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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q/A
AMENDMENT NO. 1 TO QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 30, 1996
Commission file number
1-9050
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HUDSON FOODS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 71-0427616
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1225 Hudson Road, Rogers, Arkansas 72756
(Address of principal executive offices) (Zip Code)
(501) 636-1100
(Registrant's telephone number, including area code)
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<PAGE>
The Purchase and Supply Agreement (Amended and Restated as of April 1,
1996) between Hudson Foods, Inc. and Boston Chicken, Inc., filed as Exhibit 10
under Item 6(a) of Part II of the Form 10-Q Quarterly Report of Hudson Foods,
Inc. for the quarterly period ended March 30, 1996, is amended by substituting
for Exhibit 10 as previously filed the version of Exhibit 10 attached hereto.
Certain portions of Exhibit 10 are subject to a Confidential Treatment Request
and the omitted material has been filed separately with the Securities and
Exchange Commission.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
HUDSON FOODS, INC.
Date: June 25, 1996 By /s/ Michael T. Hudson
--------------------------
Micheal T. Hudson, President
<PAGE>
EXHIBIT 10
TO HUDSON FOODS, INC. 10-Q
MARCH 30, 1996 10-Q
PURCHASE AND SUPPLY AGREEMENT
(AMENDED AND RESTATED)
This PURCHASE AND SUPPLY AGREEMENT ("Agreement"), originally made the 12th
day of October, 1994 (as originally made, herein called the "Initial
Agreement"), by and between Hudson Foods, Inc., a Delaware corporation (the
"Supplier"), and Boston Chicken, Inc., a Delaware corporation (the "Company"),
is amended and restated as of April 1, 1996.
WHEREAS, the Supplier has the capability to produce chicken products for
distribution and retail sale by the Company, which products and their
specifications are described in Exhibit A (the "BC Chicken Products"); and
WHEREAS, the Company desires to assure a continuing supply of the BC
Chicken Products and the Supplier desires to supply the Company with a portion
of its requirements of the BC Chicken Products; and
WHEREAS, as provided in the Initial Agreement, the Supplier was willing to
dedicate the entire chicken products production of its chicken processing
facility at Dexter, Missouri (the "Dexter Facility") and, upon commencement of
operations, the entire chicken products production of its chicken processing
facility (exclusive of the protein plant associated therewith) currently under
construction near Henderson, Kentucky (the "Henderson Facility" and, together
with the Dexter Facility, the "Facilities") for sale under the Initial
Agreement to or for the account of the Company, and the Company, as provided
in the Initial Agreement, desired to purchase or have sold for its account the
entire chicken products production of the Facilities;
WHEREAS, since the date of the Initial Agreement, the Company has altered
the product mix offered by Boston Chicken and Boston Market stores operated by
the Company and its franchisees (the "Stores") to include turkey, meatloaf and
ham; and
WHEREAS, the alteration of the product mix at the Stores has altered the
requirements of the Company and its franchisees for the BC Chicken Products
and affected the rate of growth of volume requirements of such items; and
WHEREAS, the Supplier believes and the Company concurs that, given changed
circumstances, the most advantageous use of the Henderson Facility is to
produce chicken products which include types which may not be required by the
Company and its franchisees; and
WHEREAS, the Company and the Supplier wish to amend and restate the
Initial Agreement to take into account such aforementioned matters in a manner
intended to preserve the aggregate economic effect of the Initial Agreement,
but which will adjust the responsibilities and opportunities of the parties in
light of the aforementioned matters and provide certain incentives and
disincentives for the profitable operation of the Dexter Facility and the
Henderson Facility, as well as certain incentives and opportunities relating
to the supply of turkey, ham and beef by the Supplier to the Company and its
franchisees; and
<PAGE>
WHEREAS, the Company and the Supplier have each determined that the
Agreement, as herein amended and restated, is potentially more advantageous
than the Initial Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual promises set forth herein, the parties hereto agree to, and hereby do,
amend and restate the Initial Agreement as set forth herein:
1. Definitions. As used herein, the following terms have the
respective meanings set forth below or set forth in the Section of this
Agreement following such term:
"Agreement" -- means the Purchase and Supply Agreement between the
Supplier and the Company, dated October 12, 1994, as amended and restated as
of April 1, 1996.
"Annual Aggregate Dexter Purchase Price" -- Section 5(b).
"Annual Dexter Adjustment Amount" -- Section 5(b).
"Annual Henderson Operating Payment" -- Section 5(c).
"Authorized Recipient" -- Section 2(b).
"Average Bid" -- Section 2(d).
"BC Chicken Products" -- Preamble.
"BC Other Products" -- Section 2(d).
"Bidding Affiliate" -- Section 2(d).
"Cap Reduction" -- Section 2(e).
"Chicken Products" -- Section 2(a).
"Commencement Date" -- Section 2(a).
"Company" -- means Boston Chicken, Inc., a Delaware corporation.
"Contract Year" -- means a fiscal year of the Company (or such portion of
a fiscal year of the Company) during the Term of this Agreement.
"Cost Improvement Program" -- Section 5(i).
"Credit Amount" -- Section 5(f).
"Dexter Facility" -- Preamble.
"Dexter Loss" -- Section 5(b).
"Dexter Inside Sales" -- Section 5(b).
<PAGE>
"Dexter Outside Sales" -- means Outside Sales relating to the Dexter
Facility.
"Dexter Term" -- means the period beginning on the Commencement Date and
ending on the Dexter Termination Date.
"Dexter Termination Date" -- Section 2(a).
"Excluded Costs" -- means the following costs or expenses: (i) the cost of
shipping Chicken Products from the relevant Facility, (ii) any payment made by
the Supplier pursuant to Section 11(a) hereof or any cost, expense or
liability for which the Supplier has been indemnified, (iii) any cost, fine,
defense expense or judgment relating to any failure of the Supplier to comply
with applicable laws, (iv) any cost incurred in, directly related to, or
assigned or allocated to the protein plant at the Henderson Facility, (v) any
taxes levied or paid solely with respect to the Supplier's income, (vi) any
amount relating to any action, occurrence, incident, transaction, omission,
claim, contract or liability prior to the Commencement Date or the Henderson
Facility Commencement Date, as applicable, (vii) any environmental liability
or clean-up, remediation or contribution imposed by applicable environmental
law (but not including (A) any utilities surcharges or (B) any expenditures
for preventive measures required by changes in applicable environmental laws
after the date of this Agreement), (viii) any costs incurred in violation of
this Agreement, including any costs relating to Chicken Products or Third-
Party Products failing to meet applicable specifications, (ix) costs of Third-
Party Products, (x) all depreciation expense with respect to the Dexter
Facility capital assets listed on Exhibit C hereto accrued during any period
prior to the earlier of the first week that the production of the Dexter
Facility reaches 650,000 chickens or June 1, 1995, and (xi) prior to the first
week that production of the Henderson Facility reaches 1,300,000 chickens, all
depreciation expense with respect to the Henderson Facility that exceeds the
depreciation expense of the Dexter Facility, measured on a cents-per-pound-of-
production basis.
"Facility" or "Facilities" -- means the Dexter Facility or the Henderson
Facility or both, as appropriate.
"Facilities Cost" -- means, with respect to the relevant Contract Year and
the appropriate Facility (either the Dexter Facility or the Henderson
Facility, as the case may be), from and after the Commencement Date or the
Henderson Facility Commencement Date, as the case may be, all costs and
expenses (other than costs or expenses that constitute Excluded Costs) that
are (i) incurred in, or directly related to, the operation of such Facility
during the Dexter Term or the Henderson Term, as the case may be, or (ii)
assigned or allocated by the Supplier to such Facility (including, without
limitation, a reasonable allocation of the Supplier's corporate overhead
expenses, determined in good faith based upon the methodology used by the
Supplier in the allocation of corporate overhead expenses to all of its
production facilities), less the following credits: (i) an amount equal to
any employee withholding credits allowed the Supplier under the KREDA program
applicable to the operation of the Henderson Facility and (ii) an amount
representing the sales or transfers of offal from the Facility to the Supplier
or affiliates of the Supplier, which amount shall be based on the then-current
Jacobsen Mid-South poultry and feather meal quote as adjusted by the schedule
<PAGE>
attached hereto as Exhibit B.
"Full Production" -- means, with respect to the Dexter Facility or the
Henderson Facility, as appropriate, that such Facility averages, for the
weekly periods ending in any calendar month, at least 85% of the minimum
average targets set forth in Section 2(a) for the Dexter Facility or Section 3
for the Henderson Facility; provided, however, that for purposes of the
calculations required by Sections 5(b) and 5(c), the Henderson Facility will
not be deemed to be in Full Production prior to the Henderson First
Anniversary Date and the Dexter Facility will not be deemed to be in Full
Production prior to the first anniversary of the Commencement Date or
following the Dexter Termination Date.
"Henderson Facility" -- Preamble.
"Henderson Facility Commencement Date" -- Section 3.
"Henderson First Anniversary Date" -- Section 3.
"Henderson Loss" -- Section 5(c).
"Henderson Sales" -- means Outside Sales relating to the Henderson
Facility plus any proceeds actually received from sales to the Company of
Chicken Products or other products produced at the Henderson Facility.
"Henderson Term" -- means the period beginning on the Henderson Facility
Commencement Date and ending on the Termination Date.
"Initial Agreement" -- Preamble.
"Interim Purchase Prices" -- means those purchase prices for Chicken
Products from the Dexter Facility invoiced to and paid by the Company during
the relevant time period, which prices shall be equivalent to the average
prices invoiced to third parties for the same Chicken Products on the same day
(or the most recent day on which a third party was invoiced for such Chicken
Products), adjusted for the Supplier's standard volume discounts and freight
and transportation differentials, and, in the event that the Chicken Product
is one which has not been purchased by any third party, the invoiced price
will be a flat price determined annually by mutual agreement of the Supplier
and the Company, which flat price is intended to be a reasonable estimate of
_____*% of Supplier's all-in costs in producing such Chicken Product.
"Make-Whole Amount" -- Section 5(e).
"Orders" -- Section 2(c).
"Outside Sales" -- means, with respect to the relevant Contract Year and
with respect to the relevant Facility, the proceeds actually received by the
Supplier for sales of Chicken Products (plus, in the case of the Henderson
Facility, proceeds received for sales of any other products produced at such
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* Confidential information deleted from this exhibit and filed separately
with the Securities and Exchange Commission.
<PAGE>
Facility) to any purchasers other than the Company (which purchasers may
include the Supplier or affiliates of the Supplier); provided, however, that
for purposes of computing Outside Sales, (i) no credit will be given for the
sales of products from the protein plant at the Henderson Facility, and (ii)
no credit will be given for any sales proceeds that are payment for or
reimbursement of shipping expenses.
"Supplier" -- means Hudson Foods, Inc., a Delaware corporation.
"Term" -- Section 4(a).
"Termination Date" -- Section 4(a).
"Third-Party Products" -- Section 2(a).
"Turkey Products" -- Section 2(b).
2. Production and Sale of Various Products.
a. Chicken Products. The Supplier agrees to sell to the Company,
or cause to be sold for the Company's account, the entire chicken products
production (the "Chicken Products," which term shall include the BC Chicken
Products) of the Dexter Facility, commencing on April 1, 1995 (the
"Commencement Date") and ending on April 1, 2000 (the "Dexter Termination
Date"), and the Company agrees to purchase such Chicken Products. The
Supplier will cause the Dexter Facility to process a minimum average of
487,000 chickens per week from April 1, 1995 continuously to June 1, 1995, and
continuously thereafter until the Dexter Termination Date to process a minimum
average of 650,000 chickens per week, such averages to be computed on a
rolling twelve-week basis (or such lesser number of weeks as has elapsed since
the Commencement Date). In the event that the production of the Dexter
Facility does not meet the targeted minimum averages set forth in this Section
2(a), whether by reason of lower than expected production rates, closure or
production limitations imposed by law, partial condemnation or destruction of
the Dexter Facility, or otherwise, the Supplier shall use its reasonable best
efforts to purchase sufficient Chicken Products from third-party suppliers
("Third-Party Products") to achieve the targeted minimum averages and shall
sell such Third-Party Products to the Company at a price equal to the Dexter
Facilities Cost plus ____________* (with the Dexter Facilities Cost being
measured on a per-pound basis for purposes of setting the selling price for
Third-Party Products) for such Chicken Products during the last period such
minimum average was met. At the request of the Company, the Supplier shall
increase production of Chicken Products at the Dexter Facility to levels not
inconsistent with prudent business practices. To the extent that the
Company's Orders do not provide for shipment of all of the Dexter Facility's
production of Chicken Products, the Supplier shall arrange the sale or
otherwise dispose of such excess Chicken Products on commercially reasonable
terms, consistent with efforts to maximize the selling price thereof, for the
account of the Company and apply the proceeds of such sales (less any returns)
to the Annual Aggregate Dexter Purchase Price pursuant to Section 5(b) hereof.
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* Confidential information deleted from this exhibit and filed separately
with the Securities and Exchange Commission.
<PAGE>
b. Turkey Products. (i) The Company agrees that, during the
period from February 1, 1996 until the end of the 1996 Contract Year, it shall
order for purchase from the Supplier not less than __________* pounds of
turkey products conforming to the recipes, specifications and standards set
forth in Exhibit E hereto (the "Turkey Products"). The Company's orders for
Turkey Products shall total for each week in such period not less than the
lesser of (A) __________* pounds or (B) _____*% of the Boston Chicken/Boston
Market system requirements for such week. The Supplier may appropriately
reduce to meet the level mentioned below any order which would cause the total
orders for any week in such period to exceed __________* pounds. The price
for such Turkey Products shall be $_____* per pound. Upon the payment by the
Company of the invoiced price for Turkey Products supplied by the Supplier
pursuant to this Section 2(b), the Supplier shall credit to the Credit Amount
an amount equal to _____* percent (_____*%) of the invoice amount for all
Turkey Products shipped pursuant to such orders.
(ii) The Supplier shall credit to the Credit Amount an amount
equal to _____* percent (_____*%) of all payments made by the Company to the
Supplier for the purchase of Turkey Products prior to February 1, 1996 in
which the average price paid was $_____* per pound or greater (including
shipping to the distributor).
(iii) The Company and the Supplier hereby agree that the
Company may designate any subsidiary, affiliate, joint venture, area
developer, franchisee, commissary, vendor, processor, or other entity involved
in the Boston Chicken/Boston Market concept (as such concept may exist from
time to time) as an authorized product recipient ("Authorized Recipient") of
Turkey Products pursuant to this Section 2(b), in which event the Company
shall be deemed to have ordered and purchased Turkey Products pursuant to this
Section 2(b) and resold them to such Authorized Recipient and the Supplier
shall act as the Company's agent in receiving orders, delivering product, and
receiving payment therefor, and the Company shall receive the credit provided
for in this Section 2(b) as if such Turkey Products had been ordered by and
delivered and invoiced directly to, and payment made directly by, the Company.
The Supplier agrees that each order form and invoice sent to any such
Authorized Recipient shall conspicuously state that the Supplier is acting as
the Company's agent in the sale of, and receipt of funds for, such products.
The Supplier agrees that each shipment of Turkey Products to an Authorized
Recipient shall be subject to indemnification at least as broad as that set
forth in Section 11(a) of this Agreement. Amounts credited to the Credit
Amount pursuant to this credit program shall be available to the same extent
and for the same purposes as any other amount credited or elected to be so
credited under this Agreement.
c. Chicken and Turkey Product Orders. Upon receipt of shipping
orders from the Company, its Authorized Recipients, or any distributor
designated by either which is reasonably acceptable to the Supplier
("Orders"), the Supplier agrees to ship to the Company or third parties
designated by the Company, (i) from the production of the Dexter Facility or
Third-Party Products, any and all Chicken Products that the Company shall
request shipment of pursuant to the Orders, and (ii) from the production of
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* Confidential information deleted from this exhibit and filed separately
with the Securities and Exchange Commission
<PAGE>
Supplier's turkey processing facilities, such Turkey Products that the Company
shall request shipment of pursuant to the Orders (subject to any order
reductions permitted by Section 2(b)). All sales of Chicken Products
hereunder (including any Outside Sales) are F.O.B. at the Dexter Facility,
with the Company solely responsible for any costs of shipping the Chicken
Products. All sales of Turkey Products under Section 2(b) are inclusive of
shipping from the Supplier's turkey processing plant to the Company's
distributors in the continental United States.
d. Bidding for BC Other Products. The Company agrees that it
shall not later than thirty (30) days prior to the beginning of each Contract
Year solicit bids from the Supplier and other meat processors for the supply
of turkey, ham and meatloaf to the Company in accordance with such recipes,
specifications, standards, terms, and conditions as it may determine in its
sole discretion (the "BC Other Products"); provided, however, that bids for
the 1996 Contract Year shall be solicited not later than April 30, 1996 (but
not earlier than March 30, 1996) for meatloaf, and not later than June 30,
1996 (but not earlier than May 31, 1996) for ham, and shall not include bids
for Turkey Products. Such bids shall be solicited in good faith from at least
three suppliers in addition to the Supplier and will be for such amounts of BC
Other Products as the Company shall have estimated in good faith as being at
least _____*% of its turkey requirements, _____*% of its ham requirements and
_____*% of its meatloaf requirements for a one-year period, and bids will be
sought in terms of either a fixed price per pound or a specified averageable
formula-based price of the requested protein. In the event that the Supplier
(or any affiliate thereof specified by Supplier as its designated bidder for
such bid, such affiliate being herein called the "Bidding Affiliate") shall
meet the requirements of such recipes, specifications, standards, terms and
conditions, and its price for such turkey, ham or meatloaf shall be not more
than $_____* per pound higher than the average of the bona fide comparable
bids received by the Company (which average, herein called the "Average Bid,"
shall be based upon the bona fide comparable bids received by the Company, and
shall exclude any bids submitted by the Supplier or any Bidding Affiliate),
such business will be awarded by the Company to the Supplier or its Bidding
Affiliate, as the case may be, at the price bid by the Supplier or such
Bidding Affiliate. In the event that the Supplier or any Bidding Affiliate
shall meet the requirements of such recipes, specifications, standards, terms
and conditions, but its price for such turkey, ham or meatloaf shall be more
than $_____* per pound higher than the Average Bid, then the Supplier or its
Bidding Affiliate, as the case may be, shall be notified immediately by the
Company of the Average Bid and given until the second business day following
such notice to revise its bid to not more than $_____* per pound higher than
the Average Bid, in which event such business will be awarded by the Company
to the Supplier or its Bidding Affiliate, as the case may be, at the revised
price bid by the Supplier or such Bidding Affiliate. All BC Other Products so
supplied to the Company by the Supplier or any Bidding Affiliate pursuant to
any initial or revised bid shall be invoiced to the Company at a price equal
to ____________* percent (_____*%) of the Supplier's or the Bidding
Affiliate's bid price forming the basis for such award. Upon the payment by
the Company of the invoiced price for BC Other Products supplied by the
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* Confidential information deleted from this exhibit and filed separately
with the Securities and Exchange Commission
<PAGE>
Supplier or its Bidding Affiliate, as the case may be, pursuant to such a bid
award, the Supplier shall credit to the Credit Amount an amount equal to ___ *
percent (_____*%) of the invoice amount for all such BC Other Products
shipped by the Supplier. The Company and the Supplier hereby agree that the
Company may designate any Authorized Recipient as the recipient of BC Other
Products pursuant to such bid and award, in which event the Company shall be
deemed to have purchased BC Other Products pursuant to such bid and award and
resold them to such Authorized Recipient and the Supplier shall act as the
Company's agent in receiving orders, delivering product, and receiving payment
therefor, and the Company shall receive the credit provided for in this
Section 2(d) as if such BC Other Products had been ordered by and delivered
and invoiced directly to, and payment made directly by, the Company. The
Supplier agrees that each order form and invoice sent to any such Authorized
Recipient shall conspicuously state that the Supplier is acting as the
Company's agent in the sale of, and receipt of funds for, such products. The
Supplier agrees that each bid made by it or its Bidding Affiliate will confirm
such agency provisions and include indemnification at least as broad as that
set forth in Section 11(a) of this Agreement. Amounts credited to the Credit
Amount pursuant to this credit program shall be available to the same extent
and for the same purposes as any other amount credited or elected to be so
credited under this Agreement.
e. Penalty for Lack of Capacity. In the event the Supplier or
its Bidding Affiliate shall not be awarded business for turkey, ham or
meatloaf pursuant to Section 2(d) in any Contract Year for failure of the
Supplier or a Bidding Affiliate to have sufficient internal capacity to
produce at least ________ * pounds per week of turkey, at least ________ *
pounds per week of ham, or at least ________ * pounds per week of meatloaf,
then the product expressed in proviso (Y) of Section 5(b) and the product
expressed in provisos (X) and (Z) of Section 5(c) shall be reduced by
$__________* for the relevant Contract Year if such failure relates to ham,
$__________* for the relevant Contract Year if such failure relates to
meatloaf, and $__________* for the relevant Contract Year if such failure
relates to turkey (each of such reductions being referred to as a "Cap
Reduction"). To the extent that any Cap Reduction pursuant to the immediately
preceding sentence does not actually reduce amounts owed by the Company to the
Supplier as Annual Dexter Adjustment Amounts or Annual Henderson Operating
Payments in the Contract Year to which such Cap Reduction first applies, such
unused portion of the Cap Reduction shall carry over to the next succeeding
Contract Year or Contract Years until fully used. Any Cap Reductions unused
as of the Termination Date shall expire without further effect.
3. Henderson Facility. The Supplier agrees to use its reasonable best
efforts to cause the Henderson Facility to be constructed and ready to begin
initial production of Chicken Products not later than July 1, 1996 (which
date, or such earlier date as the Supplier certifies in writing to the Company
that the Henderson Facility is first available for commercial production,
shall be the "Henderson Facility Commencement Date"). The Supplier will cause
the Henderson Facility to process a minimum average of 1,300,000 chickens per
week from the first anniversary of the Henderson Facility Commencement Date
(the "Henderson First Anniversary Date") continuously until the Termination
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* Confidential information deleted from this exhibit and filed separately
with the Securities and Exchange Commission
<PAGE>
Date, such average to be computed on a rolling twelve-week basis (or such
Date) and will increase production consistent with commercially reasonable
business practice. The Supplier shall arrange the sale or otherwise dispose
of Chicken Products and other products produced at the Henderson Facility on
commercially reasonable terms, consistent with efforts to maximize the selling
price thereof. The Supplier agrees that, during the period from the Henderson
First Anniversary Date to the end of the Term, for each month in which the
Henderson Facility is not in Full Production, any loss incurred by the
Henderson Facility during such month shall not be taken into account in
computing the Henderson Loss pursuant to Section 5(c) hereof, unless the
Company has consented to the operation of the Henderson Facility at less than
Full Production for such month.
4. Term.
a. Term. The term of this Agreement (the "Term") shall be a
period beginning on the Commencement Date and ending on the date that is the
fifth anniversary of the Henderson Facility Commencement Date (the
"Termination Date").
b. Termination. Notwithstanding the foregoing Section 4(a), the
Company or the Supplier may terminate this Agreement prior to the expiration
of the Term as provided in Section 12 hereof.
5. Contributions to Operating Costs and Other Payments; Credit Amount;
Examinations.
a. Initial Payment. The Company shall deposit with the Supplier,
upon execution of this Agreement, an aggregate amount of $__________*, such
amount to be retained by the Supplier as the Company's contribution towards
costs of design and construction of the Dexter Facility and the Henderson
Facility.
b. Annual Adjusting Payments for Chicken Products. The Company
shall pay, as the total purchase price for all Chicken Products purchased by
the Company from the Dexter Facility hereunder in any Contract Year during the
Dexter Term, an aggregate amount (the "Annual Aggregate Dexter Purchase
Price") equal to the sum of (x) the sum of all Interim Purchase Prices for
Chicken Products from the Dexter Facility properly invoiced to and paid by the
Company (the "Dexter Inside Sales") during such Contract Year and (y) an
adjustment amount (the "Annual Dexter Adjustment Amount") calculated annually
by Contract Year equal to fifty percent (50%) of any Dexter Loss for such
Contract Year, where "Dexter Loss" is an amount equal to the difference
between (i) ____________* percent (_____*%) of the Dexter Facilities Cost for
such relevant Contract Year, minus (ii) both (a) the Dexter Inside Sales for
such relevant Contract Year and (b) the Dexter Outside Sales for such relevant
Contract Year; provided, however, that (W) no Annual Dexter Adjustment Amount
shall be due unless and until such time as the cumulative Annual Dexter
Adjustment Amounts plus Annual Henderson Operating Payments otherwise payable
(but for operation of this proviso (W)) by the Company to the Supplier would
exceed $__________*, in which event Annual Dexter Adjustment Amounts shall be
- ---------
* Confidential information deleted from this exhibit and filed separately
with the Securities and Exchange Commission
<PAGE>
due only with respect to such excess, (X) no Annual Dexter Adjustment Amount
shall be payable for any period prior to March 31, 1996 or any period
following the Dexter Termination Date, (Y) the Annual Dexter Adjustment Amount
for any Contract Year shall not exceed the product of (1) $__________* times
(2) the quotient of (a) the sum of the number of plant-months of Full
Production by the Dexter Facility during such Contract Year plus the number of
plant-months of Full Production by the Henderson Facility during such Contract
Year, divided by (b) 24, and (Z) if the Annual Dexter Adjustment Amount for
any Contract Year shall be a negative number, then Supplier shall, at the
Company's option (exercisable in whole or in part in any combination between
cash and credits), pay to the Company in cash or credit to the Credit Amount
such Annual Dexter Adjustment Amount.
c. Annual Henderson Operating Payments. The Company shall pay,
as a contribution to the operating costs of the Henderson Facility for each
Contract Year (or portion thereof) during the Henderson Term, an amount (the
"Annual Henderson Operating Payment") equal to fifty percent (50%) of any
Henderson Loss for such Contract Year, where "Henderson Loss" is an amount
equal to the difference between (i) ____________* percent (_____*%) of the
Henderson Facilities Cost for such relevant Contract Year, minus (ii) the
Henderson Sales for such relevant Contract Year; provided, however, that (V)
no Annual Henderson Operating Payment shall be due unless and until such time
as the cumulative Annual Henderson Operating Payments plus Annual Dexter
Adjustment Amounts otherwise payable (but for operation of this proviso (V))
by the Company to the Supplier would exceed $__________*, in which event
Annual Henderson Operating Payments shall be made only with respect to such
excess, (W) no Annual Henderson Operating Payment shall be payable for the any
period prior to the Henderson First Anniversary Date or any period following
the Termination Date, (X) the Annual Henderson Operating Payment for any
Contract Year shall not exceed the product of (1) $__________* times (2) the
quotient of (a) the sum of the number of plant-months of Full Production by
the Henderson Facility during such Contract Year plus the number of plant-
months of Full Production by the Dexter Facility during such Contract Year,
divided by (b) 24, (Y) if the Annual Henderson Operating Payment for any
Contract Year shall be a negative number, then Supplier shall, at Company's
option (exercisable in whole or in part in any combination of cash and
credits), pay in cash or credit to the Credit Amount such Annual Henderson
Operating Payment, and (Z) the sum of the Annual Dexter Adjustment Amount and
the Annual Henderson Operating Payment shall not, for any Contract Year,
exceed the product of (1) $__________* times (2) the quotient of (a) the sum
of the number of plant-months of Full Production by the Henderson Facility
during such Contract Year plus the number of plant-months of Full Production
by the Dexter Facility during such Contract Year, divided by (b) 24.
d. Advertising Contribution. The Supplier shall pay to the
Company or such advertising fund or account as the Company may direct at the
end of the 1995 Contract Year $__________* to be utilized by the Company or
such fund or account to promote and advertise to consumers the products
supplied to the Company by the Supplier during the Term of this Agreement.
Such advertising and promotion may include chicken, chicken products, and to
the extent supplied partially or wholly by Supplier, ham, turkey, meatloaf,
- ---------
* Confidential information deleted from this exhibit and filed separately
with the Securities and Exchange Commission
<PAGE>
and ham, turkey, and meatloaf products, and meals including the foregoing.
Such advertising and promotion may be included with the advertising and
promotion of other products and shall be in such form or forms and through
such media as the Company may determine in its sole discretion.
e. Make-Whole Amount. Promptly following the Termination Date,
the Supplier shall compute the "Make-Whole Amount," which shall be a positive
or negative number, computed as:
X + Y - Z = Make-Whole Amount,
where
X = the sum (which sum will be $__________* or less) of all amounts
that would have been required to be paid by the Company to the
Supplier as Annual Dexter Adjustment Amounts or Annual Henderson
Operating Payments under this Agreement but are excepted from such
payment solely by reason of the operation of proviso (W) of Section
5(b) or proviso (V) of Section 5(c),
Y = all amounts required to be paid by the Company to the Supplier as
Annual Dexter Adjustment Amounts or Annual Henderson Operating
Payments under this Agreement, and
Z = the sum of all amounts required to be paid by the Supplier to the
Company (or credited to the Credit Amount) as Annual Dexter
Adjustment Amounts or Annual Henderson Operating Payments under
this Agreement.
If the Make-Whole Amount shall be:
(I) a positive number, the Company shall pay to the Supplier an amount
equal to the Make-Whole Amount, such payment to be made, to the
extent possible, by immediately applying to the amount owed any
remaining balance in the Credit Amount, up to the amount owed, and,
to the extent the Credit Amount is insufficient to pay the full
amount owed, by cash payments in the amount of such insufficiency;
or
(ii) zero or a negative number, the Supplier shall pay to the Company an
amount, in cash, equal to $__________* minus X; provided, however,
in the event that X is less than $__________*, the Supplier shall
pay to the Company an amount, in cash, equal to $__________* minus
X, and no payment shall be due under either (i) or (ii) above.
Upon the payments of any amounts due under this Section 5(e), the
remaining balance, if any, in the Credit Amount shall be paid in cash by the
Supplier to the Company. Any cash payments required under this Section 5(e)
shall be made by the party owing payment in 24 equal monthly installments
beginning not later than one month following the Termination Date.
- ---------
* Confidential information deleted from this exhibit and filed separately
with the Securities and Exchange Commission
<PAGE>
f. Credit Amount. The "Credit Amount" shall be that number of
dollars credited to such amount pursuant to this Agreement, less any amounts
deducted therefrom by the Company in lieu of a cash payment to the Supplier.
Once credited to the Credit Amount, dollars may not be deducted therefrom
except for payment in lieu of cash to the Supplier, except that upon
termination of this Agreement the remaining balance in the Credit Amount shall
be applied or distributed as provided in Section 5(e). Any amount payable by
the Company to the Supplier may be paid, at the Company's sole option, by
deducting such amount from credits in the Credit Amount from previous
calculations or by offsetting amounts which would be simultaneously credited
to the Credit Amount at the same time as such calculation. The Company agrees
that it shall not utilize its option under certain provisions of this
Agreement to elect cash payment in lieu of credit to the Credit Amount at any
time if calculation of the Make-Whole Amount at such time as if it were the
Termination Date would result in a positive number (and, in the event the
result was a negative number, to limit cash payment to such amount as would
offset such negative number).
g. Computation of Various Payments. Not later than forty-five
(45) days after the end of any Contract Year, the Supplier shall provide the
Company with a written report showing in reasonable detail the calculation of
each of the Annual Aggregate Dexter Purchase Price, the Interim Purchase
Prices for the Dexter Facility from Dexter Inside Sales, Dexter Outside Sales,
the Annual Dexter Adjustment Amount, _____*% of the Dexter Facilities Cost,
Henderson Sales, the Annual Henderson Operating Payment, _____* % of the
Henderson Facilities Cost, and any amount available for adjustment of the
Credit Amount.
h. Examination of Books and Records. The Company shall be
entitled, at its expense, (i) to examine the books and records of the Supplier
that are relevant to the determination of all defined terms and amounts
provided for in this Agreement, provided that any such examination shall be
conducted during the Supplier's normal business hours and in such a manner as
to reasonably minimize disruption of the Supplier's business, (ii) to
participate in the Supplier's preparation of budgets for the Facilities and,
following the Commencement Date or the Henderson Facility Commencement Date,
as appropriate, to approve any capital expenditures or related series of
capital expenditures at either Facility that exceeds $100,000, (iii) to direct
the Supplier with respect to the purchase of feed for the production of
chickens to be processed at the Facilities, (iv) to review the Supplier's
allocation of overhead expenses and costs and allocation of the Henderson
protein plant, (v) to review and approve all general increases in wages (or
bonuses or increases for specific employees or groups not in accordance with
past practice) or material changes in working conditions, benefits and
regulation, if such increases or changes are not generally applicable to the
Supplier's other chicken processing facilities, (vi) to review and approve or
disapprove all self-dealing transactions of the Supplier and its directors,
officers, employees and affiliates affecting the Facilities Cost, if such
transactions are not based on market prices and terms, and (vii) to determine,
jointly with the Supplier, the amounts of bonuses, if any, to be paid to the
management employees of the Facilities. Any management bonuses so determined
- ---------
* Confidential information deleted from this exhibit and filed separately
with the Securities and Exchange Commission
<PAGE>
shall be paid by the Supplier and included in the calculation of the
Facilities Cost. All amortization and depreciation of equipment, products and
services used in the computation of Facilities Cost shall be included in
Facilities Cost in accordance with the depreciation and amortization schedules
and policies attached as Exhibit D to this Agreement or as may otherwise be
mutually agreed. No cost incurred in violation of this Agreement shall be
included in Facilities Cost.
i. Cost Improvement Program. In the second Contract Year for
each Facility, both parties, in good faith, will outline and implement a
program to reduce costs (the "Cost Improvement Program"). The Cost
Improvement Program is intended to lower costs while maintaining or improving
quality, service, and productivity. The Cost Improvement Program will also be
a component in establishing objectives for Facilities management in connection
with any Facilities management performance bonus program.
6. Specifications and Inspection.
a. Quality Standards. The BC Chicken Products shall be produced
according to the quality and production standards as set forth on Exhibit A
hereto. The BC Other Products shall be produced according to quality and
production standards mutually agreed upon from time to time by the Company and
the Supplier.
b. Inspection. The Facilities and the BC Chicken Products and
the BC Other Products shall be subject to inspection and test by the Company
to the extent practicable at all times and places, including during the period
of manufacture and, in any event, prior to final acceptance by the Company or
other purchaser.
c. Quality Control. The Supplier shall provide and maintain a
quality control system covering any BC Chicken Products or BC Other Products
sold to the Company or for the Company's account. Records of all inspection
work by the Supplier shall be kept complete and available to the Company
during the performance of an Order.
7. Supplier's Covenants.
a. Affirmative Covenants. The Supplier covenants that, during
the Term of this Agreement, it shall:
i. operate the Facilities in compliance with all applicable
laws and regulations;
ii. use its best efforts, consistent with industry practices,
(A) to produce and offer for sale to the Company the BC Other Products and (B)
to minimize the Facilities Cost;
iii. cooperate in good faith with the Company in any
investigation or health or other inspection relating to the Facilities or the
BC Chicken Products and the BC Other Products; and
iv. process and package the BC Chicken Products and the BC
Other Products as specified by the Company from time to time.
<PAGE>
b. Negative Covenants. The Supplier covenants that, during the
Term of this Agreement, it shall not, without the prior consent or approval of
the Company, which consent or approval shall not unreasonably be withheld:
i. produce at the Dexter Facility any product, other than
Chicken Products sold to the Company;
ii. following the Commencement Date or the Henderson Facility
Commencement Date, as appropriate, make any capital expenditure or related
series of capital expenditures at either Facility in excess of $100,000;
iii. depreciate any of the Facilities' capital assets in a
manner inconsistent with the manner in which the Supplier has depreciated
comparable capital assets at its other production facilities in the past, as
set forth in Exhibit D;
iv. take any hedging position with respect to any feed grain
or other commodity that would be included in the calculation of the Facilities
Cost; or
v. change its current method of corporate overhead
allocation (based upon an imputed interest expense at an interest factor that
may vary during any of the Supplier's fiscal years).
8. Ordering and Logistics. The Supplier and the Company hereby
undertake to establish jointly an efficient ordering, shipping and inventory
procedure within ninety days after the date of this Agreement.
9. Force Majeure. Neither the Supplier nor the Company shall be liable
for, or deemed to be in default hereunder or subject to any remedies of the
other party as a result of, delays or performance failures due to fire or
other acts of God, strikes, riots or similar causes beyond such party's
reasonable control, and without the fault or negligence of the Company or the
Supplier; provided, however, that when the Supplier has reason to believe that
deliveries of BC Chicken Products will not be made as scheduled, written
notice setting forth the cause of the anticipated delay shall be given
immediately to the Company and the Supplier shall use reasonable efforts to
facilitate the Company in securing alternative supplies of BC Chicken
Products.
10. Warranties.
a. Supplier Warranties. The Supplier represents and warrants
that:
i. the Supplier is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware;
ii. the execution, delivery and performance by the Supplier
of this Agreement are within the Supplier's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene the
Supplier's charter or by-laws or any law or contractual restriction binding on
or affecting the Supplier;
<PAGE>
iii. there is no pending or threatened litigation challenging
the Supplier's authority to enter into and perform under this Agreement;
iv. each and every Chicken Product produced at either
Facility and its packaging: (A) will not be adulterated or misbranded within
the meaning of any applicable federal, state or local law, or any rules and
regulations promulgated thereunder; (B) will be produced (if a BC Chicken
Product) in accordance with the quality and production standards set forth on
Exhibit A hereto; and (C) will comply with applicable federal, state and local
laws, and the rules and regulations promulgated thereunder; and
v. the production of Chicken Products at either Facility
does not infringe any patent, copyright, trade secret or other proprietary
right or process.
b. Company Warranties. The Company represents and warrants that:
i. the Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware;
ii. the execution, delivery and performance by the Company of
this Agreement are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene the
Company's charter or by-laws or any law or contractual restriction binding on
or affecting the Company;
iii. there is no pending or threatened litigation challenging
the Company's authority to enter into and perform under this Agreement.
11. Indemnity.
a. Supplier's Indemnity. The Supplier agrees to protect and
indemnify and hold harmless the Company and its customers, shareholders,
officers, directors, employees, franchisees, joint venturers, agents and
affiliates from any claim, demand, loss, damage, liability, cost or expense,
directly or indirectly arising out of, or in connection with, or resulting
from, the willful or negligent acts or omissions of the Supplier, or any of
its employees, agents or contractors, relating to the manufacture, sale, use
or consumption of any article of food sold or delivered by the Supplier from
the Facilities during the Term of this Agreement. In the event the Company is
required to conduct a recall or notification campaign due to an alleged defect
in the food so sold, the Supplier will conduct the same or pay the Company's
costs and expenses thereof at the Company's option.
b. Company's Indemnity. The Company agrees to protect and
indemnify and hold harmless the Supplier, its shareholders, officers,
directors, employees, joint venturers, agents and affiliates from any claim,
demand, loss, damage, liability, cost or expense, directly or indirectly
arising out of, or in connection with, or resulting from, the willful or
negligent acts or omissions of the Company, or any of its employees, agents or
contractors, relating to the sale, use or consumption of any article of food
sold or delivered by the Supplier to the Company.
<PAGE>
12. Termination of Agreement. Notwithstanding anything to the contrary
herein stated, this Agreement shall terminate prior to the expiration of the
Term provided for in Section 4 hereof:
a. at the option of the Company, upon the filing of a voluntary
bankruptcy or insolvency petition by the Supplier or an involuntary bankruptcy
or insolvency petition against the Supplier which is not vacated within 30
days from the date of filing, or the entry of an order for relief in any
bankruptcy proceeding in which the Supplier is a defendant; the appointment of
a receiver or trustee for the Supplier; the execution of an assignment for the
benefit of creditors of the Supplier or the execution of a composition with
creditors or any agreement of like import by the Supplier; or
b. at the option of the Supplier, upon the filing of a voluntary
bankruptcy or insolvency petition by the Company or an involuntary bankruptcy
or insolvency petition against the Company which is not vacated within 30 days
from the date of filing, or the entry of an order for relief in any bankruptcy
proceeding in which the Company is a defendant; the appointment of a receiver
or trustee for the Company; the execution of an assignment for the benefit of
creditors of the Company or the execution of a composition with creditors or
any agreement of like import by the Company; or
c. at the option of the Supplier, in the event that the Company
is in material default in the performance of any of the terms or conditions of
this Agreement (including payment obligations, or the Company shall breach any
representation or warranty of the Company set forth in this Agreement in any
material respect), provided that such default or breach is not cured within
thirty (30) days after written notice to the Company by the Supplier of such
default or breach; or
d. at the option of the Company but subject to the last sentence
of Section 14 hereof, in the event that the Supplier is in material default in
the performance of any of the terms or conditions of this Agreement, or the
Supplier shall breach any of its representations or warranties set forth in
this Agreement in any material respect, provided that such default or breach
is not cured within thirty (30) days after written notice to the Supplier by
the Company of such default or breach; or
e. upon a change in control of (i) the Supplier, at the option of
the Company, or (ii) the Company, at the option of the Supplier.
If this Agreement is terminated pursuant to Section 12(c), the Company
agrees that it will purchase from the Supplier at the Supplier's net out-of-
pocket cost, or reimburse the Supplier for its net out-of-pocket cost, for all
packaging materials purchased by the Supplier for the Chicken Products and
which have been rendered unusable because of such termination.
13. Insurance. The Supplier shall at all times maintain commercial
general liability insurance, including product liability and contractual
liability coverage, the coverages, amounts and deductible levels of such
policies to be consistent with industry standards. Such policies shall name
the Company as additional insured and the Supplier shall provide the Company
with certificates of insurance evidencing these insurance coverages providing
for 30 days' advance written notice to the Company of any material change or
<PAGE>
termination of these coverages.
14. Remedies upon Default. Termination of this Agreement by either
party pursuant to Section 12(c) or (d) shall not limit or otherwise affect the
remedies of the nondefaulting or nonbreaching party against the defaulting or
breaching party. In the event that either party is in material default under
any of the terms or conditions of this Agreement or has materially breached
any of its representations or warranties in this Agreement, the nondefaulting
or nonbreaching party shall be entitled to pursue, in addition to any remedies
specifically provided herein, all further remedies then available under the
applicable state Uniform Commercial Code or otherwise available at law or in
equity. Notwithstanding anything herein to the contrary (including, without
limitation Section 12(d) hereof), the failure of any Chicken Products or
Third-Party Products to meet applicable specifications shall not be a breach
of this Agreement, provided that in the event the purchaser rejects any such
Products, the cost of any such Products shall be an "Excluded Cost" under
clause (viii) of the definition of that term and, provided further, this
sentence shall not reduce or affect any obligation the Supplier may have
pursuant to Section 11(a) of this Agreement.
15. Proprietary Information.
a. Confidentiality Agreement. The Company and the Supplier
acknowledge that they have previously executed and delivered a Confidentiality
Agreement, dated June 23, 1994, and such Confidentiality Agreement is
incorporated herein, as if fully set forth, and shall be effective during the
Term of this Agreement.
b. Remedy on Breach. In the event of a breach or threatened
breach of the obligations of the either party pursuant to the Confidentiality
Agreement, the breaching party agrees that in addition to any other legal
rights or remedies that the other party may have, the other party shall be
entitled to injunctive and/or other equitable relief to prevent or remedy such
breach or threatened breach.
16. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, but shall not be assignable by either party hereto without the prior
written consent of the other party hereto, which consent shall not
unreasonably be withheld.
<PAGE>
17. Notices. Any notice or other communication provided for herein or
given hereunder to a party hereto shall be in writing and shall be (i) mailed
by first class registered or certified mail, postage prepaid, (ii) delivered
by a nationally recognized overnight courier service, or (iii) transmitted by
confirmed facsimile or other confirmed electronic transmission, addressed as
follows:
If to the Company:
Boston Chicken, Inc.
14103 Denver West Parkway
P.O. Box 4086
Golden, Colorado 80401-4086
Facsimile: (303) 384-5335
Attn: Donald J. Bingle
General Counsel
If to the Supplier:
Hudson Foods, Inc.
1225 Hudson Road
Rogers, Arkansas 72756
Facsimile: (501) 631-5400
Attn: Michael T. Hudson
President
or to such other address with respect to a party as such party shall notify
the other party in writing as above provided.
18. Entire Agreement; Amendment. This Agreement (including attachments,
exhibits and materials incorporated by reference, and that certain Vendor
Quality Program Agreement attached hereto as Exhibit F) represents the entire
agreement between the parties and may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties. Any
amendment of this Agreement shall be in writing, signed by both parties. No
termination of approved vendor status or default under the Vendor Quality
Program Agreement shall constitute a default under or give rise to remedies
under this Agreement unless the event or events causing a termination of
approved vendor status or default under the Vendor Quality Program Agreement
would separately, without reference to the Vendor Quality Program Agreement,
constitute a default under and give rise to remedies under this Agreement.
19. Caption Headings. The section and paragraph headings used in this
Agreement are included for purposes of convenience only and shall not affect
the construction or interpretation of any of its provisions.
20. WAIVERS OF JURY TRIAL AND PUNITIVE DAMAGES. THE SUPPLIER AND THE
COMPANY EACH HEREBY IRREVOCABLY WAIVE (A) ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND (B) ALL RIGHT TO SEEK OR RECEIVE PUNITIVE DAMAGES IN ANY SUCH
ACTION, PROCEEDING OR COUNTERCLAIM.
<PAGE>
21. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware and shall be subject to the
Uniform Commercial Code of the State of Delaware to the extent not
inconsistent with the terms hereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have amended and restated the
Initial Agreement, effective as of April 1, 1996.
HUDSON FOODS, INC.
By /s/ Michael T. Hudson
--------------------------------
Michael T. Hudson
President and Chief Operating Officer
BOSTON CHICKEN, INC.
By /s/ Donald J. Bingle
--------------------------------
Name: Donald J. Bingle
Title:Vice President
<PAGE>
SCHEDULE OF EXHIBITS TO CONFORMED COPY OF
PURCHASE AND SUPPLY AGREEMENT (AMENDED AND RESTATED)
Exhibit A Specifications for the BC Chicken Products
Exhibit B By-Product Chart
Exhibit C Dexter Facility Capital Assets
Exhibit D Depreciation Schedules and Policies
Exhibit E Recipes, Specifications and Standards for the Turkey Products
Exhibit F Vendor Quality Program Agreement
<PAGE>
EXHIBIT B
BY-PRODUCT CHART
<TABLE>
<CAPTION>
PER CWT. WEIGHT F.O.B. PROTEIN PLANT BASED ON JACOBSEN-MIDSOUTH QUOTE
POULTRY/FEATHER MEAL RAW OFFAL PRICE RAW FEATHER PRICE
PRICE
<C> <C> <C>
75.00 0.20 0.10
77.50 0.23 0.13
80.00 0.26 0.16
82.50 0.29 0.19
85.00 0.32 0.22
87.50 0.35 0.25
90.00 0.38 0.28
92.50 0.41 0.31
95.00 0.44 0.34
97.50 0.47 0.37
100.00 0.50 0.40
102.50 0.53 0.43
105.00 0.56 0.46
107.50 0.59 0.49
110.00 0.62 0.52
112.50 0.65 0.55
115.00 0.68 0.58
117.50 0.71 0.61
120.00 0.74 0.64
122.50 0.77 0.67
125.00 0.80 0.70
127.50 0.83 0.73
130.00 0.86 0.76
132.50 0.89 0.79
135.00 0.92 0.82
137.50 0.95 0.85
140.00 0.98 0.88
142.50 1.01 0.91
145.00 1.04 0.94
147.50 1.07 0.97
150.00 1.10 1.00
152.50 1.13 1.03
155.00 1.16 1.06
157.50 1.19 1.09
160.00 1.22 1.12
162.50 1.25 1.15
165.00 1.28 1.18
167.50 1.31 1.21
170.00 1.34 1.24
172.50 1.37 1.27
175.00 1.40 1.30
177.50 1.43 1.33
180.00 1.46 1.36
<PAGE>
EXHIBIT CONTINUED
PER CWT. WEIGHT F.O.B. PROTEIN PLANT BASED ON JACOBSEN-MIDSOUTH QUOTE
POULTRY/FEATHER MEAL RAW OFFAL PRICE RAW FEATHER PRICE
PRICE
<C> <C> <C>
182.50 1.49 1.39
185.00 1.52 1.42
187.50 1.55 1.45
190.00 1.58 1.48
192.50 1.61 1.51
195.00 1.64 1.54
197.50 1.67 1.57
200.00 1.70 1.60
202.50 1.73 1.63
205.00 1.76 1.66
207.50 1.79 1.69
210.00 1.82 1.72
212.50 1.85 1.75
215.00 1.88 1.78
217.50 1.91 1.81
220.00 1.94 1.84
222.50 1.97 1.87
225.00 2.00 1.90
227.50 2.03 1.93
230.00 2.06 1.96
232.50 2.09 1.99
235.00 2.12 2.02
237.50 2.15 2.05
240.00 2.18 2.08
242.50 2.21 2.11
245.00 2.24 2.14
247.50 2.27 2.17
250.00 2.30 2.20
252.50 2.33 2.23
255.00 2.36 2.26
257.50 2.39 2.29
260.00 2.42 2.32
262.50 2.45 2.35
265.00 2.48 2.38
267.50 2.51 2.41
270.00 2.54 2.44
272.50 2.57 2.47
275.00 2.60 2.50
277.50 2.63 2.53
280.00 2.66 2.56
282.50 2.69 2.59
285.00 2.72 2.62
287.50 2.75 2.65
290.00 2.78 2.68
292.50 2.81 2.71
<PAGE>
EXHIBIT CONTINUED
PER CWT. WEIGHT F.O.B. PROTEIN PLANT BASED ON JACOBSEN-MIDSOUTH QUOTE
POULTRY/FEATHER MEAL RAW OFFAL PRICE RAW FEATHER PRICE
PRICE
<C> <C> <C>
295.00 2.84 2.74
297.50 2.87 2.77
300.00 2.90 2.80
302.50 2.93 2.83
305.00 2.96 2.86
307.50 2.99 2.89
310.00 3.02 2.92
312.50 3.05 2.95
315.00 3.08 2.98
317.50 3.11 3.01
320.00 3.14 3.04
322.50 3.17 3.07
325.00 3.20 3.10
327.50 3.23 3.13
330.00 3.26 3.16
332.50 3.29 3.19
335.00 3.32 3.22
337.50 3.35 3.25
340.00 3.38 3.28
342.50 3.41 3.31
345.00 3.44 3.34
347.50 3.47 3.37
350.00 3.50 3.40
352.50 3.53 3.43
355.00 3.56 3.46
357.50 3.59 3.49
</TABLE>
<PAGE>
DEXTER CAPITAL
EXHIBIT C
<TABLE>
<CAPTION>
PROJECT PROPERTY BUILDING EQUIPMENT
<S> <C> <C> <C> <C>
Property 200,000 200,000
Construction 4,200,000 4,200,000
Mechanical 525,000 525,000
Electrical 800,000 800,000
Refrigeration 960,000 960,000
Processing
Bird Sizer 170,000 170,000
Dapec System 350,000 350,000
Misc 100,000 100,000
Whole Bird Inject 308,000 308,000
Marinated Breast Fillet 1,235,000 1,235,000
Vacuum Transfer System 100,000 100,000
Cooked Meat 2,794,500 2,794,500
Freeze Rack 175,000 175,000
High Lift (3) 80,000 80,000
11,997,500 200,000 4,200,000 7,597,500
</TABLE>
<PAGE>
EXHIBIT D-1
FA.ASSETCOD.XLS
Hudson Foods, Inc. and Subs Tax yearend--6/30/XX
Fixed Asset Coding Fiscal Yearend 9/30/XX
As of 6/24/94 Book mon. - 3 = Tax Mo.
MM is 3 mo less than AM
Lease Buyouts - Book and State
Vehicles - 3 year life
Mach/Equip - 2 year life
Include Current Mo In calc. F/Y/M
Lease Buyouts - Tax
Same as lives below
<TABLE>
<CAPTION>
BOOK
-----------------------
ASSET CON- RECOVERY
CODE DESCRIPTION VENTION METHOD PERIOD
<S> <C> <C> <C>
Mfg. Bldgs (Note 6) MM SL 30
Farm Bld (Note 5) PR-HY SL 30
Leasehold Impr HY See Note 1.
M & E Foods HY SL 7
M & E Farms HY SL 7
Cars/Light Trucks HY SL 5
Heavy Trucks HY SL 5
Road Tractors HY SL 5
Road Trailers HY SL 5
Furn. & Fixt. HY SL 10
Office M & E HY SL 10
Land Imp (Note 3) PR-HY SL 20
Other:
Computers (Note 2) HY SL 5
Single Purpose (Note 4)
Agri Structures PR-HY SL 20
R & D Equip. HY SL 5
Software (Note 8) HY SL 3
Start-Up Costs MM SL 5
Airplane HY
Intangibles (Note 7) MM
<PAGE>
EXHIBIT D-1 CONTINUED
FEDERAL
----------------------------------------------
FOODS FARMS
----------------------- --------------------
ASSET RECOVERY RECOVERY
CODE DESCRIPTION METHOD PERIOD METHOD PERIOD
<S> <C> <C> <C> <C>
Mfg. Bldgs (Note 6) SL 39 N/A
Farm Bld (Note 5) N/A 150DB/SL 20
Leasehold Impr See Note 1. See Note 1.
M & E Foods DDB/SL 7 N/A
M & E Farms N/A 150DB/SL 7
Cars/Light Trucks DDB/SL 5 150DB/SL 5
Heavy Trucks DDB/SL 5 150DB/SL 5
Road Tractors DDB/SL 3 150DB/SL 3
Road Trailers DDB/SL 5 150DB/SL 5
Furn. & Fixt. DDB/SL 7 150DB/SL 7
Office M & E DDB/SL 5 150DB/SL 5
Land Imp (Note 3) 150DB/SL 15 150DB/SL 15
Other:
Computers (Note 2) DDB/SL 5 150DB/SL 5
Single Purpose (Note 4)
Agri Structures DDB/SL 10 150DB/SL 10
R & D Equip. DDB/SL 5 150DB/SL 5
Software (Note 8) SL 3 SL 3
Start-Up Costs SL 5 SL 5
Airplane DDB/SL 5 150DB/SL 5
Intangibles (Note 7) SL 15 SL 15
<PAGE>
EXHIBIT D-1 CONTINUED
FEDERAL
----------------------------------------------
AMT ACE (NOTE 9)
----------------------- --------------------
ASSET RECOVERY RECOVERY
CODE DESCRIPTION METHOD PERIOD METHOD PERIOD
<S> <C> <C> <C> <C>
Mfg. Bldgs (Note 6) SL 40 SL 40
Farm Bld (Note 5) 150DB/SL 25 SL 25
Leasehold Impr See Note 1. SL Note 1.
M & E Foods 150DB/SL 12 SL 12
M & E Farms 150DB/SL 10 SL 10
Cars/Light Trucks 150DB/SL 5 SL 5
Heavy Trucks 150DB/SL 6 SL 6
Road Tractors 150DB/SL 4 SL 4
Road Trailers 150DB/SL 6 SL 6
Furn. & Fixt. 150DB/SL 10 SL 10
Office M & E 150DB/SL 6 SL 6
Land Imp (Note 3) 150DB/SL 20 SL 20
Other:
Computers (Note 2) 150DB/SL 5 SL 5
Single Purpose (Note 4)
Agri Structures 150DB/SL 15 SL 15
R & D Equip. 150DB/SL 10 SL 10
Software (Note 8) SL 3 SL 3
Start-Up Costs SL 5 SL 5
Airplane 150DB/SL 6 SL 6
Intangibles (Note 7) SL 15 SL 15
</TABLE>
NOTES:
1. This is defined by the character of the improvement which will fall
under some other category.
2. Computers includes peripheral equipment such as printers, modems,
wiring, etc. Class code can be 3 or 6.
3. See Asset Class Code 00.3 for definition. Use tax code PR
4. Hatcheries, poultry houses, hog houses.
5. Farm structures other than single purpose. Straw sheds, cooling sheds,
farm dwellings, farm offices, feed mills and scale houses.
6. Effective May 13, 1993, Fed recovery is 30. However, prop. started as
of May 13 and placed in service by 12/31/93 is eligible for 31.5 yr
life.
7. Effective for acquisitions after 8/10/93 most intangibles will have a
tax life of 15 years.
8. Effective 8/10/93 software should be amortized over 3 years. Prior to
that date 5 years.
<PAGE>
EXHIBIT D-2
PROPOSED PROPERTY LIFE GUIDELINES
FINANCIAL BOOKS ONLY
<TABLE>
<CAPTION>
PROCESSING PLANTS
DESCRIPTION LIFE
<S> <C>
Cage Dumping System 7
Cages 4
Bird Chillers 15
Well pump system 7
Blenders/tumblers/marinators 10
Injectors 5
Formax machines 7
Formax plates Expense
Augers/breaders/batter equipment 7
Fryers 10
Conveyors/scales 7
Smokehouses/spiral freezers 10
Boilers 15
Air conditioning units 7
Packing equipment 7
DoBoys 3
Label Printers 3
Scanning Systems 5
Lab equipment 7
Refrigeration equipment
Ice Makers 15
Vessels/piping/recirculator 20
Pumps/motors/vacuum systems 7
Compressors 15
Control panels 7
Evaporators/condensors 10
Evis. equipment 5
Pickers 5
Wing Wheels 4
<PAGE>
EXHIBIT D-2 CONTINUED
PROTEIN PLANT
<S> <C>
Cookers/boilers/feather dryers 15
Augers 3
Press/Hammermill 10
Conveyors 5
Raw Meat Bins 10
Pumps 7
Scrubbers 7
FEED MILL
Pellet mills/coolers/hammer mills 10
Boilers 15
Augers/shakers 5
Truck scales 15
Feed Bins (usually considered bldg.) 30
Batching System 7
</TABLE>
<PAGE>
EXHIBIT D-3
<TABLE>
<CAPTION>
HATCHERY
<S> <C>
Incubators/hatchers (usually considered bldg.) 20
Chick-go-round turntables 7
Injectors 5
*All other M&E not included above will stay with a 7 yr. life
</TABLE>
<PAGE>
EXHIBIT F Page 1 of 3
Boston Chicken, Inc
14103 Denver West Parkway
P.O. Box 4086
Golden, CO 80401-4086
December 19, 1995 303 278 9500 Phone
303 384 5335 Fax
Mr. Jesse Hopkins
Hudson Foods, Inc.
PO Box 777
Rogers, Arkansas 72757
Dear Mr. Hopkins:
Boston Chicken, Inc. takes great pride in serving customers high quality,
great tasting food. We are pleased that Hudson Foods is a partner in this
effort.
As an extension of this quality partnership, Boston Market is implementing a
new Vendor Quality Program (VQP) which will require your financial support.
Our new VQP will be administered by Boston Chicken, Inc.'s quality assurance
(QA) representative, Industrial Food Design, Inc. (IFD). IFD will dedicate a
sizable portion of its staff and annual budget to a number of tasks necessary
to satisfy Boston Chicken quality expectations.
Based upon Hudson Foods' expected volume for 1996, your portion of 1996 VQP
expense is $123,066.92. At the beginning of each quarter, Boston Chicken,
Inc. will invoice your company in the amount of $30,766.73. Remittance
payable to Industrial Food Design, Inc. should be mailed to:
Industrial Food Design, Inc.
460-1 Squires Road
Lexington, KY 40515
For accounting purposes, a copy of this check is requested to be sent to
Boston Chicken, Inc. Attn: Accounts Receivable at the Support Center in
Golden, Colorado.
<PAGE>
EXHIBIT F CONTINUED
Please find enclosed a description of the VQP and monitoring that will be
conducted under the Level I (Ongoing Quality Maintenance), and under what
conditions accelerated monitoring could be implemented (i.e. Level II
Accelerated Monitoring and Level III Probation).*
After you have reviewed the enclosed pages, please sign and return the
agreement to my attention at the Boston Chicken Support Center at the address
listed above. Thank you.
Sincerely,
/s/ Bruce O. Burnham
Bruce O. Burnham
Vice President
Procurement
BOB/pjr
Enclosures
cc: Gerard Lewis, Boston Chicken, Inc.
Dave Jones, Boston Chicken, Inc.
Randy Miller, Boston Chicken, Inc.
Franz Ecker, Industrial Food Design, Inc.
* Confidential information deleted from this exhibit and filed separately
with the Securities and Exchange Commission.
<PAGE>
Page 1 of 8
CONFIDENTIAL
EXHIBIT A
BOSTON CHICKEN, INC.
PROCESSING SPECIFICATION
OVEN ROASTED CHICKEN
This product shall meet the requirements of this specification
and applicable Federal, State, and Municipal Food, Drug
and Health requirements.
Specification No.: PSC-320D
Date: March 24 1996
Supercedes: PSC-320B, PSC-320A, PSC-320,
PSC-320C
Pages: 1 of 8
PROCESSING PROCEDURES AND PROCESS FLOW CHART*
Sign to confirm that this document is accurate:
BOSTON CHICKEN, INC. HUDSON FOODS
Name: Name:
/s/ Donald J. Bingle /s/ Bob Galbraith
--------------------------- --------------------------
Title: Title:
Vice President Director of QA
--------------------------- --------------------------
Date: Date:
4-8-96 4-9-96
--------------------------- --------------------------
Boston Chicken, Inc. 1996 March 1996
- -------------------
* Confidential material omitted and filed separately with the Securities
and Exchange Commission.
<PAGE>
Page 1 of 4
CONFIDENTIAL
EXHIBIT A CONTINUED
HUDSON FOODS
USDA PLANT # CORPORATE OFFICE
Hudson Foods, Inc Hudson Foods, Inc.
1001 E. Stoddard P.O. Box 777
Dexter, MO 63841 Rogers, AR 72757-0777
Phone: 573-624-4548 Phone: 501-621-4957
Fax: 573-624-9834 Fax: 501-621-4930
Specification No.: C-320F
Date: April, 1996
Supercedes: C-320E, C-320D, C-320C,
C-320B, C-320A, C-320
Pages: 4
BOSTON CHICKEN, INC.
FINISHED PRODUCT SPECIFICATION
OVEN ROASTED CHICKEN BREASTS
This product shall meet the requirements of this specification
and applicable Federal, State, and Municipal Food, Drug
and Health requirements.
INGREDIENTS*
MISCELLANEOUS PRODUCT SPECIFICATIONS*
Sign to confirm that this document is accurate:
BOSTON CHICKEN, INC. HUDSON FOODS
Name: Name:
/s/ Donald J. Bingle /s/ Bob Galbraith
--------------------------- --------------------------
Title: Title:
Vice President Director of QA
--------------------------- --------------------------
Date: Date:
4-8-96 4-9-96
--------------------------- --------------------------
Boston Chicken, Inc. April 1996
- -------------------
* Confidential material omitted and filed separately with the Securities
and Exchange Commission.
<PAGE>
Page 1 of 5
CONFIDENTIAL
EXHIBIT E
ALL PROCESSORS
BOSTON CHICKEN, INC.
PROCESSING SPECIFICATION
INJECT MARINATED ROASTED TURKEY BREAST
This product shall meet the requirements of this specification
and applicable Federal, State, and Municipal Food, Drug
and Health requirements.
PROCESSING SPECIFICATIONS AND FLOW CHARTS*
Specification No.: PSP-402C
Date: July 22, 1995
Supercedes: PSP-420B, 402B2,
and 402B4
Pages: 1 of 5
PROCESS SPECIFICATIONS AND FLOW CHART*
Sign to confirm that this document is accurate:
BOSTON CHICKEN, INC. HUDSON FOODS
Name: Name:
/s/ Donald J. Bingle /s/ Bob Galbraith
--------------------------- --------------------------
Title: Title:
Vice President Director of QA
--------------------------- --------------------------
Date: Date:
4-8-96 4-9-96
--------------------------- --------------------------
Boston Chicken, Inc. July 22, 1995
- -------------------
* Confidential material omitted and filed separately with the Securities
and Exchange Commission.
<PAGE>
Page 1 of 5
CONFIDENTIAL
EXHIBIT E CONTINUED
ALL PROCESSORS
Specification No.: P-402E
Date: April 1996
Supercedes: P-400, P-401, P-402,
P-402B, 402C, P-402D
Pages: 5
BOSTON CHICKEN, INC.
FINISHED PRODUCT SPECIFICATION
INJECT MARINATED ROASTED TURKEY BREAST
This product shall meet the requirements of this specification
and applicable Federal, State, and Municipal Food, Drug
and Health requirements.
GENERAL DESCRIPTION*
PRODUCT SPECIFICATIONS*
Sign to confirm that this document is accurate:
BOSTON CHICKEN, INC. HUDSON FOODS
Name: Name:
/s/ Donald J. Bingle /s/ Bob Galbraith
--------------------------- --------------------------
Title: Title:
Vice President Director of QA
--------------------------- --------------------------
Date: Date:
4-8-96 4-9-96
--------------------------- --------------------------
Boston Chicken, Inc. April 1996
- -------------------
* Confidential material omitted and filed separately with the Securities
and Exchange Commission.
