICE. Unless otherwise provided in this Agreement, any notice, tender,
or delivery to be given by either party to the other may be effected by personal
delivery, or by registered or certified mail, postage prepaid, and shall be
deemed delivered when mailed. Any mailed notice made to Producer shall be made
as follows: G & G Pork Producers, LLC, Christopher Glaze, registered agent, 514
South Ash, Yuma, Colorado 80759. Any mailed notice made to Alliance shall be
made as follows: 3315 North Oak Trafficway, Department 189, Kansas City,
Missouri 64166. Any mailed notice made to Farmland shall be made as follows:
3315 North Oak Trafficway, Department 189, Kansas City, Missouri 64116. Each
party may designate a new mailing address by written notice to the other party.
19. ASSIGNMENT AND MODIFICATION. This Agreement is binding on the heirs,
executors, and assigns of the parties. This Agreement cannot be changed,
modified or assigned without the prior written consent of both parties.
20. NO JOINT VENTURE. Nothing contained herein shall create a partnership, nor
joint venture between Producer and Alliance, Producer and Farmland, Alliance
and Farmland or any combination thereof.
21. HEADINGS. The headings used in this Agreement are inserted for convenience
only and constitute neither a portion of this Agreement nor in any manner affect
the provisions or interpretations of this Agreement.
22. CHOICE OF LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Colorado without reference to its
conflict of law rules.
23. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
and judgment upon the award rendered by the Arbitrator(s) may be entered in any
Court having jurisdiction thereof.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
PRODUCER
By: Christopher E. Glaze
Name: Christopher E. Glaze
Title: Member
514 S. Ash
(Address)
(970) 848-2998
(Telephone No.)
###-##-####
(Social Security No.)
ALLIANCE FARMS COOPERATIVE ASSOCIATION
By: /s/ Wayne N. Snyder
Name: Wayne N. Snyder
Title: President & Chairman
FARMLAND INDUSTRIES, INC.
By: /s/ Gary E. Evans
Name: Gary E. Evans
Title: Executive Vice President