EXHIBIT 10.8
"***" - Confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission under a Confidential
Treatment Request, pursuant to Rule 406 of the Securities Act of 1933, as
amended
BY-PRODUCTS MARKETING AGREEMENT
THIS BY-PRODUCTS MARKETING AGREEMENT ("Agreement"), is made as of
October 8, 2003, by and between CONAGRA TRADE GROUP, INC. ("CTG") and SWIFT &
COMPANY, ("Swift").
XXXXXXXX:
(a) Swift is engaged in the processing of cattle and hogs, which includes
production of various by-products.
(b) CTG is engaged in the marketing and sale of various goods, including
beef and pork by-products, and has previously marketed and sold beef
and pork by-products produced by Swift.
(c) The parties desire that Swift will sell to CTG, and CTG buy from
Swift, the Products (as defined herein), all the terms and conditions
set forth below.
(d) The parties desire to maximize total profit before taxes on the
Products by maximizing revenues and minimizing costs associated with
this Agreement.
AGREEMENT:
1. PURCHASE OF PRODUCT. Pursuant to the terms and conditions herein,
Swift hereby agrees to sell to CTG, and CTG hereby agrees to purchase
from Swift, FOB the Swift processing facilities identified in Exhibit
"A" attached hereto (individually, a "Facility" and, collectively, the
"Facilities"), Swift's entire rendered by-products production as
identified in Exhibit "A" attached hereto (individually, a "Product"
and, collectively, the "Products"), resulting from the processing of
cattle and hogs at the Facilities. Title and risk of loss to the
Products shall pass to CTG upon delivery of the Products to CTG. CTG
and Swift enter into separate written contracts for the purchase of
the Products (each a "Purchase Contract"). All Products shall be sold
to CTG upon the terms and conditions of sale set forth in the
applicable Purchase Contract in the form attached hereto as Exhibit
"B"; the parties shall retain, however, all rights under this
Agreement.
2. SPECIFICATIONS. All Products will meet all applicable guidelines
published in the most recent edition of the American Fats and Oils
Association Standard Grades, Specifications and Quality Tolerances
(the "Specifications").
3. PRICES. Except those quantities of Products, if any, that the parties
agree in writing to price forward, prices for the Products shall be
calculated by the methods set forth on Exhibit "A" attached hereto and
shall be based on origin weights or first official rail scale. Any
quantities of Products which the parties agree to price forward shall
be memorialized in
writing through Purchase Contract confirmations, which will be signed
by both parties, and invoiced at the contracted price at time of
shipment.
4. PAYMENT. CTG shall make payment for all Products purchased hereunder
from Swift within fourteen (14) days of CTG's receipt of each invoice
for Products.
5. OPERATIONAL PROCEDURES. Swift shall provide CTG with access to Swift's
systems and permit CTG to: prepare daily shipping orders for the
product, schedule all shipping of Product, communicate shipment
schedules with the Facilities, enter shipping orders, generate load
number sequences and maintain open communication with the Facilities
to change shipping schedules. Each day that a Facility operates, by
8:30 a.m., Omaha time with respect to each Facility located in the
United States, Swift will provide CTG with written reports setting
forth inventory, kill schedule and conversion for each Facility for
that day. In addition, Swift will cause each Facility to communicate
directly with CTG on a daily basis with respect to any increase or
decrease in production at each Facility, any changes in rail
switching/car orders placed by Swift at each Facility, or changes in
weight/ladings.
6. CLAIMS. Product claims will be managed and processed by CTG. CTG
will provide Swift with each product claim detail within sixty (60)
days of shipment. Product claims above Ten thousand dollars
($10,000.00) require written approval from Swift prior to the
financial settlement between Swift and CTG. Swift will have financial
responsibility for all approved claims, and agrees to financially
settle with CTG within fourteen (14) days of receipt of product claim
detail.
7. NONCONFORMING PRODUCTS. In the event that Swift delivers Products to
CTG not meeting Specifications or that CTG does not believe, in its
reasonable discretion, are fit for sale ("Nonconforming Products"),
CTG shall have the right to reject such Products and shall be
reimbursed by Swift for all costs associated with such Products,
including the cost for such Products. Notwithstanding the foregoing,
in such an event CTG shall retain all other rights for damages
otherwise available under this Agreement or law.
8. RECALL OF PRODUCTS. Swift and CTG agree to promptly communicate about
any condition or event that could result in a recall of the Products.
In the event CTG determines that a recall is required, in whole or in
part, of any of the Products purchased from Swift hereunder, Swift
agrees to cooperate fully with CTG in effecting any such recall of
Products. To the extent practicable, CTG agrees to give Swift advance
notice of any such recall and work with Swift to coordinate such
recall and, consistent with CTG's responsibilities, to minimize the
impact of such recall on Swift and CTG. Swift shall bear the cost of
any such recall that arises under this Agreement, including
reimbursing the purchase price paid by CTG and its customers for such
Products.
9. SWIFT LIABILITY. Swift shall be responsible for all product liability
issues and claims, whether incurred by CTG or CTG's customers,
including failure of Products to meet Specifications, any
contamination or adulteration of Products or any failure of Products
to be reasonably capable of use or sale. Swift shall indemnify CTG,
ConAgra Foods, Inc.
2
and their affiliates, officers, directors, employees or agents from
all claims arising from or relating to the Products. CTG will comply
with the Federal requirements set forth in 21 CFR Part 589, and with
applicable federal and state laws and mandates relating to sale of the
Products. Swift shall comply with all applicable laws and mandates
relating to manufacture or production of the Products. Notwithstanding
any other provision of this Agreement, CTG shall have no obligation to
test or analyze any Product for conformance to Specifications or for
any contamination or adulteration of Products or other circumstances
that may affect salability of Products.
10. AGREEMENT REVIEW. In the event of any material change in either
party's ability to produce, market, sell, transport or otherwise
include any Product under this Agreement, the parties agree to review
this Agreement, and to use good faith efforts to reach a mutual
agreement on an amended pricing mechanism that ensures price transfers
are reflective of the then-current market values. In the event that
the parties cannot agree to the terms of the amendment within thirty
(30) days of the parties' awareness of such material change, the
parties agree to use a mutually agreeable third party to identify an
alternative pricing mechanism. The decision of such third party shall
be binding upon the parties.
11. PROFIT/REVIEW. CTG will use reasonable efforts to manage costs under
this Agreement consistent with other operating segments within CTG.
CTG agrees that within thirty (30) days following financial reporting
quarter of ConAgra Foods, Inc. ("ConAgra") and for each financial
quarter during the term of this Agreement, CTG will provide Swift with
a report (each a "Report") relating to the purchase and sale of the
Products by CTG. The Report shall provide sufficient information, as
reasonably related to the Products, to enable Swift to verify the PBT
(as defined herein) for the applicable Report period.
12. TERM AND TERMINATION. This Agreement will commence on May 26, 2003 and
will terminate on May 31, 2005 (the "Initial Term"). Provided,
however, this Agreement shall automatically renew for additional one
(1) year terms thereafter on the same terms and conditions unless
either party gives written notice of its intention not to renew the
Agreement at least ninety (90) days prior to the end of the Initial
Term or any renewal term. Provided further, that in the event CTG
notifies Swift and Australia Meat Holdings Pty. Ltd. that CTG, ConAgra
Trade Group Pty. Ltd. or one of their affiliates have executed a
long-term agreement for the storage of rendered by-products (the
"Storage Agreement"), then the parties agree to amend this Agreement
so that the term of this Agreement shall expire at the same time as
the Storage Agreement. Provided further, however, that the foregoing
sentence shall not apply unless Australia Meat Holdings Pty. Ltd. or
one of its affiliates has approved the terms of the Storage Agreement.
Anything in this Agreement to the contrary notwithstanding, either
party shall have the right to terminate this Agreement on ten (10)
days' written notice upon (i) the other party defaulting under any
material term or condition of this Agreement, unless the defaulting
party has cured such default within thirty (30) days after receiving
written notice of such default from the other party; (ii) the other
party becoming insolvent; (iii) proceedings being instituted by or
against such other party under bankruptcy or other insolvency laws or
for reorganization or receivership unless such proceedings are
dismissed within thirty
3
(30) days; or (iv) such other party making an assignment for the
benefit of its creditors, unless such assignment is dismissed within
thirty (30) days. Anything in this Agreement notwithstanding, CTG
shall have the right to terminate this Agreement on ten (10) days
written notice if Swift provides Nonconforming Products to CTG that
constitute over ten percent (10%) of the Products ordered by CTG
during any one (1) month period during the term of this Agreement.
Expiration or termination of this Agreement shall not affect any
rights or obligations of either party which have accrued through the
date of termination or expiration, or which otherwise survive
termination in accordance with their respective terms.
If CTG's sale of the Products does not generate a profit for four (4)
consecutive quarterly Report periods (as described in Section 11),
then the parties agree to review this Agreement, and to use good faith
efforts to reach a mutual agreement on amending the terms of this
Agreement. In the event that the parties cannot agree to the terms of
an amendment within thirty (30) days following the beginning of
discussions on such amendment, then either party may terminate this
Agreement upon (90) days' written notice to the other party.
13. PROFIT SHARING. Profit before tax, calculated in a manner consistent
with past practices of the parties in relation to the arrangement
memorialized under this Agreement, ("PBT") generated from CTG's
marketing of the Products and all other rendered products marketed by
CTG that are similar to the Products, regardless of origin or source
of supply of such products, but specifically excluding any products
marketed by CTG under its By-Products Marketing Agreement with
Australia Meat Holdings Pty. Ltd. and ConAgra Trade Group Pty. Ltd.,
shall be divided between Swift and CTG based on the following
performance:
Fiscal Year PBT (in million dollars) Allocation Percentage
------------------------------------ ---------------------
Swift CTG
below $4 65% 35%
incremental dollars from $4 through $6 50% 50%
incremental dollars above $6 35% 65%
CTG will account for and accumulate such profits before tax and losses
during the term of this Agreement CTG shall pay Swift its share of net
profits before tax (if any) within thirty (30) days following
ConAgra's financial reporting quarter-end for each financial quarter
during the term of this Agreement. Swift shall pay CTG its share of
net losses (if any) within thirty (30) days following ConAgra's
financial reporting quarter-end for each financial quarter during the
term of this Agreement.
14. ASSIGNMENT. Neither party shall have the right to assign this
Agreement, or any of its rights hereunder, without the prior written
consent of the other party, which consent will not be unreasonably
withheld, provided that no consent will be required for assignment by
(i) either party to any Affiliate thereof or (ii) the Company to any
person acquiring all
4
or a substantial portion of the assets of the Swift or CTG (whether by
stock or asset sale, merger, recapitalization or otherwise). Provided
further, however, that to the extent requested by Swift's senior
lenders, the parties shall execute and deliver such documents as may
be necessary to effect a collateral assignment of the rights arising
hereunder. This Agreement shall be binding on all permitted successors
and assigns.
15. INDEMNIFICATION.
(a) Swift shall indemnify and hold CTG harmless from and against any
and all claims, demands, actions, causes of action, proceedings,
judgments and other liabilities, obligations, losses, damages,
costs and expenses (including reasonable attorneys' fees and
costs) of any nature which result from a breach by Swift of any
covenant or agreement provided herein.
(b) CTG shall indemnify and hold Swift harmless from and against any
and all claims, demands, actions, causes of action, proceedings,
judgments and other liabilities, obligations, losses, damages,
costs and expenses (including reasonable attorneys' fees and
costs) of any nature which result from a breach by CTG of any
covenant or agreement provided herein.
Notwithstanding the foregoing, this Section 15 shall in no way modify,
reduce or amend the provisions of Sections 6, 7, 8, and 9 hereof or
the parties' rights or obligations thereunder.
16. INSURANCE. During the Term of this Agreement Swift shall maintain
insurance coverage with reputable insurance companies as hereinafter
set forth and, upon request, to furnish the CTG with certificates of
insurance properly executed by its insurers evidencing such fact, and
requiring the insurers to give at least thirty (30) days notice to CTG
in the event of cancellation or material alteration of such coverage.
The minimum insurance coverage to be maintained by Swift shall be
Products Liability insurance, including personal injury and property
damage, in occurrence form, affording minimum single limit protection
of no less than U.S. Five Million Dollars (US$5,000,000) per
occurrence. CTG shall be named as an additional insured under any such
policy.
17. FORCE MAJEURE. Neither CTG nor Swift shall be liable for, or deemed to
be in default hereunder or subject to any remedies of the other party
as a result of, delays or performance failures due to power failures,
fire, acts of God, acts of civil or military authority, embargoes,
epidemics, terrorism, strikes, riots or similar causes beyond such
party's reasonable control, and without the fault or negligence of CTG
or Swift. Each party shall use reasonable best efforts to minimize the
impact of any force majeure condition it experiences on the other
party to this Agreement and to otherwise keep the other party timely
advised as to minimization and removal of such condition.
18. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of
Delaware, excluding its choice of law rules.
5
19. NOTICES. All notices which are required or may be given pursuant to
the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered personally
or via facsimile or overnight courier, or mailed by Registered,
Certified or Express Mail, postage prepaid, as follows:
(a) If to Swift: Swift & Company
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
ATTN: VP Rendered Products
Fax: (000)000-0000
(b) If to CTG: ConAgra Trade Group, Inc.
00 XxxXxxx Xxxxx
Xxxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxxx
Fax: (000)000-0000
With a copy: ConAgra Foods, Inc.
Xxx XxxXxxx Xxxxx
Xxxxx, XX, X.X.X. 00000-0000
ATTN: Corporate Controller
Fax: (000)000-0000
or at such other address as any party hereto shall have designated by
notice in writing to the other parties hereto.
20. NO CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL A PARTY OR ITS AFFILIATES
OR THEIR RESPECTIVE OFFICERS, DIRECTORS, REPRESENTATIVES AND EMPLOYEES
BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES OR THEIR RESPECTIVE
OFFICERS, DIRECTORS, REPRESENTATIVES AND EMPLOYEES, WHETHER BASED IN
CONTRACT, TORT, WARRANTY, OR ANY OTHER LEGAL OR EQUITABLE GROUNDS, FOR
ANY LOSS OF THE INCOME, PROFIT OR SAVINGS OR COST OF CAPITAL OR
FINANCING OF THE OTHER PARTY OR ITS AFFILIATES FOR ANY INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR FOR ANY EXEMPLARY, SPECIAL, OR
PUNITIVE DAMAGES OF ANY KIND, RESULTING FROM OR RELATING TO THIS
AGREEMENT OR THE PRODUCTS DELIVERED HEREUNDER, EVEN IF THE OTHER PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
21. AMENDMENTS. No provision of this Agreement may be waived, amended,
supplemented or modified by either party, unless such waiver,
amendment, supplement or modification is in writing and signed by the
authorized representative of the party against whom it is sought to
enforce such waiver, amendment, supplement or modification.
22. INDEPENDENT CONTRACTORS. The relationship between Swift and CTG shall
be that of independent contractors. This Agreement is not intended to
created and shall be
6
construed as created between the parties hereto a relationship of
principal and agent, joint ventures, co-partners, or any other similar
relationship, the existence of which is hereby expressly denied by the
parties.
23. CONFIDENTIALITY. Each Party acknowledges that in connection with this
Agreement it may receive certain confidential information including,
without limitation, proprietary technology, trade secrets and Product
ingredient statements, including the information in the Reports
described in Section 11 hereof, from the other Party ("Confidential
Information"). The receiving Party shall not at any time disclose the
Confidential Information to any person, firm, partnership, corporation
or other entity (other than persons employed by the receiving Party
and having a need to access the Confidential Information) for any
reason whatsoever, nor shall the receiving Party use the Confidential
Information for its benefit or for the benefit of any person, firm,
partnership or affiliates. Each Party shall take all actions necessary
to ensure that its employees and representatives having access to the
Confidential Information are bound by the terms of this Agreement.
Confidential Information shall not include information which (i) was
in the receiving Party's possession prior to disclosure, (ii) is
hereafter independently developed by the receiving Party, (iii)
lawfully comes into the possession of the receiving Party, or (iv) is
now or subsequently becomes, through no act or failure to act by the
receiving Party, part of the public domain.
24. SURVIVAL. Any rights and obligations provided by this Agreement to be
performed after the expiration or earlier termination of this
Agreement including, without limitation, the provisions of Sections 4,
6, 7, 8, 9, 13, 14, 15, and 23 shall survive the expiration or earlier
termination hereof.
25. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
CONAGRA TRADE GROUP, INC. SWIFT & COMPANY
By: /s/ XXXXXXX X. XXXXXXX By: /s/ XXXXXX XXXXXX
------------------------------- ---------------------------------
Its: President and COO Its: President NARM
------------------------------ --------------------------------
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EXHIBIT "A"
FACILITY LOCATIONS, PRODUCTS AND PRICING
FACILITY LOCATIONS:
Greeley, Colorado
Grand Island, Nebraska
Dumas, Texas
Nampa, Idaho
Omaha, Nebraska
Hyrum, Utah
Louisville, Kentucky
Marshalltown, Iowa
Worthington, Minnesota
PRODUCTS:
Blood meal
Inedible tallow
Edible tallow
Meat and bone meal
Choice white grease
Lard
PRICING:
The USDA Tallow, Protein and Hide Report, FOB Central U.S. daily price
for each Product (USDA report NW_LS442) will be used to calculate a weekly
average (Friday through Thursday). The spreads to that weekly average (defined
below) will determine the purchase price for each Product at each Facility for
the following week. The price and volume will be established on Thursday
afternoon for the following week. Prices will be determined on a three (3) week
rolling average.
Bloodmeal
Greeley Even U.S.D.A. FOB Central
Grand Island Even U.S.D.A. FOB Central
Xxxxx Even U.S.D.A. FOB Panhandle
Nampa "***" U.S.D.A. FOB Central
Hyrum "***" U.S.D.A. FOB Central
8
Inedible Tallow
Greeley "***" Chicago Packer Tallow
Grand Island "***" Chicago Packer Tallow
"***" for polished inedible tallow
Xxxxx "***" Gulf Packer Tallow, if no Gulf
Packer then Chicago Packer Tallow "***"
Omaha "***" Chicago Packer Tallow
Nampa "***" Chicago Packer Tallow
Hyrum "***" Chicago Packer Tallow
Edible Tallow
Greeley "***" Chicago Edible Tallow
Grand Island "***" Chicago Edible Tallow
Xxxxx "***" Gulf Edible Tallow, if no Gulf
Packer then Chicago Packer Tallow "***"
Hyrum "***" Chicago Edible Tallow
Meat and Bone Meal
Greeley "***" U.S.D.A. FOB Central
Grand Island "***" U.S.D.A. FOB Central
Xxxxx even $/ton vs. U.S.D.A. FOB Panhandle
Omaha ((U.S.D.A. FOB Central/"***") x actual
protein of Product) "***"
Nampa "***" U.S.D.A. FOB Central
Hyrum "***" U.S.D.A. FOB Central
** Meat and Bone Meal pricing will be adjusted in order to reimburse Swift for
their antioxidant treatment costs as follows:
Greeley:
Swift will apply PET-OX at 400ppm. CTG will pay Swift "***"
for this treatment, by adjusting Greeley's price to "***"
USDA F.O.B. Central
Grand Island:
Swift will apply PET-OX at 500ppm. CTG will pay Swift "***"
for this treatment, by adjusting Grand Island's price to
"***" USDA F.O.B. Central
Xxxxx:
Swift will apply REND-OX at 400ppm at no charge.
9
No current application at Omaha, Hyrum or Nampa.
Other Products produced at the Facilities that are not reflected in the USDA
Tallow, Protein and Hide Report; (e.g., #2 grease, low protein meat and bone
meal) shall be priced on a spot market basis mutually agreed to by Swift and
CTG.
SWIFT AND COMPANY (SWIFT hog division)- The USDA Tallow, Protein, and Hide
Report - FOB Central U.S. daily price for each Product (USDA report NW_LS442)
will be used to calculate a weekly average (Friday through Thursday). The
spreads to that weekly average (defined below) will determine the purchase price
for each Product at each Facility for the following week. The price and volume
will be established on Thursday afternoon for the following week. Prices will be
determined on a three (3) week rolling average.
Bloodmeal
Louisville Even U.S.D.A. FOB Central
Marshalltown Even U.S.D.A. FOB Central
Worthington Even U.S.D.A. FOB Central
Choice White Grease
Louisville Even U.S.D.A. FOB Central
Marshalltown Even U.S.D.A. FOB Central
Worthington Even U.S.D.A. FOB Central
Lard
Louisville "***" U.S.D.A. FOB Central
Marshalltown "***" U.S.D.A. FOB Central
Worthington "***" U.S.D.A. FOB Central
Meat and Bone Meal
Louisville Even to Pork Meat & Bone Meal U.S.D.A.
FOB Central
Marshalltown Even to Pork Meat & Bone Meal U.S.D.A.
FOB Central
Worthington "***" Pork Meat & Bone Meal U.S.D.A.
FOB Central
Other Products produced by Swift's Facilities that are not reflected in the USDA
Central US By-Product report (e.g., xxxxx grease) to be priced on a spot market
basis mutually agreed to by Swift and CTG.
10
** In the event USDA fails to publish prices as provided herein; (either
temporarily or permanently), the parties agree to use good faith efforts to
reach a mutual agreement on an amended pricing mechanism. In the event that the
parties cannot agree to the terms of the amendment, (within 5 consecutive days
of both parties awareness of USDA's failure to publish product prices) the
parties agree to use a mutually agreeable third party to identify an alternative
pricing mechanism. The decision of the third party shall be binding for both
parties.
11
EXHIBIT "B"
PURCHASE CONTRACT
Refer to attached.
12
ConAgra Foods
ConAgra Trade Group, Inc.
XXXXXXXX XX XXXXXXXX
XXX
XXXXXX XXXXXXX XXXXX
XXXXX, XX 00000
PH: (000) 000-0000
S *** 1360817 *** DATE:
E * SWIFT & COMPANY * OUR NO:
L * * YOUR NO:
L * 17000 PROMONTORY CTR * BROKER:
E * XXXXXXX XX 00000 * BRKR NO:
R *** ***
CONAGRA TRADE GROUP, INC., (BUYER) AGREES TO BUY AND THE SELLER AGREES TO SELL
THE FOLLOWING DESCRIBED COMMODITIES. THIS IS A CONTRACT AND IS SUBJECT TO THE
TERMS AND CONDITIONS STATED BELOW AND REVERSE.
COMMODITY: PRICE: $
QUANTITY: F.O.B.:
SHIPMENT: WEIGHTS TO APPLY: ORIGIN
TERMS: NET 15 DAYS
REMARKS:
CONTRACT ACCEPTED: SWIFT & COMPANY CONAGRA TRADE GROUP, INC.
BY: BY:
-------------------------------- ----------------------------
PLEASE SIGN CUSTOMER COPY 2 AND RETURN TO US IMMEDIATELY
ANY OBJECTIONS MUST BE REPORTED BY WIRE
CUSTOMER COPY 1
--------------------------------------------------------------------------------
NOTICE: THE PROVISIONS OF THIS CONTRACT CONTAINED ON THE REVERSE SIDE
HEREOF ARE EXPRESSLY MADE PART OF THIS CONTRACT--READ CAREFULLY.
--------------------------------------------------------------------------------
[ILLEGIBLE]
1. Whether or not Seller is an active member of any of the following
associations, and to the extent not inconsistent with the terms and conditions
of this Contract, the rules, regulations and standards of the following
associations (the "Associations") shall apply respectively to each of the
commodities governed thereby: the National Grain and Feed Association, the
American Fats and Oils Association, the National Oilseed Processors Association,
the American Dehydrators Association, the Canadian Oilseed Processors
Association, and the National Cottonseed Products Association. If more than one
Association pruports to govern a given commodity,the rules and regulations of
the association appearing later in the list shall apply.
2. Buyer and Seller may be collectively referred to as "the Parties" or
individually as "the Party".
3. Whether or not an active member of any of the Associations
referenced in Paragraph I hereof, Seller acknowledges that it understands the
provisions of the applicable Association's rules, regulations and standards, and
Seller agrees to be bound thereby. The Parties agree to settle any controversies
hereunder by arbitration, that the arbitration rules of the applicable
Association shall be the basis of said arbitration or if the applicable
Association does not have arbitration rules, then according to the rules of the
American Arbitration Association, and that the decision and award determined by
such arbitration shall be final and binding upon the Parties.
4. It is agreed that neither Party to this contract shall delegate the
performance of any obligation hereunder nor assign any rights arising hereunder,
to any third person without the prior written consent of the other Party.
5. Seller warrants that commodities delivered under this Contract will
be free and clear, from and after time of delivery, of any security interest,
lien, claim or encumbrance and that seller has good and merchantable title
thereto. Seller agrees that should any lien, security interest or encumbrance be
claimed against any commodity sold hereunder, Seller will immediately cause the
same to be discharged and terminated; and, will further; hold Buyer harmless
therefrom; and, indemnify Buyer from any costs or losses incurred as a result of
such claim.
6. Seller expressly represents and warrants that the commodity or
commodities hereby purchased are of the grade indicated, and if none is
indicated, that the commodity or commodities are suitable for feeding to poultry
and livestock. Seller indemnifies and holds Buyer harmless against any
liability, loss or damage related to the failure of any portion of the
commodities purchased hereunder to meet Food and Drug Administration or other
applicable governmental agency's rules, regulations and standards for said
commodity, as well as the applicable Association's (as referenced in paragraph 1
hereof) rules, regulations, and standards for such commodity. Buyer's payment
will not constitute acceptance of a commodity sold hereunder or serve to waive
Buyer's rights to reject the commodity or recover damages should the commodity
fail to comply with the terms or specifications of this contract. Buyer
specifically reserves all rights and remedies available to it under the
applicable Association's (referenced in Paragraph 1 hereof) rules, regulations,
and standards; and the Uniform Commercial Code in effect within the jurisdiction
under which this Purchase Contract is governed, if any of the commodity sold
hereunder fails to comply with the warranties, descriptions, and requirements
set forth in this Contract, or the applicable Association's (referenced in
Paragraph 1 hereof) rules, regulations, and standards. In addition to and
without waiving any of Buyer's other remedies hereunder, Buyer may, at its sole
option, request that the Seller replace any or all portions of any shipment of
commodities hereunder which fails to comply with the terms of this Contract;
said replacement shipment to be at Seller's sole cost and expense and occur
within seven days of Seller's receipt of Buyer's notice of the commodity's
non-compliance with this Contract.
7. Buyer expressly reserves the right to cancel this Contract within
the meaning of UCC Section 2106 based upon the occurrence of any of the
following; (a) the insolvency or financial condition of Seller, (b) the
appointment for taking possession of any Seller's assets or any part thereof by
any third party, including a trustee, receiver, creditor or other party; (c) the
breach of any warranty; or, (d) any other defaults hereunder.
8. In the event Seller breaches this Contract in any manner, Seller
shall be liable to Buyer for any and all damages, including consequential
damages, incidental damages, and any lost profits incurred as a result thereof
and shall pay Buyer's reasonable attorney fees, court costs and expenses
incurred in the enforcement of this contract and any collection activities
related thereto.
9. Railcars must be loaded to capacity as required by railroad
companies. Seller to pay weighing, inspection, trackage, and interest charges,
if any. Reconsigned cars cannot be utilized on this contract unless consented to
by Buyer in writing prior to loading. Buyer reserves the right to change
destination of all shipments prior to departure of the railcar from Seller's
facility.
10. If a confirmation calls for delivery beyond fourteen (14) days from
the date of the contract, Buyer may demand from Seller a margin deposit of ten
percent (10%) of the gross value of the contract to be considered as margin on
equity, and Buyer may demand such further payments form Seller as may be
necessary to maintain a deposit on the contract of ten percent (10%) of the
gross value of the contract, plus an amount equal to the difference between the
contract-price-value and the prevailing market price-value, if the market is
above the contract price Seller agrees to pay such margin on demand and if not
paid, Buyer may exercise the same rights as if Seller had defaulted on the
contract.
11. Each Party consents to the recording of all telephone conversations
between its representatives and the representatives of the other party.
12. Any provision of this Contract which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
13. Seller warrants it has read this contract in its entirety and
understands its terms and legal effect. This Contract constitutes the entire
understanding between the Parties hereto and no modification or amendment of
this Contract shall be valid or binding unless agreed to by both Parties and
confirmed by a writing signed by the party to be charged. Seller agrees that the
terms hereof are acceptable and that Seller intends to be bound by the terms of
this Contract even if said terms differ from or conflict with the terms or
conditions contained in Seller's offer, acceptance on form of contract for such
purchase.
14. Unless otherwise exempt, this Purchase Order incorporates by
reference the EEO Clause contained in 41 C.F.R. Sections 60-1.4, 60-741.5, and
60-250.5.
