Exhibit 10
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE COMMISSION.
Amendment No. 2
To First Amended And Restated Alliance Agreement
This Agreement is entered into effective as of the 1st day of July, 1998 by and
among The Pillsbury Company having its principal offices at Pillsbury Center,
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000 ("Pillsbury"), and Seneca
Foods Corporation having its principal offices at 0000 Xxxxxxxxx-Xxxxxx Xxxx,
Xxxxxxxxx, Xxx Xxxx 00000 ("Seneca").
W I T N E S S E T H
WHEREAS, Pillsbury and Seneca are parties to a First Amended and Restated
Alliance Agreement entered into December 8, 1994 as amended on February 10, 1995
(The "Agreement"), and
WHEREAS, to improve the overall working arrangement between the parties for the
remainder of the term of the Agreement, the parties agree to make the following
changes to the Agreement for their mutual benefit:
1. The seventh Whereas clause is amended in its entirety to read as follows:
"WHEREAS, following such sale, Seneca intends to provide
Pillsbury with such long-term, strategic alliance supply from Seneca
Plants and the Sold Plants under this Agreement. As identified on
Exhibit A hereto, the Seneca Plants and the Sold Plants located in the
Midwest and Northwest and two plants located in the state of New York
are collectively referred to herein as the "Central Division Plants,"
the Seneca Plants located in the Northeast (other than the two New York
plants referred to above) which will be producing Products under the
terms of this Agreement, if any, are collectively referred to herein as
the "Eastern Division Plants", and the Central Division Plants and the
Eastern Division Plants are collectively referred to herein as the
Alliance Plants";
2. The following definitions are hereby amended and replaced in their entirely:
"Agreement" means this Alliance Agreement as amended from time to time.
"Central Division Plants" means, collectively, the Seneca Plants and
the Sold Plants located in the Midwest, Northwest and in the state of New York
which are identified on Exhibit A hereto.
"Continuous Improvement Program Team" means a team of employees of
Seneca and, initially, Pillsbury who are charged with developing and
implementing cost reduction projects at the Central Division Plants under this
Alliance Agreement.
"Cost Reduction Project" means a cost saving initiative proposed or
implemented by the Continuous Improvement Program Team.
"Eastern Division Plants" means, collectively, the Seneca Plants
located in the Northeast, if any, which will be producing Products under the
terms of this Agreement.
"Seneca" means Seneca Foods Corporation, a New York corporation.
3. The following sentences are added at the end of Section 3.2 (Central Division
Transfer Prices):
"The parties may agree from time to time in writing without further
need to amend this Agreement to add additional plants to the Central
Division Plants, either for a given Product or Fiscal Year. In the
event such plants are added, they will be accounted for based upon the
percentage of the plant's production which is sold to Pillsbury."
4. Section 3.3 of the Agreement titled Eastern Division Transfer Prices in
hereby amended in its entirety as follows:
3.3 Eastern Division Transfer Prices. The price charged by Seneca to
Pillsbury for all Acceptable Cases of Products (identified by SKU)
produced at any Eastern Division Plant, if any, shall be calculated by
adding * per Equivalent Case to the Transfer Prices for such Products
then in effect. In addition, to the extent can supplies are
manufactured, or purchased by Seneca especially for use, in the Eastern
Division, Seneca shall include in its invoice to Pillsbury the ED Can
Differential.
5. A New Subsection 3.6(g) is added as follows:
3.6 Payment Terms.
(g) Management Fee Calculations. For purposes of calculating the
Management Fee only, the Plants located in Xxxxxx, New York and Geneva, New
York, as well as any Plants temporarily added pursuant to Section 3.2 shall not
be treated as Central Division Plants.
6. A New Section is added as follows:
7.6 For certain major capital additions and potential fixed asset
write-offs (over *) at the Central Division Plants, Pillsbury and Seneca agree
to review such projects on a stand-alone basis and ascertain the most equitable
approach to funding such projects.
* Confidential Information Has Been Omitted Pursuant to a Request for
Confidential Treatment and the Omitted Information Has been Separately
Filed With the Securities and Exchange Commission.
7. ARTICLE VIII titled "COST REDUCTIONS" shall be replaced in its entirety with
the following:
8.1 Cost Reduction Incentives. Seneca and Pillsbury agree to share
equally in any savings derived during the first year of the Cost
Reduction Project from a Cost Reduction Project that is proposed by the
Continuous Improvement Program Team and approved by the ARB or their
designees. The Continuous Improvement Program Team will initially be
headed by a Pillsbury employee and supported by Seneca employees to
develop, implement and track specific Cost Reduction Projects. It is
the intent of the Parties that Seneca will internalize the function of
the Continuous Improvement Program Team when each party mutually agrees
that the program is successfully implemented. The calculations of the
cost savings will be determined in accordance with the Accounting
Procedures and will be payable each year to each party at the Year-End
Reconciliation as described in Section 3.6. After the first year of
each cost Reduction Project, all savings derived from such Cost
Reduction Project will accrue to Pillsbury or Seneca based upon the
percentage of products respectively purchased from the Plant in
question by Pillsbury or retained by Seneca for sale to non-Pillsbury
buyers, and will be built into the Standard Costs. Attached hereto as
Exhibit J-1 are the Guiding Principles under which the Continuous
Improvement Project Team will account for Cost Reduction Projects.
8.2 Cost Reduction in Supply Procurement. Pillsbury shall use its good
efforts to cooperate with Seneca to enable Seneca to procure supplies
and raw materials in a manner which seeks to maximize Seneca's
efficiency hereunder; provided that Seneca agrees that the foregoing
agreement of Pillsbury shall not obligate Pillsbury to incur
out-of-pocket expenses or costs.
* Confidential Information Has Been Omitted Pursuant to a Request for
Confidential Treatment and the Omitted Information Has been Separately
Filed With the Securities and Exchange Commission.
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8. Exhibit A is amended in its entirety as follows:
EXHIBIT A
Vegetable Division Plants
Buhl, Idaho
Blue Earth, Minnesota
Cumberland, Wisconsin
Dayton, Washington
Geneva, New York
Glencoe, Minnesota
Janesville, Wisconsin
Xxxxxx, New York
Mayville, Wisconsin
Xxxxxxxxxx, Minnesota
Rochester, Minnesota
9. A new Exhibit J-1 is added as follows:
EXHIBIT J-1
Cost Improvement Process Guiding Principles
Savings will be measured on the net savings basis, by determining gross
savings less capital and one-time expenses.
Savings must be measurable and tangible, and will include cost
avoidance projects only with the specific approval of the ARB.
Calculations of savings of Cost Reduction Projects will be benchmarked
against plan standards, which will be reflective of normal crop years.
Cost savings realized in one year will be folded into the Standard
Costs for the following Fiscal Year.
Cost improvement program will be managed in coordination with Seneca's
fiscal year, that is from April 1 through March 31, including the fiscal year
from April 1, 1998 through March 31, 1999.
Cost savings will be recorded when incurred (generally during seasonal
pack).
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2
to be executed by their duly authorized officers or representatives.
SENECA FOODS CORPORATION THE PILLSBURY COMPANY
By: /s/Xxxxx X. Xxxxxx By: /s/Xxxxxx Xxxxxxx
Its: President Its: V.P. Finance
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