Exhibit 10.28
FOIL SUPPLY AND DISTRIBUTION AGREEMENT
This foil supply and distribution agreement ("Agreement") is entered into as of
the Effective Date (as hereinafter defined).
Between: Alcan Inc. having an office at 0000 Xxxxxxxxxx Xxxxxx Xxxx,
Xxxxxxxx, Xxxxxx, X0X 0X0, Xxxxxx (hereinafter "Alcan")
And: NOVELIS Foil Products, a division of NOVELIS Inc. having an
office at 000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxx X0X 0X0
(hereinafter "NOVELIS")
Whereas, NOVELIS has agreed to manufacture and supply to or on behalf ALCAN, all
of Alcan' s requirements for retail and industrial packages of ALCAN brand
aluminum foil, including retail packages of Alcan brand foil, bulk retail
packages of Alcan brand foil and industrial rolls of Alcan brand foil, but
excluding master rolls of foil intended to be rewound onto smaller rolls and
resold, or foil sold under other brand names (hereinafter "Foil") for sale in
Canada on the terms and conditions contained in this Agreement
Whereas, NOVELIS will manufacture the Foil at its manufacturing facilities, and
through any sub-manufacturers that may be selected by NOVELIS and approved by
ALCAN. NOVELIS will be solely responsible for material acquisition and the
manufacturing process.
Whereas, the design of all Foil packaging is and remains exclusively that of
ALCAN.
NOVELIS and ALCAN mutually agree on the following:
1. PURPOSES OF THE AGREEMENT
ALCAN hereby engages NOVELIS to manufacture certain Foil products for ALCAN.
ALCAN further engages NOVELIS to provide a turn key sales and marketing service
with respect to such Foil in Canada including the advertising, marketing, sales,
warehousing, shipment, invoicing, collection, and accounting with respect to
Foil sales in Canada.
2. TERM OF AGREEMENT
This Agreement shall become effective as of the Effective Date and will remain
in effect until December 31, 2006 unless otherwise terminated as provided in
Sections 8 or 16.4 of this Agreement.
"EFFECTIVE DATE" means the effective date of the arrangement under s. 192 of the
Canada Business Corporations Act (the "CBCA") proposed by Alcan in its
management proxy circular dated November 23, 2004 (the "Arrangement"), being the
date shown on
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the certificate of arrangement issued by the director under the CBCA giving
effect to the Arrangement, which date the Parties currently expect to be January
1, 2005.
3. PURCHASE OF FOIL
ALCAN agrees to purchase from NOVELIS and NOVELIS agrees to manufacture and sell
to ALCAN 100% of ALCAN's requirements for Foil, as further described in this
Agreement.
Promptly upon execution of this Agreement and at the beginning of each calendar
quarter thereafter during the term of this agreement ALCAN shall provide NOVELIS
with a blanket purchase order for its requirements of Foil during such calendar
quarter. The price for the Foil shall be determined in accordance with the
procedures set out in Annex 1.
4. SERVICES BY NOVELIS
In addition to the supply of Foil described in this agreement, NOVELIS shall
provide on behalf of and for the benefit of ALCAN comprehensive sales,
marketing, logistics, payment collection and customer support services in
respect of the Foil sold under this agreement. Including the following:
o NOVELIS shall market the Foil throughout Canada in a manner designed to
maintain the value of the Alcan brand for such Foil products. The
advertising budget, marketing plan and promotions shall be proposed by
NOVELIS and approved by ALCAN.
o NOVELIS shall sell the Foil to customers in the retail, bulk retail and
industrial markets on behalf of and as agent for ALCAN. ALCAN, in
consultation with NOVELIS, shall set quarterly sales targets for Foil sales
in Canada. NOVELIS may utilize sales representatives who are not employees
of NOVELIS to promote these sales and the level of sales commissions to be
paid to such sales representatives shall be mutually agreed by Alcan and
NOVELIS.
o NOVELIS shall ship Foil on behalf of ALCAN to the customers and shall
coordinate the logistics of such shipments in a commercially reasonable
manner intended to meet the needs of the marketplace for Foil.
o NOVELIS shall invoice the customers for the foil and shall collect the
payments for the foil on behalf of and as agent for Alcan. NOVELIS shall
maintain true and accurate records relating to all sales and payments for
Foil.
ALCAN shall oversee the provision of such services through a marketing contact
person to be employed by ALCAN.
In consideration for providing the services described above, ALCAN shall pay to
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NOVELIS a Service Fee determined in accordance with the procedures set out in
Annex 1. In addition to the NOVELIS Service Fee, ALCAN shall reimburse NOVELIS
for the agreed costs for advertising, sales representative commissions and
promotions.
5. REPORTS AND PAYMENTS
5.1. Within thirty (30) days after the end of each calendar quarter during the
term of this agreement, NOVELIS shall report to ALCAN the Foil sales broken down
into retail, bulk retail and industrial sales during the previous quarter. For
each category, NOVELIS shall report the volume of sales, the price charged per
unit and the total amount collected on behalf of Alcan. Together with the report
NOVELIS shall pay to Alcan the net amount due to ALCAN with respect to such
sales, after certain adjustments, determined in accordance with the procedures
set out in Annex 1.
5.2. Payments due hereunder shall be made in Canadian Dollars to the address or
bank account specified by ALCAN from time to time.
6. SHIPMENT AND TITLE
6.1. All Foil shall be shipped freight prepaid to a destination designated by
the customer, or as otherwise agreed between NOVELIS and the customer.
6.2. All risk of loss, including loss due to damage, shall pass from NOVELIS to
the customer as determined between NOVELIS and the customer. Until that time,
risk of loss shall be that of NOVELIS. At no time shall the risk of loss pass to
ALCAN.
7. INSPECTION AND COORDINATION
7.1. ALCAN shall have the right to designate a person (the "ALCAN
Representative") to coordinate with NOVELIS the activities of ALCAN under this
Agreement, and to communicate to NOVELIS any problems relating thereto. The
ALCAN Representative shall have the right to inspect the Foil at reasonable
times in order to verify that the Foil meets the specifications and quality
requirements established by ALCAN and communicated to NOVELIS from time to time.
7.2. ALCAN or its customer will advise NOVELIS of any quality defects promptly
after they are discovered. Foil not conforming with the quality specifications
will be returned to NOVELIS in the manner designated by NOVELIS.
8. TERMINATION FOR DEFAULT
8.1. Either party may terminate this Agreement at any time due to material
default of the other party to comply with any relevant term or condition. Prior
to a termination for default, a written notice of default(s) shall be issued to
the defaulting party, specifying the default(s) and the time period for the
default(s) to be remedied, which shall be a period reasonably necessary to
enable the defaulting party to correct the particular
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default, but not less than 60 days. If the default(s) are remedied within the
specified time period, the termination notice will be voided.
8.2. Upon termination of this Agreement, the defaulting party shall be liable to
the non-defaulting party for its costs and expenses resulting from the default.
Notwithstanding the foregoing, the non-defaulting party will make reasonable
efforts to mitigate the defaulting party's liabilities in accordance with
reasonable commercial practices.
9. GENERAL LIABILITY
9.1. ALCAN's liability to NOVELIS for actual damages for any cause whatsoever is
limited to the amount paid by NOVELIS to ALCAN.
9.2. NOVELIS's liability to ALCAN for actual damages for any cause whatsoever is
limited to the amount due to ALCAN for Foil actually sold by NOVELIS.
9.3. Under no circumstances will either party be liable to the other for
exemplary, special, indirect, incidental or consequential damages, including
without limitation any actual or prospective lost revenue or profits.
10.0 QUALITY AND CONTROL
10.1 Form of Use. NOVELIS shall use the Alcan brand including without limitation
use on products, labels, packaging, point-of-sale displays, electronic and print
advertising and promotional pieces, and business and commercial stationery and
forms, as for example, purchase orders, invoices, price lists and business
agreements in the form and manner consistent with the Alcan Trademark Manual as
may be amended by Alcan from time to time and the use made of the Alcan brand on
the Effective Date. NOVELIS shall not use the Alcan brand in connection with any
other trademark or service xxxx without the written approval of ALCAN.
10.2 Quality Standards for Products, Services and Trademark Use. The nature and
quality of all (a) services rendered and (b) Foil manufactured, sold and
distributed by NOVELIS, in connection with the use of the Alcan brand shall meet
the standards set by ALCAN therefor and, in any event, shall be at least as high
as the normally accepted standards of the industry for such services or Foil.
10.3 Preservation of Good Will. NOVELIS shall act in such a manner as to ensure
the preservation of the goodwill associated with the Alcan brand and will comply
with all applicable laws and regulations, and obtain all governmental approvals
that may be necessary. NOVELIS shall not, by any act, tarnish, degrade or dilute
the distinctiveness of the Alcan brand or injure the reputation and goodwill
associated therewith.
11.0 INSPECTION
11.1 ALCAN shall have the right to such inspection and supervision of the
processes and material of manufacture as it may determine to be necessary to
adequately assure the quality of the Products as required under this Agreement;
and NOVELIS agrees to permit ALCAN's authorized representative upon reasonable
notice, during regular
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business hours to enter NOVELIS's premises where the Foil is being manufactured
to inspect same. All expenses to ALCAN resulting from quality control procedures
authorized hereunder, including the cost of inspection and supervision, shall be
borne entirely by ALCAN.
11.2 ALCAN shall have the right and discretion to terminate forthwith NOVELIS's
right to use the Alcan brand on any Foil which ALCAN deems in its own judgement
do not meet the quality standards specified by ALCAN under this Agreement.
12.0 OWNERSHIP OF THE ALCAN BRAND
12.1 ALCAN's Ownership Rights. All right, title and interest in and to the Alcan
brand, applications therefor and registrations or renewal thereof shall remain
vested in ALCAN. NOVELIS shall not act in any manner inconsistent with such
ownership. All uses of the Alcan brand by NOVELIS shall inure to the benefit of
and be on behalf of ALCAN. No rights are assigned with respect to the Alcan
brand except for the right to use the Alcan brand pursuant to this Agreement.
12.2 NOVELIS's Acknowledgement of ALCAN's Ownership Rights. NOVELIS confirms
ALCAN's ownership of the Alcan brand and goodwill pertaining thereto, and agrees
not to take or cause any action which may interfere with ALCAN's ownership of
the Alcan brand and goodwill represented thereby, and not to use or authorize
the use of the Alcan brand directly or indirectly with, or in relation to, any
aspect of NOVELIS's business except as specifically authorized by this
Agreement. Without limiting the generality of the foregoing, NOVELIS shall not
seek or obtain protection in the Alcan brand of any kind, including registration
of the Alcan brand, and NOVELIS agrees that it will not contest ALCAN's
exclusive ownership of the Alcan brand. At the request of ALCAN, NOVELIS shall
execute any papers or documents necessary to protect the Alcan brand.
12.3 Representation and Warranties. ALCAN makes no representation or warranty,
express or implied, in respect of the Alcan TM.
13. NON-COMPETITION
Except as specifically provided in this agreement, neither party shall have the
right to otherwise use the brands, trademarks or trade names of the other party,
either directly or indirectly, in connection with any product, promotion or
publication without the prior written approval of the other party.
NOVELIS further agrees that during the term of this agreement it will not market
retail packages of foil in Canada under a brand name that competes directly with
the ALCAN brand. However, NOVELIS may manufacture and sell retail packages of
foil to third parties who market such foil under brand names or trademarks owned
or controlled by such third parties such as "house brands".
14. WARRANTY
14.1. NOVELIS warrants to ALCAN that:
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14.1.1. Foil will be free from defects in materials and workmanship at the time
of shipment; and
14.1.2. Foil will conform to the approved sample for each Foil product offered
by NOVELIS in dimensions, appearance and surface finish within commercially
reasonable variations. The gauge of the stock used to produce the Foil shall be
within +/- 10% of gauge of the stock used to produce the approved samples.
14.2. If any Foil does not conform to the foregoing warranties, ALCAN or its
customer shall request instructions from NOVELIS regarding the return or other
disposition of the non-conforming Foil. At its expense, NOVELIS will repair or
replace the non-conforming Foil and ship the repaired or replaced Foil to the
destination specified in writing by ALCAN or its customer.
14.3. NOVELIS shall indemnify ALCAN and hold it harmless from and against any
liability, expense, damage, cost or claim (including property damage, injury or
death) ("Loss") asserted by any person or entity arising from any use or sale of
the Foil by NOVELIS on behalf of ALCAN, unless the Loss was due to the
negligent, willful or wanton misconduct of ALCAN.
15. GENERAL TERMS
15.1. Neither party may directly or indirectly sell, transfer, assign, or
delegate in whole or in part this Agreement, or any rights, duties, obligations
or liabilities under the Agreement, without prior written consent of the other.
Notwithstanding the foregoing, ALCAN and NOVELIS shall have the right for its
convenience to assign and delegate this Agreement to a subsidiary or its
controlling shareholder or a company owned or controlled by its controlling
shareholder; provided that any assignment and delegation shall not relieve ALCAN
or NOVELIS of liability hereunder.
15.2. Any modification to this Agreement shall be agreed to in writing by both
parties.
15.3. This Agreement and the related Orders shall be governed by and interpreted
according to Ontario law.
16. GENERAL PROVISIONS
16.1. Section headings are for convenience of reference only and shall not be
considered in the interpretation of this Agreement.
16.2. All notices required or permitted hereunder shall be in writing and shall
be personally delivered or dispatched by prepaid, first-class mail, or by fax,
sent to the address indicated in the preamble to this Agreement.
16.3. Any consents or approvals given or required to be given under this
Agreement shall be effective only if given in writing and executed by the duly
authorized
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representative of the party granting that consent or approval.
16.4. Neither party shall be liable hereunder to the other for delays in the
performance of its obligations caused by circumstances beyond its reasonable
control, including but not limited to, acts of god, wars, riots, strikes,
floods, labor disputes, accidents, inability to obtain appropriate metal or
other raw materials and governmental restrictions; provided that, if any such
delay shall continue for a period of sixty (60) days or more, either party shall
have the right to terminate this Agreement by written notice to the other.
16.5. The parties acknowledge that they have read this Agreement, understand it,
and agree to be bound by its terms and conditions. Further, they agree that it
is the complete and exclusive statement of the agreement between the parties
relating to the subject matter of this Agreement. This statement of their
agreement supersedes all proposals or other prior documents, proposals,
invoices, acknowledgements, oral representations, sales agreements, letters of
intent or other prior communication or agreements, written or oral, between the
parties relating to this subject. Any reproduction of this Agreement by reliable
means will be considered an original of this document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized representatives as of the day and year first
above written.
Accepted and Agreed to
NOVELIS Inc. ALCAN Inc.
By: By:
____________________________ ____________________________________
Title: Title:
____________________________ ____________________________________
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