1
EXHIBIT 10.4
TECHNOLOGY AGREEMENT
This Technology Agreement (hereinafter "Agreement") dated as
of January 31, 1997 by and among Ralcorp Holdings, Inc., a Missouri corporation
("Ralcorp"), New Ralcorp Holdings, Inc., a Missouri corporation and a wholly
owned subsidiary of Ralcorp ("New Ralcorp"), and Chex Inc., a Delaware
corporation and a wholly owned subsidiary of New Ralcorp ("Branded
Subsidiary").
WITNESSETH THAT:
WHEREAS, Ralcorp, General Xxxxx, Inc., a Delaware corporation
("Acquiror"), and General Xxxxx Missouri, Inc., a Missouri corporation and
wholly owned subsidiary of Acquiror ("Merger Sub"), have heretofore entered
into an Agreement and Plan of Merger dated as of August 13, 1996 (as amended
from time to time, the "Merger Agreement") pursuant to which Merger Sub is
being merged with and into Ralcorp immediately after the consummation of the
transactions contemplated hereby (the "Merger").
WHEREAS, this Agreement is entered into in conjunction with
the Merger Agreement in order to facilitate the license or transfer of certain
technical information and know how to certain of the parties hereto.
WHEREAS, (i) Ralcorp wishes to assign its rights to certain of
this technical information and know how to New Ralcorp and each of Ralcorp and
Branded Subsidiary wish to license other of this technical information and know
how to New Ralcorp, and New Ralcorp wishes to accept such assignments and
licenses and (ii) New Ralcorp wishes to assign its rights to certain of this
technical information and know how to Branded Subsidiary, and Branded
Subsidiary wishes to accept such assignment, with all such assignments and
licenses being on the terms and conditions as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I - DEFINITIONS
1. The term "Branded Business" shall mean the business of manufacturing,
distributing and selling branded ready-to-eat cereal (excluding
Non-Branded Cereals) and branded cereal-based snacks and snack mixes,
as ever conducted by Ralcorp, New Ralcorp, Xxxxxxx Foods, Inc., the
predecessor in interest to New Ralcorp ("Foods"), or their predecessor
in interest, Xxxxxxx Purina Company ("RP Co."), prior to the
Distribution Date.
2
2. The term "Foods Business" shall mean any business (including any of
the same businesses as previously conducted by RP Co.) as ever
conducted by Ralcorp, New Ralcorp, Foods, or any of their Affiliates
prior to the Distribution Date, other than the Branded Business.
3. The term "Technical Information and Know How" shall mean any and all
information owned or licensed from third parties by Ralcorp and its
subsidiaries, and which, as of the date of this Agreement, has been
used or reduced to practice for use by the Branded Business or the
Foods Business or by RP Co. in connection with either of such
businesses, including trade secrets, product formulas, processing and
equipment design and information, specifications, know how,
manufacturing, research, software, inventions, patent applications,
patents and industrial property rights and other technical
information.
4. The term "Assigned Technical Information and Know How" shall mean any
and all Technical Information and Know How that is or has in the past
been used exclusively in, or reduced to practice for use exclusively
by, the Foods Business and that same business as it was previously
conducted by RP Co. The term "Assigned Technical Information and Know
How" shall specifically include, without limitation, the Technical
Information and Know How listed on Schedule A attached hereto (such
information designated on Schedule A referred to as the "Special
Assigned Technical Information and Know How") and shall specifically
exclude both the Branded Technical Information and Know How and the
Shared Technical Information and Know How.
5. The term "Shared Technical Information and Know How" shall mean any
and all Technical Information and Know How that is or has in the past
been used or reduced to practice for use by (a) the Branded Business
and that same business as it was previously conducted by RP Co. for
any products which are not Designated Products and (b) both the
Branded Business and the Foods Business and those same businesses as
they were previously conducted by RP Co. The term Shared Technical
Information and Know How" shall specifically exclude the Assigned
Technical Information and Know How and the Branded Technical
Information and Know How.
6. The term "Branded Technical Information and Know How" shall mean any
and all Technical Information and Know How that is or has in the past
been used exclusively, or reduced to practice for use exclusively, by
Ralcorp, its subsidiaries or RP Co. to produce Designated Products,
including all cereal-based snacks and snack mixes that are Designated
Products, and shall include the technical information, know how and
equipment listed on Schedule B attached hereto, which shall not be
considered or form part of the Shared Technical Information and Know
How. The term "Branded Technical Information and Know How" shall
specifically exclude the Assigned Technical Information and Know How.
7. The term "Designated Products" shall have the meaning set forth in the
Trademark Agreement.
2
3
8. The term "Reorganization Agreement" shall mean the agreement by this
name dated as of the date hereof by and among Ralcorp, New Ralcorp,
Foods, Acquiror, and Branded Subsidiary.
9. The term "Trademark Agreement" shall mean the agreement by this name
dated as of the date hereof by and among Ralcorp, New Ralcorp and
Branded Subsidiary.
10. All other capitalized terms used but not otherwise defined herein
shall have the meanings ascribed thereto in the Reorganization
Agreement.
ARTICLE II - ASSIGNMENTS
1. Ralcorp hereby assigns and transfers to New Ralcorp, its successors
and assigns, all of its right, title, and interest, effective as of
the Distribution Date, in the United States of America and all foreign
countries, in and to the Assigned Technical Information and Know How
and all income, royalties, fees, damages, and payments now or
hereafter due or payable in respect thereto, and in and to any and all
causes of action (either in law or in equity), and the right to
enforce any rights and file any causes of action, including the right
to recover damages, for any past, present, or future infringement or
misappropriation of any of said rights.
2. New Ralcorp hereby assigns and transfers to Branded Subsidiary, its
successors and assigns, all of its right, title and interest,
effective as of the Distribution Date, in the United States of America
and all foreign countries, in and to the Shared Technical Information
and Know How and the Branded Technical Information and Know How in
which New Ralcorp or any of its subsidiaries owns or possesses or
otherwise has rights, together with all income, royalties, fees,
damages and payments now or hereafter due or payable in respect
thereto, and in and to any and all causes of action (either in law or
in equity), and the right to enforce any rights and file any causes of
action, including the right to recover damages, for any past, present,
or future infringement or misappropriation of any of said rights.
3. All assignments made hereunder by Ralcorp and New Ralcorp are on a
quitclaim basis without contravening the representations or warranties
concerning such Technical Information and Know How contained in the
Merger Agreement or Reorganization Agreement.
3
4
ARTICLE III - LICENSE GRANTS
1. Each of Ralcorp and Branded Subsidiary hereby grants to New Ralcorp,
effective as of the Distribution Date and subject to the terms,
covenants, conditions, and limitations set forth in this Agreement
(including, without limitation, those restrictions set forth in
Article IV hereof), that certain Technology Agreement dated as of
March 31, 1994 by and among RP Co., Xxxxxxx Purina International,
Inc., VCS Holding Company Inc. and Ralcorp, which agreement is
attached hereto as Exhibit A (the "Prior Technology Agreement"), the
Merger Agreement, and the Trademark Agreement:
(a) an irrevocable, non-exclusive, royalty-free, license to use,
employ, exercise, apply, or otherwise utilize, the Shared
Technical Information and Know How from and after the date
hereof until March 31, 1999 in the Western Hemisphere, but,
with no rights (except as expressly provided herein) during
the applicable time periods specified in Section 4(a) of
Article IV hereof to produce, have produced, or license to
produce the Designated Products or snack mixes which are not
Designated Products;
(b) an irrevocable, non-exclusive, royalty-free, license to use,
employ, exercise, apply, or otherwise utilize, the Shared
Technical Information and Know How from and after March 31,
1999, worldwide, in perpetuity, but, with no rights (except as
expressly provided herein) during the applicable time periods
specified in Section 4(a) of Article IV hereof to produce,
have produced, or license to produce the Designated Products
or snack mixes which are not Designated Products;
(c) an irrevocable, non-exclusive, royalty free, license to use,
employ, exercise, apply or otherwise utilize the Branded
Technical Information and Know How to produce, but, except as
expressly provided herein, not to disclose or sublicense the
same to third parties (including, without limitation, to
contract manufacturers, other than as is necessary for Foods
Copacking (as defined below)), (i) any products (including,
without limitation, all Designated Products and all
cereal-based snacks and snack mixes) exclusively for Branded
Subsidiary alone or for RP Co. as provided in and in
accordance with Article V, Section 1 hereinbelow, in each
case, commencing as of the Distribution Date; (ii) (A) any
products, other than snack mix products and Designated
Products which are COOKIE CRISP type ready to eat cereals,
commencing on the Distribution Date and (B) any Designated
Products which are COOKIE CRISP type ready to eat cereals,
commencing eighteen (18) months after the Distribution Date,
in each case (A) and (B), in the United States, its
territories, possessions, military installations and the
Commonwealth of Puerto Rico for any third parties; (iii) any
products, other than snack mix products, commencing five (5)
years after the Distribution Date, in all other countries for
any third parties; (iv) any snack mix products other than
those referred to in Section 4(a)(iii) of Article IV,
commencing two (2) years after the Distribution Date,
worldwide for any third parties; and (v) any snack mix
products referred to in Section 4(a)(iii) of Article IV
4
5
hereof, commencing five (5) years after the Distribution Date,
worldwide, for any third parties.
(d) an irrevocable, non-exclusive, royalty-free, license to use
the invention claimed in U.S. Patent No. 5,188,860 entitled
"Process for the Production for a Fiber Containing Cereal
Product", worldwide, in perpetuity.
For purposes of the foregoing paragraph (c), the term "Foods
Copacking" shall mean the right of New Ralcorp (subject to all of the
restrictions and obligations set forth herein and provided that all use of
Branded Technical Information and Know How and the Shared Technical Information
and Know How by any such contract manufacturer is on the same basis and subject
to the same restrictions as set forth in Section 1 of Article III and Section 4
of Article IV as they apply to New Ralcorp) to have contract manufacturers
pack, or mix with other ingredients and pack, only for New Ralcorp itself,
ready to eat cereals that are Designated Products and cereal based snacks and
snack mix products as described in Section 4(a) of Article IV, but shall not
include any right of any contract manufacturer to produce or make any of such
products for itself or other third parties.
2. New Ralcorp hereby agrees and acknowledges that the Shared Technical
Information and Know How and the Branded Technical Information and
Know How is subject to all limitations, undertakings and liabilities
contained in the Prior Technology Agreement, including, without
limitation, each of the following:
(a) New Ralcorp shall not disclose any of the Shared Technical
Information and Know How and Branded Technical Information and
Know How to any third party during the term of the license
without the written consent of RP Co.; and
(b) New Ralcorp shall obtain a written agreement from each of its
employees, agents, officers and/or directors that the Shared
Technical Information and Know How and the Branded Technical
Information and Know How will be kept confidential at all
times by such parties and that such information will not be
disclosed to any third parties.
ARTICLE IV - OBLIGATIONS OF THE PARTIES
1. New Ralcorp hereby agrees to assume from Ralcorp and fulfill all of
the technical assistance obligations owed to RP Co. by Ralcorp as
described in Article III of the Prior Technology Agreement, and
Ralcorp hereby consents to such assumption by New Ralcorp.
2. Ralcorp, Branded Subsidiary and New Ralcorp each agree to treat as
confidential all Technical Information and Know How, including the
Branded Technical Information and Know How, the Assigned Technical
Information and Know How, the Special Assigned Technical Information
and Know How and the Shared Technical Information and Know How; and
shall not at any time disclose or permit to be disclosed any portion
thereof to any other person, firm, or entity; provided, however, (i)
that New Ralcorp shall have the right to
5
6
license or disclose, in confidence, but only in accordance with the
terms of the Prior Technology Agreement and this Agreement, the Shared
Technical Information and Know How and, as to the Branded Technical
Information and Know How, in accordance with Section 2 of Article V of
this Agreement, and that this provision shall not otherwise limit or
preclude New Ralcorp from doing so and (ii) that each of Ralcorp and
Branded Subsidiary shall have the right to license or disclose, in
confidence, but only in accordance with the terms of the Prior
Technology Agreement, the Shared Technical Information and Know How
and the Branded Technical Information and Know How, and that this
provision shall not otherwise limit or preclude Ralcorp or Branded
Subsidiary from doing so. Notwithstanding the foregoing, New Ralcorp
shall not be under any obligation pursuant to this Agreement to treat
as confidential any of the Assigned Technical Information and Know How
or Special Assigned Technical Information and Know How.
3. The obligation of nondisclosure, contained in Paragraph 2 above, shall
not apply in the event that any of such confidential information:
(a) was known to the public or generally available to the public
prior to the date it was received from the disclosing party;
(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.
4. New Ralcorp, on behalf of itself and its successors in interest and
present and future subsidiaries and Affiliates other than Branded
Subsidiary, agrees and shall cause such subsidiaries and Affiliates to
agree, that (except as otherwise provided in the Supply Agreement) New
Ralcorp, its successors and such subsidiaries and Affiliates shall not
directly or indirectly:
(a) make, have made, produce, market, contract pack, sell or
license, or contract with, any third party to produce (except
as provided in and in accordance with Article V, Section 1,
hereinbelow for RP Co. and Article V, Section 3 for Branded
Subsidiary):
(i) (A) any ready-to-eat cereals that are COOKIE
CRISP-type Designated Products in the United States,
its territories, possessions, military installations
or the Commonwealth of Puerto Rico for the eighteen
(18) month period commencing upon the Distribution
Date and (B) any ready to eat cereals that are
Designated Products outside of the United States, its
territories, possessions, military installations or
the Commonwealth of Puerto Rico for the five (5) year
period commencing upon the Distribution Date (which
shall preclude, without limitation, any sales made to
third
6
7
parties of such Designated Products which New Ralcorp
knows are likely, based on reasonable information and
knowledge, to be sold or resold outside the United
States, its territories, possessions or military
installations, or the Commonwealth of Puerto Rico);
(ii) any snack mix, cereal-based or otherwise, anywhere in
the world for the two (2) year period commencing upon
the Distribution Date; and
(iii) any snack mix containing those products, or a product
substantially similar to, or identical to, products
which have been, prior to the date hereof, offered
for sale in connection with any form of the CHEX
trademark, which shall include products sold under
the Crispy Hexagon designation but which shall not
include those wheat cereals denominated or described
as SHREDDED WHEAT and similar in nature to other
shredded wheat products currently offered by other
cereal manufacturers, for the five (5) year period
commencing upon the Distribution Date; provided,
however, that this Section 4(a)(iii) and Section
4(a)(ii) hereinabove shall not apply to snack mix
products of an enterprise acquired by New Ralcorp in
which the snack mix business generates less than 20%
of the annual gross revenues of such enterprise and
less than seven (7) million dollars in annual sales;
or
(b) use, print, disseminate, display or publish on packaging for
cereals, or in any related advertising, sales or promotional
materials, any snack recipes which are essentially identical
to the snack mix recipes that have been used by Foods or New
Ralcorp in connection with CHEX products in the three (3)
years prior to the Distribution Date.
5. Ralcorp and Branded Subsidiary, and their Affiliates and subsidiaries,
hereby agree that Sections 4(a) and (b) of this Article IV shall not
apply to, and shall not restrict in any manner whatsoever, the
existing business of any third party (including the Affiliates and
subsidiaries of such third party prior to such acquisition) which may
acquire New Ralcorp or any of its Affiliates or subsidiaries, as such
existing business is conducted at the time of such acquisition.
Notwithstanding the foregoing, New Ralcorp, on behalf of itself and
its successors in interest and present and future subsidiaries and
Affiliates, agrees and shall cause such subsidiaries and Affiliates to
agree, that Sections 4(a) and (b) shall prevent any such acquiring
third party from using the Shared Technical Information and Know How
related to snack mixes or the Designated Products and the Branded
Technical Information and Know How in violation of the terms of
Sections 4(a) and (b) of this Article IV.
ARTICLE V - CERTAIN AGREEMENTS
1. Each of Ralcorp and Branded Subsidiary hereby agrees that, except as
set forth in this Section 1, nothing contained in this Agreement shall
interfere with the ability of New Ralcorp to meet the obligations of
New Ralcorp, if any, to RP Co., as set forth in the Distributorship
Agreement. Each of Ralcorp and Branded Subsidiary hereby agrees that
7
8
New Ralcorp shall have the right to produce ready to eat cereals for
RP Co. in accordance with the terms of the Distributorship Agreement,
up to, but not beyond, September 1, 1999, by which time New Ralcorp
agrees that it shall have terminated the Distributorship Agreement
insofar as it may require the production or sale of any Designated
Products. New Ralcorp also agrees that New Ralcorp shall not use any
of the Branded Trademarks in connection with such production for RP
Co., unless such usage is specifically authorized in writing by
Ralcorp.
2. Each of Ralcorp and Branded Subsidiary hereby agrees that New Ralcorp
shall have the right to license in accordance with the terms of the
Prior Technology Agreement, or, at its option, request that Ralcorp
and Branded Subsidiary each license in accordance with the terms of
the Prior Technology Agreement, if applicable, the Shared Technical
Information and Know How and the Branded Technical Information and
Know How, or any parts thereof, from and after the Distribution Date
to any subsidiaries or Affiliates of New Ralcorp (regardless of when
any such relationship with New Ralcorp may arise), for so long as such
entity continues to be a subsidiary or Affiliate of New Ralcorp, and
to any "Successor Third Party," on the same terms as set forth herein
and specifically subject to the requirement that each such entity
shall assume and be subject to and be bound by all restrictions set
forth in this Agreement and the Trademark Agreement, provided that,
upon the granting of a license of the Shared Technical Information and
Know How and the Branded Technical Information and Know How, or any
parts thereof, by Ralcorp or Branded Subsidiary to a Successor Third
Party, the then existing licenses to New Ralcorp (and its subsidiaries
and Affiliates) relating exclusively to the business transferred or to
be transferred to such Successor Third Party shall be terminated and
New Ralcorp shall only retain, if any, licenses of the Shared
Technical Information and Know How and Branded Technical Information
and Know How relating to that part of the ready to eat cereal, cereal
based snack and cereal based snack mix business of which it retains
ownership immediately after such transfer. It is hereby understood
that any such license will (i) provide the licensee with rights no
greater than the rights of New Ralcorp as set forth in this Agreement
and (ii) be subject in all respects to the terms of this Agreement and
the Prior Technology Agreement. Each of Ralcorp and Branded
Subsidiary hereby agrees that it shall, or, if necessary to fulfill
its obligations hereunder, it shall cause its Affiliates and
subsidiaries to, promptly comply with (in no case, more than fourteen
(14) days after its receipt of) any such request by New Ralcorp by
providing any such subsidiary or Affiliate of New Ralcorp with all
documentation necessary to provide such Affiliate or subsidiary with
the same rights as transferred to New Ralcorp by this Agreement. For
purposes of this Agreement, "Successor Third Party" shall mean any
entity to whom New Ralcorp transfers (by way of asset transfer, stock
transfer, merger or otherwise) following the date hereof all or
substantially all of (x) its ready to eat cereal, cereal based snack
and cereal based snack mix business as a whole, (y) substantially all
of its assets, title, properties, interests, rights and privileges,
tangible and intangible, to manufacture and sell cereals that are
identical to or substantially similar in form or overall appearance to
cereal products bearing the CHEX trademark, or (z) after a transfer of
the business as described in (y), the ready to eat cereal, cereal
based snack and cereal based snack mix business then remaining,
including any entity that is a subsidiary or Affiliate of New Ralcorp,
and any entity which is a subsequent
8
9
transferee of any of the businesses described in (x), (y) or (z) of
this Section V.2; it being understood that any license of the Shared
Technical Information and Know How and the Branded Technical
Information and Know How to a subsequent transferee shall be on the
same terms and conditions as set forth in this Section V.2.
3. Each of Ralcorp and Branded Subsidiary hereby agrees that nothing
contained in this Agreement shall interfere with the ability of New
Ralcorp to meet its obligations to Branded Subsidiary under the Supply
Agreement.
4. After the Distribution Date, none of New Ralcorp, Ralcorp nor Branded
Subsidiary shall have an ongoing obligation to assign, license, share
or provide to the other any Technical Information and Know How created
or developed after the Distribution Date.
5. Ralcorp, Branded Subsidiary and New Ralcorp each hereby acknowledges
that pursuant to the Reorganization Agreement it has agreed to abide
by certain limitations, undertakings and liabilities related to the
Assigned Technical Information and Know How, the Shared Technical
Information and Know How and the Branded Technical Information and
Know How, including those arising out of the Prior Technology
Agreement.
ARTICLE VI - ASSIGNABILITY
New Ralcorp's rights herein as to the Shared Technical
Information and Know How and the Branded Technical Information and Know How
shall not be assignable except to its successor by operation of law and except
as otherwise expressly provided herein; otherwise, this Agreement and the
rights granted herein shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
ARTICLE VII - MISCELLANEOUS PROVISIONS
1. Should any provision of this Agreement be declared unenforceable for
any reason or found contrary to any law or statute, said provision
shall be adjusted in accordance with such decision or if it cannot be
so adjusted will automatically cease to be a part of this Agreement
without affecting any other provisions or obligation thereof.
2. This Agreement shall be construed and enforced in accordance with the
laws of the State of Missouri.
3. The headings used in this Agreement are for reference only and shall
not be relied upon or used in the interpretation of this Agreement.
4. The dispute resolution provisions contained in Article XII of the
Reorganization Agreement will control in the event of any dispute in
relation to this Agreement.
9
10
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representative effective on the day and year
set forth in this Agreement.
RALCORP HOLDINGS INC.
By: /s/ J. R. Xxxxxxxxxx
-----------------------------------
Name: J. R. Xxxxxxxxxx
Title: Chief Executive Officer and
President
CHEX INC.
By: /s/ X. X. Xxxxxxxx
-----------------------------------
Name: X. X. Xxxxxxxx
Title: President
NEW RALCORP HOLDINGS, INC.
By: /s/ J. R. Xxxxxxxxxx
-----------------------------------
Name: J. R. Xxxxxxxxxx
Title: Chief Executive Officer and
President
10
11
SCHEDULE A TO THE TECHNOLOGY AGREEMENT
SPECIAL ASSIGNED TECHNICAL INFORMATION AND KNOW HOW
1. Twin screw extrusion technology and equipment currently and
historically associated exclusively with cereals not offered by and
not reduced to practice for use by cereal or snack mixes of the
Branded Business.
2. Cooking, shredding, baking and sugar frosting technology and equipment
at Xxxxxxx facility in Princeton, Kentucky currently and historically
associated exclusively with cereals (including cereals not yet in
commercial production) not offered by and not reduced to practice for
use by cereal or snack mixes of the Branded Business.
3. Crispy hexagon forming rolls and related technology currently and
historically associated exclusively with cereals not offered by the
Branded Business.
11
12
SCHEDULE B TO THE TECHNOLOGY AGREEMENT
1. Formulas and processing steps, times and conditions for the Designated
Products
2. To the extent they are exclusively associated with the Designated
Products, the following, as well:
Material specifications
Machine and equipment settings
Equipment and manufacturing specifications and instructions
Plant operating procedures
Testing procedures
Sampling procedures
Safety protocols
Ingredient testing
12
