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EXHIBIT 99.2
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT is made and entered into this 1st day of
September, 2000 by and between DEL MONTE CORPORATION, a corporation organized
and existing under the laws of the State of New York, with a principal place of
business at Xxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 ("Del Monte"), and
UNIMARK FOODS, INC., a corporation organized and existing under the laws of the
State of Texas, with a principal place of business at 000 XxXxxxx Xxxx,
Xxxxxxxxxxx, Xxxxx 00000 ("Foods"), and Foods' Mexican affiliate, INDUSTRIAS
CITRICOLAS DE MONTEMORELOS S.A. DE C.V., a corporation organized and existing
under the laws of Mexico, with a principal place of business at Xxxx. A Gral
Xxxxx Xx 0, Xxxx Xxxxxx 000, Xxxxxxxxxxxx, X.X., Xxxxxx 00000 ("ICMOSA") (Foods
and ICMOSA shall be collectively referred to herein as "Supplier").
WHEREAS, Del Monte, Foods and Foods' parent, The UniMark Group, Inc.,
entered into an Asset Purchase Agreement, dated as of August 25, 2000 ("Purchase
Agreement"), pursuant to which Del Monte agreed to purchase from Foods certain
assets as designated in the Purchase Agreement;
WHEREAS, Del Monte desires that Supplier produce and supply to Del
Monte certain processed fruit products; WHEREAS, Supplier desires to produce and
supply such products to Del Monte under the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, Del Monte and Supplier mutually agree as follows:
PART I
SECTION 1 PURCHASE OF PRODUCTS AND PRODUCTION SCHEDULING
1.1 Supplier agrees to manufacture, process, package, sample, store and
ship to Del Monte, and Del Monte agrees to purchase, the products described on
EXHIBIT I (the "Product" or the "Products").
1.2 During the first year of this Agreement, Del Monte shall purchase
the volume of Products specified on EXHIBIT I. In subsequent years under this
Agreement, Del Monte shall provide Supplier with a good faith preliminary
production estimate (the "Preliminary Production Estimate") on or before June 1
and a final, binding purchase commitment on or before September 1 (the "Annual
Purchase Commitment") for the Products to be purchased during the upcoming pack
year. Notwithstanding the foregoing, Del Monte shall provide Supplier with
notice on or before June 1 of any Products with respect to which Del Monte plans
to purchase zero (0) units in the upcoming pack year.
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1.3 Del Monte's Annual Purchase Commitment in each year shall equal or
exceed:
(a) seven-hundred seventy thousand (700,000) aggregate cases of
Products produced or sold in containers other than cans
("Chilled Products"). If at any time during the term of this
Agreement Del Monte's Annual Purchase Commitment for Chilled
Products falls below seven hundred thousand (700,000) cases,
Supplier may sell Chilled Products for retail sale in the
United States under its own brands or those of third parties;
provided that in no case shall any such sale be under Del
Monte's brands, including, without limitation, "Sunfresh,"
"Fruits of Four Seasons," "Fruit Made Easy" and "Flavor Fresh"
and all variants thereof, provided further, however, that if
Supplier receives a bona fide offer from a third party to
purchase any Chilled Products for retail sale in the United
States, Supplier shall not sell such Chilled Products without
first notifying Del Monte of such bona fide offer and offering
to Del Monte the right to purchase the Chilled Products at the
same prices of such bona fide offer. Del Monte shall have
thirty (30) days from the date of receipt of Supplier's notice
within which to submit an offer for the Chilled Products. If
Del Monte meets or exceeds the prices of the bona fide offer
received by Supplier, Supplier shall sell the Chilled Products
to Del Monte and not to the third party, and the purchase of
such Chilled Products shall be governed by the terms of this
Agreement; and
(b) during each of the first two years of this Agreement, five
hundred thousand (500,000) aggregate cases of Products produced
or sold in cans ("Canned Products"). If at any time during the
term of this Agreement Del Monte's Annual Purchase Commitment
for Canned Products falls below five hundred thousand (500,000)
cases, or the parties cannot mutually agree upon price as
specified in Section 2.1(b), Supplier will have no obligation
to continue to supply Del Monte with Canned Products. In such
event, however, (i) Supplier shall pay to Del Monte, as
compensation for its election not to produce Canned Products,
the sum of Five Hundred Thousand Dollars ($500,000), which
amount shall be payable concurrent with the delivery of
Supplier's notice that it will not produce Canned Products, and
(ii) Supplier shall remain bound by the conditions of Section
1.5 and cannot sell the Products (including Canned Product)
into the Territory without the express written consent of Del
Monte.
1.4 Del Monte shall in its sole discretion determine the type, mix and
quantity of Products set forth in its Preliminary Production Estimate and Annual
Purchase Commitment and, except as otherwise set forth herein, shall have no
obligation to purchase a minimum quantity of any individual Product or SKU. Del
Monte may vary the type and mix of Products set forth in an Annual Purchase
Commitment so long as (a) such variation is compatible with the production
capabilities of Supplier's facilities, (b) Del Monte provides Supplier with
written notice at least ninety (90) days prior to the start of production for
each affected Product (Product production schedules are set forth on EXHIBIT
II), and (c) Del Monte otherwise satisfies the volume commitments set forth
herein after giving effect to appropriate adjustments in such volume commitments
on account of the variation in Products involved.
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1.5 During the term of this Agreement, Supplier shall not sell
processed fruit products (including but not limited to the Products but
excluding any juices), whether packaged in cans, glass, plastic or any other
container, for retail sale (including grocery, health food, club store, consumer
mass merchandise, drug store, military commissary and similar channels) in the
Western Hemisphere (North America, Central America and South America;
henceforth, the "Territory") to any other purchaser without first receiving the
prior written consent of Del Monte, or as otherwise permitted by Section 1.3(a)
of this Agreement and the Purchase Agreement. Del Monte acknowledges that
Supplier may sell processed fruit products during the term of this Agreement to
customers outside of the Territory for distribution and consumption outside of
the Territory. In connection with such sales outside of the Territory, Del Monte
grants to Supplier a limited license to use the Specifications (as defined in
Section 4) to manufacture, process, package and sell processed fruit products
outside of the Territory so long as such products are not intended, directly or
indirectly, for sale or consumption within the Territory and so long as such
products are not ultimately sold or consumed within the Territory.
1.6 If at any time during the term of this Agreement, Del Monte
receives a bona fide proposal from another manufacturer or supplier for the
production and/or supply of the Products in volume amounts exceeding 50,000
cases, Del Monte shall not accept such proposal without first offering to
Supplier the right to match the terms, conditions and prices of such bona fide
proposal. Supplier shall have thirty (30) days from the date of receipt of Del
Monte's notice within which to submit a counterproposal to such bona fide
proposal. If Supplier's counterproposal would result in Del Monte paying the
same net selling price for the Products, and if Supplier's counterproposal
otherwise meets or exceeds the terms and conditions of the bona fide proposal
(including meeting or satisfying all Product specification, quality, packaging,
volume and timing requirements), Del Monte shall offer to Supplier the
opportunity to supply the Products covered by such proposal, and the purchase of
such Products shall be governed by the terms of this Agreement.
1.7 Except as provided in the Purchase Agreement and this Section 1,
Del Monte shall have no obligation, whether under the Purchase Agreement, this
Agreement or otherwise, to order or purchase any Product from Supplier.
1.8 Del Monte agrees to use reasonable efforts to assist Supplier in
converting Supplier's existing 303 millimeter diameter can packaging lines to
standard 300 millimeter diameter can packaging lines. Reasonable efforts will
include providing certain technical or production assistance to aide in the
conversion of the packaging lines but will not include any capital investment or
expenditure by Del Monte unless agreed upon in advance by the parties.
SECTION 2 PRICES, INVOICING OF PRODUCT AND PAYMENTS
2.1 For Product which has been produced and packaged by Supplier in
compliance with the terms and conditions of this Agreement, Del Monte shall pay
to Supplier the prices set forth on EXHIBIT I. The prices set forth on EXHIBIT I
shall remain fixed for the initial five-year term of this Agreement, provided,
however, that:
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(a) If Del Monte's Annual Purchase Commitment for Year 3 (or any
subsequent year) of this Agreement equals or exceeds one
million two hundred thousand (1,200,000) cases of Chilled
Products, the price for each case of Product purchased
hereunder shall be reduced in accordance with the schedule set
forth on EXHIBIT III; and
(b) If Del Monte's Annual Purchase Commitment for Canned Products
for Year 3 (or any subsequent year) of this Agreement will
equal or exceed five hundred thousand cases, the pricing for
such Products shall be adjusted to reflect then current market
and competitive conditions as mutually agreed to by the
parties. If Del Monte's Annual Purchase Commitment for Canned
Products for Year 3 (or any subsequent year) of this Agreement
will be less than five hundred thousand (500,000) cases and
Supplier elects to pack such cases for Del Monte
notwithstanding Section 1.3(b) hereof, the pricing for such
Canned Products shall be the pricing set forth on EXHIBIT I
hereof (subject to adjustment as otherwise set forth in this
Section 2).
2.2 Supplier shall invoice Del Monte for Product as delivered, duty
unpaid, to Del Monte's distribution center in McAllen, Texas. Invoices shall be
issued by Supplier upon delivery and are due and payable within thirty (30) days
of receipt in accordance with Supplier's reasonable payment instructions.
2.3 Supplier acknowledges that Del Monte may have access to raw
materials and/or supplies for use in manufacture of the Products at a lower cost
than that available to Supplier. In the event that Del Monte is able to make
such lower cost raw materials and/or supplies available to Supplier, Supplier
agrees to adjust the prices for the Products to reflect fifty-percent (50%) of
the agreed upon cost savings achieved as a result of using such lower cost raw
materials and/or supplies. Supplier and Del Monte may also agree to make certain
capital investments aimed to achieve cost savings. The cost and benefits of such
capital investments will be shared in an agreed upon amount or manner as
mutually determined by both parties.
2.4 Subject to the following sentence, Del Monte agrees to take
possession of Products manufactured hereunder no later than 180 days from the
date of production of such Products. If at any time the total Chilled Products'
inventory stored for Del Monte at Supplier's Mexican facilities exceeds one
hundred twenty thousand (120,000) cases, Del Monte shall within thirty (30) days
of receipt of written notice from Supplier take sufficient Chilled Product to
reduce such inventory amount to no more than one hundred twenty thousand
(120,000) cases, provided; however, that in determining the total Chilled
Products' inventory stored for Del Monte at Supplier's Mexican facilities, only
the Chilled Products that are of merchantable quality, are fit and useable for
their apparent intended purposes and are in strict compliance with the
Specifications (as defined in Section 4 of this Agreement) shall be considered.
2.5 Del Monte shall have the right to offset any amounts to which Del
Monte is entitled under the Purchase Agreement against any payment or payments
owed to Supplier under this Agreement.
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SECTION 3 TERM
3.1 This Agreement shall become effective on the Closing Date (as
defined in the Purchase Agreement), and, subject to Section 16 hereof, shall
continue in effect for a period of five (5) pack years until August 31, 2005
(the "Initial Term"), provided, however, that the provisions of this Agreement
shall continue in effect with respect to Product produced hereunder until such
time as such Product is delivered to Del Monte in accordance with the provisions
hereof. Following the expiration of the Initial Term, this Agreement shall renew
automatically for additional two (2)-year terms (each a "Renewal Term") unless
either party delivers written notice to the other party on or before August 31
of the last year of the then current term that the Agreement shall not be
renewed for another term. The first opportunity for either party to deliver
notice of non-renewal shall be on or before September 1, 2004, in which case
this Agreement shall terminate effective as of August 31, 2005 or upon final
delivery of Product specified in the September 1, 2004 Annual Purchase
Commitment, whichever is later.
3.2 The price and volume of Products for any Renewal Term shall be
subject to negotiation and agreement of the parties. If the parties are unable
to agree upon prices or volumes prior to the commencement of any Renewal Term,
the price and volume of Products for the Renewal Term shall be the prices and
volumes in effect as of the most recent year.
3.3 In the event Supplier elects not to renew this Agreement, Supplier
agrees that it shall not, for a period of three (3) years from the effective
date of the expiration or termination of this Agreement, sell processed fruit
products (including but not limited to the Products) to any party for retail
sale (including grocery, health food, club store, consumer mass merchandise,
drug store, military commissary and similar channels) in or into the Territory
without first offering such products to Del Monte on terms and conditions at
least as favorable to Del Monte as those offered to said party. During said
three (3) year period Supplier shall notify Del Monte of any proposed sale to a
third party and shall furnish Del Monte with a written notice that includes all
terms of the proposed sale with reasonable specificity. Del Monte shall have
thirty (30) days from receipt of such notice to notify Supplier that it will
purchase the products offered to the third party on substantially the same terms
and conditions as offered to such third party. If Del Monte declines to purchase
such products, Supplier shall be free to sell the products and volumes described
in the notice to Del Monte to a third party on the same terms and conditions as
described in such notice.
3.4 The representations, warranties and guarantees of Supplier and Del
Monte contained in this Agreement shall survive the termination or cancellation
of this Agreement for a period of three (3) years after termination.
PART II
SECTION 4 SPECIFICATIONS
4.1 Supplier shall mix, process, sample, test, pack, code, store,
handle, ship and perform such other services as may be reasonably required by
Del Monte to produce and package Product in accordance with good manufacturing
practices prevailing in the industry, all United
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States laws and regulations applicable to the production and distribution of
food products in the United States (including but not limited to the Federal
Food, Drug and Cosmetic Act ,as amended (the "Act")), and corresponding state
laws and regulations) and in strict compliance with ingredient specifications
provided by Del Monte (collectively the "Specifications"). In the event of a
conflict or inconsistency between the Specifications and either a good
manufacturing practice or an applicable law or regulation, the Specification
shall control, unless the application of a particular Specification would result
in the violation of a law or regulation, in which case that law or regulation
shall control. Supplier shall implement such changes in the Specifications as
Del Monte may from time to time reasonably request in writing. In the event a
Specification change would result in an increase in cost to Supplier, Supplier
shall advise Del Monte of such cost increase and, if Del Monte elects to
implement the Specification change notwithstanding such cost increase, Del Monte
shall be responsible for the resulting increase in cost resulting from the
Specification change.
4.2 Supplier shall timely prepare and submit to Del Monte the quality
control records and reports set forth in EXHIBIT IV and shall also furnish to
Del Monte without charge a reasonable number of samples from each production run
of Product as set forth in EXHIBIT IV or as may be otherwise reasonably
requested by Del Monte. Supplier shall perform testing of Product Supplies (as
defined in Section 6.1 hereof) and finished Product in accordance with testing
methods, and procedures and standards set forth in EXHIBIT IV in order to
determine compliance with the Specifications.
4.3 At any time during the term of this Agreement, Del Monte shall have
the right, upon reasonable prior notice, to send one or more of its authorized
employees and/or representatives to observe and inspect, during Supplier's
regular business hours, manufacturing, warehousing and other facilities used to
produce, package, store and ship Product or used to store Product Supplies. Del
Monte's representatives shall have the right to take for further inspection a
reasonable number of samples of Product and Product Supplies during such
inspection.
4.4 If any portion of Supplier's facilities or any of Supplier's
processes, inventories or equipment are in an unsanitary condition or do not
otherwise comply with the Specifications, all applicable laws and regulations
related to food products, food production facilities or worker health and safety
(including United States laws and regulations) or with the other terms and
conditions of this Agreement, Supplier shall promptly take such action as will
correct the deficiencies and bring such processes, inventories and/or equipment
into compliance with the Specifications, applicable laws and regulations
(including applicable United States laws and regulations) and with the terms and
conditions of this Agreement.
4.5 Del Monte, in addition to all other rights and remedies available
to it under applicable law, shall have the right at any time, either before or
after shipment of the Product, to reject any Product which has not been
produced, packaged, stored or handled in compliance with the Specifications by
Supplier or which is otherwise not in compliance with the terms and conditions
of this Agreement ("Nonconforming Product"). Specifically, but not by way of
limitation, the parties agree that:
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(a) Del Monte may reject and refuse to pay for Product which has
been produced and packaged during a particular production run
if samples from that production run do not conform to the
Specifications or are otherwise not in compliance with the
terms and conditions of this Agreement;
(b) Del Monte may reject and refuse to pay for any Product which
(i) has been damaged during storage or handling by Supplier or
Supplier's agents or consignees; (ii) does not fully comply
with the Specifications; (iii) does not fully comply with all
of the other terms and conditions of this Agreement; or (iv)
is otherwise not in good order for sale in the ordinary course
of business as a result of actions by Supplier; and
(c) Any Product Supplies, work in process or Product rejected by
Del Monte and reasonably determined by Del Monte not to be
reconditionable or salvageable shall be disposed of by
Supplier at Supplier's cost and expense in a manner which
shall absolutely preclude re-use for human or, unless Del
Monte otherwise consents, animal consumption. If Del Monte and
Supplier mutually determine that such Product Supplies, work
in process or Product are reconditionable or salvageable,
Supplier shall remove all Del Monte identification and dispose
of the same as mutually agreed in writing between Del Monte
and Supplier.
If Del Monte has paid Supplier for any Product which is rejected by Del
Monte as permitted under this Section 4.5, Del Monte may invoice Supplier for
the cost of such Nonconforming Product and for any Product Supplies therefor
supplied by Del Monte hereunder and also for any freight, handling and other
reasonable disposition costs or expenses incurred by Del Monte in connection
with such Nonconforming Product, and Supplier shall, at Del Monte's election,
either pay Del Monte or give Del Monte a credit in the sum of such invoice
amount within thirty (30) days of such invoice. No inspection by Del Monte or
its agents shall operate as a waiver of or limitation on Del Monte's right to
later reject or recall Nonconforming Product under the terms hereof. In the
event Supplier has produced or shipped Nonconforming Product, Del Monte may, at
any time thereafter, order Supplier to suspend the production and packaging of
Product until such time as Supplier has corrected the nonconformity.
4.6 Supplier shall make available, at Del Monte's request, the results
(including all documentation and reports generated either by Supplier or a
government agency) of all inspections and sanitation audits, and inspections and
audits conducted by Supplier, conducted during the period from sixty (60) days
before to sixty (60) days after the term of this Agreement and relating to or
affecting Supplier's facilities, or any equipment, raw materials, ingredients,
packaging materials, work in process or Product located therein. Supplier shall
provide such documentation and reports within forty-eight (48) hours of Del
Monte's request therefor. Supplier shall notify Del Monte's designated quality
assurance representative immediately by telephone of the occurrence and results
of any such inspections or audits.
4.7 Supplier shall notify Del Monte's designated quality assurance
representative immediately by telephone of the presence of any Nonconforming
Product, and shall comply with Del Monte's directions regarding the disposition
of same.
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4.8 At Del Monte's request, Supplier shall, at Supplier's sole cost and
expense (unless the nonconformity or defect in any Product subject to seizure,
recall, withdrawal or destruction is not attributable to any act or omission on
the part of Supplier) and in accordance with Del Monte's recall and withdrawal
policy, promptly perform those tasks required of it under the terms of said
policy in connection with (i) any recall or withdrawal of Nonconforming Product
initiated by Del Monte; and (ii) any seizure, destruction, recall or withdrawal
of Nonconforming Product ordered or recommended by any governmental authorities.
Supplier shall immediately notify Del Monte by telephone and by facsimile of any
situation which could result in the seizure, destruction, recall or withdrawal
of any Product or of the need for any seizure, destruction, recall or withdrawal
of any Product. Supplier shall cooperate fully with Del Monte in implementing
any seizure, destruction, recall or withdrawal of any Product, including without
limitation, assisting Del Monte in determining the scope and cause of any
Product problem and the location of any shipments of Product. Unless the
nonconformity or defect in any Product subject to seizure, recall, withdrawal or
destruction is not attributable to any act or omission on the part of Supplier,
Supplier shall reimburse Del Monte upon demand for all losses, damages, costs
and expenses incurred by Del Monte in connection with its seizure, destruction,
recall or withdrawal of such Nonconforming Product, all amounts paid by Del
Monte for any Product so seized, destroyed, recalled or withdrawn, and Del
Monte's cost of Product Supplies (if any) furnished by Del Monte to Supplier and
incorporated into such seized, destroyed, recalled or withdrawn Product.
SECTION 5 SHIPMENT OF PRODUCT
5.1 Unless Del Monte and Supplier mutually agree in writing upon a
different procedure, the Product shall be supplied on a delivered basis, duty
unpaid, to Del Monte's distribution center in McAllen, Texas, or other such
facility as mutually agreed upon by both parties, pursuant to shipping orders
submitted by Del Monte. Del Monte shall generally allow at least seven (7) days
from the date it issues a shipping order to the delivery date(s) specified in
such order. Del Monte shall have the right to reschedule any Product delivery
date provided it gives Supplier notice of such rescheduled delivery date at
least forty eight (48) hours prior to the previously scheduled delivery date and
further provided that such rescheduled delivery date is at least forty eight
(48) hours after the date of such rescheduling notice. On a weekly basis,
Supplier shall notify Del Monte, via telefax, of the quantity of Product
produced and the quantity of Product shipped by Supplier each day during such
period. The parties agree that time is of the essence with respect to dates of
delivery hereunder.
5.2 Supplier shall maintain sufficient Product and Product Supplies
inventories and sources of supply to meet shipment schedules provided by Del
Monte provided that adequate notice has been given by Del Monte to Supplier.
Upon request from Del Monte, Supplier shall provide Del Monte with complete
inventory information concerning the quantity of such Product Supplies on hand
or on order. At all times during the Term hereof, Supplier shall ensure that it
has adequate production capacity and raw materials supplies to accommodate the
production of Product in quantities set forth in production schedules provided
by Del Monte; provided, however, that Del Monte shall have no obligation for any
raw materials, ingredients or supplies beyond that committed to under an Annual
Purchase Commitment.
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5.3 Unless Del Monte and Supplier mutually agree in writing upon a
different procedure, all Product shall be shipped on CHEP pallets which are in
good structural order and sanitary condition. If CHEP pallets are unavailable,
Del Monte shall engage in a pallet exchange with Supplier or return Supplier's
pallets, or if pallets are not exchanged or returned within ninety (90) days,
Supplier may separately invoice Del Monte for such pallets. Del Monte reserves
the right to deduct from Supplier's invoices any amount charged for pallets
which are returned or which do not conform to the standards referenced herein.
5.4 Supplier shall prepare and submit to Del Monte the shipping
documents and production and inventory control reports set forth in EXHIBIT II
as well as such other reports and records as Del Monte may reasonably require to
determine Supplier's compliance with the terms and conditions of this Agreement.
5.5 Supplier shall be responsible for the safe and proper loading of
Product onto all shipping vehicles at point of origin. Supplier shall indemnify,
defend and hold Del Monte and its customers harmless from and against any and
all liability, loss, damage, cost or expense (including court costs and
reasonable attorneys' fees) arising out of or resulting from a breach of this
obligation.
SECTION 6 PROCUREMENT
6.1 Except as expressly set forth herein, Supplier shall have full
responsibility for procurement of and payment for all raw materials, ingredients
and packaging materials (collectively, together with any raw materials,
ingredients and packaging materials supplied by Del Monte, "Product Supplies")
necessary to produce and package Product for Del Monte under this Agreement.
Supplier shall store all Product Supplies in accordance with good manufacturing
practices prevailing in the industry. Such Product Supplies shall be ordered in
quantities mutually agreed to by Del Monte and Supplier.
6.2 Del Monte shall have the right to review and approve all suppliers
of Product Supplies, which approval shall not be unreasonably withheld or
delayed, and Del Monte may designate a particular supplier or suppliers
(including itself) from whom Supplier shall purchase all or certain Product
Supplies, provided, however, that Del Monte agrees to reimburse Supplier for any
increased costs resulting from any such supplier change.
6.3 Supplier shall be responsible for inspecting all Product Supplies,
whether furnished by Supplier's suppliers, by Supplier or by Del Monte and shall
have final responsibility for rejecting Product Supplies which do not conform
with the Specifications and the other terms and conditions of this Agreement.
The use of defective or nonconforming Product Supplies in Product will entitle
Del Monte to reject such Product.
SECTION 7 RISK OF LOSS
7.1 All Product derived in whole or in part from Product Supplies
furnished by Del Monte shall be and remain the property of Del Monte until Del
Xxxxx xxxxx or otherwise disposes of such Product.
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7.2 Risk of loss or damage to Product shall remain with Supplier until
the same is delivered to Del Monte or a Del Monte consignee in accordance with
the terms and conditions of this Agreement. Supplier shall further assume full
responsibility for, and indemnify and hold Del Monte harmless from and against,
any loss or damage to Product Supplies and Product in the care, custody or
control of Supplier. Del Monte shall assume full responsibility for, and
indemnify and hold Supplier harmless from and against, any loss or damage to
Product Supplies and Product in the care, custody or control of Del Monte or a
Del Monte consignee.
SECTION 8 RECORDS AND AUDITS
8.1 Supplier shall prepare, maintain and retain complete and accurate
books and records relating to the production, packaging, testing and storage of
product Supplies and Product, shipment of Product Supplies and Product, rejected
Product Supplies and Product, and production code accountability records,
including Product shipments to Del Monte, as reasonably required by Del Monte.
Supplier shall also prepare, maintain and retain any other records required to
be maintained under this Agreement or required to be kept by federal, state or
local laws and regulations.
8.2 All books and records prepared, maintained or retained by Supplier
pursuant to this Agreement shall be made available to Del Monte and its
representatives for inspection, either during or after the term hereof, upon
reasonable notice at any time during Supplier's regular business hours. All such
records shall be retained by Supplier for a period of at least three (3) years,
or longer if so required by federal, state or local laws or regulations or if
requested by Del Monte.
SECTION 9 CONFIDENTIAL AND PROPRIETARY INFORMATION
9.1 Any Specifications provided to Supplier by Del Monte are
proprietary and confidential information of Del Monte, shall not be used by
Supplier except in connection with the production and packaging of Product for
Del Monte hereunder and except as permitted by Section 1.5 hereof, and may not
be changed or modified without Del Monte's prior written consent.
9.2 All business and technical information, whether in written, oral or
electronic form, including, but not limited to, technical know-how, the
Specifications, instructions and procedures, which Del Monte at any time prior
to the date hereof has disclosed or may hereafter disclose to Supplier or to any
employee, agent or representative of Supplier, shall be received and retained by
Supplier and its employees, agents and representatives as strictly confidential
and, except as provided for herein, may not be disclosed to any third party.
Supplier shall not disclose any such information to any person within its
organization not having a need to know the same and shall only use such
information in connection with the production, packaging and storage of Product.
9.3 Supplier shall not have an obligation of confidentiality with
respect to information which:
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(a) was in the public domain at the time of receipt from Del
Monte, or which thereafter comes into the public domain
without breach of an obligation assumed hereunder: or
(b) was known and can be shown to have been known by Supplier at
the time of receipt from Del Monte and was not previously
acquired directly or indirectly from Del Monte on a
confidential basis; or
(c) becomes known to Supplier on a non-confidential basis through
a third party whose own acquisition and disclosure were
entirely independent of Supplier, not in breach of any
obligation hereunder and not obtained on a confidential basis
from Del Monte; or
(d) is approved for disclosure by Del Monte in writing.
Notwithstanding the provisions of this Section 9, in the event that
Supplier becomes legally compelled to disclose any of the confidential
information disclosed hereunder, Supplier shall provide notice thereof to Del
Monte so that Del Monte may seek a protective order or other appropriate remedy,
or, alternatively, waive Supplier's compliance with the provisions of this
Section 9. In the event that a protective order is not obtained or Del Monte
shall waive compliance with the provision of this Section 9, Supplier agrees
that it will furnish only that portion of the confidential information which
Supplier is advised by its counsel is legally required to be disclosed and
Supplier shall exercise reasonable efforts to obtain assurance that confidential
treatment will be accorded such confidential information.
9.4 All originals and copies of documented business and technical
information identified or reasonably identifiable as confidential or proprietary
to Del Monte shall be and remain the exclusive property of Del Monte at all
times and shall be returned to Del Monte upon demand or, if no demand is made,
upon the cancellation or termination of this Agreement.
SECTION 10 PURE FOOD GUARANTEE
10.1 Supplier guarantees that all Product produced and packaged for Del
Monte hereunder shall be, as of the date of shipment of such Product, not
adulterated or misbranded within the meaning of the Act and not an article which
may not, under the provisions of section 404, 405 or 512 of the Act, be
introduced into interstate commerce.
SECTION 11 COMPLIANCE
11.1 Supplier shall comply with all United States federal, state and
local laws and regulations applicable to the production and distribution of food
products and Supplier agrees that all Product and Product Supplies shall be
stored, under sanitary conditions and in strict compliance with all United
States, Mexican or other federal, state and local laws, regulations and
guidelines applicable to the production and distribution of food products.
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SECTION 12 LIENS AND SECURITY INTERESTS
12.1 Supplier specifically waives any and all liens and/or security
interests which it might acquire by operation of law or otherwise, in (i)
Product Supplies if any, furnished by Del Monte to Supplier, and (ii) Product,
the title to which either resides in Del Monte pursuant to Section 7.2 above or
has passed to Del Monte under the terms of this Agreement.
12.2 Supplier's continued right to possession of the items referred to
in Section 12.1 shall be determined solely by the terms and conditions of this
Agreement and Supplier shall at no time have any power of sale or disposal over
any such item except with the prior written consent of Del Monte.
SECTION 13 WARRANTY AND INDEMNITY
13.1 In addition to all other representations and warranties provided
by law or set forth in this Agreement, Supplier warrants and represents to Del
Monte that all Product produced, packaged and stored, and all Product shipped,
for Del Monte under this Agreement shall comply with all federal, state and
local laws and regulations applicable to the production and distribution of food
products, shall comply with the terms and conditions of this Agreement,
including the Specifications, and shall be wholesome, merchantable, and fit for
human consumption. Supplier also warrants and represents to Del Monte that
Product packaging supplied by Supplier shall be adequate for normal shipping and
storage of Product.
13.2 Any Product which does not comply with the warranty set forth in
Section 13.1 may be rejected by Del Monte pursuant to the terms of paragraph 4.5
above. Supplier shall indemnify, defend and hold Del Monte harmless from and
against any and all liability, loss or damage, cost or expense (including court
costs and reasonable attorneys fees) arising out of or resulting from a breach
of such warranty.
13.3 In the event of consumer, customer or governmental agency
complaints, demands, claims or legal actions alleging illness, injury, death or
damage as a result of the consumption or use of any Product produced, packaged,
stored or shipped by Supplier or its agents, Supplier shall indemnify, defend
and hold Del Monte harmless from and against any and all liability, loss or
damage, cost or expense (including court costs and reasonable attorney fees), of
whatsoever nature and by whomsoever asserted, arising out of, resulting from or
in any way connected with such complaint, demand, claim or legal action, except
that Supplier shall not be responsible for, and shall not be required to
indemnify, defend or hold harmless Del Monte against, any liability for illness,
injury, death or damage attributable to defects in any Product which
investigation by an independent investigator selected or approved by Del Monte
determines originated after the Product left the custody and control of Supplier
and was not attributable to any act or omission of Supplier prior to such
Product leaving such custody and control. Del Monte may employ attorneys of its
own selection to appear and defend any such complaints, demands, claims or legal
actions and Supplier shall assume full financial responsibility for the costs,
legal fees, settlement and payment of all such complaints, demands, claims and
legal actions covered by this section. Del Monte shall promptly notify Supplier
of any such complaint, demand, claim or legal action and cooperate fully in the
defense thereof. Del Monte shall have the right to
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independently resolve any complaint resulting from the use or consumption of
Product, and, unless it is determined that such complaint was attributable to a
defect in the Product originating after the Product left the custody and control
of Supplier and was not attributable to any act or omission of Supplier prior to
such Product leaving its custody and control, Supplier shall reimburse Del Monte
upon demand for amounts paid to settle such complaint and expenses incurred in
connection with such settlement, provided, however, that Supplier's obligation
to reimburse Del Monte for any settlement negotiated by Del Monte in excess of
$1,000 with respect to any single complaint shall be conditioned upon Supplier's
approval of the terms of such settlement, which approval shall not be
unreasonably withheld or delayed.
13.4 Del Monte shall indemnify, defend, and hold Supplier harmless from
and against any and all liability, loss or damage, cost or expense (including
court costs and reasonable attorney fees) arising out of or resulting from any
act or omission of Del Monte in breach of its obligations under this Agreement,
and any Product defect claim arising out of or resulting from the Specifications
or Product labeling, except to the extent such Product defect claim results from
the breach by Supplier of its obligations hereunder.
13.5 THE INDEMNIFICATION PROVIDED IN THIS AGREEMENT SHALL BE APPLICABLE
WHETHER OR NOT NEGLIGENCE OR STRICT LIABILITY OF THE PERSON ENTITLED TO
INDEMNIFICATION HEREUNDER IS ALLEGED OR PROVEN.
SECTION 14 FORCE MAJEURE
14.1 Either party shall be excused from performance under this
Agreement while and to the extent that such performance is prevented by an Act
of God, strike or other labor dispute, war or war condition, riot, civil
disorder, government regulation, embargo, fire, flood, accident or any other
casualty beyond the reasonable control of such party. In the event that either
party shall be unable to perform any of its obligations as undertaken, it shall
promptly advise the other party of its inability to perform. In the event such
inability of one party to perform shall continue for a period of sixty (60)
days, the other party shall have the right to terminate this Agreement on ten
(10) days prior written notice.
SECTION 15 RELATIONSHIP
15.1 The relationship which Supplier holds as to Del Monte is that of
an independent supplier. This Agreement is not intended to create and shall not
be construed as creating between Del Monte and Supplier the relationship of
principal and agent, joint venturers, partners or any other similar
relationship, the existence of which is hereby expressly denied, nor shall
Supplier be considered in any sense an affiliate or subsidiary of Del Monte.
Supplier shall not have any authority to create or assume in Del Monte's name or
on its behalf any obligation, expressed or implied, or to act or purport to act
as Del Monte's agent or legally empowered representative for any purpose
whatsoever. Neither party shall be liable to any third party in any way for any
engagement, obligation, commitment, contract, representation, transaction or act
or omission to act of the other, except as expressly provided herein.
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15.2 Supplier shall have exclusive control over production, packaging
and storage of Product and shall direct and be responsible for the performance
of all operations at Supplier's facility. Supplier shall retain exclusive legal
responsibility for the performance of and compliance with all of the terms and
conditions of this Agreement which are to be performed or complied with by
Supplier. Notwithstanding the provisions of this Section 15.2, Supplier shall
not be entitled to produce Product at any location other than Supplier's ICMOSA
facilities without Del Monte's prior written consent.
15.3 Subject to the terms of Section 15.2, and to the requirement
stated in Section 4.1 that any changes in the Specifications must be in writing,
Del Monte's employees may provide consultation services, including without
limitation consultation regarding operational improvements or productivity gains
with respect to the production of Product, to Supplier. Such services are of an
advisory nature only and are rendered without any liability whatsoever on the
part of Del Monte.
SECTION 16 TERMINATION
16.1 Notwithstanding the terms of Section 4 hereof, Del Monte reserves
and Supplier hereby agrees that Del Monte shall have the right to immediately
terminate this Agreement under the following circumstances:
(a) Where Supplier has failed to perform or comply with any
material term or condition hereof and (except as otherwise set
forth in subparagraph (b), (c), (e) and (f) of this Section
16.1, where Del Monte's right to terminate is not conditioned
upon its providing Supplier an opportunity to cure) has failed
to cure such nonperformance or noncompliance within thirty
(30) days after receipt of written notice of such failure from
Del Monte; or
(b) Where (i) Supplier fails to vacate an involuntary bankruptcy,
insolvency or reorganization petition or petition for an
arrangement or composition with creditors filed against
Supplier within thirty (30) days after the date of such
filing, or files such a petition on a voluntary basis, or (ii)
Supplier makes an assignment for the benefit of creditors, or
(iii) Supplier fails to vacate the appointment of a receiver
or trustee for Supplier or for any interest in Supplier's
business within thirty (30) days after such appointment, or
(iv) Supplier permits a material attachment to be levied
against and remain outstanding on any of its equipment or its
facility for more than thirty (30) days, or (v) Supplier's
interests or rights under this Agreement, or any part thereof,
pass to another by operation of law, or (vi) Supplier ceases
to do business as a going concern or ceases to conduct its
operations in the normal course of business, or (vii) Supplier
substantially changes the nature of its business or breaches
the provisions set forth in Section 20.1; or
(c) Where Supplier has adulterated any Product or has otherwise
violated the provisions of Section 10 above, or has
substituted or added, with respect to any instruction,
specification, formula, manufacturing process or quality
control standard or any procedure set forth in this Agreement
or any exhibit hereto, an
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ingredient, component, process or procedure not called for
thereby, or has altered or omitted a material ingredient,
component, process or procedure called for thereby; or
(d) Where Supplier fails to make any payment due to Del Monte
hereunder within ten (10) days after receipt of written notice
of such failure, unless the amount in issue is subject to a
bona fide dispute between the parties; or
(e) Where Supplier violates the provisions of Sections 4.6, 4.7,
9.1, or 9.2 hereof; or
(f) Where Supplier has produced adulterated or misbranded product
which is subject to regulatory agency recommended or ordered
seizure, destruction or recall.
The termination rights granted under this Section are cumulative with
and in addition to any other rights or remedies to which Del Monte may be
entitled arising from any violation, default or breach of this Agreement.
16.2 Supplier agrees that, upon the occurrence of any of the events set
forth in Section 16.1, Del Monte may, at its sole option, elect to terminate
this Agreement (i) immediately upon Del Monte's written notice of termination to
Supplier or (ii) up to sixty (60) days from the date of Del Monte's written
notice of termination to Supplier, as shall be specified in Del Monte's notice
of termination, it being understood that during the period referenced in
subparagraph (ii) hereof, Supplier shall continue to produce, package, store,
ship and sell Product to Del Monte in accordance with the terms and conditions
of this Agreement.
16.3 Notwithstanding the terms of Section 4 hereof, Supplier reserves
and Del Monte hereby agrees that Supplier shall have the right to immediately
terminate this Agreement under the following circumstances:
(a) Where Del Monte has failed to perform or comply with any
material term or condition hereof and (except as otherwise set
forth in subparagraph (b) and (c) of this Section 16.3, where
Supplier's right to terminate is not conditioned upon its
providing Del Monte a thirty (30) day opportunity to cure) has
failed to cure such nonperformance or noncompliance within
thirty (30) days after receipt of written notice of such
failure from Supplier; or
(b) Where Del Monte fails to make any payment due to Supplier
hereunder within ten (10) days after receipt of written notice
of such failure, unless the amount in issue is subject to a
bona fide dispute between the parties; or
(c) Where (i) Del Monte fails to vacate an involuntary bankruptcy,
insolvency or reorganization petition or petition for an
arrangement or composition with creditors filed against Del
Monte within thirty (30) days after the date of such filing,
or files such a petition on a voluntary basis, or (ii) Del
Monte makes an assignment for the benefit of creditors, or
(iii) Del Monte fails to vacate the appointment of a receiver
or trustee for Del Monte or for any interest in Del Monte's
business within thirty (30) days after such appointment, or
(iv) Del Monte
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permits an attachment to be levied against and remain
outstanding on a substantial portion of its assets for more
than thirty (30) days, or (v) Del Monte's interests or rights
under this Agreement, or any part thereof, pass to a
non-affiliated third party by operation of law, or (vi) Del
Monte ceases to do business as a going concern or ceases to
conduct its operations in the normal course of business.
16.4 Any failure by either party to notify the other party of a
violation, default or breach of this Agreement, or to terminate this Agreement
on account thereof, shall not constitute a waiver of such violation, default or
breach or a consent, acquiescence or waiver of any later violation, default or
breach, whether of the same or a different character.
16.5 Upon termination or cancellation of this Agreement, the rights
granted hereunder shall immediately become null and void, and Supplier shall
return to Del Monte all originals and copies of the information subject to
Section 9 hereof, but such termination or cancellation shall not affect any
obligation of, or liability incurred by, Supplier prior to such termination or
cancellation.
16.6 Upon termination or cancellation of this Agreement for any reason,
Supplier shall immediately cease performing any and all services hereunder,
except with respect to orders and work in progress which Del Monte may request
be completed, and shall deliver to Del Monte, within a reasonable period of time
(but not to exceed thirty (30) days), all conforming Product Supplies and
Product owned by Del Monte or for which Del Monte has paid or has agreed to pay,
as well as all other property of Del Monte in the possession, custody or control
of Supplier.
SECTION 17 INSURANCE
17.1 Supplier shall, at its cost, procure and maintain throughout the
term hereof:
(a) Worker's Compensation Insurance for United States employees
providing reasonable and adequate statutory benefits and
Employer's Liability Insurance.
(b) Comprehensive General Liability Insurance including
Contractual Liability, Fire Legal Liability and Product
Liability Coverage (with the Broad Form Vendor's Endorsement
naming Del Monte as an additional insured) with Bodily Injury
Limits of not less than Ten Million Dollars ($10,000,000.00)
combined single limit per occurrence.
17.2 All coverage required hereunder shall be carried with insurer(s)
with an A.M. Best Company rating of "A" or above. Supplier shall submit policies
and/or certificates of insurance evidencing the above coverage (which shall
include an agreement by the insurer not to cancel or materially alter its
coverage except upon thirty (30) days prior written notice to Del Monte) to Del
Monte for its approval before entering into performance of this Agreement. The
coverage provided by Supplier hereunder shall be primary and non-contributing
with any similar insurance which may be maintained or provided by Del Monte, and
any certificate furnished by Supplier shall be endorsed to so state. Del Monte
reserves the right to increase the dollar amount of
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coverage required hereunder for any period after three (3) years during which
this Agreement may be in effect.
17.3 Product Liability Insurance shall continue in effect for Del
Monte's benefit for a period of two (2) years from the date of last delivery of
Product to Del Monte. In case of Supplier's failure to maintain the required
insurance in effect, Del Monte may, at its option, immediately terminate this
Agreement, or procure the aforementioned insurance and charge Supplier for the
amount so expended by Del Monte.
SECTION 18 SEVERABILITY, GOVERNING LAW
18.1 In the event that any provision of this Agreement is declared
invalid or contrary to any law, rule, regulation or public policy of the United
States or any state, all of the remaining provisions hereof shall continue in
full force and effect.
18.2 This Agreement shall in all respects be governed by, construed and
enforced in accordance with the laws of the State of Texas without reference to
the conflict of laws principles thereof that would apply any other law.
18.3 If a dispute arises out of or relates to this Agreement, or the
breach or alleged breach hereof, the parties shall first attempt to resolve such
dispute through good faith negotiations involving at least one senior officer
from each party. If the dispute cannot be resolved through negotiation, the
parties agree to submit the dispute to mediation administered by the American
Arbitration Association under its commercial mediation rules before resorting to
litigation. The mediation shall be conducted in San Francisco, California, using
a mediator jointly selected by the parties.
18.4 Each of the parties irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of the United States
District Court for the Northern District of Texas, Dallas Division, or any State
court sitting in the County of Dallas, State of Texas, and any appellate court
therefrom, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties irrevocably and unconditionally agrees, to the fullest extent permitted
by law, that all claims in respect of any such action or proceeding may be heard
and determined in any such court. Each of the parties hereto agrees that a final
judgment in any such proceeding shall be conclusive and may be enforced in any
other jurisdiction by suit on the judgment or in any other manner provided by
law.
18.5 Each of the parties hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in the United States
District Court for the Northern District of Texas, Dallas Division, or any State
court sitting in the County of Dallas, State of Texas. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
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18.6 Each of the parties hereby irrevocably consents to service of
process by registered or certified mail to the address provided for notices in
Section 19. Nothing in this Agreement shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law.
SECTION 19 NOTICES
19.1 Any notice or other communication required or permitted to be
given pursuant to this Agreement shall be deemed to have been sufficiently given
if in writing and either delivered by telefax (with electronic receipt),
overnight courier service or sent by registered or certified U.S. mail, return
receipt requested, addressed as indicated below:
(a) If to Del Monte:
Del Monte Corporation
Xxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Vice President and General Counsel
Tel: 000-000-0000
Fax: 000-000-0000
(b) If to Supplier:
Unimark Foods, Inc
000 XxXxxxx Xxxx
Xxxxxxxxxxx, Xxxxx 00000
Attn: Soren Bjorn
President & CEO
Tel: 817/000-0000
Fax: 817/000-0000
and
Industrias Citricolas De Montemorelos S.A. De X.X.
Xxxx. A Gral Xxxxx Xx 0
Xxxx Xxxxxx 000
Xxxxxxxxxxxx, X.X., Xxxxxx 00000
Attn: Xxxxxx Xxxxxxx
General Manager
Tel: 01152/000 00000
Fax: 01152/000 00000
Either party may, by notice as aforesaid, designate a
different address for notices or other communications; intended for it.
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SECTION 20 MISCELLANEOUS
20.1 This Agreement is deemed to be of a personal nature and Supplier
may not assign, convey or transfer this Agreement or any interest therein or
undertake any transaction or series of transactions which would result in a
transfer of this Agreement or any interest therein, or sublicense or assign any
rights or obligations hereunder, or delegate or subcontract performance of any
obligations hereunder, in whole or in part, to any third party or parties,
without the prior written consent of Del Monte. Any attempt to do any act
prohibited herein shall be void and shall, at Del Monte's option, have the
effect of terminating this Agreement effective immediately upon Del Monte's
giving Supplier notice of such termination. For purposes of this Section 20.1,
an assignment of this Agreement shall include the sale of (a) a controlling
interest in the stock of Supplier, or (b) all, or substantially all, of
Supplier's assets. With respect to any assignment of this Agreement described in
clause (a) of the preceding sentence, Del Monte's prior written consent to such
assignment shall not be unreasonably withheld. In the event written consent is
obtained, the holder or holders through assignment, transfer or conveyance of
this Agreement or any interest therein shall be bound by all of the terms and
conditions hereof. Del Monte may assign this Agreement on written notice to any
affiliate of Del Monte.
20.2 Del Monte shall have the right to assign or transfer this
Agreement, in whole or in part, to any affiliate of Del Monte, or to any
financially responsible third party, by providing written notice of such
assignment to Supplier. This right of assignment includes the right to assign
Supplier's supply commitments to more than party, provided that the terms of
this Agreement are otherwise satisfied.
20.3 This Agreement constitutes the entire understanding between the
parties relating to, the production and packaging of Product and supersedes and
cancels any and all previous contracts or agreements between the parties with
respect thereto. If any term of this Agreement conflicts with any term of any
Purchase Order, Acceptance or Acknowledgment Form, this Agreement shall control.
This Agreement may not be altered, amended or modified except by a written
instrument executed by a duly authorized officer of Del Monte and Supplier.
20.4 The headings contained herein are inserted for convenience only
and shall not be deemed to have any substantive meaning.
20.5 Supplier shall use its best efforts to keep this Agreement and all
aspects of its relationship with Del Monte confidential provided that Supplier
may disclose information as reasonably required by applicable state and federal
securities laws.
20.6 The captions to this Agreement have been prepared and inserted for
ease of reference only and shall not be construed as limiting, defining or
affecting the substantive terms of this Agreement.
20.7 If any portion of this Agreement shall be deemed to be invalid or
unenforceable, the remainder shall be valid and enforceable to the maximum
extent permitted by law.
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20.8 In the event any action or suit is brought by either party by
reason of any default or breach of this Agreement by the other party, then the
non-defaulting party shall be entitled to recover from the defaulting party all
of its costs and expenses of suit, including reasonable attorneys fees and
costs.
20.9 The obligations of Supplier set forth in this Agreement are joint
and several.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly and lawfully authorized officers or legal representatives
effective as of the day and year first above written.
DEL MONTE CORPORATION
By:
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Name:
-----------------------------------
Title:
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UNIMARK FOODS, INC.
By:
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Name:
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Title:
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INDUSTRIAS CITRICOLAS DE
MONTEMORELOS S.A. DE C.V
By:
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Name:
-----------------------------------
Title:
----------------------------------
By:
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Name:
-----------------------------------
Title:
----------------------------------
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