UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
report (Date of earliest event reported): November 4, 2005
PILGRIM'S
PRIDE CORPORATION
(Exact
Name of Registrant as Specified in its Charter)
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Delaware
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1-9273
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75-1285071
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(State
or Other Jurisdiction
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(Commission
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(IRS
Employer
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of
Incorporation)
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File
Number)
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Identification
No.)
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4845
US Hwy. 271 N.
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Pittsburg,
Texas
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75686-0093
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(Address
of Principal Executive Offices)
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(ZIP
Code)
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Registrant's
telephone number, including area code: (903)
434-1000
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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q
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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q
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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q
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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q
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c)
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Item
1.01. Entry
into a Material Definitive Agreement.
On
November 4, 2005, Pilgrim's Pride Corporation (the “Company”) entered into a
Broiler Production Agreement with Lonnie "Bo" Pilgrim, its Chairman,
largest stockholder and a director, involving one of Mr. Pilgrim’s farms,
providing the placement of Company-owned flocks on the farm during the grow-out
phase of production. This contract is on terms substantially the same as
contracts entered into by the Company with unaffiliated parties and can be
terminated by either party upon completion of the grow-out of each flock. A
copy
of this agreement is filed as Exhibit 99.1 to this Form 8-K. Both the Company
entering into this agreement, as well as the transactions contemplated thereby,
were pre-approved by the Company’s Audit Committee on November 4, 2005 as
required by the Company’s Code of Business Conduct and Ethics.
Item
9.01. Financial Statements and Exhibits.
(c)
Exhibits
Exhibit
Number Description
99.1
Broiler Production Agreement dated effective November 15, 2005 between
Pilgrim's Pride Corporation and Lonnie "Bo" Pilgrim.
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
PILGRIM'S
PRIDE CORPORATION
Date:
November 10, 2005 By:
/s/
Richard A Cogdill
Richard A. Cogdill
Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer
Exhibit
Index
Exhibit
Number Description
99.1
Broiler Production Agreement dated effective November 15, 2005
between
Pilgrim's Pride Corporation and Lonnie "Bo" Pilgrim.
COMPLEX
LOCATION: NETEX
PILGRIM’S
PRIDE
BROILER
PRODUCTION AGREEMENT
This
Pilgrim’s Pride Broiler Production Agreement (hereinafter “Broiler Production
Agreement” or “Agreement”) is made and entered into by and between PILGRIM’S
PRIDE CORPORATION, hereinafter called the “Company” and
____LTD
Broilers_______________
hereinafter called the “Independent Grower” effective the 15th_
day of November,
2005.
WHEREAS,
Company is engaged in, among other things, the growing and processing of broiler
chickens (hereinafter referred to as “Broilers”),
WHEREAS
it is necessary that such Broilers be raised in conditions to comply with
applicable regulations and to ensure that the Broilers are of acceptable
quality,
WHEREAS
the Independent Grower has the proper farm, facilities and equipment to raise
Broilers for eventual processing, and
WHEREAS
it is the desire of both the Company and the Independent Grower that this phase
of the work be done by the Independent Grower.
NOW,
THEREFORE, in consideration of the mutual covenants and promises of the parties
hereof, the Company and the Independent Grower covenant and agree as
follows:
A. Engagement
of the Independent Grower.
Subject
to the terms and conditions of this Agreement, Independent Grower hereby
covenants and agrees to perform the work and labor necessary to maintain the
proper facilities to raise and prepare Broilers to be caught and caged for
processing for the Company. Such Agreement is to continue unless terminated
in
accordance with the provisions hereinafter contained. The work and labor herein
provided for shall be done and performed by Independent Grower as an independent
contractor and under its sole supervision, management, direction and control
of
day to day operations. The Company will not supervise Independent Grower’s
personnel or employees in the performance of such work or as to the manner,
means and methods in which such work or labor is performed other than to assure
that the Broilers are raised in compliance with applicable laws and regulations
and the guidelines of the Company.
B. Fee.
The fee
paid by the Company to the Independent Grower for the performance of services
by
the Independent Grower in connection with the engagements shall be determined
as
described in Exhibit A. Independent Growers that are company employees (or
immediate family members of an employee) or broiler service contractors will
be
excluded from the calculations used to determine the average grower
costs.
C. Term.
The
term of this Agreement shall commence on the date of execution of this
Agreement, continue on a flock to flock basis, and shall terminate upon
completion of the engagement(s) subject to the right of the Company to terminate
this Agreement upon written notice to the Independent Grower in the event the
Independent Grower does not timely perform its obligations hereunder as provided
in this Agreement.
D. Termination.
Either
the Independent Grower or the Company shall have the right to terminate this
Agreement and its Exhibits without any need for cause provided that written
notice is given after a flock is settled and before a new flock is placed.
Written notice from the Independent Grower should be given to the Live
Production Manager or Broiler Manager. Written notice shall be given from the
Company to the Independent Grower. Termination during a flock shall be in
accordance with the other terms of this Agreement. Should such termination
occur, the Company agrees to pay the Independent Grower for all services
performed until termination of this Agreement, and the Independent Grower agrees
to perform all obligations until termination of this Agreement. Once notice
has
been given by either party to terminate, the Company will not deliver new
chicks, nor will the Independent Grower accept new chicks. Except for cause
or
economic necessity, Company will not terminate this Agreement without first
requiring Independent Grower to follow the “Cost Improvement Program” as
described in Exhibit B.
In
the
event of gross negligence or abandonment of the Broilers by the Independent
Grower, the Company shall have the right to take over said work and complete
it
in any manner it sees fit, with any and all expense above that the Independent
Grower would have normally received for the job being charged back to the
Independent Grower, and at the Company’s option this Agreement, at that time,
may be terminated.
E. Representations
and Warranties of Independent Grower.
The
Independent Grower hereby represents and warrants to the Company and agrees
that:
(1)
Independent Grower will neither represent nor hold itself out to be an employee,
agent, partner, representative or joint venture of or with the
Company;
(2)
Independent Grower will pay all state, local and federal taxes which may arise
from the provision of services under this Agreement;
(3)
Independent Grower will comply with all applicable local, state and federal
laws, rules and statutes;
(4)
Independent Grower has or will procure all licenses or permits necessary or
required to carry on its business in the counties in which the Independent
Grower operates.
F. RESPONSIBILITIES
OF THE COMPANY:
| 1) |
Chicks. The
Company will provide the Independent Grower with chicks placed from
the
hatchery without bias in their selection. The Company retains title
to
these chicks and bears the specified costs of producing them prior
to
delivery to Independent Grower. The Company will provide the Independent
Grower with proper advance notice of the chick delivery
time.
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| 2) |
Feed. The
Company will provide the Independent Grower with the feed necessary
to
produce the broilers. The Company retains title to any feed and bears
the
specified costs of the feed and the right to retain or dispose of
excess
feed.
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| 3) |
Scheduling,
Number and Breed. The
Company shall determine the number, frequency of placement, size
of
broiler, and breed of birds. The Company will determine when and
where the
broilers shall be processed and will notify the Independent Grower
of the
processing arrangements.
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| 4) |
Catching
and Hauling. The
Company will provide the labor and equipment necessary to catch and
load
the broilers, and to haul the flock to a processing plant at no cost
to
the Independent Grower.
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| 5) |
Property
Damage.
Any damage or theft to Independent Grower’s property or equipment that
occurs during catching, hauling or feed delivery that is proximately
caused by the negligent act or omission of the Company or parties
under
its control, provided that it is promptly reported and verified,
will be
reimbursed or replaced without cost to Independent Grower by the
Company
or parties under its control.
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| 6) |
Documents. The
Company agrees to furnish copies of the Independent Grower’s chick
delivery tickets, feed tickets, medication tickets, live weight tickets,
condemnation certificate, settlement sheet, and a ranking sheet of
all
settlements for the week that the Independent Grower
settled.
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| 7) |
Record
Maintenance. The
Company will maintain records of each Independent Grower’s account for the
legally required time period.
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| 8) |
Certified
Scales.
The Company will provide certified scales to be used to weigh live
broilers and feed. The Company shall use certified weigh masters
to
operate these scales. The Company shall make arrangements to use
alternate
certified scales in the event the primary scale is
inoperable.
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| 9) |
Observation
of Weighing.
The
Company agrees that the Independent Grower or a family member / farm
manager is entitled to observe the weighing of feed to be delivered
to, or
the weighing of the live broilers from, his/her farm provided that
such
actions do not interrupt the normal production flow of the Company’s
operations.
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| 10) |
Payment.
The
Company agrees to pay the Independent Grower for services hereunder
in
accordance with Exhibit A hereto.
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| 11) |
Veterinary
Services.
The
Company will provide veterinary services as necessary at no cost
to the
Independent Grower. The veterinarian shall be selected solely by
the
Company. The Company retains title to any medication that is left
on
Independent Grower’s farm.
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| 12) |
Technical
Assistance.
The
Company will provide technical advice at no cost to the Independent
Grower. The Company’s Field Service Supervisors shall visit the
Independent Grower periodically to give advice and assistance as
required
to help maximize broiler performance.
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| 13) |
Risk
of Loss.
The
Company will bear the financial risk of loss of birds, feed, and
medication while these properties are in the Independent Grower’s
possession, provided that such properties were not damaged or lost
due to
a negligent act or omission of Independent Grower or parties under
its
control or due to a breach of Independent Grower’s contractual obligations
under this Agreement. The Company retains title to any supplies it
left on
the Independent Grower’s farm.
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| 14) |
Disclaimer.
EXCEPT AS SPECIFICALLY SET FORTH HEREIN, COMPANY MAKES NO OTHER
REPRESENTATIONS, GUARANTEES OR WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE INDEPENDENT GROWER’S OPERATIONS UNDER THIS AGREEMENT.
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G. RESPONSIBILTIES
OF THE INDEPENDENT GROWER:
| 1) |
Basic
Housing.
The
Independent Grower shall provide and maintain proper housing, equipment,
litter and utilities in accordance with the Company’s specifications and
applicable regulations.
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| 2) |
Husbandry
Methods. The
Independent Grower agrees to follow applicable laws and regulations
as
well as the Company’s written and verbal management recommendations,
including, but not limited to, watering, feeding, brooding, sanitation,
litter, vaccination, medication, house environment, lighting, pest
control
and biosecurity.
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| 3) |
Labor.
The
Independent Grower agrees to provide the labor necessary to provide
good
husbandry during the growing period. The Independent Grower or his/her
agent must be present when baby chicks arrive and furnish adequate
labor
to unload chicks.
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| 4) |
Catching
Preparation. The
Independent Grower will prepare the house for catching and follow
the
recommended feed withdrawals. The Independent Grower or his/her agent
must
be present to walk the houses with the crew foreman prior to the
beginning
of catching and to determine the number of dead birds. Otherwise,
the
Independent Grower will accept the crew foreman’s determination of the
number of dead birds. Independent Grower will allow catching crews
to
utilize any needed fans and
utilities.
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| 5) |
Roads.
The
Independent Grower will maintain all-weather roads to the chicken
houses
and provide adequate loading pads and space to turn vehicles. Failure
to
maintain roads, loading pads and turn-arounds will make the Independent
Grower liable for wrecker services and damages sustained by the Company
in
accessing the facility.
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| 6) |
Waste
Disposal.
The Independent Grower will dispose of all dead birds, manure and
poultry
house litter in accordance with the Dead Bird and Poultry House Litter
Best Management Practices provided in Exhibit C to this agreement.
Further, the Independent Grower agrees to dispose of all dead birds
and
poultry house litter in accordance with all applicable federal, state,
and
local laws, rules, and regulations where more stringent than the
Best
Management Practices provided in Exhibit C. Independent Grower agrees
to
have applied for or have a Waste Management Plan from the local office
of
the Natural Resource Conservation Service or similar agency or otherwise
be in compliance with such agency
requirements.
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| 7) |
Biosecurity. Independent
Grower agrees to prohibit the presence of poultry, fowl or ratites
of any
kind on his/her farm other than that provided by the Company. Independent
Grower also agrees to make every effort to limit the movement of
non-essential people, vehicles and equipment in and around the poultry
houses. In the event of a contagious disease outbreak threatening
Independent Grower’s farm, Independent Grower will comply with the
directives of all local, state and federal agencies, as well as the
guidelines of the Company.
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| 8) |
Animal
Welfare.
Company maintains a program of animal welfare that is designed to
eliminate unnecessary harm and suffering for poultry in the day-to-day
operation of our production processes. Independent Grower represents
and
warrants that Independent Grower will comply with the Company and
industry
standards regarding animal welfare including, but not limited to,
the
following provisions.
|
| A. |
Independent
Grower will follow live production practices that avoid unnecessary
suffering, prevent destructive behavior, and prevent disease while
promoting good animal health.
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| B. |
Independent
Grower will also follow the guidelines for animal welfare promulgated
by
the Company, included with the Grower guidelines, with the intent
to
promote the humane treatment and well-being of poultry through the
production process.
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| C. |
Any
Independent Grower who violates the Company animal welfare policy
and
associated procedures will be subject to termination of their Broiler
Production Agreement.
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| 9) |
Approved
Materials.
Independent
Grower agrees to not use any feeds, insecticides, medications,
disinfectants, herbicides, pesticides, wood preservatives, floor
treatments, rodenticide or other similar materials on the farm premises
without the approval of the
Company.
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| 10) |
Risk
of Loss.
The
Independent Grower will bear the financial risk of loss of Basic
Housing,
Labor, Catching Preparation, Roads and Waste Disposal, provided that
such
loss is not due solely to a negligent act or omission of the Company
or
parties under its control.
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| 11) |
Safe
Work Environment.
Independent
Grower agrees to maintain a safe working environment for representatives
of the Company and their vehicles that must enter the premises to
carry
out their work assignments. Independent Grower shall allow Company
employees, vehicles or agents to enter the premises at any
time.
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| 12) |
Compliance
With All Laws and Regulations. Independent
Grower agrees to comply with all applicable regulations and laws,
whether
federal, state or local.
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| 13) |
Record
Keeping.
Independent Grower agrees to keep accurate records of mortality and
other
detailed information deemed necessary for sound management by the
Company.
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| 14) |
Independence
of Grower. Independent
Grower is an independent contractor and is not to be considered in
any way
an employee of the Company and Independent Grower shall be solely
responsible for his/her own activities. Independent Grower will be
responsible for all of his/her own agents, employees, and subcontractors
as to wages, workers compensation, unemployment insurance, and all
other
normal and usual employer and employee expenses, and Independent
Grower
shall be responsible for all actions of those persons during their
employment with the Independent Grower. Subject to the other provisions
of
this Agreement, Independent Grower may join or assist any association
or
organization of the Independent Grower’s choice without any effect on this
Contract.
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| H. |
RESPONSIBILITIES
OF COMPANY AND INDEPENDENT GROWER:
|
| 1) |
Best
Efforts. The
Company and Independent Grower agree to use their best efforts in
maintaining the broilers in such a manner that optimizes uniformity,
health, livability, and the performance of the broilers to market
age. If
Independent Grower fails to use best efforts in management and/or
housing
of broilers and/or maintenance, or operation of equipment, the Company
has
the right (at its option) to suspend placements of chicks until such
deficiencies are corrected.
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| 2) |
Transferability.
Independent
Grower may not assign or transfer Independent Grower’s right or
obligations under this Agreement and/or its Exhibits for the specific
farm
without the Company’s prior written consent. Independent Grower
understands and acknowledges that the Company reserves the right
to
require that there be improvements or upgrades to poultry houses
or to
equipment on such farm before the Company gives consent to any transfer,
or grants a new contract, and the Company is under no obligation
whatsoever to approve a transfer of the Independent Grower’s rights or
obligations under this Agreement and/or its Exhibits or grant a new
contract. Company’s rights and obligations under this Agreement and/or its
Exhibits can be transferred or assigned without the Independent Grower’s
consent to any entity or other person acquiring Company by merger,
or
purchasing all or substantially all of Company’s assets, or acquiring all
or substantially all of the assets of the Company. Company may transfer
Independent Grower and the performance of Company’s obligations under this
Agreement to another of Company’s Complexes or divisions without
Independent Grower’s consent.
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| 3) |
Incurred
Expenses.
Any agreed upon expenses paid by the Company on the Independent Grower’s
behalf under this Agreement are hereby authorized to be deducted
from
Independent Grower’s payment prior to any other amounts being paid to
Independent Grower or their assignees. The Company will provide an
itemization of such deductions in writing at the time of
payment.
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| 4) |
Liability
and Indemnity of Independent Grower.
Subject
to the provisions for arbitration as herein provided, Independent
Grower
agrees to indemnify, defend, and hold the Company, its officers,
employees, agents, and representatives harmless against any and all
claims, damages, liabilities, losses, actions, and expenses, including
injury to any employee of or to any property of the Company, proximately
caused by negligent acts or omissions of Independent Grower or his
agents,
employees, sub-contractors or parties under its control, in the
performance of Independent Grower’s duties hereunder. Independent Grower
further agrees to indemnify, defend and hold the Company harmless
from and
against any and all losses, claims, damages, and actions, including
federal, state, or local administrative actions, rulings and all
other
actions of any nature whatsoever which are in any manner caused by
or
which result from the presence of the broilers on the premises of
Independent Grower, including, but not necessarily limited to matters
involving emission complaints, disposal complaints, or pollution
complaints, violation of law, and any negligent acts or omissions
of
Independent Grower in the performance of its obligations under this
Agreement.
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| 5) |
Liability
and Indemnity of Company.
Subject
to the provisions for arbitration as herein provided, the Company
agrees
to indemnify, defend, and hold harmless the Independent Grower from
and
against any claims, damages, liabilities, losses and expenses for
personal
injury or property damage (to property other than chicks or feed)
proximately caused by negligent acts or omissions of the Company
in the
performance of its obligations under this Agreement.
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| 6) |
THIRD
PARTY PRODUCTS.
THE COMPANY PROVIDES ANY THIRD PARTY PRODUCTS, SUCH AS MEDICINES
AND
VACCINES “AS IS,” AND DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE AS TO THOSE ITEMS, EXCEPT TO THE
EXTENT
PROVIDED BY MANUFACTURER.
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| 7) |
Arbitration. All
claims between the Company and Independent Grower arising out of
or
relating in any way to the execution, interpretation and performance
of
this Agreement and/or its Exhibits, and/or the dealings between
Independent Grower and Company, shall be submitted to arbitration
conducted by the American Arbitration Association “AAA”, unless the
parties agree otherwise. The following procedure shall
apply:
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i.
Either
party (Company or Independent Grower) may demand arbitration in writing within
one hundred twenty (120) days after the alleged claim was known or reasonably
should have been known. Such demand shall include the name and address of the
arbitrator appointed by the party demanding arbitration (“First
Party”).
ii. Within
thirty (30) days after such demand, the other party (“Second Party”) shall name
and appoint an arbitrator and notify the First Party of the name and address.
The parties hereby agree that the arbitrator selected by each party shall be
a
non-neutral arbitrator and need not meet the impartiality standards of Section
R-17(a) of the AAA Rules , which provisions are waived by the parties. However,
if a party elects not to select a non-neutral arbitrator, that shall not and
does not prevent or otherwise bar the other party from selecting a non-neutral
arbitrator.
iii. The
two
(2) arbitrators shall within thirty (30) days request a panel of seven (7)
persons to be designated by the AAA, one of whom shall be selected as the third
arbitrator. The First Party shall make the first, third, and fifth strikes
from
the panel of seven. The Second Party will execute the second, fourth and sixth
strikes. The remaining person from the original panel of seven shall become
the
third arbitrator, and he/she shall serve as chair of the proceedings. Further,
even if a party elects not to select a non-neutral arbitrator, the parties
agree
that the AAA shall still designate a panel of seven (7) proposed arbitrators,
one of whom shall be selected as the third arbitrator.
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iv.
All
arbitrators shall be persons having knowledge of and experience in
the
broiler production industry.
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v. Each
party shall bear its own arbitration costs and expenses, and the
costs and
expenses of the third arbitrator shall be shared jointly and equally
between the two parties. However, it is expressly provided that,
in order
to encourage arbitration as a method of claims resolution, the Company
does hereby agree to pay all reasonable costs and expenses of the
third
arbitrator in excess of $1,000. The cost of the third arbitrator
to the
Independent Grower shall not exceed
$500.
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vi. The
arbitration hearing shall be held at an agreed-to location or the specified
venue. At least twenty (20) days advance notice of the hearing date, time and
location shall be provided to both parties.
vii.
Discovery shall be permitted in connection with the arbitration only to the
extent, if any, expressly authorized by the arbitration panel upon a showing
of
substantial need by the Party seeking discovery.
viii.
The
individual arbitrator or the arbitration panel shall have no power to award
non-monetary or equitable relief of any sort. The arbitrator/panel
shall
also have no power to award (a) damages inconsistent with any applicable
agreement between the Parties or (b) punitive damages or any other damages
not
measured by the prevailing Party’s actual damages; and the Parties expressly
waive their right to obtain such damages in arbitration or in any other
forum.
ix.
The
three
arbitrators shall hear the evidence and testimony offered by both parties,
and
the arbitration hearing shall be concluded within ten (10) days from its
starting date unless otherwise ordered by the arbitrators. The arbitrators
will
make a majority decision within thirty (30) days from the completion of the
hearing. Both parties shall be allowed a period of time to submit post-hearing
briefs within a period of time designated by the arbitrator acting as
chairperson. An award rendered by a majority of the arbitrators appointed
pursuant to this Agreement shall be final and binding on all parties except
as
provided by law. Such judgment or award rendered by a majority of the
arbitrators may be recorded or entered by either party in any court having
jurisdiction as provided above.
x.
The
parties stipulate that the provisions hereof shall be a complete defense to
any
suit, action, or proceeding instituted in any federal, state or local court
or
before any administrative tribunal. The arbitration provisions hereof shall,
with respect to any controversy or dispute, survive the termination or
expiration of this Agreement and/or its Exhibits.
xi. Nothing
herein contained shall be deemed to give the arbitrators any authority, power,
or right to alter, change, amend, modify, add to or subtract from any of the
provisions of this Agreement and/or its Exhibits.
xii.
By
mutual
agreement and selection, the parties may waive a three-member panel and proceed
with one arbitrator only.
xiii.
Failure
by either party to participate in the arbitration process shall preclude that
party from objecting to the arbitration proceedings.
8) Confidentiality.
Independent
Grower acknowledges that its employees and other representatives will be exposed
to confidential and proprietary information of Company during the ordinary
course of providing the services contemplated by this Agreement. Independent
Grower agrees to use its best efforts and to cause its employees and other
representatives to use the same degree of care to maintain the confidentiality
of such information as it would and/or does with respect to its own proprietary
and confidential business information. Independent Grower agrees to refrain
from
disclosing any part of Company’s confidential and proprietary information to a
third party. Independent Grower further agrees not to use any confidential
and
proprietary business information of Company for any purpose other than the
performance of the Services described hereunder.
9) No
Gratuities.
Neither
party will offer or provide to the employees, agents or other representatives
of
the other party any favors, gratuities, gifts, payments, or anything of value,
whether or not in an attempt to influence such person’s administration of the
provisions of Agreement or to otherwise gain unfair advantage individually
and/or relative to competing suppliers/vendors.
Additionally,
each party will immediately report to the other party any requests made for
favors, gratuities, gifts, payments, or anything of value by employees, agents
or other representatives of such party and will cooperate with respect to any
inquiry or investigation being conducted related to such activities or alleged
activities. Pilgrim’s Pride has established its Pride Line with the toll-free
number of 1-888-536-1510 to report any unethical conduct.
10)
Prior
Agreements/Entire Agreement. This
agreement supersedes, voids and nullifies any and all previous Broiler
Production Agreements and all other previous agreements governing the
relationship between Independent Grower and Company. The Independent Grower
and
Company hereby release and extinguish all claims that they may have against
each
other under any previous Broiler Production Agreement and all other previous
agreements governing the relationship between Independent Grower and Company.
This Agreement, and any Exhibits hereto, constitute the entire agreement between
the parties, and those documents supersede all oral statements and other
communications made before the execution of those documents. Independent Grower
acknowledges that in entering into this Agreement, he/she has not relied upon
any statements that are not contained in this document, and/or the Exhibits
hereto.
11)
Verbal
Abuse or Physical Threat. Verbal
abuse and/or physical violence or threat of violence by the Independent Grower
or his/her agents to employees, representatives, and/or agents of, and/or
contractors hired by Company will not be tolerated. Any threatening physical
action, verbal threat, or abusive language by Independent Grower or parties
under its control will result in immediate termination of this Agreement and
its
Exhibits. Any reference to or presentation of weapons or firearms will be
considered a physical threat. Company employees, representatives, and/or agents
of, and/or its contractors will be expected to follow like conduct in avoiding
verbal abuse and/or physical violence or threat of violence.
12)
Unusual
Circumstances.
In the
event the parties hereto shall fail to perform their obligation hereunder,
the
same shall not constitute a breach of this Agreement and/or its Exhibits, when
and while, and to the extent that such failure shall be caused by an act of
God,
fire, riot, work stoppage, war, or compliance with acts or requests of any
governmental authority beyond reasonable control of such party.
13)
No
Modification Except in Writing. The
parties agree that this Agreement and the Exhibits hereto may not be modified
except in a writing signed by both the Company and Independent
Grower.
14)
Exclusion
of Incidental, Consequential, and Certain Other Damages. TO
THE MAXIMUM EXTENT PERMITTED BY LAW, NEITHER THE COMPANY NOR INDEPENDENT GROWER
SHALL BE LIABLE TO ONE ANOTHER FOR ANY SPECIAL, INCIDENTAL, INDIRECT,
CONSEQUENTIAL, EXEMPLARY OR NON-COMPENSATORY DAMAGES WHATSOEVER ARISING OUT
OF
OR IN ANY WAY RELATING TO THIS AGREEMENT AND/OR ITS EXHIBITS, AND/OR THE
PERFORMANCE OF THE PARTIES UNDER THIS AGREEMENT AND/OR ITS EXHIBITS.
15)
Opportunity
to Consult Attorney. Independent
Grower acknowledges that he/she has had the opportunity to consult an attorney
before entering into this Agreement and its Exhibits.
16)
Severability. The
parties agree that if any of the provisions of this Agreement and/or its
Exhibits shall be held void for any reason, the remaining provisions shall
continue in full force and effect.
17)
Choice
of Law and Venue.
Independent Grower and the Company agree that disputes should be arbitrated
as
set forth above. The parties agree that the substantive laws of the State in
which the farm is located shall govern the interpretation of this Agreement
and/or the Exhibits hereto, and all other dealings between Independent Grower
and Company, even if the choice of law rules of that State would otherwise
allow
for the application of the substantive laws of a different state. IF ANY MATTERS
IN DISPUTE ARE REQUIRED TO BE SETTLED BY LITIGATION, SUCH TRIALS WILL BE DECIDED
BY A JUDGE. THE
PARTIES WAIVE TRIAL BY JURY IN ANY SUCH ACTION(S) AND CONFIRM THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO THEIR BUSINESS TRANSACTIONS.
ANY SUCH LITIGATION, ENFORCEMENT OF AN ARBITRATION RULING OR OTHER
PROCEEDING BETWEEN THE PARTIES THAT MAY BE BROUGHT, OR ARISE OUT OF, IN
CONNECTION WITH OR BY REASON OF THIS AGREEMENT SHALL BE BROUGHT IN THE STATE
OR
FEDERAL COURT IN AND FOR DALLAS COUNTY, TEXAS, WHICH COURTS SHALL BE THE
EXCLUSIVE COURTS OF JURISDICTION AND VENUE.
INDEPENDENT
GROWER
PILGRIM’S
PRIDE CORPORATION
/s/
Lonnie “Bo”
Pilgrim
By:
/s/
Darin Beltrani
Independent
Grower Signature
Pilgrim
Poultry LTD Broilers Name:
Darin
Beltrani
Independent
Grower Name
P.O.
Box
93 Title:
Service
Tech
Pittsburg,
Texas 75686_____
Address,
City, State, Zip
Code
Date:
11-15-2005
75-1629263 903-434-1000 V#101942
SSN
Phone
No.
Date:
11-15-2005
EXHIBIT
A
BROILER
PRODUCTION PAYMENT SCHEDULE
NETEX
Complex
|
1.
|
All
broilers on each farm will be settled as one unit regardless
of the number
of houses. If all houses are not sold within the same week, settlement
will be made in accordance with the sale of the last
house.
|
2.
Payment
to the Independent Grower will be as follows:
|
3.
|
Each
week the formula cost will be calculated for each Independent
Grower
selling that week. An average cost for the week will be calculated
by
dividing the total costs of all Independent Growers, excluding
company
employees (or immediate family members of an employee) and
broilers service contractors, by their gross pounds.
|
| a. |
In
order to figure formula cost per pound, the following price schedule
will
be used:
|
Feed,
$.085 per lb; chicks, $.16; medication at cost. The gross weight will be
used in
calculating formula cost per pound.
| b. |
Any
Independent Grower with a formula cost exceeding the average by
$.0180 or
more will be removed from the group and the average recalculated.
Pay for
Independent Growers excluded from the average will be calculated
in same
manner as for those included in the
average.
|
The
Independent Grower’s payment per pound will be computed using $.0460 per pound
as the base pay. If the Independent Grower cost is less than average, the
payment will be base pay plus the deviation from average. If the Independent
Grower cost is greater than average he will receive base pay minus the
deviation
from average.
For
example, an Independent Grower that has a $.003 below average cost will
get
$.003 added to the $.0460 base pay. If the cost was $.003 above average
this
cost would be subtracted from the $.0460 base pay but no less than the
minimum
of $.0325 per pound.
All
evaporative cooled, tunnel ventilated farms that meet the Company’s
specifications and operate according to Company guidelines will receive
an
additional $.005 per pound added to the computed pay per pound.
|
4.
|
Condemnation
will not be deducted from gross weight. However, high condemnations
may
require the grower to clean, disinfect and/or other corrective
measures to
prevent further incidence.
|
|
5.
|
A
fuel allowance of $35.00/1000 sq. ft. of production capacity
will be added
to flocks placed beginning November 1st and ending March 31st
of each year
and not to exceed the first two consecutive flocks placed during
this
time.
|
|
6.
|
Settlements
will be made on Friday following the previous week’s
close.
|
|
7.
|
In
the event the Independent Grower averages $.0375 or less payment
per pound
for a period of 6 flocks, the Independent Grower will enter Pilgrim’s Cost
Improvement Program as outlined in Exhibit
B.
|
|
8.
|
Any
Monies owed to the Company are authorized to be deducted from
the
Independent Grower payment, unless other arrangements have been
made.
|
EXHIBIT
B
PILGRIM’S
PRIDE
FIXED
COST
IMPROVEMENT PROGRAM
Pilgrim’s
Pride Corporation has a Cost Improvement Program (the “Program”) designed to
help improve the performance of its high cost Independent Growers as set
out
below. The purpose of this program is to assist these Independent Growers
in
becoming more competitive and cost efficient. Participation in this Program
is
determined by the Independent Grower’s pay and the deviation from the average
standard cost as established by the provisions of the Broiler Production
Agreement.
An
Independent Grower will enter the Program when his or her pay per pound
averages
$.0375 or less over a successive period of 6 flocks. When this occurs,
the
Broiler Production Manager, Service Technician, and Independent Grower
will meet
to discuss ideas to improve his or her performance and ways to achieve
more cost
effective production. The items to be reviewed may include, but will not
be
limited to, items such as:
a. Poultry
House Management-Discussion of day-to-day management of the
broilers.
b. Bird
Density-Discussion of density options, with every effort made to reach
a mutual
agreement on any density change.
c. Equipment
and Housing Issues-Discussion of current issues other than replacement
of
existing equipment.
d. Specific
Disease Issues.
Except
as
set out in this Exhibit B, all other terms and conditions of the Broiler
Production Agreement remain in full force and effect. During any probationary
period of the Cost Improvement Program either the Company or the Independent
Grower may elect at any time to exercise its rights to terminate the Broiler
Production Agreement as noted in Section D of the Agreement.
While
in
the Program the Independent Grower will be placed on a probationary status
for
no less than three (3) flocks and must average above $.0375 pay per pound
for
these three (3) successive flocks to be taken off of probationary status
and
released from this Program. If the Independent Grower’s average does not improve
above the $.0375 level for the first three (3) successive flocks after
entering
the Program, then the Independent Grower’s Broiler Production Agreement will be
modified by removing the $.0325 minimum pay per pound for the next three
(3)
successive flocks and the Independent Grower will remain on probation and
in the
Program. If, during this extended probation of three (3) successive flocks
the
Independent Grower improves its performance sufficient to average above
$.0375
pay per pound for these three (3) successive flocks, then the Independent
Grower
will be taken off of probationary status and released from the Program.
If,
however, during this extended probation of three (3) successive flocks,
the
Independent Grower again fails to improve its performance sufficient to
average
above $.0375 pay per pound for these three (3) successive flocks, then
the
Company may terminate the Independent Grower’s Broiler Production
Agreement.
At
the
Company’s sole discretion, based on mitigating circumstances, the Company may
extend this Program on a flock to flock basis with the understanding that
the
$.0325 minimum pay per pound will remain removed from the Independent Grower’s
Broiler Production Agreement. If the Independent Grower does not improve
its
performance above $.0375 pay per pound the Company may terminate the Independent
Grower’s Broiler Production Agreement or at its sole discretion extend the
Program for another flock.
Performance
factors caused by natural disasters or other conditions beyond the reasonable
control of the Independent Grower may be considered exceptions to this
Program
at the sole discretion of the Company.
The
Independent Grower and the Company both acknowledge that the Cost Improvement
Program is related to the Independent Grower’s best efforts under the applicable
Broiler Production Agreement. Therefore, if the Independent Grower is in
a Cost
Improvement Program at the time he or she enters into a new Broiler Production
Agreement with its Exhibits, the Independent Grower’s performance under the Cost
Improvement Program before entering into the new Production Agreement will
be
considered in evaluating the Independent Grower’s performance in the Cost
Improvement Program after signing the new Broiler Production
Agreement.
EXHIBIT
C
DEAD
BIRD AND POULTRY HOUSE LITTER
BEST
MANAGEMENT PRACTICES
DEAD
BIRD BEST MANAGEMENT PRACTICES
1.
All dead
birds will be disposed of by one or more of the following approved
methods:
| a. |
Composting
|
| b. |
Incineration
|
| c. |
Rendering
|
| d. |
Any
other method approved by the applicable state regulatory
agency
|
| 2. |
In
the case of a major die-off that cannot be disposed of by the
normal,
approved means on that farm, the Independent Grower will contact
a
Pilgrim’s Pride Corporation representative within 24 hours to report
the
loss. Pilgrim’s Pride Corporation will call the appropriate state agency
to obtain a permit for burial.
|
POULTRY HOUSE LITTER BEST MANAGEMENT PRACTICES
Where
poultry house litter is land applied on property owned or leased by the
Independent Grower, the following Best Management Practices, in conjunction
with
all applicable state regulations pertaining to litter disposal, shall
be
followed:
| 1. |
Poultry
litter should not be stored outside unless covered and proper
controls,
such as berms or dikes, are utilized to prevent rainfall runoff
from
coming in contact with the litter.
|
| 2. |
Poultry
litter should be evenly distributed over application sites at
a rate not
to exceed 5 tons per acre per year, or as otherwise directed
in a site
specific land management plan.
|
| 3. |
Land
application of poultry litter should not be undertaken when soil
is
saturated, frozen, or covered with snow.
|
| 4. |
Poultry
litter should not be applied on slopes with a grade of more than
15
percent.
|
| 5. |
Edge
of field grassed strips should be used to separate watercourses
from land
application areas. Land subject to excessive erosion should be
avoided
when applying litter.
|
| 6. |
Records
should be kept by the Independent Grower of the dates, quantity,
and
specific sites where litter is applied.
|
| 7. |
Vehicles
used for transporting poultry litter on state or federally maintained
roads or more than 1 mile on any other public road should be
covered or
tarped.
|
Where
poultry house litter is sold or given to another party for land application
or
other approved use, the following Best Management Practices, plus any
other
state requirements, will be followed by the Independent Grower:
| 1. |
Records
should be kept by the Independent Grower of the dates, quantity,
and
individual or company
|
receiving
the litter.
| 2. |
A
copy of the above Best Management Practices to be utilized in
the land
application of the litter should be provided to the individual
or company
receiving the litter.
|
2005
FUEL SUPPLEMENT ADDENDUM
TO
BROILER GROWER/PRODUCTION AGREEMENT
NETEX
COMPLEX
This
2005 Fuel Supplement Addendum supplements the Pilgrim’s Pride Broiler
Grower/Production Agreement between Bo
Pilgrim______________________________
(Grower Name) and ___LTD_Broilers___________________(Farm
Name)
(hereinafter referred to as “Independent Contractor” or “Grower”) and Pilgrim’s
Pride Corporation (hereinafter referred to as the “Company”). Company and the
Independent Contractor/Grower agree that this Addendum will take effect
upon
execution by the Independent Contractor/Grower. Except for the additional
Fuel
Supplement paid under this Addendum, all other terms and conditions
of the
applicable Broiler Grower/Production Agreement and the attachments
remain in
full force and effect.
Over
the
past several months Pilgrim’s Pride has reviewed the gas pricing for this
winter. Due to the increase in cost, we realize the impact this will
have on our
Independent Contractors/Growers. In response to the increased fuel
cost, for
Independent Contractors/Growers who are actively operating under a
current
complex Broiler Production Agreement/Broiler Grower Agreement, the
Company has
approved an additional fuel supplement of $25.00 per 1000 sq. ft. of
useable
house capacity. This additional fuel supplement will be paid on the
next two (2)
flocks placed on or after October 31, 2005. This additional fuel supplement
will
be paid when each flock settles along with the regular broiler pay
for each of
the two (2) flocks provided that Independent Contractor/Grower takes
baby chicks
in the scheduled rotation. Independent Contractor/Grower agrees to
make all
reasonable efforts to keep the birds at the correct temperature and
follow
Company guidelines for production in exchange for this additional fuel
payment.
The Company reserves the right to withhold this additional fuel payment
if
Independent Contractor/Grower fails to provide adequate heat and ventilation
to
the birds.
IN
WITNESS WHEREOF, the parties have executed this Addendum to the applicable
Broiler Grower/Production Agreement effective on the 15th day of November,
2005.
PILGRIM’S
PRIDE CORPORATION: INDEPENDENT
CONTRACTOR/GROWER
Name: /s/Darin
Beltrani /s/
Bo
Pilgrim
(Printed
Name)
By: Darin
Beltrani By:
Bo
Pilgrim
Title: Service
Tech
Taxpayer
I.D. No.: 75-1629263
Address:
P.O.
Box 93
&
#160;
Pittsburg, Texas 75686
Phone #:
903-434-1000
Farm Name:
LTD
Broilers
Date: 11-15-05