1
EXHIBIT 10.40
FINAL
NEW DISTRIBUTION AGREEMENT
This Distribution Agreement (sometimes referred to as the "New
Distribution Agreement" or this "Agreement") is entered into as of this 11th day
of January, 1999 by and between Xxxxxx'x Grand Ice Cream, Inc., a Delaware
corporation headquartered at 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000
("Distributor") and Ben & Jerry's Homemade, Inc., a Vermont corporation
headquartered at 00 Xxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxxx, Xxxxxxx 00000-0000
("Manufacturer").
WHEREAS, the parties wish to confirm that a certain Distribution
Agreement dated as of January 6, 1987, as amended, including by a Letter
Amendment Agreement dated on the date hereof (the "Letter Amendment Agreement",
and such 1987 Agreement as so amended by the Letter Amendment Agreement being
sometimes referred to as the "Old Agreement"), will automatically expire,
without further notice or actions, as of the close of business on August 31,
1999, and wish, simultaneously with the entering into the Letter Amendment
Agreement and the filing of the Stipulation of dismissal with prejudice in the
pending case of Xxxxxx'x Grand Ice Cream, Inc. and Edy's Grand Ice Cream vs. Ben
& Jerry's Homemade, Inc., to enter into this Agreement effective today, but
providing for the distribution upon the terms and conditions set forth below,
commencing on September 1, 1999, of the Manufacturer's Products by Distributor
in the Distributor Territory as defined below and for certain related matters
set forth below.
NOW THEREFORE, in consideration of these premises, the mutual promises
of the parties and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. Purposes of Agreement. Manufacturer is engaged in the manufacture,
sale and distribution of ice cream and frozen dessert products manufactured and
sold under the trade name "Ben & Jerry's" and in some cases other names.
Distributor is engaged in the manufacture, sale and distribution of ice cream
products and frozen desserts sold under several brand names including "Dreyer's"
and "Edy's" and including ice cream products manufactured by or for others. The
use of the term "Distributor" in this Agreement means Xxxxxx'x Grand Ice Cream,
Inc. and any controlled subsidiaries thereof engaged in ice cream operations in
the United States (production or distribution). The term "Manufacturer" shall
mean Ben & Jerry's Homemade, Inc. and any controlled subsidiaries thereof
engaged in the United States.
Distributor and Manufacturer desire to enter into this Agreement setting
forth the mutual rights and responsibilities of the parties with respect to the
distribution, resale and promotion of Products (as defined) of the Manufacturer
through the distribution system of the Distributor, being the Distributor's
owned and operated distribution system and its authorized subdistributors.
It is understood that such distribution will commence September 1, 1999,
and that all of the provisions of this Agreement shall only be effective
commencing September 1, 1999, provided, however, that the provisions of Section
13 hereof shall be effective immediately.
1
2
"Best efforts" as used in this Agreement means commercially reasonable
use of available resources to accomplish the specified objectives.
1.1. Representation. Distributor hereby represents that as of the date
hereof it is not in default in any respect under, and will not be in default in
any respect but for the running of any applicable grace period under, any loan
agreement or other agreement for the borrowing of money or capitalized leases.
2. Distribution.
2.1. Appointment of Distributor. Subject to all of the terms hereof,
Manufacturer hereby appoints Distributor, commencing September 1, 1999, as a
non-exclusive distributor for the Products (as defined below) in the Distributor
Territory within the United States as set out in Schedule 0X (xxx "Xxxxxxxxxxx
Xxxxxxxxx"), which Distributor Territory may be changed by mutual written
consent of the parties.
The Products distributed by Distributor hereunder include (i) Ben &
Jerry's brand items which are pints, quarts, half gallons, single serve and
including bulk sizes of ice cream, frozen yogurt, sorbet, novelties and other
frozen desserts manufactured by the Manufacturer and (ii) subject to the effect
of distribution agreements between Distributor and third parties effective prior
to a designation by Manufacturer adding Products hereunder, such other brand ice
cream, frozen yogurt, sorbet, novelties and other frozen desserts of other
persons as are involved in a significant relationship with Manufacturer as may
be designated by Manufacturer from time to time, all as set forth in Schedule 2B
as supplemented or revised by Manufacturer from time to time with reasonable
notice to Distributor (collectively, the "Products").
Subject to all of the terms hereof, Distributor accepts such appointment
and agrees to use its best efforts to distribute, resell, and deliver the
Products in all flavors and sizes to all types of retail stores and all other
types of accounts in this Distributor Territory and to promote the Products in
accordance with the terms of this Agreement throughout the Distributor
Territory.
In accordance with the foregoing, Distributor will use its best efforts
to meet the distribution performance standards set out in Schedule 2C, and with
such updates and revisions as shall be agreed at least annually with respect to
each ADI or other market area listed on Schedule 2A (the "Performance
Requirements"). It is understood that the Distributor is responsible for meeting
the Performance Requirements on an annual basis on a market by market basis
within the Distributor Territory for the Distributor Territory served directly
(and if expressly applicable under Section 2 of this Agreement, geographic areas
within the Distributor Territory served indirectly, by using authorized
subdistributors). It is understood that, in the event that the Manufacturer adds
an additional distributor in part of the Distributor Territory, the volume
levels contained in the Performance Requirements shall be appropriately reduced
to reflect such appointment.
The performance goals, i.e. annual business plan volume, etc. (the
"Performance Goals") for any given calendar year, determined as provided below,
shall include the performance matters
2
3
referred to in the immediately preceding paragraph that the Distributor
reasonably should be expected to achieve in the Distributor Territory for such
year and shall be determined by taking into account (a) the Performance Goals
for the immediately preceding year, (b) actual performance of the Distributor
during the immediately preceding year, (c) any events or situations out of the
ordinary that have occurred in the immediately preceding year or are reasonably
expected to occur in the marketplace in the following year, which affected or
would reasonably be expected to affect Distributor's performance, and (d) any
reasonably reliable market performance data for the various markets in which the
Distributor and other distributors distribute substantially the same products of
the Manufacturer.
The Performance Requirements and the Performance Goals for each calendar
year commencing 2000 shall be proposed no later than October 1 of the preceding
year by Manufacturer, after prior consultation with Distributor, and thereafter
shall be the subject of good faith negotiations by the parties. In the event the
parties fail to reach agreement by October 15 in any year on the Performance
Requirements and Performance Goals for the next calendar year, then the
Performance Requirements and Performance Goals for the next calendar year shall
be determined by the averaging of the Performance Requirements and Performance
Goals (where applicable) for the top four (other than those to be applicable
under this Agreement) of the major national markets used by the Manufacturer for
distribution, planning and operational purposes, provided that, as to 1999
(which consists of the months of September - December), the parties commit to
reach agreement on the 1999 Performance Requirements and Performance Goals by no
later than March 31, 1999.
Distributor confirms that it will, except as otherwise specified in this
Agreement, use its best efforts to follow Manufacturer's general distribution
policies (the "Distribution Policies") as now in effect and as reasonably
amended for application to Manufacturer's distributors generally upon reasonable
written notice to Distributor (see Schedule 2D for the Distribution Policies as
in effect on the date hereof).
2.2. Accounts. It is agreed that Distributor Territory will include, for
all Products except bulk, any and all channels and all retail outlets,
including, but not limited to, supermarkets, A and B stores/supermarkets,
military bases, food service accounts and concession areas, Distributor owned
push carts and bunker promotions in supermarkets, convenience stores, Mom and
Pops and specialty food stores and club stores (including those served on a
consignment basis as provided below). Except for mutually agreed authorized
subdistributors (whether or not Distributor owns a minority interest therein),
Distributor will establish, maintain and operate company-owned and operated
trucks, warehouse and related assets as necessary to obtain the distribution
coverage needed to carry out Distributor's obligations to distribute the
Products. Distributor will sell the Products to accounts whether or not the
account wishes to purchase any other products distributed by Distributor.
Distributor agrees that it will not knowingly, directly or indirectly,
through independent distributors or otherwise, sell, market or distribute the
Products to any person outside the Distributor Territory or for sale outside the
Distributor Territory.
3
4
2.3. Sales in Distributor Territory and Authorized Accounts; Food
Service Accounts. With respect to distribution of Food Service (which shall
include novelties that are also distributed as provided in Section 2.2 above
and bulk) which shall consist of sales to non-grocery channels, including, but
not limited to, concessionaires, captive accounts, institutional accounts,
restaurants and the like and shall also include such scooping venues (other than
franchises) as may be established from time to time by the Manufacturer, the
Distributor shall sell to such Food Service accounts as the Manufacturer may
reasonably designate from time to time. It is understood that there may be
changes in the Manufacturer's designation of Food Service accounts which are to
be handled by the Distributor, and the parties agree to reach reasonable
accommodations in order to realize the potential for sales of the Products to
Food Service accounts.
Distributor agrees to distribute only to the authorized types of
accounts in the Distributor Territory in accordance with this Agreement,
including Sections 2.2 - 2.4. In order to carry out the provisions of this
Agreement, Distributor will abide by and, where applicable, impose these
contractual restrictions on all the persons distributing Products under this
Agreement who are not presently bound by an agreement with Distributor, except
when otherwise authorized in writing by the Manufacturer. Notwithstanding the
foregoing, nothing herein shall permit enlargement of the Distributor Territory.
Nonetheless, in the event that the Products are made available to a non-
permitted account, Distributor agrees to use its best efforts to remedy the
situation. Distributor, consistent with applicable law, will use its best
efforts to terminate any distributor or other person who continues to sell
unauthorized accounts. It is understood that the best efforts obligations of
Distributor with respect to the customer/territorial limitations are to use best
efforts, consistent with law, in enforcing such customer/territorial
restrictions under this Agreement and that Distributor shall not be liable to
the Manufacturer for any unauthorized sales or resales by the other distributors
as long as Distributor has not authorized any sales by other distributors in
derogation of the rights retained by the Manufacturer.
2.4. Distribution to Franchisees, etc. To the extent Manufacturer
supplies the Products to Distributor, Distributor agrees to supply the Products,
including bulk, to Manufacturer's franchised, licensed and company-owned scoop
shops in the Distributor Territory on a drayage basis. Distributor understands
that Manufacturer's franchise agreements require it to serve franchise customers
first in the event of product shortage. Distributor will receive a handling fee
per item delivered as established by Manufacturer, that fee currently being (*)
per 2 1/2 gallon bulk tub and (*) per sleeve of pints and miscellaneous boxed
goods, with (*) of the freight to the Distributor to be the responsibility of
Distributor.
2.5. No Exclusive Rights. As of the date of this Agreement, Manufacturer
has no other distributors in the Distributor Territory for the supermarket
channels of distribution. Before Manufacturer grants any other person a right to
distribute the Products in the Distributor Territory, Manufacturer shall first
give not less than 30 days prior written notice to Distributor and shall consult
with Distributor. Before Distributor commences the distribution of any ice cream
products of another person not being distributed by Distributor on the date
hereof, Distributor will give Manufacturer not less than 30 days prior written
notice and shall consult with Manufacturer.
------------
*This confidential portion has been omitted and
filed separately with the Commission.
4
5
2.6. Distributor's Directly Owned and Operated Distribution System. It
is understood that in the Distributor Territory Manufacturer shall sell the
Products to Distributor for distribution through Distributor's distribution
system (as more specifically described in Section 5.2 hereof ("DSD")) and with a
small percentage distributed by authorized subdistributors of the Distributor.
Distributor agrees that its maximum resale prices on Products resold to
subdistributors will not exceed (*) above the prices paid by Distributor for
such Products to the Manufacturer, including freight, under Section 9.
Distributor agrees that all subdistributors shall be subject to the
approval of the Manufacturer, which may not be unreasonably denied. All current
subdistributors are hereby approved by Manufacturer and will be listed on a
Schedule 2.6 to be delivered by Distributor to Manufacturer as soon as
practicable after execution of this Agreement by the parties. Manufacturer shall
have the right to suggest subdistributors subject to the approval of
Distributor, which may not be unreasonably denied. Without limiting any other
provision of this Agreement, the Manufacturer shall also have the right to
appoint an additional subdistributor or, if Distributor does not accept a
designated subdistributor, a co-distributor in an area if Distributor is unable
to sell any Products into a particular class of trade (such as Mom & Pops) or a
particular account of significance (an account with at least six stores) and,
provided that this right shall be limited to sales to such account(s) or class
of trade.
2.7. Supply of Products for Distribution. Manufacturer agrees to use its
best efforts to make the Products available to Distributor hereunder F.O.B.
Manufacturer's plants in Vermont, in such quantities and flavor assortments as
Distributor may reasonably require, subject only to Manufacturer's right, if
reasonably required by force majeure or other unforeseen circumstances affecting
production delays (subject to any priority contractually required by the
franchise agreements referred to above) to allocate Products between all
distributors and franchisees, including Distributor and Manufacturer's other
distributors (independent or company-owned) in this country or those buying for
distribution in foreign countries. Distributor shall purchase on full pallet
basis (or on a split pallet basis with a picking charge), one flavor per pallet
and on half-trailer load minimum basis.
2.8. No Discrimination. In order to ensure that competition for the
Products and products of the Distributor is vigorous, Distributor agrees that
all incentive, commission or other compensation programs or benefits for its
route salesmen or other sales and sales-type employees and other employees
directly involved in the distribution function shall have
incentive/commission/compensation/benefit terms relating to distribution of the
Products of the Manufacturer that are at least equal to those relating to
distribution of products manufactured by Distributor or other products
distributed by Distributor and that the instructions to and conduct of the
Distributor's personnel in the Distributor Territory shall be implemented so as
not to discriminate, directly or indirectly, against distribution of the
Products of the Manufacturer.
2.9. Co-distribution, etc. As to all ADI's within the Distributor
Territory where Distributor distributes products directly (or through
independent distributors and subdistributors, if and where so permitted by the
express terms of this Agreement) and where Manufacturer may be selling to other
distributors, Distributor will be co-distributors with Manufacturer's other
------------
*This confidential portion has been omitted and
filed separately with the Commission.
5
6
distributors, and, as between the Manufacturer and Distributor, Distributor will
not commit any material unfair trade practices as to such other distributors or
attempt to unlawfully interfere with their customers, and Manufacturer, when
acting as a distributor, will not commit any material unfair trade practices as
to Distributor or attempt to unlawfully interfere with Distributor's customers,
it being understood that neither Distributor nor Manufacturer shall be
responsible for actions taken or not taken by any of the other distributors or
subdistributors used by them.
3. Marketing and Sales. Manufacturer shall be responsible for
marketing of the Products in accordance with the provisions of this Agreement,
subject to the following:
3.1. Manufacturer and Distributor shall regularly exchange by electronic
means any information necessary to the performance of their respective
responsibilities and roles hereunder. Manufacturer will receive from Distributor
data provided through the standard UCS 867 product transfer/resale set. The
data, provided weekly, will be of the same quality and coverage as has been
supplied by Distributor in 1998 under the Old Agreement. Each party will
cooperate with the other to be able to receive and transmit data through the
standard UCS 867 protocol as soon as practicable.
3.2. Manufacturer will be responsible for the generation and (*) of the
cost of the following: all print, radio, tv or other media advertising placed by
the Manufacturer and all consumer promotions, i.e., scoop trucks, marketing
events and community events. Each party shall promptly pay, subject to the
following provisions, (*) of the cost of all slotting and trade promotions on
the Manufacturer's Products in the Distributor Territory, which shall not
include the foregoing items in the previous sentence, but shall include
off-invoice, retailer ads, retailer display specials, bunker programs, etc.,
other trade promotional techniques which may be used in lieu of such
conventional trade promotions. So long as each party's cost of trade promotions
and slotting as so defined herein on the Manufacturer's Products does not in the
aggregate exceed for all markets in the Distributor Territory (*) per Equivalent
Unit (as such term is defined in Schedule 3.2) per year, the Distributor shall
pay its (*) share of such trade promotions and slotting, without any requirement
for consent by Distributor.
With respect to the second category of trade promotions that would in
the aggregate exceed for all markets (*) per EU per year (*) share of trade
promotions, the parties must mutually agree on the promotion, in the event of
which agreement the cost of the trade promotion shall be shared on a (*) basis,
provided that, in the event the parties do not mutually agree on a trade
promotion in this second category, then the Manufacturer may require such trade
promotion to be carried out as directed, but with (*) of the cost of such trade
promotion being the responsibility of Manufacturer, it being understood that
Manufacturer shall first be required to send a notice to Distributor committing
to such (*) cost responsibility. It is understood that the provision of (*) per
EU per year will be subject to appropriate adjustment in the event of a
meaningful change in market conditions for promotion of Manufacturer's Products
(for example, if a retailer materially changes its way of doing business). All
credits or other payments necessary to carry out the provisions of this Section
3.2 shall be made by the parties on a monthly basis, and any adjustment
necessary to "true up" the amounts shall be made on a quarterly basis, with the
final adjustment promptly after the end of each calendar year.
----------------
*This confidential portion has been omitted and
filed separately with the Commission.
6
7
3.3. It is understood that, unless otherwise agreed, Manufacturer's
sales representatives shall make presentations and sales calls to Supermarket
Channel (three cash registers or more), convenience store chains, national
accounts, restaurants, and any other accounts designated by Manufacturer
following reasonable notice to Distributor as to presentations and sales calls
in the Distributor Territory, provided that Distributor personnel in the
distribution system may accompany Manufacturer's personnel, unless inappropriate
in Manufacturer's judgment, to assist in the effective promotion of the Products
through the distribution system. With respect to other accounts which are to be
sold by Distributor under this Agreement, including convenience stores (other
than convenience store chains) and Mom & Pops, Manufacturer has determined that
it would be most efficient for sales calls to be made by Distributor personnel
at the direction of the Manufacturer. In addition, all promotions on the
Products must be only those authorized by the Manufacturer, prior to offering
these to accounts.
4. Social Mission Activities. Distributor recognizes the benefit of the
image and reputation of the Products and of the Manufacturer that has been
previously created in the Distributor Territory, including that part of the
image and reputation related to the Manufacturer's approach to marketing
activities, community oriented events, promotions or benefits and the
Manufacturer's Social Mission, as set forth in Schedule 4.1. Distributor
acknowledges its responsibility to maintain and sustain that image and
reputation in Distributor activities as a distributor of the Manufacturer in the
Distributor Territory, including the obligations set forth in Section 4.1
hereof.
4.1. Distributor shall use its best efforts to integrate into its
business of distributing the Products of Manufacturer hereunder a reasonable
number (given the size of Distributor's operation) of socially responsible
activities which are not inconsistent with those activities and programs which
Manufacturer conducts to implement its social mission, as described in
Manufacturer's Annual Report for 1997 and other Manufacturer's materials
attached as Schedule 4.1 and as reasonably updated from year to year by
Manufacturer upon reasonable notice to Distributor. The Manufacturer
acknowledges that the activities of the Distributor set forth in Schedule 4.2
are examples of such socially responsible activities and that activities of the
Distributor in the "socially responsible" arena have been acceptable overall
through the date of execution of this Agreement. However, Distributor as is its
custom, will strive to make improvements to the same as may be reasonable in the
circumstances. It is also understood that, in completing the Questionnaire
furnished under Schedule 4.1 on an annual basis, Distributor shall be entitled
not to respond to the extent that the response would include confidential
business information of Distributor. Material failure by Distributor to identify
and implement such socially responsible activity from time to time, after notice
of such failure, in reasonable detail, from Manufacturer and 90 days cure
period, shall, unless reasonably cured by Distributor in said cure period,
constitute Cause under Section 8.3.
5. Delivery; Other Services.
5.1. Distributor shall be responsible for delivery of the Products and
shall provide the same delivery service and care it provides for its own
products, including service (such intervals in the week as is necessary, given
the retail outlet, to exploit the market potential) for all types of
7
8
accounts, products rotation, correct flavor assortment, proper display and
pricing of product, removal of damaged product (provided that in the event that
Product is required to be removed pursuant to a decision of the Manufacturer,
such as discontinuance of a slow moving item, the Distributor shall be solely
entitled to credit for the purchase price previously paid for such Product),
assurance of adequate back stock where allowed and display of merchandising
materials in and around the freezer case. Distributor also agrees to comply with
Manufacturer's general service standards for distributors as set forth in the
Distribution Policies referred to above and including those in Section 5.2
below.
These services will be provided by Distributor where Distributor
delivers its own products. To the extent that the Products are expressly
permitted by this Agreement to be delivered by independent distributors (or
subdistributors) used by Distributor, Distributor will exercise best efforts to
cause such independent distributors (or subdistributors) to provide delivery
service and care of the Products as aforesaid but shall in no event be liable to
Manufacturer for any act or omission in respect thereof by any such distributor.
However, in the event that such independent distributors (or subdistributors) do
not provide such delivery and care of the Products, Distributor will take action
to correct the deficiency or appoint other distributors (or subdistributors) to
provide the required delivery and care of the Products.
5.2. Temperature/Handling. All Products of the Manufacturer must be
stored at -15 degrees F. The Products may at no time in the channel of
distribution go above -10 degrees F under this Section 5.2 and as provided in
the Distribution Policies of Manufacturer. In the event Manufacturer determines
that Products are being handled at improper temperatures, Manufacturer reserves
the right to insist that Product be destroyed if quality of such Product is
affected at any time and Distributor will remain responsible for payment for the
destroyed Products.
It is agreed that the required form of market delivery by Distributor
under this Agreement is direct store delivery ("DSD"). DSD is the process by
which consumer demand is fulfilled and delivered at the store level. As part of
this process, Distributor's personnel are directly responsible for developing
store specific orders, schematics, and replenishment schedules. Product delivery
to the store (non involving a retailer's warehouse) and merchandising may be
performed by Distributor or a contracted third party.
6. Other Distribution by the Distributor. Notwithstanding any other
provision of this Agreement, the parties acknowledge that Distributor intends to
continue its existing business which may be deemed to compete with
Manufacturer's Products, and may manufacture, sell and/or distribute additional
ice cream products and other products which may compete directly with
Manufacturer's Products, in all parts of the United States and abroad, to all
classes of trade. Manufacturer agrees that nothing in this Agreement is intended
to, or shall limit or affect in any way such activities by Distributor. Nothing
herein shall be deemed to waive compliance with the "best efforts" commitment of
Section 2 hereof.
7. Relationship of Distributor and Manufacturer. The relationship of
Distributor and Manufacturer with respect to sale and purchase of Products is
that of distributor (purchaser) and
8
9
manufacturer (seller), and nothing in this Agreement shall be construed to
create any agency or partnership or any other relationship, except as set forth
herein.
Neither Distributor nor Manufacturer shall have, nor shall either
represent itself as having, any right, power or authority to create any contract
or obligations, either express or implied, on behalf of, in the name of, or
binding upon the other party, or to pledge the other's credit or to extend
credit in the other's name unless the other party shall consent thereto in
advance in writing. Without limitation of the foregoing, Manufacturer shall not
make any representation concerning Distributor or use of Distributor name in
Manufacturer's marketing and sales effort without Distributor's advance written
approval. Manufacturer does have the right without prior approval of Distributor
to inform the trade that the Products are being distributed through the
Distributor's system, and as is necessary to carry out the purposes of this
Agreement. Without limitation to the foregoing, Distributor shall not make any
representation concerning Manufacturer or use of Manufacturer's name in
Distributor's marketing and sales effort without Manufacturer's advance written
approval. Distributor does have the right without prior approval of Manufacturer
to inform the trade that the Products are being distributed through the
Distributor's system, and as is necessary to carry out the purposes of this
Agreement.
8. Term; Termination.
8.1. Term. The term of this Agreement shall start as of September 1,
1999 and shall continue for an indefinite period, unless in any case sooner
terminated pursuant to the terms of this Agreement or by mutual agreement;
provided, however, that the provisions of Section 13 hereof shall be effective
immediately.
8.2. Termination Without Cause. This Agreement may be terminated after
September 1, 1999 by either Distributor or Manufacturer without cause on not
less than six months prior written notice given to the other party; provided
that no such notice may be given during the months of October, November,
December, January, February or March in any year.
During the termination notice period under Section 8.2, the following
additional obligations set forth in this Section shall apply.
Manufacturer shall not be obligated to appoint additional distributors
in any market area during any termination notice period. The below obligations
upon termination shall only apply to the market area or areas in which the
termination is effective and shall be interpreted accordingly. A "market" or
"market areas" shall be any of the areas listed on Schedule 2A.
In the event that Distributor fails to comply in a material respect in a
market (as defined above) with its best effort obligation during the termination
notice period, this failure shall constitute Cause justifying termination by the
Manufacturer under Section 8.3 of this Agreement, effective immediately upon
written notice to Distributor (notwithstanding any contrary provision in Section
8.3, including any cure period in which to cure such default that would
otherwise be applicable under Section 8.3), or, alternatively, Manufacturer
shall have the right, by written notice to Distributor, to shorten the
termination notice period to a shorter period (but not less than
9
10
30 additional days following the date of the Manufacturer's notice to shorten
under this paragraph). In the event of a termination by Distributor without
cause, Manufacturer may, by written notice to Distributor, shorten the
termination notice period to a shorter period (but not less than 30 additional
days following the date of Manufacturer's notice to shorten under this
paragraph).
8.3. Termination for Cause. Either party may at any time terminate this
Agreement, either entirely or as to a particular affected portion of the
Distributor Territory only (as elected in any case by the terminating party, by
written notice to the other party), upon sixty (60) days' written notice to the
other for failure of the other party to comply with any of the terms set forth
herein (which terms shall include the Distributor's failure to satisfy the
Performance Requirements or Performance Goals for Products to be purchased by
Distributor for any year), in any material respect, which shall also have a
material adverse effect on Distributor's distribution performance in either the
Distributor Territory or in the affected area(s) within the Distributor
Territory ("Cause"), unless such default shall have been reasonably cured to the
satisfaction of the other party within sixty (60) days after receipt of such
written notice specifying the failure in reasonable detail. The failure of
Distributor to continue DSD as the method of distribution hereunder shall be
deemed to be "Cause", entitling Manufacturer to give Distributor the 60 day
written notice as specified in this Section. An "affected portion" of the
Distributor Territory shall be any of the markets within the Distributor
Territory that are specified in Schedule 2A.
8.3.1. Without limiting any of the foregoing provisions of this
Agreement, if Manufacturer notifies Distributor with reasonable
specificity that a particular account or group of accounts in a specific
market in the Distributor Territory is not, in the reasonable judgment
of Manufacturer, receiving appropriate distribution (i.e. in accordance
with the Performance Requirements or the Performance Goals, as in effect
for the applicable period); Distributor shall endeavor to correct the
problem. If following sixty (60) days from such notice, Manufacturer is
not, in its reasonable judgment, satisfied that the problem has been
corrected, Manufacturer may propose a solution. If within a reasonable
period (generally thirty (30) days), Distributor agrees to implement
such solution and if Distributor in fact implements such solution, such
notice shall be of no further effect. If Distributor does not so agree
to implement such solution or does not in fact implement such solution,
Manufacturer shall have the right to terminate Distributor's
distribution rights to such account or group of accounts.
8.4. Termination Upon Change in Control. Upon a Change in Control (as
defined below) of the Distributor, the Manufacturer may terminate this Agreement
upon 180 days notice, and upon a Change in Control (as defined) of Manufacturer,
Distributor may terminate this Agreement upon 180 days notice, in each case
given at any time within the nine-month period following the Change in Control
of the other party, provided, further, that if notice of termination for Change
in Control is given more than six months (but not more than nine months) after
the Change in Control, the period of the six month purchase or sales obligation
set forth below shall be shortened by the number of days equal to the number of
days by which the date of the giving of such notice of termination is later than
six months after the date of the Change in Control and the purchase or sale
obligation shall be correspondingly adjusted.
10
11
A "Change in Control" of a party means a change in control of that party
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under the Securities Exchange Act of 1934
(the "Act"), whether or not that party is then subject to such reporting
requirements; provided, however, that, without limitation, such a Change in
Control of that party shall be deemed to have occurred if (a) any "person" (as
such term is used in Section 13(d) and 14(d) of the Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of that party representing 50% or more of the combined
voting power of that party's then outstanding securities eligible to vote in the
election of directors; provided, however, that in the event, with respect to a
Change in Control of Distributor, that person (or any entity controlled by or
controlling that person) is a manufacturer or distributor of frozen desserts
which is a significant competitive factor in the United States or, with respect
to a Change in Control of Manufacturer, that person (or any entity controlled by
or controlling that person) is a manufacturer or distributor of frozen desserts
which is a significant competitive factor in the United States, the "50%" figure
shall be "35%" in each case (calculated on a "fully-diluted basis", i.e.
assuming issuance of all shares issuable upon exercise or conversion of any
outstanding options, warrants or other securities or rights irrespective of the
exercise, conversion or exchange price thereof or any term limiting the current
exercisability); (b) that party is a party to a merger, consolidation, sale of
assets or other reorganization, an issuance of securities or other transaction,
or a proxy contest, as a consequence of which members of the Board of Directors
of that party in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors thereafter; or (c)
during any period of twelve consecutive months, individuals who at the beginning
of such period constituted the Board of Directors (including for this purpose
any new director whose election or nomination for election by that party's
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board of Directors of that
party.
Notwithstanding the foregoing provisions of the definition, a "Change of
Control" of Distributor will not be deemed to have occurred solely because of
(i) the acquisition of securities of Distributor (or any reporting requirement
under the Act relating thereto) by an employee benefit plan maintained by
Distributor for the benefit of employees or by Xxxxxxx X. Xxxxx or T. Xxxx
Xxxxxx or their "affiliates" or "associates" (as such terms are defined in Rule
12b-2 under the Act) or members of their family (or trusts for their benefit) or
(ii) any merger, consolidation or reorganization involving Distributor in which
the holders of voting stock having power to cast 80% of the votes in elections
of directors of Distributor immediately prior to such merger, consolidation or
reorganization hold immediately after such transaction voting stock having power
to cast 80% of the votes in elections of directors of the surviving entity in
such transaction, and notwithstanding the foregoing provisions of the
definition, a "Change in Control" of Manufacturer will not be deemed to have
occurred solely because of (i) the acquisition of securities of Manufacturer (or
any reporting requirement under the Act relating thereto) by an employee benefit
plan maintained by Manufacturer for the benefit of employees or by Xxx Xxxxx,
Xxxxx Xxxxxxxxxx or Xxxxx Xxxx or other members of the executive management or
Board of Directors or their "affiliates" or "associates" (as such terms are
defined in Rule 12b-2 under the Act) or members
11
12
of their family (or trusts for their benefit) or (ii) any merger, consolidation
or reorganization involving Manufacturer in which the holders of voting stock
having power to cast 80% of the votes in elections of directors of the
Manufacturer immediately prior to such merger, consolidation or reorganization
hold immediately after such transaction voting stock having power to cast 80% of
the votes in elections of directors of the surviving entity in such transaction.
8.4.1. In the event of termination by Manufacturer for Change in
Control of Distributor hereunder, Distributor shall be obligated, during
the 180 day period following the date of the giving of notice of
termination for Change in Control, to purchase from Manufacturer for
resale and resell and, in the event of termination by Distributor for
Change in Control of Manufacturer hereunder, Manufacturer shall be
obligated, during the 180 day period following the date of giving of
such notice, to sell to Distributor, in each case in each market area in
the Distributor Territory, where Distributor was a distributor hereunder
immediately prior to the termination notice on a quarterly basis, not
less than the same amount of the Products as were purchased hereunder
for resale and resold in such market area during the comparable calendar
quarter of the prior year, provided that the amount required to be
purchased and resold by Distributor, during such period shall be reduced
by the amount of any increased purchases and resales during the period
by such other person (or the Manufacturer) previously distributing in
such market area and by the amount of any sales of such other person (or
the Manufacturer) making distribution for the first time in such market
area of such termination notice period. A "market" or "market area"
shall be any of the areas listed on Schedule 2A. It is understood that
the amount required to be purchased and resold by Distributor pursuant
to this paragraph shall be reduced for adverse changes in market
conditions beyond the reasonable control of Distributor, including, for
example, failure of the Manufacturer to deliver Product or novelties of
the Manufacturer or loss of a chain due to the Manufacturer's action or
inaction (and not by Distributor action or inaction), or decline in
consumer preference for super premium ice cream or novelties on a
market-wide basis, so long as Distributor is fulfilling its applicable
best efforts obligations during the applicable period under this
paragraph of Section 8.4.1 of this Agreement and that the amount
required to be sold by Manufacturer pursuant to this paragraph shall be
reduced for adverse changes in market conditions beyond the reasonable
control of Manufacturer.
In the event that Distributor fails to comply in a material respect in a
market (as defined above) with the purchase obligations set forth above during
the termination notice period, this failure shall constitute Cause justifying
termination by the Manufacturer under Section 8.3 of this Agreement, effective
immediately upon written notice to Distributor (notwithstanding any contrary
provision in Section 8.3, including any cure period in which to cure such
default that would otherwise be applicable under Section 8.3), or,
alternatively, Manufacturer shall have the right, by written notice to the
Distributor, to shorten the termination notice period to a shorter period (but
not less than 30 additional days following the date of the Manufacturer's notice
to shorten under this paragraph).
The provisions of this Section 8.4 shall be in addition to the
provisions of Sections 8.2 and 8.3.
12
13
8.5. In addition to the applicable provisions of Sections 8.2 and 8.4
above with respect to certain termination notice periods, Distributor agrees to
continue to use its best efforts hereunder during all applicable termination
notice periods under this Agreement to distribute the Products of the
Manufacturer and to preserve Manufacturer's shelf position for the replacement
distributor(s) selected by the Manufacturer upon any termination of this
Agreement in each market in the Distributor Territory listed in Schedule 2A
where Distributor was a distributor hereunder immediately prior to the
applicable termination notice.
Upon any termination of this Agreement, all materials and other data
submitted to Distributor by Manufacturer and still in Distributor possession
shall be returned to Manufacturer and Distributor shall not use the contents
thereof.
8.6. Post Termination Obligations. Upon the termination of this
Agreement by Manufacturer or by Distributor, Distributor shall return, and
Manufacturer agrees to repurchase all Products (other than unsalable Products)
at Distributor's original purchase price or in the event of Products close to
out-of-code (i.e. less than 60 days before the out of code date) at the
appropriate discount from such original purchase price, all in accordance with
the industry standards, or, at Manufacturer's option (exercisable by written
notice to Distributor), Distributor shall have the right to sell or liquidate in
the Distributor Territory in a manner approved by Manufacturer its then-current
inventory of Products, but not including unsalables in accordance with the
provisions of this Agreement. In the event of any return of Products hereunder,
the terminating party shall pay (*) of the applicable reasonable return shipping
charges; provided; however, that if either party terminates for cause, then in
such incident, the breaching party shall pay (*) of the applicable reasonable
return shipping charges. For the purposes of this provision, "unsalables" means
damaged or out-of-code Products which shall be destroyed. All amounts due for
Products sold to Distributor and all other amounts due under Sections 3.2 and 9
and any other provisions of this Agreement shall be immediately due and payable.
Nothing in this Section should affect either party's obligations to the other
upon termination, including any claims for damages.
9. Prices for Products; Payment Terms; Resale Prices; Related Matters.
9.1. Prices Payable by Distributor. Manufacturer agrees to sell the
Products at the prices determined by Manufacturer from time to time
(Manufacturer's regular Distributor Prices), which shall initially be as set
forth on Schedule 9.1 attached, F.O.B. Manufacturer's plants in Vermont, with
freight arranged by Manufacturer (or as requested by Distributor) using its
reasonable efforts to obtain the best possible freight charge available and
reimbursed by Distributor. Freight shall be split (*) between the parties,
payable within 28 days after receipt of invoice for freight services by the
party obligated by this Section to make such (*) reimbursement to the other
party. Manufacturer may change prices to the Distributor when it changes price
to its other distributors (absent unusual geographic market conditions), upon
not less than reasonable notice to Distributor which shall normally be not less
than 30 days.
9.1.1. Rebate. Distributor will pay a rebate to Manufacturer in
an amount equal to (*) of the Distributor's monthly sales of all
Products to all customers, including
----------------
*This confidential portion has been omitted and
filed separately with the Commission.
13
14
(without duplication) sales by subdistributors (but excluding sales to
or by Non-affiliated subdistributors making purchases in smaller
quantities [i.e., 10 pallets or less on an occasional basis] up to an
aggregate of 10% of Distributor's total monthly sales), payable monthly
in arrears 28 days after the end of the month via Electronic Funds
Transfer (EFT) [EDI transaction type 820]. The term "Non-affiliated
subdistributors" shall mean subdistributors in which Distributor does
not own more than 20% of the equity interests.
As used in this Section 9.1.1, Distributor's monthly sales shall
mean gross revenues less returns and allowances for damaged goods.
The parties acknowledge that the pricing method they have, for
convenience, selected to reflect the sharing of the efficiencies or savings may
erroneously be viewed by others as a discriminatory net price charged by
Manufacturer to Distributor, when such view is not consistent with the economics
of the matter. Accordingly, to eliminate any uncertainty Distributor hereby
agrees and confirms that its submission from time to time of any purchase order
for Products from Manufacturer shall irrevocably (i) confirm the release of, and
constitute a covenant not to xxx in respect of, any claim of any kind whatsoever
that its payment of such net higher price for the Products covered by such
invoice may be in violation of the price discrimination provisions of the
Xxxxxxxx-Xxxxxx Act and any state price discrimination or unfair competition law
and (ii) confirm the release of, and constitute a covenant not to xxx in respect
of, any claim of any kind whatsoever that its payment of such higher price in
respect of any previously submitted purchase order for Products of the
Manufacturer may be in violation of the Xxxxxxxx-Xxxxxx Act or any state price
discrimination or unfair competition law. Each release and covenant not to xxx
by Distributor shall remain in effect notwithstanding any inconsistent or
contradictory provision in any purchase order or other instrument unless the
provisions of this Section 9.1 are expressly terminated by a written amendment
to this Agreement.
9.2. Payment Terms. Payment terms shall be 21 days with a 7-day grace
period from the date of Manufacturer's invoice (which shall be the post-marked
date of the invoice or any earlier date of facsimile transmission or other
delivery to Distributor). Distributor agrees to maintain its internal xxxx
receipt and payment procedures so that it will be able to meet the payment terms
in the Agreement, and the parties agree that all payments shall be EFT. It is
agreed that these are material terms of this Agreement and that failure of
Distributor to make timely payments shall constitute "Cause" under Section 8.3
(unless cured or provided therein). Manufacturer also agrees to notify
Distributor of any substantial increase in freight charges before shipment is
authorized.
9.3. National Pricing. Notwithstanding the foregoing provisions of
Section 2 or this Section 9, it is understood that Manufacturer may, as is
common in the food industry, negotiate "national" or "regional" pricing
agreements with certain accounts (such as airlines or Wal-Mart, to take two
examples) where the Manufacturer's distributors, including the Distributor
hereunder, continue to sell to such accounts, but this Agreement is modified to
the extent necessary to accommodate such national pricing agreements, subject to
reaching mutual agreement between the parties in each case. The parties agree to
make such necessary amendments to implement agreements reached under this
Section 9.3. In the event that the Distributor does not agree to any
14
15
such national pricing arrangement within 14 days after a reasonably specific
presentation of the arrangement to the Distributor, then the Manufacturer shall
have the right to arrange for other distribution for such national pricing
arrangement.
9.3.1. Consignment Sales. Notwithstanding the provisions of
Section 2 and this Section 9, it is understood that Manufacturer may, as
is common in the food industry, negotiate certain consignment
arrangements for sales to club stores or Food Service accounts and
Distributor will use its best efforts to distribute the Products to such
outlets on a consignment basis, provided that consignment sales shall
require the mutual agreement of the parties. In the event that the
Distributor does not agree to any such consignment arrangement within 14
days after a reasonably specific presentation of the arrangement to the
Distributor, then the Manufacturer shall have the right to arrange for
other distribution for such consignment arrangement.
9.4. Resale Prices. Distributor shall resell at such prices as it may
determine, and Manufacturer retains no control over such resale prices.
9.5. Trade Shows. The parties confirm that the arrangements and
practices with respect to trade shows attended by Manufacturer that are
currently in effect under the Prior Agreement shall continue under this
Agreement, namely that Distributor agrees to provide delivery of Products to
Trade Shows in the areas in which Distributor is distributing hereunder at no
charge, provided that Manufacturer provides the Products and necessary freezers
for such shows.
9.6. Credit Line. Distributor shall have a line of credit under this
Agreement which shall be reasonably established by Manufacturer consistent with
the payment terms defined herein, and Manufacturer shall have the right, from
time to time at its election, to require C.O.D. payment for any Products at any
time when outstanding receivables under this Agreement and any that arose under
the Old Agreement, for purchase of the Products of the Manufacturer thereunder
(whether or not due) exceed the amount of such credit line or at any time when
the circumstances of Distributor's financial condition are such that
Manufacturer would be entitled under its regular credit policies to reduce this
amount of the credit line. Said credit line shall be available unless
Distributor is in breach of a material provision of this Agreement or unless
Manufacturer determines, pursuant to the exercise of its regular credit
policies, that Distributor's financial condition warrants a change in said
credit line. Distributor agrees to pay interest on overdue accounts at an annual
rate equal to the base rate charged to best commercial customers at BankBoston
(or its successor) from time to time plus (*). Interest shall be payable to
Manufacturer on the last day of each month.
10. Compliance with Laws: Quality Control. Each party covenants and
agrees during the term hereof, that it will fully comply with all applicable
laws, ordinances, regulations, licenses and permits of or issued by any federal,
state or local government entity, agency or instrumentality applicable to its
responsibilities hereunder.
Manufacturer shall be responsible for the quality, including proof of
quality and quality control, labeling requirements and truth of labeling, and
fitness for human consumption of the
----------------
*This confidential portion has been omitted and
filed separately with the Commission.
15
16
Products delivered hereunder. Manufacturer warrants and represents that the
Products delivered hereunder (1) are not adulterated or misbranded under the
Federal Food Drug and Cosmetic Act, as amended (the "Act"); and (2) are not
articles which may not be shipped pursuant to Sections 404 or 505 of the Act.
Title shall pass upon delivery, F.O.B. Manufacturer's plants in Vermont.
Notwithstanding any other provision hereof, the parties understand that loss or
damage to the Products during shipment, after delivery F.O.B. Manufacturer's
Plant, shall be the responsibility of Distributor.
10.1. Recall Possibility. In the event the Manufacturer determines to
recall or withdraw any of its Products (the "Recalled Products"), Distributor
will use its personnel (or a third party retrieval service if Distributor
reasonably believes the recall or withdrawal will be achieved faster, at less
expense or more efficient) to remove any Recalled Products from accounts to
which it had delivered the Recalled Products (and, where it uses any other
distributors or subdistributors, will use its best efforts to cause such other
persons to do likewise) and shall return (or cause to be returned) to
Manufacturer or dispose of Recalled Products as directed by Manufacturer.
Distributor shall be reimbursed by Manufacturer for all Recalled Products in the
amount of the net purchase price previously paid by Distributor for such
Recalled Products including freight costs and for its reasonable out-of-pocket
expenses for using its personnel or third party service to accomplish such
recall or withdrawal, including disposal costs, with payments by Manufacturer
for Recalled Products being in cash or replacement Products, at Manufacturer's
option. In the event that any recall or withdrawal of either party's products
significantly disrupts Distributor's ability to distribute the Manufacturer's
Products or Manufacturer's ability to have such distribution occur, then
Manufacturer and Distributor agree to discuss in good faith compensation for
losses incurred by either party by such disruption.
11. Hold Harmless.
11.1. It is expressly understood and agreed that Distributor shall not
be liable for and Manufacturer shall hold Distributor harmless from any
obligations, claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities of any kind or nature to a person not a
party to this Agreement ("Third Party") arising directly or indirectly out of or
in connection with this Agreement caused by Manufacturer's negligence, willful
misconduct or contractual breach, including but not limited to any costs,
expenses, court costs and reasonable attorneys' fees incurred by Distributor by
reason of any defense to any claims or lawsuits to which Distributor has been
named a party.
11.2. It is expressly understood and agreed that Manufacturer shall not
be liable for and Distributor shall hold Manufacturer harmless from any
obligations, claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities of any kind or nature to a Third Party
arising directly or indirectly out of or in connection with this Agreement
caused by Distributor's negligence, willful misconduct or contractual breach,
including but not limited to any costs, expenses, court costs and reasonable
attorneys' fees incurred by the Manufacturer by reason of any defense to any
claims or lawsuits to which Manufacturer has been named a party.
16
17
11.3. Third Person Claims. Promptly after a party has received notice of
or has knowledge of any claim against it covered by Section 11 by a Third Party
or the commencement of any action or proceeding by a Third Person with respect
to any such claim, such party (sometimes referred to as the "Indemnitee") shall
give the other party (sometimes referred to as the "Indemnitor") written notice
of such claim or commencement of such action or proceeding; provided, however,
that the failure to give such notice will not affect the right to
indemnification hereunder with respect to such claim, action or proceeding,
except to the extent that the other party has been actually prejudiced as a
result of such failure. If the Indemnitor has notified the Indemnitee within
thirty (30) days from the receipt of the foregoing notice that it wishes to
defend against the claim by the Third Person, then the Indemnitor shall have the
right to assume and control the defense of the claim by appropriate proceedings
with counsel reasonably acceptable to Indemnitee, provided that the assumption
of such defense by the Indemnitor shall constitute an acknowledgment of the
obligation to indemnify the Indemnitee hereunder. The Indemnitee may participate
in the defense, at its sole expense, of any such claim for which the Indemnitor
shall have assumed the defense pursuant to the preceding sentence, provided,
however, that counsel for the Indemnitor shall act as lead counsel in all
matters pertaining to the defense or settlement of such claims, suit or
proceeding other than claims that in Indemnitee's reasonable judgment could have
a material and adverse effect on Indemnitee's business apart from the payment of
money damages. The Indemnitee shall be entitled to indemnification for the
reasonable fees and expenses of its counsel for any period during which the
Indemnitor has not assumed the defense of any claim.
12. Trademarks. Distributor understands and agrees that it has received
no right or license, express or implied, to use in any manner the name "Ben &
Jerry's" or any other trade name or trademark used or owned by Manufacturer now
or in the future with the express written consent of Manufacturer except as set
forth herein. Subject to the terms and conditions of this Agreement and to the
continuing performance by Distributor of its obligations hereunder, Manufacturer
hereby grants Distributor a non-exclusive, non-transferable and personal license
to use Manufacturer's trademarks and logos ("Marks") solely in connection with
the distribution, display and sale of the Products pursuant to this Agreement.
Distributor agrees that such Marks shall be used only in the forms and manners
specified and approved in writing in advance by Manufacturer. All rights granted
to Distributor under this Agreement with respect to the Marks shall immediately
cease and terminate upon the termination of this Agreement. The provisions of
this Section shall survive termination.
13. Standstill. Distributor acknowledges that this Agreement is
extremely important to Manufacturer and will involve dependence of Manufacturer
upon Distributor's distribution of a significant amount of the total revenues of
Manufacturer, and accordingly, the Distributor agrees that until termination of
this Agreement, the Distributor and its affiliates (as such term is defined
under the Securities Exchange Act of 1934, as amended) ("Affiliates" for
purposes of this Agreement) shall not without the consent of Manufacturer (a) in
any manner acquire, agree to acquire or make any proposal to acquire, directly
or indirectly, any securities or property of the Manufacturer or any of its
subsidiaries or divisions, or any rights or options to acquire any such
securities or property (other than purchases of products or other properties in
the ordinary course of business), (b) propose publicly or otherwise to enter
into, directly or indirectly, any merger or
17
18
business combination, recapitalization, restructuring or other extraordinary
transactions involving the Manufacturer or any of its subsidiaries or divisions
or stockholders, (c) otherwise act, alone or in concert with others, to seek to
control or influence the executive management (except with respect to the
distribution relationship created hereby) or Board of Directors of the
Manufacturer, (d) enter into any contract, arrangement or understanding with any
person with respect to any securities of the Manufacturer (or any subsidiary of
the Manufacturer), including but not limited to any joint venture (other than
relating to distribution), loan or option agreement, put or call, guarantee of
loans, guarantee of profits or division of losses or profits, (e) make, or in
any way participate, directly or indirectly, in any "solicitation" of "proxies"
(as such terms are used in the proxy rules of the Securities and Exchange
Commission) or consents to vote, or seek to advise or influence any person with
respect to the voting of, any voting securities of the Manufacturer, (f) form,
join or in any way participate in a "group" (as defined under the Securities
Exchange Act of 1934, as amended) with respect to any acquisition of or other
action relating to securities or properties (other than purchase and sale of
products or properties in the ordinary course) of the Manufacturer, (g) advise,
assist or encourage any other person or group in connection with any of the
foregoing, (h) disclose any intention, plan or arrangement inconsistent with the
foregoing, (i) request the Manufacturer (or its directors, officers, affiliates,
stockholders, employees or agents), directly or indirectly, to amend or waive
any provision of this paragraph (including this provision), or (j) take any
action which might require either party to make a public announcement regarding
the possibility of a business combination, merger or joint venture (other than
relating to distribution) involving the Manufacturer or any of its subsidiaries
or divisions.
The foregoing provisions shall not be applicable to proposals initiated
by or on behalf of Manufacturer.
13.1. The provisions of Section 13 shall not be applicable upon the
earlier of:
(a) the date on which Manufacturer determines to initiate, solicit or
pursue (1) a sale or transfer of all or substantially all of its
assets or common shares representing 50% or more of the then
outstanding common shares or (2) a merger, reorganization,
consolidation or similar transaction between Manufacturer and any
other person in which such person would obtain ownership of 50%
or more of the then outstanding common shares;
(b) the date on which the Board of Directors of Manufacturer approves
of (or approves in principle, by letter of intent, memorandum of
understanding or similar instrument) any transaction referred to
subparagraph (a) hereof; or
(c) the date on which any person not a member of Manufacturer's Board
of Directors at the date hereof acquires common shares if the
effect of such acquisition would be to cause such person to
become the Beneficial Owner of 40% or more of the then
outstanding common shares.
Notwithstanding the foregoing, counsel or other advisors for Distributor
shall be entitled to contact Ropes & Xxxx, outside counsel for Manufacturer, to
consider whether a proposal by
18
19
Distributor that is prohibited by this Section 13 would, if it were actually
made by Distributor to Manufacturer, require public disclosure by Manufacturer
to Distributor. It is understood that if, in the judgment of Ropes & Xxxx as
outside counsel for Manufacturer, such a proposal would require such public
disclosure, then such proposal shall continue to be prohibited by this Section
13 and cannot be made. If the judgment is that such proposal would not require
such public disclosure, then such proposal may be made, but no further proposal
(without complying again with this provision) otherwise prohibited by this
Section 13 may be made by Distributor.
The same procedure for advisors for Distributor to contact outside
counsel for Manufacturer may be used in the circumstances in which Distributor
believes that, as a result of prior action taken by the Manufacturer or by a
third party unaffiliated with Distributor, Manufacturer may be considered to be
"in play" in the securities market. The parties also recognize under such
circumstances the Manufacturer may, without being requested to do so, invite a
proposal from the Distributor.
Manufacturer will give Distributor immediate notice of the occurrence of
any of these three events.
The Distributor acknowledges that money damages would not be an adequate
remedy for breach of this Section 13, and accordingly, the Manufacturer shall be
entitled to preliminary and permanent injunctive relief without the need to post
a bond to enforce these provisions.
14. Stipulation of Dismissal With Prejudice. The parties shall deliver a
stipulation of dismissal with prejudice to terminate the case entitled Xxxxxx'x
Grand Ice Cream, Inc. and Edy's Grand Ice Cream v. Ben & Jerry's Homemade, Inc.
pending in the United States District Court, Northern District of California,
Case No. C-98-3357 FMS, in the form of Exhibit I attached hereto. Each party
shall be responsible for their own attorney's fees, costs and expenses relating
to said litigation. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the other
provisions shall nevertheless be in full force and effect without being impaired
or invalidated in any way.
15. Confidential Information. Confidential Information about a party
learned under this Agreement shall not be used during or after the term of this
Agreement except for the purpose of this Agreement and, without limiting the
foregoing, such information as to the Manufacturer may not be used by the
Distributor in connection with the production, marketing, distribution or sale
of Distributor's products. Confidential Information shall, for purposes of this
Agreement, include all information relating to a party, its business and
prospect, disclosed by such party from time to time to the other party in any
manner, whether orally, visually or in tangible form (including, without
limitation, documents, devices and computer readable media) and all copies
thereof, created by either party. The term "Confidential Information" shall be
deemed to include all notes, analyses, compilations, studies, interpretations or
other documents prepared by a party which contain, reflect or are based upon the
information furnished to such party by the other party pursuant hereto.
Confidential Information shall not include any information that:
19
20
(a) was in a party's possession prior to disclosure by the other
party hereunder, provided such information is not known by such
party to be subject to another confidentiality agreement with or
secrecy obligation to the other party;
(b) was generally known in the ice cream industry at the time of
disclosure to a party hereunder, or becomes so generally known
after such disclosure, through no act of such party;
(c) has come into the possession of a party from a third party who is
not known by such party to be under any obligation to the other
party to maintain the confidentiality of such information; or
(d) was independently developed by a party without the use of any
Confidential Information of the other party, to the extent that
such independent development is reasonably established by such
first party to the other party.
16. Entire Agreement; Survival. This Agreement and the Addendum of even
date herewith (and any documents referred to herein) represents the entire
agreement and understanding of the parties with respect to the distribution,
commencing September 1, 1999, of Products of the Manufacturer by the
Distributor, the standstill provisions of Section 13, and the stipulation of
dismissal with prejudice provided for above, and there are no representations,
warranties or conditions or agreements (other than implementing invoices,
purchase orders and the like necessary to implement this Agreement) not
contained herein (or in any documents not referred to herein) that constitute
any part hereof or that are being relied upon by any party hereunder.
Notwithstanding any termination of this Agreement, all claims arising prior to
such termination for any breach of or for any amount due under this Agreement
(excluding any such claims that have been satisfied, waived or released prior to
such termination) under this Agreement shall survive such termination, and in
addition, the following sections of this Agreement shall survive any termination
of the Agreement: 3.2 (as to Distributor's obligations to pay sums owing for the
period through termination), 8.6, 9 (as to Distributor's obligations to pay sums
owing for the period through termination), 11, 12, 14, 16 and 19.
17. Negotiation of Agreement. Each party and its counsel have cooperated
in the drafting and preparation of this Agreement and the documents referred to
herein, and any and all drafts relating thereto shall be deemed the work product
of the parties and may not be construed against any party by reason of its
preparation. Accordingly, any rule of law or any legal decision that would
require interpretation of any ambiguities in this Agreement against the party
that drafted it is of no application and is hereby expressly waived.
18. Amendment and Non-assignability of Agreement. This Agreement may not
be amended or modified except by an instrument in writing signed by an
authorized officer of each party. It is agreed that neither party shall transfer
or assign this Agreement or any part hereof or any right arising hereunder, by
operation of law or otherwise, without the prior written consent of the other.
Any purported assignment without consent shall be void and of no force or effect
20
21
or, at the other party's option, shall terminate this Agreement. Subject to the
foregoing, this Agreement shall be binding on the respective parties and their
successors and assigns.
No waiver by either party of any default or breach of any covenant
hereunder shall be implied from any omission by either party to take action on
account of such default if such default persists or is repeated. No express
waiver shall affect any default other than the default specified in the waiver,
and then said waiver shall be operative only for the time and to the extent
therein stated. Waivers by either party of any covenant, term or condition
contained herein shall not be construed as a waiver of any subsequent breach of
the same covenant term or condition. The consent or approval by either party to
or of any act by either party requiring further consent or approval shall not be
deemed to waive or render unnecessary consent or approval to or of any
subsequent similar acts. If any provision of this Amendment is held by a court
of competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions shall nevertheless continue in full force without being impaired or
invalidated in any way.
No provision of any other instrument, including purchase orders,
invoices, bills of sale or like instrument which is inconsistent or conflicts
with this Agreement shall control or override any provision of this Agreement.
19. Waiver of Jury Rights; Governing Law; Jurisdiction. Each of the
parties hereto irrevocably waives all rights to a trial by jury with respect to
any dispute relating to this Agreement, the subject matter hereof or the
entering into or termination of this Agreement (a "Dispute"). This Agreement and
all actions related hereto shall be governed by, and any dispute shall be
resolved in accordance with, the laws of the State of New York, excluding its
internal choice of law principles.
In the event of any Dispute, such Dispute, if not resolved in the
ordinary course between representatives of the parties, shall be submitted for
settlement negotiation between the Chief Executive Officer of Manufacturer and
Chief Executive Officer of Distributor, and if such procedure does not resolve
such Dispute within 30 days after a request for such settlement negotiation to
the other party, then and only then shall all such Disputes be resolved
exclusively by the process of litigation in accordance with this Section. If
such litigation is brought by Manufacturer or by Distributor, it shall be
brought in the State of New York, New York City (Manhattan), provided that, if
such dispute relates to Section 13 of this Agreement, it may be brought without
resort to the settlement mechanics described above and it may also be brought by
Manufacturer in the State of Vermont and will be resolved under the laws of the
State of Vermont.
With respect to any litigation relative to any Dispute (other than
disputes arising out of Section 13) that has been commenced in accordance with
the foregoing provisions as to where and when such litigation may be brought,
the parties each hereby: (i) agree that each party has sufficient contacts with
New York City (Manhattan) and Vermont (with respect to disputes relating to
Section 13) to subject it to the personal jurisdiction of the state and federal
courts located in New York City (Manhattan) and Vermont (with respect to
disputes relating to Section 13) for purposes of any such Proper Action (a
"Proper Action"); (ii) agree that venue of any Proper Action properly lies in
New York City (Manhattan)and Vermont (with respect to disputes relating
21
22
to Section 13); (iii) waives and agrees not to assert in any Proper Action any
claim that it is not subject personally to the jurisdiction of the above-named
courts, such action should be dismissed on grounds of lack of venue or forum non
convenien; should be transferred to any court other than the above-named courts
or should be stayed by reason of the pendency of some other proceeding in any
court other than the above-named courts; (iv) consents and agrees that service
of process in any Proper Action may be made in any manner permitted by law or by
registered or certified mail, return receipt requested, at its principal place
of business, and that service made in accordance with the foregoing is
reasonably calculated to give actual notice of any such action; and (v) waives
and agrees not to assert in any Proper Action any claim that service of process
made in accordance with the foregoing does not constitute good and sufficient
service of process, including upon written notice. Notwithstanding the
foregoing, any proceeding for temporary restraining order or preliminary
injunction may be brought without resort to the settlement mechanics described
but shall only be brought in accordance with the foregoing provisions as to
where litigation with respect to any Dispute may be brought.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
22
23
20. Publicity. Both parties shall agree on a joint initial press release
on the entering into of this Agreement, the entering into of the Letter
Amendment Agreement and on the settlement in full, without any payment, of the
litigation referred to in Section 14.
21. Notices. Any notices to be given by either party to the other shall
be in writing by personal delivery or by mail, registered or certified, postage
prepaid with return receipt requested, or by facsimile (only with receipt
confirmed). Notices shall be addressed to the parties at the addresses set forth
on page one or to said other address as shall have been so notified to the other
party in accordance with this Section 21. Notices to Distributor shall be
addressed to Chief Executive Officer, with a copy to Xxxxxxx & Xxxxxx, 00
Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxxxxxxx, XX 00000, Attention: Xxxxxx X.
Xxxxxxx, Esq. Notices to Manufacturer shall be addressed to Chief Executive
Officer, Ben & Jerry's Homemade, Inc., with a copy to Ropes & Xxxx, Xxx
Xxxxxxxxxxxxx Xxxxx, Xxxxxx, XX 00000, Attention: Xxxxxx X. Xxxxxx, Esq.
IN WITNESS WHEREOF, Xxxxxx'x Grand Ice Cream, Inc. and Ben & Jerry's
Homemade, Inc., have each executed and delivered this Agreement as of the day
and year first above written.
WITNESSED: XXXXXX'X GRAND ICE CREAM, INC.
/s/ XXXXXX X. XXXXXX By: /s/ XXXXXX XXXXXXXXX
-------------------------- -------------------------------
Title: V.P. Sales
----------------------------
WITNESSED: BEN & JERRY'S HOMEMADE, INC.
/s/ XXXXXX X. XXXXXXX By: /s/ XXXXX XXXX
-------------------------- -------------------------------
Date January 14, 1999 Title: CEO
1330 EST ----------------------------
23
24
LIST OF SCHEDULES AND EXHIBITS
Schedule 0X Xxxxxxxxxxx Xxxxxxxxx
Schedule 2B The Products
Schedule 2C Performance Requirements
Schedule 2D Distribution Policies
Schedule 2.6 List of Authorized Subdistributors (to be provided)
Schedule 3.2 Equivalent Unit (EU) Conversion Chart
Schedule 4.1 Manufacturer's Social Mission
Schedule 4.2 Distributor's Social Activities
Schedule 9.1 Distributor Prices
Exhibit I Stipulation of Dismissal With Prejudice
24
25
SCHEDULE 0X
XXXXXXXXXXXX XXXXXXXXX
Xxxxxxxxxx
Xxxxxxxx
Wisconsin
Colorado
Oregon
Alaska
Arizona
Ohio
North Carolina
South Carolina
Missouri
Oklahoma
Arkansas
Indiana
Tennessee
Iowa
Virginia
Utah
Michigan
Idaho
Nebraska
26
SCHEDULE 2B
All presently available "Ben & Jerry's" branded frozen desserts, including
pints, quarts, half gallons, bulk, single serve and novelties (including in
each case ice cream, yogurt and sorbet); all presently available Xxxxxx'x Own
brand quarts and half gallons (including in each case ice cream and yogurt).
27
FINAL
ADDENDUM
Addendum dated as of January 11, 1999 to New Distribution Agreement
dated as of January 11, 1999 by and between Xxxxxx'x Grand Ice Cream, Inc.
("Distributor") and Ben & Jerry's Homemade, Inc. ("Manufacturer").
WHEREAS, the parties wish to confirm that the Distributor shall make an
additional payment or payments to Manufacturer if additional volume is added to
the business carried on by the Distributor under the New Distribution Agreement
by not later than September 30, 2000.
NOW, THEREFORE, in consideration of these premises, the mutual promises
of the parties and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. To the extent that Manufacturer adds volume to the business conducted
by the Distributor under said New Distribution Agreement by adding sales of
Manufacturer's products in areas not presently included within the term
"Distributor Territory" as set forth in Schedule 2A to said New Distribution
Agreement, or by adding volume for the Distributor by the addition of Haagen-
Dazs products for distribution within Texas and Los Angeles market by
Distributor (pursuant to agreement with Haagen-Dazs or otherwise), Distributor
will pay Manufacturer the amount required by the formula set forth below in
Paragraph 2. For purposes of this Agreement the additional volume of
Manufacturer's products and Haagen-Dazs products are collectively referred to as
"Replacement Equivalent Units" as the term "Equivalent Unit" ("EU") is defined
in Section 3.2 of the New Distribution Agreement.
2. MULTIPLY by (*) the total sales (in dollars) for the time period
September 1, 1998 through January 4, 1999 ("Said Time Period") of all
Manufacturer's Products sold by Distributor to all customers including (without
duplication) sales by subdistributors (but excluding sales to or by
non-affiliated subdistributors making purchases in smaller quantities (i.e., 10
pallets or less on an occasional basis) up to an aggregate of (*) of
Distributors total sales during Said Time Period). The term "non-affiliated
subdistributors" shall mean subdistributors in which Distributor does not own
more than 20% of the equity interests.
MINUS (*)
The remainder dollar amount is DIVIDED by the total number of
gallons (EU) of Manufacturer's Products sold to Sunbelt and to ICCI for the
calendar year 1998.
The RESULT of this division is the dollar value for each
Replacement Equivalent Unit which Distributor shall pay to Manufacturer for each
Replacement Equivalent Unit that Manufacturer adds as provided in Paragraph 1
above.
By way of illustration only: (*)
----------------
This confidential portion has been omitted and
filed separately with the commission.
1
28
3. Once aggregate payment of an amount equal to the "remainder dollar
amount" (as determined in accordance with Paragraph 2 above) is made by
Distributor, there shall be no further obligation by Distributor to make any
payments under this Addendum. No payments shall be required with respect to any
volume that is added on and after October 1, 2000.
4. Payments due under this Addendum shall be made within 30 days after
the end of a calendar quarter in which an addition of Manufacturer's or
Haagen-Dazs products has first been made.
5. Manufacturer also agrees to provide (*) free goods to Distributor
prior to December 31, 1999.
6. This Addendum shall be in addition to the obligations and duties of
the parties under the New Distribution Agreement. No provision of this Addendum
may be modified or amended except by a written instrument signed by each of
Manufacturer and Distributor.
7. This Addendum shall be binding on the parties and their respective
successors and assigns. This Addendum and all actions related hereto shall be
governed by the laws of the State of New York, excluding its internal choice of
law principles. Any dispute or claim relating to this Addendum or the entering
into of this Addendum shall be submitted to arbitration in Manhattan in the City
of New York, New York conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the Arbitrator(s) may be entered in any court having jurisdiction
thereof. The prevailing party in the arbitration proceeding shall be entitled to
recover from the losing party reasonable attorney's fees and other costs
incurred in the arbitration proceeding.
IN WITNESS WHEREOF, Xxxxxx'x Grand Ice Cream, Inc. and Ben & Jerry's
Homemade, Inc. have each executed and delivered this Addendum as of the day and
year first above written.
XXXXXX'X GRAND ICE CREAM, INC. BEN & JERRY'S HOMEMADE, INC.
By: /s/ XXXXXX XXXXXXXXX By: /s/ XXXXX XXXX
------------------------ --------------------------
Name: Xxxxxx Xxxxxxxxx Name: Xxxxx Xxxx
---------------------- -------------------------
Title: Vice President-Sales Title: CEO
---------------------- ------------------------
----------------
This confidential portion has been omitted and
filed separately with the commission.
2
