Exhibit 10.78
MARKETING AGREEMENT
This Marketing Agreement is made as of the first day of January 1995, by
and between Fosterfarms, Inc., a Delaware corporation (herein referred to as
"FF") and Agro Power Development, a New York corporation (herein referred to as
"APD") which markets produce under the trademarked name Village Farms (herein
referred to as "VF").
WHEREAS, FF leases and operates approximately 10 acres of greenhouse space
in Xxxxxx Heights, Pennsylvania (the "Facilities"), in which FF intends to
produce approximately three million pounds (3,000,000) of tomatoes ("Tomatoes")
annually, anticipating an initial harvest on or about February 20, 1995; and
WHEREAS, FF desires to contract with APD so that APD will market the
Tomatoes grown at the Facilities in accordance with this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual promises
contained, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows
1. Market and Sale of Entire Output
A. APD shall market, sell, invoice and collect the receivables for the
entire output of Tomatoes from the Facilities during the term of this
Agreement, subject to the terms for establishing the selling price and
inspection of the Tomatoes as stated herein.
B. Tomatoes shall conform in variety, consistency, quality, size, share
and grade to standards as mutually agreed upon in Appendix A. The
parties may, from time to time, revise the standards by mutual
agreement in writing.
C. FF shall provide APD either directly (on site) or by facsimile with a
daily status report by 10:00 a.m. which will contain the current daily
production detailing quantity, grade, size and color and the projected
harvest for the next day. In addition, FF will provide a projection
each Friday for the following week's (Monday-Saturday) total harvest
also broken down by date.
D. In addition to the services referred to in paragraphs A, B and C
above, APD will perform the following services:
o Marketing/sales of all FF products.
o Invoicing, collection, aging, guarantee and payment of
receivables.
o Provide shipping logistics including, rate structure and
preparation of Bills of Lading.
o Generate sales summaries by customer on a bi-weekly, monthly,
annual and rolling average basis.
o Technical support to growing, packing operations, including
on-site visits.
o Full-time APD employee located at Facilities, at no expense to
FF. The APD employee shall abide by the rules and regulations
adopted by FF. Inspection service to be provided within one (1)
hour of scheduled package efforts.
2. Selling Prices
FF acknowledges that the sale of its Tomatoes by APD is based on market
demands and price fluctuation can occur frequently and/or seasonally. APD
will use all commercially reasonable efforts to attain the highest possible
price. APD's efforts will be at least equal to its efforts for marketing
all its produce and will sell the produce from the FF Facilities to the
customers which pay the highest net return (quality of customer and payment
risk considered) as this is in the interests of both parties.
3. Payment of Receivables
APD shall collect all receivables from its customers for the sale of FF's
Tomatoes and risk of such collection shall be with APD. APD shall pay FF
for all Tomatoes sold by APD in an amount equal to the actual sales price
for such Tomatoes. APD will transfer to an account designated by FF all
monies due by APD on a weekly basis for all Tomatoes accepted by APD from
FF for the second week preceding the week of payment. FF will have the
right, providing a 48-hour notice is given, to audit APD's books and
records relating to all produce invoices, freight costs, receivables, and
any other cost related to marketing FF produce. Invoices for transferred
products shall be provided to FF within five (5) working days of transfer.
Product no otherwise invoiced will be considered as sold and money owed to
FF in the amount equal to the APD sales price for the previous one (1) week
for the same class.
4. Inspection and Acceptance
Tomatoes which have been packed and are ready for shipment will be
inspected and accepted by APD prior to shipping by a designated APD
representative. The unit of inspection and acceptance will be the pallet of
ninety-five (95) (or fewer) boxes of Tomatoes. Upon the point of inspection
in Xxxxxx Heights all "accepted" produce will be considered to have been
transferred to APD for sales purposes. Upon written notice and explanation
to FF, APD may reject all or part of the shipment not substantially in
conformity with the standards as agreed upon. An inspection form will be
established for this purposes; the intent is to provide a record of
inspection, reason for rejection and dispositions of rejected produce. Upon
such rejection, a FF representative will meet with the APD representative
to agree on a plan of action on the rejected Tomatoes. In the event that a
decision is reached by both parties to ship the Tomatoes in question and
the Tomatoes are rejected by a customer on the customer's loading dock, APD
will immediately notify FF by phone or telefax and shall describe the
reasons for the customer's rejection. FF will then have twenty-four (24)
hours within which to make an inspection of the rejected goods at the
customer's dock and shall be allowed an additional forty-eight (48) hours
within which to replace or credit any nonconforming goods. APD does not
assume the liability for rejected goods, unless caused by APD's acts or
-2-
omissions. FF may elect to sell rejected Tomatoes and such other Tomatoes
as is necessary to complete sales transactions, without restriction.
5. Shipment and Delivery
The manner and method of shipment shall be determined and arranged by APD
and will be the most cost effective. FF shall be responsible to reimburse
APD for all freight costs (shipping costs only) on a monthly basis. APD
will provide FF with a schedule of projected freight costs on a quarterly
and annual basis with updated projections each month. In the event that FF
determines that it can provide the shipment of Tomatoes more economically
than that currently being charged by APD, then FF may, upon written notice
to APD, take over such shipment.
6. Packaging
Unless otherwise specified in writing, FF shall pack all tomatoes in
fifteen (15) pound single layer boxes for premium Tomatoes and class 1
Tomatoes and twenty (20) pound boxes for class 2 Tomatoes. "Premium",
"class 1" and "class 2" Tomatoes shall be as defined in Appendix A.
Packaging for cello wrapped tomatoes, if requested by either party, shall
be subject to the mutual agreement of both parties.
In accordance with Appendix A, the VF trademark will be on all boxes packed
by FF and all premium individual tomatoes will be labeled with a sticker. A
FF stamp will be on bottom of box indicating origin of produce.
The VF trademark is a nationally registered trademark owned by APD and APD
shall allow FF to use such trademark for the sale of its Tomatoes during
the term of this Agreement.
7. Services Fee
The fee charged to FF by APD to perform the services referred to in Section
1 is as follows:
$* [Information omitted and subject to request for confidential treatment]
per shipped box plus * [Information omitted and subject to request for
confidential treatment] of the sales price of the Tomatoes delivered to
APD.
APD will xxxx FF for services twice per month with payment due within
thirty (30) days, provided that APD has made the payments required under
Section 3.
8. Agreement Commencement
A. This Agreement shall commence January 23, 1995 and continue until
December 31, 2000, unless earlier terminated as specified herein.
B. This Agreement may be terminated on thirty (30) days written notice by
either party if the other party breaches any material, term or
condition of this Agreement
-3-
and fails to begin to cure the breach within thirty (30) days after
the delivery of the written notice of the breach. In addition, this
Agreement may be terminated by either party without cause on December
31 of any year, with written notice given ninety (90) days prior. FF
agrees not to sell product to VF customers for a period of one (1)
year from the termination date. There is no restriction for FF selling
produce to a broker who may distribute to a VF customer.
9. Force Majeure
Each party shall be excused for the failure to perform its obligations
(other than payment obligations) hereunder if such failure results from a
force majeure; provided, however, that a force majeure will not excuse a
party from its obligation to make a payment under this Agreement. Each
party shall seek diligently and in good faith to perform its obligations
notwithstanding a force majeure and to overcome a force majeure as soon as
practicable.
A "force majeure" means any event or condition that has, or may reasonably
be expected to have, a material adverse effect on the ability of FF or APD
to perform any of their obligations under this Agreement or for delay in
such performance or compliance, in each case if such event or condition is
beyond the reasonable control, and not the result of willful or negligent
actions, of the nonperforming party or its agents or subcontractors relying
thereon as justification for not performing any obligation or complying
with any condition required of such party hereunder.
10. Assignment
FF may assign its rights and obligations under the Agreement to a
subsidiary established for the purposes of this Agreement. APD may assign
its rights under this Agreement to any subsidiary affiliate or successor in
interest to its business. No assignment shall be effective or relieve
either party of its obligations or liabilities hereunder unless consented
to in writing by the other party, such consent shall not be unreasonably
withheld.
11. Entire Agreement
This Agreement represents the entire agreement of the parties and may only
be modified or amended in writing, signed by both parties. This Agreement
shall be deemed to have been made in the State of New Jersey and shall be
governed by and construed in accordance with the laws of the State of New
Jersey.
12. Binding Effect
This Agreement shall remain in full force and effect upon FF and APD and as
permitted herein upon their respective successors or assignees.
13. Notice
All notices required or permitted hereunder shall be in writing and shall
be deemed to be duly given and effective on delivery if hand delivered, or
three business days after
-4-
mailing if mailed. Postage prepared by U.S. Certified Mail Return Receipt
Requested to the party intended at the address stated below or such other
addresses may be directed by notice duly given.
Agro Power Development
X.X. Xxx 000
Xxxxxxxx, Xxx Xxxxxx 00000
Fosterfarms, Inc.
Xxxxxx Xxxxxxx Xxxx
X.X. Xxx 000
Xxxxxx Xxxxxxx, Xxxxxxxxxxxx 00000
14. Miscellaneous
(a) Each party represents and warrants to the other that this Agreement
has been duly authorized and, when executed will be a valid and
binding obligation of such party and neither the execution nor
delivery of this Agreement nor the consummation of the transactions
contemplated herein shall violate or constitute a material default
under any agreement or instrument to which either party is a party or
by which it is bound.
(b) On the effective date of this Agreement and throughout the term
hereof, FF will not be a party to any oral written contract, agreement
or arrangement with any other person or company which provides or
arranges for the sale or distribution of tomatoes as set forth in this
Agreement, except for the sale of rejected Tomatoes pursuant to
Section 4.
(c) FF agrees to keep APD and VF informed of all pertinent competitive
situations that may affect the sale of the Tomatoes as contemplated by
this Agreement.
(d) In no event, whether as a result of indemnity, tort (including
negligence), statute, strict liability, contract or otherwise, shall
either party or any affiliate be liable to the other party or any
affiliate for any special, indirect, incidental or consequential
damages (for example, the loss of anticipated revenues, extra expenses
or loss of profit) sustained by any party in connection with or which
results from any wrongful act performed or omitted in connection with
this Agreement.
15. Indemnity
(a) FF shall: (i) protect and indemnify APD and its affiliates, officers,
agents and employees (collectively, the "APD Indemnified Parties")
against all actions, liabilities and claims (including, without
limitation, reasonable attorneys' fees) and (ii) defend the APD
Indemnified Parties in any suit for personal injury to, or death of,
any person or persons, or loss or damage to property, in each case, to
the extent caused (A) by breach of this Agreement by FF, or (B) by the
willful misconduct or negligent acts or omissions of FF or any of its
officers, agents or employees, in connection with or as a result of
this Agreement or the performance
-5-
of its obligations hereunder, unless in each case the injury, death,
loss, damage or cost was the result of the willful misconduct or
negligent acts or omissions of one or more of the FF Indemnified
Parties.
(b) APD shall: (i) protect and indemnify FF and its affiliates, officers,
agents and employees (collectively, the "FF Indemnified Parties")
against all actions, liabilities and losses, (including, without
limitation, reasonable attorneys' fees) and (ii) defend FF Indemnified
Parties in any suit for personal injury to, or death of, any person or
persons, or loss or damage to property, in each case, to the extent
caused by (A) breach of this Agreement by APD, or (B) the willful
misconduct or negligent acts or omissions of APD or any of its
officers, agents or employees, in connection with or as a result of
this Agreement or the performance of its obligations hereunder, unless
in each case the injury, death, loss, damage or cost was the result of
the willful misconduct or negligent acts or omissions of one or more
of the FF Indemnified Parties.
16. Insurance
(a) FF and APD shall each continuously maintain the insurance described in
Appendix B to this Agreement provided such insurance is available on
commercially reasonable terms and conditions ("Required Insurance").
If at any time any of the Required Insurance shall no longer be
available, FF or APD shall procure substitute insurance that is the
most equivalent to the required coverage. The cost of all Required
Insurance shall be paid by the party carrying such Required Insurance.
(b) Each party shall deliver to the other certificates of insurance for
Required Insurance on the Effective Date and thereafter any updated
certificates evidencing policy amendments and policy renewals and,
upon the reasonable request of the other party, any additional
information relating to Required Insurance. Each policy shall require
the insurer to provide thirty (30) days prior written notice of
termination or cancellation or of any material change in coverage or
deductibles under such policy, and ten (10) days prior written notice
of termination for nonpayment of premium.
(c) All Required Insurance shall be with insurance companies which are
authorized to do business in the Commonwealth of Pennsylvania and
shall be with insurance companies rated at least "A-XII" by Best's Key
Rating or its equivalent by another national rating organization or
other comparable insurance companies reasonably acceptable to the
parties.
17. Confidential Information
The rights and obligations of the parties set forth in this Agreement with
respect to Confidential Information are subject to applicable law. Each
party shall withhold disclosure of (i) Confidential Information and (ii)
the terms and conditions of this
-6-
Agreement unless (x) it would be unlawful to do so, or (y) unless such
disclosure is authorized by the other party.
"Confidential Information" means proprietary information of a party given
to the other party in connection with this Agreement that is (1) not in the
public domain, (2) in tangible form, (3) identified as confidential by the
word "confidential" conspicuously marked on the top of each page thereof,
and (4) annotated to reference the provisions of applicable law that
authorize nondisclosure of such material and information to the public.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
1st day of January 1995.
WITNESS: Fosterfarms, Inc.
______________________________ By: __________________________________
WITNESS: Agro Power Development
______________________________ By: __________________________________
-7-
APPENDIX A
Conformity of Tomatoes
The tomatoes will be graded into three (3) quality grades; Premium, Class 1
and Class 2. Premium and Class 1 tomatoes will be packed in fifteen (15) pound
boxes, complete with inserts. Insert size will be 22, 28, 35, 39 and 45 count.
Sizes smaller than 45 will be packed in twenty (20) pound boxes. All
inserts are to be completed filled. The number of inserts has to correspond with
the number of tomatoes in a box.
Per grade, the size of the tomatoes must be uniform. The difference in
fruit weight per grade shall not exceed 25%.
Fifteen (15) pound boxes shall not weigh less than 15.1 pounds. Twenty (20)
pound boxes shall not weigh less than 20.1 pounds (weight loss will occur during
shipping).
All tomatoes shall be cooled to a temperature between 50 and 55 degrees.
All tomatoes shall be of a clear appearance.
Color requirements vary with seasonal marketing requirements and customer
preference, but shall be uniform per box and per pallet.
PREMIUM TOMATOES: - Perfect size and appearance.
- No more than two (2) tomatoes with dry puncture holes.
- No more than two (2) tomatoes with less than 2% surface
area that is scarred.
- Tomatoes have to fit inserts. Boat shares and too large
sized fruit are not allowed.
- No blossom endrot, russetting, oozing cuts, boat shares
or other misshapen fruit.
CLASS ONE: - Tomatoes with shoulder russetting, dry puncture holes
and any scaring.
- No blossom endrot, wet cuts or puncture holes. No dull
tomatoes.
CLASS TWO: - Dime sized blossom, endrot or smalls.
- Boat shaped or misshapen.
- No larger than dime blossom endrot. No wet cuts or
puncture holes.
Pallets shall be stacked with 95 boxes or as otherwise specified.
Boxes shall have sufficient strength for stacking nineteen (19) high and
allow for cross ventilation. Premium tomato boxes shall bear the Village Farms
logo.
-8-
APPENDIX B
1. (a) Workers' Compensation (statutory limits) including (b) Employer's
Liability with limits of $1,000,000 per accident and $1,000,000 per disease
$1,000,000 policy limit.
2. Commercial General Liability with limits of $1,000,000 per
occurrence/aggregate combined single limit. Policy to be written on an
occurrence form with the following coverage features: premises/operations,
products liability/independent contractors or contractors protective and
contractual liability.
3. Commercial Automobile Liability with limits of $1,000,000 per accident for
bodily injury and property damage including coverage for owned, non-owned
and hired vehicles, contractual liability and loading/unloading hazards.
4. Excess of Umbrella Liability to follow form and apply in excess of 1(b)
(Employer's Liability), 2 and 3 above, in the amount of $2,000,000.
5. Each party will waive the subrogation rights of its insurers in favor of
the other party and provide a certificate of insurance within thirty (30)
days notice of cancellation and/or material change.
-9-
