EXHIBIT 7q
PRIVATE LABEL PRODUCT CONTRACT
THIS PRIVATE LABEL PRODUCT CONTRACT (the "Agreement") is made and entered
into between China Peregrine Food Corporation, a Delaware corporation
("Buyer") and Xxxxx, Inc., a North Carolina corporation ("Seller"),
effective as of April 23, 1999 (the "Effective Date").
WHEREAS Buyer desires to purchase from Seller those private label items
listed on Xxxxxxxx X-0, X-0 and A-3 during the term of this Agreement; and
WHEREAS Seller agrees to provide those items listed on Appendix X-0, X-0 xxx
X-0, as Buyer's private label items for the prices shown;
WHEREAS the Products will be added to Xxxxxxxx X-0, X-0 and A-3 at a later
date and initialed at that time by both parties, whereupon each so initialed
Appendix shall become binding upon the parties,
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Buyer agrees to purchase from Seller of those private label items
listed on Xxxxxxxx X-0, X-0 and A-3 at the prices set forth on Xxxxxxxx X-0,
X-0 and A-3, during the term of this Agreement.
2. Seller agrees to provide those items listed on Appendix X-0, X-0 xxx
X-0, as Buyer's private label items for the prices shown. Seller further
agrees to firm prices, adjusted for commodity fluctuations, for those
products for at least one (1) year from the Effective Date.
3. Seller agrees to use the facsimile number listed on Appendix A-1 to
order items listed on Xxxxxxxx X-0, the facsimile number listed on Appendix
A-2 to order those items listed on Xxxxxxxx X-0, and the facsimile number
listed on Appendix A-3 to order those items listed on Appendix A-3.
4. This Agreement commences on April 23, 1999 and shall continue for one
year. Thereafter, this Agreement shall be considered "Evergreen", meaning
it continues from year to year without resigning new agreements each year
with the understanding prices are reviewed as the market dictates, with
thirty (30) written days notification prior to the effective date of any
price change. Either party may terminate the agreement by providing one
year's prior written notice. Any termination by Buyer shall be subject to
the requirements in Paragraph six (6).
5. Buyer shall provide Seller with camera ready artwork to purchase
labels, lithographed or other printed materials. All reasonable expenses
incurred by Seller to complete or modify Buyer's artwork (including without
limitation: producing negatives, color proofs, plates, or other similar
expenses) shall be the responsibility of Buyer and will be billed
separately. In the event that it becomes necessary to revise product labels
etc., due to changes in ingredients, weight or to maintain regulatory
compliance, all expenses incurred shall be the responsibility of Seller. In
the event Buyer requests Seller to create new art work for labels etc. for
reasons other than those specified above, within 12 months of the approval
date of the artwork currently in use, all expenses incurred shall be the
responsibility of Buyer.
6. Within 30 days after the termination or expiration of this Agreement,
or within 60 days of when Buyer discontinues ordering a substantial volume
of any individual private label item, whichever occurs sooner, Buyer shall
as to the affected items:
a. Purchase all finished goods and unused specific use or
customized components including without limitation, unless such
components reasonably can be utilized by Seller in the manufacture of
other products: cartons, boxes, packaging materials, caps, bottles,
cans, labels, etc. which have been purchased by Seller in reasonable
reliance on the forecasts provided to Seller by Buyer not to exceed
three (3) months supply of finished and/or unfinished goods, unless
otherwise directed in writing by Buyer; and
b. Buyer further agrees to purchase all components immediately
that become obsolete due to Buyer's change in specifications, not to
exceed three (3) months supply unless otherwise directed in writing
by Buyer. Running changes will be made after components purchased
have been exhausted whenever possible.
i) Ordering a "substantial volume" shall be defined as
ordering at least half the volume that was forecast or at least
half the volume that was ordered, whichever is greater, during
the comparable period of the previous year. For these purposes
a "comparable period" shall be at least a six months period.
ii) Buyer shall also agree to take delivery of all remaining
finished goods or unused components within a reasonable period
of time (but not greater than 60 days) after termination,
expiration, or failure of the substantial volume provisions or
compensate Seller for all reasonable expenses incurred for
storage or disposal of unreleased finished products or
components, not to exceed three (3) months supply unless
otherwise directed in writing by Buyer.
7. Buyer shall provide Seller with timely forecasts of its annual need by
month at the commencement of this agreement and will update those forecasts
quarterly. These will be used by Xxxxx for capacity and materials planning.
On the first of each month, Buyer shall furnish the current month's
requirements to Seller. Seller shall manufacture and ship product without
further instructions except for Buyer's shipping instructions. Due
consideration shall be given to minimum order quantities of components,
production runs, and limited storage area for inventory of private label
finished goods at Seller's facilities.
8. In the event Buyer decides to terminate this Agreement in order to
enter into a substantially similar agreement with another supplier, Buyer
agrees to give Seller written notice of Buyer's intention to do so ("Notice
Date") along with documentation of more favorable pricing quoted by said
other supplier. Buyer agrees that Seller will thereafter have 120 days to
quote new pricing terms which meet or beat those of said other supplier, to
become effective one year from the Notice Date. If Seller meets or beats
such competitive supplier's price, this Agreement shall continue unaffected.
9. Buyer shall not advertise or, except as required by law, otherwise
disclose the fact that Seller is providing private label products to Buyer
without Seller's prior written consent. Nothing contained in this Agreement
grants any interest to Buyer in the formulas used nor does this Agreement
create any joint venture or partnership between the parties.
10. Other than the obligations set forth in paragraph six (6), neither
party shall be liable to the other for delay in performing its obligations
if caused by any event beyond the reasonable control of the affected party,
including, without limitation, fire, strike, riot, war, act of God,
government order or regulation, complete or partial shut down of plant or
distribution facility by reason of loss of power, unavailability of raw
materials or otherwise. Prompt written notice shall be given by the party
whose performance is delayed to the other setting forth full particulars.
11. Freight terms are F.O.B. Seller's facility. Payment terms are net 30
days from date product leaves Seller's facility. A 1% per month interest
rate is applied on unpaid balances beyond 30 days and Buyer may be
considered in default, at the discretion of Seller without regard to the
imposition of such interest charge, for purposes of irrevocable letter of
credit (see paragraph fifteen (15)).
12. Seller is authorized by Buyer to assign the appropriate Universal
Product Code and Shipper Container Codes for all private label merchandise,
and agrees that if this Agreement is terminated the new supplier can
purchase the remaining inventory of unused labels until that inventory of
labels has expired or new artwork can be developed...which ever comes first.
13. Seller will use commercially reasonable efforts to fill all orders
but has 48 hours to notify Buyer of short shipment items. Otherwise, Seller
agrees to reimburse Buyer for premium portion of freight cost when an item
is shorted, should the item be included in the 1st of the month
forecast/release to manufacture, pursuant to the terms of paragraph seven
(7). Buyer expects to receive product with at least 80% of Xxxxx-stated
standard shelf life remaining from the date of shipment.
14. Seller acknowledges that Buyer owns certain names, marks and logos
used in connection with its organizations (collectively referred to herein
as the "Names"), whether or not registered or copyrighted, and all goodwill
associated with or symbolized by the Names.
a. Seller shall not do anything inconsistent with the ownership of
the Names and related goodwill, and all uses of the names will inure
to the benefit of the respective owners thereof. Nothing in the
Agreement shall be deemed to constitute or result in an assignment of
any of the Names, a license to use the Names or the creation of any
equitable or other interest in them to any party other than the
owner. Buyer shall be solely responsible for taking such actions as
it deems appropriate to obtain trademark, service xxxx or copyright
registration of the Names. All rights with respect to the Names not
specifically granted in the Agreement shall be and are hereby
reserved to the owners thereof.
b. Seller is expressly forbidden to use any of the Names of Buyer
on the products it manufacturers without the express written consent
of Buyer's Vice President of Marketing. Furthermore, Seller shall
not sell any products with the Buyer label or any other Buyer Name to
anyone other than Buyer, especially its defective products. All
defects will be sold only to Buyer as defects at discounted rates or
will be destroyed. Notwithstanding anything to the contrary herein,
Seller shall not, through the use of any Name or otherwise, represent
that it is an agent or employee of Buyer.
15. Buyer will purchase an irrevocable stand-by letter of credit at a U.S.
financial institution reasonably acceptable to Seller covering expected
receivables for 30 days. Said letter of credit shall name Seller as
beneficiary and shall be payable upon draft by Seller on default by Buyer
pursuant to paragraph eleven (11).
16. Seller hereby warrants and guarantees and certifies to Buyer and to
any parent, subsidiary, division or affiliate of Buyer, and to the
franchisee or licensee thereof (collectively "Buyer"), that all products
purchased from time to time by or on the order of Buyer from Seller (the
"Articles"): (i) are in compliance with all applicable laws, regulations and
other legal requirements (including, but not limited to those relating to
health, safety, labeling, flammability, price discrimination, wage-hour,
labor and conditions of employment); (ii) will be produced and furnished in
compliance with the provisions of the Federal Fair Labor Standards Act and
similar state laws; (iii) are not and will not be misbranded hazardous
substances or banned hazardous substances within the meaning of the Federal
Child Protection and Toy Safety Act; (iv) are not in a misbranded package
within the meaning of that term in the Federal Hazardous Substance Labeling
Act; (v) all packages containing articles reflect true net weight, measure,
contents and size pursuant to applicable Federal and State requirements;
(vi) are properly labeled as to contents as required by applicable
Regulations of the Federal Trade Commission; and (vii) will be produced to
the specifications contained on Appendix A-4. EXCEPT AS EXPRESSLY PROVIDED
IN THIS PARAGRAPH SIXTEEN (16), SELLER MAKES NO WARRANTY REGARDING THE
ARTICLES INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED
USE..
a. Buyer agrees, in addition to any and all other rights or
remedies of Seller, to indemnify and hold Seller harmless from (i)
liability of any nature or kind for or on account of any allegation
of a violation of any patent, trademark, copyright or contractual or
other rights of any third parties arising from the purchase, use or
sale by Buyer of the Articles; and (ii) any and all losses, damages,
liabilities or expenses arising out of or resulting from or in
connection with the breach of any warranty, guarantee or certificate
to Buyer or in any way pertaining to or in connection with the
manufacture, production or sale of the Articles to Buyer or from any
consumer complaint, claim or legal action whatsoever, alleging
damages, death, illness or injury resulting from the purchase or use
of any of the Articles whether foreseen or unforeseen.
b. In the event of any claim, demand, action or proceeding being
commenced against Buyer by reason of any matter contemplated in the
indemnity agreement set forth in subparagraph (a) above, Buyer
agrees:
i. to give Seller prompt written notice thereof, at least
within 90 days, after Buyer becomes aware of said claims or
suits; and
ii. to accept and act upon the reasonable requests of Seller
as to the manner in which and the means by which said claims or
suits are to be dealt with; and
iii. not to compromise Seller's position by unnecessary
admissions or statements or conduct which could prejudice the
defense of any such suit or claim; and
iv. not to settle any said suit or claim without Seller's
written consent.
c. Termination of this Agreement by either party shall not alter
or change the obligations of either party under the Agreement
applying to incidents occurring during the term of the Agreement.
d. Buyer agrees to keep in force at all times while any of the
Articles are being offered for sale by Buyer, adequate public
liability insurance with both "products" and "contractual" coverage,
each with an aggregate limit of at least $1,000,000 and to furnish
Seller with a certificate from a financially responsible insurance
company evidencing that such insurance is in force, naming Buyer as
an additional insured and providing that such coverage may not be
canceled or amended without thirty (30) days prior written notice to
Seller.
17. Seller shall be Buyer's exclusive supplier of all Buyer's requirements
for cookie, cookie sandwich, cracker, cracker sandwich and nut products.
18. Buyer shall be Seller's exclusive private label distributor for
cookie, cookie sandwich, cracker, cracker sandwich and nut products in
China.
19. This Agreement shall be deemed to be made under and shall be construed
in accordance with the laws of the State of North Carolina without regard to
conflicts of laws principles of such State and the United States of America.
20. Multiple Counterparts: Facsimile Signature. This Agreement may be
executed in one or more counterparts, each of which should be an original
and all of which taken together shall constitute one in the same instrument.
Signatures exchanged by facsimile transmission shall be deemed to constitute
original, manually executed signatures and shall be binding by the parties.
AGREED:
CHINA PEREGRINE FOOD XXXXX, INC.
CORPORATION
By: By:
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Title: President Title: President
Date: Date:
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