EXHIBIT 10.3
"***" - Confidential portions of this Agreement have been omitted and
filed separately with the Securities and Exchange Commission under a
Confidential Treatment Request, pursuant to Rule 406 of the
Securities Act of 1933, as amended
PREFERRED SUPPLIER AGREEMENT
THIS AGREEMENT is made as of September 19, 2002, by and between
CONAGRA FOODS, INC., a Delaware corporation ("CAGCO"), and SWIFT & COMPANY, a
Delaware corporation ("PC").
▇▇▇▇▇▇▇▇:
(a) CAGCO and certain of its operating companies (individually, a
"CAGCO Operating Company" and collectively, the "CAGCO
Operating Companies") use certain Products (as defined below)
that are produced by certain of PC's operating companies
(individually, a "PC Operating Company" and collectively, the
"PC Operating Companies").
(b) CAGCO and PC desire to establish a mutually preferred supplier
agreement and, further, the parties desire to facilitate a
relationship which enhances CAGCO's and the CAGCO Operating
Companies' purchase of, and PC and the PC Operating Companies'
sale of, the Products, taking into consideration relevant
commercial market factors.
(c) CAGCO's and the CAGCO Operating Companies' interest is to
purchase quantities of Products in amounts substantially
similar to the volume of Products purchased by CAGCO and the
Operating Companies prior to the date of this Agreement
(subject to changes in product mix, product reformulation,
etc.) at competitive delivered prices and PC's interest is for
PC and the PC Operating Companies to supply such quantities of
Products to CAGCO and the CAGCO 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. CAGCO and the CAGCO Operating Companies hereby
agree that PC and the PC Operating Companies are preferred suppliers of the
Products and PC and the PC Operating Companies hereby agree that CAGCO and the
CAGCO Operating Companies are preferred purchasers of the Products.
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, PC and the PC Operating Companies agree to sell to CAGCO and the
CAGCO Operating Companies, and CAGCO and the CAGCO Operating Companies agree to
purchase, those fresh beef and pork
products which have historically been provided by Swift Beef Company and Swift
Pork Company to CAGCO and the CAGCO Operating Companies (collectively, the
"Products") in amounts substantially similar to the volume of Products purchased
by CAGCO and the CAGCO Operating Companies during the 12 month period prior to
the date of this Agreement (subject to changes in product mix, product
reformulation, etc.) or in such greater or smaller volumes as the parties may
mutually agree upon from time to time. CAGCO and PC agree that CAGCO will offer
PC and the PC Operating Companies the opportunity to provide CAGCO and the CAGCO
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) additional fresh beef and pork products that
they may require as a result of changes in product mix and product
reformulations, other than proprietary or other products brought to CAGCO or the
CAGCO Operating Companies by any third party for the development and/or
manufacture of new products. On a quarterly basis during the term of this
Agreement, CAGCO and those CAGCO Operating Companies requiring a supply of
Products for the next immediately succeeding three (3) month period ("Production
Period") will notify PC or the applicable PC Operating Company of CAGCO's and/or
such CAGCO Operating Companies' good faith estimate of anticipated purchases of
Products, including the type of Products, quantities, specifications, delivery
requirements and other relevant information for the upcoming Production Period
and shall offer PC or the applicable PC Operating Company the right to provide
such Products to CAGCO on the terms and conditions set forth herein. Based on
this information, PC or the applicable PC Operating Company will notify CAGCO
within ten (10) days (or such other period of time as to which the parties may
mutually agree) which Products it desires to supply. Within ten (10) days (or
such other period as to which the parties may mutually agree) after such notice
from PC or the applicable PC Operating Company, PC and CAGCO and/or those CAGCO
Operating Companies for which PC or the applicable PC Operating Company agreed
to produce the Products during the upcoming Production Period will meet to
develop firm orders for the Products for the upcoming Production Period. To
maintain this preferred supplier status, PC and the PC Operating Companies shall
meet CAGCO's and the CAGCO Operating Companies' specifications, quantity,
delivery and service requirements.
3. PRICING OF PRODUCTS. All products supplied to CAGCO and/or the CAGCO
Operating Companies hereunder shall be sold at fair market prices on a delivered
basis based upon the pricing mechanics in place today between the parties. For
informational purposes attached as Exhibit "A" are pricing mechanics for certain
Products. CAGCO and the CAGCO Operating Companies and PC and the PC Operating
Companies will meet periodically to discuss and determine pricing and payment
mechanisms and procedures.
4. TERM; CONTRACT YEAR. The initial term of this Agreement shall be
seven (7) years commencing on the date hereof.
5. SPECIAL CIRCUMSTANCES. The parties acknowledge that, from time to
time, CAGCO and/or the CAGCO 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 which shall include CAGCO's
and/or the CAGCO Operating Companies' desire to effect forward purchases of
Products (i.e., purchases of products pursuant to a purchase contract in which
the buyer and seller agree to terms and conditions for future delivery of those
products). With respect to such special circumstances, CAGCO and/or the CAGCO
Operating Companies will use
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their good faith efforts to work with PC and the PC Operating Companies so that
PC and the PC Operating Companies will have the first opportunity to supply such
Products where practical, but in the event PC or a PC Operating Company is
unable to supply such Products, or do not agree to effect CAGCO's and/or the
CAGCO Operating Companies' forward purchases of Products, CAGCO and/or the CAGCO
Operating Companies shall be free to purchase such Products (including forward
purchases of Products) from unrelated third party suppliers. With respect to any
such special circumstances Products that PC or a PC Operating Company is
initially unable to provide CAGCO (and for which CAGCO has not entered enter
into an agreement that requires such Product to be supplied by a third party),
CAGCO shall offer PC or the applicable PC Operating Company the opportunity to
provide such Products pursuant to the next quarterly notice under Section 2
above if CAGCO's requirements for such Products continue.
6. REPRESENTATIONS AND WARRANTIES OF PC. PC 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 shipment.
(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 PC 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.
(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 PC or a PC Operating Company is a party or to which any
of PC's or any PC Operating Company's assets are subject.
(e) PC or a PC Operating Company shall have clear title to all
Products sold to CAGCO and/or the CAGCO Operating Companies
hereunder, and CAGCO and/or the CAGCO Operating Companies
shall receive clear and unencumbered title to such Products.
7. REPRESENTATIONS AND WARRANTIES OF CAGCO. 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
CAGCO and/or any CAGCO Operating Company is a party or to which any of CAGCO's
or any Operating Company's assets are subject.
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8. INDEMNIFICATION.
(a) PC and the PC Operating Companies shall indemnify and hold
CAGCO and the 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 result from a
breach by PC of any representation, warranty, covenant or
agreement provided herein.
(b) CAGCO shall indemnify and hold PC and the PC 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)
which result from a breach by CAGCO of any representation,
warranty, covenant or agreement provided herein.
9. INSURANCE. During the Term each party shall maintain adequate public
liability or other insurance with reputable insurance companies as hereinafter
set forth and, upon request, to furnish the other party with certificates of
insurance properly executed by its insurers evidencing such fact, and requiring
the insurers to give at least thirty (30) days notice to 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) Comprehensive general liability insurance, including personal
injury and property damage, products and completed operations,
and form contractual and advertising liability coverages, in
occurrence form, affording minimum single limit protection of
no less than U.S. Two Million Dollars (US$2,000,000) per
occurrence
(b) Worker's compensation and employer's liability insurance in
accordance with the legal requirements of the state in which
the insured conducts its operations.
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 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 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. 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.
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11. FORCE MAJEURE. Neither PC nor CAGCO 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 CAGCO, PC, any CAGCO Operating Company or any
PC Operating Company. Should any force majeure condition occur which prevents PC
or any PC Operating Company from performing its obligations pursuant to this
Agreement, from one of its plants, PC shall, at CAGCO's request, use
commercially reasonable efforts to provide Products from PC's or PC Operating
Companies' other plants. 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.
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; provided, however, that to the
extent requested by PC's senior lenders, the parties shall execute and deliver
such documents as may be necessary to effect a collateral assignment of the
rights arising hereunder. For purposes of this Agreement, an assignment shall be
deemed to occur upon a transfer of a majority of the outstanding capital stock
of the respective party (or any Operating Company) entitled to vote for the
election of directors, either directly or indirectly, whether by merger,
consolidation, stock transfer, or otherwise. 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.
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 PC and/or any Swift & Company
PC Operating Company: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: President and Chief Executive
Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to CAGCO and/or ConAgra Foods, Inc.
any CAGCO Operating One ConAgra Drive
Company: ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Corporate Controller
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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or at such other address as any party hereto shall have designated by notice in
writing to the other parties hereto.
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.
19. CONSENT TO JURISDICTION. THE PARTIES HERETO HEREBY IRREVOCABLY
SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR DELAWARE
STATE COURT SITTING IN WILMINGTON, DELAWARE IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT AND EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
THE PARTIES HERETO SHALL CAUSE THE CAGCO OPERATING COMPANIES AND THE PC
OPERATING COMPANIES TO BE BOUND BY THIS SECTION.
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IN WITNESS WHEREOF the parties have executed this Agreement on the date
first written above.
CONAGRA FOODS, INC., a SWIFT & COMPANY,
Delaware corporation a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------- ------------------------------
Its: Executive Vice President, Its: Vice President
Operations Control and Development ------------------------------
----------------------------------
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EXHIBIT "A"
PRODUCT PRICING MECHANICS
Prices listed are net of freight. Delivered price will include freight charge
PORK
Boneless Hams "***" total FOB USDA DP Top plus formula ovg
Semi Boneless "***" total FOB USDA DP Top plus formula ovg
Bone in Hams Negotiated Base "***"
Skinless Bellies Negotiated generally based on USDA DP Top
plus formula overage
Skin on Bellies USDA DP Top "***"
Cheek Meat USDA DP Top "***"
Trimmings USDA DP Top "***" depending on
shipping location
Loins, Butts, Spareribs "***" on USDA based formulas, "***" on an
individual bid or fixed quote basis
Backribs Quote basis
BEEF
Trim USDA Topside Avg. "***" (FOB)
Misc Boxes (thin meats) Negotiated daily based off USDA plus spread
"***"
Variety Meats Negotiated daily based off USDA plus
spread "***"
Rounds Negotiated daily based off USDA plus spread
"***"
Grinds Negotiated daily based off USDA plus spread
"***"
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Briskets Negotiated daily based off USDA plus spread
"***"
Chucks Negotiated daily based off USDA plus spread
"***"
Loins Negotiated daily based off USDA plus spread
"***"
Ribs Negotiated daily based off USDA plus spread
"***"
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