Exhibit 10.36


 


CONFIDENTIAL TREATMENT REQUESTED UNDER


C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.


 


(*****) INDICATES OMITTED MATERIAL THAT IS THE


SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST


FILED SEPARATELY WITH THE COMMISSION.


 


THE OMITTED MATERIAL HAS BEEN FILED


SEPARATELY WITH THE COMMISSION.


 


SUPPLY
AGREEMENT


 


This Agreement is entered into as of August 23,
2005 by and between Congelados Don Jose, S.P.R. de R.L., a Mexican limited
liability company (“Processor”), and Birds Eye Foods, Inc., having its
principal offices at 90 Linden Oaks, Rochester, New York 14625 (“Buyer”).


 


RECITALS


 


A.            Processor is acquiring from Buyer and BEMSA Holding, Inc.
all of the issued and outstanding shares of capital stock of Birds Eye de
Mexico S.A. de C.V. (the “Transaction”), the owner and operator of a frozen
broccoli and cauliflower processing plant located in Celaya, Mexico (the “Celaya
Facility”). Processor also operates facilities at Frexport and CDJ Leon, Mexico
(together with the Celaya Facility, the “Plants”).


 


B.            Buyer wishes to have Processor process and pack at
the Plants and supply and sell to Buyer frozen broccoli and cauliflower food
products on the terms and subject to the conditions set forth herein.


 


C.            (*****)


 


D.            Buyer’s entering into this Agreement was a material
inducement to Processor’s consummating the Transaction, and but for Buyer
entering into this Agreement, Processor would not have consummated the
Transaction.


 


In consideration of the premises hereinafter
set forth, the parties agree as follows:


 


1.             PRODUCTS:  On the terms and subject to the conditions
hereof, Processor shall each Pack Year process, pack, supply, sell and load for
shipping to Buyer the broccoli and cauliflower food products listed on the
attached Exhibit A (the “Products”) in a manner substantially
similar to the past practices of the Celaya Facility. The “Pack Year” is each January 1
through the next December 31 during the term hereof, and the initial “Pack
Year” shall commence on January 1, 2006. Forecasts for the quantities of
the Products for the initial Pack Year and for subsequent Pack Years during the
term of this Agreement shall be provided by Buyer to Processor in accordance
with Section 6. Processor shall also process, pack, supply, sell
and load for shipping to Buyer for the period from the date of this Agreement
to December 31, 2005 (the “Stub Period”) in accordance with the production
schedule for the Stub Period which is attached hereto as Exhibit B
(the “Stub Period Production Schedule”) in a manner substantially similar to
the past practices of the Celaya Facility.


 

















 


(a)           For the Stub Period, and
provided Processor is not in material breach under this Agreement, Buyer shall (*****).


 


(b)           Subject to the provisions of
Section 1(e) and provided Processor is not in material breach
under this Agreement, for each Pack Year Buyer shall (*****)


 


(c)           (*****)


 


(d)           (*****)


 


(e)           Notwithstanding anything to the contrary contained in this Agreement, if Processor
and/or Buyer is excused from performance pursuant to Section 21,
then Buyer shall be excused from the requirements of subsections (a), (b) and
(c) of this Section 1 to the same extent.


 


(f)            Payments. The (*****) shall be calculated
annually. All payments pursuant to this Section 1 will be due and payable
within (*****) after receipt
by the applicable party of an invoice for such amount, calculated pursuant to Section 6(b),
via overnight mail, regular mail, courier or hand delivery and any amounts not
paid when due shall thereafter bear interest at the Applicable Rate (as defined
in Section 2(b)).


 


2.             PRICES:


 


(a)           The prices payable by Buyer
for the Products shall initially be as set forth in Exhibit A.


 


(b)           Until December 31,
2007, the prices as set forth in Exhibit A shall not be changed
except by agreement of the parties; provided, however,
that if Buyer deviates from the Targeted Mix Limitations for Products as set
forth on Exhibit A, then Processor shall promptly notify Buyer in
writing of any resultant increases in such prices. If the Buyer fails to pay
such incremental price increase as and when due, such unpaid incremental price
will earn interest calculated at the average prime rate as established in the
Money Section of The Wall Street Journal
(U.S. National Edition) from time to time, adjusted as such rate
changes thereafter and calculated on a daily basis (the “Applicable Rate”)
until such incremental price is paid in full.


 


(c)           Beginning on January 1,
2008, the prices in Exhibit A shall be increased or decreased, in
accordance with the Consumer Price Index — All Urban Consumers (Series ID:
CUUR0000SA0). On January 1, 2008, the prices will be increased or
decreased by the increase or decrease in such index from August 1, 2006 to
November 30, 2007. For all subsequent Pack Year beginning with the fourth
Pack Year, the percentage increase or decrease in such index from the December 1
of the second previous Pack Year through November 30 of the previous Pack
Year shall be referenced when implementing potential adjustments to Product
prices. Notice of price adjustments shall be provided by Processor to Buyer by January 1
of each Pack Year and shall be incorporated into Exhibit A.


 


(d)           Processor guarantees that
throughout the term of this Agreement the prices in Exhibit A, as
adjusted in accordance with this Section 2, shall be no less
favorable than the 


 


2

















 


lowest price which Processor extends to any
of its other customers for broccoli and cauliflower products substantially
comparable to the Product during the relevant Pack Year. In the event Processor
sells to any other customers substantially comparable broccoli and cauliflower
products at a lower price than is then in effect under this Agreement during
the relevant Pack year in violation of this Section 2 and the Buyer
provides notice to Processor of such violation, then the affected price for the
subsequent deliveries of the Product under this Agreement, up to the number of
pounds of substantially comparable broccoli and cauliflower products sold at
such lower price, shall be adjusted to such lower price. Processor shall have
15 days from obtaining such notice to revise its invoices to reflect such lower
price, as subsequently adjusted in accordance with this Section 2,
and if Buyer shall have paid invoices for which such lower price should have
been in effect, Processor shall promptly refund to Buyer any overpayment.
Notwithstanding the foregoing, if Processor supplies to Buyer with Buyer’s
consent Products that are not in compliance with the Specifications or that are
of lower grade, or Buyer knowingly accepts such Products, the price guaranty
shall be inapplicable to such Products supplied to Buyer. For purposes of this
Agreement, “comparable broccoli and cauliflower products” shall mean broccoli
and cauliflower products of the same or substantially similar cut, grade,
quality, and specifications as the Products; provided, however, that “comparable
broccoli and cauliflower products” shall not include products which are lower
grade, aged, distressed, or off grade.


 


3.             Buyer has provided Processor
the attached Exhibit C which sets forth various costs advanced by
Buyer relating to the Stub Period for seedlings, chemicals, and the like which
Processor will deduct from the payments Processor makes to growers of broccoli
and cauliflower which have been advanced such costs. Processor shall pay to
Buyer such amounts deducted from its payments to growers of broccoli and
cauliflower which have been advanced such costs on November 30 and December 31,
2005. Buyer will not be liable to pay to Processor amounts deducted from Buyer’s
payments to growers of broccoli and cauliflower to the extent such grower has
not provided the contracted for broccoli or cauliflower to Processor. Buyer has
taken all necessary actions, including advancing sufficient costs to growers,
to ensure the capability of the Processor to provide Products in accordance
with the Stub Period Production Schedule.


 


4.             STANDARDS:


 


(a)           Processor agrees to process
and pack the Products in accordance with good manufacturing practices and the
formulae, quality standards and other specifications attached hereto as Exhibit D
(collectively, the “Specifications”), Buyer represents and warrants that the
Specifications are substantially comparable to Buyer’s past practices and Buyer’s
past specifications at the Celaya Facility and are compatible with the
equipment, facilities and staffing at the Celaya Facility.


 


(b)           Processor’s Plants will be
inspected once annually and certified with a minimum score of 875 by the
American Institute of Baking.


 


(c)           From time to time as may be
deemed necessary by the Buyer, Buyer agrees to assign an employee of Buyer to
inspect the Products and packing procedures for the Products at the Celaya
Facility to determine if the processing and packing of the Products is in
accordance with good manufacturing practices and the Specifications.


 


3

















 


5.             TERM:  (*****) At the end of the initial
term, this Agreement shall automatically renew for a term of five (5) years
provided neither party has provided written notice to the other of its intent
to terminate this Agreement as of (*****), which notice shall be
provided no earlier than (*****) and no later than (*****).


 


6.             SCHEDULING; ORDERING:


 


(a)           Buyer shall provide Processor
with a forecast of its expected requirements for the Products for each Pack
Year (including specific requirements for each calendar month)(the “Pack Year
Forecast”). The Pack Year Forecast shall reflect the natural growing season and
historical production patterns of the Products at the Celaya Facility with
calendar month forecasts substantially similar to the historic average monthly
production percentages of Buyer from 2000 through 2004 as set forth in Exhibit E
(the “Historic Monthly Production Percentages”). The initial Pack Year Forecast
(the “Original Forecast”) shall be provided on or before October 1, 2005.


 


(b)           Based upon the Pack Year
Forecast, Processor shall establish scheduling to ensure that the Products will
be processed, packed and shipped in a manner consistent with the terms and
conditions of such forecast. Notwithstanding the foregoing, Processor may
throughout the Stub Period and a given Pack Year provide Products in excess of
or in shortage of the Products forecasted for a given month in order to
accommodate the inherent variations in the growing season for Products so long
as such excess or shortage for a given month in a Pack Year does not deviate by
more than 3,000,000 pounds from the monthly forecast provided in the Pack Year
Forecast and so long as the cumulative excess or shortage from the Pack Year
Forecast for a given calendar half (June 30 & December 31)
of a Pack Year does not deviate by more than 1,000,000 pounds from the
corresponding half year forecast.


 


(c)           The forecasts under
subsection (a) of this Section 6 shall be provided to
Processor no later than the October 1 preceding each Pack Year.


 


(d)           On the date of this
Agreement, Buyer shall issue a blanket purchase order to Processor for at least
the (*****). On or before each October 1 during the term of this
Agreement, Buyer shall issue a blanket purchase to Processor for the greater of
the Pack Year Forecast or the (*****). Any purchase order or
other order (*****) of Products
annually or the Historic Monthly Production Percentages, as applicable, may be
rejected by Processor in its sole discretion. Processor shall invoice Buyer
based upon the actual shipment of Products supplied by Processor pursuant to
subsection (b) of this Section 6. Notwithstanding the
foregoing, Processor shall have the right to invoice Buyer in a given month for
an amount of Product equal to the corresponding monthly forecast in the Pack
Year Forecast if Buyer is in breach of any of its obligations to purchase and
accept Products for a Pack Year or in the Original Forecast if Buyer is in
breach of its obligation to provide a Pack Year Forecast for each Pack Year
under this Agreement, and such breach has not been cured within 10 days after
notice to Buyer.


 


7.             PAYMENT: Buyer
agrees/to pay in immediately available funds all invoices submitted by
Processor within (*****) after the
later of (a) the date of shipment of the Product from Processor’s Plants
or (b) the date of receipt by Buyer of the invoice for such Product via 


 


4

















 


overnight mail, regular
mail, courier, or hand delivery. Any sums due Processor that are not paid when
due shall thereafter bear interest at the Applicable Rate.


 


8.             ADJUSTMENT OF STANDARDS: Buyer
reserves the right to alter the Specifications without obtaining the prior
written consent of the Processor no later than ninety (90) days prior to the
commencement of each Pack Year if such alterations are substantially compatible
with the production capabilities of the Celaya Facility and would not,
individually or in the aggregate, result in capital expenditures having to be
made by the Processor or material changes having to be implemented at the
Celaya Facility or in its operations (hereinafter “Permitted Alterations”). If
any Permitted Alteration results in increased costs to Processor or results in
decreased costs to Processor, the price set forth in Exhibit A
shall be adjusted upward or downward as shall be mutually agreed upon between
the parties to reflect such increase or decrease in costs. All alterations
other than Permitted Alterations will require the written consent of Processor
prior to implementation. Any deviation by Processor during a Pack Year from the
Specifications agreed to at the beginning of the Pack Year shall be made only
with the consent in writing of Buyer. Any deviation by Buyer during a Pack Year
or less than 90 days prior to the following Pack Year from the Specifications
agreed to at the beginning of the Pack Year or the prior Pack Year, as
applicable, shall be made only with the consent in writing of Processor.


 


9.             DELIVERY:  Buyer shall take delivery of the Products
FCAJFOB Buyer’s Plants. All prices under this Agreement shall be FCA/FOB
Processor’s Plants and are net of taxes, duties, tariffs, insurance, and shipping
costs.


 


10.           SHIPPING:


 


(a)           Processor shall provide
required staffing and equipment for loading the Products for Buyer into trucks
at the Plant’s shipping dock in a manner consistent with past practices of the
Celaya Facility. Processor shall be responsible for all Mexican customs
documentation and costs relating to the export of Products. Buyer shall be
responsible for the arrangement of and cost for the trucks for shipment of the
Products and shall be responsible for all United States customs documentation
and costs relating to the import of the Products. All shipping of the Products
shall be FCA/FOB the Plant.


 


(b)           Processor shall follow the
reasonable specifications of Buyer consistent with past practices of the Celaya
Facility for unit pattern loads in the preparation of the Products for loading
and shipping.


 


(c)           Buyer shall, at its own
expense, supply the materials, as set forth in Section 11(b), to
meet Buyer’s requirements for shipping. Processor shall allow Buyer to store at
Processor’s Celaya Facility without charge a reasonable supply of materials in
advance of processing the Products consistent with past practices of the Celaya
Facility. The Processor agrees to hold such amounts of supply materials to the
extent that such supply materials do not exceed the storage capacity of the
existing Celaya Facility warehouse as of the date hereof or the historical
storage usage at the Celaya Facility.


 


(d)           I Processor shall be
responsible for loss of or damage to the Products prior to delivery to a
carrier FCA/FOB the Plant and Buyer shall be responsible for any loss of or 


 


5

















 


damage to the Products after delivery to a
carrier FCA/FOB the Plant; provided, however,
that Processor shall remain liable for hidden damage caused by Processor which
is not discovered by Buyer until after delivery. All claims for losses from
hidden damage shall be promptly disclosed to Processor, but in any event within
thirty (30) days after delivery, and Processor or its representatives shall be
permitted to inspect such Products. Should any Products be rendered unusable by
virtue of any acts or omissions of Buyer, its agents or any carrier, Buyer
shall remain obligated to pay Processor the prices for such Products.


 


(e)           Processor will reasonably
cooperate with Buyer efforts to store Products offsite.  Buyer may not store Products with the
Processor without Processor’s prior written consent. Any storage on-site at the
Plants or off-site at the Plants shall be at Buyer’s sole cost, expense and
risk.


 


(f)            Processor shall use good
faith efforts to advise Buyer of potential delivery delays and delivery
scheduling conflicts so that Buyer may have an opportunity to plan shipments of
the Products from the Plants accordingly.


 


11.           MATERIALS AND EQUIPMENT:


 


(a)           Except as otherwise set
forth herein, Processor agrees to supply all of the required materials,
ingredients, raw product, equipment, and facilities necessary to perform its
obligations under this Agreement.


 


(b)           Buyer shall, from time to time,
deliver or cause to be delivered to Processor’s Plants, at Buyer’s expense and
risk, except as otherwise provided in this Section 11(b), all
materials required to ship the Products including the bulk tote bins,
slipsheets and/or pallets, master shipping cases, folding cartons (Kliklok),
polybags, wax overwrap, and any labels required for finished goods produced.
Buyer will not be responsible for the tote liners and tape for the master
shipping cases and totes, and, for the 16 Oz. IQF Spears, the liner polybag.
Materials supplied by Buyer shall be subject to the historic shrink rates as in
effect at the Celaya Facility.


 


(c)           Processor agrees to comply
with all regulatory requirements in the storage of materials supplied by Buyer
or procured by Processor pursuant to the provisions of this Agreement and to
store the materials in an orderly manner consistent with past practices of the
Celaya Facility to facilitate inventory of the materials.


 


12.           QUALITY ASSURANCE:


 


(a)           Processor shall provide
Buyer reasonable access, during normal business hours, to Processor’s process
and quality control records for the lots of Products submitted to Buyer for its
approval. Such access shall require prior notice by Buyer and shall be subject
to the reasonable approval of Processor. The intent of this access is to permit
the audit of Processor’s procedures and controls to assure its compliance with
the Specifications. Processor shall provide Buyer with such written reports as
are reasonably requested by Buyer on production, amounts and location of
inventories and totes of the Products.


 


6

















 


(b)           Those materials required by Section 11
to be furnished by Buyer, and by Processor for Buyer, shall be of such quality
as to permit processing, packing and shipping of the Products in accordance
with the Specifications and applicable law.


 


(c)           Buyer shall not be obligated
to accept Products which do not meet the Specifications. Any Products which do
not meet the Specifications shall be purchased at the sole discretion of Buyer
at a price to be mutually determined and agreed to by Buyer and Processor; provided, however, that the price guaranty set forth in Section 2(d) shall
be inapplicable to such Products.


 


(d)           All Products shall be
wholesome and fit for human consumption. Each party shall promptly notify the
other of any significant matter relating to any of the Products (including,
without limitation, any consumer complaint; any citation or regulatory action
by any federal, state or local authority or regulatory agency that relates to
the quality of the Products; any bacterial, chemical, pesticide or other
contamination of any of the Products or other condition of any of the Products
that violates or may violate any federal, state or local food and drug law or
regulation; or any mislabeling, misbranding or adulteration of any of the
Products).


 


13.           CODE MARKING:  Processor agrees to mark each shipping
container containing Products in a clear and legible manner using the codes
supplied by Buyer consistent with past practices of the Celaya Facility. All
shipping documents, invoices and releases of Products shall bear code dates of
the packing of the Products consistent with the past practices of the Celaya
Facility.


 


14.           RECORDS AND AUDIT:


 


(a)           Processor agrees to make and
keep accurate books and records currently updated with respect to processing
runs, inventories and shipments of the Products to the Buyer. Consistent with
past practices at the Celaya Facility and upon reasonable advance notice to
Processor, Buyer shall be permitted to inspect as may reasonably be required
such records and make copies thereof to the extent necessary to implement this
Agreement.


 


(b)           Processor agrees to keep
accurate books and records currently updated with respect to invoices and
pricing information relating to Processor’s customers to which it supplies
broccoli and cauliflower products.


 


(c)           Price Guaranty Audit.


 


(i)            Once after every Pack Year Buyer may request a list
of invoice numbers for invoices reflecting purchases of all broccoli and/or
cauliflower by customers of Processor for such Pack Year. For purposes of
verifying compliance with the price guaranty set forth in Section 2(d),
Buyer may choose from the list of invoice numbers specific invoices, not to exceed
ten percent of the total number of invoices provided (the “Specific Invoices”).
Processor will provide the Specific Invoices redacting the name of the customer
and any additional information which may reveal the identity of the customer
for purposes of Buyer’s audit of compliance with the price guaranty set forth
in Section 2(d).


 


7

















 


(ii)           If Buyer determines that Processor has violated the
price guaranty of Section 2(d), and that Buyer is entitled to a more
favorable price (a “More Favorable Price”) for a specific quantity of Products,
Buyer shall notify Processor of the More Favorable Price and the quantity of
Products sold at such More Favorable Price stating with reasonable
particularity the basis for Buyer’s conclusion. If Processor agrees that
Products were sold at a More Favorable Price, Processor shall implement the
More Favorable Price for a specified quantity of Products once notified by
Buyer. In addition, if Buyer determines that Processor has violated the price
guaranty of Section 2(d), then Buyer shall be entitled to repeat
the audit process under this Section 2(c) for the given Pack
Year, limited to a review of an additional ten percent of the total number of
invoices provided.


 


(d)           Processor shall maintain
such books and records for each Pack Year for a minimum of three (3) years
after the conclusion of the Pack Year.


 


15.           REGULATORY COMPLIANCE: Processor
shall follow good manufacturing practices in the processing of the Products and
shall comply with all applicable local, state and federal laws and regulations
governing the production of the Products. Notwithstanding the foregoing,
compliance with all applicable laws and regulations with respect to formulae
furnished by Buyer, any labeling or packaging furnished by Buyer and/or the
other Specifications shall be the sole responsibility of Buyer, and Buyer shall
save and hold harmless and indemnify Processor against and from any claim or
liability based upon the noncompliance of such materials and formulae and/or
the other Specifications with such laws and regulations.


 


16.           TITLE AND RISK OF LOSS: Title and
risk of loss to materials furnished by Buyer shall remain with Buyer at all
times. Title and risk of loss to materials furnished, supplied or purchased by
Processor shall remain with Processor until said materials are converted into
the Products and delivered to a carrier FCA/FOB the Plants. Title to the
Products and risk of loss thereto shall be with Processor until delivery of the
Products to a carrier FCA/FOB the Plants, at which time title to the Products
and risk of loss thereto shall pass to Buyer.


 


17.           PROPRIETARY INFORMATION AND
CONFIDENTIALITY:


 


(a)           All trademarks and trade
names and all trade secrets, technical know-how, specifications, formulae,
standards, procedures, new product ideas, manufacturing processes and the like
(“Proprietary Information”) owned by either party hereunder shall at all times
be and remain the exclusive property of such party, and this Agreement shall
not in any manner constitute a license to either party to use the Proprietary
Information of the other party, except as necessary for the proper performance
of this Agreement. For purposes of this Section 17, Proprietary
Information of the Processor shall include all information disclosed pursuant
to Section 14.


 


(b)           Each party shall keep
confidential any and all Proprietary Information which is disclosed to it by
the other party during the performance of this Agreement. Proprietary
Information shall not be disclosed without the express written consent of the
party owning such Proprietary Information.


 


8

















 


(c)           This Section 17
shall not apply to any Proprietary Information that: (i) is or becomes
public knowledge through no fault of the other party; (ii) is
independently disclosed to the other party by a third person not obligated to
the party owning such Proprietary Information; (iii) was independently
developed or known by the other party prior to the date of this Agreement or is
hereafter independently developed by the other party; or (iv) the other
party is required by law to disclose.


 


18.           PURE FOOD GUARANTEE:


 


(a)           Processor guarantees that no
articles of food sold by Processor to Buyer hereunder will be adulterated or misbranded
within the meaning of the Federal Act, or within the meaning of any state food
and drug law the adulteration and misbranding provisions of which are identical
with or substantially the same as those found in the Federal Act, and that such
goods will not be produced or shipped in violation of Sections 404 (21 U.S.C.S.
§ 344) or 301(d) (21 U.S.C.S. § 331(d)) of said Federal Act; provided, however, that Processor does not guarantee against
such goods becoming adulterated or misbranded within the meaning of said Act or
Acts (i) by reason of materials furnished to Processor by Buyer, (ii) by
reason of Processor’s compliance with the Specifications and/or (iii) after
delivery.


 


(b)           With respect to materials
furnished to Processor by Buyer, Buyer hereby guarantees to Processor that each
shipment or other delivery of materials made by Buyer pursuant to this
Agreement, as of the time of delivery to Processor, shall not be adulterated or
misbranded (within the meaning of the Federal Food Act, or within the meaning
of any state food and drug law the adulteration and misbranding provisions of
which are identical with or substantially the same as those found in the
Federal Act, or when applied to the Products, cause the Products to be
adulterated or misbranded within the meaning of such Acts, and shall not be an
article or articles which is prohibited by such Acts from being introduced into
interstate commerce. Buyer also guarantees that compliance by Processor with
the Specifications will not cause the Products to be adulterated or misbranded
within the meaning of such Acts. Buyer further guarantees that said shipment of
materials shall comply with all applicable federal, including the Federal Act,
state and local laws, rules and regulations and with the Specifications.


 


19.           INDEMNIFICATION:


 


(a)           Processor agrees to
indemnify and hold harmless Buyer against and from any claim, loss, damage,
liability or expense for bodily injury, death or property damage where such
injury, death or damage is caused by any ingredients or materials furnished by
Processor which do not comply with the Specifications, by any negligence of
Processor or by any act or omission on the part of Processor in violation of
this Agreement.


 


(b)           Buyer agrees to indemnify
and hold harmless Processor against and from any claim, loss, damage, liability
or expense for bodily injury, death or property damage where such injury, death
or damage is caused by any formulae or other Specifications or materials
furnished by Buyer to Processor, by any negligence of Buyer, or by any act or
omission on the part of Buyer in violation of this Agreement.


 


9














 


(c)           The foregoing
indemnifications are conditioned upon the party claiming indemnification
promptly furnishing the other party with written notice of each claim, loss,
damage, liability or expense for which indemnity will be claimed and permitting
the indemnifying party to assume the defense thereof at its sole cost and
expense.


 


20.           INSURANCE:


 


(a)           Buyer and Processor shall
each maintain during the term of this Agreement a policy of commercial general
liability insurance, including product liability coverage, with combined single
limits of not less than $5,000,000 United States dollars. Each party shall name
the other as an additional insured under such policy and shall furnish to the
other upon request evidence of such insurance in the form of a certificate
issued by its respective insurance carrier, which certificate shall provide
that there shall be no material change in, or cancellation of, such insurance
unless thirty (30) days prior written notice of such change or cancellation is
given to both parties.


 


(b)           Processor agrees to insure
Buyer’s materials and the Products in the possession of Processor against
damage by fire and extended coverage perils during the period Processor has the
risk of loss therefore.


 


21.           FORCE MAJEURE:  Neither party shall be liable to the other
party for any delay or failure to perform any of its obligations hereunder
which delay or failure to perform is due to fires, storms, floods, earthquakes,
droughts, freezing, hail, other acts of God (including without limitation weather),
war, terrorism, insurrection, riots, or governmental action, orders, or
regulations, and shall give the other party prompt notice of the occurrence of
any such event.


 


22.           TERMINATION:  Without prejudice to any other rights either
party may have under this Agreement, applicable law or rule of equity,
Buyer and Processor, as applicable, shall have the option and right to
terminate this Agreement by giving written notice thereof to the other party
upon the occurrence of any of the following events (provided that termination
by a party pursuant to this Section 22 shall not relieve the party
so terminating from the obligations incurred under this Agreement through the
date of termination):


 


(a)           The other party commits a
material breach of any teriff, covenant or condition of this Agreement and such
breach is not remedied within ninety (90) days after the non-breaching party
has sent written notice of such breach to the breaching party;


 


(b)           The other party becomes
insolvent within the meaning of any bankruptcy or insolvency law, or makes an
assignment for the benefit of its creditors; or


 


(c)           In respect of a termination
by Processor only, if Buyer fails to satisfy the (*****) or the (*****).


 


23.           ADDITIONAL SUPPLY:


 


(a)           (*****); provided
that Processor’s price for supplying such products to Buyer, including the cost
of transportation to Buyer’s facility where such product is required, meets or
is lower than any other reputable manufacturer’s bona fide price for supply
(including 


 


10

















 


the cost of transportation to Buyer’s
facility where such product is required), provided further
the performance standards of Processor including, time of delivery, quality of
product and product specifications, are substantially similar or superior to
the performance standards of any other such manufacturer so long as such
specifications are substantially similar to or less stringent than the
Specifications, and provided further
that such (*****).


 


(b)           In the event Buyer exits the
private label business for which the Products are required, Buyer shall use
reasonable commercial efforts to encourage its private label customers to
obtain broccoli and/or cauliflower products from the Processor, including
introducing Processor to Buyer’s customer contact, if feasible, and providing
Processor with the contact information for Buyer’s customer contact and copies
of any requests for bids or proposals with respect to such business that Buyer
has exited or intends to exit by not bidding. In no event will Buyer have any
liability to Processor if such customers choose to obtain product from other
manufacturers.


 


24.           ASSIGNMENT:  Neither party may assign or otherwise
transfer this Agreement, or any of its rights and obligations hereunder, or any
portion thereof, without the prior written consent of the other party, except
that, without such consent, a party may make such assignment to a successor by
consolidation or merger or to an entity which purchases all or substantially
all of the assets and business of such party. If there will be a change of
control of Buyer or if there will be an assignment of this Agreement to a
successor to Buyer by consolidation or merger or to an entity which purchases
all or substantially all of the assets or business of Buyer or otherwise, then,
subject to any confidentiality restrictions applicable to Buyer, Buyer shall
notify Processor within ten (10) days after entering into a definitive
agreement for such transaction or within ten (10) days after such change
of control, assignment by consolidation or merger or sale of all or
substantially of the assets or business of Buyer is consummated.


 


25.           NOTICES: All notices
given by the parties hereunder shall be in writing and shall be (a) personally
delivered, (b) sent via recognized courier service or (c) sent via
facsimile for which the sending party receives written verification of a report
evidencing receipt and sends a copy by regular mail or courier, to the address
set forth below or to such address as a party shall designate in writing to the
other party. Notices shall be deemed given when delivered personally, placed
with such courier, or sent via such facsimile, and shall be deemed received on
the date of receipt of personal delivery or delivery by courier or sent via
such facsimile.


 


To Buyer:


 


BIRDS EYE FOODS, INC.

90 Linden Oaks

Rochester, New York 14625

Attn: Elizabeth J. Robinson, Esq.

Facsimile:  (585) 381-0224


 


With a copy to (which shall not constitute notice to
Buyer):


 


Harris Beach PLLC

99 Garnsey Road


 


11

















 


Pittsford, New York 14534

Attn: David M. Mehalick, Esq.

Facsimile:  (585) 419-8817


 


To Processor:


 


Congelados Don Jose, S.P.R. de R.L.

c/o Organizacion Altex, S.C.

Paseo de las Palmas 820 2o. Piso

Lomas de Chapultepec, Mexico, D.F. 11000

Attention:      Roberto J. Servitje

Facsimile: (52) 5540-8378


 


With a copy to (which shall not constitute notice to
Processor):


 


Mayer, Brown, Rowe & Maw LLP

71 South Wacker Drive

Chicago, IL 60606-4637

Attn:       Douglas A. Doetsch

                Christian W.
Fabian

Facsimile: (312) 706-8535


 


26.           ENTIRE AGREEMENT:  It is agreed that neither party has made or
is making any representations or warranties, express or implied, including
without limitation warranties as to merchantability or fitness for a particular
purpose (which warranties are expressly disclaimed), not explicitly set forth
in this Agreement, that this Agreement is the entire agreement between the
parties hereto, and that this Agreement cancels and supersedes all earlier
agreements, written or oral, and that no waiver, modification or change of any
of the terms of this Agreement shall be valid unless in writing. Preprinted or
other terms and conditions appearing on the face of or reverse sides, if any.
of any invoice or other preprinted document used by either party shall not
apply to or become a part of this Agreement, whether or not signed, unless the
same complies with this Agreement. In the event of a conflict, the terms and
conditions of this Agreement shall control.


 


27.           SEVERABLE CONDITIONS:  If any condition, term or covenant of this
Agreement shall at any time be held to be void, invalid or unenforceable, such
condition, covenant or term shall be construed as severable and shall attach
only to such condition. covenant or term, and shall not in any way affect or
render void, invalid or unenforceable any other condition, covenant or term of
this Agreement which shall be carried out as if such void, invalid or
unenforceable term were not embodied herein.


 


28.           SUCCESSORS AND ASSIGNS:  This Agreement shall inure to the benefit of
the parties and their permitted successors and permitted assigns (provided the
assignment does not violate the terms hereof) and shall be binding upon the
parties and their permitted successors and permitted assigns.


 


12

















 


29.           DISPUTE RESOLUTION,
MEDIATION, ARBITRATION:


 


(a)           Dispute Resolution.  The parties agree that they shall attempt to
resolve any dispute arising out of, relating to, or having any connection with
this Agreement, including any dispute regarding its existence, validity,
interpretation, performance, breach or termination, and any tort or other
common law or statutory claims arising out of or relating to its negotiation,
execution or performance, by amicable negotiations. If either party gives
written notice (the “Written Notice”) to the other Party that a dispute has
arisen, the parties shall first attempt to resolve the dispute promptly by
negotiation between executives of each party with sufficient authority to
settle the dispute. If these executives are unable, within forty five (45)
business days of delivery of the Written Notice, to resolve the dispute (or
such longer period if agreed to by the parties in writing), then, upon further
Written Notice by either party to the other may be submitted to arbitration,
unless the unsettled dispute relates to quality of the Products or compliance
with the Specifications, in which case it shall be submitted to mediation in
accordance with clause (b) below prior to the commencement of arbitration.


 


(b)           Mediation of Quality and Specification Disputes. (i) The
parties agree to act in good faith to participate in the mediation of any
unsettled dispute relating to quality of the Products or compliance with the
Specifications, and to identify a mutually acceptable mediator. In appointing
the mediator, the Parties shall select a reputable expert to mediate the
dispute. The parties agree that, for purposes of assisting in the mediation
process, they shall jointly engage a reputable technical expert. If for any
reason a mediator cannot be agreed upon by the parties, each party shall
designate a mediator and those mediators shall select a third mediator, who
shall act as the actual mediator for the dispute.


 


(ii)           All offers, promises, conduct and statements,
whether oral or written, made in the course of the mediation by any of the
parties, their agents, employees, experts and attorneys, and by the mediator,
are confidential, privileged and inadmissible for any purpose, including
impeachment, in any arbitration involving the parties, provided that evidence
that is otherwise admissible or discoverable shall not be rendered inadmissible
or non-discoverable as a result of its use in the mediation.


 


(iii)          The parties agree that they will share equally in
the costs of the mediation.  If the
dispute is successfully resolved in the mediation, its resolution shall be
documented by a written agreement to be executed by all parties to the dispute.


 


(c)           Arbitration.  (i) If the parties cannot successfully
resolve the dispute, the dispute shall then be exclusively and finally settled
under the Rules of Arbitration of the International Chamber of Commerce by
three arbitrators appointed in accordance with the said Rules (the “Rules”),
and within the terms set forth below.


 


(ii)           The provisions of Sections 29(a),(b) and (c)(i) may
be enforced by any court of competent jurisdiction, and the party seeking
enforcement shall be entitled to an award of all costs, fees and expenses,
including attorneys’ fees, to be paid by the party against whom enforcement is
ordered.


 


(iii)          The arbitrators shall be and remain at all times
impartial and independent of the parties. The arbitrators must be fluent in the
English language. No party shall engage in any ex parte communication with any
member of the Arbitral 


 


13

















 


Tribunal regarding the substance of the arbitration or any claims being
presented to the Arbitral Tribunal.


 


(iv)          Except as agreed by the parties, the Arbitral
Tribunal shall have no power to alter or modify any terms or provisions of this
Agreement, or to render any award which, by its terms or effects, would alter
or modify any term or provision of this Agreement.


 


(v)           The Arbitral Tribunal shall not cease to have
jurisdiction by reason of any claim that the contract is null and void or
allegation that it is non-existent. The Arbitral Tribunal shall continue to
have jurisdiction to determine the respective rights of the parties and to
adjudicate their claims and pleas even though the contract itself may be
non-existent or null and void. The parties also agree that the Arbitral
Tribunal shall have the exclusive power to determine the scope of its own
jurisdiction.


 


(vi)          The place of the arbitration shall be Houston,
Texas.


 


(vii)         Discovery shall be permitted in connection with the
arbitration only to the extent, if any, expressly authorized by the Arbitral
Tribunal upon a showing of substantial need by the party seeking discovery. It
is the expressed intent of the parties that discovery shall be limited and
shall be handled expeditiously. It is also the intent of the parties that they
be required only to produce relevant and non-privileged documents or copies
thereof requested by the other parties to the extent that such documents are
identified with reasonable particularity.


 


(viii)        All aspects of the arbitration, including any
documentary evidence given by a party or witness in the arbitration, shall be
treated as confidential.


 


(ix)           The parties expressly agree that prior to the
formation of the Arbitral Tribunal, nothing in this Agreement shall prevent the
parties from applying to a court of competent jurisdiction for provisional or
interim measures or for injunctive relief as may be necessary to safeguard the
property or rights that are the subject matter of the arbitration. After the
Arbitral Tribunal is impaneled, the arbitrators shall have the power to grant
any remedy or relief they deem just and equitable, whether interim and/or
final, and any provisional measures ordered by the Arbitral Tribunal may be
immediately and specifically enforced by any court of competent jurisdiction.
Each party hereto retains the right to seek interim measures from a judicial
authority, and any such request shall not be deemed incompatible with the
agreement to arbitrate or a waiver of the right to arbitrate.


 


(x)            The Arbitral Tribunal shall have the exclusive power
to consider any defense that all or part of the claims being asserted in the
arbitration are not timely by reason of any applicable statute of limitations,
and the merits of such defenses before determining the substantive merits of
such claims, unless the Arbitral Tribunal determines that the merits of any
asserted limitations defense is sufficiently intertwined with the substantive
merits of the claims being asserted as to make impractical or inefficient the
determination of the merits of the limitations defense as a preliminary matter.


 


14

















 


(xi)           The costs of the arbitral proceeding, including
attorney’s fees and expenses, shall be borne in the manner determined by the
Arbitral Tribunal. The award may include interest from the date of any breach
or violation of this Agreement, as determined by the Arbitral Tribunal, until
paid in full, at the Applicable Rate.


 


(xii)          The Arbitral Tribunal shall issue its decision in
the form of a reasoned written award. The arbitral award shall be final and
binding on the parties. Judgment on the award may be entered in any court of
competent jurisdiction over the person or property of the person against whom
enforcement of the judgment is sought.


 


(d)           The parties agree that,
except as otherwise provided in this Agreement, the procedures set forth herein
constitute the exclusive means to resolve any controversy or claim between the
parties. If any of these provisions are determined to be invalid or
unenforceable, the remaining provisions shall remain in effect and binding on
the parties to the fullest extent permitted by law.


 


30.           INTERPRETATION:  When a reference is made in this Agreement to
an Article or a Section, such reference shall be to an Article or a Section of
this Agreement unless otherwise indicated. Any table of contents, list of
defined terms and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words “include,” “includes” or “including” are
used in this Agreement, they shall be deemed to be followed by the words “without
limitation.” All references to $ or Dollars shall mean United States Dollars.


 


31.           CONFIDENTIALITY:  The parties agree to keep the terms of this
Agreement strictly confidential; provided, however,
that each party may disclose this Agreement to its respective employees and
professional advisors that have a legitimate reason to know such information
and that agree to keep the terms of this Agreement strictly confidential.
Unless mutually agreed to by the parties, no party will issue any press release
or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of the other party.
Notwithstanding the foregoing, a party may, upon advice of legal counsel,
disclose only that portion of this Agreement or its terms legally required to
be disclosed, provided that such party promptly notifies the other party in
advance of making any such disclosure and reasonably cooperates with the other
party to limit such disclosure, including applying for protective orders or
confidential treatment.


 


32.           CHOICE OF LAW:  This Agreement
will be governed by the laws of the State of New York without regard to
conflicts of laws principles.


 


15

















 


IN WITNESS WHEREOF. the parties have caused this
Supply Agreement to be executed as of the date first above written.


 


	
  Buyer:

  	
   

  	
  Processor:

  
	
   

  	
   

  	
   

  
	
  BIRDS EYE FOODS, INC.

  	
   

  	
  CONGELADOS DON JOSE,
  S.P.R. DE R.L.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Timothy J. Benjamin

  	
   

  	
  By:

  	
  /s/ Roberto J. Servitje

  
	
  Name:

  	
  Timothy J. Benjamin

  	
   

  	
  Name:

  	
  Roberto J.Servitje

  
	
  Title

  	
  Vice President

  	
   

  	
  Title:

  	
  President of the Board of
  Directors

  



 

















 


EXHIBIT A

PRODUCTS/PRICE


 


(*****)


 

















 


EXHIBIT
B

(*****)


 

















 


EXHIBIT
C


 


See
attached excel spreadsheet.


 

















 


Birds Eye Foods Inc - Celaya
Plant


 


	
   

  	
   

  	
  August 18, 2005

  	
   

  
	
  Warehouse

  	
   

  	
   

  	
  3,04  ,160

  	
   

  
	
  Celaya

  	
   

  	
   

  	
  2,841,377

  	
   

  
	
  Greenhouses

  	
   

  	
   

  	
  202,783

  	
   

  
	
  Greenhouses

  	
   

  	
   

  	
  730,209

  	
   

  
	
  Total Cost

  	
   

  	
   

  	
  827,209

  	
   

  
	
  Expenses

  	
   

  	
   

  	
  (97,000,00

  	
  )

  
	
  Finished goods & Raw
  Mat

  	
   

  	
   

  	
  2,634

  	
   

  
	
  Finished Goods

  	
   

  	
   

  	
  2,634

  	
   

  
	
  Raw Material

  	
   

  	
   

  	
   

  	
   

  
	
  Growers

  	
   

  	
   

  	
  2,361,902

  	
   

  
	
  North of the State

  	
   

  	
   

  	
  783,779

  	
   

  
	
  Bajio Area

  	
   

  	
   

  	
  951,601

  	
   

  
	
  15/16 & 18 August’05

  	
   

  	
   

  	
  317,340

  	
   

  
	
  External Green Houses

  	
   

  	
   

  	
  309182

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
  6,138,905

  	
   

  
	
  Payables

  	
   

  	
   

  	
  (896,643

  	
  )

  
	
  Payable to growers

  	
   

  	
   

  	
  (72,832

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net effect

  	
   

  	
   

  	
  5,169,430

  	
   

  
	
  exchange rate

  	
   

  	
   

  	
  10.6088

  	
   

  
	
  Dollar amount

  	
   

  	
   

  	
  487,278

  	
   

  



 

















 


EXHIBIT D


SPECIFICATIONS


 


(*****)


 

















 


EXHIBIT E


(*****)