-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JAUvS7FrK3MMmXsc1jloe2CWtQFfrglO0gxcE07WDpRALOYKNCcGAmh+8RSZXQLj DKX9bsoOmQhBNjYJMz/qBQ== 0000897101-97-000449.txt : 19970424 0000897101-97-000449.hdr.sgml : 19970424 ACCESSION NUMBER: 0000897101-97-000449 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970423 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEVELOPED TECHNOLOGY RESOURCE INC CENTRAL INDEX KEY: 0000890725 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRICAL APPARATUS & EQUIPMENT, WIRING SUPPLIES [5063] IRS NUMBER: 411713474 STATE OF INCORPORATION: MN FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-21394 FILM NUMBER: 97585414 BUSINESS ADDRESS: STREET 1: 12800 WHITEWATER DR SUITE 170 CITY: MINNETONKA STATE: MN ZIP: 55343 BUSINESS PHONE: 6129387080 MAIL ADDRESS: STREET 1: 12800 WHITEWATER DRIVE STREET 2: SUITE 170 CITY: MINNETONKA STATE: MN ZIP: 55343 10QSB 1 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended January 31, 1997. [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to ___________________ COMMISSION FILE NO. 0-21394 DEVELOPED TECHNOLOGY RESOURCE, INC. ----------------------------------- (Exact name of registrant as specified in its charter) MINNESOTA 41-1713474 --------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 12800 WHITEWATER DRIVE, SUITE 170, MINNETONKA, MINNESOTA 55343 - --------------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) (612) 938-7080 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes____ No __X__. 790,820 common shares, $.01 par value, were outstanding as of January 31, 1997. - -------- DEVELOPED TECHNOLOGY RESOURCE, INC. INDEX Page Number ----------- PART I. FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Unaudited Financial Statements Condensed Consolidated Balance Sheets as of January 31, 1997 and October 31, 1996 3 Condensed Consolidated Statements of Operations for the three month periods ended January 31, 1997 and 1996 4 Condensed Consolidated Statements of Cash Flows for the three month periods ended January 31, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION 9
DEVELOPED TECHNOLOGY RESOURCE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) JANUARY 31, OCTOBER 31, ASSETS 1997 1996 - ------ ----------- ----------- Current assets Cash and cash equivalents $ 375,771 $ 635,609 Receivables Trade, net 54,379 126,811 Sale of business division 360,000 360,000 Other -- 28,630 Inventory 351,768 205,999 Advance payments to suppliers 350,425 214,961 Prepaid and other current assets 79,028 34,670 ---------- ---------- Total current assets 1,571,371 1,606,680 Furniture and equipment, net 501,990 513,553 Receivable from sale of business division 280,000 280,000 Deferred acquisition costs 158,350 35,616 ========== ========== $2,511,711 $2,435,849 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities Accounts payable $ 298,216 $ 188,916 Notes payable $ 63,672 70,910 Accrued liabilities 372,147 316,044 Customer deposits 68,667 44,876 Deferred grant revenue 3,379 13,055 Deferred gain on sale of business division 341,707 341,707 ---------- ---------- Total current liabilities 1,147,788 975,508 Deferred gain on sale of business division 280,000 280,000 Minority interest in joint venture 277,735 244,121 Shareholders' equity 806,188 936,220 ========== ========== $2,511,711 $2,435,849 ========== ========== See accompanying notes to the condensed consolidated financial statements.
DEVELOPED TECHNOLOGY RESOURCE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED JANUARY 31, ------------------------------ 1997 1996 ----------- ----------- Revenue Sales $ 1,331,686 $ 333,429 Commissions and other revenues 9,677 103,034 ----------- ----------- 1,341,363 436,463 ----------- ----------- Costs and Expenses Cost of sales 956,676 292,235 Selling, general, and administrative expenses 414,770 227,809 ----------- ----------- 1,371,446 520,044 ----------- ----------- Operating loss (30,083) (83,581) Other Income(Expense) Interest income 6,707 18,702 Equity in income of joint ventures -- 30,167 ----------- ----------- 6,707 48,869 Loss from continuing operations before income tax and minority interest (23,376) (34,712) Income taxes 44,008 -- ----------- ----------- Loss from continuing operations before minority interest (67,384) (34,712) Minority interest in earnings of joint venture (33,614) -- ----------- ----------- Loss from continuing operations (100,998) (34,712) Income from discontinued operations -- 25,287 ----------- ----------- Net loss ($ 100,998) ($ 9,425) =========== =========== Net loss per common share Continuing operations ($ 0.13) ($ 0.04) Discontinued operations 0.00 0.03 =========== =========== ($ 0.13) ($ 0.01) =========== =========== Weighted average common shares outstanding 790,820 838,966 =========== =========== See accompanying notes to the condensed consolidated financial statements.
DEVELOPED TECHNOLOGY RESOURCE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED JANUARY. 31, ------------------------------- 1997 1996 ----------- ----------- OPERATING ACTIVITIES Net loss ($ 100,998) ($ 9,425) Adjustment to reconcile net loss to cash provided (used) by operating activities: Depreciation 36,386 11,928 Equity in income of joint ventures -- (30,167) Minority interest in earnings of joint venture 33,614 -- Changes in operating assets and liabilities: Receivables 72,028 (128,677) Inventories (145,769) 87,880 Prepaid and other current assets (44,358) 11,286 Advance payments to suppliers (135,464) 15,871 Accounts payable and accrued liabilities 158,165 224,501 Deferred grant revenue (9,676) (64,461) Customer deposits 23,791 (12,892) ----------- ----------- Net cash provided (used) by operating activities (112,281) 105,844 ----------- ----------- INVESTING ACTIVITIES Purchase of short-term investments -- (31,946) Purchase of furniture and equipment (24,823) (340) Advances/contributions to joint ventures -- 31,311 Deferred acquisition costs (122,734) -- ----------- ----------- Net cash used by investing activities (147,557) (975) ----------- ----------- Increase (decrease) in cash and cash equivalents (259,838) 104,869 CASH AND CASH EQUIVALENTS Beginning of period 635,609 1,296,243 =========== =========== End of period $ 375,771 $ 1,401,112 =========== =========== See accompanying notes to the condensed consolidated financial statements.
DEVELOPED TECHNOLOGY RESOURCE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 1997 (UNAUDITED) 1. Basis of Presentation The interim financial statements are unaudited, but in the opinion of management reflect all normal recurring adjustments for a fair presentation of the financial position as of January 31, 1997 and October 31, 1996, as well as, the results of operations and cash flows for the three month periods ending January 31, 1997 and January 31, 1996. The first quarter 1997 consolidated financial statements include the accounts of DTR and Foodmaster. All significant intercompany transactions and balances were eliminated in consolidation. The January 31, 1997, financial statements report the investment in FoodMaster on a consolidated basis as DTR obtained effective controlling interest in the joint venture during the fiscal year 1996. Previously, investment in joint ventures, including FoodMaster, were carried on the equity basis to recognize DTR's share in the investee's underlying net book value plus other contributed assets, advances and costs in excess of net assets. Under this method, DTR's share of the net income or losses of the joint ventures was reflected in their statement of operations. The results of operations for any interim period are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the Company's Annual Report and Notes thereto on Form 10-KSB for the year ended October 31, 1996, and filed with the Securities and Exchange Commission. 2. Stock Redemption In the first quarter, 48,190 shares of common stock were redeemed in exchange for the satisfaction of $29,034 in accounts receivable owed. 3. Subsequent Events On March 3, 1997, the Company and Agribusiness Partners International L.P.(API) announced the formation of FoodMaster International LLC (FoodMaster International) for the purpose of pursuing dairy opportunities in the former Soviet Union. Under this agreement, the Company contributed to FoodMaster International the Foodmaster operation in Kazakhstan, the Ak-Bulak option and its opportunities in Moldova and API agreed to fund up to $6 million over the next two years to expand the business. DTR will manage the day to day operations of FoodMaster International and its subsidiaries under a separate management agreement. API will own 60% of FoodMaster International and the Company 40%, with the Company having the opportunity to earn greater economic interest by reaching defined performance targets. The Company applied for and received a grant of approximately $456,000 from (USAID) to expand in Moldova. 4. New Pronouncement In February 1997, the Finance and Accounting Standards Board(FASB) issued SFAS - No. 128, "Earnings Per Share," which is required to be adopted by the Company in the reporting period ending January 31, 1998. At that time the Company will be required to change the method currently used to compute earnings per share and restate all prior periods. Under the new standard for calculating basic earnings per share, the dilutive effect of stock options will be eliminated. The Company has determined the impact of implementing SFAS #128 on the calculation of earnings per share for the quarters ending January 31, 1996 and 1996 would not be material. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW Statements included in this Management's Discussion and Analysis and elsewhere in this Form 10-QSB, in future filings by the Registrant with the Securities and Exchange Commission and in the Registrant's press releases and oral statements made with the approval of authorized executive officers, if not historical or current facts, should be considered "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. Registrant wishes to caution the reader not to place undue reliance on any such forward-looking statements, which speak only as of the date made. During the first quarter of 1996, the Company sold its aviation security sales and service business to Gate Technologies for $810,000 including reimbursement of expenses of $45,000. This transaction is more fully described under, "Discontinued Operations." The financial statements and related information have been adjusted to reflect the sale of this business. Additionally, overhead was reduced to the level necessary to effectively support continuing operations in conjunction with its restructuring plan. In 1995, the Company formed FoodMaster, a Kazakhstan limited liability company owned in equal parts by the Company and Ak-Bulak, a Kazakhstan company, for the purpose of manufacturing and selling dairy products under license from the Company. Dairy production began in June, 1995, and sales grew each quarter through 1996. Effective August 1996, the Company won a tender with an option to purchase 80% of its failing Kazakhstan partner, Ak-Bulak. On March 3, 1997, the Company and Agribusiness Partners International L.P.(API) announced the formation of FoodMaster International LLC (FoodMaster International) for the purpose of pursuing dairy opportunities in the former Soviet Union(FSU). Under this agreement, the Company contributed to FoodMaster International the Foodmaster operations in Kazakhstan, the Ak-Bulak option and its opportunities in Moldova and API agreed to fund up to $6 million over the next two years to expand the business. DTR will manage the day to day operations of FoodMaster International and its subsidiaries under a separate management agreement. API will own 60% of FoodMaster International and the Company 40%, with the Company having the opportunity to earn greater economic interest by reaching defined performance targets. The company will account for its 40% interest in FoodMaster International under the equity method, recording only its share of FoodMaster International's operating results as equity in net income(loss) of partnerships and joint ventures. ONGOING BUSINESS STRATEGY As the manager of FoodMaster International, the Company's strategy is to expand FoodMaster International's dairy processing business in Kazakhstan and to other regions of the FSU. Foodmaster International intends to exercise the option to purchase 80% of Ak-Bulak, resulting in a 90% ownership of FoodMaster by FoodMaster International. FoodMaster International will start operations in Moldova and begin production of certain products in Akmola, Kazakhstan's new capital. The Company has applied for and received a grant of approximately $456,000 from the United States Agency for International Development(USAID) to expand in Moldova. The Company will continue to operate its x-ray tube business and look for opportunities to expand sales when available. BUSINESS OPERATIONS FOODMASTER For the three months ended January 31, 1997 FoodMaster generated revenue of $1,294,808 from the sale of its dairy products. Cost of sales was $903,951 (70%), with selling, general and administrative expenses of $279,950 (22%). FoodMaster, after taxes and DTR royalty fees, earned $50,421 for the quarter (4%). The majority of the revenue was earned from the sales of kefir. During the same period in 1996, DTR's share of FoodMaster's income under the equity method was $30,167. DTR receives license and royalty fees from FoodMaster; $16,807 of these fees are included in other revenues for the first quarter of fiscal 1997. During the same period in 1996, the Company received fees of $28,794. All activity conducted by FoodMaster is in the local currency (the Tenge); the effects of currency exchange rates have not been significant. X-RAY TUBES In the first quarter 1997, revenue, cost of sales and gross profit from the sale of X-ray tubes was $37,800, $34,900 and $2,900 respectively. During the same period in 1996, revenue, cost of sales and gross profit were $18,900, $15,400 and $3,500. FOOD PACKAGING EQUIPMENT No sales of food packaging equipment were recognized during the first quarter of 1997. During the same period in 1996, the Company had equipment sales of $221,543. With the cost of equipment sold of $198,781, the Company had gross profit of $22,762. DISCONTINUED OPERATIONS Effective December 31, 1995, the Company entered into an agreement selling certain assets and the rights to the sale of airport security equipment in the former Soviet Union to a U.K. company owned by a former DTR employee. For a combination of fixed and contingent payments, the Company transferred assets, inventory, customer lists, promotional materials, and other items having an approximate net book value on January 31, 1996 of $143,293, net of liabilities assumed by the buyer. Under terms of the agreement, the Company assigned to the former employee all its rights under exclusive distribution agreements with its principal suppliers, and agreed to cooperate to effect a smooth transfer of the business. Consideration received by the Company included a cash payment of $45,000 to reimburse the Company for expenses related to this business during the first quarter of fiscal 1996, and payments over the next 30 months totaling $765,000. A portion of these payments are personally guaranteed and are collateralized by his ownership of 16,430 shares of the Company's common stock. Additional contingent payments may also be received based on future performance. The Company retained the right to pursue airport security management contracts. Due to the inherent risks associated with doing business in the FSU, including credit risk, the Company recorded the note receivable and has deferred all profit until payments are received. PART II. OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities. Not applicable. Item 3. Defaults Upon Senior Securities. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders. None Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. (a) List of Exhibits 4.1 Amended Incentive Stock Option Grant - Erlan Sagadiev 4.2 Amended Incentive Stock Option Grant - John Hupp 10.1 Limited Liability Company Agreement of Foodmaster International L.L.C. 10.2 Share Transfer Agreement 10.3 Bill of Sale, Assignment and Assumption Agreement 10.4 Management Agreement between DTR and Foodmaster International LLC 10.5 Employment Agreement between DTR and Erlan Sagadiev 10.6 Employment Agreement between DTR and John Hupp (b) Reports on Form 8-K Form 8-K Current Report Dated March 3, 1997. The items reported on this 8-K concerned a news release from the Registrant's Board of Directors announcing the formation of Foodmaster International LLC for the purpose of pursuing dairy opportunities in the former Soviet Union. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: April 21, 1997 DEVELOPED TECHNOLOGY ------------------------- RESOURCE, INC. ------------------------------------ (Registrant) ------------------------------------ John P. Hupp, President ------------------------------------ Lydia Bauer Chief Financial Officer EX-4.1 2 AMENDED INCENTIVE STOCK OPTION GRANT Exhibit 4.1 December 11, 1996 PERSONAL AND CONFIDENTIAL Mr. Erlan Sagadiev Developed Technology Resource, Inc. 6409 City West Parkway, Suite 200 Eden Prairie, MN 55344 RE: AMENDED INCENTIVE STOCK OPTION GRANT Dear Mr. Sagadiev, Effective September 30, 1996 Developed Technology Resource, Inc. (hereinafter the "Company") approved a grant to you (hereinafter the "OPTIONEE") of an incentive stock option (the "September 30 Option") to purchase 250,000 shares of common stock of the COMPANY, par value one cent ($0.01) per share pursuant to the terms of your Employment Agreement effective the same date. For good and valuable consideration which is hereby acknowledged, the September 30 Option is hereby amended effective December 11, 1996 in its entirety as stated in and subject to the provisions of this letter. This option letter incorporates by reference all of the provisions set forth in the COMPANY's Amended and Restated 1992 Stock Option Plan, as amended effective September 30, 1996, a copy of which is attached. The terms of the Plan are in all respects controlling except where expressly qualified or supplemented in this letter. 1. Option Price The option price per share shall be $1.22 which is the fair market value of the shares on the date of this amendment. 2. Exercise of you Option During Lifetime You may purchase the number of shares indicated in Column One below subject to the following conditions: a. You must be employed by the Company, or any of its subsidiaries, on the corresponding dates in Column Two; b. After fulfilling the employment requirements indicated in Column Two, on the next page, you must purchase such shares no later than the earlier of three(3) months after the termination of your employment or the corresponding date in Column Three. Column One Column Two Column Three ---------- ---------- ------------ Last Date to Exercise Option Number of Shares Date Exercisable If Employed ---------------- ---------------- ----------- 50,000 9/30/97 9/29/06 50,000 9/30/98 9/29/06 50,000 9/30/99 9/29/06 50,000 9/30/00 9/29/06 50,000 9/30/01 9/29/06 Notwithstanding the foregoing, if your employment with the Company is terminated by the Company other than for "cause"(as defined below), your options shall immediately become exercisable for a period of three(3) months after the date of termination as follows: Termination Date Options Exercisable - ---------------- ------------------- on or before 9/30/97 100,000 on or before 9/30/98 150,000 after 9/30/98 250,000 After three(3) months from the date of termination all of your unexercised options shall lapse and terminate. For purposes of this section 2, the term "cause" shall mean (i) material breach of your employment agreement with the company; which breach is not cured within five(5) days after written notice thereof from the Company to you or (ii)your conviction by a trial court of competent jurisdiction or pleading nolo contendere to (a) a felony or (b) a crime involving moral turpitude which could cause your retention to result in substantial damage or substantial and continued embarrassment to the Company. The exercisability of your options shall not be accelerated pursuant to this Section 2 upon your death. In no event shall the terms and provisions of this Agreement be considered am employment agreement between you and the Company. 3. Exercise of Your Option Upon Death In the event of your death during employment, or within three(3) months after termination of your employment, any options which you were eligible to exercise on the date of death may be exercised by your estate or by the person to whom such right devolved from you by reason of your death at any time within one (1) year of the date of death. 4. Nontransferability of Option This option may not be transferred in any manner otherwise than by will or the laws of descent or distribution and may be exercised during the lifetime of the OPTIONEE only by the OPTIONEE. 5. Non-Participation in Certain Reorganization of the Company Notwithstanding the provisions of Section 7 of the Plan, if during the time that this option is unexercised and outstanding, the Company transfers substantially all of the assets associated with the X-ray tube business of the Company to a controlled subsidiary corporation in a transaction otherwise described in Section 7 of the plan, by acceptance of this option you hereby waive and disclaim any rights to shares, options or other rights to acquire shares in such subsidiary that you might otherwise have pursuant to Section 7 of the plan, articles and/or bylaws of the Company or by operation of law. In the event any part of this option is exercised, the shares received by OPTIONEE prior to a transaction described in this paragraph shall not be subject to this waiver and disclaimer and OPTIONEE may participate in such transaction with respect to shares held. Except as specifically modified in this paragraph 5, the provisions of Section 7 of the Plan shall otherwise remain in full force and effect. 6. Acquired for investment This option is granted on the condition that purchase of stock will be for investment purposed only and will not be acquired with a view toward distribution. 7. Notices Each notice relating to this option shall be in writing and delivered in person or by certified mail to the proper address of the party to whom such notice is given. Each notice shall be deemed to have been given on the date it is received. Each notice to the COMPANY shall be addressed to it at its principal office now at 12800 Whitewater Drive, Suite 170, Minnetonka, MN 55343. Each notice to the OPTIONEE or other person or persons when entitled to exercise the option shall be addressed to the OPTIONEE or such other person or persons at the OPTIONEE's address set forth in the heading of this letter. Anyone to whom a notice may be given under this option may designate a new address by notice to that effect. 8. Special Tax Treatment In the event you seek to qualify for the special tax treatment available for this type of option, you may not dispose of any shares within two(2) years of the date of the grant and within one(1) year of transfer of the shares to you. 9. Acceptance of Option If you accept this option, please execute a copy of this letter and return it to me. At the times when you exercise this option, please use the attached notice of exercise of stock option. Very truly yours, DEVELOPED TECHNOLOGY RESOURCES, INC. ACCEPTED: ____________________ By:____________________________ Erlan Sagadiev Its:___________________________ EX-4.2 3 AMENDED INCENTIVE STOCK OPTION GRANT Exhibit 4.2 December 11, 1996 PERSONAL AND CONFIDENTIAL Mr. John Hupp Developed Technology Resource, Inc. 6409 City West Parkway, Suite 200 Eden Prairie, MN 55344 RE: AMENDED INCENTIVE STOCK OPTION GRANT Dear Mr. Hupp, Effective September 30, 1996 Developed Technology Resource, Inc. (hereinafter the "Company") approved a grant to you (hereinafter the "OPTIONEE") of an incentive stock option (the "September 30 Option") to purchase 250,000 shares of common stock of the COMPANY, par value one cent ($0.01) per share pursuant to the terms of your Employment Agreement effective the same date. For good and valuable consideration which is hereby acknowledged, the September 30 Option is hereby amended effective December 11, 1996 in its entirety as stated in and subject to the provisions of this letter. This option letter incorporates by reference all of the provisions set forth in the COMPANY's Amended and Restated 1992 Stock Option Plan, as amended effective September 30, 1996, a copy of which is attached. The terms of the Plan are in all respects controlling except where expressly qualified or supplemented in this letter. 1. Option Price The option price per share shall be $1.22 which is the fair market value of the shares on the date of this amendment. 2. Exercise of you Option During Lifetime You may purchase the number of shares indicated in Column One below subject to the following conditions: a. You must be employed by the Company, or any of its subsidiaries, on the corresponding dates in Column Two; b. After fulfilling the employment requirements indicated in Column Two, on the next page, you must purchase such shares no later than the earlier of three(3) months after the termination of your employment or the corresponding date in Column Three. Column One Column Two Column Three ---------- ---------- ------------ Last Date to Exercise Option Number of Shares Date Exercisable If Employed ---------------- ---------------- ----------- 50,000 9/30/97 9/29/06 50,000 9/30/98 9/29/06 50,000 9/30/99 9/29/06 50,000 9/30/00 9/29/06 50,000 9/30/01 9/29/06 Notwithstanding the foregoing, if your employment with the Company is terminated by the Company other than for "cause"(as defined below), your options shall immediately become exercisable for a period of three(3) months after the date of termination as follows: Termination Date Options Exercisable - ---------------- ------------------- on or before 9/30/97 100,000 on or before 9/30/98 150,000 after 9/30/98 250,000 After three(3) months from the date of termination all of your unexercised options shall lapse and terminate. For purposes of this section 2, the term "cause" shall mean (i) material breach of your employment agreement with the company; which breach is not cured within five(5) days after written notice thereof from the Company to you or (ii)your conviction by a trial court of competent jurisdiction or pleading nolo contendere to (a) a felony or (b) a crime involving moral turpitude which could cause your retention to result in substantial damage or substantial and continued embarrassment to the Company. The exercisability of your options shall not be accelerated pursuant to this Section 2 upon your death. In no event shall the terms and provisions of this Agreement be considered am employment agreement between you and the Company. 3. Exercise of Your Option Upon Death In the event of your death during employment, or within three(3) months after termination of your employment, any options which you were eligible to exercise on the date of death may be exercised by your estate or by the person to whom such right devolved from you by reason of your death at any time within one (1) year of the date of death. 4. Nontransferability of Option This option may not be transferred in any manner otherwise than by will or the laws of descent or distribution and may be exercised during the lifetime of the OPTIONEE only by the OPTIONEE. 5. Non-Participation in Certain Reorganization of the Company Notwithstanding the provisions of Section 7 of the Plan, if during the time that this option is unexercised and outstanding, the Company transfers substantially all of the assets associated with the X-ray tube business of the Company to a controlled subsidiary corporation in a transaction otherwise described in Section 7 of the plan, by acceptance of this option you hereby waive and disclaim any rights to shares, options or other rights to acquire shares in such subsidiary that you might otherwise have pursuant to Section 7 of the plan, articles and/or bylaws of the Company or by operation of law. In the event any part of this option is exercised, the shares received by OPTIONEE prior to a transaction described in this paragraph shall not be subject to this waiver and disclaimer and OPTIONEE may participate in such transaction with respect to shares held. Except as specifically modified in this paragraph 5, the provisions of Section 7 of the Plan shall otherwise remain in full force and effect. 6. Acquired for investment This option is granted on the condition that purchase of stock will be for investment purposed only and will not be acquired with a view toward distribution. 7. Notices Each notice relating to this option shall be in writing and delivered in person or by certified mail to the proper address of the party to whom such notice is given. Each notice shall be deemed to have been given on the date it is received. Each notice to the COMPANY shall be addressed to it at its principal office now at 12800 Whitewater Drive, Suite 170, Minnetonka, MN 55343. Each notice to the OPTIONEE or other person or persons when entitled to exercise the option shall be addressed to the OPTIONEE or such other person or persons at the OPTIONEE's address set forth in the heading of this letter. Anyone to whom a notice may be given under this option may designate a new address by notice to that effect. 8. Special Tax Treatment In the event you seek to qualify for the special tax treatment available for this type of option, you may not dispose of any shares within two(2) years of the date of the grant and within one(1) year of transfer of the shares to you. 9. Acceptance of Option If you accept this option, please execute a copy of this letter and return it to me. At the times when you exercise this option, please use the attached notice of exercise of stock option. Very truly yours, DEVELOPED TECHNOLOGY RESOURCES, INC. ACCEPTED: ________________ By:____________________________ John Hupp Its:___________________________ EX-10.1 4 LIMITED LIABILITY COMPANY AGREEMENT EXHIBIT 10.1 LIMITED LIABILITY COMPANY AGREEMENT OF FOODMASTER INTERNATIONAL L.L.C. THIS LIMITED LIABILITY COMPANY AGREEMENT ("Agreement") is made and entered into as of this 3rd day of March, 1997 by and between (i) API DAIRY PARTNERS L.P. ("API I") and AGRIBUSINESS PARTNERS INTERNATIONAL L.P. II ("API II"), both of which are limited partnerships organized and existing under the laws of the State of Delaware, with their principal offices at 1004 Farnam Street, Omaha, Nebraska, 68102 (API I and API II hereinafter collectively referred to as "API"), and (ii) DEVELOPED TECHNOLOGY RESOURCE, INC, a Minnesota corporation organized and existing under the laws of the State of Minnesota with its principal office at 12800 Whitewater Drive, Suite 170, Minnetonka, Minnesota, 55343 (hereinafter referred to as "DTR"), for the purpose of forming a limited liability company under the laws of the State of Delaware. WITNESSETH WHEREAS, API I is a holding company formed to hold dairy investments made by Agribusiness Partners International, L.P., which is an investment fund formed for the purpose of investing in agribusiness in the former Soviet Union and which is guaranteed by the Overseas Private Investment Corporation ("OPIC") and governed by an OPIC financing agreement; WHEREAS, API II is an affiliate of API I and has also been formed for the purpose of investing in agribusiness in the former Soviet Union, but which is not guaranteed by OPIC; WHEREAS, DTR owns certain interests in dairy and food related businesses in the former Soviet Union; and WHEREAS, API and DTR desire to jointly own, operate and develop certain dairy and food related businesses in the former Soviet Union. NOW, THEREFORE, for and in consideration of the premises and mutual covenants set forth herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS 1.1 Certain Defined Terms. In addition to the other terms defined in this Agreement, the following terms shall have the respective meanings set forth below: (a) "Capital Contribution" means, with respect to any Member, the amount of capital contributed by such Member to the Company in accordance with Article 3 hereof. (b) "Certificate of Formation" means the certificate of formation of the Company as filed in the Office of the Secretary of State of the State of Delaware on February 27, 1997, as amended from time to time. (c) "Current Ratio" means current assets divided by current liabilities. (d) "Debt Ratio" means the sum of total current liabilities and long term debt divided by total assets. (e) "Dollars" means the lawful currency of the United States of America. (f) "GAAP" means generally accepted accounting principles as used in the United States. (g) "Interest" means the ownership interest of a Member in the Company (which shall be considered personal property for all purposes), consisting of (i) such Member's right to receive profits, losses, allocations, and distributions, (ii) such Member's right to vote or grant or withhold consents with respect to Company matters as provided herein or in the Delaware Act, and (iii) such Member's other rights and privileges as herein provided. (h) "Members" means API and DTR and all other persons who may become Members of the Company as provided herein. (i) "Percentage Interest" means (i) sixty percent(60%) with respect to API (fifty-seven percent (57%) with respect to API I and three percent (3%) with respect to API II), and (ii)forty percent (40%) with respect to DTR, subject to adjustment in accordance with Section 5.2. 1.2 Other Definitional Provisions. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular; references to the singular include the plural; and references to the masculine gender include the feminine and neuter genders. The words "hereof", "herein", and similar terms refer to this Agreement as a whole. The term "including" is not limiting and the term "or" has the inclusive meaning represented by the term "and/or." ARTICLE II ORGANIZATION 2.1 Formation and Name. Subject to the terms and conditions of this Agreement, the Members hereby agree to establish and operate a limited liability company under the laws of the State of Delaware to be named FoodMaster International L.L.C. (the "Company"). The Company shall be formed upon the filing of the Certificate of Formation with the Secretary of State of Delaware. The Members hereby adopt the Certificate of Formation filed with the Secretary of State of Delaware on February 27, 1997 as the Certificate of Formation of the Company. 2.2 Purposes and Activities. The business and purpose of the Company shall be to produce, package and distribute dairy, juice and other food related products in the former Soviet Union. 2.3 Principal Office. The principal place of business of the Company shall be located at the offices of DTR at 12800 Whitewater Drive, Suite 170, Minnetonka, Minnesota, 55343 or such other place as the Members may from time to time determine. The registered office of the Company in the State of Delaware shall be located at 1209 Orange Street, Wilmington, Delaware, 19801, and the registered agent of the Company for service of process at such address shall be The Corporation Trust Company (or such other registered office and registered agent as the Members may from time to time select). 2.4 Term. The Company shall dissolve in accordance with the provisions of Section 7.1. 2.5 Closing. The closing (the "Closing") shall occur on March 3, 1997 ARTICLE III CAPITAL STRUCTURE 3.1 Capital Contributions. (a) DTR shall make a Capital Contribution to the Company of up to Four Million Dollars ($4,000,000) by transferring certain rights and properties to the Company. The rights and properties to be transferred to the Company and the fair market value thereof as agreed to by the Members for the purposes of determining the amount of DTR's Capital Contribution are as follows: (i) DTR's fifty percent (50%) interest in the Kazakstan limited liability partnership FoodMaster TOO and certain other property identified in the Share Transfer attached as Exhibit A-1 hereto and the Bill of Sale attached as Exhibit A-2 hereto (collectively, the "FoodMaster Interest ") valued at One Million Nine Hundred and Seventy Five Thousand Dollars ($1,975,000) to be contributed by signing appropriate acts of transfer and acceptance at Closing; (ii) DTR's right to purchase eighty percent (80%) of the shareholding in the Ak Bulak Dairy in Kazakstan ("Ak Bulak Dairy Interest") valued at One Million Five Hundred and Seventy Five Thousand Dollars ($1,575,000) to be contributed by assignment to the Company immediately upon the shares being properly registered with the Ministry of Justice and National Securities Commission and made available for purchase from the State Committee for Privatization of State Property of the Republic of Kazakstan; and (iii) The opportunity to purchase all of the newly issued shares of the Hincesti Dairy in Moldova (constituting fifty percent (50%) of the total shares of the Hincesti Dairy) (the "Hincesti Dairy Interest") and the benefit of certain equipment, materials and services acquired by DTR pursuant to a grant from the United States Agency for International Development (the "USAID Property"), valued collectively at Four Hundred and Fifty Thousand Dollars ($450,000). DTR further agrees that the USAID Property shall be used exclusively for the benefit of the Company and DTR shall assign the USAID Property to the Company upon DTR acquiring legal title thereto; (b) API shall make a Capital Contribution to the Company of up to Six Million Dollars ($6,000,000) (the percentage of each Capital Contribution to be made by API pursuant to this Agreement shall be contributed by API I and API II based on their respective Percentage Interests) which shall be contributed in installments by bank transfer to the Company's Dollar-denominated bank account maintained at First Bank, International Moscow Bank or another bank acceptable to API, in amounts and subject to conditions as follows: (i) API shall contribute to the Company One Million Three Hundred Thousand Dollars ($1,300,000) upon transfer of the FoodMaster Interest; (ii) API shall contribute to the Company Seven Hundred Thousand Dollars ($700,000) upon satisfaction of all conditions to the transfer to the Company of the AK Bulak Dairy Interest; (iii) API shall contribute to the Company Nine Hundred Forty-Five Thousand Dollars ($945,000) upon the Company obtaining the right to acquire the Hincesti Dairy Interest; and (iv) API shall contribute the balance of its Capital Contribution to finance additional projects as approved by the Members. (c) If DTR is unable to contribute to the Company the properties identified in Section 3.1(a)(iii), DTR may, subject to the approval of the Members, contribute other property in lieu thereof. 3.2 Additional Capital Contributions. (a) Except as provided in this Section 3.2 or otherwise unanimously agreed to by the Members, no Member shall be required or permitted to make any additional capital contributions to the Company except as specified in Section 3.1. (b) If, as of the second anniversary of the Closing or the liquidation of the Company, whichever occurs first, the amount of capital contributed to the Company by API is less than sixty percent (60%) of the total amount of capital contributed by both API and DTR as of such date ("Total Capital"), API shall make an additional Capital Contribution ("Additional Contribution") to the Company which the Company shall distribute to DTR as a reduction of its Capital Contribution. The amount of the Additional Contribution shall be equal to the difference between (i) sixty percent (60%) of the Total Capital, and (ii) the amount of the Total Capital contributed by API. 3.3 Failure to Contribute. (a) In the event that the Company does not obtain full legal title to (i) the properties identified in Section 3.2(a)(i) prior to the date that is ninety (90) days after the Closing, or (ii) the property identified in Section 3.2(a)(ii) within one year after the Closing (in either case, a "Non-Transferred Property"), API may terminate this Agreement and liquidate THE Company. In the event that API elects to liquidate the Company pursuant to this Section 3.3, the Company shall take any steps reasonably necessary to return parties to their original position. (b) In the event that API is required to make a Capital Contribution pursuant to Sections 3.1 or 3.2(b) and fails to make such Contribution, the number of Directors that API and DTR shall each be entitled to appoint pursuant to Article IV shall be adjusted to reflect actual Capital Contributions as of such date, provided that the rights contained in Article IV shall be restored upon the making of such contribution by API. 3.4 Return of Capital. No Member has a right to withdraw its Capital Contribution except upon liquidation of the Company or as otherwise provided for in this Agreement. No interest shall accrue or be paid by the Company with respect to any Capital Contribution. ARTICLE IV MANAGEMENT 4.1 Management. The management of the Company shall be vested in a Board of Directors (the "Board") consisting of five (5) members, three (3) of whom shall be appointed by API and two (2) of whom shall be appointed by DTR. The Board may appoint, employ, or otherwise contract with any persons or entities for the transaction of the business of the Company or the performance of services for or on behalf of the Company, and the Board may delegate to any such person (who may be designated an officer of the Company) or entity such authority to act on behalf of the Company as the Board may from time to time deem appropriate. The Company shall enter into a management agreement with DTR, in the form of Exhibit B hereto (the "Management Agreement"), pursuant to which DTR shall manage the business of the Company. 4.2 Appointment of Directors. The initial members of the Board of Directors shall be appointed by Members prior to the first meeting. Any Director may be removed by the Member appointing such Director. Upon the death, retirement or removal of any Director, the Member appointing such Director may appoint a replacement. 4.3 Actions by the Board. Except as otherwise specified in this Agreement, any action to be taken or approved by the Board requires the approval of a majority of the Directors. 4.4 Committees of the Board. The Directors may appoint from among their number one or more committees and may delegate to such committee any of the powers of the Directors. 4.5 Meetings of Board. Meetings of the Board may be called by any Director provided that the Board shall meet at least once during each calendar quarter. Three (3) Directors shall constitute a quorum for the transaction of business and notwithstanding any vacancy on the Board, a quorum may exercise all powers of the Board. Meetings of the Board shall be held at such time and place as determined by the Board. Notice of such meetings shall be provided to each Director at least ten (10) days prior to the meeting. The Board may act without a meeting provided that such action is consented to in writing by each Director then in office. Directors may participate in any meeting of the Board by conference call or similar communications equipment by means of which all persons can hear each other, and participation by such means shall constitute attendance at such meeting. 4.6 Distribution. Distributions to Members shall be made in such amounts and at such times as determined by the Board based on the budget and business plan in effect and on the current and expected cash flow needs of the Company. 4.7 Financial Statements. The Company shall cause annual financial statements for the Company to be prepared in accordance with GAAP and provided to Members within ninety (90) days of the end of the Company's fiscal year. The Company shall also cause an audit to be performed on an annual basis of each entity controlled by the Company which audit shall be performed in accordance with GAAP and in accordance with any applicable local accounting principles and practices. 4.8 Extraordinary Actions. In addition to other actions identified herein requiring unanimous approval of the Members, the Company shall not (i) sell or otherwise dispose of all or substantially all of its assets unless such sale or disposition is unanimously approved by the Members provided that such approval shall not be unreasonably withheld, (ii) undertake any new investment projects unless such projects are unanimously approved by the Members, or (iii) terminate the Management Agreement unless such termination is unanimously approved by the Members. ARTICLE V ALLOCATIONS 5.1 Allocations. All items of Company income, gain, loss, deduction, credit, or the like shall be allocated among the Members in accordance with their respective Percentage Interests (as adjusted pursuant to Section 5.2) as of the end of the fiscal year with respect to which such items were incurred. 5.2 Adjustment of Percentage Interests. It is the intent of the Members that DTR's Percentage Interest shall be increased to the extent that API earns an actual Internal Rate of Return over the term of its investment in the Company ("IRR") in excess of thirty-five percent (35%), provided that the adjustment of Percentage Interests shall not alter the voting/management provisions contained in this Agreement. To effect the foregoing, API's estimated IRR on its investment in the Company shall be calculated as of the end of each fiscal year. The calculation of API's estimated IRR shall be based on all actual cash flows received to date and an estimated terminal value of API's Interest based on the book value of the Company determined in accordance with GAAP. If API's estimated IRR as calculated at the end of any fiscal year is greater than thirty-five percent (35%), DTR's Percentage Interest shall be set at the percentage set forth in Appendix A corresponding to such IRR, and API's Percentage Interest shall be correspondingly adjusted. If API's IRR as calculated at the end of any fiscal year is thirty-five percent (35%) or less, DTR's Percentage Interest shall be set at forty percent (40%). Notwithstanding the provisions of Section 5.1 or the adjustments of the respective Percentage Interests pursuant to this Section 5.2, the amount of income allocated to DTR for any fiscal year shall be reduced to the extent that the allocation of such income would result in DTR being allocated a percentage of the Company's income over the term of API's investment in the Company that is greater than the percentage identified in Appendix A which corresponds to API's IRR as of such date. For the purposes of this Section 5.2, "terminal value,, means the proceeds from the sale of API's Interest. A final non- estimated calculation of API's IRR shall be calculated, and Percentage Interest calculated thereon, upon the sale, transfer or liquidation by API of its Interest, based on cash flows to date and the actual terminal value of API's Interest. ARTICLE VI TRANSFERS 6.1 New Members. Additional Members shall not be admitted in the absence of unanimous consent of the existing Members except as provided herein. 6.2 Transfers to Third Parties. No Member may sell, assign, pledge, or otherwise transfer or encumber (collectively "transfer") all or any part of its Interest and no transferee of all or any part of any Member's Interest shall be admitted as a substituted Member, without the unanimous consent of all Members. provided that if DTR refuses to consent to a transfer proposed by API, the put-right provided pursuant to Section 6.4 shall become immediately exercisable. 6.3 Transfer by API After Five Years by Sale or IPO. If after five years from the Closing, API has not sold its Interest in the Company, then at API's election, DTR will, at the request of API, either assist API in the sale of its Interest to a third party, subject to the consent provisions set forth in Section 6.2, or assist in an initial public offering ("IPO") of Interests in the Company. 6.4 Put Right. If any time after five years from the Closing, API has not sold or otherwise liquidated its Interest in the Company, then API may elect to require the Company to purchase API's Interest at its fair market value at the time of election determined as: (a) The Members shall select a qualified independent third party who shall provide the Members with an appraisal of the fair market value of API's Interest. (b) Based upon the appraisal provided pursuant to Section 6.4(a), the Members shall agree on a fair market value of API's Interest. (c) If the Members fail to reach an agreement on the fair market value of API's Interest, then the fair market value shall be determined by arbitration pursuant to Article X, except that each Member shall select an arbitrator qualified to provide an appraisal of the fair market value of API's Interest. If the highest valuation does not exceed the lowest valuation by ten percent (10%) of each other, then the fair market value will be the average of the values provided by both of the arbitrators. If the highest valuation exceeds the lowest valuation by 10% or greater, then an additional qualified arbitrator shall be selected by the original arbitrators. The additional arbitrator shall set the fair market value of API's Interest at a value between the appraised values provided by the first two arbitrators. (d) The Company shall pay API cash in full payment within forty-five (45) days of the Company's purchase of API's Interest unless the Current Ratio of the Company is less than 2 to 1 and the Debt Ratio of the Company is greater than 30%. The Company may then elect to pay for the purchase of API's Interest with a senior note (or combination of cash and senior note). The senior note will be superior in right of payment to all debt obligations of the Company except for debt obligations of the Company existing at the time of issuance of the note which cannot by their terms be subordinated to such note. Interest will accrue on the unpaid principal amount of the senior note at a rate of twenty-five percent (25%) per annum. Principal and interest shall be amortized and payable in equal monthly installments over a term of twenty-four (24) months. The Company shall have the right to prepay any principal due under the senior note without penalty. ARTICLE VII TERMINATION OF AGREEMENT/LIQUIDATION 7.1 Termination of Agreement. This Agreement shall terminate and the Company shall be liquidated (i) in accordance with Section 3.3(a) of this Agreement, (ii) upon the unanimous agreement of the Members, (iii) on the date that is thirty (30) years after the filing of the Certificate of Formation with the Delaware Secretary of State, or (iv) upon the withdrawal, bankruptcy, or dissolution of any Member or the occurrence of any other event that terminates the continued membership of any Member in the Company under Delaware law unless the remaining Members unanimously agree to continue the business of the Company within ninety (90) days of such event. Upon termination, this Agreement shall be of no further force and effect provided that the indemnification provisions of Section 12.1 and the confidentiality provision contained in Section 8.2 shall continue in full force and effect. 7.2 API Priority Distribution. If the Company is liquidated for any reason, sold or refinanced prior to API's receipt of distributions in an amount equivalent to its Capital Contributions to the Company (after giving effect to Section 3.2(b)), then API shall have priority over DTR's right to receive any distribution of the assets of the Company in an amount equal to the amount of API's Capital Contribution less distributions to API after the payment of all amounts owed by the Company to creditors. Proceeds in excess of such amount shall be distributed in accordance with the following priority: (i) to DTR to the extent of its Capital Contribution (after giving effect to Section 3.2(b)) less distributions received, and (ii) to the members in proportion to their Percentage Interests. The priority payment set forth in this Section 7.2 is not intended to prohibit the making of distributions to Members. ARTICLE VIII NON-COMPETITION/CONFIDENTIALITY 8.1 Non-competition. (a) Neither DTR, nor any affiliate thereof, shall directly or indirectly own, manage, invest or participate in any corporation, partnership, joint venture or other enterprise involved in the production or distribution of dairy, juice or food-related projects in the former Soviet Union except through the Company unless (i) the proposed project has a projected five year IRR, calculated based on reasonable assumptions mutually agreed to by API and DTR, of not less than thirty-five percent (35%), (ii) DTR has provided notice of the proposed project to the Company, which notice shall contain reasonable details regarding such project, and (iii) the Company has not, within thirty (30) days of the receipt of notice pursuant to clause (ii) of this sentence, elected to undertake such project or, revoked such election within sixty (60) days thereof because of unsatisfactory results from the Company's due diligence of the project. (b) Neither API, nor any affiliate thereof, shall directly or indirectly own, manage, invest or participate in any corporation, partnership, joint venture or other enterprise involved in the production or distribution of dairy products in the former Soviet Union except through the Company unless (i) the proposed project has a projected five year IRR, calculated based on reasonable assumptions mutually agreed to by API and DTR, of not less than thirty-five percent (35%), and (ii) API has provided notice of the proposed project to the Company, which notice shall contain reasonable details regarding such project, and (iii) the Company has not, within thirty (30) days of the receipt of notice pursuant to clause (ii) of this sentence, elected to undertake such project or, revoked such election within sixty (60) days of such election because of unsatisfactory results from the Company's due diligence of the project. The provisions of this Section 8.1(b) shall not apply to API's investment in the Borisoglebsk project. (c) As used in this Section 8.1, the term "affiliate,' with respect to either DTR or API shall mean any person or entity directly or indirectly controlling, controlled by, or under common control with DTR or API, as the case may be. 8.2 Confidentiality. (a) Unless otherwise specifically agreed by API and DTR, during the term of this Agreement and for a period of five (5) years thereafter, the Company and each Member shall maintain in confidence, and shall refrain from using or disclosing, all Confidential Information. For the purposes of this Section 8.2, "Confidential Information" means all know-how, financial data, technical data (including the terms of the transactions contemplated in this Agreement), trade secrets or other confidential information that the Company has disclosed to any Member, or that a Member has disclosed to any other Member or the Company, under or in connection with this Agreement. The Company and each Member shall cause its directors, current and past employees, agents and contractors to refrain from using or disclosing any Confidential Information in any manner, except as expressly permitted by this Section 8.2. (b) Notwithstanding the foregoing, this Section 8.2 shall not restrict the use or disclosure of Confidential Information to the extent that: (i) the information becomes generally available to the public without breach of this Section 8.2; (ii) the recipient lawfully obtains the information from a third party who is not subject to the terms of this Agreement; (iii) the recipient has independently developed the information prior to disclosure; or (iv) applicable law requires disclosure of the information to governmental, legislative or judicial authorities, provided that the recipient shall give prior notice to the disclosing party and use its best efforts to require such authorities to continue to accord confidential treatment to the information. (c) Notwithstanding the foregoing, this Section 8.2 shall not restrict the use or disclosure of Confidential Information to the extent necessary to permit either API or DTR to undertake a project pursuant to Section 8.1. ARTICLE IX FORCE MAJEURE 9.1 Force Majeure Defined. "Force Majeure" means the occurrence of circumstances beyond the reasonable control of the Member affected, and which such Member could not have prevented by the exercise of reasonable diligence. Events of Force Majeure include: (a) earthquakes, floods, fires or other natural physical disasters; wars or hostilities; riots or civil disturbances; acts of terrorism or sabotage; governmental regulations, decrees or actions; and legislative or judicial actions; or (b) actions of any persons or groups of persons (i) with the purpose of obtaining money or property from the Company or from employees or representatives of the Company by coercion or intimidation; (ii) threatening the life and/or health of employees or representatives of the Company or (iii) causing or threatening to cause material loss to the Company, provided that adequate evidence of such circumstances is presented to the satisfaction of the other Members; or (c) actions of any governmental authority to seize, confiscate, expropriate or nationalize the Interest of any Member or its share in the Company or any property of the Company, or otherwise to prevent any Member from exercising its rights with respect to the Company as set forth in this Agreement or applicable law in force on the date hereof. 9.2 Effect of Force Majeure. If an event of Force Majeure causes a Member's failure or delay in its performance of any obligations under this Agreement, then such failure or delay shall be excused (and thus shall not constitute a breach of this Agreement for as long as the Force Majeure remains in effect). 9.3 Notice of Force Majeure. A Member that fails or delays to perform any obligations under this Agreement due to Force Majeure shall so notify the other Members in writing, as promptly as possible after such occurrence. The notice shall describe the nature of the Force Majeure, furnish adequate evidence of the existence and circumstances of the event of Force Majeure and, to the extent possible, estimate its duration and its likely effects on the Member's performance of its obligations under this Agreement. 9.4 Cessation of Force Majeure. A Member whose performance is affected by a Force Majeure shall use its best efforts to terminate the effects of such Force Majeure. Upon the cessation of the Force Majeure, the affected Member shall resume performance of its obligations as soon as possible. The affected Member shall notify the other Members as soon as it learns that the Force Majeure has ceased or appears likely to cease. ARTICLE X RESOLUTION OF DISPUTES 10.1 Arbitration. Any dispute, claim or grievance arising out of or relating to the interpretation or application of this Agreement, or to the breach, termination of validity thereof, shall be settled by arbitration in accordance with the then- current Center for Public Resources Rules of Non-Administered Arbitration of Business Disputes, by a sole arbitrator. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. ss.ss. et seq. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The place of the arbitration shall be a neutral city in the midwestern United States. ARTICLE XI REPRESENTATIONS AND WARRANTIES 11.1 API. API I and API II each represent and warrant to DTR: (a) It is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware. It has the power and authority to own, lease, and operate its assets, properties, and businesses and to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery, and performance of this Agreement by it have been duly authorized by all necessary action on its part, and this Agreement is legally binding upon it in accordance with its terms. (b) The execution, delivery, and performance by it of this Agreement and the transactions contemplated hereby will not (i) violate the provisions of any order, judgment, or decree of any court or other governmental agency or any arbitrator applicable to it, (ii) result in a material breach of or constitute (with due notice or lapse of time or both) a material default under any contract or agreement to which it is a party or by which it is bound; or (iii) violate any provision of law applicable to it, the violation of which is likely to have a material adverse effect on the business, operations or condition (financial or otherwise) of it or the Company. 11.2 DTR. DTR represents and warrants: (a) DTR is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota. DTR has the corporate power and authority to own, lease and operate its assets, properties, and business and to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery, and performance of this Agreement by DTR have been duly authorized by all necessary corporate actions on the part of DTR, and this Agreement is legally binding upon DTR in accordance with its terms. (b) The execution, delivery, and performance by DTR of this Agreement and the transactions contemplated hereby will not (i) violate the provisions of any order, judgment, or decree of any court or other governmental agency or any arbitrator applicable to DTR or the Articles of Incorporation or Bylaws of DTR; (ii) result in a material breach of or constitute (with due notice or lapse of time or both) a material default under any contract or agreement to which DTR is a party or by which DTR is bound; or (iii) violate any provision of law applicable to DTR, the violation of which is likely to have a material adverse effect on the business, operations or condition (financial or otherwise) of DTR or the Company. (c) DTR has or will have at the time of contribution, full legal right to transfer and assign all rights and properties to be contributed to the Company as Capital Contributions pursuant to the terms of this Agreement, free and clear mortgage, pledge, claim, lien charge, obligation, liability (including liability for taxes) or other encumbrances, and the Company will receive full legal and beneficial title to all such rights and properties. ARTICLE XII INDEMNIFICATION 12.1 Extent of Responsibility for Damages. Each Member shall indemnify and hold harmless the other Member for losses, claims, damages, liabilities, including without limitation reasonable legal and other expenses incurred in connection with investigating any loss, claim, damage or liability, that such Member may incur or suffer by reason of (i) any inaccuracy in any representation or the breach of any warranty made by the Member hereunder, or (ii) the failure of such Member to fully perform or observe any term, provision, covenant, agreement to be performed under this Agreement. 12.2 Indemnification of Members and Directors. The Company shall indemnify and hold harmless each Member and its Affiliates and each Director (each an "Indemnified Person") against any and all losses, claims, damages, expenses and liabilities of any kind whatsoever that such Indemnified Person may at any time become subject to or liable for by reason of the formation, operation, or termination of the Company, or the Indemnified Person acting as a Member or Director of the Company, or the authorized actions of such Indemnified Person in connection with the conduct of the affairs of the Company, provided that no Indemnified Person shall be entitled to indemnification to the extent that liability otherwise indemnified for results from (i) any act or omission of such Indemnified Person that involves actual fraud or willful misconduct, or (ii) any transaction from which such Indemnified Person derived improper personal benefit. 12.3 Limitation of Liability. No Member shall have any personal liability whatsoever to the Company or any other Member on account of such Member's status as a Member or by reason of such Member's acts or omissions in connection with the conduct of the business of the Company; provided, however, that nothing contained herein shall protect any Member against any liability to the Company or the Members to which such Member would otherwise be subject by reason of (i) any act or omission of such Manager that involves actual fraud or willful misconduct or (ii) any transaction from which such Member derived improper personal benefit. ARTICLE XIII GENERAL PROVISIONS 13.1 Limitation on Liability. The debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise, shall be solely the debts, obligations, and liabilities of the Company, and no Member of the Company shall be obligated personally for any such debt, obligation, or liability of the Company solely by reason of being a Member. 13.2 Tax Treatment. It is the intention of the Members that the Company shall be taxed as a "partnership" for federal, state, local, and foreign income tax purposes. The Members agree to take all reasonable actions, including the amendment of this Agreement and the execution of other documents, as may reasonably be required in order for the Company to qualify for and receive "partnership" treatment for federal, state, local, and foreign income tax purposes. 13.3 Cooperation. The parties hereto shall in good faith undertake to perform their obligations under this Agreement. Upon execution of this Agreement and thereafter, each party shall do such things as may be reasonably requested by the other party hereto in order to more effectively carry out the intent of this Agreement. 13.4 Notices. Except as otherwise provided in this Agreement, any and all notices, consents, waivers, directions, requests, votes or other instruments or communications among the Members, Member representatives and the Company under this Agreement shall be communicated and be effective only if the original is sent in writing by hand or by registered mail, and a copy is sent by telex or facsimile. Any notice so given shall be deemed to have been received as of the date the original is received, or as of the date on which a copy was sent by telex or facsimile and a confirmation of receipt indicated on the sending telex or facsimile machine, whichever is earlier. 13.5 Applicable Law. This Agreement shall be governed by and interpreted in accordance with the substantive law of the State of Delaware. The Company shall be governed by and operate in accordance with the applicable legislation of Delaware. 13.6 Severability. In case one or more of the provisions contained in this Agreement, or any application thereof, shall be invalid, illegal or unenforceable in any respect under applicable law, the validity, legality and enforceability of the remaining provisions contained therein and any other application thereof shall not be affected or impaired in any way. 13.7 Entire Agreement. This Agreement sets forth the entire agreement among the Members relating to the subject matter contained herein and shall create binding rights and obligations of the Members, and between the Members and the Company. All other prior agreements or understandings, both written and oral, are of no further force or effect. This Agreement shall not be amended or replaced except by unanimous written agreement of the Members. 13.8 Headings. The headings contained in this Agreement are for convenience only and shall not be used to construe or interpret the substantive meaning or intent of any provision thereof. 13.9 Counterparts. This Agreement may be executed in one or more counterparts, each of which is an original but all of which shall constitute one instrument. IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed in four (4) originals on the date first written above. FOR AND ON BEHALF OF: DEVELOPED TECHNOLOGY RESOURCE, INC. By: Name: John P. Hupp Title: President FOR AND ON BEHALF OF: API DAIRY PARTNERS L.P. By Agribusiness Holding Company L.L.C. its general partner By: Name: Gary N. Thompson Title: Chief Financial Officer FOR AND ON BEHALF OF: AGRIBUSINESS PARTNERS INTERNATIONAL L.P. II By C.I.S. Management Company L.L.C. its general partner By: Name: Gary N. Thompson Title: Chief Financial Officer APPENDIX A DTR Ownership Table** IRR DTR DTR to API Economic Control Ownership Ownership 35% 40% 40% 37 41 40 39 42 40 41 43 40 43 44 40 45 45 40 47 46 40 49 47 40 51 48 40 53 49 40 55 50 40 57 51 40 59 52 40 61 53 40 63 54 40 65 55 40 - ----- 66 56 40 67 57 40 68 58 40 69 59 40 70 60 40 71 61 40 72 62 40 73 63 40 74 64 40 75 65 40 76 66 40 77 67 40 78 68 40 79 69 40 80 70 40 ** The DTR Ownership Table is set up using a ratio of 2 units of IRR increase for 1 unit of economic ownership increase until API's IRR reaches 65% thereafter, the ratio will be 1 unit of IRR increase for 1 unit of economic ownership increase. A EX-10.2 5 SHARE TRANSFER Exhibit 10.2 SHARE TRANSFER City of Minnetonka, MN, USA Date: March 3, 1997 ------------------- ------------- THIS SHARE TRANSFER (the "Transfer") is made by and between FoodMaster International L.L.C., a company created under the laws of the State of Delaware, U.S.A. (hereinafter referred to as "FI"), and Developed Technology Resource, Inc., a company created under the laws of the State of Minnesota, U.S.A., (hereinafter referred to as "DTR"). WHEREAS, the Certificate On State Registration No. 171900-TOO(UY) dated July 14, 1995, issued by the Ministry Of Justice of the Republic of Kazakhstan on the name of the Company with Limited Liability FoodMaster Corporation TOO ("FoodMaster L.L.C. ") evidences that FoodMaster L.L.C. is a legal entity; WHEREAS, the Foundation Agreement of FoodMaster L.L.C. of February 1, 1995 (as amended) and the Charter of FoodMaster L.L.C. of February 1, 1995 (as amended) state that DTR possesses an equity share in the amount of 508 of FoodMaster L.L.C. ("Equity Share"). NOW THEREFORE, the parties have concluded this Transfer as follows: I. SUBJECT MATTER OF THE AGREEMENT DTR hereby transfers and assigns all of its rights and interest in the Equity Share to FI as of the date of this Agreement and as part of the capital contribution of DTR to FI under the terms and conditions contained in the Limited Liability Company Agreement of FI dated as of the date hereof. II. TERMS AND CONDITIONS OF THE AGREEMENT 2.1 FI's rights in and to the Equity Share shall arise from the moment of the conclusion of this Transfer. 2.2 Subsequent to the date of this Transfer, DTR shall take all necessary steps to reregister the Equity Share in the name of FI, including but not limited to: (a) signing and providing the letter of withdrawal from FoodMaster L.L.C. (b) preparing and signing the Protocol Of The General Meeting of FoodMaster L.L.C. approving the necessary changes to the foundation documents of FoodMaster L.L.C. and other related issues, and registering new foundation documents with the Ministry of Justice. All of the foregoing steps shall be taken to the sole satisfaction of FI. III. REPRESENTATIONS DTR represents and warrants that (i) DTR has full and record and beneficial title to Equity Share and the Equity Share is not encumbered with any liens, pledges or other encumbrances or rights of third parties, (ii) DTR has authority and has taken all steps necessary to enter into this Transfer and transfer the Equity Share and neither executing this Transfer or transferring the Equity Share violates or will violate any law applicable to DTR, (iii) FoodMaster L.L.C. is validly existing and properly registered in accordance with all laws applicable to it, (iv) DTR has obtained the letter of consent for this Transfer from the Ak Bulak Joint Stock Company, which is another participant in FoodMaster L.L.C., and (v) FI will obtain full legal title to the Equity Share subject to the satisfaction of the conditions set forth in Section 2.2 of this transfer. The parties hereby agree to the foregoing by the signatures of their undersigned representatives as of the date first above written: FOR AND ON BEHALF OF: DEVELOPED TECHNOLOGY RESOURCE, INC. By: Name: John P. Hupp Title: President FOR AND ON BEHALF OF: FOODMASTER INTERNATIONAL L.L.C. By API Dairy Partners L.P., member By Agribusiness Holding Company L.L.C, its general partner By: Name: Gary N. Thompson Title: Chief Financial Officer EX-10.3 6 BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT EXHIBIT 10.3 BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT Developed Technology Resource, Inc. ("DTR") a Minnesota Corporation, hereby sells, assigns and transfers to FoodMaster International L.L.C., a Delaware Limited Liability Company ("FoodMaster"), the following personal property: 1. The following items located at the Ak Bulak Dairy in the city of Issyk, Kazakhstan ("Ak Bulak"), which are a capital contribution by DTR to FoodMaster and for which no additional consideration is to be paid by FoodMaster: 1 Mercedes Tractor Trailer truck 2435L, Serial #wDB65846315549468, 16 cyl 1 Rebuilt Hamba yogurt/sour cream packaging machine. Model 2400 Loan Agreement dated February 21, 1995, for $60,000 Loan Agreement dated May 7, 1996, for $40,000 2. The following items, for which FoodMaster shall pay to DTR the consideration set forth below: 1 NiMCO 350 QL form, fill, seal machine $19,078.94 (located in Ak Bulak) 1 NiMCO 550 QL form, fill, seal machine 29,613.69 (at NiMCo factory) 1 Used Hamba Yogurt filling machine 11,470.00 (at Phoenix factory), plus shipping 473.21 repair parts 297.40 1 Vitaline ice cream machine and wrapper 120,000.00 ---------- (in transit to Ak Bulak) 180,193.24 FoodMaster agrees to assume liability for the balance owed by DTR to the vendors of the above machines with respect to any of the items listed in this section 2 and agrees to indemnify DTR and to hold DTR harmless for any further liability or obligation to any vendor with respect to such items. 3. The Following accounts receivable owed by the FoodMaster Corporation TOO to DTR for payments made on behalf of FoodMaster Corporation TOO by DTR, which are sold, transferred and assigned without recourse in exchange for payment to DTR of the amounts set forth below. Cargill $4,451.36 Aliance Food Equipment 2,373.60 Germantown USA 834.00 Germantown USA 4,004.00 International Dairy Equipment 880.00 MO Air 10,000.00 Label Makers, Inc. 7,075.00 NiMCO Corporation 2,698.38 Landis Plastics 39,331.70 Phoenix Engineering 99.72 Rhone-Poulen, Inc. 2,805.11 Advance to FoodMaster (for Powdered Milk) 35 000.00 ---------- Total 109,552.87 DTR represents that these expenses were necessary for the implementation of the Dairy Proposal, dated December 1996 which was provided by DTR to certain members of FoodMaster. 4. DTR agrees to sign any and all documents that may be required to perfect the sale, transfer and assignment of all its right, title and interest (including leasehold) to the property which is the subject of this agreement and agrees to indemnify FoodMaster and hold FoodMaster harmless in the event that FoodMaster does not obtain full legal title to such property. Effective upon the signing of this agreement, all of DTR's rights to use, control and dispose of the property which is the subject of this agreement is transferred to FoodMaster. FOR AND ON BEHALF OF: Dated: 3-3-97 DEVELOPED TECHNOLOGY RESOURCE, INC. By: John P. Hupp, President and Chief Executive Officer Dated: 3-3-97 FOR AND BEHALF OF: FOOD MASTER INTERNATIONAL L.L.C. By: API Dairy Partners L.P., member By: Agribusiness Holding Company L.L.C., its general partner By: Gary N. Thompson, Chief Financial Officer ACKNOWLEDGED AND CONSENTED TO: FoodMaster Corporation, TOO By: Erlan Sagadiev Dated: - -- EX-10.4 7 MANAGEMENT AGREEMENT EXHIBIT 10.4 MANAGEMENT AGREEMENT THIS AGREEMENT ("Agreement") is made and entered into as of the 3rd day of March, 1997, by and between DEVELOPED TECHNOLOGY RESOURCE, INC., a corporation organized under the laws of the State of Minnesota (hereinafter the "Manager"), and FOODMASTER INTERNATIONAL L.L.C., a limited liability company organized under the laws of the State of Delaware (hereinafter the "Company"). WITNESSETH: WHEREAS, the Company has been formed by the Manager and certain other parties (collectively the "Members") for the purpose of producing, packaging and distributing high-quality, branded dairy, juice and other food related products in the former Soviet Union; and WHEREAS, as an inducement to the Members to form the Company, the Manager has agreed to manage the business of the Company. NOW, THEREFORE, for and in consideration of the foregoing and the premises and mutual covenants hereinafter contained, the parties hereto hereby agree as follows: 1. Engagement of Manager. The Company hereby engages the Manager to develop, manage and operate all business activities of the Company and to do and perform any and all things in the management of those business activities customarily performed by managers of similar businesses, subject to the terms and conditions imposed by this Agreement. 2. Acceptance by Manager/Priority of Resources. Manager hereby agrees to manage the business of the Company on the terms and conditions provided herein. It is understood and agreed that the Manager will devote all resources necessary to the performance of its obligations under this Agreement and shall not undertake any other projects or commitments which may adversely affect its ability to perform its obligations under this Agreement. 3. Control by the Company. Notwithstanding any other provision of this Agreement, the Manager shall be subject to the direction and control of the Company with respect to all aspects of the performance of its obligations under this Agreement 4. Duties of Manager. Subject to the provisions of Section 3, Manager agrees to perform all actions reasonably necessary to develop, manage and operate the business activities of the Company, including without limitation the following: a. Manage all business activities of the Company. b. Conduct all business activities of the Company's FoodMaster operations in Kazakstan and its prospective operations in Moldova. c. Investigate other dairy and food operations in the former Soviet Union for possible investment by the Company. d. Establish and maintain bank accounts for the Company, provided that such accounts shall be approved by the Company prior to being established, and keep the books and records of all business activities of the Company, to pay all debts and obligations, to execute contracts as authorized by the Company. e. Engage accountants for the Company and for the businesses owned and controlled by the Company, provided that such accountants shall be approved by the Company prior to engagement. Select, employ, supervise, direct, pay and discharge all employees or independent contractors necessary, in Manager's opinion, for the development, management, and operation of the Company's businesses in the former Soviet Union, and all such persons shall be employees or agents of Manager and not of the Company. Manager shall carry workers' compensation insurance, written in such manner as also to protect the Company in an appropriate amount, covering all such employees, and shall withhold for tax purposes and make all deductions and file all reports required under all applicable laws and regulations. f. Such other duties and responsibilities reasonably requested from time to time by the Company. 5. Employee Non-Competes. The Manager shall cause each of its key employees to enter into non-competition agreements pursuant to which each of its employees shall agree that during their employment with the Manager and for a period of one year after termination thereof (whether voluntary or involuntary), such employee shall not (i) directly or indirectly maintain an ownership interest in, operate, or work for any entity which produces, packages or distributes dairy, juice or other food related products in any of the Republics of the former Soviet Union in which the Company engages, or proposes to engage, in such activities, (ii) solicit, do business with, or deliver products or services to any person or entity who was a client or customer of the Company, or (iii) employ or offer to employ any individual who was employed by the Manager or the Company or in any way associated with the Manager or the Company. For purposes of this Agreement, the term "key employees" shall refer to John P. Hupp, Erlan Sagadiev, Denis Gablenko, and Lydia L. Bauer, and any other individuals employed by the Manager during the term of this Agreement to perform duties for the Manager similar to those performed by the four foregoing individuals. 6. Independent Contractor. The Manager shall operate as an independent contractor and neither Manager nor its employees shall be considered employees of the Company. 7. Property of the Company. It is understood and agreed that all books, records, files, reports, business products, discoveries, improvements, know-how or techniques made, developed or created by the Manager (or its agents or employees) in connection with the performance of the Manager's obligations under this Agreement, shall be the property of the Company and shall be assigned to the Company upon request. Nothing in this Agreement is intended to preclude the Manager from using (i) any products, discoveries, improvements, know-how or techniques in connection with projects which the Company has declined to pursue under the Company's Limited Liability Company Agreement, or (ii) products, discoveries, improvements, know-how or techniques unrelated to the production, packaging or distribution of dairy, juice or other food related products in the former Soviet Union. 8. Insurance. The Company shall provide liability insurance in an amount satisfactory to the Manager. The Manager shall be named insured on such liability insurance policies and certificates of insurance shall be provided to the Manager. 9. Reports. The Manager will submit to the Company monthly financial statements for all businesses in which the Company has an investment and will provide such other information and reports as may be requested from time to time by the Company. 10. Preparation of Annual Budget. Manager shall prepare a preliminary annual budget forty-five (45) days prior to the end of each fiscal year. The Company shall provide the Manager with an approved budget for each fiscal year prior to the beginning of that fiscal year. The Company must approve any expenses incurred by the Manager in excess of amounts specified in the approved budget. 11. Indemnification. (a) The Company shall indemnify and hold harmless the Manager from and against any and all claims or liabilities for damage or injury to property or persons or death of persons occurring on or about the premises of any businesses owned or controlled by the Company and managed by the Manager, except for such claims as arise due to the negligent act or omission of Manager, its agents or employees. (b) The Manager shall indemnify and hold harmless the Company against any and all claims or liabilities for damage or injury to property or persons or death of persons resulting or arising from the negligent acts or omissions of the Manager, its agents or employees, except for such claims as arise due to the negligent acts of omissions of the Company which do not involve any negligent acts or omissions of the Manager, its agents or employees. 12. Compensation and Expense Reimbursement. (a) As consideration for performing the services identified in this Agreement, the Company shall reimburse the Manager for all expenses reasonably incurred by the Manager in connection with the performance of services under this Agreement provided that such expenses are specified in the budget approved pursuant to Section 10 or have been pre-approved by the Company. The Manager shall provide the Company with monthly invoices (in form and detail as reasonably acceptable to the Company) of expenses to be reimbursed under this Agreement. The Company shall pay the Manager for expenses identified in such invoice within thirty (30) days of the receipt of an invoice. (b) Upon execution of this Agreement, the Company shall reimburse the Manager for the expenses identified on Exhibit A hereto which were for equipment purchases, consulting fees, and travel and other expenses incurred from November 15, 1996 through the date of this Agreement, which the Manager represents were necessary to implement the Dairy Proposal, dated December 1996, provided by the Manager to the Members (the "Dairy Proposal"). Subsequent to the date of this Agreement, the Company shall reimburse the Manager for other expenses incurred prior to the date of this Agreement that are not identified on Exhibit A which the Manager represents were necessary to implement the Dairy Proposal. 13. Contracts. Contracts and agreements entered into in accordance with Section 4 of this Agreement in connection with the development, management or operation of the businesses owned or controlled by the Company and managed by the Manager shall be executed by the Manager as agent of the Company, and the Company agrees to indemnify and hold harmless the Manager from and against all existing and future liabilities under such contracts and agreements, provided that the Manager shall have no authority to incur any obligation on behalf of the Company that exceeds [U.S.]$25,000 unless (i) the amount of such obligation, the identity of the party to whom the obligation is to be incurred, and the purpose for which the obligation is to be incurred is specified in a budget approved by the Company, or (ii) such obligation is otherwise specifically approved by the Company. 14. Term. This Agreement shall be effective as of the date hereof and shall remain in effect until terminated in accordance with the following sentence. This Agreement shall not terminate except (i) by mutual consent of the parties hereto, (ii) by either party for cause, (iii) by the Company upon sixty (60) day prior written notice, or (iv) upon the liquidation of the Company. For purposes of this Agreement, "cause" shall mean the breach of any term hereof which breach is not cured within thirty (30) days of the delivery of notice of such breach by the party seeking termination. 15. Cooperation Between Parties. The parties agree to give each other full cooperation and assistance to the end that both parties may discharge their responsibilities hereunder. 16. Notices. Wherever in this Agreement it shall be required or permitted that notice or demand be given or served by either party to this Agreement to or on the other, such notice or demand shall be given or served either personally or forwarded by registered or certified mail, postage prepaid, and a copy sent by telex or facsimile. Any notice so given shall be deemed to have been received as of the date the original is received, or as of the date on which a copy was sent by telex or facsimile and a confirmation of receipt indicated on the sending telex or facsimile machine, whichever is earlier. The addresses for the parties are as follows: To the Manager: To the Company: Development Technology, Inc. 12800 Whitewater Drive, Suite 170 Minnetonka, MN 55343 Telecopy: 612-938-2319 c/o Agribusiness Management Co. 1004 Farnham Street, Suite 400 Omaha, NE 68102 Telecopy: 412-345-8966 Such addresses may be changed from time to time by either party by serving notice as above provided. 17. Assignment. This Agreement shall be binding upon the successors and assigns of the parties hereto and may not be assigned by Manager, except to an entity controlled by Manager, without the prior written consent of the Company. 18. Amendment or Modification. This Agreement constitutes the entire agreement between the parties hereto, and no variance or modification hereof shall be valid or enforceable, except by an amendment or supplemental agreement in writing executed by the parties hereto. 19. Choice of Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without giving effect to principles of conflicts of laws. 20. Counterparts. This Agreement may be executed in one or more counterparts, each of which is an original but all of which shall constitute one instrument. IN WITNESS WHEREOF, the parties hereof have caused this instrument to be duly executed as of the day and year first above written. FOODMASTER INTERNATIONAL L.L.C. By API Dairy Partners L.P., Member By Agribusiness Holding Company L.L.C., its general partner By Gary N. Thompson, Chief Financial Officer DEVELOPED TECHNOLOGY RESOURCE, INC. By _________________________________ John P. Hupp, President
Expenses for Reimbursement Data Vendor Description Amount - ------------------------------------------------------------------------------------------------------- 2/1 5/97 Payroll $ 8,542.08 2/3/97 Kinko's Investment proposal copy 12.27 2/3/97 Ceridian Payroll processing 36.00 2/3/97 American Medical Security Dental premium 102.15 2/4/97 Cargill, Inc. Rent-Feb 97 2,967.64 2/4/97 Medica Medical insurance-Feb 97 833.75 2/1 0/97 Fed of Trade Union Chisinau Office Rent-Feb 97 600.00 2/13/97 Office Max Office supplies 110.43 2/28/97 Payroll-2/28/97 8,542.08 $21,746.40 12/10/96 Peter Sandfort Hinchesti & St. Petersburg proiects 5,392.21 l/20/97 Peter Sandfort Hinchesti project 3,691.00 2/13/97 Peter Sandfort Kazakhstan 3,091.00 12,174.21 12/18/96 Mr. Alexandrov Airline ticket 1,931.22 1/6/97 John Hupp Mr. Alexandrov's visit expenses 2,161.33 1/7/97 Denis Gablenko Mr. Alexandrov's visit expenses 113.03 2/18/97 John Hupp Mr. Alexandrov's visit expenses 478.92 2/18/97 John Hupp NY/DC Trip for AID Sandfort, Sagad 2,083.13 6,767.63 2/26/97 Robert Half Lydia Bauer Placement fees 15,000.00 15,000.00 10/96-12/96 Denis Gablenko Moldova travel expenses 7,366.17 1/97 Denis Gablenko Flight from Moscow to Moldova 1,139.95 8,506.12 Ak Bulak Debt Payments 157,729.58 157,729.58 ACCOUNT RECEIVABLES TO FOODMASTER LLC Cargill $4,451.36 Alliance Food Equipment 2,373.60 Germantown USA 834 Germantown USA 4,004.00 International Dairy Equipment 880 MO Air 10,000.00 Label Makers ,Inc. 7,075.00 NiMCO Corporation 2,698.38 Landis Plastics 39,331.70 Phoenix Engineering 99.72 Rhone-Poulen, Inc. 2,805.11 Advance to FoodMaster for Powdered Milk 35,000.00 Subtotal: 109,552.87 EQUIPMENT PURCHASED 1 NiMCO 350 QL form fill and seal machine 19,078.94 1 NiMCO 550 QL form fill and seal machine 29,613.69 1 Used rebuilt Hamba Yogurt filling 11,470.00 -shipping 443.21 -repair parts 297.40 1 Vitaline ice cream machine and wrapper 120,000.00 Subtotal: 180,903.24 Grand Total: $512,380.05
EX-10.5 8 EMPLOYMENT AGREEMENT Exhibit 10.5 EMPLOYMENT AGREEMENT BY AND BETWEEN ERLAN SAGADIEV AND DEVELOPED TECHNOLOGY RESOURCE, INC. THIS EMPLOYMENT AGREEMENT, effective September 30, 1996, is made by and between Erlan Sagadiev ("Executive") and Developed Technology Resource, Inc. ("DTR"), a Minnesota corporation. WHEREAS, DTR desires the services of Executive to assist DTR in its operas provided herein, and Executive has agreed to provide such services; NOW, THEREFORE, DTR and Executive, in consideration of the mutual promises and covenants contained herein, agree as follows: 1.EMPLOYMENT. DTR agrees to employ Executive as its General Manager of its Food Master subsidiary. Executive hereby accepts such employment. 2.EXCLUSIVITY OF SERVICES. Executive will devote his best efforts to the performance of his duties hereunder as a full time employee of DTR. Executive will not, without the written consent of the Board of Directors of DTR, engage in any activity which conflicts or interferes with the performance of his duties hereunder. Executive warrants that there exist no undisclosed written or oral arrangements preventing his exclusive service to DTR, and that he has not made any undisclosed commitment or performed any undisclosed act, and will not make any commitment or perform any act, in conflict with the exclusive nature of his duties to DTR. 3. TERM. This Employment Agreement shall have a term of five (5) years, beginning on September 30, 1996 and expiring on September 29, 2001, subject to earlier termination under Section 8 hereof. 4.COMPENSATION. In consideration of Executive's acceptance of continued employment and performance of duties under this Employment Agreement, including, but not limited to the provisions of Sections 5, 6 and 7, DTR shall pay to Executive the following Compensation: (a)Salary. Executive shall be paid a salary at a gross annual rate of Sixty Thousand Dollars ($60,000.00). The Board of Directors of DTR may, in its discretion, increase Executive's salary. Salary payments hereunder shall made in the same manner and number as are the salary payments of other senior executives of DTR and shall be subject to required payroll tax withholding and other deductions authorized by Executive. (b)Bonuses. The Board of Directors of DTR may grant Executive one or more bonuses in its discretion. (c)Benefits. Executive shall, for each fiscal year this Employment Agreement remains effective, be entitled to paid vacations, health plans, pension plans, stock purchase plans, profit sharing plan, automobile allowance, and any other benefit plans, on the same terms as such benefits are available generally to other senior executives of DTR. (d)Expense Reimbursement. DTR will pay or reimburse Executive for all reasonable and necessary out-of-pocket expenses incurred by him in the performance of his duties under this Employment Agreement, subject to presentation of appropriate vouchers in accordance with DTR' normal policies for expense verification. (e)Grant of Option. As additional consideration for the covenants in paragraphs 5, 6 and 7, DTR agrees to grant Executive, effective as of the date hereof, an incentive stock option to purchase 250,000 shares of Common Stock, inaccordance with the terms of the grant letter attached. COVENANT NOT TO COMPETE. In partial consideration of the Compensation paid under this Employment Agreement, Executive agrees that during the term of this Employment Agreement and for a period of one (l) year following the termination of his employment, whether voluntary or involuntary, he shall not, either personally, or through an employer, firm, agent, servant, employee, partner, shareholder, representative, affiliate, or any other entity: (a)solicit, do business with, or deliver products or services which compete with the business, products or services of DTR to any person or entity who was a client or customer of DTR or was in any way associated with DTR as of the date of Executive's termination or at any time during the twelve (12) months immediately preceding such termination, without the prior written consent of DTR, (b)employ or offer to employ any individual employed by DTR or in any way associated with DTR within the four (4) months preceding the termination of Executive's employment; or request, advise or entice any such individual to leave the employment of DTR or disassociate from DTR, without the prior written consent of DTR, provided that any involuntary termination must be in compliance with this Employment Agreement, including the provisions of Section 8(b). Executive further agrees that in the event he breaches any of the covenants contained in this Section 5, irreparable injury will result to DTR, that DTR's remedy at law will be inadequate, and that DTR will be entitled to an injunction to restrain the continuing breach of this Employment Agreement by Executive, his partners, agents, servants, employees, or representatives, or any other persons or entities acting for or with him. DTR shall, without limitation, be entitled to damages, reasonable attorneys fees, and all other costs and expenses incurred in connection with the enforcement of this Section 5, in addition to any other rights or remedies which DTR may have at law or in equity. DTR may waive the application of this section for good cause. 6. NONDISCLOSURE OF INFORMATION. (a)Executive agrees that any information related to the business of DTR, or any of its clients, customers or associated entities, and acquired by Executive during his employment by DTR shall be regarded as confidential and solely for the benefit of DTR. Executive shall not, except as necessary in the ordinary course of conducting business for DTR, use such information himself or disclose such information to any other person, directly or indirectly, either during the term of this Employment Agreement or at any time thereafter, without the prior written consent of DTR. (b)Executive shall not remove any records or documents from the premises of DTR, or any of its clients, customers or associated entities, in either original, duplicate, or copied form, except as necessary in the ordinary course of conducting business for DTR. Executive shall immediately deliver to DTR, upon termination of employment with DTR, or at any other time upon DTR's request, any such records or documents in Executive's possession or control. 7. INVENTIONS. (a)"Inventions," as used in this Section 7, means any discoveries, improvements and ideas (whether or not they are in writing or reduced to practice) or works of authorship (whether or not they can be patented or copyrighted) that Executive makes, authors, or conceives (either alone or with others) and that: (i)concern directly DTR's business or DTR's present or demonstrably anticipated future research or development; (ii)result from any work Executive performs for DTR; (iii)use DTR's equipment, supplies, facilities, or trade secret information; or (iv)Executive develops during the time Executive is performing employment duties for DTR; (b)Executive agrees that all Inventions made by Executive during or within six months after the term of this Agreement will be DTR's sole and exclusive property. Executive will, with respect to any Invention: (i)keep current, accurate, and complete records, which will belong to DTR; (ii)promptly and fully disclose the existence and describe the nature of the Invention to DTR in writing (and without request); (iii)assign (and Executive does hereby assign) to DTR all of his rights to the Invention, any applications he makes for patents or copyrights in any country, and any patents or copyrights granted to him in any country; and (iv)acknowledge and deliver promptly to DTR any written instruments and perform any other acts necessary in DTR's opinion to preserve property rights in the Invention against forfeiture, abandonment or loss and to obtain and maintain letters patent and/or copyrights on the Invention and to vest the entire right and title to the Invention in DTR. The requirements of this subsection 7(b) do not apply to an Invention for which no equipment, supplies, facility or trade secret information of DTR was used and which was developed entirely on Executive's own time, and (1) which does not relate directly to DTR's business or to DTR's actual or demonstrably anticipated research or development, or (2) which does not result from any work Executive performed for DTR. Except as previously disclosed to DTR in writing, Executive does not have, and will not assert, any claims to or rights under any Inventions as having been made, conceived, authored or acquired by Executive prior to his employment by DTR. With respect to any obligations performed by Executive under this subsection 7(b) following termination of employment, DTR will pay Executive reasonable hourly compensation (consistent with the last Base Salary) and will pay or reimburse all reasonable out-of-pocket expenses. 8.TERMINATION. (a)Executive's employment shall be terminated under any of the following circumstances: (i)Immediately, if Executive has breached this Employment Agreement in any material respect, and such breach is not cured by Executive, or is not capable of being cured by Executive, within 30 days after written notice of such breach is delivered to Executive; (ii)Immediately, in the event of (1) Executive's conviction of a felony or crime involving moral turpitude or immoral conduct that is reasonably likely to affect adversely the business of DTR, or the goodwill associated therewith, or (2) the bankruptcy of DTR; (iii)Voluntary termination by Executive; (iv)Upon the death or total disability of Executive. (b)In the event that Executive's employment is voluntarily terminated pursuant to Section 8(a)(iii) above, or is involuntarily terminated pursuant to subsections (i)-(ii) of Section 8(a) above, Executive shall not be entitled to any Compensation following such termination. (c)If Executive's employment is terminated pursuant to Section 8(a)(iv), Executive and/or his surviving spouse and dependents, if any, otherwise his estate, shall receive the salary in the amount and manner set forth in Section 4(a) hereof and the benefits set forth in Section 4(c) (to the extent allowed by law) for a three month period. (d)In the event that Executive's employment is involuntarily terminated for any reason other than those set forth in subsections (i)-(iv) of Section 8(a) above, Executive shall receive the salary in the amount and manner set forth in Section 4(a) hereof and the benefits set forth in Section 4(c) hereof (to the extent allowed by law) through and until September 30, 1997, or for three months, whichever period is longer. DTR may satisfy this obligation by continuing to make the regular payroll payments for the term rather than a lump sum payment. (e)Nothing in this Section 8 shall be construed to affect Executive's entitlement to be paid for vacation, salary or benefits earned and unpaid at the time his employment is terminated. (f)Notwithstanding any termination of this Employment Agreement by any party and for any reason, in consideration of his employment hereunder to the date of such termination, Executive shall remain bound by the provisions of this Employment Agreement which specifically relate to periods, activities or obligations upon or subsequent to the termination of Executive's employment, except as specifically provided otherwise in this Agreement. 9.CONSENT TO VENUE AND JURISDICTION. Executive consents to venue and jurisdiction in the District Court of Hennepin County, State of Minnesota, and in the United States District Court for the District of Minnesota, and to service of process under Minnesota law, in any action commenced to enforce this Agreement. 10.ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties, and may not be amended or modified except by mutual written agreement of DTR and Executive. 11.SUCCESSORS AND ASSIGNS. Subject to the provisions herein, the benefits and obligations of this Agreement shall be binding upon and inure to the successors and assigns of DTR. 12.GOVERNING LAW. This Employment Agreement shall be construed under and governed by the laws of the State of Minnesota. 13.NOTICE. Any notice or other communications required or permitted to be given to the parties hereto shall be deemed to have been given on the third (3rd) day following deposit in the United States mail, postage prepaid, and addressed to the appropriate party at the address of such party as may be, from time to time, provided in writing to the other. 14. SEVERABILITY. If any provisions of this Employment Agreement shall, for any reason, be adjudged to be void, invalid or unenforceable by a court of law, the remainder of this Employment Agreement shall nonetheless continue and remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement. Dated: 2/3/97 Dated: 2/3/97 DEVELOPED TECHNOLOGY RESOURCE, INC. By Its "Executive" EX-10.6 9 EMPLOYMENT AGREEMENT Exhibit 10.6 EMPLOYMENT AGREEMENT BY AND BETWEEN JOHN HUPP AND DEVELOPED TECHNOLOGY RESOURCE, INC. THIS EMPLOYMENT AGREEMENT, effective September 30, 1996, is made by and between John Hupp ("Executive") and Developed Technology Resource, Inc. ("DTR"), a Minnesota corporation. WHEREAS, DTR desires the services of Executive to assist DTR in its operations as provided herein, and Executive has agreed to provide such services; NOW, THEREFORE, DTR and Executive, in consideration of the mutual promises and covenants contained herein, agree as follows: 1. EMPLOYMENT. DTR agrees to employ Executive as its President or other Executive officer position. Executive is currently employed as President and will remain President of DTR for a minimum of one year unless the Board of Directors and Executive jointly determine that Executive will better serve DTR in another Executive officer position. After one year, the Board shall determine if Executive shall remain in the office of the President or shall appoint him to such other Executive officer position. "Executive officer" for the purposes of this section means a management-level employee with the authority to make and implement decisions affecting DTR's policies and operations, subject only to review by the Board of Directors. Executive hereby accepts such employment. Executive will serve DTR under the direction of its Board of Directors. 2. EXCLUSIVITY OF SERVICES. Executive will devote his best efforts to the performance of his dudes hereunder as a full time employee of DTR. Executive will not, without the written consent of the Board of Directors of DTR, engage in any activity which conflicts or interferes with the performance of his dudes hereunder. Executive warrants that there exist no undisclosed written or oral arrangements preventing his exclusive service to DTR, and that he has not made any undisclosed commitment or performed any undisclosed act, and will not make any commitment or perform any act, in conflict with the exclusive nature of his duties to DTR. 3. TERM. This Employment Agreement shall have a term of five (5) years, beginning on September 30, 1996 and expiring on September 29, 2001, subject to earlier termination under Section 8 hereof. 4. COMPENSATION. In consideration of Executive's acceptance of continued employment and performance of duties under this Employment Agreement, including, but not limited to the provisions of Sections 5, 6 and 7, DTR shall pay to Executive the following Compensation: (a) Salary. Executive shall be paid a salary at a gross annual rate of Seventy-Five Thousand Dollars ($75,000.00) until December 31, 1996 at which time the annual salary will increase to Ninety Thousand Dollars ($90,000.00) per annum on January 1, 1997. The Board of Directors of DTR may, in its discretion,increase Executive's salary. Salary payments hereunder shall be made in the same manner and number as are the salary payments of other senior executives of DTR and shall be subject to required payroll tax withholding and other deductions authorized by Executive. (b) Bonuses. The Board of Directors of DTR may grant Executive one or more bonuses in its discretion. (c) Benefits. Executive shall, for each fiscal year this Employment Agreement remains effective, be entitled to paid vacations, health plans, pension plans, stock purchase plans, profit sharing plan, automobile allowance, and any other benefit plans, on the same terms as such benefits are available generally to other senior executives of DTR. (d) Expense Reimbursement. DTR will pay or reimburse Executive for all reasonable and necessary out-of-pocket expenses incurred by him in the performance of his duties under this Employment Agreement, subject to the presentation of appropriate vouchers in accordance with DTR' normal policies for expense verification. (e) Grant of Option. As additional consideration for the covenants in paragraphs 5, 6 and 7, DTR agrees to grant Executive, effective as of the date hereof, an incentive stock option to purchase 250,000 shares of Common Stock, in accordance with the terms of the grant letter attached. 5. COVENANT NOT TO COMPETE. In partial consideration of the Compensation paid under this Employment Agreement, Executive agrees that during the term of this Employment Agreement and for a period of one (1) year following the termination of his employment, whether voluntary or involuntary, he shall not, either personally, or through an employer, firm, agent, servant, employee, partner, shareholder, representative, affiliate, or any other entity: (a) solicit, do business with, or deliver products or services which compete with the business, products or services of DTR to any person or entity who was a client or customer of DTR or was in any way associated with DTR as of the date of Executive's termination or at any time during the twelve (12) months immediately preceding such termination, without the prior written consent of DTR, (b) employ or offer to employ any individual employed by DTR or in any way associated with DTR within the four (4) months preceding the termination of Executive's employment; or request, advise or entice any such individual to leave the employment of DTR or disassociate from DTR, without the prior written consent of DTR, provided that any involuntary termination must be in compliance with this Employment Agreement, including the provisions of Section 8(b). Executive further agrees that in the event he breaches any of the covenants contained in this Section 5, irreparable injury will result to DTR, that DTR's remedy at law will be inadequate, and that DTR will be entitled to an injunction to restrain the continuing breach of this Employment Agreement by Executive, his partners, agents, servants, employees, or representatives, or any other persons or entities acting for or with him. DTR shall, without limitation, be entitled to damages, reasonable attorneys fees, and all other costs and expenses incurred in connection with the enforcement of this Section 5, in addition to any other rights or remedies which DTR may have at law or in equity. DTR may waive the application of this section for good cause. 6. NONDISCLOSURE OF INFORMATION. (a) Executive agrees that any information related to the business of DTR, or any of its clients, customers or associated entities, and acquired by Executive during his employment by DTR shall be regarded as confidential and solely for the benefit of DTR. Executive shall not, except as necessary in the ordinary course of conducting business for DTR, use such information himself or disclose such information to any other person, directly or indirectly, either during the term of this Employment Agreement or at any time thereafter, without the prior written consent of DTR. (b) Executive shall not remove any records or documents from the premises of DTR, or any of its clients, customers or associated entities, in either original, duplicate, or copied form, except as necessary in the ordinary course of conducting business for DTR. Executive shall immediately deliver to DTR, upon termination of employment with DTR, or at any other time upon DTR's request, any such records or documents in Executive's possession or control. 7. INVENTIONS. (a) "Inventions," as used in this Section 7, means any discoveries, improvements and ideas (whether or not they are in writing or reduced to practice) or works of authorship (whether or not they can be patented or copyrighted) that Executive makes, authors, or conceives (either alone or with others) and that: (i) concern directly DTR's business or DTR's present or demonstrably anticipated future research or development; (ii) result from any work Executive performs for DTR; (iii) use DTR's equipment, supplies, facilities, or trade secret information; or (iv) Executive develops during the lime Executive is performing employment duties for DTR; (b) Executive agrees that all Inventions made by Executive during or within six months after the term of this Agreement will be DTR's sole and exclusive property. Executive will, with respect to any Invention: (i) keep current, accurate, and complete records, which will belong to DTR; (ii) promptly and fully disclose the existence and describe the nature of the Invention to DTR in writing (and without request); (iii) assign (and Executive does hereby assign) to DTR all of his rights to the Invention, any applications he makes for patents or copyrights in any country, and any patents or copyrights granted to him in any country; and (iv) acknowledge and deliver promptly to DTR any written instruments and perform any other acts necessary in DTR's opinion to preserve property rights in the Invention against forfeiture, abandonment or loss and to obtain and maintain letters patent and/ or copyrights on the Invention and to vest the entire right and title to the Invention in DTR. The requirements of this subsection 7(b) do not apply to an Invention for which no equipment, supplies, facility or trade secret information of DTR was used and which was developed entirely on Executive's own time, and (1) which does not relate directly to DTR's business or to DTR's actual or demonstrably anticipated research or development, or (2) which does not result from any work Executive performed for DTR. Except as previously disclosed to DTR in writing, Executive does not have, and will not assert any claims to or rights under any Inventions as having been made, conceived, authored or acquired by Executive prior to his employment by DTR. With respect to any obligations performed by Executive under this subsection 7(b) following termination of employment, DTR will pay Executive reasonable hourly compensation (consistent with the last Base Salary) and will pay or reimburse all reasonable out-of-pocket expenses. 8. TERMINATION. (a) Executive's employment shall be terminated under any of the following circumstances: (i) Immediately, if Executive has breached this Employment Agreement in any material respect, and such breach is not cured by Executive, or is not capable of being cured by Executive, within 30 days after written notice of such breach is delivered to Executive; (ii) Immediately, in the event of (l) Executive conviction of a felony or crime involving moral turpitude or immoral conduct that is reasonably likely to affect adversely the business of DTR, or the goodwill associated therewith, or (2) the bankruptcy of DTR; (iii) Voluntary termination by Executive; (iv) Upon the death or total disability of Executive. (b) In the event that Executive's employment is voluntarily terminated pursuant to Section 8(a)(iii) above, or is involuntarily terminated pursuant to subsections (i)-(ii) of Section 8(a) above, Executive shall not be entitled to any Compensation following such termination. (c) If Executive's employment is terminated pursuant to Section 8(a)(iv), Executive and/or his surviving spouse and dependents, if any, otherwise his estate, shall receive the salary in the amount and manner set forth in Section 4(a) hereof and the benefits set forth in Section 4(c) (to the extent allowed by law) for a three month period. (d) In the event that Executive's employment is involuntarily terminated for any reason other than those set forth in subsections (i)-(iv) of Section 8(a) above, Executive shall receive the salary in the amount and manner set forth in Section 4(a) hereof and the benefits set forth in Section 4(c) hereof (to the extent allowed by law) through and until September 30, 1997, or for three months, whichever period is longer. DTR may satisfy this obligation by continuing to make the regular payroll payments for the term rather than a lump sum payment. (e) Nothing in this Section 8 shall be construed to affect Executive's entitlement to be paid for vacation, salary or be nefits earned and unpaid at the time his employment is terminated. (f) Notwithstanding any termination of this Employment Agreement by any party and for any reason, in consideration of his employment hereunder to the date of such termination, Executive shall remain bound by the provisions of this Employment Agreement which specifically relate to periods, activities or obligations upon or subsequent to the termination of Executive's employment, except as specifically provided otherwise in this Agreement. 9. CONSENT TO VENUE AND JURISDICTION. Executive consents to venue and jurisdiction in the District Court of Hennepin County, State of Minnesota, and in the United States District Court for the District of Minnesota, and to service of process under Minnesota law, in any action commenced to enforce this Agreement. 10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties, and may not be amended or modified except by mutual written agreement of DTR and Executive. 11. SUCCESSORS AND ASSIGNS. Subject to the provisions herein, the benefits and obligations of this Agreement shall be binding upon and inure to the successors and assigns of DTR. 12. GOVERNING LAW. This Employment Agreement shall be construed under and governed by the laws of the State of Minnesota. 13. NOTICE. Any notice or other communications required or permitted to be given to the parties hereto shall be deemed to have been given on the third (3rd) day following deposit in the United States mail, postage prepaid, and addressed to the appropriate party at the address of such party as may be, from time to time, provided in writing to the other. 14. SEVERABILITY. If any provisions of this Employment Agreement shall, for any reason, be adjudged to be void, invalid or unenforceable by a court of law, the remainder of this Employment Agreement shall nonetheless continue and remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement. DEVELOPED TECHNOLOGY RESOURCE, INC. Dated: By Its Dated: "Executive" -----END PRIVACY-ENHANCED MESSAGE-----