Amended And Restated Co-pack Agreement

Exhibit 10.33


AMENDED AND RESTATED CO-PACK AGREEMENT


THIS AMENDED AND RESTATED CO-PACK AGREEMENT, made and entered into this 13th day of September, 2001, by and between Weight Watchers International, Inc., a Virginia corporation with its principal offices at 175 Crossways Park West, Woodbury, New York 11797-2055 ("WWI") and Nellson Nutraceutical, Inc., a Delaware corporation with its principal offices at 5801 Ayala Avenue, Irwindale, California 91706-1146 ("Co-Packer").


WITNESSETH:


WHEREAS, WWI and Co-Packer entered into a Co-Pack Agreement, dated November 30, 1999 (the "Existing Agreement"), and the parties desire to modify certain of the terms of their business agreement and wish to do so by canceling the Existing Agreement and substituting in its place this Agreement upon the terms and conditions set forth herein; and


WHEREAS, WWI desires to obtain a supply of bar and drink mix products as more fully described in Exhibit A, which is attached to and made a part of this Agreement, (the "Products") for distribution and sale by WWI under the terms of this Agreement and Co-Packer desires to supply the Products to WWI under the terms of this Agreement.


NOW, THEREFORE, in consideration of the premises and the mutual promises that this Agreement contains, and other good and valuable consideration, receipt of which the parties acknowledge, the parties, intending to be bound legally, agree as follows:


1. MANUFACTURE OF THE PRODUCT. WWI shall place purchase orders with Co-Packer, and Co-Packer shall sell and deliver to WWI, quantities of the Products under the terms of this Agreement. Co-Packer shall manufacture and package the Products in strict compliance with the standards and specifications attached as Exhibit B and made a part of


this Agreement (the "Specifications"). All purchases of the Products by WWI under this Agreement shall be pursuant to, and under the terms and conditions of, a duly authorized and issued WWI purchase order, the form of which is attached as Exhibit C and made a part of this Agreement. In addition, Co-Packer shall comply with the provisions of the WWI Co-Pack Manual for the Products attached as Exhibit D and made a part of this Agreement, as WWI may reissue or amend from time to time (the "Co-Pack Manual"). The terms and conditions of the WWI purchase order form and the Co-Pack Manual shall be in addition to and not in limitation of the terms and conditions of this Agreement. Any inconsistencies between the terms and conditions of the WWI purchase order form or the Co-Pack Manual and this Agreement shall be resolved in favor of the terms and conditions of this Agreement. Any inconsistencies between the terms and conditions of the WWI purchase order form and the provisions of the Co-Pack Manual shall be resolved in favor of the provisions of the Co-Pack Manual. Any terms or conditions appearing on or incorporated into any invoice forms or other documents sent by Co-Packer which are inconsistent with or in addition to the terms and conditions of this Agreement shall not apply.


2. TERM. The term of this Agreement shall commence as of the date of this Agreement and shall continue in full force and effect until December 31, 2004 (the "Term"). This Agreement may, at the option of WWI, be renewed for an additional one (1) year period, and successive one (1) year periods thereafter, by providing written notice to Co-Packer of such election to renew at least one hundred eighty (180) days prior to expiration of the Term or any renewal term thereof.


3. PRODUCTION SCHEDULE. Both parties understand and acknowledge that the quantity and variety of the Products ordered by WWI will be derived from marketing projections that may not necessarily depict actual sales volume since the Products represent a new entry by WWI into the bar market; therefore, the total quantity of Product to be purchased hereunder is subject to wide fluctuation. On or before the beginning of each month during the Term or any renewal term, WWI shall also furnish Co-Packer with an estimate of the quantities of the Products it will require in the succeeding three-month period. These estimates shall not be binding or otherwise limit or obligate WWI in its order


of Products under this Agreement. Notwithstanding anything contained herein to the contrary, WWI shall not be required to purchase any minimum quantity of the Products.


4. LEAD TIME. Co-Packer understands and acknowledges that, because of the competitive nature of the market for the Products, TIME IS OF THE ESSENCE of this Agreement. Co-Packer shall manufacture and shall ship all quantities of the Products for delivery as specified in a duly authorized purchase order that WWI has issued pursuant to Section 1 of this Agreement. Co-Packer shall manufacture and have ready for shipment sufficient Products to fill WWI's purchase orders with thirty (30) days from the date each purchase order is received by Co-Packer.


5. MANUFACTURING FACILITIES. Co-Packer shall manufacture the Products at its processing facilities at Irwindale and Los Angeles, California or at such other facility as WWI and Co-Packer shall mutually agree (the "Factory"). Co-Packer warrants that the Factory is capable of manufacturing and processing the Products in accordance with the requirements of this Agreement and that Co-Packer now solely leases and operates, and for the term of this Agreement solely shall lease and operate, the Factory and all processing equipment located in the Factory. Co-packer shall be the exclusive supplier of the Products within the continental United States of America during the term of this Agreement.


6. RAW MATERIALS; INGREDIENTS; PACKAGING. Co-Packer shall furnish all raw materials and ingredients required for the manufacture, production, and processing of the Products and shall supply all nutrition bar wraps, four pack cartons, and cases necessary for packaging of the Products under this Agreement. Co-Packer shall label all Products using artwork, graphics, and label copy that WWI shall furnish.


7. OWNERSHIP RIGHTS OF WWI; CHANGES IN SPECIFICATIONS. Co-Packer acknowledges that WWI is and shall remain the owner of all recipes, formulations, specifications, artwork, graphics, and label copy furnished by, or developed for, WWI and other confidential and proprietary information relating to the Products. Co-Packer shall be the owner of the specific manufacturing processing techniques which it develops in the


production of the Products. WWI shall have the right from time to time at its sole option to modify the formulations for the Products included as part of the Specifications. The prices for Products with modified formulations shall be adjusted by mutual agreement of the parties hereto to reflect any increased or decreased cost of manufacture by Co-Packer. WWI shall also have the right from time to time upon the mutual agreement of the parties hereto to require modifications or alterations in the processing techniques utilized to manufacture the Products. The prices shall be adjusted by mutual agreement of the parties hereto to reflect any increased or decreased costs as a result of such modifications or alterations, including but not limited to any increased or decreased fixed costs from changes in or additions to equipment required thereby.


8. COMPENSATION. WWI shall pay to Co-Packer in full and complete consideration for the manufacture of the Products, including but not limited to all ingredients, processing, production ,wrapping, packaging and packing of the Products in display boxes and master shippers, and the industry standard stretch wrapping of pallets and delivery of the Products to WWI, the prices specified on Exhibit E, attached hereto and made part hereof, for all Products manufactured, processed, and delivered in strict compliance with the Specifications and delivered as herein set forth. One Hundred Eighty (180) days prior to the expiration of the initial term of this Agreement and any renewal terms thereafter, the parties will review the economics of the supply relationship set forth herein. For the purpose of such review, the aggregate baseline cost of the Products will directly relate to the price per bar as set forth on Exhibit E. If the aggregate baseline cost of raw materials, packaging materials, direct labor, or variable overhead increases or decreases more than five (5) percent during the period under review, the parties agree to negotiate an appropriate price adjustment in good faith.


9. MATERIALS.


(a) All ingredients and raw materials that Co-Packer uses for the manufacture of the Products shall strictly conform to the Specifications. Suppliers of all other raw materials and ingredients for use in the manufacture of the Products shall be


subject, at WWI's option, to the review and approval of WWI before receipt and use of raw materials and ingredients from such supplier. Such approval of Co-Packer's suppliers shall not be unreasonably withheld. Any such review and approval of suppliers by WWI shall be gratuitous and shall not (i) relieve Co-Packer of its obligations under this Agreement, including the duty to inspect all incoming raw materials and insure that they meet the Specifications, or (ii) constitute acceptance by WWI of any raw materials, ingredients, Products, or portion thereof.


10. DELIVERY. Co-Packer shall deliver all the Products that WWI purchases under this Agreement to WWI F.O.B. the Factory and shall place the Products into the custody of carriers that WWI has approved pursuant to WWI's written directions. Co-Packer shall furnish to WWI sufficient information to verify shipment of the Products. Co-Packer shall invoice WWI for the Products on the earlier of the date: (i) that such Products are shipped from the Factory on instructions from WWI; or (ii) four (4) days after production of Product pursuant to a duly authorized and issued WWI purchase order. Terms of payment shall be 1% fifteen (15) days, net thirty (30) days from the date that WWI receives such invoice.


11. RISK OF LOSS. WWI shall bear the risk of loss or damage to any of the Products after Co-Packer has delivered the same to the possession of WWI or to a carrier that WWI has approved pursuant to WWI's instructions, except for loss or damage caused by the manufacturing, processing, packaging, or quality of the Products, in which case Co-Packer solely shall bear the risk of such loss or damage. Co-Packer shall bear the risk of loss or damage to any of the Products that occurs before the delivery of such Products to WWI or to the carrier that WWI has designated for transportation of the Products.


12. INSPECTIONS. Representatives of WWI may enter and inspect, as they pertain to the production of the Products, the Factory and any warehouse at which Co-Packer has stored the Products, during the time of production, storage, or clean-up periods. The inspection may include all aspects of Co-Packer's manufacturing techniques, quality control, sanitation procedures, and records. Co-Packer may restrict access by WWI's representatives


to only those areas where the Products and ingredients and materials for the Products are processed, tested, or stored. Co-Packer shall maintain and make available to WWI upon request all records of chemical, physical, microbiological, and process tests of the basic ingredients and packaging materials, intermediate prod ...