Exhibit 10.2
MANUFACTURING AND DISTRIBUTION AGREEMENT
Manufacturing and Distribution Agreement, dated as of
September 28, 2001 (this "Agreement"), between Church & Xxxxxx Co., Inc., a
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Delaware corporation ("C&D"), and Armkel, LLC, a Delaware limited liability
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company ("Armkel") (each of Armkel and C&D, a "Party" and collectively, the
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"Parties").
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RECITALS:
WHEREAS, Xxxxxx-Xxxxxxx, Inc., a Delaware corporation ("CW")
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and Armkel have executed and delivered an Asset Purchase Agreement, dated as of
May 7, 2001 (including the exhibits, schedules and annexes thereto, and as
amended, the "Asset Purchase Agreement"), providing for, among other things, the
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sale, conveyance, transfer, assignment and delivery to Armkel of all of CW's and
its Affiliates' rights, title and interest in and to the Purchased Assets (as
defined in the Asset Purchase Agreement) and the assumption by Armkel of all of
the Assumed Liabilities (as defined in the Asset Purchase Agreement; such sales,
transfers, assignments, purchases, acceptances and assumptions collectively, the
"Asset Purchase");
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WHEREAS, in connection with the transactions contemplated by
the Asset Purchase Agreement, C&D and Armkel have agreed that C&D will
manufacture and distribute certain products for Armkel in North America, for the
period and subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 General Terms. For purposes of this Agreement, the
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following terms have the meanings hereinafter indicated:
"Affiliate" shall mean, with respect to any Person, any other
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Person directly or indirectly controlling, controlled by or under common control
with such Person as of the time of determination.
"Agreement" shall have the meaning assigned thereto in the
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Preamble.
"Armkel" shall have the meaning assigned thereto in the
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Preamble.
"Armkel Indemnified Parties" shall have the meaning specified
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in Section 8.2.
"Asset Purchase" shall have the meaning assigned thereto in
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the Recitals.
"Asset Purchase Agreement" shall have the meaning assigned
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thereto in the Recitals.
"Bankruptcy Event" with respect to a Party shall mean the filing
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of an involuntary petition in bankruptcy or similar proceeding against such
Party seeking its reorganization, liquidation or the appointment of a receiver,
trustee or liquidator for it or for all or substantially all of its assets,
whereupon such petition shall not be dismissed within 60 days after the filing
thereof, or if such Party shall (i) apply for or consent in writing to the
appointment of a receiver, trustee or liquidator of all or substantially all of
its assets, (ii) file a voluntary petition in bankruptcy or similar proceeding
or admit in writing its inability to pay its debts as they become due, (iii)
make a general assignment for the benefit of creditors, (iv) file a petition or
an answer seeking reorganization or an arrangement with its creditors or take
advantage of any insolvency law with respect to itself as debtor, or (v) file an
answer admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization, insolvency proceedings or any similar proceedings.
"Business Day" shall mean any day other than a Saturday, a Sunday
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or a day on which banks in the City of New York are authorized or obligated by
law or executive order to close.
"Capital Repairs" shall have the meaning specified in Section
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3.2.
"Change of Control" means the occurrence of any of the following
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events: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) becomes the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 35% of the total voting power of the capital stock of
C&D outstanding at such time; (ii) a merger or consolidation or similar
transaction involving C&D after which the holders of C&D's capital stock do not
own at least 65% of the total voting power represented by the capital stock of
the surviving entity of such merger or consolidation; or (iii) the adoption of a
plan of complete liquidation or the sale or disposition by C&D of at least 75%
of its assets in any one or series of transactions.
"Claim Notice" shall have the meaning specified in Section 8.3.
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"Closing" shall have the meaning set forth in the Asset Purchase
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Agreement.
"Closing Date" shall have the meaning set forth in the Asset
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Purchase Agreement.
"Confidential Information" shall have the meaning specified in
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Section 9.2.
"CW" shall have the meaning assigned thereto in the Recitals.
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"C&D" shall have the meaning assigned thereto in the Preamble.
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"C&D Indemnified Parties" shall have the meaning specified in
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Section 8.1.
"Distribution Services" shall have the meaning specified in
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Section 2.3.
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"Equipment" shall mean the equipment and tangible personal property
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set forth on Exhibit A.
"Facility" shall mean the facility where the Products are currently
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manufactured or such other facility as the Parties may agree.
"Fees and Costs" shall mean the Fees and Costs listed on Schedule A
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hereto, or as otherwise agreed by the Parties.
"Force Majeure Event" shall have the meaning specified in Section 9.1.
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"Good Manufacturing Practices" shall have the meaning specified in
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Section 5.9(a).
"Indemnified Party" shall have the meaning specified in Sections 8.1
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and 8.2.
"Indemnifying Party" shall have the meaning specified in Sections 8.1
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and 8.2.
"Indemnity Claim" shall have the meaning specified in Section 8.3.
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"Xxxxx Member" shall have the meaning set forth in the LLC Agreement.
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"LLC Agreement" shall mean the Amended and Restated Limited Liability
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Company Agreement of Armkel, LLC, dated as of August 27, 2001, as the same may
be amended or modified from time to time.
"Losses" shall have the meaning specified in Section 8.1.
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"Manufacturing Services" shall have the meaning specified in Section
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2.2(a).
"Marks" shall have the meaning specified in Section 9.4.
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"New Product" shall mean a new product for the Nair product line not
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initially included on Exhibit B on the Closing Date but which is added to
Exhibit B in accordance with the provisions of Section 2.5. A New Product shall
be deemed to constitute a Product from and after the date Exhibit B is amended
pursuant to Section 2.5; provided that all references in this Agreement to New
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Products shall continue to include New Products that have become Products and
have been added to Exhibit B.
"Notice Period" shall have the meaning specified in Section 8.3.
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"Party" shall have the meaning assigned thereto in the Preamble.
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"Person" shall mean any individual, firm, partnership, association,
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group (as such term is used in Rule 13d-5 under the Securities Exchange Act of
1934, as amended, as such Rule is in effect on the date of this Agreement),
corporation, limited liability company or other entity.
"Product Production Order" shall have the meaning specified in Section
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4.2.
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"Products" shall mean those products listed on Exhibit B, and those
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products, if any, which may be added to Exhibit B by the mutual written
agreement of the Parties.
"Recall" shall have the meaning specified in Section 5.12.
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"Rejection Notice" shall have the meaning specified in Section 5.10.
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"Removal Period" shall have the meaning specified in Section 3.3.
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"Representative" shall have the meaning specified in Section 2.8.
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"Services" shall mean the Manufacturing Services and the Distribution
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Services as set forth on Schedule A.
"Specifications" shall mean the specifications currently used by CW to
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produce the Products, as revised in accordance with Section 2.2 (b).
"Subsidiary" shall mean, with respect to any Person, more than 50% of
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the outstanding voting power of which is at the time owned or controlled
directly or indirectly by such Person or by one or more of such subsidiary
entities, or both.
"Third Party Claim" shall have the meaning specified in Section 8.3.
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"Variable Costs" shall mean the direct labor and direct materials
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costs for producing units of a Product or New Product, as the case may be.
ARTICLE II
SERVICES AND PRODUCTS
2.1 Services.
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(a) C&D shall provide or cause one of its Affiliates to provide to
Armkel or the relevant Affiliate of Armkel the Services for the term of the
Agreement. The Services shall be as described on Schedule A. Additions or
variations to the level of the Services or Fees and Costs identified on Schedule
A hereto may be made from time to time by agreement between the Parties as set
forth in a revised Schedule A. In the event any Service is terminated in
accordance with Section 6.3(c), this Agreement shall remain in effect unless
otherwise terminated in full in accordance with Article VI.
(b) Each Party shall create and maintain full and accurate
books in connection with the provision of the Services, and all other records
relevant to this Agreement, and upon reasonable notice from the other Party
shall make available for inspection and copy by such other Party's agents such
records during reasonable business hours.
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2.2 Manufacturing Services.
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(a) Product Quantities. During the term of this Agreement, and
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subject to the provisions of this Agreement, C&D shall manufacture and supply to
Armkel in accordance with the terms of this Agreement, including, without
limitation, the Specifications in respect to the Products, 100% of Armkel's
total requirements for the Products (such manufacturing and supply services, the
"Manufacturing Services").
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(b) Revised Specifications. At the request and at the sole cost and
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expense of Armkel, the Specifications for any Products manufactured hereunder
may be revised at any time upon the agreement of C&D, which agreement will not
be unreasonably withheld, delayed or conditioned. The cost of conversion to the
new Specifications shall be composed of C&D's actual conversion costs reasonably
incurred by C&D at Armkel's direction, and with C&D's agreement contemplated by
this Section 2.2.
2.3 Distribution Services. During the term of this agreement C&D will
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supply Armkel with supply chain and distribution services ("Distribution
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Services") with respect to all Armkel products, including order entry and
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processing, production planning and deployment of inventory, warehousing of
products, transportation and the distribution services set forth on Schedule A.
These services will be provided in the same manner that C&D uses in support of
its own products. Where ever practicably possible C&D will xxxx Armkel for
Distribution Services on a direct cost basis. Where a direct cost basis is not
possible costs will be allocated on a mutually agreed upon basis.
2.4 Changes. Except with the prior written consent of Armkel, C&D
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will not make any change to Product ingredients, components, Specifications,
trade dress or packaging. Costs incurred by C&D for any changes requested by
Armkel shall be borne by Armkel.
2.5 New Products. If Armkel develops a New Product for commercial
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manufacture, it may submit a proposal to C&D to manufacture and supply such
product, which proposal shall include its best estimate of the Variable Costs of
manufacturing and supplying the New Product. The Variable Costs of manufacturing
such New Product shall be determined in a manner consistent with the calculation
of Variable Costs for all other Products. C&D shall be obligated to manufacture
such New Product for Armkel to the extent that such New Product is a line
extension of an existing Product and the Parties agree upon reasonable Variable
Costs; provided that C&D shall not be obligated to manufacture any New Product
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for Armkel for which C&D lacks the necessary equipment unless Armkel agrees to
purchase or otherwise supply such equipment for C&D. Any proposal for the
manufacture and distribution by C&D of a New Product that is a new formulation
of an existing Product shall be discussed by the Parties as to the feasibility
and reasonable costs of manufacturing such New Product. Notwithstanding anything
to the contrary contained herein, Armkel shall have the right to have a New
Product manufactured by a third party if Armkel decides not to accept C&D's
final proposal for the manufacture and distribution of such New Product (in such
case a New Product shall not become a "Product" for purposes of this Agreement).
If Armkel accepts C&D's proposal with respect to the manufacture and
distribution of a New Product, the Parties will reevaluate the manufacturing
overhead costs set forth on Schedule A and if such New Product production is
anticipated to materially increase such manufacturing overhead costs, the
Parties will agree on a new
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manufacturing overhead costs. Armkel will purchase 100% of its requirements
for any New Products for which the Parties agree that C&D will manufacture
pursuant to this Section.
2.6 No Competitive Products by C&D. C&D agrees that it shall not
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manufacture, nor cause or allow any of its Affiliates to manufacture, the
Products for any reason except as provided in this Agreement. Notwithstanding
the foregoing, the Parties acknowledge and agree that the Products may be
manufactured by a third party from time to time for limited periods, as
determined by C&D in its reasonable discretion, provided that the Fees and Costs
set forth on Schedule A shall remain applicable to the Manufacturing Services
hereunder. Except as provided in this Agreement, during the term of this
Agreement, C&D shall not manufacture, nor cause any of its Affiliates to
manufacture, for itself or for an other party, any product that is the same as,
or similar in design, function or appearance to, the Products.
2.7 Parameters of Services; Standard of Service. (a) The Services
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shall be in scope and nature substantially the same as such Services were
provided within CW for the four quarters prior to the date of the Asset Purchase
Agreement unless otherwise agreed to by the Parties.
(b) In performing the Services, C&D or any of its Affiliates
providing the Services on its behalf shall provide substantially the same level
of service and use substantially the same degree of care as consistent with the
highest level of services, determined on an aggregate basis, provided by C&D to
its own products, divisions or Subsidiaries, and in connection with the
provision of such Services, C&D shall not favor its own products, divisions or
Subsidiaries over those provided to Armkel (when viewed on an aggregate basis)
(it being understood that C&D may be unable to retain and/or attract qualified
employees from time to time; accordingly, to the extent C&D is so affected, C&D
shall not be in breach of its obligations hereunder so long as it uses its
reasonable best efforts to hire or make available replacement personnel to
perform the Services required hereunder).
(c) C&D agrees that the person it appoints as a Representative in
accordance with Section 2.8 hereof, the members of the manufacturing team and
the providers of any other Services hereunder will have the appropriate skill
sets to perform such functions in the good faith judgment of C&D and will not
have any material conflicts of interest of which C&D has knowledge or
responsibilities that materially conflict with performing those functions and
Services, in either case without the prior consent of Armkel.
2.8 Representatives. Each of Armkel and C&D shall nominate a
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representative (each, a "Representative") to act as the primary contact person
with respect to the Services provided hereunder. Each of Armkel and C&D shall
advise the other in writing of its appointment of a Representative or any
successor Representative. The initial Representatives are:
For C&D: Xxxx Xxxxxx
For Armkel: Xxxxxxx Xxxxxx
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The Representatives shall periodically discuss the quality of Services
provided hereunder and shall attempt in good faith to resolve all matters that
may arise during the term of this Agreement.
2.9 Ownership. Armkel represents that it has acquired all rights,
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title and interests in and to the Products and the related intellectual property
pursuant to the Asset Purchase Agreement. Neither C&D nor any Affiliate thereof
is acquiring pursuant to this Agreement any ownership interests in the Products
manufactured hereunder or any related intellectual property (other than C&D's
ownership of inventory in the ordinary course of manufacture hereunder, until
title passes pursuant to Section 4.4).
2.10 Agreement to Provide Transition Services in the Event of a Third
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Party Sale. In the event of a sale of Armkel or any Subsidiary or business unit
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thereof to a third party, C&D shall be required to offer to provide to any such
third party purchaser transition services for the purchased business of the type
provided to Armkel pursuant to this Agreement. C&D shall offer to provide such
services for a period of no less than one year from the date of such sale. The
terms on which such services shall be provided shall be (a) for the first 90
days of any transition period, substantially similar to the terms on which
services are provided by C&D to Armkel pursuant to this Agreement; and (b)
thereafter, on a fully-allocated cost basis for the remainder of such one-year
period.
ARTICLE III
EQUIPMENT
3.1 Equipment License. Armkel hereby grants to C&D a royalty-free
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license to use the Equipment for the sole and exclusive purpose of manufacturing
the Products for Armkel, and C&D hereby accepts such license, all on the terms
and conditions set forth in this Agreement. The Equipment and Confidential
Information shall at all times be and remain the property of Armkel, and C&D
shall have no interest therein or rights thereto except as specifically provided
in this Agreement. C&D shall not remove the Equipment from the Facility during
the term of this Agreement or thereafter without Armkel's written consent. If
requested by Armkel, C&D shall affix to the Equipment asset tags indicating that
the Equipment is the property of Armkel. C&D acknowledges that it is a bailee
with respect to the Equipment.
3.2 Maintenance and Repair of Equipment. During the term of this
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Agreement, C&D shall perform, at its cost and expense, all routine maintenance
and repair in substantial conformity with what has historically been performed
on the Equipment at such intervals as have been historically customary to
maintain the Equipment in good working order, including but not limited to
changing oil, replacing filters and lubrication. Armkel shall bear the costs and
expenses of repairs to the Equipment that are not routine or which extend the
useful life of the Equipment beyond routine maintenance and servicing (referred
to herein as "Capital Repairs"). If the historical performance of maintenance,
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cleaning, and repair failed to conform with current Good Manufacturing
Practices, C&D agrees to henceforth comply with such equipment standard. If C&D
ascertains that the Equipment requires any Capital Repairs, C&D shall promptly
advise Armkel thereof by telephone or fax pursuant to Section 9.10 hereof.
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Except in the case of an emergency, Armkel shall have the right to direct the
manner in which such Capital Repairs shall be effected, and C&D shall abide by
such directions. To the extent C&D reasonably incurs any out-of-pocket costs or
otherwise at Armkel's direction for Capital Repairs (including time of its own
employees in diagnosing or effecting any such repairs), C&D shall invoice Armkel
therefor, which invoice shall be accompanied by the invoices or vouchers for
such costs. Armkel shall pay such invoice within 30 days after its receipt
thereof.
3.3 Return of Equipment. After any termination hereunder and for one
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month thereafter (the "Removal Period"), Armkel and its designated contractors
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shall have the right (which Armkel may exercise at any time and from time to
time during such period, upon reasonable notice and subject to the consent of
C&D, which consent shall not unreasonably be withheld) to enter upon the
Facility and remove the Equipment or any components thereof therefrom, provided,
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however, that such removal shall not unreasonably interfere with operation of
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the Facility. During the course of such removal, C&D may reasonably restrict
access by Armkel's employees to the areas of the Facility where products other
than Armkel's products are being manufactured; provided, that in no event shall
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Armkel be ultimately prevented from removing the Equipment as a result of such
restrictions. Equipment not removed by the expiration of the Removal Period
shall be and become the property of C&D without further act or charge. C&D shall
cooperate with Armkel and shall provide at Armkel's request employees to assist
Armkel in disassembling and crating any such Equipment prior to its removal.
C&D's obligation to provide employees to assist in disassembling and crating
equipment shall be contingent upon C&D having employees available for such
duties without adversely impacting C&D's other operations; provided, that to the
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extent Armkel has requested of C&D that Equipment be removed and it is not
removed due to C&D not providing sufficient employees to assist in the removal,
the date referenced in the first sentence of this Section 3.3 shall be extended
to the extent required to permit removal of the Equipment with the necessary
assistance of C&D's employees. Armkel shall repair any damage to the Facility
caused by such removal and shall reimburse C&D for reasonable out-of-pocket
costs (including time of C&D's own employees) incurred by C&D in disassembling
and crating the Equipment, costs for which are to be agreed upon by both parties
in good faith in advance of any such activity. It is Armkel's responsibility to
validate that Equipment is operational before removal and, without limiting
C&D's obligation to provide Armkel assistance as contemplated hereby, it is
Armkel's sole responsibility to ensure successful removal, transportation and
reinstallation in Armkel's facility. C&D makes no warranties for Equipment other
than that it will be maintained as described herein. During Equipment removal,
Armkel agrees to adhere to the general contractor and removal procedures and
standards observed in the consumer products industry.
ARTICLE IV
PRODUCT SCHEDULING
In order to permit production and supply in the most efficient
and economical manner possible, the following procedures shall apply during the
term of this Agreement:
4.1 Best Estimated Forecast of Product Requirements. Armkel shall
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provide C&D with its best estimated 12-month rolling forecasts of Armkel's
requirements, by month and
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by seven digit SKU number, for supply of the Products. Except for the first
forecast which shall be delivered at or prior to the Closing and which shall be
for the number of days from the date of the Closing until the next following
December 31, each such forecast will be for a 12-month period beginning on the
first month to which it applies and shall be due 60 days before commencement of
the period to which it applies. The forecasts delivered hereunder are not firm
commitments by Armkel to order or purchase the Products, but are provided only
as a guide to assist C&D in scheduling production.
4.2 Production Orders. Armkel will issue to C&D production orders
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which shall serve as a firm order for the Products (each, a "Product Production
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Order"). Such Product Production Orders shall be issued at least fourteen
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calendar days prior to the anticipated delivery date for Products covered by
such order or such other longer lead time and batch sizes as had been customary
for the Products during the prior four quarters. Armkel will use its reasonable
best efforts to give C&D longer lead times whenever possible and C&D will use
all reasonable commercial efforts to fulfill any short lead time orders.
4.3 Delivery, Pricing and Payment. (a) C&D shall coordinate
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deliveries of the Products with the Representative designated by Armkel. All
shipments shall be at the agreed upon level of costs and services. C&D shall
provide Armkel a list of common carriers from time to time for its approval,
which shall not be unreasonably withheld, and C&D shall schedule deliveries with
the common carriers and with the appropriate Armkel personnel. C&D shall have
the responsibility to inspect all carriers shipping the Products and shall
reject any carrier not in a clean, dry and odorless condition or which is not
otherwise in accordance with industry practice. The rejection of any carrier not
meeting Armkel's standards shall be immediately reported to Armkel's
Representative. If after inspection, C&D determines that the carrier meets
Armkel's requirements for carrier fitness, C&D shall proceed to deliver the
Products to the carrier.
(b) All shipments of the Products by common carrier shall be
consistent with the published price list. C&D will maintain adequate and
accurate shipping records in order that the Product lots on all shipments may be
traced. Unless otherwise specified herein, Armkel shall be responsible for
paying all shipping costs and expenses associated with the transportation of the
Products.
4.4 Risk of Loss and Insurance. (a) Title to the Products shall be
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and remain with Armkel from the date the Product is delivered to the carrier at
the Facility for delivery to Armkel. C&D shall bear the risk of loss to the
Products until it is delivered to the carrier at the Facility for delivery to
Armkel.
(b) At all times during the term of this Agreement, C&D shall, at its
sole cost and expense, maintain commercial public liability insurance in amounts
not less than:
(i) property insurance at cash value of the Facility; and
(ii) liability insurance for bodily injury and property damage of
$5,000,000 combined single limit per occurrence and in the
aggregate.
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A copy of each insurance policy or certificate thereof shall be issued by an
insurer reasonably satisfactory to Armkel and authorized to issue such policy or
policies, shall name Armkel and the mortgagee of Armkel, if any, as additional
insured and shall otherwise be reasonably satisfactory to Armkel, and shall be
delivered to the Armkel within 10 calendar days following commencement of this
Agreement and shall not be subject to cancellation upon less than 10 calendar
days written notice to Armkel.
(c) C&D acknowledges that Armkel has an interest in resolving product
liability claims quickly and in a manner that minimizes the negative impact of
the experience to the consumer. C&D further acknowledges that packages of the
Products produced by C&D may have a toll-free number for consumers to call in
order to make comments about the Products. As a result, Armkel will be in a
position to solve many product liability claims quickly and for a nominal
amount. Notwithstanding Section 8.3, C&D hereby agrees that Armkel may handle
product liability claims regarding the Products provided such claims can be
settled for less than $5,000 on an individual basis. In the event the claim is a
result of actions or inactions of C&D for which it would be responsible under
this Agreement, C&D agrees to reimburse Armkel for costs of settling these
claims, notwithstanding the fact that it may not have been notified of such
claim prior to settlement. Settlements for amounts greater than $5,000 will be
subject in all respects to Articles VII and VIII hereof. Notwithstanding the
foregoing, the Parties agree that C&D will not be responsible for any claims
relating to formulation of the Products, except to the extent such formulation
is not in accordance with the Specifications through the gross negligence or
willful misconduct of C&D. Armkel agrees to notify C&D of all claims to be
settled by Armkel in accordance with this clause (c) as soon as possible.
Armkel's right to settle any claims for which C&D is obligated to reimburse
Armkel under this clause (c), other than by the procedures contemplated by
Section 8.3 hereof, shall terminate to the extent the aggregate of all such
claims is greater than $75,000 in any contract year.
4.5 Notification of Delay or Non-Performance. Without affecting C&D's
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other obligations hereunder, in the event C&D reasonably believes that
production or delivery of the Products may be delayed, impaired or prevented for
any reason, including for any reason which constitutes a permitted delay (in
accordance with Section 9.1), C&D shall (i) immediately notify Armkel of the
possibility of such delay, and the reasons therefor; (ii) immediately notify
Armkel of such actual delay, and the reasons therefor; and (iii) use all
reasonable commercial efforts to keep its contractual commitments under this
Agreement.
If within 30 days the Parties are unable to resolve the subject
problem, and if, at the conclusion of such period Armkel reasonably determines
that C&D will not adequately be able to supply Armkel's firm orders, Armkel
shall be free to enter into an agreement with an alternative supplier for such
quantities of Products that Armkel has determined that C&D will be unable to
supply (or any amount in excess thereof that constitutes the minimum batch size
production from Armkel's alternative supplier). C&D shall be obligated for a
period of 90 days from the end of such 30 day period to reimburse Armkel for the
increased expense incurred by Armkel in obtaining its requirements for such
Product from an alternative supplier over the costs for such Products hereunder.
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ARTICLE V
PAYMENT; PRODUCT PRICING
5.1 Payment. The consideration to be paid by Armkel for the Services
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and Products shall be the Fees and Costs. C&D will invoice Armkel in United
States dollars on a monthly basis (with quarterly true-ups as necessary), and
Armkel shall pay to C&D or to such Affiliate as C&D may direct the amounts due
under such invoices in United States dollars no later than 10 Business Days of
receipt by Armkel.
5.2 Notification of Changes in Raw Materials or Packaging Materials.
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Without limiting Armkel's obligations hereunder, C&D shall notify Armkel in
writing of all changes of which it becomes aware in the costs of raw materials
or packaging material that are likely to materially change the Fees and Costs
hereunder.
5.3 Purchase of Inventory. On the date of the Closing, C&D shall
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purchase on an "as is where is" basis from Armkel all inventory relating to the
Products, other than the finished goods inventory of the Products that Armkel
purchased from CW pursuant to the Asset Purchase Agreement, and the agreed
purchase price for such inventory shall be the invoice amount for such raw
material components and packaging necessary to make the Products and shall be
paid by means of four equal offsets to the amounts otherwise due to C&D by
Armkel under the invoices to be delivered to Armkel by C&D hereunder until such
payment is fully discharged.
5.4 Periodic Re-Evaluations. The Parties agree to re-evaluate the
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Fees and Costs listed on Schedule A, including the underlying methods used to
determine such amounts, from time to time, and in any event at least annually,
to confirm that such levels or fee structures produce a result consistent with
the supply requirements of Armkel and the costs incurred by the Parties to
provide the Services. In addition, the Parties agree to re-evaluate the fee
structures listed on Schedule A following any increase in the Nair product line
fiscal year net sales in North America by 10% or more over the prior fiscal
year's net sales in North America for the Nair product line, based on a December
31 fiscal year end. If the Parties are unable to agree upon adjustments to the
fee structures, the fixed fees set forth on Schedule A automatically shall be
adjusted based on the increase and/or decrease in the consumer price index
(specifically, the "CPI-U" index, as calculated by the Bureau of Labor
Statistics) for such year.
5.5 Inspection, Sampling, Line Capacity, Raw Materials. (a) C&D shall
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inspect and sample all raw materials and packaging purchased for the Products
for conformance with the Specifications and shall withhold from use in the
manufacture of the Products any raw materials or packaging determined by C&D not
to be in conformity with such the Specifications. C&D will maintain available
line capacity and inventories of raw materials and packaging materials in
sufficient amounts to support the production requirements of the Products
contemplated by the best estimated forecast to be delivered by Armkel to C&D
hereunder.
(b) Without limiting the provisions of Section 5.13, upon Armkel's
request and at its sole cost and expense, C&D shall provide samples of raw
materials and packaging purchased for the Products to Armkel for analysis. If
Armkel reasonably determines that such
11
materials and packaging are not in conformance with the Specifications, C&D
shall withhold from use any such materials not in conformance.
5.6 Obsolete Goods. It is understood by the Parties that when
--------------
production is terminated, and possibly during the term of this Agreement, some
materials will either become obsolete due to changes in the Specifications or
there will be extra material due to incorrect forecasting. Although Armkel will
be financially responsible for these obsolete and/or extra materials, (i) C&D
shall use all prudent means to minimize the financial impact to Armkel of these
material losses, and (ii) under no circumstances will Armkel be responsible
under the provisions of this Section for raw materials and packaging materials
which, when ordered by C&D or purchased by C&D from Armkel pursuant to Section
5.3 hereof, represented more than a six-month supply (based on Armkel's rolling
forecast at the time when the materials were purchased) of the item in question.
5.7 Records. C&D shall keep complete, true and accurate records and
-------
accounts in accordance with generally accepted accounting principles applied on
a consistent basis from year to year with respect to information used to
determine the Fees and Costs (including, without limitation, raw materials and
packaging) and other information relevant to the manufacture, packaging or
shipping of the Products, quality assurance measures, and all other procedures
utilized in the production process under this Agreement and including an
inventory of all finished goods produced and shipped or held by C&D. Such
records and accounts shall be separate from the records and accounts with
respect to C&D's own products and activities and all products distributed
hereunder to customers and other third party purchasers shall be billed and
invoiced using Armkel stationery, except for products that the Parties agree may
be billed and invoiced under C&D's stationery, provided that C&D maintains
separate internal accounts with respect to such Armkel products. Armkel or its
representatives shall have the right to audit any and all of such records and
accounts of C&D.
5.8 Sampling and Testing. (a) Without limiting its warranties herein,
--------------------
C&D shall perform at its sole cost and expense, the sampling and testing
procedures, including microbiological, analytical and environmental testing, for
the Products in accordance with Armkel's Specifications and the quality control
procedures for the Products prior to releasing the Products for delivery to
Armkel.
(b) Without limiting the provisions of Section 5.13, Armkel may
perform, or engage an independent third party to perform, at Armkel's sole cost
and expense, sampling and testing procedures for the Products to determine that
such Products are in accordance with the Specifications. If Armkel reasonably
determines that such Products are not in conformance with the Specifications,
C&D shall not release such Products for delivery to Armkel.
5.9 Covenant and Warranty. (a) C&D warrants that each lot of Product
---------------------
sold to Armkel will be manufactured, processed and packaged and held in
accordance with the higher of the standards established by (i) the Good
Manufacturing Practices regulations promulgated by the United States Food and
Drug Administration (collectively, "Good Manufacturing Practices") or (ii) C&D's
internal standards. All manufacturing services performed pursuant to this
Agreement shall be performed in compliance with all material applicable federal,
state, provincial and local laws, rules and regulations.
12
(b) C&D warrants that the Products delivered to Armkel in accordance
with this Agreement (i) will be free from defects in materials and manufacture;
(ii) will conform to the Specifications and all applicable laws and regulations
of the United States Food and Drug Administration, the United States Public
Health Service, and any and all other similar applicable health and safety laws
and regulations of the United States, any state and any local jurisdiction; and
(iii) when delivered to Armkel, shall not be adulterated or misbranded within
the meaning of the United States Federal Food, Drug and Cosmetic Act and
regulations promulgated thereunder; and (iv) shall not be articles which may
not, under the provisions of Section 512 of the Federal Food, Drug and Cosmetic
Act, be introduced into interstate commerce.
(c) Each Party shall obtain and maintain all material permits,
approvals and licenses necessary or appropriate to perform its obligations
hereunder and shall at all times comply with the terms and conditions of such
permits, approvals and licenses.
5.10 Acceptance. Each batch of the Products delivered by C&D to
----------
Armkel shall be deemed to be accepted unless Armkel gives C&D a written notice
(a "Rejection Notice") within 30 calendar days of Armkel's actual receipt of
such Products, stating in reasonable detail the deficiencies of such Products
hereunder and delivering any such rejected Products to C&D at C&D's expense. The
rejection shall be conclusive and binding upon the Parties and Armkel shall have
no obligation to pay for such Products if C&D does not specifically deny
responsibility for the deficiencies with the Products forming the basis of
Armkel's rejection, by delivery within 30 days after C&D's receipt of both the
rejected goods and the Rejection Notice of written notice to Armkel stating in
reasonable detail the relevant information underlying its denial of
responsibility.
5.11 Defects, Discrepancies. C&D shall remedy any defects or
----------------------
discrepancies caused by C&D by replacement, at no additional cost to Armkel, of
any Products rejected by Armkel in accordance with Section 5.10 above for
failure to conform to the requirements of this Agreement. C&D's obligation under
the prior sentence shall include reimbursing Armkel for all reasonable
transportation, retrieval, storage and destruction costs associated with the
defective Products. The remedies of this Section 5.11 are in addition to those
contemplated by Article VIII hereof.
5.12 Recalls. Armkel shall determine in its sole discretion, and in
-------
accordance with its direction, from time to time, to conduct a voluntary recall,
market withdrawal or field correction (a voluntary or mandatory recall, and any
such market withdrawal or field correction, a "Recall") of any Products
------
manufactured by C&D. To the extent any such Recall is the result of deficiencies
of any Products arising from C&D's breach hereunder, C&D shall either replace
the recalled Products with an equivalent quantity of such Products or credit
Armkel for the Fees and Costs paid by Armkel hereunder in respect of such
Products. The remedies of this Section 5.12 are in addition to those
contemplated by Article VIII hereof.
5.13 Access. Upon reasonable notice, and during C&D's normal
------
operations, C&D shall permit Armkel or its designees access to C&D's facilities
utilized in the receiving, handling, packaging and storage of packaging, raw
materials and the Products for the purpose of ascertaining C&D's compliance with
Good Manufacturing Practices, Specifications and quality
13
assurance requirements and otherwise with the terms hereunder in respect of the
Services and determination of the Fees and Costs; provided, that unless
permitted under another agreement between the Parties, Armkel shall not have
access to any part of C&D's facilities which are not used directly in the
manufacture of the Products or the receiving, storage, handling or packaging of
any Products or raw materials or which are subject to limited access by
agreement of the Parties. Notwithstanding the foregoing, Armkel's access to and
inspections of C&D's facilities and operations permitted hereunder shall not
affect C&D's obligations to comply with all requirements of this Agreement. C&D
shall promptly notify Armkel of any discrepancies noted during any inspection of
C&D's production facilities by the United States Food and Drug Administration,
the United States Public Health Service, any state or any other legally
authorized federal, state or local regulatory agency and shall also provide
Armkel a list of any discrepancies noted by any authorities relating to the
manufacture, packaging and storage by C&D of the Products, the raw materials and
the packaging materials. C&D shall allow Armkel or its designees reasonable
access to all records insofar as they relate to the Products.
ARTICLE VI
TERM AND TERMINATION
6.1 Duration. Subject to the terms of Sections 9.2 and 9.3 and this
--------
Article VI, this Agreement shall terminate upon the fifth anniversary of the
date hereof; provided, that this Agreement shall be automatically renewed for
successive one year periods unless either party gives notice of its intention
not to renew (in whole or in part) at least six months prior to the expiration
of the term.
6.2 Early Termination by C&D. C&D may terminate this Agreement by
------------------------
(and effective upon) its delivery of written notice to Armkel specifying the
basis for termination hereunder, under the following circumstances:
(a) if Armkel shall breach this Agreement in any material respect;
provided, that Armkel shall have the right to prevent termination based upon
Armkel's material breach of this Agreement by curing such material breach within
60 days following receipt of C&D's termination notice;
(b) the sale to a third party of the Xxxxx Member's or C&D's
ownership interests in Armkel pursuant to Section 10.3 ("Sales by Xxxxx: Right
of First Offer, Drag-Along Rights") or Section 10.2 ("Sales by C&D: Right of
First Offer, Drag-Along Rights") of the LLC Agreement, in either case subject to
Section 2.10 hereof; or
(c) following the occurrence of a Bankruptcy Event with respect to
C&D or Armkel.
6.3 Early Termination by Armkel. Armkel may terminate this Agreement
---------------------------
by (and effective upon) its delivery of written notice to C&D specifying the
basis for termination hereunder, under the following circumstances:
(a) the sale to a third party of C&D's or the Xxxxx Member's
ownership interests in Armkel pursuant to Section 10.2 ("Sales by C&D: Right of
First Offer, Drag-Along
14
Rights") or Section 10.3 ("Sales by Xxxxx: Right of First Offer, Drag-Along
Rights") of the LLC Agreement, in either case subject to Section 2.10 hereof;
(b) upon the occurrence of a Change of Control of C&D;
(c) with respect to any particular Service or Services provided
hereunder, if (1) such Service or Services have been significantly deficient as
provided by C&D for a period of at least 180 days, compared to such Service or
Services having been provided by an independent third party who performs
services similar to the Services for a business of the size and type of Armkel,
and such deficiency was within C&D's control, (2) the Chief Executive Officer of
Armkel recommends to the Board of Directors of Armkel to terminate such Service
or Services, (3) Armkel has provided written notice to C&D detailing such
deficiency and (4) Armkel has provided C&D an opportunity to cure such
deficiency for a period of at least 90 days following such written notice; or
(d) following the occurrence of a Bankruptcy Event with respect to
C&D or Armkel.
In the event any Service is terminated in accordance with paragraph
(c) of this Section 6.3, this Agreement shall remain in effect with respect to
all other Services unless otherwise terminated in full in accordance with the
other terms of this Article VI.
6.4 Partial Termination. Without limiting any of the rights set forth
-------------------
in Section 6.3, Armkel shall have the right to terminate the Manufacturing
Services with respect to any Product if (1) the Manufacturing Services provided
by C&D with respect to such Product have been deficient for a period of at least
30 days, and such deficiency is within C&D's control; (2) the Chief Executive
Officer of Armkel recommends to the Board of Directors of Armkel to terminate
the Manufacturing Services provided by C&D with respect to such Product, (3)
Armkel has provided written notice to C&D detailing such deficiency and (4)
Armkel has provided C&D an opportunity to cure such deficiency for a period of
at least 15 days. Without limiting the foregoing, C&D's failure to supply any
Product that has been ordered in accordance with Section 4.2 of this Agreement
for a period in excess of 30 days from the due date of delivery shall be deemed
to be a deficiency in the services provided. In the event of termination of any
Manufacturing Services effected pursuant to this Section 6.4, Armkel may
thereafter purchase such Product from an alternative source.
6.5 Consequences on Termination. In the event this Agreement expires
---------------------------
or is terminated in accordance with this Article VI, then (a) C&D shall promptly
cease all Services, and shall cause its Affiliates to do so, and shall transfer
back to Armkel all works in progress and finished goods and associated raw
materials, (b) each of C&D and Armkel shall promptly return all Confidential
Information received from the other Party in connection with this Agreement,
without retaining a copy thereof, (c) each of C&D and Armkel shall promptly
honor all credits and make any accrued and unpaid payment to the other Party as
required pursuant to the terms of this Agreement, including payments for all
works in progress, finished goods and raw materials, (d) Armkel shall remove its
Equipment from the Facility as contemplated by Section 3.3 hereof, and (e) each
Party shall continue to be subject to and responsible for its accrued but
unperformed obligations and any liabilities in respect of its prior breach
hereof.
15
ARTICLE VII
LIMITATION ON LIABILITY
7.1 Limitation on Liability. Neither Party nor any of its Affiliates
-----------------------
will be liable to the other Party or its Affiliates for any claim or demand
against such other Party and its Affiliates, and their respective officers,
directors, partners, principals, employees, agents or representatives, arising
under or relating to this Agreement (i) by any unaffiliated third party (except
as provided in Article VIII hereof), or (ii) for any amounts representing loss
of profit, loss of business or special, indirect, incidental, consequential or
punitive damages of any nature whatsoever, including, without limitation, any
damages arising out of or in connection with any loss of business or
anticipatory profits, even if such Person has been advised of the possibility of
such damages.
ARTICLE VIII
INDEMNIFICATION
8.1 Armkel Indemnification. Subject to Article VII, Armkel (for
----------------------
purposes of Section 8.3, an "Indemnifying Party") shall indemnify, defend and
------------------
hold harmless C&D and its Affiliates, and their respective officers, directors,
partners, principals, employees, agents and representatives (collectively, the
"C&D Indemnified Parties", and for purposes of Section 8.3, each an "Indemnified
----------------------- -----------
Party"), from and against all liabilities, out-of-pocket costs and expenses,
-----
including, without limitation, reasonable defense costs, settlement costs and
attorneys' fees (collectively, "Losses"), based upon (i) any claim, action, suit
------
or proceeding by an unaffiliated third party arising out of or related to the
provision of Services pursuant to this Agreement; provided, however, that the
--------
foregoing indemnification under clause (i) shall not apply to the extent, and
only to the extent, that such Losses are directly and proximately caused by the
gross negligence or willful misconduct of C&D or its Affiliates or C&D's failure
to comply in any material respect with the express terms of this Agreement or
(ii) Armkel's failure to comply in any material respect with the express terms
of this Agreement. The indemnification obligations set forth in this Section 8.1
are subject to the indemnification procedures set forth in Section 8.3.
8.2 C&D Indemnification. Subject to Article VII, C&D (for purposes of
-------------------
Section 8.3, an "Indemnifying Party") shall indemnify, defend and hold harmless
------------------
Armkel and its Affiliates, and their respective officers, directors, partners,
principals, employees, agents and representatives (collectively, the "Armkel
------
Indemnified Parties", and for purposes of Section 8.3, each an "Indemnified
------------------- -----------
Party") from and against any Losses suffered by the Armkel Indemnified Parties
-----
to the extent, and only to the extent, that such Losses are directly or
proximately caused by (i) the gross negligence or willful misconduct of C&D or
its Affiliates or (ii) C&D's failure to comply in any material respect with the
express terms of this Agreement. The indemnification obligations set forth in
this Section 8.2 are subject to the indemnification procedures set forth in
Section 8.3.
8.3 Procedures for Indemnity Claims. Any claim which may form a basis
-------------------------------
for indemnification hereunder (an "Indemnity Claim") by any Indemnified Party
---------------
shall be asserted
16
and resolved as set forth in this Section 8.3. The Indemnified Party shall
promptly, but in no event more than 15 Business Days following such Indemnified
Party's receipt of, notice of, or actual knowledge of such claim, give written
notice to the Indemnifying Party, which notice shall state in reasonable detail
the nature and basis of the Indemnity Claim and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of any claim) and which notice, if applicable,
shall also have attached to it copies of all relevant documents received by the
Indemnified Party substantiating such Indemnity Claim (the "Claim Notice").
------------
Failure of the Indemnified Party to give a Claim Notice as contemplated hereby
shall not relieve the Indemnifying Party from liability for indemnification
hereunder, except if and to the extent that the Indemnifying Party is actually
prejudiced thereby. Thereafter, the Indemnified Party shall deliver to the
Indemnifying Party, on an ongoing basis promptly after the Indemnified Party's
receipt thereof, copies of all notices and documents received by the Indemnified
Party relating to the Indemnity Claim, as the case may be. With respect to an
indemnity claim other than an a third party claim that is resolved as provided
in this Section 8.3, the Indemnifying Party shall promptly pay such Indemnity
Claim within 20 Business Days from its receipt of the Claim Notice (the "Notice
------
Period"), unless it notifies the Indemnified Party in writing that the
------
Indemnifying Party disputes the liability of the Indemnifying Party to the
Indemnified Party hereunder with respect to the Indemnity Claim. If the
Indemnity Claim involves an amount in dispute with a third party (a "Third Party
-----------
Claim"), the Indemnifying Party may advise the Indemnified Party within 10
-----
Business Days from its receipt of the Claim Notice that it will defend the
Indemnified Party against such Third Party Claim. Except as hereinafter
provided, in the event that the Indemnifying Party so notifies the Indemnified
Party that it will defend the Indemnified Party against such Third Party Claim,
the Indemnifying Party shall have the right to defend the Indemnified Party by
appropriate proceedings and shall have the sole power to direct and control such
defense. All costs and expenses incurred by the Indemnifying Party in defending
the Third Party Claim shall be paid by the Indemnifying Party. If an Indemnified
Party desires to participate in any such defense it may do so at its sole cost
and expense; provided, that the Indemnified Party and its counsel shall comply
--------
with all reasonable instructions from the Indemnifying Party. The Indemnifying
Party shall not consent to the entry of any judgment or enter into any
settlement in respect of a Third Party Claim without the consent of the
Indemnified Party, to the extent such judgment or settlement imposes a
non-monetary obligation on the Indemnified Party or is not accompanied by a
complete and unconditional release of the Indemnified Party in respect of such
Third Party Claim; provided, that the consent of the Indemnified Party shall not
--------
be unreasonably withheld, conditioned or delayed. If the Indemnifying Party
elects not to defend the Indemnified Party against such Third Party Claim,
whether by not giving the Indemnified Party timely notice as provided above or
otherwise, then the Indemnified Party may conduct the defense and the reasonable
costs and expenses pertaining to such defense shall be the liability of the
Indemnifying Party. In any case, whether or not the Indemnifying Party elects to
control the defense of a Third Party Claim, the Indemnified Party shall not
consent to the entry of any judgment or enter into any settlement in respect of
a Third Party Claim without the consent of the Indemnifying Party, and without
such consent the Indemnifying Party shall not be obligated to indemnify the
Indemnified Party hereunder in respect of the related Indemnification Claim;
provided, that the consent of the Indemnifying Party shall not be unreasonably
--------
withheld, conditioned or delayed. To the extent the Indemnifying Party shall
direct, control or participate in the defense or settlement of any Third Party
Claim, the Indemnified Party will, as reasonably
17
required, give the Indemnifying Party and its counsel access to, during normal
business hours, the relevant business records and other documents, and permit
them to consult with the employees and counsel of the Indemnified Party.
Regardless of which Person assumes control of the defense of any claim, each
Party shall cooperate and provide the other Party reasonable assistance in the
defense thereof.
8.4 Sole Remedy. The remedies set forth in this Agreement shall
-----------
constitute the sole and exclusive remedy and shall be in lieu of any other
remedies that may be available to C&D Indemnified Parties or Armkel Indemnified
Parties under any agreement, pursuant to any statutory or common law, in equity
or otherwise with respect to the subject matter of this Agreement. The Parties
each hereby waive any provision of any applicable law to the extent that it
would limit or restrict the agreements contained in this Section 8.4.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Force Majeure. Subject to Section 4.5 hereof, in the event the
-------------
performance by Armkel or C&D of their respective duties or obligations hereunder
is interrupted or interfered with by reason of any cause beyond its reasonable
control including, but not limited to, fire, storm, flood, earthquake,
explosion, war, strike or labor disruption, rebellion, insurrection, quarantine,
`act of God', boycott, embargo, shortage or unavailability of supplies, riot, or
governmental law, regulation or edict (collectively, a "Force Majeure Event"),
-------------------
the Party affected by such Force Majeure Event shall not be deemed to be in
default of this Agreement by reason of its nonperformance of its obligations
hereunder to the extent due to such Force Majeure Event, but shall give prompt
written notice to the other Party of the Force Majeure Event. If, as soon as,
and to the extent that the Force Majeure Event no longer interrupts a Party's
performance of its obligations hereunder, its interrupted obligations shall
accrue from such point forward under the terms hereof.
9.2 Confidential Information. The Parties hereto expressly
------------------------
acknowledge and agree that all information, whether written or oral, furnished
by either Party to the other Party or any Affiliate of such other Party pursuant
to this Agreement, including any schedules and exhibits hereto ("Confidential
------------
Information") shall be deemed to be confidential and shall be maintained by each
-----------
Party and their respective Affiliates in confidence, using the same degree of
care to preserve the confidentiality of such Confidential Information that the
Party to whom such Confidential Information is disclosed would use to preserve
the confidentiality of its own information of a similar nature and in no event
less than a reasonable degree of care. Except as authorized in writing by the
other Party, neither Party shall at any time disclose or permit to be disclosed
any such Confidential Information to any person, firm, corporation or entity,
(i) except as may reasonably be required in connection with the performance of
this Agreement by the Parties or their respective Affiliates, as the case may
be, and (ii) except to the Parties' lenders, financing sources, agents or
representatives who are informed by the Parties of the confidential nature of
the information and are bound to maintain its confidentiality, and (iii) in the
course of due diligence in connection with the sale of all or a portion of
either Party's business or the sale of either Party's ownership interests in
Armkel, provided the disclosure is pursuant to a written
18
nondisclosure agreement having terms comparable to Sections 9.2 and 9.3 hereof.
The provisions of this Section 9.2 shall survive the termination of this
Agreement.
9.3 Exceptions. The obligation not to disclose information under
----------
Section 9.2 shall not apply to information that, as of the Closing Date or
thereafter, (i) is or becomes generally available to the public other than as a
result of disclosure made by the Party desiring to treat such information as
nonconfidential or any of its Affiliates or representatives thereof, (ii) was or
becomes readily available to the Party desiring to treat such information as
nonconfidential or any of its Affiliates or representatives thereof on a
nonconfidential basis prior to its disclosure to such Party by the other Party,
or (iii) becomes available to the Party desiring to treat such information as
nonconfidential or any of its Affiliates or representatives thereof on a
nonconfidential basis from a source other than its own files or personnel or the
other Party or its Subsidiaries, provided, that such source is not known by the
Party desiring to treat such information as nonconfidential to be bound by
confidentiality agreements with the other party or its Affiliates or by legal,
fiduciary constraints on disclosure of such information, or (iv) is required to
be disclosed pursuant to a governmental order or decree or other legal
requirement (including the requirements of the U.S. Securities and Exchange
Commission and the listing rules of any applicable securities exchange),
provided, that the Party required to disclosure such information shall give the
other Party prompt notice thereof prior to such disclosure and, at the request
of the other Party, shall cooperate in all reasonable respects in maintaining
the confidentiality of such information, including obtaining a protective order
or other similar order. Nothing in this Section 9.3 shall limit in any respect
either Party's ability to disclose information in connection with the
enforcement by such Party of its rights under this Agreement.
9.4 License. Armkel hereby grants C&D a non-assignable,
-------
non-sublicenseable, royalty-free license to use Armkel's marks, trade dress,
logos, artwork, packaging and labeling and all related items and rights
("Marks") on Products supplied by C&D to Armkel hereunder. All Marks for the
-----
Products provided by Armkel shall remain the exclusive and sole property of
Armkel. C&D shall not utilize, for any purpose whatsoever, any Xxxx provided
hereunder in any manner inconsistent with the terms of this Agreement or any
other agreement between the parties. C&D further agrees that it will in no way
utilize the Marks in any other manner regarding C&D, unless Armkel's prior
written consent specifically referencing this Section 9.4 is obtained.
9.5 Independent Contractor. This Agreement shall not constitute or
----------------------
give rise to a partnership between the Parties. The operation of any equipment
or machinery or devices used by C&D and the employment of labor to process,
package, pack, code date, stencil, store, assemble and load the Products shall
be the sole responsibility of C&D. All activities by C&D under the terms of this
Agreement shall be carried on by C&D as an independent contractor and not as an
agent for or employee of Armkel and this Agreement shall not constitute or give
rise to an agency relationship between the parties except as otherwise expressly
contemplated hereby. Armkel shall not be liable for any injuries or personal or
real property damages incurred by C&D or its agents or employees in the
performance of their duties hereunder, as the case may be, unless caused by the
material breach by Armkel of the terms hereof. No employee of C&D shall be
deemed to be an employee of Armkel.
19
9.6 Conflict with Purchase Order Terms. In case of any conflict
----------------------------------
between the terms of this Agreement and the terms of any purchase orders,
acceptances, correspondence, memoranda, listing sheets or documents forming part
of any order or acceptance for the Products during the term of this Agreement,
the terms of this Agreement shall govern and prevail and conflicting and
additional terms and conditions of any such documents shall be deemed deleted
and shall not be binding upon the Parties.
9.7 Taxes. Armkel shall pay all sales, revenue, excise or other
-----
federal, state or local taxes payable with respect to any purchase or shipment
of the Products hereunder, excluding franchise, ad valorem, income taxes or
other similar taxes of C&D related to the operation of its business. In lieu of
sales taxes, Armkel may provide C&D with an appropriate sales tax exemption
certificate acceptable to the relevant taxing authority.
9.8 Modification or Amendment. Subject to the provisions of
-------------------------
applicable law, the parties hereto may only modify or amend this Agreement by
written agreement executed and delivered by duly authorized officers of Armkel
and C&D.
9.9 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
---------------------------------------------
(i) THIS AGREEMENT AND ANY DISPUTES, CLAIMS OR CONTROVERSIES ARISING
FROM OR RELATING TO THE AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. The Parties hereby irrevocably submit to the jurisdiction of
the courts of the State of New York and the Federal courts of the United States
of America located in the County of New York, New York solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the transactions
contemplated hereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the Parties irrevocably
agree that all claims with respect to such action or proceeding shall be heard
and determined in such a New York State or Federal court. The Parties hereby
consent to and grant any such court jurisdiction over the person of such Parties
and over the subject matter of such dispute and agree that mailing of process or
other papers in connection with any such action or proceeding in the manner
provided in Section 9.10 or in such other manner as may be permitted by law
shall be valid and sufficient service thereof.
(ii) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
20
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.9.
9.10 Notices. Any notice, request, instruction or other document to
-------
be given hereunder by any party to the others shall be in writing and shall be
deemed to have been delivered (i) on the date of service, if served personally,
(ii) upon confirmation of receipt, if transmitted by facsimile, electronic or
digital transmission method, (iii) on the first business day after sent, if sent
for next day delivery by recognized overnight delivery service and (iv) on the
third day after it is sent, if sent by first class mail. In each case, notice
shall have been sent to the Parties at the following addresses:
if to Armkel:
------------
Armkel, LLC
c/o Kelso & Company
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, XX, Esq.
Telecopy: (000) 000-0000
(with copies to:
Xxx Xxxxx
Xxxxxx X. Xxxxxx
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 212-735-2000)
if to C&D
---------
Church & Xxxxxx Co., Inc.
000 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
(with copies to
00
Xxxxxx Xxxxx, Xxx.
Xxxxxx, Xxxx & Xxxxxxxx LLP
0 Xxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 212-351-4035)
or to such other persons or addresses as may be designated in writing by the
Party to receive such notice as provided above.
9.11 Entire Agreement. This Agreement, including any schedules and
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exhibits hereto or thereto, constitute the entire agreement with respect to the
subject matter hereof, and supersedes all other prior agreements,
understandings, representations and warranties both written and oral, among the
Parties.
9.12 Severability. It is the intention of the Parties that the
------------
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. It is the intention of the
Parties that if any provision of this Agreement, or the application thereof to
any Person or any circumstance, is invalid or unenforceable, (i) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (ii) the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
9.13 No Third-Party Beneficiary Rights. This Agreement is not
---------------------------------
intended to confer upon any Person other than the Parties any rights or remedies
hereunder or in connection herewith.
9.14 Assignment. This Agreement and any rights and obligations
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hereunder shall not be assignable by either Party whether by operation of law or
otherwise, without the prior written consent of the other Party, and any
assignment made in contravention of this Section 9.14 shall be null and void;
provided, that a Party may assign any of its rights and
22
obligations hereunder in whole or in part, to an Affiliate of such Party without
consent of the other Party, provided such Affiliate agrees to be bound by this
Agreement; provided further, that any Affiliate of a Party may perform any
obligations due to be rendered by such Party to the other Party hereunder and
any Party may cause any obligation due to it by the other Party hereunder to be
rendered to its Affiliate, if in either of such cases, such substitution does
not change the nature of the obligations in any way or otherwise have any
adverse impact on the other Party; provided further, that if a Party's Affiliate
is performing any obligations on behalf of such Party, such Party shall continue
to be directly and primarily liable hereunder for the performance thereof.
9.15 Arbitration. The Parties shall endeavor to settle all disputes
-----------
by amicable negotiations. Except as otherwise provided herein, any claim,
dispute, disagreement or controversy that arises among the Parties relating to
this Agreement that is not amicably settled shall be resolved by arbitration.
Any such arbitration shall be heard in The City of New York, New York, before a
panel consisting of three (3) arbitrators, each of whom shall be impartial. Upon
the written Request for Arbitration of either Party to commence arbitration
hereunder, each Party shall choose one (1) arbitrator within fifteen (15) days
of the date of such request. The arbitrators chosen by each Party shall then
mutually choose one (1) additional arbitrator within fifteen (15) days after
both arbitrators have been chosen by the Parties. Except as the Parties may
otherwise agree, all arbitrators (if not selected by the Parties and arbitrators
within a total of thirty (30) days of a written Request for Arbitration) shall
be appointed pursuant to the commercial arbitration rules of the American
Arbitration Association. In determining the appropriate background of the
arbitrators, the appointing authority shall give due consideration to the issues
to be resolved, but his or her decision as to the identity of the arbitrator(s)
shall be final. An arbitration may be commenced by either Party by the service
of a written Request for Arbitration upon the other. Such Request for
Arbitration shall summarize the controversy or claim to be arbitrated. All
attorneys' fees and costs of the arbitration shall in the first instance be
borne by the respective Party incurring such costs and fees but the arbitrators
shall have the discretion to award costs and/or attorney's fees as they deem
appropriate under the circumstances. The Parties hereby expressly waive punitive
damages, and under no circumstances shall an award contain any amount that in
any way reflects punitive damages. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. It is
intended that controversies or claims submitted to arbitration under this
Section 9.15 shall remain confidential, and to that end it is agreed by the
Parties that neither the facts disclosed in the arbitration, the issues
arbitrated, nor the views or opinions of any Persons concerning them, shall be
disclosed to third Persons at any time, except to the extent necessary to
enforce an award or judgment or as required by law or in response to legal
process or in connection with such arbitration. Any arbitration under this
Section 9.15 shall be conducted pursuant to the commercial arbitration rules of
the American Arbitration Association. All decisions by the panel of arbitrators
shall be final, binding and nonappealable.
9.16 Headings/Construction. Section headings contained in this
---------------------
Agreement are for convenient reference only, and shall not in any way affect the
meaning or interpretation of this Agreement. The language used in this Agreement
will be deemed the language chosen by the Parties to express their mutual
intent, and no rule of strict construction will be applied against any Person.
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9.17 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.18 Determinations by Armkel. For purposes of this Agreement,
------------------------
determinations to be made by Armkel hereunder shall be made solely as directed
by the Kelso Member or, in the event of a sale to a third party of all of the
Xxxxx Member's ownership interests in Armkel pursuant to Section 10.3 of the LLC
Agreement, such third party transferee, in each case, acting in good faith on
behalf of Armkel and its members.
24
IN WITNESS WHEREOF, the Parties hereby have caused this
Agreement to be executed by their proper officers, duly authorized to do so, as
of the date first written above.
ARMKEL, LLC
By:_________________________________
Name:
Title:
CHURCH & XXXXXX CO., INC.
By:_________________________________
Name:
Title:
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SCHEDULE A
Services; Fees and Costs/1/
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Services Costs
Manufacturing of Nair Product Line
----------------------------------
Direct Labor Actual Costs
Manufacturing Overheads (includes quality
control, maintenance and maintenance supplies,
utilities, general plant supervision, property
taxes and insurance; excludes depreciation) $500,000/2/ per year
Operations $300,000/2/ per year
Distribution for all domestic Armkel products
---------------------------------------------
Storage & Handling, Freight Actual Cost
Warehousing, Labor and Overheads Contract Basis/3/
Raw and Packaging Materials Actual Cost
Returned Goods Processing Contract Basis/3/
NOTES:
1 All fees and costs are based on customary manufacturing and distribution
activities similar to those in effect as of the date of this Agreement with
respect to the Products and do not include any extraordinary activities or
activities significantly different from those in effect as of such date.
2 Subject to adjustment as provided under Article V of this Agreement.
3 On a contract basis as requested by Armkel, based on time records, space
utilization or similar basis.
EXHIBIT A
Equipment
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Any equipment and tangible personal property located at the Facility
that constitutes a Purchased Asset under the Asset Purchase Agreement, and that
are used in the manufacture of the Products.
EXHIBIT B
Products
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See Attached for Nair(TM) Product Line by SKU
