Exhibit 10.18
PRODUCTION AGREEMENT
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This Production Agreement (the "Agreement") is made as of the 19th day of
November, 1997, by and between Aurora Foods, Inc., a Delaware corporation
("Buyer"), and The Red Wing Company, Inc., a Delaware corporation ("Producer").
WITNESSETH
WHEREAS, Buyer possesses formulas and processes for the manufacture of
certain food products described in Schedule A hereto (the "Products");
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WHEREAS, Producer is engaged in the business of manufacturing and mixing
food products, including food products similar to the Products;
WHEREAS, Producer has facilities and expertise for the production of the
Products; and
WHEREAS, Buyer and Producer desire to define and develope a business
relationship whereby Producer will manufacture and sell, and Buyer will
purchase, the Products subject to the terms and conditions set forth herein.
NOW THEREFORE, for mutual and adequate consideration, Producer and Buyer
agree as follows:
1. TERM. Unless earlier terminated in accordance with Section 22 hereof, this
Agreement shall commence as of November 19, 1997, (the "Commencement Date")
and shall end on the fifth anniversary of the Commencement Date (the
"Original Term") and shall be subject to automatic renewal for additional
consecutive one year terms (the "Renewal Term or Terms") unless a decision
is made by either party not to renew. Any decision not to renew shall be
submitted in writing by the party making such decision no later than one-
hundred eighty (180 ) days prior to the expiration of the Original Term or
any Renewal Term. The "Agreement Term" shall mean the Original Term, and if
this Agreement is renewed, the Renewal Term or Terms.
2. PRODUCTION FACILITIES. The Products will be manufactured at Producer's
facilities located at San Jose, California (the "San Xxxx Plant"), Streator,
Illinois (the "Streator Plant"), Dunkirk, New York (the "Dunkirk Plant"),
Fredonia, New York (the "Fredonia Plant") and any other plant location of
Producer as is approved in advance by Buyer, which approval shall not be
unreasonably withheld (each, an "Approved Facility").
3. PRODUCTS; ANNUAL MINIMUM PRODUCTION.
a. Subject to the terms and conditions of this Agreement, Producer agrees
to manufacture and sell to Buyer, and Buyer agrees to purchase from the
Producer, the Products as set forth on Schedule A in such quantities and
at such Approved Facilities as shall be determined from time to time in
the sole judgment of Buyer.
b. Notwithstanding the foregoing, subject to the terms and conditions of
this Agreement, Buyer agrees that, during the second year of the
Original Term (with the second year being measured from the first
anniversary of the Commencement Date to the day immediately preceding
the second anniversary of the Commencement Date) and during each year of
the Original Term thereafter, Buyer shall order at least three million
three hundred thousand equivalent cases of Products from the Producer
(with an equivalent case being equal to 288 ounces of the Products)
(such number of equivalent cases, as the same may be adjusted in
accordance with this Section 3, is hereafter referred to as the "Annual
Minimum").
c. Buyer has advised Producer that, at some time during the Original Term,
Buyer may redesign the packaging for the entire line of its Country
Kitchen/R/ brand of table syrup, and Producer reserves the right not to
produce any of the redesigned products of the Country Kitchen/R/ brand
of table syrup. If Producer exercises its right not to produce any of
the redesigned products of the Country Kitchen/R/ brand (which shall not
be deemed to be a breach of this Agreement) so that Buyer has another
person produce the Country Kitchen/R/ brand of table syrup, then the
Annual Minimum number of equivalent cases to be ordered by Buyer shall
be adjusted downward as follows:
(i) During the year of the Original Term (with the year being
determined in accordance with Section 3(b) of this Agreement) in
which Buyer has another person commence production of any of the
redesigned products of the Country Kitchen/R/ brand of table syrup,
the Annual Minimum for such year shall equal three million three
hundred thousand equivalent cases of Products minus the Partial
Year Shortfall (as hereinafter defined). The term "Partial Year
Shortfall" shall mean an amount equal to the lesser of (a) seven
hundred thousand equivalent cases of Products divided by 365 times
the number of calendar days remaining in such year or (b) the
actual number of equivalent cases of the Country Kitchen/R/ brand
of table syrup produced by the third party producer in such year.
(ii) During each year of the Original Term following the year of the
Original Term (with the year being determined in accordance with
Section 3(b)
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of This Agreement) in which Buyer has another person commence
production of any of the redesigned products of the Country
Kitchen/R/ brand of table syrup, the Annual Minimum shall equal
three million three hundred thousand equivalent cases of Products
minus the Subsequent Full Year Shortfall (as hereinafter defined).
The term "Subsequent Full Year Shortfall" shall mean an amount
equal to the lesser of (a) seven hundred thousand equivalent cases
of Products or (b) the actual number of equivalent cases of the
Country Kitchen/R/ brand of table syrup produced by the third party
producer during such subsequent year.
d. If during any year after the first year of the Original Term Buyer shall
order more equivalent cases of Products than the applicable Annual
Minimum number of cases for such year, then, for purposes of determining
under this Agreement whether Buyer has ordered in a particular year the
applicable Annual Minimum number of cases, the excess number of
equivalent cases from such year shall be carried forward (but not
carried back) to be applied against the applicable Annual Minimum number
of cases to be ordered by the Buyer in any subsequent year of the
Original Term. The sum of the number of equivalent cases carried forward
from prior years and the number of equivalent cases actually order
during such year shall be the amount of equivalent cases deemed ordered
for such year by the Buyer for purposes of this Agreement. If the sum of
the number of equivalent cases carried forward from prior years and the
number of equivalent cases actually ordered during such year by the
Buyer shall be less than the applicable Annual Minimum number of cases
for such year, the number of equivalent cases carried forward shall be
included in the number of cases deemed ordered for such year and shall
be utilized to decrease the amount that may be owing to the Producer
pursuant to Section 14(a) of this Agreement.
e. IF DURING ANY YEAR AFTER THE FIRST YEAR OF THE ORIGINAL TERM BUYER SHALL
FAIL TO ORDER THE APPLICABLE ANNUAL MINIMUM NUMBER OF EQUIVALENT CASES
OF PRODUCTS FROM THE PRODUCER FOR SUCH YEAR (WITH SUCH CALCULATION BEING
DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3 OF THIS
AGREEMENT, INCLUDING THE PROVISIONS OF PARAGRAPH D OF THIS SECTION 3),
THE SOLE AND EXCLUSIVE REMEDIES FOR PRODUCER FOR SUCH FAILURE SHALL BE
(I) THE REMEDY PROVIDED TO PRODUCER IN SECTION 14(A) OF THIS AGREEMENT
AND (II) IF SUCH FAILURE OCCURS DURING THE SECOND YEAR OF THE ORIGINAL
TERM, AN ADDITIONAL ONE HUNDRED EIGHTY DAYS SHALL BE ADDED TO THE
ORIGINAL TWO YEAR PERIOD SET FORTH IN SECTION 22(B) OF THIS AGREEMENT
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BEFORE THE BUYER SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT
PURSUANT TO SECTION 22(B).
4. MANUFACTURING STANDARDS. Producer agrees to manufacture each of the Products
in accordance with Buyer's specifications, quality control standards and
other procedures that are contained in the Operating Manual that has been
delivered to Producer and that shall be deemed to be a part hereof as
Schedule B (the "Specification"), which may be modified from time to time in
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the sole judgment of Buyer upon thirty days prior written notice to the
Producer; provided, however, in the event any such modifications to the
Specifications result in any change in the cost to produce the Products, the
price for the Products shall be adjusted upward or downward, as the case may
be, to cover the change in the cost to produce the Products. Upon written
notification from Buyer to the Producer modifying the Specifications,
Schedule B shall be deemed amended by such modification. Buyer agrees to
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promptly supply Producer with all formulas, operating techniques,
manufacturing procedures and other technical information necessary and
appropriate for the manufacture of the Products; provided, however, that
Producer understands that Buyer is relying upon Producer's expertise in
suggesting to Buyer and implementing the appropriate procedures for the
manufacture of the Products.
5. GRANT OF LICENSE. Subject to the terms and conditions of this Agreement,
Buyer hereby grants to Producer, who accepts the same, a nonexclusive, non-
assignable, indivisible and royalty free right and license to manufacture
and sell the Products to Buyer exclusively. The license includes the right
to use the Specifications and any other technical know-how, formulas,
manufacturing processes, and other technical and confidential information
useful or necessary for the manufacture of the Products. This license will
remain in effect until the expiration or other termination of this Agreement
and may not be assigned, transferred (including any transfer by operation of
law), subcontracted or sublicensed to any third party (other than, in the
case of a sublicense or subcontract, to a wholly-owned subsidiary of the
Producer) without the prior written consent of Buyer, which consent may be
withheld in the sole discretion of Buyer. In the event Producer enters into
any sublicense or subcontract with a wholly-owned subsidiary of Producer,
Producer shall be responsible for all acts and omissions of its wholly-owned
subsidiary.
6. CONFIDENTIAL INFORMATION.
a. For the purpose of this Agreement, "Confidential Information" shall mean
all written information related to the Products and all formulas,
manufacturing processes, data, know-how, technical and non-technical
materials, and product samples and specifications (including the
Specifications) which Buyer has disclosed to Producer prior to this
Agreement or which Buyer may disclose to Producer pursuant to or in
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connection with this Agreement, and all pricing information with respect
to the Products, all written financial information, manufacturing
processes, data, know-how, technical and non-technical materials which
Producer has disclosed to Buyer prior to this Agreement or which
Producer may disclose to Buyer pursuant to or in connection with this
Agreement.
b. Notwithstanding the foregoing, Confidential Information shall not
include any information which the non-disclosing party can demonstrate
by reasonable evidence: (i) is or becomes public knowledge through no
fault or omission of the non-disclosing party; (ii) is lawfully obtained
by the non-disclosing party from a third party under no obligation of
confidentiality concerning such information; (iii) was, at the time of
receipt, otherwise known to the non-disclosing party without
restrictions as to use or disclosure; or (iv) is developed independently
by the non-disclosing party and without reliance upon the Confidential
Information disclosed hereunder. The burden of proving any such
exceptions to the definition of Confidential Information will reside
with the non-disclosing party.
c. The non-disclosing party agrees to hold all Confidential Information of
the disclosing party in confidence and not to disclose any Confidential
Information to any third party except (i) those with a need to know in
order to assist in the manufacture of the Products, (ii) as may be
required by law; or (iii) to accountants, attorneys, bankers and other
professional advisors of a party. The non-disclosing party agrees not to
make any use of the Confidential Information except as provided herein.
d. The non-disclosing party agrees that its directors, officers, employees,
agents and other representatives who have access to the Confidential
Information of the disclosing party will be made aware of the
obligations of confidentiality and non-use set forth in Section 6 of
this Agreement and will be bound to abide by these obligations. The non-
disclosing party agrees that it shall be responsible for any breach of
the obligations of confidentiality or non-use by any person to whom such
information is disclosed by the non-disclosing party.
e. The Confidential Information of the disclosing party shall remain the
exclusive property of the disclosing party, and the non-disclosing party
acquires no interest in or rights thereto under this Agreement or
otherwise. Upon termination of this Agreement, or at any time upon the
disclosing part's request, the nondisclosing party shall, at its sole
option, either promptly return all tangible forms of Confidential
Information of the disclosing party (including copies) to the disclosing
party then in the non-disclosing part's possession or under its
control or destroy such Confidential Information and deliver a
certificate to the disclosing party certifying such destruction. Upon
termination of this Agreement, to the
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extent that any document prepared by or on behalf of the non-disclosing
party incorporates any Confidential Information of the disclosing party,
the non-disclosing party shall destroy such documentation and deliver a
certificate to the disclosing party certifying such destruction.
f. The non-disclosing party shall be liable to the disclosing party for all
direct and incidental damages (including, without limitation, reasonable
attorneys fees) incurred as a result of the breach of the
confidentiality and/or non-use provisions of Section 6 of this Agreement
by the non-disclosing party. The non-disclosing party also acknowledges
and agrees that, in the event of such a breach, such Damages may not be
an adequate remedy and that the disclosing party shall be entitled to
specific performance and injunctive or other equitable relief as a
remedy for any such breach.
g. The non-disclosing party acknowledges that the Confidential Information
disclosed or to be disclosed by the disclosing party represents the
disclosing part's valuable property, which is intended to be maintained
in perpetuity as trade secret property. Accordingly, the confidentiality
and non-use obligations of Section 6 of this Agreement shall be
continuing in nature and shall survive termination of this Agreement.
7. SALE AND PURCHASE OF PRODUCTS.
a. The terms and conditions contained in this Agreement shall be effective
for all Products sold by the Producer to the Buyer during the Agreement
Term. During the Agreement Term, Producer agrees to manufacture and sell
the Products to Buyer against the Monthly Production Request (as such
term is hereinafter defined in Section 10 of this Agreement) of the
Buyer which request shall be deemed to be a production purchase order.
During the Agreement Term, Producer agrees to deliver the Products
manufactured and sold to Buyer against shipping orders of Buyer. Except
as otherwise set forth in this Agreement, each contract for the purchase
and sale of the Products shall be initiated hereunder by Buyer's
issuance to Producer of a production purchase order and delivery of such
Products shall be initiated against, shipping orders of the Buyer.
Unless Buyer otherwise agrees in writing, ALL PRODUCTION PURCHASE ORDERS
AND SHIPPING ORDERS ARE EXPRESSLY LIMITED TO THE TERMS HEREOF AND ANY
ADDITIONAL OR DIFFERENT TERMS ARE OBJECTED TO WITHOUT FURTHER
NOTIFICATION BY PRODUCER AND BUYER. Shipping orders shall be issued to
the Producer at least five (5) business days prior to the requested
shipping date. If the quantity of the particular Product requested in
such shipping order for delivery in a calendar month, when added
together with all other shipping orders for such particular Product for
delivery in the same calendar month, is not in
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excess of the quantity for such Product as set forth in the then current
Monthly Production Request, such shipping order for such Product shall
be deemed accepted without any further act of the Producer. If the
quantity of the particular Product requested in such shipping order for
delivery in a calendar month, when added together with all other
shipping orders for such particular Product for delivery in the same
calendar month, is in excess of the quantity for such Product as set
forth in the then current Monthly Production Request, such shipping
order shall be deemed accepted to the extent that such quantities are
not in excess of the then current Monthly Production Request for such
Product and, with respect to the remaining quantities, shall be accepted
or rejected by Producer in writing within five (5) business days of the
issuance of the shipping order to the Producer. If the Producer shall
not have otherwise notified the Buyer within five (5) business days of
the issuance of such shipping order, the order shall be deemed accepted
in full by Producer and, to the extent the quantities are in excess of
the then current Monthly Production Request for such Product, shall be
deemed to be a production purchase order with respect to such excess
quantities. Producer shall use its best efforts to deliver all
quantities of Products ordered by Buyer pursuant to any shipping order.
This Agreement and all orders issued pursuant hereto shall be deemed a
series of installments and shall be deemed to constitute a single
contract between Producer and Buyer. The parties recognize that the
demands and convenience of business operations may make it necessary or
desirable for Buyer to transmit, and Producer to accept, production
purchase orders and shipping purchase orders by telecopier or by
electronic data interchange (in each case with reasonable confirmation
procedures in place).
b. Time and quantity shall be of the essence in any shipping order. Unless
otherwise specified, delivery times specified are the times of delivery
of the Products at an Approved Facility as designated by Buyer. Producer
shall inform Buyer immediately of any occurrence which will or is
expected to result in any delivery at any time or in any quantity not
specified in any shipping order and also of corrective measures which
Producer has taken, or will take, to minimize the effect of such
occurrence. Buyer, in addition to all other remedies available to it in
law or in equity, shall have the right to cancel any shipping order or
part thereof if delivery is not made within the time specified or in the
quantities ordered.
c. 1f, for any reason other than a Force Majeure Event (as hereinafter
defined in Section 19), Producer is unable to produce from an Approved
Facility the amount of the Monthly Production Request for any particular
line of Product that the Monthly Production Request contemplates being
produced from such Approved Facility Producer shall produce the
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amount at another Approved Facility of the Producer, including, if
approved by the Buyer (which approval shall not be unreasonably
withheld) facilities of the Producer that are not currently Approved
Facilities (each, a "Substitute Facility"). The price charged to the
Buyer far the Product produced at the Substitute Facility shall be the
unit price that would have been charged to Buyer had such Product been
produced at the Approved Facility. In addition, in the event Producer is
required to produce Products at a Substitute Facility, Producer shall
reimburse Buyer for all incidental damages (e.g., additional shipping
charges) incurred by Buyer as a result of the Products being produced at
a Substitute Facility.
8. PRICES, PAYMENT TERMS AND DELIVERY.
a. The initial unit purchase prices of the Products shall be as specified
in the pricing schedule attached hereto as Schedule C. During the
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Agreement Term, the unit purchase prices for the Products shall be
subject to change (both upward and downward) based upon market
fluctuations in the cost of the components that form the line item "Raw
Materials", "Packaging Materials", "Direct Labor", "Variable Overhead"
and "Factory Fixed" as set forth in Schedule C. Producer agrees that it
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shall not effect any change in the purchase price of the Products as a
result of a change in the price of corn syrup except upon reasonable
prior written notice from the Producer to the Buyer. Producer further
agrees that, if Producer believes a change in the Factory Fixed cost
component of the purchase price for the Products is warranted, Producer
shall notify Buyer in writing of such requested change and identify with
reasonable specificity the basis for the price change of the Products
not less than thirty, nor more than sixty, days prior to an anniversary
of the Commencement Date. Producer further agrees that the Factory Fixed
cost component shall not be requested to be changed more than one time a
year. Prior to implementing any change in the Factory Fixed cost
component, Buyer and Producer shall mutually agree on such change;
provided, however, that in the event Buyer and Producer do not mutually
agree on such change, the panties nevertheless intend to be bound by
this Agreement, and any such change in the Factory Fixed cost component
shall be reasonable (as construed in accordance with Section 1302.18(A)
of the Ohio Revised Code). My change in the Factory Fixed cost component
shall be effective as of the applicable anniversary of the Commencement
Date. In the event of any price change (including a price change as a
result of a change in the price of corn syrup), upon request of Buyer,
Producer shall promptly identify with reasonable specificity the basis
for the price change of the Products. Upon request of Buyer, Producer
shall promptly supply Buyer with copies of documentation supporting such
price change and the methodology used by Producer to determine the price
change. The parties intend for the price of the Products to be the
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Producer's cost of manufacturing the Products plus a tolling fee that is
included within the line item "Factory Fixed" as set forth in Schedule
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C.
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b. In all cases under this Agreement, Producer shall use its best efforts
to obtain the lowest and best prices and/or rates for all raw materials
and packaging materials used in the production of the Products.
c. In the event of a price change to the Products, Buyer may suggest to the
Producer for its consideration reasonably acceptable alternate sources
in order to lessen a price increase or enhance a price decrease.
d. Except as specifically provided elsewhere in this Agreement, Producer
warrants that the unit purchase prices for the Products as determined in
accordance with this Section 8 shall be complete, and no additional
charges of any kind shall be added without Buyers express written
consent.
e. Delivery of the Products set forth in or with reference to each shipping
order shall be F.O.B. Buyer's carrier at the loading dock of an Approved
Facility or any Substitute Facility of the Producer.
f. Producer shall submit an invoice to the Buyer on a daily basis for the
Products produced by the Producer during the preceding business day.
Terms of payment for each invoice will be net thirty (30) days from the
date of invoice. The invoice will reference item code and Product name,
number of cases, unit price per case, the Approved Facility or the
Substitute Facility, as the case may be, and amount due.
g. Invoices for payment shall be sent to:
Aurora Foods, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Payments shall be sent to:
SunTrust Bank
X.X. Xxx 0000
Xxxxxxx Xxxxxxx 00000
For credit to: The Red Wing Company, Inc.
Account Number 8801079982
h. Producer warrants and covenants that all units of the Product delivered
to Buyer shall be free from any security interest, lien or other
encumbrance of any person, corporation, partnership, governmental body
or other entity.
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9. RAW MATERIALS AND PACKAGING MATERIALS.
a. Unless otherwise set forth herein, Producer shall be responsible for
ordering and paying for all raw materials, packaging materials and
supplies to be utilized in producing the Products (including ordering of
the labels, flavors and miscellaneous packaging, if any).
b. Producer shall use its best efforts to maintain an adequate inventory of
raw materials, packaging materials and supplies necessary to meet
production requirements at each Approved Facility.
c. Packaging materials and other items of inventory that are tailored for
the Products will be used by the Producer only for the Products.
Producer shall not maintain excessive levels of such inventory at any
Approved Facility. Upon request, the Buyer shall be provided with access
to all records concerning such inventory at each Approved Facility
d. At least annually, Producer shall discuss with Buyer strategic issues
concerning purchasing of raw materials and packaging materials for the
Products.
10. PRODUCTION SCHEDULE.
a. Buyer will provide Producer, on or about the fifteenth day of each
month during the Agreement Term, with a rolling three month production
forecast (the "Forecasted Quantities of Products") for the next three
calendar months. The purpose of the Forecasted Quantities of Products
is to provide the Producer with Buyer's good faith estimate of
production needs in order to allow Producer to plan for ordering raw
materials, packaging materials and supplies (including labels, flavors
and miscellaneous packaging, if any) and to plan for Product
production.
b. On or before the fifteenth day of each month during the Agreement Term,
Buyer will provide Producer with a written production request for the
delivery of Products during the next calendar month (the "Monthly
Production Request'), which (i) until such time as each of the Approved
Facilities are producing the Products, such Monthly Production Request
shall not for any particular calendar month exceed such number of cases
of Products as Producer shall in good faith advise Buyer that it is
capable of producing based on its capacity limitations and (ii) after
such time as each of the Approved Facilities are producing the
Products, such Monthly Production Request shall not for any particular
calendar month exceed in the aggregate [ ]* equivalent cases of
Products. Producer shall be obligated to deliver to Buyer the
quantities of the Products set forth in
* Confidential treatment requested by the Company.
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each Monthly Production Request. By the last day of each calendar month,
Buyer shall be obligated to purchase and take delivery of the Products
in quantities that are not less than the quantities as are set forth in
the Monthly Production Request for such calendar month. Producer shall
in good faith schedule the timing and volume of the production of the
Products over the course of each month (with the intention being that
Buyer shall not receive invoices for the production of Products
substantially in advance of the shipping orders for the Products), and
Buyer shall in good faith place shipping orders over the course of each
month in a manner generally consistent with its past practices in an
orderly fashion so that the shipping orders will exhaust the Monthly
Production Request (with the intention being that Producer shall not
have unreasonable day to day increases in the level of inventory of the
finished Products during a month).
11. INVENTORY OF RAW MATERIALS AND PACKAGING MATERIALS.
a. With respect to each Approved Facility, Producer agrees to maintain at
all times during the Agreement Term at each Approved Facility an
inventory of raw materials packaging materials and supplies utilized in
producing the Products in quantities equal to produce at least five (5)
days of the average quantities of such Products sold to Buyer during the
preceding sixty (60) days.
12. SHIPMENT AND PALLET EXCHANGE.
a. Unless otherwise mutually agreed in writing, the Products will be
shipped in pallet quantities on conventional pallets or, at Buyer's cost
and expense, Chep pallets. Producer and Buyer agree to observe a
conventional pallet exchange procedure pursuant to which Buyer will
return to Producer one (1) conventional pallet for each conventional
pallet received by Buyer. If Buyer fails to return to Producer
conventional pallets on a one-for-one basis, Buyer shall pay Producer
$5.00 for each conventional pallet Buyer has failed to return within
twenty-five (25) days of date of invoice for such pallets. If Buyer has
delivered to Producer more conventional pallets than the number of
conventional pallets received by Buyer, Producer shall credit against
the purchase price for the Products $5.00 for each conventional pallet
Buyer has returned to Producer in excess of the number of conventional
pallets received by the Buyer. Buyer and Producer shall establish
reasonable procedures in order to comply with the terms of the pallet
exchange program.
b. Shipment of Products shall be made directly by Buyer using its owned or
contracted carriers. Title and risk of loss for the Products shall pass
to
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Buyer at the time of delivery of possession of the Products to the
carrier by Producer.
c. Buyer shall be responsible for transportation costs for the Products
from an Approved Facility or outside warehousing facilities maintained
by the Producer to the warehouse or other destination designated by
Buyer.
13. MANUFACTURING EQUIPMENT OF BUYER.
a. Subject to the provisions of Section 13(g) of this Agreement, Buyer
shall supply to Producer, deliver and install, at no cost to the
Producer, certain existing equipment of the Buyer identified in Schedule
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D (the "Manufacturing Equipment") that is used in the production of the
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Products for installation in the Approved Facilities identified on
Schedule D. Buyer shall use its bests efforts to ensure that the
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delivery and installation of the equipment at an Approved Facility shall
be completed no later than the dates set forth on Schedule D, subject to
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any Force Majeure Events. Except as disclosed to Producer at the time of
the moving of the Manufacturing Equipment from their current locations,
Buyer represents and warrants that the Manufacturing Equipment is, or
shall be, after delivery and installation at the Approved Facilities, in
good operating condition and repair (reasonable wear and tear excepted)
and suitable for its intended purpose. For purposes of this Agreement,
the Manufacturing Equipment shall include any equipment purchased or
acquired in connection with the moving and reinstallation of the
Manufacturing Equipment to the designated Approved Facilities (the
"Related Equipment"). The general categories and general descriptions of
the Related Equipment that the parties currently contemplate will be
purchased or acquired in connection with the moving and reinstallation
of the Manufacturing Equipment to the designated Approved Facilities is
set forth in Schedule D-1. At such time as the actual purchases or
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acquisitions are made, Buyer and Producer will substitute Schedule D-1
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with a revised Schedule D-1 that shall identify with specificity such
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equipment and shall contain such information as Buyer may reasonably
request so that Buyer may appropriately account for such assets on its
books and records. Such equipment shall be owned by Buyer, and the
allocation of the costs of purchasing such equipment shall be determined
in accordance with the provisions set forth in Section 13(g) of this
Agreement.
b. Subject to the provisions of Section 13(g) of this Agreement, Buyer
shall control, and be responsible for all costs related to, the removal,
packaging, moving and reinstallation of the Manufacturing Equipment to
the designated Approved Facility for such equipment and the purchase of
the Related Equipment. Buyer shall retain title to all of the
Manufacturing Equipment, including the Related Equipment.
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c. If during the Agreement Term Buyer and Producer jointly agree in writing
that any additional manufacturing equipment is needed to manufacture the
Products at an Approved Facility under this Agreement, Buyer shall be
responsible for all costs related to the purchase, delivery and
installation of such additional equipment. Such additional equipment
shall become part of the Manufacturing Equipment, the title to which
shall be retained by Buyer. After the moving and reinstallation of the
Manufacturing Equipment has been completed, in the event Buyer or
Producer thereafter desire to make any capital expenditures that relates
to the Manufacturing Equipment and the production of either the Products
for the Buyer or table syrup products for private label brands produced
by Producer, such capital expenditures shall not be made unless the
parties mutually agree on the allocation of the financial responsibility
for such capital expenditures and the ownership of the capital
improvements.
d. In the event that any of the Manufacturing Equipment (whether or not
such equipment is existing as of the Commencement Date) requires
extraordinary repairs in the nature of major overhauls and/or major
upgrades during the Agreement Term, the Buyer shall control, and be
responsible for all costs related to, such extraordinary repairs.
e. Producer shall control, and be responsible for all costs related to, all
ordinary and routine maintenance and repair of the Manufacturing
Equipment during the Agreement Term. In the ordinary course of business,
Producer shall maintain and repair such Manufacturing Equipment so that
such equipment is, and remains, in substantially the same condition as
when installed at the Approved Facilities by Buyer, reasonable wear and
tear and damage by unavoidable casualty excepted.
f. Provided that Producer delivers Products in accordance with the terms of
shipping orders delivered to the Producer by Buyer under Section 7(a) of
this Agreement, Buyer agrees that, in addition to using the
Manufacturing Equipment for the production of the Products, Producer
shall be entitled to use the Manufacturing Equipment in connection with
the production of table syrup products for private label brands produced
by Producer. Producer agrees that it shall not use such equipment for
any other purpose.
g. Notwithstanding the provisions of Sections 13(a) and 13(b) of this
Agreement, Buyer and Producer agree that, with respect to the moving and
reinstallation of the Manufacturing Equipment to the designated Approved
Facilities and the purchase of the Related Equipment, Buyer shall be
responsible for the lesser of (1) 50% of all costs related to the moving
and reinstallation of such Manufacturing Equipment and the purchase of
the Related Equipment; or (2) $2,500,000.00. Producer shall
-13-
be responsible for all other costs related to the moving and
reinstallation of the Manufacturing Equipment to the designated Approved
Facilities and the purchase of the Related Equipment. Buyer and Producer
acknowledge and agree that the removal and packaging of the
Manufacturing Equipment for the Log Cabin/R/ lines shall be the
responsibility of the Buyer, and the costs to Buyer of removal and
packaging such equipment shall not be applied in calculating the cap on
the Buyer's costs described in the immediately preceding sentence. Buyer
shall contract directly with one or more other persons for removal and
packaging of the Manufacturing Equipment.
h. Subject to the provisions of Section 13(g) of this Agreement, Producer
shall submit to Buyer on a weekly basis one master billing statement for
all invoices under $5,000 received by Producer for goods or services
purchased by Producer in connection with to the moving and
reinstallation of the Manufacturing Equipment to the designated Approved
Facilities or the purchase of the Related Equipment. The master billing
statement shall itemize the goods or services purchased by the Producer
that are the subject of the master billing statement. In submitting such
master billing statement to Buyer, Producer warrants to Buyer that the
goods and services have been purchased by the Producer and that the
amount set forth in the master billing statement is due to be paid by
the Producer. Subject to the provisions of Section 13(g) of this
Agreement, within twenty four hours after Buyer receives such master
billing statement from the Producer, Buyer shall mail or send via
overnight courier a check payable to the Producer in an amount equal to
fifty percent (50%) of the master billing statement. Producer shall use
the proceeds of such check to pay the Buyer's share of the cost of the
goods and services purchased by the Producer, and shall pay the
remaining balance due to the providers of the goods and services with
its own funds. In the event Buyer fails within twenty four hours after
Buyer receives such master billing statement from the Producer to mail
or send via overnight courier the amount due to the Producer, Producer
shall be entitled to charge Buyer interest on the unpaid amount at the
rate of 10% per annum until the amount flue is paid in full from the
date such payment was to be sent to Producer.
i. Subject to the provisions of Section 13(g) of this Agreement, Producer
shall submit to Buyer on a weekly basis each invoice that equals or is
in excess of $5,000 that is received by the Producer during the
preceding calendar week for goods or services purchased by Producer in
connection with the moving and reinstallation of the Manufacturing
Equipment to the designated Approved Facilities or the purchase of the
Related Equipment. In submitting such an invoice to Buyer, Producer
warrants to Buyer that the goods and services have been purchased by the
Producer and that the amount set forth in the invoice is due to be paid
-14-
by the Producer. For each such invoice, Producer shall clearly identify
the date that Producer is contractually required to pay the amount of
the invoice to the provider of the goods or services. Subject to the
provisions of Section 13(g) of this Agreement and provided that Buyer
receives the invoice at least ten days prior to the date the invoice is
due, Buyer shall mail or send via overnight courier a check payable to
the Producer in an amount equal to fifty percent (50%) of each such
invoice not less than five days prior to the date such invoice is due.
Producer shall use the proceeds of such check to pay Buyer's share of
the invoice, and shall pay the remaining balance due on the invoice with
its own funds. In the event Buyer fails to mail or send via overnight
courier the amount due to the Producer within five days prior to the
date the invoice is due, Producer shall be entitled to charge Buyer
interest on the unpaid amount at the rate of 10% per annum until the
amount due is paid in full from the date such payment was to be sent to
Producer.
14. CERTAIN PAYMENTS TO PRODUCER.
a. Subject to the terms and conditions of this Agreement, if, during any
year after the first year of the Original Term, Buyer shall fail to
order the applicable Annual Minimum number of equivalent cases of
Products from the Producer for such year (with such calculation being
determined in accordance with the provisions of Section 3 of this
Agreement, including the provisions of paragraph d of Section 3), then,
within thirty days after the end of such year, Buyer shall pay to
Producer an amount equal to the product of (x) $.15 and (y) the number
that results from subtracting from the applicable Annual Minimum number
of equivalent cases of Products to be ordered by Buyer for such year
(with such applicable Annual Minimum being determined in accordance
with the provisions of Section 3 of this Agreement) the number of
equivalent cases of Products deemed ordered by Buyer for such year
(with such number being determined in accordance with the provisions of
Section 3 of this Agreement, including the provisions of paragraph d of
Section 3 relating to the use of carry forward equivalent cases to
reduce the amount that may be due to the Producer hereunder).
b. Subject to the terms and conditions of this Agreement, if pursuant to
Section 1 of this Agreement, Buyer shall give notice not to renew this
Agreement past the end of the Original Term, and at the end of the
Original Term, the Amortization Amount (as hereinafter defined) exceeds
the Amortization Credit (as hereinafter defined), then Buyer shall pay
to the Producer, within thirty (30) days of the end of the Original
Term, the difference between the Amortization Amount and Amortization
Credit.
-15-
The term ("Amortization Amount") shall mean an amount equal to the
lesser of (i) $2,500,000 or (ii) one half of the amounts spent by the
Producer for costs related to the moving and reinstallation of the
Manufacturing Equipment and purchase of Related Equipment.
The term "Amortization Credit" shall mean an amount equal to the sum of:
(i) the product of the total number of equivalent cases of Products paid
for by Buyer during or within thirty days after the Original Term times
$.15; (ii) the total amounts previously paid to the Producer by the
Buyer pursuant to Section 14(a) of this Agreement; and (iii) the product
of the total number of equivalent cases of table syrup for private label
brands produced by the Producer using the Manufacturing Equipment during
the Original Term times $.15.
15. PRIVATE LABEL PRODUCTION REPORTS.
a. Within thirty days after the end of each year during the Agreement Term,
Producer shall deliver to Buyer a production report certified by the
President of the Producer that details the number of equivalent cases of
table syrup for private label brands produced by the Producer during
such year pursuant to Section 13(f) of this Agreement. Upon the request
of Buyer, Buyer shall be entitled to inspect and audit the books and
records of the Producer relating to the production report so that Buyer
may independently verify the accuracy of the certified production
report.
16. WARRANTIES OF PRODUCER REGARDING QUALITY OF PRODUCT AND CONFORMANCE TO
SPECIFICATIONS.
a. Producer agrees and warrants to Buyer that Producer has and will adhere
to all laws, regulations, orders, ordinances and industry standards
relating to Producer's manufacture, packaging, labeling and sale of the
Products, including those specifically relating to the manufacture and
packaging of foodstuffs and the Federal Food, Drug and Cosmetic Act;
that each unit of the Products will meet the Specifications therefor
and, upon delivery to Buyer, will be free of all defects of manufacture,
handling, packaging and processing.
b. Producer warrants that it has obtained, or prior to the time it
commences production of the Products will have obtained, any
governmental approvals required in connection with the production and
sale of the Products, and will furnish copies or other evidence
satisfactory to Buyer of all such approvals upon the request of Buyer.
c. Producer warrants that all raw materials and packaging materials for the
manufacturing and packaging of the Products will be sampled and tested
-16-
by Producer in accordance with its obligations under this Agreement,
including those contained in Section 17 of this Agreement.
d. At Producer's request, Buyer shall make reasonable amounts of each
allegedly defective or nonconforming unit of the Product available for
Producer's inspection or shall, if so directed by Producer, return, at
Producer's cost and expense, each such unit of the Product to an
Approved Facility of the Producer.
e. In the event of Producer's breach of the covenants or warranties set
forth in this Section 16, Producer shall, at Buyer's option, either (i)
replace the defective or nonconforming-units of the Product at
Producer's sole cost and expense and deliver the replacement units of
the Product to Buyer within 20 days, or (ii) permit Buyer, at Producer's
sole cost and expense, to return the defective or nonconforming units of
the Product and, if payment therefor has already been made, credit the
price thereof to Buyer, together with all incidental damages incurred by
Buyer in connection with such return. Buyer shall have no obligation to
accept delivery or take possession of any defective or nonconforming
Product from Producer. The remedies of Buyer set forth in this Section
16(e) for breach of any of the warranties and covenants in Section 16 by
Producer are the sole and exclusive remedies of Buyer for any such
breach by Producer.
f. THE FOREGOING WARRANTIES ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
WARRANTIES EXCEPT THAT OF TITLE, WHETHER WRITTEN, ORAL OR IMPLIED, IN
FACT OR IN LAW (INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE).
17. QUALITY ASSURANCE INSPECTIONS AND TESTING
a. Representatives of Buyer shall have the right to inspect, at reasonable
times and upon prior notice, the Approved Facilities and to observe its
procedures prior to and during the period of manufacturing, packaging,
storing and handling the Products. Producer reserves the right to guide
such inspections in order to protect the confidential nature of other
products being manufactured by Producer.
b. Producer shall be responsible for routine quality assurance of the
Products at the time of manufacture and, in the fulfillment of such
obligations, shall apply quality assurance tests, procedures and methods
in accordance with the Specifications.
-17-
18. INSPECTIONS, ACCEPTANCE AND RETURNS.
a. Product not rejected within thirty (30) days after title passes to Buyer
will be deemed accepted by Buyer. If, after any inspection, Buyer
attempts to reject any Product, Buyer shall specify all claimed
nonconformity in a notice of rejection sent to Producer. Product
rejected by Buyer shall be returned in substantially the same condition
as when title passed to Buyer. Nothing contained in this Agreement shall
relieve in any way Producer from the obligation of testing, inspection
and quality control.
19. FORCE MAJEURE; PRODUCTION AT SUBSTITUTE FACILITIES
a. In the event of strikes; war; civil insurrection; riots: thefts;
inability to obtain necessary labor, materials, components, fuel or
transportation; changes in the Specifications; fire; flood; earthquake;
or other act of God or other cause beyond the control of the parties
hereto which renders it impracticable for either party to comply with
the terms of this Agreement (a "Force Majeure Event"), except as
otherwise set forth herein, no liability far non-compliance caused
thereby during the continuance thereof will exist or arise under this
Agreement.
b. If a Force Majeure Event occurs, the party who is unable to perform as a
result of such event shall immediately notify the other party, which
other party may suspend its obligations hereunder for a period equal to
the Force Majeure Event. In addition, if, within 90 days after the
occurrence of the Force Majeure Event, the party who was unable to
perform as a result of such event is still unable to perform in
accordance with this Agreement, the other party may terminate this
Agreement upon written notice to the party who is unable to perform in
accordance with this Agreement.
c. If a Force Majeure Event occurs, the party who is unable to perform as a
result of such event agrees that it shall use its best efforts to
eliminate the cause of such event or otherwise take actions so that it
is able to perform under this Agreement as promptly as is reasonably
practicable. Notwithstanding the foregoing, if a Force Majeure Event
prevents Producer from performing any of its obligations hereunder and
such Force Majeure Event could be cured by Producer incurring additional
costs (e.g., if there were a strike and the strike could be resolved by
Producer's meeting the demands of its employees), Producer shall have no
obligation to cure such Force Majeure Event by the incurrence of
additional costs in connection with the production of the Products
unless Buyer agrees to pay such additional costs.
-18-
d. If a Force Majeure Event occurs that directly affects fewer than all of
the Approved Facilities of the Producer (e.g., a fire at only one of the
Approved Facilities), Producer agrees that, if, as a result of the Force
Majeure Event, Producer is unable to produce from an Approved Facility
the amount of the Monthly Production Request for any particular line of
Product that the Monthly Production Request contemplates being produced
from such Approved Facility, Producer shall use its best efforts to
produce the amount at a Substitute Facility in a manner that is
consistent with its obligations to other customers. The price charged to
the Buyer for the Product produced at the Substitute Facility shall be
the unit price for producing such Product at the Substitute Facility.
e. If a Force Majeure Event occurs that directly affects fewer than all of
the Approved Facilities of the Producer, Producer agrees that, in the
event that the transfer of production of Products to a Substitute
Facility creates production capacity problems at the Substitute
Facility, Producer shall in good faith take reasonable steps to meet the
production requirements of the Buyer under this Agreement in a manner
consistent with Producer's obligations to other customers. In addition,
Producer agrees that, in the event of a production capacity problem at a
Substitute Facility as a result of a Force Majeure Event that directly
affects fewer than all of the Approved Facilities of the Producer,
Producer shall fairly and in good faith allocate production capacity at
the Substitute Facility among Buyer and other customers who have
outstanding production contracts with Producer.
20. INDEMNIFICATION.
a. Producer will indemnify and hold harmless Buyer and its representatives,
stockholders, controlling persons, and affiliates (collectively, the
"Buyer Indemnified Persons") for, and will pay to the Buyer Indemnified
Persons, the amount of, any loss, liability, claim, damage, cost and
expense (including costs of investigation and defense and reasonable
attorneys' fees), (collectively, "Damages"), incurred by the Buyer
Indemnified Persons involving a third-party claim arising, directly or
indirectly, from or in connection with any injury (including death) to
person or property to the extent proximately caused by the Producer's
breach of this Agreement, negligence or willful misconduct.
The remedies provided in this Section 20(a) will not be exclusive of or
limit any other remedies that may be available to Buyer or Buyer
Indemnified Persons.
b. Buyer will indemnify and hold harmless the Producer and its
representatives, stockholders, controlling persons and affiliates
-19-
(collectively, the "Producer Indemnified Persons") for, and will pay to
the Producer Indemnified Persons, (i) the amount of any Damages incurred
by the Producer Indemnified Persons involving a third-party claim
arising, directly or indirectly, from or in connection with any injury
(including death) to person or property to the extent proximately caused
by the Buyers breach of this Agreement, negligence or willful misconduct
and (ii) the amount of any Damages incurred by the Producer Indemnified
Persons arising, directly or indirectly, from or in connection with any
infringement, alleged infringement or any other violation or alleged
violation of any patent, trademark, trade dress or copyright rights or
other proprietary rights owned or controlled by third parties by reason
of the manufacture, production, use, distribution, advertising or sale
of the Products.
The remedies provided in this Section 20(b) will not be exclusive of or
limit any other remedies that may be available to Producer or the
Producer Indemnified Persons.
c. Promptly after receipt by an indemnified party under Section 20(a) or
20(b) of notice of the commencement of any proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying
party under any such Section, give written notice to the indemnifying
party of the commencement of such claim, but the failure to notify the
indemnifying party will not relieve the indemnifying party of any
liability that it may have to any indemnified party, except to the
extent that the indemnifying party demonstrates that the defense of such
action is prejudiced by the indemnifying party's failure to give such
notice.
d. If any proceeding referred to in Section 20(c) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such proceeding, the indemnifying party will be entitled
to participate in such proceeding and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such proceeding
and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party
fails to provided reasonable assurance to the indemnified party of its
financial capacity to defend such proceeding and provide indemnification
with respect to such proceeding), to assume the defense of such
proceeding with counsel reasonably satisfactory to the indemnified party
and, after notice from the indemnifying party to the indemnified party
of its election to assume the defense of such proceeding, the
indemnifying party will not, as long as it diligently conducts such
defense, be liable to the indemnified party under this Section 20 for
any fees of other counsel or any other expenses with respect to the
defense of such proceeding subsequently incurred by the indemnified
party in connection with the defense of such proceeding. If
-20-
the indemnifying party assumes the defense of a proceeding, (i) no
compromise or settlement of such claims may be effected by the
indemnifying party without the indemnified party's consent (which
consent shall not be unreasonably withheld) unless (A) there is no
finding or admission of any violation of legal requirements or any
violation of the rights of any person and no effect on any other claims
that may be made against the indemnified party, and (B) the sole relief
provided is monetary damages that are paid in full by the indemnifying
party; and (ii) the indemnified party will have no liability with
respect to any compromise or settlement of such claims effected without
its consent. If notice is given to an indemnifying party of the
commencement of any proceeding and the indemnifying party does not,
within ten days after the indemnified party's notice is given, give
notice to the indemnified party of its election to assume the defense of
such proceeding, the indemnifying party will be bound by any
determination made in such proceeding or any compromise or settlement
effected by the indemnified party.
e. Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a proceeding may
adversely affect it or its affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying
party, assume the exclusive right to defend, compromise, or settle such
proceeding, but the indemnifying party will not be conclusively bound by
any determination of a proceeding so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld).
21. INSURANCE. During the Agreement Term, Producer agrees to maintain insurance
against public liability which may arise out of, relate to or be caused by
the Products in an amount of not less than $2 million per occurrence.
Producer will maintain at all times during the Agreement Term product
liability insurance in an amount of not less than $5 million per occurrence.
In addition, Producer shall maintain liability umbrella coverage of not less
than $5 million. Producer shall deliver to Buyer certificates of insurance
issued by the insurance carriers adding the Buyer as an additional insured
on all such policies. Each such certificate shall provide that such
insurance shall not be canceled without fifteen days prior written notice to
the Buyer.
22. TERMINATION.
a. If either party shall breach any of the provisions of this Agreement and
such breach shall continue for a period of thirty (30) days after the
receipt of written notice specifying the breach to such party, or should
either party (i) file or have filed against it a bankruptcy petition
(which, in the case of a
-21-
petition filed against a party, is not thereafter dismissed within sixty
days after the filing of the petition against the party) or (ii) enter
into any type of proceeding under and pursuant to the insolvency or
receivership laws of any state or (iii) make a general assignment for
the benefit of creditors or (iv) a Force Majeure Event occurs that gives
rise to a right of termination under Section 19, then, and in any such
events, the other party shall have the right to terminate this Agreement
by giving written notice to that effect to such party, with termination
becoming effective upon the date set forth therein. If this Agreement is
terminated by the Producer as a result of a breach of any of the
provisions of this Agreement by Buyer or by the Producer as a result of
the occurrence of an event identified in clause (i), (ii), (iii) or (iv)
of this Section 22(a), Buyer shall pay to Producer, in addition to any
other remedies or damages available to Producer at law or equity
(including any other amounts which are due and owing to Producer under
this Agreement), within thirty days after such termination, an amount
equal to the difference between the Amortization Amount and the
Amortization Credit
b. Subject to the provisions of Section 3 of this Agreement, on and after
the second anniversary of the Commencement Date, Buyer may terminate
this Agreement entirely, or terminate the Agreement as it relates to
production of Products at a particular Approved Facility, at any time
upon one hundred eighty days prior written notice to the Producer. If
the Buyer terminates this Agreement entirely pursuant to this Section
22(b), within thirty days after such termination, Buyer shall pay to
Producer as a termination fee an amount equal to the difference between
the Amortization Amount and the Amortization Credit.
c. The termination of this Agreement shall not relieve either party of any
obligation or liability accrued prior to termination, or rescind or give
rise to any right to rescind anything done by either party prior to such
termination. The termination of this Agreement shall not in any way
affect the confidentiality and non-use obligations under Section 6 of
this Agreement or any other obligations which are expressly stated
herein to be continuing or are by their nature continuing.
d. Upon the effective date of a complete termination of this Agreement:
(i) The license provided for in Section 5 shall terminate.
(ii) Producer shall:
(a) cease any use of the Confidential Information of Buyer;
-22-
(b) return to Buyer or destroy all tangible forms of the
Confidential Information of Buyer;
(c) make available for purchase by the Buyer at Producer's cost
all packaging materials and other items of inventory that,
pursuant to Section 9(c), are tailored exclusively for the
Products;
(d) return to Buyer, at Buyer's sole cost and expense, all of
Manufacturing Equipment installed in any of the Approved
Facilities and provide access during normal business hours to
any representatives of Buyer to any such facilities for the
removal of such equipment from the facilities of the
Producer; and
(e) make available for delivery to Buyer any finished Product
inventory maintained by Producer
(iii) Buyer shall:
(a) within ten days after such termination, purchase at
Producer's cost all packaging materials and other items of
inventory that, pursuant to Section 9(c), are tailored
exclusively for the Products and that are in good and usable
condition;
(b) within thirty days after such termination, remove at Buyer's
cost and expense, all of Manufacturing Equipment installed in
any of the Approved Facilities and repair all damage caused
to any of the Approved Facilities in connection with the
removal of such equipment;
(c) within ten days after such termination, purchase any finished
Product inventory maintained by Producer;
(d) cease any use of the Confidential Information of Producer;
and
(e) return to Producer or destroy all tangible forms of the
Confidential Information of Producer.
(iv) Producer shall make conforming deliveries under the terms of this
Agreement for any then-outstanding Orders; and
-23-
(v) All sums owed Producer by Buyer shall become immediately due and
payable.
23. MISCELLANEOUS.
a. Notice. Notices permitted or requested to be given hereunder shall be in
writing and shall be deemed effective, if given by registered or
certified mail, postage prepaid, ten (10) days after deposit thereof
with the appropriate postal authorities, if given by nationally
recognized express courier which provides a receipt of delivery, on the
date delivery is completed, and if given by confirmed telecopier, on the
date of transmittal, and in all cases addressed to:
It to Producer: The Red Wing Company, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, President
Facsimile: (000)000-0000
If to Buyer: Aurora Foods, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
b. Assignment. Neither party shall assign this Agreement without the prior
written consent of the other party; provided, however, that either party
may assign this Agreement without the written consent of the other party
in connection with the sale of all or substantially all of the assets of
such assigning party.
c. Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties and supersedes all prior or
contemporaneous agreements and understandings whether written, oral or
implied between Buyer and Producer or their affiliates with respect to
the subject matter hereto.
d. Amendment. Except for any Specifications that are furnished by Buyer to
Producer from time to time after the date hereof, and which shall become
a part of this Agreement, this Agreement may not be amended, super-seded
or altered except by an instrument in writing duly executed and
delivered on behalf of each of the parties hereto.
-24-
e. Waiver. No failure or delay on the part of either party hereto to
exercise any right, privilege or power under this Agreement shall
operate as a waiver or relinquishment thereof; nor shall any single or
partial exercise by either party preclude any other or further exercise
thereof, or the exercise of any other right, privilege or power.
f. Severability. The provisions of this Agreement are separate and
divisible and if any court of competent jurisdiction shall determine any
provision of this Agreement to be void and/or unenforceable, the
remaining provision or provisions shall be construed as if the void
and/or unenforceable provision or provisions were not included in the
Agreement.
g. Non-Exclusive Agreement. This Agreement is not an exclusive agreement
and Buyer may, without limitation, manufacture the Products itself or
may enter an agreement with other parties for the manufacture of such
Products.
h Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Ohio.
i. Independent Contractors. The parties are independent contractors. Nothing
contained herein shall be deemed to create the relationship of
partnership or joint venture between the parties. Neither party shall
have the right to incur any obligation to third parties which shall be
binding upon the other.
24. LIMITATION OF LIABILITY FOR CONSEQUENTIAL DAMAGES. Except as may arise
pursuant to the indemnification provided by Section 20 of this Agreement,
neither party shall be liable for consequential damages (including lost
profits or lost revenues) of any kind resulting from a breach of this
Agreement by a party.
25. RIGHT OF FIRST OPPORTUNITY. Subject to other provisions of this Section 25,
Buyer hereby agrees that, during the Agreement Term, Buyer shall provide
Producer with a right of first opportunity to bid or otherwise quote Buyer
for the production of any products owned, developed or acquired by Buyer
that are not currently set forth on Schedule A and that are within the
----------
production or packing expertise of Producer. Buyer shall also provide
Producer with the first opportunity to produce Products on the terms and
conditions set forth in this Agreement that may be in excess of the 450,000
equivalent case cap that is set forth in Section 10(b) of this Agreement.
Producer shall promptly respond to any request from Buyer for a bid or quote
on any such products or to produce Products in excess of the Monthly
Production Request cap set forth in Section 10(b) of this Agreement.
Notwithstanding the foregoing, Producer shall not have a right of first
opportunity to bid or otherwise quote for the production of the "Portion
Pac" business for Mrs. Butterworths/R/ products, Log Cabin/R/ products or
other branded syrup products.
-25-
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be
executed by their respective duly authorized representative to be effective as
of the date first set forth above.
AURORA FOODS, INC. THE RED WING COMPANY, INC.
("Buyer") ("Producer")
By: /s/ Herrar By: /s/ Xxxxxx X. Xxxxxx
--------------------------- ------------------------
Its: President Its: President
-------------------------- -----------------------
-26-
SCHEDULE A
LIST OF PRODUCTS
BRAND SKU DESCRIPTION
-------------------------------------------------------------------------------
Log Cabin 43000 000360 12oz. Regular
000370 24oz. Regular
000560 36oz. Regular
349010 Gallon Regular
000530 12oz. Lite
000520 24oz. Lite
000390 36oz. Lite
349020 Gallon Lite
Country Kitchen 000660 24oz. Regular
000710 36oz. Regular
000640 24oz. Lite
000710 36oz. Lite
001130 24oz. Butter
Wigwam 849140 Gallon Wigwam
-------------------------------------------------------------------------------
SCHEDULE B
SPECIFICATIONS
The Buyer's Operating Manual, which as been separately delivered to producer, is
deemed td be included herein and a part of the Agreement.
SCHEDULE C
CONFIDENTIAL TREATMENT FOR SCHEDULE C HAS BEEN REQUESTED
SCHEDULE D-1
Related Equipment
Item NY Main Line CA Flex Line
--------------------------------------------------------------------------------
PACKAGING LINE
--------------------------------------------------------------------------------
Misc. Rebuilds $75,000 $75,000
--------------------------------------------------------------------------------
Change Parts $120,000
--------------------------------------------------------------------------------
Stretch Wrap $65,000 $30,000
--------------------------------------------------------------------------------
Vendor Service $15,000 $15,000
--------------------------------------------------------------------------------
On Line Labeling $100,000 $100,000
--------------------------------------------------------------------------------
Conveyor Revisions $100,000 $50,000
--------------------------------------------------------------------------------
Palletizer $100,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SWEETENER(S)
--------------------------------------------------------------------------------
Tanks $235,000 $40,000
--------------------------------------------------------------------------------
Pumps/Piping Revisions $20,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LOGISTICS
--------------------------------------------------------------------------------
Forklift(s) $50,000 $50,000
--------------------------------------------------------------------------------
Misc. Case Conveyor Revisions $25,000 $25,000
--------------------------------------------------------------------------------
Loading Dock Leveler(s)/Restraint(s). $25,000 $50,000
--------------------------------------------------------------------------------
LOG CABIN SYRUP BUSINESS
CHICAGO, ILLINOIS
JULY 1, 1997
QUANTITY MANUFACTURER MODEL DESCRIPTION SERIAL NUMBER
-------- ------------ ----- ----------- -------------
MACHINERY AND EQUIPMENT
2 12,000-gal. vertical insulated maple
syrup storage tanks, with
controls and wiring, pipe and
connections, and concrete pad
4 Viking 3" rotary gear transfer pumps
1 Viking 3" rotary gear transfer pump
1 Kraft Foods, Inc. Special 12-oz, 24-oz, 36-oz main line auto.
maple syrup bottle filling
and packaging line consisting of
4 - Xxxxxx Stainless Equipment Co. Inc. 3,000-
gal. cap. vertical batch mixing tanks
4 - Waukesba 130" x 3" rotary gear transfer pumps
2 - Xxxxxx Stainless Equipment Co. Inc. 300-
gal. cap. vertical xxxx tanks
1 - Waukesha 55" x 2" rotary gear transfer pump
2 - Xxxxxx Stainless Equipment Co. Inc.
1,000-gal. cap. vertical gum slurry mixing tanks
1 - Waukesha 130" x 3" rotary gear transfer pump
1 - Minor ingredient feed system
1 - Crepaco Inc. 3,000-gal. cap. vertical holding tank
1 - Waukesha 130" x 3" rotary gear transfer pump
1 - APV Co. Inc. model R-56 platetype pasteurizer
1 - Empty bottle feed system, with Tubar
hydraulic tote dumper, power infeed conveyor Xxxxxxx
Corp. bottle dump xxxxxx, and 2 Hopprnan Corp. model
FRS-60 unscrambler feeders
1 - Consolidated 40-spout rotary filling machine
1 - Xxxxxxxx Tinting Screw Co. model C09-10-12120-001
bottle orienter
1 - Waukesha 130" x 3" rotary gear transfer pump
1 - Capem capping machine
1 - All stainless steel bottle cap feed system
1- Inline filled battle tunnel washer/dryer
1- PDC International Corp. model 75 C-ER
tamper-seal applicator
2 - Videojet Excel P bottle date coders
LOG CABIN SYRUP BUSINESS
CHICAGO, ILLINOIS
JULY 1, 1997
QUANTITY MANUFACTURER MODEL DESCRIPTION SERIAL NUMBER
-------- ------------ ----- ----------- -------------
1 - Goring Xxxx model TEK21 metal detector/ejector
1 - X.X. Xxxxxxx Co. model 1703-15 LCS case creator
1 - X.X. Xxxxxxx Co. case partition inserter
1 - Xxxxxxxx International Inc. model 900 case packer
1 - WA. Pearson Co. case sealer
1 - Videojet Maxum case coder
1 - Overhead power belt case conveyor system
1 - Xxxxx model 300PLC2 - 40" x 48" x 5 1/2"
pallettzing machine
1 - Lot of PVC slat bottle conveyor
5 - The Aeroacoustics Corp. bottle conveyor
vacuum blowers
1 - New York Blower vacuum fan
1 - Plate heat exchanger
Controls and wiring
Pipe, fittings, and valves
1 Kraft Foods, Inc. Special 12-oz., 24-oz., 36-oz flex line auto. maple
syrup bottle filling and packaging line consisting of
2 - Xxxxxx Stainless Equipment Co. Inc.
2,000-gal. cap. vertical batch mixing tanks
2 - Wankesha model 60 rotary gear transfer pumps
1 - Crepaco Inc. 3,000-gal. cap. vertical holding tank
1 - Waukesha model 60 rotary, gear transfer pump
1 - Insulated heat exchanger holding tank
1 - APV Crepaco Inc. model R57 plate-type pasteurizer
1 - Empty bottle feed system
1 - U.S. Bottlers Mfg. Co. model DS16 rotary
bottle air cleaner
1 - 32-spout rotary filling machine
1 - capping machine
1 - Xxxxxxxx Machine Group rotary bowl cap orienter
1 - Inline filled bottle tunnel washer/dryer
1 - Reclaim tank/pump unit
1 - PDC International Corp. model 75C-ER
tamper-seal applicator
1 - Videojet Excel P bottle date coder
1 - Goring Xxxx model TEK21 metal detector/ejector
1 - Packing table
1 - A-B-C Packaging Machine Corp. model 36 case sealer
LOG CABIN SYRUP BUSINESS
CHICAGO, ILLINOIS
JULY 1, 1997
QUANTITY MANUFACTURER MODEL DESCRIPTION SERIAL NUMBER
-------- ------------ ----- ----------- -------------
1 - A-B-C Packaging Machine Corp. case palletizer
1 - Lot of PVC slat bottle conveyor
Controls and wiring
Pipe, fittings, and valves
TOTAL MACHINERY AND EQUIPMENT
SCHEDULE D
BEST EFFORT COMPLETION DATES
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Production Line Facility Delivery Installation Produce
--------------- -------- -------- ------------ -------
Flex San Jose, CA w/o 02/01/98 2/98 - 4/98 04/01/98
Main Dunkirk, NY w/o 04/01/98 4/98 - 6/98 06/01/98
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