ASSET ACQUISITION AGREEMENT
DATE : July 1, 1997
BETWEEN : International Trade Group, LLC,
an Oregon limited liability company
0000 X.X. Xxxxxxxx Xx.
Xxxxxx, XX 00000 "SELLER"
AND : Seabourne Ventures, Inc., an Oregon corporation
0000 X.X. Xxxxxxxx Xx.
Xxxxxxxx, XX 00000 "BUYER"
RECITALS
A. Buyer desires to acquire certain assets of Seller.
B. Seller is willing to sell to Buyer certain of its assets pursuant to
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, it is agreed as follows:
1. AGREEMENT TO SELL AND PURCHASE. Subject to the terms and conditions
herein set forth, Seller hereby agrees to sell, assign, transfer, convey and
deliver to Buyer and Buyer agrees to purchase and acquire from Seller, the
assets described in the attached Exhibit A which is incorporated by this
reference ("Assets").
2. ASSUMPTION OF LIABILITIES. Buyer shall assume all of Seller's
obligations ("Liabilities") described in the attached Exhibit B, which is
incorporated by this reference, and shall hold Seller harmless from any
liability thereon.
3. PURCHASE PRICE FOR THE ASSETS/ALLOCATION OF PURCHASE PRICE. In
consideration of the sale, assignment, transfer, conveyance and delivery of the
Assets by Seller to Buyer, Buyer shall pay to Buyer the sum of One Million
Seven Hundred Sixty Five Dollar ($1,765,000.00) represented by a Subordinated
Unsecured Convertible Promissory Note ("Note") attached hereto as Exhibit C and
incorporated by this reference. The Purchase Price shall be allocated as
follows:
Cash $ 59,983.27
Inventory 429,519.08
Accounts Receivable 304,672.41
Equipment 158,436.72
Prepaid expenses 43,442.20
Goodwill 768,946.32
--------------
TOTAL $ 1,765,000.00
PAGE 1. ASSET ACQUISITION AGREEMENT
Exhibit 10.1
4. CLOSING DATE AND CLOSING. This Agreement shall be closed ("Closing")
at Buyer's offices. Closing shall occur on or before July 1, 1997 ("Closing
Date"). On the Closing Date, the Parties, among other things, shall do the
following:
4.1 TRANSFER OF TITLE. Seller shall sell, assign, transfer, convey
and deliver to Buyer, the Assets being sold pursuant to this Agreement by
appropriate document of transfer, in a form acceptable to Buyer, containing
warranties of title, free and clear of encumbrances and security interests
(except as otherwise agreed to herein or related to the Liabilities).
4.2 DELIVERY OF NOTE. Buyer shall deliver to Seller the executed
Note.
4.3 MISCELLANEOUS. The Parties shall do all other things at Closing
to consummate and effectuate this Agreement, and all other agreements,
covenants and conditions set forth herein and therein.
4.4 FURTHER ACTS. If, at any time after the Closing Date, any
further action by any of the Parties to this Agreement is necessary or desirable
to carry out the purposes of this Agreement and/or to vest in Buyer full title
to the Assets sold hereunder, such party shall take all such necessary or
desirable action to cause such action to be taken.
5. REPRESENTATIONS AND WARRANTIES BY SELLER. Seller represents and
warrants to Buyer as of the date of this Agreement and as of the Closing Date as
follows:
5.1 EXISTENCE/GOOD STANDING. Seller is now and on the Closing Date
will be a limited liability company, duly organized, validly existing and active
under the laws of the State of Oregon. Seller has all requisite power and
authority to own the Assets, and to carry on its business as now being
conducted and is duly qualified to do business and is in good standing in all
jurisdictions where it owns or leases property, maintains employees or conducts
business.
5.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENTS. Seller has
the requisite power and authority to execute and deliver this Agreement. The
consummation by Seller of the transactions contemplated hereby has been duly
authorized by all requisite corporate action. This Agreement constitutes the
valid and legally binding obligation of Seller, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general principles of equity.
5.3 TITLE. Seller owns absolute title to the Assets. On the
Closing Date, the same shall be conveyed to Buyer free and clear of all
mortgages, liens, pledges, security interests and encumbrances of any nature
whatsoever, except as related directly to the Liabilities.
5.4 COMPLIANCE WITH LAW. To the best of Seller's knowledge, Seller
has complied with, and is in compliance with, all federal, state, local and
foreign laws, rules, ordinances, decrees and orders applicable to the operation
if its business or to its owned or leased properties, including, without
limitation, applicable environmental, pollution control and land use provisions.
PAGE 2. ASSET ACQUISITION AGREEMENT
Seller has obtained all necessary permits, licenses, variances, exemptions,
orders and approvals from federal, state, local and foreign regulatory bodies
in order to conduct its business as presently conducted.
5.5 NO APPROVAL OR NOTICES REQUIRED; NO CONFLICTS. To the best of
Seller's knowledge, the execution, delivery and performance of this Agreement
and each of the other agreements, exhibits and documents referred to herein or
necessary to effectuate this Agreement (collectively, the "Documents" or
individually, the "Document"), by Seller and the consummation of the
transactions contemplated hereby or thereby will not:
5.5.1 Constitute a violation of any provision of applicable
law;
5.5.2 Require any consent, approval, permit or authorization
of any person or governmental authority;
5.5.3 Result in a breach of or a default under (with or
without the giving of notice or lapse of time), acceleration or termination of,
or the creation in any party of the right to accelerate, terminate, modify or
cancel any agreement or other restriction, encumbrance, obligation or liability
to which Seller is a party or by which it is bound or to which any of the Assets
are subject; or
5.5.4 Conflict with, or result in a breach of, or constitute a
default under, any provision of Seller's Articles of Organization or Operating
Agreement, or of any applicable order, writ, injunction or decree of any court
or governmental instrumentality.
5.6 NO UNDISCLOSED LIABILITIES. Except for the Liabilities, there
are no liabilities or obligations of any nature, whether absolute, accrued,
contingent or otherwise, applicable to Seller which may have adverse
consequences on Buyer. Buyer acknowledges that some of the Liabilities are
estimates as of the date of this Agreement, such as accounts payable for which
no invoice as yet has been received by Seller, payroll and payroll taxes, and
other payables incurred in the ordinary course of business. Any variance between
the actual amount of the Liabilities and any estimates shall not constitute a
breach the representations and warranties of Seller in this Agreement.
5.7 TAXES. Seller has timely filed or will timely file with the
appropriate governmental agencies all tax returns, information returns and
reports required to have been filed with respect to all periods ending on or
before the Closing Date. Seller has paid, or will pay, in full, as of the
Closing Date, all taxes, interest, penalties, assessments, deficiencies and
other charges ("Taxes"), the non-payment of which could result in the imposition
of Taxes on Buyer or the imposition of a lien on or in any of the Assets, or
that could otherwise result in a risk of forfeiture of any of the Assets.
Seller has not filed or entered into any election, consent or extension
agreement which extends any applicable statute of limitations. Seller has made
adequate provisions for all accrued and unpaid Taxes of Seller. To the best of
Seller's knowledge, Seller is not a party to any action or proceeding pending or
threatened by any governmental authority for assessment or collection of Taxes,
no unresolved claims for assessment or collection of such Taxes has been
asserted against it, and no audit or investigation by governmental authorities
is underway.
PAGE 3. ASSET ACQUISITION AGREEMENT
5.8 REPRESENTATIONS IN OTHER DOCUMENTS. The representations and
warranties of Seller in all documents executed by Seller in connection with the
sale, assignment, transfer, conveyance and delivery by Seller of the Assets and
the assumption by the Buyer of the Liabilities are, to the best of Seller's
knowledge, true and accurate in all material respects as of the date of such
representation and warranty and as of the Closing Date.
5.9 LEGAL PROCEEDINGS; CLAIMS. There are no claims, actions, suits,
arbitrations, proceedings or investigations pending or threatened against
Seller, before or by any governmental or nongovernmental department, commission,
board, bureau, agency or instrumentality, whether federal, state, local or
foreign, or any other person, and there are no outstanding or unsatisfied
judgments, orders, decrees or stipulations to which Seller is a party, which
relate to either the Assets or the transaction contemplated herein, or which
would alone or in the aggregate have a material adverse effect upon the
business, business prospects, assets or financial condition of Seller.
5.10 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty made or to be made by Seller in this Agreement or in any other Document
furnished or to be furnished from time to time in connection herewith, contains
or will contain any misrepresentation of a material fact or omits or will omit
to state any material fact necessary to make the statements herein or therein
not misleading. There is no fact known to Seller which would materially
adversely affect, or which would, in the future, materially adversely affect,
the business, prospects, assets, property or condition (financial or otherwise)
of Seller which has not been set forth in this Agreement, except those facts
concerning general economic, legislative, regulatory, or other matters such as
may generally impact all businesses of the type operated by Seller.
6. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as of the date of this Agreement and as of the Closing Date
as follows:
6.1 EXISTENCE; GOOD STANDING. Buyer is now and on the Closing Date
will be a corporation, duly organized, validly existing and active under the
laws of the State of Oregon. Seller has all requisite corporate power and
authority to carry on its business as now being conducted and is duly qualified
to do business and is in good standing in all jurisdictions where it owns or
leases property, maintains employees or conducts business.
6.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENTS. Buyer has the
requisite corporate power and authority to execute and deliver this Agreement.
The consummation by Buyer of the transactions contemplated hereby has been duly
authorized by all requisite corporate action. This Agreement constitutes the
valid and legally binding obligation of Buyer, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general principles of equity.
6.3 NO APPROVAL OR NOTICES REQUIRED; NO CONFLICTS. To the best
of Buyer's knowledge, the execution, delivery and performance of this Agreement
and each of the other agreements, exhibits and documents referred to herein or
necessary to effectuate this Agreement
PAGE 4. ASSET ACQUISITION AGREEMENT
(collectively, the "Documents" or individually, the "Document"), by Seller and
the consummation of the transactions contemplated hereby or thereby will not:
6.4.1 Constitute a violation of any provision of applicable
law;
6.4.2 Require any consent, approval, permit or authorization
of any person or governmental authority;
6.4.3 Result in a breach of or a default under (with or
without the giving of notice or lapse of time), acceleration or termination of,
or the creation in any party of the right to accelerate, terminate, modify or
cancel any agreement or other restriction, encumbrance, obligation or liability
to which Buyer is a party; or
6.4.4 Conflict with or result in a breach of or constitute a
default under any provision of Buyer's Articles of Incorporation or By-Laws, or
of any applicable order, writ, injunction or decree of any court or governmental
instrumentality.
6.5 REPRESENTATIONS IN OTHER DOCUMENTS. The representations and
warranties of Buyer in all documents executed by Buyer in connection with the
sale, assignment, transfer, conveyance and delivery of the Assets and the
assumption by Buyer of the Liabilities are, to the best of Buyer's knowledge,
are true and accurate in all material respects as of the date of such
representation and warranty and as of the Closing Date.
6.6 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation or
warranty made or to be made by Buyer in this Agreement or in any other Document
furnished or to be furnished from time to time in connection herewith contains
or will contain any misrepresentation of a material fact or omits or will omit
to state any material fact necessary to make the statements herein or therein
not misleading. There is no fact known to Buyer which materially adversely
affects, or which would in the future materially adversely affect the ability of
Buyer to perform its obligations under this Agreement which has not been set
forth in this Agreement, except those factors concerning general economic,
legislative, regulatory or other matters such as may generally impact all
businesses of the type conducted by Buyer.
7. COVENANTS. Buyer and Seller each covenant and agree with the others
to perform and observe the following covenants:
7.1 COOPERATION. The Buyer and Seller each will fully cooperate with
the other and with the others' counsel and accountants in connection with any
steps required to be taken as part of its obligations under this Agreement. The
Buyer and Seller will use their respective best efforts to cause all conditions
to this Agreement to be satisfied as promptly as possible and to obtain all
consents and approvals necessary for its due and punctual performance of this
Agreement and for the satisfaction of the conditions hereof on its part to be
satisfied. Neither the Buyer nor the Seller shall undertake any course of
action inconsistent with this Agreement or which would make any
PAGE 5. ASSET ACQUISITION AGREEMENT
representations, warranties or agreements made by it in this Agreement untrue or
render any conditions precedent to this Agreement unable to be satisfied at or
prior to the Closing Date.
7.2 PUBLICITY. The initial press release relating to this Agreement
shall be a joint press release and thereafter the Buyer and Seller shall consult
with each other, and use reasonable efforts to agree upon the text of any press
release, before issuing any such press release or otherwise making public
statements with respect to the transactions contemplated hereby.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligations of
Buyer to perform and observe the covenants, agreements and conditions hereof to
be performed and observed by it at or before the Closing Date shall be subject
to the satisfaction of the following conditions, any of which may be expressly
waived in writing by Buyer:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH
COVENANTS. The representations and warranties of Seller contained herein shall
have been true in all material respects when made and shall be true in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of such date, except to the extent that such
representations and warranties are made as of a specified date, in which case
such representations and warranties shall be true as of the specified date.
Seller shall have performed in all material respects all obligations and
agreements and complied in all material respects with all covenants and
conditions contained in this Agreement to be performed and complied with by it
or by them at or prior to the Closing Date.
8.3 LEGAL PROCEEDINGS. No order of any court or administrative
agency shall be in effect which enjoins, restrains or prohibits consummation of
this Agreement, and no litigation, investigation or administrative proceeding
shall be pending or threatened which would enjoin, restrain or prohibit
consummation of this Agreement.
8.4 TITLE. Seller shall have supplied to Buyer evidence satisfactory
to Buyer establishing Seller's good and marketable title to the Asset, free and
clear of all liens, mortgages, pledges, deeds of trust, security interests,
conditional sales agreements, charges, encumbrances and other adverse claims or
interests of any kind, except encumbrances arising out of the Liabilities
assumed by Buyer under Section 2.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations of
Seller perform and observe the covenants, agreements and conditions hereof to
be performed and observed by it at or before the Closing Date shall be subject
to the satisfaction of the following conditions, any of which it may expressly
waive in writing:
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer contained herein shall have been true in all material
respects when made and shall be true in all material respects on and as of the
Closing Date with the same force and effect as though made on and as of such
date, except as affected by transactions contemplated hereby, and
PAGE 6. ASSET ACQUISITION AGREEMENT
except to the extent that such representations and warranties are made as of a
specified date, in which case such representations and warranties shall be true
as of the specified date.
9.2 PERFORMANCE OF AGREEMENT. Buyer shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants and conditions contained in this Agreement to be
performed and complied with by it at or prior to the Closing Date.
9.3 APPROVALS AND CONSENTS. All approvals and consents from third
parties which are necessary for the consummation of the transactions
contemplated hereby shall have been obtained.
9.5 LEGAL PROCEEDINGS. No order of any court or administrative
agency shall be in effect which enjoins, restrains or prohibits consummation of
this Agreement, and no litigation, investigation or administrative proceeding
shall be pending or threatened which would enjoin, restrain or prohibit
consummation of this Agreement.
10. SURVIVAL AND INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Agreement shall survive the Closing Date of this
Agreement. Any party learning of a misrepresentation or breach of warranty
under this Agreement shall as soon as practicable give notice in writing thereof
to the other party to this Agreement.
10.2 INDEMNIFICATION OF BUYER. Seller agree to defend, indemnify and
hold Buyer, its successors and assigns harmless from and against:
10.2.1 Any and all claims, liabilities, and obligations of any
kind and description, contingent or otherwise, including attorney's fees and
expenses of litigation, known or should have been known, arising out of or
related to the Seller's right, title and interest in the Assets, including but
not limited to any taxes, interest and penalties assessed against Seller in
relation to Seller's right, title and interest in the Assets.
10.2.2 If any claim is asserted against Buyer which would give
rise to a claim by Buyer against Seller for indemnification under the provisions
of this section, Buyer shall promptly give written notice to Seller and
Shareholders concerning such claim, and Seller shall, at no expense to Buyer,
defend the claim, to the point of nonappealable final judgment. If Seller
fails to take steps to defend said claim within ten (10) days of Buyer providing
written notice of said claim, or if Seller and fails to sooner defend said claim
when the nature of the claim or date of service requires immediate defensive
action, or if Seller at any time abandons defense of such a claim, Buyer may
undertake or continue the defense of any such claims, with counsel of its own
choosing, and shall be entitled to indemnity from Seller for all costs of such
defense, including but not limited to, reasonable attorney's fees, court costs
and incidental expenses of litigation. If Buyer becomes entitled to payment of
indemnity pursuant to this section, Seller shall immediately pay to Buyer the
PAGE 7. ASSET ACQUISITION AGREEMENT
amount of said indemnity claim. Buyer shall not be entitled to indemnity from
Seller except for the obligations to defend set forth in this section, unless
and until Buyer has actually paid a claim, debt or other liability giving rise
to a right of indemnity under this section, or has incurred a legal obligation
to do so. In such event, Buyer shall be entitled to interest from Seller at
the rate of twelve (12%) percent per annum from the date of said payment until
the indemnity claim is paid.
10.3 INDEMNIFICATION OF SELLER. Buyer agrees to defend, indemnify and
hold Seller harmless from and against:
10.3.1 Any and all claims, liabilities and obligations of every
kind and description, contingent or otherwise, including attorney's fees and
expenses of litigation, known or unknown, arising out of or relating to Buyer's
acquisition of the Assets.
10.3.2 Any and all damages, claims, obligations or deficiencies
of any kind and description, contingent or otherwise, including attorney's fees
and expenses of litigation, known or should have been known, resulting from any
misrepresentation, breach of warranty or covenant, or nonfulfillment of any
agreement on the part of Buyer under this Agreement or any Document.
10.3.3 If any claim is asserted against Seller which would
give rise to a claim by Seller against Buyer for indemnification under the
provisions of this section, Seller shall promptly give notice to Buyer
concerning such claim, and Buyer shall, at no expense to Seller , defend the
claim, to the point of nonappealable final judgment. If Buyer fails to take
steps to defend said claim within ten (10) days of Seller providing written
notice of said claim, or if Buyer fails to sooner defend said claim when the
nature of the claim or date of service requires immediate defensive action, or
if Buyer at any time abandons defense of such a claim, Seller may undertake or
continue the defense of any such claims with counsel of their own choosing, and
shall be entitled to indemnity from Buyer for all costs of such defense,
including but not limited to, reasonable attorney's fees, court costs and
incidental expenses of litigation. If Seller becomes entitled to payment of
indemnity pursuant to this section, Buyer shall immediately pay to Seller the
amount of such indemnity claim. Seller shall not be entitled to indemnity from
Buyer, except for the obligations to defend set forth in this section, unless
and until Seller has actually paid a claim, debt or other liability giving rise
to a right of indemnity under this section, or have incurred a legal obligation
to pay such a claim, debt or other liability. In such event, Seller shall be
entitled to interest from Buyer at the rate of twelve (12%) percent per annum
from the date of said payment until the indemnity claim is paid.
10.4 SURVIVAL OF INDEMNIFICATION. The rights of each indemnified party
hereunder shall be in addition to any other rights such indemnified party may
have under the Articles of Incorporation or bylaws of either the Buyer or Seller
under applicable state law. The provisions of this Section 10 shall survive the
consummation of this Agreement and expressly are intended to benefit each of the
indemnified parties and will be binding on all successors and assigns of the
Buyer and Seller, respectively.
PAGE 8. ASSET ACQUISITION AGREEMENT
11. MISCELLANEOUS PROVISIONS.
11.1 BENEFIT. Subject to the provisions set forth herein restricting
assignment, this Agreement shall be binding upon and inure to the benefit of the
heirs, executors, administrators, successors and assigns of Seller and Buyer.
11.2 NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
IF TO BUYER, TO:
Seabourne Ventures, Inc.
0000 X.X. Xxxxxxxx Xx.
Xxxxxx, XX 00000
Attention: Alain de la Motte
Fax: (000) 000-0000
IF TO THE SELLER, TO:
International Trade Group, LLC
0000 X.X. Xxxxxxxx Xx.
Xxxxxxxx, XX 00000
11.3 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Oregon without regard to its rules on conflict of laws.
11.4 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
11.5 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of will deemed to be an original and together shall
constitute one and same instrument.
11.6 INCORPORATION OF EXHIBITS. All exhibits attached hereto and
referred to herein are hereby incorporated herein and made a part of this
Agreement.
11.7 ATTORNEY'S FEES. In the event the services of an attorney at law
are necessary to enforce any of the terms of this Agreement or to resolve any
disputes arising under this Agreement through arbitration, the prevailing
Party shall be entitled to recover its attorney's fees from the losing Party in
such proceeding to the extent permitted by the arbitrator.
PAGE 9. ASSET ACQUISITION AGREEMENT
11.8 ASSIGNMENT. The Parties may assign their rights and liabilities
arising under this Agreement or the Documents, only with the prior written
consent of the other parties, which consent shall not be unreasonably withheld,
provided, however, that any assignment of rights by the Seller or Shareholders
shall be subject to all of the terms and conditions of this Agreement, and any
rights of setoff, recoupment or defense of Buyer arising under this Agreement or
any of the Documents, and shall not relieve Seller or Shareholders of any
liabilities under this Agreement.
11.8 ARBITRATION/MEDIATION. If any controversy or claim arising out
of this Agreement cannot be settled by the parties hereto, the controversy or
claim shall be settled by mediation or arbitration in accordance with the rules
of the Arbitration Service of Portland, Inc. then in effect and judgment on the
award may be entered in any court having jurisdiction. Nothing herein, however,
shall prevent either party hereto from resort to a court of competent
jurisdiction in those instances where injunctive relief may be appropriate.
11.9 COMPLETE AGREEMENT. This Agreement and other agreements referred
to herein set forth the entire understanding of the parties hereto with respect
to the matters provided herein and supersede all prior agreements, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any of the parties or by any officer, employer or representative of
any party.
IN WITNESS WHEREOF, the parties have executed this Agreement by their
respective authorized officers as of the date first above written.
SELLER: BUYER:
International Trade Group, LLC Seabourne Ventures, Inc.
By: /s/ Xxxxx X. De La Motte By: /s/ Xxxxx X. Xxxxxx
---------------------------- ----------------------------
Name: Xxxxx X. De La Motte Name: Xxxxx X. Xxxxxx
-------------------------- --------------------------
Title: President/CEO Title: Executive V.P.
------------------------- -------------------------
PAGE 10. ASSET ACQUISITION AGREEMENT
ASSETS
EXHIBIT A
SERIAL DEP. REM. BOOK
ITEM MODEL NUMBER LIFE LIFE COST VALUE DEPREC.
----------------------------------------------------------------------------------------------------
COMPUTER HARDWARE $8,534 $5,000 $3,534
Macintosh Performa 6360cd 8 3 3.0 $2,032 $2,025 $ 7
Memory Kingston 8 mb 8 3 3.0 $ 139 $ 138 $ 1
PC Card Xxxxx 28.8 8 3 3.0 $ 299 $ 298 $ 1
PC Card Xxxxx 28.8 8 3 3.0 $ 300 $ 299 $ 1
PC Laptop Toshiba 8 3 0.1 $3,101 $ 74 $3,027
PC Laptop Toshiba T2135 8 3 2.7 $1,998 $1,768 $ 230
Printer Stylewriter 2400 8 3 3.0 $ 349 $ 348 $ 1
Printer HP Deskjet 8 3 0.5 $ 316 $ 51 $ 265
----------------------------------------------------------------------------------------------------
------------------------------
------------------------------
GRAND TOTALS: $8,534 $5,000 $3,534
PAGE 1 ASSET DEPRECIATION REPORT 1/20/98
ASSETS MODEL PURCHASED FROM LOCATION ORIGINAL COST PURCHASE DATE
------ ----- -------------- -------- ------------- -------------
1069 Moisture Test Lignomat Agroindustrias $ 396.25 10/22/96
1070 Scale Basculas Agroindustrias $ 4,499.80 10/28/96
1037 Compression Gauge Xxxxxx Agroindustrias $ 862.31 11/1/96
1039-1045 Solenoid Valve XxXxxxxx-Xxxx Agroindustrias $ 801.55 11/20/96
1003-1013 Insect Light Xxxxxxx Mfg Agroindustrias $ 4,480.00 1/1/97
1021 Steam Cleaner Sanitech Corp. Agroindustrias $ 7,410.00 1/1/97
1047 Plastic Tubs Consolidated Plastics Agroindustrias $ 476.28 1/1/97
1036 Press Wght Machine Taller Industrial Agroindustrias $ 2,119.79 1/1/97
1035 Electric Can Opener Boxer Northwest Agroindustrias $ 350.00 1/1/97
1025 Forktruck Toyotalift Agroindustrias $ 29,825.00 1/1/97
1026 Push-Pull Attach. Toyotalift Agroindustrias $ 7,481.00 1/1/97
1014 Chill Room Xxxxx Xxxx Agroindustrias $ 40,167.04 1/1/97
1038 Thermal Data Ellab Agroindustrias $ 6,623.00 1/1/97
1034 Box Imprinter L.A. Supply Label Agroindustrias $ 635.18 1/1/97
1039-1045 Thermometer (7 day) XxXxxxxx-Xxxx Agroindustrias $ 3,182.45 1/1/97
1046 Steel Table Xxxxxx-Xxxxxxx Agroindustrias $ 1,964.35 1/1/97
1029 Fogging System Spraying System Agroindustrias $ 912.27 1/1/97
1048 Photocopier Serv Copias Agroindustrias $ 6,609.90 1/1/97
1001 Portable Scale Precision Scale Agroindustrias $ 1,847.00 1/1/97
1000 Butchering Scale Precision Scale Agroindustrias $ 6,140.00 1/1/97
1030-1033 Can Counter WESCO Agroindustrias $ 1,344.00 1/1/97
? Can Counter WESCO Agroindustrias $ 361.00 1/1/97
1021 Nozzles Sanitech Corp. Agroindustrias $ 168.50 1/1/97
1047 Plastic Tubs Consolidated Plastics Agroindustrias $ 1,144.01 1/1/97
? Can Counter WESCO Agroindustrias $ 288.00 1/1/97
1072 Spray Equipment Spraying System Agroindustrias $ 3,980.30 1/1/97
no Spring & Studs Xxxxx Agroindustrias $ 432.54 2/3/97
no Eyeglasses Xx. Xxxxxxx Agroindustrias $ 1,612.80 2/14/97
1052-1069 Steel Table Xxxxxx-Xxxxxxx Agroindustrias $ 11,730.00 2/19/97
1071 Histamine System Neogen Agroindustrias $ 926.75 5/14/97
no Histamine Kit Neogen Agroindustrias $ 179.00 5/14/97
1049,1050 Ceiling Fan/Exhaust Grainger Agroindustrias $ 2,064.50 5/15/97
no Light Fixtures Grainger Agroindustrias $ 173.01 5/22/97
1051 Light Fixtures ESD Company Agroindustrias $ 1,297.84 5/27/97
no Fixtures Accessories ESD Company Agroindustrias $ 86.24 5/27/97
no Cutting boards Port Plastics Agroindustrias $ 186.00 5/28/97
no Cutting boards Port Plastics Agroindustrias $ 679.06 6/18/97
$153,436.72 -$15,416.88
SELLER'S RIGHT, TITLE AND INTEREST IN AND TO THE ATTACHED
TOLL-PACKING AGREEMENT FOR CANNED TUNA
TOLL-PACKING AGREEMENT FOR CANNED TUNA
This agreement is entered into this 5th day of September 1996, by and between:
AGROINDUSTRIAS XXXXX X.X. DE C.V. a company duly organized and existing under
the laws of Mexico, in the state of Baja, having its registered office at
Fabrica Km. 104, Carretera Tecate, Ensenada, Baja, CA, Mexico, (hereinafter
referred to as "SELLER"), represented by its Director General, Ing. Xxxxxx
Xxxxxx Xxxxxxxxx.
AND
INTERNATIONAL TRADE GROUP, LLC, a Limited Liability Company duly organized
and existing under the laws of the State of Oregon (USA), having its
registered office at 0000 X.X. Xxxxxxxx Xxxx, Xxxxxx, Xxxxxx 00000,
(hereinafter referred to as "BUYER"), represented by its President/CEO, Xxxxx
X. de la Motte.
WHEREAS
SELLER is a tuna cannery specializing in the processing and packing of
frozen tuna fish into canned tuna products for the Mexican market.
SELLER is prepared to convert its production plant in Ensenada into a 100%
dolphin-safe operation as soon as this Agreement is signed.
SELLER is licensed by the Mexican Customs authorities to import raw
material required to pack canned tuna, warehouse it in SELLER's own bonded
facilities, and process it into finished products that can be reexported without
import duty or export levies of any kind.
BUYER is an international buying consortium which purchases imported
private label food products for the account of its members/partners, including
some of the largest US and international food chains, food service companies and
private label distributors. BUYER is interested in importing various types,
sizes and quality of canned tuna to meet the needs of its members/partners.
BUYER and SELLER are willing to enter into a toll-packing arrangement for
canned tuna Products on the terms and conditions hereinafter set forth.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS
1.1. In this agreement:
1.1.1. The word "PRODUCT (s)" or "FINISHED PRODUCT (s)" shall mean processed
flesh of canned tuna cooked and packed in water from frozen Raw
Material, in accordance with BUYER's specifications for Finished
Products, and the US Food & Drug Administration ("FDA") (and their
Canadian counterpart) Standard of Identity as defined in the latest
available Almanac (Exhibit A).
1.1.2. "RAW MATERIAL" shall refer to one metric ton of frozen tuna fish of
the Skipjack (KATSUWONUS PELAMIS), Yellowfin (THUNNUS ALBACARES),
or Albacore (THUNNUS ALALUNGA) species, graded by weight in
accordance with the classifications defined in paragraph 1.1.8 below
for each specie. For the purpose of this agreement, the Cost of Raw
Material shall always be calculated based on an average frozen weight
of a particular specie. It will be SELLER's
IGC/Xxxxx - Toll Packing Agreement for Canned Tuna, Cont'd. Page 2
and BUYER's joint responsibility to approve the quality of all
incoming Raw Material upon delivery at the dock and to ensure it
meets or exceeds BUYER's specifications. Once Raw Material has been
approved by SELLER and BUYER, the responsibility for the preservation
of such Raw Material in safe, secure and sanitary conditions in
SELLER's cold storage warehouses shall be that of SELLER.
1.1.3. "COST OF RAW MATERIAL" shall refer to the all-inclusive cost of Raw
Material delivered at the SELLER's packing plant in Ensenada, Baja CA,
Mexico, in units of one metric ton (1,000 kg). This price shall be
computed to include the cost of transporting the fish from the Ensenada
dock to SELLER's cannery, which cost shall not exceed $13.08 per ton,
including but not limited to the weighing of the fish, labor charges
to load the bins on the truck, securing the load, loading and unloading
supervision by SELLER, trucking. In the event savings can be achieved
by negotiating volume discounts, all such rebates shall accrue to BUYER
exclusively.
1.1.4. "CASE YIELD" shall refer to the number of cases of finished product
for a particular can size that SELLER agrees to deliver to BUYER for
each ton of Raw Material BUYER makes available to SELLER under this
Agreement. To calculate the Case Yield, the following formula shall
apply:
(Yield) X (1,000 grams)
------------------------------------ = No. of Cases per ton ("Case
(Fill Weight) X (# of Cans Per Case) Yield").
1.1.5. "COST OF RAW MATERIAL PER CASE" shall refer to the amount of Raw
Material used to produce one case of Finished Product, after processing
and cooking. To calculate the Cost of Raw Material per case, the
following formula shall apply:
(Cost of Raw Material Per ton)
------------------------------ = Cost of Raw Material Per Case
(Case Yield)
Unless otherwise specified, the word "Case of Finished Product" or
"Case" used in the calculation of the cost of Finished Product shall
specifically refer to a base unit of measurement consisting of 48
cans, 6 ounces each.
1.1.6. "FISH MEAL RECOVERY" shall refer to the cooked scrap byproduct
recovery that can be further processed into fish meal for each metric
ton of Raw Material. For calculation purposes, it is assumed that 27%
of the Raw Material weight shall be purchased by SELLER from BUYER for
further processing into fish meal. At BUYER's sole option, BUYER may
choose to sell scrap to SELLER or to require SELLER to process scrap
Raw Material into fish meal. In the latter case, BUYER shall pay
SELLER US $137 (one hundred thirty seven) per ton of finished fish
meal product delivered to BUYER, ex-factory. It is understood that it
will require 2.5 to 3 tons of scrap Raw Material to produce one ton
of fish meal with the following approximate specifications: 52%
protein, 12%-13% ash, 16% fat content, 8% to 9% water content.
1.1.7. "RAW MATERIAL COST AFTER RECOVERY" shall refer to the net cost per
metric ton of Raw Material after deducting US $5.40 per ton (27% of
$20 per ton of scrap) for revenue derived from Fish Meal Recovery.
1.1.8. The "YIELD" shall refer to the percentage derived by dividing the
total weight (in kilograms), of the longitudinal loins or other
striated muscular tissue of the fish ("Loins") which is usable to pack
Finished Products in accordance with BUYER's specifications, divided
by 1,000 kilograms. For calculation purposes the production Yields
guaranteed by SELLER for each fish variety and weight category shall
be as follow:
1.8/3.4 kg MORE THAN 3.4 kg
---------- ----------------
Skipjack (KATSUWONUS PELAMIS) 39% 41%
IGC/Xxxxx - Toll Packing Agreement for Canned Tuna, Cont'd. Page 3
1.8/3.4 kg 3.4/9 kg MORE THAN 9 Kg
---------- -------- --------------
Yellowfin (THUNNUS ALBACARES) 39% 42.5% 45.2
LESS THAN 5 Kg 5/10 Kg MORE THAN 10 Kg
-------------- ------- --------------
Albacore (THUNNUS ALALUNGA) 48% 51.7% 54.1%
1.1.9. "FILL WEIGHT" shall refer to the weight of a cooked tuna Loin portion
that is placed in each can prior to the addition of water and/or
Hydrolyzed Protein, and prior to the sealing of the can. Such weights
shall be added at a future date based on BUYER's specifications and
test runs, and shall become part of this Agreement.
Fill Weights by Pack Type Skipjack Yellowfin Albacore
----------------------------------------------------------------------------------
Fish Fill (CLW) grams/can (307 x 109) 100 100
Fish Fill (CLW) grams/can (307 x 205)-
Fish Fill (CLW) grams/can (401 x 204)-
Fish Fill (CLW) grams/can (6O3 x 408)
Fish Fill (SLW) grams/can (401 x 204)
Fish Fill (CWW) grams/can (603 x 408)
Fish Fill (SWW) grams/can (307 x 109)
Fish Fill (SWW) grams/can (211 x 106)-
Fish Fill (SWW) grams/can (401 x 204)
Fish Fill (SWW) grams/can (603 x 408)
The above Fill Weights represent the fish weights prior to the
addition of HP. After the addition of HP, the resulting Pressed Weight
must be no less than that required by the FDA's Standard of Identity
and/or BUYER's specifications.
CLW = Chunk Light Tuna in Water (Skipjack or Yellowfin)
SLW = Solid Light Tuna in Water (Skipjack or Yellowfin)
CWW = Chunk White Tuna in Water (Albacore)
SWW = Solid White Tuna in Water (Albacore)
1.1.10. "PRESSED WEIGHT" shall refer to the average weight of the tuna in each
can after draining out all liquid from the can and pressing out any
liquid that has been absorbed by the fish, in accordance with
paragraph C (2) of the FDA's standard of Identity for Canned Tuna.
Pressed Weights by Pack Type Skipjack Yellowfin Albacore
----------------------------------------------------------------------------------
P.W. (CLW) grams/can (307 x 109)
P.W. (CLW) grams/can (307 x 205)-
P.W. (CLW) grams/can (401 x 204)-
P.W. (CLW) grams/can (603 x 408)
P.W. (SLW) grams/can (401 x 204)
P.W. (CWW) grams/can (603 x 408)
P.W. (SWW) grams/can (307 x 109)
P.W. (SWW) grams/can (211 x 106)-
P.W. (SWW) grams/can (401 x 204)
P.W. (SWW) grams/can (603 x 408)
CLW = Chunk Light in Water
SLW - Solid Light in Water
CWW = Chunk White in Water
SWW = Solid White in Water
ITG/Xxxxx - Toll Packing Agreement for Canned Tuna, Cont'd. Page 4
1.1.12. "CHUNK(s)" or "CHUNK PACK(s)" shall refer to tuna packed in accordance
with paragraph 3 (ii) of the FDA's Standard of Identity and according
to specifications supplied by BUYER.
1.1.13. "FLAKES" shall refer to tuna packed in accordance with
paragraph 3 (iii) of the FDA's Standard of Identity.
1.1.14. "HYDROLYZED PROTEIN" or "HP" shall refer to the solution derived from
adding Exelpro's 12% E-Pro-SB solution to the packing medium, in
accordance with Wescotek, Inc.'s specifications and recommendations.
1.1.15. The word "CAN(s)" shall refer to a two-piece or three-piece metal can
normally used to pack tuna. The following retail and food service can
sizes shall be available to BUYER AS SOON AS SELLER installs the Xxxxx
solid-packing machines, but no later than five months from the date of
signature of this Agreement: 6oz Cans (2 piece), 3 oz Cans (2 piece),
12 oz Cans (2 piece), 9 oz Cans (2 piece) and, at a later date,
66.6 oz Cans (3 piece).
1.1.16. The word "CARTONS" OR "CASE" shall refer to a case of the following
can sizes as follows:
(a) Retail: 48 cans of 6 oz ("48/6 oz"), or 24 cans of 6 oz
("24/6 oz")
(b) Retail: 16 (3 Pack) 3 oz ("16/3/3 oz")
(c) Retail: 24 cans of 12 oz ("24/12 oz")
(d) Retail: 24 cans of 9 oz ("24/9 oz")
(e) Production at a later date: Food Service: 6/66.6 oz (6/66.6 oz")
1.1.17. "DIRECT MATERIAL" shall refer to all material used to produce the
finished product, including, cans, lids, salt, spring water,
hydrolyzed protein, printed labels, and cartons, including reject
allowance, but excluding the frozen Raw Material. Unless otherwise
specified it shall specifically refer to the unit cost of one case of
Finished Product.
1.1.18. "SELLER'S FEE" shall refer to the fully-loaded, all-inclusive,
toll-packing cost charged by SELLER to BUYER to produce one Case of
48/6oz cans of Finished Product, on an ex-factory basis (loaded in the
container/ truck). Unless otherwise specified it shall specifically
refer to the unit cost of one case of finished product, regardless of
the specie of the fish, or the pack type. This fee includes all direct,
and indirect labor, administrative costs, factory overhead, interest,
depreciation and amortization. In the event BUYER is required to
guarantee of cost of the Xxxxx solid-packing machines and to pay the
manufacturer directly a per Case fee, SELLER's fee shall automatically
be reduced by that amount, which is currently $0.12 per Case, plus any
duties or taxes that must be paid to the authorities of Mexico or the
United States of America.
1.1.19. "CASES PER CONTAINER" shall refer to the maximum number of cases that
can be loaded on a 20' container or truck while remaining within the
maximum weight limit for the trade route in question.
1.1.20. "FIRST IN, FIRST OUT" shall refer to the accounting method used to
account for inventory. In this Agreement it shall also refer to the
inventory rotation of frozen raw material that is used to pack the
finished product.
2. AGREEMENT TO SELL AND PURCHASE
2.1. SELLER agrees to toll-pack canned tuna products exclusively for BUYER,
and BUYER agrees to purchase from SELLER, Finished Products upon the
terms and conditions set forth in this agreement.
2.2. SELLER shall allocate no less that 60% of its total capacity (measured
in either tons of Raw Material processed per day or in Cases of
Finished Products produced per day or per month) to produce Products
for BUYER. During the term of this Agreement or any renewal thereof,
ITG/Xxxxx - Toll Packing Agreement for Canned Tuna. Cont'd. Page 5
SELLER shall produce Products for BUYER on an exclusive basis, it
being understood however that SELLER shall be free to use the
remainder of its capacity (up to a maximum of 40%) to continue
packing for its own brand (Xxxxx) and for other private label
distributors in Mexico, so long as such products are exclusively
for consumption within Mexico. In this respect, SELLER is
specifically prohibited from manufacturing, selling, trading,
exporting or supplying Raw Material or Finished Products to any
export market, directly or indirectly, and all export inquiries
shall be turned over to BUYER by SELLER when received. Furthermore,
SELLER shall not during the term of this Agreement and any renewal
thereof supply Products to Wal-Mart International in Mexico,
directly or indirectly, under the Wal-Mart's label, brand or xxxx
("Great Value") or any other brand or Trademark directly owned by
Wal-Mart, Inc or Wal-Mart International, Inc.
2.3. SELLER is prohibited from co-mingling BUYER's Raw Material with its
own during production. To that end and to ensure a clear separation of
assets, SELLER shall process and pack BUYER's Raw Material in
production units of one full shift or day of production at a time. In
no event can SELLER pack products for its own account at the same time
as BUYER's Products.
3. TERM, VALIDITY AND EXCLUSIVITY
3.1. This agreement shall come into force ("Effective Date") the later of
any of the following events occurring:
3.1.1 The date this Agreement is signed by both parties, or
3.1.2 The date the Judge in charge of the "Suspension de Pagos"
authorizes SELLER to enter into this transaction and SELLER
provides BUYER with an official certificate attesting to the
fact that this Agreement has been registered in Mexico with
the appropriate authorities in accordance with paragraph 19.5.
below, or
3.1.3 The date SELLER's factory is removed from the US Food and
Drug Administration "Automatic Detention" list, or
3.1.4 The date PhF issues a certificate that the plant has been
brought up to full BUYER and FDA standards, or
3.1.5 The date Xx Xxxxxxxx, BUYER's consulting engineer, attests
in writing that SELLER's plant and equipment is up to
operating standard and that SELLER is capable of producing
products that meet or exceed BUYER's specifications, or
3.1.6 The date the Mexican Government's Fisheries division grants
the US flag fishing boats that are under contract with BUYER
the right to off load Raw Material in the ports of Ensenada
or San Xxxxxx, Baja, Mexico.
It shall remain in force for a period of five years as of the
Effective Date. Thereafter it shall be automatically renewed for
additional equal terms, unless terminated by either party in
writing not less than 6 (six) months prior to its expiration or
any renewal/s thereof.
3.2. SELLER shall grant BUYER exclusive packing privileges encompassing
100% (one hundred percent) of SELLER's capacity made available for the
export market during the term of this Agreement and any renewal
thereof. BUYER shall have a 60 (sixty) day right of first refusal to
purchase any additional manufacturing capacity made available by
SELLER, at any time during the term of this Agreement and any renewal
thereof. In this respect, SELLER shall offer to BUYER any excess
capacity in writing at least two months prior to the anticipated time
when the excess capacity is scheduled to become available. In the
event BUYER fails to take-up the additional capacity, SELLER shall be
free to offer such additional capacity to buyers in markets other than
the United States of America or Canada, including Wal-Mart
International, their agents or representatives.
ITG/Xxxxx - Toll Packing Agreement for Canned Tuna. Cont'd. Page 6
4. BUYER'S DUTIES
4.1. BUYER shall procure all Raw Material and Direct Material needed for
toll-packing. SELLER shall be responsible for the loading of bins onto
the truck, and transportation to SELLER's cold storage warehouse under
safe, sanitary and secure conditions, so as to prevent theft or
shortages in transit. All costs associated with the pick-up and
transportation of the Raw Material to the cold storage warehouse shall
be in accordance with paragraph 1.1.3 above.
4.2. BUYER shall procure and ship from the United States all Direct
Material needed for production at SELLER's custom-bonded facilities in
Ensenada, Mexico. BUYER shall pay for all costs of direct material and
its transport from the United States to SELLER's manufacturing plant.
4.3. BUYER shall communicate information monthly to SELLER regarding its
sales activities and inventory levels. Such information shall be kept
by SELLER in the strictest confidence and shall only be made available
to those within its organization specifically responsible for the
implementation of this Agreement.
4.4. BUYER shall immediately inform SELLER of any observation/s or
complaint/s received from customers in respect of the Products and
SELLER shall promptly correct its manufacturing processes to correct
such problem/s. Repeated failure to correct a problem in a timely
fashion shall constitute sufficient reason for early termination of
this Agreement by BUYER.
4.5. BUYER shall keep SELLER informed of (i) the laws and regulations
applicable to the importation of canned tuna and to the Products
including, INTER ALIA, import regulations, labeling & packing
specifications, food safety requirements, etc.
5. SELLER'S DUTIES
5.1. SELLER shall communicate information monthly to BUYER regarding the
current market price and market trends for Raw Material costs (low,
average and high) in Mexico, as well as information regarding
competitive activities.
5.2. SELLER shall pack tuna for and on behalf of BUYER in accordance with
BUYER's specifications and directives. SELLER shall handle all Direct
Material and Raw Material supplied by BUYER under this Toll Packing
Agreement with care and shall maintain safe and sanitary warehousing,
processing and canning facilities at all times in accordance with
established standards for Good Manufacturing Practices ("GMP"). SELLER
shall be responsible for the implementation without delay, of any
changes, modifications or processes required by BUYER's representative
on site to bring the packing in line with established GMP, FDA or
BUYER's guidelines. SELLER agrees to implement a Hazard Analysis
Critical Control Point ("HACCP") program as soon as deemed practical
and reasonable by BUYER, but no later than one year from the date this
Agreement is signed.
5.3. SELLER shall receive and hold at SELLER's Cold Storage warehouse at
the plant ("Cold Storage"), BUYER's Raw Material inventory in a secure
and locked part of the facility. SELLER guarantees that products will
only be stored in metal bins in secure rooms at an ambient temperature
of no more than -10 DEG C (minus ten degrees centigrade) and that all
generators shall be maintained in good working order at all times in
order to prevent power outages that could affect the quality of
BUYER's Raw Material. SELLER shall clearly xxxx the bins of Raw
Material that belong to BUYER and prevent BUYER's Raw Material from
being intermingled with other fish belonging to SELLER or that of any
other third party, both in cold storage and during the manufacturing
process. SELLER agrees that the approximately 900 square meters of cold
storage warehouse that contains BUYER's Raw Material shall be secured
by a double pad lock, with the keys for the first padlock held at all
times by BUYER's representative on site, and the key to the second
padlock by SELLER's employee.
ITG/Xxxxx - Toll Packing Agreement for Canned Tuna, Cont'd. Page 7
5.4. SELLER shall receive and warehouse in its bonded warehouse, at no cost
to BUYER, all Direct Materials needed for toll-packing. SELLER shall
be responsible for all import and reexport formalities in Mexico so as
to enable materials to enter Mexico and to be reexported duty free.
Any custom brokerage costs associated with the importation of Direct
Material into Mexico shall be borne by BUYER.
5.5. SELLER shall submit to BUYER or to BUYER's representative on site, on
the Friday of each week, a form duly filled and signed by SELLER
showing the Raw Material receipt for each delivery, broken down by
fish specie and weights. The form shall contain specific annotation
relative to the quality of incoming Raw Material together with copies
of laboratory reports for histamine and salt content tests.
5.6. SELLER shall furnish BUYER at least once a week, on each Monday, for
the preceding week, a complete accounting of Raw Material, Direct
Material and rejects used in production, as well as an
inventory-on-hand report using the First-in First-out accounting
method. SELLER shall perform physical inventories at its own expense at
least once every two months. SELLER shall be responsible for the cost
of any inventory shortage after Direct and/ or Raw Materials are
received at SELLER's warehouse.
5.7. SELLER shall provide BUYER with proof of insurance, covering all
risks, no later than 30 (thirty) days prior to the first scheduled
pack time. The insurance policy shall be issued by an international
carrier with a AAA rating, and shall cover the full value Plus 10%
(ten percent) of Direct Material and Raw Material belonging to BUYER
while the product is under SELLER's control. BUYER shall be provided
with a certificate of endorsement issued by the insurance company
showing BUYER as the beneficiary. Upon expiration of the policy SELLER
shall cause a new one to be reissued without any time gap during which
BUYER's assets are unprotected.
5.8. SELLER shall inform BUYER immediately concerning any event that could
potentially affect production, capacity, delivery timing, or shipment
of Products purchased under this Agreement, as well as with any
information needed by BUYER for carrying out its obligations under
this Agreement
5.9. SELLER shall only process at its facilities dolphin-safe tuna as
currently defined by the US Maritime Fisheries, United States laws and
the environmental groups active in dolphin preservation.
6. ANNUAL VOLUMES AND CAPACITY
6.1. During the term of this agreement and any renewal thereof, BUYER
undertakes to purchase from SELLER, not less than 850,000 Cases of
Finished Products within a calendar year, subject to the availability
of Raw Material, and SELLER undertakes to manufacture for BUYER all of
BUYER's requirements up to an aggregate of 850,000 cases of Finished
Products per calendar year. This quantity may be increased or
decreased at any time by written agreement of the parties.
6.2. SELLER shall make available to BUYER a production capacity of no less
than 50 tons of Raw Material per day, per eight hour shift, based on
an average fish size of 5 kilos and up.
6.3. BUYER shall endeavor to provide steady production orders to SELLER
to ensure maximum capacity utilization, however it is clearly
understood that such orders will be subject to market conditions,
availability of frozen Raw Material, and the competitiveness of Raw
Material costs at any one point in time. For this reason, SELLER shall
work closely with BUYER to provide a flexible manufacturing schedule
to fit BUYER's needs and opportunities.
7. ORDERS
ITG/Xxxxx - Toll Packing Agreement for Canned Tuna, Cont'd. Page 8
7.1. SELLER shall pack, label and warehouse Finished Products packed for
BUYER in accordance with BUYERS' written orders, instructions and
specifications.
7.2. Purchase Orders ("P/O") and Shipping Instructions ("S/I") shall be
submitted to SELLER on a regular basis by BUYER. Such S/I (Exhibit
"C") shall be submitted with as long a lead time as possible, but
shall only be binding upon BUYER when both the following documents
have been issued: (a) BUYER has issued a P/0 (Exhibit "D"), and (b)
BUYER has issued a S/I which contains specific shipping and delivery
instructions in support of the P/O for each container or truck load.
7.3. SELLER shall inform BUYER in writing within 48 hours of receipt of a
P/O or S/I if, for whatever reason, it is unable to meet the specified
delivery date. SELLER may not unreasonably reject or postpone delivery
of orders transmitted by BUYER. Any refusal of order/s contrary to
good faith shall be considered as a breach of contract. Furthermore
SELLER agrees that it shall not subcontract, farm out or assign any
part of the manufacturing process to outside vendors without BUYER'S
written approval.
7.4. SELLER shall make the first containers available for shipment to BUYER
during the Second week of October, 1996. BUYER shall issue Purchase
Orders and Shipping Orders no later than one month prior to the first
shipment.
7.5. SELLER undertakes, in good faith, to fill all orders placed by BUYER
within 10 (ten) days of receipt of a signed Purchase Order submitted
by fax or by mail.
7.6. BUYER agrees to order and take delivery of minimum quantities of one
truck or container load at a time, or in multiples thereof. It is
expressly agreed however that BUYER will be allowed to mix different
Products, labels and can sizes within the same container.
8. PRICES AND COST ACCOUNTING
8.1. BUYER shall pay SELLER a fee of US $3.75 (three dollars and seventy
five cents) net per Case of Finished Product ("Seller's Fee").
8.2. SELLER shall invoice BUYER monthly for Cold Storage at an all-inclusive
rate of US$ 28 per ton, per month, calculated based on the actual
average daily inventory held in cold storage. This cost shall include
all in and out, metal bin rental, and insurance for the greater of 125%
of the value of the Raw Material held in cold storage, or the actual
replacement cost.
8.3. At the end of each week, SELLER shall furnish to BUYER written records
of each lot of raw material ("Raw Material Inventory") used in
production and the production yields achieved for each lot in
accordance with BUYER's reporting format. Each lot shall indicate the
weight category per specie, total weight per category, the achieved
Yield based on fish size and specie, and the actual number of Cases of
Finished Products manufactured from each lot of raw material, by
applying the following formula:
(# of tons) X (Cost of Raw Material Per Ton) No. of Cases of
-------------------------------------------- = Finished Product
Case Yield
SELLER shall use the First In, First Out method to account for
BUYER's Raw Material used in manufacturing and to calculate the
Cost of Raw Material Per Case of Finished Product. An Excel
spreadsheet shall be maintained by SELLER and transmitted to BUYER
weekly to show the inventory movements of incoming raw material and
outgoing finished products.
The Cost of Raw Material Per Case shall be determined weekly and
applied to the calculation of the Finished Product. Even though BUYER
will source and procure the fish raw material, SELLER shall declare
the value of fish used on all invoices to BUYER in accordance with
the above formula.
ITG/Xxxxx - Toll Packing Agreement for Canned Tuna, Cont'd. Page 9
8.4. BUYER shall be responsible for the cost of all Direct Material used in
production. BUYER and SELLER shall agree on an acceptable percentage
of rejects for each material and SELLER shall be responsible for the
accounting of all material used in production as well as for rejects.
Rejects shall be kept for BUYER's verification and only disposed of
after BUYER's representative has signed-off on it. In the event the
production rejects exceed mutually agreed threshold, SELLER shall
reimburse BUYER for the cost of excess material used in production,
and BUYER shall be free to deduct the fully-loaded value of such
excesses from any and all amounts owed SELLER by BUYER.
8.5. SELLER shall purchase from BUYER 100% (one hundred percent) of the
fish scrap for processing into fish meal. BUYER shall invoice SELLER
US $20 (twenty) per ton of fish scrap used in production. At BUYER's
sole option, BUYER may request a separate payment or request SELLER to
issue a credit note in favor of BUYER.
8.6. In the event actual production Yields are better than those specified
in paragraph 1.1.8 above, it is expressly agreed that one hundred
percent of the benefit of those improvements shall accrue to BUYER. In
this event SELLER shall deliver to BUYER a greater number of Cases per
ton of Raw Material than anticipated under this contract.
9. PAYMENT TERMS & METHODS
9.1. SELLER shall ship Products to BUYER weekly or bi-monthly in units of no
less than one truck load (1,960 cases) at a time. SELLER's Fee shall
be due and payable 30 days from receipt of invoice. BUYER shall pay
all invoices in US dollars by wire transfer or by check made payable
to SELLER.
9.2. BUYER agrees to help fund SELLER's cash flow for a period of up to six
months from the Effective Date of this Agreement, by opening in favor
of SELLER an irrevocable and transferable Letter of Credit covering
SELLER's Fees in connection with Finished Products manufactured for
BUYER and exported to BUYER.
9.3. SELLER's Fees shall be due and payable only after Products have been
approved by the US Food and Drug Administration for entry in the
United States. In the event that the US FDA rejects a particular
shipment, SELLER shall immediately reimburse BUYER all costs
associated with the production of the rejected shipment based on
BUYER's fully-loaded costs. Such payments shall be due and payable in
full within 70 days of BUYER's invoice to SELLER, on the understanding
that BUYER shall charge SELLER a financing cost of 11% per annum over
and above the fully-loaded cost, during the period the debt is
outstanding. Upon receipt of payment by BUYER, SELLER shall be free to
sell rejected Products in the Mexican market, after such Products have
been relabelled with the SELLER's own labels. All transport costs,
import fees, warehousing and tests associated with the delivery of a
rejected container shall be borne by SELLER.
9.4. At BUYER's sole option, BUYER shall either cause:
(a) an irrevocable letter of credit to be opened in favor of SELLER
in the amount of US$ 350,000, which SELLER shall use as collateral
to finance plant and capital improvements as well as new equipment
needed to: (a) bring SELLER's facilities up to BUYER's quality
standards and, (b) finance the implementation of a HACCP quality
assurance program, and (c) finance a Yield improvement program
("Capital Improvements"). The letter of credit shall allow SELLER
to draw an amount of US $0.10 (ten cents) per Case of Finished
Product exported to BUYER. This fee shall be payable over and above
the Seller's Fee. Drawings shall be in amounts of no less than
$5,000 at a time.
or
ITG/Xxxxx - Toll Packing Agreement for Canned Tuna, Cont'd. Page 10
(b) payments to be made directly to suppliers of equipment and
services needed for the Capital Improvements. In this event, BUYER
shall be the sole owner of all Capital Improvements and no payment
will be due SELLER in connection with the use of such equipment.
9.5. SELLER may not at any time during the term of this Agreement or any
renewal thereof use or process for its own account, take possession
of, dispose of, or transfer BUYER's Direct Materials and/or Raw
Materials to satisfy any of BUYER's obligations or SELLER's claim
against BUYER.
9.6. SELLER shall keep all BUYER-financed Capital Improvements, Direct
Material and Equipment free and clear of any lien, encumbrances,
hypothecation or charge of any kind during the term of this Agreement
and any renewal thereof. It shall the the responsibility of SELLER to
cause BUYER's lien on Equipment and Direct Material to be registered
in the Official Registry in Ensenada within seven days of the
signature of this Agreement, and to provide BUYER with a copy of such
registration.
9.7. In the event this Agreement is terminated prematurely for any reason
whatsoever, or upon its expiry, SELLER shall have the option of either
(a) returning to BUYER all Capital Improvements belonging to BUYER, or
(b) reimbursing BUYER for all payments made, directly or indirectly,
by BUYER to finance such Capital Improvements and to pay for
inventoried Raw Material and Direct Material. At BUYER's sole option,
BUYER may convert SELLER's indebtedness toward BUYER into SELLER's
voting shares of preferred or common at the then prevailing book
value.
10. WARRANTIES AND INDEMNIFICATION
10.1. SELLER hereby guarantees that no Product shipped to BUYER shall be, as
of the date of such shipment or delivery, adulterated or misbranded or
unsafe within the meaning of the US Federal Food, Drug and Cosmetic
Act with all revisions and amendments pertaining thereto (including
the Pesticide and Food Additive Amendments of 1958) or within the
meaning of any substantially similar state law.
SELLER hereby agrees to defend, pay, indemnify and hold BUYER
harmless from and against any and all claims, demands, fines,
suits, actions, proceedings, orders, decrees and judgments of any
kind or nature by or in favor of anyone whomsoever and from and
against any and all costs and expenses, including reasonable
attorneys fees, resulting from or in connection with liability or
loss arising from use, distribution and marketing of any Products
furnished by SELLER.
SELLER agrees to indemnify and hold BUYER harmless from liability,
suits or actions of any kind arising from the use, distribution and
marketing of any products furnished by SELLER, however SELLER
shall not indemnify and hold BUYER harmless from any loss or
liability arising out of the negligent acts or omissions of BUYER,
its agents or employees.
10.2. BUYER and SELLER shall carry separately and at their own expense an
insurance policy providing INTER ALIA, product liability coverage in
an amount of at least US$1,000,000 (one million US dollars). SELLER
undertakes to name BUYER an additional insured party under SELLER's
policy no later than thirty (30) days from the date this Agreement is
signed, SELLER shall furnish BUYER with the original policy or
policies or duly executed certificates for the same together with
satisfactory evidence of payment of the premium thereof.
10.3. SELLER guarantees that at all times, during the term of this Agreement
and any renewal thereof, any Direct Material, Raw Materials, or
equipment belonging to BUYER (BUYER's Assets") shall at all times be
held in storage at SELLER's own facilities, free and clear of any
lien, encumbrances, hypothecation or charge of any kind. In this
respect, SELLER shall cause no later than 30 days from the date of this
agreement a filing to be made with the appropriate Mexican
authorities, a lien in favor of BUYER on all Direct Material and Raw
Material shipped by BUYER to SELLER for use in production.
ITG/Xxxxx - Toll Packing Agreement for Canned Tuna, Cont'd. Page 11
11. QUALITY CONTROL
11.1. SELLER shall, at any time during performance of its obligations
hereunder, permit BUYER to maintain a representative in those areas of
the plant where Raw Material, ingredients, Direct Materials, or
Finished Products are stored, handled or processed, and to enable
BUYER to inspect said facilities and assess the procedures followed by
SELLER to assure that said plants, facilities and procedures are
consistent with BUYER's quality standards and with any other
requirement which may be agreed upon from time to time by and between
the parties.
11.2. SELLER shall provide at no cost to BUYER a furnished office, a phone
line and a fax line (overseas calls charged to BUYER) to permit
BUYER's full time representative to fulfill his duties relative to
quality assurance and production monitoring.
11.3. SELLER shall permit BUYER's representative to inspect each lot of
Finished Products prior to accepting the lot, in accordance with
BUYER's standard sampling procedures as defined in BUYER's or BUYER's
Specifications. In the event BUYER's representative rejects a
particular lot that is found to be sub-standard, it will be the
SELLER's responsibility to segregate rejected Products in its
warehouse and to maintain a separate accounting for rejected Products.
It is expressly agreed that BUYER's representative shall refrain from
giving orders to SELLER's employees and shall discuss quality issues
strictly with SELLER's Supervisor.
12. DELIVERY AND STORAGE
12.1. SELLER shall deliver Finished Products to BUYER on an ex-factory
basis, loaded and braced in the truck or container.
12.2. Container/truck loading inspection procedures shall be the sole
responsibility of SELLER. In this respect SELLER will undertake to
inspect every container/truck for leaks, damage or defects that could
result in damage to the Products in transit. SELLER shall only accept
from shipping lines and freight forwarders, containers or trucks that
meet or exceed BUYER's requirements for water-proofing and quality.
Any containers that does not meet BUYER's requirements shall be
replaced before loading. SELLER will load all containers in accordance
with BUYER's loading instructions and cause appropriate bracing to be
placed within the container in order to prevent cargo damage caused by
load shifts in transit.
12.3. SELLER shall store and warehouse Products in a moisture-free
environment, in accordance with generally accepted standards, so as to
minimize the risk of Product deterioration or contamination that could
render the Product unfit for consumption. SELLER's warehouse shall be
secure against theft and shall be free of rodent infestation.
12.4. All finished Products shall be warehoused by SELLER based on generally
accepted principles of stock rotation using the first-in, first-out
method, and no charge shall be made to BUYER for warehousing of Direct
Materials or Finished Products.
13. INSPECTION ACCEPTANCE CLAIMS
13.1. All Products shall be received at its final destination subject to
BUYER's inspection and acceptance. Claims regarding defective Products
shall be made in writing to SELLER no later than ninety (90) days
after delivery of the goods at its final destination.
13.2. All claims for shortage shall be reported in writing to SELLER within
30 (thirty) days of the arrival of the container/truck at its final
destination. SELLER shall correct shortages at no cost to BUYER or
refund BUYER within 10 days for the full cost of Product. SELLER and
BUYER shall cooperate with each other in presenting claims for xxxx of
lading shortages or for merchandise damaged in transit.
ITG/Xxxxx - Toll Packing Agreement for Canned Tuna, Cont'd. Page 12
13.3. In the event that certain Product codes are found to be defective
after delivery at its final destination and such codes have been
inspected by BUYER's quality assurance employees as part of BUYER's
pre-shipment organoleptic inspection, it is agreed that BUYER shall
bear the responsibility only for defects that can be detected during
the course of a normal organoleptic inspection involving a randomly
selected sample. However, any defects, whether hidden or not and/or
not otherwise easily identifiable during the course or a normal
pre-shipment organoleptic inspection of randomly selected samples (e.g.
honey combing, vacuum loss, or microbiological contamination), shall
automatically be the sole responsibility of SELLER.
14. PACKAGING AND LABELING
14.1. All preparation, packaging, containerization and loading necessary to
preserve quality and to ensure safe transportation of the Products to
the US shall be the SELLER's sole responsibility.
14.2. Unless otherwise agreed in writing, SELLER and BUYER shall cooperate to
identify and obtain the lowest freight rates for each shipment. All
shipping contracts shall be the responsibility of BUYER.
15. TERMINATION
15.1. Each party may terminate this agreement with immediate effect, by
notice given in writing by registered mail, in case of a substantial
breach by the other part of the obligations arising out of the
contract or in case of exceptional circumstances, as defined below,
justifying the earlier termination.
15.2. Any failure by a party to carry out all or part of its obligations
under the contract resulting in such detriment to the other party as
to substantially deprive it of what it is entitled to expect under the
contract, shall be considered as a substantial breach for the purpose
of article 15.1. above.
15.3. Any violation of the provisions under articles 4.4, 5, 6, 8, 9.4, 9.5,
9.6, 10, 11, 12, 13, 17, 18 and 19.5 of the present agreement shall
also be regarded as a substantial breach of contract.
15.4. Any violation of the contractual obligations may be considered as a
substantial breach, if such violation is repeated notwithstanding a
written request by the other party to fulfill the contract
obligations.
15.5. The parties further agree that the following situations shall be
considered as exceptional circumstances that justify the earlier
termination by the other party: unavailability of Raw Material at a
competitive price, unforeseen hikes in import duties, unforeseen
governmental regulations or trade barriers, withdrawal of Mexican
Government permits to off load fish in Baja, Mexico, bankruptcy,
moratorium, receivership, liquidation or any kind of composition
between the debtor and the creditors or any circumstances that are
likely to affect substantially one party's ability to carry out its
obligations under this contract.
15.6. In the event of termination, for any reason whatsoever, SELLER shall
immediately release to BUYER, or BUYER's representatives or agents,
all BUYER's Assets in its possession at the time of termination.
SELLER shall permit BUYER's representatives to enter and remove
BUYER's Assets from SELLER's facilities. In this respect, SELLER shall
make every effort to facilitate the immediate and efficient return of
BUYER's Assets and the loading of such assets in a container or truck.
16. FORCE MAJEURE
16.1. Either party may be released from its obligations hereunder in the
event that governmental regulations or any other causes beyond the
parties' control renders performance impossible. Such
ITG/Xxxxx - Toll Packing Agreement for Canned Tuna, Cont'd. Page 13
release shall, however, be exclusively limited to that period of time
when performance is made impossible.
16.2. Should performance by either party be prevented for more than six
consecutive months, then the damaged party shall be entitled to
terminate this agreement by written notice 30 (thirty) days before
effective termination.
17. ASSIGNMENT
17.1. The present agreement may not be assigned without the other party's
prior written consent.
17.2. In the event this contract is assigned to a third party, the new party
will be required to abide by all the terms and conditions of this
Agreement.
18. CONFIDENTIALITY
Both parties agree to keep all information exchanged during the term
of this agreement or any subsequent renewal thereof as strictly
confidential, including but not limited to information regarding
volume of sales, pricing, market intelligence, competitive offers,
systems and procedures, suppliers names and addresses, bills of
lading, financial information and Product specifications.
19. MISCELLANEOUS PROVISIONS
19.1. This contract supersedes any other preceding agreement between the
parties on the subject.
19.2. No addition or modification to this contract shall be valid unless
made in writing and signed by each party's legal representative.
19.3. The nullity of a particular clause of this contract for whatever
reason shall not entail the nullity of the whole agreement, unless the
clause is of such importance that the party to the benefit of which it
was made would not have entered into the contract had it known that
the clause would not have been valid.
19.4. In the event this Agreement is translated into Spanish, it is agreed
that only the English version shall be admissible in any arbitration
or court proceedings.
19.3 SELLER shall be responsible to register this Agreement with the
appropriate authorities in Mexico within seven days of its signature.
In this respect, SELLER shall undertake, at its sole expense, to cause
whatever legal steps or registration are required with the Federal,
State or City Government or the courts, to cause this Agreement to
become valid and binding in Mexico.
20. APPLICABLE LAW:
This contract shall be interpreted and construed in accordance with
the laws of the State of Oregon in the United States of America and
shall be governed by said law.
21. ARBITRATION
21.1. Any dispute arising out of or in connection with the present agreement
shall be finally settled in accordance with the Rules of Conciliation
and Arbitration of the International Chamber of Commerce by one or
more arbitrators appointed in accordance with said Rules. The venue of
proceedings shall be Portland, Oregon, in the United States, the
language of the arbitration shall be English and the substantive law
applicable shall be that of the United States. The
ITG/Xxxxx - Toll Packing Agreement for Canned Tuna, Cont'd. Page 14
ruling of the arbitration panel shall be final and binding upon the
parties and may be enforced in any court of law deemed appropriate.
21.2. In the event the present Agreement has been translated into other
languages, it is expressly agreed that only the original English
version shall constitute the official contract. Arbitration
proceedings shall be based on the English version of the Agreement and
no other translation shall be admissible during such proceedings.
22. ANNEXES
The following annexes constitute an integral part of the present
agreement:
(i) Exhibit A....... FDA Almanac - Standard of Identity for Canned Tuna
(ii) Exhibit B....... Sample Purchase Order
(iii) Exhibit C....... Sample Shipping Instruction
Agro Industrial Xxxxx, X.X. de C.V. International Trade Group, LLC.
/s/ Xxxxxx Xxxxxx Xxxxxxxxx /s/ Xxxxx X. de la Motte
-------------------------------- -----------------------------
Ing. Xxxxxx Xxxxxx Xxxxxxxxx Xxxxx L. de la Motte
General Manager President/CEO
"Appendix A"
Page 1 of 7
Section 161.190 CANNED TUNA
PROMULGATED 2/7/57. REVISED 10/31/90, CORRECTED 2/15/91. REVISED 1/6/93.
*IDENTITY
(a)(1) Canned tuna is the food consisting of processed flesh of fish of
the species enumerated in paragrah (a)(2) of this section, prepared in one of
the optional forms of pack specified in paragraph (a)(3) of this section,
conforming to one of the color designations specified in paragraph (a)(4) of
this section, in one of the optional packing media specified in paragraph
(a)(5) of this section, and may contain one or more of the seasonings and
flavorings specified in paragraph (a)(6) of this section. For the purpose of
inhibiting the development of struvite crystals, sodium acid pyrophosphate
may be added in a quantity not in excess of 0.5 percent by weight of the
finished food. It is packed in hermetically sealed containers and so
processed by heat as to prevent spoilage. It is labeled in accordance with
the provisions of paragraph (a)(8) of this section.
(0)(XX XXXXXXX 00 XX 00000. 10/31/90: EFFECTIVE 12/31/90: CORRECTED
2/15/91) The fish included in the class known as tuna fish are:
THUNNUS THYNNUS (Linnaeus. 1758)--
Northern bluefin tuna
THUNNUS MACCOYII (Casteinau. 1872)--
Southern bluefin tuna
THUNNUS ALALUNGA (Bonnaterre. 1788)--
Albacore
THUNNUS ATLANTICUS (Lesson. 1830)--
Blackfin tuna
THUNNUS OBESUS (Xxxx. 1839)--
Bigeye tuna
THUNNUS ALBACARES (Bonnaterre. 1788)--
Yellowfin tuna
THUNNUS TONGGOL (Bleeker. 1851)--
Longtail tuna
KATSUWONUS PELAMIS (Linnaeus. 1758)--
Skipjack tuna
EUTHYNNUS ALLETTERATUS (Rafinesque. 1810)--
Spotted tunny
EUTHYNNUS LINEATUS Kishinouye. 1920--
Black skipjack tuna
EUTHYNNUS AFFINIS (Cantor. 1849)--
Kawakawa
ALLOTHUNNUS FALLAI Serventy. 1948--
Slender tuna
AUXIS ROCHEI (Xxxxx. 1810)--
Bullet tuna
AUXIS THAZARD (Lacepede. 1800)--
Frigate tuna
STYLES
(3) The optional forms of processed tuna consist of loins and other
striated muscular tissue of the fish. The loin is the longitudinal quarter of
the great lateral muscle freed from skin, scales, visible blood clots, bones,
gills, viscera and from the nonstriated part of such muscle, which part
(known anatomically as the median superficial muscle) is highly vascular in
structure, dark in color because of retained blood, and granular in form.
Canned tuna is prepared in one of the following forms of pack, the identity
of which is determined in accordance with the methods prescribed in paragraph
(c)(2) of this section.
(i) Solid or solid pack consists of loins freed from any surface tissue
discolored by diffused hemolyzed blood, cut in transverse segments to which
no free fragments are added. In containers of 1 pound or less of net
contents, such segments are cut in lengths suitable for packing in one layer.
In containers of more than one pound net contents, such segments may be cut
in lengths suitable for packing in one or more layers of equal thickness.
Segments are placed in the can with the planes of their transverse cut ends
parallel to the ends of the can. A piece of segment may be added if necessary
to fill a container. The proportion of free flakes broken from loins in the
canning operations shall not exceed 18 percent.
(ii) Chunk, chunks, chunk style consists of a mixture of pieces of tuna in
which the original muscle structure is retained. The piecess may vary in
size, but not less than 50 percent of the weight of the pressed contents of a
container is retained on a 1/2 inch mesh screen.
___________
*FDA announced (49 FR 23769, 7/16/84) a temporary permit issued to Xxxxxxx
Purina Co. to market test, for a period of 15 months, beginning no later than
10/15/84, canned tuna in vegetable oil and canned tuna in water which
contains a blend of sodium tripolypnosonate and sodium hexametaonosonata. In
the processing steps prior to canning these ingredients will be used to
reduce loss of natural fluids and protein during cooking, to prevent
oxidative changes during product cool-down, and to facilitate separation of
loin meat. Ingredients will be used to prevent struvite crystal formation
during storage.
Name of the permit holder changed (50 FR 12/17/35) to Van Camp Seafood
Co., Inc. and expiration date of the permit changed to coincide with the
effective date of final rule resulting from a proposal to amend the standard
or 30 days after termination of such proposal.
FDA announced (54 FR 40245, 10/13/89) a temporary market test permit
issued to Starkist Seafood Co. for 300,000 cases of 48/6oz. canned tuna
products containing added natural smoke flavor. At FR 4/13/91 FDA announced
extension of the expiration date to coincide with the effective date of final
rule resulting from a proposal to amend the standard or 30 days after
termination of such proposal.
FDA announced (56 FR 48212, 9/24/91) a temporary market test permit issued
to Bumble Bee Seafoods, Inc. for 300,000 24/6 1/8 oz. cases each of canned
tuna with jalapeno peppers in spring water, and canned tuna with jalapeno
peppers in soybean oil. At FR 7/21/92 FDA announced amendment to the permit
to increase the distribution area, and increase the quantity of chunk light
tuna with jalapeno in oil to 400,000 cases.
416
THE ALAMANAC--Volume 1--1993
Page 2 of 7
STANDARDS OF IDENTITY, FILL--CANNED TUNA FISH--Continued
(iii) Flake or flakes consist of a mixture of pieces of tuna in which
more than 50 percent of the weight of the pressed contents of the container
will pass through a 1/2 inch mesh screen, but in which the muscular structure
of the flesh is retained.
(iv) Grated consists of a mixture of particles of tuna that have been
reduced to uniform size, that will pass through a 1/2 inch mesh screen, and
in which the particles are discrete and do not comprise a paste.
(v) Any of the specified forms of pack of canned tuna may be smoked.
Canned smoked tuna shall be labeled in accordance with the provisions of
paragraph (a)(8)(v) of this section.
COLOR DESIGNATIONS
(4) Canned tuna, in any of the forms of pack specified in paragraph
(a)(3) of this section, falls within one of the following color
designations, measured by visual comparison with matte surface neutral
reflectance standards corresponding to the specified Xxxxxxx units of value,
determined in accordance with paragraph (a)(7) of this section.
(i) WHITE. This color disignation is limited to the species Thunnus
alalunga (albacore), and is not darker than Xxxxxxx value 6.3.
(ii) LIGHT. This color designation includes any tuna not darker than
Xxxxxxx value 5.3.
(iii) DARK. This color designation includes all tuna darker than Xxxxxxx
value 5.3.
(iv) BLENDED. This color designation may be applied only to tuna flakes
specified in paragraph (a)(3)(iii) of this section, consisting of a mixture
of tuna flakes of which not less than 20 percent by weight meet the color
standard for either white tuna or light tuna, and the remainder of which fall
within the color standard for dark tuna. The color designation for blended
tuna is determined in accordance with paragraph (a)(7) of this section.
PACKING MEDIA
(5) (AS REVISED 58FR 2850. 1/6/93) Canned tuna is packed in one of the
following optional packing media.
(i) Any edible vegetable oil other than olive oil, or any mixture of such
oils not containing olive oil.
(ii) Olive oil.
(iii) Water.
(6) Canned tuna may be seasoned or flavored with one or more of the
following:
(i) Salt.
(ii) Monosodium glutamate.
(iii) Hydrolyzed protein declared in accordance with the applicable
provisions of Section 101.22.
(iv) Spices or spice oils or spice extracts.
(v) Vegetable broth in an amount not in excess of 5 percent of the
volume capacity of the container, such broth to consist of a minimum of 0.5
percent by weight of vegetables: Beans, cabbage, carrots, celery, garlic,
onions, parsley, peas, potatoes, green xxxx peppers, red xxxx peppers,
spinach, and tomatoes.
(vi) Garlic.
(vii) Lemon flavoring to be prepared from lemon oil and citric acid
together with safe and suitable carriers for the lemon oil which are present
at nonfunctional and insignificant levels in the finished canned food. When
lemon flavoring is added, a safe and suitable solubilizing and dispersing
ingredient may be added in a quantity not exceeding 0.005 percent by weight
of the finished food. A substance used in accordance with this paragraph is
deemed to be suitable if it is used in an amount no greater than necessary
to achieve the intended flavor effect, and is deemed to be safe if it is not
a food additive as defined in section 201(s) of the Federal Food, Drug, and
Cosmetic Act (the act), or if it is a food additive as so defined, it is used
in conformity with regulations established pursuant to section 409 of the
act.
(viii) Edible vegetable oil or partially hydrogenated vegetable oil,
excluding olive oil, used alone or in combination in an amount not to exceed
5 percent of the volume capacity of the container, with or without any
suitable form of emulsifying and suspending ingredients that has been
affirmed as GRAS or approved as a food additive to aid in dispersion of the
oil, as seasoning in canned tuna packed in water.
DETERMINING COLOR
(7) For determination of the color designations specified in paragraph
(a)(4) of this section, the following method shall be used: Recombine the
separations of pressed cake resulting from the method prescribed in paragraph
(c)(2) of this section. Pass the combined portions through a sieve fitted
with woven-wire cloth of 1/4-inch mesh complying with the specifications of
such cloth set forth in "Official Methods of Analysis of the Association of
Official Analytical Chemists," 13th Ed. (1980), Table 1. "Nominal Dimensions
of Standard Test Sieves (U.S.A. Standard Series)," under the heading
"Definitions of Terms and Explanatory Notes," which is incorporated by
reference(1). Mix the sieved material and place a sufficient quantity into a
307 x 113 size container (bearing a top seam and having a false bottom
approximately 1/2 inch deep and painted flat black inside and outside) so
that after tamping and
--------
(1) For availability of reference materials see beginning of Part 146, this
Almanac.
THE ALMANAC--Volume 1-- 1993 417
Page 3 of 7
STANDARDS OF IDENTITY, FILL--CANNED TUNA FISH--Continued
smoothing the surface of the sample the material will be 1/8 inch to 1/4
inch below the top of the container. Within 10 minutes after sieving through
the 1/4 inch mesh wire-woven cloth, determine the Xxxxxxx value of sample
surface.
(i) Determine the Xxxxxxx value of the sample surface so prepared. The
following method may be used, employing an optical comparator, consisting of
a lens and prism system which brings two beams of light, reflected from equal
areas of sample surface and standard surface, respectively, together, within
an eyepiece, so as to show an equally divided optical field. The scanned
areas of sample and standard surface are not smaller than 2 square inches.
Light reaching the eye is rendered sufficiently diffuse, by design of
eyepiece and comparator, so that detail of the sample surface will remain
undefined, to a degree such as to avoid visual confusion in observation of a
match of over-all intensity of reflected light. The eyepiece contains a color
filter centering at a wave-length between 550 microns and 560 microns. The
filter does not pass appreciable visible radiation of wavelengths below 540
microns or above 570 microns. The passed wavelength band is of a
monochromaticity sufficient to cause a sample and a neutral standard of equal
reflectance to appear of the same hue. The comparator is rigidly mounted on a
vertical stand attached to the base in which arrangement is provided for
securely and accurately positioning two cans of size 307 x 113 in the two
fields of view. Mounted on the base are two shaded lamps, which direct the
center of their beams of light at about a 45 degree angle to the plane of the
sample and standard surfaces. The lamps are so positioned that light from one
bears mainly upon the sample surface and light from the other mainly on the
standard surface, and are so placed in relation to sample and standard that
no shadows, as from the can rims, appear in the fields of view. The lamps are
strong enough to furnish adequate and convenient illumination through
eyepiece and filter. Means is provided to alter the light intensity of one
lamp in relation to the other, as may conveniently be achieved by using a 100
watt tungsten filament bulb in one lamp and using, in the other, a similar
150-watt bulb connected with the power source through a suitable rheostat.
The stand is equipped with nonglossy black curtains on the side of the
observer, to exclude variation in extraneous light reflected from the person
of the observer.
(ii) To adjust the comparator, place a pair of matte surface standards
of Xxxxxxx value 5.3, mounted as described in paragraph (a)(7)(iv) of this
section, in position in the comparator base, and adjust the intensity of the
variable lamp until the two halves of the optical field, viewed through the
eyepiece, are of equal brightness. Then remove one of the standards and
replace it with the prepared sample. Without altering any other adjustments,
observe through the eyepiece whether the sample appears lighter or darker
than the standard. In case of examination of albacore designated "white",
conduct the procedure using standards of Xxxxxxx value 6.3.
(iii) The standards with which comparisons are made are essentially
neutral matte-finish standards, equivalent in luminous reflectance of light
of 555 microns wavelength to 33.7 percent of the luminous reflectance of
magnesium oxide (for Xxxxxxx value 6.3) and 22.6 percent of the luminous
reflectance of magnesium oxide (for Xxxxxxx value 5.3), as given by the
relationship between Xxxxxxx value and luminous reflectance derived by a
subcommittee of the Optical Society of America and published in the "Journal
of the Optical Society of America" Volume 33, page 406 (1943), which is
incorporated by reference.(1)
(iv) These standards shall be cut in circles 3-1/4 inches in diameter and
shall be mounted in 307 x 113 size containers, bearing a top seam and painted
flat black inside and outside, so that the surfaces of the standards are 3/16
inch below the top of the containers in which they are mounted.
(v) In the case of blended tuna, the foregoing method shall be varied by
first separating the tuna flakes of the two different colors before passing
them through the 1/4 inch mesh sieve, then proceeding with each portion
separately for the determination of its color value, employing, if necessary,
a sample container with false bottom greater than 1/2 inch deep.
LABELING
(8)(i) The specified names of the canned tuna for which definitions and
standards of identity are prescribed by this section, except where water is
the packing medium or where the tuna is smoked, are formed by combining the
designation of form of pack with the color designation of the tuna; for
example, "Solid pack white tuna", "Grated dark tuna", etc. In the case of
blended tuna, there shall be used both applicable color designations of the
blended flakes, in precedence determined in accordance with the predominating
portion found in the container; for example, "Blended white and dark and tuna
flakes", "Blended dark and light tuna flakes".
(ii) The specified name of canned tuna when water is used as the packing
medium is
THE ALMANAC -- Volume 1 -- 1993
418
---------------
(1) For availability of reference materials see beginning of Part 145,
this Almanac.
418
Page 4 of 7
STANDARDS OF IDENTITY, FILL--CANNED TUNA FISH--Continued
formed as described in paragraph (a)(8)(i) of this section, followed by the
words "in water"; for example, "Grated light tuna in water".
(iii) When the packing medium is vegetable oil or olive oil, the label
shall bear the name of the optional packing medium used, as specified in
paragraph (a)(5) of this section, preceded by the word "in" or the words
"packed in". In case of the optional ingredient specified in paragraph
(a)(5)(i) of this section, the name or names of the oil used may be stated,
or the general term "vegetable oil" may be used.
(iv) In case solid pack tuna is packed in olive oil, the designation
"Tonno" may also appear.
(v) In case any of the specified forms of canned tuna are smoked, the
word "smoked" shall appear as a part of the name on the label; for example,
"Smoked light tuna flakes".
+(vi) (AS REVISED 58 FR 2850, 1/6/93) Where the canned tuna contains one
or more of the ingredients provided for in paragraph (a)(6) of this section,
the label shall bear the statement "Seasoned with _______", the blank being
filled in with the name or names of the ingredient or ingredients used,
except that if the ingredient designated in paragraph (a)(6)(v) of this
section is used, the blank shall be filled in with the term "vegetable
broth", and if the ingredients designated in paragraph (a)(6)(viii) of this
section are used, the blank may be filled in with the term "oil", and if the
ingredient designated in paragraph (a)(6)(iv) of this section is used alone,
the label may alternatively bear either the statement "spiced" or the
statement "with added spice"; and if salt is the only seasoning ingredient
used, the label may alternatively bear any of the statements "salted", "with
added salt", or "salt added". If the flavoring ingredients designated in
paragraph (a)(6)(vii) of this section are used, the words "lemon flavored" or
"with lemon flavoring" shall appear as part of the name on the label; for
example, "lemon flavored chunk light tuna". Citric acid and any optional
solubilizing and dispersing agent used as specified in paragraph (a)(6)(vii)
of this section in connection with lemon flavoring ingredients or emulsifying
and suspending ingredients used as specified in paragraph (a)(6)(viii) of
this section shall be designated on the label by their common or usual name.
(vii) Where the canned tuna contains the optional ingredient sodium acid
pyrophosphate as provided in paragraph (a)(1) of this section, the label
shall bear the statement "pyrophosphate added" or "with added pyrophosphate".
(viii) Wherever the name of the food appears on the label so
conspicuously as to be easily seen under customary conditions of purchase,
the names of the optional ingredients used, as specified in paragraphs
(a)(8)(iii), (vi), and (vii) of this section (except if lemon flavoring is
added, this subparagraph applies only to the terms "lemon flavored" or "with
lemon flavoring", not to the constituent ingredients of that flavoring or to
any optional solubilizing or dispersing ingredient used in connection with
lemon flavoring ingredients), shall immediately and conspicuously precede or
follow such name without intervening, written, printed, or graphic matter,
except that the common name of the species of tuna fish may so intervene; but
the species name "albacore" may be employed only for canned tuna of that
species which meets the color designation "white" as prescribed by paragraph
(a)(4)(i) of this section.
(ix) Statements of optional ingredients present required by paragraph
(a)(8)(vi) of this section, but not subject to the provisions of paragraph
(a)(8)(vii) of this section shall be set forth on the label with such
prominence and conspicuousness as to render them likely to be read and
understood by the ordinary individual under customary conditions of purchase.
(b) (Reserved)
FILL OF CONTAINER
(c)(1) The standard of fill of container for canned tuna is a fill such
that the average weight of the pressed cake from 24 cans, as determined by
the method prescribed by paragraph (c)(2) of this section, is not less than
the minimum value specified for the corresponding can size and form of tuna
ingredient in the following table:
I. II.
Can size and Minimum value for
form of tuna weights of pressed cake
ingredient (average of 24 cans)
OUNCES
211 x 109:
Solid.......................................................... 2.25
Chunks......................................................... 1.98
Flakes......................................................... 1.98
Grated......................................................... 2.00
307 x 113:
Solid.......................................................... 4.47
Chunks......................................................... 3.92
Flakes......................................................... 3.92
Grated......................................................... 3.96
401 x 206:
Solid.......................................................... 8.76
Chunks......................................................... 7.58
Flakes......................................................... 7.58
Grated......................................................... 7.76
603 x 408:
Solid.......................................................... 43.2
Chunks......................................................... 37.9
Flakes......................................................... 37.9
Grated......................................................... 38.3
----------
+See copy regarding FDA's proposed revision immediately following this
standard.
THE ALMANAC--Volume 1--1993 419
Page 5 of 7
STANDARDS OF IDENTITY, FILL--CANNED TUNA FISH--Continued
If the can size in question is not listed, calculate the value for column II
as follows: From the list select as the comparable can size that one having
nearest the water capacity of the can size in question, multiply the value
listed in column II for the same form of tuna ingredient by the water
capacity of the can size in question, and divide by the water capacity of the
comparable can size. Water capacities are determined by the general method
provided in Section 130.12(a) of this chapter. For the purposes of this
section, cans of dimensions 211 x 109 shall be deemed to have a water
capacity of 68 degrees Fahrenheit of 3.55 avoirdupois ounces of water; cans of
dimensions 307 x 113, a water capacity of 7.05 avoirdupois ounces of water,
cans of dimensions 401 x 206, a water capacity of 13.80 avoirdupois ounces of
water; and cans of dimensions 603 x 408, a water capacity of 68.15
avoirdupois ounces of water.
TESTING METHODS
(2) The methods referred to in paragraph (c)(1) of this section for
determining the weight of the pressed cake and referred to in paragraph
(a)(3)(i) of this section for determining the percent of free flakes and the
percent of pieces that pass through a 1/2 inch mesh sieve are as follows:
(i) Have each of the 24 cans and contents at a temperature of 75 degrees
Fahrenheit within equals 5 degrees Fahrenheit. Test each can in turn as
follows:
(ii) Cut out the top of the can (code end), using a can opener that does
not remove nor distort the double seam.
(iii) With the cut top held on the can contents, invert the can, and
drain the free liquid by gentle finger pressure on the cut lid so that most
of the free liquid drains from the can.
(iv) With the cut lid still in place, cut out the bottom of the can with
the can opener, then turn the can upright and remove the cut can top (code
end). Scrape off any adhering tuna particles into the tuna mass in the can.
(v) Place the proper size of press cylinder as provided in paragraph
(c)(3)(i) of this section in a horizontal position on a table; then, using
the cut bottom of the can as a pusher, gently force the can contents from the
can into the cylinder so that the flat side of the can contents lies in
contact with the bottom of the cylinder. Remove the bottom of the can that
was used as the pusher and scrape any adhering particles from the can body
and bottom of the can, and put them in the cylinder.
(vi) Place the cylinder plunger on top of the can contents in the
cylinder. Remove the eyebolt and put the cylinder and plunger in position on
the press (paragraph (c)(3)(iii) of this section).
(vii) Begin the operation of the press and as soon as liquid is observed
coming from the cylinder start timing the operation. Apply pressure to the
plunger slowly and at a uniform rate, so that a full minute is used to reach
a pressure of 384 pounds per square inch of plunger face in contact with the
can contents. Hold this pressure for 1 additional minute and then release the
pressure and disengage the plunger from the press shaft. Tip the press
cylinder so that any free liquid is drained out.
(viii) Remove press cylinder with plunger from the press, insert eyebolt
in plunger and withdraw it from the cylinder. Loosen the pressed cake from
the cylinder with a thin blade and remove the entire press cake as gently as
possible, to keep the mass in a single cake during this operation. Place the
pressed cake and any pieces that adhered to the plunger and cylinder in a
tared receiving pan and determine the weight of the pressed material.
(ix) For cans larger than 401 x 206, cut out the top of the can and
drain off free liquid from the can contents as in operations described in
paragraphs (c)(2)(ii) and (iii) of this section. Determine the gross weight of
the can and remaining contents. Using a tared core cutter as provided for in
paragraph (c)(3)(ii) of this section, cut vertically a core of the drained
material in the can. Determine the weight of the core. With a thin spatula
transfer the core to the pressing cylinder for 401 x 206 cans. Determine the
weight of the pressed cake as in the operations described in paragraphs
(c)(2)(v) through (viii) of this section. Remove the remaining drained
contents of the can, reserving the contents for the determination of free
flakes (paragraph (c)(2)(xi) of this section), weigh the empty can, and
calculate the weight of the total drained material. Calculate the weight of
pressed cake on the entire can basis by multiplying the weight of the pressed
cake of the core by the ratio of the weight of the drained contents of the
can to the weight of the core before pressing.
(x) Repeat the determination of weight of pressed cake on the remainder
of the 24 cans and determine the average weight of pressed cake for the
purpose of paragraph (c)(1) of this section.
(xi) Determination of free flakes: If the optional form of tuna
ingredient is solid pack, determine the percent of free flakes. Any flakes
resulting from the operations described in this paragraph (c)(2)(xi) or in
other parts of this paragraph are to be weighed as free flakes. Only
fragments that were broken in the canning procedure are considered to be free
flakes. If the can is of such size that its entire drained contents were
pressed as described in paragraphs (c)(2)(i) to (viii) of this section,
inclusive, examine the pressed
420 THE ALMANAC--Volume 1--1993
Page 6 of 7
STANDARDS OF IDENTITY. FILL--CANNED TUNA FISH--Continued
cake carefully for free flakes. Using a spatula, scrape free flakes gently
from the outside of the cake. Weigh the aggregate free flakes that were
broken from the loin segments in the canning procedure and calculate their
percentage of the total weight of pressed cake. If the can is of such size
that a core was cut for pressing as described in paragraph (c)(2)(ix) of this
section, make the examination for free flakes on a weighted portion of the
drained material remaining after the core was removed. The weight of the
portion examined should be approximately equal the weight of the core before
pressing. Calculate the weight of the free flakes that were broken from the
loins in the canning procedure as a percentage of the weight of the portion
examined.
(xii) Determination of particle size: If the optional form of tuna
ingredient is chunks, flakes, or grated, the pressed cake resulting from the
operations described in paragraphs (c)(2)(i) to (ix) of this section,
inclusive, is gently separated by hand, care being taken to avoid breaking
the pieces. The separated pieces are evenly distributed over the top sieve of
the screen separation equipment described in paragraph (c)(3)(iv) of this
section. Beginning with the top sieve, lift and drop each sieve by its open
edge three times. Each time, the open edge of the sieve is lifted the full
distance permitted by the device. Combine and weigh the material remaining on
the three top sieves (1-1/2 inch, 1 inch, 1/2 inch screens), and determine
the combined percentage retention by weight in relation to the total weight
of the pressed cake.
TESTING EQUIPMENT
(3)(i) The press cylinder and plunger referred to in paragraph (c)(2) of
this section are made of stainless steel. The press cylinders are made with a
lip to facilitate drainage of the liquid. Plungers have a threaded center
hole, about half as deep as the thickness of the plunger, for receiving a
ringbolt to assist in removing the plunger from the press cylinder.
Dimensions for press cylinders and plungers are as follows:
FOR CAN SIZE 211 X 109
Press cylinder:
Inside depth, approximately 3-3/4 inches.
Inside diameter, 2.593 inches.
Wall thickness, approximately 3/8 inch.
Plunger:
Thickness, approximately 1 inch.
Diameter, 2.568 inches.
FOR CAN SIZE 307 X 113
Press cylinder:
Inside depth, approximately 4 inches.
Inside diameter, 3.344 inches.
Wall thickness, approximately 3/8 inch.
Plunger:
Thickness, approximately 1-1/4 inches.
Diameter, 3.319 inches.
FOR CAN SIZE 401 X 206
Press cylinder:
Inside depth, approximately 4-1/8 inches.
Inside diameter, 3.969 inches.
Wall thickness, approximately 1/2 inch.
Plunger:
Thickness, approximately 1-1/4 inches.
Diameter, 3.944 inches.
For can sizes where the diameter is greater than 401, the core cutter
described in paragraph (c)(3)(ii) of this section shall be used and the
resulting core pressed in the press cylinder for can size 401 x 206. For can
sizes differing from those specified in this paragraph (c)(3)(i), special
press cylinders and plungers may be used. Special press cylinders have inside
diameters 1/10 inch less than the outside diameters, at the double seam, for
the can sizes for which the cylinders are used; plunger diameters are 0.025
inch less than the inside diameters of the press cylinders.
(ii) The core cutter referred to in paragraph (c)(2)(ix and (xi) of this
section and paragraph (c)(3)(i) of this section is made from a previously
sealed 300 x 407 can. The cover, including the top seam, is cut out. The edge
is smoothed and sharpened. A small hole to permit passage of air is made in
the bottom.
(iii) The hydraulic press referred to in paragraph (c)(2)(vi) to (x) of
this section, inclusive, is made by so mounting a hydraulic xxxx, in a strong
frame, that it will press horizontally against the center of the plunger in
the press cylinder used. The frame is so braced that it does not change shape
when pressure is applied. The gauge on the hydraulic xxxx is so calibrated
that it will indicate, for the plunger being used, when the plunger is
pressing against the contents of the press cylinder with a pressure of 384
pounds per square inch of plunger face.
(iv) The sieving device referred to in paragraph (c)(2)(xii) of this
section consists of three sieves, each approximately 1 foot square, loosely
mounted, one above the other, in a metal frame. The mesh in the top sieve
complies with the specifications for 1-1/2 inch woven-wire cloth as set forth
in "Standard Specifications for Sieves," as published March 1, 1940, in L.C.
584 of the U.S. Department of Commerce, National Bureau of Standards, which
is incorporated by reference(1). The meshes in the sieves below comply with
similar specifications for 1 inch and 1/2 inch woven-wire cloth as set forth
in the same pub-
----------------
(1) For availability of reference materials see beginning of Part 145, this
Almanac.
THE ALMANAC--Volume 1--1993
421
Page 7 of 7
STANDARDS OF IDENTITY, FILL--CANNED TUNA FISH--(Continued)
lication. The sides of each sieve are formed, in a raised rim, from 3/4
inch x 1/8 inch metal strap. The frame has tracks made of 3/8 inch angle
metal to support each sieve under each side. The tracks are so positioned as
to permit each sieve a free vertical travel of 1-3/4 inches.
(4) If canned tuna falls below the applicable standard of fill of
container prescribed in paragraph (c)(1) of this section, the label shall
bear the general statement of substandard fill provided in Section 130.14(b)
of this chapter, in the manner and form therein specified.
-------------------------------------------------------------------------------
FDA PROPOSAL
TUNA INGREDIENT LABELING
At 58 FR 2950, 1/6/93 FDA proposed to add two sentences to the end of Section
161.190(a)(8)(vi) to read as follows:
(vi) * * * If the vegetable extractives used in manufacturing the
vegetable broth include extractives of soybeans, the designation of vegetable
broth in the ingredient statement shall be followed by a parenthetical
listing as follows: "vegetable broth (includes soybeans)." Alternatively, if
vegetable broth containing soybean extractives serves as a flavor and has no
flavor enhancing function, it may be listed in the ingredient statement as:
"flavoring (includes soybeans)."
FDA'S PROPOSED EFFECTIVE DATE FOR A FINAL RULE IS 5/8/94.
-------------------------------------------------------------------------------
International Trade Group, LLC PURCHASE ORDER P. 1 of 1
[LOGO] 0000 XX Xxxxxxxx Xx Note: purchase order number must appear on all packages, Print Date: 9/4/96
Xxxxxx, XX 00000 invoices, correspondence and bills of lading.
USA
Ph: (000) 000-0000 Fax: (503)
598-4391
-----------------------------------------------------------------------------------------------------------------------------------
Supplier Vendor No. 177 Ship To Purchase Order #
Tuna Packers Extraordinaire, S.A. de C.V. W.T. Young Storage B6-1398-A
Ensanada, Mexico The Kroger Company -----------------------------
0000 Xxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000 September 4, 1996
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Ordered Via Confirming To Ship Via Requisitioner
ITQ Plant Manager Overland Carrier w/Interchange at Border Xxx Xxxxxx
-----------------------------------------------------------------------------------------------------------------------------------
Minimum Cases per Container Terms of Sale Payment Terms Buyer
0000 X&X Xxxx Xxxxx Draft Acceptance at 60 days from BOL Date Xxxxx Xxxxxxxxxxx
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
1. 5400 24/6 oz 11110-22222 24/6 oz Chunk Light Tuna in Water, Kroger label US$ 15.000 US$81,000.00
3. 60 Empty Cartons Please inlclude 20 empty cartons per container for US$ 0.000 US$ 0.00
repackaging damaged cases
4. ((NOTE: THIS IS EXHIBIT B, NOT A VALID PURCHASE ORDER.))
5.
FOR PRE-SHIPMENT INSPECTION, CONTACT:
XXX XXXXXX PHONE: (000) 000-0000
0000 XX XXXXXXXX XXXX
XXXXXX, XX 00000 Total Cost > US$81,000.00
PURCHASE ORDER CONDITIONS:
Products should be manufactured, packed and labelled in accordance with
attached specifications and meet US FDA standards of identity typical of this
product. Labelling should be under the label mentioned in each Shipping
Instructions for the specified item number found on the bar code. Each
shipment is to be inspected by our agent prior to delivery to the carrier.
Purchase order is subject to our standard Product and Packaging Agreement
with the Supplier mentioned above. Draft acceptance and documentation should
be addressed immediately after shipment in one lot by express courier to our
bank: U.S. National Bank of Oregon, Attn: Xxxxxx North, International
Banking, 000 X.X. Xxxxx Xxxxxx, X-00, Xxxxxxxx, Xxxxxx 00000.
AUTHORIZED SIGNATURE: [ILLEGIBLE]
IMPORTANT:
This purchase order and Seller's acceptance hereof is subject to and is
expressly limited to the terms and conditions set forth on the front and back
side of this purchase order. Any additional or different terms in Seller's
acceptance or confirmation forms must be approved in writing by Purchaser or
authorized agent thereof.
Exhibit "C"
International Trade Group, LLC Shipping Instruction S6-1387B
0000 XX Xxxxxxxx Xxxx
[XXXX] Xxxxxx, XX 00000 Page 1 of 1
USA
Ph: (000) 000-0000 FAX: (000) 000-0000
CONTAINER TYPE: 20 Foot Dry PREFERRED CARRIER: Shipper's preferred carrier
PORT OF LOADING: Haimen CARRIER's CONTRACT:
PLACE OF DELIVERY: Louisville, Kentucky FREIGHT TERMS: C&F Louisville, KY
Shipper pays FAF, etc.
CONSIGNEE FOREIGN SHIPPER
--------- ---------------
International Trade Group Xxx Xxxxxx Jinhua Import & Export Corporation (L7)
0000 XX Xxxxxxxx Xxxx Phone: (000) 000-0000 00 Xxxx Xx Xxxx
Xxxxxx, XX 00000 Fax: (000) 000-0000 Jinhua, Zhejiang PRC
TO ARRANGE PICK-UP CONTACT NOTIFY PARTY
-------------------------- ------------
International Trade Group, LLC International Trade Group
Xxx Xxxx-Ping 0000 XX Xxxxxxxx Xxxx
Phone: 00-000-0000 Xxxxxx, XX 00000
Fax: 00-000-0000
SEND ORIGINAL DOCUMENTS TO REQUIRED DOCUMENTS
-------------------------- ------------------
Star Bank International Trade Group Please refer to Draft Acceptance for required
Attn: International Banking 0000 XX Xxxxxxxx Xxxx documents.
000 Xxxxxx Xxxxxx Xxxxxx, XX 00000
Xxxxxxxxxx, XX 00000
SPECIAL SHIPPING AND LOADING INSTRUCTIONS
-----------------------------------------
Arrange for delivery to Louisville, Kentucky via US West Coast Port. Check
container for water-leaking holes. Floor-load cases in interlocking and
overlapping pattern to avoid in-transit damage.
--THE FOLLOWING ITEMS MUST BE SHIPPED--
Earliest Latest Arrival
Order# Ship Date Date at POD UPC Code Commodity Description
------------------------------------------------------------------------------------------------------------------------
1387B-01 Jun 15, 1996 Jul 21, 1996 11110-8548 4800 cases of 12/8 oz Sliced Waterchestnuts, Kroger label
------------------------------------------------------------------------------------------------------------------------
1387B-02 Jun 15, 1996 Jul 21, 1996 11110-85481 4800 cases of 12/8 oz Whole Waterchestnuts, Kroger label
Issue Date: May 24, 1996
NOTE: PURCHASE ORDER MUST APPEAR ON ON ALL CASES,
INVOICES, CORRESPONDENCE AND BILLS OF LADING
Authorized
Signature: [illegible] IMPORTANT: This order is subject to price quotations
and terms received from seller. Seller's acceptance
of this order constitutes an acknowledgment that
transport will be arranged as specified within
established price guidelines.
[LETTERHEAD]
FAX MESSAGE
TO: (FIRM) I.T.G. FAX NO. 0-000-000-0000
--------------------------------------------------------------------------------
LOCALE: OREGON DATE: 4 September 1996
--------------------------------------------------------------------------------
ATTENTION: MR. ALAIN DE LA MOTTE TOTAL PAGES: 4
--------------------------------------------------------------------------------
DEAR ALAIN:
FURTHER TO OUR TELEPHONE CONVERSATION OF EARLIER TODAY!
ATTACHED ARE COPIES OF THE TECHNICAL INFORMATION THAT I AM FORWARDING TO
ED!
OUR BASIC LEASE TERMS ARE AS FOLLOWS:
1. TERM: FIVE (5) YEAR INITIAL TERM, WITH TWO (2) YEAR RENEWAL
OPTIONS THEREAFTER
2. ANNUAL MINIMUM RENTAL: U.S. $25,000.00 PAYABLE IN TWELVE (12)
EQUAL PAYMENTS OF U.S. $2083.33. FIRST YEAR PAID IN ADVANCE!
3. OVERAGE RENTAL: U.S. $O.12 PER CASE (48/6oz cans) FOR ALL
PRODUCTION IN EXCESS OF 208,333 CASES IN ANY LEASE YEAR OVER-
AGE IS PAYABLE ON AN AS-ACCRUED BASIS.
4. INSURANCE IS REQUIRED IN THE AMOUNT OF U.S. $225,000.00!
NOTE: ALL PAYMENTS ARE "NET" OF ANY APPLICABLE TAXES!
WE HAVE CONTACTED OUR LEGAL COUNSEL IN BAJA, AND HE IS EXPECTING TO HERE
FROM YOU. XX. XXXXXX XXXXXX TIJUANA, B.C. 011-52-66-865557!
PLEASE ADVISE IF WE CAN PROVIDE ADDITIONAL INFORMATION, PRIOR TO SENDING A
"COPY" OF OUR LEASE AGREEMENT FOR YOUR REVIEW!
BEST REGARDS
/s/ Xxxxx Xxxxx
XXXXX XXXXX
LIABILITIES ASSUMED
EXHIBIT B
LEASE AGREEMENT
FOR
SOLID PACK TUNA CANNING MACHINE
(For 307 Diameter Size Can)
THIS LEASE AGREEMENT, made and executed in the State of
California, United States of America ("U.S.A."), as of this 30th day of
September, 1996, between XXXXX MACHINERY & ENGINEERING CO., INC., a California
corporation, whose mailing address is X.X. Xxx 0000, Xxxxxxx, Xxxxxxxxxx, 00000,
X.X.X., hereinafter called "LESSOR"; and INTERNATIONAL TRADE GROUP, LLC., an
Oregon limited liability company, whose principal office address is 0000 X.X.
Xxxxxxxx Xx., Xxxxxx, Xxxxxx, 00000, hereinafter referred to as "LESSEE":
W I T N E S S E T H:
WHEREAS, Lessor is the holder of Letters Patent of the United
States, Spain, Italy, and Japan, and has constructed a machine capable of being
used for the solid packing of tuna and other fish in the fish canning industry,
and has made other inventions and discoveries as are revealed in the following
documents and drawings:
30 SEPTEMBER 1996
1
(1) United States Letters Patent No. 4,166,140, entitled
"Method of Canning Fish";
(2) United States Letters Patent No. 5,199,241, entitled
"Can Star Drive for Solid Pack Tuna Canning Machines";
(3) Spanish Letters Patent No. 465,109, entitled
"Solid Pack Tuna Canning Machine";
(4) Italian Letters Patent No. 1,083,748, entitled
"Solid Pack Tuna Canning Machine";
(5) Japanese Letters Patent No. 1,380,477, entitled
"Solid Pack Tuna Canning Machine."
WHEREAS, Lessee desires to lease from Lessor the Solid Pack Tuna
Canning Machine described in Paragraph 1 of this Agreement ("Machine"), and to
place said Machine in the custody of Agroindustrias Xxxxx X.X. de C.V. ("Xxxxx")
pursuant to a Toll-Packing Agreement between Lessee and Xxxxx dated September 5,
1996.
WHEREAS, Lessor is willing to lease said Machine to Lessee under
such circumstances, but only if all of the terms and conditions applicable to
such circumstances are met.
NOW, THEREFORE, in consideration of the promises made herein and
intending to be legally bound, the parties hereto agree as follows:
30 SEPTEMBER 1996
2
1. LEASE
Lessor hereby leases to Lessee, and Lessee hereby hires from
Lessor, a machine for use in the packing of tuna and other fish products in the
fish canning industry described as a Solid Pack Tuna Canning Machine, Machine
No. SP182-96, hereinafter referred to as the "Machine," upon the terms and
conditions and for the terms hereinafter stated. Said Machine shall be used in
the filling of 307 diameter size cans as described in Exhibit "A" included
herewith.
2. TERM
This Lease shall be for a term of five (5) years to commence on
the earlier of (a) the date of first actual use of the Machine by Lessee; or
(b) thirty (30) days after arrival of the Machine at Xxxxx'x plant. Provided
Lessee is not in default under this Lease, Lessee may renew this Lease for an
additional two (2) year term on expiration of the initial five (5) year term
upon the same terms and conditions of the Lease, except as otherwise provided
herein. Thereafter, the term of this Lease may be renewed for successive two
(2) year periods upon the same terms and conditions of the Lease, except as
otherwise provided herein. Lessee shall notify Lessor in writing as to
renewal or termination of this Lease not later than sixty (60) days before
the end of the initial five (5) year term, and sixty (60) days before the end
of each two (2) year renewal term. If no written notice of Lessee's
determination to renew or terminate is given, the term of this Lease shall be
deemed to have been renewed as hereinabove provided.
30 SEPTEMBER 1996
3
3. RENT
3.1 Lessee agrees to pay to Lessor as rental for the use of the
Machine an annual minimum rental at the rate of Twenty-Five Thousand United
States Dollars (U.S. $25,000.00) for each lease year of the initial five (5)
year term of this Lease, or any renewal thereof, net after any applicable local
or other taxes (the "Annual Minimum Rental"). The Annual Minimum Rental shall be
paid by Lessee to Lessor in twelve (12) monthly installments of Two Thousand
Eighty-Three United States Dollars and Thirty-Three United States Cents (U.S.
$2,083.33) net after any applicable local or other taxes, on or before the
twentieth (20th) day following each month of each lease year of the initial five
(5) year term of this Lease, or any renewal thereof.
3.2 In addition to the Annual Minimum Rental, Lessee agrees to
pay to Lessor for the use of the Machine during each lease year of the initial
five (5) year term of this Lease, or any renewal thereof, net after any
applicable local or other taxes, a per case (a case for purposes of this Lease
shall consist of forty-eight (48) cans) rental ("Overage Rental") at the rate of
Twelve United States Cents (U.S. $.12) for each case of 307 diameter size cans,
for all such production from the Machine exceeding Two Hundred Eight Thousand
Three Hundred Thirty-Three (208,333) cases.
Overage Rental shall be paid on an as-accrued, monthly basis,
concurrently with the monthly installment of the Annual Minimum Rental.
30 SEPTEMBER 1996
4
3.3 Lessee, upon execution of this Lease, notwithstanding
Paragraph 3.1, hereinabove, agrees to pay to Lessor Twenty-Five Thousand United
States Dollars (U.S. $25,000.00) as advanced payment of the Annual Minimum
Rental ("Advanced Deposit") for the first (1st) lease year of the initial five
(5) year term of the Lease, net after any applicable local or other taxes. In
the event that the Lease is terminated within its first (1st) lease year as a
result of a default by Lessee under terms of the Lease, or by mutual agreement,
or by Lessee for any reason, no refund of any portion of the Advanced Deposit
shall be due then by Lessor. The Lease shall not be considered in full force and
effect until after the Advanced Deposit received by Lessor in Gardena,
California, U.S.A.
During the first (1st) lease year of the initial five (5) year
term of the Lease, Lessee shall not make monthly installments of the Annual
Minimum Rental as specified in Paragraph 3.1 of the Lease. In the event that
production exceeds the quantity stipulated in the Lease, Overage Rental incurred
shall be paid on an as-accrued, monthly basis, as specified in Paragraph 3.2,
hereinabove.
3.4 The Annual Minimum Rental and the per case charge for Overage
Rental remain subject to the terms and conditions of Section 3.6 of this Lease,
or any renewal thereof.
30 SEPTEMBER 1996
5
3.5 On or before the twentieth (20th) day following each month of
this Lease, or any renewal thereof, and concurrently with the payment of the
monthly installment of the Annual Minimum Rental and any Overage Rental due,
Lessee shall render to Lessor a true and correct monthly production report,
certified by an official of the Lessee, giving an account of the number of cases
and can sizes filled or packed on the Machine during the preceding month. Within
twenty (20) days after the end of each lease year, Lessee shall render to Lessor
a true and correct annual report, certified by an official of the Lessee, giving
an account of the number of cases and can sizes filled or packed on the Machine
during the preceding lease year.
3.6 At the end of the initial five (5) year term of this Lease
and at the end of each subsequent two (2) year renewal term of this Lease,
Lessor may, at its option, and upon at least ninety (90) days written notice to
Lessee prior to the end of such term, increase the Annual Minimum Rental and/or
the Overage Rental case rate to the extent of any percentage increase in the
Consumer Price Index for all urban consumers (base year 1967=100) for the
U.S.A., published by the United States Department of Labor, Bureau of Labor
Statistics (the "CPI") which may have taken place since the date the initial
term of this Lease commenced (the "Initial Date"). The base period for purposes
hereof shall be the CPI published most recently prior to the Initial Date ("Base
Index"). The determination of any increase shall be made by comparing the Base
Index with the CPI published most recently prior to the end of the initial five
(5) year term or each subsequent two (2) year renewal term, as the case may be.
30 SEPTEMBER 1996
6
3.7 Lessee agrees to keep accurate books and records of the
number of cases and the number and sizes of cans filled or packed on the Machine
during the term of this Lease, or any renewal thereof, and agrees to permit such
books and records to be examined by Lessor and its duly accredited agents,
servants and employees to the extent necessary to verify the aforesaid monthly
and annual reports. If Lessor disputes the certified annual report of Lessee for
any lease year during the term of this Lease or any renewal thereof, Lessor
shall have the right to have an independent accounting firm of its choice review
such report and examine the books and records of Lessee pertaining thereto. The
cost of such independent accounting firm's examination shall be borne by Lessor
unless the Overage Rental determined as a result thereof to be due for the lease
year in question is more than five percent (5%) higher than the amount thereof
first determined to be payable by Lessee, in which case the costs of such
examination, as well as any additional monies due, shall be promptly paid by
Lessee.
4. SHIPPING
4.1 Lessor shall deliver the Machine to Lessee within 120 days
after receipt of signed Lease Agreement, a signed counterpart Bailment Agreement
set forth in Exhibit "B" attached hereto ("Bailment Agreement"), and Advanced
Deposit as specified in Paragraph 3.3, hereinabove, F.O.B. Gardena, California,
U.S.A. (INCOTERMS, 1990), who shall thereupon deliver the Machine to Xxxxx. Upon
delivery of the Machine to Xxxxx, Lessee shall provide to Lessor any and all
documents, instruments, and proof satisfactory to Lessor that the Machine
has been imported and delivered to Xxxxx in compliance with all applicable laws
and regulations. Lessor shall not be responsible for
30 SEPTEMBER 1996
7
any loss occasioned by any delay in delivery of the Machine that is the result
of fire, earthquake, water damage, tornado and wind storm, explosion, smoke and
smudge, aircraft, motor vehicle or ship damage, collapse of building or
structure, strikes, riots and civil commotion, vandalism and malicious mischief,
burglary and theft, government interference or other matters over which Lessor
has no control. Lessee shall pay all fees, local or other taxes, freight,
insurance and all transportation costs. All replacement parts which Lessor
agrees to provide Lessee, pursuant to Paragraph 8 hereinbelow, shall be
delivered to Lessee F.O.B. (INCOTERMS, 1990), Gardena, California, U.S.A. Lessee
shall pay all fees, local or other taxes, freight, insurance and all
transportation costs.
4.2 On the expiration or termination of this Lease, or expiration
or termination of any renewal thereof, Lessee shall, within ten (10) days
thereafter, promptly crate and ship the Machine, together with any and all spare
parts, manuals and accessories, to Lessor via surface freight at Lessee's sole
cost and expense to ensure arrival at Lessor's facility in Gardena, California,
U.S.A. within sixty (60) days after such termination or expiration. Lessee shall
pay all fees and local or other taxes necessary to accomplish full delivery to
Gardena, California, U.S.A. Lessee shall obtain and maintain appropriate
insurance with respect to the Machine pending and until its actual return to
Lessor in Gardena, California, U.S.A. Such insurance shall provide coverage
against loss or damage to the Machine in an amount not less than its replacement
cost of Two Hundred Twenty-Five Thousand United States Dollars (U.S.
$225,000.00), net after any applicable local or other taxes. If for any reason,
upon the expiration or termination of this Lease, or expiration or termination
of any renewal thereof, Lessee is unable
30 SEPTEMBER 1996
8
to return the Machine to Lessor as specified, Lessee shall pay to Lessor the
stipulated loss value of the Machine of Two Hundred Twenty-Five Thousand United
States Dollars (U.S. $225,000.00), net after any applicable local or other
taxes.
5. BARE RIGHT OF USE: APPROPRIATE GOVERNMENTAL FILINGS
Lessee hereby acquires no right in or to the Machine other than
the bare right of use in accordance with this Lease, or any renewal thereof, and
no right in any application for patent or any patent relating to the Machine or
any element thereof which Lessor now has or may hereafter acquire. The Machine
is and shall remain the property of Lessor. The Machine shall be plainly marked
as the property of Lessor, and Lessee agrees not to remove, obliterate or
conceal that marking. The Machine is, and shall at all times be and remain
personal property of the Lessor notwithstanding that the Machine or any part
thereof may be in any manner affixed or attached to, or embedded in, or
permanently resting on, real property or any building thereon. Lessee agrees to
execute or otherwise assist Lessor in the filing with the appropriate
governmental agencies or authorities for the location where the Machine is
located, and provide all documentation which may be necessary to put third (3rd)
parties on notice that the Machine is the personal property of Lessor, and to
protect Lessor's ownership interest therein.
6. INSTALLATION
Lessee agrees to provide a safe, suitable and sufficient place
for installation of the Machine, being one which maintains and preserves the
operability, condition and normal period of use of the Machine. The Machine
30 SEPTEMBER 1996
9
shall be installed at Xxxxx'x cannery in accordance with the Bailment Agreement.
Lessee shall not permit the Machine to be removed from such location without the
prior written consent of Lessor.
7. USE OF MACHINE
Lessee shall use the Machine in a careful and proper manner, in
accordance with all oral, written or other form of instructions supplied by
Lessor concerning operation of the Machine, and shall comply with and conform to
all national, state, municipal, police and other laws, ordinances and
regulations in effect in anywise relating to the possession, use, or maintenance
of the Machine; and shall, subject to the prior written approval of Lessor, make
any alterations required by such laws, ordinances and regulations at Lessee's
cost and expense. Lessee shall not otherwise alter or modify the Machine without
the prior written consent of Lessor. Lessee agrees to use the Machine for the
purpose of canning fish and fish products only. Lessor, its duly accredited
agents, servants and employees, shall at all reasonable times during business
hours have the right to enter into and on the premises where the Machine may be
located for the purpose of inspecting the Machine or observing its use.
8. REPAIRS AND MAINTENANCE
Lessee at its own cost and expense shall keep the Machine in good
repair, condition and working order including routine adjustment and lubrication
and other maintenance requirements as may be specified by any oral, written or
other form of instructions supplied by Lessor. Due to the
30 SEPTEMBER 1996
10
reciprocating nature of the mechanism and the speed limitations inherent in this
type of equipment, the maximum operating speed of the Machine shall be clearly
displayed on the Machine. If parts become worn or damaged as a result of Lessee
operating the Machine in excess of the displayed maximum speed, cost of all
labor, repairs and replacement parts shall be paid for by Lessee. Lessor agrees
to replace, at Lessor's cost, and as soon as possible after receiving written
notice thereof, any defective parts; provided, however, that Lessor shall not be
liable to Lessee whatsoever for any damages or loss of product arising directly
or indirectly out of a breakdown of the Machine due to such defective part.
Lessor further agrees to replace, at Lessor's cost, and as soon as possible
after receiving written notice thereof, any part that becomes inoperative due to
normal wear and tear. Parts which become inoperative due to reasons other than
defectiveness or normal wear and tear shall be replaced by Lessor, as soon as
possible after receiving written notice thereof, but at Lessee's own cost.
Lessee shall pay all labor costs for the installation of any replacement part
furnished by Lessor under this Paragraph. Notwithstanding the foregoing, Lessor
shall have no obligation to replace or repair the Machine's main drive electric
motor unless same is defective and Lessor is notified in writing thereof within
thirty (30) days of first (1st) use of the Machine.
9. NO PHOTOGRAPHING OR OTHER COPYING OF MACHINE
Lessee shall prevent any photographing, drawing, modeling,
molding or any other type of reproduction, duplication, copying, illustration or
representation or any measuring or examination of the Machine or any component
of the Machine unless such photographing, drawing, modeling, molding
30 SEPTEMBER 1996
11
or other type of reproduction, duplication, copying, illustration,
representation, measuring or examination is necessary for the operation,
maintenance, or repair of the Machine or component thereof. In such event,
Lessee shall maintain in its possession or ensure the return of any photograph,
drawing, model, mold, or other type of reproduction, duplication, copy,
illustration, representation or measurement or results of any examination and
shall not exhibit or disclose same to any person or persons without the express
written approval of Lessor.
10. SURRENDER
On the expiration or termination of this Lease, or on the
expiration or termination of any renewal thereof, Lessee shall (unless Lessee
has paid Lessor in cash the stipulated loss value of the Machine pursuant to
Paragraph 11 hereinbelow) return the Machine to Lessor in good repair, condition
and working order, ordinary wear and tear resulting from proper use thereof
alone excepted, and in the manner specified in Paragraph 4.2 hereinabove.
11. LOSS AND DAMAGE; STIPULATED LOSS VALUE
Lessee hereby assumes and shall bear the entire risk of loss and
damage to the Machine from any and every cause whatsoever. No loss or damage to
the Machine or any part thereof shall impair any obligation of Lessee under this
Lease, or any renewal thereof, which shall continue in full force and effect. In
the event of irreparable damage to the Machine such that for practical business
purposes it cannot be used again, or total destruction
30 SEPTEMBER 1996
12
of the Machine, or total loss of the Machine due to any other reason, including
but not limited to, loss of the Machine or loss of use of the Machine by reason
of the operation of the laws of the U.S.A. or Mexico, during the term of this
Lease or any renewal thereof, Lessee shall pay to Lessor the sum of Two Hundred
Twenty-Five Thousand United States Dollars (U.S. $225,000.00), net after any
applicable local or other taxes, representing the stipulated loss value of the
Machine during the term of this Lease, or any renewal thereof. Upon such payment
in full by Lessee to Lessor this Lease, or any renewal thereof, shall terminate.
Any such amount due by Lessee to Lessor shall be reduced by any payments made to
Lessor from insurance maintained by Lessee as provided in Paragraph 12
hereinbelow.
12. INSURANCE
Lessee shall provide at Lessee's cost, insurance, including but
not limited to fire insurance, on the Machine against all risks of loss or
damage from every cause whatsoever for an amount not less than the stipulated
loss value of the Machine specified in Paragraph 11 hereinabove. Lessee agrees
to designate Lessor as the beneficiary under all such policies of insurance, and
to provide Lessor with adequate evidence thereof upon request.
13. INDEMNITY
Lessor shall not be liable for, and Lessee shall indemnify Lessor
against and hold Lessor harmless from, any and all claims, actions, suits,
proceedings (including, but not limited to, those relating to patent disputes),
costs, expenses, damages and liabilities, including attorneys'
30 SEPTEMBER 1996
13
fees, arising out of, connected with, or resulting from, the delivery,
possession, use, operation, or return of the Machine by Lessee, its agents,
servants, and employees.
14. DEFAULT
The failure of Lessee to make any payment of rent or any other
amount required under this Lease, or any renewal thereof, within fifteen (15)
days after the same is due and payable, or to observe or perform any of the
provisions of this Lease, or any renewal thereof, to be observed or performed by
Lessee or Xxxxx for a period of twenty (20) days after written notice thereof by
Lessor, shall constitute a material default and a breach of this Lease, or any
renewal thereof, by Lessee. In the event of any such material default by Lessee,
Lessor shall have the right to exercise any one or more of the following
remedies concurrently or separately:
A. To terminate this Lease;
B. To enter the premises of Lessee and take possession of the
Machine pursuant to legal proceedings, or to any notice provided by
law, without terminating this Lease and re-rent the Machine for the
account of Lessee either in Lessor's name or otherwise, for such
period as Lessor may deem advisable; in which event the rents received
on any such re-rental during the balance of the term of this Lease
shall be applied first (1st) to the expense of the re-rental and
removal including necessary renovation and reconditioning of the
Machine, and thereafter toward payment of all sums due or to become
due Lessor hereunder. Lessee shall pay to
30 SEPTEMBER 1996
14
Lessor any deficiency. Any said taking of possession shall not
constitute a termination of this Lease unless Lessor expressly so
notifies Lessee in writing;
C. To declare the entire amount of rent hereunder immediately due
and payable without notice or demand to Lessee;
D. To xxx for and recover all rents and other payments then
accrued or thereafter accruing;
E. To pursue any other remedy at law or in equity.
Notwithstanding any said repossession or any other action which
Lessor may take, Lessee shall be and remain liable for the full performance of
all obligations on the part of Lessee to be performed under this Lease. Any and
all costs of removal, repair, reconditioning, trading, freight and other charges
shall be paid by Lessee.
15. TAXES AND ASSESSMENTS
Lessee shall keep the Machine free and clear of all levies,
liens, encumbrances and shall pay all license fees, registration fees,
assessments, charges, duties and local or other taxes of any kind whatsoever
imposed by any governmental agency or authority, which may now or hereafter be
imposed upon the use, operation, or possession of the Machine. In case of
Lessee's failure to pay said fees, assessments, charges, and local or other
taxes, Lessor shall have the right, but not the obligation, to pay any said
fees, assessments, charges, and local or other taxes, as the case may be. In
that event, the cost thereof shall be repayable to Lessor with the next
installment of rent and failure to repay the same by Lessee may be treated by
30 SEPTEMBER 1996
15
Lessor as a default by Lessee. Copies of local or other tax receipts, if
applicable, are to be sent to Lessor annually indicating timely and proper
payments of local or other taxes.
16. BANKRUPTCY; ASSIGNMENT
Neither this Lease, nor any renewal thereof, nor any interest
therein is assignable or transferable by operation of law, through receivership,
bankruptcy or otherwise. Without the prior written consent of Lessor, Lessee
shall not (a) assign, transfer, pledge or hypothecate this Lease, or any renewal
thereof, the Machine, or any part thereof, or any interest therein; or (b)
sublet or lend the Machine or any part thereof, or permit the Machine or any
part thereof to be used by anyone other than Lessee or Lessee's employees.
Consent to any of the foregoing prohibited acts applies only in the given
instant, and is not a consent to any subsequent like act by Lessee or any other
person. Subject to the foregoing, this Lease, or any renewal thereof, inures to
the benefit of, and is binding on, the heirs, legatees, personal representatives
and successors, of the parties hereto.
17. LESSOR'S NON-EXCLUSIVE ROYALTY-FREE LICENSE
Lessee agrees that if, during the term of this Lease, or any
renewal thereof, and for a period of two (2) years thereafter, it shall acquire
any patents as a result of its agents, servants and employees inventing any
improvements or modifications, or developing any method or methods, machine or
machines adapted to affect the purpose of the Machine, then and in such event
Lessor shall have a non-exclusive royalty-free license
30 SEPTEMBER 1996
16
covering such improvements, methods or machines. The term of any such
non-exclusive royalty-free license under the provisions of this Paragraph shall
be perpetual.
18. CORPORATE EXISTENCE; AUTHORITY
Lessee represents and warrants to Lessor that it is a limited
liability company duly organized and validly existing under the laws of the
State of Oregon, U.S.A.; that it has full power and authority to enter into this
Lease; that it has obtained all governmental consents and/or approvals necessary
to enable it to perform its obligations hereunder; and that the execution by it
of this Lease and the performance of its obligations under this Lease does not
violate any law, rule, regulation or order of any government, governmental
agency or court and does not breach any agreement to which it is a party. The
undersigned individual purporting to execute this Lease on behalf of Lessee
represents and warrants that he has been duly authorized and directed to execute
this Lease on behalf of Lessee.
19. INTEREST
Should Lessee fail to pay any part of the rent herein reserved or
any other sum required by Lessee to be paid to Lessor, within fifteen (15) days
after the due date thereof, Lessee shall pay unto the Lessor interest on such
delinquent payment from the expiration of said fifteen (15) days until paid at
the average U.S. prime rate, plus one percent (1%), per lease year.
30 SEPTEMBER 1996
17
20. CONCURRENT REMEDIES
No right or remedies herein conferred on or reserved to Lessor is
exclusive of any other right or remedy herein or at law or in equity provided or
permitted; but each shall be cumulative of every other right or remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise, and may be enforced concurrently therewith or from time to time.
21. NON-WAIVER
No covenant or condition of this Lease may be waived except by
the written consent of Lessor. Forbearance or indulgence by Lessor in any regard
whatsoever shall not constitute a waiver of the covenant or condition to be
performed by Lessee to which the same may apply, and, until complete performance
by Lessee of said covenant or condition, Lessor shall be entitled to invoke any
remedy available to Lessor under this Lease or at law or in equity despite said
forbearance or indulgence.
22. ENTIRE AGREEMENT
This instrument constitutes the entire agreement between Lessor
and Lessee; it shall not be amended, altered, or changed except by a written
agreement signed by the parties hereto.
30 SEPTEMBER 1996
18
23. ATTORNEYS' FEES
In the event either party shall bring any action or proceeding
for damages for an alleged breach of any provision of this Lease, to recover
rents, or to enforce, protect or establish any right or remedy of either party,
the prevailing party shall be entitled to recover as a part of such action or
proceeding reasonable attorneys' fees and court costs.
24. REMITTANCES
24.1 All payments of Annual Minimum Rental and Overage Rental;
and charges for any prepaid freight and transportation costs on the Machine or
parts, as well as charges for parts, service, and service expenses, that are the
responsibility of Lessee hereunder, shall be remitted by International Trade
Group, LLC.
24.2 All rents and charges payable by Lessee to Lessor hereunder
shall be paid to Lessor at any of the following: at X.X. Xxx 0000, Xxxxxxx,
Xxxxxxxxxx, 00000, X.X.X.; directly to Lessor's bank account, which is held as
of the date of this agreement, at 0xx Xxxxxxxx Xxxx, Xxxxxxx XXX Xxxxxxxx, 0xx
Xxxxx, XXX #000000000, 000 Xxxx 000xx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx, 00000,
U.S.A., and is Account No. 020-611812; or at such other place as Lessor may
hereafter designate in writing.
30 SEPTEMBER 1996
19
25. NOTICES
All notices provided for in this Lease or which either party may
desire to give shall be in writing. Any notice to be given by either of the
parties hereto to the other may be delivered in person or to an officer of
Lessee or Lessor, or may be deposited in the appropriate governmental air mail
registered or certified with postage pre-paid, addressed to the party for whom
intended at the address set forth above, or at such other address as either of
the parties hereto may hereafter designate by notice in writing served in the
manner provided under this Paragraph. Service of any such written notice shall
be deemed complete at the time of personal delivery or within seven (7) business
days after the mailing thereof as hereinabove provided.
26. TITLES
The titles to the Paragraphs of this Lease are solely for the
convenience of the parties, and are not an aid in the interpretation of the
instrument.
27. CHOICE OF LAW
This Lease shall be deemed to have been made and executed in the
State of California, U.S.A., and the rights of the parties hereunder shall be
construed, enforced and governed according to the laws of that State. As a
material part of the consideration to the parties for entering into this
Agreement, each party (1) agrees that, at the option of Lessor, all actions and
proceedings based upon, arising out of or relating in any way directly or
indirectly to, this Lease shall be litigated exclusively in courts located
30 SEPTEMBER 1996
20
within Los Angeles County, California, (2) consents to the jurisdiction of any
such court and consents to the service of process in any such action or
proceeding by personal delivery, first-class mail, or any other method permitted
by law, and (3) waives any and all rights to transfer or change the venue of any
such action or proceeding to any court outside Los Angeles County, California.
28. CURRENCY OF ACCOUNT
The parties intend and agree that the currency of account for
transactions hereunder shall be United States Dollars. Any and all payments
hereunder shall be in United States Dollars.
IN WITNESS WHEREOF, the parties hereto have caused this Lease
Agreement to be signed and executed by their company officers thereunto duly
authorized as of the day and year first above written.
"LESSOR" "LESSEE"
XXXXX MACHINERY & INTERNATIONAL TRADE GROUP, LLC.
ENGINEERING CO., INC.
By /s/ Xxxx X. Xxxxx By /s/ [ILLEGIBLE]
------------------------------ ------------------------------
Xxxx X. Xxxxx
Title President Title President/CEO
---------------------------- ---------------------------
Date 30 September 1996 Date 10/1/96
----------------------------- ---------------------------
30 SEPTEMBER 1996
21
[DIAGRAM]
307 X 109 CAN
TWO PIECE TIN PLATE
SP182-96
EXHIBIT "A"
LEASE AGREEMENT
FOR
SOLID PACK TUNA CANNING
MACHINE
(For 307 Diameter Size Can)
THIS LEASE AGREEMENT, made and executed in the State of California,
United States of America ("U.S.A."), as of this 6th day of February, 1997,
between XXXXX MACHINERY & ENGINEERING CO., INC., a California corporation, whose
mailing address is X.X. Xxx 0000, Xxxxxxx, Xxxxxxxxxx, 00000, X.X.X.,
hereinafter called "LESSOR"; and INTERNATIONAL TRADE GROUP, LLC., an Oregon
limited liability company, whose principal office address is 0000 X.X. Xxxxxxxx
Xx., Xxxxxx, Xxxxxx, 00000, hereinafter referred to as "LESSEE":
W I T N E S S E T H:
WHEREAS, Lessor is the holder of Letters Patent of the United States,
Spain, Italy, and Japan, and has constructed a machine capable of being used for
the solid packing of tuna and other fish in the fish canning industry, and has
made other inventions and discoveries as are revealed in the following documents
and drawings:
6 FEBRUARY 1997
1
(1) United States Letters Patent No. 4,166,140, entitled "Method of
Canning Fish";
(2) United States Letters Patent No. 5,199,241, entitled "Can Star Drive
for Solid Pack Tuna Canning Machines";
(3) Spanish Letters Patent No. 465,109, entitled "Solid Pack Tuna Canning
Machine";
(4) Italian Letters Patent No. 1,083,748, entitled "Solid Pack Tuna
Canning Machine";
(5) Japanese Letters Patent No. 1,380,477, entitled "Solid Pack Tuna
Canning Machine."
WHEREAS, Lessee desires to lease from Lessor the Solid Pack Tuna
Canning Machine described in Paragraph 1 of this Agreement ("Machine"), and to
place said Machine in the custody of Agroindustrias Xxxxx X.X. de C.V. ("Xxxxx")
pursuant to a Toll-Packing Agreement between Lessee and Xxxxx dated September 5,
1996.
WHEREAS, Lessor is willing to lease said Machine to Lessee under such
circumstances, but only if all of the terms and conditions applicable to such
circumstances are met.
NOW, THEREFORE, in consideration of the promises made herein and
intending to be legally bound, the parties hereto agree as follows:
6 FEBRUARY 1997
2
1. LEASE
Lessor hereby leases to Lessee, and Lessee hereby hires from Lessor, a
machine for use in the packing of tuna and other fish products in the fish
canning industry described as a Solid Pack Tuna Canning Machine, Machine No.
SP195-96, hereinafter referred to as the "Machine," upon the terms and
conditions and for the terms hereinafter stated. Said Machine shall be used in
the filling of 307 diameter size cans as described in Exhibit "A" included
herewith.
2. TERM
This Lease shall be for a term of five (5) years to commence on the
earlier of (a) the date of first actual use of the Machine by Lessee: or (b)
thirty (30) days after arrival of the Machine at Xxxxx'x plant. Provided Lessee
is not in default under this Lease, Lessee may renew this Lease for an
additional two (2) year term on expiration of the initial five (5) year term
upon the same terms and conditions of the Lease, except as otherwise provided
herein. Thereafter, the term of this Lease may be renewed for successive two (2)
year periods upon the same terms and conditions of the Lease, except as
otherwise provided herein. Lessee shall notify Lessor in writing as to renewal
or termination of this Lease not later than sixty (60) days before the end of
the initial five (5) year term, and sixty (60) days before the end of each two
(2) year renewal term. If no written notice of Lessee's determination to renew
or terminate is given, the term of this Lease shall be deemed to have been
renewed as hereinabove provided.
6 FEBRUARY 1997
3
3. RENT
3.1 Lessee agrees to pay to Lessor as rental for the use of the
Machine an annual minimum rental at the rate of Twenty-Five Thousand United
States Dollars (U.S. $25,000.00) for each lease year of the initial five (5)
year term of this Lease, or any renewal thereof, net after any applicable local
or other taxes (the "Annual Minimum Rental"). The Annual Minimum Rental shall be
paid by Lessee to Lessor in twelve (12) monthly installments of Two Thousand
Eighty-Three United States Dollars and Thirty-Three United States Cents (U.S.
$2,083.33) net after any applicable local or other taxes, on or before the
twentieth (20th) day following each month of each lease year of the initial five
(5) year term of this Lease, or any renewal thereof.
3.2 In addition to the Annual Minimum Rental, Lessee agrees to pay to
Lessor for the use of the Machine during each lease year of the initial five (5)
year term of this Lease, or any renewal thereof, net after any applicable local
or other taxes, a per case (a case for purposes of this Lease shall consist of
forty-eight (48) cans) rental ("Overage Rental") at the rate of Twelve United
States Cents (U.S. $.12) for each case of 307 diameter size cans, for all such
production from the Machine exceeding Two Hundred Eight Thousand Three Hundred
Thirty-Three (208,333) cases.
Overage Rental shall be paid on an as-accrued, monthly basis,
concurrently with the monthly installment of the Annual Minimum Rental.
6 FEBRUARY 1997
4
3.3 Lessee, upon execution of this Lease, notwithstanding Paragraph
3.1, hereinabove, agrees to pay to Lessor Twenty-Five Thousand United States
Dollars (U.S. $25,000.00) as advanced payment of the Annual Minimum Rental
("Advanced Deposit") for the first (1st) lease year of the initial five (5) year
term of the Lease, net after any applicable local or other taxes. In the event
that the Lease is terminated within its first (1st) lease year as a result of a
default by Lessee under terms of the Lease, or by mutual agreement, or by Lessee
for any reason, no refund of any portion of the Advanced Deposit shall be due
then by Lessor. The Lease shall not be considered in full force and effect until
after the Advanced Deposit is received by Lessor in Gardena, California, U.S.A.
During the first (1st) lease year of the initial five (5) year term of
the Lease, Lessee shall not make monthly installments of the Annual Minimum
Rental as specified in Paragraph 3.1 of the Lease. In the event that production
exceeds the quantity stipulated in the Lease, Overage Rental incurred shall be
paid on an as-accrued, monthly basis, as specified in Paragraph 3.2,
hereinabove.
3.4 The Annual Minimum Rental and the per case charge for Overage
Rental remain subject to the terms and conditions of Section 3.6 of this Lease,
or any renewal thereof.
6 FEBRUARY 1997
5
3.5 On or before the twentieth (20th) day following each month of this
Lease, or any renewal thereof, and concurrently with the payment of the monthly
installment of the Annual Minimum Rental and any Overage Rental due, Lessee
shall render to Lessor a true and correct monthly production report, certified
by an official of the Lessee, giving an account of the number of cases and can
sizes filled or packed on the Machine during the preceding month. Within twenty
(20) days after the end of each lease year, Lessee shall render to Lessor a true
and correct annual report, certified by an official of the Lessee, giving an
account of the number of cases and can sizes filled or packed on the Machine
during the preceding lease year.
3.6 At the end of the initial five (5) year term of this Lease and at
the end of each subsequent two (2) year renewal term of this Lease, Lessor may,
at its option, and upon at least ninety (90) days written notice to Lessee prior
to the end of such term, increase the Annual Minimum Rental and/or the Overage
Rental case rate to the extent of any percentage increase in the Consumer Price
Index for all urban consumers (base year 1967=100) for the U.S.A., published by
the United States Department of Labor, Bureau of Labor Statistics (the "CPI")
which may have taken place since the date the initial term of this Lease
commenced (the "Initial Date"). The base period for purposes hereof shall be the
CPI published most recently prior to the Initial Date ("Base Index"). The
determination of any increase shall be made by comparing the Base Index with the
CPI published most recently prior to the end of the initial five (5) year term
or each subsequent two (2) year renewal term, as the case may be.
6 FEBRUARY 1997
6
3.7 Lessee agrees to keep accurate books and records of the number of
cases and the number and sizes of cans filled or packed on the Machine during
the term of this Lease, or any renewal thereof, and agrees to permit such books
and records to be examined by Lessor and its duly accredited agents, servants
and employees to the extent necessary to verify the aforesaid monthly and annual
reports. If Lessor disputes the certified annual report of Lessee for any lease
year during the term of this Lease or any renewal thereof, Lessor shall have the
right to have an independent accounting firm of its choice review such report
and examine the books and records of Lessee pertaining thereto. The cost of such
independent accounting firm's examination shall be borne by Lessor unless the
Overage Rental determined as a result thereof to be due for the lease year in
question is more than five percent (5%) higher than the amount thereof first
determined to be payable by Lessee, in which case the costs of such examination,
as well as any additional monies due, shall be promptly paid by Lessee.
4. SHIPPING
4.1 Lessor shall deliver the Machine to Lessee within 120 days after
receipt of signed Lease Agreement, a signed counterpart Addendum to the Bailment
Agreement signed by Xxxxx on November 2, 1996 set forth in Exhibit "B" attached
hereto, "Addendum to the Bailment Agreement," and Advanced Deposit as specified
in Paragraph 3.3, hereinabove, F.O.B. Gardena, California, U.S.A. (INCOTERMS,
1990), who shall thereupon deliver the Machine to Xxxxx. Upon delivery of the
Machine to Xxxxx, Lessee shall provide to Lessor any and all documents,
instruments, bonds, and proof satisfactory to Lessor that the machine has been
imported and delivered to Xxxxx in compliance
6 FEBRUARY 1997
7
with all applicable laws and regulations. Lessor shall not be responsible for
any loss occasioned by any delay in delivery of the Machine that is the result
of fire, earthquake, water damage, tornado and wind storm, explosion, smoke and
smudge, aircraft, motor vehicle or ship damage, collapse of building or
structure, strikes, riots and civil commotion, vandalism and malicious mischief,
burglary and theft, government interference or other matters over which Lessor
has no control. Lessee shall pay all fees, local or other taxes, freight,
insurance and all transportation costs. All replacement parts which Lessor
agrees to provide Lessee, pursuant to Paragraph 8 hereinbelow, shall be
delivered to Lessee F.O.B. (INCOTERMS, 1990), Gardena, California, U.S.A. Lessee
shall pay all fees, local or other taxes, freight, insurance and all
transportation costs.
4.2 On the expiration or termination of this Lease, or expiration or
termination of any renewal thereof, Lessee shall, within ten (10) days
thereafter, promptly crate and ship the Machine, together with any and all spare
parts, manuals and accessories, to Lessor via surface freight at Lessee's sole
cost and expense to ensure arrival at Lessor's facility in Gardena, California,
U.S.A. within sixty (60) days after such termination or expiration. Lessee shall
pay all fees and local or other taxes necessary to accomplish full delivery to
Gardena, California, U.S.A. Lessee shall obtain and maintain appropriate
insurance with respect to the Machine pending and until its actual return to
Lessor in Gardena, California, U.S.A. Such insurance shall provide coverage
against loss or damage to the Machine in an amount not less than its replacement
cost of Two Hundred Twenty-Five Thousand United States Dollars (U.S.
$225,000.00), net after any applicable local or other taxes. If for any reason,
upon the expiration or termination of this
6 FEBRUARY 1997
8
Lease, or expiration or termination of any renewal thereof, Lessee is unable to
return the Machine to Lessor as specified, Lessee shall pay to Lessor the
stipulated loss value of the Machine of Two Hundred Twenty-Five Thousand United
States Dollars (U.S. $225,000.00), net after any applicable local or other
taxes.
5. BARE RIGHT OF USE; APPROPRIATE GOVERNMENTAL FILINGS
Lessee hereby acquires no right in or to the Machine other than the
bare right of use in accordance with this Lease, or any renewal thereof, and no
right in any application for patent or any patent relating to the Machine or any
element thereof which Lessor now has or may hereafter acquire. The Machine is
and shall remain the property of Lessor. The Machine shall be plainly marked as
the property of Lessor, and Lessee agrees not to remove, obliterate or conceal
that marking. The Machine is, and shall at all times be and remain personal
property of the Lessor notwithstanding that the Machine or any part thereof may
be in any manner affixed or attached to, or embedded in, or permanently resting
on, real property or any building thereon. Lessee agrees to execute or otherwise
assist Lessor in the filing with the appropriate governmental agencies or
authorities for the location where the Machine is located, and provide all
documentation which may be necessary to put third (3rd) parties on notice that
the Machine is the personal property of Lessor, and to protect Lessor's
ownership interest therein.
6 FEBRUARY 1997
9
6. INSTALLATION
Lessee agrees to provide a safe, suitable and sufficient place for
installation of the Machine, being one which maintains and preserves the
operability, condition and normal period of use of the Machine. The Machine
shall be installed at Xxxxx'x cannery in accordance with the signed counterpart
Addendum to the Bailment Agreement. Lessee shall not permit the Machine to be
removed from such location without the prior written consent of Lessor.
7. USE OF MACHINE
Lessee shall use the Machine in a careful and proper manner, in
accordance with all oral, written or other form of instructions supplied by
Lessor concerning operation of the Machine, and shall comply with and conform to
all national, state, municipal, police and other laws, ordinances and
regulations in effect in anywise relating to the possession, use, or maintenance
of the Machine; and shall, subject to the prior written approval of Lessor, make
any alterations required by such laws, ordinances and regulations at Lessee's
cost and expense. Lessee shall not otherwise alter or modify the Machine without
the prior written consent of Lessor. Lessee agrees to use the Machine for the
purpose of canning fish and fish products only. Lessor, its duly accredited
agents, servants and employees, shall at all reasonable times during business
hours have the right to enter into and on the premises where the Machine may be
located for the purpose of inspecting the Machine or observing its use.
6 FEBRUARY 1997
10
8. REPAIRS AND MAINTENANCE
Lessee at its own cost and expense shall keep the Machine in good
repair, condition and working order including routine adjustment and lubrication
and other maintenance requirements as may be specified by any oral, written or
other form of instructions supplied by Lessor. Due to the reciprocating nature
of the mechanism and the speed limitations inherent in this type of equipment,
the maximum operating speed of the Machine shall be clearly displayed on the
Machine. If parts become worn or damaged as a result of Lessee operating the
Machine in excess of the displayed maximum speed, cost of all labor, repairs and
replacement parts shall be paid for by Lessee. Lessor agrees to replace, at
Lessor's cost, and as soon as possible after receiving written notice thereof,
any defective parts; provided, however, that Lessor shall not be liable to
Lessee whatsoever for any damages or loss of product arising directly or
indirectly out of a breakdown of the Machine due to such defective part. Lessor
further agrees to replace, at Lessor's cost, and as soon as possible after
receiving written notice thereof, any part that becomes inoperative due to
normal wear and tear. Parts which become inoperative due to reasons other than
defectiveness or normal wear and tear shall be replaced by Lessor, as soon as
possible after receiving written notice thereof, but at Lessee's own cost.
Lessee shall pay all labor costs for the installation of any replacement part
furnished by Lessor under this Paragraph. Notwithstanding the foregoing, Lessor
shall have no obligation to replace or repair the Machine's main drive electric
motor unless same is defective and Lessor is notified in writing thereof within
thirty (30) days of first (1st) use of the Machine.
6 FEBRUARY 1997
11
9. NO PHOTOGRAPHING OR OTHER COPYING OF MACHINE
Lessee shall prevent any photographing, drawing, modeling, molding or
any other type of reproduction, duplication, copying, illustration or
representation or any measuring or examination of the Machine or any component
of the Machine unless such photographing, drawing, modeling, molding or other
type of reproduction, duplication, copying, illustration, representation,
measuring or examination is necessary for the operation, maintenance, or repair
of the Machine or component thereof. In such event, Lessee shall maintain in its
possession or ensure the return of any photograph, drawing, model, mold, or
other type of reproduction, duplication, copy, illustration, representation or
measurement or results of any examination and shall not exhibit or disclose same
to any person or persons without the express written approval of Lessor.
10. SURRENDER
On the expiration or termination of this Lease, or on the expiration
or termination of any renewal thereof, Lessee shall (unless Lessee has paid
Lessor in cash the stipulated loss value of the Machine pursuant to Paragraph 11
hereinbelow) return the Machine to Lessor in good repair, condition and working
order, ordinary wear and tear resulting from proper use thereof alone excepted,
and in the manner specified in Paragraph 4.2 hereinabove.
6 FEBRUARY 1997
12
11. LOSS AND DAMAGE; STIPULATED LOSS VALUE
Lessee hereby assumes and shall bear the entire risk of loss and
damage to the Machine from any and every cause whatsoever. No loss or damage to
the Machine or any part thereof shall impair any obligation of Lessee under this
Lease, or any renewal thereof, which shall continue in full force and effect. In
the event of irreparable damage to the Machine such that for practical business
purposes it cannot be used again, or total destruction of the Machine, or total
loss of the Machine due to any other reason, including but not limited to, loss
of the Machine or loss of use of the Machine by reason of the operation of the
laws of the U.S.A. or Mexico, during the term of this Lease or any renewal
thereof, Lessee shall pay to Lessor the sum of Two Hundred Twenty-Five Thousand
United States Dollars (U.S. $225,000.00), net after any applicable local or
other taxes, representing the stipulated loss value of the Machine during the
term of this Lease, or any renewal thereof. Upon such payment in full by Lessee
to Lessor this Lease, or any renewal thereof, shall terminate. Any such amount
due by Lessee to Lessor shall be reduced by any payments made to Lessor from
insurance maintained by Lessee as provided in Paragraph 12 hereinbelow.
12. INSURANCE
Lessee shall provide at Lessee's cost, insurance, including but not
limited to fire insurance, on the Machine against all risks of loss or damage
from every cause whatsoever for an amount not less than the stipulated loss
value of the Machine specified in Paragraph 11 hereinabove. Lessee agrees to
designate Lessor as the beneficiary under all such policies of insurance, and to
provide Lessor with adequate evidence thereof upon request.
6 FEBRUARY 1997
13
13. INDEMNITY
Lessor shall not be liable for, and Lessee shall indemnify Lessor
against and hold Lessor harmless from, any and all claims, actions, suits,
proceedings (including, but not limited to, those relating to patent disputes),
costs, expenses, damages and liabilities, including attorneys' fees, arising out
of, connected with, or resulting from, the delivery, possession, use, operation,
or return of the Machine by Lessee, its agents, servants, and employees.
14. DEFAULT
The failure of Lessee to make any payment of rent or any other amount
required under this Lease, or any renewal thereof, within fifteen (15) days
after the same is due and payable, or to observe or perform any of the
provisions of this Lease, or any renewal thereof, to be observed or performed by
Lessee or Xxxxx for a period of twenty (20) days after written notice thereof by
Lessor, shall constitute a material default and a breach of this Lease, or any
renewal thereof, by Lessee. In the event of any such material default by Lessee,
Lessor shall have the right to exercise any one or more of the following
remedies concurrently or separately:
A. To terminate this Lease;
B. To enter the premises of Lessee and take possession of the Machine
pursuant to legal proceedings, or to any notice provided by law, without
terminating this Lease and re-rent the Machine for the account of Lessee
either in Lessor's name or otherwise, for such period as Lessor may deem
advisable; in which event the rents received on any such re-rental during
the balance of the term of
6 FEBRUARY 1997
14
this Lease shall be applied first (1st) to the expense of the re-rental and
removal including necessary renovation and reconditioning of the Machine,
and thereafter toward payment of all sums due or to become due Lessor
hereunder. Lessee shall pay to Lessor any deficiency. Any said taking of
possession shall not constitute a termination of this Lease unless Lessor
expressly so notifies Lessee in writing;
C. To declare the entire amount of rent hereunder immediately due and
payable without notice or demand to Lessee;
D. To xxx for and recover all rents and other payments then accrued or
thereafter accruing;
E. To pursue any other remedy at law or in equity.
Notwithstanding any said repossession or any other action which Lessor
may take, Lessee shall be and remain liable for the full performance of all
obligations on the part of Lessee to be performed under this Lease. Any and all
costs of removal, repair, reconditioning, trading, freight and other charges
shall be paid by Lessee.
15. TAXES AND ASSESSMENTS
Lessee shall keep the Machine free and clear of all levies, liens,
encumbrances and shall pay all license fees, registration fees, assessments,
charges, duties and local or other taxes of any kind whatsoever imposed by any
governmental agency or authority, which may now or hereafter be imposed upon the
use, operation, or possession of the Machine. In case of Lessee's failure to pay
said fees, assessments, charges, and local or other taxes, Lessor shall have the
right, but not the obligation, to pay any said
6 FEBRUARY 1997
15
fees, assessments, charges, and local or other taxes, as the case may be. In
that event, the cost thereof shall be repayable to Lessor with the next
installment of rent and failure to repay the same by Lessee may be treated by
Lessor as a default by Lessee. Copies of local or other tax receipts, if
applicable, are to be sent to Lessor annually indicating timely and proper
payments of local or other taxes.
16. BANKRUPTCY; ASSIGNMENT
Neither this Lease, nor any renewal thereof, nor any interest therein
is assignable or transferable by operation of law, through receivership,
bankruptcy or otherwise. Without the prior written consent of Lessor, Lessee
shall not (a) assign, transfer, pledge or hypothecate this Lease, or any renewal
thereof, the Machine, or any part thereof, or any interest therein; or (b)
sublet or lend the Machine or any part thereof, or permit the Machine or any
part thereof to be used by anyone other than Lessee or Lessee's employees.
Consent to any of the foregoing prohibited acts applies only in the given
instant, and is not a consent to any subsequent like act by Lessee or any other
person. Subject to the foregoing, this Lease, or any renewal thereof, inures to
the benefit of, and is binding on, the heirs, legatees, personal representatives
and successors, of the parties hereto.
17. LESSOR'S NON-EXCLUSIVE ROYALTY-FREE LICENSE
Lessee agrees that if, during the term of this Lease, or any renewal
thereof, and for a period of two (2) years thereafter, it shall acquire any
patents as a result of its agents, servants and employees
6 FEBRUARY 1997
16
inventing any improvements or modifications, or developing any method or
methods, machine or machines adapted to affect the purpose of the Machine, then
and in such event Lessor shall have a non-exclusive royalty-free license
covering such improvements, methods or machines. The term of any such
non-exclusive royalty-free license under the provisions of this Paragraph shall
be perpetual.
18. CORPORATE EXISTENCE; AUTHORITY
Lessee represents and warrants to Lessor that it is a limited
liability company duly organized and validly existing under the laws of the
State of Oregon, U.S.A.; that it has full power and authority to enter into this
Lease; that it has obtained all governmental consents and/or approvals necessary
to enable it to perform its obligations hereunder; and that the execution by it
of this Lease and the performance of its obligations under this Lease does not
violate any law, rule, regulation or order of any government, governmental
agency or court and does not breach any agreement to which it is a party. The
undersigned individual purporting to execute this Lease on behalf of Lessee
represents and warrants that he has been duly authorized and directed to execute
this Lease on behalf of Lessee.
19. INTEREST
Should Lessee fail to pay any part of the rent herein reserved or any
other sum required by Lessee to be paid to Lessor, within fifteen (15) days
after the due date thereof, Lessee shall pay unto the Lessor interest on such
delinquent payment from the expiration of said fifteen (15) days until paid at
the average U.S. prime rate, plus one percent (1%), per lease year.
6 FEBRUARY 1997
17
20. CONCURRENT REMEDIES
No right or remedies herein conferred on or reserved to Lessor is
exclusive of any other right or remedy herein or at law or in equity provided or
permitted; but each shall be cumulative of every other right or remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise, and may be enforced concurrently therewith or from time to time.
21. NON-WAIVER
No covenant or condition of this Lease may be waived except by the
written consent of Lessor. Forbearance or indulgence by Lessor in any regard
whatsoever shall not constitute a waiver of the covenant or condition to be
performed by Lessee to which the same may apply, and, until complete performance
by Lessee of said covenant or condition, Lessor shall be entitled to invoke any
remedy available to Lessor under this Lease or at law or in equity despite said
forbearance or indulgence.
22. ENTIRE AGREEMENT
This instrument constitutes the entire agreement between Lessor and
Lessee; it shall not be amended, altered, or changed except by a written
agreement signed by the parties hereto.
6 FEBRUARY 1997
18
23. ATTORNEYS' FEES
In the event either party shall bring any action or proceeding for
damages for an alleged breach of any provision of this Lease, to recover rents,
or to enforce, protect or establish any right or remedy of either party, the
prevailing party shall be entitled to recover as a part of such action or
proceeding reasonable attorneys' fees and court costs.
24. REMITTANCES
24.1 All payments of Annual Minimum Rental and Overage Rental; and
charges for any prepaid freight and transportation costs on the Machine or
parts, as well as charges for parts, service, and service expenses, that are the
responsibility of Lessee hereunder, shall be remitted by International Trade
Group, LLC.
24.2 All rents and charges payable by Lessee to Lessor hereunder shall
be paid to Lessor at any of the following: at X.X. Xxx 0000, Xxxxxxx,
Xxxxxxxxxx, 00000, X.X.X.; directly to Lessor's bank account, which is held as
of the date of this agreement, at 0xx Xxxxxxxx Xxxx, Xxxxxxx XXX Xxxxxxxx, 0xx
Xxxxx, XXX #000000000, 000 Xxxx 000xx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx, 00000,
U.S.A., and is Account No. 020-611812; or at such other place as Lessor may
hereafter designate in writing.
6 FEBRUARY 1997
19
25. NOTICES
All notices provided for in this Lease or which either party may
desire to give shall be in writing. Any notice to be given by either of the
parties hereto to the other may be delivered in person or to an officer of
Lessee or Lessor, or may be deposited in the appropriate governmental air mail
registered or certified with postage pre-paid, addressed to the party for whom
intended at the address set forth above, or at such other address as either of
the parties hereto may hereafter designate by notice in writing served in the
manner provided under this Paragraph. Service of any such written notice shall
be deemed complete at the time of personal delivery or within seven (7) business
days after the mailing thereof as hereinabove provided.
26. TITLES
The titles to the Paragraphs of this Lease are solely for the
convenience of the parties, and are not an aid in the interpretation of the
instrument.
27. CHOICE OF LAW
This Lease shall be deemed to have been made and executed in the State
of California, U.S.A., and the rights of the parties hereunder shall be
construed, enforced and governed according to the laws of that State. As a
material part of the consideration to the parties for entering into this
Agreement, each party (1) agrees that, at the option of Lessor, all actions and
proceedings based upon, arising out of or relating in any way directly or
indirectly to, this Lease shall be litigated exclusively in courts located
6 FEBRUARY 1997
20
within Los Angeles County, California, (2) consents to the jurisdiction of any
such court and consents to the service of process in any such action or
proceeding by personal delivery, first-class mail, or any other method permitted
by law, and (3) waives any and all rights to transfer or change the venue of any
such action or proceeding to any court outside Los Angeles County, California.
28. CURRENCY OF ACCOUNT
The parties intend and agree that the currency of account for
transactions hereunder shall be United States Dollars. Any and all payments
hereunder shall be in United States Dollars.
6 FEBRUARY 1997
21
IN WITNESS WHEREOF, the parties hereto have caused this Lease
Agreement to be signed and executed by their company officers thereunto duly
authorized as of the day and year first above written.
"LESSOR" "LESSEE"
XXXXX MACHINERY & INTERNATIONAL TRADE GROUP, LLC.
ENGINEERING CO., INC.
By /s/ Xxxx X. Xxxxx By /s/ [ILLEGIBLE]
------------------------- ---------------------------------
Xxxx X. Xxxxx
Title President Title President/CEO
------------------------- --------------------------------
Date 6 February 1997 Date February 18, 1997
------------------------- --------------------------------
6 FEBRUARY 1997
22
[DIAGRAM]
307 x 109 CAN
TWO PIECE TIN PLATE
EXHIBIT "A"
SP195-96
SUBORDINATED UNSECURED CONVERTIBLE PROMISSORY NOTE
EXHIBIT C
--------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND
APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
--------------------------------------------------------------------------------
SEABOURNE VENTURES, INC.
SUBORDINATED UNSECURED CONVERTIBLE PROMISSORY NOTE
Tigard, Oregon
$1,765,000 + Interest July 1, 1997
FOR VALUE RECEIVED, the undersigned a Corporation duly registered in the
State of Oregon with its principal place of business at 0000 X.X. Xxxxxxxx
Xxxx, Xxxxxx, Xxxxxx 00000 ("Borrower") promises to pay to the order of
International Trade Group, LLC at its offices in the City of Tigard, Oregon
("Holder"), or at Holder's option, at such other place as may be designated
from time to time by the Holder, $1,765,000 (one million seven hundred sixty
five thousand US dollars) with interest on unpaid principal computed from
July 1, 1997 at the rate of prime (as published in the Wall Street Journal) +
1.5% (150 basis points) per annum. The full principal and accumulated
interest will become due and payable on December 31, 1998.
Payment of any installment of principal or interest owing on this note may be
made prior to the maturity date without penalty, however Borrower shall
provide Holder with written notice of intent to prepay any portion of this
loan at least ten (10) days in advance of the anticipated prepayment date,
and Holder shall have obtained the audited financial statements of Borrower
for the most recently ended fiscal year as well as the unaudited financial
statements of Borrower for each quarter then ended, certified by Borrower's
chief financial officer.
All amounts due hereunder shall immediately become due and payable without
notice or demand, upon the appointment of a receiver or liquidator, whether
voluntary or involuntary, for Borrower or for any of its property, upon the
filing of a petition by or against Borrower under the provisions of any
insolvency law or federal
bankruptcy law, upon the making by Borrower of an assignment for the benefit of
its creditors or upon the dissolution or termination of existence of borrower.
(1) Holder may elect to declare all or any part of the indebtedness
immediately due and payable upon the occurrence of any of the following
events:
1.1 failure to pay any part of the indebtedness when due; or
1.2 nonperformance by Borrower of any agreement with, or any condition
imposed by, Holder with respect to the indebtedness; or
(2) Holder may elect to declare all or any part of the indebtedness
immediately due and payable prior to any of the following events occurring:
2.1 the sale or transfer of substantially all the stocks of the borrower
to a third party; or
2.2 the sale, in cash, stock swap or any other consideration, directly or
indirectly, of substantially all of the borrower's assets to a third party;
or
2.3 the merger or amalgamation of the borrower's assets with a third
party, or the sale or transfer, for cash, stock swap or other
consideration, directly or indirectly, of any part or all of Borrower's
activities to another company, unless agreed in writing by a majority of
Borrower's stockholders.
Holder may assign this Promissory Note and upon such assignment, the Assignee
shall be entitled, after notification to Borrower, to performance of all
Borrower's obligations hereunder and said Assignee shall be entitled to all
rights and remedies of Holder as set forth herein.
CONVERSION RIGHTS:
Upon the occurrence of any of the above event or when this Note becomes due on
December 31, 1998, Holder shall have the right to convert the principal of this
note into 1,765,000 shares of ordinary voting common shares of stock of the
Company.
Such conversion assumes that Holder shall have received Borrower's regular
audited financial statements and that of its most recent completed fiscal year.
Upon Holder's election to convert this note into shares of stock, Borrower shall
cause to be issued and
delivered to Holder the amount of stock designated above within five business
days of receipt of written notice of Holder's election. Borrower shall also
submit a computation of accrued interest due Holder under the terms of this
Agreement and cause a check to be issued for such interest.
Executed the date and year first set forth above.
SEABOURNE VENTURES, INC.
By: /s/ Xxxxx X. de la motte
-------------------------------
Xxxxx X. de la motte
President/CEO
ATTEST:
By: /s/ Xxxxx XxXxxxxx
--------------------------
Xxxxx XxXxxxxx
Secretary
