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EXHIBIT 10.7
EXECUTION COPY
TRANSITIONAL SERVICES AGREEMENT
This TRANSITIONAL SERVICES AGREEMENT (this "Agreement") is
made as of January 28, 1999, by and between HERSHEY FOODS CORPORATION, a
Delaware corporation ("HFC"), and NEW WORLD PASTA COMPANY, a Delaware
corporation ("NWPC");
W I T N E S S E T H:
WHEREAS, pursuant to that certain Recapitalization Agreement,
dated as of December 15, 1998, by and among HFC, NWPC, Hershey CRE, Inc., New
World Pasta, LLC and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ Fund III, L.P. (the
"Recapitalization Agreement"), the parties agreed to recapitalize NWPC following
the contribution of the Assets to NWPC and the assumption of the Assumed
Liabilities by NWPC (each term as defined in the Recapitalization Agreement);
and
WHEREAS, in connection therewith, NWPC and HFC each desire
that HFC provide NWPC with certain transition services as set forth herein; and
WHEREAS, in connection therewith, NWPC and HFC each desire
that NWPC provide HFC with certain transition services as set forth herein; and
WHEREAS, capitalized terms used herein and not otherwise
defined herein have the meanings given to such terms in the Recapitalization
Agreement;
NOW, THEREFORE, in consideration of the premises and covenants
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, HFC and NWPC agree as follows:
1. Transition Services. During the term of this Agreement as
set forth in Section 5 below (the "Transition Period"), HFC shall provide, or
cause its Affiliates to provide, to NWPC from the date of this Agreement and for
the period of time described on Annex A attached hereto with respect to each of
the services, the services set forth on such Annex A, in the manner and at a
relative level of service consistent in all material respects with that provided
by HFC or its Affiliates to or for the benefit of the Business immediately prior
to the date hereof. Such services shall be provided at the costs set forth in
Annex A. In addition, NWPC shall also pay the prorated equitable portion
reasonably determined by HFC of any amounts that are required to be paid to any
licensors of software that is used in connection with the provision of any
service hereunder that HFC identifies as being payable following the date hereof
and that are not reflected in the payments to be made to HFC pursuant to Annex A
or that any such licensor requires HFC to pay following the date hereof, and any
amounts that are required to be paid to any such licensors to obtain the consent
of such licensor to provide any of the services hereunder. Subject to the
immediately preceding sentence, HFC shall use reasonable efforts to obtain any
consents that may be required from any such licensor in order to provide any of
the services hereunder. During the term of this Agreement,
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NWPC shall provide to HFC the transition services regarding crisped rice on the
terms and conditions as set forth in Item 9 of Annex A.
2. Billing and Payment. NWPC shall promptly pay (a) in advance
the facilities rental amounts set forth in Section 1 of Annex A on a monthly
basis and (b) all bills and invoices that it receives from HFC or its Affiliates
for the other services provided under or pursuant to this Agreement. The amounts
referenced in clause (a) above shall be paid prior to the commencement of the
particular month. The charges referenced in clause (b) above will be billed by
HFC to NWPC at the end of each calendar month during the Transition Period. HFC
shall promptly pay all bills and invoices that it receives from NWPC or its
Affiliates for the services provided under or pursuant to Item 9 of Annex A. All
such invoices shall be paid not later than ten (10) days following receipt by
NWPC of HFC's invoice or HFC of NWPC's invoice, as applicable. All payments will
be made by wire transfer or by check in accordance with the instructions
provided by the receiving party (in writing to the other party).
3. General Intent. Each Party shall use its reasonable
commercial efforts to provide the transition services it is to provide that are
set forth on Annex A attached hereto and such other transition assistance as the
parties may otherwise agree for the periods specified on Annex A (with respect
to such additional services, at a cost and for such period as is mutually
agreed). NWPC agrees to use its reasonable commercial efforts to end its need to
use such assistance as soon as reasonably possible and (unless the parties
otherwise agree) in all events to end such need with respect to each service
specified in Annex A attached hereto not later than six (6) months from the date
hereof, or such shorter period as may be specified in Annex A attached hereto
for the provision of each such service.
4. Validity of Documents. The parties hereto shall be entitled
to rely upon the genuineness, validity or truthfulness of any document,
instrument or other writing presented in connection with this Agreement unless
such document, instrument or other writing appears on its face to be fraudulent,
false or forged.
5. Term of Agreement. The term of this Agreement shall
commence on the date hereof and shall continue (unless sooner terminated
pursuant to the terms hereof) for a period of six (6) months, or such shorter
period as may be provided in Annex A attached hereto with respect to particular
services described in Annex A attached hereto.
6. Partial Termination. The provision of one or more of the
services provided by HFC and/or its Affiliates hereunder or by NWPC and/or its
Affiliates hereunder may be terminated earlier than the period specified in
Annex A attached hereto and certain services specifically identified on such
schedule as being subject to extension may be extended by NWPC, in any such
case, on not less than twenty (20) days' prior written notice to the party
providing such services. As soon as reasonably practicable following receipt of
any such notice, HFC shall advise NWPC as to whether termination or extension of
such service will require the termination or partial termination or extension or
partial extension of, or otherwise affect the provision of, certain other
services specified in Annex A attached hereto. If such is the case, NWPC may
withdraw its termination or extension notice. Otherwise, such termination or
extension shall be final as of such twentieth day or other later date specified
in the applicable notices.
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7. Inventions. Any inventions, discoveries, improvements, or
developments ("Inventions"), whether or not patentable, relating to the services
to be provided hereunder which are conceived or reduced to practice by HFC's
personnel during the Transition Period, shall be the sole and exclusive property
of HFC; provided, however, that HFC shall grant NWPC a nonexclusive, perpetual,
irrevocable, worldwide, royalty-free right and license to make, have made, use,
have used and sell products in connection with the Business which embody or
otherwise use such Inventions.
8. Assignment. Except as set forth below, this Agreement and
any rights and obligations hereunder shall not be assignable or transferable by
NWPC or HFC (including by operation of law in connection with a merger or sale
of stock, or sale of substantially all the assets, of NWPC without the prior
written consent of the other party and any purported assignment without such
consent shall be void and without effect; provided, however, that without the
consent of HFC, NWPC may assign its rights hereunder (i) to one or more
wholly-owned subsidiaries of NWPC and (ii) but not its obligations hereunder, as
collateral under a security interest in favor of the Lenders under the
Commitment Letters or any other financing source of NWPC, upon written notice of
such assignment to HFC.
9. Confidentiality. Each party shall cause each of its
Affiliates and each of their officers, directors and employees to hold all
information relating to the business of the other party disclosed to it by
reason of this Agreement confidential and will not disclose any of such
information to any party unless legally compelled to disclose such information;
provided, however, that to the extent that any of them may become so legally
compelled they may only disclose such information if they shall first have used
reasonable efforts, and, if practicable, shall have afforded the other party the
opportunity, to obtain an appropriate protective order or other satisfactory
assurance of confidential treatment for the information required to be so
disclosed.
10. Limitation of Liability. HFC shall not be liable to NWPC
or any third party (including specifically employees of NWPC) and NWPC shall not
be liable to HFC or any third party (including specifically employees of HFC)
for any special, punitive, consequential, incidental or exemplary damages
(including lost or anticipated revenues or profits relating to the same) arising
from any claim relating to this Agreement or any of the services provided
hereunder, whether such claim is based on warranty, contract, tort (including
negligence or strict liability) or otherwise, even if an authorized
representative of HFC or NWPC, as applicable, is advised of the possibility or
likelihood of the same. In addition, HFC shall not be liable to NWPC or any
third party (including specifically employees of NWPC) and NWPC shall not be
liable to HFC or any third party (including specifically employees of HFC) for
any direct damages arising from any claim relating to this Agreement or any of
the services provided hereunder or required to be provided hereunder, except to
the extent that such direct damages are caused by the willful misconduct or
gross negligence of HFC or its Affiliates or NWPC or its Affiliates, as
applicable.
11. Notices. All notices, reports and receipts shall be in
writing and shall be deemed duly given on (i) the date of personal or courier
delivery; (ii) the date of transmission by telecopy or other electronic
transmission service, provided a confirmation copy is also sent no later than
the next business day by postage paid, return receipt requested first-class
mail; or (iii) three (3) business days after the date of deposit in the United
States mails, by postage paid, return receipt requested first-class mail,
addressed as follows:
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(i) if to NWPC,
New World Pasta Company
c/o Hershey Foods Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
(ii) if to HFC,
Hershey Foods Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, P.C.
Either party may change its address by written notice to the
other party in accordance with this Section 11.
12. Modification; Nonwaiver. No alleged waiver, modification
or amendment to this Agreement or to Annex A attached hereto shall be effective
against either party hereto, unless in writing, signed by the party against
which such waiver, modification or amendment is asserted, and referring
specifically to the provision hereof alleged to be waived, modified or amended.
The failure or delay of either party to insist upon the other party's strict
performance of the provisions in this Agreement or to exercise in any respect
any right, power, privilege or remedy provided for under this Agreement shall
not operate as a waiver or relinquishment thereof, nor shall any single or
partial exercise of any right, power, privilege or remedy preclude other or
further exercise thereof,
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or the exercise of any other right, power, privilege or remedy; provided,
however, that the obligations and duties of either party with respect to the
performance of any term or condition in this Agreement shall continue in full
force and effect.
13. Relationship of Parties. Except as specifically provided
herein, none of the parties shall act or represent or hold itself out as having
authority to act as an agent or partner of the other parties, or in any way bind
or commit the other party to any obligations. Nothing contained in this
Agreement shall be construed as creating a partnership, joint venture, agency,
trust or other association of any kind, each party being individually
responsible only for its obligations as set forth in this Agreement.
14. Force Majeure. If HFC or NWPC, as applicable, is prevented
from complying, either totally or in part, with any of the terms or provisions
of this Agreement by reason of fire, flood, storm, strike, lockout or other
labor trouble, any law, order, proclamation, regulation, ordinance, demand or
requirement of any governmental authority, riot, war, rebellion or other causes
beyond the reasonable control of HFC or NWPC, as applicable, or other acts of
God, then upon written notice to NWPC or HFC, as applicable, the affected
provisions and/or other requirements of this Agreement shall be suspended during
the period of such disability and HFC shall have no liability to NWPC or HFC, as
applicable, or any other party in connection therewith. HFC shall make all
commercially reasonable efforts to remove such disability within thirty (30)
days of giving notice of such disability.
15. Interpretation. The headings and captions contained in
this Agreement and in Annex A attached hereto are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
The use of the word "including" herein shall mean "including without
limitation."
16. Counterparts. This Agreement may be executed in one or
more counterparts (including by means of telecopied signature pages), all of
which shall be considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of the parties and
delivered to the other party.
17. Entire Agreement. This Agreement and the Recapitalization
Agreement contain the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, whether written or oral, relating to such subject
matter.
18. Representation by Counsel; Interpretation. HFC and NWPC
acknowledge that each of them has been represented by counsel in connection with
this Agreement and the transactions contemplated hereby. Accordingly, any rule
of law or any legal decision that would require interpretation of any claimed
ambiguities in this Agreement against the party that drafted it has no
application and is expressly waived.
19. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid and effective under
applicable law, but if any provision of this Agreement or the application of any
such provision to any Person or circumstance shall be held
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invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
20. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Pennsylvania, without regard to the conflicts of law principles therein. Any
dispute arising from or in connection with this Agreement shall be subject to
the provisions of Sections 31 and 32 of the Recapitalization Agreement.
21. Annex A. Annex A attached hereto and referred to herein is
hereby incorporated in and made a part of this Agreement as if set forth in full
herein.
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IN WITNESS WHEREOF, the parties have caused this Transitional
Services Agreement to be executed by their duly authorized representatives as of
the date and year first set forth above.
HERSHEY FOODS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
NEW WORLD PASTA COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President and Assistant Secretary
