EXHIBIT 10.6
PRODUCTION AND SALES AGREEMENT
Agreement made and entered into this 27 day of February, 1998, by and
between Xxxxxxx Farms Inc. of Vermont, located at Jonergin Drive, Swanton, VT.
05488 hereinafter ("Supplier") and International Ingredient Corporation, 0000
Xxxx Xxxxxx, Xx. Xxxxx, XX. 00000 hereinafter ("Buyer") involving Buyer's
facility located at Xxxxx Xxxxxx Xxxx, Xxxxxxxxxxx, XX. 00000.
Witnesseth:
WHEREAS, Supplier, in the ordinary and regular course of its business
produces concentrated liquid whey from which marketable dried whey can be
produced; and
WHEREAS, Buyer desires Supplier to produce dried whey and sell its
output thereof to Buyer, and
WHEREAS, Buyer is ready, willing and able to facilitate Supplier's
production of dried whey upon the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the premises and mutual promises and
covenants of the parties it is hereby agreed as follows:
1. Upon the execution of this Agreement, Buyer shall undertake to deliver
to Supplier's facility certain roll drying equipment ("Equipment") more
particularly described in Appendix D.
2. Said roll drying equipment shall be and remain at all times the
property of Buyer, and shall not be considered, treated as or made a fixture or
apart of the real property upon which Supplier's facility is located.
3. The parties shall have the duties and obligations as set forth in
Appendix C to this Agreement with respect to the installation of said roller
dryers at Supplier's facility.
4. Buyer guarantees that at the time of installation said equipment shall
be in good working order.
5. Supplier shall, after initial training in the operation and maintenance
of dryers through start-up phase ( start-up phase to be determined ), be solely
responsible, at all times during the term of this agreement, for the operation
and use of said equipment including supplying the labor to operate and maintain
equipment. Buyer shall have no duty or obligation to train or oversee the work
of any person assigned by Supplier to operate said equipment after the start up
phase. Supplier shall be solely responsible for maintaining the equipment in
good working order throughout the term of this Agreement. Upon Supplier's
request, Buyer shall provide consultation on the operation and maintenance of
dryers throughout the term of this Agreement.
6. Supplier shall be solely responsible for any claims, actions, causes of
action, damages or injuries arising out of or relating to the operation of said
equipment while in Seller's possession. Supplier shall defend and hold Buyer
harmless and indemnify Buyer from and against any and all claims, actions,
causes of actions, judgements, damages, or liabilities whether sounding in tort,
contract or warranty, and all reasonable expenses, including attorney fees and
court costs, assessed or asserted against Buyer for any injury or death of any
person arising out of or relating to any use of said equipment while in
Supplier's possession.
7. Supplier shall at all times during this Agreement insure said equipment
against loss due to fire, wind, and extended coverage with a financially sound
insurance company in an amount not less than one Hundred Thousand Dollars
($100,000.00), per dryer and shall cause Buyer to be named as an additional
insured under said policy or policies as Buyer's interest may be in said
equipment.
8. Buyer guarantees that the process, formulas, technology and equipment
provided to Supplier will provide roller dried whey meeting the standards and
specifications set forth in Appendix A. Supplier shall use said drying equipment
to produce dried whey which shall have the specifications and properties as set
forth in Appendix A. of this Agreement ("Acceptable Quality Dried Whey").
9. Supplier shall sell exclusively to Buyer all of its acceptable quality
dried whey produced at its facility during the term of this Agreement. Supplier
shall not sell, give away, or deliver to any other persons, firm, or corporation
any dried whey of acceptable quality, without Buyer's prior written consent.
10. Supplier shall not sell any liquid whey produced at their facility to
third parties without the Buyer's prior written consent.
11. Supplier agrees not to disclose, share, or disseminate by any means or
in any manner to any person or entity not a party to this Agreement any and all
information relating to the operation, equipment, technology, use, or
specifications of the roller dryers. Such information shall be shared with only
those employees of the Supplier on a need to know basis. Supplier further agrees
not to employ the roller dryers in the processing of any material other than
liquid whey.
12. Buyer, during regular business hours and upon reasonable notice, shall
have the right to enter onto Supplier's property and observe production of dried
whey and the use of the drying equipment and sample and test the production runs
to determine whether the whey is acceptable quality dried whey.
13. Buyer shall purchase all Supplier's acceptable quality dried whey upon the
price and payment terms as set forth in Appendix B to this Agreement. Should
dried whey, delivered by Supplier, not meet the quality standard set forth in
Appendix A, Buyer shall accept the dried whey at no cost to self and dispose of
same in an environmentally safe manner at no cost to Supplier.
14. Supplier shall deliver to Buyer's facility all of its daily production of
acceptable quality dried whey within ten (10) days of processing.
15. The initial term of this Agreement shall be for a period of thirty (30)
months beginning on the ____ day of ____, 1998 and shall automatically renew for
successive (3) year terms after the initial term. Supplier agrees that drying of
whey shall commence no later than six months after beginning of Agreement.
16. This Agreement may be terminated only after the initial term and during the
renewal term. Either party has the right to terminate this agreement during the
renewal term by providing the other party not less than (6) months notice.
Notice of termination may be given during the initial term.
17. In the event this Agreement is terminated, it shall be the responsibility of
the terminating party to pay for all expenses associated with the removal of the
roll drying equipment and freight to Buyer's facility.
18. In the event this agreement is terminated, the Supplier shall have the right
to purchase from Buyer the roll drying equipment. If the parties cannot agree on
a price for the roll drying equipment, the parties shall choose a mutually
agreed upon third party to mediate the negotiation. Both Supplier and Buyer
shall be bound by the decision of the third party.
19. If either party ( Supplier / Buyer ) materially breaches its obligations /
promises under this Agreement, file a petition of bankruptcy or otherwise be
declared bankrupt, make an assignment of all or substantially all of its assets
to its creditors, or if a receiver or similar official is appointed for all or
substantially all of its assets, said party must notify other party immediately.
Either party may terminate this Agreement immediately upon receiving notice from
other party.
20. Upon termination of this Agreement Supplier shall return to Buyer all of the
drying equipment supplied by Buyer in its possession in the same condition as
when received except for ordinary wear and tear as determined by Buyer. Supplier
shall be responsible for Buyer's costs to repair said equipment so that same is
returned to operational condition. If Buyer so elects, subject to the provisions
of Section 17, Buyer shall have the immediate right upon termination of
Agreement to, with reasonable notice, enter upon Supplier's property and remove
its drying equipment and Supplier shall cooperate with Buyer so that Buyer may
remove said dryers at its convenience.
21. A party shall not be deemed to have defaulted or failed to perform hereunder
if that party's inability to perform or default shall have been caused by an
event or events beyond the control and without the fault of that party,
including (without limitations) acts of Government, embargoes, fire, flood,
explosions, acts of God or a public enemy, strikes. labor disputes, vandalism.
civil riots or the inability to procure necessary raw materials, supplies or
equipment.
22. Whenever an actual potential labor dispute delays or threatens to delay
Supplier's timely performance hereunder, Supplier shall immediately give notice
thereof to Buyer.
23. All of the terms and conditions to this Agreement are specified herein, and
include the terms and conditions contained in the attached Appendix A through D.
24. This Agreement supersedes all prior communications, representations or
agreements between the parties, whether verbal or written, including any printed
terms and conditions which may appear on Buyer's or Supplier's purchase orders,
invoices or other forms to the extent such terms are different from or
inconsistent herewith.
25. The remedies reserved to Buyer and Supplier herein shall be cumulative and
in addition to all other or future remedies provided by law. No waiver by either
party of any breach, default or violation of any term, warranty, representation,
agreement, covenant, condition or provision hereof shall constitute a waiver of
any subsequent breach, default or violation of the same or other term, warranty,
representation, agreement, covenant, condition or provision.
26. All notices and other communications from either party to the other
hereunder shall be in writing and shall be deemed given when delivered
personally, by courier service or when deposited in the United States Mail,
certified or registered mail, return receipt requested, postage prepaid and
properly addressed to supplier at Xxxxxxx Farms Inc., 000 Xxxxx Xxxx, X.X. Xxx
000, Xxxxxxxxx, XX 00000 and to Buyer at International Ingredient Corporation,
0000 Xxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxxx,
President.
27. This Agreement constitutes the entire understanding between the parties with
respect to the Information provided hereunder. No amendment or modification of
this Agreement shall be valid or binding on the parties unless made in writing
and executed on behalf of each party by its duly authorized representative.
28. The existence of this Agreement along with the terms and provisions hereof
shall be and remain confidential and shall not be disclosed, shared, or
disseminated by any means or in any manner to any person or entity not a party
to this Agreement and information relating to this Agreement shall be shared
with only those employees, agents and representatives of the parties having need
to know about the Agreement and its provisions to administer same except where
required by law.
29. The validity, construction and performance of this Agreement shall be
governed by the laws of the State of Vermont.
IN WITNESS WHEROF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date set forth.
Buyer: Supplier:
International Ingredient Corporation Xxxxxxx Farms, Inc.
By:/s/ Xxxxx X. Xxxxxxxx By:/s/ Xxxxxxx Xxxxxxxx
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Xxxxx X. Xxxxxxxx, President Xxxxxxx Xxxxxxxx, President/C.E.O.
February 19, 1998 February 27,1998
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(Date) (Date)
June 12, 2001
International Ingredient Corporation
0000 Xxxx Xxxxxx
Xxx 00000
Xx. Xxxxx, XX 00000
Gentlemen:
Reference is made to that certain Production and Sales Agreement, made
the 27th day of February, 1998, by and between the undersigned, Xxxxxxx Farms,
Inc. ("Xxxxxxx Farms"), and you ("International Ingredient") (the "Agreement"),
pursuant to which International Ingredient installed certain of its roll drying
equipment (the "Equipment") for the drying of liquid whey at Xxxxxxx Farms'
cheese manufacturing facility in Swanton, Vermont (the "Facility") and Xxxxxxx
Farms agreed to sell exclusively to International Ingredient, and International
Ingredient agreed to purchase from Xxxxxxx Farms, at a formula price, all of
Xxxxxxx Farms' acceptable quality dried whey produced at the Facility.
When agreed to and accepted by you, this letter agreement ("Letter
Agreement") shall (a) acknowledge that Xxxxxxx Farms is purchasing the Equipment
from International Ingredient pursuant to a separate document being executed and
delivered concurrently herewith, and (b) constitute our amendment to the
Production and Sales Agreement:
1. Purchase of Equipment. Concurrently with the execution of this
Letter Agreement, Xxxxxxx Farms and International Ingredient are entering into
an Equipment Purchase Agreement, pursuant to which Xxxxxxx Farms is purchasing
six (6) driers from International Ingredient for a purchase price of $540,000.
2. Amendment of the Agreement.
(a) Section 9 of the Agreement is hereby amended to add the
following sentence at the end thereof: "Supplier shall sell a minimum
of 12,000,000 pounds of acceptable quality whey to Buyer, provided that
(a) Supplier produces enough cheese to generate that amount of
acceptable quality whey, and (b) after roll drying such whey it
constitutes acceptable quality whey."
(b) Section 15 of the Agreement is hereby amended to read as
follows: - "The term of this Agreement shall commence no later than six
months after the beginning of this Agreement and terminate at 5:00 P.M.
Vermont time on December 31, 2003, provided Supplier or Buyer gives the
other notice, not less than six (6) months prior to such date, that it
does not intend to extend the term of this Agreement. In the event such
notice is not given on a timely basis, then this Agreement shall
continue in effect for a period of six (6) months after either Supplier
or Buyer gives the other such notice.
(c) Sections 2, 7, 11, 16, 17, 18 and 20 of the Agreement are
hereby deleted and are of no further force or effect.
3. Continuing Effect of Letter Agreement. Except as provided for in
this Letter Agreement, the terms and conditions of the Agreement shall remain in
full force and effect during the term thereof.
This letter agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
If the foregoing accurately sets forth our understanding, please
evidence your approval of this letter agreement by causing the enclosed copy to
be signed and returned to the undersigned.
Very truly yours,
XXXXXXX FARMS, INC.
By: /s/Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx, President
AGREED TO AND ACCEPTED:
INTERNATIONAL INGREDIENT CORP.
By:/s/Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx, President
