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B&G Foods / Emeril Food of Love Productions -
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Exhibit 10.13
AGREEMENT BY AND BETWEEN
EMERIL' S FOOD OF LOVE PRODUCTIONS, L.L.C. and
B&G FOODS, INC.
This agreement (the " Agreement" ) is entered into as of this day, the 9th of JUNE, 2000. (" Effective Date" ) between Emeril' s Food of Love Productions, L.L.C., a Louisiana [ (State)] limited liability company, having an address of 638 Camp, New Orleans, LA and B&G Foods, Inc. (" B&G" ), a Delaware corporation, having offices at Four Gatehall Drive, Suite 110, Parsippany, New Jersey 07054.
WHEREAS , Emeril Lagasse (" Lagasse" ) is a widely recognized chef of superior ability and an entertainer, who enjoys celebrity status for his ability to prepare gourmet foods;
WHEREAS, Emeril' s Food of Love Productions, L.L.C. has ownership of, and is authorized to grant exclusive licenses pertaining to, the name, picture, image and other identifying marks of Lagasse;
WHEREAS, B&G Foods, Inc. is a company that manufactures and markets at wholesale a variety of foods products throughout the United States and Canada; and
WHEREAS , the parties desire to develop and promote an exclusive line of certain quality food products bearing the name, picture, image and other identifying marks of Lagasse for retail distribution.
NOW THEREFORE , the parties hereby agree as follows:
Section 1. Definitions . The following terms shall have the meanings given to them by the parties:
a. FLP . As used herein, " FLP" shall mean Emeril' s Food of Love Productions, L.L.C. and Lagasse, except where used in conjunction with Lagasse, in which event the term shall apply solely to Emeril' s Food of Love Productions.
b . Marks . The term " Marks" shall mean all copyrights, patents, trade names, logos, trademarks, service marks and other proprietary and intellectual rights held by or associated with FLP and/or Emeril Lagasse including without limitation the name " Emeril Lagasse" .
c . Net Sales . " Net Sales" shall mean gross sales of Products less discounts, promotional allowances, and returns actually allowed and for which full refunds are granted. Notwithstanding the above definition, sales to FLP or Related Companies shall not be
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included in computing Net Sales or royalties paid hereunder to FLP. The Products shall be sold and distributed hereunder for the sole purpose of wholesale and retail sales and shall not be sold or distributed as favors, premiums, give-aways, or tie-ins in connection with the sale and/or advertising of any other goods, (excluding the " Product" ), wares, merchandise or services of any nature or description, except as may be approved in writing by FLP. " Promotional allowances" shall not exceed those customarily accorded to other B&G premium brands.
d. Personality . " Personality" shall refer to any name (given or professional), picture, photograph, in-person appearance, catch-phrase, likeness, image, facsimile signature, testimonial, endorsement and/or biographical material of Lagasse.
e. Preferential Price . A " Preferential Price" shall mean a price for a Product set by B&G which shall be fifteen percent (15%) less than B&G' s published average wholesale selling price but in no event more than any price charged to a Retail Channel.
f. Product . The term " Product" shall mean any and all dry seasoning, liquid seasoning, condiment, pepper, sauce, syrup, dressing, jarred garlic, and marinade products manufactured, marketed and/or distributed by B&G bearing Marks or Personality pursuant to this Agreement. This term may be amended by the parties to include the items set forth in Section 4(b) of this Agreement.
g. Recipe . The term " Recipe" shall mean any product formulation, or component thereof, created in whole or in part by FLP or Lagasse (either alone or together with B&G) for any Product.
h. Retail Channels . " Retail Channels" shall mean the following types of outlets to which, and individual retailers to whom, B&G may supply the Products under this Agreement: grocery stores, specialty stores, gourmet markets, mass merchants, convenience stores, drugstores, warehouse shopping clubs, shopping malls, military and wholesalers and distributors who service the foregoing.
i. Related Companies . " Related Companies" shall mean all entities in which FLP or Lagasse, separately or in combination, hold a majority of the financial interest thereto and which pertain in any way to food preparation or products, including, but not limited to " Emerils.com, LLC" and " Emeril' s Homebase, LLC."
j. Right of First Negotiation . As used in Section 4(b) below, a " Right of First Negotiation" , if exercised, shall entitle B&G to enter into bona fide and exclusive negotiations with FLP which shall be conducted for 30 days following either (1) notice from FLP of its desire to have used, or (2) notice from B&G of its desire to use, any Mark, Personality, or Recipe in conjunction with a product other than one defined as a Product herein.
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k Territory . The term " Territory" shall mean the United States of America, its territories and possessions, the Caribbean Basin and Canada.
Section 2. Grant of Rights
a. License . Subject to the provisions of Section 6, FLP hereby grants an exclusive license to B&G to use all Marks, Personality and Recipes with respect to B&G' s manufacturing, marketing and distributing to Retail Channels of all Products in the Territory. A schedule of all existing Marks is annexed hereto as Attachment C.
1. Restrictions . Ownership of all Marks, Personality and Recipes shall remain the property of FLP, and B&G shall not have the right to license, sublicense or grant the right to use same without the prior written consent of FLP. No Marks, Personality or Recipe shall be used or licensed by B&G to endorse any Retail Channel.
2. Nothing herein contained shall prohibit Lagasse from appearing on a television program sponsored by manufacturer(s) of products competitive with the Products or doing generic commercial lead-ins and lead-outs; provided, however, Lagasse shall not endorse any products competitive with any the Product.
3. Third Party Infringers/Licenses/Co-Packers .
A. Third Party Infringers. In the event a party shall become aware of any use by any third party of any Marks, Personality, or Recipe or any term confusingly similar thereto, licensed under this Agreement, with respect to any dry seasoning, liquid seasoning, condiment, pepper, sauce, syrup, dressing, jarred garlic, or marinade product, it shall promptly notify the other party in writing of such use, and if said use commenced prior to this Agreement or was the result of any actions of FLP intended prior to execution of this Agreement, FLP shall take such actions as may be required, including the engagement of legal counsel, to enforce the rights of FLP and B&G and protect the exclusivity of the license granted herein. Any recovery of monies in excess of expenses shall be split fifty percent (50%) to B&G and fifty percent (50%) to FLP. If FLP fails to take the required action, B&G may terminate this Agreement, or may file suit so on behalf of FLP and FLP shall indemnify and hold B&G harmless with respect to all costs and expenses, (including reasonable attorney' s fees and costs) incidental thereto and which are in excess of any recovery. In such instance, B&G shall also be entitled to retain any monies recovered in said litigation. In the event such use occurs subsequent to the execution of this agreement and was not the result of actions of FLP as aforesaid, B&G shall take such actions as may be required, including the engagement of counsel, to enforce the rights of FLP and B&G and protect the exclusivity
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of the license granted herein. Any recovery of monies in excess of expenses shall be split fifty percent (50%) to B&G and fifty percent (50%) to FLP. If B&G fails to take such necessary action, FLP may do so on behalf of B&G and B&G shall indemnify and hold FLP harmless with respect to all costs and expenses (including reasonable attorney' s fees) incidental thereto and which are in excess of any recovery. In such instance, FLP shall also be entitled to retain any monies recovered in said litigation.
B. Third Party Licenses. Except for any agreements or alleged agreements with Alive Culinary (which FLP obligates itself to terminate immediately) because the license granted herein is exclusive, any grant, agreement, contract or understanding between FLP and a third party for the use of any Marks, Personality or Recipe with respect to any dry seasoning, liquid seasoning, condiment, pepper, sauce, syrup, dressing, jarred garlic, or marinade product, is strictly prohibited. FLP hereby represents and warrants that any and all such preexisting licenses have expired or been terminated (or as to Alive Culinary will be terminated upon execution hereof), and that FLP shall indemnify and hold B&G harmless (including reasonable attorney' s fees and costs) with respect to any and all claims by any alleged past or present third party license.
C. Third Party Co-Packers, Etc. Except for any agreements or alleged agreements with Alive Culinary (which FLP obligates itself to terminate immediately), FLP agrees and represents that as of the date of this agreement, neither FLP, nor any third party under contract with FLP, manufactures, markets and/or distributes any dry seasoning, liquid seasoning, condiment, pepper, sauce, syrup, dressing, jarred garlic or marinade product. FLP hereby represents and warrants that any and all such preexisting contracts have expired or been terminated (or as to Alive Culinary will be terminated upon execution hereof), and that FLP shall indemnify and hold B&G harmless (including reasonable attorneys' fees and costs) with respect to any and all claims by any such past or present third party.
b. Exclusive Supplier . If, during the term of this Agreement, FLP is required to supply any dry seasoning, liquid seasoning, condiment, pepper, sauce, syrup, dressing, jarred garlic, or marinade product, regardless of whether same is presently manufactured or marketed by B&G under this Agreement, to a third party, including but not limited to, restaurant chains and processors of prepared foods, B&G shall have the option to exclusively supply same to, or on behalf of, FLP, and shall further have the option to supply same to Retail Channels as a Product, subject to FLP approval as set forth in Section 6 and provided B&G can supply same in a timely fashion, sufficient quantity of approved quality and at a competitive price which shall not be less than the Preferential Price unless mutually
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agreed to by the parties hereto.
c. Preferential Pricing . FLP and Related Companies shall have the right to purchase all Products at Preferential Prices, and to sell same except to Retail Channels.
Section 3. Duties of the Parties .
a. B&G .
1. Products . B&G shall manufacture, package, market and distribute at least one (1) dry seasoning, and one (1) marinade Product, each such Product based upon Recipes, by the first anniversary of the Effective Date. Thereafter, B&G shall introduce and market at least three (3) new Products based upon Recipes in each year of the term of this Agreement.
2. Supply . B&G agrees to supply FLP with quantities of Products, as required by FLP and Related Companies and in accordance with Section 5.
b. FLP . In each contract year, FLP shall, at the request of B&G, develop and deliver at least five (5) commercially feasible Recipes for Products within thirty (30) business days of such a request.
c. Lagasse.
1. Publicity Events . Upon the request of B&G, which shall not be unreasonable as to time, place or duration, Lagasse shall attend six (6) publicity events per year to promote the Products. As many as four (4) such appearances shall be at trade shows or other professional venues selected by B&G, subject to the approval of Lagasse, which shall not be unreasonably withheld. A minimum of two (2) such appearances will be at a time and place suitable for the promotion of the Products and specified by Lagasse, subject to the approval of B&G, which shall not be unreasonably withheld. The duration of any single appearance shall be mutually agreed upon, but in no event may be less than two (2) hours, greater than eight (8) hours, or span a period longer than one (1) day. If Lagasse must travel for the purpose of making any such appearance, B&G shall make arrangements and provide for first-class transportation and hotel accommodations for Lagasse and a companion.
2. Photographs . At the request and under the direction of B&G, but not more that twice a year, Lagasse shall appear and pose for photographs which may be used by B&G solely in connection with the rights granted to it by this Agreement. Such photographs shall be taken at a mutually agreeable time and place for a period of not more than two (2) consecutive hours and four (4) hours total. If Lagasse must
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travel for such purpose, B&G shall make arrangements and provide for first-class transportation and hotel accommodations for Lagasse and a companion. B&G shall enjoy full ownership of all photographs taken, but its right to use any such photograph for the promotion of any Product shall cease upon termination or expiration of this Agreement. All photographs shall be subject to FLP' s prior approval as well as its approval rights in Section 6 below. FLP shall also have this right to utilize, without charge, any such photographs during the term of this Agreement.
3. Use of Products . Lagasse will use his best efforts to utilize and to otherwise promote Products during public events or events to be broadcast, whenever appropriate.
Section 4. Products
a. Generally . As of the Effective Date and subject to Section 6 below, B&G shall have the right to manufacture, market and/or distribute the following types of products using the license granted to it by FLP under Section 2(a) of this Agreement: dry seasonings, liquid seasonings, condiments, peppers, sauce of all kinds, syrups, dressings, jarred garlic, and marinades.
b. Additional Products . FLP hereby grants B&G the Right of First Negotiation with respect to packaged side dishes, soup products and other shelf-stable grocery products not specified in Section 4(a) above.
c. During the Term of this Agreement, B&G will not sell or distribute any Recipe under any label other than one using Marks and/or Personality.
Section 5. Supply . Subject to the terms of this Agreement, B&G agrees to manufacture and sell Products to FLP and Related Companies under the following conditions:
a. Orders. B&G shall accept written orders for Products on a weekly basis, or at any other interval mutually agreeable to the parties. Such orders shall be made in accordance with the notice provisions of Section 16 and shall be binding upon the party placing same. All orders shall specify the number of cases requested.
b. Price. The price for any Product shall be the Preferential Price, as defined herein.
c. Delivery/Risk of Loss . With respect to actual shipment of Products ordered pursuant to this Section 5, B&G shall require at least ten (10) days prior written notice of a desired data for delivery. B&G will delivery Products to FLP or Related Company F.O.B. the applicable B&G manufacturing facility or any approved co-packing facility. Products shall be deemed to be delivered when loaded onto a common carrier for shipment, with
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complete delivery instructions, at said location. B&G represents that the foregoing terms are B&G' s standard terms with its other buyers.
d. Limitation of B&G' s Obligations . B&G shall use reasonable efforts to fill any order in a timely fashion but shall not be so obligated if product commitments to third parties prevent such accommodation or if the required raw material, ingredients or packaging are not available. In the event B&G cannot fill any order made in accordance with this Section 5, B&G shall promptly so notify FLP or Related Company.
Section 6. Approvals
a. Product: Labeling . Before selling or distributing any of the Products, B&G shall furnish FLP, without charge, a reasonable number of samples of each Product and its packaging materials for approval, which approval shall not be unreasonably withheld. Any item submitted to FLP shall be deemed approved unless the same shall be disapproved by FLP in writing not later than fifteen (15) business days after delivery. All manufactured Products shall comply with the approved samples. All Product packaging and marketing material shall contain appropriate copyright and trademark notices to protect FLP' s rights. In order to assure product quality, FLP shall have the right, upon reasonable notice, to inspect and approve of B&G' s manufacturing and distribution facilities.
b. Marketing Materials . Prior to use, B&G shall, furnish to FLP all advertising and publicity material pertaining to the Products or FLP for approval, which approval shall not be unreasonably withheld. Any such item submitted to FLP shall be deemed approved unless the same shall be disapproved by FLP in writing not later than fifteen (15) business days after delivery.
c. Co-Packing Companies . Notwithstanding any terms to the contrary, B&G shall have the right to utilize third parties to manufacture and/or package Products, provided that notice of any such intention be given to FLP and that FLP have the right to approve, on a reasonable basis, any such third party with respect to quality. B&G shall use reasonable efforts to obtain information from and permission for FLP to inspect the premises of such third party. FLP' s approval shall be deemed to have been given unless same shall be disapproved by FLP in writing not later than fifteen (15) business days after notice. Any such third party shall be required to sign a confidentiality agreement in content substantially as set forth in Section 13 below.
Section 7. Term: Extension
a. Initial Term . The initial term of this Agreement shall be three (3) years from the Effective Date (" Initial Term" ). During the Initial Term, B&G shall pay to FLP an advance and minimum royalties as set forth in Section 8.
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b. Extensions and Renewal Terms . As set forth below, the term of this Agreement is subject to extensions based upon annual Net Sales. Sixty (60) days prior to the end of any given term, B&G shall determine the Net Sales for the immediately proceeding four (4) fiscal quarters of B&G (the " Past Year" ) using reasonable business accounting methods. B&G shall notify FLP of its determination, and, where applicable, its desire to extend the present term, at least forty-five (45) days prior to the end of the present term.
1. First Renewal Term . The Initial Term shall be automatically extended for an additional two-year period (" First Renewal Term" ) if Net Sales are at least $6 million during the Past Year of the Initial Term.
2. Second Renewal Term . B&G shall have the option of automatically extending the term for an additional five-year period (" Second Renewal Term" ) if Net Sales are at least $10 million during the Past Year of the First Renewal Term.
3. Additional Renewal Terms .
A. Automatic Renewal Terms . After the Second Renewal Term, this Agreement shall automatically renew for consecutive one-year periods (" Automatic Renewal Term" ) for so long as Net Sales in the Past Year are at least $20 million.
B. Optional Renewal Terms . At any time following the Second Renewal Term, B&G shall have the continuing option to renew the Agreement for additional, consecutive one-year periods (" Optional Renewal Term" ) for so long as Net Sales in the Past Year are at least $15 million, but less than $20 million.
C. CPI Adjustment . Notwithstanding anything contained in Subparagraphs A and B above, for purposes of computing the Net Sales level in the Past Year after the Second Renewal Term and for each renewal year thereafter, the Net Sales level shall be that amount determined by multiplying $20 million or $15 million as the case may be, by a fraction the denominator of which shall be in the Consumer Price Index (" CPI" ), now known as the " United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index, U.S. City Average for all Urban Consumers, Seasonally Adjusted, All items (1982 - 1984), at the end of the Second Renewal Term and the numerator of which shall be the CPI at the end of the Past Year (the " CPI Adjustment" ); provided, however, that the CPI Adjustment shall not exceed two percent (2%) in any one year.
Where the Net Sales for any Past Year are below the above stated thresholds, either party may terminate this Agreement by serving written notice upon the other party within ninety (90) days after the end of the preceding term.
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During the term hereof, B&G shall not manufacture or distribute Products utilizing the name or likeness of or the endorsement by another chef or celebrity.
Section 8. Compensation.
a. Advance . B&G shall pay FLP a non-returnable $1.2 million advance, $600,000 payable upon the execution of this Agreement and $600,000 payable upon the first anniversary of the Effective Date. Both advance disbursements are conditioned upon FLP' s performance throughout the year in which the disbursement is made.
b. Royalty Schedule . During the term of this ...
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