EXHIBIT 10.16
FIRST AMENDED AND
RESTATED
PRODUCTION AGREEMENT
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This First Amended and Restated Production Agreement (the "Agreement") is
made as of the 19th day of November, 1997, by and between Aurora Foods, Inc.
(formerly known as MBW Foods, Inc.), a Delaware corporation ("Buyer"), and The
Red Wing Company, Inc., a Delaware corporation ("Producer").
WITNESSETH
WHEREAS, Buyer and Producer entered into a Production Agreement dated as of
June 9,1997;
WHEREAS, Buyer and Producer desire to amend and restate such Production
Agreement;
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 develop 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 June 9, 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. My 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 ▇▇▇▇ Plant"), Streator,
Illinois (the "Streator 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. 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
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at such Approved Facilities as shall be determined from time to time in the
sole judgment of Buyer. Notwithstanding the foregoing, Buyer agrees that (i)
during the first year of the Original Term (with the first year being
measured from the Commencement Date to the day immediately preceding the
first anniversary of the Commencement Date), Buyer shall order at least one
million five hundred thousand equivalent cases of Products from the Producer
(with an equivalent case being equal to 288 ounces of the Products) and (ii)
during each year of the Original Term thereafter, Buyer shall order at least
two million five hundred thousand equivalent cases of Products from the
Producer. IF, DURING ANY SUCH YEAR OF THE ORIGINAL TERM, BUYER SHALL FAIL TO
ORDER AT LEAST SUCH NUMBER OF EQUIVALENT CASES OF PRODUCTS FROM THE
PRODUCER, THE SOLE AND EXCLUSIVE REMEDY FOR PRODUCER FOR SUCH FAILURE SHALL
BE THAT, FOR EACH YEAR IN WHICH THE BUYER FAILS TO ORDER AT LEAST SUCH
NUMBER OF EQUIVALENT CASES OF PRODUCTS FROM THE PRODUCER, AN ADDITIONAL ONE
HUNDRED EIGHTY DAYS SHALL BE ADDED TO THE ORIGINAL TWO YEAR PERIOD SET FORTH
IN SECTION 22(B) OF THIS AGREEMENT 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 specifications), 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
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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 non-exclusive, 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
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.
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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 party's request, the non-disclosing 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 party'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 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 party's valuable property, which is intended to be maintained
in
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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 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
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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. If, 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 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 for 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
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Materials", "Direct Labor", "Variable Overhead" and "Factory Fixed" as
set forth in Schedule C. Producer agrees that it shall not effect any
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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 parties 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). Any 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 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 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 Buyer's express written
consent.
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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.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Payments shall be sent to:
SunTrust Bank
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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.
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
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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 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).
* Confidential treatment requested by the Company.
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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 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 D (the "Manufacturing Equipment") that is used in the
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production of the Products for installation in the Approved Facility
identified on Schedule D. Buyer shall use its bests efforts to ensure
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that the delivery and installation of the equipment at an Approved
Facility shall be completed no later than the
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dates set forth on Schedule D, subject to any Force Majeure Events.
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Except as disclosed to Producer at the time of the removal 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.
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. Buyer shall retain
title to all of the Manufacturing Equipment.
c. In the event 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.
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. Producer agrees that the Manufacturing Equipment shall only be used by
Producer in connection with the production of the Products on behalf of
Buyer. Producer agrees that it shall not use such equipment for any
other purpose.
g. Notwithstanding the provisions of Sections 13(a), 13(b) and 14(b) of
this Agreement, Buyer and Producer agree that Buyer (1) shall be
responsible for all costs related to the moving and reinstallation of
the Manufacturing Equipment for the Mrs. Butterworths/R/ lines to the
designated Approved Facilities; and (2) shall reimburse Producer far all
costs associated with
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retrofitting Producer Manufacturing Equipment, provided that such
responsibility and reimbursement shall not exceed $3,300,000.00 in the
aggregate. Producer shall be responsible for all costs related to the
moving and reinstallation of the Manufacturing Equipment and the
retrofitting of the Producer Manufacturing Equipment that are in excess
of $3,300,000.00. Buyer and Producer acknowledge and agree that the
removing and packaging of the Manufacturing Equipment for the Mrs.
Butterworths/R/ lines shall also be the responsibility of the Buyer,
and the costs to Buyer of removing and packaging such equipment shall
not be applied in calculating the $3,300,000 cap described previously
in this paragraph.
(h) Upon mutual agreement of Buyer and Producer, Buyer shall purchase
palletizers (at a cost that shall not exceed $200,000) for installation
in connection with the Mrs. Butterworths/R/ lines. Buyer and Producer
acknowledge and agree that such cost shall not be applied in
calculating the $3,300,000 cap described previously in Section 13(g) of
this Agreement. Buyer shall be invoiced directly by the seller of the
palletizers.
(i) Prior to reinstalling the Manufacturing Equipment for the Mrs.
Butterworths/R/ lines at an Approved Facility, Buyer shall cause to be
performed, and shall be responsible for all costs related to, certain
mutually agreed upon maintenance projects relating to certain pieces of
the Manufacturing Equipment. Those maintenance projects include:(i) the
repair and maintenance of two glass cleaners, (ii) the repair and
maintenance of a labeler and (iii) the repair and maintenance of a
homogenizer. In addition, Buyer shall purchase, and shall be
responsible for all costs related to the purchase of parts cabinets as
mutually agreed upon by Buyer and Producer. The current estimated cost
of the repair and maintenance of the foregoing items and the purchase
of the parts cabinets is $132,000. Buyer and Producer acknowledge and
agree that the costs of such repair and maintenance of the foregoing
items and the cost of purchasing the parts cabinets shall be the
responsibility of the Buyer, but such costs shall not be applied in
calculating the $3,300,000 cap described previously in Section 13(g) of
this Agreement
14. MANUFACTURING EQUIPMENT OF THE PRODUCER
a. Producer agrees that certain manufacturing equipment owned and used by
Producer at its San ▇▇▇▇ Facility, which equipment is identified on
Schedule E (the "Producer Manufacturing Equipment"), shall be used in
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connection with the production of some of the Products at such Approved
Facility.
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b. Subject to the provisions of Section 13(g) of this Agreement, Buyer
agrees to reimburse Producer for all costs associated with retrofitting
the Producer Manufacturing Equipment so as to enable the Producer to
utilize such equipment in the production of Products. Producer shall
have title to all retrofitted pieces of equipment; provided Buyer shall
have title to any change parts which are needed solely for the
production of the Products. Schedule E sets forth an estimate of the
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costs to retrofit certain Producer Manufacturing Equipment but shall
not, subject to the provisions of Section 13(g) of this Agreement, be
deemed to limit Buyer's obligation to reimburse Producer for all costs
associated with the retrofitting.
c. Buyer understands and agrees that the Producer Manufacturing Equipment
will not be used solely to produce the Products, but will also be used
by Producer to produce other products, including, but not limited to,
Producer's spaghetti sauce and ketchup's.
d. In the event that any of the Producer 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 Producer 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 Producer
Manufacturing Equipment during the Agreement Term. In the ordinary
course of business, Producer shall maintain and repair such Producer
Manufacturing Equipment so that such equipment is, and remains, in good
operating condition and repair and suitable for its intended purpose.
15. ADDITION TO THE STREATOR FACILITY.
a. In consideration for the Buyer entering into this Agreement, Producer
has agreed to construct an addition to its Streator Facility (the
"Streator Addition"). The estimated costs of the. Streator Addition are
attached hereto as Schedule F
----------
b. The Producer shall control, and be responsible for all costs related
to, the construction of the Streator Addition. Title to the Streator
Addition shall be in the name of Producer. The Producer agrees to
commence construction of the Streator Addition as soon as possible and
agrees that it will use its best efforts to ensure that the
construction of the Streator Addition will be completed no later than
December 31, 1997, subject to any Force Majeure Events.
-13-
c. During the Agreement Term, the Streator Addition shall not be used to
store or produce any other products, unless such storage or production
does not materially disrupt or interfere with the production and
storage of Products at the Streator Addition.
d. In consideration for the Producer constructing the Streator Addition,
during the Agreement Term, Buyer agrees to pay an additional charge on
each case of Mrs. Butterworths/R/ Products produced at any Approved
Facility or Substitute Facility in the amount set forth in Schedule C
----------
up to an aggregate amount that is the lesser of (i) the actual
construction cost of the Streator Addition or (ii) the estimated cost
of the Streator Addition as set forth on Schedule F. On a quarterly
----------
basis, the Producer shall provide to Buyer an itemized account of the
number of cases for each particular line of the Product purchased by
Buyer from each Approved Facility and any Substitute Facility and the
aggregate amount of the additional charge paid by Buyer to Producer
relating to the Streator Addition.
e. If on the anniversary date of the Commencement Date each year, the
aggregate amount of the building amortization charge on each case of
Mrs. Butterworths(R) Products sold during such year is less than
$240,000, Buyer shall pay to Producer the difference between the
aggregate amount of the building amortization charge and $240,000,
which amount shall be paid within ten (10) days of the anniversary date
of the Commencement Date.
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.
-14-
c. Producer warrants that all raw materials and packaging materials for
the manufacturing and packaging of the Products will be sampled and
tested 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.
-15-
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 non-
conformity 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 for 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, it 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 effort 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.
-16-
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
(collectively,
-17-
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 Buyer's 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 provide 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
-18-
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 title rights of any person and no affect 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 insurance 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
-19-
(i) file or have filed against it a bankruptcy petition (which, in the
case of a 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 as a result of a breach of any
of the provisions of this Agreement by Buyer or 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,
within thirty days after such termination, the unpaid balance of the
amount That Buyer would have paid pursuant to Section 15(d) of this
Agreement for the Streator Addition.
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 the unpaid balance of the amount that
Buyer would have paid pursuant to Section 15(d) of this Agreement for
the Streator Addition.
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;
(b) return to Buyer or destroy all tangible forms of the
Confidential Information of Buyer;
-20-
(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
(v) All sums owed Producer by Buyer shall become immediately due and
payable.
-21-
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.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, President
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
If to Buyer: Aurora Foods, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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, superseded
or altered except by an instrument in writing duly executed and
delivered on behalf of each of the parties hereto.
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 relinquishment thereof; nor shall any single or partial
exercise
-22-
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 or may
enter into 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 350,000
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.
-23-
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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------ -------------------------
Its: President Its:President
----------------------- ------------------------
-24-
SCHEDULE A
LIST OF PRODUCTS
SKU Description - Syrup
-------------------------------------------------------------------------------
397162 Display Gallons
-------------------------------------------------------------------------------
397170 Display Gallons French
-------------------------------------------------------------------------------
579129 24 Oz. Regular
-------------------------------------------------------------------------------
529224 24 Oz. Lite
-------------------------------------------------------------------------------
579412 12 Oz. Regular
-------------------------------------------------------------------------------
579169 12 Oz. Regular 1.69
-------------------------------------------------------------------------------
529212 12 Oz. Lite
-------------------------------------------------------------------------------
529169 12 Oz. Lite 1.69
-------------------------------------------------------------------------------
579408 36 Oz. Regular
-------------------------------------------------------------------------------
529208 36 Oz. Lite
-------------------------------------------------------------------------------
SCHEDULE B
SPECIFICATIONS
The Buyer's Operating Manual, which has been separately delivered to Producer,
is deemed to be included herein and a pan of the Agreement.
SCHEDULE C
Confidential treatment for Schedule C has been requested
SCHEDULE D
BEST EFFORT
COMPLETION DATES
-----------------------------------------------------------------------------------------------
Production Facility Delivery Installation Produce
-----------------------------------------------------------------------------------------------
Gallons San ▇▇▇▇ w/o 07/21/97 w/o 08/11/97 08/18/97
-----------------------------------------------------------------------------------------------
Glass Streator w/o 12/03/97 w/o 01/01/98 02/01/98
-----------------------------------------------------------------------------------------------
SCHEDULE E
PRODUCER MANUFACTURING EQUIPMENT
RELOCATION/RETROFIT COST ESTIMATES
ITEM NAME STREATOR SAN ▇▇▇▇
--------- -------- --------
$ $
- -
GALLON PRODUCTION
Processing 5,000 38,500
Holding Tank N/A 50,000
Product Cooling 25,500 10,500
Controls 5,500 20,000
Piping 9,500 15,000
Homogenizer 75,500 53,300
Deasrator 18,000 N/A
Mechanical Installation 5,000 12,500
Electrical Installation 10,000 12,500
Contingency 6,500 0
-------- --------
Sub Total Gallon Processing 160,500 212,300
Packaging
Installation of Gallon Line N/A 50,000
Filler Parts 3,000 N/A
Copper Parts N/A N/A
Labeler Parts 2,500 7,500
-------- --------
Sub Total Gallon Packaging 5,500 57,500
TOTAL GALLON PRODUCTION 166,000 269,800
RELOCATION/RETROFIT COST ESTIMATES
ITEM NAME STREATOR SAN ▇▇▇▇ SAN ▇▇▇▇ SAN ▇▇▇▇
ALL SIZES 24 OZ. ONLY 12 & 24 ▇▇. ▇▇, ▇▇, ▇▇ ▇▇
$ $ $ $
------------------ ----------------- ----------------- ----------------
RETAIL PRODUCTION
Processing Revisions
Gum Induction N/A 34,000 34,000 34,000
Process Control Upgrade 327,980 a N/A N/A N/A
Sweetner Tank(s) 235,000 b 20,000 20,000 20,000
Product Cooling 107,000 50,000 50,000 50,000
------------------ ----------------- ----------------- ----------------
Sub Total Retail Processing 669,980 104,000 104,000 104,000
Packaging Revisions
Glass Cleaner 33,508 d 45,000 c 45,000 c 45,000 c
Filler N/A 21,521 23,880 28,440
Capper N/A 24,515 28,122 31,729
Labeler 38,340 d 42,516 67,344 92,506
Packer N/A 7,141 14,232 21,322
Palletizer 4,163 d 0 0 0
------------------ ----------------- ----------------- ----------------
Sub Total Retail Packaging 76,011 140,693 178,578 218,997
Olathe Equipment
Millwright Dismantle TBD *
Electrical Dismantle TBD *
Equipment Transfer TBD *
Millwright Install 400,000
Electrical Install 300,000
Compressed Air 25,000
Water 25,000
Hot Water 30,000
Line Lube 5,000
Vendor Start-Up Service 20,000 0 0 0
------------------ ----------------- ----------------- ----------------
Sub Total Olathe Equipment 805,000 0 0 0
SCHEDULE E
PRODUCER MANUFACTURING EQUIPMENT
RELOCATION/RETROFIT COST ESTIMATES
ITEM NAME STREATOR SAN ▇▇▇▇ SAN ▇▇▇▇ SAN ▇▇▇▇
ALL SIZES 24 OZ. ONLY 12 & 24 ▇▇. ▇▇, ▇▇, ▇▇ ▇▇
$ $ $ $
------------------ ----------------- ----------------- ----------------
RETAIL PRODUCTION
Support Services
Electrical
Utility High Viltage Feed 65,000
Primary Switch 50,000
Transformer/Service 150,000
Feeder to MCC's 200,000
Contingency 50,000 0 0 0
------------------ ----------------- ----------------- ----------------
Sub Total 515,000 0 0 0
Steam 15,000 0 0 0
Water
Water Main/Meter 30,000
Charcoal Filters 10,000
Water Softner 50,000 0 0 0
------------------ ----------------- ----------------- ----------------
Sub Total 90,000 0 0 0
Compressed Air
Air Compressor 40,000
New Header 5,000 0 0 0
------------------ ----------------- ----------------- ----------------
Sub Total 45,000 0 0 0
Sub Total Support Services 665,000 0 0 0
TOTAL RETAIL PRODUCTION 2,215,991 244,693 282,578 322,997
*= To Be Determined
a = discrationary Item to Update obsolete control system.
b = Replacing existing sweetner tanks with outside storage tanks.
c = To provide bottle cleaner; existing will not work.
d = Dalayed P.M.'s discovered 5/29 visit.
SCHEDULE F
STREATOR BUILDING ADDITION
ITEM NAME STREATOR
$
--------- ---------
BUILDING CONSTRUCTION
New Building Addition (~13,000 SF) 910,000
Iowa Street Dock Renovations
Enclosure 25,000
Cooler 68,500
Existing Shipping Warehouse Renovations
Sanitary Sewers 131,500
Storm Sewers 10,000
Wall Removals/Modifications 70,000
---------
TOTAL BUILDING CONSTRUCTION 1,185,000