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EXHIBIT 10.20
BASIC SALE AND PURCHASE AGREEMENT
THIS AGREEMENT made and entered into on January 1, 1997 by and between Premium
Standard Farms, Inc., with its principal office at 000 Xxxx 0xx Xxxxxx, Xxxxx
000, Xxxxxx Xxxx, Xxxxxxxx 00000 (hereinafter called the "PRODUCER") and
Marubeni America Corporation, with its branch office at the Amoco Building,
Suite 4838, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 (hereinafter called
the "EXPORTER").
WITNESSETH
WHEREAS, the PRODUCER is engaged in, among other things, the business of
producing and selling chilled pork products from its Milan, Missouri processing
facility.
WHEREAS, the EXPORTER is engaged in, among other things, the business of
exporting various goods into the TERRITORY (as hereinafter defined) and desires
to export the PRODUCTS into the TERRITORY.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants (as hereinafter defined) and desires to export the PRODUCTS into the
TERRITORY.
ARTICLE 1. DEFINITIONS
1.1 When used in the AGREEMENT, the following terms shall have the following
respective meanings:
(a) "PRODUCTS" shall mean chilled and frozen pork (except pork offals)
produced by PRODUCER at its Milan, Missouri processing facility.
(b) "TERRITORY" shall mean Japan.
ARTICLE 2. APPOINTMENT
2.1 The PRODUCER hereby appoints the EXPORTER as its sole exporter to export
the PRODUCTS into the TERRITORY during the term of the AGREEMENT, and
the EXPORTER hereby accepts such appointment, all on terms and
conditions hereinafter set forth.
2.2 The PRODUCER agrees, that during the term of the AGREEMENT, it will
neither export or import into or sell the PRODUCTS in the TERRITORY
itself nor sell the PRODUCTS to any other party whom it knows or should
reasonably know intends to export or import into or sell the PRODUCTS in
the TERRITORY as chilled pork. The PRODUCER further agrees that, during
the term of the AGREEMENT, it will not take itself nor cause any third
party to take any action which may tend to damage, limit or circumscribe
the exclusive rights of the EXPORTER.
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ARTICLE 3. RELATIONSHIP
3.1 The relationship between the PRODUCER and the EXPORTER created hereby is
that of vendor and vendee only, and nothing contained in the AGREEMENT
shall be deemed or construed as constituting any party as an agent or
legal representative of any other party for purpose whatsoever, or as
conferring upon any party any right or authority to assume or create any
obligation or responsibility, expressed or implied, orally or in
writing, on behalf of or the name of any other party or to bind any
other party in any manner whatsoever.
ARTICLE 4. PRICES
4.1 The prices to the EXPORTER for the PRODUCTS shall, unless otherwise
agreed upon, be quoted in U.S. Dollars.
4.2 All duties and taxes applicable to or levied on the PRODUCTS sold to the
EXPORTER hereunder by the State of Missouri to the United States shall
be paid by PRODUCER and all other duties, tax, fees, tariff, assessments
and impositions of any kind imposed, levied or assessed by any person or
entity shall be paid by "EXPORTER".
4.3 The prices of the PRODUCTS shall be mutually agreed upon at the same
time of each sale and purchase transaction under ARTICLE 8 hereof.
ARTICLE 5. PAYMENT TERMS
5.1 Payment for the PRODUCTS by the EXPORTER to the PRODUCER shall be made
within fourteen days after the EXPORTER's receipt of original invoice,
original health certificate and original xxxx of lading of the PRODUCTS
destined for the TERRITORY.
ARTICLE 6. SHIPMENTS
6.1 The terms of shipment shall be FOB PRODUCER's Milan, Missouri plant,
unless otherwise agreed upon.
ARTICLE 7. MINIMUM VOLUMES
7.1 PRODUCER shall sell to EXPORTER and EXPORTER shall purchase from
PRODUCER the following volume of the PRODUCTS:
1997 4 loads per week
1998 8 loads per week
1999 12 loads per week
7.2 PRODUCTS purchased from PRODUCER by EXPLORER do not have to be shipped
to Japan, but will be included in the total weekly order weight.
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ARTICLE 8. INDIVIDUAL CONTRACTS
8.1 The detailed terms and conditions of each individual purchase of the
PRODUCTS hereunder by the EXPORTER from the PRODUCER shall be mutually
agreed upon at the time of such purchase and confirmed by such parties
in a "Confirmation of Purchase Contract" (the form of which is attached
hereto as EXHIBIT I and made an integral part hereof) to be issued by
the EXPORTER to the PRODUCER and countersigned and returned by the
PRODUCER.
8.2 Each such individual purchase contract between the PRODUCER and the
EXPORTER shall be deemed to incorporate all of the terms and conditions
hereof to the extent that they may be applicable and are not
inconsistent with the terms and conditions of said individual purchase
contract: provided, however, that the terms and conditions of the
AGREEMENT shall, in the event of a conflict, have precedence over those
on the reverse side of the "Confirmation of Purchase Contract".
ARTICLE 9. INSPECTION
9.1 At all times during the term of the AGREEMENT, the EXPORTER shall have
the right to dispatch its designated person(s) to inspect the quality of
the PRODUCTS and the PRODUCER shall accept and cooperate with such
inspector.
9.2 All products shall pass USDA inspection and approved procedures.
At the EXPORTER's request any time during the terms of this
AGREEMENT, the PRODUCER shall provide the EXPORTER with information in
respect of its examination system.
ARTICLE 10. TERM
10.1 This AGREEMENT shall, unless earlier terminated as provided herein,
expire on December 31, 1999 unless the parties shall, at least sixty
(60) days prior to the expiration date, mutually agree in writing to
extend the term.
ARTICLE 11. TERMINATION
11.1 Any party may forthwith terminate this AGREEMENT by notice to such
effect to the other parties if any other party commits a breach of term
and condition contained in this AGREEMENT and fails to remedy the same
within thirty (30) days after notice from the party(ies) not in breach
setting out the nature of such breach and demanding that the same be
remedied, provided however, any breach which may be cured by the payment
of money must be cured within ten (10) days after such notice from the
other party.
11.2 Any party may forthwith terminate this AGREEMENT by notice to such
effect to the other parties if bankruptcy, insolvency, or reorganization
proceedings, or any other proceedings analogous in nature or effect, are
instituted by or against any other party and is not dismissed within
ninety (90) days or if either party is dissolved or liquidated, whether
voluntarily or involuntarily, a receiver or trustee is appointed for all
or a substantial part of the assets of any other party or any other
party make an assignment for the benefit of creditors.
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ARTICLE 12. FORCE MAJEURE
12.1 No party shall be liable in any manner for failure to perform or delay
in performing all or any part of this AGREEMENT or of any individual
purchase contract entered into pursuant hereto which is directly or
indirectly due to any cause or circumstance beyond the control of such
party including, without limitation, acts of god, fire, flood storms,
earthquake, typhoon, tidal wave, plague or other epidemics, governmental
laws, orders, regulations, sanctions or restrictions, war (whether
declared or not), armed conflict or the serious threat of same,
hostilities, mobilization, blockade, embargo, detention, revolution,
riot, looting, lockout, strike or other labor dispute, unavailability of
transportation, unavailability or interruption of supplies of hog
packing materials or other supplies used by PRODUCER.
ARTICLE 13. GOVERNING LAW
13.1 This AGREMENT shall be governed by and construed in accordance with the
laws of the State of Missouri.
ARTICLE 14. ARBITRATION
14.1 All disputes, controversies or differences which may arise between the
parties hereto, out of, in relation to in connection with this AGREEMENT
or any individual sales contract entered into pursuant hereto, or for
the breach hereof of thereof, which cannot be resolved amicably by the
parties shall be finally settled by arbitration in Kansas City,
Missouri, pursuant to the commercial Arbitration Association or its
successor, by three (3) arbitrators to be selected in accordance with
said rules:
14.2 The award rendered therein shall be final and binding upon all the
parties.
ARTICLE 15. ENTIRE AGREEMENT
15.1 This AGREEMENT and any Confirmation of Purchase Contract entered into
pursuant hereto constitutes the entire agreement between the parties
hereto and wholly cancels, terminates and supersedes all previous
negotiations, agreements and commitments, whether formal or informal,
oral or written, with respect to the subject matter hereof.
ARTICLE 16. AMENDMENTS
16.1 This AGREEMENT shall not be amended, changed or modified in any manner
except by an instrument in writing signed by duly authorized
representative of each of the parties hereto.
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ARTICLE 17. ASSIGNMENT
17.1 This AGREEMENT shall be binding upon and shall insure to the benefit of
PRODUCER and EXPORTER and their respective successors and permitted
assigns.
17.2 No party shall assign, transfer or otherwise dispose of any its rights
or obligations under the AGREEMENT, in whole or in part, without the
prior written consent of the other parties.
ARTICLE 18. NO WAIVER
18.1 No failure to exercise or delaying exercising any right or remedy under
this AGREEMENT by any party shall operate as a waiver thereof or of any
other right or remedy which such party may have hereunder.
18.2 The rights and remedies provided herein are cumulative and not exclusive
of any rights and remedies provided by law, in equity or otherwise.
ARTICLE 19. SEVERABILITY
19.1 In the event that any provision or any portion of any provision of the
AGREEMENT is adjudged, by a court of competent jurisdiction, to be
invalid, illegal or unenforceable under the laws of the state of
Missouri, such provision or portion thereof shall be deemed to be
deleted from the AGREEMENT and the validity of the remainder of the
AGREEMENT shall remain unaffected thereby.
ARTICLE 20. NOTICES
20.1 All notices, requests or other communication required or permitted to be
given hereunder shall be writing in English language and shall be sent
by registered airmail letter, postage prepaid, or by telex or telefax
(with confirmation by registered airmail letter, postage prepaid) to the
other parties at their respective addresses set forth below or to such
other address as may from time to time be notified by any part to the
other parties in accordance with article 20.1:
If to the PRODUCER:
Premium Standard Farms, Inc.
000 Xxxx 0xx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
If to the EXPORTER:
Marubeni America Corporation
Amoco Building, Suite 4838
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
20.2 All notices shall be deemed to have been received when duly transmitted
by telefax, two (2) days after deposit if sent by U.S. airmail.
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ARTICLES 21. HEADINGS
21.1 The headings of the AGREEMENT are inserted for the convenience of
reference only and shall not affect the construction interpretation
hereof.
ARTICLE 22. COUNTERPARTS
22.1 This AGREEMENT may be executed in one or more counterparts each of which
shall be deemed as original, but all of which together shall constitute
one and the same instrument. IN WITNESS WHEREOF, the parties hereto
have caused this AGREEMENT to be executed by their respective, duly
authorized representatives as of the day and year first above written.
Premium Standard Farms, Inc.
By /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Its President
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Marubeni America Corporation
By /s/ Not Legible
-----------------------------------
Its Vice President and General Manager
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PRICE AGREEMENT
March 1, 1997, by and between Premium Standard Farms, Inc. and Marubeni America
Corporation, the parties hereto agree as follows:
PERIOD:
Beginning on March 1, 1997, and ending on December 31, 1997.
WEEKLY MINIMUM ORDER:
The EXPORTER agrees to purchase the following form the PRODUCER on a weekly
basis:
- 1 load of fresh boneless loin product priced on the formula basis
- 1 load of fresh boneless loin product priced on a negotiated basis
- 1 load of fresh or frozen boneless loin product priced on a negotiated
basis
- 1 load of fresh or frozen mixed product on a negotiated basis
- Beginning April 1, 1997 1 load of single ribbed bellies priced on a
negotiated basis
- Beginning June 16, 1997 one of the price negotiated loin product loads
will covert to formula priced load
PRICING:
All pricing is FOB Milan, Missouri, USA.
Yields %
Item Adjustment CC Loin MM Loin JS Loin
--------------------------------------------------------------------------------------------
Loins Regular Fresh 14-18lbs. Plus $.19/lb. 100.0 100.0 100.0
Trimming 42% Fresh ________ 4.6 7.45 0.0
Trimming 72% Fresh ________ 17.8 17.8 16.56
Loin Backrib (combo) 1.75lbs-dn ________ 7.5 7.5 7.16
Tenderloin Plus $.20/lb. 4.2 4.3 4.0
Fat(1) ________ 1.65 3.3 1.56
Boneless Sirloin Fixed Price $1.25/lb. 5.5 5.5 5.5
Riblets Fixed Price $.30/lb. 1.5 1.5 1.5
Bones Fixed Price $.025/lb. 20.55 20.55 20.55
Cut Loss $.00/lb, .5 .5 .5
Total 63.8 68.3 57.35
Yield of Loin 36.2 31.7 42.65
(1) Choice White Grease X .70 yield less .01/lb energy charge
Value = (Base Prices + Adjustments) X Yields
Processing Charge (Labor, Overhead, Packaging, etc.) - $.45/lb.
The Processing Charge may be adjusted annually to reflect increases or
decreases in labor or packaging.
Formula Price = (Value of Loin - Value of Credits Total)/Yield of Loin +
Processing Charge
Tenderloin Price = Weekly Average of the USDA Topside Close + $.20/lb.
Base price (except riblets, boneless sirloin, and bones) shall be the weekly
average of the USDA Top Side announced by the Department of Agriculture of the
United States in the preceding week of shipment of the PRODUCTS by the
PRODUCER.
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CEILING AND FLOOR PRICE:
The floor and ceiling price will be set on the USDA topside close week's prior
average on Loins Regular Fresh 14-18 lbs. as used in the above formula as the
input price. The ceiling price will be set at 1.30/lb and the floor will be set
at 1.10/lb. If the input price exceeds the ceiling price, the formula input
price will be calculated as the average of the higher price and the ceiling
price. If the input price is less than the floor price, the formula input price
will be calculated as the average of the lower price and the floor price. For
example, if the input price is 1.37/lb., the formula price will be 1.3350/lb.,
or if the input price is .945/lb., the formula price will be 1.0225/lb. If the
PRODUCER and EXPORTER agree, this may be adjusted on 4/20/97 and 8/29/97.
ORDER FOR PRODUCTION:
EXPORTER shall place order for production quantities to PRODUCER no later than
two Thursdays before the production week to be confirmed via facsimile.
Negotiated prices shall be confirmed with the Order for Production.
THE GUARANTEE OF QUANTITY FOR TENDERLOIN:
PRODUCER shall guarantee to ship a minimum of one boneless tenderloin for
every one boneless loin shipped to the EXPORTER.
March 1, 1997
Premium Standard Farms, Inc.
By /s/ Xxxxxx X. Xxxxxx
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President and COO
Marubeni America Corporation
By /s/ Not Legible
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