Common use of Global Volume Increment Clause in Contracts

Global Volume Increment. a) To potentially reduce or eliminate the incremental absorption charge resulting from the application of the cost tiers where the respective annual purchase volumes are below the Base Tiers, volume shortfalls in products sourced from Callebaut’s Monterrey facility and from Callebaut’s ▇▇▇▇▇▇▇▇ facility may be offset by other volume sourced by Hershey from Callebaut as set forth in this Section. b) Reference is made to the Base Tier volume ranges set forth in the Conversion Cost Grids of the Supply Agreements: i. The Base Tier volume range for the Supply Agreement for Mexico is the amount set forth in Exhibit F. ii. The Base Tier volume range for the Supply Agreement for ▇▇▇▇▇▇▇▇ is the amount set forth in Exhibit F. iii. The Global Supply Agreement does not include a Base Tier Volume range. Solely for the purposes of this Section, the Base Tier volume range for the Global Supply Agreement shall be the amount set forth in Exhibit F. iv. As per Section (2)(B)(1), Hershey’s shall deliver to Callebaut the Annual Estimate for the following calendar year detailing production requirements for each of Callebaut’s Monterrey facility and Callebaut’s ▇▇▇▇▇▇▇▇ facility, production requirements under the Global Supply Agreement and production requirements for any Subsequent Supply Agreement. The sum of these Annual Estimates shall be collectively referred to as the Global Volume Estimate. For purposes of clarity, volumes to be included in the Global Volume Estimate shall include all volumes sourced by Hershey from any Callebaut facility, including all chocolate bulk products, all chocolate fillings to be used in a Callebaut, Hershey facility or co-manufacturer facility, all chocolate chips and chocolate eggs production, and all new products sourced from Callebaut by Hershey, but shall not include Cocoa Ingredients. c) The Global Volume Increment shall be calculated as: 66% x [the sum of the amount by which the Annual Estimates exceed the Base Tiers, plus the Estimated Subsequent Supply Agreement Volume] i. Where the resulting Global Volume Increment is a number greater than zero, it shall be first added to the Annual Estimate for Callebaut’s Monterrey facility in an amount necessary to reach the amount set forth in Exhibit F (which is the lowest volume of the Base Tier range) to determine the cost tier to be used for the January – December conversion cost to be determined in accordance with Section (2)(D). After deducting any amount applied to determine the cost tier for product sourced from Callebaut’s Monterrey facility, any remaining Global Volume Increment may be similarly applied to determine the cost tier for Callebaut’s ▇▇▇▇▇▇▇▇ facility. In no instance shall the Global Volume Increment result in conversion costs lower than that reflected in the Base Tier of the Conversion Cost Grids. ii. With respect to the application of the Global Volume Increment, each calendar year must be viewed on a stand-alone basis. Volume from one calendar year may not be applied to any preceding or succeeding calendar year. iii. The calculation of the Global Volume Increment shall commence with the calendar year starting on January 1, 2009. iv. Annually at each November Steering Committee Meeting, the Parties will review actual annual purchase volumes as compared to the Annual Estimate used to calculate the Global Volume Increment and to establish the cost tiers used in the January – December conversion costs. If such actual annual purchase volumes indicates that a different cost tier should have been used for the then current calendar year, the Parties shall calculate and agree upon any necessary year-end adjustment to be applied to all volume for the full calendar year and apply such year-end adjustment as per Section (2)(D)(2)(b). v. Examples of the calculation of the global increment methodology are attached as part of Exhibit F.