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EXHIBIT 10.10
AMENDED AND RESTATED
MILL AGREEMENT
Between
HERSHEY PASTA & GROCERY GROUP
and
XXXXXX MILLING COMPANY
March 1, 1998
(Fresno, California)
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TABLE OF CONTENTS
1. DEFINITIONS..............................................................1
1.1 Blended Products..................................................1
1.2 Contract Goods....................................................2
1.3 Contract Year.....................................................2
1.4 Delivery Period...................................................2
1.5 Durum Products....................................................2
1.6 HPG Plants........................................................2
1.7 Mill Capacity.....................................................2
1.8 Minimum Quantity..................................................2
1.9 Non-Durum Products................................................2
1.10 Third Party Contract..............................................2
1.11 Actual Freight Cost...............................................2
2. PURCHASE AND SALE OF DURUM PRODUCTS......................................3
2.1 Minimum Quantity..................................................3
2.2 Quantity and Quality Requirements of Individual Purchases.........3
2.3 Price and Payment.................................................3
2.4 Enrichment........................................................4
2.5 Notice of Requirements............................................4
2.6 Shipment..........................................................5
3. TERM.....................................................................5
4. TERMINATION..............................................................5
4.1 Breach of Obligations.............................................5
4.2 Bankruptcy........................................................6
5. LIQUIDATED DAMAGES IN THE EVENT OF FORCE MAJEURE.........................6
5.1 Liquidated Damages................................................6
5.2 Force Majeure.....................................................6
6. INSPECTION RIGHTS OF HPG.................................................7
7. TRANSPORTATION...........................................................7
8. STORAGE..................................................................7
8A. WHEAT STORAGE............................................................7
9. GOVERNING LAW............................................................8
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10. RIGHT OF FIRST REFUSAL...................................................8
11. NOTICE...................................................................9
12. TERMS OF SALE............................................................9
13. BREACH OF AGREEMENT.....................................................10
14. CONFIDENTIALITY.........................................................10
15. ARBITRATION.............................................................10
16. BINDING EFFECT..........................................................10
17. SEVERABILITY............................................................10
18. COUNTERPARTS............................................................11
19. INTEGRATION.............................................................11
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THIS AMENDED AND RESTATED MILL AGREEMENT ("Agreement") is made and entered
into effective as of the 1st day of March, 1998, by and between XXXXXX MILLING
COMPANY, a Minnesota corporation ("Xxxxxx") and HERSHEY PASTA & GROCERY GROUP, a
division of Hershey Foods Corporation, a Delaware corporation ("HPG").
RECITALS
WHEREAS, Xxxxxx has constructed and is operating a flour mill located in
Fresno, California (the "Mill"), for processing wheat and producing semolina and
various wheat flours;
WHEREAS, Xxxxxx desired to secure a commitment for a large volume of
business on a continuing basis;
WHEREAS, HPG is engaged in the manufacture of a variety of pasta and other
products at a plant located in Fresno, California (the "Plant");
WHEREAS, HPG purchases substantial quantities of durum wheat flours for
use in conjunction with the operation of the Plant;
WHEREAS, HPG agreed to purchase a portion of its requirements for durum
wheat flours for the Plant and Xxxxxx agreed to supply such requirements
pursuant to an Agreement between HPG and Xxxxxx dated September 17, 1990, which
Agreement was amended pursuant to an Amendment to Agreement dated September 2,
1992, a letter amendment as of dated August 18, 1994 and a letter amendment
dated as of April 9, 1997 (as amended, the "Mill Agreement");
WHEREAS, HPG and Xxxxxx now desire to amend and restate the Mill Agreement
in its entirety for convenience purposes on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the above premises and the mutual
covenants and agreements herein contained, it is agreed by and between the
parties hereto as follows:
1. DEFINITIONS. For the purposes of this Agreement, the following
definitions shall apply:
1.1 Blended Products. The term "Blended Products" shall mean any
flour comprised of no less than [Confidential Treatment Requested by New World
Pasta Company].
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1.2 Contract Goods. The term "Contract Goods" shall mean
collectively Durum Products, Non-Durum Products, and Blended Products.
1.3 Contract Year. The term "Contract Year" shall mean a period of
twelve (12) consecutive months commencing each year on the date, or anniversary
of the date, on which the term of this Agreement shall commence pursuant to
Section 3 of this Agreement.
1.4 Delivery Period. The term "Delivery Period" shall mean any
period during which Contract Goods purchased by HPG pursuant to a contract with
a third party are to be delivered.
1.5 Durum Products. The term "Durum Products" shall mean no less
than [Confidential Treatment Requested by New World Pasta Company].
1.6 HPG Plants. The terms "HPG Plant" or the term "the Plant" shall
mean HPG's plant located in Fresno, California.
1.7 Mill Capacity. The term "Mill Capacity" shall mean the quantity
of Contract Goods which the Mill shall be capable of producing, [Confidential
Treatment Requested by New World Pasta Company].
1.8 Minimum Quantity. The term "Minimum Quantity" shall have the
meaning set forth in Section 2.1 below.
1.9 Non-Durum Products. The term "Non-Durum Products" shall mean any
flour products made in whole from wheat other than durum wheat.
1.10 Third Party Contract. The term "Third Party Contract" shall
mean any contract with a third party for any Contract Goods.
1.11 Actual Freight Cost. The term "Actual Freight Cost" shall have
the meaning set forth in Section 2.3
2. PURCHASE AND SALE OF DURUM PRODUCTS.
2.1 Minimum Quantity. During each Contract Year and subject to the further
terms of this contract, HPG agrees to purchase from Xxxxxx and Xxxxxx agrees to
sell to HPG and supply from the Mill:
[Confidential Treatment Requested by New World Pasta Company]
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2.2 Quantity and Quality Requirements of Individual Purchases. HPG agrees
that during the course of the Contract Year it shall purchase such quantities of
Contract Goods, in the aggregate, from Xxxxxx such that by the end of a Contract
Year, HPG shall have purchased at least [Confidential Treatment Requested by New
World Pasta Company] of its aggregate purchases of goods for use in the Plant,
which are the equivalent of Contract Goods, from Xxxxxx.
HPG may order, at its discretion, any amount of the specific type of
Contract Goods, subject only to the aforestated aggregate purchase requirement.
Xxxxxx shall sell and deliver, in accordance with the instructions of HPG and
the terms of this Agreement, the specific Contract Goods which are ordered by
HPG. Such Contract Goods shall be of a quality in accordance with the
specifications as set forth in Schedule A. The specifications set forth on
Schedule A may be changed if mutually agreed upon by the parties.
In no event, however, shall Xxxxxx be required to sell to HPG Contract
Goods in excess of the Mill Capacity pursuant to the terms of this Agreement.
2.3 Price and Payment. It is intended by both parties that HPG shall buy
the Contract Goods from Xxxxxx, and Xxxxxx shall sell and deliver the Contract
Goods to HPG, F.O.B. [Confidential Treatment Requested by New World Pasta
Company] at a price equal to the Actual Contract Price. The Actual Contract
Price shall be calculated as follows:
[Confidential Treatment Requested by New World Pasta Company]
Effective September 1, 1998, Xxxxxx will offer HPG the
following volume incentive discount off the agreed upon purchase
prices specified above for Contract Goods purchased from the Mill:
Purchases Quantity Discount
------------------ --------
[Confidential Treatment Requested by New World Pasta Company]
2.4 Enrichment. In the event HPG is purchasing any Third Party Contract
goods similar to Contract Goods and such similar goods are enriched as per HPG's
specifications, then Xxxxxx shall also enrich the Contract Goods purchased by
HPG, per HPG's specifications, for the same price, terms and conditions as
stated in such Third Party Contract; provided, however, that in the event said
Third Party Contract does not provide for enrichment, then Xxxxxx will, at HPG's
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request, enrich said Contract Goods and the cost, to be negotiated by both
parties, shall be paid by HPG to Xxxxxx as an additional cost and expense of
HPG.
2.5 Notice of Requirements. On or before the [Confidential Treatment
Requested by New World Pasta Company] day of each month, HPG shall use
reasonable efforts to give a delivery schedule to Xxxxxx, in writing or by
telephone, forecasting the type and quantity of Contract Goods which HPG shall
require at the Plant during the following month. The quantity of Contract Goods
which HPG may order to be delivered to HPG during any given week shall not,
without the prior written consent of Xxxxxx, exceed an amount equal to the
production capacity of the Mill for such week. The parties recognize that sales
of pasta products in which the Contract Goods will be utilized are seasonal in
nature. Therefore, HPG cannot plan or predict with certainty its need for
Contract Goods. HPG agrees it shall use reasonable, good faith efforts to
provide Xxxxxx with a forecast of HPG's intended purchases of Contract Goods
within [Confidential Treatment Requested by New World Pasta Company] of expected
delivery. [Confidential Treatment Requested by New World Pasta Company].
2.6 Shipment. Delivery of Contract Goods to HPG shall be made at such
times as shall be ordered by HPG, provided, however, that Xxxxxx, shall not be
required to ship Contract Goods on Saturdays, Sundays, or any other day the Mill
is closed by reason of a legal or union- bargained holiday unless special
prearrangements have been made.
Xxxxxx shall deliver Contract Goods F.O.B. [Confidential Treatment
Requested by New World Pasta Company] in accordance with orders placed by HPG.
Delay in delivery resulting from the unavailability of the agreed upon mode of
transportation from the Mill to HPG's plant shall not constitute breach of this
Agreement and shall not give rise to a claim by HPG for damages, unless
otherwise set forth in the delivery terms or transportation arrangements, if (a)
such delay does not exceed [Confidential Treatment Requested by New World Pasta
Company], (b) such unavailability is not the fault of Xxxxxx (which may include
a one (1) week period each year at which time the Mill's operations shall cease
for fumigation, maintenance, and repairs, for which Xxxxxx shall provide
[Confidential Treatment Requested by New World Pasta Company] advance notice to
HPG), and (c) Xxxxxx has used reasonable efforts to provide a reasonable
substitute mode of transportation.
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3. TERM. The term of this Agreement shall be a period commencing with the first
day of the month following that in which such production of Contract Goods
commenced and shall expire on [Confidential Treatment Requested by New World
Pasta Company].
4. TERMINATION.
4.1 Breach of Obligations. Failure of Xxxxxx to comply with any of the
obligations or conditions herein contained, including, but not limited to late
delivery or failure to meet product specifications, shall be a default and shall
entitle HPG to give Xxxxxx written notice to cure such default. If any such
default is not cured within [Confidential Treatment Requested by New World Pasta
Company] after receipt of such written notice, HPG shall be entitled to
terminate this Agreement by giving written notice to take effect immediately.
4.2 Bankruptcy. If either party shall file a voluntary petition in
bankruptcy, be declared a bankrupt, make an assignment for the benefit of
creditors or suffer the appointment of a receiver or a trustee of its assets,
that party shall be in breach of this Agreement and the other party shall have
the right to terminate this Agreement by giving written notice to take effect
immediately.
5. LIQUIDATED DAMAGES IN THE EVENT OF FORCE MAJEURE.
5.1 Liquidated Damages. In the event that Xxxxxx shall become unable to
supply HPG with its requirements in accordance with Section 2 of this Agreement,
or to perform any particular contract between Xxxxxx and HPG, for the sale of
any particular quantity or type of Contract Goods for any reason beyond the
control of Xxxxxx, unless covered by Section 5.2, Xxxxxx shall either purchase
sufficient quantities and quality of comparable Contract Goods on the open
market to fulfill the orders of HPG or notify HPG that Xxxxxx is unable to make
the necessary purchases to enable HPG to effect its own cover for such orders
from other suppliers and Xxxxxx shall pay, as liquidated damages and not as a
penalty, to HPG the difference between the cost of cover for any Contract Goods
which Xxxxxx failed to so deliver and the Actual Contract Price thereof. Such
payment shall be made within 30 days after HPG shall have paid for such cover
and apprised Xxxxxx of the cost of such cover. Xxxxxx and HPG acknowledge that
the terms of this Section 5.1 which provide for liquidated damages are not
intended to apply to those force majeure circumstances described in Section 5.2
below.
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5.1.1. For purposes of Section 5.1, the Actual Contract Price of a
particular quantity of any Contract Goods ordered by HPG which Xxxxxx
failed to deliver shall equal the price fixed for such Contract Goods in
accordance with Section 2.3 at the time such order was placed.
5.2 Force Majeure. Xxxxxx and HPG shall be excused from performance of the
purchase and supply provisions of this Agreement by reason of circumstances
beyond their control, including, but not limited to, acts of God, disaster,
fire, floods, the elements, lockouts, strikes, embargoes, governmental acts,
wars (declared or undeclared) and riots. The party experiencing such force
majeure shall provide prompt notice to the other party and its performance shall
be excused during the existence of such force majeure. The party experiencing
such force majeure shall use its best efforts to remove, rectify or correct such
force majeure and if the force majeure extends for longer than eighteen (18)
months, the other party shall have the option of terminating this Agreement upon
written notice. If the force majeure prevents Xxxxxx from supplying Contract
Goods to the Plant as set forth in this Agreement, then after nine (9) months of
such force majeure, and during the continuance of such force majeure, Xxxxxx
agrees to reimburse HPG for the difference in cost to HPG of Contract Goods
required to be purchased by HPG for operation of the Plant and the cost of such
Contract Goods as calculated under subsection 2.3.
6. INSPECTION RIGHTS OF HPG. During the term of this Agreement, HPG is hereby
granted the rights to examine, at any time that the Mill is open, the Mill and
the raw materials used to manufacture Contract Goods.
7. TRANSPORTATION. Xxxxxx will deliver Contract Goods to the Plant by truck
which carrier shall meet the reasonable approval of HPG. Should HPG request
deliveries by a mode other than truck, then HPG will reimburse Xxxxxx for the
actual additional cost incurred by Xxxxxx because of the increase in
transportation costs.
8. STORAGE. HPG has, at [Confidential Treatment Requested by New World Pasta
Company], constructed storage at the HPG plant sufficient to hold [Confidential
Treatment Requested by New World Pasta Company] of Contract Goods, single
identity at a time. HPG agrees to use this capacity only for Xxxxxx produced
products. The form and method of such
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construction was agreed to by and between Xxxxxx and HPG. At the termination or
the expiration of this Agreement, HPG shall own, at no cost, the storage
facility free and clear of any liens, claims or encumbrances.
8A. WHEAT STORAGE. Xxxxxx has constructed and will make available to HPG
additional storage at the Mill sufficient to hold an additional [Confidential
Treatment Requested by New World Pasta Company] of wheat (in addition to the
current storage capacity of [Confidential Treatment Requested by New World Pasta
Company]). HPG will pay Xxxxxx for the use of this additional storage (for each
bushel HPG stores in excess of [Confidential Treatment Requested by New World
Pasta Company]) a per bushel amount as follows:
[Confidential Treatment Requested by New World Pasta Company]
HPG's right to use of the storage is always dependent on [Confidential
Treatment Requested by New World Pasta Company].
9. GOVERNING LAW. The parties hereto acknowledge that this Agreement was made
under, and shall be governed by, the laws of the State of California.
10. [Confidential Treatment Requested by New World Pasta Company].
11. NOTICE. All notices under this Agreement shall be in writing and may be
delivered by hand or sent by mail, courier or facsimile. Notices by mail shall
be sent by United States registered or certified mail, postage prepaid, return
receipt requested, and shall be deemed delivered five (5) days after date of
mailing. Notices sent by facsimile shall be deemed received on the day sent;
provided that (i) the sender receives written confirmation that the facsimile
has been sent, and (ii) the sender delivers a copy thereof to the other party by
overnight courier. Notices by courier shall be deemed to have been received at
the time of delivery or refusal of delivery as confirmed by the courier's
records. Notices shall be sent to the parties at the addresses set forth below,
or at such other addresses or persons as the party may from time to time
designate by written notice to the other party:
If to Xxxxxx: Xxxxxx Milling Company
000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: President
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With copy to: Xxxxxxx X. Xxxx
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
If to HPG: Hershey Pasta & Grocery Group
000 Xxxxxxx X Xxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
With copy to: Hershey Pasta & Grocery Group
000 Xxxxxxx X Xxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Vice President Finance
12. TERMS OF SALE. Except as otherwise provided in this Agreement or in any
particular contract for the purchase and delivery of any particular quantity of
Contract Goods, all sales of Contract Goods shall be governed by the Uniform
Commercial Code.
13. BREACH OF AGREEMENT. In the event of any breach of this
Agreement, the non- breaching party may avail itself of any remedies afforded it
by law.
14. CONFIDENTIALITY. Both Xxxxxx and HPG hereby agree not to disclose to
any third party (except financial institutions or professional personnel such as
lawyers, accountants, and the like who are employed by the party hereto) the
specific provisions of this Agreement.
15. ARBITRATION. In the event the parties are unable to agree upon the pricing
of any products hereunder, the amount due for any delivery, or the quality of
any delivery they shall identify a third party who shall determine such amount,
and whose determination shall be binding upon the parties hereto, and further
provided that if Xxxxxx and HPG shall be unable to agree upon the identity of
such third party, said determination shall be made by a board of arbitration in
accordance with the rules and regulations of the American Arbitration
Association, and held in San Francisco or Los Angeles, California. The cost of
said arbitration shall be divided between the parties so that the losing party
shall pay to the prevailing party a portion of the cost of the prevailing
party's attorneys' fees and costs which shall be equal to a percentage
determined by dividing (i) the value of the award to the prevailing party by
(ii) the amount of the prevailing party's claim in the arbitration. The decision
of the arbitrators shall be final and
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binding and entitled to recognition and enforcement by the courts of the United
States and by the courts of all states of the United States.
16. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and assigns. It is recognized
that HPG's willingness to enter this Agreement is based in part on its reliance
on Xxxxxx'x practices and reputation and that, therefore, this Agreement cannot
be assigned, sold, or disposed of by Xxxxxx by contract or by law, without HPG's
written consent.
17. SEVERABILITY. The determination that any portion or provision of this
Agreement is invalid or unenforceable shall not affect the remaining portions or
provisions hereof, unless such determination of invalidity relates to the
essence or essential terms of this Agreement, in which event the entire
Agreement shall become null and void.
18. COUNTERPARTS. This Agreement may be executed in two or more counterparts and
all counterparts so executed shall for all purposes constitute one agreement,
binding on all the parties hereto, notwithstanding that all parties shall not
have executed the same counterpart.
19. INTEGRATION. This Agreement represents the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings of the parties including, but not limited to, the
Agreement between HPG and Xxxxxx dated September 17, 1990, as amended by the
Amendment to Agreement dated September 2, 1992, the letter agreement dated
August 18, 1994 and the letter agreement dated April 9, 1997.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
WITNESS XXXXXX MILLING COMPANY
/s/ Xxxxxx Xxxxx By /s/ Xxxx X. Xxxxxx
--------------------------- ---------------------------------
Its President
WITNESS HERSHEY PASTA & GROCERY GROUP
/s/ Xxxx X. Xxxxxx By /s/ Xxx X. Xxxx
--------------------------- ---------------------------------
Its President
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