Ex-10.13
Transitional Co-Pack Agreement
TRANSITIONAL CO-PACK AGREEMENT
THIS TRANSITIONAL CO-PACK AGREEMENT (this "Agreement"), dated as of
July 1, 1997, by and between KRAFT FOODS, INC., a Delaware corporation
("Co-Packer"), and Aurora Foods Inc. (formerly MBW Foods Inc.), a Delaware
corporation ("Buyer");
W I T N E S S E T H:
WHEREAS, Buyer has purchased the LOG CABIN(R), COUNTRY KITCHEN(R)
and WIGWAM(R) syrup business (the "Business") of Co-Packer pursuant to that
certain Asset Purchase Agreement, dated as of May 7, 1997, by and between
Co-Packer and Buyer (the "Asset Purchase Agreement");
WHEREAS, pursuant to the Asset Purchase Agreement, Buyer has
purchased from Co-Packer certain machinery and equipment used in the Business, a
list of which is attached hereto as Exhibit A (the "Equipment");
WHEREAS, ownership of (and risk of loss with respect to) the
Equipment has been transferred to Buyer as of the Closing Date (as defined in
the Asset Purchase Agreement);
WHEREAS, Buyer wishes to engage Co-Packer for the purpose of
manufacturing, processing and packaging the syrup products listed on Exhibit B
attached hereto (the "Product"), utilizing the Equipment owned by Buyer and
located at Co-Packer's facilities in Chicago, Illinois (the "Chicago Facility")
and Allentown, Pennsylvania (the "Allentown Facility" and, together with the
Chicago Facility, the "Facilities"); and
WHEREAS, Co-Packer wishes to utilize certain of the Equipment owned
by Buyer for the purpose of manufacturing, processing and packaging the syrup
products listed on Exhibit C attached hereto (the "Co-Packer Product") in order
to enable Co-Packer to continue (i) to supply such Co-Packer Product to Alliant
Foodservice ("Alliant") pursuant to the Distribution Agreement, dated as of
February 13, 1995, by and among Co-Packer, Alliant and CDRF Acquisition
Corporation (the "Distribution Agreement") and (ii) to export such Co-Packer
Product to Mexico;
NOW, THEREFORE, in consideration of the premises and of the mutual
promises and covenants hereinafter set forth, the parties hereto agree as
follows:
1. Product and Its Manufacture/Packaging
1.1 Subject to and on the terms and conditions hereof, Co-Packer shall
supply the Product to Buyer.
1.2 Subject to and on the terms and conditions hereof, Co-Packer shall
manufacture and process the Product in accordance with the formulas, raw and
packaging material specifications and finished product standards, the equipment
and the manufacturing practices (collectively, the "Specifications") used by
Co-Packer in manufacturing the Product as of the date of the Asset Purchase
Agreement. Subject to Co-Packer's approval (which shall not be unreasonably
withheld), the Specifications may be changed by Buyer from time to time on
ninety (90) days' prior written notice; provided, however, that Co-Packer and
Buyer shall mutually agree upon a schedule for any such Specifications change to
minimize the incremental costs resulting from such change; and further provided,
however, that (i) Buyer shall pay for any necessary administrative or technical
support services relating to the implementation of any such change to the
Specifications and shall promptly reimburse Co-Packer for any and all expenses
and costs associated with or arising out of any such change in the
Specifications (including the write-off of any stock of raw and packaging
materials (including labels) and work-in-process and any start-up costs), (ii)
Buyer shall pay for and provide any new equipment necessary to produce Product
with such changed Specifications and (iii) the prices (and all components
thereof) charged for the Product as set forth on Exhibit B attached hereto may
be adjusted by Co-Packer (on a retroactive basis to the date of such
Specifications change) to reflect incremental costs resulting from any such
change in the Specifications. Co-Packer shall notify Buyer in writing of any
such price changes and Exhibit B shall be deemed to be amended to reflect the
new prices in effect for the Product as a result of any such change in the
Specifications.
1.3 All packaging (including labels) for the Product shall have been
approved by Buyer prior to use; provided, however, that the types and designs of
the stock of packaging existing as of the date of this Agreement shall be deemed
approved. Buyer hereby grants to Co-Packer the right and license to use Buyer's
trademarks relating to the Product solely for the purpose of performing services
under this Agreement during the term hereof. Co-Packer shall not use packaging
materials for the Product for any purpose other than the exercise of its rights
and performance of its obligations pursuant to this Agreement. Co-Packer hereby
grants to Buyer a fully-paid license to sell Product with labels bearing the
trademarks
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"KRAFT", "KRAFT FOODS", "KRAFT GENERAL FOODS" and the "KRAFT IN ELONGATED
HEXAGON" design but only to the extent of the supply of labels for Product
existing as of the date of this Agreement (and in no event for more than one
year from the date hereof), and thereafter Buyer shall have no right or license
hereunder to use the trademarks "KRAFT", "KRAFT FOODS", "KRAFT GENERAL FOODS"
and the "KRAFT IN ELONGATED HEXAGON" design in any way.
1.4 Co-Packer shall replace without charge any Product not complying with
the Specifications or having any defects in manufacturing or packaging
demonstrated to have existed at the time of shipment to Buyer ("Defective
Product"); provided that Buyer gives Co-Packer reasonably prompt written notice
upon discovery of any Defective Product; and provided, further, however, that
Buyer shall bear any losses due to Defective Product or otherwise unsaleable
Product attributable in any respect to the Specifications relating thereto
(including any change to the Specifications pursuant to Section 1.2 hereof).
1.5 Co-Packer shall continue to purchase all raw and packaging materials
used for the Product, other than those raw and packaging materials purchased by
Buyer pursuant to the Asset Purchase Agreement (which shall be used to
manufacture, process and package the Product on a "first-in, first-out" basis
before Co-Packer uses any similar materials acquired after the date hereof), and
Co-Packer shall retain title thereto until title to finished Product has passed
to Buyer pursuant to Section 4.3 hereof. In the event Buyer desires to supply
any raw or packaging materials to Co-Packer, Buyer shall make a written proposal
to Co-Packer (which proposal shall describe the method of procurement of such
materials by Co-Packer), and if Co-Packer's computer systems permit Co-Packer to
procure such materials on a basis which does not unreasonably burden Co-Packer
or unreasonably interfere with the manner in which Co-Packer procures other raw
and packaging materials or the manner in which it performs its other duties
under this Agreement or the Transition Services Agreement (e.g., invoicing,
shipping, etc.), Co-Packer shall reasonably cooperate with Buyer to implement
Buyer's proposal. If Buyer's proposal is implemented, the Raw Material Cost (as
defined below) and/or Packaging Cost (as defined below) shall be reduced for any
Product using such materials supplied by Buyer by the cost of such materials so
supplied, and Buyer shall be responsible for any additional costs (or additional
yield losses) incurred by Co-Packer as a result of using such materials supplied
by Buyer.
1.6 Yield losses, on a monthly basis, for raw materials shall be
maintained by Co-Packer at or below historical levels (calculated by averaging
Co-Packer's monthly loss allowances for such raw materials during the
twelve-month period immediately preceding the date of this Agreement), except to
the extent changes in Specifications result in higher levels.
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2. License to Use Equipment
2.1 Buyer hereby grants to Co-Packer and its affiliates (and Co-Packer
hereby accepts) a fully-paid right and license to use at the Facilities the
Equipment for the sole and exclusive purpose of manufacturing and packaging (i)
the Product for Buyer during the term of this Agreement, (ii) the Co-Packer
Product during the period beginning on the date of this Agreement and ending,
with respect to any such Equipment, on the thirtieth day preceding the removal
of such Equipment from a Facility, and (iii) Product for export and sale in
jurisdictions other than the United States. The Equipment shall at all times be
and remain the property of Buyer, Co-Packer shall have no interest therein or
rights thereto except as provided in this Agreement, and Buyer shall bear the
risk of loss of such Equipment at all times during the term of and following the
termination or expiration of this Agreement. Except as otherwise provided in the
last sentence of Section 2.3 below, Co-Packer shall not remove the Equipment
from the Facilities during the term of this Agreement, or during the forty-five
(45) day period thereafter, without Buyer's written consent. If requested by
Buyer, Co-Packer shall affix to the Equipment asset tags supplied by Buyer
indicating that the Equipment is the property of Buyer.
2.2 Co-Packer agrees to provide normal routine maintenance for the
Equipment as has historically been performed on the Equipment at such intervals
as has been historically performed to maintain the Equipment in good working
order in all material respects; provided that Buyer shall bear the cost of all
spare parts (other than those purchased by Buyer pursuant to the Asset Purchase
Agreement) necessary to provide such normal routine maintenance (it being
understood that an estimate of such spare parts costs has been included in the
Manufacturing Variable, Labor and Expense Costs (as defined below) set forth on
Exhibit B attached hereto and that Buyer shall not be separately charged to the
extent reflected therein). Buyer shall bear all costs of repairs to the
Equipment that are not normal and routine, including repairs that extend the
useful life of the Equipment beyond routine maintenance and servicing (referred
to herein as "Capital Repairs"). If Co-Packer determines that the Equipment
requires any Capital Repairs, Co-Packer shall promptly advise Buyer thereof by
telephone or telecopy. Buyer shall have the right to direct a reasonable manner
in which Capital Repairs shall be effected, and Co-Packer shall abide by such
directions; provided that if Buyer fails to deliver such directions within three
(3) business days of its receipt of the notice from Co-Packer of the need
therefor, Co-Packer may effect, at Buyer's expense, such Capital Repairs as it
determines in its reasonable discretion are appropriate. Buyer shall bear all
costs of all Capital Repairs, including labor expense and technical support
incurred by Co-Packer during the course of such repairs. Co-Packer shall invoice
Buyer therefor on an as-provided basis, which invoice shall be accompanied by
the
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invoices or vouchers for such costs. Buyer shall pay such invoice within twenty
(20) days of receipt thereof. Co-Packer shall be excused from performance
hereunder to the extent any of the Equipment is not in working condition, except
to the extent such Equipment is not in working condition due to the fault of
Co-Packer. Buyer shall be responsible for the purchase of any new equipment
(including any new tool, die and mold costs) and spare parts necessary to (i)
maintain or increase production of the Product or (ii) produce any Product with
Specifications which have been changed by Buyer pursuant to Section 1.2 hereof
or as a result of changes in regulatory requirements.
2.3 Buyer shall remove Equipment from the Facilities within sixty (60)
days following the termination of production with such Equipment. Co-Packer
shall reasonably cooperate with Buyer in removing the Equipment. Co-Packer
shall, at Co-Packer's cost, remove all utility sources and shared piping, bulk
handling, materials handling and related equipment from the Equipment and
prepare for and remove the Equipment from the production floor, crate the
Equipment (where practicable) and deliver the Equipment to Buyer at the loading
dock of the applicable Facility at which the Equipment is located in a manner
suitable for shipping, F.O.B. loading dock of such Facility. Buyer and Co-Packer
shall jointly develop a timetable for the preparation for removal of, and the
removal and shipping of, the Equipment, and Buyer shall be responsible for
removing the Equipment from the loading dock of the applicable Facility and
shipping the Equipment. When removing such Equipment from any Facility, Buyer
and its agents shall comply with all rules and regulations of Co-Packer relating
to such Facility, and Buyer shall be responsible for any damages to such
Facility caused by Buyer and its agents during such removal. If Buyer fails to
remove any Equipment from the Facilities within sixty (60) days following the
termination of production with such Equipment (provided that such Equipment was
available for removal a reasonable time prior thereto), Co-Packer may, at
Buyer's expense and risk, arrange for such removal and shipment to Buyer, or, if
Buyer refuses to accept the Equipment, Co-Packer may, at Buyer's expense and
risk, arrange for the removal, shipment and/or scrapping of the Equipment.
2.4 Buyer shall provide at least sixty (60) days' notice to Co-Packer of
its intention to cease production pursuant to this Agreement at the Chicago
Facility and at least ninety (90) days' notice to Co-Packer of its intention to
cease production pursuant to this Agreement at the Allentown Facility so as to
permit Co-Packer to build inventories of the Co-Packer Product prior to the
removal.
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3. Estimates, Orders and Volume Requirements
3.1 Buyer shall, on a monthly basis, provide a rolling 13-week production
requirements forecast (each, a "Forecast") by SKU and distribution center. Buyer
shall be responsible for all the Product produced by Co-Packer in reasonable
reliance on each Forecast. Buyer shall place firm orders for the Product for no
less than the minimum run quantity set forth in Exhibit B, and orders for less
than such minimum run quantity shall be treated by Co-Packer as orders for such
minimum run quantity. Exceptions to minimum run quantities shall be made only by
mutual consent in writing between Buyer and Co-Packer, and Buyer shall bear all
incremental costs associated with such exceptions to minimum run quantities.
Buyer shall, in accordance with Section 6.3 hereof, bear the cost of any unused
raw materials and packaging materials procured by Co-Packer in reliance on the
Forecast in the event that Buyer's firm orders for specific Product are lower
than the Forecast for such Product. Buyer shall provide Co-Packer reasonable
notice of any increases in any Forecast due to any material increase in demand
and shall bear the incremental costs resulting from any increase in production
to meet such demand. To the extent such increases in Forecasts exceed
Co-Packer's manufacturing capacity and/or raw or packaging material
availability, Buyer and Co-Packer shall mutually agree upon product scheduling
to deliver priority customer orders.
3.2 In the event of any failure by Co-Packer timely to deliver the Product
to Buyer in the quantities set forth in any Order or in compliance with the
Specifications, Buyer shall use all commercially reasonable efforts to mitigate
or eliminate any adverse impact to Buyer resulting from such failure, and
Co-Packer shall use all commercially reasonable efforts to resume full
performance of its obligations hereunder as soon as practicable following the
onset of the events or circumstances giving rise to such failure.
4. Storage and Handling, Redistribution and Delivery
4.1 Co-Packer shall provide storage and handling services for the Product
at the applicable production Facility and in Co-Packer's distribution centers.
The cost of such storage and handling services shall be included in the Variable
Warehousing Costs (as defined below) for Product set forth on Exhibit B attached
hereto. Finished Product shall remain in Facilities no longer than 60 days from
the date of production of such Product.
4.2 Co-Packer shall load and ship the Product, with appropriate shipping
documents, to such delivery point (e.g., customer warehouses or other final
destination) and in such quantities as may be designated by Buyer in its Order
for such Product. Co-Packer
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shall bear all responsibility for selecting the carrier, including the
scheduling of pickups and negotiating of freight rates. The cost of such
transportation services for Product, including, as applicable, the cost of
transporting Product from the Facility at which such Product was produced to a
distribution center determined by Co-Packer, between distribution centers and to
Buyer's customers (collectively, "Freight Costs"), shall be charged to Buyer (i)
where actual cost information is available, at Co-Packer's actual cost for such
services or (ii) where actual cost information is not available, on an allocated
basis consistent with Co-Packer's past custom and practice of allocating such
costs. Co-Packer shall not provide any storage, handling or distribution
services with respect to any products manufactured by Buyer or third parties.
4.3 During the term of the Transition Services Agreement, delivery shall
be made in accordance with the terms of the Transition Services Agreement, and
title to (and risk of loss with respect to) the Product shall pass to Buyer at
such time as Co-Packer ships the Product to Buyer's customers. After the term of
the Transition Services Agreement, Co-Packer shall deliver the Product at the
loading dock of the Facility at which such Product was produced, F.O.B. dock of
production, and title to (and risk of loss with respect to) the Product shall
pass to Buyer upon such delivery.
5. Price and Payment
5.1 Buyer shall pay Co-Packer the prices for Product set forth on Exhibit
B attached hereto, subject to adjustment by Co-Packer from time to time as
described below. Such prices include the following components: (i) Raw Material
Costs, (ii) Packaging Costs, (iii) Manufacturing Variable, Labor and Expense
Costs, (iv) Variable Warehousing Costs and (v) Fixed Overhead Costs. Buyer shall
also reimburse Co-Packer for all Freight Costs.
5.1(a) Buyer shall pay the actual cost of raw materials for Product
("Raw Material Costs"). Current estimates of Raw Material Costs for each
Product are set forth on the appropriate tier price list for such Product
on Exhibit B attached hereto. Raw Material Costs are subject to adjustment
pursuant to Section 5.2 hereof.
5.1(b) Buyer shall pay the actual cost of packaging materials for
Product ("Packaging Costs"). Current estimates of Packaging Costs for each
Product are set forth on the appropriate tier price list for such Product
on Exhibit B attached hereto. Packaging Costs are subject to adjustment
pursuant to Section 5.2 hereof.
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5.1(c) Buyer shall pay the Manufacturing Variable, Labor and Expense
Costs for Product set forth on the appropriate tier price list for such
Product on Exhibit B attached hereto. For purposes of this Agreement,
"Manufacturing Variable, Labor and Expense Costs" shall mean for any
Product all variable costs (other than Raw Material Costs and Packaging
Costs) relating to the manufacture, process and packaging of such Product
(e.g., conversion costs). Manufacturing Costs are subject to adjustment
pursuant to Section 5.3 hereof.
5.1(d) Buyer shall pay the Variable Warehousing Costs for Product
set forth on the appropriate tier price list for such Product on Exhibit B
attached hereto. For purposes of this Agreement, "Variable Warehousing
Costs" shall mean for any Product all variable costs relating to the
storage, handling and distribution of such Product within Co-Packer's
distribution network. Variable Warehousing Costs are subject to adjustment
pursuant to Section 5.3 hereof.
5.1(e) During the term of this Agreement, Buyer shall pay on a
monthly basis (for each month during the term of this Agreement) the Fixed
Costs ("Fixed Costs") set forth in Note 1 on Exhibit B attached hereto for
such month; provided that, if this Agreement is terminated early, such
Fixed Costs shall be prorated during the final month of the term of this
Agreement.
5.2 Prices charged for Product shall be retroactively adjusted by
Co-Packer from time to time to reflect the actual Raw Material Costs and
Packaging Costs for such Product. An appropriate payment shall be made to
compensate for any such variance, either by Buyer to Co-Packer or by Co-Packer
to Buyer, as the case may be, within thirty (30) days of the notification of
cost changes given by Co-Packer pursuant to the following sentence. Co-Packer
shall notify Buyer in writing of all such cost changes on Buyer's invoice, and
Exhibit B attached hereto shall be deemed to be amended to reflect the new
prices which shall then be in effect. Upon Buyer's request, Co-Packer shall
provide to Buyer in writing a reasonable explanation of any Raw Material Cost
and Packaging Cost changes that resulted in the price change; provided that
Co-Packer shall not be required to describe specific prices for Raw Material
Costs and Packaging Costs where such prices are subject to confidentiality
agreements with third parties.
5.3 At the end of each fiscal quarter of Co-Packer ("Fiscal Quarter"),
Manufacturing Variable, Labor and Expense Costs and Variable Warehousing Costs
(collectively, "Conversion Costs") charged for Product for the next Fiscal
Quarter may be retroactively adjusted by Co-Packer to reflect any reductions in
volume during such Fiscal
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Quarter below Co-Packer's historical volume of production for such quarter
resulting from shipments of Product manufactured by third-party co-packers to
Buyer's customers. Adjustments at times other than the end of each Fiscal
Quarter shall be effective as of such time as any actual increases in Conversion
Costs occurred. Upon such adjustment, an appropriate payment shall be made by
Buyer to Co-Packer to compensate for such variance within thirty (30) days of
the notification of cost changes given by Co-Packer pursuant to the following
sentence. Co-Packer shall notify Buyer in writing of all such Conversion Cost
changes and Exhibit B attached hereto shall be deemed to be amended to reflect
the new prices which shall then be in effect. All such written notices shall
contain a reasonable explanation of the Conversion Cost change that resulted in
the price change.
5.4 The Variable Warehousing Costs set forth on Exhibit B attached hereto
include the cost of pallet services to be provided pursuant to Co-Packer's
existing pallet delivery system. Buyer shall pay any amounts that are required
to be paid to Co-Packer's pallet provider in connection with the provision of
pallet services hereunder, and any amounts that are required to be paid to such
pallet provider to obtain the consent of such pallet provider to provide any
such pallet services hereunder. Subject to the immediately preceding sentence,
Co-Packer shall use reasonable efforts to obtain any consents that may be
required from such pallet provider in order to obtain any such pallet services.
5.5 On January 1, 1998, Co-Packer shall adjust the prices on Exhibit B to
reflect the new prices which shall then be in effect for Products listed on
Exhibit B as a result of changes in Co-Packer's standard costs.
5.6 Co-Packer shall invoice Buyer on a monthly basis for all shipments of
the Products made for such month, indicating on such invoice (i) a description
of all Products shipped, (ii) the quantity of Products shipped and (iii) the
total price for such Products. Notwithstanding the time at which title to and
risk of loss for the Product passes to Buyer pursuant to Section 4.3 hereof,
Buyer shall make payment to Co-Packer within thirty (30) days following the date
of such invoice.
5.7 Buyer's obligation to make payments to Co-Packer under this Agreement
shall not be subject to offset or reduction by reason of any amounts alleged to
be owing from Co-Packer to Buyer, whether pursuant to the Asset Purchase
Agreement or otherwise.
5.8 Notwithstanding anything to the contrary in this Section 5, Buyer
shall not be required to make payment to Co-Packer for any of the raw materials,
packaging materials and work-in-process acquired by Buyer pursuant to the Asset
Purchase Agreement that is
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used by Co-Packer to manufacture, process and package the Product pursuant to
Section 1.5 hereof, and the invoices issued with respect to such Product will
not reflect any charge for such raw materials, packaging materials and
work-in-process or, if such invoices do so reflect a charge for such materials,
such invoices shall also reflect a credit in the amount that Buyer paid for such
materials pursuant to the terms of the Asset Purchase Agreement. To the extent
that Co-Packer uses raw materials, packaging materials and work-in-process
acquired by Buyer pursuant to the Asset Purchase Agreement in order to
manufacture, process and package the Co-Packer Product, Buyer shall be entitled
to a credit on the first invoices issued pursuant to this Agreement after such
use.
6. Term and Termination
6.1 The term of this Agreement shall commence on the Closing Date and
shall expire on April 1, 1998, unless terminated earlier in accordance with the
provisions of this Section 6 or by Buyer upon 60 days' prior written notice to
Co-Packer.
6.2 Either party may immediately terminate this Agreement if a Default (as
defined below) by the other party has occurred and is continuing by giving
written notice thereof to the defaulting party. The term "Default" shall mean
any of the following:
(i) failure by a party to comply with or to perform any material
provision or condition of this Agreement for ten (10) days after written
notice thereof to such party; or
(ii) a party becomes insolvent, is unable to pay its debts as they
mature or is the subject of a petition in bankruptcy, whether voluntary or
involuntary, or of any other proceeding under bankruptcy, insolvency or
similar laws; or makes an assignment for the benefit of creditors; or is
named in, or its property is subject to a suit for appointment of a
receiver; or is dissolved or liquidated; or
(iii) any warranty made in this Agreement is breached, false, or
misleading in any material respect.
In the event of such termination, the non-defaulting party shall be
entitled to pursue any remedy provided in law or equity, including injunctive
relief and the right to recover any damages it may have suffered by reason of
such Default.
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6.3 Upon termination or expiration of this Agreement, Buyer shall purchase
from Co-Packer any and all raw materials, packaging materials (including labels)
and work-in-process held by Co-Packer for use in production of Product at
Co-Packer's costs therefor and all finished goods then held by Co-Packer at the
prices set forth on Exhibit B. Co-Packer shall submit an invoice to Buyer for
the costs of such materials (which invoice shall be accompanied by the invoices
or vouchers for such costs) and finished goods, which Buyer shall pay within
thirty (30) days of receipt.
6.4 Upon termination or expiration of this Agreement, all rights,
obligations, and causes of action accruing hereunder prior to such termination
shall survive and the provisions of this Agreement shall continue to be
controlling for the purpose of determining the rights of the parties hereto. The
waiver or repeated waiver by either party hereto of any breach of any provision
of this Agreement by the other party shall not be deemed a waiver of a future
breach.
6.5 Upon termination or expiration of this Agreement, Buyer shall remove
the Equipment from the Facilities in accordance with Section 2.3 hereof.
6.6 The provisions of Sections 6, 7, 8 and 9 hereof shall survive any
termination or expiration of this Agreement.
7. Confidentiality
7.1 Co-Packer shall regard as confidential and proprietary all of the
information communicated to it by Buyer in connection with this Agreement (which
information shall at all times be the property of Buyer). Co-Packer shall not,
without Buyer's prior written consent, at any time (a) use such information for
any purpose other than in connection with the performance of its obligations
under this Agreement or (b) disclose any portion of such information to third
parties, excluding Co-Packer's agents or subcontractors which are directly
performing services for Co-Packer in connection with this Agreement. Co-Packer
shall at the termination or expiration of this Agreement return to Buyer all
such information which is in written or tangible form (including all copies,
summaries and notes of the contents thereof).
Notwithstanding the foregoing, Co-Packer's obligations pursuant to
this Section 7.1 shall not apply to (i) information that, at the time of
disclosure, is, or after disclosure becomes part of, the public domain other
than as a consequence of Co-Packer's breach, (ii) information that was known or
otherwise available to Co-Packer prior to the
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disclosure by Buyer (other than as a result of Co-Packer's ownership of the
Business prior to the date of this Agreement), (iii) information disclosed by a
third party to Co-Packer after the disclosure by Buyer, if such third party's
disclosure neither violates any obligation of the third party to Buyer nor is a
consequence of Co-Packer's breach, (iv) information that Buyer authorizes in
writing for release or (v) information which is independently developed by
Co-Packer.
7.2 Buyer shall regard as confidential and proprietary all of the
information communicated to it by Co-Packer in connection with this Agreement
(which information shall at all times be the property of Co-Packer). Buyer shall
not, without Co-Packer's prior written consent, at any time (a) use such
information for any purpose other than in connection with the performance of its
obligations under this Agreement or (b) disclose any portion of such information
to third parties, excluding Buyer's agents or subcontractors which are directly
performing services for Buyer in connection with this Agreement. Buyer shall at
the termination or expiration of this Agreement return to Co-Packer all such
information which is in written or tangible form (including all copies,
summaries and notes of the contents thereof).
Notwithstanding the foregoing, Buyer's obligations pursuant to this
Section 7.2 shall not apply to (i) information that, at the time of disclosure,
is, or after disclosure becomes part of, the public domain other than as a
consequence of Buyer's breach, (ii) information that was known or otherwise
available to Buyer prior to the disclosure by Co-Packer, (iii) information
disclosed by a third party to Buyer after the disclosure by Co-Packer, if such
third party's disclosure neither violates any obligation of the third party to
Co-Packer nor is a consequence of Buyer's breach, (iv) information that
Co-Packer authorizes, in writing, for release, or (v) information that is
acquired by Buyer pursuant to the terms of the Asset Purchase Agreement.
7.3 Each of the parties hereto agrees that any breach of this Section 7 by
such party, its employees, agents or subcontractors shall cause irreparable
injury to the other party, that the other party shall be entitled to specific
performance and injunctive or other equitable relief as a remedy for any such
breach, and, further, each party agrees to waive any requirement for the
securing or posting of any bond in connection with any such remedy.
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8. Guarantees and Indemnifications
8.1 Co-Packer represents and warrants that it has delivered to Buyer an
executed Continuing Guaranty in the form of Exhibit D hereto for all Product
manufactured, processed and packaged for Buyer pursuant to this Agreement.
8.2 Co-Packer shall indemnify Buyer for all claims, actions and other
liabilities, including reasonable legal fees or other costs (collectively,
"Losses"), that may be claimed, asserted or recovered against Buyer (i) by any
person, firm or corporation on account of any actual or alleged damage to
property, injury or death occurring to any person arising out of any obligation
defaulted upon by Co-Packer under this Agreement (including any recalls of
products), (ii) out of actual or alleged injury to person or property or death
occurring to any Co-Packer employees, agents or any other individuals on
Co-Packer's premises and (iii) for any negligent acts or omissions of Co-Packer
employees or agents, in each case other than Losses arising from adherence to
the Specifications and other than consequential damages or lost profits. Buyer
shall indemnify Co-Packer for all Losses that arise from any complaints, claims
or legal actions (a) alleging infringement of any letters patent, trademarks,
copyrights or otherwise, resulting from the use of any packaging materials
(including labels) or new Specifications for the Product, (b) brought by any
governmental authority against or concerning the Product or (c) that in any way
arise in connection with the quality of the Product (including a defect in any
Product attributable to the Specifications relating thereto), except if such
liability arises as a result of Co-Packer's breach of any of its obligations
under this Agreement.
8.3 In order for a party (the "Indemnified Party") to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of
or involving a claim or demand, made by any person, firm, governmental authority
or corporation against the Indemnified Party (a "Third Party Claim"), such
Indemnified Party must notify the indemnifying party in writing of the Third
Party Claim within ten (10) business days after receipt by such Indemnified
Party of written notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the indemnifying party shall have been actually
prejudiced as a result of such failure.
If a Third Party Claim is made against an Indemnified Party, the
indemnifying party will be entitled to participate in the defense thereof and,
upon notice to the Indemnified Party, to assume the defense thereof; provided
that (i) the indemnifying party's counsel is reasonably satisfactory to the
Indemnified Party, and (ii) the indemnifying party shall
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thereafter consult with the Indemnified Party upon the Indemnified Party's
reasonable request for such consultation from time to time with respect to such
suit, action or proceeding. If the indemnifying party assumes such defense, the
Indemnified Party shall have the right (but not the duty) to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the indemnifying party. The indemnifying party shall be
liable for the fees and expenses of counsel employed by the Indemnified Party
for any period during which the indemnifying party has not assumed the defense
thereof, but the indemnifying party shall not be liable to the Indemnified Party
for any legal expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof. Whether or not the indemnifying party
chooses to defend or prosecute any Third Party Claim, all of the parties hereto
shall cooperate in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the indemnifying party's request) the provision
to the indemnifying party of records and information which are reasonably
relevant to such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Whether or not the indemnifying party shall have
assumed the defense of a Third Party Claim, the Indemnified Party shall not
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the indemnifying party's prior written consent, which
shall not be unreasonably withheld.
Any payment pursuant to this Section 8.3 shall be made not later than
thirty (30) days after receipt by the indemnifying party of written notice from
the Indemnified Party stating that any Third Party Claim has been paid by any
Indemnified Party and the amount thereof and the indemnity payment requested.
Any payment not made when due shall accrue interest at the rate of one and
one-half percent (1 1/2%) per month until paid in full.
8.4 Notwithstanding anything herein to the contrary, in no event shall
Co-Packer or Buyer be liable to the other party under any provision of this
Agreement for any consequential, incidental or punitive damages or lost profits;
provided, however, that Co-Packer shall be responsible for Buyer's cost of cover
and any incidental damages incurred by Buyer in connection with any Defective
Product.
8.5 Co-Packer shall promptly notify Buyer, and Buyer shall promptly notify
Co-Packer, if Co-Packer or Buyer, as the case may be, reasonably determines at
any time, or is notified orally or in writing by any public authority, that any
Product ("Designated Product") is or may be contaminated or adulterated or
otherwise poses a health risk. In any such case, Buyer shall promptly follow all
instructions delivered by Co-Packer with respect to: (i) public announcements
regarding such Designated Product, (ii) recalls, withdrawals or
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seizures of such Designated Product and (iii) any other action reasonably
requested by Co-Packer in connection with such Designated Product. Buyer shall
pay all costs and expenses associated with any actions taken with respect to
Designated Product pursuant to this Section 8.5; provided that payment of such
costs and expenses by Buyer shall not be deemed to prejudice or otherwise affect
Buyer's rights under Section 8.2 hereof.
9. Miscellaneous
9.1 With reasonable prior notice to Co-Packer and to the extent reasonably
necessary to protect its rights under this Agreement, Buyer shall have the right
(a) to inspect only those areas of the Facilities where the Product is produced
and stored during hours when the Product is being manufactured and (b) to review
Co-Packer's manufacturing records pertaining to the Product during regular
business hours. Representatives of Buyer shall be allowed access only to those
areas of the Facilities where Product is situated for the purpose of inspecting
the Product prior to delivery to Buyer. In addition, Co-Packer shall provide
Buyer on a timely basis with copies of all written inspection reports relating
to the Facilities which are issued to Co-Packer by the U.S. Food and Drug
Administration or any state or local food and drug or similar agency (but only
to the extent such reports relate to the Product).
9.2 If Co-Packer 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 Co-Packer
or other acts of God, then upon written notice to Buyer, the affected provisions
and/or other requirements of this Agreement shall be suspended during the period
of such disability. Co-Packer shall make all reasonable efforts to remove such
disability within thirty (30) days of giving notice of such disability. If the
disability continues for more than ten (10) days after the cessation of the
reason for such disability, Buyer shall have the right to terminate this
Agreement, and neither party shall thereafter have any further rights or
obligations hereunder, except as set forth in Section 6. During said period,
Buyer may seek to have its needs, which would otherwise be met hereunder, met by
others without liability to Co-Packer hereunder.
9.3 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Illinois applicable to agreements made and to
be performed entirely within such State, without regard to the conflicts of law
principles of such State.
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9.4 Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid 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 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.
9.5 This Agreement and any rights and obligations hereunder shall not be
assignable or transferrable by Buyer or Co-Packer (including by operation of law
in connection with a merger or sale of stock, or sale of substantially all the
assets, of Buyer or Co-Packer), without the prior written consent of the other
party, provided that, without the consent of Co-Packer, Buyer may assign its
rights hereunder (i) to one or more wholly owned subsidiaries of Buyer upon
written notice of such assignment to Co-Packer, (ii) to Buyer's secured lenders
as collateral to secure indebtedness of Buyer or (iii) in connection with the
sale of all or substantially all of the assets of the Business to any
unaffiliated third party (regardless of the form of transaction) (it being
understood, however, that no such assignment shall limit or otherwise affect
Buyer's obligations hereunder) and provided further that, without the consent of
Buyer, Co-Packer may assign its rights hereunder to one or more wholly owned
subsidiaries of Co-Packer upon written notice of such assignment to Buyer (it
being understood, however, that no such assignment shall limit or otherwise
affect Co-Packer's obligations hereunder).
9.6 This Agreement and the Asset Purchase Agreement contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and thereof and supersede all prior agreements and
understandings, whether written or oral, relating to such subject matter.
9.7 No alleged waiver, modification or amendment to this Agreement or the
Exhibits 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 the provision hereof alleged
to be waived, modified or amended; provided, however, that Exhibit B attached
hereto may be amended by Co-Packer in accordance with the provisions of Sections
1.2, 5.2, 5.3 and 5.5.
9.8 All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent by prepaid
telex, cable or telecopy, or sent, postage prepaid, by registered, certified or
express mail, or reputable overnight courier service and shall be deemed given
when so delivered by hand, telexed,
-16-
cabled or telecopied, or if mailed, three days after mailing (one business day
in the case of express mail or overnight courier service), as follows:
If to Co-Packer: Kraft Foods, Inc.
Xxxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
with a copy to: Kraft Foods, Inc.
Xxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx
Associate General Counsel
Telecopy No.: (000) 000-0000
If to Buyer: Aurora Foods Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
with a copy to: Dartford Partnership, L.L.C.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxx
Telecopy No.: (000) 000-0000
Either party may change its mailing address by written notice to the
other party in accordance with this Section 9.8.
9.9 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, or the exercise of any other right, power, privilege,
or remedy; provided, however, that the obligations and duties of either party
with
-17-
respect to the performance of any term or condition in this Agreement shall
continue in full force and effect.
9.10 Nothing contained herein shall be deemed or construed to create any
partnership or joint venture between Buyer and Co-Packer. All activities by
Co-Packer under the terms of this Agreement shall be carried on by Co-Packer as
an independent contractor and not as an agent for or employee of Buyer. Under no
circumstances shall any employee of Co-Packer be deemed or construed to be an
employee of Buyer.
9.11 Buyer shall pay all sales, revenue, excise or other federal, state or
local taxes payable with respect to any purchase or shipment of Product
hereunder, excluding franchise, ad valorem, or income taxes of Co-Packer. In
lieu of sales taxes, Buyer may provide Co-Packer with an appropriate sales tax
exemption certificate acceptable to the relevant taxing authority.
9.12 The headings and captions contained in this Agreement and any Exhibit
hereto are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Any capitalized terms used in any
Exhibit and not otherwise defined therein shall have the meanings set forth in
this Agreement. The use of the word "including" herein shall mean "including
without limitation."
9.13 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 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.
9.14 Any dispute between the parties hereto arising under or in connection
with this Agreement shall be settled exclusively by negotiation or arbitration
in accordance with the provisions of Section 30 of the Asset Purchase Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Transitional Co-Pack Agreement as of the date and year first written above.
KRAFT FOODS, INC.
BY: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Title: Vice President
AURORA FOODS INC.
(formerly MBW FOODS INC.)
BY: /s/ Xxxxx X. Xxxxxx
-------------------------------
Title: Executive Vice President
EXHIBIT A
EQUIPMENT LIST
Reference is made to the Equipment (as defined in the Asset Purchase Agreement).
EXHIBIT B
PRODUCTS AND PRICING
See attached.
In addition, Buyer shall bear all costs of promotional packaging materials and
corresponding incremental costs.
EXHIBIT C
CO-PACKER PRODUCT
Product Number Product Description
-------------- -------------------
--------------------------------------------------------------------------------
06476 100/2oz Kraft Syrup SSCups
--------------------------------------------------------------------------------
07852 4/1 gallon Kraft Syrup
--------------------------------------------------------------------------------
06510 100/1.4oz Kraft Syrup SSCups
--------------------------------------------------------------------------------
000360 Log Cabin Reg 24/12oz
--------------------------------------------------------------------------------
000370 Log Cabin Reg 12/24oz
--------------------------------------------------------------------------------
000390 Log Cabin Reg 9/36oz
--------------------------------------------------------------------------------
000530 Log Cabin Lite 12/12oz
--------------------------------------------------------------------------------
Exhibit D
CONTINUING GUARANTY
Aurora Foods Inc.
(formerly MBW Foods Inc.)
Gentlemen/Ladies:
The undersigned hereby guarantees the article or articles comprising each
shipment or other delivery of Product (as defined in the Transitional Co-Pack
Agreement, dated as of the date hereof, by and between you and the undersigned
(the "Transitional Co-Pack Agreement")), hereafter made by the undersigned to
you, or on your order, or to or on the order of any subsidiary or affiliated
company of yours, as of the date of each shipment or delivery, to be, on such
date, not adulterated or misbranded within the meaning of the Federal Food, Drug
and Cosmetic Act, and not an article which may not, under the provisions of
Section 404 or 505 of the Act, be introduced into the Interstate Commerce, and
to be not adulterated or misbranded within the meaning of the statutes of any
state of the United States.
The undersigned further agrees that the above guaranty shall apply to all
Product which it shall sell to you hereafter pursuant to the terms of the
Transitional Co-Pack Agreement. Dated this 1st day of July, 1997.
KRAFT FOODS, INC.
Xxxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
