Yoplait Manufacturing And Dist. License Agreement

EXHIBIT 10.32


[***] Indicates confidential information. Confidential treatment requested under Rule 24b-2.

Portion omitted filed separately with the Securities and Exchange Commission.


YOPLAIT MANUFACTURING AND

DISTRIBUTION LICENSE AGREEMENT


Between the undersigned:


Socie9te9 de De9veloppements et d' Innovations des Marche9s Agricoles et Alimentaires SODIMA-Union de Coope9ratives Agricoles, previously named Socie9te9 de Diffusion de Marques SODIMA - a union of agricultural cooperatives under French law, with variable capital, registered under Nb0 1274 N, with its registered offices at 170bis, Boulevard du Montparnasse, Paris 14b0, France


hereinafter referred to as " SODIMA"

on the one hand, and


General Mills, Inc. a Delaware corporation, with principal Executives Offices at 9200 Wayzata Boulevard, Minneapolis, Minnesota 55440, U.S.A.


hereinafter referred to as " the Licensee" on the other hand.


For purposes of this Agreement, Licensee shall include General Mills, Inc. and all of its more than 50% - owned or controlled (directly or indirectly) domestic subsidiaries for which General Mills, Inc. shall guarantee the full performance of the terms and conditions of this Agreement.


WHEREAS:


A.

SODIMA has developed and may continue to develop manufacturing processes, formulas and techniques, methods of merchandising and promotion, distinctive shapes of containers and packaging, and advertising and promotional materials (hereinafter sometimes collectively referred to as the " SODIMA know-how" ), relating to [***] (" the Products, the further definition and main types of which are listed in Exhibit A hereto, which Exhibit forms an integral part of this Agreement), which are produced and distributed under the " YOPLAIT" Trademark, presently registered in the United States of


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America (" United States" ) or other trademarks pertaining to the YOPLAIT line registered or in the process of registration in the United States for the Products listed in Exhibit B hereto (collectively, the " Trademarks" Exhibit B forms an integral part of this Agreement), which have attained a favorable reputation and extensive goodwill outside the United States; and


B.

SODIMA proposes to grant to the Licensee and the Licensee wishes to acquire, a license for the manufacture and distribution of the Products (as hereinafter defined) using the aforementioned SODIMA know-how, promotional information and Trademarks, upon the terms and conditions hereinafter set forth, in all of the United States and its territories and possessions, excluding Puerto Rico (hereinafter called the " Territory" ).


NOW, THEREFORE, on the basis of the foregoing recitals and the mutual agreements hereinafter set forth, the parties agree as follows:


I Grant of License


I.1

SODIMA hereby grants to the Licensee, on the terms and conditions set forth in this Agreement, a License:


a)

to manufacture, in the Territory, and only in the Territory, the Products under the Trademarks;


b)

to distribute and sell, in the Territory, and only in the Territory, the Products under the Trademarks;


c)

to use, in the Territory, and only in the Territory, for the foregoing purposes, the manufacturing processes, formulas and techniques, methods of production, quality control, methods of merchandising and promotion, the Trademarks, any copyrights and patents owned by SODIMA in the United States, product names, distinctive shapes of containers and packaging, advertising and promotional materials, which have been or may hereafter be developed, by or for SODIMA and made available to the Licensee in accordance with the terms of this Agreement for use in connection with the manufacture and sale of the Products.


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I.2

The License granted pursuant hereto shall be an exclusive license, even as to SODIMA, within the Territory so long as this Agreement shall remain in effect. SODIMA also agrees that so long as this Agreement shall remain in effect it will not grant to any other party any license under the Trademarks for any product and/or service in the Territory, which latter obligation shall extend to any trademarks now in existence or any new or modified trademarks of the Yoplait line which SODIMA may from time to time adopt as provided for in paragraph VI.9 for the Products as well as any trademarks in the Territory which incorporate " YO" or " YOP" as an element thereof. SODIMA warrants that it has the right to grant the licenses hereunder in accordance with paragraphs I.1 and I.2 including the process, products improvements and other know-how specified in paragraph I.1a), b) and c) and other paragraphs originated and owned or to be originated by SODIMA' s corporate or cooperative members and their corporate or cooperative manufacturing members. SODIMA also warrants that trademarks for the YOPLAIT line with respect to the Products originated and owned or to be originated by SODIMA' s corporate or cooperative members and their corporate or cooperative manufacturing members will not be licensed by such members to any third party in the Territory.


II. - License Fee and Royalties


II.1

License Fee


As consideration for the initial disclosure of know-how in accordance with paragraph III.1 and the initial technical assistance in accordance with paragraphs III.2, III.3 and III.4 by SODIMA, the Licensee shall pay SODIMA [***] United States dollars as follows:


a)

[***]; and


b)

[***].


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Such payments are to be made in Paris in such manner as SODIMA shall specify. The effective date of this Agreement means the date when Licensee acquires (by purchase or otherwise) the last of the rights in connection with the Products previously granted by SODIMA within parts of the Territory to Summit Foods Company and Michigan Cottage Cheese, Inc. For purposes of this definition of effective date, acquire shall include any reversion of such previously granted rights to SODIMA. Upon being acquired, such rights shall then be cancelled and superseded by the rights granted herein and the parties agree that this Agreement shall become effective only if all of the said previously granted rights are acquired as aforesaid within a period of three (3) months after the date of execution of this Agreement; provided, however, that if Licensee is diligently attempting to complete the acquisition of said previously granted rights SODIMA agrees to extend such time period for an additional three (3) months. SODIMA agrees that it will not withhold approval of the assignment or transfer to Licensee of the rights previously granted to Summit Foods Company and Michigan Cottage Cheese, and SODIMA also warrants that except for the said grants, no rights under the licensed subject matter herein have been granted to any other party in the Territory. SODIMA agrees that upon the effective date of this Agreement the License fee payments to be made by Licensee under this paragraph II.1 supersede and cancel any such license (or franchise) fee payment obligation of Summit Foods Company under agreements between SODIMA and Summit Foods Company.


II.2

Royalty


As further consideration for this Agreement, Licensee agrees to pay to SODIMA a royalty in United States dollars on the Licensee' s Gross Revenues as hereinafter defined from sales of the Products, which will be calculated as follows:


[***]. Thereafter, the royalties shall be calculated in accordance with the following schedule on an annualized fiscal year basis:


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Gross Revenues Per Fiscal Year In United States Dollars

Royalty Rate Percent (%) of Gross Revenues


[***]

[***]


Fiscal year shall mean the period from June 1 in any one calendar year to May 31 in the next calendar year. The first such full fiscal year shall commence on June 1, 1978. Fiscal quarter shall mean the three calendar month periods commencing on June 1, September 1, December 1 and March 1 of each fiscal year.


The royalty shall be payable to SODIMA in Paris within 30 days after the end of each fiscal quarter during the term of the Agreement.


II.3

" Gross Revenues" means the gross sales price invoiced by Licensee to purchasers of the Products minus any credits or allowances given as a result of return of such Products, any quantity discounts allowed (but not promotional allowances), and any applicable sales or use taxes.


II.4

The Licensee shall furnish to SODIMA monthly statistics reflecting the Licensee' s total sales of the Products in units, and quarterly reports of Gross Revenues. Such statistics shall be furnished not later than twenty (20) days after the end of the calendar month in which such sales were made and such reports shall be furnished not later than thirty (30) days after the end of the fiscal quarter in which such sales were made.


The Licensee shall keep true and accurate accounts and records of all sales of the Products, and such accounts and records shall be available for inspection by SODIMA, its authorized agents or representatives, at all times during normal business hours, provided that such SODIMA agents or representatives shall first have to be approved by Licensee (such approval not the be unreasonably withheld).


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II.5

In the event Licensee is required by the United States Government or requested by SODIMA to pay on SODIMA' s behalf any withholding taxes imposed by the United States governmental authorities on royalty income to SODIMA hereunder, Licensee shall deduct the amounts so paid from the royalties due to SODIMA and Licensee shall provide SODIMA with the appropriate receipt for the payments of such taxes. In the event of a significant change in the United States tax laws affecting royalty income to SODIMA to SODIMA' s detriment, the parties shall renegotiate in good faith the royalty rates provided for herein; provided, however, that any such renegotiated royalty rates shall not have a material adverse effect on either of the parties.


SODIMA agrees to be responsible for any other taxes which may become due and payable by SODIMA in regard to any sums received hereunder by SODIMA and accordingly, SODIMA indemnifies and holds Licensee harmless from the payment of any such taxes.


II.6

To the extent permitted by applicable law, any amount not paid when due by the Licensee hereunder shall bear interest at the official discount rate of the Bank of France in effect on the date payment was due.


In the event that, by reason of applicable law or regulations relating to exchange controls, the Licensee shall be unable to pay the amounts due under Article II herein in France, said amounts shall be paid to an account designated by SODIMA with a bank in the United States and shall constitute payment of such amounts. The Licensee shall instruct such bank to advise SODIMA promptly of the credit.


III Undertakings of SODIMA


III.1

Throughout the term of this Agreement, and subject to the provisions of paragraph III.4 hereof, SODIMA shall furnish and communicate to Licensee the SODIMA know-how and requisite information with respect to the manufacturing processes, formulas, techniques and merchandising, and promotion methods for the Products covered by the License granted hereunder.


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III.2

Subject to the provisions of paragraph III.4 hereof, SODIMA shall furnish all technical assistance to the Licensee necessary for manufacture of the Products including:


a)

assistance in the selection and installation of equipment and machinery;


b)

assistance in the planning, start-up, adjustment and control of manufacturing operations;


c)

assistance in the determination of initial quantities and available sources of supply for raw materials and packaging materials;


d)

assistance in the establishment and implementation of quality control with respect to raw materials, packaging and finished products;


e)

assistance in the development of improved productivity and profitability;


f)

assistance in the development of the Products and in their adaptation to applicable laws and regulations and to consumer tastes;


g)

analysis of personnel functions, definition of personnel profiles and training of the head of manufacturing operations of the Licensee; and


h)

after the commencement of operations, continuing assistance in connection with quality control, the training of key personnel, and the procurement of raw materials.


III.3

Subject to the provisions of paragraph III.4 hereof, throughout the term of this Agreement, SODIMA shall furnish technical assistance to the Licensee in connection with the merchandising and promotion of the Products in the Territory including the following:


a)

assistance in the development and application of sales techniques;


b)

assistance in preparing and conducting market studies;


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c)

assistance in the development of plans for advertising, promotion and sales operations and organization of distribution and delivery systems;


d)

assistance in the selection and investigation of sales outlets;


e)

assistance in the analysis of and the determination of such adjustments as may be required;


f)

a study of personnel functions, the definition of personnel profiles and the training of the head of sales operations of the Licensee; and


g)

continuing assistance in the merchandising and promotion techniques after the commencement of production.


III.4

The assistance to be provided by SODIMA pursuant to paragraphs III.1, III.2 and III.3 hereof shall be carried out at such time and in such manner as SODIMA shall reasonably determine and during the start-up period, such assistance shall be provided as necessary to meet the needs of Licensee in achieving the start-up of production and marketing of the Products under the schedule of Exhibit C (which Exhibit forms an integral part of this Agreement).


SODIMA shall assign two fully qualified technical representatives (one in the production field and one in the marketing field) to coordinate the providing of assistance to the Licensee in achieving the start-up production and marketing of the Products under the schedule of Exhibit C hereto. These representatives will be made available according to the judgment of SODIMA to meet all reasonable requests of the Licensee in achieving such start-up of production and marketing provided however, that such technical representatives will devote 80% of their working time (holidays deducted) to such assistance, unless the parties from time to time mutually agree in good faith that some lesser % is needed by Licensee or unless SODIMA is prevented for unforeseen reasons from supplying the full 80%.


Such representatives shall respectively have a background in the production and marketing of the Products and shall be reasonably fluent in the English language. SODIMA shall also provide such other necessary assistance by its qualified personnel during the start-up period as shall be reasonably determined by mutual agreement between SODIMA and Licensee to be necessary


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to meet the needs of Licensee in achieving the start-up of production and marketing of the Products under the schedule of Exhibit C hereto.


III.5

SODIMA shall bear the expenses of furnishing the assistance to be provided by it pursuant to paragraphs III.1, III.2, and III.3 and III.4 hereof insofar as they relate to the cost (including salary, travel and temporary living costs) of qualified personnel of SODIMA; the cost of documentation and written materials furnished by SODIMA; and the cost of any raw materials and packaging of the Products consumed or used in reasonable quantities in connection with such technical assistance in any of the pilot plants of SODIMA and its affiliated companies. All other costs of such technical assistance, including salary, travel and temporary living costs of the Licensee' s employees, and the use of packagings, materials and equipment at the Licensee' s plant, shall be borne by the Licensee.


III.6

SODIMA shall provide further assistance in connection with the License granted hereunder from time to time upon the request of the Licensee, at the times and to the extent that SODIMA shall reasonably determine to be practicable.


For this purpose, the Licensee shall bear the cost of such extra assistance which will be based on a mutually agreed upon cost per day. In addition, such expenses as travel and temporary living costs of personnel providing the extra assistance shall be borne by the Licensee.


III.7

Subject to the other provisions in this Agreement including the provisions of paragraph VI.3, nothing contained in this Agreement shall be deemed to obligate SODIMA to furnish to the Licensee any advice, technical assistance or information of any kind whatsoever, other than that which SODIMA shall reasonably be able to furnish on the basis of its know-how in the manufacture and sale of Products, and SODIMA shall not be liable to the Licensee for any loss, damage or expense of any nature suffered or incurred by the Licensee as a result or consequence of advice, technical


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assistance or information furnished to it by SODIMA in good faith and without serious negligence to be proved by Licensee.


IV Undertakings of the Licensee


IV.1

The Licensee accepts the License granted herein on the terms and conditions set forth in this Agreement and acknowledges that the rights and privileges granted hereunder are to be used only to the extent, for the purposes and in the manner herein set forth.


The Licensee undertakes:


a)

To commence production and marketing of the Products in the Territory as soon as reasonably possible and in any event, to commence such production and marketing of the Products in the Territory at least in accordance with the schedule annexed hereto as Exhibit C, unless Licensee demonstrates diligence in attempting to follow the schedule but for valid business reasons has been unable to adhere to the same, such reasons including economic conditions, competitive situation, strategic changes, unforeseen events and the like. Licensee will keep SODIMA appraised of the status of plans in regard to the schedule.


b)

To promote sales of, and to use its best efforts to increase demand for, the Products in the Territory by making the Products available and be positioned as quality products.


c)

To keep SODIMA informed on a regular and continuing basis of the Licensee' s activities in manufacturing and marketing the Products.


IV.2

The Licensee will not engage directly or indirectly in any activity which constitutes an infringement, appropriation, copying or imitation of any of the distinctive packaging, Trademarks or trade names provided by SODIMA hereunder or which otherwise injures the value of SODIMA' s interest therein. For a period of five years from the effective date of the Agreement, the Licensee will not without the prior written consent of SODIMA, manufacture, distribute or sell products identical or substantially similar to the Products,


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provided that direct sales by Licensee' s restaurants to their customers or direct sales through Licensee' s vending machines are excluded from the latter commitment. [***].


IV.3

The Licensee undertakes to comply at all times with all applicable laws and regulations in connection with the manufacture, distribution, sale and promotion of the Products and to be responsible in case of failure to comply with such laws and regulations for SODIMA' s assistance (see paragraph III.2).


IV.4

The Licensee shall keep confidential and shall not cause or permit the disclosure of the processes, formulas, techniques, and methods, and customer and marketing information, furnished to it by SODIMA to any person other than those whose duties require possession of such information.


Said confidentiality requirement shall not apply to any information which Licensee can show (a) was in the possession of Licensee prior to receipt of any disclosure to it pursuant to this Agreement and not heretofore directly or indirectly derived from SODIMA, or (b) is or becomes without disclosure by Licensee part of the public knowledge or literature, or (c) otherwise lawfully becomes available to Licensee without restriction or disclosure by Licensee, from sources other than SODIMA, which sources did not acquire such information directly from SODIMA.


IV.5

The Licensee shall make every reasonable effort to employ as key people in connection with the manufacture and sale of the Products personnel fully qualified to perform the responsibilities of their positions. SODIMA will assist Licensee in this regard by furnishing advice as to the qualifications of such key personnel.


The Licensee undertakes to send at its own expense its key people to one YOPLAIT plant selected by SODIMA during a period of time selected by mutual consent in the event that both Licensee' s and SODIMA' s technical representatives deem it reasonably necessary.


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IV.6

The choice of packaging, graphics and designs on, with respect to the Products must be provided to SODIMA in the United States, or if so instructed to SODIMA in Paris for approval (which approval shall not be unreasonably withheld) before any production or distribution of the Products hereunder. With respect to minor changes in such packaging, graphics and designs, SODIMA will have three (3) business days after the reception of such materials in the United States to give its approval or refusal (which approval shall not be unreasonably withheld). If SODIMA shall not have responded within this three-day period, SODIMA' s approval will be deemed to have been given for the submitted materials.


V Improvements and New Products


V.1

The term " new product or process" shall mean any product or process (including packaging and equipment) within the scope of the Products and the SODIMA know-how licensed hereunder, the development of which would not be obvious to a person, skilled in the art, who is thoroughly familiar with SODIMA' s techniques. In regard to the formulas of new products, it shall be clearly demonstrable that the same have peculiarity and originality over the SODIMA formulas through the inventive efforts of the person or persons developing such new product formulas where such person or persons shall have used the SODIMA formulas as a starting point, provided that any such new product or process developed by Licensee shall not be known by SODIMA-members (hereinafter defined) or shall not have already been developed by SODIMA-members at the time Licensee made such new product or process, the burden of proof in this respect always residing in SODIMA-members. Licensee shall have the burden of proving when such new product or process was made by Licensee.


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For purposes of this Agreement, the term " obvious" shall be construed according to the Patent Laws of the United States.


V.2

Any innovation or change which does not meet the requirements of paragraph V.1 for new product or process shall be termed an " improvement" and therefore shall not be deemed a new product or process for purposes of this Agreement for example any product within the scope of the Products licensed hereunder, of which the profitability, the quality or characteristics, including the form of presentation and conservation of the product (liquid, gaseous, solid, ice, etc.) shall merely have been improved or modified, whether by modification of the percentage of ingredients, or by the mere addition or deletion of any element, shall not be deemed a " new product" , regardless of the process or means used.


V.3

SODIMA shall grant to the Licensee all the rights and privileges described in this Agreement with respect to any of its new products or processes and to each improvement in any of the Products made or developed by SODIMA.


V.4

SODIMA shall have the right, from time to time upon reasonable written notice to the Licensee, to request Licensee to add products within the scope of the Products already developed by SODIMA or which SODIMA may develop during the course of this Agreement to the Products. Licensee shall have the right, however, to decline to produce such products if Licensee deems it economically inadvisable to do so. The parties may, however, agree to conduct test marketing for any such product and if such test marketing demonstrates sufficient market potential including economic feasibility, Licensee cannot decline to produce such product. Expenses for any such test marketing shall be shared equally between Licensee and SODIMA.


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V.5

SODIMA shall provide technical assistance to the Licensee in the manner contemplated in Article III of this Agreement with respect to all such improvements and new products and processes.


V.6

a)

The Licensee shall promptly communicate to SODIMA and hereby grants to SODIMA and its cooperative and corporate members and their cooperative and corporate manufacturing members (hereafter SODIMA members) the non-exclusive, irrevocable, right to use, manufacture and sell, including the right to grant sublicenses without any restriction as to Territory (with the exception of Licensee' s Territory) during the term of this Agreement and subject to the provisions of paragraphs V.7 (a) and V.7 (d)) or field of application within the scope of the Products and SODIMA know-how licensed hereunder, all new products and processes, as well as all improvements which the Licensee may develop in any of the Products or in connection with the manufacturing and distribution thereof. The rights granted hereunder in respect of improvements shall be royalty-free. The rights granted hereunder to SODIMA members in respect to new products and processes shall be royalty-free provided however that such new products are manufactured in France and that such new processes are carried out in France.


b)

Licensee agrees that the right to grant sublicenses under Licensee' s new products and processes as defined in paragraphs V.1 and V.2 hereinabove to licensees or franchisees of SODIMA-members resides in SODIMA-members and Licensee will not undertake to grant licenses under Licensee' s new products and processes to such licensees and franchisees of SODIMA-members. SODIMA-members agree that the sublicensing of the new products and processes of Licensee to the licensees and franchisees of SODIMA-members is conditioned on the receiving of the prior agreement or approval as set forth herein below of Licensee.


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With respect to receiving the prior agreement of Licensee, SODIMA members and Licensee agree to negotiate in good faith concerning the payment of a lump-sum for the use of Licensee' s new products or processes by any or all of the licensees or franchisees of SODIMA-members; if any such agreement is consumated, then SODIMA-members will not be required to share any further royalties, lump-sum payments or both with Licensee, from any of its licensees or franchisees for the new product or process covered by such agreement. With respect to receiving the prior approval of Licensee for a sublicense for the new products or processes of Licensee, SODIMA-members agree to provide Licensee in writing with the names of the proposed licensees or franchisees to be sublicensed and the countries in which such sublicense would be effective and Licensee shall have the right to approve or disapprove any such sublicense, provided however, that the Licensee' s approval will not be unreasonably withheld. On further regard to such sublicenses, SODIMA-members agree to use their best efforts to obtain from the licensees and franchisees of SODIMA-members royalties or lump-sum payments or both under any such sublicense consistent with the royalties and lump-sum payments received or being received by SODIMA-members under existing agreements with the respective licensees or ...