Exhibit 10.37
COLORADO BREEDING FARM AGREEMENT
THIS AGREEMENT is made and entered into as of this 21 day of April, 1997 by
and between Alliance Farms Cooperative Association, of 3315 North Oak
Trafficway, Kansas City, Missouri 64116, (hereinafter "Alliance"); Triple R of
Yuma, Colorado (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 8/4/92, 4/4/94, 7/1/96 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 lands constituting
Producer's farm, the Facilities and any other designated swine production area
to conduct all activities associated with the care and management of Alliance's
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 required by this Agreement.
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 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) Maintenance of the Facilities and all equipment located therein
in proper functioning order.
b) Disposal of waste as required by all applicable governmental
regulations and good management practices.
c) Obtaining and maintaining all required governmental permits necessary
to own the Facilities and to comply with Producer's responsibilities
and obligations as detailed herein.
d) Maintaining all weather service roads to the Facilities in good
condition, free of any overhanging wires or other obstacles, with
adequate space for turning swine transport and service vehicles.
Failure to so maintain service roads and turning areas will result in
Producer's liability for any towing charges or other damages incurred
by Alliance.
e) Implementation of rodent and fly control procedures around the
Facilities.
f) Providing power washer for cleaning of the Facilities.
g) Power washing and disinfecting the inside of the Facilities and
feeders prior to admittance of the first Lot.
h) Keeping dogs, cats and other domestic animals out of the Facilities.
i) Providing Alliance unrestricted access to the Facilities to conduct
activities associated with this Agreement.
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 as to the care and feeding of swine provided by
or on behalf of Farmland 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.
e) a default or breach by Producer of its responsibilities and
obligations under this Agreement shall constitute a default or breach
under the Grow/Finish Agreement.
The foregoing rights and responsibilities of Farmland and Producer under the
Grow/Finish Agreement shall resume upon the termination of this Agreement;
provided, however, this Agreement shall act to extend the original term of the
Grow/Finish Agreement for the length of this Agreement.
5. INSURANCE. Producer shall maintain, at Producer's expense, a general
liability insurance policy providing a minimum of $500,000 bodily injury and
replacement value property damage coverage for the Facilities and 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 it
deems necessary for its purposes; provided, however, Alliance must obtain the
consent of Producer prior to any such alteration, addition or improvement. Any
fixtures erected in or attached to the Facilities by Alliance may be removed by
Alliance at the termination of this Agreement, provided that any such removal
shall not permanently injure the building.
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 = $31.50 x Pig Spaces
12
Such payment shall be paid to Producer approximately 14 days after the start of
each month. 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
5,640 pig spaces.
8. TERM AND TERMINATION. This Agreement shall commence on 5-1, 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"). 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 conditions provided herein, except that Alliance may terminate this
Agreement at any time thereafter upon thirty (30) days prior written notice (the
Initial Term together with any subsequent extension thereof shall hereinafter be
defined as the "Term").
9. 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, other
casualty or inevitable accident excepted.
10. WAIVER OF PROPERTY DAMAGE. Subject to the provisions of Section 9 hereof,
Producer hereby waives any and all claims for recovery from Alliance or Farmland
for loss or damage to Producer's property caused directly or indirectly by the
swine.
11. EVENTS OF DEFAULT. Producer shall be in default upon the happening of any
of the following events:
a)Default under any financing agreement, security agreement, note or any
other document, writing or instrument evidencing an obligation of
Producer to a lending institution;
b)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;
c)Producer using abusive language or threatening physical harm to Alliance
or its authorized representatives or preventing or impeding Alliance or
its authorized representatives from accessing the Facilities or the
swine;
d)Insolvency or bankruptcy of the Producer;
e)The happening of any event which in the opinion of Alliance endangers or
impairs the swine or Alliance's property;
f)Failure of Producer to perform its obligations under this Agreement; or
g)Any representation or warranty made by Producer or on behalf of Producer
proves to be incorrect or otherwise misleading.
12. ACTION BY ALLIANCE ON DEFAULT OF PRODUCER. This Agreement may be
terminated by Alliance in the event of any default by Producer, upon written
notice by Alliance to Farmland and Producer 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. In the event there are two
defaults by Producer of a same or similar nature in any one year period which
are cured by Producer, upon the happening of a third default by Producer of a
same or similar nature to the first two defaults within such one year period,
Alliance shall have the right to terminate this Agreement without the Producer
having any cure rights. Alliance reserves the right to exercise any other
rights it may have at law or in equity.
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.
13. 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.
14. 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.
15. FACILITIES LOCATION. The Facilities shall be located at such location or
locations as is designated in the Grow/Finish Agreement.
16. 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. Producer shall execute any UCC-1 financing statement or other
documents Alliance deems necessary or advisable to protect Alliance's ownership
of the swine.
17. LIENS. Producer waives any right Producer may have to assert and agrees
not to assert or permit to be asserted any lien upon any of the swine which are
the subject matter of this Agreement and will INDEMNIFY, REIMBURSE AND HOLD
ALLIANCE HARMLESS from any and all such liens or claims to any of the swine or
the proceeds thereof.
18. 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.
19. 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.
20. 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.
21. 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.
22. 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: /s/ Donald Rutledge
Name: Triple R
Title: President
10639 C Rd 30, Yuma, Co
(Address)
970-848-2549
(Telephone No.)
(Social Security No.)
ALLIANCE FARMS COOPERATIVE ASSOCIATION
By: /s/ Wayne N. Snyder
Name: Wayne N. Snyder
Title: President
FARMLAND INDUSTRIES, INC.
By: /s/ Gary E. Evans
Name: Gary E. Evans
Title: Executive Vice President