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EXHIBIT 10.6
TRANSITION SERVICES - SUPPLY AGREEMENT
BETWEEN
CHEX INC.
AND
NEW RALCORP HOLDINGS, INC.
FOR
"CHEX" AND "COOKIE CRISP" CEREALS
2
TABLE OF CONTENTS
TRANSITION SERVICES - SUPPLY AGREEMENT
PART I SUPPLY AGREEMENT
SECTION 1 DEFINITIONS 1
SECTION 2 TERM 3
SECTION 3 PERFORMANCE 3
SECTION 4 PRODUCTION SYSTEM 4
SECTION 5 MATERIALS 4
SECTION 6 SAMPLING AND TESTING 4
SECTION 7 STORAGE 5
SECTION 8 REJECTION 5
SECTION 9 INSPECTION 6
SECTION 10 SUPPLY; QUANTITIES 7
SECTION 11 PAYMENT 8
SECTION 12 WARRANTIES AND COVENANTS 10
SECTION 13 INSURANCE 11
SECTION 14 INDEMNIFICATION 12
SECTION 15 CONFIDENTIAL INFORMATION 14
SECTION 16 INTELLECTUAL PROPERTY 15
SECTION 17 BREACH 15
SECTION 18 TERMINATION 16
SECTION 19 BRANDED SUBSIDIARY PRICING 16
SECTION 20 RIGHTS RESERVED TO BRANDED SUBSIDIARY 17
SECTION 21 ASSIGNMENT 17
SECTION 22 INTERPRETATIONS 17
SECTION 23 DISCRIMINATION 00
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0
XXXXX XX XXXXXXXX (XXXX.)
TRANSITION SERVICES - SUPPLY AGREEMENT
SECTION 24 ENTIRE AGREEMENT 17
SECTION 25 FORCE MAJEURE 18
SECTION 26 GOVERNING LAW 18
SECTION 27 INDEPENDENT CONTRACTOR 18
SECTION 28 NOTICE 18
SECTION 29 REGULATORY NOTICE 19
SECTION 30 SUCCESSORS AND ASSIGNS 19
SECTION 31 WAIVER 19
SECTION 32 AUTHORIZATION; VALIDITY 20
PART II TRANSITION SERVICES 18
SCHEDULE(S)
SCHEDULE - 1 22
SCHEDULE - 2 26
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TRANSITION SERVICES - SUPPLY AGREEMENT
This Transition Services - Supply Agreement ("Agreement"), dated as of
January 31, 1997, is between CHEX INC., a Delaware corporation ("Branded
Subsidiary"), and NEW RALCORP HOLDINGS, INC., a Missouri corporation
("Supplier") on behalf of itself, its subsidiaries and Affiliates.
WHEREAS, Branded Subsidiary and Supplier possess certain Technical
Information for the manufacture of ready-to-eat (RTE) cereals; and,
WHEREAS, Branded Subsidiary wishes Supplier to produce certain of such
products on behalf of Branded Subsidiary and to provide certain other
transition services to Branded Subsidiary; and
WHEREAS, Supplier is willing to produce those products and provide
those other transition services specified herein.
In consideration of the mutual agreements, promises and covenants
herein contained, the parties hereby agree as follows:
PART I.
SUPPLY AGREEMENT
SECTION 1 DEFINITIONS
A. "FDCA" shall mean the Federal Food, Drug and Cosmetic Act,
including its amendments and regulations.
B. "Laws" shall mean the FDCA and all applicable state and
municipal statutes, rules and regulations substantially
similar to the FDCA.
C. "Nonconforming Products" shall mean Products which do not
comply with the FDCA, other Laws or the Specifications
referred to below.
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D. "Plant" shall mean, for the production of rice-based cereal
packaged using the "CHEX" trademark (i.e. Rice Chex),
Supplier's Battle Creek, Michigan cereal plant, up to its
capacity as defined in Schedule 1; and for cereal packaged
using the "COOKIE CRISP" trademark, Supplier's Lancaster, Ohio
cereal plant, up to its capacity as defined in Schedule 1; and
Supplier's Sparks, Nevada cereal plant, to the extent Supplier
deems reasonably necessary to utilize such plant for
production of Cookie Crisp cereal in lieu of the Lancaster,
Ohio plant.
E. "Product(s)" shall mean Products Of The Type which have been
offered for sale in connection with any form of any CHEX or
COOKIE CRISP trademarks.
F. "Technical Information" shall mean all formulae, information
concerning manufacturing processes and know-how, quality
control data, test data and all other scientific and/or
technical data and information ("data") relating to the
development, manufacture, distribution, sale, or use of the
Products and all proprietary rights embodied therein and
related thereto which is licensed by Branded Subsidiary or its
Affiliates to Supplier or its Affiliates, or provided to
Supplier by Branded Subsidiary or which may hereafter be
developed by Branded Subsidiary and provided to Supplier by
Branded Subsidiary, whether provided in oral, written or other
form including, but not limited to, any patent or patent
application, formulation, software, product and packaging
specifications, trade secrets and know-how.
G. "Specifications" shall mean the formulas and specifications
for the Products and their production, processing and
packaging, which shall reflect the actual operating conditions
and practices of Supplier as of the date of this Agreement and
as such may be amended from time to time upon reasonable
advance written notice by Branded Subsidiary, and other
information relating to quality control, processing, packaging
and administrative procedures as the parties shall mutually
agree upon prior to Closing (the "Other Information"). The
parties shall set forth the terms of the Other Information as
an Exhibit hereto (the "Other Information Exhibit"). The
Other Information Exhibit shall be made a part hereof, and may
be amended from time to time by written agreement of the
parties.
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H. The term "Products Of The Type" shall mean the identical
products and all products substantially similar in form or in
overall appearance to such products, whether or not they are
similar in flavor or are used in association with other
ingredients (e.g. raisins).
I. All other capitalized terms used but not otherwise defined
herein shall have the meanings ascribed thereto in the
Reorganization Agreement (the "Reorganization Agreement")
dated as of the date hereof, by and among Supplier, Branded
Subsidiary, Xxxxxxx Foods, Inc. ("Foods"), General Xxxxx, Inc.
("General Xxxxx"), General Xxxxx Missouri, Inc. ("General
Xxxxx Missouri") and Ralcorp Holdings, Inc. ("Ralcorp").
SECTION 2 TERM
This Agreement shall commence immediately after the Closing Date (the
"Closing Date") of the Agreement and Plan of Merger by and among
Ralcorp, General Xxxxx and General Xxxxx Missouri, dated as of August
13, 1996 (as amended, the "Merger Agreement").
This agreement shall expire, with respect to COOKIE CRISP, eighteen
months after the Closing Date; provided that Branded Subsidiary may
extend this Agreement, with respect to COOKIE CRISP, for a second term
not to exceed six (6) months, by notice given not less than sixty (60)
days prior to the expiration of such initial term.
This Agreement shall expire, with respect to RICE CHEX, eighteen
months after the Closing Date.
SECTION 3 PERFORMANCE
A. General Understanding. Supplier agrees to use reasonable
efforts to produce the Products in accordance with the
provisions of this Agreement.
B. Performance. Supplier's performance hereunder, including its
production, packaging and labeling of Products, and handling
and storing ingredients and packaging materials, including
stretch wrap, if any, to be used in connection with Products
produced on Branded Subsidiary's behalf ("Materials"), shall
be in accordance with the terms of this Agreement, including,
without limitation, the Specifications. Branded Subsidiary
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reserves the right at any time to modify, delete or add to the
Specifications provided that Branded Subsidiary allows
Supplier reasonable time in each instance to implement any
changes necessitated by such revisions in the Specifications
so that Product(s) will remain in compliance with such
Specifications. If any such modification(s) as approved by
Supplier result(s) in additional costs to Supplier, Supplier
shall be entitled to a cost increase equal to the reasonable
additional costs resulting therefrom in accordance with
Section 11 hereof. Such costs may include the costs of
disposing of Nonconforming Product if Supplier determines, in
its reasonable discretion, that it will be unable, exercising
reasonable efforts, to consistently meet such revised
Specifications, and notifies Branded Subsidiary accordingly.
All Exhibits and Schedules attached hereto or referred to
herein are incorporated by reference herein and form part of
this Agreement.
SECTION 4 PRODUCTION SYSTEM
Supplier's Equipment. Supplier shall provide all equipment and
personnel necessary to produce, package and ship Products in
accordance with the terms hereof without any additional costs to
Branded Subsidiary beyond those incorporated into the respective
Product prices and/or rates as described in Section 11A.
SECTION 5 MATERIALS
Securing Materials and loss of yield shall be in accordance with
Schedule 1 attached hereto.
SECTION 6 SAMPLING AND TESTING
A. Materials. Supplier shall inspect, sample, analyze and test
all Materials received by Supplier to be used to produce or
package Products in accordance with the Specifications. Any
Materials which do not comply with the requirements of the
Specifications shall not be used by Supplier for any reason in
connection with the Products, and Supplier shall immediately
notify Branded Subsidiary of all such nonconforming
Material(s) when such Material(s) were supplied by Branded
Subsidiary or purchased on Supplier's behalf by Branded
Subsidiary. The parties shall provide Materials in accordance
with the terms set forth in Schedule 1.
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B. Products. Supplier shall sample and test the Products in
accordance with the Specifications. Supplier shall also
segregate for testing by Branded Subsidiary such quantities of
packaged Products and Materials as Branded Subsidiary may from
time to time reasonably request and Supplier shall, at Branded
Subsidiary's expense, ship such packages and Materials to such
destinations as specified by Branded Subsidiary.
C. Protection. Supplier shall exercise reasonable care in
handling, storing and protecting the Products and Materials
intended for use in the Products.
SECTION 7 STORAGE
Supplier shall provide suitable Branded Subsidiary approved storage
and warehousing space ("space") in accordance with Schedule 1.
SECTION 8 REJECTION
A. Supplier shall not knowingly ship any Nonconforming Products
to Branded Subsidiary.
B. Nothing contained in this Agreement shall be deemed to
obligate Branded Subsidiary to inspect any products purchased
hereunder.
C. Without limiting any other rights available to Branded
Subsidiary with respect to Nonconforming Products which are in
violation of any Laws, unless otherwise agreed by the parties,
in the event that Supplier produces any Nonconforming
Products, Supplier shall promptly replace such Products at no
cost to Branded Subsidiary (including any additional freight
costs incurred), except to the extent such nonconformance was
as the result of Branded Subsidiary's actions, including but
not limited to if such nonconformance was attributable to
Materials supplied by Branded Subsidiary or purchased on
Supplier's behalf by Branded Subsidiary. Replacement of
Nonconforming Products by Supplier at no cost to Branded
Subsidiary shall be Branded Subsidiary's sole remedy with
respect to Nonconforming Products which are not in violation
of any Laws.
D. Nonconforming Products still within Supplier's possession
shall be destroyed or disposed of pursuant to instructions
provided by Branded Subsidiary. Such disposal shall be at the
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expense of Supplier, except to the extent such nonconformance
was as the result of Branded Subsidiary's actions, including
but not limited to if such nonconformance was attributable to
Materials supplied by Branded Subsidiary or purchased on
Supplier's behalf by Branded Subsidiary. In no event shall
Supplier sell, distribute or ship any Nonconforming Products
in violation of Branded Subsidiary's instructions.
Notwithstanding the above, Supplier may, subject to Branded
Subsidiary's consent, donate such Products provided they are
removed from the normal retail packaging prior to ultimate
distribution.
E. Supplier shall code the Products in accordance with the
Specifications.
SECTION 9 INSPECTION
A. Records. Supplier shall maintain, at the Plant, true,
accurate and complete records in respect of Products
production, packaging, storage, sampling, testing and shipment
hereunder ("Records") in accordance with Supplier's Record
Retention Policy, a copy of which will be provided to Branded
Subsidiary. Upon written notice to Supplier from Branded
Subsidiary, Supplier shall permit Branded Subsidiary to (i)
inspect the Records at the Plant and at mutually convenient
times and locations, and (ii) take inventory of Materials and
finished Products produced by Supplier for Branded Subsidiary.
B. Inventories. Supplier shall provide Branded Subsidiary access
to Supplier's reports related to Supplier's inventory of
Products and Materials in accordance with the Specifications.
C. Plant. During the period(s) Supplier is performing any of its
services hereunder and upon reasonable advance notice, Branded
Subsidiary may inspect, at Branded Subsidiary's cost, areas of
the Plant where Materials or Products are handled, processed,
sampled, tested, packaged or stored hereunder for the purposes
of inspecting the Plant and its facilities, and the Products,
Materials and procedures followed by Supplier; provided,
however, that Supplier shall have the right to accompany
Branded Subsidiary on any such inspections; and provided,
further that such inspection(s) shall not relieve Supplier of
any of its obligations hereunder. Supplier shall, in good
faith, explore the possibility and feasibility of changing its
procedure(s) whenever such changes are determined by
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Branded Subsidiary as necessary or desirable in order to
correct and/or improve the Products, the conditions of
processing and packaging and the procedures followed
hereunder. Supplier has the right to restrict access to any
location, material or equipment that is proprietary to
Supplier's continued production of other products; provided,
however, that such restrictions shall not prevent Branded
Subsidiary's representatives from having access to the areas
of the Plant where Materials or Products are handled,
processed, packaged or stored hereunder, for the purposes of
inspecting the Plant and its facilities, and the Products,
Materials and procedures followed by Supplier.
D. Immediate Notice. Supplier shall immediately notify Branded
Subsidiary of any sanitation audits, the results of which
indicate the presence of any food pathogens in the Plant or
possible adulteration of the Products.
SECTION 10 SUPPLY; QUANTITIES
A. To ensure that Branded Subsidiary shall have sufficient
Products during the first 18 months of the transition
following the above referred to Merger (and an additional 6
months with respect to COOKIE CRISP in the event that Branded
Subsidiary renews this Agreement in accordance with Section
2), Branded Subsidiary shall have the sole and exclusive right
to Supplier's and its subsidiaries' and Affiliates' available
capacity and rights to make Products, at all of their plants
and facilities, during the term hereof (i) up to 8,400 cwt. a
month of RICE CHEX and 10,000 cwt. a month for COOKIE CRISP,
and (ii) beyond these levels, other than as reasonably
necessary to meet Supplier's requirements for CHEX-type ready
to eat cereal Products to be sold by Supplier under Private
Label Trademarks and Supplier's obligations under its
Exclusive Distribution Agreement with Xxxxxxx Purina Company,
dated April 1, 1994 (the "RP Agreement"), with any demands
exceeding Supplier's ability to supply allocated
proportionally between Branded Subsidiary and Xxxxxxx Purina
Company, based upon total quantities ordered after Supplier
first meets Branded Subsidiary's monthly requirements for RICE
CHEX up to 8,400 cwt. a month and for COOKIE CRISP up to
10,000 cwt. a month and Supplier's requirements for CHEX-type
ready to eat cereal Products (after Supplier has first met
Branded Subsidiary's monthly requirements, up to 8,400 cwt. a
month); provided, however, that any production of Products for
Supplier or Xxxxxxx Purina Company pursuant to such agreement
shall not include the use of any of the CHEX or
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COOKIE CRISP trademarks or any other trademarks or trade dress
owned by Branded Subsidiary or its Affiliates except as
otherwise agreed in writing by Branded Subsidiary. Further,
it is understood and acknowledged that the calculation of
available capacity for RICE CHEX production has taken into
account Supplier's anticipated capacity requirements for its
store brand hexagon shaped biscuit product sold under several
names, including Crispy Hexagons, among others, and, in any
event, Supplier's obligation to supply Branded Subsidiary
hereunder shall not exceed Supplier's capacity as set forth in
Schedule 1. Branded Subsidiary may order and Supplier shall
produce for Branded Subsidiary Products ordered in accordance
with firm orders as set out in Schedule 1. Branded Subsidiary
agrees that it will order a minimum of 90,000 cwt. of Cookie
Crisp cereal during the term, and a minimum of 2,000 cwt. in
any given month during the COOKIE CRISP Commitment Period (as
defined in Schedule 1C). Branded Subsidiary agrees that in
any month during the term in which Branded Subsidiary orders
Rice Chex cereal, Branded Subsidiary will order a minimum of
6,000 cwt. of Rice Chex cereal in such month.
B. Except for such production of Products (which shall not
include the use of the CHEX or COOKIE CRISP trademarks or
other trademarks and trade dress of Branded Subsidiary or its
Affiliates), if any as may be necessary, as set forth above,
for Supplier for CHEX-type ready-to-eat cereal Products sold
under Private Label Trademarks and for Xxxxxxx Purina Company
under the RP Agreement, during the term Supplier shall produce
Products solely and exclusively for Branded Subsidiary.
SECTION 11 PAYMENT
A. Product Price. Subject to the provisions of Sections 3B and
11B, Branded Subsidiary shall pay Supplier an amount equal to
$37.09 per cwt. of COOKIE CRISP for the period beginning at
the commencement of the term of this Agreement and ending on
September 30, 1997, $38.28 per cwt. of COOKIE CRISP for the
period beginning on October 1, 1997 and ending on September
30, 1998, and $39.50 per cwt. of COOKIE CRISP thereafter, for
Supplier's manufacturing variable costs, warehouse variable
costs, fixed manufacturing and fixed warehouse costs for
COOKIE CRISP produced and packaged in accordance with this
Agreement. Branded Subsidiary shall pay Supplier an amount
equal to actual costs for all Materials provided by Supplier
in connection with COOKIE CRISP
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produced and packaged in accordance with this Agreement,
subject to yield losses set forth in Schedule 1E.
Subject to the provisions of Sections 3B and 11B, Branded
Subsidiary shall pay Supplier an amount equal to $38.64 per
cwt. of RICE CHEX for the period beginning at the commencement
of the term of this Agreement and ending on September 30, 1997
and $39.94 per cwt. of RICE CHEX for the remainder of the term
of this Agreement, for Supplier's manufacturing variable
costs, warehouse variable costs, fixed manufacturing and fixed
warehouse costs (excluding depreciation costs with respect to
Building 3 of Supplier's Plant location at Battle Creek,
Michigan and the equipment utilized therein) for RICE CHEX
produced and packaged in accordance with this Agreement.
Branded Subsidiary shall pay Supplier an amount equal to
actual costs for all Materials provided by Supplier in
connection with RICE CHEX produced and packaged in accordance
with this Agreement, subject to yield losses set forth in
Schedule 1E.
In addition, Branded Subsidiary shall pay Supplier an amount
(the "Commitment Amount") equal to $85,500 for each month in
the RICE CHEX Commitment Period, as such term is defined in
Schedule 1C. The Commitment Amount for any month in the RICE
CHEX Commitment Period shall be reduced by an amount which
bears the same ratio to $85,500 as the Supplier Weight (as
defined below) for such month bears to the Aggregate Weight
(as defined below) for such month.
The term "Supplier Weight" means, for any month in
the RICE CHEX Commitment Period, the total weight of
all products produced by Supplier in Building 3 of
Supplier's Plant location at Battle Creek, Michigan,
other than such Products produced by Supplier for
Branded Subsidiary, alone in accordance with the
terms of this Agreement.
The term "Aggregate Weight" means, for any month in
the RICE CHEX Commitment Period, the total weight of
all products produced by Supplier in Building 3 of
Supplier's Plant location at Battle Creek, Michigan.
For each month in the Subsequent Period (as defined below) that
Supplier utilizes Building 3 of Supplier's Plant location at Battle
Creek, Michigan, Supplier shall pay to
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Branded Subsidiary an amount equal to 50 percent of the quotient of
(x) the sum of the Commitment Amounts for each Non-use Month (as
defined below), divided by (y) the aggregate number of Non-use Months.
The term "Subsequent Period" means the period of consecutive
months equal in number to the aggregate number of Non-use
Months, commencing upon the termination of the RICE CHEX
Commitment Period.
The term "Non-use Month" means any month in the RICE CHEX
Commitment Period during which Building 3 of Supplier's Plant
location at Battle Creek, Michigan is not utilized for the
production of RICE CHEX for Branded Subsidiary in accordance
with this Agreement.
Product will be shipped F.O.B. Plant. Supplier will invoice
Branded Subsidiary monthly for all production. Payment terms
will be net 11 days.
Yield losses will be addressed as identified in Schedule 1E.
B. Cost Savings. The parties agree to cooperate throughout the
term of this Agreement to identify methods of reducing the
cost of the Products and shall meet periodically to discuss
cost savings plans.
SECTION 12 WARRANTIES AND COVENANTS
A. Supplier represents, warrants and covenants that:
1. Except to the extent arising out of the actions of
Branded Subsidiary or from Materials provided by
Branded Subsidiary or purchased on Supplier's behalf by
Branded Subsidiary, Supplier's performance hereunder
shall be in accordance with all the terms of this
Agreement, including the Specifications, and be free of
defects in workmanship and materials, except for
defects arising from conformity with the applicable
Specifications to the extent such Specifications were
modified per Branded Subsidiary's request;
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2. Supplier shall not cause any of the Products
processed, packaged, stored, labeled and shipped
hereunder to be adulterated or misbranded, within the
meaning of Laws, or to be products which may not, under
any of the provisions thereof, be introduced into
interstate commerce, and the Products shall comply with
all Laws;
3. Supplier's performance hereunder, including, without
limitation, the maintenance of the Plant, shall at all
times be in compliance with all Laws.
B. Branded Subsidiary's sampling Products and/or approving it for
shipment shall neither relieve Supplier of its warranties
hereunder nor be construed as a waiver of any of Supplier's
obligations hereunder.
C. Branded Subsidiary represents and warrants that compliance
with the Specifications of this Agreement, to the extent
modified per Branded Subsidiary's request, shall not cause any
of the Products processed, packed and labeled hereunder to be
adulterated or misbranded, within the meaning of the FDCA, or
to be products which may not, under any of the provisions
thereof, be introduced into interstate commerce.
SECTION 13 INSURANCE
On or before execution of this Agreement, Supplier shall
obtain:
A. Product liability insurance on an occurrence basis with
issuers acceptable to Branded Subsidiary. The product
liability insurance to be maintained shall provide coverage of
Two Million Dollars ($2,000,000) per occurrence, with a Five
Million Dollars ($5,000,000) annual aggregate;
B. Public liability insurance, including contractual liability
with limits of not less than Two Million Dollars ($2,000,000);
C. Worker's compensation insurance in accordance with the Laws
where the Plant is located on all employees engaged in any way
in the work pursuant to this Agreement; and
D. Broad form vendor's liability coverage.
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Each such policy shall provide that it may not expire or be canceled
except upon thirty (30) days' prior written notice to Branded
Subsidiary. Upon the execution of this Agreement, and upon every
insurance renewal during the term of this Agreement, Supplier shall
deliver to Branded Subsidiary (i) a certificate of insurance
evidencing such insurance, (ii) if requested by Branded Subsidiary, a
true and complete copy of the policy as then in effect, and (iii)
proof of payment of premiums. Notwithstanding the foregoing Branded
Subsidiary shall not be under a duty to examine such policy.
Branded Subsidiary does not in any way represent that the insurance
coverage specified herein is sufficient or adequate to protect
Supplier's interests or potential liabilities.
SECTION 14 INDEMNIFICATION
A. Supplier hereby indemnifies Branded Subsidiary and forever
holds Branded Subsidiary (including its parent, subsidiary and
Affiliated corporations, and their respective directors,
officers, employees and agents) and its customers harmless
from and against all claims, suits, actions, proceedings,
damages, losses or liabilities, costs or expenses (including
reasonable attorneys' fees, expenses and amounts paid in
settlement) (but excluding consequential damages (which shall
include but not be limited to lost profits))("Claims")
incurred by Branded Subsidiary arising out of, based upon, or
in connection with any (i) material breach of any of
Supplier's warranties, representations or agreements under
this Agreement, (ii) injuries or damages to third parties
arising from or in any way related to the use or consumption
of any Products produced by Supplier for Branded Subsidiary
pursuant to this Agreement, to the extent arising out of the
condition of such Product(s) as of the date of shipment to
Branded Subsidiary (except to the extent attributable to
Materials supplied by Branded Subsidiary or purchased on
Supplier's behalf by Branded Subsidiary), (iii) actual or
alleged injury to person or property or death occurring to any
of Supplier's employees, agents or any individual on
Supplier's premises, (iv) fines and penalties for statutory
violations of Laws attributable to Supplier in connection with
Supplier's manufacture of Products pursuant to this Agreement,
(v) claim or action by any person alleging that use of any
know-how, machinery, equipment or process employed by Supplier
in connection with the manufacture of the Products produced by
Supplier for Branded Subsidiary pursuant to this Agreement
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infringes upon any rights of any third party or violates other
rights, and (vi) all reasonable costs of any recall of
Products produced pursuant to the terms hereof as to which
Supplier has consented, such consent not to be unreasonably
withheld. In the event of any Claims made against Branded
Subsidiary, Branded Subsidiary shall notify Supplier of such
claim promptly upon a representative of Branded Subsidiary
obtaining knowledge of such Claim, provided that failure to
give such notice shall not relieve Supplier from its indemnity
hereunder, except to the extent Supplier is prejudiced
thereby. Thereafter, Supplier, at its sole cost and expense,
may assume the defense of any claim for which it is required
to indemnify Branded Subsidiary pursuant to this Section 14A,
using counsel of its own choice. Notwithstanding anything in
this Section 14 to the contrary, Supplier shall not, without
Branded Subsidiary's prior written consent, which consent
shall not be unreasonably withheld, settle or compromise any
Claim or consent to entry of any judgment with respect to any
Claim for anything other than money damages paid by Supplier
which would have a material adverse effect on Branded
Subsidiary. Supplier may, without Branded Subsidiary's prior
written consent, settle or compromise any Claim or consent to
entry of any judgment with respect to any Claim which requires
solely money damages paid by Supplier and which includes as an
unconditional term thereof the release of Branded Subsidiary
and its Affiliates by the plaintiff from all liability in
respect of such Claim. Branded Subsidiary shall make
available to Supplier all records and other materials
reasonably required for use in contesting any Claim and shall
cooperate fully with Supplier in the conduct and defense of
any Claim.
B. Branded Subsidiary hereby indemnifies Supplier and forever
holds Supplier (including its parent, subsidiary and
Affiliated corporations, and their respective directors,
officers, employees and agents) and its customers harmless
from and against all Claims incurred by Supplier arising out
of, based upon, or in connection with any (i) material breach
of any of Branded Subsidiary's warranties, representations or
agreements under this Agreement, (ii) injuries or damages to
third parties arising from or in any way related to the use of
or consumption of any Products produced by Supplier for
Branded Subsidiary to the extent such injuries or damages are
attributable to Materials or premiums supplied by Branded
Subsidiary or purchased on Supplier's behalf by Branded
Subsidiary, or from conditions which arise after Products were
made available for shipment to Branded Subsidiary; (iii)
fines, penalties or any other actions or claims arising out of
alleged violations of any laws or regulations, including Laws,
as a result of any Product claims
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made by Branded Subsidiary (e.g. health claims) or other copy,
graphics, coupons and promotional offers used in connection
with such Products on packaging or in advertising (except when
such violation arises from Supplier's breach of this
Agreement); (iv) claim or action by any person alleging that
use of any know-how, machinery, equipment or process employed
by Supplier at Branded Subsidiary's behest after the Closing
in connection with the manufacture of Products for Branded
Subsidiary infringes upon any rights of any third party.
C. The provisions of this Section 14 shall survive the termination
of this Agreement.
SECTION 15 CONFIDENTIAL INFORMATION
A. Except as expressly provided in the Technology Agreement,
Supplier shall not use the Specifications, Technical
Information owned by or licensed to Branded Subsidiary and all
other confidential information of Branded Subsidiary for any
reason other than the production of Products in accordance
with the terms of this Agreement and shall not disclose this
information to any third party and shall keep confidential all
such information. The terms of this provision shall survive
the expiration or termination of this Agreement.
B. Except as expressly provided in the Technology Agreement,
Branded Subsidiary shall not use any confidential information
of Supplier that Branded Subsidiary is not otherwise
specifically entitled to use pursuant to the terms of the
Technology Agreement, including but not limited to information
pertaining to the operation of Plants, and production of other
products at such facilities, and Branded Subsidiary shall not
disclose this information to any third party and shall keep
confidential all such information. The terms of this
provision shall survive the expiration or termination of this
Agreement.
C. The obligations of nondisclosure, contained in Paragraphs 15A
and B above, shall not apply in the event that any of such
information:
(a) was known to the public or generally available to the
public prior to the date it was received from the
disclosing party:
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(b) became known to the public or generally available to
the public subsequent to the date it was received
from the disclosing party without any fault of the
receiving party; or
(c) is, subsequent to the date of this Agreement,
disclosed to the receiving party from a third party
who is under no obligation of confidentiality
regarding the same.
SECTION 16 INTELLECTUAL PROPERTY
Nothing in this Agreement shall be construed to grant to Supplier any
right to or interest in (i) any trademark, trade name, trade dress,
copyright and patent right or (ii) except as may be provided in the
Technology Agreement, any other rights, including any rights to any
Technical Information and Know How which is owned by or licensed to
Branded Subsidiary or its Affiliates ("Intellectual Property").
SECTION 17 BREACH
The following actions shall each constitute a breach of this
Agreement.
A. The institution by Supplier or Branded Subsidiary of a
voluntary case under any chapter of the Bankruptcy Code (Title
11, United States Code), or any equivalent or similar action
under any other federal or state law in effect at such time
relating to bankruptcy or insolvency, or if a petition is
filed against Supplier or Branded Subsidiary under the
Bankruptcy Code, or if a petition is filed seeking any such
equivalent or similar relief against Supplier or Branded
Subsidiary under any other federal or state law in effect at
the time relating to bankruptcy;
B. If Supplier or Branded Subsidiary makes a general assignment
for the benefit of creditors;
C. If Supplier or Branded Subsidiary admits in writing an
inability to pay its debts generally as they become due;
D. If Supplier or Branded Subsidiary has appointed (voluntarily
or involuntarily) a trustee, receiver, custodian or agent
under applicable law or under contract, whose appointment
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or authority to take charge of property of Supplier or Branded
Subsidiary for the purpose of general administration of such
property for the benefit of Supplier's or Branded Subsidiary's
creditors, respectively; or
E. If Supplier or Branded Subsidiary commits a material breach of
any of the material terms or provisions of this Agreement and
such breach is not cured within thirty (30) days after written
notice to the breaching party advising of such breach.
SECTION 18 TERMINATION
A. In the event this Agreement expires or is terminated, Supplier
shall promptly provide Branded Subsidiary with all Products
and other Materials owned or provided by Branded Subsidiary
which are in Supplier's possession.
B. In the event of the occurrence of any material breach not
cured within thirty (30) days of written notice of such
breach, the non-breaching party may terminate this Agreement
effective immediately upon written notice to the breaching
party.
C. Upon termination of this Agreement for any reason Supplier
shall immediately stop the production of any Products then in
process which were to be supplied to Branded Subsidiary and
promptly deliver to Branded Subsidiary all Products
manufactured hereunder along with all Specifications,
Technical Information belonging to Branded Subsidiary,
artwork, premiums, and packaging materials purchased by
Branded Subsidiary and all other Materials and supplies
provided by Branded Subsidiary. Branded Subsidiary shall
purchase from Supplier reasonable quantities of any packaging
materials and any other Materials purchased by Supplier
specifically for use with Products to be produced for Branded
Subsidiary.
D. Upon any change of control of Supplier, Branded Subsidiary may
terminate this Agreement effective immediately upon written
notice to Supplier.
SECTION 19 BRANDED SUBSIDIARY PRICING
Branded Subsidiary shall independently determine its prices of the
Products to its customers.
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SECTION 20 RIGHTS RESERVED TO BRANDED SUBSIDIARY
Except to the extent otherwise provided herein, Branded Subsidiary
reserves to itself the right to alter the flavors, formulas,
ingredients, processing conditions, labeling or packaging for the
Products, provided that Supplier may reasonably refuse to accept any
alteration which adversely affects Supplier's production of other
products in the affected Plant(s).
SECTION 21 ASSIGNMENT
Other than to a wholly owned subsidiary or to a wholly owned
subsidiary of its parent company, which shall agree to be bound by all
the terms and conditions hereof, neither party shall assign or
otherwise transfer in any manner its rights under this Agreement
without the other's prior written consent. No assignment of this
Agreement will act to relieve the Assignor from any of its duties or
obligations hereunder.
SECTION 22 INTERPRETATIONS
The captions contained in this Agreement are for convenience and
reference only and do not define, limit, extend or describe the scope
of this Agreement or the intent of any provision thereof. This
Agreement shall be deemed to have been drafted by each party hereto.
SECTION 23 DISCRIMINATION
Supplier shall not discriminate, in violation of the applicable laws,
in its employment practices and shall comply with all applicable
federal, state and local laws, statutes, ordinances, rules,
regulations and orders regarding employee relations.
SECTION 24 ENTIRE AGREEMENT
This Agreement, including its attached exhibits and schedules
specified herein, together with the Trademark Agreement, the
Technology Agreement, the Reorganization Agreement and the Merger
Agreement supersedes all prior or contemporaneous written or oral
agreements and understandings relating to the subject matter hereof.
This Agreement shall not be amended, altered, or changed unless in
writing signed by the parties hereto.
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SECTION 25 FORCE MAJEURE
In the event that a party hereto shall be delayed, hindered in or
prevented from the performance of any act required hereunder by reason
of strikes, lock-outs, labor troubles, inability to procure Materials,
failure of power, riots, insurrection, war or other reasons of a like
nature not the fault of, or under the reasonable control of, the party
delayed in performing work or doing acts required hereunder (a
"Casualty"), then performance of such act(s) shall be excused for the
period of the delay and the period for the performance of any such act
shall be extended for a period equal to the period of such delay,
provided such delayed party promptly gives written notice to the other
party of the occurrence giving rise to the delay and upon cessation of
the event causing the delay, promptly resumes performance of its
obligations hereunder.
SECTION 26 GOVERNING LAW
This Agreement shall be governed and construed in accordance with the
laws of the State of Missouri, including all matters of construction,
validity, enforcement and performance.
SECTION 27 INDEPENDENT CONTRACTOR
Supplier agrees that its services are provided as an independent
contractor and that individuals employed by Supplier shall not be
deemed employees of Branded Subsidiary for any reason. Neither party
shall have the authority to bind the other party or to assume or
create any obligation or responsibility, express or implied, on behalf
of the other party or in the other party's name.
SECTION 28 NOTICE
All notices, requests and other communications to any party hereunder
shall be in writing (including facsimile or similar writing) and shall
be given:
If to Branded Subsidiary, to: Chex Inc.
Number Xxx Xxxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
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Telephone: (000) 000-0000
If to Supplier, to: New Ralcorp Holdings, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
With additional copies as noted
in the Schedule(s).
or such other address or telex or facsimile number as such party may
hereafter specify by written notice to the other party.
SECTION 29 REGULATORY NOTICE
Each party agrees to notify the other immediately by telephone of any
action or inspection by any regulatory agency with respect to the
Products covered by this Agreement, or any of the raw materials or
ingredients used to manufacture Products covered by his Agreement, and
shall confirm such notice promptly in writing. Supplier shall
promptly deliver to Branded Subsidiary copies of all reports
pertaining to the Plants (to the extent relevant to Products produced
by Supplier for Branded Subsidiary pursuant to this Agreement) or
Products resulting from an inspection of the Plant made by government
organizations.
SECTION 30 SUCCESSORS AND ASSIGNS
Except as limited by the Assignment provisions hereof, this Agreement,
its terms and provisions shall be binding upon and inure to the
benefit of the parties hereto and their respective partners, legal
representatives, successors and assigns.
SECTION 31 WAIVER
Either party's failure to enforce any provision of this Agreement or
to require performance by the other party shall not be construed as a
waiver of such provision nor affect the validity of the Agreement or
any part thereof, or either party's right to enforce any provision
thereafter.
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SECTION 32 AUTHORIZATION; VALIDITY
The persons executing this Agreement on behalf of the Supplier and
Branded Subsidiary each acknowledge that they are duly authorized to
execute this Agreement on behalf of and bind Supplier or Branded
Subsidiary, as the case may be, to the terms hereof.
PART II.
OTHER TRANSITION SERVICES
1. Services. Subject to the terms of this part of the Agreement,
from and after the Effective Date of this Agreement, Supplier shall make such
Services available to Branded Subsidiary in accordance with Supplier's normal
practice in providing such services as of the Effective Date or as specifically
set forth in Schedule 2 hereto (the "Services"). In consideration for the
Services, Branded Subsidiary shall pay to Supplier an amount equal to the
reasonable costs of Supplier (including, but not limited to labor costs) in
providing such Services and each Service provided will be separately invoiced
to Branded Subsidiary. Branded Subsidiary shall give Supplier written notice
of its intent to terminate any one or more of the Services at least thirty (30)
days prior to the termination of the Service. This Agreement shall continue in
full force and effect with respect to any Services not terminated by any such
notices.
2. Knowledge Transfer: Data Separation & Transfer. Supplier and
Branded Subsidiary shall, through their respective information systems
departments, work together to the extent reasonably necessary to facilitate the
transfer of knowledge and data to Branded Subsidiary in accordance with the
terms of the Reorganization Agreement and the Technology Agreement in order to
eliminate the need for or to otherwise discontinue as expeditiously as
reasonably possible those Services performed in accordance with this Agreement.
To the extent such Services can reasonably be eliminated upon the separation
and transfer of data, the parties will work toward executing such transfer
immediately following the Closing. Branded Subsidiary shall pay to Supplier an
amount equal to such reasonable costs for all hours expended by Supplier
personnel and actual charges incurred in separating and converting and/or
transferring data and in transferring knowledge associated therewith.
3. Liability: Indemnification. Supplier shall have no liability
to Branded Subsidiary with respect to its furnishing any of the Services
hereunder except for its willful misconduct or gross negligence. By agreeing
to provide the Services as an accommodation to Branded Subsidiary, Supplier is
making no representations or warranties as to the quality, suitability or
adequacy of the Services for any purpose or use, except that Supplier will use
such care in providing services to Branded Subsidiary as it would use in
providing such services for its own
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use. In providing the Services, Supplier shall not be obligated to (i) hire
any additional employees; (ii) maintain the employment of any specific
employee; (iii) purchase, lease or license any additional equipment or
software; or (iv) pay any costs related to the transfer or conversion of
Branded Subsidiary's data to Branded Subsidiary or any alternate supplier of
administrative services. Except for Supplier's gross negligence or willful
misconduct, the sole remedy of Branded Subsidiary in the event data owned by it
is lost or damaged in any way during processing by Supplier is the refund to it
of any charges paid for the processing of the damaged data. Supplier agrees to
exercise reasonable diligence to correct errors or deficiencies in the
Services. Except for Supplier's gross negligence or willful misconduct, (i)
Supplier shall not be liable to any third party in any way for any obligation
or commitment or for any act or omission in connection with the provision of
Services by Supplier and (ii) Branded Subsidiary shall be solely liable and
responsible for any and all claims, liabilities, obligations, losses, costs,
expenses, litigation, proceedings, taxes, levies, imposts, duties,
deficiencies, assessments, charges, allegations, demands, damages or judgments
of any kind or nature whatsoever ("Liabilities") related to, arising from,
asserted against or associated with Supplier furnishing or failing to furnish
to Branded Subsidiary any of the Services described herein. Upon the
termination of any of the Services, Branded Subsidiary shall be obligated to
return to Supplier, as soon as reasonably practicable, any equipment or other
property of Supplier relating to the Services which is owned or leased by it
and is or was in Branded Subsidiary's possession or control and which was or is
not part of the assets to be transferred pursuant to the Merger Agreement or
the Reorganization Agreement. Effective as of the date of this Agreement,
Branded Subsidiary shall indemnify and hold Supplier and its affiliates and
their respective directors, shareholders, officers, employees, agents,
consultants, representatives, successors, transferees and assigns harmless from
and against any and all Liabilities (including, without limitation, reasonable
fees and expenses of counsel) of whatever kind and nature related to, arising
from, asserted against or associated with Supplier's furnishing or failing to
furnish the Services provided for in this Agreement, other than Liabilities
arising out of the willful misconduct or gross negligence of Supplier or its
affiliates or their respective directors, shareholders, officers, employees,
agents, consultants, representatives, successors, transferees or assigns.
Nothing herein, however, shall be deemed to affect the right of Branded
Subsidiary to seek damages or other rights of redress against Supplier for
breach of the provisions of this part of the Agreement.
4. Claims. Branded Subsidiary's receipt of any Service performed
hereunder shall be an unqualified acceptance of, and a waiver by it of any and
all claims with respect to such Service unless Branded Subsidiary gives
Supplier notice of claim within thirty (30) days after such receipt; no claim
by Branded Subsidiary against Supplier of any kind, whether as to service
performed or for delayed performance or non- performance, unless such claim is
based on gross negligence or willful misconduct, shall be greater in amount
than the fee for the Service in respect of which such claim is made; and in no
event will Supplier be liable to Branded Subsidiary for any incidental or
consequential damages, whether or not caused by or resulting from gross
negligence or willful misconduct or breach of obligations hereunder.
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5. Additional Services. If Branded Subsidiary wants Supplier to
provide any service other than the Services provided for in the Schedule 2,
Branded Subsidiary shall notify Supplier, and within five (5) days following
the giving of such notice, Supplier shall provide such service if such service
is reasonably necessary for the conduct of the Branded Business (as defined in
the Reorganization Agreement) in the ordinary course. Branded Subsidiary shall
be invoiced for such services in accordance with billing practices reasonably
determined by Supplier. The provision by Supplier of any such additional
Services shall be subject to all other provisions of this Agreement, as if
those Services had originally been part of the Schedule 2 to this Agreement.
6. Confidentiality. Any and all information which is not
generally known to the public which is exchanged between the parties in
connection with this Agreement, whether of a technical or business nature,
shall be considered to be confidential. The parties agree that confidential
information shall not be disclosed to any third party or parties without the
written consent of the other party, except to the extent otherwise addressed by
the Technology Agreement, which shall be treated in accordance with the terms
of the Technology Agreement. Each party shall take reasonable measures to
protect against nondisclosure of confidential information by its officers and
employees. Confidential information shall not include any information (i)
which is or becomes part of the public domain, (ii) which is obtained from
third parties who are not bound by confidentiality obligations, except to the
extent otherwise addressed by the Technology Agreement or (iii) which is
required to be disclosed by law, regulation, legal process or the rules of any
state or federal regulatory agency or the New York Stock Exchange. The
provisions of this section shall survive the termination of this Agreement.
7. Billing and Payment. Supplier shall xxxx Branded Subsidiary
on a monthly basis for the amounts due to Supplier for services provided
pursuant to the terms of this Agreement. All such bills shall contain
reasonable detail and shall be due thirty (30) days after receipt. The failure
of Branded Subsidiary to pay any xxxx within thirty (30) days of receipt shall
result in Branded Subsidiary owing Supplier an additional handling charge equal
to 1% per month of the amount due from the date due to the payment date.
8. Term. It is intended that the Services be provided by
Supplier as a temporary accommodation to Branded Subsidiary. Supplier shall
provide the Services for a period beginning at the commencement of the term of
this Agreement. In no event, however, shall Supplier be obligated to provide
any Services identified pursuant to Part II of this Agreement beyond ninety
(90) days from the Closing Date.
9. Other Provisions. Section 1 and Sections 21 through 32 of
Part I of this Agreement shall be incorporated by reference to this Part II.
The remaining terms of Part I shall in no way govern nor otherwise be
applicable to the services provided pursuant to this Part II.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CHEX INC. NEW RALCORP HOLDINGS, INC.
By /s/ Xxxxxx X. Xxxxxxxx By /s/ J. R. Xxxxxxxxxx
------------------------------ ------------------------------
Title President Title Chief Executive Officer and
President
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