EXHIBIT 10.11.2
AMENDMENT AGREEMENT
Amendment Agreement dated as of December 2, 1999 to Distribution Agreement dated
as of August 26, 1998, as amended prior to the date hereof (the "Distribution
Agreement") between The Pillsbury Company ("Pillsbury") and Ben & Jerry's
Homemade, Inc. ("Ben & Jerry's" or the "Manufacturer").
WHEREAS, Pillsbury and Nestle USA -- Food Group, Inc. ("Nestle USA") have
formed a United States ice cream joint venture, Ice Cream Partners USA, LLC (the
"Joint Venture"), which has commenced operations;
WHEREAS, the Distribution Agreement may not be assigned to and assumed by
the Joint Venture without the consent of the Manufacturer;
WHEREAS, the parties to the Distribution Agreement wish to confirm their
agreement as follows:
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 hereby each agree to amend/supplement the
Distribution Agreement as follows:
1. Distributor and Defined Terms. All capitalized terms not defined herein shall
have the meanings given them in the Distribution Agreement. References to the
"Distributor" shall mean the Joint Venture, which shall include all of the
Nestle ice cream operations in the United State (except the Nestle minority
interest in Xxxxxx'x Grand Ice Cream, Inc.) upon the execution of this Amendment
Agreement.
2. Standstill. Reference is made to the Standstill Agreement dated August 17,
1999 (the "Standstill Agreement") between Ben & Jerry's and Pillsbury (and
Diageo), a copy of which is attached hereto, which shall remain in effect, as
modified in this Section, notwithstanding the assignment hereby made of said
Standstill Agreement to the Joint Venture. Pillsbury agrees to an aggregate
limitation on the shares of Ben & Jerry's that may be beneficially owned by the
Joint Venture and Pillsbury (and Diageo) on a combined basis for all
signatories, namely 4.9% in Clause (i) in the third paragraph of Section 1
thereof and in the next to last paragraph of Section 1 thereof, and 14.9% in
Clause (iii) in the third paragraph of Section 1 thereof. As assignee of the
Standstill Agreement from Pillsbury, which the Joint Venture hereby assumes, the
Joint Venture shall be liable as if it were Pillsbury under the Standstill
Agreement, as so modified.
3. Performance Requirements and Performance Goals. The last paragraph page
3 and the first full paragraph on page 4 of the Distribution Agreement (Section
2.1) is deleted and replaced with the following:
"The Performance Requirements and Performance Goals for each calendar
year for each market in the Distributor Territory commencing with
Performance Requirements and Performance Goals for the calendar year 2001
shall be agreed upon on or before October 15 of the prior year. In the
event no agreement has been reached on the Performance Requirements
and/or Performance Goals by October 15 of any year (the "Present Year"),
then the CEOs
of Manufacturer and Distributor shall attempt to agree on such
Performance Requirements and/or Performance Goals on or before November
15 of the Present Year. If they are unable to agree, the matter will be
submitted for mediation. The parties shall have until December 15 of the
Present Year to mutually agree upon a qualified mediator, who shall be a
person familiar with the economics and practices of the food distribution
industry and have experience serving as a mediator in commercial
disputes; if they are unable to agree upon a single mediator, each party
shall designate its own similarly qualified mediator by January 15 of the
following year (the "Next Year") and the mediators so designated shall
choose a third mediator by February 15 of the Next Year. If the mediation
process has not resulted in agreement by March 15 of the Next Year, the
issues shall be subject to binding arbitration before a single
arbitrator, who shall be chosen by the majority of the mediators, and who
shall be charged with making a decision on Performance Requirements
and/or Performance Goals to be in effect. The determination of the
arbitrator as to Performance Requirements and/or Performance Goals for
that current year shall be final and binding upon both the parties. The
cost of any mediation or arbitration shall be borne equally by the
parties."
Performance Requirements may be revised and updated by mutual agreement
of Manufacturer and Distributor, in line with industry improvements in
distribution.
Failure by the Distributor to achieve the Performance Requirements shall
not entitle the Manufacturer to a claim for damages against the Distributor, but
may entitle the Manufacturer to terminate for cause and receive the Termination
Fee according to the terms set forth in Section 8.3."
4. Co-packing. The Joint Venture on the one hand and Manufacturer on the other
hand agree that any co-packing agreements that may subsequently be entered into
between them, upon any later mutual agreement, shall be on a "most-favored
nations" basis. Products produced by the Joint Venture for Pillsbury, Nestle USA
or their affiliates will be excluded when determining "most-favored nations"
treatment.
5. Most Favored Nation Treatment. The parties agree that Section 9.8 of the
Distribution Agreement was not intended to apply to and does not apply to
products owned by or licensed to the Distributor or any of its affiliates.
6. Expansion of the Distributor's "Company-Owned System". Section 2.6 is
amended by adding at the end of the first paragraph the following:
"In the event that the Distributor's directly owned and operated
distribution system is expanded beyond its size as of August 26, 1998,
the Manufacturer will be offered the opportunity, on not less than two
months notice, but will not be required, to participate in all or any
part of such expansion with respect to having the Joint Venture
distribute the Products (as defined in Section 2.1 of the Distribution
Agreement) of the Manufacturer in any such expanded areas. Any such
additional areas selected by Manufacturer shall be automatically added
to Amended Schedule 2A."
6.1 Distributor Territory. Schedule 2A is deleted and replaced
with Amended Schedule 2A, attached hereto, provided that at the
date hereof the information relating to Connecticut and Virginia
counties listed in the boxed area on the second page of said
Amended Schedule 2A (listing counties) remains to be agreed
between the parties.
References in the Distribution Agreement, as amended to
Schedules 2A and 2C shall hereafter mean Amended Schedules 2A
and 2C respectively.
7. Guarantee. Pillsbury shall unconditionally guarantee the payment obligations
from time to time of the Joint Venture to Ben & Jerry's (notwithstanding the
assumption by the Joint Venture of the obligations of Pillsbury). The Pillsbury
guarantee hereunder shall be a "guarantee of performance" with respect to the
obligations guaranteed and shall not be a "guarantee of collection"; the
Pillsbury guarantee hereunder shall be effective with respect to all obligations
incurred by the Joint Venture up through October 1, 2004 and shall be limited to
the guaranty of payment of all amounts owed to Manufacturer for Product or
promotions or rebates and any fees or amounts owed under Section 8 of the
Distribution Agreement as amended. When and if Nestle USA executes a guarantee
on the same terms as the guarantee by Pillsbury hereunder, each of the
guarantees of Pillsbury and Nestle USA shall be joint and several obligations of
such companies.
8. Social Mission. Section 4.1 of the Distribution Agreement is hereby amended
by adding at the end thereof the following: "The parties agree that the Social
Mission activities of Pillsbury as of the date hereof satisfied the requirements
set forth for Distributor in Sections 4 and 4.1 of the Distribution Agreement
and that Joint Venture is not expected to perform the same activities as
Pillsbury. The Manufacturer acknowledges that the Joint Venture has no prior
experience as a separate operating company. Within eight months after the date
of this Amendment Agreement the Joint Venture shall submit to the Manufacturer
its plans for compliance with this Section and Section 4 and shall commence to
comply within 30 days thereafter. Prior to such commencement pursuant to the
submitted plans, any Social Mission activities of the Pillsbury and Nestle USA
businesses which are conducted in part by the Joint Venture or which relate to
the operation of the Joint Venture shall be counted toward compliance of the
Distributor's obligations under Sections 4 and 4.1."
9. Termination Without Cause. The first paragraph of Section 8.2 of the
Distribution Agreement is hereby deleted and replaced with the following: "This
Agreement may be terminated by Distributor without cause on not less than twelve
months prior written notice given after October 1, 2003. If Manufacturer
terminates this Agreement without cause or gives notice of termination without
cause prior to January 1, 2001, then Manufacturer shall pay the amount of
undepreciated tax book value of the Distributor for assets invested in the
distribution system under this Agreement, all as set forth on Amended Schedule
8.2 attached hereto, except that Manufacturer may give notice of termination
without cause not later than November 1, 2000 for a termination effective
February 28, 2001 without any requirement to make any such payment per Amended
Schedule 8.2.
Beginning January 2, 2001, Manufacturer may terminate this Agreement
without cause at any time and without paying the amounts set forth on Amended
Schedule 8.2 attached hereto by giving no less than five months prior written
notice to Distributor. Distributor may terminate this Agreement without cause at
any time after October 1, 2004 by giving on or after October 1, 2003 no less
than 12 months prior written notice to Manufacturer.
In the event at any time after January 1, 2001 there is a Change of
Control of Manufacturer in a manner deemed to be "hostile" by the Board of
Directors of Manufacturer prior to said Change in Control (it being understood
that said Board of Directors shall have sole and conclusive authority to make
such determination as to whether the change is "hostile" for purposes of this
Agreement), then Manufacturer shall be required to give not less than 24 months
written notice instead of five
months written notice in order to terminate this Agreement without cause under
Section 8.2 after January 1, 2001."
10. Termination for Cause. Section 8.3 of the Distribution Agreement is amended
by deleting paragraph 8.3 and replacing it with the following paragraph and
subparagraphs, and by renumbering subparagraphs 8.3.1 to 8.3.5:
"8.3 Termination for Cause. Except as otherwise provided for in
Sections 8.3.2 through 8.3.5, either party may at any time terminate
this Agreement, either entirely or as to a particular affected portion
of the Distributor Territory only, as provided below, 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 in any material respect,
which shall also have a material adverse effect on Distributor's
distribution performance or the Manufacturer's performance in the
Distributor Territory, or in the affected area(s) within the
Distributor Territory as the case may be ("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. 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 Termination Fee. Termination pursuant to subparagraph 8.3.2 or
Termination for Cause pursuant to subparagraph 8.3.4, if such
termination occurs prior to October 1, 2004, entitles Manufacturer to
a termination fee of [*] (the "Termination Fee") as set forth in such
subparagraphs. If Manufacturer is entitled to the Termination Fee
according to the terms of subparagraphs 8.3.2 or 8.3.4, Distributor
will pay the Termination Fee within 30 days of the date of
Manufacturer's notice of such termination of the Agreement and upon
such payment to Manufacturer, the Manufacturer shall have no other
remedies or claims against Distributor upon such termination pursuant
to the provisions of subparagraphs 8.3.2 and 8.3.4 of this Agreement.
In the event that there is litigation over whether the Distributor is
obligated to pay the Manufacturer the Termination Fee as specified in
subparagraphs 8.3.2 and 8.3.4 and the Manufacturer prevails on the
issue in such litigation and the Distributor is ordered to pay the
Termination Fee, the Manufacturer shall be entitled to recover its
reasonable costs and expenses of counsel in connection with such
litigation and, in the event that the Distributor is ordered to pay
the Termination Fee pursuant to Section 8.3.2, an additional fee of
[*] from the Distributor. If the Distributor prevails in such
litigation and payment of the Termination Fee is not ordered, then
Distributor shall be entitled to recover two times its reasonable
costs and expenses of counsel in connection with such litigation.
8.3.2 Termination for DSD Exit. Subject to the Provisions of Section
8.3.3, Distributor agrees to give Manufacturer not less than one year
written notice before any system wide grocery or substantially
system-wide grocery or complete system-wide exit of the use of DSD
*This confidential portion has been omitted and filed separately with the
Commission.
as its principal mode of distribution of Manufacturer's Products. Any
such system-wide grocery or substantially system-wide grocery exit of
DSD, except as specifically set forth in the following subparagraph
8.3.3, shall entitle Manufacturer to terminate the Agreement in its
entirety or with respect to any affected portion of the Distributor
Territory upon 60 days written notice to Distributor and shall also
entitle Manufacturer to the Termination Fee if the Agreement is
terminated in its entirety. Any exit of the use of DSD for any market
described in Schedule 2A, except for any system-wide grocery or
substantially system-wide grocery exit or complete system-wide exit of
the use of DSD or as specifically set forth in the following
subparagraph 8.3.3, shall entitled Manufacturer to terminate the
Agreement upon 60 days written notice to Distributor with respect to
the affected portion but shall not entitle Manufacturer to the
Termination Fee.
8.3.3 DSD Exits That Do Not Entitle the Manufacture to Terminate This
Agreement. Manufacturer acknowledges that Distributor may exit DSD on a
customer specific basis (any channel) at the demand-request of a
customer, and the Manufacturer further acknowledges that Distributor
may thereafter exit DSD on a specific geographic market basis (any or
all channels) or on a system-wide grocery basis if prior or current
customer demand-requested exit(s) result in Distributor's sole
determination in good faith in its reasonable business judgment, as
reviewed in reasonable detail with the Manufacturer, that, as a result
of the foregoing, conditions are economically unfavorable for the
Distributor to continue DSD in that specific geographic market or in
the grocery channel. Distributor agrees promptly to inform Manufacturer
in writing of a customer request or demand-request which Distributor
plans to implement. Distributor agrees to provide Manufacturer as much
notice as possible prior to exiting DSD on any customer-specific basis,
but Manufacturer acknowledges that the notice period for such exits may
be dependent upon the customer. Distributor agrees to provide
Manufacturer written notice of at least 90 days prior to exiting DSD on
any specific geographic market basis or any system-wide channel basis.
Manufacturer will not be entitled to the Termination Fee or other
remedy for such customer specific demand-requested DSD exit or for any
subsequent specific geographic market based exit (any or all channels)
or a subsequent system-wide grocery DSD based exit occurring in
accordance with Distributor's determination made in compliance with
this subsection. In the event that Distributor uses the warehouse mode
for shipment to a specific customer or geographic portion of the
Territory, Manufacturer shall have the right, upon 60 days written
notice to the Distributor, to elect to ship the Products directly to
the applicable warehouse, in which event the Distributor will not do
so.
8.3.4 Failure of Distributor to Comply with Performance Requirements.
Beginning September 1, 2000, Distributor's failure to materially
satisfy the Performance Requirements after all notice and cure periods
set forth in this subparagraph, which failure has a material adverse
effect on Distributor's distribution performance in (i) the Distributor
Territory as a whole, shall be cause for Manufacturer to terminate the
Agreement and collect the Termination Fee or in (ii) any market
described in Schedule 2A, shall be cause for Manufacturer to terminate
the Agreement with respect to the affected portion but shall not
entitle Manufacturer to the Termination Fee. Manufacturer shall provide
written notice to Distributor specifying in reasonable detail and
failure of Distributor to materially comply with the Performance
Requirements and the material adverse effect on Distributor's
performance. If Distributor has not cured any such failure within 45
days, Manufacturer shall provide written notice with accompanying
details to Distributor of Distributor's continuing
failure. Within 15 days of receipt of this notice, Distributor will
meet with Manufacturer to discuss the noncompliance and to present a
plan for achieving compliance. If Distributor fails to cure its
non-performance of the Performance Requirements in Amended Schedule 2C
and such non-performance constitutes a material breach thereof, taking
into account the cumulative effect of such non-compliance in
performance of the Performance Requirements, within 60 days of the
meeting and such noncompliance is within the control of the Distributor
and the Manufacturer is not a material contributor to such
noncompliance, then Distributor has failed to materially satisfy the
Performance Requirements and the Manufacturer may terminate the
Agreement on 60 days written notice. By way of example but not
limitation, Manufacturer must have a sufficient product supply
available and, except in respects not material, shipped on time to
Distributor at all times, must fully provide in all material respect
its planned marketing support, provide adequate notice and
communication for promotions (at least 12 weeks notice), ensure that
all material POS materials are available. Upon Manufacturer's
termination of the Agreement for Distributor's failure to satisfy the
Performance Requirements (as provided in this subsection), Manufacturer
shall be entitled to the Termination Fee unless Distributor achieved
the Performance Goals for the applicable period despite its failure to
satisfy the Performance Requirements."
8.3.5. Particular Account or Group of Accounts. 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, 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. No Termination Fee shall be payable pursuant to
Section 8.3.5."
11. Termination for Change of Control. The first sentence of Section 8.4 is
deleted and replaced with the following: "Upon a Change in Control (as defined
below) of the Distributor, the Manufacturer may terminate this Agreement upon 12
months notice, and upon a Change in Control (as defined) of Manufacturer,
Distributor may terminate this Agreement upon 12 months notice, in each case
given at any time within the 180 day period following the Change in Control of
the other party."
Section 8.4 is further amended by deleting the words "announcement" and
substituting the word "consummation" in the second line of the second paragraph
of Section 8.4.
Section 8.4 is further amended to add at the end of the second paragraph,
following the words constitute a "Change in Control" the following:
"With respect to a Change in Control of the Distributor in the form of
the Joint Venture, the acquisition by either of Nestle USA or
Pillsbury, or any of their parents or affiliates, of more of the voting
securities (or LLC or other interests equivalent thereto) than held by
the other
"member (and its affiliates)" in the Joint Venture shall constitute a
Change in Control of the Joint Venture, and the references to "voting
securities" shall include LLC interests (and other equivalent
interests), and the references to "shareholders" shall include LLC
members (and other equivalent interests), and the sale of all or
substantially all of the assets of the Joint Venture or a sale of all
or substantially all of the distribution business of the Joint Venture
shall each constitute a Change in Control of the Distributor."
The first sentence of Section 8.4.1 of the Agreement is deleted and replaced
with the following:
"In the event of termination hereunder by Distributor for Change in
Control of the Manufacturer under Section 8.4, Distributor shall be
obligated, during the 12 months notice period, to continue to purchase
Products from Manufacturer for resale and use its best efforts to
distribute in each market in the Distributor Territory listed in
Amended Schedule 2A where Distributor was a distributor hereunder
immediately prior to the termination notice."
12. New Section 20 is added to the Distribution Agreement, reading as follows:
"20. Distributor Advisory Council. Distributor has used, and intends to
use from time to time in the future, an informal "Distributor Advisory
Council" ("DAC") as a forum for manufacturers and subdistributors to
present their lawful distribution concerns under various agreements,
including the Distribution Agreement as in effect from time to time, and
proposed best practices solutions to Distributor. Manufacturer agrees to
provide a representative to serve on the DAC. Distributor shall pay the
reasonable costs and expenses of Manufacturer's representative to attend
the meetings of the Distributor Advisory Council. Manufacturer
acknowledges the nonbinding advisory purpose of the DAC meetings and
agrees that its participation is not intended to provide any contractual
rights to Manufacturer."
13. Miscellaneous. Section 1 of the Distribution Agreement is hereby
amended by adding the following at the end thereof:
"After assignment of the Distribution Agreement to the Joint Venture, the
term "Distributor" shall include all of the Nestle ice cream operations in the
United States (excluding Nestle's minority interest in Xxxxxx'x Grand Ice Cream,
Inc.)."
Section 2.6 of the Distribution Agreement is hereby amended by adding at
the end thereof the following:
"Nestle (excluding Nestle's minority interest in Xxxxxx'x Grand Ice Cream,
Inc.) does not bring to the Joint Venture any directly owned and operated
DSD distribution".
Section 14 of the Distribution Agreement is hereby amended by adding at the
end thereof the following:
"Each of Pillsbury and Nestle USA shall be bound by the obligations in
the Distribution Agreement relating to Confidential Information and the
obligations set forth in Section 14.".
Section 14.1 of the Distribution Agreement is hereby amended by deleting
the words "Pillsbury (or Haagen-Dazs)" and inserting in its place "the Joint
Venture".
Section 17 of the Distribution Agreement is hereby amended by changing the
reference in the second paragraph to "Vice President, Haagen-Dazs North America"
to read "Chief Executive Officer, Joint Venture".
Section 19 of the Distribution Agreement is hereby amended to provide that
notice to Distributor shall be addressed to Chief Executive Officer, Joint
Venture at
Ice Cream Partners, LLC
c/o Nestle Frozen Food Company
00000 Xxxxxxxxxx Xxxx
Xxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
The Pillsbury Company
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
14. Adjustment Under Section 3.2. Section 3.2 of the Distribution Agreement
provides that "It is understood that the provision of [*] per gallon on pints,
quarts and half gallons per year will be subject to appropriate adjustment in
the event of a meaningful change in market conditions for promotion of
Manufacturer's Products". The parties to this Amendment Agreement agree that
recent developments relating to a third party ice cream competitor constitute
such a "meaningful change in market conditions" and agree that all references to
[*] in Section 3.2 are hereby changed to [*].
15. Assignment of the Agreement. Manufacturer hereby consents to the assignment
of the Distribution Agreement, as previously amended, and as amended by this
Agreement, to the Joint Venture effective as of October 8, 1999. Manufacturer
agrees that Pillsbury is released from all obligations and liabilities under the
Distribution Agreement except for those obligations and liabilities that came
into existence prior to the date hereof or related to the period prior to the
date hereof and except as specifically set forth herein, including the
obligations under Sections 2 and 7 hereof.
*This confidential portion has been omitted and filed separately with the
Commission.
IN WITNESS WHEREOF, each of the parties has duly executed and delivered
this Amendment Agreement as of the date set forth above.
BEN & JERRY'S HOMEMADE, INC.
By:_____________________________
THE PILLSBURY COMPANY
By:_____________________________
Accepted:
ICE CREAM PARTNERS USA, LLC
By:_____________________________
