EXHIBIT 10.8.3
LETTER AMENDMENT AGREEMENT
Letter Amendment Agreement entered into as of January 11, 1999 to that
certain Distribution Agreement between Ben & Jerry's Homemade, Inc., a Vermont
corporation headquartered at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Manufacturer") and ▇▇▇▇▇▇'▇ Grand Ice Cream, Inc., a California
corporation located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
certain of its subsidiaries (collectively, the "Distributor") dated as of
January 6, 1987 and as amended from time to time prior to the date hereof (such
Agreement as in effect immediately prior to this Letter Amendment Agreement
being sometimes referred to as the "Prior Agreement").
WHEREAS, the parties have agreed on certain amendments to the Prior
Agreement contained below, which shall be applicable to the distribution of the
Manufacturer's Products by Distributor during the period September 1, 1998
through August 31, 1999 (said period sometimes being referred to as the "Interim
Period").
WHEREAS, the parties have agreed that the Prior Agreement as further
amended hereby (the Prior Agreement as so further amended hereby being sometimes
referred to as the "Old Agreement") shall automatically expire, without any
further notice or actions, at the close of business on August 31, 1999 as more
fully set forth herein;
WHEREAS, the parties have simultaneously entered into a new distribution
agreement of even date (the "New Distribution Agreement") providing for the
purchase, commencing September 1, 1999, by Distributor of products of the
Manufacturer for resale and distribution in the territory specified in said New
Distribution Agreement (a copy of which is attached hereto); and
WHEREAS, the parties have simultaneously terminated, by stipulation of
dismissal, with prejudice, the litigation entitled ▇▇▇▇▇▇'▇ Grand Ice Cream,
Inc. and Edy's Grand Ice Cream vs. Ben & Jerry's Homemade, Inc. pending in the
United States District Court for the northern District of California.
NOW THEREFORE, in consideration of these premises and the mutual promises
of the parties and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
1. Prior Notices. No effect shall be given to the termination notice dated
August 31, 1998 from Manufacturer to Distributor and the related notices of the
Distributor to Manufacturer dated September 22, 1998 and of the Manufacturer to
Distributor dated August 26, 1998 and October 12, 1998.
Definitions used in the Prior Agreement are used herein with such defined
meanings, except as otherwise expressly provided herein.
2. Amendments to the Prior Agreement. The parties agree that the following
amendments (or confirmations in some cases) to the Prior Agreement are effective
from and after this date and shall control, notwithstanding any provisions of
the Prior Agreement.
(i) The area within which Distributor shall purchase and resell
Manufacturer's Products under the Old Agreement shall continue to be the
Territory set forth in the Prior Agreement, subject to the following provisions
of this Letter Amendment Agreement. Distributor's rights in all portions of the
Territory (other than the New York Territory) shall be exclusive to the extent
they were exclusive under the Prior Agreement on August 30, 1998 and shall be
non-exclusive to the extent they were non-exclusive under the Prior Agreement on
August 30, 1998.
Subject to the terms of the existing agreements with such parties,
including the Prior Agreement, as applicable, during the Interim Period,
Manufacturer agrees to maintain or cause to be maintained on essentially the
same terms and conditions, the current distribution relationships with Sunbelt
Distributors Inc. of Houston, Texas, and with Rainbo Distributors of San
Leandro, California, which serves the out-of-home markets in Northern
California.
(ii) Distributor's exclusive rights to purchase and distribute
Manufacturer's Products to the supermarket trade (three cash registers or more)
in the New York Territory (the New York City metropolitan area, including the
five boroughs of New York, Nassau County, Suffolk County, Westchester County and
Northern New Jersey) are hereby agreed to terminate automatically, without any
further notice or action, on April 15, 1999 and Distributor agrees that it will
not make any sales of Manufacturer's Products, directly or indirectly, in such
supermarket trade in the New York Territory or to any person for resale in such
supermarket trade in the New York Territory after April 15, 1999. The parties
understand that the remaining channels of distribution in the New York Territory
remain exclusive until April 15, 1999 and will then continue on a non-exclusive
basis until August 31, 1999. The parties confirm that, notwithstanding any
provision of the Old Agreement, the Manufacturer has no right to make
Distributor's distribution rights non-exclusive in any channel of distribution
in the New York Territory prior to April 15, 1999.
(iii) The parties confirm that, without limiting Distributor's best efforts
obligations under the Prior Agreement to distribute Manufacturer's Products,
Distributor shall, during the Interim Period, be required to purchase
Manufacturer's Products in at least an amount equal to the volume purchase
commitment set forth in Section 8 of the Prior Agreement (which commitment
became applicable as a result of Manufacturer's notice of August 31, 1998 and
Distributor's election of September 22, 1998 and which is hereby confirmed to
remain a commitment binding Distributor during the Interim Period; provided,
however, that this volume purchase commitment shall not be applicable with
respect to the Territory described in Schedule 2A to the New Distribution
Agreement. The parties understand that such commitment shall be adjusted to
reflect changes in the Territory herein and the method of selling hereunder.
Distributor recognizes that this commitment forms part of the Prior Agreement
and is subject to the "for cause" termination provisions thereof.
(iv) In addition to the purchase prices payable by Distributor for
Manufacturer's Products specified in the Old Agreement, for the period beginning
January 5, 1999 Distributor shall pay a rebate to Manufacturer, payable every
month in arrears 28 days after the end of each month, equal to [ * ] of the
amount of the Distributor's monthly sales of all Products to all customers
including (without duplication) sales by subdistributors (but excluding sales to
or by those Non-affiliated subdistributors making purchases in smaller
quantities [i.e., 10 pallets or less on an occasional basis] up to an aggregate
of [ * ] of Distributor's total monthly sales). The term "Non-affiliated
subdistributors" shall mean subdistributors in which Distributor does not own
more than 20% of the equity interests. As used in this Section, Distributor's
monthly sales shall mean gross revenues less returns and allowances for damaged
goods. Distributor's failure to make rebate payments when due shall constitute a
failure to comply by Distributor which will permit termination of the Old
Agreement by Manufacturer under Section 8 of the Old Agreement unless cured
within 30 days after notice of such failure from Manufacturer to Distributor.
(v) The parties have previously agreed under the Prior Agreement that
Distributor will pay Manufacturer [ * ] of the cost of the trade promotions on
the Manufacturer's Products that have been mutually agreed for the remaining
months of the year 1998. With respect to the period January 1, 1999 through
August 31, 1999 Distributor agrees to pay Manufacturer [ * ] of the trade
promotion dollars in an amount equal to the cost for the same months in 1998
(which are hereby deemed to be mutually agreed in advance through August 31,
1999 and agreed through April 15, 1999 in the case of the supermarket channel in
the New York Territory) provided that Manufacturer pays the remaining [ * ] of
the cost of such promotions. The parties confirm that payments shall be made by
Distributor in the manner that has been the current practice under the Prior
Agreement in 1998, namely promptly by way of off-invoice credits and debits.
For these purposes, trade promotions on the Manufacturer's Products shall
not include print, radio, television or other media advertising placed by the
Manufacturer and all consumer promotions, i.e. scoop trucks, marketing agents
and community agents or slotting, 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. If
Manufacturer wishes to conduct additional trade promotions for the period
* This confidential portion has been omitted and filed separately with the
Commission.
January 1, 1999 through August 31, 1999, Distributor shall not be required
to make any [ * ] payment of the cost of such additional trade promotions unless
Distributor has given its express consent. If the Distributor does not give its
consent, then Manufacturer may continue such additional trade promotions and
bear [ * ] of the cost thereof.
(vi) During the Interim Period, Distributor shall pay its portion of the
cost of all slotting on the Manufacturer's Products in accordance with Section
4(c) of the Prior Agreement.
(vii) With respect to "selling" activities pertaining to the Products of
the Manufacturer during the Interim Period, it is agreed that Manufacturer shall
take over on January 5, 1999, the "corporate selling", which means selling to
all chain accounts and headquarters selling; provided, however, that Distributor
will continue to provide such services so as to work with Manufacturer to
provide a smooth transition from Distributor to Manufacturer but in no event
shall this continued support last more than three to four weeks after the
execution of this Letter Amendment. Distributor will continue to do the selling
activities "up and down the street" trade at the store level through its route
salesmen and other personnel.
(viii) During the Interim Period, Distributor shall not, directly or
indirectly manufacture, test market, market, promote or sell super premium ice
cream or products as previously defined in the Prior Agreement (and for
convenience, set forth below) except as follows:
Manufacturer agrees that the provisions of the Old Agreement relating to
super premium ice cream or products, including, without limitation, the
provisions of Section 8A thereof, shall not apply to the following activities of
Distributor and that the following activities shall be permitted and shall not
be deemed inconsistent with the performance by Distributor of its best efforts
obligations under the Old Agreement:
1. The development of formulae, processes, marketing and sales plans and
other plans relating to super premium ice cream or products;
2. Test-marketing, promoting, selling and manufacturing (to the extent
appropriate to test-marketing) super premium ice cream or products within the
territory described in Schedule 2A to the New Distribution Agreement, within the
State of California or, beginning April 15, 1999, within the State of New York;
* This confidential portion has been omitted and filed separately with the
Commission.
"ice cream, frozen yogurt, sorbets, ices or other frozen dessert products
whether dairy based or not (although not to include super premium novelties)
primarily sold in pint-size containers for a current retail price equal to or
greater than an average of $2.19 per pint over a 52 week period adjusted by the
CPI Index (December 1993 to equal 100 for this purpose), and including quart or
half-gallon sizes of such products."
(ix) The Old Agreement, including without limitation the provisions
relating to the New York Territory, shall automatically, without any further
notice or actions, expire at the close of business on August 31, 1999 unless
sooner terminated in accordance with its provisions. Notwithstanding this agreed
expiration of the Old Agreement, all claims arising prior to such expiration for
any breach of or for any amount due under the Old Agreement (excluding any such
claims that have been satisfied, waived or released prior to such expiration)
shall survive such expiration in each case.
(x) All sums payable to Manufacturer for Manufacturer's Products purchased
hereunder shall be paid in arrears 21 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) with a 7-day grace
period. As to all sums not paid within such 28 day period, Distributor shall in
addition pay a [ * ] late payment premium.
(xi) The amount of credit available under paragraph 9 of the Old Agreement
shall be changed to [ * ] and all other provisions of the line of credit and its
workings will remain as in the Old Agreement. Said credit line shall be
available unless Distributor is in breach of a material provision of the Old
Agreement or unless Manufacturer determines, pursuant to the exercise of its
regular credit policy, that Distributor's financial condition warrants a change
in the said credit line.
3. The Partiesd' Current Compliance; Best Efforts Standard. The parties
acknowledge and agree that as of the date of this Letter Amendment Agreement
each party is in full compliance with all of the terms of Prior Agreement,
including, without limitation, each party's best efforts obligations, and each
party hereby waives any non-compliance (to the extent the relevant party knows
or has reason to know of non-compliance) by the other under the Prior Agreement
prior to the date of this Letter Amendment Agreement. Notwithstanding any other
provision of the Old Agreement, Distributor shall not be in breach of any of its
best efforts obligations under the Old Agreement if Distributor is performing
under the Old Agreement in a manner substantially consistent with its
performance during the twelve (12) month period
* This confidential portion has been omitted and filed separately with the
Commission.
immediately preceding the date of execution of this Letter Amendment Agreement
(the "Comparison Period"). Nothing herein shall be deemed to waive compliance
with the "best efforts" commitment under the Prior Agreement.
4. Negotiation of Agreement. Each party and its counsel have cooperated in
the drafting and preparation of this Letter Amendment 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 Letter
Amendment Agreement against the party that drafted it is of no application and
is hereby expressly waived.
5. Representation and Covenant. Distributor hereby represents that as of
the date hereof it is not in default in any respect under, and will not be in
default in any respect but for the running of any applicable grace period under,
any loan agreement or other agreement for the borrowing of money or capitalized
leases (collectively referred to as the "Financing Agreements").
6. Entire Agreement; Amendments. The Prior Agreement as amended hereby and
the New Distribution Agreement constitute the entire agreement between the
parties, and there are no representations, warranties or conditions or
agreements (other than invoices, purchase orders and the like necessary to
implement said agreements) not contained herein (or in any document not referred
to herein) that constitutes any part hereof or that are being relied upon by any
party hereunder. If any provision of this Letter Agreement is held by a court of
competent judgment to be invalid, void or unenforceable, the other provisions
shall nevertheless be in full force and effect without being impaired or
invalidated in any way.
Except as expressly amended hereby, the Prior Agreement shall continue in
full force and effect.
No provisions of the Old Agreement may be modified or amended except by a
written instrument signed by each of Manufacturer and Distributor.
7. Governing Law. This Letter Amendment Agreement shall be binding on the
parties and successors and assigns, as provided in the Prior Agreement. This
Letter Amendment Agreement and all actions related hereto shall be governed by,
and any dispute relating to this Letter Amendment Agreement or the Prior
Agreement or the entering into of this Letter Amendment Agreement or the
expiration of the Old Agreement shall be resolved in accordance with, the
provisions of the Old Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed and delivered by its duly authorized representative as of the day
and year first above-written.
BEN & JERRY'S HOMEMADE, INC.
By:
Title:
▇▇▇▇▇▇'▇ GRAND ICE CREAM, INC.
By:
Title:
EDY'S GRAND ICE CREAM, INC.
By:
Title: