Exhibit 10.14
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (this "AGREEMENT") is made as of
July 1, 1997, by and between KRAFT FOODS, INC., a Delaware corporation
("SELLER"), and AURORA FOODS INC. (formerly MBW FOODS INC.), a Delaware
corporation ("BUYER");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as
of May 7, 1997, by and between Buyer and Seller (as amended, the "ASSET PURCHASE
AGREEMENT"), Seller has agreed to sell to Buyer the Assets, and Buyer has agreed
to purchase the Assets and to assume the Assumed Liabilities;
WHEREAS, in connection therewith, Buyer and Seller desire that Seller
provide Buyer with certain transition services as set forth herein; and
WHEREAS, capitalized terms used herein and not otherwise defined
herein have the meanings given to such terms in the Asset Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Seller and Buyer agree as follows:
1. TRANSITION SERVICES. During the term of this Agreement as set
forth in Section 5 below (the "TRANSITION PERIOD"), Seller shall provide, or
cause its affiliates to provide, to Buyer (with respect to the Business) from
the date of this Agreement and for the period of time described on ANNEX A
attached hereto with respect to each of the services, the services set forth on
ANNEX A attached hereto, in the manner and at a relative level of service
consistent in all material respects with that provided by Seller or its
affiliates to the Business immediately prior to the date hereof. Unless
otherwise agreed, such services shall be provided at Vendor Cost. For purposes
of this Agreement, "VENDOR COST" means the cost historically allocated to the
Business for such service, adjusted to reflect any changes in the nature or
level of the services. If no cost has historically been allocated to the
Business, then "VENDOR COST" shall be defined as the sum of (i) the total cost
of an individual or department of Seller or its affiliates prorated on an
equitable basis for time spent on providing the services, and (ii) any other
direct out-of-pocket costs incurred by Seller and its affiliates in providing
the services. In addition, Buyer shall also pay any amounts that are required
to be paid to any licensors of software that is used in connection with the
provision of any services hereunder, and any amounts that are required to be
paid to any such licensors to obtain the consent of such licensors to provide
any of the services hereunder. Subject to the immediately preceding sentence,
Seller shall use reasonable efforts to obtain any consents that may be required
from such licensors in order to provide any of the services hereunder.
2. BILLING AND PAYMENT. Buyer shall promptly pay any bills and
invoices that it receives from Seller or its affiliates for services provided
under or pursuant to this Agreement, subject to receiving, if requested, any
appropriate support documentation for such bills and invoices. Such charges may
at Seller's option be billed as incurred if the amount involved equals or
exceeds $10,000, or, if such charges do not exceed $10,000, at the end of each
calendar month during the Transition Period. All invoices shall be paid by wire
transfer in accordance with the instructions provided by Seller (in writing to
Buyer) not later than ten (10) days following receipt by Buyer of Seller's
invoice. Buyer shall not offset any amounts owing to it by Seller or any of
Seller's affiliates against amounts payable by Buyer hereunder.
3. GENERAL INTENT. Seller shall use its reasonable commercial
efforts to provide the transition services which are set forth on ANNEX A
attached hereto and such other transition assistance as the parties may
otherwise agree during the Transition Period at a cost to be mutually agreed.
Buyer agrees to use its reasonable commercial efforts to end its need to use
such assistance as soon as reasonably possible and (unless the parties otherwise
agree) in all events to end such need with respect to each service specified in
ANNEX A attached hereto not later than six (6) months from the date hereof, or
such shorter period as may be specified in ANNEX A attached hereto for the
provision of each such service.
4. VALIDITY OF DOCUMENTS. The parties hereto shall be entitled to
rely upon the genuineness, validity or truthfulness of any document, instrument
or other writing presented in connection with this Agreement unless such
document, instrument or other writing appears on its face to be fraudulent,
false or forged.
5. TERM OF AGREEMENT. The term of this Agreement shall commence on
the date hereof and shall
continue (unless sooner terminated pursuant to the terms hereof) for a period of
six (6) months, or such shorter period as may be provided in ANNEX A attached
hereto with respect to particular services described in ANNEX A attached hereto.
6. PARTIAL TERMINATION. Any and all of the services provided by
Seller and its affiliates hereunder are only terminable earlier than the period
specified in ANNEX A attached hereto by Buyer on twenty (20) days' prior written
notice to Seller. As soon as reasonably practicable following receipt of any
such notice, Seller shall advise Buyer as to whether termination of such service
will require the termination or partial termination of, or otherwise affect the
provision of, certain other services specified in ANNEX A attached hereto. If
such is the case, Buyer may withdraw its termination notice. Otherwise, such
termination shall be final.
7. ASSIGNMENT. Except as set forth below, this Agreement and any
rights and obligations hereunder shall not be assignable or transferable by
Buyer or Seller (including by operation of law in connection with a merger or
sale of stock, or sale of substantially all the assets, of Buyer or Seller)
without the prior written consent of the other party and any purported
assignment without such consent shall be void and without effect; PROVIDED,
HOWEVER, that without the consent of Seller, Buyer may assign its rights
hereunder (i) to one or more wholly-owned subsidiaries of Buyer upon written
notice of such assignment to Seller, (ii) to Buyer's secured lenders as
collateral to secure indebtedness of Buyer, or (iii) in connection with the sale
of all or substantially all of the assets of the Business to any unaffiliated
third party (regardless of the form of transaction) (it being understood,
however, that no such assignment shall limit or otherwise affect Buyer's
obligations hereunder).
8. CONFIDENTIALITY. Each party shall cause each of its affiliates
and each of their officers, directors and employees to hold all information
relating to the business of the other party disclosed to it by reason of this
Agreement confidential and will not disclose any of such information to any
party unless legally compelled to disclose such information; PROVIDED, HOWEVER,
that to the extent that any of them may become so legally compelled they may
only disclose such information if they shall first have used reasonable efforts
to, and, if practicable, shall have afforded the other party the opportunity to
obtain, an appropriate protective order or other satisfactory assurance of
confidential treatment for the information required to be so disclosed.
9. LIMITATION OF LIABILITY. Seller shall not be liable to Buyer or
any third party for any special, punitive, consequential, incidental or
exemplary damages (including lost or anticipated revenues or profits relating to
the same) arising from any claim relating to this Agreement or any of the
services provided hereunder, whether such claim is based on warranty, contract,
tort (including negligence or strict liability) or otherwise, even if an
authorized representative of Seller is advised of the possibility or likelihood
of the same. In addition, Seller shall not be liable to Buyer or any third
party for any direct damages arising from any claim relating to this Agreement
or any of the services provided hereunder or required to be provided hereunder,
except to the extent that such direct damages are caused by the willful
misconduct of Seller or its affiliates.
10. NOTICES. All notices, reports and receipts shall be in writing
and shall be deemed duly given on (i) the date of personal or courier delivery;
(ii) the date of transmission by telecopy or other electronic transmission
service, provided a confirmation copy is also sent no later than the next
business day by postage paid, return receipt requested first-class mail; or
(iii) three (3) business days after the date of deposit in the United States
mails, by postage paid, return receipt requested first-class mail, addressed as
follows:
(i) if to Buyer,
Aurora Foods Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: President
WITH A COPY TO:
Dartford Partnership, L.L.C.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxx Xxxxxx
(ii) if to Seller,
Kraft Foods, Inc.
Xxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopy No. (000) 000-0000
Attention: General Counsel
WITH A COPY TO:
Kraft Foods, Inc.
Xxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopy No. (000) 000-0000
Attention: Xxxxxxxx Xxxxx, Associate General Counsel
Either party may change its address by written notice to the other
party in accordance with this Section 10.
11. MODIFICATION; NONWAIVER. No alleged waiver, modification or
amendment to this Agreement or to ANNEX A attached hereto shall be effective
against either party hereto, unless in writing, signed by the party against
which such waiver, modification or amendment is asserted, and referring
specifically to the provision hereof alleged to be waived, modified or amended.
The failure or delay of either party to insist upon the other party's strict
performance of the provisions in this Agreement or to exercise in any respect
any right, power, privilege or remedy provided for under this Agreement shall
not operate as a waiver or relinquishment thereof, nor shall any single or
partial exercise of any right, power, privilege or remedy preclude other or
further exercise thereof, or the exercise of any other right, power, privilege
or remedy; PROVIDED, HOWEVER, that the obligations and duties of either party
with respect to the performance of any term or condition in this Agreement shall
continue in full force and effect.
12. RELATIONSHIP OF PARTIES. Except as specifically provided herein,
none of the parties shall act or represent or hold itself out as having
authority to act as an agent or partner of the other parties, or in any way bind
or commit the other party to any obligations. Nothing contained in this
Agreement shall be construed as creating a partnership, joint venture, agency,
trust or other association of any kind, each party being individually
responsible only for its obligations as set forth in this Agreement.
13. FORCE MAJEURE. If Seller is prevented from complying, either
totally or in part, with any of the terms or provisions of this Agreement by
reason of fire, flood, storm, strike, lockout or other labor trouble, any law,
order, proclamation, regulation, ordinance, demand or requirement of any
governmental authority, riot, war, rebellion or other causes beyond the
reasonable control of Seller or other acts of God, then upon written notice to
Buyer, the affected provisions and/or other requirements of this Agreement shall
be suspended during the period of such disability and Seller shall have no
liability to Buyer or any other party in connection therewith. Seller shall
make all reasonable efforts to remove such disability within thirty (30) days of
giving notice of such disability.
14. INTERPRETATION. The headings and captions contained in this
Agreement and in ANNEX A attached hereto are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
The use of the word "including" herein shall mean "including without
limitation."
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts (including by means of telecopied signature pages), all of which
shall be considered one and the same agreement, and shall become effective when
one or more such counterparts have been signed by each of the parties and
delivered to the other party.
16. ENTIRE AGREEMENT. This Agreement and the Asset Purchase
Agreement contain the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, whether written or oral, relating to such subject
matter.
17. REPRESENTATION BY COUNSEL; INTERPRETATION. Seller and Buyer
acknowledge that each of them has been represented by counsel in connection with
this Agreement and the transactions contemplated hereby. Accordingly, any rule
of law or any legal decision that would require interpretation of any claimed
ambiguities in this Agreement against the party that drafted it has no
application and is expressly waived.
18. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid and effective under
applicable law, but if any provision of this Agreement or the application of any
such provision to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof.
19. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Illinois applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
20. ANNEX A. ANNEX A attached hereto and referred to herein is
hereby incorporated in and made a part of this Agreement as if set forth in full
herein.
21. ARBITRATION. The parties hereby irrevocably and unconditionally
agree that any dispute between them arising out of or relating in any way to
this Agreement or the transactions arising hereunder shall be settled
exclusively by arbitration in the City of Chicago, Illinois, pursuant to the
provisions of Section 30(b) of the Asset Purchase Agreement.
* * * * *
IN WITNESS WHEREOF, the parties have caused this Transition Services
Agreement to be executed by their duly authorized representatives as of the date
and year first set forth above.
KRAFT FOODS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Its:Vice President
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AURORA FOODS INC.
(formerly MBW FOODS INC.)
By: /s/ Xxxxx X. Xxxxxx
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Its:Executive Vice President
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TRANSITION SERVICES AGREEMENT
BETWEEN KRAFT (SELLER) AND MBW (BUYER)
TSA
SECTION DESCRIPTION PERIOD COST
------- ----------- ------ ----
I A SALES SUPPORT
Retail sales brokerage July 1997 to 3.0% of net revenue through November;
Dec 1997 1.0% of net revenue in December.
Net revenue defined as gross sales less
product allowances, cash discounts and
unsaleables.
Foodservice sales July 1997 to 5.0% of net revenue.
brokerage Dec 1997
Current file of products, July 1997 to No charge.
payment terms, promotional Dec 1997
price programs, sales plans
for markets, portions of sales
manuals
I B MARKETING
Consult with marketing up to 5 No charge for service; actual costs of
management man-days out-of-pocket expenses, e.g., travel
up to 5 add'l $750 per day, plus actual
man-days out-of-pocket costs
Xxxxxxx market data July 1997 to $8,550 per month
(required while using retail Dec 1997
sales brokerage services)
Foodservice--manage promotions July 1997 to $5,000 per month
contracts and bids; coordinate Dec 1997
with field sales
I C SALESFORCE CONSULTATION July 1997 to No charge for daily activities. No charge
Dec 1997 for up to one day per region to meet with
MBW and/or MBW's brokers. $750 per
person per day after first day to meet with
MBW and/or MBW's brokers
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TRANSITION SERVICES AGREEMENT
BETWEEN KRAFT (SELLER) AND MBW (BUYER)
TSA
SECTION DESCRIPTION PERIOD COST
------- ----------- ------ ----
II A TRANSACTION PROCESSING
Order entry, invoicing, credit, July 1997 to $120,600 per month
collections, cash applications, Dec 1997
deduction management. Order
picking and loading, schedule
carriers. Trade and consumer
promotion management,
make payments for promo-
tions and coupons. Manage
and process trade claims for
damages and returns
Foodservice--managing inventory, July 1997 to $2,500 per month
forecasting sales, managing Dec 1997
warehousing
II B ACCOUNTING SERVICES
Daily, weekly, monthly sales July 1997 to Included in II A above
reporting. Monthly reporting Dec 1997
of gross and net sales.
Monthly accounts receivable
aging. Trade deal accounting
Monthly financial reporting July 1997 to $4,000 per month
Dec 1997
Foodservice sales and financial July 1997 to $5,500 per month
reporting, systems support Dec 1997
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TRANSITION SERVICES AGREEMENT
BETWEEN KRAFT (SELLER) AND MBW (BUYER)
TSA
SECTION DESCRIPTION PERIOD COST
------- ----------- ------ ----
III A CONSUMER RESPONSE (800#) July 1997 to $8.00 per consumer contact
Dec 1997
Consumer response historical None Not applicable
data. MBW does not want this.
III B INFORMATION SERVICES
Special requests of July 1997 to $750 per person per day
information reporting and Dec 1997
presentation
KRAFT PROPRIETARY SOFTWARE
--------------------------
Inventory, warehousing, July 1997 to No charge
order management, freight Dec 1997
scheduling, freight payment
THIRD PARTY SOFTWARE
--------------------
GEAC--Fixed Assets, July 1997 to $7,000 for the 6-month period
Accts Pay, Accts Rec Dec 1997
Sterling--Gentran Plus, July 1997 to $5,000 for the 6-month period
Connect Mlbx + Dec 1997
(Third party software costs will be the lesser of
Kraft's actual out-of-pocket costs or the above)
n/a Foodservice technical support-- July 1997 to $750 per person per day
specification and packaging Dec 1997
changes
NOTE:
A month is defined as Kraft's accounting month. July, August,
October and November are each 4 weeks; September and December
are each 5 weeks. The monthly fees will not be adjusted for the
varying lengths of the months.
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