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EXHIBIT 10.9
MILL AGREEMENT
by and among
XXXXXX MILLING COMPANY,
WINCHESTER PASTA, L.L.C.
and
NEW WORLD PASTA COMPANY
January 28, 0000
Xxxxxxxxxx, Xxxxxxxx
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TABLE OF CONTENTS
Page
GENERAL BACKGROUND.............................................................1
ARTICLE I - DEFINITIONS........................................................2
Section 1.01 Accounting Terms...........................................2
Section 1.02 Contract Goods.............................................2
Section 1.03 Contract Price.............................................2
Section 1.04 Contract Year..............................................2
Section 1.05 Daily Plant Capacity.......................................2
Section 1.06 Delivery Period............................................2
Section 1.07 Fancy Patent Flour.........................................3
Section 1.08 Flour Requirements.........................................3
Section 1.09 Initial Term...............................................3
Section 1.10 Lebanon Plant..............................................3
Section 1.11 Mill.......................................................3
Section 1.12 Mill Assets................................................3
Section 1.13 Mill Capacity..............................................3
Section 1.14 Plant......................................................3
Section 1.15 Plant Property.............................................3
Section 1.16 Premises...................................................4
Section 1.17 Semolina...................................................4
ARTICLE II - OPERATIONS........................................................4
Section 2.01 Quantity...................................................4
Section 2.02 Quality Requirements of Individual Purchases...............5
Section 2.03 Purchase of Excess Contract Goods..........................6
Section 2.04 Permits and Licenses.......................................7
Section 2.05 Price......................................................7
Section 2.06 Payment...................................................10
Section 2.07 Notice of Flour Requirements..............................10
Section 2.08 Delivery of Contract Goods................................11
Section 2.09 Failure of Supply and Liquidated Damages..................11
Section 2.10 Purchase and Manufacturing Records........................12
Section 2.11 Inspection................................................13
Section 2.12 Quantity of Contract Goods Delivered......................13
Section 2.13 Terms of Sale.............................................14
Section 2.14 Maintenance Program.......................................14
Section 2.15 Force Majeure.............................................14
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ARTICLE III - RESPECTIVE RIGHTS, TERMINATION AND TRANSFER.....................15
Section 3.01 Term......................................................15
Section 3.02 Breach of Obligations.....................................19
Section 3.03 Termination by Xxxxxx.....................................19
ARTICLE IV - GENERAL PROVISIONS...............................................20
Section 4.01 Governing Law.............................................20
Section 4.02 Right of First Refusal....................................20
Section 4.03 Notices...................................................21
Section 4.04 Terms of Sale.............................................22
Section 4.05 Breach of Agreement.......................................22
Section 4.06 Confidentiality...........................................22
Section 4.07 Arbitration...............................................23
Section 4.08 Binding Effect and Assignment.............................23
Section 4.09 Severability..............................................23
Section 4.10 Counterparts..............................................23
Section 4.11 Integration...............................................24
Section 4.12 Amendment to Prior Agreement..............................24
LIST OF EXHIBITS
Exhibit A - Specifications
Exhibit B - Delivery Procedures
Exhibit C - Legal Description for Premises
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MILL AGREEMENT
THIS MILL AGREEMENT ("Agreement") is made and entered into effective as of
the 28th day of January, 1999, by and among XXXXXX MILLING COMPANY, a Minnesota
corporation ("Xxxxxx"), WINCHESTER PASTA, L.L.C., a Delaware limited liability
company ("WPLLC") and NEW WORLD PASTA COMPANY f/k/a HERSHEY PASTA MANUFACTURING
COMPANY, a Delaware corporation ("NWP").
In consideration of the mutual covenants and agreements herein contained,
and intending to be legally bound, it is agreed by and between the parties
hereto as follows:
GENERAL BACKGROUND
1. NWP has acquired and will operate a pasta manufacturing and processing
plant located in or near Winchester, Virginia (the "Plant") on land owned by NWP
(the "Plant Property").
2. NWP will need to purchase substantial quantities of semolina and durum
wheat flours for use in conjunction with the operation of the Plant.
3. NWP desires to have a flour mill capable of supplying the Flour
Requirements of the Plant located on the Plant Property and operated as an
integrated part of the Plant operations (the "Mill").
4. Xxxxxx has constructed and is operating the Mill for processing durum
wheat and producing Contract Goods (as hereinafter defined).
5. Xxxxxx, before commencing construction of the Mill, desired to secure a
commitment for a large volume of business on a continuing basis, which Xxxxxx
secured from
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the Hershey Pasta & Grocery Group, a division of Hershey Foods Corporation, the
assets of which have now been acquired by NWP.
6. NWP wants to purchase from Xxxxxx and Xxxxxx is willing to supply to
NWP, semolina and durum wheat flours for the Plant on the terms and conditions
hereinafter set forth.
ARTICLE I
DEFINITIONS
For the purposes of this Agreement, the following definitions shall have
the meanings set forth below:
Section 1.01 Accounting Terms. Any accounting terms used in this Agreement
which are not specifically defined shall have the meanings customarily given
them in accordance with generally accepted accounting principles.
Section 1.02 Contract Goods. The term "Contract Goods" shall mean
collectively semolina and durum wheat flours used by NWP to manufacture pasta
and noodles.
Section 1.03 Contract Price. The price for Contract Goods determined in
accordance with Sections 2.05 or 3.01.
Section 1.04 Contract Year. The term "Contract Year" shall mean a calendar
year beginning on January 1 and ending on December 31.
Section 1.05 Daily Plant Capacity. The daily production capacity of the
Plant requires at least [Confidential Treatment Requested by New World Pasta
Company] per day of Contract Goods.
Section 1.06 Delivery Period. The term "Delivery Period" shall mean any
period during which Contract Goods purchased by NWP are to be delivered.
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Section 1.07 Fancy Patent Flour. The flour produced from durum wheat which
meets NWP specifications for "fancy patent flour".
Section 1.08 Flour Requirements. "Flour Requirements" shall mean the
semolina and durum wheat flour raw material needs of the Plant as ordered by
NWP.
Section 1.09 Initial Term. As defined in Section 3.01.
Section 1.10 Lebanon Plant. Means NWP's production facility located in
Lebanon, Pennsylvania.
Section 1.11 Mill. The "Mill" shall mean the flour mill located adjacent
to the Plant Property which is capable of processing durum wheat in sufficient
quantities to supply the Plant's Flour Requirements, subject to the limitations
set forth in this Agreement.
Section 1.12 Mill Assets. As defined in Section 4.02.
Section 1.13 Mill Capacity. The term "Mill Capacity" shall mean the
quantity of Contract Goods which the Mill shall be capable of producing,
operating [Confidential Treatment Requested by New World Pasta Company]. The
Mill will be capable of producing fancy patent flours daily in amounts which are
no more than [Confidential Treatment Requested by New World Pasta Company] of
the average daily Mill Capacity.
Section 1.14 Plant. The term "Plant" shall mean NWP's pasta production
facility located in or near Winchester, Virginia.
Section 1.15 Plant Property. The land in or near Winchester, Virginia
owned by NWP on which the Plant has been constructed.
Section 1.16 Premises. The property owned by Xxxxxx Milling Company
Limited Partnership on which the Mill is located.
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Section 1.17 Semolina. The flour produced from durum wheat which meets NWP
specifications. It is recognized that there is a Standard of Identity for
semolina promulgated by the U.S. Food and Drug Administration. The Mill shall be
capable of producing semolina consistent with such standard as it now exists or
may exist in the future.
ARTICLE II
OPERATIONS
Section 2.01 Quantity. During each Contract Year and subject to the
further terms of this Agreement, NWP agrees to purchase from Xxxxxx and Xxxxxx
agrees to sell to NWP and supply from the Mill the Contract Goods which NWP
shall require during such Contract Year in conjunction with the ongoing
operation of the Plant. Except as otherwise set forth below in this Section
2.01, the parties agree that Xxxxxx'x obligation to supply Contract Goods to NWP
and NWP's obligation to purchase Contract Goods from Xxxxxx under this Agreement
shall apply only to the Daily Plant Capacity as defined in Section 1.05. All
non-Contract Goods emanating from the Mill shall belong to Xxxxxx. If NWP
increases the Daily Plant Capacity to produce pasta products over the amount
stated in Section 1.05, then NWP shall permit Xxxxxx to offer, on terms and
conditions Xxxxxx deems appropriate, to supply NWP Contract Goods at the Plant
to meet such increased capacity requirements, provided, however, that at all
times Xxxxxx shall supply NWP its requirements for Contract Goods for the Plant
as ordered by NWP regardless of the Daily Plant Capacity up to a maximum annual
capacity of [Confidential Treatment Requested by New World Pasta Company] of
Contract Goods.
Section 2.02 Quality Requirements of Individual Purchases. Xxxxxx shall
sell and deliver, in accordance with the instructions of NWP and the terms of
this Agreement, the specific
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Contract Goods which are ordered by NWP. Such Contract Goods shall be of a
quality in accordance with the specifications set forth in Exhibit A. Further,
the specifications shall be changed if required by law or regulation or at NWP's
election. If NWP elects to change the specifications for Contract Goods, it
shall give Xxxxxx at least thirty (30) days prior notice. If any change in the
specifications results in increased costs to Xxxxxx in providing Contract Goods
and such cost increase is documented by records kept in the ordinary course of
business, then the parties shall negotiate in good faith an adjustment to the
pricing formulas of this Agreement to address such increased costs. The Contract
Goods processed and delivered by Xxxxxx to NWP under the terms of this Agreement
shall also conform to all applicable federal, state and local laws and
regulations. Xxxxxx warrants that its processing of the Contract Goods shall be
in accordance with good manufacturing practices, all applicable laws and
regulations and NWP's specifications and that the Mill shall be maintained in a
sanitary, food grade status. NWP may reject any Contract Goods which fail to
comply with the provisions of this Section and under such circumstances Xxxxxx
shall retrieve, as necessary, all such non-conforming Contract Goods and bear
all costs and expenses associated with such non-conforming Contract Goods,
including but not limited to, reimbursement to NWP for any costs involved in
handling or processing such Contract Goods, retrieval of such Contract Goods,
costs and expenses incurred by NWP in connection with the handling of
work-in-process or finished goods utilizing such non-conforming Contract Goods.
Costs and expenses incurred in connection with finished goods shall be borne by
Xxxxxx only to the extent NWP can reasonably demonstrate that the problem with
the finished goods arose from a problem with Contract Goods supplied by Xxxxxx.
Xxxxxx shall take samples at regular intervals of Contract Goods prior to
delivery to NWP.
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Section 2.03 Purchase of Excess Contract Goods. To the extent that the
quantity of Contract Goods purchased from the Mill for use at the Plant is less
than the quantity of Contract Goods that would be required to satisfy the Daily
Plant Capacity (the amount of such difference being referred to herein as the
"Excess Contract Goods"), NWP agrees to purchase from Xxxxxx, and Xxxxxx agrees
to sell to NWP, such Excess Contract Goods for use by NWP at NWP's Lebanon
Plant. For purposes of this provision, NWP shall be obligated to purchase Excess
Contract Goods from Xxxxxx for the Lebanon Plant equal to the amount of such
Excess Contract Goods, but not more than [Confidential Treatment Requested by
New World Pasta Company] of the Lebanon Plant's annual requirements for Contract
Goods during each Contract Year. Notwithstanding the above, Xxxxxx'x obligation
to supply Contract Goods to the Lebanon Plant shall extend to all NWP orders, up
to [Confidential Treatment Requested by New World Pasta Company] of the Lebanon
Plant's annual requirements for Contract Goods, but Xxxxxx shall not be
obligated to supply Contract Goods to the Plant and the Lebanon Plant in an
amount in excess of the maximum annual Mill Capacity of [Confidential Treatment
Requested by New World Pasta Company] of Contract Goods. The price and payment
terms for such Contract Goods delivered to the Lebanon Plant shall be the same
as the price and payment terms for Contract Goods supplied to the Plant under
this Agreement, except that NWP shall pay Xxxxxx for actual delivery charges
incurred to transport the Contract Goods from the Mill to the Lebanon Plant. For
purposes of this provision, all delivery shall be as reasonably directed by NWP.
In the event rail transportation is specified by NWP, the actual delivery charge
shall not exceed the lowest available rate for movement in private cars and
Xxxxxx shall be responsible for supplying the private cars. If alternate
delivery is made necessary due solely to actions or omissions of
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NWP, NWP will be responsible for any delivery charges in excess of [Confidential
Treatment Requested by New World Pasta Company]. Notwithstanding the above,
[Confidential Treatment Requested by New World Pasta Company] it being the
intent of the parties that the [Confidential Treatment Requested by New World
Pasta Company]. At the end of the Initial Term, if NWP renews the Agreement
pursuant to Section 3.01, the transportation cost if rail transportation is
specified by NWP, will be adjusted to take into account any increase or decrease
in the cost of leasing private rail cars.
Section 2.04 Permits and Licenses. Xxxxxx shall acquire and maintain all
material licenses and permits required for the handling, processing and
production of the Contract Goods and operations of the Mill. NWP shall exercise
reasonable commercial judgment in obtaining and maintaining necessary and
material licenses and permits for the operation of the Plant.
Section 2.05 Price. NWP shall purchase from Xxxxxx and Xxxxxx shall sell
to NWP, FOB [Confidential Treatment Requested by New World Pasta Company] NWP's
requirements of Contract Goods, in conformance with Section 2.01, at the Plant.
For purposes of calculating NWP's price, the price of durum wheat FOB the Mill
will include [Confidential Treatment Requested by New World Pasta Company]. The
price that NWP shall pay for the Contract Goods delivered to the Plant,
including fancy patent flour shall be determined, at NWP's election, in
accordance with one of the following two (2) formulas:
(a) The purchase price per cwt for semolina and other durum wheat
flour specified by NWP shall be determined by the sum of the calculations below
divided by [Confidential Treatment Requested by New World Pasta Company].
If the total [Confidential Treatment Requested by New World Pasta
Company] exceeds [Confidential Treatment Requested by New World
Pasta Company] shall be adjusted to [Confidential Treatment
Requested by New World Pasta Company]. If the total annual
[Confidential Treatment Requested by New World Pasta Company] shall
be adjusted [Confidential Treatment Requested by New World Pasta
Company] for all [Confidential Treatment Requested by New World
Pasta Company].
Under this pricing mechanism, Xxxxxx shall [Confidential Treatment
Requested by New World Pasta Company].
(b) [Confidential Treatment Requested by New World Pasta Company].
For purposes of exercise of this provision, Xxxxxx agrees to make available for
NWP's use, [Confidential Treatment Requested by New World Pasta Company]. Each
bushel of wheat
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delivered by NWP hereunder shall establish the price of [Confidential Treatment
Requested by New World Pasta Company] pounds of Contract Goods to NWP. At the
time of such purchase by NWP, Xxxxxx will indicate to NWP the quantity necessary
to produce the Contract Goods being priced by NWP. NWP's delivery of said
purchases to the Mill will be evenly spread over the delivery period of the
Contract Goods. If said purchases are delivered to the Mill by rail they will be
delivered in accordance with normal rail delivery practices. The payment for
said wheat shall be made to NWP in accordance with normal terms from the date of
delivery and subject to receipt of freight and wheat purchase documentation. The
purchase price for the Contract Goods manufactured by Xxxxxx for NWP shall be
determined by the sum of the calculations below divided by [Confidential
Treatment Requested by New World Pasta Company].
If the total [Confidential Treatment Requested by New World Pasta
Company] (including [Confidential Treatment Requested by New World Pasta
Company] exceeds [Confidential Treatment Requested by New World Pasta Company].
If the total annual [Confidential Treatment Requested by New World Pasta
Company] shall be adjusted [Confidential Treatment Requested by New World Pasta
Company]. Under this pricing mechanism, Xxxxxx shall [Confidential Treatment
Requested by New World Pasta Company].
Notwithstanding anything contained in this Section 2.05 to the
contrary, in the event that both Xxxxxx and NWP mutually agree, Xxxxxx may offer
to manufacture and sell to NWP Contract Goods at an amount less than the formula
pricing as provided for in any paragraph of this Section 2.05.
Section 2.06 Payment. Payment terms for Contract Goods sold pursuant to
this Agreement shall be [Confidential Treatment Requested by New World Pasta
Company] from receipt at the Plant of Xxxxxx'x shipment or [Confidential
Treatment Requested by New World Pasta Company] of receipt of Xxxxxx'x invoice
at NWP's billing location, whichever is later, which invoice shall not be issued
until after delivery of the subject Contract Goods, or as otherwise agreed upon
between the parties.
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Section 2.07 Notice of Flour Requirements. On or before the [Confidential
Treatment Requested by New World Pasta Company] day of each month, or other
schedule that the parties agree upon, NWP shall use reasonable efforts to give a
nonbinding delivery schedule to Xxxxxx, in writing or by telephone, forecasting
the type and quantity of Contract Goods which NWP shall require at the Plant
and, as may be applicable (and to the extent such orders in total do not exceed
[Confidential Treatment Requested by New World Pasta Company] of Contract Goods
per year), [Confidential Treatment Requested by New World Pasta Company], during
the following month. Xxxxxx shall deliver Contract Goods in accordance with
NWP's actual order but will not be required to deliver Contract Goods to NWP
unless and until the price for such Contract Goods has been fixed pursuant to
Section 2.05. The parties recognize that sales of pasta products in which the
Contract Goods will be utilized are seasonal in nature. Therefore, NWP cannot
plan or predict with certainty its need for Contract Goods. Such forecast by
NWP, therefore, shall not be binding on NWP with respect to the amount of
Contract Goods which are actually ordered.
Section 2.08 Delivery of Contract Goods. Delivery of Contract Goods to NWP
shall be made to the Plant at such times as shall be ordered by NWP by
[Confidential Treatment Requested by New World Pasta Company], 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 recognized
holiday unless Xxxxxx has been notified of the need for such shipment
[Confidential Treatment Requested by New World Pasta Company] in advance. In the
event of interruption of such method of delivery of Contract Goods to the Plant
from the Mill, Xxxxxx will, unless prevented by events described in Section 2.15
supply NWP all of its
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requirements for the Plant in some other fashion bearing all the cost and
expense of doing so. Title to the Contract Goods shall transfer to NWP at the
point where the pneumatic pipe enters the Plant, or if another delivery method
is used, then when NWP takes possession of the Contract Goods. If the Mill is
closed or not operating, NWP may still take delivery of Contract Goods, to the
extent of inventory available, by utilizing the control panel in NWP's Plant
which controls the flow of Contract Goods through the pneumatic pipes in
accordance with agreed upon procedures between Xxxxxx and NWP. Delivery of
Contract Goods to NWP at the Lebanon Plant shall be in accordance with the
procedure set forth in Exhibit B which is attached hereto, covering Contract
Goods which are shipped either by rail or by truck. Title to the Contract Goods
shall transfer to NWP at the time of acceptance by NWP at the Lebanon Plant.
Section 2.09 Failure of Supply and Liquidated Damages. In the event that
Xxxxxx shall become unable to supply NWP with its requirements in accordance
with Section 2.01, or to perform any particular contract between Xxxxxx and NWP,
for the sale of any particular quantity or type of Contract Goods for any
reason, unless covered by Section 2.15, Xxxxxx shall either purchase sufficient
quantities and quality of comparable Contract Goods on the open market to
fulfill the orders of NWP or immediately notify NWP upon receipt of NWP's order
that Xxxxxx is unable to make the necessary purchases or to make NWP's required
deliveries, to enable NWP to effect its own cover for such orders from other
suppliers and Xxxxxx shall pay to NWP, as liquidated damages and not as a
penalty, the difference between NWP's cost of cover for any Contract Goods
(which cost includes all freight and transaction costs for such cover) which
Xxxxxx failed to so deliver and the contract price thereof. Such payment shall
be made within [Confidential Treatment Requested by New World Pasta Company]
after NWP shall have
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paid for such cover and apprised Xxxxxx of the cost of such cover. Xxxxxx and
NWP acknowledge that the terms of this Section 2.09 which provide for liquidated
damages are not intended to apply to those force majeure circumstances described
in Section 2.15.
Section 2.10 Purchase and Manufacturing Records.
(a) Xxxxxx shall keep complete, true and accurate records and
accounts with respect to all matters and inputs affecting the price of Contract
Goods, including but not limited to, records with respect to purchasing and
transporting of flour, such records to be kept in accordance with generally
accepted accounting principles applied on a consistent basis from year to year.
NWP or its representatives shall have the right to audit such records and
accounts after reasonable prior notice to Xxxxxx, and Xxxxxx shall provide NWP
with monthly statements of such matters in such form as shall be reasonably
requested by NWP.
(b) Xxxxxx shall also keep complete, true and accurate records with
respect to manufacturing practices, quality assurance measures, analytical
procedures and data and inspection reports. Xxxxxx shall allow NWP access to
such records upon NWP's request insofar as they deal with the Contract Goods.
Section 2.11 Inspection. During the term of this Agreement, Xxxxxx shall
provide NWP with access to the Mill at any time during operating hours after
reasonable notification by NWP to Xxxxxx. NWP shall not be required to give
Xxxxxx notice in emergency situations. Xxxxxx shall promptly notify NWP of the
results of any and all inspections of the Mill by any regulatory or industry
authority. Further, Xxxxxx shall immediately notify NWP of any deficiencies,
sanitation or quality problems in incoming flour, operations or Contract Goods
identified by Xxxxxx, regulatory authorities or any third party.
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Section 2.12 Quantity of Contract Goods Delivered. In order to determine
and track the quantity of Contract Goods delivered by Xxxxxx to NWP through the
pneumatic pipes, all Contract Goods shall be weighed by a scale at the point of
discharge from the Mill storage silos into the pneumatic pipes. For purposes of
confirming the quantity there shall also be weighing done by volumetric scale
based on totaling air lock turns. Adjustments to quantity and/or equipment shall
be made if these weighing mechanisms do not conform. At any time, NWP may enter
the Mill to check, recalibrate or otherwise investigate the weighing equipment
for accuracy and proper operation. Determination of the quantity of Contract
Goods delivered to the Lebanon Plant shall be based upon certified railroad
weight certificates if the Contract Goods are delivered by rail or upon
certified bills of lading if the Contract Goods are not delivered by rail.
Section 2.13 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.
Section 2.14 Maintenance Program. Xxxxxx shall adhere to, at its cost, a
program for the maintenance of the Mill and any and all equipment installed
therein, which program shall be in keeping with the generally accepted industry
standards for such programs and which shall also be as reasonable and prudent as
Xxxxxx'x program for the maintenance at other Xxxxxx facilities. Such
maintenance program shall also be consistent with all requirements and
recommendations of the equipment manufacturers.
Section 2.15 Force Majeure. Xxxxxx and NWP shall be excused from
performance of the purchase and supply provisions of this Article II by reason
of circumstances beyond their control, including, but not limited to, acts of
God, disaster, fire, floods, the elements, lockouts,
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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 required
by Section 2.01, then after nine (9) months of such force majeure, and during
the continuance of such force majeure, Xxxxxx agrees to reimburse NWP for the
difference in cost to NWP of Contract Goods required to be purchased by NWP for
operation of the Plant and the cost of such Contract Goods as calculated under
Section 2.05.
ARTICLE III
RESPECTIVE RIGHTS, TERMINATION AND TRANSFER
Section 3.01 Term. The Initial Term of this Agreement shall expire
on [Confidential Treatment Requested by New World Pasta Company]; provided,
however, that the price for Contract Goods shall be adjusted, effective
[Confidential Treatment Requested by New World Pasta Company] to reflect
[Confidential Treatment Requested by New World Pasta Company], as defined below,
which [Confidential Treatment Requested by New World Pasta Company]. In
addition, the price for Contract Goods shall be adjusted [Confidential Treatment
Requested by New World Pasta Company], as defined below, [Confidential Treatment
Requested by New World Pasta Company] as measured by [Confidential Treatment
Requested by New World Pasta Company] in accordance with the following formula:
[Confidential Treatment Requested by New World Pasta Company]
Both adjustments shall be calculated using the fiscal year
[Confidential Treatment Requested by New World Pasta Company] through
[Confidential Treatment Requested by New World Pasta Company] as the base year.
The calculation of these adjustments shall be made in accordance with the
following:
The [Confidential Treatment Requested by New World Pasta
Company] are: [Confidential Treatment Requested by New World Pasta Company] and
other [Confidential Treatment Requested by New World Pasta Company] (which shall
only mean the [Confidential Treatment Requested by New World Pasta Company] and
[Confidential Treatment Requested by New World Pasta Company] including
[Confidential Treatment Requested by New World Pasta Company]. It is the intent
of the parties that [Confidential Treatment Requested by New World Pasta
Company] derived by dividing the sum total of each such [Confidential Treatment
Requested by New World Pasta Company] during the [Confidential Treatment
Requested by New World Pasta Company] by the total [Confidential Treatment
Requested by New World Pasta Company] during the same twelve (12) month period,
whether [Confidential Treatment Requested by New World Pasta Company] or not;
however [Confidential Treatment Requested by New World Pasta Company] shall not
include [Confidential Treatment Requested by New World Pasta Company]. Xxxxxx
shall [Confidential Treatment Requested by New World Pasta Company] to
[Confidential Treatment Requested by New World Pasta Company].
The [Confidential Treatment Requested by New World Pasta Company]
shall be determined by dividing the total [Confidential Treatment Requested by
New World Pasta Company] by an estimated [Confidential Treatment Requested by
New World Pasta Company]: no adjustment is applied to the [Confidential
Treatment Requested by New World Pasta Company]. During [Confidential Treatment
Requested by New World Pasta Company] is reduced by [Confidential Treatment
Requested by New World Pasta Company] to arrive at [Confidential Treatment
Requested by New World Pasta Company] for that year, [Confidential Treatment
Requested by New World Pasta Company] is [Confidential Treatment Requested by
New World Pasta Company]. For [Confidential Treatment Requested by New World
Pasta Company] and subsequent periods the [Confidential Treatment Requested by
New World Pasta Company]. The [Confidential Treatment Requested by New World
Pasta Company] will be computed as a [Confidential Treatment Requested by New
World Pasta Company] using the method described for [Confidential Treatment
Requested by New World Pasta Company].
The [Confidential Treatment Requested by New World Pasta Company] is
the remainder determined by taking the average [Confidential Treatment Requested
by New World Pasta Company], minus the [Confidential Treatment Requested by New
World Pasta Company], minus the [Confidential Treatment Requested by New World
Pasta Company] used to [Confidential Treatment Requested by New World Pasta
Company], including [Confidential Treatment Requested by New World Pasta
Company] needed to [Confidential Treatment Requested by New World Pasta
Company], less the [Confidential Treatment Requested by New World Pasta Company]
from the sale [Confidential Treatment Requested by New World Pasta Company] such
as [Confidential Treatment Requested by New World Pasta Company], minus the
[Confidential Treatment Requested by New World Pasta Company] is determined by
taking the sum of [Confidential Treatment Requested by New World Pasta Company]
and dividing by [Confidential Treatment Requested by New World Pasta Company].
Notwithstanding the above, [Confidential Treatment Requested by New
World Pasta Company] shall not be adjusted to [Confidential Treatment Requested
by New World Pasta Company] the amount of [Confidential Treatment Requested by
New World Pasta Company], or that would otherwise [Confidential Treatment
Requested by New World Pasta Company]. For purposes of this Agreement,
[Confidential Treatment Requested by New World Pasta Company] shall be defined
to mean [Confidential Treatment Requested by New World Pasta Company]. For
purposes of interpretation, [Confidential Treatment Requested by New World Pasta
Company] shall not be construed to require an [Confidential Treatment Requested
by New World Pasta Company], but shall require [Confidential Treatment Requested
by New World Pasta Company]. In the event that the adjustment of the price for
[Confidential Treatment Requested by New World Pasta Company], Xxxxxx shall have
the [Confidential Treatment Requested by New World Pasta Company] it may decline
such [Confidential Treatment Requested by New World Pasta Company], in which
case NWP [Confidential Treatment Requested by New World Pasta Company].
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On or before [Confidential Treatment Requested by New World Pasta
Company] and on or before December 31st of each year thereafter, until this
Agreement expires or is terminated, NWP shall exercise one of the following
options by delivering written notice thereof to Xxxxxx (failure to provide such
written notice shall result in the exercise of Option (a) below):
(a) Allow the [Confidential Treatment Requested by New World Pasta
Company], except that the [Confidential Treatment Requested by New World Pasta
Company] as set forth above. Such [Confidential Treatment Requested by New
World Pasta Company] shall become effective [Confidential Treatment Requested by
New World Pasta Company].
(b) Notify [Confidential Treatment Requested by New World Pasta
Company] this Agreement. Upon such notice from [Confidential Treatment Requested
by New World Pasta Company], the parties agree [Confidential Treatment Requested
by New World Pasta Company] to both parties. In the event the parties
[Confidential Treatment Requested by New World Pasta Company], then
[Confidential Treatment Requested by New World Pasta Company], prior to
[Confidential Treatment Requested by New World Pasta Company] the Agreement
[Confidential Treatment Requested by New World Pasta Company] shall be adjusted
[Confidential Treatment Requested by New World Pasta Company], or allow the
[Confidential Treatment Requested by New World Pasta Company] from the date on
[Confidential Treatment Requested by New World Pasta Company]. During any such
[Confidential Treatment Requested by New World Pasta Company] or any such
[Confidential Treatment Requested by New World Pasta Company], the terms which
were [Confidential Treatment Requested by New World Pasta Company] shall
control.
In the event that [Confidential Treatment Requested by New World
Pasta Company] pursuant to this Section due to [Confidential Treatment Requested
by New World Pasta Company], and Xxxxxx [Confidential Treatment Requested by New
World Pasta Company], it is understood and acknowledged that [Confidential
Treatment Requested by New World Pasta Company]. However, if [Confidential
Treatment Requested by New World Pasta Company] establishes a [Confidential
Treatment Requested by New World Pasta Company] from other [Confidential
Treatment Requested by New World Pasta Company] to the extent of such
[Confidential Treatment Requested by New World Pasta Company]. For purposes of
this Agreement, [Confidential Treatment Requested by New World Pasta Company]
shall be deemed to mean [Confidential Treatment Requested by New World Pasta
Company] exceeding [Confidential Treatment Requested by New World Pasta
Company]. For example, if [Confidential Treatment Requested by New World Pasta
Company], then [Confidential Treatment Requested by New World Pasta Company]
under this Agreement to supply [Confidential Treatment Requested by New World
Pasta Company].
Section 3.02 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 NWP to give Xxxxxx written notice to cure such default.
[Confidential Treatment Requested by New World Pasta Company].
Section 3.03 Termination by Xxxxxx. Failure of NWP to comply with any of
the obligations or conditions herein contained, including, but not limited to
failure to purchase or pay for Contract Goods, shall be a default and shall
entitle Xxxxxx to give NWP written notice to cure such default. If any such
default is not cured within thirty (30) days after receipt of such written
notice, Xxxxxx shall be entitled to terminate this Agreement by giving written
notice to take effect six (6) months after such notice. Upon a termination of
the Agreement under this provision, NWP and Xxxxxx shall work together to
disconnect and disassemble any physical connections between the Plant and the
Mill.
ARTICLE IV
GENERAL PROVISIONS
Section 4.01 Governing Law. The parties hereto acknowledge that this
Agreement was made under, and shall be governed by the laws of the State of
Virginia.
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Section 4.02 [Confidential Treatment Requested by New World Pasta
Company]. For purposes of this Section 4.02, [Confidential Treatment Requested
by New World Pasta Company] mean [Confidential Treatment Requested by New World
Pasta Company].
Section 4.03 Notices. 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 given on the date
transmitted; provided that (i) the sender receives a written confirmation to
verify the transmission, and (ii) the sender also delivers a copy of the notice
to the other party by overnight courier. Notices sent by a courier shall be
deemed delivered on the date of receipt or the date delivery is refused by the
intended recipient as evidenced 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
or MMCLP: 000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: President
With a copy to: Xxxxxxx X. Xxxx, Esquire
Xxxxxx Xxxxxxx Xxxxxx & Brand
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
If to WPLLC: Winchester Pasta, L.L.C.
000 Xxxxxxx X Xxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Executive Officer
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With a copy to: Winchester Pasta, L.L.C.
000 Xxxxxxx X Xxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Vice President of Finance/
Chief Financial Officer
If to NWP: New World Pasta Company
000 Xxxxxxx X Xxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to: New World Pasta Company
000 Xxxxxxx X Xxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Vice President of Finance/
Chief Financial Officer
Section 4.04 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.
Section 4.05 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, except as otherwise provided in Section 2.09 or Section 4.07 of this
Agreement which shall govern in the event of any conflict with other provisions
of this Agreement.
Section 4.06 Confidentiality. Both Xxxxxx and NWP hereby agree not to
disclose, without the other parties' consent, to any third party (except
financial institutions or professional personnel such as lawyers, accountants,
and the like who are employed by the party hereto or as may be required or
advisable to comply with law) the specific provisions of this Agreement.
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Section 4.07 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 NWP 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 Minneapolis, Minnesota. 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 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.
Section 4.08 Binding Effect and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto, their successors
and assigns.
Section 4.09 Severability. The determination that any portion or provision
of this Agreement is invalid or enforceable 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.
Section 4.10 Counterparts. This Agreement may be executed in two or more
counterparts and all counterparts so executed shall for all purposes constitute
one agreement,
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binding on all the parties hereto, notwithstanding that all parties shall not
have executed the same counterpart.
Section 4.11 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 with respect to the subject
matter hereof.
Section 4.12 Amendment to Prior Agreement. This Agreement is an amendment
and restatement of that certain Amended and Restated Mill Agreement ("Prior
Agreement") dated effective as of the 29th day of July, 1998, by and among
Xxxxxx and HERSHEY PASTA & GROCERY GROUP, a division of Hershey Foods
Corporation, a Delaware corporation ("HPG"). This Agreement hereby supercedes
such Prior Agreement with respect to to all Flour Requirements of WPLLC, NWP and
its Affiliates at such companies' Winchester, VA and Lebanon, PA processing
plants. The Prior Agreement shall continue to apply to all Flour supplied by
Xxxxxx prior to the date hereof and all Flour Requirements ordered by HPG prior
to the date hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
WINCHESTER PASTA, L.L.C.
WITNESS
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxxx
---------------------------- -------------------------------------
Name: Xxxxx Xxxxxxxx
Title:
NEW WORLD PASTA COMPANY
WITNESS
/s/ Xxxxxx Xxxxx By: /s/ C. Xxxxxx Xxxxxxx
---------------------------- -------------------------------------
Name: C. Xxxxxx Xxxxxxx
Title: Chairman,Chief Executive
Officer and Director
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XXXXXX MILLING COMPANY
WITNESS
/s/ Xxxxxx Xxxxx By: /s/ Xxxx X. Xxxxxx
---------------------------- -------------------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman, President and Chief
Executive Officer
ACKNOWLEDGMENT
Xxxxxx Milling Company Limited Partnership, a Minnesota limited
partnership, is executing this Mill Agreement solely to indicate its agreement
to be bound by the Right of First Refusal provisions contained in Section 4.02.
XXXXXX MILLING COMPANY LIMITED
PARTNERSHIP
By Xxxxxx Milling Company,
Its General Partner
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
Title:
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