EXHIBIT 10.11
THE PILLSBURY COMPANY DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Distribution Agreement") is entered
into as of this 26th day of August, 1998 by and between The Pillsbury Company, a
Delaware corporation headquartered at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000-0000 ("Distributor"), and Ben & Jerry's Homemade, Inc., a
Vermont corporation headquartered at 00 Xxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxxx,
Xxxxxxx 00000-0000 ("Manufacturer").
WHEREAS, Manufacturer wishes to reduce its dependence on Xxxxxx'x Grand
Ice Cream, Inc. ("Dreyer's"), a leading ice cream company in the market and the
leading ice cream distributor in the market, as a distributor of more than 50%
of the sales of ice cream products of the Manufacturer, and whereas Dreyer's is
the only "national" (more or less) distributor of ice cream in the domestic
market;
WHEREAS Distributor wishes to obtain additional volume of ice cream to
put through its distribution system, in order to realize efficiencies/economies
of scale; and
WHEREAS, Manufacturer wishes to achieve efficiencies in the
distribution of its products and wishes to use Distributor as a distributor in
certain areas and whereas Distributor wishes to act as distributor for ice cream
products of Manufacturer in certain areas.
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 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 various food products including,
through its Haagen-Dazs unit, ice cream products sold under the name
"Haagen-Dazs" and including ice cream products manufactured by or for others.
The use of the term "Distributor" in this Agreement means The Pillsbury Company,
including its Haagen-Dazs ice cream operations and any subsidiaries engaged in
ice cream operations in the United States (but not including Haagen-Dazs
operations as a franchisor). The term "Manufacturer" shall mean Ben & Jerry's
Homemade, Inc. and any subsidiaries thereof. At the present time more than half
of Manufacturer's products are distributed by Dreyer's, a leading ice cream
company in the market and the leading ice cream distribution company in the
market, and Manufacturer wishes to diversify the distribution of its Products.
It is acknowledged by the parties that distribution by Distributor
cannot commence in certain respects and areas until and unless a certain
distribution agreement between Manufacturer and Dreyer's dated as of January 20,
1987 as amended (the "Dreyer's Agreement") has been either terminated by
Manufacturer in accordance with the provisions thereof or appropriately modified
so as to permit the distribution by Distributor contemplated hereunder.
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 except where otherwise expressly
provided. The parties agree that such distribution will thereby achieve
efficiencies in the distribution of Products of the Manufacturer, without
causing an increase in the resale prices of such Products to retailers, and will
achieve efficiencies/economics of scale in the distribution of products of the
Distributor, through economies of scale that result from putting the additional
volume of Products of the Manufacturer through the Distributor's distribution
system. The parties further agree that such efficiencies and economies are,
through the pricing and rebate provisions of this Agreement, being economically
shared by the parties, all to the mutual best interest of the parties. Reference
is made to an Exhibit dated the date hereof outlining in summary form the annual
profit improvement for the Manufacturer which, is expected to be achieved, such
Exhibit being a non-binding Exhibit referenced solely to show the contemplation
of the Manufacturer. It is expressly understood that such Exhibit does not
constitute any warranty or representation or promises by the Distributor. The
parties also intend that the implementation of the efficiencies contemplated by
this Agreement should expand the ice cream products available in the marketplace
and will thereby assist consumers in selecting ice cream products from time to
time at retailers, all of which products, including Manufacturer's Products and
Distributor's products, will be in competition with one another.
"Best efforts" as used in this Agreement means commercially reasonable
use of available resources to accomplish the specified objectives or, in some
cases, the overall objective, of this Agreement.
2. Distribution.
2.1. Appointment of Distributor. Subject to all of the terms hereof,
Manufacturer hereby appoints Distributor as a non-exclusive distributor for the
Products 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
sub-zero frozen desserts manufactured by the Manufacturer and (ii) such other
brand ice cream, frozen yogurt, sorbet, novelties and other sub-zero frozen
desserts of other persons as are involved in a significant relationship with
Manufacturer (other than simply a distribution relationship) 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
written 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 (and with a minimum drop amount of no greater than 3?
gallons) in all flavors and sizes to all types of retail stores and all other
types of accounts in this Distributor Territory (except with respect to certain
channel limitations set forth in Section 2.3) 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 (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 subdistributors which are commonly referred to by
Distributor as "internal subdistributors").
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 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 such 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 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, the
parties commit to reach agreement on the 1999 Performance Requirements and
Performance Goals (which may not cover a full 12 months) by no later than
October 15, 1998, and failure of the parties to reach agreement on the 1999
Performance Requirements and Performance Goals by said date shall constitute
"Cause" under Section 8.3.
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 under
Section 8.3. Failure to achieve the Performance Goals shall not constitute Cause
except as provided in the preceding sentence with respect to reaching an
agreement by October 15, 1998.
Within ten days prior to the commencement of resale of the Products,
pursuant to the Transition Period provisions of Section 2.10, the parties agree
that the Products will be available in appropriate quantities in Distributor's
warehouses.
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 for the Distributor on the date hereof.)
2.2. Accounts. Subject to Section 2.3, 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 (on a consignment
basis as provided below). 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.
2.3. Sales in Distributor Territory and Authorized Accounts; Smaller
Class of Trade Channel; Food Service Accounts. In the geographic markets within
the Distributor Territory set forth on Schedule 2.3, Distributor shall
distribute to the "Supermarket Channel" (which shall mean A and B supermarkets
and stores with three cash registers or more) and not to the "Smaller Class of
Trade" (meaning convenience stores, Mom & Pops and the like, other than
convenience store chains), which Smaller Class of Trade channel in such
geographic markets are being handled by other distributors of the Manufacturer
pursuant to Manufacturer's decision that such arrangement is in the best
interest of its marketing program.
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 2.3 and 2.4. In order to carry out the provisions of this
Agreement, Distributor will abide by and, where applicable, impose these
"account" or "channel" contractual restrictions on all the persons distributing
Products under this Agreement except when otherwise authorized in writing by the
Manufacturer. 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 channel/customer limitations under this Section
2.3 are to use best efforts, consistent with law, in enforcing such customer
restrictions under this Section 2.3 and Section 2.2 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. 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. The parties agree to meet
and review the appropriateness of these fees at least annually.
2.5. No Exclusive Rights. Before Manufacturer grants any other person a
right to distribute the Products in the Distributor Territory, Manufacturer
shall first give not less than 90 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 90 days prior
written notice and will consult with Manufacturer.
* This confidential portion has been omitted and filed separately with the
Commission
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 directly owned
and operated distribution system, including trucks and personnel, and with a
small percentage distributed by subdistributors of the Distributor (referred to
by Distributor as "internal distributors"). Distributor agrees that its maximum
resale prices on Products resold to the "internals" will not exceed [ * ]
(weighted average) above the prices paid by Distributor for such Products to the
Manufacturer under the first paragraph of Section 9.1. The parties agree that,
if the size of Distributor's owned and operated distribution system increases,
the parties will discuss whether Manufacturer shall sell its Products to
Distributor's owned and operated distribution system in additional areas not now
included in Distributor Territory.
2.6.1. Distributor acknowledges that it has been informed that in the
geographic area listed on Schedule 2.6.1 Manufacturer shall sell or may sell the
Products to independent distributors who may be the same persons who are
purchasing products of Distributor from Distributor as distributors taking
delivery from the Distributor at such distributor's warehouse (referred to by
Distributor as "external distributors"). Distributor agrees that in any such
market area Manufacturer may use other direct distributors or, subject to
reaching mutual agreement between the parties, may sell Products to Distributor
which shall then use its best efforts to resell to such persons who act as such
"external distributors" for Distributor. In this connection it is understood
that Distributor will use its best efforts to assist Manufacturer in concluding
distribution agreements with such externals and during the Transition Period
shall provide distributor management without a fee and, if requested by
Manufacturer thereafter, for a fee of [ * ] of the purchase prices of such
Products by such externals, or as otherwise mutually agreed between the parties.
In the event that the Manufacturer is not able to conclude distribution
agreements with one or more of the external distributors on Schedule 2.6.1 with
respect to areas outside the Distributor Territory, as a result of Dreyer's not
distributing Products of the Manufacturer in such areas, then Distributor agrees
to use its best efforts to purchase Products for resale to such "external
distributors" for distribution by such external distributors in the specified
areas.
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.
* This confidential portion has been omitted and filed separately with the
Commission
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
involved in the distribution function up through the level of Regional Vice
Presidents of Distributor 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.
Notwithstanding the foregoing, in the event that Manufacturer, Distributor or
another manufacturer of frozen dessert products carried by the Distributor has a
time-limited special incentive program on certain items, there can be special
incentive commission on similar arrangements for Distributor's personnel for the
limited duration of such programs, with 30 days written notice to the Regional
Vice Presidents of Distributor, that will not be considered to be a violation of
this Section 2.8.
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
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.
2.10 Transition Period. Distributor acknowledges that Manufacturer's
ability to sell certain products within the definition of Products to
Distributor, and therefore the effective implementation of the transactions
contemplated by this Agreement, is, to the extent Dreyer's has exclusive rights,
conditioned upon and subject to either or a combination of (i) Manufacturer's
termination of the Dreyer's Agreement without cause by notice given not later
than September 1, 1998 (except as to the New York Territory as defined in the
Dreyer's Agreement) or (ii) a modification thereto consistent with Section 2 of
this Agreement as to the Distributor Territory (or portions thereof) so as to
permit the distribution contemplated by this Agreement. In other areas or with
respect to certain products within the defined Products, Dreyer's has only
non-exclusive rights under the Dreyer's Agreement and Manufacturer may appoint
Distributor as an additional distributor, pursuant to the provisions of the
Dreyer's Agreement.
In this connection, the parties acknowledge that it is not certain
under the Dreyer's Agreement whether notice of termination without cause as to
the New York Territory (as defined therein) may be given prior to December 31,
1998 but that Manufacturer has the right to make Dreyer's rights in said New
York Territory non-exclusive upon not less than 90 days notice. Accordingly,
this Agreement does not provide for sales of Products to Distributor for resale
in said New York Territory prior to the effective date of termination as to the
New York Territory, except following 90 days written notice given by the
Manufacturer to Dreyer's making Dreyer's rights in the said New York Territory
non-exclusive.
Upon the giving of notice of termination by Manufacturer without cause
under the Dreyer's Agreement (not including the New York Territory), Dreyer's
rights under the Dreyer's Agreement are or become non-exclusive, unless Dreyer's
elects to give notice to retain its exclusivity (in which event Manufacturer
plans to give notice to Dreyer's to shorten such exclusivity to a period of not
more than 90 days, as permitted under the Dreyer's Agreement). Accordingly,
Distributor agrees to use its best efforts to commence distribution of the
Products on such date not later than the date or dates in the various areas
within the Distributor Territory that Dreyer's rights are or have become
non-exclusive in such areas, it being understood that the parties will
reasonably cooperate to select a date or dates which are appropriate to carry
out the objectives of this Agreement. In any event, Distributor agrees that it
shall fully implement distribution of the Products in the Distributor Territory
by March 1, 1999, provided that it has received six months prior written notice
or such lesser notice which is reasonable in the judgment of the Distributor in
terms of the time needed for Distributor to gear up with respect to any market
in question.
The parties each agree to use best efforts to take all planning and
action in the Transition Period in order to carry out the purposes of this
Agreement, and in particular to avoid any hiatus or dislocation in the
marketplace for the availability of the Products as a result of Manufacturer's
election to shift certain distribution of its Products from existing
distributors to the Distributor as provided in this Agreement.
2.11. Regular Performance Meetings. The parties agree that executives
of the parties who are not involved in the day-to-day distribution operations
hereunder shall meet at least four times a year to discuss operations under this
Agreement with the intent to resolve issues of performance before they become
potentially major items and consider changes to meet changing market conditions.
Such meetings will be at a place selected by one party for the first meeting and
then at a place selected by the other party for the second meeting, etc., or at
such other places as shall be mutually agreed. The parties agree that these
meetings are an important part of this Agreement.
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 include
customer name and general location (but without an actual address), delivery
date, quantity, item code/description, price and allowance. Each party will
cooperate and Ben & Jerry's will use its best efforts 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, community events and slotting. Each party shall promptly pay,
subject to the following provisions, [ * ] of the cost of all trade promotions
on the Manufacturer's Products, which shall not include the foregoing items in
the previous sentence, but shall include off-invoice, retailer ads, retailer
display specials, bunker programs, etc. and 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 on the Manufacturer's Products does not in the
aggregate exceed for all markets in the Distributor Territory [ * ] on pints,
quarts and half gallons per gallon per year, the Distributor shall pay its [ * ]
share of such trade promotions, 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 gallon per year for each
party's [ * ] 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 program 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 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. 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.
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.
* This confidential portion has been omitted and filed separately with the
Commission
4. Social Mission Activities. Distributor recognizes that in taking
over the distribution of the Products of the Manufacturer in the Distributor
Territory it is succeeding to the benefit of the image and reputation of the
Products and the Manufacturer that has been created in the Distributor
Territory, including that part of the image and reputation related to the
Manufacturer's approach to marketing activities, including among other things,
community oriented events, promotions or benefits and Manufacturer's Social
Mission, as set forth in Schedule 4. 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. It is 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. It is
understood that such socially responsible activity will be part of the annual
Performance Goals under Section 2.1 which shall then become part of the
Performance Requirements.
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 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 merchandizing 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 is being handled at improper temperatures, Manufacturer reserves
the right to insist that Product be destroyed if quality of such Product is
affected and at any time and Distributor will remain responsible for payment for
the destroyed Products.
Manufacturer understands and requires that Distributor's form of market
delivery is direct store delivery, and each of the Manufacturer and Distributor
agrees to use its best efforts to convert the warehouse distribution to Giant
stores to DSD.
6. Other Distribution by the Distributor. Subject to the foregoing,
Distributor reserves the unrestricted right to sell products (other than the
Products purchased from the Manufacturer) to anyone within or without the
Distributor Territory; however, in accepting appointment as Manufacturer's
distributor hereunder, Distributor agrees to use its best efforts in
enthusiastically expanding the sales volume of the Products and their position
in the case throughout the entire Distributor Territory.
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 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 of 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 the date hereof,
subject to the provisions of Section 2.10 pertaining to the Transition Period,
and shall continue until October 1, 2002, and thereafter for an indefinite
period, unless in any case sooner terminated pursuant to the terms of this
Agreement or by mutual agreement.
8.2. Termination Without Cause. This Agreement may be terminated by
Distributor without cause on not less than 12 months prior written notice to
Manufacturer given to Manufacturer after October 1, 2002, and may be terminated
by Manufacturer without cause at any time on not less than five months prior
written notice to Distributor provided that, in the event that such termination
by Manufacturer occurs prior to October 1, 2002, 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 Schedule 8.2.
In the event that 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 the
Section 8.2.
During the termination notice period under Section 8.2, the following
additional obligations set forth in this Section shall apply.
In the event of termination hereunder by Distributor without cause,
Distributor shall be obligated, during the twelve (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
Schedule 2A where Distributor was a distributor hereunder immediately prior to
the termination notice. In connection therewith, Distributor shall distribute
suchProducts in compliance with the Performance Requirements in each such market
area, which if not agreed specifically shall be the Performance Requirements in
effect during the comparable period in the prior year.
Provided, however, that the Manufacturer may, upon 30 days' written
notice to Distributor after Distributor has given notice of termination without
cause, elect to shorten the 12-month notice period to a shorter period (but not
less than five months), in which event Distributor's performance obligation for
the 12-month notice period set forth above shall be prorated to such shortened
notice period.
Manufacturer shall not be obligated to appoint additional distributors
in any area during any termination notice period. The above obligations upon
termination shall only apply to the market area or areas in which the
termination is effective and shall be interpreted accordingly.
In the event that Distributor fails to comply in a material respect in
a market (as defined above) with the Performance Requirements 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 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).
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, 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 for Products to be purchased by Distributor for any year, after the
first year ending September 30, 1999) in any material respect, which shall also
have a material adverse effect on Distributor's distribution performance in the
Distributor Territory or on 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. 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. 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 Defendant'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 90 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 90 day period following the Change in Control of
the other party. The provisions of this Section 8.4 shall be in addition to the
provisions of Sections 8.2 and 8.3.
A "Change of Control" of a party for purposes of this Agreement shall
mean the earlier to occur of: (i) an announcement by any person of an
acquisition of a party's securities or other transaction with respect to
beneficial ownership of a party with respect to either, (x) the acquisition of
50% or more of a party's voting securities or (y) the merger or consolidation of
a party with another entity in which the shareholders of such party would not,
immediately after the merger or consolidation, own at least 50% of the voting
securities of the entity issuing the cash or securities in the merger or
consolidation, or (ii) the sale of all or substantially all of the assets of a
party, including with respect to Distributor, a sale of all or substantially all
of the Haagen-Dazs business (other than the Haagen-Dazs franchise business);
provided, however, that an internal corporate restructuring of the Distributor
or Diageo PLC in which the Haagen-Dazs business becomes a different division or
entity within the Distributor or Diageo PLC, without a Change of Control of the
Distributor (or Haagen-Dazs or Diageo PLC) otherwise taking place, shall not by
itself constitute a Change of Control.
Notwithstanding the foregoing provisions of the definition of "Change
in Control", a Change in Control of Manufacturer will not be deemed to have
occurred solely because of the acquisition of securities of Manufacturer by
members of executive management or the Board of Directors of Manufacturer or by
an employee benefit plan maintained by Manufacturer for the benefit of employees
or by officers or directors 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).
8.4.1. 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 90 days' 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 Schedule 2A where Distributor was
a distributor hereunder immediately prior to the termination notice. In
connection therewith, Distributor shall distribute such Products in compliance
with the Performance Requirements in each such market area, which if not agreed
specifically shall be the Performance Requirements in effect during the
comparable period in the prior year.
In the event that Distributor fails to comply in a material respect in
a market (as defined above) with the Performance Requirements 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 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).
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
termination notice. In connection therewith, Distributor shall continue to
distribute such Products in compliance with the Performance Requirements in each
such market area (as defined above) during the applicable termination notice
periods, which, if not agreed specifically, shall be the Performance
Requirements in effect during the comparable period in the prior year. In the
event that Distributor fails to comply in a material respect in a market (as
defined above) with the Performance Requirements during the termination notice
period in effect under the applicable section of this Agreement, 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 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). 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 unsaleable Products)
at Distributor's original purchase price or in the event of Products close to
out-of-code at the appropriate discount from such original purchase price, all
in accordance with the industry standards, plus [ * ] of the applicable
reasonable return shipping charges 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 reasonably acceptable to the
Manufacturer its then-current inventory of Products, but not including
unsalables in accordance with the provisions of this Agreement. 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 shall
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 21 days after receipt of the freight xxxx 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.
* This confidential portion has been omitted and filed separately with the
Commission
9.1.1. Rebate. Distributor will pay a rebate to Manufacturer based upon
the volume of Products sold by Distributor in the Distributor Territory per the
Rebate Schedule defined in Section 9.1.2. The basic rebate rate of [ * ] based
on the Distributor's monthly sales of all Products to all customers will be paid
monthly in arrears 18 days after the end of the month via Electronic Funds
Transfer (EFT) [EDI transaction type 820]. Adjustments for a greater or lesser
rebate based upon volume will be made at the end of the fourth calendar quarter.
The adjustment will be made based upon the cumulative volume of Products sold
and the rebate schedule in Section 9.1.2. Distributor and Manufacturer will
mutually agree upon the applicable seasonality percentages. Distributor will
make required adjustment payments within 18 days after the end of the month via
Electronic Funds Transfer (EFT).
9.1.2. Rebate Schedule. The rebate relates to the volume of sales in
Equivalent Units (gallons adjusted to a common base taking into account varying
package sizes). The Manufacturer and Distributor have agreed upon the Equivalent
Units ("EU's") calculation as set forth in Schedule 9.1.2. The cumulative volume
will be calculated on a calendar year basis, starting at zero at the beginning
of each year. The rebate will be as set forth below:
1. If the total volume of Products sold by Distributor is greater than or equal
to [ * ] EU's and less than [ * ] EU's, Distributor will pay a rebate to
Manufacturer equal to [ * ] of the total aggregate Net Revenues of Products sold
by the Distributor in the Distributor Territory to all customers during that
calendar year.
2. If the total volume of Products sold by Distributor is greater than or equal
to [ * ] EU's and less than [ * ] EU's, Distributor will pay a rebate to
Manufacturer equal to [ * ] of the total aggregate Net Revenues of Products sold
by the Distributor in the Distributor Territory to all customers during that
calendar year.
3. If the total volume of Products sold by Distributor is greater than or equal
to [ * ] EU's and less than [ * ] EU's, Distributor will pay a rebate to
Manufacturer equal to [ * ] of the total aggregate Net Revenues of Products sold
by the Distributor in the Distributor Territory to all customers during that
calendar year.
4. If the total volume of Products sold by Distributor is greater than or equal
to [ * ] EU's and less than [ * ] EU's, Distributor will pay a rebate to
Manufacturer equal to [ * ] of the total aggregate Net Revenues of Products sold
by the Distributor in the Distributor Territory to all customers during that
calendar year.
5. If the total volume of Products sold by Distributor is greater than or equal
to [ * ] EU's, Distributor will pay a rebate to Manufacturer equal to [ * ] of
the total aggregate Net Revenues of Products sold by the Distributor in the
Distributor Territory to all customers during that calendar year.
* This confidential portion has been omitted and filed separately with the
Commission
6. Notwithstanding the foregoing items in the Rebate Schedule, the minimum
rebate on all sales by Distributor in the Distributor Territory prior to January
1, 2000 will be [ * ].
7. If the total volume of Products sold by Distributor in the Distributor
Territory in any calendar year after 1999 and prior to January 1, 2003 is less
than [ * ] EU's, other than a short fall below [ * ] EU's attributable to
Distributor's failure to satisfy the Performance Requirements and comply with
its other obligations under this Agreement or force majeure or other cause not
reasonably within the control of either party to this Agreement, the
Manufacturer shall be required to transfer new distribution business, in an
amount clearly above the shortfall amount, with respect to the Products to be
distributed outside the Distributor Territory or with respect to additional
Products for distribution within the Distributor Territory. In connection
therewith Manufacturer must notify Distributor within 20 days after the end of
the calendar year, setting forth in reasonable detail the volumes to be so
transferred and the areas to which such volumes relate and must substantially
complete the transfer of such additional distribution business of an aggregate
amount clearly greater in EU's as the amount of shortfall below [ * ] EU's
within not more than 90 days after the end of such calendar year (or such
greater period of days as may be necessary solely to comply with any applicable
termination notice requirements of contracts between Manufacturer and other
distributors that must be terminated or modified to permit such transfers).
Failure to so notify and to so transfer the required amount of new distribution
business shall constitute Cause for termination under Section 8.3.
As used in this Section 9.1.2 Net Revenues shall mean Gross Revenues
minus returns and allowances for damaged Products.
9.2. Pricing Economies. Distributor confirms that it is agreeing to pay
Manufacturer a portion of the efficiencies or savings to its directly owned and
operated distribution system that result from adding the volume of
Manufacturer's products through that system. For convenience, the parties have
agreed to reflect this payment by Distributor to Manufacturer in this Agreement
by an increase in the net prices for the Products payable by Distributor under
Section 9.1 (and its subsections) above Manufacturer's regular net prices to its
other distributors and by inclusion in Section 9.5 of a provision for maximum
resale prices established by Manufacturer.
The parties acknowledge that the 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
or the intentions of the parties. 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
* This confidential portion has been omitted and filed separately with the
Commission
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 9.2 are
expressly terminated by a written amendment to this Agreement.
9.3. Payment Terms. Payment terms shall be 18 days 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 the Distribution Agreement. Manufacturer also agrees to notify
Distributor of any substantial increase in freight charges before shipment is
authorized.
9.4. 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 9.4. In the event that the Distributor does not agree to any 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.
9.4.1. 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.
9.5. Resale Prices. Distributor shall resell at such prices as it may
determine, and Manufacturer retains no control over such resale prices provided,
however, that such resale prices by Distributor shall not exceed the maximum
resale price specified in the formula attached as Schedules 9.5.1 and 9.5.2. It
is understood that on the date hereof the maximum resale price specified by
Manufacturer does not exceed the resale price at which Manufacturer believes its
Products are generally being resold by its largest distributor, it being
acknowledged that Manufacturer does not control the resale prices and that,
therefore, this belief on the Manufacturer's part is only an estimate.
9.6. Trade Shows. In addition, 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. Attached is Schedule 9.6, indicating trade
shows in which the Distributor participated in 1997 and 1998 (including
projected trade shows for the rest of 1998).
9.7. Credit Line. Distributor shall have a line of credit under this
Agreement which shall be established by Manufacturer, and Manufacturer shall
have the right, from time to time at its election, to require C.O.D. payment for
any Product at any time when outstanding receivables under this Agreement for
purchase of the Products (whether or not due) exceed the amount of such credit
line. Said credit line shall be available unless Distributor is in breach of a
material provision of this Agreement or unless there is a termination 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
amounts at an annual rate equal to the base rate charged to best commercial
customers at Bank Boston (or its successor) from time to time plus [ * ].
Interest shall be payable to Manufacturer on the last day of each month.
9.8. Most Favored Nation Treatment. In the event that the net margin
percentage generated by the Distributor with respect to the distribution of ice
cream or other frozen desserts of persons other than the Manufacturer is less
than the margin percentage generated by the Distributor with respect to
distribution of the Products hereunder, calculated with respect to comparable
volumes and term of purchase/distribution agreement and other relevant factors
of the distribution purchases, then Manufacturer shall be entitled to an
additional rebate in the appropriate amount so that the Manufacturer shall have
the benefit of such most favored nation treatment during the period of this
Agreement. Manufacturer shall be entitled to an audit, not more than once a
year, performed by an independent public accounting firm of nationally
recognized reputation of such books and records, including contract terms, of
the Distributor, but only to the extent necessary in such firm's professional
judgment to perform such audit to determine whether an additional rebate is
payable to Manufacturer under this Section with respect to Products purchased by
Distributor during not more than the two preceding years before the year in
which the audit is commenced (it being understood that pricing/rebate with
respect to any given year may not be audited more than once). The expenses of
such audit shall be paid by Manufacturer if no additional rebate is due after
the audit and shall be paid by the Distributor if an additional rebate is due.
The parties agree that the judgment of such firm as to whether an additional
rebate is due shall be conclusive.
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.
* This confidential portion has been omitted and filed separately with the
Commission
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 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"); (2) are not articles which may not be shipped pursuant to
Sections 404 or 505 of the Act; and (3) have the shelflives set forth from time
to time on Schedule 10, which may be supplemented by Manufacturer with respect
to additional items that are added to the Products. 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 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 of
any recall or withdrawal of either party's products, then Manufacturer and
Distributor agree to discuss in good faith compensation for losses incurred by
the non-recalling 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 alleged or actual
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 alleged or actual 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.
11.3. Indemnification Regarding Distributors.
11.3.1. 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 (collectively,
"Losses") to a person not a party to this Agreement ("Third Party") arising
directly or indirectly out of or in connection with Manufacturer's termination,
in whole or in part, of its relationship with Dreyer's (to select Distributor as
a replacement for some or all of the distribution presently handled by
Dreyer's), excluding (a) attorneys fees incurred by Distributor (it being
understood that Manufacturer shall select counsel to defend the Distributor with
respect to such matters covered by this Section 11.3.1, as provided in 11.3.3
below and that Manufacturer has, in any matter covered by this Section 11.3.1,
no option not to defend Distributor in such matter) by reason of any defense to
any claims or lawsuits to which Distributor has been named a party and (b) any
such Losses caused by the actions or non-actions of the Distributor or of some
other person which is not the Manufacturer. It is understood that negotiation
and/or signing by Distributor of this Agreement shall not be construed to be an
action by Distributor within the meaning of clause (b) of the preceding sentence
with respect to any claim by Dreyer's that such signing and/or negotiation
constitutes a breach by the Manufacturer of, or tortious interference by
Distributor with, the Dreyer's Agreement.
11.3.2. The provisions of Section 11.3.1 shall apply to any claim within
the ambit of said section, and the provisions of 11.1 or 11.2 shall not apply to
such claim.
11.3.3. 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 (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 without 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. [This Section intentionally left blank.]
14. Scope of Agreement. This Agreement relates only to the distribution
of the Products by Distributor. The parties confirm their understanding that no
subject, other than sales by Distributor of the Products and the effect of a
change in control of each party and the standstill provisions relating to the
acquisition of securities or property of a party by the other party and its
Affiliates is the subject of this Agreement. No other matters, including without
limitation matters relating to pricing of products of the Distributor,
production, flavors, timing of products or sales/marketing (except as pertaining
to this Agreement) of either party, are covered by this Agreement.
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. Nothing
in this paragraph shall be construed to prevent or inhibit Distributor's ability
to respond competitively to information as to the Manufacturer provided that the
information was not at the time it was disclosed to Distributor "Confidential
Information" as defined below or was subsequently disclosed to or learned by
Distributor from the marketplace or from a third party not known to be under any
obligation to Manufacturer to maintain the confidentiality of such information
and provided further that, while Distributor agrees to take such measures (as
are reasonable without materially interfering with Distributor's management) to
minimize the number of its employees (who are involved in the sale of
Distributor's own ice cream products) who obtain knowledge of Confidential
Information, Manufacturer acknowledges that such measures may be imperfect, and
in this regard, Distributor agrees to use its best efforts so that such of its
employees learning such Confidential Information prior to the time Distributor
otherwise learns such information from the marketplace will not materially
change Distributor's decisions with respect to production and marketing of
Distributor's own products as a result of such Confidential Information gained
solely under this Agreement. In addition, in the event that there is a
particular item of Confidential Information which is regarded by Manufacturer as
having a very high degree of confidentiality, the parties will discuss the
design and implementation of such special procedures as can be designed to
enable the Distributor to carry out its obligations under this Agreement without
such item actually being used by Distributor in connection with its own products
at a time when such item remains Confidential Information. 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:
(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.
This Agreement (and any documents referred to herein) represents the
entire agreement and understanding of the parties with respect to the
distribution of products of the Manufacturer by the Distributor and the
ancillary standstill provisions of Section 13, and there are no representations,
warranties or conditions or agreements (other than implementing invoices,
purchase orders and the like necessary to implement the Agreement) not contained
herein (or in any documents not referred to herein). The following sections of
this Agreement shall survive any termination of the Agreement: 8.6, 9.2, 11, 12,
13, 14, 16.1 and 17.
14.1. Employees. Except as otherwise agreed between the parties, in
view of the Confidential Information being transmitted by and to employees of a
party under this Agreement, each party agrees not to solicit the employment of
employees, working in the frozen dessert business, of Pillsbury (or Haagen-Dazs)
or the Manufacturer, as the case may be, during the duration of this Agreement,
it being understood that a party is not in breach of this Section if, without
solicitation by such party, any such employee determines to leave the employment
of the other party and seek employment with such first party.
15. 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.
16. 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
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, and, with respect to Section 13, their Affiliates (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.
17. 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 the laws of the State of
Delaware, excluding its 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
the Vice President, Haagen-Dazs North America, 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, it shall be brought
in the State of Minnesota, or if brought by Distributor it shall be brought in
the State of Vermont, 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 Vermont or by
Distributor in Minnesota.
With respect to any litigation relative to any Dispute 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) to subject it to the
personal jurisdiction of the state and federal courts located in New York City
(Manhattan) 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); (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.
18. Publicity. Until announced by a press release by Manufacturer,
neither party shall made any disclosure except a disclosure to another
distributor of Manufacturer necessary to implement certain provisions of this
Agreement (except a disclosure consented to by the other party) and except as
may be advisable to comply with the securities laws in the opinion of securities
law counsel to such party. It is agreed that the Distributor shall have an
opportunity to review and comment on the initial press release of Manufacturer
on this Agreement and that the parties shall use their best efforts to agree on
the wording of such initial press release of the Manufacturer.
19. 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 19. Notices to Distributor shall be
addressed to Vice President, Haagen-Dazs North America, with a copy to the Vice
President and General Counsel, Pillsbury North America. 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, Diageo PLC only as to the obligations in Section 13,
Distributor for itself (and its Haagen-Dazs business unit) and, with respect to
Section 13 for its Affiliates, including Diageo PLC, and Manufacturer for itself
and, with respect to Section 13 its Affiliates, have each executed and delivered
this Agreement as of the day and year first above written.
WITNESSED: THE PILLSBURY COMPANY
By:
Title:
WITNESSED: BEN & JERRY'S HOMEMADE, INC.
By:
Title:
WITNESSED: DIAGEO PLC (only as to Section 13)
By:
Title:
