Common use of Material Diversion and Diversion Auditor Clause in Contracts

Material Diversion and Diversion Auditor. (a) If in a party’s reasonable opinion the value of products branded with the perpetually Licensed Trademarks “Tang”, “Kool-Aid”, “Jell-O” or “MiO” (solely if and to the extent a Trademark registration is obtained in Latin America for the “MiO” GroceryCo Xxxx) that were diverted in violation of Section 4.1 is material (being understood to mean that the estimated value of such diverted or intended to be diverted products is no less than five (5) million US Dollars of net revenues to the selling party over the course of one calendar year aggregated across all applicable jurisdictions (by way of example, three (3) million US Dollars of “Tang” into Mexico and two (2) million US Dollars of “Tang” into Puerto Rico), as adjusted for inflation each year following the Distribution Date by the percentage increase (or decrease) of the All Items Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor (or any successor of such consumer price index)) (“Material Diversion”), the party affected by such Material Diversion (the “Infringed Party”) shall promptly bring such case to the attention of the Diversion Panel. The Infringed Party shall also be entitled to instruct a reputable independent public accountant working on an hourly or flat fee basis and does not receive a contingency fee or other bounty or bonus fee (the “Diversion Auditor”) to conduct a review of the orders, books and records (to the extent relating to the brands that are the subject of the Material Diversion at issue) of the party whose Customers are suspected to have caused diversion of product (the “Accused Party”); provided that the Diversion Auditor shall be at the time of its selection one of the four (4) largest accounting firms in the NA Countries (which as of the Distribution Date would be Deloitte, Ernst & Young, KPMG, or PwC). Once a Diversion Auditor is selected with respect to an actual or suspected Material Diversion pursuant to this Section 4.4, such Diversion Auditor may not be replaced with respect to such actual or suspected Material Diversion. Through such audit (“Diversion Audit”), the Diversion Auditor shall be required to reach a determination on whether the Accused Party was actively or passively facilitating Material Diversion. If the Accused Party has admitted actively or passively facilitating Material Diversion or the Diversion Auditor concludes on a balance of probabilities that the Accused Party was actively or passively facilitating Material Diversion, the Accused Party’s liability for Material Diversion affecting the Infringed Party shall be considered proven. (b) Subject to Sub-Section 4.4(c) below, if the Diversion Auditor (i) is unable to reasonably conclude on a balance of probabilities that the Accused Party was actively or passively facilitating Material Diversion and (ii) has reasonably found indicia suggesting the Accused Party’s active or passive facilitation of Material Diversion, a rebuttable presumption shall arise that the Accused Party has actively or passively facilitated Material Diversion and the Accused Party shall bear the burden of proving to the reasonable satisfaction of the Diversion Auditor that it did not actively or passively facilitate Material Diversion affecting the Infringed Party. If the Accused Party fails to discharge its burden of proof, then the Accused Party shall be deemed to have facilitated Material Diversion affecting the Infringed Party and the same shall be noted in the Diversion Audit Report. If the Accused Party succeeds in discharging its burden of proof, then the Diversion Auditor shall determine that the Accused Party was not facilitating Material Diversion affecting the Infringed Party and the same shall be noted in the Diversion Audit Report. (c) If the Accused Party’s Customer that is suspected to have caused Material Diversion is a Large North American Customer and the Accused Party has proven to the reasonable satisfaction of the Diversion Auditor that (i) the Accused Party has sent the Customer a No-Diversion letter pursuant to Section 4.1; and (ii) such Customer ships products that is the subject of a Material Diversion into the Infringed Party’s jurisdiction(s) in such quantities (up to ten percent (10%) of the Accused Party’s sales of such products to such Customer) that would not raise suspicions to a reasonably diligent business person; and (iii) the Accused Party has credibly assured that it did not know that such Customer has caused or intended to cause Material Diversion; then the net revenues of the Accused Party related to sales to such Large North American Customer shall not be included in the calculation of the total net revenues of diverted product for the purposes of assessing whether the net revenue threshold set forth in Section 4.4(a) for a Material Diversion has been met; provided, however, that the Infringed Party shall continue to otherwise retain all available legal rights to pursue a claim against the Accused Party or such Large North American Customer for trademark infringement.

Material Diversion and Diversion Auditor. (a) If in a party’s reasonable opinion the value of products branded with the perpetually Licensed Trademarks “Tang”, “Kool-Aid”, “Jell-O” or “MiO” (solely if and to the extent a Trademark registration is obtained in Latin America for the “MiO” GroceryCo Xxxx) that were diverted in violation of Section 4.1 is material (being understood to mean that the estimated value of such diverted or intended to be diverted products is no less than five (5) 44 million US Dollars of net revenues to the selling party over the course of one calendar year aggregated across all applicable jurisdictions (by way of example, three (3) million US Dollars of “Tang” into Mexico and two (2) million US Dollars of “Tang” into Puerto Rico), as adjusted for inflation each year following the Distribution Date by the percentage increase (or decrease) of the All Items Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor (or any successor of such consumer price index)) (“Material Diversion”), the party affected by such Material Diversion (the “Infringed Party”) shall promptly bring such case to the attention of the Diversion Panel. The Infringed Party shall also be entitled to instruct a reputable independent public accountant working on an hourly or flat fee basis and does not receive a contingency fee or other bounty or bonus fee (the “Diversion Auditor”) to conduct a review of the orders, books and records (to the extent relating to the brands that are the subject of the Material Diversion at issue) of the party whose Customers are suspected to have caused diversion of product (the “Accused Party”); provided that the Diversion Auditor shall be at the time of its selection one of the four (4) largest accounting firms in the NA Countries (which as of the Distribution Date would be Deloitte, Ernst & Young, KPMG, or PwC). Once a Diversion Auditor is selected with respect to an actual or suspected Material Diversion pursuant to this Section 4.4, such Diversion Auditor may not be replaced with respect to such actual or suspected Material Diversion. Through such audit (“Diversion Audit”), the Diversion Auditor shall be required to reach a determination on whether the Accused Party was actively or passively facilitating Material Diversion. If the Accused Party has admitted actively or passively facilitating Material Diversion or the Diversion Auditor concludes on a balance of probabilities that the Accused Party was actively or passively facilitating Material Diversion, the Accused Party’s liability for Material Diversion affecting the Infringed Party shall be considered proven. (b) Subject to Sub-Section 4.4(c) below, if the Diversion Auditor (i) is unable to reasonably conclude on a balance of probabilities that the Accused Party was actively or passively facilitating Material Diversion and (ii) has reasonably found indicia suggesting the Accused Party’s active or passive facilitation of Material Diversion, a rebuttable presumption shall arise that the Accused Party has actively or passively facilitated Material Diversion and the Accused Party shall bear the burden of proving to the reasonable satisfaction of the Diversion Auditor that it did not actively or passively facilitate Material Diversion affecting the Infringed Party. If the Accused Party fails to discharge its burden of proof, then the Accused Party shall be deemed to have facilitated Material Diversion affecting the Infringed Party and the same shall be noted in the Diversion Audit Report. If the Accused Party succeeds in discharging its burden of proof, then the Diversion Auditor shall determine that the Accused Party was not facilitating Material Diversion affecting the Infringed Party and the same shall be noted in the Diversion Audit Report. (c) If the Accused Party’s Customer that is suspected to have caused Material Diversion is a Large North American Customer and the Accused Party has proven to the reasonable satisfaction of the Diversion Auditor that (i) the Accused Party has sent the Customer a No-Diversion letter pursuant to Section 4.1; and (ii) such Customer ships products that is the subject of a Material Diversion into the Infringed Party’s jurisdiction(s) in such quantities (up to ten percent (10%) of the Accused Party’s sales of such products to such Customer) that would not raise suspicions to a reasonably diligent business person; and (iii) the Accused Party has credibly assured that it did not know that such Customer has caused or intended to cause Material Diversion; then the net revenues of the Accused Party related to sales to such Large North American Customer shall not be included in the calculation of the total net revenues of diverted product for the purposes of assessing whether the net revenue threshold set forth in Section 4.4(a) for a Material Diversion has been met; provided, however, that the Infringed Party shall continue to otherwise retain all available legal rights to pursue a claim against the Accused Party or such Large North American Customer for trademark infringement.

Material Diversion and Diversion Auditor. (a) If in a party’s reasonable opinion the value of products branded with the perpetually Licensed Trademarks “Tang”, “Kool-Aid”, “Jell-O” or “MiO” (solely if and to the extent a Trademark registration is obtained in Latin America for the “MiO” GroceryCo Xxxx) that were diverted in violation of Section 4.1 is material (being understood to mean that the estimated value of such diverted or intended to be diverted products is no less than five (5) million US Dollars of net revenues to the selling party over the course of one calendar year aggregated across all applicable jurisdictions (by way of example, three (3) million US Dollars of “Tang” into Mexico and two (2) million US Dollars of “Tang” into Puerto Rico), as adjusted for inflation each year following the Distribution Date by the percentage increase (or decrease) of the All Items Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor (or any successor of such consumer price index)) (“Material Diversion”), the party affected by such Material Diversion (the “Infringed Party”) shall promptly bring such case to the attention of the Diversion Panel. The Infringed Party shall also be entitled to instruct a reputable independent public accountant working on an hourly or flat fee basis and does not receive a contingency fee or other bounty or bonus fee (the “Diversion Auditor”) to conduct a review of the orders, books and records (to the extent relating to the brands that are the subject of the Material Diversion at issue) of the party whose Customers are suspected to have caused diversion of product (the “Accused Party”); provided that the Diversion Auditor shall be at the time of its selection one of the four (4) largest accounting firms in the NA Countries (which as of the Distribution Date date hereof would be Deloitte, Ernst & Young, KPMG, or PwC). Once a Diversion Auditor is selected with respect to an actual or suspected Material Diversion pursuant to this Section 4.4, such Diversion Auditor may not be replaced with respect to such actual or suspected Material Diversion. Through such audit (“Diversion Audit”), the Diversion Auditor shall be required to reach a determination on whether the Accused Party was actively or passively facilitating Material Diversion. If the Accused Party has admitted actively or passively facilitating Material Diversion or the Diversion Auditor concludes on a balance of probabilities that the Accused Party was actively or passively facilitating Material Diversion, the Accused Party’s liability for Material Diversion affecting the Infringed Party shall be considered proven. (b) Subject to Sub-Section 4.4(c) below, if the Diversion Auditor (i) is unable to reasonably conclude on a balance of probabilities that the Accused Party was actively or passively facilitating Material Diversion and (ii) has reasonably found indicia suggesting the Accused Party’s active or passive facilitation of Material Diversion, a rebuttable presumption shall arise that the Accused Party has actively or passively facilitated Material Diversion and the Accused Party shall bear the burden of proving to the reasonable satisfaction of the Diversion Auditor that it did not actively or passively facilitate Material Diversion affecting the Infringed Party. If the Accused Party fails to discharge its burden of proof, then the Accused Party shall be deemed to have facilitated Material Diversion affecting the Infringed Party and the same shall be noted in the Diversion Audit Report. If the Accused Party succeeds in discharging its burden of proof, then the Diversion Auditor shall determine that the Accused Party was not facilitating Material Diversion affecting the Infringed Party and the same shall be noted in the Diversion Audit Report. (c) If the Accused Party’s Customer that is suspected to have caused Material Diversion is a Large North American Customer and the Accused Party has proven to the reasonable satisfaction of the Diversion Auditor that (i) the Accused Party has sent the Customer a No-Diversion letter pursuant to Section 4.1; and (ii) such Customer ships products that is the subject of a Material Diversion into the Infringed Party’s jurisdiction(s) in such quantities (up to ten percent (10%) of the Accused Party’s sales of such products to such Customer) that would not raise suspicions to a reasonably diligent business person; and (iii) the Accused Party has credibly assured that it did not know that such Customer has caused or intended to cause Material Diversion; then the net revenues of the Accused Party related to sales to such Large North American Customer shall not be included in the calculation of the total net revenues of diverted product for the purposes of assessing whether the net revenue threshold set forth in Section 4.4(a) for a Material Diversion has been met; provided, however, that the Infringed Party shall continue to otherwise retain all available legal rights to pursue a claim against the Accused Party or such Large North American Customer for trademark infringement.