Exhibit 10(h)(2)
THIS PRODUCT SUPPLY AGREEMENT (the "Agreement") is made as of April 14,
1997, by and between CODDLE ROASTED MEATS, INC., a Virginia corporation
(hereinafter referred to as "Coddle"); and XXXXXXXX'X FOODS, INC., a Virginia
corporation (hereinafter referred to as "Xxxxxxxx'x").
RECITALS
A. Pursuant to the Asset Purchase Agreement dated as of March 18, 1997
(the "Purchase Agreement"), by and between Xxxxxxxx'x and Coddle, Coddle has
agreed to buy certain of the assets of Xxxxxxxx'x Manufacturing Processing
Division (the "Transaction").
B. Following the Closing of the Purchase Agreement, Coddle will
manufacture and sell to Xxxxxxxx'x the Coddle Products (hereinafter defined)
under the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
A. Purchase and Sale of Products. Subject to the terms and conditions
of this Agreement, Coddle agrees to sell to Xxxxxxxx'x, and Xxxxxxxx'x agrees to
purchase from Coddle at the Purchase Price (as hereinafter defined) all of
Xxxxxxxx'x requirements for the products identified on Exhibit A attached hereto
and made a part hereof (the "Coddle Products").
With respect to the products listed on Exhibit A, it is agreed and
understood that the term "Coddle Products" as used herein is to be construed to
mean the identical products listed on Exhibit A, produced and manufactured under
the same formulas used by Xxxxxxxx'x during its manufacture of such products,
which formulas are being sold to Coddle pursuant to the terms of the Purchase
Agreement. Xxxxxxxx'x shall be under no obligation hereunder to purchase Coddle
Products which are produced with different formulas or recipes.
B. Multi-Unit and Large End User Accounts. Xxxxxxxx'x shall not be
obligated to purchase Coddle Products hereunder for sale to (i) any account with
over five (5) affiliated locations (a "Multi-Unit Account"), or (ii) any
end-user account with aggregate annual purchases exceeding $500,000 (a "Large
End-User Account") to the extent that such account requires Xxxxxxxx'x, after
the closing of the Transaction, to sell to such accounts products other than
those produced or sold by Coddle ("Competing Products"), and such requirement is
not solicited or recommended by Xxxxxxxx'x. Multi-Unit Accounts and Large
End-User Accounts are sometimes referred to hereinafter as collectively,
"Excluded Accounts."
C. Except as otherwise provided in paragraph 2b below, as a
precondition to Xxxxxxxx'x ability to sell Competing Products to an Excluded
Account under this Agreement, Xxxxxxxx'x must provide Coddle with a written
notice from the Excluded Account requiring Xxxxxxxx'x to offer such Competing
Products.
D. Ten (10) business days prior to a sale by Xxxxxxxx'x to any Excluded
Account hereunder, Xxxxxxxx'x shall give Coddle notice of its intent to sell
Competing Products to such Excluded Account and shall specify the Competing
Product. Upon receipt of such notice, Coddle shall have the right to call on
such Excluded Account with Xxxxxxxx'x assistance to try to sell the
corresponding Coddle Products to such Excluded Account instead of the requested
Competing Products as specified in the notice.
E. Except as provided in subparagraph 2.d hereunder, under no
condition, during the term of this Agreement shall Xxxxxxxx'x "general list"
Competing Products, i.e., with respect to the products which are the subject of
this Agreement, Xxxxxxxx'x shall not offer its customers a general product line
other than the Coddle Products.
F. Attached hereto and made a part hereof as Exhibit B is (i) a list of
products which Xxxxxxxx'x purchases from other vendors and "general lists" and
(ii) a list of the customers to which Xxxxxxxx'x currently sells such products.
There shall be no restriction hereunder against Xxxxxxxx'x ability to continue
to "general list" the listed products and to sell the listed products to the
customers set forth on Exhibit B. In the event that Coddle is able to produce
products which are of equivalent kind, quality and value to the products listed
on Exhibit B, Xxxxxxxx'x shall cooperate with Coddle in marketing Coddle's
products to the listed customers.
G. Coddle's Audit of Excluded Accounts. Coddle shall have the right to
audit Xxxxxxxx'x records to confirm the existence of any Excluded Account
claimed by Xxxxxxxx'x. In the event such audit reveals that a customer does not
qualify as an Excluded Account under the terms of this Agreement, Xxxxxxxx'x
shall bear the cost of such audit and shall immediately cease sales of Competing
Products to such account. If the audit reveals that the customer is a properly
designated Excluded Account, Coddle shall bear the cost of such audit, including
all costs incurred by Xxxxxxxx'x in accommodating such audit.
H. Purchase Price.
I. Coddle shall sell the Coddle Products to Xxxxxxxx'x at prices
reasonably equivalent to prices Coddle charges to other purchasers and
distributors of the Coddle Products buying in comparable volumes and shall offer
to Xxxxxxxx'x the same rebate, growth, or marketing programs offered for the
same Coddle Products, except that Coddle may price Coddle Products at special
rates lower than those sold to Xxxxxxxx'x in the case of bids or proposals made
directly by Coddle to school or governmental entities and for unique pricing
promotions for major end users (excluding other distributors).
J. Upon three days notice to Coddle, Xxxxxxxx'x shall have the right to
audit Coddle's records to confirm the "Purchase Price" compliance with the
provisions of this paragraph 4. In the event such audit reveals that the
Xxxxxxxx'x invoice price for a Coddle Product, over a rolling six-month period,
exceeds the price for the same Coddle Product to other distribution customers of
Coddle, buying in comparable volumes, then Coddle shall promptly pay to
Xxxxxxxx'x any "over-charge" so determined. If the audit reveals that Coddle has
complied with the "Purchase Price" provisions of this Agreement, Xxxxxxxx'x
shall bear the cost of such audit, including all costs incurred by Coddle in
accommodating such audit.
K. Coddle covenants that it will maintain pricing for the Coddle
Products which is reasonably comparable to corresponding Competing Products of
similar quality sold in similar quantities in Xxxxxxxx'x markets, such that the
Coddle Products remain marketable by Xxxxxxxx'x when sold at customary industry
margins. Xxxxxxxx'x shall provide written notice to Coddle of any alleged breach
of this covenant, and Coddle shall have 15 days thereafter to adjust its pricing
so that it complies with the provisions of this paragraph.
L. Term. The term of this Agreement shall be Five (5) years commencing
on the date hereof.
M. Orders. Coddle Products must be ordered from Coddle not less than
seven (7) days prior to delivery date. Coddle may accept, in its discretion,
orders for delivery in less than seven (7) days.
N. Quality. Coddle warrants that the quality of the Coddle Products
sold will be reasonably equal to the standards of quality existing at the time
of the Closing of the Transaction.
O. Customer Satisfaction. If, on a case-by-case basis, any Xxxxxxxx'x
customer requests that Xxxxxxxx'x offer one or more Competing Products because
such customer is dissatisfied with the quality of the corresponding Coddle
Products, Xxxxxxxx'x shall give Coddle prompt notice of the nature of the
complaint and shall cooperate with Coddle in attempting to address such
customer's concerns. If Coddle is unable to cure the problem to such customer's
satisfaction within 30 days after Coddle receives notice of the complaint, then
Xxxxxxxx'x shall thereafter have the option of selling corresponding Competing
Products to such customer. Nothing herein shall affect Xxxxxxxx'x obligations
under this Agreement with respect to other customers or with respect to any
Coddle Product which is not specifically subject to such complaint.
P. Payments. Coddle shall render its invoices covering shipments as
soon as practicable after each shipment. Terms of payment are net seven (7) days
after date of invoice and other terms set forth on Coddle's standard invoice, a
copy of which is attached hereto as Exhibit C and made a part hereof, provided
that if Xxxxxxxx'x fails to make timely payment of such invoices or if Coddle
shall have any reasonable doubt at any time as to Xxxxxxxx'x financial
responsibility, Coddle may decline to make further shipments hereunder, except
upon payment in cash at the time of delivery. All payments shall be made at
Coddle's principal place of business or the place specified for payment on the
applicable Coddle invoice.
Q. Maintenance and Cooperation. Xxxxxxxx'x agrees that its distribution
division will maintain the same selling practices and procedures, and customer
service relating to the Coddle Products to the extent practical during the term
of this Agreement. The parties hereto agree to cooperate with each other to
market and sell the Coddle Products through Seller's distribution business.
R. Force Majeure.
S. In the event of an Act of God, explosion, accident, fire, drought,
flood, earthquake, tornado, hurricane, strike, labor disturbance, insurrection,
riot, war, act of a public enemy, the acts or orders of a governmental unit,
freight embargo, transportation, power, utility, labor or material shortage,
delay in transportation or default of supplier or any other cause beyond
Coddle's reasonable control, interfering with the production, supply,
transportation, or consumption of the Coddle Products or with the supply of raw
materials or utilities used in connection therewith (a "Force Majeure Event"),
the obligation of Coddle to supply Coddle Products hereunder shall be held in
abeyance for the duration of the Force Majeure Event and the term of this
Agreement shall be extended for a period equal thereto. If a Force Majeure Event
results in or may reasonably be expected to result in an inability of Coddle to
ship Coddle Products for more than seven (7) days past their scheduled shipping
dates, then Xxxxxxxx'x may purchase the Coddle Products covered by any orders so
affected by the Force Majeure Event from other suppliers. CODDLE SHALL NOT BE
LIABLE FOR ANY DAMAGES, DIRECT OR CONSEQUENTIAL, ARISING OUT OF ANY DELAY IN
DELIVERY OR FAILURE TO DELIVER ANY OF THE CODDLE PRODUCTS SOLD HEREUNDER IF SUCH
DELAY OR FAILURE TO DELIVER IS DUE TO A FORCE MAJEURE EVENT.
T. Any suspension or reduction of deliveries of Coddle Products under
this Agreement due to the occurrence of any Force Majeure Event shall not
invalidate or be a basis for termination of this Agreement, and, upon the
removal or termination of the Force Majeure Event during the term of this
Agreement, delivery shall be made and taken, as the case may be, on the
specified terms in effect immediately prior to such suspension or reduction.
U. If in consequence of any Force Majeure Event, Coddle's production is
partially curtailed, Coddle may allocate its available supply of Coddle Products
among its then present customers on such basis as Coddle may deem fair and
practical, and in making such allocation, Coddle shall, as near as practicable,
limit its reduction of shipments to such customers to the same percentage in
each case.
V. The provisions of this Paragraph 11 shall not be available to any
party hereto which shall fail to use reasonable diligence to remedy the
situation and to remove the Force Majeure Event affecting its performance
hereunder with all reasonable dispatch. The requirement that any Force Majeure
Event be remedied with all reasonable dispatch shall not require the settlement
of strikes or labor controversies by acceding to the demands of the opposing
party or parties.
I. Assignment. This Agreement shall be binding upon and inure to the benefit of
the successors of the parties hereto but shall not be assignable by either party
without the written consent of the other party, except in connection with a
merger of such party or the sale of substantially all of the assets of such
party.
II. Notices. All notices, requests or other communications hereunder shall be in
writing, addressed to Xxxxxxxx'x or Coddle, at the following addresses:
(i) If to Xxxxxxxx'x:
Xx. Xxxxxx Mules, Chairman
Xxxxxxxx'x Foods, Inc.
X.X. Xxx 0000
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone (000) 000-0000
with copy to:
Xxxxxxx X. Xxxxxxx, Esquire
McGuire, Woods, Battle and Xxxxxx, L.L.P.
Xxxxx Xxxxx Xxxxxx - Xxxxx 0000
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(ii) If to Coddle:
Xx. Xxxxx X. Xxxxxx
000 Xxxxxx Xxxx
Xxxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
with copy to:
Xxxxxxx X. Xxxxx, Esquire
Payne, Gates, Xxxxxxxx & Radd, P.C.
Attorneys and Counsellors at Law
Fifteenth Floor, Dominion Tower
000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
The address of either party may be changed by giving notice in writing at any
time to the other party. Any notice to be given under this Agreement shall be
deemed duly given if (i) delivered personally, (ii) sent by telecopy and
acknowledged by recipient, (iii) delivered by overnight express, or (iv) sent by
United Stated registered or certified mail, postage prepaid. Any notice that is
delivered personally, or sent by telecopy or overnight express in the manner
provided herein shall be deemed to have been duly given to the party to whom it
is directed upon actual receipt (and, in the case of telecopy acknowledgment) by
such party. Any notice that is addressed and mailed in the manner provided
herein shall be conclusively presumed to have been given to the party to which
it is addressed at the closed of business, local time of the recipient, on the
third day after it is so placed in the mail.
A. Termination.
B. Except as otherwise provided in the paragraph dealing with Force
Majeure, in the event either of the parties hereto fails to perform in any
material respect any of the terms or conditions of this Agreement, and such
failure continues for a period of 30 days after written notice and demand by the
other party, then the non-breaching party shall thereupon have the option to
terminate this Agreement.
C. In the event of any voluntary or involuntary bankruptcy,
receivership, insolvency or reorganization proceedings involving either party or
its property, or the assignment of all, or substantially all, of the assets of
either party for the benefit of creditors, or a receiver is appointed for it or
any substantial part of its property, the other party may, to the extent
permissible under applicable law, terminate its obligations hereunder by giving
written notice of such termination, which shall become effective upon the giving
of such notice.
D. The parties' right of termination shall be in addition to, and not
in lieu of, any other rights or remedies available to the non-breaching party.
E. The parties hereto acknowledge that damages may not be an adequate
remedy in the event of the breach of this Agreement and, in such case, agree
that an injured party may be entitled to the specific performance of the
provisions of this Agreement.
F. Non-Waiver. The failure of either party to insist in any one or more
instances upon strict performance of any of the provisions of this Agreement or
to take advantage of any of its rights hereunder shall not be construed as a
waiver of any such provisions or the relinquishment of any such rights, but the
same shall continue and remain in full force and effect.
G. Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof, and the parties
shall not be bound by any representations or agreements which are not expressly
set forth in this Agreement.
H. Amendments. No modification, amendment or waiver of any provision of
this Agreement shall be effective unless in writing signed by an authorized
officer of each of the parties hereto.
I. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which together shall constitute one and the same instrument.
J. Captions. The captions of the various paragraphs of this Agreement
are for convenience of reference only and shall not affect the interpretation of
the provisions hereof.
K. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Virginia (other than its choice of law
principles).
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by the respective officers as of the date first written above.
CODDLE ROASTED MEATS, INC.
By:/s/ Levis X. Xxxxxxx
Its: President
XXXXXXXX'X FOODS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx, Xx.
Its: Senior Vice President
Exhibits
A = Coddle Products
B = Customers Buying Competing Products
C = Form of Coddle Invoice
EXHIBIT A TO PRODUCT SUPPLY AGREEMENT
"Coddle Products" means cooked roast beef, cooked and raw corn beef, cooked
pastrami, cooked pot roast, cooked Philly shave steak, cooked meat loaf, cooked
pork and beef marinated products, and sweet pickle corned beef, including
without limitation, the products listed on the attached Manufacturing Inventory
Value Report Count.
