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EXHIBIT 10.23
Supply Contract standing between The Coca-Cola Export Corporation, hereby
represented by Xx. Xxxxxx Xxxxxxx Xxxxxx, acting as purchaser, which from here
on will be referred as COEXPORT, and GRUPO INDUSTRIAL SANTA ENGRACIA, S.A. de
C.V., hereby represented by Xx. Xxxx Xxxxx Xxxxxxxx Brohez, acting on his own
right as supplied, which from here on will be referred as THE GROWER. Both
parties agree upon the following declarations and clauses.
DECLARATIONS
I. THE GROWER - declares:
A) To be an organized and existing corporation according to the General
Law of Mercantile Societies and that for all legal purposes regarding
this contract, his address is: Ave. Carrera Xxxxxx number 226 Pte,
Victoria City 87000, Tamaulipas.
B) To be registered as such up to the Internal Revenue Service under the
Code GIS-880802 GH-6.
C) Among other activities, to plan citrus, for which it acquires in rent
and in ownership lands to be used for this agricultural activity.
D) Xx. Xxxx Xxxxx Xxxxxxxx Brohez hereby shows proof of his right to
represent THE GROWER by Public Letter number 2101, issued June 31,
1994, by the Notary Public number 187 in the Victoria City,
Tamaulipas.
II. COEXPORT declares:
A) To be a branch fully authorized to operate in Mexico under the General
Law of Mercantile Societies.
B) To be registered as such up to the Internal Revenue Service under the
code CCE 520101-TC7.
C) Among other activities to manufacture soft-drink concentrates in
assorted flavors, for which purpose it requires the ITALIAN TYPE
LEMON. This product has been
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traditionally imported from other countries by COEXPORT and other
consumers, given that Mexico does not produce it in sufficient amounts
to satisfy the domestic demand. For this reason, COEXPORT initiated a
technical assistance and promoting program for Italian Lemon
production among citrus xxxxxx sin the State of Tamaulipas and other
states of the Mexican Republic.
D) That Xx. Xxxxxx Xxxxxxx Xxxxxx hereby shows proof of his right to
represent COEXPORT by the Public Letter number 80481, issued January
16, 1995, by the Notary Public Number 9 in the Mexico City, Attorney
Xxxx Xxxxx Xxxxxxxxxx Xxxxxx.
E) That for all purposes related to this contract its address is Xxxxx
Xxxxx Number 115, Col. Bosque de Xxxxxxxxxxx, Xxxxxx Xxxx, 00000,
Xxxxxx Xxxxxxx Municipality.
III. Hereby, both parties declare to know the above declarations as true
and voluntarily agree upon the following.
CLAUSES
FIRST: THE GROWER obliges to plan within a period of three years, 5000 Ha
(five thousand hectares) of Italian type lemon, directly or through its
affiliated or branch enterprises on which it has control, either by contractual
rights or by stockholder majority, according to the planting program of
Attachment "A," which signed by both parties will be part of this contract.
THE GROWER obliges to realize all the necessary works in his orchard to
guarantee COEXPORT a minimum delivery of fresh fruit in metric tons per year,
in accordance with the following annual crop program, same that can change due
to reasons out of control of THE GROWER (freezes, extended dry seasons, etc.).
Annual Crop Program
Year Mt Ton of fruit/Year Year Mt Ton of fruit/Year
1996 0 2002 80,000
1997 0 2003 104,000
1998 500 2004 124,000
1999 7,500 2005 134,000
2000 25,900 2006 144,000
2001 54,000 2007 150,000
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SECOND: THE GROWER obliges to supply directly or through its affiliated or
branch enterprises on which it has control, either by contractual rights or by
stockholder majority, and COEXPORT obliges to buy all the crop of the fresh
fruit produced by THE GROWER in the five thousand hectares mentioned in the
first clause of this Contract and as agreed in clauses third through
fourteenth.
THIRD: This contract will have a mandatory term of ten years which will start
counting at its signing. Both parties will be able to extend the same for an
equal period by only signing a written agreement for such effect and to be
executed within the last 30 days of the term of this contract.
FOURTH: THE GROWER agrees that COEXPORT only obliges to buy the fresh fruit
produced during the natural crop of the grove and that fulfills the quality
specifications set forth in Attachment "B" of this contract, which is signed by
both parties, will be part of the same. Likewise, COEXPORT will hold the right
of preference for the acquisition of the fresh fruit produced out of the
natural crop season, under the same terms and conditions established for the
purchasing of the natural crop.
FIFTH: THE GROWER will supply the Italian lemon fresh fruit, free-on-board the
processing plan designated by COEXPORT within a zone of 500 km maximum and with
the quality to provide in process cold pressed oil lemon which meets the
specifications of the Foods Chemical Codex (FCC) for this product and to have a
minimum aldehyde content reported as Citral (C10H160) of 2.3%. The price per
metric ton of fresh fruit that COEXPORT will pay THE GROWER will be calculated
on the basis of the content in kilograms of Italian lemon oil as the total
average of the natural crop and in the same way, the crop(s) out of this season
per metric ton of fresh fruit, applying for its payment the prices set forth in
"Attachment C" of this contract, which signed by both parties, will be part of
the same.
To determine Italian lemon oil content per ton of fresh fruit that the GROWER
delivers to COEXPORT, the analytical methods established in Attachment "D" of
this contract will be applied, which signed by both parties will be part of the
same.
The essential oil content of the fruit shall be determined by COEXPORT or
COEXPORT's designee, by analysis of representative samples of fruit from each
truck load. The GROWER or the GROWER's designee may observe the sampling of
the fruit and determination of oil content.
In the event that the annual average of aldehyde content reported as Citral
(C10H160) in dewaxed cold pressed Italian lemon oil is lower than 2.3%, the
GROWER agrees that COEXPORT adjusts down by 1% prices set forth in Attachment
"C" for every one tenth of
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a point by which the average annual aldehyde level falls below the minimum of
2.3%. At COEXPORT's discretion, it may purchase or not the fruit whose
aldehyde content in lemon oil to be lower than 2.0% for which both parties will
agree in negotiate the rice at the moment of the purchase.
Price adjustment due to low aldehyde content will be calculated by deducting
the actual annual average aldehyde level from 2.3% and then dividing the
difference by 10, the number will be multiplied by the average price paid per
metric ton of fruit during the calendar year in which the low aldehyde level
was recorded (Attachment "C"). The result will be the total amount in dollars
that the GROWER should rebate to COEXPORT by March 31, of the year following
the year of the crop.
COEXPORT will have the final determination as to the aldehyde level of the oil
and will share its aldehyde analysis method with the GROWER for aldehyde
determination.
COEXPORT will make the provisional payments weekly after the first fruit is
delivered by THE GROWER and taking as a basis for these payments, the oil
content of the fruit determined by COEXPORT or whom he designs, in
representative samples of each delivery that THE GROWER will make at the
Processing Plant. At the end of the crop and in the last delivery of the
fruit, both parties agree to make the necessary adjustments between the paid
value and the real value found as oil content in the fruit in the final
payment, which will be at the latest four weeks after the last delivery of the
fresh fruit.
In case of fruit delivered out of the natural crop, the same payment procedure
will be applied.
SIXTH: All payments that COEXPORT makes on account of the fresh fruit
purchasing, will be in American dollars at the exchange rate in national
currency that for that effect establishes the Banco do Mexico and that be
published in the Official Daily of the Federation in the day the payment
occurs.
SEVENTH: COEXPORT obliges to provide THE GROWER freely, at no charge, the
technical advice requested according to the generally accepted procedures for
Italian lemon production and processing in order to optimize the citrus
production. COEXPORT will give technical advice through Technical Reports and
xxxxxx inspections made by COEXPORT's field technical personnel with the
technical recommendation required. THE GROWER holds, at all times, his right
to implement or reject the advice without prejudice of the obligations that THE
GROWER acquires because of the signing of this contract. Under no
circumstances COEXPORT will be responsible for the results in terms of amount
or quality of the fresh fruit obtained, being at all times THE GROWER's
responsibility.
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EIGHTH: COEXPORT obliges before THE GROWER to finance the harvest and hauling
of the first fresh fruit delivery to the processing plant that COEXPORT
designates, discounting any money advanced from the first provisional payment
that COEXPORT makes.
NINTH: COEXPORT obliges to provide THE GROWER freely, at no charge, up to
750,000 (seven hundred fifty thousand) Italian type lemon trees that are enough
for planting 3,000 Ha (three thousand) out of the 5,000 Ha (five thousand)
motive of this Contract according to the calendar of Attachment "A." The trees
required for planting the remaining 2,000 Ha (two thousand) will be on THE
GROWER's account, likewise, if THE GROWER decides to plant at a density of more
than 250 trees per hectare, the lacking trees for the planting will be on its
own account.
TENTH: Both parties agree that all matters stated in Article number 1639 in
the Civil Code in force of the State of Tamaulipas and its correlative, the
Article number 2309 in the Civil Code in force of the Mexico City, will not
stand for the purposes of this contract since it is the GROWER's responsibility
and risk the event that the crop might fail to exist. THE GROWER, if so
wanted, will freely contract on its account an insurance to protect himself
against the event that the crop might fail to bear, and or, against the event
that his grove gets damaged by acts of God, intentional acts or because of
negligence.
THE GROWER obliges to take the necessary actions to repair the damages that the
grove may suffer because of acts of God or intentional acts as fire, sabotage
or any other event of similar nature.
ELEVENTH: COEXPORT holds no responsibility in any law suit between THE GROWER
and his workers. THE GROWER obliges to keep COEXPORT excluded and safe against
any civil, labor or criminal claim, including working accidents.
TWELFTH: All matters not considered in this Contract, will be ruled by the
Civil Code of Mexico City.
THIRTEENTH: Both parties manifest not to find vices of consent that could
nullify it.
FOURTEENTH: For the interpretation and compliance of this Contract, both
parties agree to be ruled by the courthouse of law of Mexico City, and hereby
resign to any other else.
This contract has been read fully and both parties are aware of its content and
legal force, and sign at the bottom at the City of Victoria, Tamaulipas, on
October 7, 1996.
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COEXPORT THE GROWER
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Xx. Xxxxxx Xxxxxxx Xxxxxx Xx. Xxxx Xxxxx Xxxxxxxx Brohez
Witness: Witness:
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Xx. Xxxxxxxx Xxxxxxxxx Aja Xx. Xxxx Xxxxx
Witness: Witness:
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Xx. Xxxxxxx Xxxx Xxxxx Mr. Manual Xxxxxxxx Xxxxxxx
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ATTACHMENT "A"
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PLANTING PROGRAM 1996-1999
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CALENDAR FIRST STAGE 1996-1997
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MONTH YEAR NO. HA. MONTH YEAR NO. HA.
November 1996 50 March 1997 150
December 50 April 200
January 1997 50 May 200
February 100 June 200
TOTAL 1000
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CALENDAR SECOND STAGE 1997-1998
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MONTH YEAR NO. HA. MONTH YEAR NO. HA.
July 1997 200 December 1997 200
August 200 January 1998 200
September 200 February 200
October 200 March 200
November 200 April 200
TOTAL 2000
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CALENDAR THIRD STAGE 1998-1999
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MONTH YEAR NO. HA. MONTH YEAR NO. HA.
May 1998 200 October 1998 200
June 200 November 200
July 200 December 200
August 200 January 1999 200
September 200 February 200
TOTAL 2000
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GRAN
TOTAL 5000 Ha.
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ATTACHMENT "B"
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Fruit Quality Specifications
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1. Fruit must be fresh. It must be free of diseases, viruses and other
plagues which could be harmful to other fruit with which it comes into
contact and which could adversely affect the quality of the products
produced from the fruit.
2. Only pesticides and chemicals that are registered for use on citrus in
the United States of America may be used.
These must only be used at levels generally considered safe.
COEXPORT will make the final determination as to the acceptability of
the pesticides and chemicals levels on the fruit.
For information purposes only, Attachment "E" of this Contract lists
the approved pesticides as of May 1, 1996; nevertheless, at all times,
it is the GROWER's responsibility to ensure that only approved
pesticides, fungicides, herbicides and other agricultural chemicals
are used at the approved levels, giving the warranty to COEXPORT that
all the fruit harvested in its xxxxxx comply with all federal, state
and local laws and regulations applicable to the use of these products
including the Federal Hazardous Substance Act, the Federal Foods and
Beverage Act and any other regulation or Law relating to the use and
handling of these substances.
3. The fruit must not be transported in vehicles that transport
pesticides, dangerous materials or similars.
4. The cold pressed essential oil obtained from the fresh fruit, should
meet the requirements established for the Italian Lemon essential oil
(Citrus Xxxxx Xxxx).
Essential Lemon Oil (Citrus Xxxxx, Xxxx.) characteristics
1. Definition
The essential lemon oil is the oil obtained in cold, without the addition of
heat, by expression of the oil cells located in the external part of the
epicarp (flavedo) of the fruit Citrus Xxxxx Xxxx; Citrus Limonum Xxxxx; family
Rutaceae, subfamily Aurantoideae, Tribe Citrae, Sub-
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tribe Citrinae, according to Swibgle's classification grown in Mexico with or
without previous separation of the juice and peel and without the addition of
antioxidants or adulterants. The oil mixes easily in anhydrous alcohol and
glacial acetic acid. In all events, the specifications and analysis procedures
mentioned in this annex, or in the event a doubt about the product
characteristics or methods of analysis arise, the product must comply with the
United States Pharmacopoeia for the product "Cold pressed lemon oil, U.S.P."
and complementary with the Food Chemical Codex Specifications.
2. Specifications
A) Color: Ranging from pale yellow to deep yellow or green yellow,
transparent in all cases.
B) Organoleptic characteristics: Odor and taste must be characteristic
of the external part of ripe lemons. Must not show a Turpentine odor.
C) Aldehyde content: Total aldehyde content reported as Citral (C10H160)
must be greater than 2.3% w/w.
D) Angular rotation: Between / 57 degrees and 65.6 degrees
E) Content of:
Arsenic (as As): Not greater than 3 ppm
Heavy Metals (as Pb): Not greater than 0.004%
Lead: Not greater than 10 ppm
F) Refraction Index: Between 1.473 and 1.474 at 20 degrees C
G) Specific gravity: Between 0.849 and 0.855
H) U.V. Absorvance: Not greater than 1,300
I) Evaporation Residue: No greater than 3.5% w/w.
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ATTACHMENT "C"
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ATTACHMENT "D"
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Determination of Essential Oil content in Fresh Fruit by the Xxxxx method.
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Required material:
2 Plastic bags with handles for sampling
1 Plate balance. 0 to 5 kg capacity
1 Knife
1 Cutting board
1 Blender, institutional type
1 Calculator with basic functions
2 Connector tubes, Pyrex, Iowa state type
2 Clamps for connector
2 500-ml round flasks, Pyrex
2 Electric heating mantles with color regulator
2 Condensers with hoses, connected to the running water faucet
2 Universal stands with ring
1 Digital analytical balance, limit of accuracy 0.01 g
2 250-ml plastic beakers
1 1000-ml plastic beaker
2 150-xx xxxxx beakers
2 50-ml graduated cylinders, Pyrex
Flask with isopropyl alcohol
Flask with distilled water
1 10-ml pipette with suction rubber bulb
1 Electric stirrer
2 Magnetic stirring bars
1 Automatic burette with feeding plastic flask
Reagents
o Isopropyl alcohol
o Potassim Bromide - Potassium Bromate Solution, 0.1 N
o Hydrochloric Acid Solution 1:2 (one volume of hydrochloric acid per
two volumes of distilled water).
o Methyl orange, 0.1% in water
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Procedure:
1. With the plastic bag, take a sample of 2.5 kg of fresh fruit approx.
once the transportation unit arrives to the processing plant. A second
sample of the same weight will be withdrawn from the same unit after
having received 50% of the total delivery.
2. The two samples are washed and with the knife and cutting board, the
fruit is cut in quarters from one end to another, placing a quarter of
each fruit into a 1000-ml plastic beaker. The rest of the fruit is
discarded.
3. Fruit quarters separated in beakers are weighted, poured into the
blender and added with the same amount in kilograms of water. The mix
is blended at law speed for 3 to 5 minutes and at high speed for the
same period of time. The emulsion should be free of lumps.
4. In a round flask or Xxxxx distillation flask which has been previously
tared in a digital balance, weight 10 to 15 grams of the blended
sample. Record the weight obtained.
5. Add to the distillation flask, 25-ml isopropyl alcohol and 50-ml
distilled water, measured with the 50-ml cylinder.
6. Place it in the electric heating mantle, with the connector tube (Fig.
1).
7. The condensed liquid is received in a 50-ml cylinder, the heating
mantle with the regulator is turned on and after 2 to 3 minutes, the
contents of the flask will begin to boil and then distill.
8. Once 30-ml of distilled liquid are obtained, the regulator is turned
off, and the tube and flask removed with protecting gloves for its
later cleaning. (It is very important that the condenser be rinsed
with distilled water and isopropyl alcohol after the analysis since
residues may remain affecting further determinations).
9. The 30-ml of distilled liquid are placed in a glass beaker, 10-ml of
hydrochloric acid solution (1:2) previously prepared with orange methyl
indicator are added with a pipette fitted with a suction rubber bulb.
10. The beaker content is placed on the electric stirrer with a magnetic
stirring bar for its moderate stirring, proceed with titration using
the potassium bromide-bromate solution 0.1N previously prepared;
solution is added dropwise. Titration is completed when the liquid
changes from pink to clear color. Record ml of solution used.
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11. The oil content in kg/ton of fruit of the sample is obtained through
the following formula:
Formula:
Oil kg/ton of fruit = AxNx 6.816x10
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M
where
A = ml of Bromide-Bromate potassium solution used.
N = Normality of Bromide-Bromate potassium solution used.
M = Weight in grams of the blended sample used.
DRAWING OF OIL DISTILLATION APPARATUS
