EXHIBIT 10.2
CAMBOROUGH-22 CLOSED HERD MULTIPLIER AGREEMENT
ALLIANCE FARM
THIS AGREEMENT, entered into this first day of March, 1996, is by and between
PIG IMPROVEMENT COMPANY, INC., hereafter "PIC", a Wisconsin Corporation, and
ALLIANCE FARM COOPERATIVE ASSOCIATION, a Colorado Corporation, hereafter
"Multiplier".
RECITALS
1. PIC has established and maintained herds of Breeding Pigs which serve
as Genetic Nucleus Herds for the production of female and male
Breeding Pigs which have selective and unique traits and
characteristics, including, but not limited to, favorable reproduction
and growth performance of their offspring; and
2. Animals identified above and hereinafter defined, are the principal
products sold and distributed by PIC, its agents and employees, and
have been the principal product of said company for many years; and
3. PIC has developed a uniform method of operation, has compiled a body
of technical knowledge, skills and operating experience as it relates
to the genetic improvement and performance of swine sold by PIC to
Multipliers, and has developed Multiplier lists and other valuable
information used in conjunction with Multipliers' production and
marketing of Slaughter Animals; and
4. PIC has instituted and maintains certain breeding programs which seek
to standardize and maximize the genetic benefit to Multipliers using
PIC products and services in raising animals for slaughter through the
specific breeding programs unique to PIC and its breeding animals; and
5. Such Breeding Pigs, their offspring, as hereinafter defined, and the
breeding programs used by PIC result in animals and products
hereinafter defined, which are unique to PIC and which also include
the "Camborough" which is registered as a trademark in the U.S.A. and
exclusively owned by Dalgety, PLC, the parent company of PIC; and
6. Multiplier wishes to engage in the business of swine production and
avail itself of PIC's expertise, exclusive products, breeding
programs, technical knowledge and skills; and
7. This Multiplier Agreement has as its express purposes the production
of Parent Animals suitable for production of Slaughter Animals (said
Parent Animals representing PIC's principal products identified
herein); and
8. Multiplier wishes to artificially inseminate certain animals purchased
from PIC, or the progeny of those animals; and
9. PIC is willing, under certain terms and conditions, to allow
Multiplier to artificially inseminate certain animals purchased from
PIC, or the progeny of those animals; and
10. PIC is willing to permit Multiplier to use PIC's expertise, products,
breeding programs, technical knowledge, and skills to produce Parent
for sale and/or transfer only to Multiplier-owned Commercial Herds, to
Members who have signed a Member Commercial Production Agreement and
who are identified in Schedule 3, and other entities by written
permission of PIC, subject to the controls and protection of PIC's
exclusive property as provided herein; and
11. Multiplier recognizes the value to it of such exclusive products and
programs and wishes to establish Multiplier Herd(s) and to produce and
transfer animals, strictly in accordance with the restrictions,
limitations, terms and conditions set forth in this Agreement.
In consideration of the mutual promises and the covenants and agreements
hereinafter set forth, it is agreed as follows:
I. DEFINITIONS
For the purpose of this Agreement, the following terms shall have the
following meanings:
A. AI BOARS - Breeding Males produced by PIC or on farms under contract
with PIC.
B. AI STUD - the buildings and facilities owned by PIC, or under contract
with PIC, where Great-Grandparent, Grandparent, and Parent Males are
housed for collection of semen.
C. ARTIFICIAL INSEMINATION (AI) - introduction of semen into the uterus
or oviduct by other than natural means.
D. BREEDING FEMALES - gilts and/or sows to be used for reproductive
purposes.
E. BREEDING MALES - boars to be used for reproductive purposes.
F. BREEDING PIGS - pigs selected to be used for breeding purposes.
G. COMMERCIAL HERDS - herds utilizing Breeding Animals and/or AI to
produce only Slaughter Animals.
H. COMMERCIAL BOARS - Parent Boars intended to be used for the production
of Slaughter Animals only.
I. COMMERCIAL FEMALES - Parent Females intended to be used for the
production of Slaughter Animals only.
J. DAUGHTER NUCLEUS HERDS - breeding herds that receive Great-Grandparent
Animals from a PIC Genetic Nucleus Herd and produce Grandparent
Animals.
K. GENETIC NUCLEUS HERD - one of a few selected PIC farms wherein animals
of particular and unique genetic characteristics are produced.
L. GRANDPARENT ANIMALS (FEMALES AND MALES) - direct offspring of Great-
Grandparent Animals used to produce Parent Animals.
M. GREAT-GRANDPARENT ANIMALS (FEMALES AND MALES) - selected animals of
unique genetic characteristics resulting in superior animals produced
from selected nucleus herds.
N. ISOWEAN7 - animals weaned using PIC's registered Isowean7 technology
and sold at weights between 6 and 15 pounds.
O. MULTIPLIER'S COMMERCIAL FARMS - farms consisting of Commercial Herds
that fall into any of the following categories:
1. Multiplier has sole ownership interest in the commercial farm and
herd.
2. Multiplier leases the commercial farm production facility and has
sole ownership interest in the Commercial Herd.
3. The commercial farm production facility is owned by another
party, but that party is under contract with Multiplier and the
contract requires the owner of the facility to comply with the
restrictions on sale and use of the breeding stock and its
progeny that are incorporated in this agreement.
P. MULTIPLIER'S CLOSED HERD MULTIPLIER (CHM) - that portion of the
Multiplier's herd(s) consisting of PIC Grandparent Animals devoted to
the production of Parent Animals for use as replacements in
Multiplier's Commercial Farms.
Q. MULTIPLIER UNIT(S) - the physical location, buildings, and facilities,
which have been authorized by PIC for the location of a Multiplier
Herd.
R. NATURAL SERVICE - the introduction of semen into the uterus or oviduct
by natural means.
S. NECESSARY REPLACEMENTS - any and all Grandparent Animals needed by
Multiplier to maintain the Multiplier Herd(s) at the levels indicated
in Schedule 2.
T. PARENT ANIMALS (FEMALES AND MALES) - direct offspring of Grandparent
Animals.
U. PARENT BOARS - direct male offspring of Grandparent Animals.
V. PARENT GILTS - direct female offspring of Grandparent Animals.
W. PERMITTED FEEDLOTS - facilities identified in Schedule 3, to which
Slaughter Animals may be transferred for finishing prior to slaughter.
X. PIC BOARS - Breeding Males owned by PIC or produced on farms under
contract with PIC.
Y. PIC GILTS - Breeding Females owned by PIC or produced on farms under
contract with PIC.
Z. PIC SEMEN - semen collected from AI Boars.
AA. SLAUGHTER ANIMALS - animals intended to be slaughtered instead of used
for breeding purposes.
II. TERM
This Agreement will continue, subject to termination as set out in Section
VI below, for seven (7) years from the date of this Agreement. After the
31st day of March, 2003, this Agreement will automatically be renewed for
successive two (2) year terms, unless either party gives written notice of
termination not less than twelve (12) months prior to the end of the then
current term.
III. ESTABLISHMENT AND MAINTENANCE OF HERDS
A. PIC shall sell to Multiplier and Multiplier shall buy from PIC
Grandparent Gilts and Grandparent Boars and all Necessary Replacement
Grandparent Gilts and Grandparent Boars to establish and maintain the
Multiplier Herd(s) listed in Schedule 2 of this Agreement.
B. Multiplier will maintain the Multiplier Herds and Commercial Herds at
the sizes set out in this Agreement by periodically purchasing animals
from PIC. Prices for animals purchased by Multiplier from PIC will be
adjusted, as provided in Schedule 1, attached, if ratios in the Herds
set out in Schedules 2 and 3, attached, exceed 25 Sows per Boar.
Herds will not be considered to have exceeded the allowed ratio if,
within 5 days after the ratio is exceeded in the Herds, Multiplier
places orders which, when filled, will bring the actual Sow to Boar
ratio in the Herds to below 25 Sows per Boar.
C. Herd sizes will be determined by counting only animals which have
reached a weight of at least 200 pounds. Herd sizes may vary by plus
or minus five percent (5%) without Multiplier being considered in
breach of this Agreement, so long as Multiplier otherwise complies
with the requirements of this Agreement.
IV. SUPPLY AND PURCHASE OF BREEDING PIGS
During the term of this Agreement and any extension of it, the following
will apply:
A. All sales by PIC to Multiplier, provided in Section III above, shall
be at the prices specified in Schedule 1 attached hereto. Breeding
Pigs sold hereunder shall not include pigs produced by transgenic
technology. PIC agrees to offer Multiplier breeding stock produced in
the future by transgenic technology, if available, and if the parties
agree to terms at the time such technology is determined by PIC to be
available for sale.
B. Multiplier shall purchase all Necessary Replacement Grandparent
Animals only from PIC or Farmland.
C. Sales of all Breeding Pigs supplied by PIC shall be in accordance
with, and subject to, the Conditions of Sale set forth in Schedule 4
attached hereto. Multiplier agrees to be bound by the provisions of
Schedule 4.
V. COVENANTS OF THE PARTIES
A. PIC covenants and agrees:
1. To sell Grandparent Animals, if available, to Multiplier at the
prices specified in Schedule 1, for use to produce Parent Animals
for Multiplier's Commercial Herds.
2. To provide the Multiplier with production and technical
assistance at Multiplier's reasonable request, and at such
charges, to be paid by Multiplier, as PIC may determine and
Multiplier may accept. If the parties are unable to agree in
advance on the rate to be charged and paid for such assistance,
PIC shall have no obligation to provide it.
3. To permit Multiplier to transfer to Multiplier's Commercial Farms
the Parent Animals produced by the PIC Grandparent Animals sold
to Multiplier, or by the use of Grandparent semen collected by or
sold to Multiplier, subject to the restrictions on use provided
herein.
4. To sell PIC Commercial Boars, if available, to Multiplier for use
to produce Slaughter Animals in the Multiplier's Commercial
Farms.
5. To sell to Multiplier PIC Parent Gilts, if available and if
Multiplier is in compliance with terms of this Agreement, at the
price listed in Schedule 1.
6. To permit Multiplier to transfer to Permitted Feedlots the
Slaughter Animals produced by the Parent Animals in the
Multiplier's Commercial Farms, subject to the restrictions on use
provided herein.
B. Multiplier covenants and agrees:
1. To transfer Parent Animals produced by Multiplier and selected as
suitable for breeding ONLY to Multiplier's Commercial Farms
identified in Schedule 3 for use to produce Slaughter Animals,
and to sell only for slaughter all Parent Animals in excess of
the needs of Multiplier's Commercial Farms, unless PIC in its
sole discretion shall determine and direct otherwise.
2. Allow no pigs other than those delivered by PIC, or their
progeny, to come into the Multiplier Unit and to include only
Grandparent Animals, delivered pursuant to PIC instructions, in
the Multiplier Herd(s). This provision will not preclude
Multiplier from using non-PIC Parent Boars in Multiplier's
Commercial Herds.
3. To sell only for slaughter any and all Grandparent Animals
removed from the Multiplier's CHM.
4. To follow the Genetic Program as set forth in Schedule 5.
5. To pay all veterinary costs associated with, and incurred by, the
Multiplier, including, without limitation, costs directly
associated with the production and distribution of Selects to
permitted feedlots (e.g., veterinarian visits, diagnostic work,
blood testing, health papers and the cost of vaccines,
anthelmintics, and antibiotics).
6. To sell only for slaughter all Parent Animals produced by the
Multiplier's CHM and not transferred to Multiplier's Commercial
Farms and not to dispose of them in any other manner except with
the specific prior written consent of PIC. In no circumstances
shall the Multiplier sell or use the female progeny of the
Grandparent Animals for breeding purposes other than by transfer
to Multiplier's Commercial Farms, unless the Multiplier has,
prior to each such sale or use, obtained the specific written
consent of PIC therefor, nor shall Multiplier use the male
progeny of said Grandparent Animals for any breeding purpose
whatsoever. The foregoing restrictions on the disposition of
stock of the Multiplier Herd(s) shall survive termination of this
Agreement and remain in full force and effect until PIC is
satisfied that any and all Grandparent Animals provided by PIC as
the initial herd and/or Necessary Replacements, as well as Parent
Gilts produced by Multiplier from PIC Grandparent Animals are no
longer on the premises and that only Commercial Boars and Females
remain. The parties hereto acknowledge and agree that
irreparable damage may result to PIC and its reputation if
Multiplier violates this Subsection 6, and that no adequate
remedy at law exists for such a breach. Accordingly, in addition
to any other rights or remedies or damages available to PIC at
law or equity, in the event of a breach or threatened breach of
the terms of this Subsection 6 PIC shall be entitled to
appropriate injunctive relief, including temporary and permanent,
mandatory and prohibitive injunctive relief, without the
necessity of posting bond or other security. Nothing herein
shall be construed as prohibiting PIC from pursuing other
remedies available to PIC for such breach or threatened breach,
including the recovery of money damages.
7. To sell the progeny of the Parent Animals only to Permitted
Feedlots or for slaughter, and not retain the progeny for use for
breeding purposes or permit the use of the progeny for breeding
purposes.
8. To require that any Permitted Feedlots to which Slaughter Animals
are sold or transferred for finishing comply in all respects with
the restrictions on the use of genetics contained in this
Agreement.
9. TO INDEMNIFY FULLY AND DEFEND PIC FROM ANY AND ALL LIABILITY,
CLAIM, SUIT, ADMINISTRATIVE PROCEEDING, OR OTHER CAUSE OF ANY
NATURE WHATSOEVER BROUGHT BY ANY PERSON, FIRM OR ENTITY, IF SAID
CLAIM, SUIT OR CAUSE IS BROUGHT AS A RESULT OF ANIMALS SOLD OR
TRANSFERRED BY MULTIPLIER TO ITS MEMBERS OR THE PROGENY OF SAID
ANIMALS, AND TO PAY ANY AND ALL REASONABLE LEGAL FEES INCURRED BY
PIC IN DEFENDING ANY SUCH CLAIM AND TO INDEMNIFY FULLY AND DEFEND
PIC FROM AND AGAINST CLAIMS, LOSSES AND SUITS (INCLUDING
REASONABLE ATTORNEY FEES) ARISING FROM PERSONAL INJURIES TO THIRD
PARTIES OR PROPERTY DAMAGE CAUSED BY THE NEGLIGENT ACTS OR
OMISSIONS OF MULTIPLIER, ITS AGENTS, EMPLOYEES OR CONTRACTORS.
This provision will not apply to claims, suits, or causes arising
out of any intentionally wrongful, reckless, or grossly negligent
acts of PIC, its employees or agents.
10. To maintain the Multiplier Herd(s) listed in Schedule 2 of this
Agreement at the sizes listed in Schedule 2.
11. Notify PIC of any changes of plus or minus five percent (5%) or
more in the sizes of the Multiplier Herd(s) and Commercial Herds
as they occur and certify in writing to PIC the accuracy of
Schedules 2 and 3 annually on the anniversary date of this
Agreement.
12. To be responsible for all credit replacements of Breeding Pigs
produced in the Multiplier's CHM and used by the Multiplier's
Commercial Farms or permitted feedlots. It is agreed and
understood that PIC shall have no replacement responsibility to
Multiplier or any other person, firm or entity, for the Parent
Animals produced at the Multiplier's CHM.
13. To purchase all Parent Boar replacements for Multiplier's
Commercial Farms from PIC.
14. To keep all records and make all reports specified by PIC in
writing and to report to PIC, without limitation, the monthly
disposition of all Parent Gilts leaving the Multiplier Unit(s),
including the number sold to slaughter.
15. To subscribe to PIGTALES, PIG CHAMP, or another data system
acceptable to PIC.
16. To castrate all male progeny of the Grandparent Animals at less
than 10 weeks of age.
17. To give PIC staff the right of access to the Multiplier Unit(s)
for the purpose of inspecting the Multiplier Herd(s) Multiplier
Commercial Herds and herd records at all reasonable times. This
right to inspect the above herds will include, but is not limited
to, the right to obtain blood samples from the herds for the
purpose of monitoring the use, or presence of specific breeds,
lines, genetics, or DNA in the herds. This provision shall
survive termination of this Agreement for a period of six (6)
months after the last breeding pigs provided by PIC have been
removed from the herds so that PIC has adequate means of assuring
compliance with the covenants restricting disposition of animals.
18. Not disclose to any person (other than an employee or contractor
of Multiplier directly involved in the management of the
Multiplier Herd), PIC breeding techniques, feeding programs or
other information furnished by PIC in connection with the
development and maintenance of the Multiplier Herd, which has
been supplied and specified in writing as confidential, by PIC.
19. Unless authorized in advance by PIC in writing, not collect or
use germplasm, embryos, or other non-natural means of reproducing
PIC animals, with the exception of fresh semen, which Multiplier
may collect from the Grandparent Boars in the Multiplier Herd(s)
and use on Multiplier's Grandparent Females. Multiplier may also
use semen for artificial insemination if Multiplier is in
compliance with the terms and conditions of an Agreement of Sale
for Semen or Agreement of Sale for AI Boars between Multiplier
and PIC, or if semen is purchased from an AI Stud under contract
with PIC. Following termination of this Agreement, Multiplier
may not collect or use germplasm, embryos, Grandparent Boar semen
or other non-natural means of reproducing PIC animals.
Multiplier agrees that no semen, collected from Grandparent or
Parent Boars or purchased from PIC or from an AI Stud under
contract with PIC, will be transferred to any other party without
PIC's written consent.
VI. TERMINATION
This Agreement may be terminated under the following circumstances:
A. Immediately, upon written notice from PIC to Multiplier following the
occurrence of any substantial breach of this Agreement. Breach of any
one of the following sections of this Agreement is a substantial
breach of this Agreement: Section V, B. 1, 2, 3, 4, 5, 6, 7 and 8;
Sections IX and X.
B. Thirty days after written notice to Multiplier by PIC of Multiplier's
breach of any other provision of this Agreement, if said breach
remains uncured to PIC's satisfaction, or immediately, upon notice of
termination, if the breach is one that has occurred a second time in a
six month period following notice of breach. Termination hereunder
shall be effective upon written notice of termination by PIC to the
other party hereto, which notice shall specify the breach, the date of
notice thereof and the reasons cure is not satisfactory to PIC.
C. Thirty days after written notice by Multiplier to PIC of breach of any
of PIC's covenants, if said breach remains uncured to Multiplier's
satisfaction, or immediately, upon notice of termination, if the
breach is one that has occurred a second time in a six month period
following notice of breach. Termination hereunder shall be effective
upon written notice of termination by Multiplier to PIC, which notice
shall specify the breach, the date of notice thereof and the reasons
cure is not satisfactory to Multiplier.
D. Thirty days after written notice from Multiplier to PIC, if PIC fails
to deliver orders placed by Multiplier for animals under this
Agreement and which orders have been confirmed by PIC, for a period of
120 consecutive days.
E. If either Multiplier or PIC shall generally not pay its debts as they
become due or shall admit in writing its inability to pay its debts,
or shall make a general assignment for the benefit of creditors; or
shall commence any case, proceeding or other action seeking to have an
order for relief entered on its behalf as debtor or to adjudicate it
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts
under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors or seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any
substantial part of its property; or shall take any corporate action
to authorize or in contemplation of any of the actions set forth above
in this paragraph; or any case, proceeding or other action against any
party hereto shall be commenced seeking to have an order for relief
entered against it as debtor or to adjudicate it bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts under any
law relating to bankruptcy, insolvency, reorganization or relief of
debtors, or seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of
its property, and such case, proceeding or other action (i) result sin
the entry of an order for relief against it which is not fully stayed
within seven (7) business days after the entry thereof or (ii) shall
remain undismissed for a period of forty-five (45) days.
F. After expiration of the original seven (7) year term or any extension
of it, provided either party gives written notice of termination not
less than twelve (12) months prior to the end of the then current
term.
G. At any time, by mutual consent of the parties, which shall be in
writing and signed by both parties hereto.
VII. PROCEDURES AFTER TERMINATION
In the event of termination for any reason, the following will apply:
A. Multiplier shall change the mating pattern of the Multiplier Herd(s),
as directed by PIC, to commercial production; shall not dispose of any
Grandparent Breeding Animals, male or female, other than directly to
PIC or for slaughter; shall sell to slaughter all Grandparent Males
within six (6) months and all Grandparent Females within eighteen (18)
months after termination, unless the parties have agreed in writing on
an alternative procedure within three (3) months after termination.
PIC may, at its sole option, repurchase the PIC Grandparent Males at
fair market value, which shall be determined by agreement of the
parties, taking into account their age, condition and productivity, or
if the parties cannot agree, by arbitration, under the rules for
commercial arbitration of the American Arbitration Association.
B. Multiplier may continue to transfer Parent Females to Multiplier's
Commercial Farms until Multiplier's inventory of said Parent Gilts is
exhausted, so long as Multiplier continues to comply fully with
Multiplier Covenants 1, 3, 5, 7, 8, 10, 11, 13, 15, 16, and 17 until
all Parent Gilt inventory has been transferred or sold for slaughter.
If Multiplier breaches any of these covenants, all Parent Gilts
remaining on the farm shall immediately be sold to PIC at slaughter
price or for slaughter, at PIC's option.
C. Multiplier shall provide PIC with documentation that the provisions of
the above subsections A - B have been complied with and shall continue
to permit PIC access to the Multiplier Herd(s) and to Multiplier's
records to assure compliance.
VIII. CLOSURE OF MULTIPLIER HERDS
The parties anticipate and intend that the Multiplier Herd(s) established
hereunder shall remain in operation during the entire term of this
Agreement. However, both parties are familiar with the risks involved in
swine management and the possibility that economically significant disease
may occur in well-managed herds and that steps to correct a health problem
may vary depending on the nature and extent of the problem. Therefore, the
parties agree as follows:
A. During a period of not more than 90 days, the full use of the progeny
from one or more of the Multiplier Herd(s) may be interrupted as a
result of a health problem, without there being a breach of this
Agreement, so long as Multiplier immediately advises PIC of the
situation, takes all reasonable steps to clean up the herd, and
recommence shipping and continues to be bound by all provisions of
this Agreement.
B. If the health problem is such that resolution in the period set out
above is not possible, Multiplier shall make a decision with 90 days
of discovery of the health problem on whether to attempt de-population
and re-population of the affected Multiplier Herd(s) or to close said
Herd(s).
C. In case of de-population and re-population, Multiplier shall purchase
within 12 months of the decision to re-populate, all animals for the
re-population program from PIC, at the prices specified in Schedule 1,
and during the period of de-population and re-population:
1. Multiplier shall buy all Parent Gilts used by Multiplier to
maintain Multiplier's Commercial Farms during the de-
population/re-population period only from PIC; or
2. Multiplier may continue to transfer, if available, Parent Gilts
produced in the affected Multiplier Herd(s) if Multiplier elects
to transfer them in spite of the health problem; and
3. Multiplier shall continue to be bound by all the provisions of
this Agreement.
D. If Multiplier elects not to de-populate and re-populate the affected
Herd(s), but instead to close it permanently, all provisions of this
Agreement shall continue to apply to Multiplier with respect to the
unaffected Multiplier Herd(s); and
1. Multiplier shall use the Parent Gilts produced by the unaffected
Multiplier Herd(s); or
2. Multiplier shall buy, if available, all Parent Gilts for use in
Multiplier's Commercial Farms only from PIC.
E. If PIC is unable to deliver confirmed orders for GPS for more than 30
consecutive days due to health concerns, Multiplier may temporarily
convert such portion of its Multiplier Herds to commercial production
as are reasonably necessary to maintain pig flows through Multiplier's
units. Such introduction of parent gilts shall end within 60 days
after shipment of GPS to Multiplier from PIC are restored.
IX. COVENANT NOT TO COMPETE
Multiplier covenants and agrees that Multiplier, and owners and/or
shareholders with more than a ten percent (10%) interest in Multiplier,
will not, jointly or severally, establish, engage in, or become involved
in, directly or indirectly as an owner, partner, or shareholder with more
than 20% interest, employee or otherwise, the business of selling swine as
Breeding Pigs, using PIC animals, PIC semen, PIC genetics, or PIC
proprietary technology obtained from Multiplier, or the progeny thereof,
except as specifically permitted herein. Multiplier further covenants and
agrees that Multiplier, will not, establish, engage in, or become involved
in, directly or indirectly as an owner, partner, shareholder with more than
20% interest, employee or otherwise, the business of selling swine as
Breeding Pigs. Further, Multiplier shall not participate in any business
offering Breeding Pigs of special or unique genetic characteristics for a
period of twelve (12) months after the date of termination of this
Agreement, at any location within a radius of 250 miles of any of the
Multiplier Unit(s) identified in Schedule 2 of this Agreement. Nothing in
this Section shall prevent Multiplier, or its owners or shareholders, from
becoming a contract multiplier for other commercial swine breeding stock
companies, using Units other than those identified in this Agreement, or
from selling the Breeding Pigs produced by such non-PIC Units only to such
commercial swine breeding stock companies.
X. ASSIGNMENT
PIC may not assign its interest in this Agreement, except to an affiliated
company, and Multiplier may not assign or otherwise transfer its interest
in this Agreement to any other party, without the written consent of PIC.
This Agreement may be terminated, at PIC's option, if any one or more
shareholders, members, or owners, with effective control of more than 20%
of Multiplier, assigns or otherwise transfers such shares, memberships, or
ownership interest in the Multiplier to any person or entity other than
another shareholder, member, or owner of the Multiplier.
XI. PROFITABILITY
PIC does not guarantee any level of profitability as part of this
Agreement. Multiplier understands that pig breeding and feeding operations
are subject to risks associated with the industry, and that profitability
may be adversely affected by fluctuation in hog, pork and feed prices, by
disease and accident, and that the present demand in breeding animals and
pork may decline.
XII. MISCELLANEOUS PROVISIONS
A. Addresses
Should either party change its business address, it shall notify the
other party within thirty (30) days of the date of such change.
B. Notice
1. All notices required by this Agreement shall be in writing and
shall be sent by Registered or Certified Mail to the business
address of the other party. All notices, unless otherwise
stated, shall be deemed to be effective forty-eight (48) hours
after the date of postmark.
2. The current business addresses of the parties, subject to change
under Section XII. A. above, are:
PIG IMPROVEMENT COMPANY, INC.
P.O. Box 348
Franklin, KY 42135-0348
ALLIANCE FARM COOPERATIVE ASSOCIATION, INC.
P.O. Box 7305
Department 189
Kansas City, MO 64116
C. Governing Law
The terms of this Agreement shall be interpreted under the laws of the
State of Iowa.
D. Total Agreement
This Agreement constitutes the entire Agreement of the parties and
supersedes all prior agreements, representations, or negotiations
between or by the parties hereto. Multiplier acknowledges that it has
read and understands this Agreement, that its entering into this
Agreement is voluntary and not done in reliance of any representation
of PIC except as herein provided.
E. Additional Herds
This Agreement does not restrict in any way PIC's right at its sole
discretion to establish additional multiplier herds at any time or
place or with any individual or company.
F. AI Parent Boars
If Multiplier wishes to purchase AI Parent Boars or Semen from PIC,
Multiplier will be required to sign a separate Agreement of Sale
governing such purchase.
G. Effect of Invalid Provisions
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof and the
Agreement shall be construed in all respects as if such invalid or
unenforceable provisions were omitted.
H. Benefit
This Agreement shall be binding upon the parties, their heirs,
personal representatives, and permitted successors or assigns.
I. Non-Waiver Provision
Failure by PIC to enforce any covenant or provision hereof or to
require Multiplier to abide by any provision or requirement shall not
be deemed a waiver of said covenant, provision or requirement and
shall not affect in any way PIC's subsequent right to enforcement.
J. Incorporation of Schedules
Schedules 1 through 5, referred to in various locations in this
Agreement and attached to it, are incorporated into this Agreement as
though they were fully set forth in it, and are binding on the
parties. Multiplier acknowledges receipt of Schedules 1 through 5.
K. Authority
Each individual executing this Agreement represents that he has full
authority to bind the entity for which he signs to all terms and
conditions of this Agreement. Each of the parties hereto represents
that he has full individual, partnership or corporate authority to
enter into this Agreement. Each party agrees to provide evidence of
such authority upon request by the other party.
L. Recitals
The Recitals stated at the beginning of this Agreement are
incorporated herein and by this reference made part of this Agreement.
M. Situs of Contract
This Agreement will not be deemed completed until it is signed by PIC.
This Agreement may be signed by PIC only at its offices in Franklin,
Simpson County, Kentucky.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
ALLIANCE FARM COOPERATIVE ASSOCIATION, INC.
By: By:
Title: Title:
Date: Date:
PIG IMPROVEMENT COMPANY, INC.
By: By:
Title: Title:
Date: Date:
SCHEDULE 1
PRICES AND FEES
MULTIPLIER #14733
I. Grandparent Animals
A. Open PIC Line 1050 Grandparent Gilts at 200-220
lbs.
$360 per head
B. Open Isowean\ PIC Line 1050 Grandparent Gilts
$210 per head
C. Natural Service PIC Line 1075 Grandparent Boars
at 230-260 lbs.
$935 per head
D. AI Grandparent Boars at 230-260 lbs.
Current List Price
E. PIC Line 1075 or PIC Line 1030 Grandparent Semen
$7 per dose,
plus transportation
II. Parent Animals
A. Open Camborough 22 Parent Gilts at 200-220 lbs.
List Less $30
B. Natural Service Parent Boars
List Less $100
C. AI Parent Boars, effective July 1, 1996:
Line 327 or 419
$5,000 less 15%
Line 420
$6,000 less 15%
III. Selection Fees and Grandparent Female Use Fees
The monthly fees payable to PIC will be determined as follows:
A. If Multiplier and Members mate no more than the equivalent of 10% of
PIC Parent Gilts genetics with non-PIC Parent Male genetics in all
Multiplier and Member Commercial herds, then:
Year 1 $35 per select, no minimum selects required.
Year 2 $35 per select, no minimum selects required.
Year 3 $35 per select, 3 selects minimum per Grandparent Female.
Years 4 - 7 $12 per month Grandparent Female Use Fee for each Grandparent
Female in the Multiplier Herd.
B. If Multiplier and Members mate more than the equivalent of 10% of PIC
Parent Gilts genetics with non-PIC Parent Male genetics in all
Multiplier and Member Commercial Herds, then:
Year 1 $40 per select, no minimum selects required.
Year 2 $40 per select, no minimum selects required.
Year 3 $40 per select, 3 selects minimum per Grandparent
Female.
Years 4 - 7 $15 per month Grandparent Female Use Fee for each Grandparent
Female in the Multiplier Herd.
C. If Multiplier Herd is closed for health reasons, Multiplier will pay
PIC $15 per month Grandparent Female Use Fee for each Grandparent
Female in the Multiplier Herd, so long as no more than the equivalent
of 10% of the PIC Parent Females are used with non-PIC Parent Boar
genetics in all Multiplier and Member Commercial Herds. The fee will
be $18 if more than the equivalent of 10% of the PIC Parent Females
are used with non-PIC Parent Boars in all Multiplier and Member
Commercial Herds.
D. Minimum Selection Fees: The minimum Selection Fees, as provided above,
will be computed every six months, and will be credited against fees
due from actual transfers of Selects during the previous six months.
The first minimum Selection Fees will be due 36 months after delivery
of the first Grandparent Female to the Multiplier Herd and will
consist of one-half of the annual minimum Selection Fees, or 1.5 Per
Select Fees for each Grandparent Female in the Multiplier Herd. This
Minimum Selection Fee will be paid every six months during year three
of this Agreement. The minimum fee will be prorated during periods
when distribution of Selects is halted due to temporary or permanent
closure of the Multiplier Unit, as provided for in Section VIII of
this Agreement, if PIC is immediately notified in writing of such
temporary or permanent closure.
ALL PRICING LISTED IN THIS SECTION III. IS SUBJECT TO PRICE REVIEW AS SET
OUT IN SECTION V. BELOW.
IV. Payment Due Date
A. Grandparent or Parent Purchases: Payment due on delivery, as provided
in the Conditions of Sale, Schedule 4.
B. Selection Fees: Multiplier will account for all Parent Gilts delivered
to the Multiplier and Member Commercial Herds on Gilt Movement Report
forms provided by PIC. The accounting will be made within 10 days
after the end of each calendar month. Payment of such fees must
accompany the monthly reports filed with PIC. PIC may withhold
delivery of subsequent shipments of breeding stock to the Multiplier
until outstanding Selection Fee payments are made. A delinquency
charge of 1 1/2% per month will be charged on all delinquent accounts.
C. Grandparent Female Use Fees: The Use Fee will be paid monthly, based
on the number of Grandparent Females in the Multiplier Herd, on the
last day of the calendar month. Multiplier will report monthly on
forms provided by PIC. The accounting will be made at the end of each
month. Payment of such fees must accompany the monthly reports filed
with PIC. PIC may withhold delivery of subsequent shipments of
breeding stock to the Multiplier until outstanding Selection Fee
payments are made. A delinquency charge of 1 1/2% per month will be
charged on all delinquent accounts.
V. Price and Fee Revisions
A. Beginning on the first day of the 25th month following execution of
this Agreement, and no more often than biannually thereafter, PIC may
revise the prices and fees established herein. No upward revision
will exceed the percentage change in the Agricultural Production
Index, as published in the Agriculture Outlook Economic Research
Service of the United States Department of Agriculture during the 24-
months preceding the revision, as shown in the most current report
available, and no upward revision will exceed twenty percent (20%) of
the applicable price or fee in effect at the time of the revision.
All revisions will be effective sixty (60) days after written notice
to the Multiplier.
B. Boar-to-Sow Ratios
(1) If Multiplier uses Natural Service Boars and, if the number of
Natural Service Boars in any of the herds established hereunder
falls below one boar for every 25 sows in the herd, PIC shall
increase the price for animals sold or transferred to that herd
or require Multiplier to restore the boar population to the
required number as a condition for continuation of this
Agreement.
(2) If multiplier uses artificial insemination or other means of
reproducing PIC animals in any of the herds established hereunder
and said use results in a boar to sow ratio less than one boar to
every 25 sows, PIC shall increase the prices for boars sold to
that herd by the same percentage as the boar to sow ratio
changes. For example, if Multiplier is using one boar to 50
sows, the animal price shall double.
(3) If PIC has received written notice of intent to close permanently
any herd in compliance with the terms of Section VII.D., hereof,
the herd covered by the notice of closure shall be exempted from
the minimum boar requirement.
VI. Conditions of Sale
The Conditions of Sale, Schedule 4, apply to all sales of breeding stock
and semen.
SCHEDULE 2
AUTHORIZED BREEDING HERDS
FARM NAME SHIP TO HERD SIZE ADDRESS AT PHYSICAL
Boars Gilts LOCATION OF HERD
Alliance Farm #9110 18 2400, plus or , IL
minus 5%
Multiplier will purchase sufficient GP Gilts to maintain a ratio of one GP
Female in the Multiplier Herd for every 15 Parent Females in the Authorized
Commercial Herds listed in Schedule 3.
SCHEDULE 3
AUTHORIZED COMMERCIAL HERDS
I. MULTIPLIER COMMERCIAL HERDS:
FARM NAME SHIP TO HERD SIZE ADDRESS AT PHYSICAL
Boars Gilts LOCATION OF HERD
Alliance Farm , Illinois
II. PERMITTED FEEDLOTS:
FARM NAME SHIP TO HERD SIZE ADDRESS AT PHYSICAL
Boars Gilts LOCATION OF HERD
SCHEDULE 4
CONDITIONS OF SALE
FOR NATURAL SERVICE BOARS AND GILTS
A. WARRANTIES OF PIC REGARDING THE SALE OF ANIMALS. Except as otherwise
provided in these Conditions of Sale, including but not limited to Section
H. (DISEASE STATEMENT), PIC gives the following warranties:
1. Animals supplied under these Conditions of Sale have been inspected
and certified in accordance with applicable federal and state animal
health regulations.
2. Animals supplied under these Conditions of Sale will be of the line,
type and Halothane gene status indicated.
3. Animals delivered by PIC either:
a. Will have been owned by PIC for at least thirty (30) days, or
b. Will have been acquired by PIC from a farm that is operated in
accordance with standards established by PIC.
4. All Gilts sold by PIC under these Conditions of Sale at over five
months of age will be physically capable of breeding after proper
isolation and acclimatization.
5. All Natural Service Boars sold by PIC under these Conditions of Sale
at over six months of age will be physically capable of breeding after
proper isolation and acclimatization.
B. WARRANTIES OF MEMBER MULTIPLIER: Member Multiplier warrants:
1. Member Multiplier will use the animals purchased under these
Conditions of Sale only in Member Multiplier's own herds, and on
Member Multiplier's own animals.
2. Except as otherwise specifically allowed under this Agreement, Member
Multiplier will not use, sell or transfer the animals purchased under
these Conditions of Sale for the production of pigs to be used by
Member Multiplier or any other person or entity as breeding animals or
for sale as breeding animals.
3. Member Multiplier will not use, sell or transfer the progeny of the
animals purchased under these Conditions of Sale except for slaughter.
4. Member Multiplier will not use Natural Service Boars purchased under
these Conditions of Sale for artificial insemination.
C. ISOLATION AND ACCLIMATIZATION.
1. Member Multiplier will completely isolate all animals in a clean
facility, physically separate from other swine for at least 30 days,
will follow the recommendations of a licensed veterinarian for
isolation and for release of animals after the isolation period, and
will not begin acclimatization procedures for 30 days after delivery.
PIC encourages Member Multiplier to test animals, at Member
Multiplier's expense, for pathogens or disease which are of concern to
Member Multiplier while animals are in isolation. Member Multiplier
agrees and understands that PIC will have no duty to credit Member
Multiplier for animals due to the presence of economically significant
infectious agents unless Member Multiplier complies with this
isolation procedure.
2. Member Multiplier will acclimatize animals in a separate facility
alongside existing stock for at least 30 days after isolation, and
will follow the recommendations of a licensed veterinarian for the
release of animals from acclimatization.
D. CREDITS AND PROCEDURES.
1. In case of complaint, Member Multiplier must call or write to PIC,
stating delivery date, invoice number, pig tag and/or ear tattoo
number, and the exact nature of the complaint. If the animals do not
meet the warranties set out in these Conditions of Sale, PIC may
authorize slaughter following notification and/or may issue a credit
for the invoiced cost of the animal, less slaughter value. PIC will
not issue credit for dead animals or any slaughtered animals before
the complaint process described above has been followed, unless a
postmortem certified by Member Multiplier's veterinarian reveals a
defect that rendered the animal infertile or incapable of breeding
after the required isolation and acclimatization period.
2. In case of complaint based on the presence of economically significant
infectious agents in the animals, if the isolation procedures above
have been followed, if Member Multiplier's veterinarian provides PIC
with evidence satisfactory to PIC of the existence of the agent, and
if PIC receives from Member Multiplier the notice and complaint
required by the complaint process before the animals carrying the
agent are removed from isolation, PIC will credit to Member Multiplier
the invoiced cost of the animals less slaughter value.
3. PIC will issue credits only if the complaint is received within 30
days after delivery for complaints based on structural soundness or
based on the presence of economically significant infectious agents,
and within 150 days for any other complaint; and PIC will issue
credits only if the complaint procedures are followed. Credits will
be offset against any debt owned by Member Multiplier to PIC, and any
balance will be credited to Member Multiplier's account.
E. LIMITATION OF LIABILITY. PIC will have no liability for risk of loss of
animals from and after delivery. PIC's liability for losses due to
economically significant infectious agents, or due to advice and
information given by PIC, whether oral or written, will be limited to the
procedure provided in Section D (Credits and Procedures) above. PIC will
have no liability for losses resulting or allegedly resulting from failure
of female animals to conceive, settle, farrow, or produce progeny after
mating. PIC will not be liable for incidental or consequential losses,
including, without limitation, veterinarian's fees, lost profits, or other
incidental or consequential damages of any nature.
F. While PIC makes every effort to deliver animals on time, specified or
suggested delivery dates will not be of the essence of these Conditions of
Sale. PIC will have no liability for any loss caused by late delivery.
G. LIMITATION PERIOD. Any lawsuit or litigation, alleged to arise out of the
purchase of animals from PIC by Member Multiplier, must be brought not
later than one year after delivery.
H. DISEASE STATEMENT. Member Multiplier is experienced in swine breeding, and
knows that organisms which cause swine diseases (called pathogens) are
present in virtually every swine herd, including PIC's swine herds. NEW OR
DIFFERENT PATHOGENS OR DISEASES MAY ARISE AT ANY TIME. (See also PIC's
Isolation and Acclimatization recommendations, which identify pathogens for
which PIC administers vaccines). The outbreak of diseases however is
caused by many factors in addition to the presence of pathogens within a
swine or swine herd. Although PIC attempts to minimize the presence of
pathogens and diseases in its herds and in the swine breeding stock it
sells, PIC CANNOT AND DOES NOT WARRANT THE ABSENCE OF ANY PATHOGENS OR
DISEASE IN THE ANIMALS SOLD BY PIC. PATHOGENS OR DISEASES MAY BE PRESENT
AT TIME OF SALE OR MAY APPEAR LATER.
I. DISCLAIMER OF OTHER WARRANTIES. These Conditions of Sale contain all of
the warranties made by PIC to Member Multiplier. No other warranties,
expressed or implied are given. Except as otherwise set out in these
Conditions of Sale, all animals sold under these Conditions of Sale are
sold "AS IS". PIC SPECIFICALLY GIVES NO WARRANTY OF MERCHANTABILITY,
HEALTH, OR FITNESS FOR A PARTICULAR PURPOSE EXCEPT AS SPECIFICALLY STATED
IN THESE CONDITIONS OF SALE. PIC specifically disclaims any warranty of
the genetic make-up of animals, the performance of animals, or the
characteristics or performance of their progeny, except as otherwise set
out in these Conditions of Sale. There are no warranties which extend
beyond these Conditions of Sale.
J. NON-WAIVER. Failure to enforce any provision in these Conditions of Sale
will not be deemed a waiver of PIC's future right to enforcement of that
provision or any other provision in these Conditions of Sale.
K. EXCLUSIVE REMEDY. MEMBER MULTIPLIER'S REMEDY OF CREDIT FOR THE INVOICED
COST OF AN ANIMAL, LESS SLAUGHTER VALUE, AS PROVIDED IN SECTION D., CREDITS
AND PROCEDURES, OF THESE CONDITIONS OF SALE, IS THE EXCLUSIVE REMEDY
AGAINST PIC FOR ANY CLAIM ARISING OUT OF THE PURCHASE OF ANIMALS FROM PIC
BY MEMBER MULTIPLIER. ALL OTHER REMEDIES, WHETHER UNDER STATUTE,
REGULATION, CONTRACT, TORT, WARRANTY, NEGLIGENCE, OR ANY OTHER LEGAL THEORY
OF ANY NATURE, ARE EXPRESSLY WAIVED BY MEMBER MULTIPLIER. MEMBER
MULTIPLIER IS AWARE OF THE RISKS OF SWINE PRODUCTION AND THEREFORE THIS
WAIVER IS NEITHER UNREASONABLE NOR UNCONSCIONABLE.
L. CANCELLATION. Cancellations of any orders made under these Conditions of
Sale will be effective only if made more than five (5) days before the
requested delivery date. Cancellations will be effective when received by
PIC at its Franklin, KY., office.
M. PAYMENT. Payment for each animal or shipment of animals will be made in
full ON DELIVERY, and payment of all other fees will be made within 10 days
of the reporting date. A late-payment service charge of 1 1/2% per month
(18% per year) will be added to any amount unpaid within ten (10) days.
PIC may withhold future deliveries if Member Multiplier fails to make
payments as set out in these Conditions of Sale.
N. APPLICABLE LAW. These Conditions of Sale will be interpreted under the
laws of the State of Kentucky. The parties consent that any dispute
hereunder will be tried in the Kentucky Circuit Court, that they will
consent to the Kentucky Circuit Court's jurisdiction over them, and that
venue for such dispute will be in the Kentucky Circuit Court for Simpson
County.
O. ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT OF THE
PARTIES REGARDING THE MATTERS COVERED BY THESE CONDITIONS OF SALE AND THE
ATTACHED AGREEMENT, AND SUPERSEDES ALL OTHER AGREEMENTS, REPRESENTATIONS,
OR NEGOTIATIONS BETWEEN OR BY THE PARTIES HERETO, WHETHER ORAL OR WRITTEN,
REGARDING SUCH MATTERS. THIS AGREEMENT MAY NOT BE AMENDED EXCEPT BY A
WRITTEN DOCUMENT SIGNED BY BOTH PARTIES. MEMBER MULTIPLIER ACKNOWLEDGES
THAT MEMBER MULTIPLIER HAS READ AND UNDERSTANDS THESE CONDITIONS OF SALE
AND THE AGREEMENT TO WHICH THEY ARE ATTACHED, AND THAT MEMBER MULTIPLIER'S
ENTERING INTO THESE CONDITIONS OF SALE AND THE ATTACHED AGREEMENT IS
VOLUNTARY AND NOT DONE IN RELIANCE OF ANY REPRESENTATION OF PIC EXCEPT AS
HEREIN PROVIDED.
MEMBER MULTIPLIER AGREES, BY SIGNING BELOW, THAT PIC HAS GIVEN MEMBER MULTIPLIER
NO PROMISES, WARRANTIES, GUARANTEES, OR REPRESENTATIONS EXCEPT AS SPECIFICALLY
STATED IN THESE CONDITIONS OF SALE AND THE ATTACHED AGREEMENT.
ALLIANCE FARM COOPERATIVE ASSOCIATION, INC.
By:
Title:
Date:
SCHEDULE 5
PIC GENETIC PROGRAM
Multiplier shall at all times comply strictly with the PIC Genetic Program set
forth in this Schedule, by mating the animals, whether by natural service or AI,
in the Multiplier Herds only in compliance with the required mating programs set
forth below. Multiplier shall not mate animals except in compliance with this
Schedule.
MATING PROGRAM
Male x Female = Product
Genetic Genetic Genetic
Status Status Sex Status
L19 x L42 = Gilt C-22 Parent
PIC shall have the right to change the Genetic Program set forth above. Upon
written notice by PIC to Multiplier of any change in the Genetic Program,
Multiplier shall comply therewith.