TERMS & CONDITIONS AGREEMENT

This Terms & Conditions Agreement (this “Agreement”) is made and entered into, effective as of February 1, 2018, (the “Effective Date”), by and between  Advanced Food Systems ^® , Inc.  (“Seller”), having its principal place of business at 21 Roosevelt Avenue, Somerset, New Jersey 08873, and “Buyer”.

     WHEREAS, Seller develops and manufactures customized ingredient systems for meat and poultry products, frozen foods, sauces and marinades, and many other products (“Products”); 

     WHEREAS, Seller and Buyer (collectively, the “Parties”, and each individually, a “Party”) desire to establish in this Agreement the terms upon which Seller will manufacture and supply Products to Buyer. 

     NOW, THEREFORE, in consideration of the terms, conditions and mutual covenants set forth in this Agreement and other good and valuable consideration hereinafter set forth, the Parties intending to be legally bound agree as follows: 

ARTICLE I
SUPPLY

1.1.                             SELLER PURCHASE ORDERS.   Seller shall sell to Buyer certain Products of Seller as detailed in written purchase orders issued by Buyer to Seller, in form and substance satisfactory to Seller.  Such purchase orders shall only state (a) the names and quantities (including unit-weights) of each Product to be delivered by Seller, (b) the desired delivery dates thereof (subject to Section 1.3 below), (c) the desired place of delivery and (d) the mutually agreed-to purchase price for such Products.  All prices are F.O.B. Seller’s place of shipment.  By executing this Agreement, Buyer shall be deemed to have agreed to all of the terms and conditions of this Agreement, and any different or additional terms contained in any purchase order, acknowledgement, offer or other document of any kind submitted by Buyer shall be null and void to the extent they conflict with the terms of this Agreement. 

1.1.                             RISK OF LOSS - ACCEPTANCE OF PRODUCT.   The Products shall be shipped F.O.B. Seller’s place of shipment.  Risk of loss and, unless otherwise specified, title to the Products, shall pass to Buyer upon delivery of the Products by Seller to a carrier designated for or by Seller and Seller’s responsibility for loss or damage shall cease. Seller reserves the right to make partial shipments of the Products in accordance with the Agreement. 

1.2.                            DELIVERY.   Buyer and Seller shall mutually agree as to an estimated shipment date (such shipment date shall be estimated based on the desired delivery date) for the Products.  Shipment dates specified are approximate only.  Seller shall select the shipping method in its discretion unless otherwise expressly specified by Buyer.

1.3.                            RETURNS AND RECALLS.   Products may not be returned without Seller’s prior consent and, if given, Seller will provide Buyer with complete shipping instructions.  Buyer’s failure or refusal to accept delivery of Products without just cause is considered a material breach of the Agreement.  Buyer shall not conduct any voluntary recalls or withdrawals without the prior written consent of Seller.    If Buyer rejects Products conforming in all material respects to any specifications issued by Seller, Buyer shall remain liable for the full price of the Products less any net salvage value recovered by Seller.  All shipping costs to return Products to Seller shall be borne by Buyer.

1.4.                            NOTICE OF BUYER’S DISCONTINUATION OR PURCHASE REDUCTION.   Buyer acknowledges that (i) the Products contemplated hereunder are custom-designed and custom-manufactured by Seller for Buyer, (ii) Seller must maintain adequate inventory of unique ingredients for Buyer so that it can meet applicable supply deadlines, and (iii) Seller will encounter a significant financial hardship should Buyer discontinue the purchase of Seller’s Products without adequate notice or materially decrease the quantity of Products purchased hereunder without adequate notice.  Accordingly, Buyer shall deliver to Seller at least Forty-Five (45) days prior written notice of either a discontinuation of the purchase of Products purchased hereunder or any material reduction in the quantity of Products purchased by Buyer hereunder (it being agreed that a “material reduction” as contemplated above shall be deemed to have occurred should Buyer’s quantity of Product purchased in any given calendar quarter during the Term be less than half of the average quantity purchased by Buyer during the immediately two prior calendar quarters).  The failure to deliver such notice shall be deemed a material breach hereunder by Buyer, and Seller shall be entitled to applicable remedies including, without limitation, reimbursement for the cost of a 45-day supply of both the wasted finished Product and the wasted raw materials.

ARTICLE II
WARRANTIES AND INDEMNIFICATION

2.1.                            SELLER WARRANTY.   Seller represents and warrants that, when shipped by Seller: (a) each Product shall be free from defects in material and materially free in defects in workmanship and (b) each Product and all portions thereof shall be supplied to Buyer free and clear of any lien or encumbrance; and (c) each Product shall meet in all material respects the specifications agreed upon by Seller as set forth in any specifications issued by Seller to Buyer relating to such Product.  EXCEPT AS SET FORTH IN THIS SECTION, THE PRODUCTS PROVIDED BY SELLER ARE PROVIDED “AS IS” AND “WITH ALL FAULTS”.  SELLER MAKES NO WARRANTIES AND DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, WRITTEN OR ORAL, ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE, OR OTHERWISE INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, QUALITY AND GENERAL FITNESS OR FITNESS FOR A PARTICULAR PURPOSE.  SELLER SHALL NOT BE LIABLE FOR ANY CLAIM BY ANY THIRD PARTY BASED ON A WARRANTY OR REPRESENTATION OF BUYER WHICH IS INCONSISTENT WITH OR IN ADDITION TO SELLER’S WARRANTIES, AND BUYER SHALL, AT ITS OWN EXPENSE, INDEMNIFY AND HOLD SELLER HARMLESS FROM ANY CLAIM BY ANY THIRD PARTY TO THE EXTENT IT IS BASED UPON ANY SUCH INCONSISTENT OR ADDITIONAL WARRANTY OR REPRESENTATION IN ACCORDANCE WITH THIS SECTION.  FOR THE AVOIDANCE OF DOUBT, SELLER MAKES NO ASSURANCES AS TO ALLERGENS OR OTHER CONTENTS OF THE PRODUCT EXCEPT AS SET FORTH IN THIS SECTION OR ANY RELATED SPECIFICATIONS ISSUED BY SELLER. 

2.2.           BUYER WARRANTY .  Buyer represents and warrants that it shall package, label, store and use any and all Products in accordance with any related specifications issued by Seller and all applicable Laws, including, without limitation, those relating to environmental law and safety.

2.3.           INDEMNIFICATION .   Buyer agrees to indemnify, defend, and hold harmless Seller and its shareholders and affiliates, and its directors, officers and employees, from and against any and all third party claims (including, without limitation, claims for damages, injuries or death to persons and/or property) and losses, damages, costs and expenses (including, without limitation, attorneys’ fees and costs of investigation) and liabilities (including, without limitation, amounts paid in settlement) arising from third party claims, directly or indirectly arising out of, resulting from, or relating to: (a) any breach or violation of any representation, warranty or agreement of Buyer contained herein; (b)  any alteration of or modification to the Products; (c) any use of the Products for purposes other than those for which they were designed; and (d) any other abuse, misuse, mishandling, improper maintenance, storage or handling, or misapplication of the Products.

2.4.                            LIMITATION OF LIABILITY.   In no event shall Seller be liable for punitive, special, incidental or consequential loss or damage to the Buyer, including, but not limited to, lost profits, lost revenues, or loss of business, even if Seller has been notified of the possibility of such damages in advance, or for loss or damage (whether personal, property or otherwise), in excess of the purchase price of the Products, resulting from or arising out of, the breach of any term or condition (whether express or implied) of the Agreement or otherwise resulting from, or arising out of, the Products.

ARTICLE III
MISCELLANEOUS

3.1.                            APPLICABLE LAW AND JURISDICTION.   The Agreement and all obligations, rights and remedies of the parties with respect to the Agreement and the Products, and all issues, controversies or other matters arising between the parties with respect to the Products and the transactions contemplated by the Agreement shall be governed by and interpreted exclusively in accordance with the laws of the State of New Jersey (without applying its conflict of law rules).  Seller and Buyer each submit to the exclusive personal jurisdiction and venue of the United States federal courts situated in the State of New Jersey and state courts situated in Somerset County, New Jersey, and at the sole option of Seller, of the courts in any jurisdiction in which Buyer’s principal place of business or any assets of Buyer subject to judgment may be located. 

3.2.           ENTIRE AGREEMENT . The terms herein, together with such other documents specifically made a part hereof, shall constitute the complete and exclusive statement of the agreement between the parties, supersede all previous understandings, written or oral, between the parties which may have existed relating to the Products, and may hereafter be modified only by a written instrument executed by authorized representatives of both Parties.

3.3.           Term and Termination .   The term of the Agreement (“Term”) shall commence on the date first written above and shall remain in effect for a period of one (1) year, unless terminated earlier pursuant to this Sectionand after such initial term shall be automatically renewed for a term of one (1) year on each anniversary of the date of this Agreement unless either Party, by the delivery of a written notice at least ninety (90) days prior to the expiration of the initial term or of any renewal term, advises the other party of its intention not to renew the Agreement for an additional year.  Either Party shall have the right to terminate the Agreement upon thirty (30) days written notice to the other Party if the other Party breaches any material provision of the Agreement, and such breach is not cured within ten (10) days after the breaching Party is notified of such breach by the non-breaching Party.

3.4.           GENERAL CONDITIONS .    (a) No delay or failure on the part of Seller in exercising any right or remedy under the Agreement and no partial or single exercise thereof, shall constitute a waiver of such right or remedy or any other right or remedy, (b) If any term of the Agreement or the application thereof shall be determined by a court to be illegal, such illegality shall not affect any other term or condition hereof, and such other terms and conditions shall continue in full force and effect, (c) Paragraph headings are inserted for convenience only and do not form a part of the Agreement, (d) The Agreement and all rights and obligations hereunder may not be assigned by Buyer without the prior written consent of Seller, (e) Seller does not intend, nor shall any clause be interpreted, to create hereunder any obligations of Seller in favor of, benefit to, or rights in, any third party, (f) Seller and Buyer are each independent contractors and neither party shall be, nor represent itself to be, the franchiser, partner, broker, employee, servant, agent, or legal representative of the other party for any purpose whatsoever, and (g) The terms and provisions hereof shall be binding upon and inure to the benefit of permitted successors in interest and assigns of either party, subject to the provisions above.

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