MASTER INNOVATION AND SUPPLY AGREEMENT between THE HERSHEY COMPANY and BARRY CALLEBAUT, AG Dated this 13th day of July, 2007
Exhibit
10.1
Execution
Copy
between
THE
HERSHEY COMPANY
and
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, AG
_____________________________
Dated
this 13th day
of July, 2007
_____________________________
TABLE
OF CONTENTS
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Page
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1.
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DEFINITIONS
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1
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2.
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SUPPLY
AGREEMENTS
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2
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3.
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STEERING
COMMITTEE
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13
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4.
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STANDARDS
FOR PERFORMANCE
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13
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5.
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NON-COMPETE
AGREEMENT
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14
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6.
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NON-SOLICITATION
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14
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7.
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CONFIDENTIALITY
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8.
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TERM
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17
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9.
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TERMINATION
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17
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10.
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INDEPENDENT
CONTRACTORS
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11.
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REPRESENTATIONS
AND WARRANTIES
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18
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12.
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INDEMNIFICATION
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19
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13.
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FORCE
MAJEURE
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20
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14.
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NOTICE
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20
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15.
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NO
WAIVER
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16.
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ASSIGNMENTS
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21
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17.
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GOVERNING
LAW
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21
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18.
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REAL
ESTATE AGREEMENTS
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21
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19.
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ENTIRE
AGREEMENT AND HEADINGS
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21
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20.
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CONFLICTING
TERMS
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21
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21.
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PREPRINTED
TERMS
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22.
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BINDING
EFFECT
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i
EXHIBITS
Exhibit
A: Hershey
Specifications
Exhibit
B: Form of Open Book
Costing Data
Exhibit
C: Insurance
Exhibit
D:
Competitors
Exhibit
E: Product Guaranty and
Indemnity
Exhibit
F: Global Volume Increment
Examples
ii
MASTER
INNOVATION AND SUPPLY AGREEMENT (this “Agreement”) is entered into this
13th day of
July, 2007.
BETWEEN:
THE
HERSHEY COMPANY, a corporation organized and existing under the laws of
the State of Delaware, with a principal place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter individually referred to as
"Hershey" or a “Party”),
and
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, AG, a corporation organized and existing under the laws of
Switzerland, with a principal place of business at Westpark ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ (hereinafter individually referred to as
“Callebaut” or a “Party”).
Hershey
and Callebaut may collectively be referred to herein as the
“Parties”.
BACKGROUND:
Hershey
and Callebaut are manufacturers of chocolate and confectionery products and
have
experience in the design, development, manufacture and marketing of such
products. Simultaneous with the signing of this Agreement, Hershey
and Callebaut have entered into a Product Development and Innovation Agreement
(together with any exhibits thereto, the “Innovation Agreement”) under which
Hershey will utilize Callebaut’s product development, innovation and
manufacturing expertise and Hershey and Callebaut will collaborate on joint
development of new technologies and products. Hershey and Callebaut now wish
to
enter into this Agreement and the related Supply Agreements, pursuant to which
Callebaut will manufacture certain products and ingredients for
Hershey.
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1.
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DEFINITIONS
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In
addition to the terms defined elsewhere in this Agreement, whenever used in
this
Agreement the following terms shall have the respective meanings set out
below:
“Affiliate”
means a wholly owned subsidiary of a Party.
“Bulk
Chocolate Product” means chocolate in solid and/or liquid form, including
chocolate chips and chocolate chunks in any form.
“Cocoa
Ingredient” means cocoa liquor, cocoa butter and/or cocoa
powder.
“Finished
Consumer Chocolate Confectionery Product” means any product in any form that
does not require further processing prior to retail sale to a
consumer.
“Global
Supply Agreement” means the Supply Agreement of even date herewith for
Products sourced between the Parties other than those Products sourced under
the
Supply Agreement for Mexico, the Supply Agreement for ▇▇▇▇▇▇▇▇ or a Subsequent
Supply Agreement, together with any exhibits thereto.
“Hershey
Specifications” means the product specifications, technical procedures and
quality requirements provided from time to time by Hershey.
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“Losses”
means damages, losses, liabilities, obligations and claims of any kind
(including, without limitations, reasonable attorney’s fees and
expenses).
“North
America” means the United States, Canada, Mexico, Puerto Rico and the U.S.
Virgin Islands.
“Products”
means any and all products defined as such in a Supply Agreement.
“Real
Estate Agreements” means the Lease Agreement for the Monterrey, Mexico land
and the Lease Agreement for the Robinson, Illinois premises, together in each
instance with any exhibits thereto.
“Related
Agreements” mean, collectively, each Supply Agreement, the Real Estate
Agreements and the Innovation Agreement.
“Subsequent
Supply Agreement” means any separate supply agreement entered into by the
Parties or Affiliates thereof subsequent to the date of this Agreement and
designated as such therein.
“Supply
Agreement” means any of the Supply Agreement for Mexico, the Supply
Agreement for ▇▇▇▇▇▇▇▇, the Global Supply Agreement or any subsequent Supply
Agreement.
“Supply
Agreement for Mexico” means the Supply Agreement for chocolate products to
be produced in Monterrey, Mexico, together with any exhibits thereto, of even
date herewith.
“Supply
Agreement for ▇▇▇▇▇▇▇▇” means the Supply Agreement for chocolate products to
be produced in Robinson, Illinois, together with any exhibits thereto, of even
date herewith.
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2.
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SUPPLY
AGREEMENTS
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Simultaneous
with the signing of this Agreement the Parties will execute each of the Supply
Agreements. The Supply Agreements provide that Callebaut will,
through the use of its own technical information and equipment, and through
the
use of certain technical information provided by Hershey, manufacture, package
and deliver the Products defined therein to Hershey in exchange for the
consideration referenced in the respective Supply Agreement. The following
terms
and conditions shall apply to each of the Supply Agreements:
A. Production
of Products
1. Callebaut
will produce, package and deliver Products for Hershey in accordance with the
Hershey Specifications. The Hershey Specifications are attached
hereto as Exhibit A. Callebaut agrees to abide by Hershey’s Supplier
Code of Conduct. Callebaut acknowledges that the Hershey Specifications may
be
revised upon prior written notice by Hershey, in its sole discretion, at any
time during the term of this Agreement. In the event that revisions
to the Hershey Specifications result in a change in cost to Callebaut, including
a change in cost due to any required capital addition or expenditure on the
part
of Callebaut, following good-faith negotiations between the Parties, the amount
paid to Callebaut under the applicable Supply Agreement will be adjusted to
reflect the new cost. If such revisions render unmarketable any of
the Products or inventories of ingredients or packaging materials, Hershey
shall
purchase, up to the quantity authorized in accordance with the provisions of
Section 2(B)(2), all such items from Callebaut at Callebaut's cost or other
agreed upon price.
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2. Callebaut
agrees to pay for any and all capital required to manufacture the Products
unless specified otherwise in this Agreement or in a Supply
Agreement.
B. Operations
Planning
The
Parties agree to plan the
production under each Supply Agreement in accordance with the following
principles:
1. On
October 1 of each year during the term of each Supply Agreement, Hershey will
provide to Callebaut an estimate of the twelve (12) month demand for the
upcoming calendar year (January to December) by Product (the “Annual
Estimate”).
2. Thirty
(30) days before each calendar quarter during the term of each Supply Agreement
Hershey will provide Callebaut with a scheduling agreement which will be used
to
track product shipments and subsequent invoices (the “Scheduling
Agreement”). This Scheduling Agreement will provide a more current
estimate of Product demand for the upcoming quarter at the Product level and
will identify Product cost in accordance with the terms of the applicable Supply
Agreement. It is understood by the Parties that when production is
terminated, and possibly during the term of this Agreement, some materials
will
either become obsolete due to changes in the Hershey's Specifications or there
will be extra material due to incorrect forecasting. While Hershey
will be financially responsible for these obsolete and/or extra
materials:
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a)
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Callebaut
shall use all prudent means to minimize the financial impact to Hershey
of
these material losses, and
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b)
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under
no circumstances will Hershey be responsible under the provisions
of this
section for ingredients and packaging materials which, when ordered
by
Callebaut, represented more than a three (3) month supply (based
on the
then current production plan) of the item in question (except with
regard
to production of promotion or “one time” products which will be mutually
agreed to), and
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c)
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notwithstanding
(b) above, Callebaut may enter into supply contracts for a period
of
longer than three (3) months with the prior written approval from
Hershey.
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3. Each
week during the term of this Agreement Hershey will provide Callebaut a shipment
plan by facility for the Products showing estimated required shipments of
Products on a twelve (12) week rolling basis (the “Shipment
Plan”). Additionally, for Monterrey and ▇▇▇▇▇▇▇▇
Hershey will further identify the first two weeks of the Shipment
Plan into daily shipments, inclusive of Saturdays, Sundays and non-business
days
if Hershey requires shipments on such days.
4. Except
as set forth in the volume and pricing provisions of Section
2(B)(7) and any obligation that exists under Section 2(B)(2)
above with respect to the Supply Agreement for Mexico and the Supply
Agreement for ▇▇▇▇▇▇▇▇ Hershey shall be obligated to purchase from Callebaut
only the three day production reflected in the relevant Shipment Plan for the
day after such Shipment Plan was received and the next two days, and with
respect to the Global Supply Agreement Hershey shall be obligated to purchase
from Callebaut only the first two-weeks’ production reflected in the
then-current Shipment Plan.
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5. Designated
representatives within the plants will plan the shipments outlined in an
applicable Shipment Plan on a daily and/or shift basis.
6. Callebaut
will supply all of Hershey’s actual demands. In the event Hershey’s daily
production demand exceeds Callebaut’s daily capacity, Callebaut will make the
Product that exceeded its capacity on the next available production run.
Callebaut will undertake commercially reasonable efforts to ensure that
commitments to third party customers do not limit or interfere with any
production for Hershey, provided, however, that nothing contained in this
Agreement or any Supply Agreement shall be interpreted as requiring Callebaut
to
cancel service commitments to third-party customers as a result of any error
or
omission in a Scheduling Agreement or Shipment Plan. For planning
purposes in the Monterrey facility, Callebaut will provide Hershey with
information pertaining to the facility’s estimated daily production capacity no
later than May 1, 2008.
7. In
the event that Hershey’s actual order volume of Products in any given calendar
year under the applicable Supply Agreement is less than the amounts set forth
on
Exhibit F from Callebaut’s Monterrey facility and Callebaut’s ▇▇▇▇▇▇▇▇ facility,
respectively, and provided the shortfall is not due to Callebaut’s action or
inaction, the consequences shall be limited to:
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a)
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The
continued application of the cost tiers in the Conversion Cost Grids
of
the respective Supply Agreements as may be adjusted in accordance
with the
Global Volume Increment set forth below;
and
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b)
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With
respect to Callebaut’s Monterrey facility, Callebaut may exercise the Put
Option set forth in the Supply Agreement for
Mexico.
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8.
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Global
Volume Increment
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a)
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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.
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b)
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Reference
is made to the Base Tier volume ranges set forth in the Conversion
Cost
Grids of the Supply Agreements:
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i.
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The
Base Tier volume range for the Supply Agreement for Mexico is the
amount
set forth in Exhibit F.
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ii.
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The
Base Tier volume range for the Supply Agreement for ▇▇▇▇▇▇▇▇ is the
amount
set forth in Exhibit F.
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iii.
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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.
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iv.
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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
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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.
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c)
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The
Global Volume Increment shall be calculated
as:
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66%
x
[the sum of the amount by which the Annual Estimates exceed the Base Tiers,
plus
the Estimated Subsequent Supply Agreement Volume]
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i.
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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.
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ii.
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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.
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iii.
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The
calculation of the Global Volume Increment shall commence with the
calendar year starting on January 1,
2009.
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iv.
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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).
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v.
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Examples
of the calculation of the global increment methodology are attached
as
part of Exhibit F.
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C.
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Contingency
and Business
Interruption
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If
during the term of a Supply
Agreement, through no fault of Hershey, Callebaut is delayed or unable to
deliver Products in accordance with the terms of this Agreement or any Supply
Agreement, other than as a result of a force majeure event, then in addition
to
any other remedies available to Hershey, Callebaut will, at Hershey’s option,
either reimburse Hershey for incremental costs it incurs in obtaining alternate
supplies of Products or Callebaut will supply Products from its facilities
at
the same delivered cost as specified in the current applicable Scheduling
Agreement. Products can only be sourced in a form and/or from a
country which allows Hershey’s country of origin labeling to remain correct, and
which does not subject the finished goods Hershey makes with the Products to
additional duties or taxes upon export, unless Callebaut reimburses Hershey
for
any such additional duties or taxes.
D. Product
Costing and Procurement
1. Hershey
shall reimburse Callebaut for the ingredients and packaging materials used
to
produce Products, at costs to be established in accordance with the provisions
of Section 2(D)(2), shall pay Callebaut a conversion cost specified in the
Pricing Grid of the applicable Supply Agreement (which conversion cost shall
include Callebaut's cost of labor, overhead and profit and, where applicable,
the incremental absorption charge), and shall pay Callebaut’s agreed upon
working capital financing costs. Product costs will be developed and
communicated with full detail to include at minimum ingredient component costs
and yields, packaging component costs and yields and conversion
costs. Product costs will be established no later than
December 31 for the following full calendar year (January to December),
subject to the provisions of Section 2(D)(4).
2. Hershey
and Callebaut agree to establish Product costs as follows:
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a)
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As
part of the August Steering Committee meeting, Hershey and Callebaut
will
review the estimated volumes of ingredients and components which
will be
required to produce Hershey’s estimated demand of Products for the
upcoming calendar year. The Parties will discuss the method by which
ingredients and packaging components will be purchased. The
Parties agree that at Hershey’s option one of the following methods will
be used to procure each component:
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i)
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Hershey
sells the ingredient or component directly to
Callebaut;
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ii)
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Callebaut
places orders or releases for ingredients or components with Hershey’s
suppliers under Hershey’s contracts; provided however, that any supplier
must be approved by Callebaut, such approval not to be unreasonably
withheld; or
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iii)
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Callebaut
purchases directly from its suppliers (which are approved by
Hershey).
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Any
ingredients or components sourced pursuant to clause (i) or (ii)
shall be
referred to herein as “Hershey Raw Materials”, and any ingredients
or
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components
sourced pursuant to clause (iii) shall be referred to herein as “Callebaut
Raw Materials”. With regard to any ingredients or components
sourced pursuant to clause (i), Hershey shall be liable to Callebaut
for
the quality and suitability of use of such ingredients or components,
unless quality or suitability fails due to the action or inaction
of
Callebaut. At any time during production Hershey may
require Callebaut to change one or more of the methods of procurement
that
have been selected, subject to fulfillment of any pre-existing commitments
Callebaut may have made to suppliers, provided, however, that such
commitments, other than with respect to any ingredients or components
sourced pursuant to clause (i), do not exceed the amount authorized
to be
purchased under Section 2(B)(2).
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b)
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During
the November Steering Committee meeting, Hershey will provide Callebaut
with the costs for Hershey Raw Materials and Callebaut will present
Hershey with the proposed costs for the Callebaut Raw Materials,
inclusive
of any carry or forward cover costs necessary to establish yearlong
pricing, for each Product. Callebaut will also provide substantiation
and
documentation showing current costs and the methodology Callebaut
used to
calculate the proposed annual cost for each Callebaut Raw Material
and the
then current estimate of any year-end adjustments, as provided for
under
the Supply Agreements, including adjustments resulting from the
application of the fineness grid and from tiered pricing based on
actual
calendar year volume. In the event the Parties cannot agree on
a cost for a Callebaut Raw Material, Hershey shall have the right
to
purchase this component itself and sell it to Callebaut or to require
that
Callebaut purchase it under one of Hershey’s established contracts with a
supplier. If the Parties reach an agreement on the annual cost for
Callebaut Raw Materials, Callebaut will use that cost in its calculation
of Product costing to Hershey for the next calendar year
period. In addition, nothing in this Agreement or any Related
Agreement shall be construed as allowing Hershey access to Callebaut’s
financial records, including, but not limited to, operating costs
and
suppliers’ invoices. Callebaut will provide open-book costing
data for the Products in form substantially similar to that shown
on
Exhibit B.
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3. During
November of each year hereunder Callebaut will have entered all agreed upon
input costs and variables into the product pricing model and will provide
Hershey with costs for each Product by appropriate unit of measure (case, pound,
other).
4. Product
costs will be calculated in accordance with this Agreement for a period of
one
year (January – December). These costs will be used in the Scheduling
Agreements and will be subject to change only at the start of each calendar
year, except in the case of an event of Force Majeure or for exceptional
inflationary events in areas such as energy costs or currency
rates. The Parties agree to jointly work towards minimizing the
impact of any such fluctuations.
5. Should
Product(s) be added throughout the year, Hershey and Callebaut will create
Product costs by unit of measure following the above methodology (to include
all
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ingredients, packaging, conversion costs and
yields/waste/overweight) 30 days before the first production.
6. In
the event that a change in Hershey Specifications results in an increase or
decrease in actual conversion costs, Hershey and Callebaut will review
documented changes and negotiate a new conversion cost that reflects such change
which will take effect from the date of the change.
7. All
Callebaut orders under Hershey supply contracts will be reported to Hershey
in a
manner established by Hershey and Callebaut.
8.
Product costs will include a financing fee on the Callebaut Raw Materials,
the
conversion fee charged by Callebaut and the incremental absorption charge where
applicable. For purposes of the financing fee, cocoa based products
involving forward contracts shall be considered Callebaut Raw
Materials. The agreed to financing fee for the subsequent calendar
year will be fixed at each November Steering Committee Meeting and will reflect
Callebaut’s estimated cost of borrowing.
9. Hershey
and Callebaut will each designate one contact for all pricing questions and
other operating issues arising under this agreement or any Supply
Agreement.
E. Product
Yields
1. Each
Supply Agreement will set forth a waste, loss, and/or overweight allowance
for
each ingredient and packaging component used to produce a Product (the
“Established Yields”). Callebaut shall be responsible for all additional
ingredients and packaging components required as a result of Callebaut’s failure
to comply with Established Yields.
2. Hershey
and Callebaut will review any issues with Established Yields where
applicable. Should Hershey and Callebaut agree to adjust the
Established Yield, the new Established Yield will apply for the following year’s
production (January-December). Any adjustment will not be
retroactive, except as otherwise mutually agreed to by the Parties.
F. Currency
1. Unless
otherwise agreed by the Parties, Hershey will pay for Products produced under
the Monterrey and Robinson Supply Agreements in United States
Dollars. Any reference to “Dollars” or “$” in this Agreement or any
Related Agreement shall be a reference to United States Dollars.
2. For
all other production Hershey and Callebaut will agree to the payment currency
and exchange rates at minimum thirty (30) days before such production under
the
Global Supply Agreement or a Subsequent Agreement begins.
3. Any
and all currency and exchange rate agreements will be reviewed annually by
the
Parties.
4. Callebaut
and Hershey will agree on currency exchange rates for use in calendar year
pricing for those Callebaut Raw Materials that involve currencies other than
the
currency used to invoice Hershey for Products. Callebaut shall be
responsible for any variances in such currency exchange rates as part of the
calendar year pricing, except for cases of
8
exceptional
inflationary events that may affect calendar year pricing. The
Parties agree to jointly work towards minimizing the impact of any such
exceptional inflationary events.
G. Payments
for Products
1. Callebaut
shall issue its invoice for Products produced in accordance with this Agreement
at the time such Products are shipped or delivered to Hershey in accordance
with
the delivery terms. Hershey shall pay any amount due under this
Agreement following receipt of Callebaut's invoice on terms of net twenty-three
(23) days from date of receipt of invoice plus a seven day grace period to
enable weekly grouping of payments, except in the case of a good faith
dispute.
2. To
ensure prompt payment of all invoices, Callebaut shall include on each invoice
the information requested by Hershey in a form agreed in advance.
3. Invoices
shall be electronically submitted. The date of receipt of electronic invoices
will be the date following the date upon which it is transmitted.
4. All
payments shall be electronically transferred to the designated bank account
of
the Party to which such payments are due.
5. A
Party may only set off amounts it is owed by the other Party if permitted by
applicable law and against amounts it owes the other Party in the event the
Party seeking to offset payments has a credible concern about the other Party’s
creditworthiness.
H. Productivity
1. Hershey
and Callebaut recognize the need to provide the highest quality product at
the
lowest possible cost. To accomplish this objective, Hershey and
Callebaut agree to cooperate in a continuing effort to improve the productivity
of all operations.
2. These
productivity efforts should target but are not limited to, (i) improved yields
for packaging and ingredient utilization; (ii) optimization of output in all
phases of the production process; (iii) obtaining the lowest possible cost
per
unit on packaging and ingredients; (iv) labor reductions through effective
utilization; (v) reduction of overweights; and (vi) minimization of
sampling/testing of the Products.
3. It
is recognized that Callebaut’s ability to share conversion cost productivity for
its ▇▇▇▇▇▇▇▇ and Monterrey facilities will be dependent on Callebaut’s ability
to fill available capacity with third party volume. Hershey and Callebaut agree
to share in all productivity improvements related to production output, labor
reductions, etc. Notwithstanding the above, Hershey shall receive
100% of all cost improvements resulting from reductions in unit costs for
ingredients and packaging, minimization of all sampling/testing, as well as
savings from Hershey funded capital investments of the Products, except where
such Hershey funded capital investments improve the overall efficiency of the
Callebaut facility whereby Callebaut third-party volume may also benefit from
such investments. Hershey's share of the resulting productivity
efforts shall be in the form of conversion cost reductions or Established Yield
improvements.
I. Supply
of Ingredients and Packaging
9
1. For Callebaut
Raw Materials, Callebaut will issue its purchase orders directly with suppliers,
and will honor all payment terms of the suppliers on a timely basis, except
in
the case of a good faith dispute. Callebaut will use only suppliers that have
been previously approved in writing by Hershey for the
Products. Hershey shall in no way be a party to or responsible for
Callebaut’s contracts for Callebaut Raw Materials.
2. For
Hershey Raw Materials, Hershey shall, at its option, either invoice Callebaut
or
direct the supplier to invoice Callebaut directly, and Callebaut shall pay
any
amount due Hershey hereunder following receipt of Hershey’s invoice on terms of
net twenty-three (23) days from date of receipt of invoice plus a seven day
grace period to enable weekly groupings of payments or shall pay within the
supplier’s stated terms, except, in each instance, in the case of a good faith
dispute.
3. With
Hershey’s prior approval, such approval not to be unreasonably withheld,
Callebaut may source ingredients and packaging from other Callebaut divisions
at
prevailing market rates. The Parties recognize that Hershey has
existing contractual obligations for the procurement of Cocoa Ingredients at
the
date of this Agreement. Upon the expiration of these contractual
commitments, Hershey will source Cocoa Ingredients from Callebaut for the
▇▇▇▇▇▇▇▇ Facility as long as Callebaut meets Hershey’s product specifications,
quality requirements, time requirements, commercial cost assumptions, capacity
and volume requirements, and geographic need. Hershey will source
Cocoa Ingredients from Callebaut for the Monterrey facility from the start
of
production as long as Callebaut meets Hershey’s product specifications, quality
requirements, time requirements, commercial cost assumptions, capacity and
volume requirements, and geographic need.
4. Where
commercially reasonable, the Hershey Raw Materials volumes shall only be used
in
the Products and Callebaut agrees not to use Hershey Raw Materials volumes
in
any other product it may produce. Should it not be commercially
reasonable to ensure that Hershey Raw Materials are used solely in the Products
(e.g. due to common silos, manufacturing processes, etc.), Hershey shall
nonetheless receive the benefit of use of raw materials of equal quality and
specification in the manufacture of the Products and in pricing on invoices
received from Callebaut.
5. Callebaut
shall inspect and sample all Hershey Raw Materials and Callebaut Raw Materials
for conformance with Hershey's Specifications and shall reject and withhold
from
use in the manufacture of the Products any Hershey Raw Materials or Callebaut
Raw Materials determined by Callebaut not to be in conformity with such Hershey
Specifications. Callebaut will maintain available line capacity and
inventories of ingredients and packaging materials in sufficient amounts to
support the production requirements of the Products set forth on the Shipment
Plan issued by Hershey to Callebaut. Callebaut acknowledges that certain
ingredients used in the products have a limited shelf life. Callebaut
agrees to utilize the ingredients in such a manner as to utilize first those
ingredients which have been in inventory the longest.
J. Quality
Assurance
1. Without
limiting its warranties herein, Callebaut shall manufacture the Products and
perform the sampling and testing procedures for the Products in accordance
with
the Hershey Specifications.
10
2. All
Products delivered by Callebaut to Hershey under the terms of this Agreement
shall conform to the Hershey Specifications, applicable laws and regulations
of
the United States Food and Drug Administration, the United States Public Health
Service, Mexico’s Ministry of Health, Canadian Regulatory Agency Requirements,
and any and all other applicable United States, Canadian and Mexican federal,
state and local laws and regulations. All water used in connection
with the Products, whether it be for processing or cleaning, shall meet the
United States Environmental Protection Agency and applicable Canadian and
Mexican safe drinking water standards. All required testing will be
done at Callebaut's expense, which expense shall be included as part of the
conversion fee charged by Callebaut, however, Hershey shall reimburse Callebaut
separate and apart from the conversion cost for all third-party testing expense,
if any, incurred by Callebaut between the date of this Agreement and December
31, 2007 while the Parties work towards the certification of the Callebaut-owned
labs. Should such certification be delayed beyond December 31, 2007
due to the action or inaction of Hershey, the final reimbursement date will
be
extended until such date as the Callebaut-owned labs are so
certified. Should, however, such certification be delayed because of
Callebaut failing to provide Hershey with necessary information or Callebaut’s
failure to implement remedial actions, if any, validly identified by Hershey,
Callebaut will be responsible for any third-party testing expense incurred
after
December 31, 2007. Should Hershey change the Hershey Specifications
at any time during the term of this Agreement, the Parties will negotiate in
good faith any required adjustment to conversion costs.
3. Callebaut
warrants that (i) it will perform under this Agreement in accordance with all
the terms hereof, (ii) that its processing of the Products hereunder shall
be in
accordance with the highest standards prescribed by the Good Manufacturing
Practices regulations promulgated by the United States Food and Drug
Administration, all applicable United States, Canadian and Mexican laws and
regulations and Hershey's Specifications, and (iii) that all Products, when
delivered to Hershey, will comply with Hershey’s Specifications, shall not be
adulterated or misbranded within the meaning of the United States Federal Food,
Drug and Cosmetic Act (the “Act”), applicable Canadian and Mexican law, and
regulations promulgated thereunder, and shall not be articles which may not,
under the provisions of Section 404 or 505 of the Act, be introduced into
interstate commerce.
4. Callebaut
shall reimburse Hershey for any costs or losses incurred by Hershey as a result
of any Product rejected by Hershey for failure to conform to the requirements
of
this Agreement. Callebaut's obligation under the prior sentence shall
include reimbursing Hershey for all reasonable cleaning, transportation,
retrieval, storage and destruction costs caused by the defective
Product. The above remedies are not exclusive and, subject to the
provisions of Section 10(F), Hershey shall be entitled to all remedies hereunder
and allowed by law. Callebaut shall not be required to remedy any
defects or discrepancies caused substantially by inherent defects in Hershey's
Specifications. All major incidents shall be reported to the Steering
Committee at the quarterly meeting following the incident.
11
5. Callebaut
shall remove any Product rejected by Hershey or not otherwise meeting the
requirements of this Agreement in accordance with Hershey's reasonable
instructions. Rejected Product sourced under any Supply Agreement
that has already been packaged by Hershey into finished product shall be
disposed of in accordance with Hershey’s reasonable instructions. The
method of disposition of rejected Products sourced under either the Mexico
Supply Agreement or the ▇▇▇▇▇▇▇▇ Supply Agreement that has not already been
packaged by Hershey into finished product shall be at Callebaut’s
discretion. With Hershey’s prior approval, and provided that
Callebaut can meet Hershey Specifications and in compliance with applicable
laws
and regulations, rejected Products may be blended into future Products sold
to
Hershey. Callebaut may also blend any such rejected Product into any
other products for third-party volume at a rate of 5%, or such greater rate
as
may be approved by Hershey. Callebaut will be responsible for
the cost of normal disposal of Product rejected for failure to satisfy the
requirements of this Agreement.
6. Upon
reasonable notice, and during Callebaut's normal operations, Callebaut shall
permit Hershey or its designees access to Callebaut's facilities utilized in
the
receiving, handling, packaging and storage of packaging, ingredients and
Products for the purpose of ascertaining Callebaut's compliance with Good
Manufacturing Practices and Hershey Specifications and quality assurance
requirements, provided however, that unless permitted under another agreement
between the Parties, Hershey shall not have access to any part of Callebaut's
facilities which are not used directly in the manufacture of Products or the
receiving, storage, handling or packaging of any Products or ingredients or
which are subject to limited access by agreement of the
Parties. Notwithstanding the foregoing, Callebaut shall have the
final responsibility for complying with all requirements of this Agreement,
the
Hershey Specifications, Good Manufacturing Practices and other legal
requirements. Callebaut shall promptly notify Hershey of any material
discrepancies noted during any inspection of Callebaut's production facilities
by the United States Food and Drug Administration, the United States Public
Health Service, Canadian Regulatory Authority, Mexico’s Ministry of Health, any
state or any other legally authorized federal, state or local regulatory agency
and shall also provide Hershey a list of any discrepancies noted by any
authorities relating to the manufacture, packaging and storage by Callebaut
of
the Products, the ingredients and the packaging materials.
7. Callebaut
shall keep complete, true and accurate records with respect to compliance with
the requirements of the Hershey Specifications set forth on Exhibit
A. Callebaut shall allow Hershey or its designees reasonable access
to these records insofar as they relate to the Products, potential product
recalls, potential product claims and government inquiries. These
records will be maintained for a period of not less than 6 years.
8. Callebaut
represents that it has registered its facilities as required under the United
States Food and Drug Administration Bioterrorism Act. Callebaut will
remain in compliance with such Act through the term of this
Agreement. Callebaut agrees to contact Hershey promptly (but in no
event later than one hour after Callebaut knows or should have known of the
incident) if any of the Callebaut facilities used for the production of any
Product are affected by security violation, theft or other incident that is
reasonably likely to impair Product integrity.
12
9. The
Parties incorporate the Product Guaranty and Indemnity Agreement attached as
Exhibit E into this Agreement.
K. Delivery,
Title Transfer, Risk of Loss and Insurance
1. Delivery
terms, transfer of title to and risk of loss of the Products are addressed
in
each of the Supply Agreements.
2. Callebaut
shall carry and maintain Insurance coverage as defined in Exhibit
C. The limits specified in Exhibit C are based upon factors existing
at the commencement of this Agreement. The Parties agree that these
limits may be increased or decreased, by mutual agreement, throughout the term
of this Agreement. Should an increase in insurance coverage be
required, the Parties agree to negotiate in good faith any required adjustments
to the calendar year pricing for the Products, effective for the January to
December period following the increase in coverage. Hershey shall be
named as additional named insured on each of the foregoing
policies. Callebaut shall pay all premiums when due and within such
period of time as is necessary to keep such insurance in full force and
effect. Current certificates of insurance shall be provided to
Hershey to evidence the coverage required by this Section
2(K)(2). Such certificates shall provide for thirty (30) days advance
written notice to Hershey of any cancellation of the relevant policy and
Callebaut shall provide thirty (30) days advance written notice of any material
change to the relevant policy.
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3.
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STEERING
COMMITTEE
|
A
Steering Committee shall be established to assess performance and address issues
arising under this Agreement and the Related Agreements. Each Party
shall assign representatives from their management teams to guide the
relationship between the Parties, ensure compliance with this Agreement and
the
Related Agreements, resolve issues and disputes, measure and assess performance,
and evaluate proposals from either side. At least one senior
executive or officer of each Party shall participate on the Steering
Committee. The respective individuals from each Party responsible for
production, quality, logistics and pricing are expected to attend Steering
Committee meetings. The Steering Committee will meet quarterly. A
Party wishing to modify or amend any provision of any agreement between the
Parties may submit the proposed change to the Steering Committee for its
consideration along with the basis for the proposal, any adjustment in costs
or
schedules of delivery of Products resulting from the change, and any other
impact of the change, to the other Party. No change will be accepted
until agreed upon by both Parties in writing and signed by each
Party.
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4.
|
STANDARDS
FOR PERFORMANCE
|
A. Both
Parties agree to develop two-way performance metrics by which performance under
this Agreement will be evaluated. A scorecard with key performance
indicators and metrics will be jointly developed by September 30, 2007 (the
“Performance Scorecard”). Performance bands will be set forth as follows
on the Performance Scorecard for the determination of aggregate average
quarterly scores: (i) Acceptable; (ii) Immediate action; and (iii)
Unacceptable. For purposes of clarity, the Parties both
acknowledge that an “Unacceptable” rating will result in the event of a
significant disruption in the supply of Products arising from Callebaut’s action
or inaction under this Agreement.
13
B. Prior
to each Steering Committee meeting, each Party will complete their respective
Performance Scorecard for both their and the other Party’s performance over the
past three, six and twelve months. Performance Scorecard reports will
be reviewed at the quarterly Steering Committee meeting. If the
Steering Committee identifies issues that need improvement, the responsible
Party will provide corrective action plans and results within a reasonable
amount of time commensurate with the severity of the issue. The
Performance Scorecard shall be developed in sufficient form and content to
clearly define those key performance indicators which, if not achieved, would
constitute a breach under the terms of this Agreement or the Supply
Agreements.
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5.
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NON-COMPETE
AGREEMENT
|
A. The
parties agree to the Non-Compete provisions set forth in Exhibit F.
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6.
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NON-SOLICITATION
|
Except
as expressly permitted in any
related agreement the Parties agree not to solicit the other Party’s employees
for employment. The Parties further agree that public advertisements or postings
of job openings in the ordinary course of a Party’s business are not considered
solicitation hereunder.
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7.
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CONFIDENTIALITY
|
A. “Confidential
Information” shall mean Proprietary Information and Trade Secret
Information. With respect to information disclosed by Hershey to
Callebaut, Confidential Information shall mean non-public information,
including, without limitation, all information Callebaut may receive, or has
received since September 1, 2006, from Hershey concerning the processing of,
production of, marketing of, distribution of, selling of, strategic plans of,
recipes for and quantities of the Products Hershey requests Callebaut to process
and package and any recipes, ingredients, suppliers, product specifications,
production output, sales volume, consumer insights, costing/financial
information, productivity, research/developmental activities, location of
manufacturing or Hershey manufacturing processes used in the production of
the
Products. With respect to information disclosed by Callebaut to
Hershey, Confidential Information shall mean non-public information, including,
without limitation, all information Hershey may receive, or has
received since September 1, 2006, from Callebaut concerning Callebaut’s
facilities, financial and production capabilities, processing of, production
of,
marketing of, distribution of selling of and strategic plans of Callebaut
products and any recipes, ingredients, suppliers, product specifications,
production output, sales volume, costing/financial information, productivity
and
research/developmental activities.
B. “Proprietary
Information” shall mean that Confidential Information of a Party that is not
included in Trade Secret Information.
C. “Trade
Secret Information” shall mean that information of a Party which that Party
considers to be confidential and proprietary in nature which relates to the
product and ingredient formulas and production processes which are critical
to
the ongoing and future business of such Party, the unauthorized disclosure
or
use of which could result in materially adverse technical and/or commercial
results to that Party whether disclosed in writing, orally or by observation
(including without limitation by e-mail or other electronic
communication).
14
D. Any
Confidential Information disclosed or otherwise disseminated from one Party
(hereafter, the “Disclosing Party”) to the other Party (hereafter, the
“Receiving Party”) whether such information is conveyed orally or in written
form (including without limitation by e-mail or other electronic communication)
or by observation or in any other manner, shall be treated and regarded as
confidential and proprietary information, which is the exclusive and sole
property of the Disclosing Party in accordance with the following
provisions:
1. Each
Party’s obligations with respect to the Confidential Information of the other
Party shall apply with respect to any Confidential Information covered by and
disclosed in accordance with the terms of this Agreement, the Innovation
Agreement and the Mutual Non-Disclosure Agreements between the Parties dated
April 10, 2007, March 16, 2006 and December 21, 2005, which Mutual
Non-Disclosure Agreements are hereby superseded.
2. All
Trade Secret Information disclosed or otherwise provided to a Receiving Party
hereunder after the date of this Agreement shall either (i) be disclosed in
writing (including electronic documents) bearing a legend or other statement
that the disclosed information is classified as “Confidential” by the Disclosing
Party; or (ii) with respect to information provided orally or by providing
access to restricted areas for observation purposes, subsequently identified
as
“Confidential” by the Disclosing Party in a written document and provided to the
Receiving Party within thirty (30) days of disclosure. All product
and ingredient formulas and production processes of one Party received by the
other Party relating to the Products shall be deemed Trade Secrets unless
otherwise explicitly specified by the Disclosing Party at the time of the
disclosure. The Parties agree to work through the Research Committee
with respect to disclosure of Trade Secrets pertaining to the Innovation
Agreement in accordance with the terms of the Innovation
Agreement. If the Receiving Party disagrees with the identification
of a Trade Secret set forth in any Disclosing Party documentation, it shall
raise such issue with the Research Committee as defined in the Innovation
Agreement and the Research Committee shall revise the identification as may
be
necessary to satisfy both the Disclosing Party and the Receiving Party
consistent with the collaborative spirit of the Innovation
Agreement. Proprietary Information may also bear a legend or other
statement classifying the information as “CONFIDENTIAL” but such designation
will not cause such Proprietary Information to be treated as Trade Secret
Information.
3. In
addition to the foregoing obligations with respect to treatment of Confidential
Information, the Parties shall also comply with any protocols, conditions and
other restrictions imposed by the Research Committee with respect to handling,
retention and dissemination of Confidential Information of a Party, including
any procedures intended to facilitate return of such Confidential Information
to
the Disclosing Party.
4. A
Receiving Party shall keep all Confidential Information received from a
Disclosing Party strictly confidential and secret and shall not divulge,
communicate or transmit such Confidential Information to any other
Persons. A Receiving Party shall permit disclosure of such
Confidential Information only to such of its directors, officers, employees,
contractors (other than competitors of the Disclosing Party), and advisors
who
need such information for the purpose of implementing this Agreement and the
agreements which are exhibits hereto, provided that such Persons are subject
to
confidentiality and use restrictions equivalent to those contained
herein. If a Receiving Party desires to share Confidential
Information with a Person outside of the scope of this Agreement, it shall
first
obtain the consent of the Disclosing Party. A Receiving Party shall
use at least such efforts to maintain the confidentiality of such
Confidential
15
Information
as it uses to protect the confidentiality of its own Confidential Information,
but in no event shall a Receiving Party use less than commercially reasonable
efforts to maintain such confidentiality. Callebaut agrees that
Hershey’s proprietary flavors and essences disclosed pursuant to the April 10,
2007 Mutual Non-Disclosure Agreement shall be considered to be Trade Secret
Information and it will not chemically analyze, reverse engineer and disassemble
such flavors and essences. Callebaut acknowledges that the formulas
and non-public processes disclosed in connection with Callebaut’s production of
semi-sweet chocolate chips for sale to Hershey are Hershey Trade
Secrets.
5. A
Receiving Party shall not utilize Trade Secret Information it has received
from
a Disclosing Party in any manner, except for the limited purposes authorized
in
this Agreement or the agreements which are Exhibits hereto, provided that
Confidential Information that is an Innovation shall be treated in accordance
with the provisions of the Innovation Agreement. Otherwise,
Proprietary Information, which is not an Innovation, may be freely used but
not
disclosed except as otherwise permitted hereunder by the Parties.
6. These
obligations of confidentiality and restrictions on use of Confidential
Information shall survive the termination or expiration of this Agreement for
a
period of five (5) years, except for Trade Secret Information which shall remain
subject to obligations of confidentiality and restrictions on use
indefinitely. Upon the later of (i) the termination or expiration of
this Agreement and (ii) the termination or expiration of a Receiving Party’s
authorization to use specific Confidential Information, the Receiving Party
shall return all documents and other materials containing Confidential
Information that were disclosed by the Disclosing Party to the Disclosing Party
together with all copies and other embodiments thereof or otherwise dispose
of
such documents and materials (including without limitation deletion or
destruction of electronic data) in accordance with the Disclosing Party’s
written direction. In the event of inadvertent disclosure of Trade
Secret Information, the Disclosing Party shall have the right and obligation
to
promptly request return of such Trade Secret Information and the Receiving
Party
shall use reasonable efforts to promptly collect and return all such Trade
Secret Information.
7. The
obligations herein concerning Confidential information of the Parties under
this
Agreement shall not pertain to information which: (i) is generally known to
the
public at the time of its disclosure or becomes generally available to the
public at any time thereafter, (ii) is disclosed to the Receiving Party by
a
third party who has the right to disclose such information, (iii) was known
to
the Receiving Party prior to its disclosure under this Agreement, or (iv) is
independently developed by the Receiving Party without use of the Disclosing
Party's Confidential Information.
8. In
the event of a breach or threatened breach of the provisions of this Section
7,
the non-breaching Party shall be entitled to an injunction restraining the
breaching Party from disclosing, in whole or in part, any of the
above-referenced information or from rendering any service to any person, firm,
corporation, association, or other entity to whom such information has been
disclosed or is threatened to be disclosed. Except as otherwise
stated in Section 7(D)(9), nothing herein shall be construed as prohibiting
the
non-breaching Party from pursuing any other remedies available at law or in
equity for such breach or threatened breach, including the recovery of
damages.
16
9. Notwithstanding
anything else herein, the Parties acknowledge that certain Residual Information
disclosed as part of the Parties’ collaborative efforts under the Innovation
Agreement may be retained within their respective companies, including, without
limitation the minds of employees and data systems, and subsequently used by
a
Receiving Party even though the Receiving Party has used its commercially
reasonable efforts to refrain from using and to destroy or return such Residual
Information to the Disclosing Party and complied with any protocols, conditions
and other restrictions imposed by the Research Committee with respect to
handling, retention and dissemination of Confidential
Information. The Parties agree that they will not bring any
legal actions or proceedings against one another arising from such use of
Residual Information exchanged under the operation of the Innovation
Agreement. “Residual Information” shall mean such Confidential
Information provided from a Disclosing Party which in documentary form
(including, without limitation, written, graphic or electronic form), is
retained in the files of a Party after it has used reasonable efforts to locate
any and all copies and disseminations thereof and which do not on their face
indicate that they are the Confidential Information of the Disclosing Party,
and
such Confidential Information retained in the minds/memories of employees and
other permissible Persons which Confidential Information has not been
specifically and intentionally committed to memory.
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8.
|
TERM
|
A. The
term of this Agreement shall commence on the date noted on the first page of
this Agreement and shall expire, unless earlier terminated, on December 31,
2022. The term of this Agreement may be extended or renewed at any
time as agreed in writing by the Parties.
B. Terms
for each of the Related Agreements are defined therein and may vary from the
term of this Agreement.
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9.
|
TERMINATION
|
A. Either
Party shall be entitled to terminate this Agreement at any time within 60 days
of the occurrence of any of the following: (i) if the other Party files a
voluntary petition in bankruptcy, is declared bankrupt, makes an assignment
for
the benefit of creditors or suffers the appointment of a receiver or a trustee
of its assets, (ii) if the other Party breaches the conditions of Section 7
in a
material manner which results in Losses for the non-breaching Party or (iii)
as
set forth in Section 16.
B. In
addition, Hershey shall be entitled to terminate this Agreement at any time
within 60 days of the occurrence of any of the following:
1. a
material breach by Callebaut of the conditions of Section 5A;
2. Callebaut’s
failure to address a significant disruption in the supply or quality of
Products;
3. the
disposition by Callebaut, in whole or in part, of its business (other than
to
its one or more of Affiliates) and such disposal materially affects the ability
of Callebaut to duly perform under this Agreement or any Related Agreement;
or
4. a
direct or indirect change of control in the legal or beneficial ownership of
Callebaut and such change of control is in favor of:
17
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(a)
|
one
of Hershey’s direct competitors as set forth on Exhibit D, or those
successors or assigns to those competitive
businesses;
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|
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(b)
|
a
person or entity that might reasonably bring Hershey into disrepute;
or
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|
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(c)
|
a
person or entity whose financial standing and/or past and/or present
business practices presents Hershey, based on Hershey's reasonable
determination, with significant risk in connection with this
Agreement.
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C. Upon
any termination of this Agreement, each Related Agreement shall also terminate,
unless the Parties otherwise agree in writing.
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10.
|
INDEPENDENT
CONTRACTORS
|
Nothing
in this Agreement or any Related Agreement is intended or shall be deemed to
constitute a partnership, agency, employer/employee or joint venture
relationship between the Parties. Neither Party shall be deemed to be
or to have been acting on the behalf of the other Party by reason of any action
hereunder or under any Related Agreement. All activities by the
Parties hereunder or under any Related Agreement shall be preformed by them
as
independent contractors. Neither Party shall incur any debt or make
any commitment for or on behalf of the other Party, except to the extent
specifically required hereby or by the provisions of a Related
Agreement.
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11.
|
REPRESENTATIONS
AND WARRANTIES
|
A. Callebaut's
Representations. Callebaut hereby represents and warrants to
Hershey that the following are true and correct as of the effective date of
this
Agreement.
1. Callebaut
has full power to execute and perform its obligations under this Agreement,
to
perform the covenants and transactions contemplated hereby, and, without
limitation, to ▇▇▇▇▇ ▇▇▇▇▇▇▇ the rights defined in the Product Development
and
Innovation Agreement of even date herewith;
2. Callebaut
is not a party to, nor will it become a party to during the Term, any agreement
which restricts or otherwise is in conflict with the terms of this
Agreement;
3. all
corporate action on the part of Callebaut, its officers and directors necessary
for the authorization, execution and delivery of this Agreement and the
performance of all obligations of Callebaut hereunder have been taken;
and
4. this
Agreement constitutes a valid and legally binding obligation of Callebaut
enforceable in accordance with its terms.
▇. ▇▇▇▇▇▇▇'▇
Representations. Hershey hereby represents and warrants to
Callebaut that the following are true and correct as of the effective date
of
this Agreement:
1. Hershey
has full power to execute and perform its obligations under this Agreement
and
to perform the covenants and transactions contemplated hereby;
2. Hershey
is not a party to, nor will it become a party to during the Term, any agreement
which restricts or otherwise is in conflict with the terms of this
Agreement;
18
3. all
corporate action on the part of Hershey, its officers and directors, necessary
for the authorization, execution and delivery of this Agreement and the
performance of all obligations of Hershey hereunder have been taken;
and
4. this
Agreement constitutes a valid and legally binding obligation of Hershey
enforceable in accordance with its terms.
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12.
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INDEMNIFICATION
|
A. Callebaut
shall defend and indemnify Hershey and its Affiliates, and their respective
officers, directors, employees, agents, successors and permitted assigns (each
a
“Hershey Indemnitee”; it being understood that Hershey constitutes a Hershey
Indemnitee), against all Losses arising out of, caused by, happening in
connection with or otherwise related to this Agreement or any Related Agreement
and the work performed by Callebaut or any of its Affiliates hereunder or
thereunder, including, but not limited to, Callebaut's manufacture, loading,
transportation, unloading, storage, handling, packaging or use of the Hershey
Raw Materials, the Callebaut Raw Materials and/or any Products except, however,
when caused:
1. by
the action or inaction of any Hershey Indemnitee;
2. by
Callebaut's reliance on and adherence to the Hershey Specifications or written
directions provided by Hershey; or
3. by
the use of Hershey Raw Materials which were defective at the time of delivery
to
Callebaut.
B. Callebaut
further acknowledges and agrees, to the maximum extent permitted by applicable
law, to indemnify and defend each Hershey Indemnitee against losses in the
form
of fines, penalties and assessments resulting from Callebaut’s breach of the
terms of this Agreement or any Related Agreement, or the violation of any law,
regulation and/or ordinance directly or indirectly relating to Callebaut's
performance of this Agreement or any Related Agreement.
▇. ▇▇▇▇▇▇▇
shall have the right, but not the duty, to participate, at its own cost, in
the
defense of any relevant claim or litigation with attorneys of Hershey's
selection.
▇. ▇▇▇▇▇▇▇
shall defend and indemnify Callebaut and its Affiliates, and their respective
officers, directors, employees, agents, successors and permitted assigns (each
a
“Callebaut Indemnitee”; it being understood that Callebaut constitutes a
Callebaut Indemnitee), against all Losses arising out of, caused by, happening
in connection with or otherwise related to:
1. the
action or inaction of any Hershey Indemnitee;
2. Callebaut's
reliance on and adherence to the Hershey Specifications or written directions
provided by any Hershey Indemnitee;
3. the
use of Hershey Raw Materials ingredients which were defective when made
available to Callebaut; or
4. any
breach by Hershey or any Affiliate of Hershey of this Agreement or any Related
Agreement.
E. Callebaut
shall have the right, but not the duty, to participate, at its own cost, in
the
defense of any claim or litigation with attorneys of Callebaut's
selection.
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F. Anything
contained in this Agreement or any Related Agreement to the contrary
notwithstanding, neither Party hereto shall have any liability under any
provision of this Agreement or any Related Agreement (whether pursuant to this
Section 12 or pursuant to any cause of action or complaint initiated by or
on
behalf of any Party) for any punitive or special damages, loss of business
reputation, or 50% of lost future profit, regardless of whether the
relevant claim is based on warranty, contract, tort (including negligence or
strict liability) or otherwise. Each Party hereto agrees to take all
reasonable action to mitigate any Losses it may suffer or incur upon and after
becoming aware of any event which could reasonably be expected to give rise
to
any Losses.
G. Callebaut’s
and Hershey’s indemnification obligations shall survive the termination or
expiration of this Agreement and any Related Agreement.
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13.
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FORCE
MAJEURE
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In
the
event that either Party shall be totally or partially unable to fulfill one
or
more of its obligations hereunder or under any Related Agreement as a result
of
acts or occurrences beyond the control of the Party affected, such as, but
not
limited to, actions, omissions or impositions by local, state, provincial,
federal or national government authorities, fire, flood, earthquake, or other
natural disaster, acts of God, act of terrorism or revolution or labor unrest,
the Party so affected shall be totally or partially relieved from fulfilling
its
contract obligations during the period of such force majeure. In
connection with any such force majeure event, the affected Party shall notify
the other Party of the circumstances thereof as soon as reasonably possible
and
shall propose alternatives to the Steering Committee. In addition, if
such force majeure event shall continue for a period of 90 days or longer,
then
the other Party shall be entitled to terminate this Agreement or the relevant
Related Agreement, as applicable, at any time thereafter during which such
event
is continuing.
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14.
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NOTICE
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Any
notice or other writing required or permitted to be given under this Agreement
or any Related Agreement, except for the separate notice provisions set forth
in
the Innovation Agreement, (referred to in this Section 14 as a “notice”) shall
be deemed duly given if delivered personally (including by recognized delivery
device), or sent by prepaid, registered mail, or transmitted by fax or other
form of recorded communication tested prior to transmission to the address
of
the applicable Party set out above, if to Hershey to the attention of Senior
Director, Global Manufacturing Alliances, fax no. ▇▇▇-▇▇▇-▇▇▇▇ with a copy
to
Legal Counsel, fax no. ▇▇▇-▇▇▇-▇▇▇▇, and if to Callebaut to the attention of
the
President, North America, fax no. ▇▇▇-▇▇▇-▇▇▇▇, with a copy to the Chief
Financial Officer, North America, fax no. ▇▇▇-▇▇▇-▇▇▇▇. Either Party
may change the address for notice by notifying the other Party in the manner
provided in this Section 14. Any notice which is personally delivered
shall be deemed to have been given and received on the day it is so delivered,
unless such day is not a business day, in which case it will be deemed delivered
on the next business day. Any notice which is mailed in the manner
provided for in this Section 14 shall be deemed to have been given and received
on the 5th
business day following the date of its mailing. Any notice
transmitted by fax or other form of recorded communications shall be deemed
given and received on the 1st business
day after
its transmission.
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15.
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NO
WAIVER
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The
failure of either Party to assert a right hereunder or any Related Agreement
or
to insist upon compliance with any terms or conditions of this Agreement or
any
Related Agreement shall not constitute a waiver of that right or excuse the
subsequent performance or nonperformance of any term or condition by the other
Party.
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16.
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ASSIGNMENTS
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A. This
Agreement will be assignable to a successor in interest of substantially all
of
a Party’s assets, subject to Hershey’s termination rights set forth in Section
9. All other assignments will be subject to the prior written consent
of the non-assigning Party hereto.
B. Callebaut
shall not subcontract the performance of its obligations hereunder or under
any
Related Agreement, or permit any other arrangement having similar effect, in
any
event other than to an Affiliate of Callebaut, without obtaining the prior
written consent of Hershey.
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17.
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GOVERNING
LAW
|
This
Agreement shall be governed and construed in accordance with the laws (excluding
the conflict of laws rules thereof) of the State of New York. Each
Party hereto agrees to submit to the exclusive jurisdiction of the Courts of
the
Southern District of New York with respect to this Agreement.
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18.
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REAL
ESTATE AGREEMENTS
|
The
Parties agree to negotiate in good faith with respect to the Real Estate
Agreements, such negotiation to begin as soon as practical following execution
of this Agreement. In the event the Parties fail to execute the Real
Estate Agreements before August 31, 2007 either Party may terminate this
Agreement (which will also result in the termination of all previously executed
Related Agreements) and upon any such termination neither Party shall have
any
further liability to the other with respect to this Agreement or any Related
Agreement.
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19.
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ENTIRE
AGREEMENT AND HEADINGS
|
This
Agreement and the Related Agreements constitute the entire agreement between
the
Parties with respect to the subject matter hereof and thereof, and any prior
or
contemporaneous agreements or understandings related thereto (including the
Product Purchase and Supply Agreement between the Parties dated December 4,
2006
and any letters of intent or confidentiality agreements) are deemed superseded
hereby. Neither this Agreement nor any Related Agreement may be
amended except by an instrument in writing duly executed on behalf of the Party
against which such amendment is sought to be enforced. All headings
utilized herein are inserted for reference only and shall have no effect on
the
meaning or construction of any terms of this Agreement.
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20.
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CONFLICTING
TERMS
|
The
terms
of this Agreement shall supersede and take precedence over any conflicting
terms
found in any Related Agreement or any purchase order or invoice issued by either
Party.
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21.
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PREPRINTED
TERMS
|
In
no
event shall any preprinted terms or conditions found on either Party’s purchase
orders, invoices or other preprinted forms be considered an amendment or
modification of this Agreement or any Related Agreement. Such preprinted terms
or conditions, to the extent in conflict with this Agreement or any Related
Agreement, shall be considered null and of no effect.
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22.
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BINDING
EFFECT
|
The
rights created by this Agreement shall inure to the benefit of, and the
obligations created hereby shall be binding upon, the Parties and their
respective successors and permitted assigns.
IN
WITNESS WHEREOF, each of the Parties hereto has executed this Agreement by
its
duly authorized representatives as of the date and year first above
written.
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▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, AG
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|
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By /s/
▇▇▇▇▇▇▇ De Maeseneire
Name:
▇▇▇▇▇▇▇ De Maeseneire
Title: Chief
Executive Officer
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|
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THE
HERSHEY COMPANY
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|
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By
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior
Vice President,
General
Counsel & Secretary
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22