1
Exhibit 10.21
The following is an agreement effective March 28, 1997 between The
Delicious Frookie Company, Inc. ("D/F"), ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Old Colony Baking Company, Inc. ("OCB"), ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, for the exclusive rights to manufacture, have
manufactured and distribute "D/F" products in Single Serve Channel of
Distribution ("SSCD") packaging.
1. "OCB" will be designated as the exclusive agent for "D/F" in the "SSCD"
for a period of three (3) years (Initial three (3) year Agreement, ("IA"))
with two (2) additional three (3) year option periods ("OP1"), ("OP2").
These option periods, treated separately, shall be predicated on the
ability of "OCB" to meet specified performance objectives ("PO").
(a) See Schedule 1 for the "PO" that must be attained in the "IA" to
exercise "OP1". If the "PO" for the "IA" are met, "OPI" must be
offered to "OCB", unless there is an outstanding breach of the terms
of the agreement, which "OCB" has not corrected and for which notice
was given.
(b) The "PO" for "OP1" that will determine if "OP2" must be offered
to "OCB" will be mutually established by "D/F" and "OCB" in the last
year of the "IA". If
2
the established "PO" are met in "OP1", then "OP2" must be offered to
"OCB".
(c) If "OCB" exercises any of the option periods, it will give
notice to "D/F" of its exercise, in writing, no less than (120) days
prior to the end of the corresponding "IA" or "OP1". If "D/F" does
not receive timely notice from "OCB" of its exercise of the option
period, then the terms after termination shall apply.
(d) Should "OCB" fail to meet its "PO" in "OP1" or "OP2" for two (2)
consecutive years, "D/F" shall have the right to terminate its
exclusive agreement with "OCB" or if "OCB" fails to meet at least
forty-five (45%) percent of the "PO" in the first year of each of
the aforementioned two year periods, "D/F" has the right to
terminate this agreement at that time.
In the event that "D/F" products, which represented a significant
portion of the "OCB" sales figures, become unavailable for sale to
"OCB", the "PO" will be revised to reflect the loss of those items.
The revised "PO" will be mutually decided upon by "OCB" and "D/F".
As used herein, "D/F" products means all past and present products
"D/F" is marketing and products that "D/F" markets in the future,
and for which "D/F" has the
-2-
3
right to grant "OCB" co-packing rights, during the life of this
agreement.
2. During the time this agreement is in effect between "OCB" and "D/F", "D/F"
will not manufacture or have manufactured any Single Serve packaging of
their past, current or future products for the "SSCD" without the
expressed written consent of "OCB". Notwithstanding the above, it is
further agreed, that in the event "OCB" is unable to ship acceptable
products and/or competitively priced to comparable products fill orders
within the normally acceptable industry time limits (which should not
exceed two (2) weeks from the receipt of the order) on a consistent basis,
that this section (#2), by mutual agreement between "OCB" and "D/F" shall
become void. "Acceptable time limits" means twenty (20) working days delay
in shipping orders from the date of receipt of the order. If "OCB" is
diligently seeking to cure the delay, "OCB" shall have twenty-five (25)
working days delay as "acceptable time limits". Should either party find
it necessary to exercise this section, such exercise will pertain only to
the product(s) in question.
3. "D/F" shall provide and own the formulations (i.e. the commercial recipe)
provided to "OCB" for the "D/F" products "OCB" chooses to make available
to the "SSCD", and "OCB shall not use those formulations to manufacture or
have
-3-
4
manufactured products for any party other than "D/F". If those
formulations are modified by either "OCB" or the co- packer chosen by
"OCB", "D/F" shall first approve such modified formulations before any
product is shipped to customers. "OCB" shall keep all said formulations
strictly confidential, except for current co-packers or prospective
co-packers who will be required to sign an "OCB" confidentiality
agreement, sample annexed as Schedule 2, which "OCB" shall also enforce
for the benefit of "D/F" for any violation of "D/F's" material, before the
formulation is disclosed to them. In the event that "OCB" and "D/F" shall
terminate this agreement at any point in the future, the aforementioned
formulations shall remain confidential, not to be disclosed or used by
"OCB" or its co-packers.
4. "OCB" in its capacity as exclusive agent for "D/F" Products in the "SSCD",
will have the sole authority in determining the following, including but
not limited to, co-packer, raw materials, packaging materials, packaging
suppliers, warehouse location (if applicable), modes of transportation,
carrier selection, brokerage force, and salespeople. This section does not
preclude the right of "D/F" to approve the product quality, approval of
"OCB" formula used by the maker of product, final packaging for trademark
use, labeling, structure, or legal language that "OCB" will use in its
products for the "SSCD". Any changes however must be within
-4-
5
the capabilities of the chosen "OCB" suppliers, provided that those
capabilities are normal and customary in the industry, not withstanding
this, "D/F" must approve the final packaging as specified above.
5. "OCB" will have the right to use all current and future products of "D/F";
however, "OCB" will be the final authority in deciding which of those
products are made available for the "SSCD". "OCB" solicits, welcomes and
respects all input from "D/F" regarding their items. By the second year,
Frookie products must also be utilized in the "SSCD".
6. "D/F" will purchase only first quality products from the "OCB" co-packer
manufactured for the "SSCD" trade and sell said products to "OCB". "D/F"
will upcharge "OCB" .0075 cents per unit (one (1) unit = any product
intended for the normal "SSCD") which will be reflected in the price
charged to "OCB". It is further agreed that "OCB" will pay to "D/F" all
royalty due the individual "licensors" for the additional "SSCD" items
being made available for sale. This royalty shall be based on the
documentation given to "OCB" of the agreement held by "D/F" with the
individual "licensees". This royalty will be based on the "D/F" selling
price to "OCB". See, Schedule 3.
-5-
6
(a) "OCB" co-packers will not allow any products other than first
quality goods to leave its manufacturing facility for any
reason.
(b) "D/F" may purchase from "OCB" selected products for the
"SSCD". "D/F's" costs will be "OCB's" costs + no more than
five (5%) percent.
7. "D/F" will pay all "OCB" co-packers within their terms of payment unless a
prior agreement has been reached with the co-packer and "OCB". "D/F" will
offer the same discount terms of sale to "OCB" that the "OCB" co-packer
offers to "D/F", these terms shall result in an equal amount to both
parties. In the event "D/F" does not adhere to the terms of the co-packer
invoice or prior payment arrangements, "OCB"shall have the right, upon
"OCB" giving notice to "D/F", to pay the invoice directly to the co-packer
with the obligated upcharge paid directly to "D/F".
(a) It is further agreed that all contact with the "OCB" co-packers
will be made through "OCB". Access by ▇▇▇▇▇▇ Worth in her capacity
as R&D for "D/F" or her assistant or access contractually obligated
to by "D/F" are not covered by this prohibition. Access to
co-packer's facility is strictly at their discretion. All visits are
to
-6-
7
be coordinated through "OCB" which will act in a prompt manner.
8. "D/F" acknowledges that in the course of doing business in the "SSCD"
market and by using brokerage firms designated by "OCB", "D/F" may have an
opportunity to sell goods in the retail trade, that is, products not
controlled by "OCB" and which are readily available by "D/F" in their
normal course of business. These goods will be sold to "OCB" at a mutually
acceptable price or on a commission basis.
(a) Only brokerage commission costs on these goods will be assumed
by "OCB".
(b) All other costs, i.e. freight, promotions, discounts,
allowances, etc. will be the responsibility of "D/F" should they
choose to accept the order.
9. This agreement shall become effective on the date first set forth above
and shall terminate, where applicable, upon any party's receipt of written
notice of termination sent by the other party, if sent by fax, will be
receipt of the fax with confirmation by mail. Termination may only occur
within the confines of this agreement. Any notice of termination shall
-7-
8
be sent to the address of the respective party set forth herein:
To the attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ for Old Colony Baking Company, Inc. or
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ Worth for The Delicious Frookie Company, Inc.
Old Colony Baking Co. The Delicious Frookie Company, Inc.
Box 1461 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇-▇▇▇▇ Suite #2
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copies are to be sent to ▇▇▇▇▇▇ ▇▇▇▇▇▇, attorney for "D/F" and ▇▇▇▇▇▇▇
▇▇▇▇▇ attorney for "OCB".
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Marks, Marks and ▇▇▇▇▇▇ Stroll, Miskin, Previto and ▇▇▇▇▇▇▇
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇▇ ▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇. 60602 ▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address or fax number at any time by written
notice to the other parties as set forth above.
10. During the term of this agreement, or for a period of two (2) years after,
either termination by "OCB" or termination by "D/F" for cause, "OCB" will
not contact or take license with any past (any previous association of
more than twelve
-8-
9
(12) months old is excluded from this provision) or present "D/F"
licensor, or supply product to such licensor except through or for "D/F".
"OCB" further agrees that, if it should contact any prospective licensor
with regard to a business relationship, it will do so as an agent for
"D/F" within the same framework that exists or had existed (i.e.,"D/F"
being the license holder with "OCB" as exclusive agent for the "SSCD"). So
as not to confuse any prospective licensor, "OCB" will advise "D/F" of any
intent to contact any such licensor before initial is made. In the event
that "OCB" is responsible for adding a licensor to "D/F", the terms of
this agreement in regard to the upcharge may not necessarily apply, i.e.,
that particular licensor's upcharge may be negotiated separately by mutual
agreement between "OCB" and "D/F".
11. In the unlikely event that an interpretation of this agreement or specific
sections of this agreement that refer to "mutual decisions" are not
resolved on a mutual basis by "OCB" and "D/F", they shall be referred to
an independent arbitrator for his/her final and binding decision. This
arbitrator shall be mutually selected by the attorneys identified in
paragraph 9 above of this agreement, and shall take place in Chicago,
Illinois. Should the attorneys find themselves unable to agree on an
arbitrator, the matter
-9-
10
shall be submitted to the American Arbitration Association pursuant to its
Commercial Rules.
12. "OCB" agrees that products for the "SSCD" shall be manufactured, packaged,
stored, distributed and marketed in accordance with all applicable
Federal, state and/or local laws and regulations. "OCB" further agrees
that all facilities utilized to manufacture, package or store "D/F"
products for the "SSCD" shall be maintained in accordance with all
applicable Federal, state and/or local laws and regulations.
13. "OCB" agrees that products for the "SSCD" shall be manufactured and
packaged in strict accordance with "OCB's approved formulas and product
specifications and quality specifications as per samples approved by "D/F"
prior to initial manufacture. "OCB" further agrees to provide "D/F" with
samples (in reasonable quantities) of all products for the "SSCD" upon
request from "D/F".
14. "OCB" warrants that products for the "SSCD" as of the date of shipment,
shall not be adulterated or misbranded within the meaning of any local,
state or Federal law, regulation, ordinance, rule or procedures and shall
not be a product which may not be sold in interstate commerce pursuant to
the Food, Drug and Cosmetic Act, as amended.
-10-
11
15. This agreement may be terminated by either party in the event of breach by
one party of an obligation hereunder unless such breach is cured within
thirty (30) days of written notice of the alleged breach by the other
party.
16. This agreement may also be terminated by either party, forthwith, if the
other party becomes insolvent, commits an act of bankruptcy, makes an
assignment for the benefit of creditors, or if a receiver or receiver
manager is appointed for the other party or over any of its assets, or if
any proceeding in bankruptcy, receivership, winding-up or liquidation is
initiated in respect of the other party, or if the other party ceases to
carry on business.
17. This document constitutes the entire agreement between the parties,
supersedes any prior agreements both oral and written, regarding this
subject matter, and shall not be modified except by a writing executed by
the parties hereto.
18. This agreement shall inure to the benefit of and shall be binding upon the
parties hereto and their successors.
Please indicate your assent of this agreement by signing where indicated and
returning one (1) copy and retaining one (1) copy.
-11-
12
The Delicious Frookie Company, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Pres.
Date: 5/7/97
Old Colony Baking Company, Inc.
By: /s/ Illegible
Its: President
Date: 5/7/97
-12-
13
Schedule 1
OLD COLONY BAKING COMPANY., INC.
PERFORMANCE OBJECTIVES
(As Related to Sales for the Delicious Frookie Company)
-------------------------------------------------------------------------------
Year 1 Year 2 Year 3
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Projected D/F Sales $1,200,000 $1,300,000 $1,350,000
-------------------------------------------------------------------------------
Minimum Minimum Minimum
Dollars D/F Dollars D/F Dollars
will will D/F will
realize realize realize
Performance Objectives $15,000 $42,000 $84,000
-------------------------------------------------------------------------------
NOTES:
1. The Delicious Frookie Co. will upcharge Old Colony .0075 cents per unit
manufactured. 1 Unit=any product intended for the normal Single Serve
Channel of Distribution
EXAMPLE
If the invoice from the co-packer to Delicious/Frookie is for 2500 cs.
(packed 48 ct.), Delicious/Frookie would upcharge the invoice to Old
Colony by $900.00 (2500x48=90,000 Units x .0075 = $900.00
14
Schedule ▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ E-mail: ▇▇▇▇▇▇▇@▇▇▇.▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
================================================================================
___________ This initial of the signatory on page two indicates that they are
aware that the term "▇▇▇▇▇" on this page refers to the company which they
represent and are signing for.
In accordance with our previous discussions, Old Colony Baking Co., Inc. ("OCB")
is interested in working with you in connection with the development and
manufacture of specific products determined by "OCB". "OCB" shall provide and
own the formulas (i.e. the commercial recipe) of such products, including any
improvements jointly made to such formulations and "▇▇▇▇▇" shall not
manufacturer products with the formulations for any party other than "OCB", nor
disclose the formulations to any party other party without the expressed written
consent of "OCB".
During the course of your activities, either party may become exposed to
information, materials or data that the other party considers secret and
confidential ("Confidential Information").
The parties agree that they shall: 1) maintain the Confidential Information of
the other in strict confidence and 2) not use the Confidential Information of
the other party, howsoever obtained, for its own benefit or disclose it to third
parties. This confidentiality obligation shall remain in effect for a period two
(2) years from the date hereof if no agreement was reached between the two
parties, or a period of two (2) years from the date after the last occurrence
the two parties engaged in business. All printed formulations of any manner
shall be immediately destroyed; however, given the fact that one can not erase
one's memory, they will continue to be held in the strictest of confidence
intending for them never to be disclosed. Termination of this agreement shall
not terminate these confidentiality obligations.
This agreement shall not apply to any information, verbal or written, which was
in the possession of the party receiving the information prior to the time of
disclosure, in the public domain prior to the disclosure or becomes part of the
public domain not due to any unauthorized act or omission on the part of the
party receiving the information.
Disclosure within its own organization of Confidential Information by the party
receiving information hereunder shall be made on a need to know basis and shall
be treated in the same manner that the receiving
-14-
15
Old Colony Baking Company Inc. Page Two
==========================================================================
party treats its own confidential information. In any event, formulations issued
to company personnel shall be issued a control number and its location shall
always be known to the signatory of this document.
Confidential Information shall include, but is not limited to: (a) information
that "▇▇▇▇▇" may acquire through observation or be furnished with regarding
"OCB" products; (b) the fact that the parties have had or are having discussions
regarding the development of "OCB" products.
This agreement shall become effective on the date first set forth above and
shall terminate upon any party's receipt of written notice of termination sent
by the other party or upon the execution by the parties of a co-pack agreement.
Any notice of termination shall be sent to the address of the respective party
set forth herein, to the attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ for Old Colony Baking Co.,
Inc. or for Co. The parties further
acknowledge that neither party is under obligation to enter into further
agreement or commercial relationship. Please indicate your assent hereby
signing, dating and returning the enclosed duplicate of this agreement to me.
Sincerely,
Old Colony Baking Company, Inc.
By:
------------------------------------
Its:
------------------------------------
AGREED TO:
Company, Inc.
By:
------------------------------------
Its:
------------------------------------
Date:
------------------------------------
-15-
16
Schedule 3
Delicious Frookie Licensing Program
================================================================================
Licensed Trademarks Royalty
------------------- -------
--------------------------------------------------------------------------------
Butterfinger & 2% of net sales
Raisinets
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ 5% of net sales, less returns refunded
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ 3% of net sales
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇. Cheese 4% of first $3.5M of net sales & 3%
thereafter
--------------------------------------------------------------------------------
Eskimo Pie 3.5% of net wholesale sales
--------------------------------------------------------------------------------
Land O'Lakes 3% of net sales
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇'▇ 2%
--------------------------------------------------------------------------------
Ringling Bros 4% of first $3.5M of net sales & 3%
thereafter
--------------------------------------------------------------------------------
▇▇▇▇▇▇ 5% net sales + 2% net sales (as amended
12/7/92)
================================================================================
-16-
