EXHIBIT 10.20
EXHIBIT 1.45
FORM OF TRANSITIONAL SUPPLY AGREEMENT
This is a TRANSITIONAL SUPPLY AGREEMENT ("TS Agreement"), dated November ___,
1997 between The Procter & ▇▇▇▇▇▇ Manufacturing Company, an Ohio corporation
("Supplier"), and MBW Investors LLC, a Delaware limited liability company
("Buyer"'). Each of Supplier and Buyer may hereafter be referred to as a "Party"
or, collectively, as "Parties."
WHEREAS, Supplier, certain of Supplier's Affiliates, and Buyer have entered into
an Asset Sale and Purchase Agreement, dated as of November ___ 1997 ("Sale
Agreement"), pursuant to which Buyer will purchase the Acquired Assets (as
defined in the Sale Agreement and a Transitional Services Agreement ("Services
Agreement") dated November _____, 1997 pursuant to which Supplier's Affiliates
will provide certain transitional services to Buyer); and
WHEREAS, in connection with the acquisition, Buyer wishes that Supplier continue
Manufacturing (as defined hereinafter) Products (as defined hereinafter) for the
period set forth herein;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, agreements, and conditions contained herein, the parties hereto agree
as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 General. Any capitalized term used but not defined herein will have the
meaning set forth in the Sale Agreement or the Services Agreement.
1.02 "Contract Manufacturing" means the Manufacturing of Products of the
Business by any third party pursuant to an agreement with Supplier. The
terms "Contract Manufacture", "Contract Manufacturer" and "Contract
Manufactured" will have the appropriate derivative meanings.
1.03 "Major Repairs" means repairs or replacements of equipment (including
Equipment) or facilities used in the Manufacture of Products to the extent
such repairs or replacements exceed the monthly repair, replacement and
maintenance cost assumed in Schedule TS9.01.
1.04 "Manufacturing" means the sourcing and warehousing of raw and packaging
materials, compounding, component preparation, incoming and outgoing
quality control, fabrication, filling, inspecting, labeling, packing,
packaging and/or
warehousing of any Product, or any part thereof as well as associated
activities, in accordance with the Specifications and the terms and
conditions of this TS Agreement. It will also mean the management of any
Contract Manufacturing. The terms "Manufacture" and "Manufactured" will
have the appropriate derivative meanings.
1.05 "Plant" means that portion of Supplier's facility located in Jackson,
Tennessee, that is used exclusively in the Business and/or such other
facility of Supplier as may be used exclusively in the Manufacture of
Products.
1.06 "Products" means, except where specifically qualified in this TS
Agreement, all of the SKUs of the Business as formulated and packaged for
sale as of Closing, whether Manufactured before or after the date hereof
together with any Mandatory Changes, Alterations and/or Additional
Modifications.
1.07 "Product Category" means the particular type of Product. For purposes of
this TS Agreement, a Product may be categorized as one of the following:
angel food cake mix; brownie mix; layer cake mix; cookie mix; frosting;
muffin mix; and all other mixes.
1.08 "SKUs" means Stock Keeping Units.
1.09 "Specialty Mixes" means angel food cake mix, brownie mix, cookie mix,
muffin mix and all other mixes except layer cake mix.
1.10 "Specifications" means the procedures, requirements, formula(e) and
standards related to Products employed by Supplier as of the Closing Date,
as amended pursuant to this TS Agreement.
1.11 "Transitional Period" means that period commencing on the Closing Date
ending on the following date for the following Products:
Specialty Mixes 6 months after the Closing Date
frosting 9 months after the Closing Date
layer cake mix 15 months after the Closing Date
1.12 Other Definitions. Other terms defined in this Agreement, and the location
where they are defined, are:
"Affected Party".....................Section 18.04
"Additional Modifications"...........Section 6.03
"Alterations"........................Section 6.02
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"Baseline"........................................Section 3.02(b)
"Buyer"...........................................Preamble
"Closing Date Month"..............................Section 3.01
"Defaulting Party"................................Section 17.01
"Demands".........................................Section 13.01
"Distribution Center Pipeline Inventory"..........Section 5.05
"FIFO"............................................Section 5.02
"First Going Month"...............................Section 3.01
"First Removal"...................................Schedule TS2.01
"Forecast"........................................Section 3.02
"Forecast Update".................................Section 3.03
"Initial Forecast"................................Section 3.01
"Mandatory Changes"...............................Section 6.01
"Next Month"......................................Section 3.02
"Non-Affected Party"..............................Section 17.04
"Non-Defaulting Party"............................Section 16.01
"Party"/"Parties".................................Preamble
"Sales Agreement".................................Preamble
"Second Month"....................................Section 3.02(b)
"Second Removal"..................................Schedule TS2.01
"Services Agreement"..............................Preamble
"Supplier"........................................Preamble
"Technical Services"..............................Section 11.01
"Technical Services Period".......................Section 11.01
"Third Month".....................................Section 3.02(b)
"Third Removal"...................................Schedule TS2.01
"Training Services"...............................Section 11.02
"TS Agreement"....................................Preamble
"TS Agreement Termination Date"...................Section 17.01
ARTICLE II
BASIC OBLIGATIONS
2.01 Supplier's Obligation. Subject to the limitations and conditions of this
TS Agreement, during the Transitional Period Supplier will Manufacture for
Buyer, or arrange to have a third party Contract Manufacture for Buyer,
or arrange for an Affiliate of Supplier to sell to Buyer, all or a
portion of Buyer's requirements (up to the maximums set forth in Schedule
TS2.01) for Products in compliance with the Specification and will perform
certain Technical Services and Training Services for Buyer pursuant to
Article 11.
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2.02 Buyer's Obligation. Subject to the limitations and conditions of this TS
Agreement, during the Transitional Period Buyer will purchase from
Supplier all or a portion of its requirements (up to the maximums set
forth in Schedule TS2.01) for Products, at the prices set forth on
Schedule TS9.01 or at such other prices as may be determined in accordance
with this TS Agreement. Buyer will also be responsible for paying various
other expenses related to the Manufacture and shipment of the Products and
related to the Technical Services and Training Services, as set forth
elsewhere in this TS Agreement.
ARTICLE III
MANUFACTURING SCHEDULING/REPORTS/LOCATIONS
3.01 Initial Forecast. Prior to the Closing Date, Buyer and Supplier will work
together in good faith to develop a forecast ("Initial Forecast") of
Buyer's requirements, by SKU and by shipment location (as designated
pursuant to Section 5.01), for the period from the Closing Date until the
end of the calendar month in which the Closing Date falls (the "Closing
Date Month"), as well as for the first calendar month after the Closing
Date Month (the "First Going Month"). On the Closing Date, this Initial
Forecast will constitute a firm written purchase order, and Supplier will
Manufacture and Buyer will purchase the quantities set forth in this
Initial Forecast.
3.02 Rolling Forecast. On the 8th calendar day of the First Going Month and
each subsequent month, Buyer will deliver to Supplier a forecast (the
"Forecast") of Buyer's requirements, by SKU and by shipment location (as
designated pursuant to Section 5.01) for the calendar month following the
month in which the Forecast is delivered (the "Next Month"), as well as
for all subsequent months of the Transitional Period.
(a) Permitted Variations from Forecast for Next Month. Upon delivery, the
Forecast will constitute a firm written purchase order for the Next
Month; provided, however, that if Buyer provides written notice to
Supplier prior to the 5th calendar day of the Next Month, Buyer will
be permitted to vary the quantities specified in the Forecast for
that Next Month by up to 10% by SKU, with a maximum variation of up
to 5% by Product Category.
(b) Permitted Variations from Forecast for Two Subsequent Months. First
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Forecast. The first Forecast delivered by Buyer will also form a
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baseline order ("Baseline") for the month following the Next Month
(the "Second Month"), and for the month after that (the "Third
Month"). Between the time of the first Forecast and the time when the
quantities specified in that Forecast for the Second Month constitute
a firm written purchase order, Buyer may vary the Baseline quantities
for the Second Month by up to 20% by SKU, with a maximum variation of
up to 10% by Product Category (in addition to the variation permitted
after the forecasted quantities constitute a firm written purchase
order by Section 3.02(a) above). Subsequent
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Forecasts. Each Forecast after the first Forecast will form a Baseline
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for the Third Month. Between the time of any Forecast (including the
first Forecast) and the time when the quantities specified in that
Forecast for the Third Month constitute a firm written purchase order,
Buyer may vary the Baseline quantities by up to 20% by SKU, with a
maximum variation of up to 10% by Product Category (in addition to the
variation permitted after the forecasted quantities constitute a firm
written purchase order by Section 3.02(a) above).
An illustration of these permitted variations is set forth in Schedule TS3.02.
Notwithstanding the foregoing, if during any period, Buyer desires to purchase a
quantity of Products that exceeds the amounts set forth in any Forecast, Buyer
will notify Supplier in writing, and Supplier will consider such request and
may, in its sole discretion, accommodate Buyer, but will be under no obligation
to supply such additional quantities.
3.03 Forecast Updates. On Thursday of each week, Buyer will provide Supplier
with an interim update ("Forecast Update") to the most recent Forecast.
Forecast Updates will have no impact on the firm written purchase order
quantities, the Baseline quantities, or any variations from such
quantities permitted by Section 302, but will serve as a means to identify
in advance any problem areas.
3.04 Reports by Supplier. If requested by Buyer, Supplier will provide Buyer
with monthly raw material, packing material and finished Product reports
reflecting Manufacturing, Contract Manufacturing, shipments, inventories,
and non-binding projections related thereto. These reports will be issued
during the first 10 Business Days of the month following the date of the
request, provided the request is received by the 20th calendar day of the
previous month.
3.05 Relocation of Manufacturing. If during the Transitional Period for any
Product(s), Supplier elects to relocate any Manufacturing or Contract
Manufacturing of such Product(s) to a facility(ies) different from the
facility(ies) then Manufacturing or Contract Manufacturing Product,
Supplier will notify Buyer at least 30 days prior to such relocation and
will be solely responsible for any additional Manufacturing expenses
during the Transitional Period for such Product(s) resulting from such
relocation; provided, however, that if such relocation is mutually agreed
upon between Supplier and Buyer (Buyer's agreement not to be unreasonably
withheld if it intends to utilize such different facility(ies) on an
ongoing basis after the Transitional Period), Buyer will be responsible
for any such additional expenses.
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ARTICLE IV
MATERIALS AND EQUIPMENT
4.01 Sources of Materials. Supplier will source all raw and packaging materials
required for Manufacturing or Contract Manufacturing Products from vendors
reasonably selected by Supplier consistent with Supplier's ordinary past
business practices and in quantities reasonably calculated to meet Buyer's
Forecasts in a cost-effective manner.
4.02 Decisions About and Costs of Major Repairs. Buyer and its agents will be
permitted reasonable access to the Plant to make an independent assessment
of the need for and estimated cost of Major Repairs. Buyer will have the
right, in its sole discretion, to determine whether a Major Repair should
be made. Buyer will also have the right to select, and determine the
method of selection of, the Person to make Major Repairs, including by
means of solicitation of bids, subject in all cases to Supplier's
approval, which will not be unreasonably withheld. The cost of Major
Repairs will be borne by Buyer, except to the extent Major Repairs are due
to Supplier's negligence, gross negligence, intentional misconduct or
breach of this TS Agreement, in which case such cost will be borne by
Supplier. Supplier will not be held liable for Manufacturing delays,
disruptions, or adverse effects upon Product quantity or quality arising
out of or related to Buyer's exercise of its rights under this Section
4.02, except to the extent any such delays, disruptions or adverse effects
upon Product quantity or quality are the direct result of Supplier's
negligence, gross negligence, intentional misconduct or breach of this TS
Agreement.
4.03 Normal Repair and Replacement of Equipment. Supplier will be responsible
for all repairs or replacement of equipment (including Equipment) or
facilities used in the Manufacture of Products to the extent such repairs
or replacements are not Major Repairs.
ARTICLE V
STORAGE AND SHIPPING
5.01 Storage and Shipping.
(a) During the Transitional Products Shipment Period, Supplier will store
Products at existing Supplier plants and distribution centers.
Supplier will be responsible for all damages to or loss of Products
that take place while Products are stored in Supplier controlled
distribution centers.
(b) After the Transitional Products Shipment Period, Supplier will ship,
or arrange for a Contract Manufacturer to ship, Products in full
truckload quantities (on common carriers selected by Buyer) at
Buyer's expense (including without limitation any duties payable in
respect of any shipment)
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and risk of loss from the Plant or Contract Manufacturer's facility
(i.e., F.O.B. Supplier Plant or F.O.B. Contract Manufacturer's
facility) to 5 locations specified by Buyer in writing at least 15
calendar days prior to Supplier's first shipment. Upon 30 calendar
days prior notice to Supplier, Buyer may change any destination for
shipment of Products from the Plant or any Contract Manufacturer's
facility. Neither Supplier nor any Contract Manufacturer will be
responsible for month-month storage of finished product inventory, it
being anticipated that all Product Manufactured will be shipped
pursuant to Buyer's Forecast for each month.
5.02 Order of Use for Raw and Packaging Materials and Inventory by Supplier.
Supplier will use raw and packaging materials for its Manufacture of
Products on a first-in, first-out basis ("FIFO") consistent with
Supplier's past ordinary business practices. Any Product inventory as of
Closing will likewise be used first to satisfy Buyer's requirements.
5.03 Common Carrier Claims. After the Transitional Products Shipment Period,
all claims by or to common carriers in connection with Products will be
the responsibility of Buyer, except to the extent any such claim by a
common carrier is due to Supplier's negligence, gross negligence,
intentional misconduct or breach of this TS Agreement.
5.04 Pallets. Supplier and any Contract Manufacturer will ship Products to
Buyer on CHEP pallets. After the Transitional Products Shipment Period,
Buyer will, at its discretion, either pay Supplier for such pallets at
Supplier's or any Contract Manufacturer's actual cost, as applicable, or
establish a lease contract for such pallets directly with Chep USA.
5.05 Distribution Center Pipeline Inventory. Prior to the Closing, Supplier and
Buyer will mutually agree on a commercially reasonable inventory of
Products (the "Distribution Center Pipeline Inventory") which Supplier
will, by the end of the Transitional Products Shipment Period, ship to
Buyer's distribution centers to help Buyer meet anticipated customer
orders from its distribution centers after the Transitional Products
Shipment Period.
ARTICLE VI
CHANGES TO SPECIFICATIONS
6.01 Mandatory Changes. Prior to the Closing, Supplier and Buyer will mutually
agree on artwork and label changes to remove Supplier's names and consumer
information telephone number ("Mandatory Changes"), which Supplier may
make on its own timing; provided, however, that if Supplier elects not to
use the
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Mandatory Changes after 3 months after Closing, such election will not
constitute a breach by Buyer of Section 6.25 of the Sale Agreement.
6.02 Alterations. Upon 90 days' prior written notice to Supplier, Buyer may
alter the Specifications for artwork and label copy of Product
("Alterations") without the consent of Supplier; provided that Buyer will
be responsible at the time of the notice for:
(a) providing Specifications and any other materials required or prudent
for implementation of such Alterations, including, without
limitation, artwork;
(b) having secured from any Governmental Entity any approvals that may be
necessary or advisable in connection with any Alteration, and Buyer
will also be responsible for;
(c) any resulting increases in Manufacturing costs;
(d) all liabilities, costs or expenses, including those of third parties,
arising out of or related to Alterations, including those related to
the failure or alleged failure of the Alterations to comply with
applicable laws and regulations; and
(e) all costs of scrapping raw or packaging materials (including the
costs of the raw or packaging materials) or secondary market
disposition of finished goods associated with any Alterations;
provided, however, that Supplier and Buyer will share on an equal
basis any scrapping costs for packaging materials associated with any
Alterations after the 90 day notice period.
6.03 Additional Modifications. Buyer will not require Supplier to Manufacture
any new SKUs that have not previously been marketed by Supplier as part of
the Business. If, during the Transitional Period, Buyer wishes Supplier to
Manufacture any SKUs that have previously been marketed but are not
currently marketed by Supplier as part of the Business, or to make changes
to the Specifications for existing SKUs other than Alterations
(collectively "Additional Modifications"), Supplier will in good faith
conduct a study into the cost and feasibility of such Additional
Modifications. If, based on this study, Supplier concludes that the
Additional Modifications can be achieved without significant hardship to
Supplier or to the relocation of the Equipment, and if Supplier and Buyer
reach a mutually acceptable agreement regarding the price and other
particulars of the Additional Modifications, Supplier will make a good
faith effort to implement the Additional Modifications.
For any Additional Modifications agreed to by Supplier and Buyer:
(a) Supplier and Buyer will mutually agree upon a schedule for any such
Additional Modifications to minimize the incremental costs resulting from
such Additional Modifications;
(b) Buyer will be responsible for the same requirements and expenses as set
forth above with respect to Alterations;
(c) Buyer will pay for and provide any new Equipment necessary to Manufacture
Products with such Additional Modifications; and
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(d) the prices (and all components thereof) charged for the Products as set
forth on Schedule TS9.01 thereto may be adjusted by Supplier (on a
retroactive basis to the date of such Additional Modifications) to reflect
incremental costs resulting from any such Additional Modifications.
6.04 Discontinuations. With 90 days written notice, and subject to Supplier's
approval (which will not be unreasonably withheld), Buyer may from time to
time discontinue existing SKUs.
ARTICLE VII
QUALITY ASSURANCE
7.01 Supplier Tests. Supplier and any Contract Manufacturer will perform
quality control tests and assays on raw and packaging materials and
finished Products in accordance with Specifications.
7.02 Buyer Inspections. Supplier will permit Buyer's designated representatives
to inspect and visit from time to time the Plant for the purpose of
determining compliance with this TS Agreement. Such inspections will occur
during regular business hours after reasonable written notice to Supplier.
Buyer will not disrupt Supplier's operations.
7.03 Buyer Tests. At Buyer's request Supplier or any Contract Manufacturer
will, at Buyer's expense, send a reasonable number of Product samples to
Buyer for examination and testing, at Buyers expense, to assure conformity
with Specifications.
ARTICLE VIII
COMPLIANCE WITH LAWS
8.01 Laws Related to Manufacturing. Supplier will comply in all Material
respects with laws and regulations relating to environmental matters,
wages and hours, equal employment opportunity, tax withholding on
payrolls, working and sanitary conditions and workers' compensation, in
each case at the Plant with respect to Products.
8.02 Laws Related to Products. Notwithstanding Section 8.01, Buyer will be
responsible for complying in all material respects with all other laws and
regulations relating to Products (without regard to whether such Products
have been the subject of any Alteration or Additional Modification),
including without
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limitation laws relating to the formulation, transportation, labeling,
sale, marketing and distribution of Products.
ARTICLE IX
PRICE
9.01 Pricing and Cost Assumptions. Schedule TS9.01 sets forth, by SKU, the
price Buyer will pay Supplier for Products. Schedule T59.01 also sets
forth major assumptions concerning the Manufacturing or Contract
Manufacturing costs of Products. In the event of any increase or decrease
in Manufacturing or Contract Manufacturing costs, (not including cost
changes associated with any decision by Supplier to switch from
Manufacturing Products itself to partial or full Contract Manufacturing of
some or all Products, except as provided in Section 3.05) Supplier will
pass such increase or decrease through to Buyer, such that the price Buyer
will pay Supplier for Products will reflect such increase or decrease.
Supplier will notify Buyer in writing of any such increase or decrease at
least 15 calendar days prior to the effectiveness of such increase or
decrease. The notice will include:
(a) the reason for the increase or decrease;
(b) the date when the increase or decrease will take effect; and
(c) the amount of the increase or decrease.
Supplier will use its reasonable efforts to minimize Manufacturing and
Contract Manufacturing cost increases consistent with its ordinary past
business practices; provided, however, that this requirement will not
limit Supplier's ability to switch from Manufacturing Products itself to
partial or full Contract Manufacturing of some or all Products.
ARTICLE X
PAYMENT
10.01 Invoicing and Payment. Supplier will send Buyer an invoice for each
truckload shipment of Products. All invoices will be based upon the ▇▇▇▇
of lading describing the Products and quantity of Products shipped to
Buyer (or shipped to trade customers during the Transitional Products
Shipment Period). Buyer will be responsible for paying each invoice
within 30 calendar days of the date of such invoice and payment will not
be delayed pending delivery of Products by any common carrier or
resolution of any disputes between Buyer and any common carrier regarding
the shipment. Buyer will pay Supplier a late payment charge of 12% per
annum on any payment not received within the time period set forth above.
Payment will be made in United States dollars and sent to the location
designated in advance by Supplier.
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ARTICLE XI
TECHNICAL AND TRAINING SERVICES
11.01 Technical Services. From the Closing Date until the earlier of the
termination of this TS Agreement or 15 months after the Closing Date (the
"Technical Services Period"), Supplier will provide up to five thousand
(5,000) person-hours of the time of appropriate personnel of Supplier or
its Affiliate to assist Buyer in its efforts to prepare to Manufacture
the Products (the "Technical Services").
11.02 Location and Scheduling of Technical Services. The Technical Services
will be performed at such facilities of Buyer's or of Buyer's Contract
Manufacturers as Buyer will designate or at other locations mutually
agreed to by Supplier and Buyer (including Supplier's pilot Plant
facility in Cincinnati, Ohio). Supplier and Buyer will mutually agree in
good faith upon the scheduling of such Technical Services; provided,
however, that such scheduling must not unreasonably interfere with the
normal operations of Supplier or its Affiliates.
11.03 Payment for Technical Services. Buyer will reimburse Supplier for
Supplier's out-of-pocket costs of providing the Technical Services. Such
out-of-pocket costs include the cost of transporting the personnel
performing the Technical Services, as well as their reasonable charges
for food and lodging, but will not include their wages, salary or
benefits.
11.04 Additional Technical Services. If Buyer desires a commercially reasonable
level of additional hours of Technical Services during the Technical
Services Period beyond the five thousand (5,000) hours specified in
Section 11.01, it may so inform Supplier. If Supplier agrees to provide
such Technical Services (such agreement not to be unreasonably withheld),
Buyer will, in addition to making the payments to Supplier described in
Section 11.03, pay Supplier one hundred fifty United States dollars (US
$150) per hour for the services of the personnel who provide such
Technical Services.
11.05 Training Services. From the Closing Date until the earlier of the
termination date of this TS Agreement or 15 months after the Closing
Date, Supplier will permit up to 20 employees of Buyer's or of any
entity(ies) designated by Buyer to spend up to 20 Business Days at
Supplier's Plant to receive training from personnel of Supplier's on the
Manufacturing of the Products (the "Training Services"). Buyer will not
be obligated to make any payment to Supplier for the Training Services,
but Buyer will bear all of its costs in making its personnel (or the
personnel of such other entity(ies) as it may designate) available at
Supplier's Plant to receive the Training Services. Supplier and Buyer
will mutually agree in good faith to schedule such Technical Services;
provided, however, that such scheduling must not unreasonably interfere
with the normal operations of Supplier or its Affiliates.
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ARTICLE XII
SUPPLIER'S WARRANTY AND DISCLAIMER
12.01 Warranty. Supplier warrants that it or Contract Manufacturer will pass to
Buyer good and marketable title to the Products, free and clear of all
material liens, claims, security interests and encumbrances of any kind,
and that, at the time of Manufacture, the Products will be manufactured
in accordance with and will comply with the Specifications therefor and
will not be adulterated.
12.02 Limitation of Warranties. SUPPLIER MAKES NO WARRANTY, OTHER THAN THE
WARRANTIES SET FORTH HEREIN OR IN THE SALE AGREEMENT. THE WARRANTIES SET
FORTH HEREIN AND THEREIN ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION THE WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE, OR ANY WARRANTY THAT THE SERVICES
PROVIDED UNDER THIS AGREEMENT WILL BE SUFFICIENT TO ALLOW BUYER TO
SUCCESSFULLY TRANSITION, MANAGE OR OPERATE THE BUSINESS.
ARTICLE XIII
INDEMNIFICATION
13.01 Buyer's Indemnification. Subject to Section 13.03, Buyer will defend,
indemnify, and hold Supplier harmless from and against:
(a) all claims, losses, liabilities damages, costs and expenses
(including without limitation reasonable fees and expenses of
attorneys incurred in investigation or defense) (collectively
"Demands"), of any third-party Action arising out of or related to
Products or breach of this TS Agreement by Buyer, except to the
extent such Demand arises out of or relates to Supplier's breach of
this TS Agreement,
(b) all Demands arising from personal injury to employees of Buyer (or
of any entity(ies) designated by Buyer) while at Supplier's Plant to
receive Technical Services or Training Services, unless such Demands
result from the sole negligence of Supplier; and
(c) all costs and expenses of Supplier (including without limitation
reasonable fees and expenses of attorneys) incurred in connection
with the successful enforcement of any rights of Supplier under the
indemnity provided in this Section 13.01.
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13.02 Suppliers Indemnification. Subject to Section 13.03, Supplier will
defend, indemnify and hold Buyer harmless from and against:
(a) any Demand of any third-party Action to the extent such Demand
arises out of or relates to breach of this TS Agreement by Supplier,
(b) all Demands arising from personal injury to employees of Supplier or
its Affiliates while at facilities of Buyer or of Buyers Contract
Manufacturers to provide Technical Services, unless such Demands
result from the sole negligence of Buyer or of Buyer's Contract
Manufacturers; and
(c) all costs and expenses of Buyer (including without limitation
reasonable fees and expenses of attorneys) incurred in connection
with the successful enforcement of any rights of Buyer under the
indemnity provided in this Section 13.02.
13.03 Applicable Provisions of the Sale Agreement. Sections 9.01(b), (c), (d)
and (e) and Sections 9.02(b), (c), (d) and (e) of the Sale Agreement will
apply to the indemnification obligations under this TS Agreement as if
the Demands hereunder were either a Supplier's Assertion or a Buyer's
Assertion, as applicable, provided, however, all references therein to
Seller will be deemed to be references to Supplier.
ARTICLE XIV
INTELLECTUAL PROPERTY
14.01 Ownership of Intellectual Property. All Intellectual Property owned by
either party will at all times be and remain the exclusive property of
the owner thereof and this TS Agreement will not constitute a license
except to the extent required to fulfill each party's obligations
hereunder.
ARTICLE XV
SUPPLIER'S USE OF BUYER'S PROPERTY
15.01 Books and Records. During the Transitional Period Supplier will be
permitted, at no cost to Supplier, to retain and use any Books and
Records or other documents transferred to the Buyer pursuant to the Sale
Agreement to the extent necessary or advisable for Supplier to fulfill
its obligations under this TS Agreement.
15.02 Equipment. During the Transitional Period Supplier will be permitted, at
no cost to Supplier, to retain and use any Equipment transferred to the
Buyer pursuant to the Sale Agreement to the extent necessary or advisable
for Supplier to fulfill its obligations under this TS Agreement. Buyer
will be permitted to label such Equipment as Buyer's property. Supplier
will not assert or cause any lien to be placed on such Equipment. At the
reasonable request of any secured lender of
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Buyer, Supplier will confirm that it waives any rights it may have under
local law to assert landlord's, mechanic's or similar liens on such
Equipment.
ARTICLE XVI
TERM
16.01 Term of Agreement. This TS Agreement will be effective for the duration
of the Transitional Period.
ARTICLE XVII
TERMINATION/EXPIRATION
17.01 Notice of Default. In addition to any other rights or remedies Buyer or
Supplier may have at law or in equity, a party not in default under this
TS Agreement (the "Non-Defaulting Party") may terminate this TS Agreement
by giving written notice to the other party (the "Defaulting Party") of
the Non-Defaulting Party's intention to terminate this TS Agreement upon
the occurrence of either or both of the following events:
(a) a breach by the Defaulting Party of any of its obligations hereunder;
or
(b) the filing by or against the Defaulting Party of a petition in
bankruptcy, or any appointment of a receiver for the Defaulting Party
or any substantial part of its assets, or any assignment for the
benefit of the Defaulting Party's creditors.
Such notice will identify a date for termination of this TS Agreement,
which date will not be sooner than 20 Business Days after receipt of such
notice by the Defaulting Party ("TS Agreement Termination Date"). If the
event on which the notice is based is not cured prior to the TS Agreement
Termination Date, then this TS Agreement will terminate on the TS
Agreement Termination Date.
17.02 Termination Without Cause. Buyer may terminate this TS Agreement at any
time without cause and without penalty by giving 90 calendar days prior
written notice to Supplier.
17.03 Effect on Other Agreements/Survival of Certain Provisions. Termination of
this TS Agreement will have no effect on any other agreements between
Buyer and Supplier, unless an effect is mutually and specifically agreed
in writing between the parties the termination of this TS Agreement will
not relieve either party of any liability to the other based on acts or
omissions prior to the termination of this TS Agreement. The following
Sections will survive termination: Sections 13.01, 13.02, 13.03 and
17.04.
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17.04 Unshipped Products and Materials. Upon termination or expiration of this
TS Agreement, Supplier and any Contract Manufacturer will promptly ship
to Buyer at the address(es) designated by Buyer pursuant to Section 5.01,
and Buyer will purchase:
(a) any unshipped Products as of the Termination Date or the date of
expiration, at the price(s) set forth in Schedule TS9.01 as modified
pursuant to Section 9.01; and
(b) any unused but usable raw and packaging materials exclusively related
to Products, at Supplier's actual cost.
Buyer will be responsible for paying for the shipment of, and will bear
the risk of loss for, usable raw and packaging materials and Products to
the designated location(s).
ARTICLE XVIII
MISCELLANEOUS
18.01 Entire Agreement. The Transaction Documents constitute the entire
agreement among Supplier, certain of Supplier's Affiliates, and Buyer
with respect to, among other things, the Manufacture of Products. In the
event of any inconsistency between the Transaction Documents and any
subsequently-issued document, including without limitation a written
purchase order, the Transaction Documents will prevail.
18.02 Taxes. Buyer and Supplier each agree to pay all taxes assessed on all
materials, excluding Products, to which they have title. Buyer will be
responsible for paying all taxes assessed on finished Products.
18.03 Supplier's Employees and Independent Contractor Status. During the term
hereof, and for a period of 1 year after the expiration or termination of
this TS Agreement, Buyer and its Affiliates and agents will not without
Supplier's prior written agreement directly or indirectly solicit for
employment or hire any employees of Supplier or its Affiliates who have
worked primarily in the Manufacture of Products. Supplier is acting as an
independent contractor.
18.04 Force Majeure. Neither party (the "Affected Party") will be liable to the
other (the "Non-Affected Party") for failure to perform any part of this
TS Agreement if such failure results from an act of God, war conditions,
revolt, revolution, sabotage, actions of a Governmental Entity, laws,
regulations, embargo, fire, strike, other labor trouble, or any cause
beyond the Affected Party's control. Upon the occurrence of any such
event which results in, or will result in, delay or failure to perform
according to the terms of this TS Agreement, the Affected Party will
promptly give notice to the Non-Affected Party of such occurrence and the
effect and/or anticipated effect of such occurrence. The Affected Party
will use its
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reasonable efforts to minimize disruptions in its performance and to
resume performance of its obligations under this TS Agreement as soon as
practicable, provided, however, the resolution of any strike or labor
trouble will be within the sole discretion of the Affected Party.
18.05 No Right of Set-Off. Notwithstanding any other provisions of this TS
Agreement or any other agreement between the parties, all payments to be
made by either party under the Transaction Documents will be made free of
any set-off and will be promptly remitted to the party entitled to
receive payment hereunder.
18.06 Employment Relationship. The personnel of each Party performing any
services hereunder will be the employees of that Party, and the other
Party will have no labor relationship with such personnel nor will the
other Party be liable for wages, salaries, benefits or collective
bargaining liabilities to such employees.
18.07 Confidentiality. Each Party will regard as confidential and proprietary
all of the information communicated to it by the other Party in
connection with this Agreement (which information will at all times be
the property of the other Party). Each Party will not, without the prior
written consent of the other Party, at any time (a) use such information
for any purpose other than in connection with the performance of its
obligations under this Agreement or (b) disclose any portion of such
information to third parties, excluding Party's agents or subcontractors
which are directly performing services for Supplier in connection with
this Agreement (and who will be informed of and subject to the
requirements of this section). Each Party will at the termination or
expiration of this Agreement return to the other Party all such
information which is in written or tangible form (including all copies,
summaries and notes of the contents thereof).
18.07 Limitation. Any other Action pursuant to this TS Agreement, including any
Action with respect to an indemnity obligation, must be commenced within
1 year after the expiration or termination of this TS Agreement.
18.08 Notices. All notices required or permitted to be given under this TS
Agreement will be in writing and will be deemed to be properly given when
actually received by the Person entitled to receive the notice at the
address stated below, or at such other address as Supplier or Buyer may
provide by notice to the other:
Supplier: The Procter & ▇▇▇▇▇▇ Manufacturing Company
▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Fax:
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With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Associate General Counsel
The Procter & ▇▇▇▇▇▇ Company
▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Buyer:
Attention:
Fax:
With copies to:
Fax:
18.09 Waiver of Certain Defaults. All claims for failure or alleged failure of
Products to meet Specifications will be deemed waived unless received by
Supplier in writing within 15 calendar days after receipt by Buyer of the
Products in question.
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IN WITNESS WHEREOF, the parties have signed this TS Agreement on the date first
set forth above.
THE PROCTER & ▇▇▇▇▇▇ MBW INVESTORS LLC
MANUFACTURING COMPANY
By: _____________________________ By: _____________________________
Name printed: ___________________ Name printed: ___________________
Title: __________________________ Title: __________________________
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Schedule TS2.01
Confidential treatment for Schedule TS2.0l has been requested
SCHEDULE T53.02
ILLUSTRATION OF PERMITTED FORECAST VARIATIONS
PAGE 1 OF 2
For purposes of this illustration, assume the Closing Date is December 15, 1997;
therefore the First Going Month is January 1998. Fractional case quantities will
be used below for clarity, even though they will not be produced in practice.
On January 8,1995, Buyer must deliver to Supplier a Forecast for February 1998
(the Next Month), March 1998 (the Second Month), April 1998 (the Third Month)
and each remaining month in the Transitional Period. For purposes of this
illustration, assume that Buyer forecasts its requirements for every month of
the Transitional Period at 7,000 cases per month, divided evenly among the
Product Categories (i.e., 1,000 cases in each Product Category). Further assume
that each Product Category contains 10 SKUs, and that Buyer forecasts its
requirements as being split evenly among all SKUs (i.e., Buyer forecasts
requirements of 100 cases for each SKU).
The Baseline quantities specified for February on January 8 by Buyer are firm,
subject to Buyer's right to make changes until February 5 of 10% or less by SKU,
with a maximum variation of 5% by Product Category. This means that, as long as
Buyer notifies Supplier by February 5, Supplier will be required to Manufacture
during February between 90 and 110 cases of each SKU, with the total cases for
each Product Category being between 950 and 1,050.
The Baseline quantities specified for March on January 8 are subject to Buyer's
right to make changes until February 8 of 20% or less by SKU, with a maximum
variation of 10% by Product Category. Thus, the Forecast delivered on February
8 could call for between 80 and 120 cases of each SKU, with the total cases for
each Product Category being between 900 and 1,100. Assume that the February 8
Forecast for March production calls for 97 cases of each SKU, for a total of 970
cases per Product Category. Then, as long as Buyer notifies Supplier by March 5,
Buyer can further vary these quantities by the amounts permitted for quantities
that have become firm written purchase order-i.e., another 10% or less by SKU,
with a maximum variation of 5% by Product Category. Thus, if Supplier receives
the proper notice by March 5, it will be required to Manufacture during March
between 87.3 and 106.7 cases per SKU, with the total cases for each Product
Category being between 921.5 and 1,018.5.
SCHEDULE T53.02
ILLUSTRATION OF PERMITTED FORECAST VARIATIONS
PAGE 2 OF 2
The Baseline quantities specified for April on January 8 are subject to Buyer's
right to make changes until March 8 of 20% or less by SKU, with a maximum
variation of 10% by Product Category. Thus, the Forecast delivered on March 8
could call for between 80 and 120 cases of each SKU, with the total cases for
each Product Category being between 900 and 1,100. [Note that these figures will
not vary depending on the numbers in the February 8 Forecast, because March's
Baseline quantities were set on January 8]. Assume that the March 8 Forecast for
April production calls for 110 cases of each SKU, for a total of 1,100 cases per
Product Category. Then, as long as Buyer notifies Supplier by April 5, Buyer can
further vary these quantities by the amounts permitted for quantities that have
become firm written purchase orders-i.e., another 10% or less by SKU, with a
maximum variation of 5% by Product Category. Thus, if Supplier receives the
proper notice by April Sit will be required to Manufacture during April between
99 and 121 cases per SKU, with the total cases for each Product Category being
between 1,045 and 1155.
Note that the Baseline quantities for March and April were set by the January 8
Forecast. Likewise, the Baseline quantities for May would be set by the February
8 Forecast; the Baseline quantities for June would be set by the March 8
forecast, and so forth.
Schedule TS9.01
Confidential treatment for Schedule TS9.0l has been requested
