1
EXHIBIT 10.14
BROKER AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of April, 1996, by and
between KRAFT FOODS, INC., a Delaware corporation, with a place of business at
000 Xxxxx Xxxxxx, Xxxxx 00, Xxxxxxxx Xxxxxxx, XX 00000 ("Kraft"), and MIKE'S
ORIGINAL, INC., with its principal place of business at 000 Xxxxxxx Xxxxxxxx,
Xxxxxxx, XX 00000 ("Mike's").
WHEREAS, Mike's wishes to engage Kraft's services as a broker with
respect to sales of Mike's products to the United States military; and
WHEREAS, Kraft is willing to act as such a broker on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, the parties agree as follows:
1. Representation. Kraft shall represent Mike's in the sales of those
products listed in Exhibit A, attached hereto and incorporated herein by
reference (the "Products"), to the military institutions listed on Exhibit B,
attached hereto and incorporated herein by reference (the "Military Customers"),
on the terms and conditions set forth below. Such representation shall be
exclusive within the Super Premium ice cream category. Kraft shall also
represent Mike's in the sale of such other products to such other customers as
the parties may mutually agree to from time to time, as reflected by written
amendments to Exhibits A and B, respectively.
2. Effective Date. The term of this Agreement shall commence as of April 1,
1996, and shall continue for a period of one year, unless earlier terminated
pursuant to Section 8 hereof. After such initial term, this Agreement shall
renew for successive periods of one year, unless either party shall notify the
other in accordance with Section 8A of its desire to terminate this Agreement.
3. Obligations of Kraft. During the term of this Agreement, Kraft shall
perform the following obligations in a professional and workmanlike manner:
A. Offer all the Products for sale to the Military Customers. The
parties acknowledge and agree that Kraft is acting as a sales representative
only with respect to the Products. Kraft shall not purchase or inventory the
Products, take title to the Products or bear any risk of loss or liability with
respect to the Products.
B. Make recommendations concerning the selection of delivery
agents to provide delivery services to the Military Customers; provided,
however, that Mike's shall have the sole discretion as to whether such delivery
agents are actually utilized to deliver such Products (the delivery agents
actually contracted by Mike's shall be referred to herein as the "Delivery
Agents").
C. Assist Mike's in managing issues with the Delivery Agents. Such
assistance shall include using reasonable efforts to assure that Delivery Agents
provide Mike's with (i) timely proof of delivery documents in accordance with
Mike's contract with such Delivery Agents; (ii) proper ordering and stock
rotation; and (iii) quality delivery service and Product presentation at the
stores of the Military Customers.
2
D. Accept pricing information and information regarding Product
additions or deletions form Mike's and maintain and distribute to the Military
Customers.
E. Make recommendations concerning marketing plans and trade
deals; provided, however, that Mike's shall have sole discretion whether to
accept such recommendations and shall be solely responsible and liable for all
decisions and agreements relating to pricing, marketing and promotions of the
Products, including but not limited to any most favored customer warranties made
by Mike's to the government.
F. Make payments to Military Customers located outside the
Continental United States for trade promotions that have been authorized by
Mike's and provide Mike's with invoices on a quarterly basis for the aggregate
amount of such trade promotions payments. Mike's shall reimburse Kraft for such
payments in accordance with Section 5D.
G. Provide assistance with respect to unsaleable Products. Such
assistance shall include: (i) picking up such unsaleable Products at the
Military Customer's store; (ii) reimbursing the applicable Military Customer as
the shelf price of such Product in effect on the date of pick-up; (iii)
completing Military Customer's vendor credit memorandum ("VCM") which serves as
supporting backup to the unsaleable reimbursement (except that in the case of
overseas deliveries, such VCM shall be prepared by Kraft's overseas broker, S&K
Sales Company); (iv) on a quarterly basis, provide Mike's with an invoice for
the aggregate amount of VCMs reimbursed during such quarter, together with such
supporting internal documentation as is reasonably available to Kraft. Mike's
shall reimburse Kraft for such payments in accordance with Section 5E.
H. If requested by Mike's, provide assistance in resolving
disputes with Military Customers regarding deductions or other issues relating
to the collection of accounts receivable; provided, however, that Mike's shall
bear all financial and legal risks associated with the collection of such
accounts receivable.
I. In the case of products that are proposed to be introduced to
Military Customers, pick up samples for such products from the Delivery Agents
and demonstrate them with the Military Customers. Samples shall be shipped by
Mike's to Delivery Agents for this purpose and should be recognized by the
Delivery Agents as "No Charge" samples for Kraft's sales use.
J. In the case of distribution voids, purchase samples with Mike's
approval for use with Military Customers in such quantities as may be authorized
by Mike's and provide Mike's quarterly with an invoice for such purchases,
together with such supporting documentation as is reasonably available to Kraft.
Mike's shall reimburse Kraft for such payments in accordance with Section 5F
hereof.
4. Obligations of Mike's. During the term of this Agreement, Mike's shall
perform the following obligations in a professional and workmanlike manner.
3
A. Establish separate contracts with the Military Customers and
the Delivery Agents and advise Kraft of the terms and conditions of, termination
of and/or material amendments to such contracts and any other information that
Kraft shall deem relevant to enable Kraft to perform its obligations hereunder.
Mike's acknowledges that Kraft is not a party to, or a third party beneficiary
of, any of these contracts with the Military Customers or the Delivery Agents
and shall have no responsibility for liabilities arising in contract or tort
under such contracts or arising out of the pricing, manufacture, storage or
delivery of Products to the Military Customers.
B. File such certifications and/or documentation as may be
required by federal, state or local law or regulation regarding the brokerage
relationship between Kraft and Mike's with respect to sales of the Products.
C. Provide Kraft with current, accurate and complete information
regarding the Products, pricing, marketing, trade promotions and Retail
Order Agreement changes. All data relating to Product and pricing changes and
trade promotions shall be submitted to the Kraft Sales Planning Department not
less than forty-five (45) days prior to their respective effective dates.
D. Provide timely approvals of the marketing plans and trade
promotions recommended by Kraft and Retail Order Agreement amendments; provided,
however, that such approval may be withheld in Mike's sole discretion.
5. Commissions and Other Payments.
A. Commissions. In full and complete consideration for the
services to be provided by Kraft under this Agreement, Mike's shall pay Kraft
commissions as follows:
(i) Mike's shall pay an initial commission of five percent
(5%) on all Net Sales of the Products to Military Customers located inside the
Continental United States. "Net Sales" hereunder shall be defined as Mike's then
current published list price for a Product minus any Vendor Price Reductions or
similar off-invoice allowances. Such commissions shall be paid on a monthly
basis as soon as practicable (but not more than ten (10) days) after the close
of business for the month to the following address: Kraft Foods, Inc., 000 Xxxxx
Xxxxxx, Xxxxx 00, Xxxxxxxx Xxxxxxx, XX 00000, Attention: Xxxxx Xxxxx - Military
Sales. The parties intend that this five percent (5%) commission be in effect
for an initial period only, and that such commission shall be amended at such
time as the parties shall mutually agree in writing to be payable as follows:
(i) four percent (4%) of Net Sales commission payable in accordance with the
foregoing payment terms plus (ii) one percent (l%) of Net Sales commission
payable upon Kraft's achievement of such sales volume objectives as the parties
may agree to in writing.
(ii) Mike's shall pay a commission of three percent (3%) on
all Net Sales of Products to Military Customers located outside the Continental
United States. Such commissions shall be paid on a monthly basis as soon as
practicable (but not more than ten (10) days after the close of business for the
month to Kraft's overseas military sales broker at the following address: S&K
Sales Company, 0000 Xxxxxx Xxxxxx Xxxx, Xxxxxxx XX 00000, Attention: Xxxxx
Xxxxx.
4
(iii) Mike's shall pay an additional initial commission of two
percent (2%) to Kraft on all Net Sales of Products to Military Customers located
outside the Continental United States to cover Kraft's marketing and
administrative support of the overseas market and sales management of Kraft's
overseas broker. Such commissions shall be paid on a monthly basis as soon as
practicable (but not more than ten (10) days) after the close of business for
the month and mailed to the address set forth in Section 5A(i) hereof. The
parties intend that this two percent (2%) commission be in effect for an initial
period only, and that such commission shall be amended at such time as the
parties shall mutually agree in writing to be payable as follows: (i) one
percent (1%) of Net Sales commission payable in accordance with the foregoing
payment terms plus (ii) one percent (1%) of Net Sales commission payable upon
Kraft's achievement of such sales volume objectives as the parties may agree to
in writing.
B. Stocking Allowances.
(i) Mike's shall ensure that its Product pricing is sufficient
to cover a thirty-six cents ($.36) per case charge for vendor stocking services.
(ii) Mike's shall pay monthly, within ten (10) days of
receipt, all invoices delivered by Kraft's stockage broker, Prime Team Services,
with respect to stocking services performed in connection with the Products in
the Continental United States. Such invoices shall have been audited and
approved in advance by Kraft prior to their submission to Mike's by Prime Team
Services.
(iii) Mike's shall pay to Kraft thirty-six cents ($.36) per
case for each case of Product delivered to Military Customers not located in the
Continental United States to cover stocking allowances paid by S&K Sales Co.,
Kraft's overseas sales broker. Such stocking allowance shall be paid on a
monthly basis as soon as practicable (but not more than ten (10) days) after the
close of business for the month and mailed to the address set forth in Section
5A(i) hereof.
C. Delivery Agent Fees. Mike's shall pay the Delivery Agents
for services rendered in connection with the delivery of the Products to
the Military Customers in accordance with Mike's agreements with such Delivery
Agents.
D. Trade Promotions. In accordance with Section 3(f) hereof,
Mike's shall reimburse Kraft for all trade promotion payments made by Kraft's
overseas broker to Military Customers located outside the Continental United
States. Such payments shall be made within ten (10) days of receipt of Kraft's
quarterly invoice for such amounts, with the notation of "trade promotion
payments" on the check.
E. Unsaleable Payments. In accordance with Section 3(g) hereof
Mike's shall reimburse Kraft for all VCMs reimbursed by Kraft to Military
Customers for unsaleable Products. Such payments shall be made within
ten(10)days of receipt of Kraft's quarterly invoice for such amounts, with the
notation of "unsaleable reimbursement" on the check.
5
F. Distribution Void Samples. In accordance with Section 3(i)
hereof, Mike's shall reimburse Kraft for all samples purchased for purposes of
making sales presentations to military customers in an effort to close an
existing distribution void. Such payments shall be made within ten (10) days of
receipt of Kraft's quarterly invoice for such amounts, with the notation of
"distribution void samples" on the check.
6. Prices and Terms of Sale. Kraft shall quote to the Military
Customers only those prices and other terms that Mike's shall designate
to Kraft in writing from time to time.
7. Independent Status. Neither Mike's nor Kraft shall have any
authority to employ any person on behalf of the other. Each party shall have (as
between the parties) the exclusive right to select, engage, fix the compensation
of, discharge, and otherwise to manage, supervise, and control the persons hired
by it and shall, with respect to all such persons, perform all obligations and
discharge all liabilities imposed upon employers under labor, wage-hour,
xxxxxxx'x compensation, unemployment compensation or insurance, social security,
and other Federal, State and local laws and regulations.
8. Termination.
A. This Agreement may be terminated by either party at any time
for any reason upon thirty (30) days written notice by one party to the other.
Such termination shall be deemed effective immediately upon notice being given.
In the event of such termination, Mike's shall make all payments as set forth in
this Agreement on Products that are sold and shipped to the Military Customers
through the date on which termination is effective.
B. This Agreement shall terminate immediately without the
necessity of prior notice if (a) either party should discontinue or cease doing
business, (b) either party should become bankrupt or insolvent or take advantage
of any bankruptcy or insolvency act or make an assignment of the benefit of
creditors, (c) a controlling interest in either party's organization is acquired
by any third party, (d) either party fails to comply with or perform any
material provisions of this Agreement, and such failure is not cured within
thirty (30) days of written notification of such failure, (e) Mike's contract
with the government is terminated for any reason, (f) either party is debarred,
suspended or in any way sanctioned by the United States government, or (g) any
warranty made by either party is breached or is false or misleading in any
material respect.
C. Upon notification receipt or issuance under Section 8A
or termination under Section 8B hereof, Kraft will immediately discontinue
all services described in this Agreement and will incur no further commissions
or expenses pursuant hereto without Mike's prior written approval. Except as
otherwise specifically provided herein, termination of this Agreement shall not
relieve the parties of any obligation accruing with respect to this Agreement
prior to such termination.
9. Notice. All notices, reports and receipts shall be in writing
and shall be deemed duly given on (i) the date of personal or courier
delivery; (ii) the date of transmission by telecopy or other electronic
transmission service, provided a confirmation copy is also sent no later than
the next business day by postage paid, return receipt requested first-class
mail; or (iii) three (3) business days after the date of deposit in the United
States mails, by postage paid, return receipt requested first-class mail,
addressed as follows:
6
If to Kraft: Kraft Foods, Inc.
000 Xxxxx Xxxxxx
Xxxxx 00
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx - Military Sales
Telecopy No: (000) 000-0000
If to Mike's: Mike's Original, Inc.
000 Xxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxx Xxxxx - President & COO
Telecopy No: ________________
Either party may change its mailing address by written notice to the other party
in accordance with this paragraph.
10. Indemnification; Compliance with Laws.
X. Xxxxx shall indemnify, defend and hold Mike's, its employees
and agents harmless from and against any and all liabilities, losses,
costs, damages, injuries, claims, suits, judgments, causes or action and
expenses (including reasonable attorney's fees, court costs and out-of-pocket
expenses) (collectively the "Liabilities") suffered or incurred by Mike's as a
result of a breach of any representation, warranty or covenant made hereunder by
Kraft or any negligent act or deed, whether by way of tort or contract,
committed or omitted by Kraft, its employees or agents in the performance of
this Agreement.
B. Mike's shall indemnify, defend and hold Kraft, its employees
and agents harmless from and against any and all Liabilities suffered or
incurred by Kraft as a result of a breach of any representation, warranty or
covenant made hereunder by Mike's or any negligent act or deed, whether by way
of tort or contract, committed or omitted by Mike's, its employees or agents in
the performance of this Agreement.
C. In addition to the foregoing, Mike's acknowledges that Kraft is
engaged hereunder solely to sell Products to the Military Customers and that
Kraft shall not take title to or have possession of any Products at any time
other than product samples for selling purposes. Mike's shall indemnify Kraft
and hold Kraft, its employees and agents harmless from and against any and all
Liabilities arising out of the pricing, manufacture, production, storage or
delivery of the Products, whether such Liabilities are for personal injury,
property damage or otherwise and all liabilities arising out of Mike's contracts
with the government.
