EXHIBIT 99.8
EXHIBIT 1.1(g)
MONTGOMERY SUPPLY AGREEMENT
THIS AGREEMENT is made as of ________, 2003 by and between CONAGRA
FOODS, INC., a Delaware corporation ("ConAgra"), and PILGRIM'S PRIDE
CORPORATION, a Delaware corporation ("Pilgrim's").
RECITALS:
(a) Pilgrim's and certain of its operating companies
(individually, a "Pilgrim Operating Company" and,
collectively, the "Pilgrim Operating Companies") use certain
Products (as defined below) that are produced by ConAgra on a
chicken breast line located within ConAgra's Montgomery,
Alabama facility (the "ConAgra Facility").
(b) ConAgra and Pilgrim's desire to establish a mutually-preferred
supplier/purchaser agreement and to facilitate a relationship
which enhances Pilgrim's and the Pilgrim Operating Companies'
purchase of, and the sale by ConAgra of, the Products, taking
into consideration relevant commercial market factors.
(c) Pilgrim's and the Pilgrim Operating Companies' interest is to
purchase quantities of Products in amounts substantially
similar to the volume of Products purchased by ConAgra Poultry
Company prior to the date of this Agreement (subject to
changes in product mix, product reformulation, market
conditions, etc.) at competitive delivered prices, and
ConAgra's interest is for ConAgra to supply such quantities of
Products to Pilgrim's and the Pilgrim Operating Companies at
competitive delivered prices.
AGREEMENT:
In consideration of the foregoing recitals which are incorporated with
and are made a part of this Agreement, and in further consideration of the
mutual covenants and agreements hereinafter contained, the parties hereto agree
as follows:
1. GENERAL STATEMENT. Pilgrim's hereby agrees that ConAgra is a
preferred supplier of the Products and ConAgra hereby agrees that Pilgrim's and
the Pilgrim Operating Companies are preferred purchasers of the Products. All
raw materials required by ConAgra to produce the Products under this Agreement
shall be supplied by Pilgrim's in accordance with that certain ConAgra Supply
Agreement between the parties of even date herewith provided, however, that the
cost of the raw materials so supplied by Pilgrim's shall not be used adversely
against ConAgra when comparing ConAgra's Cost (as defined below) pursuant to the
terms of Section 3 below.
2. PURCHASE AND SALE OF PRODUCTS. In order to facilitate this preferred
supplier/purchaser relationship, and subject to the terms and conditions set
forth herein, ConAgra shall sell to Pilgrim's and the Pilgrim Operating
Companies, and Pilgrim's and the Pilgrim Operating Companies shall purchase from
ConAgra, those specific chicken breast products produced for
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existing customer base at the ConAgra Facility meeting Pilgrim's and the Pilgrim
Operating Companies' quality and service standards (collectively, the
"Products") in amounts substantially similar to the volume of Products purchased
by ConAgra Poultry Company during the twelve (12) month period prior to the date
of this Agreement (subject to changes in product mix, product reformulation,
market conditions, etc.), or in such greater or smaller volumes as the parties
may mutually agree upon from time to time. The parties agree that Pilgrim's will
offer ConAgra the first opportunity to provide Pilgrim's and the Pilgrim
Operating Companies (including operating companies formed or acquired after the
date hereof that require Products, subject to compliance with such companies'
supply agreements or arrangements existing prior to, and not established in
contemplation of such companies' acquisition) additional Products that any of
them may require as a result of changes in product mix and product
reformulations, other than proprietary or other products brought to Pilgrim's or
the Pilgrim Operating Companies by any third party for the development and/or
manufacture of new products. At least three (3) days prior to the start of each
period of time mutually agreed to by the parties during the term of this
Agreement, ConAgra will contact Pilgrim's and those Pilgrim Operating Companies
requiring a supply of Products for the next immediately succeeding mutually
agreed to production period ("Production Period") to obtain Pilgrim's and/or
such Pilgrim Operating Companies' good faith estimate of anticipated purchases
of Products. Included in the information to be provided by Pilgrim's and/or the
Pilgrim Operating Companies will be the type of Products, quantities,
specifications, estimated delivery requirements and other relevant information
for the upcoming Production Period and Pilgrim's and/or the Pilgrim Operating
Companies shall offer ConAgra the right to provide such Products to Pilgrim's on
the terms and conditions set forth herein. Based on this information, ConAgra
will notify Pilgrim's within three (3) days thereafter (or such other period of
time as to which the parties may mutually agree) which Products it desires to
supply. Within three (3) days (or such other period as to which the parties may
mutually agree) after sending such notice to Pilgrim's, ConAgra will meet with
Pilgrim's to develop good faith estimated orders for the Products for the
upcoming Production Period. Each party agrees to give the other party, if
possible, at least ninety (90) days prior written notice of any significant
demand change with respect to the Products to be supplied and purchased
hereunder of which either party may become aware. To maintain this preferred
supplier status, ConAgra shall meet Pilgrim's and the Pilgrim Operating
Companies' specifications (consistent with existing specifications and as may be
reasonably changed in the future), quantity, delivery and service requirements.
To maintain this preferred purchaser status, Pilgrim's and the Pilgrim Operating
companies shall comply with the agreed payment terms.
3. PRICING OF PRODUCTS. All products supplied to Pilgrim's and/or the
Pilgrim Operating Companies hereunder shall be sold at ConAgra's actual total
production cost (including meat cost, ingredient cost, yield and overhead) in
producing Products at the ConAgra Facility ("ConAgra's Cost"), plus $.18 per
pound of Product. The parties agree that during the term of this Agreement,
interest and allocated corporate overhead will not exceed on a per pound basis
interest and allocated corporate overhead for ConAgra's fiscal year 2003.
ConAgra agrees to use its reasonable best efforts to manage its fixed and
variable costs in producing Products at the ConAgra Facility as efficiently as
possible. Both parties will agree to an industry standard cost benchmark or
other metrics to which ConAgra's Cost can be compared in order to insure the
competitive cost structure at the ConAgra Facility. Pilgrim's shall have at all
reasonable times the right to audit ConAgra's books and records in order to
verify ConAgra's Cost and ConAgra's determination and calculation thereof.
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If, at any time, during the term of this Agreement, ConAgra and
Pilgrim's cannot agree on any price or component of the price which is to be
mutually agreed to by the parties, then the pricing dispute shall be submitted
to Pilgrim's Vice President of Sales and ConAgra's Vice President of Operations
(for the ConAgra operation involved in the pricing dispute) for resolution. If
these individuals are unable to resolve such pricing dispute after ten (10) days
of discussions, then the pricing dispute shall be submitted to Pilgrim's Chief
Financial Officer and ConAgra's Executive Vice President Operations Control and
Development for resolution.
4. TERM. The term of this Agreement shall be two (2) years commencing
on the date hereof, provided however, this Agreement shall earlier terminate in
the event of a "Customer Base Event" (as defined below). As of June 7, 2003,
ConAgra is producing certain specific Products on the chicken breast line at the
ConAgra Facility for sale to an existing customer base. As used herein, a
"Customer Base Event" occurs if, after June 7, 2003, such existing customer base
ceases for any reason to purchase such specific Products from ConAgra or a
ConAgra affiliate (prior to the closing of the transactions contemplated by the
Stock Purchase Agreement, dated June ___, 2003, between ConAgra and Pilgrim's),
or from Pilgrim's or an Acquired Company (as defined in the Stock Purchase
Agreement) after such closing.
5. SPECIAL CIRCUMSTANCES. The parties acknowledge that, from time to
time, Pilgrim's and/or the Pilgrim Operating Companies may have unpredicted
and/or special purchase needs for Products that cannot be accommodated by the
purchase and sale mechanism set forth in Section 2 above, including Pilgrim's
and/or the Pilgrim Operating Companies' desire to effect forward purchases of
Products (i.e., the purchase of goods made pursuant to a contract in which the
buyer and seller agree to terms and conditions for future delivery of those
goods). With respect to such special circumstances, Pilgrim's and/or the Pilgrim
Operating Companies will use their good faith efforts to work with ConAgra so
that ConAgra will have the first opportunity to supply such Products where
practical, but in the event ConAgra is unable to supply such Products, or does
not agree to effect Pilgrim's and/or the Pilgrim Operating Companies' forward
purchases of Products, Pilgrim's and/or the Pilgrim Operating Companies shall be
free to purchase such Products (including forward purchases of Products) from
unrelated third-party suppliers. With respect to any such Products that ConAgra
is initially unable to provide Pilgrim's (and for which Pilgrim's has not
entered enter into an agreement that requires such Product to be supplied by a
third party), Pilgrim's shall offer ConAgra the opportunity to provide such
Products pursuant to the next three (3) month notice under Section 2 above if
Pilgrim's requirements for such Products continue.
6. REPRESENTATIONS AND WARRANTIES OF CONAGRA. ConAgra warrants and
represents that:
(a) All of the Products shall comply with the specifications
therefor, and shall be fit and wholesome for human consumption
at the time of delivery.
(b) None of the Products delivered hereunder shall be, as of the
date of such delivery, adulterated or misbranded within the
meaning of the Federal Food, Drug and Cosmetic Act, as
amended, or any other applicable food or drug law or
regulation. All Products delivered pursuant to this Agreement
by ConAgra shall be goods that, under the provisions of such
laws and regulations, may be lawfully shipped and sold in
interstate commerce and conform in all respects to the
requirements of such laws and rules and regulations issued
pursuant to such laws.
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(c) The Products shall be merchantable, of good quality, and fit
for the purpose intended.
(d) The execution of the Agreement and performance of its
obligations under this Agreement does not, and will not,
breach or conflict with any agreement, pledge, or contract to
which ConAgra is a party or to which any of the assets of
ConAgra are subject.
(e) ConAgra shall have clear title to all Products sold to
Pilgrim's and/or the Pilgrim Operating Companies hereunder,
and Pilgrim's and/or the Pilgrim Operating Companies shall
receive clear and unencumbered title to such Products.
7. REPRESENTATIONS AND WARRANTIES OF PILGRIM'S. The execution of the
Agreement and performance of its obligations under this Agreement does not, and
will not, breach or conflict with any agreement, pledge, or contract to which
Pilgrim's and/or any Pilgrim Operating Company is a party or to which any assets
of Pilgrim's or any Pilgrim Operating Company are subject.
8. INDEMNIFICATION.
(a) ConAgra shall indemnify and hold Pilgrim's and the Pilgrim
Operating Companies harmless from and against any and all
claims, demands, actions, causes of action, proceedings,
judgments and other liabilities, obligations, losses, damages,
costs and expenses (including reasonable attorneys' fees and
costs) of any nature which arise out of ConAgra's negligent
acts or omissions or result from a breach by ConAgra of any
representation, warranty, covenant or agreement provided
herein.
(b) Pilgrim's shall indemnify and hold ConAgra harmless from and
against any and all claims, demands, actions, causes of
action, proceedings, judgments and other liabilities,
obligations, losses, damages, costs and expenses (including
reasonable attorneys' fees and costs) which arise out of
Pilgrim's negligent acts or omissions or result from a breach
by Pilgrim's and/or any Pilgrim Operating Company of any
representation, warranty, covenant or agreement provided
herein.
9. INSURANCE. During the term of this Agreement each party shall
maintain adequate public liability or other insurance with reputable insurance
companies as hereinafter set forth. Each party shall furnish the other party
with certificates of insurance properly executed by its insurers evidencing such
insurance, and requiring the insurers to give at least thirty (30) days notice
to the other party in the event of cancellation or material alteration of such
coverage. The minimum insurance coverage to be maintained shall be as follows:
(a) Commercial general liability insurance written on occurrence
form, providing blanket contractual liability coverage and
products liability (including coverage for terroristic acts,
if available and at a reasonable cost) against claims for
bodily injury, death and property damage, affording minimum
single limit protection of no less than U.S. Two Million
Dollars (US$2,000,000) per occurrence.
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(b) Worker's compensation (or acceptable equivalent) insurance in
accordance with the statutory requirements (including any
self-insurance provisions, if applicable) of the states in
which the insured conducts its operations and employer's
liability insurance affording minimum single limit protection
of $1,000,000 in respect to personal injury or death resulting
from one occurrence.
(c) Automobile liability insurance with limits of coverage of no
less than $2,000,000 per occurrence .
(d) Excess liability insurance with limits of coverage of no less
than $3,000,000 per occurrence and must follow form on all
underlying policies.
10. CONFIDENTIALITY. Each party acknowledges that in connection with
this Agreement it may receive certain confidential information from the other
party ("Confidential Information"). The receiving party shall not at any time
disclose the Confidential Information to any person, firm, partnership,
corporation or other entity (other than persons employed by the receiving party
and having a need to access the Confidential Information for purposes of
performing this Agreement) for any reason whatsoever, nor shall the receiving
party use the Confidential Information for its benefit or for the benefit of any
person, firm, partnership or affiliates during the term of this Agreement or for
any purpose other than this Agreement and for a period of two (2) years after
the termination hereof unless required by any governmental authority or in
response to any valid legal process. Confidential Information disclosure will be
limited to that information necessary to effectuate the purpose of this
Agreement. Each party shall take all actions necessary to ensure that its
employees and representatives having access to the Confidential Information are
bound by the terms of this Agreement. Confidential Information shall not include
information which (i) was in the receiving party's possession prior to
disclosure, (ii) is hereafter independently developed by the receiving party,
(iii) lawfully comes into the possession of the receiving party, or (iv) is now
or subsequently becomes, through no act or failure to act by the receiving
party, part of the public domain.
11. FORCE MAJEURE. Neither Pilgrim's nor ConAgra shall be liable for,
or deemed to be in default hereunder or subject to any remedies of the other
party as a result of, delays or performance failures due to power failures,
fire, acts of God, acts of civil or military authority, embargoes, epidemics,
terrorism, strikes, riots or similar causes beyond such party's reasonable
control, and without the fault or negligence of ConAgra, Pilgrim's or any
Pilgrim Operating Company. Should any force majeure condition occur which
prevents ConAgra from performing its obligations pursuant to this Agreement from
the ConAgra Facility, ConAgra shall, at Pilgrim's request, use commercially
reasonable efforts to provide Products from another plant of ConAgra or any
ConAgra Operating Company. If ConAgra is unable to provide Products from another
ConAgra plant, then Pilgrim's shall have the right during the period of force
majeure to either (i) purchase Products from any third party, or (ii) to the
extent ConAgra may agree, direct ConAgra to obtain Products required hereunder
by Pilgrim's and/or the Pilgrim Operating Companies from any third party
suppliers reasonably acceptable to Pilgrim's. Each party shall use reasonable
best efforts to minimize the impact of any force majeure condition it
experiences on the other party to this Agreement and to otherwise keep the other
party timely advised as to minimization and removal of such condition.
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12. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of Delaware, excluding its choice of law rules.
13. NO ASSIGNMENT. Neither party may assign this Agreement or its
rights hereunder without prior written consent from the other party, which
consent shall not be unreasonably withheld. For purposes of this Agreement, an
assignment shall be deemed to occur upon a change in the controlling ownership
interest of the respective party (or any Operating Company), either directly or
indirectly, whether by merger, consolidation, stock transfer, or otherwise. In
the event the proposed assignee of this Agreement does not accept assignment of
this Agreement or in the event such consent is withheld with respect to the
sale, merger or other transfer of any Operating Company or the assets thereof,
the assigning party shall have the right to terminate this Agreement; provided
that with respect to a proposed partial assignment, such termination shall only
relate to the Operating Companies or plants, as applicable, subject to such
partial assignment. In the event either party is interested in selling any plant
or business which is involved in either the purchase or sale under this
Agreement, then the party desiring to sell such plant or business shall notify
the other party hereto of its interest in such sale at the same time it notifies
third parties of its interest in selling the plant or business.
14. NOTICES. All notices which are required or may be given pursuant to
the terms of this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered personally or via telefacsimile or
overnight courier, or mailed by registered, certified or express mail, postage
prepaid, as follows:
(a) If to Pilgrim's or any Pilgrim's Pride Corporation
Pilgrim's Operating Company: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: CFO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Pilgrim's Pride Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: Risk Management Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to ConAgra: ConAgra Foods, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: Controller
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as any party hereto shall have designated by notice in
writing to the other parties hereto.
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14. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, their legal representatives, successors and
permitted assigns.
15. ENTIRE AGREEMENT; AMENDMENTS. This writing constitutes the entire
understanding between the parties and supersedes all previous agreements or
negotiations on the subject matter herein whether written or oral, and shall not
be modified or amended except by written agreement duly executed by the parties
hereto.
16. WAIVER. A waiver by either party of any breach or default of this
Agreement is not to be construed as a waiver of any subsequent breach or
default.
17. INDEPENDENT CONTRACTORS. The relationship between the parties shall
at all times be deemed that of independent contractors. This Agreement is not
intended to create between the parties a relationship of partners, principal and
agent, joint venturers or any other similar relationship.
18. NO CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL A PARTY OR ITS
AFFILIATES OR THEIR RESPECTIVE OFFICERS, DIRECTORS, REPRESENTATIVES AND
EMPLOYEES BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES OR THEIR RESPECTIVE
OFFICERS, DIRECTORS, REPRESENTATIVES AND EMPLOYEES, WHETHER BASED IN CONTRACT,
TORT, WARRANTY, OR ANY OTHER LEGAL OR EQUITABLE GROUNDS, FOR ANY LOSS OF THE
INCOME, PROFIT OR SAVINGS OR COST OF CAPITAL OR FINANCING OF THE OTHER PARTY OR
ITS AFFILIATES, FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR FOR ANY
EXEMPLARY, SPECIAL, OR PUNITIVE DAMAGES OF ANY KIND, RESULTING FROM OR RELATING
TO THIS AGREEMENT OR THE PRODUCTS DELIVERED HEREUNDER, EVEN IF THE OTHER PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
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IN WITNESS WHEREOF the parties have executed this Agreement on the date
first written above.
CONAGRA FOODS, INC., PILGRIM'S PRIDE CORPORATION,
a Delaware corporation a Delaware corporation
By: By:
-------------------------------- ----------------------------------
Its: Its:
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