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DRAFT 2/16/94
DAIRY PRODUCTS SUPPLY AGREEMENT
This Dairy Products Supply Agreement (the "Agreement") is made this ____
day of __________, 1994, by and between The Morningstar Group Inc., and its
wholly owned subsidiaries executing this Agreement, with principal offices at
5956 Sherry Lane, Suite 1100, Dallas, Texas 75225 (collectively "Seller") and
Velda Farms Inc., a Delaware corporation, with its principal offices at 501
N.E. 181st Street, Miami, Florida 33162 ("Buyer").
W I T N E S S E T H:
Whereas, Seller has entered into that certain Stock Purchase Agreement
dated February ____, 1994, (the "Purchase Agreement"), pursuant to which Seller
has agreed to sell all of the outstanding common stock of Buyer; and
Whereas, one of the conditions precedent to closing under the Purchase
Agreement and part of the consideration therefor is that Buyer and Seller shall
enter into this Agreement, pursuant to which Seller agrees to sell and deliver,
and Buyer agrees to purchase, Buyer's requirements for certain products
supplied by Seller.
Now, therefore, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, Seller and Buyer
agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used herein shall have the meanings ascribed to them
in Article I hereof unless such terms are defined elsewhere in this Agreement.
Affiliate(s): With respect to any specified person, any other person
controlling or controlled by or under common control with such specified
person. For the purpose of this
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definition, "control", when used with respect to any specified person, means
the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meaning
correlative to the foregoing.
Agreement: As defined above in the preamble.
Agreement Year: The one year period commencing on the Effective Date
and each succeeding year during the Term.
Applicable Regulations: As defined in Section 5.1.
Arbitrable Dispute: As defined in Section 19.2.
Base Price: As defined in Section 4.1.
Base Pricing Period: The period from the Effective Date until the fifth
anniversary of the Effective Date.
Best Efforts: With respect to any undertaking as to the performance of
which a party has covenanted to use its Best Efforts to accomplish such
undertaking, the term Best Efforts shall mean the diligent pursuit by such
party, in good faith, of all such acts as may be required in light of such
party's capabilities at the time such performance is required to be rendered to
perform such undertaking; provided, however, in no event shall the obligation
to use Best Efforts require any party to (i) make any capital expenditure
(other than as contemplated by such party's then current capital budget); (ii)
incur any indebtedness for money borrowed (other than as contemplated by such
party's then current operating budget); (iii) modify, amend, breach of
terminate any contractual arrangement with an unaffiliated person by or to
which such party is then bound or subject, which modification, amendment,
breach or termination would cause such party to incur a liability; or (iv)
suffer any operating loss as a result of, or in connection with, the
performance of such undertaking.
Best Price: As defined in Section 4.1
Bid Expiration: As defined in Section 4.4.
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Buyer: As defined above in the preamble.
Buyer's Requirements: During the term of this Agreement, Buyer's
requirements for resale of the Products to retail and commercial customers in
the State of Florida. Buyer's Requirements do not include sales of products
similar in nature to the Products to other dairy operators in the State of
Florida.
Claim: As defined in Section 9.4
Confidential Information: As defined in Section 11.1
Designated Facility: As defined in Section 3.3.
Effective Date: As defined in Section 2.1.
Existing Florida Distributor: As defined in Section 3.2.
Force Majeure: Acts of God, strikes, lockouts or other industrial
disturbances, acts of the public enemy, wars, blockades, insurrections, riots,
requisitions and priorities of the United States or foreign government or the
government of any state or subdivision thereof, including imposition by any
duly authorized agency of such government of mandatory allocation of one or
more of the Products sold hereunder, civil disturbances, explosions, orders,
laws or proclamations of such governmental authorities acting under claim or
color of authority, and any other cause or causes which are not within the
reasonable control of the party claiming Force Majeure, provided that Force
Majeure does not include any interference with a party's performance of its
obligations resulting from or attributable to a violation of any law,
regulation, rule or order, or from any failure to maintain its facilities at
all times in accordance with the requirements of applicable law, regulations,
rules and orders and in accordance with good industry practice.
Indemnified Party: As defined in Section 9.3
Indemnifying Party: As defined in Section 9.3
Index: As defined in Section 4.1
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Labor/Utility Cap: As defined in Section 4.1.
Market Price: As defined in Section 4.3.
Market Pricing Period: The period after the Base Pricing Period until
the termination of this Agreement.
Products: The slate of dairy and other products listed on Exhibit A-1
which are manufactured or processed by Seller for sale to Buyer, together with
any other products of substantially the same quality, character or grade that
Buyer elects to buy in addition to or as a substitute for any of the foregoing.
"Product" refers to any of the Products. Any Product which Seller ceases to
manufacture or process during the Term will no longer be deemed a Product
subject to this Agreement.
Product Group: The sub groups of Products described as Product Group A
and Product Group B on Exhibit A-1.
Rejected Products: As defined in Section 5.4
Seller: As defined in the preamble.
Surplus Packaging: As defined in Section 13.5.
Term: As defined in Section 2.1.
USDA: The United States Department of Agriculture.
ARTICLE II
TERM OF AGREEMENT
Section 2.1. The term (the "Term") of this Agreement shall commence as
of the closing date under the Purchase Agreement (the "Effective Date") and
shall continue for an initial period of five years, during which the Base Price
shall apply, followed by a subsequent period of five years, during which the
Market Price shall apply, unless earlier terminated as set forth in this
Agreement.
ARTICLE III
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BUYER'S REQUIREMENTS
Section 3.1. Subject to the terms of this Agreement, Buyer shall
purchase from Seller, and Seller shall sell to Buyer, such quantities and types
of Products as are needed from time to time to satisfy Buyer's Requirements.
Section 3.2. (a) Buyer agrees that, except as otherwise permitted by
this Agreement, during the Term, Seller will be the exclusive source of supply
for Buyer's Requirements, and that Buyer will not purchase the Products from
any other person, nor process or manufacture the Products in order to satisfy
Buyer's Requirements, unless Buyer has first complied with the terms of this
Agreement.
(b) If Seller fails to deliver any Products required by
Buyer in accordance with the terms of this Agreement (for reasons other than
Force Majeure), Buyer may purchase such products from other suppliers until
such time as Seller resumes the delivery of the Products in accordance with the
terms of this Agreement.
(c) If any customer of Buyer requests that Buyer sell to
that customer products similar to the Products (i) that have a brand, label or
formulation that Seller cannot, or upon request by Buyer will not, manufacture
or process, or (ii) that are manufactured or processed by a manufacturer or
processor other than Seller, then Buyer may purchase such products from other
suppliers, manufacturers or processors or Buyer may manufacture or process such
products, for sale to the customer making that request. Buyer agrees that
Buyer will not solicit or encourage its customers to specify products described
in the preceding sentence.
(d) Provided that all such products purchased, manufactured
or processed are sold and delivered outside of the State of Florida for use or
resale outside of the State of Florida, Buyer may (i) purchase products similar
to the Products from suppliers other than Seller, and (ii) manufacture or
process products similar to the Products.
(e) Buyer is not obligated by this Agreement to purchase
any minimum quantity of any Product from Seller.
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(f) The limitations imposed by Sections 3.1 and 3.2 of this
Agreement apply to Buyer and any subsidiary of Buyer, but will not apply to any
business purchased by Buyer or any of its affiliates which is, at the time of
purchase, engaged in selling products similar to the Products to retail and
commercial customers in the state of Florida (an "Existing Florida
Distributor"). If Buyer acquires an Existing Florida Distributor during the
Term and combines its business with that of Buyer, the parties will in good
faith negotiate such modifications to this Agreement as may be required in
order to permit Buyer's purchase of Products pursuant to this Agreement in
substantially similar volumes to those existing prior to the acquisition of the
Existing Florida Distributor.
Section 3.3. The Products supplied by Seller pursuant to this Agreement
as identified on Exhibit A are presently being, and during the Term will be,
manufactured or processed by Seller or its subsidiaries at the facilities
designated on Exhibit A (the "Designated Facilities"). Seller may not supply
products manufactured or processed at any facility of Seller other than a
Designated Facility without the prior written consent of Buyer, which may not
be unreasonably withheld. Any request by Seller to change the Designated
Facility for any Product must (i) be in writing, (ii) be made not less than
thirty days before such change is to be made effective, (iii) permit Buyer a
reasonable opportunity to evaluate the character and quality of the affected
Products, and (iv) be accompanied by such assurances as Buyer may reasonably
request that such change will not adversely affect the quality and character of
the Product or Products.
Section 3.4. Seller shall use its Best Efforts during the Base Pricing
Period to obtain all ingredients, containers and packaging materials, raw
materials, labor and utilities at competitive prices consistent with the other
quality control provisions of this Agreement and in a manner that is generally
consistent with the practices of Seller employed prior to the Effective Date.
ARTICLE IV
PRODUCTS PRICES
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Section 4.1. During the Base Pricing Period, the purchase price per
unit for each of the Products (inclusive of all transportation, service and
delivery costs) shall be determined as follows (the "Base Price"):
(a) On the Effective Date, the price to Buyer for each
Product shall be the price per unit in effect on February 1, 1994 as
reflected in Exhibit A-1. Exhibit A-2 sets forth Seller's per unit cost
for milk and milk based ingredients and Seller's per unit costs for
labor, electricity and natural gas for the year ended December 31, 1993.
(b) The Base Prices of the Products manufactured or
processed by Seller are to be adjusted after the Effective Date in
accordance with Section 4.2 in the event of and to the extent of:
(i) any increase or decrease in Seller's cost per
unit of raw milk, as reflected by the published Federal Order
No. 30 Class II price announced from time to time (the "Index"),
plus or minus any federally mandated adjustments and as impacted
by the federally published butterfat differential and plus or
minus any changes in applicable supplier premium (or equivalent
measures if the Index is ever changed during the Term) occurring
after February 1, 1994;
(ii) any increase or decrease in Seller's cost per
unit for packaging and raw materials (other than milk), net of
all rebates, discounts and allowances, occurring after December
31, 1993; and
(iii) The lesser of (x) 100% of the annual amount
of the increase or decrease in Seller's product costs resulting
from an increase or decrease in Seller's labor rates and utility
rates occurring after December 31, 1993 and (y) a maximum
percentage increase in Seller's aggregate labor and utility
rates of five percent (5%) per year, on a cumulative basis,
commencing as of January 1, 1994 (the "Labor/ Utility Cap").
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(c) Each invoice for Products purchased at the Base Price
as determined above will be reduced by a rebate amount equal to 8%.
(d) In the event that at any time during the Term Seller
supplies and delivers products substantially similar to the Products to
a dairy operator, distributor or food service supplier located in the
State of Florida in aggregate national quantities not more than twice
the annual quantities of such Products being sold to Buyer under this
Agreement, at a price (the "Best Price") that is less than the Base
Price or Market Price set pursuant to this Agreement, Seller shall
notify Buyer and shall set the Market Price or Base Price at the Best
Price for the relevant Products for so long as Seller is selling
Products at the Best Price in the State of Florida.
Section 4.2. During the Base Pricing Period, Seller shall effect
changes in the Base Price, which will become effective on the first day of the
month following Seller's notice to Buyer, as follows:
(a) Changes in the Base Price made pursuant to Section
4.1(b)(i) are to be announced to Buyer by Seller's written notice on or
before the fifteenth day of each month based upon the relevant costs
effective as of the last day of the preceding month.
(b) Changes in the Base Price made pursuant to Section
4.1(b)(ii) are to be announced to Buyer by Seller's written notice on or
before the fifteenth day of the month following each calendar quarter
based upon the relevant costs of Seller for the preceding calendar
quarter.
(c) Changes in the Base Price made pursuant to Section
4.1(b)(iii) are to be announced to Buyer by Seller's written notice on
or before the fifteenth day of the second month following each calendar
year based upon the relevant costs of the Seller, or changes in the
applicable index, for the preceding calendar year. Measurements of the
percentage change of labor and utility rates subject to the
Labor/Utility Cap are to be
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determined against the level of rates as of December 31, 1993.
(d) Changes in Base Prices will be made in accordance with
this Section 4.2 for the months, calendar quarters and years ending
after the Effective Date.
(e) Upon Buyer's request, Seller will furnish to Buyer (a)
a certificate of its Chief Financial Officer and (b) documentary
evidence from its books and records, reasonably satisfactory to Buyer,
to substantiate the determination of the Base Prices, provided, however,
all such information made available to Buyer will be considered
Confidential Information.
Section 4.3. During the Market Pricing Period, the purchase price of
the Products included in each Product Group will be the prices agreed upon from
time to time by Buyer and Seller for that Product Group or as determined
pursuant to Section 4.4 (the "Market Price") and will reflect competitive
market conditions and include all transportation, service and delivery costs.
Section 4.4. (a) If at any time during the Market Pricing Period,
Seller and Buyer are unable to agree on any Market Prices pursuant to Section
4.3, Buyer may solicit competitive bids for one or more complete Product Groups
from third party suppliers. Buyer will notify Seller that it is soliciting
bids for one or more complete Product Groups at the time Buyer solicits such
bids. If Buyer obtains a bona fide offer to supply the full slate of Products
included in a Product Group which (i) is submitted by a third party supplier
who is capable of furnishing the Products included in a Product Group which are
substantially similar in quality and quantity to the Products then being
supplied by Seller and with substantially similar service by the Supplier as
that required by this Agreement, (ii) is for a term of not less than three (3)
months, (iii) would result in a reduction in the aggregate dollar value of
Buyer's total monthly purchases for that Product Group of more than one percent
(1%) of the aggregate dollar value of Buyer's total monthly purchases of the
Product Group (such percentage to be determined in each case by using the
prices quoted in the third party supplier bid to calculate
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the aggregate dollar value of the Product Group that would have been purchased
by Buyer during the month preceding the month in which such competitive bid is
made), and (iv) certified by Buyer's independent certified public accountants
to meet each of the conditions stated above at (i), (ii) and (iii), then Buyer
will notify Seller of the existence of the competitive bid. If within seven
(7) days after its receipt of written notice from Buyer, Seller has not elected
to meet the competitive bid, Buyer may purchase the Products included in the
Product Group made subject of the competitive bid from the third party supplier
pursuant to the terms of the supplier's bid. If Seller meets the competitive
bid, Buyer will furnish Seller with a copy of the competitive bid.
(b) When the term of the supplier's bid expires (the "Bid
Expiration"), the Seller may thereafter supply the Buyer's Requirements for the
Products if the Buyer neither solicits nor receives third party bids for that
Product Group in accordance with Section 4.4(a). If the Buyer desires to
solicit third party bids for Buyer's Requirements of a Product Group prior to a
Bid Expiration, Buyer will solicit such bids at least fourteen (14) days prior
to the Bid Expiration. Buyer will notify Seller that it is soliciting bids for
the relevant Product Group at the time Buyer solicits bids. If Buyer receives
a third party bid to supply Buyer's Requirements for the relevant Product Group
meeting the conditions of Section 4.4(a)(i) and (ii), then Buyer will notify
Seller of the existence of the competitive bid. If Seller (within seven (7)
business days after being notified of the terms of the competitive bid by
Buyer) submits a bid which meets the competitive bid received by Buyer, Seller
will then supply Buyer's Requirements for the relevant Product Group pursuant
to the terms of the bid and the terms of this Agreement.
(c) Seller may seek to match the bid of a third party supplier with
respect to a Product Group on no more than three occasions. Any Product Group
which is made subject to Seller's rights under this Section 4.4 on three
occasions will upon the solicitation of competitive bids on a fourth occasion
cease to be considered a Product Group subject to this Agreement, and Buyer may
thereafter obtain Buyer's Requirements for that Product Group as Buyer may
determine without compliance with this Agreement.
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ARTICLE V
QUALITY OF PRODUCTS
Section 5.1. (a) Seller represents, warrants and covenants to Buyer as
follows:
(i) All Products sold by Seller to Buyer pursuant to this
Agreement will be of a quality and grade consistent with good industry
practices, will comply with all applicable federal, state and local
laws, rules, regulations and requirements ("Applicable Regulations"),
and will be of a quality and character at least equal to that furnished
to Buyer by Seller during the two year period prior to the Effective
Date;
(ii) All Products sold by Seller pursuant to this Agreement
will be good and merchantable and fit for the purposes and uses for
which they are intended; and
(iii) All Products sold by Seller to Buyer pursuant to this
Agreement will be manufactured, processed, labeled, packaged, stored and
shipped in compliance with Applicable Regulations.
(b) Seller shall regularly conduct such tests of the Products and of
the raw materials, ingredients and processes used in connection with the
manufacturing and processing of the Products as are commonly utilized in the
dairy processing industry or required by federal, state or local governmental
authorities.
(c) Upon request in advance and during reasonable business hours,
Seller will permit qualified representatives of Buyer to enter and inspect the
areas of Seller's manufacturing, processing and distribution, laboratory and
quality control facilities used to produce, store and ship the Products and to
store the raw materials, packaging and ingredients relating thereto. Seller
shall provide Buyer with reasonable notice of and access to all of the tests
conducted by Seller pursuant to paragraph (b) above and copies of the reports
and written results of such tests; provided, however, all information made
available to Buyer's representatives will be considered to be
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Confidential Information and will be used by Buyer only for specific
recommendations and guidelines to ensure compliance with Seller's
representations, warranties and covenants given in this Agreement.
Section 5.2. Seller shall promptly notify Buyer of (i) any citation,
threatened regulatory action or contact by any federal, state or local
authority or regulatory agency which relates to Seller's representations,
warranties and covenants contained in this Article V, (ii) any suspected
bacterial, chemical, pesticide or other contamination of the Products or other
condition of the Products which violates any Applicable Regulations or Seller's
representations, warranties and covenants contained in this Article V, (iii)
Seller's receipt of any citation, notice of violation or enforcement action by
any federal, state or local authority or regulatory agency relating to sanitary
conditions or compliance with Applicable Regulations of Seller's facilities or
in other areas where the Products, and/or ingredients and materials for such
Products, are manufactured, processed, packaged or stored, and (iv) any
occurrence or state of facts of which Seller is aware which would reasonably be
expected, if disclosed to a federal, state or local authority, to have any of
the effects set forth at (i), (ii) or (iii) above. Seller will promptly notify
Buyer of any request or order for recall, market withdrawal or stock recovery
of the Products by any federal, state or local authority or regulatory agency,
and any voluntary recall, market withdrawal or stock recovery of the Products
initiated by Seller.
Section 5.3. If Seller initiates a recall, Buyer agrees to use its Best
Efforts to remove all Products from distribution channels within its control
and to otherwise cooperate with Seller in its efforts associated with such
recall. Buyer shall have the right to withdraw, remove and/or recall any
Products from any stage of Buyer's distribution and/or sale, whether such
Products have been purchased by the ultimate consumer or otherwise, if Buyer,
in the exercise of its reasonable business judgment, believes in good faith
that such Products (i) are in any way contaminated with any foreign substance
that is likely to threaten public safety and health or (ii) have not been
manufactured, processed, labeled, packaged, stored or shipped in compliance
with Applicable
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Regulations and with the terms of this Agreement. If with regard to any recall
(a) instituted by Seller or (b) instituted by Buyer it is determined that
either (i) there is confirmed contamination of any of the Products subject to
the recall which occurred prior to the time that title to the Products passed
to Buyer, or (ii) the Products were not manufactured, processed, labeled,
packaged, stored or shipped in material compliance with Section 5.1 hereof,
Seller shall promptly reimburse Buyer for all expenses reasonably incurred by
Buyer in connection with the recall. Seller shall also utilize the
identification system in effect on the Effective Date or another comparable
system in order to facilitate identification of the Products. All Products
that have been the subject of a withdrawal, removal or recall shall be disposed
of by Seller at its sole cost and expense, in accordance with Applicable
Regulations and consistently with good industry practices. At Buyer's option,
Seller will either (i) replace the withdrawn, removed or recalled Products with
Products conforming to the terms of this Agreement, or (ii) reimburse or credit
Buyer for the cost to Buyer of the recalled, withdrawn or removed Products and
all other expenses incurred by Buyer in connection with the withdrawal, removal
or recall.
Section 5.4. Buyer reserves the right at any time to reject and/or
return Products (the "Rejected Products") which (i) have at the time of
delivery less than the number of days of shelf life set forth on Exhibit A-1 or
(ii) do not comply with the quality standards set forth in this Agreement or
(iii) are damaged or unsaleable as a result of acts or omissions of Seller or
its distributors, carriers or other representatives. Buyer shall notify Seller
by telephone and in writing by facsimile or overnight delivery of such Rejected
Products. All costs associated with rejecting the Rejected Products shall be
borne solely by Seller, including, without limitation, all costs incurred by
Buyer with respect to the transportation and handling, delivery and return of
Rejected Products. As soon as is reasonably possible, but in any event not
later than the next delivery date to Buyer occurring after notice of rejection
is given by Buyer to Seller, Seller shall remove the Rejected Products from
Buyer's premises. All Rejected Products shall be disposed of by Seller at its
expense in strict accordance with Applicable Regulations and consistently with
good industry practices. At Buyer's option, Seller will either (i) replace
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the Rejected Products with Products conforming to the terms of this Agreement,
or (ii) reimburse or credit Buyer for the cost to Buyer of the Rejected
Products and all other expenses incurred by Buyer in connection with the
Rejected Products.
Section 5.5 Seller will not be responsible for any damage to or
degradation in the quality of Products occurring after acceptance of delivery
by Buyer in accordance with this Agreement.
ARTICLE VI
DELIVERY, TITLE AND RISK OF LOSS
Section 6.1. Seller shall deliver Products to the Buyer on such dates
and at such times and in such manner as Buyer may reasonably request from time
to time.
Section 6.2. Seller warrants and shall defend title to the Products
delivered to Buyer hereunder. Title to and risk of loss to the Products shall
pass to Buyer after the Products have been delivered to the Buyer's locations
and accepted there by Buyer's personnel by signing and dating the applicable
delivery documents.
Section 6.3. Seller shall be solely responsible for transportation of
the Products to Buyer's locations, either through its own trucks and equipment
or through independent carriers selected by Seller. Seller shall operate its
trucks and equipment in accordance with good industry practices and Applicable
Regulations. If any employee, independent distributor or other carrier used by
Seller to deliver Products to Buyer's locations demonstrates business practices
that are unsafe or dishonest, upon receipt of notification of such fact from
Buyer, Seller shall use its Best Efforts to replace such individual or entity
as quickly as is reasonably possible.
ARTICLE VII
PAYMENT
Section 7.1. Any payments to be made by either party to the other under
this Agreement shall be made within
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twenty-eight (28) days of the date of invoice. Billing or invoicing shall be
rendered to Buyer as of the date of delivery of the Products to Buyer's
locations, and any invoices remaining unpaid after thirty-five (35) days from
the date of invoice will accrue, and Buyer shall pay Seller, a late fee of 1%
of the unpaid invoice amount. If an invoice remains unpaid for more than sixty
(60) days after the date of invoice, it will accrue, and Buyer shall pay
Seller, a late fee of two percent (2%) of the unpaid invoice amount. The
amount of the late fee will thereafter increase by 1% of the amount of the
invoice monthly, but not in excess of the maximum rate permitted by law, until
paid.
Section 7.2. In the event that Buyer disputes in good faith and with a
reasonable basis the price, quantity and/or types of Products delivered to
Buyer, Buyer is not obligated to pay that portion of any invoice statement that
pertains to the disputed Products until such time as the dispute has been
resolved pursuant to Article XIX. Interest will accrue at a rate of one-half
percent per month only on that portion of any disputed and unpaid amounts which
are finally determined to be due and payable, but commencing as of the
sixteenth (16th) day following the date that payment of the invoice was due.
Each invoice delivered by Seller will constitute prima facie evidence of the
time of delivery, quantities and prices of the Products described therein
absent evidence to the contrary.
Section 7.3. The existence of any dispute described in Section 7.2 will
not be deemed a default by Buyer or otherwise affect either party's future
performance under this Agreement. Payment by Buyer of any invoice does not
constitute a waiver of Buyer's right to dispute such statement.
Section 7.4. If either party identifies an error in any statement, then
such party shall promptly notify the other party in writing of the alleged
error and shall provide written evidence to confirm the error to the extent
reasonably available at the time of notice.
Section 7.5. Unless otherwise agreed by the parties, any notice of
error issued pursuant to this Article VII, which pertains to the quantities of
Products ordered and delivered or the timing of such deliveries shall be
resolved on the basis of
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those records in each party's possession which have been executed or stamped by
Seller's delivery person that delivered the Products and Buyer's representative
at the location where the disputed quantities were delivered.
Section 7.6. Following the resolution of any alleged error, any
overpayment or underpayment shall be promptly remedied by the party benefitting
from the error. Any amounts paid in resolution of an overpayment or
underpayment will include interest on the amount of the overpayment or
underpayment at a rate of one-half percent per month from the date that the
payment pertaining to such error was initially made through the date that such
error was finally corrected.
ARTICLE VIII
FORCE MAJEURE
Section 8.1. In the event either Buyer or Seller is delayed, hindered
or prevented wholly or in part by Force Majeure from carrying out or fulfilling
its obligations under this Agreement for a period of more than three (3)
business days, the party claiming Force Majeure shall give detailed notice of
such Force Majeure by telephone, facsimile, telex or telegraph (which notice
shall be promptly confirmed in writing) to the other party as promptly as
possible after the occurrence of the Force Majeure. Thereupon, the obligations
of both parties shall be suspended during the continuance of the Force Majeure
to the extent such obligations are thereby affected. The party affected by
Force Majeure shall use its Best Efforts to remedy, with reasonable dispatch,
the conditions creating the Force Majeure, but nothing contained herein shall
be construed as requiring a party to settle any labor dispute by acceding to
any opposing demands when such course of action is inadvisable in the
discretion of such party, or to incur any material expenditure.
Notwithstanding the foregoing. Seller shall be entitled to claim Force Majeure
hereunder only if it also claims, with respect to the products similarly
affected thereby, Force Majeure against its other customers in the areas
affected by such Force Majeure.
Section 8.2. If the occurrence of an event of Force Majeure only
partially impairs Seller's ability to supply
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Products to Buyer, then Seller shall allocate all of its available supplies of
Products among Seller's then existing customers, including Buyer, and shall
continue to supply such parties with proportionately the same quantity of
Products as they received from Seller prior to such event of Force Majeure. If
Seller is unable to supply to Buyer a portion of any Product Group that is not
material as a result of an event of Force Majeure, Buyer may purchase during
the continuance of such event of Force Majeure any unsupplied Products from any
third-party supplier and shall continue to purchase from Seller such Products
in the Product Group as Seller is capable of supplying. If Seller is unable to
supply one or more Products from a Designated Facility as a result of an event
of Force Majeure, Seller may, by complying with the requirements of Section
3.3, supply such Products from another facility, and Buyer agrees that it will
act as promptly as possible in order to facilitate a change in facilities in
accordance with Section 3.3. If Seller is unable to supply a material portion
of a Product Group to Buyer as a result of an event of Force Majeure, Buyer may
purchase all of Buyer's Requirements for that Product Group directly from any
third-party supplier during the continuance of such event of Force Majeure. If
the period of nonperformance due to Force Majeure exceeds forty-five (45) days
from the date of notice of Force Majeure by Seller, Buyer may, by giving notice
to Seller, terminate this Agreement as to the Product Group affected by the
event of Force Majeure until such time as Seller is capable of supplying
Buyer's Requirements in a manner which is in all material respects the same as
that being employed prior to the occurrence of the event of Force Majeure, at
which time this Agreement will be reinstated unless Buyer is otherwise
contractually obligated to purchase its requirements for products from a
third-party supplier. In connection with any termination of this Agreement as
the result of an event of Force Majeure, Buyer shall use its Best Efforts to
refrain from entering into any contracts to purchase products from third
parties which provide for a term in excess of the period of time that Buyer
reasonably expects will be required in order to remedy the conditions creating
the Force Majeure or the damages resulting therefrom.
ARTICLE IX
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INDEMNITY
Section 9.1. Seller shall absolutely and irrevocably indemnify, defend
and hold harmless Buyer and its affiliates and its and their respective
directors, stockholders, officers, employees, agents, consultants,
representatives, successors, transferees, assignees, franchisees and licensees
from and against any and all damages arising from, relating to or associated
with any one or more of the following:
(i) Seller's breach, violation or default of, or failure to
comply with, any one or more of the representations or warranties made
by Seller in this Agreement;
(ii) the delivery of the Products to Buyer, including,
without limitation, any damages relating to any act or omission of any
of Seller's independent distributors or of any carriers or such
independent distributor's or carrier's employees or agents, during the
course of, or in any way related to, the delivery of Products;
(iii) the withdrawal, recall, removal, disposal and/or rejection
of the Products to the extent that any such action is (a) instituted by
Seller or (b) permitted by this Agreement and attributable to Seller's
failure to comply with the representations and warranties set forth in
Section 5.1 of this Agreement; and
(iv) any aspect of the manufacture, production, processing,
packaging, storage, distribution, sale or handling of the Products prior
to the acceptance of the Products by Buyer as specified in this
Agreement.
Section 9.2. Buyer shall absolutely and irrevocably indemnify, defend
and hold harmless Seller and its affiliates and its and their respective
directors, stockholders, employees, agents, consultants, representatives,
transferees and assignees from and against any and all damages arising from,
relating to or associated with any of the following:
(i) Buyer's breach or failure to fulfill its
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obligations under Section 5.3; and
(ii) the withdrawal, recall, removal, disposal and/or
rejection of the Products to the extent that any such action is (a)
instituted by Buyer for reasons other than Seller's breach of its
representations and warranties set forth in Section 5.1 or (b) permitted
by this Agreement and attributable to damage to or degradation in the
quality of Products occurring after acceptance of delivery by Buyer in
accordance with this Agreement.
Section 9.3. For purposes of this Article IX, the term "Indemnifying
Party" when used in connection with a particular Claim (defined below) means
the party having an obligation to indemnify the other party with respect to
such Claim, and the term "Indemnified Party" means the party having the right
to be indemnified with respect to such Claim by the other party.
Section 9.4. Each party agrees that promptly after it becomes aware of
facts giving rise to a Claim by it for indemnification pursuant to this Article
XV (a "Claim"), it, as an Indemnified Party, will provide notice of the Claim
in writing to the other party, specifying the nature and basis for such Claim
(a "Claim Notice"). The failure of an Indemnified Party to send a Claim Notice
does not relieve the Indemnifying Party from liability with respect to a Claim
unless the failure actually results in material prejudice to the Indemnifying
Party's ability to effectively defend against such Claim.
Section 9.5. The Indemnifying Party shall, at its sole cost, defend by
all appropriate legal proceedings any Claim for which it is obligated to
indemnify the Indemnified Party pursuant to this Article IX. The Indemnifying
Party shall select the attorneys to defend the Claim; provided, the Indemnified
Party may participate in the proceedings and be represented by attorneys of its
own choosing, and the cost attributable to the attorneys employed by the
Indemnified Party will be borne solely by the Indemnified Party, unless, in the
opinion of counsel to the Indemnified Party, conflicts of interest between the
parties make it inappropriate for the Indemnified Party to be represented by
the counsel selected by the Indemnifying Party, in which event the Indemnifying
Party shall pay the cost of the Indemnified Party's counsel. If,
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after notice as provided for herein, the Indemnifying Party does not defend any
Claim as provided in this Section 9.5., the Indemnified Party may (but shall
have no obligation to) defend any Claim and the Indemnifying Party will be
bound by the result obtained by the Indemnified Party.
Section 9.6. If requested by the Indemnifying Party, the Indemnified
Party agrees to cooperate with the Indemnifying Party and its counsel in
contesting any Claim which the Indemnifying Party elects to contest or, if
appropriate, in making any counterclaim against the person asserting the Claim,
or any cross-complaint against any person; provided, the Indemnifying Party
shall reimburse the Indemnified Party for any expenses incurred by it in so
cooperating.
SECTION 9.7. THE OBLIGATIONS OF THE INDEMNIFYING PARTY TO INDEMNIFY THE
INDEMNIFIED PARTY HEREUNDER SHALL NOT BE TERMINATED, MODIFIED OR ABATED IF THE
CAUSE OR ALLEGED CAUSE OF THE DAMAGES FOR WHICH A CLAIM IS MADE HEREUNDER IS IN
PART THE SOLE OR CONCURRENT, ACTIVE OR PASSIVE, IMPUTED, TECHNICAL OR OTHER
NEGLIGENCE, GROSS NEGLIGENCE OR FAULT OF THE INDEMNIFIED PARTY; provided that
such indemnity shall not extend to any amount of damages which are determined
(on a comparative negligence or similar basis) to be attributable to the sole
or concurrent, active or passive, imputed, technical or other negligence, gross
negligence or fault of the Indemnified Party.
Section 9.8. The Indemnifying Party shall pay to the Indemnified Party,
upon demand, the amount of any damages to which the Indemnified Party may
become entitled by reason of the provisions of this Article IX.
Section 9.9. Notwithstanding the above provisions in this Article IX,
Buyer may, at its option, settle any and all consumer complaints relating to
the Products by substituting other Products without prior notice to Seller,
provided that Buyer retains for delivery to Seller the remainder, if any, of
any Product which is the subject of the consumer complaint. Seller shall
reimburse Buyer for the cost to Buyer of all such settlements, provided such
settlements are limited in amount to the greater of (a) the cost of the
affected Products as set forth in this Agreement or (b) $200.00 per occurrence.
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ARTICLE X
INSURANCE
Section 10.1. During the Term of this Agreement, Seller shall (y)
procure and maintain, from reputable insurance carriers acceptable to Buyer the
insurance set forth below, which shall be primary and will not contribute with
any insurance carried by Buyer and (z) upon execution of this Agreement and
periodically thereafter (but not less often than annually), furnish Buyer with
certificates (i) evidencing that such insurance is in force, and (ii) providing
that such insurance shall not be cancelled or altered without thirty (30) days
prior written notice being given to Buyer (which, unless otherwise agreed to by
Buyer, shall not constitute consent to such cancellation or alteration):
(i) Worker's compensation and employers' liability
insurance covering all persons employed by or acting on behalf of Seller
who will be performing any service hereunder, including, but not limited
to, those involved in the delivery of the Products under this Agreement;
(ii) Comprehensive general liability insurance covering all
services, equipment, and products provided by Seller, including but not
limited to personal injury coverage, products/completed operations
liability coverage including vendors broad form endorsements in favor of
Buyer and broad form contractual liability coverage for liability
assumed by Seller in this Agreement, with limits of at least $5 million
combined single limit per occurrence or higher limits adequate to
protect both Buyer and Seller for claims of personal injury, bodily
injury (including death), property damage and exemplary and punitive
damages where permitted by law, and naming Buyer as an additional
insured on the policy or policies (except with respect to Buyer's
negligence or willful misconduct); and
(iii) Automobile liability insurance covering all vehicles or
equipment used in the performance by Seller of this Agreement, including
coverage for all owned, nonowned, hired and leased vehicles or equipment
with
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policy limits of at least $5 million combined single limit per
occurrence or higher limits adequate to protect both Buyer and Seller
for claims of bodily injury (including death) and property damage, and
naming Buyer as an additional insured (except with respect to Buyer's
negligence or willful misconduct).
Section 16.2. The foregoing insurance held or to be obtained by Seller
must include, if permitted by law, a waiver of subrogation by the insurance
carrier in favor of Buyer. Seller agrees to notify each of its insurance
companies of any waiver of subrogation so as to prevent the invalidation of any
insurance coverage by reason of the waiver. Seller shall provide Buyer with
written acknowledgements of waivers of subrogation executed by authorized
representatives of the insurance companies. Seller shall immediately notify
Buyer of the exhaustion of any limits of coverage, including aggregates, and
will remedy any exhaustion in order to prevent any uninsured gap in coverage.
The insurance required hereunder does not limit Seller's liability nor release
Seller from any liability under this Agreement.
ARTICLE XI
CONFIDENTIALITY
Section 11.1. Seller and Buyer shall, and shall use reasonable efforts
to cause their respective employees, agents and other representatives to, hold
in confidence all Confidential Information, and Seller and Buyer shall not, and
shall use reasonable efforts to ensure that any other persons having access to
the Confidential Information through them shall not, disclose the same to any
person except in connection with this Agreement and otherwise as may be
reasonably necessary to carry out this Agreement and the transactions
contemplated hereby or to comply with applicable law. For purposes hereof,
"Confidential Information" means all information of any kind (including without
limitation sales and promotional results) obtained directly or indirectly from
Seller or Buyer, or any of its employees, agents, accountants, counsel or other
representatives, relating to Seller's or Buyer's business, except information
which constitutes readily ascertainable public information, including without
limitation,
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any information filed with the Securities and Exchange Commission.
ARTICLE XII
ASSIGNMENT
Section 12.1. Buyer may not assign this Agreement without the prior
written consent of Seller. In the event Buyer, or all or substantially all of
Buyer's assets, is sold or otherwise disposed of, Buyer shall cause any such
purchaser or transferee to assume the obligations of Buyer under this
Agreement.
Section 12.2. Seller may assign this Agreement in whole or in part with
respect to any Products to one or more wholly owned subsidiaries which owns and
operates the Designated Facility which manufactures or processes those
Products, following notice to Buyer of such assignment. Seller may assign this
Agreement to one or more Affiliates or successors of Seller, provided that any
such assignment to an Affiliate or successor shall be subject to receipt of
Buyer's prior written consent, which will not be unreasonably withheld or
delayed, so long as such Affiliate or successor (i) owns and operates the
Designated Facility which manufactures or processes those Products, (ii) is
capable of performing the terms and conditions of this Agreement and (iii) is
not partially or wholly owned by a company engaged in the business of operating
a dairy business or distributing products in competition with Buyer, in each
case within the state of Florida. Notwithstanding anything to the contrary
contained in this Section 12.2, if Seller sells, transfers or otherwise
disposes of the stock of any subsidiary or Affiliate to which it has assigned
this Agreement, Seller's previous assignment of this Agreement shall terminate
effective as of the date of such sale of stock and this Agreement shall revert
to Seller without further action by Seller or any such subsidiary or Affiliate
unless Seller shall have obtained Buyer's prior written approval of such stock
sale, which consent and release shall not be unreasonably withheld or delayed
so long as the purchaser of such stock (i) is not a company engaged in the
business of operating a dairy or distributing products in competition with
Buyer, in each case within the state of
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Florida, and (ii) is, in the exercise of Buyer's good faith business judgment,
capable of performing in all material respects the terms and conditions of this
Agreement.
ARTICLE XIII
TERMINATION
Section 13.1. Buyer may terminate this Agreement in its entirety if
Seller commits a material breach of this Agreement and such breach is not cured
within thirty (30) days after receipt of written notice of such default from
Buyer. For the purposes of this Agreement, the occurrences of any one or more
of the following shall constitute a material breach of performance by Seller:
(i) Seller's repeated failure to (a) deliver Buyer's
Requirements for the Products on a timely basis consistent with good
industry practice, or (b) supply Buyer with Products that comply with
the quality standards set forth in this Agreement, or (c) comply in all
material respects with the representations, warranties and covenants set
forth in this Agreement; or
(ii) Seller suspends business, liquidates its business or
dissolves, whether voluntarily or involuntarily.
Section 13.2. Seller may terminate this Agreement in the event that
Buyer commits a material breach of this Agreement and such breach is not cured
within thirty (30) days after receipt of written notice of such default from
Seller. For the purposes of this Agreement, the occurrences of any one or more
of the following shall constitute a material breach of performance by Buyer:
(i) Buyer's repeated failure to (a) purchase and pay for
Buyer's Requirements for the Products in accordance with the terms of
this Agreement, or (b) comply in all material respects with the
representations, warranties and covenants set forth in this Agreement;
or
(ii) Buyer suspends business, liquidates its business
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or dissolves, whether voluntarily or involuntarily.
Section 13.3. The termination rights granted under this Article XIII
are cumulative with, and in addition to, any other rights or remedies to which
Buyer or Seller may be entitled arising from any violation, default, failure or
breach of this Agreement.
Section 13.4. Upon termination of this Agreement, Buyer and Seller will
fulfill their respective outstanding obligations hereunder, and thereafter
Buyer will be relieved of its obligations to purchase Products, and Seller will
be relieved of its obligations to supply the Products hereunder.
Section 13.5. Buyer agrees that upon termination of this Agreement,
other than a termination described in Section 13.1(i), Seller may, upon
reasonable written notice to Buyer (which notice shall be delivered in any
event not more than thirty (30) days after the date of such termination),
require Buyer, subject to the conditions stated in this Section 13.5, to
purchase from Seller Seller's inventory of Products packaging materials as of
the date of termination ("Surplus Packaging"). Buyer's obligation to purchase
Surplus Packaging will be limited to (i) materials that are not useable by
Seller for packaging of products for sale to other customers of Seller due to
size or markings, and (ii) quantities not in excess of the quantities of the
associated Products shipped to Buyer during the sixty (60) day period prior to
termination. The price for the Surplus Packaging will be Seller's
out-of-pocket cost thereof, net of any rebates, discounts and allowances.
Seller will deliver the Surplus Packaging to Buyer with reasonable promptness
after notifying Buyer of Buyer's obligation to purchase the Surplus Packaging.
Payment is to be made by Buyer in accordance with Article VII. To the extent
that Seller elects to retain or resell any Surplus Packaging to a third party
or parties, Seller will not use or resell any Surplus Packaging that includes
markings that in any way relate to or identify Buyer without Buyer's prior
written consent, which will not be unreasonably withheld.
ARTICLE XIV
PUBLICITY
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Section 14.1. Seller and Buyer shall cooperate with each other in the
development and distribution of all news releases and other public disclosures
relating to the transactions contemplated by this Agreement. Neither Seller
nor Buyer may issue or make, or cause to have issued or made, any press release
or announcement concerning the transactions contemplated hereby without the
advance approval in writing of the form and substance thereof by the other
party, unless the release or announcement is required by any federal, state or
local law or order, writ, injunction or decree or in connection with any
withdrawal, removal or recall of any Product, in which event the party making a
release or announcement must provide the other party with a written copy of the
release or announcement and an opportunity to comment on its contents prior to
its public release.
ARTICLE XV
NOTICES
Section 15.1 Unless otherwise provided herein, all notices, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand, or sent by telex or
telecopy, or sent by United States mail, first class, registered or certified,
return receipt requested, with property postage prepaid in each case addressed
as follows:
If to Buyer:
Velda Farms, Inc.
501 N.E. 181st Street
Miami, Florida 33162
Attn: General Manager
(305) 653-7020 (FAX)
With a copy to:
ENGLES MANAGEMENT, INC.
3811 Turtle Creek Bl., Suite 1950
Dallas, Texas 75219
Attn: Gregg Engles
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and:
HUGHES & LUCE, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Attn: William A. McCormack
(214) 939-6100 (FAX)
If to Seller:
THE MORNINGSTAR GROUP INC.
5956 Sherry Lane
Suite 1100
Dallas, Texas 75225-6522
Attn: General Counsel
(214) 360-9100 (FAX)
With a copy to:
(Counsel)
or such other address or to such other person as any party to hereto shall have
last designated by notices given to the other party in accordance with this
Section 15.1. Any notice given hereunder shall be deemed to have been given at
the time of receipt thereof by the party to whom such notice is addressed;
provided, any notice given by telecopy and received after the receiving party's
normal business hours shall be deemed received by such party on the immediately
succeeding business day.
ARTICLE XVI
RELATIONSHIP OF PARTIES
Section 16.1. The relationship between the parties to this Agreement is
that of independent contractors. Neither party is an agent, partner or
employee of the other and neither party has any right or any authority to enter
into any contract or undertaking in the name of or for the account of the other
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nor may either assume or create any obligation of any kind, express or implied,
on behalf of the other. Subject to the rights retained or granted to either
party and the obligations undertaken by each party pursuant to this Agreement,
each party will conduct its business at its own initiative and at its own cost
and expense.
ARTICLE XVII
MODIFICATIONS
Section 17.1. This Agreement may not be amended except pursuant to a
written instrument executed by Buyer and Seller, nor will this Agreement be
deemed to have been amended or any rights hereunder to have been waived by any
course of dealing or course of performance between the parties.
ARTICLE XVIII
RIGHTS AND REMEDIES
Section 18.1. The rights and remedies granted under this Agreement are
not exclusive rights and remedies but are in addition to all other rights and
remedies available at law or in equity.
ARTICLE XIX
Dispute Resolution
Section 19.1. Any disputes not resolved between Buyer's personnel
responsible for receiving Products and Seller's delivery personnel responsible
for delivering Products must first be referred for resolution to Buyer's and
Seller's supervisory personnel. To the extent that the dispute cannot be
resolved by these representatives or if the dispute pertains to a matter which
when resolved is likely to impact the interpretation of this Agreement, then
the dispute must be referred for resolution to a representative appointed by
each of Seller and Buyer. Each party's designated representative shall
endeavor in good faith to resolve any disputes within the limits of each
representative's authority. Any dispute that is not so resolved within seven
(7) business days from the
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inception of the dispute must be referred for resolution to an executive
officer of Seller and an executive officer of Buyer, who shall attempt to
resolve the dispute within seven (7) business days from the date that it is
referred to them. If and only if any dispute remains unresolved after the
parties have followed the dispute resolution procedures set forth above in this
Section 19.1, the provisions of Section 19.2 will apply with respect to the
resolution of the unresolved dispute.
Section 19.2. In the event any dispute arising out of or relating to
this Agreement cannot be resolved in accordance with Section 19.1 above (an
"Arbitrable Dispute"), the dispute must be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
and judgment upon the award rendered by the Arbitrators may be entered in
Federal Court (or state court if federal courts are without jurisdiction)
located in the City of Dallas in the State of Texas. All arbitration
proceedings shall be held in Dallas County, Texas. Either party may commence
arbitration of any Arbitrable Dispute by giving notice to the other party,
specifying in the notice the name and address of the person designated by it to
act as an arbitrator. Within 10 days after receipt of this notice, the other
party shall notify the first party of the name and address of the person
designated by it to act as an arbitrator. The arbitrators appointed by each
party may be affiliated with that party. If the second party fails to notify
the first party of the appointment of an arbitrator within the 10-day period
specified above, then the appointment of the second arbitrator by the American
Arbitration Association will be made in the same manner as hereinafter provided
for the appointment of a third arbitrator in a case where the two appointed
arbitrators and the parties are unable to agree upon a third arbitrator. The
two arbitrators so chosen shall meet within ten (10) days after the second
arbitrator is appointed, and if, within twenty (20) days after the second
arbitrator is appointed, the two arbitrators cannot agree upon the question in
dispute, they shall together appoint a third arbitrator. If they are unable to
agree upon a third arbitrator within thirty (30) days after the appointment of
the second arbitrator, the third arbitrator will be selected by the parties if
they can agree within a further period of ten (10) days. If the parties do not
agree within ten (10) days, then either party, on behalf of both and
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after notice to the other, may request the American Arbitration Association to
appoint a third arbitrator, in accordance with its rules then prevailing. Each
arbitrator chosen or appointed pursuant to this Section 19.2 must have at least
ten (10) years experience in a calling connected with the dispute, and the
third arbitrator must also be a disinterested person. The arbitrators shall
render their award, upon the concurrence of at least two of their number, not
later than thirty (30) days after the appointment of the third arbitrator.
Their decision and award must be in writing, and counterpart copies are to be
delivered to each of the parties. In rendering their award, the arbitrators
will have no power to modify any of the provisions of this Agreement, and the
jurisdiction of the arbitrators is expressly limited accordingly. Each party
shall pay the fees and expenses of the arbitrator that it appointed, and the
fees and expenses of the third arbitrator and all other expenses of the
arbitration are to be borne by the parties equally. Each party shall pay the
expense of its own counsel, experts, and the preparation and presentation of
proof.
ARTICLE XX
FURTHER ACTIONS
Section 20.1. Each party shall execute and deliver such other
agreements and other documents and take such other actions as may reasonably be
requested by the other party in order to implement the transactions
contemplated by this Agreement.
ARTICLE XXI
SEVERABILITY
Section 21.1. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced due to any rule of law or
public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to either party. Upon a determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
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shall negotiate in good faith to modify this Agreement to effect the original
intent of the parties as closely as possible in an acceptable manner so that
the reasonable expectations of the parties to this Agreement are fulfilled to
the extent possible.
ARTICLE XXII
GOVERNING LAW
Section 22.1. THIS AGREEMENT SHALL BE CONSTRUED, PERFORMED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF (TEXAS).
ARTICLE XXIII
HEADINGS; REFERENCES
Section 23.1. The article and section headings in this Agreement are
for convenience of reference only and do not alter or affect the meaning or
interpretation of any provisions hereof. Any reference in this Agreement to an
article or section shall be deemed to refer to the applicable article or
section of this Agreement unless otherwise stated. Any reference to an Exhibit
refers to the applicable Exhibit attached to this Agreement, all of such
Exhibits being incorporated herein and made a part hereof by this reference.
ARTICLE XXIV
WAIVER
Section 24.1. Rights of the parties hereunder cannot be waived except
pursuant to a written instrument executed by the party against whom such waiver
is sought to be enforced, and the waiver of any one right under this Agreement
by either party does not constitute a waiver of any subsequent or other rights
which that party may have under this Agreement.
ARTICLE XXV
COUNTERPARTS
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Section 25.1. This Agreement may be executed in one or more
counterparts, each of which is to be deemed an original, but all of which
constitute one and the same instrument.
ARTICLE XXVI
ENTIRE AGREEMENT
Section 26.1. This Agreement (which includes the Exhibits attached
hereto) constitutes the entire agreement and understanding of Seller and Buyer
with respect to the subject matter hereof and fully supersedes any and all
statements, projections, understandings, agreements, covenants, representations
and warranties between Seller and Buyer made prior to the execution and
delivery of this Agreement with respect to its subject matter.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first above written.
THE MORNINGSTAR GROUP INC.
Attest:
By:____________________________ By: __________________________
Title: ________________________ Title: _______________________
VELDA FARMS INC.
By:____________________________ By: __________________________
Title: ________________________ Title: _______________________
(Operator Subsidiary)
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EXHIBIT A-1
MINIMUM
DAYS OF
REMAINING PER UNIT DESIGNATED
DESCRIPTION SHELF LIFE PRICE FACILITY
- ----------- ---------- -------- ----------
PRODUCT GROUP A - Sterile Creams
---------------
QT. STERILE LIGHT CREAM
HPT. STERILE LIGHT CREAM
QT. STERILE HEAVY CREAM
HPT. STERILE HEAVY CREAM
QT. COFFEE COMPANION
1/2 OZ. ND CREAMERS (250)
1/2 OZ. H&H CREAMERS (250)
3/8 OZ. 2% CREAMERS (348)
3/8 OZ. H&H CREAMERS (400)
3/8 OZ. ND CREAMERS (400)
PRODUCT GROUP B - Cultured Products
---------------
35 LB. SOUR CREAM
5 LB. SOUR CREAM
16 OZ. FARM STORES SOUR CREAM
8 OZ. SOUR CREAM
35 LB. COTTAGE CHEESE
5 LB. COTTAGE CHEESE
5 LB. 2% COTTAGE CHEESE
24 OZ. FARM STORES COTTAGE CHEESE
16 OZ. COTTAGE CHEESE
12 OZ. FARM STORES COTTAGE CHEESE
8 OZ. COTTAGE CHEESE
35 LB. YOGURT
8 OZ. PLAIN YOGURT
8 OZ. STRAWBERRY YOGURT
8 OZ. STRAWBERRY/BANANA YOGURT
8 OZ. BLUEBERRY YOGURT
8 OZ. RASPBERRY YOGURT
8 OZ. MIXED BERRY YOGURT
8 OZ. PEACH YOGURT
5 LB. PLAIN YOGURT
8 OZ. FRENCH ONION DIP
- A-33 -