Exhibit 10.3
FEED PURCHASE AGREEMENT
THIS FEED PURCHASE AGREEMENT ("Agreement") is made this day of 27th Aug.,
by and between Alliance Farms and M&M Co-op, located at Yuma, Colorado ("Grain
Processor").
Alliance desires to arrange for a supply of feed to one or more hog
production facility(s); and Grain Processor desires to supply such feed, all in
accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, Alliance desires to issue these Feed Purchase
Specifications:
1. DEFINITIONS. The following words and terms shall have the following
meanings: "Approved Ingredients" shall mean the Ingredients that are obtained
from approved suppliers and listed in the Quality Assurance manual. "Diet"
shall mean the formula, recipe, proportion of ingredients or make-up of the
Feed. "Feed" shall mean the feed that conforms to the specifications and
requirements included in this Agreement.
2. PURCHASE OF FEED. Alliance agrees to purchase Feed from Grain Processor
and Grain Processor agrees to sell Feed to Alliance, all in accordance with the
terms and conditions of this Agreement.
3. TERM. This Agreement commences on September 1, 1999, and shall be in
effect for one (1) calendar year. Either party may cancel this Agreement upon
thirty (30) days notice.
4. QUALITY STANDARDS. All Feed must be (i) manufactured in full accordance
with the Farmland Livestock Production Quality Standards, (ii) of feed types
that have been approved in writing by Alliance, and (iii) manufactured from the
correct and current weekly Xxxxx formulation. Each Grain Processor must be in
full compliance with Livestock Production's then current Quality Standards. All
orders for Feed are subject to meeting necessary requirements and to the final
approval of Alliance or its representative. Only Approved Ingredients may be
used in the mixing of Feeds. Any variations on ingredient or drug option must
be cleared (in writing) previous to manufacture by a member of Farmland's
Livestock Production Division.
5. FEED ORDERS. All nursery and finishing Feed orders must have an SDI
reference number. Any variation from the SDI order must be approved by
Alliance.
6. INVOICES. All invoices must contain the following information: (a)
invoice number, (b) SDI reference number, (c) price per cwt or per ton, (d)
gross weight, (e) tare weight, (f) net weight, (g) grain processor name and
mailing address, (h) lot number, (i) producer name, (j) total price, (k) type of
feed, (l) drug option and strength, (n) date of shipment, (o) and other relevant
terms.
7. DIETS. The Diets will be communicated from Alliance to Grain Processor
from time to time and are the exclusive property of Alliance. Feed that is made
from the Diets may only be manufactured for use feeding animals owned by
Alliance or persons under contract with Alliance, unless prior approval is given
by Alliance. The Diets, including all nutritional specifications that are a
part of the Diets, are strictly confidential, and may not be shared with any
third party without the consent of Alliance.
8. PURCHASE PRICE. All grain used in rations shall be sold in weekly
intervals (unless agreed to otherwise) to Alliance at the price bid to grain
producers by Grain Processor on the day of sale or the day a cash contract is
agreed upon, plus 10 cents per bushel.
9. OTHER GRAIN CONTRACTS. Grain processor agrees to make reasonable efforts
to purchase grain from producers and sell such grain to Alliance on a
competitive basis. In the event that the purchase and sale process described in
Provision 8 is no longer competitive, Alliance may purchase grain directly from
other sources. In such event, Alliance shall pay Grain Processor three (3)
cents per bushel to cover the Grain Processor's put-through costs.
10. SALE BY GRAIN PROCESSOR TO ALLIANCE. Soybean meal, premixes, additives and
supplements shall be sold by Grain Processor to Alliance at the Grain
Processor's inventory cost. This cost is arrived at by adding the ingredient's
cost F.O.B. the manufacturing plant to the lowest possible freight (whether
obtained from Alliance or other sources approved by Grain Processor and
Alliance). All food drugs or medications mixed in the Feed, and all packaged
drugs and treatments (non-feed additives), whether obtained from Alliance or
other source approved by Alliance, shall be sold by Grain Processor to Alliance
at the lowest available price, delivered to Grain Processor.
11. ANIMAL HEALTH PRODUCTS. Alliance, at Alliance's option, shall supply all
animal health products to Alliance Farm operators.
12. SALE OF INGREDIENTS. Alliance retains the right to deliver any ingredients
(including any and all feed additives, premixes, supplements, grain and soybean
meal) to the Grain Processor if Alliance has reasonable grounds to suspect that
Grain Processor is not in accordance with points #8 and #10 above.
13. PURCHASE OF INGREDIENTS BY GRAIN PROCESSOR. In purchasing ingredients for
the Feed, Grain Purchaser must either (a) purchase such ingredients from
Alliance or an affiliate of Alliance, or (b) purchase such ingredients from a
supplier at a price equal to or lower than the price offered by Alliance or an
affiliate of Alliance.
14. INVENTORIES. Alliance shall have the right to maintain inventories of
ingredients at the Grain Processor's location. Shrinkage on Alliance owned
inventories that is in excess of industry standards will be charged to Grain
Processor. Excess Shrinkage is defined as shrinkage that is in excess of 0.75%
inventory loss on the original quantity delivered.
15. PRICING DAY. Pricing day is on Wednesday, with pricing due on Wednesday
morning by 10:00 A.M. Pricing sent in on Wednesday will take effect for the
following Sunday, and continue to be in effect through Saturday of that week.
On weeks prior to holiday weeks, pricing may be due on Tuesday.
16. PRICE LIST. On Monday, a complete finished feed price list (Generated
through the XXXXX system) will be sent to the Grain Processor, this pricing will
contain prices at which feed shipped in the that calendar week should be billed.
17. GRIND AND MIX PRICE. Grain processor will receive $8.00/ton for "grind and
mix" on existing feed business for barns in service before August 31, 1999.
After this date, any new business generated from new or relocated barns will be
compensated for at a rate of $5.00/ton.
18. PELLETING FEE. Pelleting fee is $5.00/ton on all feeds. A $3.00/ton
milling premium is associated with the manufacture of pre-starter nursery feeds
(Currently Nursery I and Nursery II).
19. DELIVERY. Grain Processor will charge $6/ton for delivery within 25 miles
of the Grain Processor. In addition, any miles further than 25 loaded miles
will be charged at a rate of 1.75/loaded mile on a 24 ton minimum.
20. AUDIT. Alliance may conduct an review of Grain Processor's feed ingredient
receipts if Alliance has reasonable grounds to suspect that Grain Processor is
not in accordance with points #8 and #10 above.
21. ALLIANCE WARRANTIES. ALLIANCE MAKES NO WARRANTIES EITHER EXPRESSED OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AS TO ANY PRODUCT,
INGREDIENT, FEED, MEDICATION OR PROGRAM PRESCRIBED UNDER THIS AGREEMENT.
ALLIANCE MAKES NO WARRANTIES EITHER EXPRESSED OR IMPLIED RELATIVE TO GRAIN
PROCESSOR'S PROFITABILITY AS A RESULT OF THIS AGREEMENT. GRAIN PROCESSOR
RECOGNIZES AND ACCEPTS THE HAZARDS INHERENT IN ANY FEED PRODUCING VENTURE.
22. FORCE MAJEURE. Either party to this Agreement shall be relieved of his or
its responsibilities and obligations hereunder when performance becomes
commercially impossible because of reasons beyond their reasonable control such
as, but not limited to, fire, explosion, strike, accident, governmental
regulations, or intervention and acts of God. Financial difficulty that may
impact the Feed, however, shall not relieve Grain Processor of his or its
responsibilities and obligations to deliver Feed under this Agreement.
23. ASSIGNMENT. This Agreement may not be assigned by either party without
prior written consent of the other party. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
24. APPLICABLE LAW. This Agreement shall be construed in accordance with the
laws of the State of Missouri, without reference to the conflict of laws
principles of such state.
25. ENTIRE AGREEMENT/MODIFICATION. This Agreement constitutes the entire
agreement between the parties and can be modified only in writing signed by all
parties hereto.
26. NOTICES. All notices, requests, demands and other communications hereunder
shall be deemed to be duly given if delivered by hand or if mailed by certified
or registered mail, postage prepaid, at the addresses set forth above.
27. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute but one and the same instrument.
28. HEADINGS. The headings used in this Agreement are for convenience only and
shall not constitute a part of this Agreement.
29. EXHIBITS. All of the exhibits and appendices attached hereto are
incorporated herein and made a part of this Agreement by reference thereto.
30. ARBITRATION/ENFORCEMENT. Any controversy or claim arising out of or
relating to this contract, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof. Subject
to the above, costs and expenses incurred by Alliance in connection with the
enforcement of its rights under this Agreement shall be reimbursed by Grain
Processor.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
ALLIANCE FARMS:
By: _____________________
Print Name: Xxxxx Xxxxxx
Title: Vice President, Livestock Production
GRAIN PROCESSOR:
Yuma Xxxxxx'x M&M Co-op
By: _____________________
Print Name: Xxxxx Xxxx
Interim Manager
