CUSTOM SLAUGHTER AND FABRICATION AGREEMENT
THIS AMENDMENT TO CUSTOM SLAUGHTER AND FABRICATION
AGREEMENT (the "Amendment") is executed as of the 9th day of
April, 1997, by BEEF AMERICA (`'Beef America"), RED OAK
HEREFORD FARMS, INC. ("Hereford'') and RED OAK FARMS, INC.
('`Red Oak Farms, Inc ")
WITNESSETH:
WHEREAS, Beef America and Hereford are parties to that
certain Custom Slaughter and Fabrication Agreement (the
"Agreement") dated February 19, 1997; and
WHEREAS, because Red Oak Farms, Inc., rather than
Hereford, purchases and sells beef, the parties, intended
That Red Oak Farms, Inc., rather than Hereford, would be a
party to the Agreement and have therefore agreed to execute
this Amendment for the purpose of substituting Red Oak
Farms, Inc. for Hereford thereunder.
NOW, THEREFORE, for good and valuable consideration,
the parties hereby amend the Agreement as follows:
1. Substitution of Red Oak Farms, Inc. The parties
hereby acknowledge and agree that Red Oak Farms, Inc. shall
be substituted for Hereford under the Agreement. All
references in the Agreement to Hereford shall hereafter be
deemed to refer to Red Oak Farms, Inc., rather than to
Hereford. Red Oak Farms, Inc. hereby agrees to assume and
be bound by and timely perform, observe, discharge and
otherwise comply with all terms, covenants, conditions and
obligations of Hereford under the Agreement as though Red
Oak Farms, Inc, was the original signatory thereto. Beef
America hereby agrees to look to Red Oak Farms, Inc. for the
performance of such duties and obligations.
2. Interpretation. If there is a conflict between the
terms of this Amendment and the terms of the Agreement, the
terms of this Amendment control. Except as expressly amended
hereby, the Agreement remains in full force and effect as
between Beef America and Red Oak Farms, Inc.
3. Miscellaneous. This Amendment may be executed in
counterparts and constitutes the parties' entire
understanding concerning the subject matter hereof. No prior
or contemporaneous representations, promises or agreements
relating to the subject matter hereof and not embodied in
this Amendment are of any force or effect. This Amendment
shall not be modified except in a writing signed by all
parties hereto. If any provision of this Amendment is held
to be invalid or unenforceable, the remaining provisions
shall not be affected. This Amendment shall be binding upon
and shall inure to the benefit of the parties hereto and
their respective heirs, representatives, successors and
assigns.
IN WITNESS WHEREOF, the parties have duly executed this
AMENDMENT TO CUSTOM SLAUGHTER AND FABRICATION AGREEMENT as
of the day and year first above written.
BEEF AMERICA
By:__________________________________
Its:__________________________________
RED OAK HEREFORD FARMS,INC.
By:___________________________________
Its:___________________________________
RED OAK FARMS, INC.
By:__________________________________
Its:___________________________________
CUSTOM SLAUGHTER AND FABRICATION AGREEMENT
BETWEEN BEEF AMERICA
AND
RED OAK HEREFORD FARMS, INC.
THIS AGREEMENT is made and entered into this 19th day
of February, 1997 by and between Beef America, 14748 W.
Center Rd., Omaha, NE and Red Oak Hereford Farms, Inc., Red
Oak, IA 51566.
WHEREAS, Beef America is engaged in the business of
slaughtering and fabricating beef and owns and operates a
plant to do so in Norfolk, NE which is subject to United
States Department of Agriculture (USDA) inspection. Beef
America desires to provide fee-based slaughter and
fabrication services to Red Oak Hereford Farms, Inc. as well
as to purchase designated offal and by-products.
WHEREAS, Red Oak Hereford Farms, Inc. is engaged in the
business of purchasing live beef animals and marketing and
selling fabricated beef. Red Oak Hereford Farms, Inc.
desires to solicit slaughter and fabrication services for
beef animals meeting Certified Hereford Beef certification.
Red Oak Hereford Farms, Inc. desires to sell to Beef America
certain offal and by-product items of which Red Oak Hereford
Farms, Inc. does not market and sell. Red Oak Hereford
Farms, Inc. also desires to sell to Beef America certain
carcasses that do not meet the USDA certification for
Certified Hereford Beef.
NOW, THEREFORE, in consideration of the promises and
mutual covenants set forth in the AGREEMENT, the parties
agree as follows:
1. Beef America will slaughter and fabricate 800 to 4,000
Certified Hereford Beef carcasses per week. If cattle
numbers fall outside this range for more than one week, Beef
America has the option to terminate this agreement and a new
agreement between Beef America and Red Oak Hereford Farms,
Inc. will be reached.
1A. Red Oak Hereford Farms will make available to
Beef America 20,000 shares of stock in Red Oak
Hereford Farms, Inc.
2. Beef America will purchase all carcasses that do not
meet USDA specifications for Certified Hereford Beef
according to a formula pricing mechanism whereas the base
price is the average USDA reported Nebraska "flat in the
beef' price for the week of slaughter. This base price is
then adjusted to a Choice, Yield Grade 3 price weekly
according to Beef America's average grading. Premiums will
be offered to cattle grading USDA Prime and USDA Yield Grade
I and 2 within the USDA Prime and Choice grade. Discounts
from the USDA Choice, Yield Grade 3 cost will be applied to
cattle grading USDA Select or lower, USDA Yield Grade 4 or
greater, carcasses weighing less than 550 pounds, and
carcasses weighing more than 950 pounds. Beef America
reserves the right to adjust these premiums and discounts
weekly as needed to adjust to current grading. All carcasses
that can not be fabricated by Beef America (Dark Cutters,
Measled Beef, Blood Spots) will be purchased by Beef America
at the FOB value that Beef America receives. Beef America
will supply to Red Oak Hereford Farms, Inc. all current
pricing, premium and discount schedules.
3. Beef America will purchase from Red Oak Hereford Farms,
inc. all offal items (which are routinely processed by Beef
America) from slaughtered cattle under this agreement. The
purchase price will be Beef America's closing inventory
price of these items determined the week prior to slaughter.
Beef America will provide to Red Oak Hereford Farms, Inc.
documentation of all offal prices, weights and yields for
the time period representing the slaughter of Certified
Hereford Beef Red Oak Hereford Farms, Inc. has the option to
market any offal items.
4. Beef America will purchase from Red Oak Hereford Farms,
Inc. all hides from slaughtered cattle under this agreement.
The purchase price will be determined by the previous week's
average of the Chicago Daily Hide and Tallow Market Quotes.
All hides will be graded, weighed and processed separately
and a weekly production report will be sent to Red Oak
Hereford Farms, Inc.
5. Beef America will provide to Red Oak Hereford Farms,
Inc. the fabrication yield information on the Certified
Hereford Beef that is processed. Beef America may purchase
fabricated beef items from Red Oak Hereford Farms, Inc. but
is under no obligation to do so.
6. Beef America's payment to Red Oak Hereford Farms, Inc.
will be a net payment (payment for non-certified cattle,
plus offal, plus hides, minus the slaughter and fabrication
fee) closed out weekly with a check issued to Red Oak
Hereford Farms, Inc. within 7 days of slaughter.
7. Red Oak Hereford Farms, Inc. will pay Beef America a
sum of $40.00 for every carcass slaughtered but not
fabricated (non-certified cattle). Red Oak Hereford Farms,
Inc. will pay Beef America according to the following scale
for every carcass fabricated.
Number of Head Fabricated Fee/head
1st 2000 $100.00
Next 1000 $ 95.00
Next 1000 $ 90.00
7A. Cost revised annually for actual cost increases.
8. Red Oak Hereford Farms, Inc. will deliver the cattle
for weekly slaughter to the plant either the evening before
or the morning of the slaughter to be scheduled with Beef
America cattle buyers.
9. Red Oak Hereford Farms, Inc. will notify the Omaha
corporate office (Paul Bergston) as to the number of cattle
to be delivered each week. This needs to be accomplished by
10:00 A.M. Tuesday.
10. Red Oak Hereford Farms, inc. will be responsible to
order, deliver and pay for all custom boxes for Certified
Hereford Beef Red Oak Hereford Farms, inc. will own the
inventory of custom boxes. Each weekly close-out will
include a credit back to Red Oak Hereford Farms, inc. for
Beef America's regular cost of boxes.
11. Red Oak Hereford Farms, inc. will communicate with
Norfolk Fabrication (Dennis Sydow) as to fabrication
instructions or changes by 10:00 A.M. Tuesday of each week.
If Beef America purchases any product, this information must
be part of the fabrication order ("make sheet"). Red Oak
Hereford Farms, inc. needs to inform Beef America of the
outcome of partial boxes (i.e., shipped, sold to Beef
America?).
12. Red Oak Hereford Farms, Inc. will provide Beef America
with boxed beef shipping orders and truck schedules for the
entire weekly fabrication production (if the carcasses are
fabricated on Saturday, then orders and schedules must be in
by Friday at noon). Beef America's boxed beef inventory
space is limited which requires an "in and out" scheduling
of Certified Hereford Beef to eliminate potential problems.
13. Red Oak Hereford Farms, inc. will have a representative
present at the plant the day of slaughter and also the day
of fabrication.
TERM. This AGREEMENT commences on the day that this
agreement is executed and shall terminate March 1, 2000
unless terminated sooner by a) mutual consent of both
parties; b) if either party becomes insolvent or bankrupt;
c) violation of the terms of this agreement (with a 30 day
continuation period); or d) by either party for any reason
after 120 day written notification. Section c) is not
applicable to paragraph 2.
AMENDMENTS. This agreement may be amended at any time by
mutual consent.
BINDING EFFECT. This agreement shall be binding on the
parties hereto and their respective heirs, executors,
successors, and/ assigns.
Signed Date Signed Date
____________________________ ____________________________
President, President,
Beef America Red Oak Hereford Farms, Inc.