AMENDMENT NO. 1 TO LICENSING AGREEMENT
EXHIBIT 10.44
AMENDMENT NO. 1 TO
LICENSING AGREEMENT
LICENSING AGREEMENT
By:
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Xxxxxx Brothers Brewing Company, an Oregon corporation (“Xxxxxx”) 000 X. Xxxxxxx Xxxxxxxx, Xxxxxx 00000 |
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and: |
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| Craft Brands Alliance LLC, an Oregon limited liability company (“CBA”) 000 X. Xxxxxxx Xxxxxxxx, Xxxxxx 00000 |
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and: |
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| Redhook Ale Brewery Incorporated, a Washington corporation (“Redhook”) 00000 XX 000xx Xxxxxx Xxxxxxxxxxx, Xxxxxxxxxx 00000 |
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Date:
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June 2005 |
This Amendment No. 1 to Licensing Agreement (“Agreement”) is entered into by and between
Xxxxxx and Redhook as of the date first set forth above.
BACKGROUND
A. Pursuant to the Licensing Agreement between Xxxxxx and Redhook dated February 1, 2003 (the
“Licensing Agreement”), Redhook is manufacturing Xxxxxx Hefeweizen product (the “Xxxxxx Product”)
at its Portsmouth facility and distributing the Xxxxxx Product in the states of Maine, Vermont, New
Hampshire, Massachusetts, Rhode Island, Connecticut, New York, Pennsylvania, Ohio, Maryland, New
Jersey, Delaware, West Virginia, Virginia, North Carolina, South Carolina, Kentucky, Tennessee,
Georgia, Alabama, Mississippi, Florida, Wisconsin, Michigan, Indiana, Illinois, and Washington D.C.
(the “Initial Redhook Territory”).
B. Pursuant to that certain Supply, Distribution, and Licensing Agreement by and between
Xxxxxx and CBA dated July 1, 2004, Xxxxxx granted to CBA certain exclusive rights to expand its
distribution to include the additional states of Iowa, Kansas, Minnesota, Missouri, Nebraska, North
Dakota, and South Dakota (referred to herein as “Region 6”).
X. Xxxxxx and Redhook desire to amend the Licensing Agreement to permit Redhook to
manufacture, bottle, and package additional Xxxxxx Product at Redhook’s Portsmouth Facility and to
advertise, market, and distribute the Xxxxxx Product for sale in Region 6 through the distribution
system established by Anheuser-Xxxxx, Inc. on the terms and conditions set forth herein.
AGREEMENT
Based on the mutual promises set forth below and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
1.1 Expansion of Territory. The term “Territory” as used in the Licensing Agreement
is defined to also include the states in Region 6.
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1.2 Approvals. If Redhook has not obtained all licenses and approvals necessary and
commenced selling Xxxxxx Product in any state located within the Region 6 by the third anniversary
date of this Amendment, Xxxxxx may modify the Territory to eliminate such state from the Territory
if (a) Xxxxxx notifies Redhook of Xxxxxx’x intent to modify the Territory to eliminate a state (the
“Elimination Notice”) and (b) Redhook fails, within 45 days from the date of the Elimination
Notice, to obtain all necessary licenses to sell the Xxxxxx Product in the state or fails make any
sales of Xxxxxx Product in such state.
2. Brand Management. Redhook will comply with the brand management guidelines set
forth on Exhibit C, attached to the Licensing Agreement. In addition, Redhook will employ
a market manager (the “Region 6 Market Manager”) who will be responsible for ensuring Redhook’s
compliance with the brand management guidelines in Region 6. The initial Region 6 Market Manager
will be located in either St. Louis, Missouri, or Kansas City, Missouri. Any replacement Region 6
Market Manager shall be a knowledgeable and experienced beer market manager with comparable
qualifications as the initial Region 6 Market Manager. Redhook shall introduce any replacement
Region 6 Market Manager to Xxxxxx in advance of employment if requested by Xxxxxx.
3. Royalties. Redhook will pay Xxxxxx royalties for sales of Xxxxxx Products in
Region 6 (collectively, the “Region 6 Royalties”) as follows:
| Region 6 Royalties Through | Region 6 Royalties Following | |||
| Volume | December 31, 2005 | December 31, 2005 | ||
0-41,340 PCEs
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$0.00 PCE if sales are less than 41,340 PCE | $0.25 PCE | ||
| $0.25 if sales are 41,340 PCE or greater | ||||
41,341-68,900 PCEs
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$0.75 PCE | $0.75 PCE | ||
Over 68,900 PCEs
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$1.00 PCE | $1.00 PCE |
3.1 The Region 6 Royalty rates set forth above shall be adjusted as follows:
| (i) | for purposes of this Section 3.1, “Net Sales Price” equals the weighted average gross wholesale price charged by Redhook for the Xxxxxx Product, minus the weighted-average excise taxes, Margins, and discounts. “Margins” are those fees identified as “Margins” payable by Redhook to Anheuser-Xxxxx, Inc. (“ABI”) under its Distribution Agreement with ABI. The “Base Net Sales Price” shall be Net Sales Price upon which increases or decreases are computed. The initial Base Net Sales Price shall be the Net Sales Price as of December 31, 2004. Whenever an adjustment is made under this Section 4.2, the Net Sales Price which triggered the increase or decrease shall be the Base Net Sales Price for the next adjustment. |
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| (ii) | for aggregate increases or decreases in the Net Sales Price after December 31, 2004, which are greater than a 2% increase or decrease over the Base Net Sales Price then in effect, the Royalty Rates will increase or decrease by the same percentage change; provided, however, that in no event will the Royalty Rates decrease below the amounts set forth in Section 4.1 above. |
3.2 The Net Sales Price shall be calculated as of December 31 of each calendar year and
compared to the Net Sales Price as of December 31 of the immediately preceding year. Any Royalty
rate adjustment shall be applied to all Xxxxxx Product delivered in the calendar year immediately
following the calendar year the Net Sales Price increases or decreases by at least 2%.
3.3 Reports. On or before the thirtieth (30th) day of the calendar month
following the end of each calendar quarter, Redhook shall pay to Xxxxxx Region 6 Royalties accrued
in such calendar quarter. Such payment shall be accompanied by a report setting forth (a) the
aggregate actual sales volume of the Xxxxxx Product by Redhook in Region 6 for such period, (b) the
Region 6 Royalties payable hereunder, and (c) such other detail as Xxxxxx may reasonably request.
3.4 Partial Periods. If a period for which the Region 6 Royalties are due is less
than a full calendar quarter or calendar year, then the obligation for such period shall be
adjusted based on the number of days in such period relative to the number of days in such calendar
quarter or calendar year.
3.5 Books and Records. Redhook shall maintain such books and records as are necessary
to establish the accuracy of the reports submitted under Section 4.4 for a period of three years
from the date of submission of such reports. For purposes of verifying the accuracy of Region 6
Royalties paid by Redhook hereunder, such books and records shall be made available to Xxxxxx
during regular business hours, at the location where such books and records are normally
maintained, for audit by Xxxxxx or its designee. Such audits may be made once during each
six-month period. The costs incurred in connection with the audit shall be paid by Xxxxxx;
provided, however, that Redhook shall pay such fees and expenses if the audit reveals an
underpayment of royalties of more than five percent in any calendar quarter.
4. Notices. Any notice, request or demand to be given or made under this Agreement
shall be in writing and shall be deemed to have been duly given or made (i) upon delivery, if
delivered by hand and addressed to the party for whom intended at the address listed below,
(ii) ten (10) days after deposit in the mails, if sent certified or registered air mail (if
available) with return receipt requested, or five (5) days after deposit if deposited for delivery
with a reputable courier service, and in each case addressed to the party for whom intended at the
address listed below or (iii) upon completion of transmission, if sent by facsimile transmission to
the party for whom intended at the fax number listed below, provided that a copy of the facsimile
transmission is promptly deposited for delivery by one of the methods listed in (i) or (ii) above:
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| If to Xxxxxx, to: | ||||||
| Xxxxxx Brothers Brewing Company | ||||||
| 000 X. Xxxxxxx | ||||||
| Xxxxxxxx, Xxxxxx 00000 | ||||||
| Attn: Xxxx Xxxxxx | ||||||
| Fax: 000-000-0000 | ||||||
| If to CBA, to: | ||||||
| Craft Brands Alliance LLC | ||||||
| 000 X. Xxxxxxx | ||||||
| Xxxxxxxx, Xxxxxx 00000 | ||||||
| Attn: Xxxxx Xxxxxxxxxx | ||||||
| Fax: 000-000-0000 | ||||||
| If to Redhook, to: | ||||||
| Redhook Ale Brewery Incorporated | ||||||
| 00000 XX 000xx Xxxxxx | ||||||
| Xxxxxxxxxxx, Xxxxxxxxxx 00000 | ||||||
| Attn: Xxxxx Xxxxxxxxx | ||||||
| Fax: 000-000-0000 |
Any party may change its address and/or fax number for the purposes of this Section 13 by written
notice hereunder given to the other parties at least ten (10) days prior to the effective date of
such change.
5. CBA’s Consent; Rights. CBA hereby consents to adding Region 6 to the Territory on
the terms and conditions set forth in this Amendment. Notwithstanding the foregoing, however, upon
60 days prior written notice to Redhook and Xxxxxx, CBA may, without creating any liability to
Redhook, remove the states in Region 6 from the Territory, subject to the terms and conditions set
forth in the Amendment No. 1 to Restated Operating Agreement of CBA of even date herewith, a form
of which is attached as Exhibit A.
6. Other Terms. All other terms and conditions in the Licensing Agreement not
expressly modified herein remain in full force and effect.
7. Counterparts. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one agreement.
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The parties have executed this Agreement as of the date first set forth above.
| XXXXXX BROTHERS BREWING COMPANY | REDHOOK ALE BREWERY INCORPORATED | |||||||||
By:
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/s/ Xxxx Xxxxxx | By: | /s/ Xxxxx X. Xxxxxxxxx | |||||||
Name:
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Xxxx Xxxxxx | Name: | Xxxxx X. Xxxxxxxxx | |||||||
Title:
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President | Title: | EVP / CFO / COO | |||||||
| CRAFT BRANDS ALLIANCE LLC | ||||||||||
By: |
/s/ Xxxxx X. Xxxxxxxxxx | |||||||||
Name: |
Xxxxx X. Xxxxxxxxxx | |||||||||
Title: |
President | |||||||||
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EXHIBIT A
AMENDMENT NO. 1 TO RESTATED OPERATING AGREEMENT OF CBA
