Amended & Restated Jams Manufacturing Agreement

AMENDED AND RESTATED JAMS MANUFACTURING AGREEMENT


THIS AGREEMENT is made and entered into as of March 3, 1997 by and between Roseland Manufacturing, Inc., a Delaware corporation (hereinafter referred to as "Seller"), and International Home Foods, Inc., a Delaware corporation (hereinafter referred to as "Purchaser").


WITNESSETH:


WHEREAS, American Home Food Products, Inc., a Delaware corporation and Seller entered into a Jams Manufacturing Agreement as of January 21, 1994 and said Agreement was assigned by American Home Food Products, Inc. to Purchaser on November 1, 1996; and


WHEREAS, Purchaser and Seller wish to further amend such Agreement and to execute this Amended and Restated Jams Manufacturing Agreement in order that Purchaser may continue to purchase Product from Seller, and Seller may continue to sell Product to Purchaser, in each case upon the terms and conditions set forth herein;


NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


1. DEFINITIONS


As used herein, the following terms shall have the following meanings:


"Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person.


A "Case" of any finished Product means the stockkeeping-unit (sku) of such finished Product, provided, however that shippers, multi-packs and other multiple case units, notwithstanding their identification as SKUs, comprise multiple quantities of equivalent cases of base SKUs.


"CD Limit" means the aggregate amount equal to (i) 2% multiplied by (ii) the Overall Cost per Case for each Case of Product purchased by Purchaser hereunder during the twelve months preceding the date of the occurrence to which the CD Limit is applied.


"Consequential Damages" means any indirect or consequential damages arising from, relating to or in connection with this Agreement, whether arising from or relating to breach of warranty, agreement or covenant, negligence, strict liability in tort or other causes.


"Direct Labor Cost" means the Standard Cost of direct labor utilized in the production of Product, including the cost of fringe benefits, allocated to Product in a manner consistent


1 2 with current practices in effect for allocation of such labor cost to all products manufactured by Seller, as set forth in Schedule 1 to Exhibit B hereto.


"Force Majeure" shall have the meaning ascribed to such term in Section 10.


"Intellectual Property Right" means any trademark, service mark, trade name, invention, patent, trade secret, copyright, know-how (including any registrations or applications for registration of any of the foregoing), trade dress, logos, labels, labeling and other indicia of ownership, or any other similar type of proprietary intellectual property right.


"Manufacturing Facility" means Seller's manufacturing facility located at 426 Eagle Rock Avenue, Roseland, New Jersey.


"Materials" means all materials and ingredients necessary for the manufacture, labeling, packing and storage of Product which Purchaser has purchased from Seller pursuant to Exhibit B hereto.


"Materials Cost" means the cost of Materials purchased by Seller to be utilized in the production of Product.


"Overall Cost" means, per Case of any Product at any time, the sum of (i) the Standard Cost of Materials utilized plus (ii) Direct Labor Cost plus (iii) Overhead Cost, in each case per Case of such Product in effect at such time.


"Overhead Cost" means the Standard Cost of overhead incurred at the manufacturing plant of Seller where Product is manufactured, allocated to Product in a manner consistent with Seller's current practices in effect for allocation of overhead cost to all products manufactured by Seller, as modified by Section 5, as set forth in Schedule 1 to Exhibit B hereto.


"Person" means an individual, corporation, partnership, association, trust or other entity or organization.


"Product" means any and all jam, jelly and preserve products manufactured for and marketed by Purchaser including, but not limited to, the products listed in Exhibit A hereto.


"Product Defect" means any defect in any Product including, without limitation, in the workmanship, in the manufacture of, in the ingredients or raw materials comprising or in the labeling or packaging of any Product.


"Standard Cost" with respect to Materials Cost, Direct Labor Cost or Overhead Cost, as the case may be, means the cost thereof that is based on expected yields and utilizations consistent with current budgeting practices, as modified by Section 5, as set forth in Schedule 1 to Exhibit B hereto.


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"Term" means the term of this Agreement as described pursuant to Section 6.


2. PRODUCTION; PRODUCT SPECIFICATIONS


(a) During the Term hereof, Seller agrees to manufacture, package and sell to Purchaser, and Purchaser agrees to purchase from Seller, Purchaser's total requirements of Product, subject to Section 2(d).


(b) Purchaser agrees to purchase Product from Seller and Seller agrees to sell Product to Purchaser pursuant to the purchase order procedures described in section 3.


(c) Product delivered hereunder shall be manufactured in accordance with current production standards and practices at the Manufacturing Facility. Either party may, from time to time, during the Term, request the approval of the other party to a change in such standards or practices, which approval shall not be unreasonably withheld; provided that if any such requested change is not agreed to, the standards and practices in effect immediately prior to the time of such request shall remain valid and in effect. Any and all changes to such practices and standards shall be made only pursuant to written agreement of the parties as aforesaid; provided that Seller shall be entitled to increase its Standard Costs of production to the extent of any increase in production costs resulting from any change in production standards or practices pursuant to this Section 2 (c) from those in effect on the date hereof; and provided further that if Seller notifies Purchaser of any such increases in its Standard Costs of production, Seller shall furnish Purchaser with documentation reasonably satisfactory to Purchaser evidencing the increase in the Standard Costs of production.


In the event that the production standards and practices are changed by mutual agreement pursuant to this Section 2 (c), Seller shall manufacture Product hereunder in compliance with such changed production practices and standards.


(d) Purchaser has the right, exercisable at its option, to transfer some or all production of Product to other manufacturing facilities prior to the expiration of the Term of this Agreement, provided, however, Purchaser gives Seller 180 days' prior written notice and reimburses Seller for the lower of either (i) fixed costs of contract termination, or (ii) fixed labor and overhead costs remaining in the Term of this Agreement (e.g. lease and labor contract termination costs). Purchaser will be provided access to Sellers facilities to remove equipment and make general repairs as necessary following written notification.


3. PURCHASE ORDERS


(a) By December 1 of each year during the term hereof, Purchaser shall provide Seller with an annual forecast for the following calendar year of requirements of Product, by SKU, which shall be updated monthly and shall include notice of any promotional activity and significant changes in case volume activity.


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(b) On a regular and frequent basis, which may be daily, Purchaser and Seller (i) shall review the inventory of Product and anticipated sales of the Product; and (ii) agree upon a production schedule which will provide Purchaser with sufficient amounts of Product to maintain appropriate customer service levels. Seller shall be responsible for scheduling shipment of the Product to Purchaser's designated locations based on deployment schedule provided by Purchaser.


(c) In the event Seller, within five (5) business days after receipt of an annual forecast (or monthly update), notifies Purchaser of its inability to meet such forecast (or monthly update), including the specified delivery dates, the parties shall attempt to arrange a substituted delivery schedule by mutual agreement. Such notice shall include a statement of the reasons for such inability and the amount of Product affected.


(d) Except in the case of Force Majeure (in which case the provisions of Section 10 shall apply), in the event the parties are unable to agree on a substituted delivery schedule, Purchaser shall have the right to have Product manufactured by parties other than Seller or to undertake manufacture itself, but only if Product can be obtained more expeditiously from an alternative source and only in such amounts and for such periods necessary to make up the difference between the amounts required by Purchaser hereunder and only for such periods Seller is unable to timely supply Product to Purchaser. In that event, Seller agrees to provide Purchaser or its nominee with all technical assistance necessary for the manufacture of Product.


(e) In accordance with Purchaser's policy, Seller must obtain written approval to purchase more than 50% of the annual requirement for any component item.


4. PRICING: MATERIALS


(a) The price for Product ("Price") supplied pursuant to this Agreement shall be determined as set forth in Exhibit B.


(b) The provisions relating to responsibility and payments regarding purchase and sale of Materials shall be as set forth in Exhibit B.


(c) Seller represents and warrants that it has entered into written commercially satisfactory arrangements pertaining to the Materials and Purchaser, when it acquires title to and ownership of such Materials in accordance with Section 7 of this Agreement, shall have all the rights and benefits of Seller pursuant to such agreements as if it were Seller. Seller agrees to provide Purchaser with copies of such bailment agreements.


4 5 5. ADMINISTRATIVE SERVICES: EQUIPMENT RENTAL


(a) Seller will lease from Purchaser all of Purchaser's manufacturing equipment that is, as of the date hereof, located at the Manufacturing Facility (the "Equipment") in order for Seller to perform its obligations hereunder, for $1 per month.


(b) Seller and Purchaser agree that the Equipment shall be located in and remain in the Manufacturing Facility at all times, at no cost to Purchaser therefor. Seller will not utilize the Equipment for any purpose other than to manufacture Product or for any other use that the parties shall agree to in writing. The Equipment may not be moved or relocated outside of the Manufacturing Facility by Seller without Purchaser's prior written consent. Seller agrees that it shall not impair the right, title or interest of Purchaser in and to the Equipment, nor shall allow any lien or other encumbrances to be levied thereon,


(c) Seller will operate and maintain the Equipment in accordance with past practices. Seller agrees to provide routine daily maintenance to the Equipment. Any capital expenditures required in connection with production of Product hereunder shall be subject to Purchaser's approval, which shall not be unreasonably withheld and Purchaser shall be liable for all such capital expenditures.


(d) Upon exercise of Purchaser's rights under Section 2 (d), Purchaser may remove Equipment from the Manufacturing Facility from time to time upon reasonable notice to Seller, all costs of removal and transporting of Equipment to be borne by Purchaser; provided that after any such removal sufficient Equipment remains at the Manufacturing Facility to enable Seller to perform its production obligations hereunder; provided further that in the event of any such removal, the Direct Labor Cost and Overhead Cost per Case of Product shall be increased to the extent necessary to reflect Seller's increased costs arising from any such removal during the period from commencement of any such removal to expiration or termination of this Agreement pursuant to Section 6 or Section 17.


(e) Upon termination of this Agreement, the lease provided for in Section 5(a) shall terminate and Purchaser shall, as soon as practicable thereafter but in no event later than 30 days after termination of this Agreement, remove the Equipment from the Manufacturing Facility. In the event such Equipment has not been removed within such 30 day period, beginning on the next day, Purchaser shall pay rent to Seller for the use of Manufacturing Facility at the rate of $27,000 per month.


(f) In the event of the removal of Equipment pursuant to Section 5(d) or 5(e), Purchaser shall pay all costs of removal and transporting of the Equipment and all costs to repair any damage to the Manufacturing Facility caused by removal of the Equipment, which repairs shall include the patching and filling of holes and repair of any structural damage. All repairs shall be completed within 30 days following completion of equipment removal. In the event repairs are not completed within such 30 day period, beginning on the 31st day, Purchaser shall pay rent to Seller at the rate of $27,000 per month until said repairs are completed.


5 6 6. TERM OF AGREEMENT


The term of the Agreement shall be twenty-four (24) months, commencing on April 1, 1997 and expiring on March 31, 1999 (the "Initial Term"). Purchaser will be provided the opportunity to discuss with Seller its labor contract strategy and shall be allowed to review and approve contract strategy and contract proposals prior to renewal. Seller will use its best efforts to complete the renewal of its union contract and building lease by September 15, 1998. Purchaser shall have the right, exercisable at its option, to extend the term of this Agreement for an additional period of twenty-four (24) months upon 180 days prior written notice to Seller (the "Option"), to be given no later than September 30, 1998.


7. DELIVERIES: TITLE AND RISK


(a) Title to, ownership of and risk of loss with respect to all Materials purchased by Seller shall remain with Seller until purchased by Purchaser as described in Exhibit B hereto, and upon such purchase, title to and ownership of all such Materials shall pass to Purchaser; provided, however, that, except as expressly provided herein, risk of loss shall at all times remain with Seller and Seller shall be liable for any loss of or damage to the Materials including, but not limited to, any shortages in the Materials while in the possession of Seller or Seller's bailees' possessions, subject to the provisions of Section 7 of Exhibit B.


(b) The parties agree that Purchaser is hereby authorized to file one or more financing statements, continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting Purchaser's ownership interest in the Materials with or without the signature of Seller.


(c) Shipments shall be made on the approximate date or dates reasonably specified by Purchaser provided orders are received (and a delivery schedule approved) by Seller at least thirty (30) days before such specified date(s).


(d) All deliveries of Product purchased and sold hereunder shall be F.O.B. the Manufacturing Facility.


(e) Risk of loss with respect to all Product purchased and sold hereunder shall remain with Seller until delivery to a carrier at the Manufacturing Facility as provided in Section 7 (d). Title to and ownership of all Product (other than the Materials) and risk of loss with respect to such Product purchased hereunder will pass to Purchaser upon delivery to the carrier at the Manufacturing Facility.


8. PAYMENT TERMS


Payment of the Price of Product produced hereunder shall be made by Purchaser within twenty (20) days from date of invoice. Seller shall invoice Purchaser weekly based on actual production of Product in the week preceding the ...