AMENDED FORM 10-K
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 1995
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _________________
Commission File Number 0-13544
BEN & JERRY'S HOMEMADE, INC.
(Exact name of registrant as specified in its charter)
Vermont 03-0267543
(State of incorporation) (I.R.S. Employer Identification No.)
115 Kimball Avenue
South Burlington, Vermont 05403
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 802-651-9600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.033 par value per share
Class B Common Stock, $.033 par value per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No__
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (225.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
Yes x No
The aggregate market value of the Company's Class A and Class B Common
Stock held by non-affiliates was approximately $82,302,060 and $3,752,265
respectively, at March 8, 1996.
At March 8, 1996, 6,272,646 shares of the Company's Class A Common Stock
and 911,963 shares of the Company's Class B Common Stock were outstanding.
Page 1 of 150 pages. Exhibit Index appears on page 38.
<PAGE>
BEN & JERRY'S HOMEMADE, INC.
1995 FORM 10-K ANNUAL REPORT
Table of Contents
Page
Item 1. Business.................................................1
Item 2. Properties..............................................15
Item 3. Legal Proceedings.......................................16
Item 4. Submission of Matters to Vote of Security Holders.......16
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.....................................17
Item 6. Selected Financial Data.................................18
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.....................19
Item 8. Financial Statements and Supplementary Data.............27
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure..................27
Item 10. Directors and Executive Officers of the Company.........28
Item 11. Executive Compensation..................................31
Item 12. Security Ownership of Certain Beneficial Owners
and Management..........................................33
Item 13. Certain Relationships and Related Transactions..........34
Item 14. Exhibits, Financial Statements, and Financial
Statement Schedules, and Reports on Form 8-K............38
ITEM 1. BUSINESS
Introduction
Ben & Jerry's Homemade, Inc. (Ben & Jerry's or the "Company") is a
leading manufacturer of super premium ice cream, frozen yogurt and sorbet in
unique and regular flavors. The Company also manufactures ice cream novelty
products, including Peace Pops. The Company uses natural ingredients in its
products and believes that its gourmet-quality, "down home", made in Vermont
image is a key element of its marketing strategy.
The Company's products are currently distributed throughout the United
States primarily through independent distributors. However, the Company's
marketing resources are concentrated on certain target markets including New
England, New York, the Mid- Atlantic region, Florida, Texas, the West Coast and
selected other major markets, including the metropolitan Chicago and Denver
areas. In 1995, approximately 79% of the sales of the Company's packaged pints
were attributable to these target markets. The Company's products are also
available in the United Kingdom.
The Company currently markets 34 flavors in packaged pints, for sale
primarily in supermarkets, grocery stores, convenience stores and other retail
food outlets and over 50 flavors of its ice cream and frozen yogurt in bulk,
primarily to restaurants and Ben & Jerry's franchised "scoop shops."
History and Philosophy of the Company
The Company began active operations in May 1978, when Ben Cohen, now
the Company's Chairperson, and Jerry Greenfield, now the Company's Vice
Chairperson, opened a retail store in a renovated gas station in Burlington,
Vermont. The store featured homemade ice cream made in an antique rock salt ice
cream freezer. That ice cream parlor continues to make its own ice cream in the
same freezer in a larger location in Burlington.
The Company believes that, despite its growth, it has maintained a
reputation for producing gourmet-quality, natural ice cream and for sponsoring
or creating light-hearted promotions that foster an image as an independent
socially conscious Vermont company.
The Board of Directors of the Company has formalized its basic business
philosophy by adopting a three part "mission statement" for Ben & Jerry's. The
statement includes a "product mission," to "make, distribute and sell the finest
quality all- natural ice cream"; an "economic mission," to "operate the Company
on a sound financial basis...increasing value for our shareholders and creating
career opportunities and financial rewards for our employees"; and a "social
mission," to "operate the Company...[to] improve the quality of life of our
employees and a broad community: local, national and international." Since 1988
the Company's Annual Report to Stockholders has contained a "social audit" on
the Company's performance during the year.
The Company contributed $768,000 to the Ben & Jerry's Foundation, Inc.
for grants by the Foundation to charities, and directly to other charitable
organizations for the year ended December 30, 1995. Under present Board policy,
cash donations to The Ben & Jerry's Foundation and directly to other charitable
organizations by the Company, are approximately 7.5% of income before income
taxes. The amount of the Company's cash contribution is subject to review by the
Board of Directors from time to time in light of the Company's cash needs, its
operating results, existing conditions in the industry and other factors deemed
relevant by the Board. See "The Ben & Jerry's Foundation."
Ben & Jerry's maintains a special tie to the Vermont community in which
it had its origins. The Company donates product to public events and community
celebrations in the Vermont area. In 1994, the Company created a Community
Action Team at each of the Company's five sites in Vermont. Each Community
Action Team receives a portion of the 7.5% of pre-tax profits directed for
philanthropy to make cash contributions to various organizations in Vermont.
Each county in Vermont is covered by a Ben & Jerry's Community Action Team.
Also, the Company, acting as agent, transfers funds to charitable organizations
throughout Vermont derived from the sale of "factory seconds" to participating
Vermont retail grocers.
Ben & Jerry's has also taken actions intended to strengthen the
Company's ability to remain an independent, Vermont-based company. Ben & Jerry's
believes these actions are in the best interests of the Company, its
stockholders, its employees and the Vermont community. See "Anti-Takeover
Effects of Class B Common Stock and Preferred Stock".
In 1991 the Company decided to pay not less than a certain minimum
price for its dairy ingredients, other than yogurt cultures, to bring the price
up to an amount based upon the average price for dairy products in certain prior
periods. This commitment is part of an effort to foster the supply of Vermont
dairy products and thereby also seek to maintain the long-term viability of the
Company's source of supply of its principal dairy ingredients, against the
marketplace background of a continuing trend of decreasing family dairy farms in
Vermont. In early 1994 the Company's agreement with the St. Albans Cooperative
Creamery was amended to include, as a condition for payment of the premium, an
assurance from the St. Albans Cooperative Creamery that the milk and cream
purchased by the Company will not come from cows that have been treated with
rBST, a synthetic growth hormone approved by the FDA. The Company's premium
policy has some adverse impact on its gross margin.
In 1992, the Company became a signatory to the CERES Principals adopted
by the Community for Environmentally Responsible Economies. The CERES Principles
establish an environmental ethic with criteria by which investors and others can
assess the environmental performance of companies. Ben & Jerry's is also a
founding member of Businesses for Social Responsibility, Inc. ("BSR"), an
organization in Washington, DC which promotes a concept of business
profitability that includes environmental responsibility and social equity. Ben
& Jerry's is also a member of the Vermont Business for Social Responsibility.
The Super Premium Ice Cream, Frozen Yogurt and Sorbet Market
The packaged ice cream industry includes economy, regular, premium and
super premium products. Super premium ice cream is generally characterized by a
greater richness and density than other kinds of ice cream.
This higher quality ice cream generally costs more than other kinds and
is usually marketed by emphasizing quality, flavor selection, texture and brand
image. Other types of ice cream are largely marketed on the basis of price.
Super premium ice cream and super premium frozen yogurt and, more
recently, super premium sorbet have become an important part of the frozen
dessert industry. In response to the demand for lower fat, lower cholesterol
products, the Company introduced its own super premium low fat frozen yogurt in
1992, and four non-fat frozen yogurt flavors in 1995. In February 1996, the
Company commenced its introduction of six fat-free and cholesterol-free sorbet
flavors.
The Company believes, based on information provided by Information
Resources, Inc., a software and marketing information services company ("IRI"),
that total annual U.S. sales in supermarkets at retail prices (defined as
grocery stores with annual revenues of at least $2 million) of super premium ice
cream, frozen yogurt, ice milk and sorbet were in excess of $443 million in
1995, compared with about $415 million in 1994, although unit volume declined
about 1%. The IRI information also indicates that the super premium category,
excluding sorbet, declined in volume about 6.6% from 1994. This was caused by a
decline in sales of ice cream, combined with flat sales of low-fat frozen
yogurt, partially offset by growth in non-fat product categories. In 1995 Ben &
Jerry's increased its domestic market share of the super premium ice cream and
frozen yogurt categories combined, as surveyed by IRI, although its domestic
share of the super premium category overall declined, as Ben & Jerry's did not
introduce its sorbet until 1996. All of the information in this paragraph is
taken from IRI data.
Ben & Jerry's Super Premium Ice Cream, Frozen Yogurt and Sorbet
Ben & Jerry's super premium ice cream is a high butterfat ice cream,
with approximately 15% fat (excluding add-ins) and approximately 20% air
content. Ben & Jerry's low fat frozen yogurt is a high quality frozen yogurt
with approximately 2% fat (excluding add-ins) and approximately 20% air content.
Of the Company's seven frozen yogurt flavors, two flavors are labeled low fat, a
third flavor is not labeled low fat because it contains add-ins which increase
the total fat content over the 3% fat level required by FDA labeling guidelines.
The remaining four flavors in Ben & Jerry's frozen yogurt line are labeled
non-fat. Ben & Jerry's non-fat frozen yogurt is a high quality frozen yogurt
with approximately 0% fat and approximately 40% air content. The fat content of
these products is derived mostly from the butterfat in cream but also from egg
yolks (except for frozen yogurt). Ben & Jerry's frozen sorbet is a non-fat
sorbet with approximately 20% air content. The sorbet line is manufactured with
Vermont Pure(TM) Spring Water and conventionally and organically grown fruit.
Pure cane sugar, beet sugar and corn syrup are the only sweeteners used. Ben &
Jerry's frozen desserts contain no artificial ingredients or preservatives,
although one of the candies used in two of Ben & Jerry's flavors does contain
artificial flavoring. All other flavorings used by the Company include premium
quality, unpreserved extracts and fruits, nuts, chocolates, liqueurs, cookies
and candies. The dairy products in Ben & Jerry's frozen desserts are readily
available from dairy cooperatives in Vermont. The various flavorings are readily
available from multiple suppliers throughout the country.
A number of Ben & Jerry's flavors are original creations of the
Company, including Cherry Garcia(R), Doonesberry(R) (introduced in 1996), Chunky
Monkey(R), Rainforest Crunch, White Russian(TM), Chubby Hubby(R), Chocolate
Fudge Brownie and Chocolate Chip Cookie Dough, which has become the Company's
most popular flavor.
Ben & Jerry's license agreements include a license from the estate of
Jerry Garcia formerly of the Grateful Dead rock group with respect to the
Company's Cherry Garcia flavor; political cartoonist Garry Trudeau with respect
to the Company's Doonesberry flavor of the new sorbet line of products; Wavy
Gravy for the flavor Wavy Gravy; and The Kahlua Company for use of Kahlua(R) as
flavoring in White Russian ice cream.
The mix used by the Company in the production of Ben & Jerry's ice
cream follows the original formula developed by Ben Cohen and Jerry Greenfield
and consists of fresh cream, cane or beet sugar, non-fat milk solids, egg yolks
and natural stabilizers. All of the Company's plants include mix batching
facilities that enable Ben & Jerry's to manufacture its own ice cream mix for
use at its plants. The automated mix batching equipment, together with a quality
control lab, enhances the Company's ability to maintain consistent quality
production. The Company purchases its dairy ingredients, except yogurt cultures,
from the St. Albans Cooperative Creamery. The Company purchases cultured
pasteurized milk mix from another Vermont dairy cooperative which is used for
manufacture of its frozen yogurt products. The Company also purchases Vermont
Pure(TM) Spring Water which is used to manufacture the Company's new sorbet
products. The Company has designed and modified special machinery to insert
large chunks of cookies and candies into its ice cream and frozen yogurt.
The Company also makes ice cream novelty products, including stick
pops, which Ben & Jerry's markets as Peace Pops(TM), and Brownie Bars commencing
March, 1996.
Manufacturing
The Company currently has a projected maximum manufacturing capacity at
its own facilities of approximately 17.3 million gallons per year of packaged
pints and 3.5 million gallons of bulk product contingent upon product mix and
excluding novelty lines.
The Company manufactures Ben & Jerry's super premium ice cream and
frozen yogurt pints at its Waterbury, Vermont plant. The Company generally
operates its Waterbury plant 2 shifts a day, six days a week. The Company
manufactured approximately 4.6 million gallons at this facility in 1995.
The Company's Springfield, Vermont plant is used for the production of
ice cream novelties, bulk ice cream and frozen yogurt, and packaged pints and
quarts. The plant produced approximately 1.1 million dozen novelties, 2.3
million gallons of bulk ice cream and frozen yogurt, packaged pints and quarts.
In 1995, the Company generally operated the Springfield plant five to six days
per week, either with one or two production shifts depending on the season.
From June 1992 to September 1995, the Company operated an interim pint
manufacturing line in St. Albans, Vermont in space provided by the St. Albans
Cooperative Creamery, from which the Company purchases all of its dairy
ingredients except yogurt cultures. Production on this line was approximately
2.3 million gallons of packaged pints in 1995. This line was phased out in
September 1995 as production at the Company's new St. Albans, Vermont facility
increased.
In October 1992, the Company started construction of a new
manufacturing plant in St. Albans, Vermont at a total cost now estimated at
$40.1 million, net of an asset write-down of $6.8 million in 1994. In March
1995, the new plant started manufacturing ice cream on one line using a
temporary nitrogen tunnel hardening system. A second line began operation in
December 1995. The Company expects the rate of actual production per minute at
the new plant to increase during 1996. In 1995, the plant produced 2.2 million
gallons of packaged pints. Based upon the current product mix, and with the two
lines that became operational in 1995, the new plant is designed to provide a
maximum projected capacity of approximately 12 million gallons of packaged pints
per year. With the addition of a third manufacturing line at the plant, the
maximum projected capacity of this plant would be approximately 17 million
gallons of packaged pints per year contingent upon product mix. Currently the
St. Albans plant is producing both ice cream and sorbet in packaged pints.
In order to meet demand for its pints from 1989 to 1995, the Company
had a manufacturing and warehouse agreement with Edy's Grand Ice Cream
("Edy's"), a subsidiary of Dreyer's Grand Ice Cream, Inc. ("Dreyer's"). Under
this agreement, Edy's manufactured certain pint ice cream flavors at its plant
in Fort Wayne, Indiana with specifications and quality control provided by Ben &
Jerry's and using Vermont dairy products. This agreement expired in September
1995. Approximately 1.9 million gallons, or about 16% of the packaged pints
manufactured in 1995, were manufactured under this arrangement, down from
approximately 40% in 1994.
Markets and Customers
The Company markets packaged pints, quarts and novelty products
primarily through supermarkets, grocery stores, convenience stores and other
retail food outlets. The Company markets ice cream, frozen yogurt and sorbet in
2 1/2-gallon bulk containers primarily through franchised (and Company-owned)
Ben & Jerry's "scoop shops" and through restaurants.
Ben & Jerry's products are distributed primarily through Dreyer's and
independent regional ice cream distributors. With some exceptions, only one
distributor is appointed for each territory for supermarkets. In some areas,
sub-distributors are used. Company trucks also distribute some of the products
that are sold in Vermont and upstate New York.
Ben & Jerry's has a distribution agreement with Dreyer's under which
Dreyer's acts as the master distributor (with exclusivity, in general, for sales
to supermarkets and similar accounts) of Ben & Jerry's products in most of the
Company's markets outside of New England, upstate New York, Pennsylvania and
Texas. Dreyer's markets its own premium ice cream under both the Dreyer's and
Edy's brand names as well as certain frozen dessert products of other companies.
Dreyer's does not produce or market any other super premium ice cream, or frozen
yogurt, (other than novelties), and in the event that Dreyer's were to
distribute another super premium ice cream, or frozen yogurt in any part of its
territory, Dreyer's would lose the exclusivity granted to it as a Ben & Jerry's
distributor under the agreement. The agreement also contains certain additional
provisions specific to the greater metropolitan New York market, including
special limitations on the ability of either party to terminate the agreement
with respect to the New York market. In early 1994, the agreement was amended to
provide for the Company to perform the subdistribution of Ben & Jerry's products
to convenience stores and "mom and pops" in the New York City area. In October
1995, exclusive distribution rights for the New York City area were transferred
back to Dreyer's. Net sales to Dreyer's (including sales where the Company acted
as a subdistributor in the New York City area) accounted for approximately 44%
and 49% of the Company's net sales for 1995 and 1994, respectively.
In the event that Dreyer's were to terminate the agreement without
cause, the agreement provides for a twelve month notice period (subject to
reduction by the Company) and specified minimum purchase requirements by
Dreyer's during the notice period. In addition, the agreement provides for
termination by Ben & Jerry's without cause upon twelve months' notice and for
termination by Ben & Jerry's or Dreyer's on short notice for cause. The
agreement also contains certain provisions for termination by one party (at its
election) upon a change in control (as defined) of the other, in which event the
terminated party experiencing the change in control has a minimum purchase or
sale obligation, as the case may be, for a specified additional period and also
must make a $20 million termination payment to the other party. In addition, the
agreement states that in the event that Dreyer's, directly or indirectly
introduces, acquires, or distributes in the United States another super premium
product (as defined), the Company may terminate the agreement and Dreyer's must
make a $20 million termination payment to the Company. The common stock of
Dreyer's is publicly traded. In April 1994, Nestle USA, Inc. (a U.S. subsidiary
of a large international conglomerate) acquired a significant minority equity
position in Dreyer's. (See also "Competition")
The relationship between the Company and Dreyer's commenced in 1987,
and the distribution agreement has been amended several times since then. The
Company and Dreyer's regularly engage in discussions regarding ways to improve
their long-term relationship to their mutual benefit, and it is contemplated
that the parties may revise and restate the distribution agreement. Any changes
which are then or thereafter adopted may have certain beneficial or adverse
consequences, the effects of which cannot be foreseen by the Company.
While the Company believes that its relationships with Dreyer's and its
other distributors generally have been satisfactory and that these relationships
have been instrumental in the Company's growth, the Company has at times
experienced difficulties in maintaining these relationships. Available
distribution alternatives are limited. Accordingly, there can be no assurance
that such difficulties, which may be related to actions by the Company's
competitors or by one or more of the distributors themselves (or their
controlling persons), will not have a material adverse effect on the Company's
business. Loss of one or more of the Company's principal distributors or
termination of one or more of the related distribution agreements could have a
material adverse effect on the Company's business.
Marketing
Ben & Jerry's marketing strategy is characterized by its focus on
innovative, non-traditional methods of promotion. The Company emphasizes the
high quality, natural ingredients in its products, and the "down home Vermont"
image of its products in its packaging, sales materials and promotional
campaigns. Significant prominence has been given to Ben Cohen and Jerry
Greenfield, the founders of the Company, as "two real guys" still actively
involved in the Company. Pictures of Ben and Jerry appear on packaging, and they
make personal appearances on TV, radio and at select marketing events.
As the Company has become a significant force in super premium ice
cream and frozen yogurt, its marketing emphasis has shifted from portraying
itself as the small "underdog" firm to a Company-wide focus on community
involvement and its status as a socially responsible business. In the past, the
Company has focused its marketing efforts on communicating newsworthy,
company-wide unique business approaches that tend to generate unpaid newspaper,
magazine, radio and TV news coverage.
During 1995, the Company created and produced a Ben & Jerry's "One
World, One Heart" Festival in Vermont. The Company also sponsored the Ben &
Jerry's Newport Folk Festival in Newport, Rhode Island. These events, attended
by nearly 50,000 people in outdoor public areas generated lots of goodwill, ice
cream sampling and social activism, while building customer loyalty and support
for the Company's products in the future.
Ben & Jerry's continues to conduct guided tours of its facility in
Waterbury, Vermont. In 1995, approximately 250,000 people visited the plant,
making it (the Company believes) the single most popular tourist attraction in
the State.
Franchise shops are an integral part of the Company's marketing efforts
and work on the local level contributes to the Company's three part mission. A
franchise is required to spend at least 4% of its gross sales on community/self
directed marketing, sampling, advertising and participation in certain Ben &
Jerry's selected promotions.
The Company is introducing its new line of six innovative sorbet
flavors made with all natural ingredients and Vermont Pure(TM) Spring Water by
offering consumers 1 million free samples during March and April 1996. Samples
will be offered at all franchised scoop shops and given away during sampling
sessions scheduled in target markets throughout the country.
Franchise Program
As of December 30, 1995, there were 132 franchised Ben & Jerry's "scoop
shops", as compared with 123 stores open at December 31, 1994, including in each
case satellite shops. The franchised "scoop shops" are located in New England,
New York, the mid-Atlantic region, Georgia, Florida, Ohio, Indiana, Illinois,
California and Canada.
During 1995, the Company opened 8 additional franchised "scoop shops"
under single store, satellite and area franchise agreements discussed below and
added one "Partnershop." Ben & Jerry's has changed its policy limiting the
development of individual franchise store openings and is actively pursuing
locations in selected markets around the country.
The Company's domestic franchise agreements with respect to individual
stores are for a ten-year term with an option to the franchisee to renew for a
second ten-year term. The agreements grant the franchisee an exclusive area for
bulk ice cream, frozen yogurt, and sorbet with certain exceptions and require
the franchisee to purchase from the appropriate local distributor Ben & Jerry's
ice cream, frozen yogurt, sorbet and certain other products, principally baked
goods and hot fudge sauce. Franchisees pay an initial franchise fee, currently
$25,000 per store, and each franchisee is required to make the advertising
payments described above. The franchise agreements with stores sponsored by
charitable organizations, often referred to as Partnershops, provide for waivers
of certain financial provisions.
In addition, the Company has entered into a few exclusive area
franchise agreements. Under these agreements, the franchisee agrees to pay a
specified negotiated franchise fee in installments and to open a certain number
of stores in a particular territory according to a specified schedule. The
franchisee is given exclusive franchise rights in the territory, subject to
conditions specified in the agreements. Under its current area franchise
agreements, franchisees have agreed to open an aggregate of 55 stores, primarily
in California, 27 of which had been opened as of December 30, 1995 in accordance
with amended build-out schedules. The Company's Canadian subsidiary also has
seven franchised Ben & Jerry's "scoop shops" including satellite shops in
Canada.
International
The Company regularly investigates the possibilities of entering new
markets and intends to enter additional foreign markets, particularly in Europe
and the Pacific Rim. In March 1994, the Company started shipping its products to
smaller specialty stores in the United Kingdom. Ben & Jerry's ice cream products
are now distributed nationally in the United Kingdom, and are available in parts
of Ireland and at one "hyper-market" chain in France.
In 1990, the Company entered into a joint venture agreement with
certain individuals in the former Soviet Union to establish a Ben & Jerry's
manufacturing facility and franchised "scoop shops" in the Russian state of
Karelia. The Company's goal is to provide a model of a small scale private
enterprise in the former Soviet Union and to foster international cooperation
and global understanding. The joint venture is currently operating three scoop
shops in Karelia.
In 1992, the Company repurchased the Canadian rights to Ben & Jerry's
products which it had previously licensed in 1987. In 1987, the Company granted
an exclusive license to manufacture and sell Ben & Jerry's ice cream in Israel.
Competition
The super premium ice cream, frozen yogurt and sorbet business is
highly competitive. The Company's principal competitor is The Haagen-Dazs
Company, Inc. Other significant competitors are Dannon, Columbo, and Healthy
Choice. Haagen-Dazs, an industry leader in the super premium ice cream market,
is owned by The Pillsbury Company, which in turn is owned by Grand Metropolitan
PLC, a British food and liquor conglomerate. Grand Metropolitan is a large,
diversified company with resources significantly greater than the Company's, and
Haagen-Dazs has a significant share of the markets which the Company has entered
in recent years and has already been marketing a sorbet line. Haagen-Dazs has
also entered substantially more foreign markets than the Company (including
certain markets in Europe and the Pacific Rim). Haagen-Dazs and certain other
competitors also market flavors using pieces of cookies and candies as
ingredients.
In the ice cream novelty segment, the Company competes with several
well-known brands, including Haagen-Dazs and Dove Bars, manufactured by a
division of Mars, Inc. Both of these other brands have achieved far larger
shares of the novelty market than the Company.
During 1995, the Company noted that the premium category again
experienced increased promotional activity driven by the national competition
between Dreyer's Grand Ice Cream, Inc. and Breyer's Ice Cream (owned by
Unilever, a large international food company). In accordance with Dreyer's
strategic five year plan to accelerate the sales of their branded premium
products Dreyer's has increased its consumer marketing efforts and continued
expansion of its distribution system into additional U.S. markets.
There are a number of other super premium brands, including some
significant regional ice cream companies and some new entries. Increased
competition and the increased consumer demand for new lower fat, lower
cholesterol products like low fat or nonfat frozen yogurt, low fat ice cream and
sorbet, combined with limited shelf space within supermarkets, may have, in
general, made market entry harder and has already forced some brands out of some
markets. The ability to introduce innovative new flavors and low fat offerings
on a periodic basis is also a significant competitive factor. The Company
expects strong competition to continue, including price/promotional competition,
competition for adequate distribution and limited shelf space within the frozen
dessert category in supermarkets and other food retail outlets.
Seasonality
The ice cream, frozen yogurt and frozen dessert industry generally
experiences the highest volume during the spring and summer months and the
lowest volume in the winter months.
Regulation
The Company is subject to regulation by various governmental agencies,
including the United States Food and Drug Administration and the Vermont
Department of Agriculture. It must also obtain licenses from the states where
Ben & Jerry's products are sold. The criteria for labeling
low-fat/low-cholesterol and other health-oriented foods was revised, and in some
respects made more stringent, by the FDA. The Company, like other companies in
the food industry, made changes in its labeling in response to these regulations
and is in compliance. The Company cannot predict the impact of possible further
changes that it may be required to make in response to legislation, rules or
inquiries made from time to time by any governmental agencies. FDA regulations
may, in certain instances, affect the ability of the Company, as well as others
in the frozen desserts industry, to develop and market new products.
Nevertheless, the Company does not believe these legislative and administrative
rules and regulations will have a significant impact on its operations.
In connection with the operation of all its plants, the Company must
comply with the Vermont environmental laws and regulations relating to air
quality, waste management, and other related land use matters. The Company
maintains wastewater discharge permits for all of its manufacturing locations.
The Waterbury plant and the new St. Albans plant pretreat production effluent
prior to discharge to the municipal treatment facility. The Company believes
that it is in compliance with all of the required operational permits relating
to environmental regulations.
The Company believes that it is in compliance in all material respects
with the other regulatory requirements applicable to its operations and that
continuing expenditures for compliance with environmental or other regulatory
requirements will not materially affect its results.
Trademarks
The name Ben & Jerry's(R) and the proprietary flavor names: Cherry
Garcia(R); Chunky Monkey(R); Chubby Hubby(R); Dastardly Mash(R); and Vermont's
Finest(TM) are all registered trademarks of the Company. Cherry Garcia(R) and
Doonesberry(R) are licensed to the Company, as are certain other flavor names.
Some of the Company's other trademarks include: White Russian(TM); New York
Super Fudge Chunk(TM); and Peace Pops(TM).
Employees
At December 30, 1995, Ben & Jerry's employed 703 people including full
time, part time and temporary employees. This represents a 14.7% increase from
the 613 people employed by the Company at December 31, 1994.
The Ben & Jerry's Foundation
In 1985, Ben Cohen, Chairperson of the Board, contributed a portion of
the equity of the Company which he then owned to The Ben & Jerry's Foundation,
Inc., a charitable organization under Section 501(c)(3) of the Internal Revenue
Code, in order to enable the Foundation to sell such equity and invest the net
proceeds (approximately $598,000) in income-producing securities to generate
funds for future charitable grants. Until March 1994, the Foundation was the
recipient of the bulk of the Company's cash charitable contributions and
provided the principal means for carrying out the Company's cash charitable
giving policy. In March 1994, the Board of Directors revised the process to make
philanthropic giving more meaningful for, and connected to, the employees of the
Company. Employees serving in Community Action Teams now provide the principal
means for carrying out the Company's cash charitable giving policy in the State
of Vermont. The Foundation, with input from its employee-led grant making
committee, provides the principal means for carrying out the Company's cash
charitable giving policy across the nation. The Foundation continues to target
its grants to local groups concerned with the welfare of children and their
families, and other grass roots social change organizations.
In October 1985, pursuant to stockholder authorization, the Company
sold to the Foundation all of the 900 authorized shares of Preferred Stock for
$10 per share. The Preferred Stock gives the Foundation a special class voting
right to act with respect to certain mergers and other Business Combinations (as
defined in the Company's charter). The sale of Preferred Stock was designed to
perpetuate the relationship between the Foundation and the Company and to assist
the Company in its determination to remain an independent business headquartered
in Vermont.
Anti-Takeover Effects of Class B Common Stock and Preferred Stock
The holders of Class A Common Stock are entitled to one vote for each
share held on all matters voted on by stockholders, including the election of
directors. The holders of Class B Common Stock are entitled to ten votes for
each share held in the election of directors and on all other matters. The Class
B Common Stock is generally nontransferable, and there is no trading market for
the Class B Common Stock. The Class B Common Stock is freely convertible into
Class A Common Stock on a share-for-share basis and transferable thereafter.
The Company has been advised that Mr. Ben Cohen (Chairperson and a
director of the Company), Mr. Jerry Greenfield (Vice Chairperson and a director
of the Company), Mr. Fred Lager (a director and consultant to the Company) and
Mr. Jeff Furman (a director and consultant to the Company) (collectively, the
"Principal Stockholders") presently intend to retain substantial numbers of
shares of Class B Common Stock. As a result of conversions by "public"
stockholders of Class B Common Stock, in order to enable their sales of such
securities, the Class B Common Stock is now held disproportionately by Company
insiders, including the above-named four directors who are Principal
Stockholders. See "Security Ownership of Certain Beneficial Owners and
Management." As of March 8, 1996, these four principal individual stockholders
held shares representing 48.0% of the aggregate voting power in elections of
directors and various other matters but only 20.0% of the aggregate common
equity outstanding, permitting them, as a practical matter, generally to decide
elections of directors and various other questions submitted to a vote of the
Company's stockholders even though they might sell substantial portions of their
Class A Common Stock.
The Board of Directors, without further stockholder approval, may
authorize the issuance of additional shares of Class B Common Stock in the
future and sell shares of Class B Common Stock held in the Company's treasury;
however, issuance or sale of additional shares of Class B Common Stock, while
not permitted under a rule of the NASDAQ-NMS until 1995, is still subject to
approval under limited circumstances by the NASDAQ-NMS.
In 1985, the Company sold 900 shares of Preferred Stock at a price of
$10 per share to The Ben & Jerry's Foundation, Inc. (the "Foundation"). While
the Foundation is a charitable entity legally separate from the Company, it may
be deemed to be an affiliate of the Company because two of the three current
directors of the Foundation are Messrs. Greenfield and Furman. The Preferred
Stock gives the Foundation a special class voting right to act with respect to
certain Business Combinations (as defined in the Company's charter). The sale of
the Preferred Stock to the Foundation effectively limits the voting rights that
holders of the Class A Common Stock and Class B Common Stock, the owners of
virtually all of the equity in the Company, would otherwise have with respect to
Business Combinations (as defined). This may have the effect of limiting such
common stockholders' participation in certain transactions such as mergers,
other Business Combinations (as defined) and tender offers, whether or not such
transactions might be favored by such common stockholders.
The Class B Common Stock and the Preferred Stock may be deemed to be
"anti-takeover" devices in that the Board of Directors believes the existence of
these securities will make it difficult for a third party to acquire control of
the Company on terms opposed by the holders of the Class B Common Stock,
including primarily the Principal Stockholders, and the Foundation or for
incumbent management and the Board of Directors to be
removed. See also "Risk Factors" in Item 7 of this Report.
ITEM 2. PROPERTIES
Ben & Jerry's owns a 42.5 acre site in Waterbury, Vermont on which it
operates a 46,000 square-foot plant producing ice cream and frozen yogurt in
packaged pints. The Company also owns a 48,000 square-foot production facility
in Springfield, Vermont. The Springfield plant is used for the production of ice
cream novelties, bulk ice cream and frozen yogurt and at times packaged pints
and quarts.
The Company's property, plant and equipment at its production
facilities in Waterbury and Springfield are subject to various liens securing a
portion of the Company's long-term debt.
In 1991, the Company entered into a twenty-five year lease with an
option to purchase 17.1 acres of land in Rockingham, Vermont on which the
Company constructed, and operates, a 45,000 square-foot central distribution
facility.
In 1992, the Company entered into a five-year lease/purchase agreement
for a 42-acre parcel of land in St. Albans, Vermont, the site of the Company's
82,000 square-foot new plant.
In February 1996, the Company entered into a ten year lease agreement
for approximately 50,000 square-feet of office and light manufacturing space in
South Burlington, Vermont where the Company's executive offices and
administrative departments are now located, following the 1996 move from its
Waterbury headquarters.
The Company also leases space for its retail ice cream parlors in
Burlington and Montpelier, Vermont and 12,000 square feet of storage space in
Waterbury, Vermont. The Company owns two single-family houses, both situated on
land adjacent to its manufacturing facility it Waterbury, used for a day-care
center, employee training and other purposes.
The Company believes that all of its facilities are well maintained and
in good repair.
ITEM 3. LEGAL PROCEEDINGS
On December 14, 1995, the Company was served with a class action
complaint filed in federal court in Burlington, Vermont. The complaint,
captioned Henry G. Jakobe, Jr. v. Ben & Jerry's Inc., et al., United States
District Court (D. Vermont) Case No. 1-95-CV-373, was filed by a Ben & Jerry's
shareholder on behalf of himself and purportedly on behalf of all other Ben &
Jerry's shareholders who purchased the common stock of the Company during the
period from March 25, 1994 through December 19, 1994. Plaintiff alleges that the
Company violated the federal securities laws by making, in 1994, untrue
statements of material facts and omitting to state material facts primarily
concerning the Company's construction and start-up of its new manufacturing
facility in St. Albans, Vermont. Also named as defendants in the Complaint are
certain present and former officers and directors of the Company, Ben Cohen,
Chairperson of the Board; Jerry Greenfield, Vice Chairperson of the Board;
Frances Rathke, Chief Financial Officer; and Charles Lacy, former President.
Plaintiff is seeking an unspecified amount of monetary damages.
While this action is in its preliminary stages management believes,
based on an initial review, the allegations made in the lawsuit are without
merit and the Company intends to defend the lawsuit vigorously.
The Company is subject to certain additional litigation and claims in
the ordinary course of business which management believes are not material to
the Company's business.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company
during the fourth quarter of 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Class A Common Stock is traded on the NASDAQ National
Market System under the symbol BJICA. The following table sets forth for the
period January 1, 1994 through March 8, 1996 the high and low closing sales
prices of the Company's Class A Common Stock for the periods indicated.
High Low
---- ---
1994
- ----
First Quarter...................... $20 $14 3/4
Second Quarter..................... 18 1/2 14
Third Quarter...................... 16 3/4 13
Fourth Quarter..................... 14 9 1/2
1995
- ----
First Quarter...................... $14 $ 9 5/8
Second Quarter..................... 15 1/2 11 3/4
Third Quarter...................... 20 13 5/8
Fourth Quarter..................... 19 14 1/2
1996
- ----
First Quarter (through March 8).... $17 1/4 $13 1/2
The Class B Common Stock is generally non-transferable, and there is no
trading market for the Class B Common Stock. The Class B Common Stock is freely
convertible into Class A Common Stock on a share-for-share basis, and
transferable thereafter.
The Company has never declared a cash dividend on its Class A Common
Stock or the Class B Common Stock and the current policy of its Board of
Directors is to retain earnings for expansion and development of the Company's
business. Accordingly, the Board of Directors does not anticipate declaring any
cash dividends on the Class A or Class B Common Stock in the foreseeable future.
See "Description of Capital Stock-Dividends."
As of March 8, 1996 there were 11,168 holders of record of the
Company's Class A Common Stock and 2,508 holders of record of the Company's
Class B Common Stock.
ITEM 6. SELECTED FINANCIAL DATA
The following table contains selected financial information for the
Company's fiscal years 1991 through 1995.
<TABLE>
(In thousands except per share data)
Summary of Operations:
Year Ended
----------
12/30/95 12/31/94 12/25/93 12/26/92 12/28/91
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales ....................... $155,333 $148,802 $140,328 $131,969 $ 96,997
Cost of sales ................... 109,125 109,760 100,210 94,389 68,500
Gross profit .................... 46,208 39,042 40,118 37,580 28,497
Selling, general
and administrative
expenses ..................... 36,362 36,253 28,270 26,243 21,264
Asset write-down ................ 6,779
Other income
(expense)--net ............... (441) 228 197 (23) (729)
Income(loss) before
income taxes .................... 9,405 (3,762) 12,045 11,314 6,504
Income taxes(benefit) ........... 3,457 (1,893) 4,844 4,639 2,765
Net income(loss) ................ 5,948 (1,869) 7,201 6,675 3,739
Net income(loss) per
common share (1).............. $ 0.83 $ (0.26) $ 1.01 $ 1.07 $ 0.67
Weighted average
common shares
outstanding (1)............... 7,222 7,148 7,138 6,254 5,572
Balance Sheet Data:
Years Ended
-----------
12/30/95 12/31/94 12/25/93 12/26/92 12/28/91
-------- -------- -------- -------- --------
Working capital $ 51,023 $ 37,456 $ 29,292 $ 18,053 $ 11,035
Total assets 131,074 120,296 106,361 88,207 43,056
Long-term debt 31,977 32,419 18,002 2,641 2,787
Stockholders' equity (2) 78,531 72,502 74,262 66,760 26,269
<FN>
(1) The per share amounts and average shares outstanding have been adjusted for
the effects of all stock splits, including stock splits in the form of stock
dividends.
(2) No cash dividends have been declared or paid by the Company on its capital
stock since the Company's organization. The Company intends to reinvest earnings
for use in its business and to finance future growth. Accordingly, the Board of
Directors does not anticipate declaring any cash dividends in the foreseeable
future.
</FN>
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The following table shows certain items as a percentage of net sales which
are included in the Company's Statement of Operations and the percentage
increase (decrease) of such items as compared to the indicated prior period.
Percentage of Net Sales
Year Ended
12/30/95 12/31/94 12/25/93
-------- -------- --------
Net sales ................ 100.0% 100.0% 100.0%
Cost of sales ............ 70.2 73.8 71.4
---- ---- ----
Gross profit ............. 29.8 26.2 28.6
Selling, general
and administrative
expense ............. 23.4 24.4 20.2
Asset write-down ......... (4.6)
Other income
(expenses) .......... (0.4) 0.2 0.2
----- --- ---
Income(loss)before
income taxes ........ 6.0 (2.6) 8.6
Income taxes(benefit) .... 2.2 (1.3) 3.5
--- ----- ---
Net income(loss) ......... 3.8% (1.3)% 5.1%
=== ===== ===
Sales
Net sales in the fourth quarter of 1995 increased 5% from the fourth
quarter of 1994, and net sales in 1995 overall increased 4.4% to $155 million
from $149 million in 1994. Pint volume decreased 1.5% compared to 1994. The
Company believes this decrease in pint volume is consistent with the recent
performance in the super premium category overall, excluding sorbet which the
Company did not introduce until 1996. This volume decrease was offset by a 3.7%
price increase of pints sold to distributors that went into effect in March
1995. Net sales of both novelties and 21/2 gallon bulk containers product
categories had modest increases in 1995.
Pint sales represented approximately 85% of total net sales in 1995,
1994 and 1993. Net sales of 2 1/2 gallon bulk containers represented
approximately 7% of total net sales in 1995 and 1994, and 8% in 1993. Net sales
of novelties accounted for approximately 6% of total net sales in 1995 and 5% in
1994 and 1993. Net sales from the Company's retail stores represented 2% of
total net sales in 1995, 3% in 1994 and 2% in 1993.
Net sales in 1994 overall increased 6.0% to $149 million from $140
million in 1993. This was primarily the result of a 7% increase in net sales of
packaged pints. The increase in pint sales was primarily due to sales of the
Company's new "Smooth, No Chunks" line which was introduced nationally during
the months of March through May 1994. Sales of the Company's reformulated and
repackaged Peace Pops resulted in an increase in Peace Pop sales. However this
was offset by the absence of sales of the Brownie Bar which the Company
discontinued manufacturing in May 1993, resulting in a approximately the same
level of net sales of novelties overall in 1994 as in 1993.
Cost of Sales
Cost of sales in 1995 decreased approximately $.6 million or 0.6% over
the same period in 1994 and overall gross profit as a percentage of net sales
increased from 26.2% in 1994 to 29.8% in 1995. The higher gross profit as a
percentage of sales in 1995 is due to the price increase effective in March 1995
combined with improved inventory management and production efficiencies, as
compared with 1994. In addition, the improved gross margin reflects less product
manufactured for the Company by Edy's Grand Ice Cream, a subsidiary of Dreyer's
Grand Ice Cream, resulting from the transfer of production to the Company's new
manufacturing facility in St. Albans, Vermont. During 1995 approximately 16% of
the packaged pints manufactured by the Company were produced by Edy's, compared
to 40% in 1994.
Cost of sales in 1994 increased approximately $9.6 million, or 9.5%
over the same period in 1993 and overall gross profit as a percentage of net
sales decreased from 28.6% in 1993 to 26.2% in 1994. Overall gross profit in
1994 was impacted by inventory management problems and production
inefficiencies, as well as 1994 start-up costs associated with certain flavors
of the new "Smooth, No Chunks" ice cream line in packaged pints. The significant
increase in the number and complexity of some of the pint flavors being produced
requires a higher level of production planning, purchasing, inventory management
and operational systems than were then in place in the Company.
During 1994 the lower gross profit as a percentage of sales also
reflected higher manufacturing costs due to more product being produced for the
Company by Edy's, with approximately 40% of the packaged pints manufactured by
the Company produced by Edy's in 1994 as compared to 37% in 1993.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 0.3% to $36.4
million in 1995 from $36.3 million in 1994 but decreased as a percentage of net
sales to 23.4% in 1995 from 24.4% in 1994. This increase in dollar spending
primarily reflects strengthening of the Company's infrastructure in order to
prepare for increased growth, offset by the lower level of marketing and sales
spending compared to 1994, when the launch of the new "Smooth, No Chunks" line
occurred.
Selling, general and administrative expenses had increased 28% to $36.3
million in 1994 from $28.3 million in 1993 and increased as a percentage of net
sales to 24.4% in 1994 from 20.2% in 1993. This increase was due principally to
increased marketing and selling expenses, including higher than anticipated
coupon redemption expenses, associated with promoting the then new "Smooth, No
Chunks" line as well as the Company's taking over the distribution arrangements
to the smaller classes of trade in the New York market and one-time costs
associated with changes in distribution arrangements in the United Kingdom.
Asset Write-Down
1994 results included a pretax charge of $6.8 million, representing a
write-down of certain assets of the Company's new St. Albans, Vermont plant,
including a portion of the previously incurred capitalized interest and project
management costs. The impact of this charge on both the 1994 fourth quarter and
full year 1994 results was $4.1 million or $0.57 per share. Following
substantial delays with the implementation and completion of certain automated
handling processes and refrigeration hardening equipment of the new plant and
after receipt of a report from an outside engineering firm experienced in the
refrigerated food industry, the Company decided to replace certain of the
software and equipment installed at the new plant.
The Company began manufacturing at the new St. Albans plant in March
1995, utilizing a temporary set-up on one production line. The two currently
planned manufacturing lines were fully operational in December 1995 and it is
expected that the rate of production on these lines will be increased in 1996.
Other Income(Expense)
Interest income increased $0.6 million during 1995 compared to 1994.
This increase was primarily due to higher interest rates on investments.
Interest expense increased $1.2 million in 1995 compared to 1994. This increase
was due primarily to the capitalization of interest in the prior year as part of
the cost of the new plant in St. Albans, Vermont as compared with capitalization
of only a small amount of interest in 1995 before the plant became operational.
Interest income increased $0.3 million during 1994 compared to 1993
reflecting interest earned on investments. Interest expense increased $0.2
million reflecting the issuance of the $30 million Series A and B Notes bearing
interest at a weighted average rate of 5.84%. Interest expense was reduced
during 1994 by capitalization of interest as part of the cost of the new plant.
Income Taxes
The Company's effective income tax rate increased from (50.3%) in 1994
to 36.8% in 1995 primarily reflecting the profit in 1995, as compared to the
loss in 1994, combined with lower income tax credits and tax-exempt interest
income in 1995 as compared to 1994. In 1993, the Company's effective income tax
rate was 40.2% reflecting lower income tax credits and tax-exempt interest
income. Management expects 1996's effective income tax rate to increase to
approximately 38%.
Net Income
As a result of the foregoing, net income increased $7.8 million to $5.9
million in 1995 compared to a net loss of $1.9 million in 1994, and net income
of $7.2 million in 1993. Net income (loss) as a percentage of net sales was 3.8%
in 1995, (1.3%) in 1994 and 5.1% in 1993.
Seasonality
The Company typically experiences more demand for its products during
the summer than during the winter.
Inflation
Inflation has not had a material effect on the Company's business to
date. Management believes that the effects of inflation and changing prices were
successfully managed in 1995, with both margins and earnings being protected
through a combination of pricing adjustments, cost control programs and
productivity gains.
Liquidity and Capital Resources
The Company's working capital at December 30, 1995 was approximately
$51.0 million as compared to $37.5 million at December 31, 1994. This $13.5
million increase was primarily due to increases of $14.6 million in cash and
cash equivalents.
Net cash provided by operations in 1995 was approximately $15.9
million. Approximately $7.5 million was used for net additions to property,
plant and equipment, primarily for the new plant in St. Albans, Vermont that
began production in 1995. At December 30, 1995 cash and cash equivalents were
$35.4 million.
Inventories have decreased slightly since the end of December 1994 from
$13.5 million to $12.6 million at December 30, 1995. Accounts receivable has
increased $1.8 million since December 31, 1994 from $9.9 million to $11.7
million at December 30, 1995. This increase is due to increased sales for the
month of December, 1995 as compared with December, 1994 as well as increased
international sales which have a longer collection cycle than domestic sales.
During the second quarter of 1989, the Company entered into a
manufacturing and warehouse agreement with Edy's Grand Ice Cream, a subsidiary
of Dreyer's Grand Ice Cream, Inc., to manufacture product at Edy's plant in Fort
Wayne, Indiana in accordance with specifications and quality control provided by
the Company and using dairy products from Vermont. This agreement expired in
September 1995. This agreement assisted the Company in meeting its demand prior
to and during the construction period of the Company's new plant in St. Albans,
Vermont. Because per unit manufacturing costs were higher under this agreement
than at the Company's plants, this agreement had an adverse impact on the
Company's gross profit as a percentage of net sales throughout its term.
In October 1992, the Company began construction of a new third plant in
St. Albans, Vermont. At December 30, 1995, the Company has spent approximately
$38.2 million to date, net of the 1994 $6.8 million write-down of certain
assets, on building and equipping the new plant ($6.2 million in 1995 of which
$1.2 million was transferred from the temporary facility at the St. Albans
Cooperative) and anticipates additional capital costs for the St. Albans plant
of approximately $1.9 million in 1996. The cost of building and equipping the
new plant, net of the 1994 $6.8 million write-down of certain assets is
currently estimated to be approximately $40.1 million.
In addition to the $6.2 million construction expenditures for the new
plant, other capital expenditures in 1995 totaled $2.5 million. These projects
included equipment upgrades at the Waterbury and Springfield plants.
In addition to $1.9 million of capital expenditures to complete the new
plant at St. Albans, the Company anticipates other capital expenditures in 1996
of approximately $10.6 million. Substantially all of these additional projected
capital expenditures relate to equipment upgrades in Waterbury and Springfield,
leasehold improvements at the Company's headquarter offices in South Burlington,
Vermont, and computer related expenditures, with a small proportion for
equipment enhancements at the St. Albans plant.
The Company's long-term debt includes $30 million aggregate principal
amount of Senior Notes issued in 1993 and 1994, which are held in cash
equivalents pending their use in the business.
On December 29, 1995, the Company extended two line of credit
agreements, for an aggregate of $20 million, with The First National Bank of
Boston and Key Bank of Vermont. These are unsecured agreements providing for
borrowings from time to time, expiring September 29, 1998 and December 29, 1998,
respectively. The agreements specify interest at either the banks' Base Rate or
the Eurodollar rate plus a maximum of 1.25%. As of March 28, 1996 there have
been no borrowings under these line of credit.
Management believes that internally generated funds, cash currently on
hand, investments held in cash equivalents (pending their use in the business),
and equipment lease financing and/or borrowings under the Company's two
unsecured bank lines of credit will be adequate to meet anticipated operating
and capital requirements.
Forward-Looking Statements
This section, as well as other portions of this document, includes
certain forward-looking statements about the Company's business and new
products, sales and expenses, effective tax rate and operating and capital
requirements. In addition, forward-looking statements may be included in various
other Company documents to be issued in the future and in various oral
statements by Company representatives to security analysts and investors from
time to time. Any such statements are subject to risks that could cause the
actual results or needs to vary materially. These risks are discussed below in
"Risk Factors" in this document.
Risk Factors
Dependence on Independent Ice Cream Distributors. The Company is
dependent on maintaining satisfactory relationships with independent ice cream
distributors that now generally act as the Company's exclusive or master
distributor in their assigned territories. While the Company believes its
relationships with Dreyer's and its other distributors generally have been
satisfactory and have been instrumental in the Company's growth, the Company has
at times experienced difficulty in maintaining such relationships. Available
distribution alternatives are limited. Accordingly, there can be no assurance
that difficulties in maintaining relationships with distributors, which may be
related to actions by the Company's competitors or by one or more of the
Company's distributors themselves (or their controlling persons), will not have
a material adverse effect on the Company's business. The loss of one or more of
the Company's principal distributors or termination of one or more of the
related distribution agreements could have a material adverse effect on the
Company's business. See "Business - Markets and Customers."
Growth in sales and earnings. In 1995, net sales of the Company
increased 4.4% to $155 million from $149 million in 1994. Pint volume decreased
1.5% compared to 1994. The Company believes this decrease is consistent with the
recent performance in the super premium category overall excluding sorbet, which
contributed more growth than the total increase in the super premium category
from 1994 to 1995. Given these overall domestic super premium industry trends,
the successful introduction of innovative flavors on a periodic basis has become
increasingly important to any sales growth by the Company. Accordingly, the
future degree of market acceptance of the Company's sorbet line, which is being
introduced February through May 1996, and which will be accompanied by a
significant increase in promotional expenditures is likely to have an important
impact on the Company's 1996 and future financial results. See "Management's
Discussion and Analysis of Financial Conditions and Results of Operations."
Competitive Environment. The super premium frozen dessert market is
highly competitive with the distinctions between the super premium category, and
the "adjoining" premium category less marked than in the past and with the
domestic super premium frozen dessert category showing a recent decline in
industry sales, except for sorbet. And, as noted above, the ability to
successfully introduce innovative flavors on a periodic basis that are accepted
by the marketplace is a significant competitive factor. In addition, the
Company's principal competitors are large, diversified companies with resources
significantly greater than the Company's. The Company expects strong competition
to continue, including competition for adequate distribution and competition for
the limited shelf space for the frozen dessert category in supermarkets and
other retail food outlets. See "Business-Competition" and "Business-The Super
Premium Frozen Dessert Market."
Reliance on a limited number of Key Personnel. The success of the
Company is significantly dependent on the services of Robert Holland, Jr., the
Chief Executive Officer and a limited number of executive managers working under
Mr. Holland, as well as certain continued services of Ben Cohen, the Chairperson
of the Board and co-founder of the Company; and Jerry Greenfield, Vice
Chairperson and co-founder of the Company. Loss of the services of any of these
persons could have a material adverse effect on the Company's business. See
"Directors and Executive Officers of the Company."
The Company's Social Mission. The Company's basic business philosophy
is embodied in a three-part "mission statement," which includes a "social
mission" to "operate the Company...[to] improve the quality of life of our
employees and a broad community: local, national and international." The Company
believes that implementation of its social mission, which is integrated into the
Company's business, has been beneficial to the Company's overall financial
performance. However, it is possible that at some future date the amount of the
Company's energies and resources devoted to its social mission could have a
material adverse financial effect on the Company's business. See
"Business-History and Philosophy of the Company" and "Business-Marketing."
Control of the Company. The Company has two classes of common stock -
the Class A Common Stock, entitled to one vote per share, and the Class B Common
Stock, entitled, except to the extent otherwise provided by law, to ten votes
per share. Ben Cohen, Jerry Greenfield, Fred Lager and Jeffrey Furman
(collectively, the "Principal Stockholders") hold shares representing 48.0% of
the aggregate voting power in elections for directors, permitting them as a
practical matter to elect all members of the Board of Directors and thereby
effectively control the business, policies and management of the Company.
Because of their significant holdings of Class B Common Stock, the Principal
Stockholders may continue to exercise this control even if they were to sell
substantial portions of their Class A Common Stock. See "Security Ownership of
Certain Beneficial Owners and Management."
In addition, the Company has issued all of the Class A Preferred Stock
to the Foundation. All current directors of the Foundation are directors and or
employees of the Company. The Preferred Stock gives the Foundation a special
class voting right to act with respect to certain Business Combinations (as
defined in the Company's charter) and effectively limits the voting rights that
holders of the Class A Common Stock and Class B Common Stock, the owners of
virtually all of the equity in the Company, would otherwise have with respect to
such Business Combinations. See "Business- The Ben & Jerry's Foundation."
While the Board of Directors believes that the Class B Common Stock and
the Preferred Stock are important elements in keeping Ben & Jerry's an
independent Vermont-based business, the Class B Common Stock and the Preferred
Stock may be deemed to be "anti-takeover" devices (and thus may be deemed to
have the potential for adverse consequences on the business) in that the Board
of Directors believes the existence of these securities will make it difficult
for a third party to acquire control of the Company on terms opposed by the
holders of the Class B Common Stock, including primarily the Principal
Stockholders, or The Foundation, or for incumbent management and the Board of
Directors to be removed.
International. The Company's principal competitors have substantial
market shares in various countries outside the United States, principally Europe
and Japan. The Company has limited international sales to date, but is
investigating the possibility of international expansion. However, there can be
no assurance that the Company will be successful in entering, on a long-term
profitable basis, such international markets as it selects.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is in Item 14(a) of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Directors and Executive Officers
The directors and executive officers of the Company are as follows:
Name Age Office
- ---- --- ------
Ben Cohen............ 44 Chairperson and Director
Robert Holland Jr.... 55 President, Chief Executive Officer
and Director
Jerry Greenfield..... 44 Vice Chairperson and Director
Elizabeth Bankowski.. 48 Director and Director of Social
Mission
Merritt C. Chandler.. 79 Director
Jeffrey Furman....... 52 Director
Fred Lager........... 41 Director
Frederick A. Miller.. 49 Director
Henry Morgan......... 70 Director
Frances Rathke....... 35 Chief Financial Officer, Treasurer
and Secretary
Bruce Bowman......... 43 Senior Director of Operations
Jerry Welsh.......... 50 Consultant and Acting Director of
Marketing and Sales
All directors hold office until the 1996 annual meeting of
stockholders of the Company and until their successors are elected and
qualified. The Board of Directors has an Audit Committee on which Messrs.
Morgan, Chandler and Lager (Chairperson) serve and a Compensation Committee on
which Messrs. Morgan (Chairperson), Chandler, Furman and Miller serve. Officers
serve until their successors are elected and qualified.
Ben Cohen, a founder of the Company, has served as Chairperson of the
Board of Directors since February 1989. From January 1, 1991 through January 29,
1995 he was the Chief Executive Officer of the Company. Mr. Cohen has been a
director of the Company since 1977. Mr. Cohen is a director of Community
Products, Inc., a manufacturer of Rain Forest Crunch candy, Blue Fish Clothing,
Inc., and Social Venture Network.
Robert Holland Jr. has served as President and Chief Executive Officer
since January 1995. Mr. Holland has served as a director of the Company since
March 1995. Prior to this Mr. Holland served as Chairperson and Chief Executive
Officer of ROHKER-J, a consulting firm for Fortune 500 companies since 1991. Mr.
Holland served as Chairperson and Chief Executive Officer of Gilreath
Manufacturing, Inc. from March 1990 until 1991. From 1968 until 1991 Mr. Holland
also served as an associate and then partner of McKinsey & Company, Inc. where
he managed projects for global concerns involving operational, strategic and
marketing issues. Mr. Holland is Chairperson of the Board of Trustees at Spelman
College, a trustee of Atlanta University Center and Mutual of New York and is a
member of the Board of Directors of Frontier Corporation, TrueMark Manufacturing
Company and the Harlem Junior Tennis Program.
Jerry Greenfield, a founder of the Company, has served as director and
Vice Chairperson of the Board of Directors since 1990.
Elizabeth Bankowski has served as Director of Social Mission
Development since December 1991. Ms. Bankowski has been a director of the
Company since 1990.
Merritt C. Chandler has served as a director of the Company since
1987. Mr. Chandler has been Business Manager of the Addison, Vermont Central
Supervisory Union, a group of school districts, since 1985. Mr. Chandler serves
as a member of the Compensation Committee of the Board of Directors and as a
member of the Audit Committee of the Board of Directors.
Jeffrey Furman has been a consultant to the Company since March 1991.
Prior to that Mr. Furman was an Officer of the Company. He has served as a
director of the Company since 1982. Mr. Furman serves as a member of the
Compensation Committee of the Board of Directors.
Fred Lager is currently a consultant to the Company. Prior to this Mr.
Lager served as President and Chief Executive Officer of the Company from
February 1989 until 1991. Mr. Lager has served as a director of the Company
since 1982. He currently serves as Chairperson of the Audit Committee of the
Board of Directors. Mr. Lager is a director of Working Assets Funding Service
and Whole Foods Market, Inc., the largest chain of natural food supermarkets in
the country.
Frederick A. Miller has served as a director of the Company since
1992. Since 1985, he has been President of the Kaleel Jamison Consulting Group,
Inc., a strategic cultural change and management consulting firm. Mr. Miller
serves as a member of the Compensation Committee of the Board of Directors.
Henry Morgan has served as a director of the Company since 1987. Mr.
Morgan serves as Chairperson of the Compensation Committee and as a member of
the Audit Committee of the Board of Directors. He is President and sole director
of Symbolics, Inc., a corporation which has filed for protection under Chapter
11 of the United State Bankruptcy Code. He is also a director of Cambridge
Bancorporation.
Frances Rathke has served as Chief Financial Officer and Chief
Accounting Officer of the Company since April, 1990 and Secretary and Treasurer
effective January 1, 1991. Prior to this, Ms. Rathke was Controller of the
Company.
Jerry Welsh is a consultant for the Company with responsibility for
Sales and Marketing since October 1995. Jerry Welsh is President of Welsh
Marketing Associates, Inc. which he formed in 1988. Prior to this, Mr. Welsh was
Senior Executive Vice President for The E. F. Hutton Group, Inc.
Bruce Bowman has served as Senior Director of Operations since August
1995. Prior to this, Mr. Bowman was Senior Vice President of Operations at Tom's
Foods, Inc., a food manufacturing company from April 1991 until August 1995.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the cash compensation paid by the
Company in Fiscal Years 1993 - 1995 as well as certain other compensation paid,
awarded or accrued for those years to the Company's Chief Executive Officer (Ben
Cohen was CEO prior to Robert Holland's election in January 1995) and the
Company's other executive officers at the end of the 1995 fiscal year whose
total salary and bonuses for 1995 exceeded $100,000:
<TABLE>
Long-Term Compensation
Annual Compensation Awards Payouts
------------------- ------------------------------------
Other Securities All
Name and Annual Restricted Underlying Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus(2) ation(4) Awards(3) SARS Payouts sation(5)
- -------- ---- ------ -------- -------- --------- ---- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ben Cohen 1995 $132,500 -- $2,195
Chairperson 1994 $132,500 -- $2,650
and CEO(1) 1993 $133,212 -- $2,664
Jerry Greenfield 1995 $132,500 -- $2,195
Vice Chairperson 1994 $132,745 -- $2,655
1993 $132,517 -- $2,650
Robert Holland, Jr. 1995 $225,962 $100,000 $180,000 --
CEO, President and
Director
Frances Rathke 1995 $125,000 $1,281 30,000 $2,260
CFO, Treasurer 1994 $121,398 $611 $2,440
and Secretary 1993 $110,000 $1,581 $2,232
Elizabeth Bankowski 1995 $125,000 $745 $14,341 $21,360 5,000 $2,267
Director of Social 1994 $115,803 $328 $2,323
Mission Development 1993 $105,000 $694 $2,114
<FN>
(1) Ben Cohen was CEO prior to January 31, 1995.
(2) "Bonus" includes discretionary distributions under the Company's profit
sharing plan pursuant to which a cash bonus was awarded to all employees (other
than co-founders, Ben Cohen and Jerry Greenfield, CEO Robert Holland, and Senior
Director of Operations Bruce Bowman). Robert Holland was awarded a bonus in
accordance with his employment contract of $100,000 for the year 1995.
(3) "Restricted Stock Awards" includes restricted stock awards of 2000 shares
made in 1995. No other restricted stock awards were made in 1993-1995, or are
outstanding. Award was vested at date of grant.
(4) "Other Annual Compensation" consists of gross-up payments for tax
liabilities incurred on the restricted stock award granted in 1995.
(5) "All Other Compensation" includes company contributions to 401(K) plans.
</FN>
</TABLE>
<TABLE>
Option/SAR Grants in 1995
Potential
Realizable
Value at
Percentage Assumed Annual
of Total Rates of
Options/ Stock Price
SARS Exercise Appreciation
Options/ Granted to or for Option Term
SARS Employees Base Price Expiration
Granted in 1995 (per share) Date 5% 10%
------- ------- ----------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Ben Cohen ......... 0 0 0 0 0 0
Jerry Greenfield 0 0 0 0 0 0
Robert Holland, Jr 180,000 75% $ 10.81 1/29/03 $1,223,073 $3,101,104
Frances Rathke .... 30,000 12.50% $10.63-$14.00 3/31/04 $ 253,539 $ 642,517
Elizabeth Bankowski 5,000 2.08% $ 10.63 3/31/04 $ 33,326 $ 84,707
</TABLE>
<TABLE>
Aggregated Option/SAR Exercises in 1995 and 1995 Year-End
Option/SAR Values
Shares Value of Unexercised
Acquired Number of Unexercised In-The-Money Options/
on Options/SARS at 12/30/95 SARS at 12/30/95
Exercise Value ------------------------ ----------------
(#) Realized Exercisable Unexercisable Exercisable Unexercisable
--- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ben Cohen 0 0 0 0 0 ---
Jerry Greenfield 0 0 0 0 0 ---
Robert Holland, Jr. 0 0 20,000 160,000 $78,750 $630,000
Frances Rathke 0 0 2,500 28,685 $10,300 $29,050
Elizabeth Bankowski 0 0 2,500 3,470 $10,300 $10,300
</TABLE>
Directors who are not employees or full-time consultants of the Company
receive $9,000 per year plus expenses. On December 17, 1992, two non-employee
directors, Mr. Chandler and Mr. Morgan, each received awards of 1,000 shares of
the Company's Class A Common Stock under the 1992 Non-Employee Directors'
Restricted Stock Plan. The shares had a market value on the date of grant of
$28.50 per share.
The Company has also adopted the 1995 Non-Employee Directors Plan for
Stock in lieu of Directors Cash Retainer under which directors may elect to be
paid annually, in lieu of the cash retainer for Board services, shares of common
stock having a fair market value (as of the date of payment) equal to the amount
of such annual retainer. This plan was not implemented with respect to the year
1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 8, 1996 with
respect to the beneficial ownership of the outstanding shares of Class A Common
Stock, Class B Common Stock and Preferred Stock by (i) all persons owning of
record, or beneficially to the knowledge of the Company, more than five percent
of the outstanding shares of Class A Common Stock, Class B Common Stock or
Preferred Stock, (ii) each director and executive officer of the Company
individually, (iii) all directors and officers of the Company as a group and
(iv) The Ben & Jerry's Foundation, Inc. The mailing address of each of the
persons shown and of the Foundation is c/o the Company, 115 Kimball Avenue,
South Burlington, Vermont 05403.
<TABLE>
Amount of Amount of
Beneficial Beneficial Amount of
Ownership of Ownership of Beneficial
Class A Class B Ownership of
Common Stock Common Stock Preferred Stock
------------ ------------ ---------------
Percentage Percentage Percentage
Number of Number of Number of
of Outstanding of Outstanding of outstanding
Shares Shares (a) Shares Shares (b) Shares Shares
------ ---------- ------ ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Ben Cohen (c) 604,373 9.6 487,876 52.24 0 0
Robert Holland, Jr. 0 0 0 0 0 0
Fred Lager (d) 30,600 * 53,600 5.90 0 0
Jeffrey Furman (e),(f) 10,000 * 30,300 3.30 0 0
Merritt C. Chandler 1,072 * 36 * 0 0
Henry Morgan 2,700 * * * 0 0
Jerry Greenfield (e) 130,000 2.01 90,000 9.90 0 0
Frederick Miller 600 * 0 0 0 0
Elizabeth Bankowski 3,182 * 0 0 0 0
Frances Rathke 3,315 * 0 0 0 0
Bruce Bowman 0 0 0 0 0 0
------- ----- ------- ----- - -
All Officers and directors
as a group (13 persons) 785,842 12.53 661,812 72.60 0 0
======= ===== ======= ===== = =
The Ben & Jerry's
Foundation, Inc. 0 0 0 0 900 100
= = = = === ===
- ----------------------
<FN>
* Less than 1%
(a) Based on the number of shares of Class A Common Stock outstanding as of
March 8, 1996. Each share of Class A Common Stock entitles the holder to
one vote.
(b) Based on the number of shares of Class B Common Stock outstanding as of
March 8, 1996. Each share of Class B Common Stock entitles the holder to
ten votes.
(c) Under the regulations and interpretations of the Securities and Exchange
Commission, Mr. Cohen may be deemed to be a parent of the Company.
(d) Mr. Lager owns these shares jointly with his wife.
(e) By virtue of their positions as two of the three current directors of the
Foundation, which has the power to vote or dispose of the Preferred Stock,
each of Messrs. Greenfield, a co-founder, Director and Vice Chairperson of
the Company, and Furman, a Director of and consultant to the Company, may
be deemed, under the regulations and interpretations of the Securities and
Exchange Commission, to own beneficially the Preferred Stock.
(f) Does not include 210 shares of Class A Common Stock and 105 shares of Class
B Common Stock owned by Mr. Furman's wife, as to which he disclaims
beneficial ownership.
(g) While the Foundation is an entity legally separate from the Company, it may
be deemed to be an affiliate of the Company under the securities laws.
</FN>
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Greenfield, Vice Chairperson, is also a director and President of the
Foundation. Mr. Furman is a director of the Foundation.
During the year ended December 30, 1995, the Company purchased Rain Forest
Crunch cashew-brazilnut buttercrunch candy to be included in Ben & Jerry's Rain
Forest Crunch flavor ice cream for an aggregate purchase price of approximately
$1,500,000 from Community Products, Inc., a company of which Messrs. Cohen and
Furman are the principal stockholders and of which Mr. Cohen is also president.
Mr. Lager was a director until January 1994. The candy was purchased from
Community Products, Inc. at competitive prices and on standard terms and
conditions. Although the Company expects to purchase additional quantities of
candy from Community Products, Inc., termination of Ben & Jerry's relationship
with this supplier would not have a material effect on the Company's business.
Subsequent to year-end 1990, Messrs. Lager and Furman retired as employees
of the Company and as President (and Chief Executive Officer) and Secretary,
respectively. Messrs. Lager and Furman first provided services to the Company in
1982 and 1978, respectively, and have been instrumental, along with the
co-founders of the Company, in its emergence as a leading super premium ice
cream business and a socially responsible Vermont company. The Board has
approved the following employment termination arrangements for Messrs. Lager and
Furman, each of whom remains a director of the Company and a consultant to the
Company.
Under the terms of the Employment Agreement dated January 1, 1984 between
the Company and Mr. Lager, Mr. Lager is entitled, in consideration of his
covenant not to compete for the period of two years after termination of
employment, to severance compensation during that two year period at his annual
base salary level in effect on the date of termination of employment ($100,000
per year). The Employment Agreement was amended (i) to extend the termination
date from December 31, 1989 to February 2, 1991, (ii) to provide that the
Company pay for family health insurance coverage under the Company's regular
employee health insurance plan for a twelve year period after termination, (iii)
to transfer to Mr. Lager a $1 million life insurance policy presently held by
the Company on Mr. Lager's life and to provide for continued payment by the
Company of the premiums due on the life insurance policy (currently $11,745 per
year) until the date when the policy becomes "self-funding", which is estimated
to be December 31, 2002, and (iv) to extend the non-compete provisions for an
additional three years (without any additional payment) beyond the two-year
post-employment non-competition period provided for in the original Employment
Agreement.
Under the terms of a Consulting Agreement dated as of January 17, 1991 (the
"Original Consulting Agreement"), Mr. Lager agrees to furnish management
consulting services to the Company upon the Company's request (up to
approximately 40 hours per month, at the Company's request, subject to holidays
and vacations) for a five- year period, commencing February 3, 1991, with
compensation being paid at the rate of $75,000 for the first year, and with
$5,000 annual increases for each of the following four years. Under the
Agreement Mr. Lager has agreed not to compete with the Company during the term
of and for a period of two years following the expiration of the Agreement.
Mr. Lager's Original Consulting Agreement was amended in 1994 and 1995 to
reflect additional consulting services during the period the Company was
searching for a new Chief Executive Officer and while Mr. Lager was Acting
Director of Manufacturing. Mr. Lager furnished full-time management consulting
services and was compensated at the rate of $3,300 per week plus reasonable
out-of-pocket expenses for the period July 1, 1994 through December 31, 1994.
For the period January 1, 1995 through August 31, 1995, Mr. Lager was
compensated at the rate of $4,615 per week in addition to payments at the rate
due under the Original Consulting Agreement, plus reasonable out-of-pocket
expenses. Commencing September 1995, Mr. Lager is providing only part-time
consulting services called for under the Original Consulting Agreement at the
rate provided therein, which is now $8,333 per month, plus reasonable
out-of-pocket expenses. In 1994 and 1995, Mr. Lager was paid $147,217 and
$235,902. The term of his Original Consulting Agreement, as extended by the
1994-1995 amendment, is July 31, 1996.
Under the terms of a Severance and Non-Competition Agreement dated as of
December 31, 1990, Mr. Furman was entitled to two-year severance/non-competition
payments similar to those paid to Mr. Lager. Under the terms of the Agreement,
Mr. Furman was entitled, as severance and in consideration of his covenant not
to compete for a period of five years after termination of employment, to
compensation payable for the first two years after termination on March 2, 1991
at the annual rate of $60,000. The Severance and Non-Competition Agreement also
provides for the Company to pay for family health insurance coverage under the
Company's regular employee health insurance plan for an eight-year period after
termination. In 1995, Mr. Furman was paid $51,938 for consulting services in
connection with his work on behalf of the Company as the Chair of the CEO Search
Committee and consultant for certain projects including the Russian joint
venture, franchise partnershops and alternative supplier arrangements.
Mr. Holland was hired January 30, 1995 as President and Chief Executive
Officer and replaced Mr. Lacy as a Director in March 1995. Under Mr. Holland's
Employment Agreement which has a term of four years, Mr. Holland is entitled to
a base salary of $250,000 per year, subject to increase from time to time by the
Board of Directors, and an annual incentive award payable in cash or vested
shares of Class A Common Stock as determined by the Compensation Committee of
the Board of Directors in an amount up to but not exceeding $125,000, with all
or such portion thereof to be earned on a sliding scale based upon the extent to
which the Committee determines that Mr. Holland has met in each fiscal year the
objectives previously established for that year by the Compensation Committee.
For 1995, the Incentive Award Objectives were financial objectives and for years
1996 and beyond the Objectives will be financial and non-financial in nature
(i.e. Internal Culture and External Social Responsibility, etc.). Under the
Company's 1985 Stock Option Plan, Mr. Holland received non- incentive stock
options to purchase 180,000 shares of Class A Common Stock of the Company at an
exercise price of $10 13/16 per share equal to the fair market value at the date
of grant. The options have a term of eight years and become exercisable at the
rate of 20,000 shares a year for the first four years, and thereafter at the
rate of 25,000 a year so long as Mr. Holland is an employee of the Company under
this Agreement, provided that, in lieu of said "regular" annual vesting of
options during the fifth through eighth years, options for 25,000 shares which
are at the time the latest options to become "regularly" exercisable by the
passage of time become exercisable, by acceleration, upon the Committee's
determination by March 15th of each year, commencing March 15, 1996, that Mr.
Holland has met the Non-Financial Option Objectives previously established for
that fiscal year by the Committee. As of March 28, 1996 no options had been
accelerated. The agreement provides for termination of employment by the Company
for cause (as defined) and also provides for termination by the Company other
than for cause or by Mr. Holland for good reason (as defined), in each of which
events Mr. Holland is entitled to receive for the remaining period of the four
year term his base salary and an amount equal to the average Incentive Award
that was earned prior to termination under the Agreement times the period
remaining and all options which could have become exercisable upon "regular"
annual vesting prior to the end of the four year term shall be accelerated and
become vested upon such termination. The Agreement also provides that during the
term and for two years thereafter Mr. Holland will not compete with the Company.
Mr. Cohen, Chairperson and a director, has an employment agreement which
has been extended for a term ending April 30, 1997. The agreement provided for a
base salary, which may be increased by the Board (the Board has currently fixed
such base salary at $150,000), and he is entitled to an incentive bonus at the
discretion of the Board. The agreement also provides for certain medical
benefits and a covenant not to compete during the term of the agreement and for
a two year period thereafter, in consideration of payment by the Company (except
as otherwise provided in the agreement) of the then-current base salary during
the two-year period.
Mr. Greenfield, Vice Chairperson, a director and also a director and
President of Ben & Jerry's Foundation, has an employment agreement which has
been extended for a term ending April 30, 1997. The agreement provides for a
base salary, which may be increased by the Board (the Board h as currently fixed
such base salary at $150,000), and he is entitled to an incentive bonus at the
discretion of the Board. The agreement also provides for certain medical
benefits and a covenant not to compete during the term of the agreement and for
a two-year period thereafter, in consideration of payment by the Company (except
as otherwise provided in the agreement) of the then-current base salary during
the two-year period.
Mr. Bowman, Senior Director of Operations, has an employment agreement
dated August 21, 1995, which has a term of three years, expiring August 20,
1998. The agreement provides for an annual base salary, which may be increased
by the Board (the Board has currently fixed such base salary at $160,000), and
he is entitled to an incentive bonus, not exceeding 35% of his base salary
(payable in cash and shares of Class A Common Stock under the Company's
Restricted Stock Plan), as determined by the Chief Executive Officer, subject to
approval of the Compensation Committee. The amount of the award for the 1995
short year was $40,000. The agreement also provides for stock options on 25,000
shares of Class A Common Stock which were granted in August, 1995, vesting over
a period of six years, commencing January 1, 1997. The agreement also provides
for medical, life insurance, 401(k)plan and other employee benefits, a covenant
not to compete during the term of the agreement and for a two-year period
thereafter, and for one year's continuation of then-current base salary and
annual incentive award at the rates in effect on the date of termination of his
employment by the Company without cause.
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND FINANCIAL STATEMENT SCHEDULE,
AND REPORTS ON FORM 8-K
(a) List of financial statements and financial statement schedule:
Form 10-K
Page No.
--------
(1) The following consolidated financial statements are
included in Item 8:
Consolidated Balance Sheets as of December 30, 1995 and
December 31, 1994 F-2
Consolidated Statements of Operations for the years
ended December 30, 1995, December 31, 1994, and
December 25,1993 F-3
Consolidated Statements of Stockholders' Equity for the
years ended December 30, 1995, December 31, 1994 and
December 25, 1993 F-4
Consolidated Statements of Cash Flows for the years
ended December 30, 1995, December 31, 1994 and December
25, 1993 F-5
Notes to Consolidated Financial Statements F-6 to F-16
(2) The following financial statement schedule is included
in Item 14 (d) F-17
SCHEDULE II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have
been omitted.
(3) The following designated exhibits are, as indicated
below, either filed herewith or have heretofore been
filed with the Securities and Exchange Commission under
the Securities Act of 1933 or the Securities Exchange
Act of 1934 and are referred to and incorporated herein
by reference to such filings.
Exhibit No.
- -----------
3.1 Articles of Association, as amended, of the Company (filed with the
Securities and Commission as Exhibit 3.1 and 3.1.1 to the Company's
Registration Statement on Form-1 (File No. 33-284) and incorporated
herein by reference).
3.1.1 Amendment to Articles of Association on June 27, 1987 (filed as
Exhibit 1 to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1987 and incorporated herein by reference).
3.1.2 Amendment to Articles of Association on September 7, 1993 (filed as
Exhibit 1 to the Company's Quarterly Report on Form 10-Q for the
period ended June 26, 1993 and incorporated herein by reference).
3.1.3 Amendment to Articles of Association on August 4, 1995 (filed as
Exhibit 3.1.3 to the Company's Quarterly Report on Form 10-Q for the
period ended July 1, 1995 and incorporated herein by reference).
3.2 By-laws as amended through November 10, 1995 (filed as Exhibit 3.2.2
to the Company's Report on Form 10-Q for the period ended September
30, 1995 and incorporated herein by reference).
3.2.1 Section 2 of Article 5 of the By-laws as amended on January 18, 1996
(filed herewith).
4.1 See Exhibit 3.1.
4.2 See Exhibit 3.2
4.3 Mortgage and Security Agreement among the State of Vermont, the
Company and the Howard Bank, N.A. (filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-1 (file no. 33-284) and
incorporated herein by reference).
4.4 Guaranty by the Company accepted by the Howard Bank, N.A., Trustee,
and Marine Midland Bank, N.A., as amended (filed as Exhibits 4.2 and
4.2.1 to the Company's Registration Statement on Form S-1 (file no.
33-284) and incorporated herein by reference), as amended November 20,
1987 (filed as Exhibit 4.4 to the Company's Registration Statement on
Form S-1 (file no. 33-17516) and incorporated by reference), as
amended January 31 and March 10, 1989 (filed as Exhibit 4.4 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1988 and incorporated herein by reference).
4.4.1 Amendment to item 4.4 dated July 28, 1992 (filed an Exhibit to the
Company's Registration Statement on Form S-3 (file no. 33-51550) and
incorporated herein by reference).
4.5 Loan Agreement and Amendment between the Village of Waterbury, Vermont
and the Company (filed as Exhibit 4.4 to the Company's Registration
Statement on Form S-1(file no. 33-284) and incorporated herein by
reference).
4.6 Second Mortgage and Security Agreement dated December 11, 1984 between
the Company and the Village of Waterbury, Vermont (filed as Exhibit
4.5 to the Company's Registration Statement on Form S-1 (file no.
33-284)and incorporated herein by reference).
4.7 Grant Agreement between the Secretary of Housing and Urban Development
and the Village of Waterbury, Vermont dated September 15, 1984 (filed
as Exhibit 4.6 to the Company's Registration Statement on Form S-1
(file no. 33-284) and incorporated herein by reference).
4.8 Form of Class A Common Stock Certificate (filed as Exhibit 4.8 to the
Company's Registration Statement on Form S-1 (file no. 33-17516) and
incorporated herein by reference).
4.9 Form of Class B Common Stock Certificate (filed as Exhibit 4.9 to the
Company's Registration Statement on Form S-1 (file no. 33-17516) and
incorporated herein by reference).
4.10 Omitted.
4.11 Senior Note Agreement dated as of October 13, 1993 between Ben &
Jerry's Homemade, Inc. and The Travelers Insurance Company and
Principal Mutual Life Insurance Company (filed as Exhibit 1 to the
Company's Quarterly Report on Form 10-Q for the period ended September
25, 1993 and incorporated herein by reference).
The registrant agrees to furnish a copy to the Commission upon request
of any other instrument with respect to long-term debt (not filed as
an exhibit), none of which relates to securities exceeding 10% of the
total assets of the registrants.
10.1 Employment Agreement between Bennett R. Cohen and the Company (filed
as Exhibit 10.1 to the Company's Registration Statement on Form S-1
(file no. 33-284) and incorporated herein by reference).
10.1.1 Amendment to Employment Agreement dated as of March 27,1991 (filed as
Exhibit 10.1 to the Company's Registration Statement on Form S-1 (file
no. 33-284) and incorporated herein by reference).
10.1.2 Amendment to Employment Agreement dated as of May 1, 1995 (filed
herewith).
10.2 Employment Agreement between Fred Lager and the Company(filed as
Exhibit 10.2 to the Company's Registration Statement on Form S-1 (file
no. 33-284) and incorporated herein by reference).
10.2.1 Amendment to Employment Agreement dated as of December 31, 1990 (filed
as Exhibit 10.2.1 to the Company's Annual Report on Form 10-K for the
year ended December 29, 1990 and incorporated herein by reference).
10.2.2 Consulting Agreement between Fred Lager and the Company dated as of
January 17, 1991 (filed as Exhibit 10.2.2 to the Company's Annual
Report on Form 10-K for the year ended December 18, 1991 and
incorporated herein by reference).
10.2.3 Amendment to Consulting Agreement between Fred Lager and the Company
dated as of July 1, 1994 (filed as Exhibit 10.2.3 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference).
10.2.4 Amendment to Consulting Agreement between Fred Lager and the Company
dated as of January 1, 1995 (filed as Exhibit 10.2.4 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference).
10.3 Employment Agreement between Charles Lacy and the Company dated August
18, 1994 (filed as Exhibit 10.3 to the Company's Annual Report on Form
10-K for the year ended December 31, 1994 and incorporated herein by
reference).
10.4 Employment Agreement dated May 1, 1995 between Jerry Greenfield and
the Company (filed herewith).
10.5 Settlement Agreement dated March 20, 1985 between the Company and
Haagen-Dazs, Inc. (filed as Exhibit 10.8 to the Company's Registration
Statement on Form S-1 (file no. 33-284) and incorporated herein by
reference).
10.6 Omitted.
10.7 License Agreement between the Company and L.S. Heath & Sons, Inc.
(filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1986 and incorporated herein by
reference).
10.8 Distribution Agreement between the Company and Dreyer's Grand Ice
Cream, Inc. dated January 6, 1987 (filed as Exhibit 10.13 to the
Company's Annual Report on Form 10-K For the year ended December 31,
1986 and incorporated herein by reference), as amended as of January
20, 1989 (filed as Exhibit 10.14 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1988 and incorporated herein
by reference).
10.8.1 Amendment to Item 10.8 dated August 31, 1992 (filed as Exhibit 28.1 to
the Company's Registration Statement on Form S-3 (file no. 33-51550)
and incorporated here-in by reference).
10.8.2 Amendment to Item 10.8 dated April 18, 1994 filed as Exhibit 2 to the
Company's Quarterly Report on Form 10-Q dated March 26, 1994 and
incorporated here-in by reference).
10.8.3 Subdistribution Agreement between the Company and Dreyer's Grand Ice
Cream, Inc. dated February 7, 1994 (filed as Exhibit 1 to the
Company's Quarterly Report on Form 10-Q dated March 26, 1994 and
incorporated here-in by reference.)
10.8.4 Amendment to Item 10.8.3 dated October 27, 1995 (filed herewith).
10.9 License Agreement between the Company and Jerry Garcia and Grateful
Dead Productions, Inc. dated July 26, 1987(filed as Exhibit 10.15 to
the Company's Registration Statement on Form S-1 (file no. 33-17516)
and incorporated herein by reference).
10.10 Omitted.
10.11 Area Franchise Agreement between the Company and Ben & Jerry's of
Indiana Inc. dated November 18, 1987 (filed as Exhibit 10.20 to the
Company's Registration Statement on Form S-1 (file no. 33-17516) and
incorporated herein by reference).
10.12 Omitted.
10.13 Franchise Agreement between the Company and Ben & Jerry's of
California, Inc. dated June 13, 1988 (filed as Exhibit 10.21 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1988 and incorporated herein by reference).
10.13.1 Amendment to 10.13 effective December 17, 1990 (filed as Exhibit
10.13.1 to the Company's Annual Report on Form 10-K for the year ended
December 25, 1993 and incorporated herein by reference).
10.13.2 Amendment to 10.13 dated as of March 20, 1992 (filed as Exhibit
10.13.2 to the Company's Annual Report on Form 10-K for the year ended
December 25, 1993 and incorporated herein by reference).
10.14 Area Franchise Amended and Restated Agreement between the Company and
Ben & Jerry's West Coast, Inc. dated March 27, 1992 (filed as Exhibit
10.13.2 on Form 10-K for the year ended December 25, 1993 and
incorporated herein by reference).
10.15 Franchise Agreement between the Company and BJ O/R, a California
limited partnership, dated June 9, 1993 (filed as Exhibit 2 to the
Company's Quarterly Report on Form 10-Q for the period ended June 26,
1993 and incorporated herein by reference).
10.16 Omitted.
10.17 Lease between the Company and Stedeley Partnership dated November 30,
1988 (filed as Exhibit 10.25 to the Company's Annual Report on Form
10-K for the year ended December 31, 1988 and incorporated herein by
reference).
10.18 Manufacturing and Warehouse Agreement between the Company and Edy's
Grand Ice Cream, a subsidiary of Dreyer's Grand Ice Cream, Inc. dated
April 5, 1989 (filed as Exhibit 10.18 to the Company's Annual Report
on Form 10-K for the year ended December 30, 1989 and incorporated
herein by reference).
10.18.1 Amendment to Item 10.18 dated September 18, 1992 (filed as Exhibit
10.18.1 to the Company's Annual Report on Form 10-K for the year ended
December 25, 1993 and incorporated herein by reference).
10.18.2 Amendment to Item 10.18 dated November 12, 1992(filed as Exhibit
10.18.2 to the Company's Annual Report on Form 10-K for the year ended
December 25, 1993 and incorporated herein by reference).
10.18.3 Amendment to Item 10.18 dated September 2, 1994 (filed as Exhibit 1 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 24, 1994 and incorporated herein by reference).
10.19 1986 Restricted Stock Plan (filed as Exhibit 10.19 to the Company's
Annual Report on Form 10-K for the year ended December 30, 1989 and
incorporated herein by reference).
10.20 1986 Employee Stock Purchase Plan (filed as Exhibit 4 to the Company's
Registration Statements on Form S-8 (file nos. 33-9420 and 33-17594)
and incorporated herein by reference).
10.20.1 Amendment to Employee Stock Purchase Plan dated on August 4, 1995
(filed as Exhibit 10.20.1 on Form 10-Q for the period ended July 1,
1995 and incorporated herein by reference).
10.21 1985 Stock Option Plan (filed as Exhibit 10.21 to the Company's Annual
Report on Form 10-K for the year ended December 30, 1989 and
incorporated herein by reference).
10.21.1 1994 Amendment to 1985 Stock Option Plan (filed as Exhibit 10.21.1 to
the Company's Annual Report on Form 10-K for the year ended December
30, 1994 and incorporated herein by reference).
10.22 Ben & Jerry's Homemade, Inc. Employees' Retirement Plan as amended
(filed as Exhibit 10.22 to the Company's Annual Report on Form 10-K
for the year ended December 30, 1989 and incorporated herein by
reference).
10.22.1 Amendment to Item 10.22 dated January 1, 1990 (filed as Exhibit
10.22.1 to the Company's Report on Form 10-K for the year ended
December 29, 1991 and incorporated herein by reference).
10.22.2 Amendment to Item 10.22 dated June 28, 1990 (filed as Exhibit 10.22.2
to the Company's Report on Form 10-K for the year ended December 25,
1993 and incorporated herein by reference).
10.22.3 Amendment to Item 10.22 dated January 1, 1991 (filed as Exhibit
10.22.3 to the Company's Report on Form 10-K for the year ended
December 25, 1993 and incorporated herein by reference).
10.23 1991 Restricted Stock Plan (filed as Exhibit 10.23 to the Company's
Report on Form 10-K for the year ended December 25, 1993 and
incorporated herein by reference).
10.24 Severance/Non-Competition Agreement dated as of December 31, 1990
between Jeffrey Furman and the Company (filed as Exhibit 10.24 to the
Company's Report on Form 10-K for the year ended December 25, 1993 and
incorporated herein by reference).
10.25 Omitted.
10.26 Directors and Officers Liability Insurance Policy, dated February 24,
1995 (filed as Exhibit 10.26 to the Company's Annual Report on Form
10-K for the year ended December 31, 1994 and incorporated herein by
reference).
10.26.1 Directors and Officers Liability Insurance Policy, Binder dated
February 24, 1996 (filed herewith)
10.27 1992 Non-employee Directors' Restricted Stock Plan (filed as Exhibit
10.27 to the Company's Annual Report on Form 10-K for the year ended
December 25, 1993 and incorporated herein by reference).
10.28 Employment Agreement between Robert Holland Jr. and the Company dated
January 30, 1995, (filed as Exhibit 10.28 to the Company's Report on
Form 10-K for the year ended December 31, 1994 and incorporated herein
by reference).
10.29 1995 Equity Incentive Plan (filed as Exhibit 10.29 to the Company's
Quarterly Report on Form 10-Q for the period ended July 1, 1995 and
incorporated herein by reference).
10.30 Non-Employee Director's Plan For Stock In Lieu of Directors' Cash
Retainer Dated August 4, 1995 (filed as Exhibit 10.30 to Form 10-Q
quarter ended July 1, 1995 and incorporated herein by reference).
10.31 Employment Agreement dated August 21, 1995 between the Company and
Bruce Bowman (filed herewith).
10.32 Lease dated February 1, 1996 between the Company and Technology Park
Associates, Inc. (filed herewith).
11.0 Statement Re: Computation of Per Share Earnings (filed herewith).
21.1 Subsidiaries of the registrant as of December 30, 1995 (filed
herewith).
23.1 Consent of Ernst & Young LLP (filed herewith).
(b) No Current Reports on Form 8-K were filed during the fourth
quarter of 1995.
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BEN & JERRY'S HOMEMADE, INC.
Dated: March 28, 1996 By: __________________________
/s/Robert Holland Jr.
President and CEO
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the date indicated.
March 28, 1996 ____________________________________
/s/Elizabeth Bankowski
Director, Director of Social Mission
Development
March 28, 1996 ____________________________________
/s/Merritt C. Chandler
Director
March 28, 1996 ____________________________________
/s/Bennett R. Cohen
Director and Chairperson
March 28, 1996 ____________________________________
/s/Jeffrey Furman
Director
March 28, 1996 ____________________________________
/s/Jerry Greenfield
Director and Vice Chairperson
March 28, 1996 ____________________________________
/s/Robert Holland Jr.
Director, President and
Principal Executive Officer
March 28, 1996 ____________________________________
/s/Fred E. Lager
Director
March 28, 1996 ____________________________________
/s/Frederick A. Miller
Director
March 28, 1996 ____________________________________
/s/Henry Morgan
Director
March 28, 1996 ____________________________________
/s/Frances Rathke
Principal Financial Officer and
Principal Accounting Officer
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) and (2),(c)and(d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 30, 1995
BEN & JERRY'S HOMEMADE INC.
SOUTH BURLINGTON, VERMONT
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
Report of Independent Auditors.............................................F-1
Consolidated Balance Sheets as of December 30, 1995 and December
31, 1994..............................................................F-2
Consolidated Statements of Operations for the years ended
December 30, 1995, December 31, 1994, and December 25,
1993..................................................................F-3
Consolidated Statements of Stockholders' Equity for the years
ended December 30, 1995, December 31, 1994, and December 25,
1993............................................................... .F-4
Consolidated Statements of Cash Flows for the years ended
December 30, 1995, December 31, 1994, and December 25,
1993..................................................................F-5
Notes to Consolidated Financial Statements.........................F-6 to F-16
Financial Schedule:
SCHEDULE II - Valuation and Qualifying Accounts... ......................F-17
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Board of Directors and Stockholders
Ben & Jerry's Homemade, Inc.
We have audited the accompanying consolidated balance sheets of Ben & Jerry's
Homemade, Inc. as of December 30, 1995 and December 31, 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 30, 1995. Our audits also
included the financial statement schedule listed in the Index at Item 14(a).
These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Ben &
Jerry's Homemade, Inc. at December 30, 1995 and December 31, 1994 and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 30, 1995 in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Boston, Massachusetts
January 26, 1996
F-1
<PAGE>
<TABLE>
Consolidated Balance Sheets
(In thousands except share data)
December 30, December 31,
1995 1994
---- ----
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents .............................................. $ 35,406 $ 20,778
Accounts receivable
Trade (less allowance of $802 in 1995 and $504 in 1994
for doubtful accounts) ............................................ 11,660 9,902
Other .............................................................. 854 2,003
Inventories ............................................................ 12,616 13,463
Deferred income taxes .................................................. 3,599 3,146
Income taxes receivable ................................................ 2,831 2,098
Prepaid expenses ....................................................... 1,097 534
----- ---
Total current assets ............................................... 68,063 51,924
------ ------
Property, plant and equipment, net .......................................... 59,600 57,981
Investments ................................................................. 1,000 8,000
Other assets ................................................................ 2,411 2,391
----- -----
$ 131,074 $ 120,296
========= =========
Liabilities & Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses .................................. $ 16,592 $ 13,915
Current portion of long-term debt and
capital lease obligations .......................................... 448 553
--- ---
Total current liabilities ..................................... 17,040 14,468
------ ------
Long-term debt and capital lease obligations ................................ 31,977 32,419
------ ------
Deferred income taxes ....................................................... 3,526 907
----- ---
Commitments and contingencies
Stockholders' equity:
$1.20 noncumulative Class A preferred stock -
$1.00 par value, redeemable at the Company's option
at $12.00 per share; 900 shares authorized,
issued and outstanding, aggregate preference
on voluntary or involuntary liquidation - $9,000 ................... 1 1
Class A common stock - $.033 par value; authorized
20,000,000 shares; issued: 6,330,302 shares at
December 30, 1995 and 6,290,580 shares at
December 31, 1994 .................................................. 209 208
Class B common stock - $.033 par value; authorized
3,000,000 shares; issued: 914,325 shares at
December 30, 1995 and 932,448 shares at
December 31, 1994 .................................................. 30 31
Additional paid-in capital ............................................. 48,521 48,366
Retained earnings ...................................................... 31,264 25,316
Cumulative translation adjustment ...................................... (114)
Treasury stock, at cost: 67,032 Class A and 1,092......................
Class B shares at December 30, 1995 and 69,032
Class A and 1,092 Class B shares at
December 31, 1994 .................................................. (1,380) (1,420)
------ ------
Total stockholders' equity .................................... 78,531 72,502
------ ------
$ 131,074 $ 120,296
========= ==========
See accompanying notes.
</TABLE>
F-2
<PAGE>
Ben & Jerry's Homemade, Inc.
Consolidated Statements of Operations
(In thousands except per share data)
<TABLE>
Years Ended
Dec. 30, 1995 Dec. 31, 1994 Dec.25,1993
(52 weeks) (53 weeks) (52 weeks)
---------- ---------- ----------
<S> <C> <C> <C>
Net sales $ 155,333 $ 148,802 $ 140,328
Cost of sales 109,125 109,760 100,210
------------- ------------- -------------
Gross profit 46,208 39,042 40,118
Selling, general and administrative expenses 36,362 36,253 28,270
Asset write-down 6,779
Other income (expense):
Interest income 1,681 1,034 757
Interest expense (1,525) (295) (104)
Other (597) (511) (456)
------------- ------------- -------------
(441) 228 197
------------- ------------- -------------
Income (loss) before income taxes 9,405 (3,762) 12,045
Income taxes (benefit) 3,457 (1,893) 4,844
------------- -------------- -------------
Net income (loss) $ 5,948 $ (1,869 ) $ 7,201
============= ============ =============
Net income (loss) per common share $ 0.83 $ (0.26) $ 1.01
Weighted average common and common
equivalentshares outstanding 7,222 7,148 7,138
</TABLE>
See accompanying notes.
F-3
<PAGE>
Ben & Jerry's Homemade, Inc.
Consolidated Statements of Stockholders' Equity
(In thousands except share data)
<TABLE>
Preferred
Stock Common Stock Treasury Stock
----- ------------ --------------
Class A Class B Additional Cumulative Class A Class B
Par Par Par Paid-in Retained Unearned Translation
Value Value Value Capital Earnings Compensation Adjustment Cost Cost
----- ----- ----- ------- --------------------- ---------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 26, 1992 ............. $ 1 $ 206 $ 33 $47,941 $19,984 $(38) $ 0 $(1,362) $ (5)
Net income ............................... 7,201
Common stock issued under stock
purchase plan (12,826 Class A shares) 280
Common stock issued under restricted
stock plan (100 Class A shares) ..... 1 2
Conversion of Class B shares to Class A
shares (14,371 shares) .............. 1 (1)
Amortization of unearned
compensation ........................ 18
--------------------------------------------------------------------------------------
Balance at December 25, 1993 ............. 1 207 32 48,222 27,185 (20) 0 (1,360) (5)
Net income (loss) ........................ (1,869)
Common stock issued under stock
purchase plan (8,619 Class A shares) 139
Conversion of Class B shares to Class A
shares (15,189 shares) .............. 1 (1)
Termination of stock award (Class A
shares) ............................. 5 20 (55)
--------------------------------------------------------------------------------------
Balance at December 31, 1994 ............. 1 208 31 48,366 25,316 0 0 (1,415) (5)
Net income ............................... 5,948
Common stock issued under stock
purchase plan (21,599 Class A shares) 174
Conversion of Class B shares to Class A
shares (18,123 shares) .............. 1 (1)
Common stock issued under restricted
stock plan (2,000 Class A shares) .. (19) 40
Foreign currency translation adjustment .. (114)
--------------------------------------------------------------------------------------
Balance at December 30, 1995 ............. $ 1 $ 209 $ 30 $48,521 $31,264 $ 0 $(114) $(1,375) $(5)
====== ===== ==== ======= ======= === ===== ======= ===
</TABLE>
See accompanying notes.
F-4
<PAGE>
Ben & Jerry's Homemade, Inc.
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
Years Ended
-----------
December 30, December 31, December 25,
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) .............................. $ 5,948 $ (1,869) $ 7,201
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities:
Depreciation and amortization .............. 5,928 4,707 4,303
Deferred income taxes ...................... 2,166 (1,564) (264)
Provision for doubtful accounts ............ 400 311 58
Amortization of unearned compensation ...... 18
Loss on asset write-down ................... 6,779
Loss (gain) on disposition of assets ....... 171 69 (10)
Stock awards ............................... 21 3
Changes in assets and liabilities
Accounts receivable ................... (1,009) (536) (2,888)
Income taxes receivable/payable ....... (733) (2,442) 650
Inventories ........................... 847 (10) 3,637
Prepaid expenses and other assets ..... (563) 313 (639)
Accounts payable and accrued expenses . 2,677 (1,159) (4,790)
----- ------ ------
Net cash provided by operating activities ................. 15,853 4,599 7,279
------ ----- -----
Cash flows from investing activities:
Additions to property, plant and equipment ..... (7,532) (26,213) (17,796)
Proceeds from sale of property, plant
and equipment .............................. 96 194 48
Decrease in investments ........................ 7,000 14,000 3,200
Changes in other assets ........................ (303) (882) (57)
---- ---- ---
Net cash used for investing activities .................... (739) (12,901) (14,605)
---- ------- -------
Cash flows from financing activities:
Net proceeds from long-term debt ............... 14,936 15,145
Repayments of long-term debt and
capital leases ............................. (547) (700) (751)
Net proceeds from issuance of common stock ..... 174 139 281
--- --- ---
Net cash (used for) provided by financing activities (373) 14,375 14,675
---- ------ ------
Effect of exchange rate changes on cash ................... (113)
Increase in cash and cash equivalents ..................... 14,628 6,073 7,349
Cash and cash equivalents at beginning of year ............ 20,778 14,705 7,356
------ ------ -----
Cash and cash equivalents at end of year .................. $ 35,406 $ 20,778 $ 14,705
======== ======== ========
</TABLE>
See accompanying notes.
F-5
<PAGE>
Ben & Jerry's Homemade, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Business
Ben & Jerry's Homemade, Inc. (the Company) makes and sells super premium
ice cream and other frozen dessert products through distributors and directly to
retail outlets, including Company-owned and franchised ice cream parlors.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and all its wholly-owned subsidiaries. Intercompany accounts and transactions
have been eliminated.
Use of Estimates
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Fiscal Year
The Company's fiscal year is a fifty-two or fifty-three week period ending
on the last Saturday in December. 1995 was fifty-two weeks, 1994 was fifty-three
weeks and 1993 was fifty-two weeks. The effect of the additional week on 1994's
results of operations was not material.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
by the first-in, first-out method.
Cash Equivalents
Cash equivalents represent highly liquid investments with maturities of
three months or less at date of purchase.
Investments
Management determines the appropriate classification of debt securities at
the time of purchase and reevaluates such designation as of each balance sheet
date. Marketable equity securities and debt securities not classified as
held-to-maturity are classified as available-for-sale. Available-for-sale
securities are carried at fair value, with the unrealized gains and losses, net
of tax, reported in a separate component of shareholders' equity. The amortized
cost of debt securities in this category is adjusted for amortization of
premiums and accretion of discounts to maturity. Such amortization is included
in interest income. Realized gains and losses and declines in value judged to be
other-than-temporary on available-for-sale securities are included in income.
The cost of securities sold is based on the specific identification method.
Interest and dividends on securities classified as available-for-sale are
included in investment income.
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to significant
concentration of credit risk, consist of cash, investments and trade accounts
receivable. The Company places its investments in highly rated financial
institutions around the country, obligations of the United States Government and
investment grade short-term instruments. No more than 20% of the total
investment portfolio shall be in any one issuer or guarantor other than United
States Government instruments which limits the amount of credit exposure. The
Company sells its products primarily to well established frozen dessert
distribution companies throughout the United States and the United Kingdom. The
Company performs ongoing credit evaluations of its customers and maintains
reserves for potential credit losses. Historically, the Company has not
experienced significant losses related to investments or trade receivables.
F-6
<PAGE>
Ben & Jerry's Homemade, Inc.
Notes to Consolidated Financial Statements (continued)
Dollars in tables in thousands except share data
Property, Plant and Equipment
Property, plant and equipment are carried at cost. Depreciation, including
amortization of leasehold improvements, is computed using the straight-line
method over the estimated useful lives of the related assets. Amortization of
assets under capital leases is computed on the straight-line method over the
lease term and is included in depreciation expense.
Translation of Foreign Currencies
Assets and liabilities of the Company's foreign operations are translated
into United States dollars at exchange rates in effect on the balance sheet
date. Income and expense items are translated at average exchange rates
prevailing during the year. Translation adjustments are accumulated as a
separate component of stockholders' equity. Transaction gains or losses are
recognized as other income or expense in the period incurred. Transaction gains
or losses have been immaterial for all periods presented.
Revenue Recognition
The Company recognizes revenue and the related costs when product is
shipped. The Company recognizes franchise fees as income for individual stores
when services required by the franchise agreement have been substantially
performed and the store opens for business. Franchise fees relating to area
franchise agreements are recognized in proportion to the number of stores for
which the required services have been substantially performed. Franchise fees
recognized as income were approximately $166,000, $82,000 and $103,000 in 1995,
1994 and 1993, respectively. These amounts have been included in net sales.
Advertising
Advertising costs are expensed as incurred. Advertising expense ( excluding
cooperative advertising with distribution companies) amounted to approximately $
4.3 million , $5.0 million, and $1.6 million for the years ended December 30,
1995, December 31, 1994 and December 25, 1993.
Income Taxes
The Company accounts for income taxes under the liability method in
accordance with Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (SFAS 109). Under the liability method, deferred tax
liabilities and assets are recognized for the tax consequences of temporary
differences between the financial reporting and tax bases of assets and
liabilities.
Stock Based Compensation
The Company grants stock options for a fixed number of shares with an
exercise price equal to the fair value of the shares at the date of the grant.
The Company accounts for stock option grants in accordance with APB Opinion No.
25, "Accounting for Stock Issued to Employees" and intends to continue to do so.
Accordingly, no compensation expense for stock option grants is recognized.
Earnings Per Share
Primary earnings per common share is computed based on the weighted average
number of shares of Class A and Class B Common Stock outstanding during the
period, and for incremental shares assumed issued for dilutive common stock
equivalents. Fully diluted earnings per share did not differ materially from
primary earnings per share.
Impact of Recently Issued Accounting Standards
In March 1995, the FASB issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company will adopt Statement 121
in the first quarter of 1996 and, based on current circumstances, does not
believe the effect of the adoption will be material.
F-7
<PAGE>
Ben & Jerry's Homemade, Inc.
Notes to Consolidated Financial Statements (continued)
Dollars in tables in thousands except share data
2. INVENTORIES
1995 1994
---- ----
Ice cream and ingredients $ 11,480 $ 12,395
Paper goods 674 486
Food, beverages, and gift items 462 582
------------------ -----------------
$ 12,616 $ 13,463
================== =================
The Company purchases certain ingredients (approximately $1,500,000
annually) from a company owned by the Company's Chairperson and a member of the
Board of Directors.
3. PROPERTY, PLANT AND EQUIPMENT
Estimated
Useful Lives/
1995 1994 Lease Term
---- ---- ----------
Land and improvements ............... $ 3,575 $ 2,456 15-25 years
Land under capital lease ............ 866 866
Buildings ........................... 35,644 13,234 25 years
Equipment and furniture ............. 41,324 26,771 3-20 years
Equipment under capital lease ....... 934 934 5 years
Leasehold improvements .............. 1,277 2,002 3-10 years
Construction in progress ............ 740 32,269
--- ------
84,360 78,532
Less accumulated depreciation ....... 24,760 20,551
------ ------
$59,600 $57,981
======= =======
Accumulated depreciation at December 30, 1995 and December 31, 1994,
included accumulated amortization of $902,000 and $874,000 respectively, related
to assets under capital lease.
F-8
<PAGE>
Ben & Jerry's Homemade, Inc.
Notes to Consolidated Financial Statements (continued)
Dollars in tables in thousands except share data
4. CASH AND INVESTMENTS
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." As required under the Statement, the Company
adopted the provisions of the new standards as of the beginning of 1994. In
accordance with the Statement, prior period financial statements have not been
restated to reflect the change in accounting principle. The cumulative effect of
adopting Statement 115 did not have a material effect on the Company's financial
statements.
The Company's cash and investments in debt securities available-for-sale
are carried at fair value, which approximates cost, as summarized below:
1995 1994
------- -------
Municipal bonds .......................................... $16,507 $ 9,003
U.S. corporate securities ................................ 14,139 10,000
------- -------
Total debt securities available-for-sale ........ 30,646 19,003
Cash, cash equivalents and money market accounts ......... 5,760 9,775
------- -------
Total cash, cash equivalents and investments .... $36,406 $28,778
======= =======
All debt securities at December 30, 1995 have maturities of less than
twelve months. Certain debt securities have been classified as long-term to
reflect their intended use to finance capital projects.
Investments in debt securities mature at par in thirty to forty-five day
intervals, at which time the stated interest rates are reset at the then market
rate. Gross purchases and maturities aggregated $94,500,000 and $83,525,000 in
1995, and $81,400,000 and $91,960,000 respectively in 1994.
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
1995 1994
------- -------
Trade accounts payable ........................... $ 7,283 $ 5,075
Accrued expenses ................................. 6,071 2,627
Accrued construction costs ....................... 51 2,975
Accrued payroll and related costs ................ 1,749 1,607
Accrued promotional costs ........................ 1,313 1,580
Other ............................................ 125 51
------- -------
$16,592 $13,915
======= =======
F-9
<PAGE>
Ben & Jerry's Homemade, Inc.
Notes to Consolidated Financial Statements (continued)
Dollars in tables in thousands except share data
6. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
<TABLE>
1995 1994
------- -------
<S> <C> <C>
Senior Notes - Series A payable in annual installments beginning
in 1998 through 2003 with interest payable semiannually at 5.9% ........... $20,000 $20,000
Senior Notes - Series B payable in annual installments beginning
in 1998 through 2003 with interest payable semiannually at 5.73% .......... 10,000 10,000
Industrial Revenue Bonds (IRB), payable in monthly installments
of $12,500 plus interest at 75% of the prime rate (6.375% at December 30,
1995 and 6.375% at December 31, 1994) through
June 2000 ................................................................. 613 766
Urban Development Action Grant, payable in quarterly installments
of $22,130 including interest at 9% through April 2000 .................... 310 367
Capital lease obligations ...................................................... 771 827
Other long-term obligations .................................................... 731 1,012
------- -------
32,425 32,972
Less current portion ........................................................... 448 553
------- -------
$31,977 $32,419
======= =======
</TABLE>
Property, plant and equipment having a net book value of approximately
$18,872,000 at December 30, 1995 is pledged as collateral for certain long-term
debt.
Long-term debt and capital lease obligations at December 30, 1995 maturing
in each of the next five years and thereafter are as follows:
Capital lease Long-term
obligations debt
----------- ----
1996 $ 114 $ 382
1997 581 343
1998 15 5,411
1999 15 5,295
2000 15 5,229
Thereafter 245 14,994
--- ------
Total minimum payments 985 31,654
Less amounts representing interest 214
--- ------
Present value of minimum payments $ 771 $ 31,654
========= =========
Interest of approximately $497,000, $1,288,000 and $295,000 was capitalized
in 1995, 1994 and 1993, respectively, as part of the acquisition cost of
property, plant and equipment. Interest paid, including interest capitalized,
amounted to $2,023,000, $1,755,000 and $239,000 for 1995, 1994 and 1993,
respectively.
The Company has available two $10,000,000 unsecured working capital line of
credit agreements with two banks. Interest on borrowings under the agreements is
set at the banks' Base Rate or at the Eurodollar Rate plus a maximum of up to
1.25%. The agreements expire December 29, 1998 and September 29, 1998,
respectively, and any outstanding borrowings are due at that time. No amounts
were borrowed under these or any prior bank agreements during 1995, 1994, and
1993.
Certain of the debt agreements contain certain restrictive covenants
requiring maintenance of minimum levels of working
F-10
<PAGE>
Ben & Jerry's Homemade, Inc.
Notes to Consolidated Financial Statements (continued)
Dollars in tables in thousands except share data
capital, net worth and debt to capitalization ratios. As of December 30, 1995
the Company was in compliance with the provisions of these agreements. Under the
most restrictive of these covenants requiring maintenance of a minimum
consolidated tangible net worth of $55 million, approximately $23,000,000 of
retained earnings at December 30, 1995 was available for payment of dividends.
7. INCOME TAXES
The provision (benefit) for income taxes consists of the following:
1995 1994 1993
---- ---- ----
Federal:
Current $ 873 $ (314) $ 4,086
Deferred 1,695 (1,263) (211)
----- ------ ----
2,568 (1,577) 3,875
State:
Current 418 (15) 1,022
Deferred 471 (301) (53)
--- ---- ---
889 (316) 969
--- ---- ---
$ 3,457 $ (1,893) $ 4,844
======= ======== =======
Income taxes computed at the federal statutory rate differ from amounts
provided as follows:
1995 1994 1993
---- ---- ----
Tax at statutory rate .................. 34.0% (34.0)% 35.0%
State tax, less federal tax effect ..... 4.5 (5.6) 5.3
Income tax credits ..................... (2.9) (6.7)
Municipal bond interest ................ (1.1) (5.0) (1.8)
Other, net ............................. 2.3 1.0 1.7
--- --- ---
Provision (benefit) for income taxes ... 36.8% (50.3)% 40.2%
==== ===== ====
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes and are attributable to
the following:
1995 1994
------ ------
Deferred tax assets:
Accrued liabilities ......................... $1,514 $2,057
Inventories ................................. 1,106 703
Accounts receivable ......................... 386 254
Other ....................................... 695 245
------ ------
Total deferred tax assets ................... 3,701 3,259
------ ------
Deferred tax liabilities:
Depreciation ................................ 3,628 1,003
Other ....................................... 17
------ ------
Total deferred tax liabilities .............. 3,628 1,020
------ ------
Net deferred tax assets ..................... $ 73 2,239
====== ======
Income taxes paid amounted to $1,918,000, $2,111,000 and $4,477,000 during 1995,
1994 and 1993, respectively.
F-11
<PAGE>
Ben & Jerry's Homemade, Inc.
Notes to Consolidated Financial Statements (continued)
Dollars in tables in thousands except share data
8. THE BEN & JERRY'S FOUNDATION, INC.
In October 1985, the Company issued Class A Preferred Stock to The Ben &
Jerry's Foundation, Inc. (the Foundation), a non-profit corporation qualified
under section 501(c)(3) of the Internal Revenue Code. The primary purpose of the
Foundation is to be a principal recipient of cash contributions from the Company
which are then donated to various community organizations and other charitable
institutions. Amounts expensed for contributions to the Foundation and directly
to other charitable organizations, at the rate of approximately 7.5% of income
before income taxes amounted to approximately $768,000, and $977,000 for 1995
and 1993 respectively. In 1994 there were no amounts expensed for contributions
to the foundation.
The Preferred Stock is entitled to vote as a separate class in certain
business combinations, such that approval of two-thirds of the class is required
for such business combinations. Two directors, including one of the founders of
the Company, are members of the Board of Directors of the Foundation.
9. STOCK PLANS
The Company maintains an Employee Stock Purchase Plan which authorizes the
issuance of up to 300,000 shares of common stock. All employees with six months
of continuous service are eligible to participate in this plan. Participants in
the plan are entitled to purchase Class A Common Stock during specified
semi-annual periods through the accumulation of payroll, at the lower of 85% of
market value of the stock at the beginning or end of the offering period. At
December 30, 1995, 96,664 shares had been issued under the plan and 203,336
shares were available for future issuance.
The Company maintains two Stock Option Plans:
The 1985 Option Plan provides for the grant of incentive and non-incentive
stock options to employees or consultants. The 1985 Option Plan provides that
options granted are exercisable at the market value on the date of grant. On
March 31, 1994 stock options were granted under the Plan to approximately 500
employees across all levels of the Company. Additional options were granted
under the Plan during 1995. While the Company may grant options which may become
excercisable at different times or within different periods, the Company has
generally granted options to employees of which 50% vest at two years from the
date of grant and 100% vest within four years. At December 30, 1995, no shares
of Class A Common Stock were available under the 1985 Option Plan for additional
grants as the plan had expired.
A summary of the 1985 Option Plan activity is as follows:
Number of Option Price
Options Per Share
------- ----------------------------
Outstanding at December 25, 1993 ....... 0 $ 0.00 - $ 0.00
Granted ............................ 177,927 16.75 - 16.75
Exercised .......................... 0 0.00 - 0.00
Forfeited .......................... (15,619) 16.75 - 16.75
------- ---------------------------
Outstanding at December 31, 1994 ....... 162,308 16.75 - 16.75
Granted ............................ 215,000 10.63 - 14.00
Exercised .......................... 0 0.00 - 0.00
Forfeited .......................... (19,871) 16.75 - 16.75
------- ---------------------------
Outstanding at December 30, 1995 ....... 357,437 $ 10.63 - $ 16.75
=======
Options vested at December 30, 1995 .... 25,000 $ 10.63 - $ 10.81
F-12
<PAGE>
Ben & Jerry's Homemade, Inc.
Notes to Consolidated Financial Statements (continued)
Dollars in tables in thousands except share data
The 1995 Equity Incentive Plan provides for the grant to employees and
consultants of incentive and non-incentive stock options , stock appreciation
rights, restricted stock, unrestricted stock awards, deferred stock awards, cash
or stock performance awards, loans or supplemental grants, or combinations
thereof. At December 30, 1995, 475,000 shares of Class A Common Stock were
available under the 1995 Equity Incentive Plan for additional grants.
A summary of the 1995 Equity Incentive Plan activity is as follows:
Number of Option Price
Options Per Share
-------- -------------------------
Outstanding at December 31, 1994 ....... 0 $ 0.00 - $ 0.00
Granted ............................ 25,000 19.00 - 19.00
Exercised .......................... 0 0.00 - 0.00
Forfeited .......................... 0 0.00 - 0.00
------ -------------------------
Outstanding at December 30, 1995 ....... 25,000 $ 19.00 - $ 19.00
Options vested at December 30, 1995 .... 0 $ 0.00 - $ 0.00
------
The Company has three restricted stock plans (the 1986,1991, and 1992
Plans) which provide that employees, consultants, or non-employee directors, on
becoming eligible, may be awarded shares of Class A Common Stock by the
Compensation Committee of the Board of Directors. Shares issued under the plans
become vested over periods of up to five years. The Company has also adopted the
1995 Plan, which provides that non-employee directors can elect to receive stock
in lieu of a Director's cash retainer. These shares are vested immediately. At
December 30, 1995, a total of 71,000 shares had been awarded under these plans,
of which 57,955 were fully vested and 13,045 had been forfeited. 33,000 shares
were available for future awards. No further shares may be awarded under the
1986 or 1991 Plans. Restricted shares may also be issued under the 1995 Equity
Incentive Plan . Unearned compensation on unvested shares is recorded as of the
award date and is amortized over the vesting period.
As of December 30, 1995, a total of 711,336 shares are reserved for future
grant under all of the Company's stock plans.
10. EMPLOYEE BENEFIT PLANS
The Company maintains profit sharing and savings plans for all eligible
employees. Contributions to the profit sharing plan are allocated among all
current full-time and regular part-time employees (other than the co-founders,
CEO and the Senior Director of Operations) based upon length of service with the
Company. The profit sharing plan is informal and discretionary. The savings plan
is maintained in accordance with the provisions of Section 401(k) of the
Internal Revenue Code and allows all employees with at least twelve months of
service to make annual tax-deferred voluntary contributions up to fifteen
percent of their salary. The Company may match the contribution up to two
percent of the employee's gross annual salary.
Total contributions by the Company to the profit sharing and savings plans
were approximately $769,000, $508,000 and $894,000 for 1995, 1994 and 1993,
respectively.
11. COMMON STOCK
In June 1987, the Company's shareholders adopted an amendment to the
Company's Articles of Association that authorized 3,000,000 shares of a new
Class B Common Stock and redesignated the Company's existing Common Stock as
Class A Common Stock. The Class B Common Stock has 10 votes per share on all
matters, is generally non-transferable and is convertible into Class A Common
Stock on a one-for-one basis.
F-13
<PAGE>
Ben & Jerry's Homemade, Inc.
Notes to Consolidated Financial Statements (continued)
Dollars in tables in thousands except share data
12. WRITE-DOWN OF ASSETS IN 1994
In 1994, following substantial delays with the implementation and
completion of certain automated handling processes and refrigeration hardening
equipment of the Company's St. Albans, Vermont plant and after receipt of a
report from an outside engineering firm experienced in the refrigerated food
industry, the Company decided to replace certain of the software and equipment
installed at the new plant. The loss from the write-down of the related assets
(including a portion of the previously incurred capitalized interest and project
management costs), recorded in the Company's fourth quarter, amounted to
$6,779,000 (approximately $4.1 million after tax or $0.57 per share). Of this
amount, $3,804,000 was offset against the balance in construction in progress
while $2,975,000 was accrued for additional anticipated costs, which were paid
during 1995.
13. LEGAL MATTERS
On December 14, 1995, the Company was served with a class action complaint
filed in federal court in Burlington, Vermont. The complaint, captioned Henry G.
Jakobe, Jr. v. Ben & Jerry's Inc., et al., , was filed by a Ben & Jerry's
shareholder on behalf of himself and purportedly on behalf of all other Ben &
Jerry's shareholders who purchased the common stock of the Company during the
period from March 25, 1994 through December 19, 1994. Plaintiff alleges that the
Company violated the federal securities laws by making, in 1994, untrue
statements of material facts and omitting to state material facts primarily
concerning the Company's
construction and start-up of its new manufacturing facility in St. Albans,
Vermont. Also named as defendants in the Complaint are certain present and
former officers and directors of the Company, Ben Cohen, Chairperson of the
Board; Jerry Greenfield, Vice Chairperson of the Board; Frances Rathke, Chief
Financial Officer; and Charles Lacy, former President. Plaintiff is seeking an
unspecified amount of monetary damages.
While this action is in its preliminary stages management believes, based
on an initial review, the allegations made in the lawsuit are without merit and
the Company intends to defend the lawsuit vigorously.
F-14
<PAGE>
Ben & Jerry's Homemade, Inc.
Notes to Consolidated Financial Statements (continued)
Dollars in tables in thousands except share data
14. COMMITMENTS
The Company leases certain property and equipment under operating leases.
Minimum payments for operating leases having initial or remaining noncancellable
terms in excess of one year are as follows:
1996 $ 454
1997 316
1998 206
1999 131
2000 37
Rent expense for operating leases amounted to approximately $662,000,
$516,000 and $425,000 in 1995, 1994 and 1993, respectively.
15. SIGNIFICANT CUSTOMERS
The Company's most significant customer, Dreyer's Grand Ice Cream, Inc.,
accounted for 44%, 49%, or 54% of net sales in 1995, 1994 and 1993 respectively.
16. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the balance sheet for
cash and cash equivalents approximates its fair value.
Investments: The fair values for marketable securities are based on quoted
market prices.
Long- and short-term debt: The fair values of the Company's long-term debt are
estimated using discounted cash flow analyses, based on the Company's current
incremental borrowing rates for similar types of borrowing arrangements.
The carrying amounts and fair values of the Company's financial instruments are
as follows:
1995 1994
------------------- ---------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
Cash and cash equivalents $ 35,406 35,406 20,778 20,778
Investments 1,000 1,000 8,000 8,000
Long-term debt (32,425) (29,815) (32,972) (29,917)
F-15
<PAGE>
Ben & Jerry's Homemade, Inc.
Notes to Consolidated Financial Statements (continued)
Dollars in tables in thousands except share data
17. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
1995
- ----
Net Sales ................ $ 34,205 $ 42,936 $ 45,405 $ 32,787
Gross Profit ............. $ 9,702 $ 13,496 $ 14,076 $ 8,934
Net Income ............... $ 911 $ 1,653 $ 2,525 $ 859
Net Income Per
Common Share ........ $ .13 $ .23 $ .35 $ .12
1994(1)
- -------
Net Sales ................ $ 32,191 $ 40,657 $ 44,761 $ 31,193
Gross Profit ............. $ 7,983 $ 11,064 $ 12,921 $ 7,074
Net Income (Loss) ........ $ 902 $ 714 $ 1,415 $ (4,900)
Net Income (Loss) Per
Common Share ........ $ 0.13 $ 0.10 $ 0.20 $ (0.69)
<FN>
(1) Fourth quarter 1994 results include an after-tax charge of $4.1 million or
$.57 per share, representing a write-down of certain assets at the
Company's new plant as described in Note 12.
</FN>
</TABLE>
F-16
<PAGE>
BEN & JERRY'S HOMEMADE, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years ended December 30, 1995, December 31, 1994, and December 25, 1993
<TABLE>
Balance at Charged
beginning to costs Charged to Balance at
Description of year and expenses other accounts Deductions(1) end of year
- ----------- ------- ------------ -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 30, 1995
Allowance for doubtful accounts
(deducted from accounts
receivable) ................................... $504 $400 $--- $102 $802
Year ended December 31, 1994
Allowance for doubtful accounts
(deducted from accounts
receivable) ................................... $229 $311 $--- $ 36 $504
Year ended December 25, 1993
Allowance for doubtful accounts
(deducted from accounts
receivable) ................................... $350 $ 58 $--- $179 $229
<FN>
(1) Accounts deemed to be uncollectible.
</FN>
</TABLE>
F-17
<PAGE>
Exhibit 3.2.1
By-Laws
of
BEN & JERRY'S HOMEMADE, INC.
Article V
Shares of Stock
Stock Certificates. Each shareholder shall be entitled to a
certificate representing the shares of the Corporation owned by him, under the
corporate seal or a facsimile thereof, in such form as may be prescribed from
time to time by the directors. The certificate shall be signed (either
manually or by facsimile) by the President or a Vice-President, and by the
Treasurer or the Secretary. In case any officer who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he or she were such officer at the time
of its issue.
Every certificate representing the Corporation's shares which
are subject to any restriction on transfer pursuant to the Articles of
Association, the By-Laws or any agreement to which the Corporation is a party,
shall have the restriction noted conspicuously on the certificate and shall
also set forth on the face or back thereof either the full text of the
restriction or a statement of the existence of such restriction and a
statement that the Corporation will furnish a copy thereof to the holder of
such certificate upon written request and without charge. Every certificate
representing the Corporation's shares issued when the Corporation is
authorized to issue more than one class or series of shares shall set forth on
its face or back either the full text of the preferences, voting powers,
qualifications and special and relative rights of the shares of each class and
series authorized to be issued or a statement of the existence of such
preferences, powers, qualifications, and rights, and a statement that the
Corporation will furnish a copy thereof to the holder of such certificate upon
written request and without charge.
<PAGE>
Exhibit 10.1.2
EMPLOYMENT AGREEMENT:
AGREEMENT made and entered into as of the 1st day of May, 1995, by and between
BEN & JERRY'S HOMEMADE, INC., a Vermont corporation with principal place of
business in Waterbury, Vermont (the "Company") and Ben Cohen ("Cohen"), a
resident of Williston, Vermont.
WITNESSETH:
WHEREAS, the Company is desirous of employing Cohen as Chairperson of the
Board of Directors of the Company and Cohen is desirous of committing himself to
serve the Company in such capacities, all on the terms and conditions
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Employment. The Company agrees to employ Cohen, and Cohen hereby agrees to
accept employment as Chairperson of the Board of Directors of the Company for
the Term in accordance with the terms and conditions set forth in this
Agreement, the by-laws of the Company and the instructions given from time to
time by the Board of Directors of the Company .
2. Term. Subject to the termination provisions set forth in Paragraph 9 hereof,
the employment term (the "Term") of this Agreement shall terminate on April 30,
1997, unless extended by the parties.
3. Duties. As Chairman of the Board of Directors of the Company, Cohen shall
have duties and responsibilities as set forth in the by-laws and as determined
from time to time by the Board of Directors . Cohen shall devote substantially
all of his time to the business and affairs of the
<PAGE>
Company during normal working hours and shall use his best efforts to advance
the best interests of the Company. In the event that Cohen wishes to serve as a
director, officer, member of any committee or as a consultant for a person other
than the Company, he must first obtain the prior written approval of the Board
of Directors of the Company and, if authorized to render such service, then only
under terms and conditions established by the Board.
4. Compensation and Benefits.
4.1 Base Salary. The Company shall pay to Cohen a base salary ("Base
Salary") of $132,500 per annum for the fiscal year ending 1995. Within ninety
days of the beginning of each fiscal year the Board of Directors of the Company
will review Cohen's Base Salary with a view to an upward adjustment thereof
based upon Cohen's performance, the performance of the Company, inflation,
comparable salaries of other executives with similar responsibilities and other
relevant factors.
4.2 Bonus. The Company shall pay Cohen for each fiscal year during the
period of Cohen's employment hereunder, commencing with the fiscal year ending
December 31, 1995, a bonus ("Bonus") in an amount to be determined by the Board
of Directors of the Company in its discretion. The Bonus shall be payable within
90 days after receipt by the Company of financial statements of the Company,
certified by the independent certified public accountants of the Company in
accordance with generally accepted accounting principles applied on a consistent
basis.
4.3 Out-of-Pocket Expenses. The Company shall promptly pay or reimburse
Cohen for all reasonable expenses incurred or paid by him in the performance of
his duties hereunder, provided that Cohen properly accounts therefor in
accordance with the policies of the Company.
<PAGE>
4.4 Medical Benefits. The Company will provide Cohen with medical and
hospitalization insurance and other benefits generally available to employees
during the Term.
4.5 Vacation. Cohen shall be entitled to four weeks paid vacation per annum
at times to be mutually selected by Cohen and the Company.
4.6 Car. As a co-founder Cohen shall be entitled to a "Company Car',
including gas and maintenance (other than personal).
5. Protection of Confidential Information.
5.1 Covenant. Cohen acknowledges that his employment by the Company has and
will continue to bring him into close contact with many confidential affairs of
the Company, including information about costs, profits, markets, sales,
products, key personnel, pricing policies, operational methods, strategic and
other business plans, manufacturing processes and other business affairs,
methods of information not readily available to the public, and plans for future
developments. Cohen further acknowledges that the services to be performed by
him under this Agreement are of a special, unique and extraordinary character.
Cohen further acknowledges that the business of the Company is conducted
throughout the United States and that he is therefore capable of competing with
the Company from nearly any location in the United States. In recognition of the
foregoing, Cohen covenants and agrees:
(a) That he will keep secret all confidential of the Company and not
use them himself or disclose them to anyone outside of the Company, either
during or
<PAGE>
after the Term except in accordance with the performance of his duties or
with the Company's prior written consent; and
(b) That he will deliver promptly to the Company on termination of
this Agreement, or at any time the Company may so request, all memoranda,
notes, records, reports and other documents (and all copies thereof)
relating to the Company's business, which he may then possess or have under
his control.
5.2 Specific Remedies. If Cohen commits a breach, or threatens to commit a
breach, of any of the provisions of paragraph 5.1, the Company shall have (I)
the right and remedy to have such provisions specifically enforced by any court
having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to the Company and
that money damages will not provide adequate remedy to the Company, and (ii) the
right and remedy to require Cohen to account for and pay over to the Company all
compensation, profits, monies, accruals, increments or other benefits
(collectively "Benefits") derived or received by Cohen as the result of any
transactions constituting a breach of any of the provisions of paragraph 5.1,
and Cohen hereby agrees to account for and pay over such Benefits to the
Company.
6. Restriction on Competition
6.1 Covenant. In recognition of the consideration described in Paragraph 4
and below in this Paragraph, Cohen covenants and agrees that, so long as he is
employed under this Agreement and for a period of two (2) years thereafter, he
will not (i) enter, directly or indirectly, into the employ of or render,
directly or indirectly, any services to any person, firm or corporation engaged
in any business competitive with any business of the Company; (ii)engage,
directly or indirectly, in any such business for his own account;
<PAGE>
or (iii) become interested, directly or indirectly, in any such business as an
individual partner, shareholder, creditor, director, officer, principal, agent,
employee, trustee, consultant, advisor or in any other relationship or capacity.
In consideration for the agreement not to compete as set forth herein, in
addition to the Compensation and Benefits provided in Paragraph 4 of this
Agreement, (A) the Company agrees to pay Cohen 100% of his then current Base
Salary during the two year period following the expiration of the Term, provided
however, that such payments shall terminate (i) upon Cohen's accepting
non-competitive employment with another company; (ii) upon the waiver, following
the written request by Cohen, of the restriction on competition by the Company
with 30 days prior written notice; or (iii) upon Cohen's termination of
employment by the Company with cause as defined in Paragraph 9 hereof or
termination of this Agreement by the Company under Paragraph 6.2 or 9; (B) the
provisions of this Paragraph 6.1 shall not be deemed to preclude Cohen from
employment by a corporation some of the activities of which are competitive with
the business of the Company if Cohen's employment does not relate, directly or
indirectly, to such competitive business; and (iv) nothing contained in this
paragraph 6.1 shall be deemed to prohibit Cohen from acquiring or holding,
solely as an investment, publicly traded securities of any competitor
corporation so long as such securities do not, in the aggregate, constitute more
than 2% of any class of series of outstanding securities of such corporation.
6.2 Remedies. In the event of the violation by Cohen of any of the
covenants of Paragraphs 5.1 or 6.1, such violation shall be deemed to be "cause"
for termination pursuant to the terms of Paragraph 9 hereof, and, in addition,
the Company shall have the right and
<PAGE>
remedy to have the provisions of Paragraph 6.1 specifically enforced, it being
acknowledged and agreed that any such violation or threatened violation will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company.
7. Independence, Severability and Non-Exclusivity. Each of the rights and
remedies enumerated in Paragraphs 5.2 and 6.2 shall be independent of the other
and shall be severally enforceable and all of such rights and remedies shall be
in addition to and not in lieu of any other rights and remedies available to the
Company under the law or in equity. If any of the covenants contained in
Paragraphs 5.1 or 6.1 or if any of the rights or remedies enumerated in
Paragraphs 5.2 or 6.2, or any part of any of them, is hereafter construed to be
invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants or rights or remedies which shall be given full effect
without regard to the invalid portions. The parties intend to and do hereby
confer jurisdiction to enforce the covenants contained in Paragraphs 5.1 and 6.1
upon the United States Federal District Court for the District of Vermont and
the courts of the State of Vermont. If any of the covenants contained in
Paragraphs 5.1 or 6.1 is held to be unenforceable because of the duration of
such provision or the area covered thereby, the parties agree that the court
making such determination shall have the power to reduce the duration and/or
area of such provision and in its reduced form said provision shall then be
enforceable.
8. Product Development. Cohen acknowledges that during the Term he may conceive
of, discover, invent or create new products or product improvements whether
patentable or copyrightable or not (all of the foregoing being collectively
referred to herein as "Product Developments") and that various business
opportunities relating to the business of the Company may be presented to him by
reason of his relationship created by this Agreement. Cohen
<PAGE>
acknowledges that all of the foregoing shall be owned by and belong exclusively
to the Company and that he shall not have any personal interest therein,
provided that they are either related in any manner to the business of the
Company, or are conceived or made on or presented to Cohen during the Company's
time or with the use of the Company's facilities or materials. Cohen shall (i)
disclose promptly any such Product Developments and business opportunities to
the Company; (ii) assign to the Company, without additional compensation, the
entire rights to such Product Developments and business opportunities; (iii)
execute all documents and instruments necessary to carry out the foregoing; and
(iv) give testimony in support of its or his development or creation in any
appropriate case.
9. Termination. This Agreement shall terminate, at the option of the Company,
(i) for cause, which shall be defined as: (a) Cohen's willful failure to comply
with any of the material terms of this Agreement, including, without limitation,
Cohen's violation of any covenants in Paragraphs 5.1 and 6.1; (b) Cohen's
willful engagement, in his capacity as an executive officer of the Company, in
gross misconduct injurious to the Company, and (c) Cohen's failure to carry out
direction from the Board of Directors of the Company or the Chief Executive
Officer of the Company; and (ii) pursuant to Paragraph 6.2 hereof.
In the event of termination of this Agreement by the Company for cause as
defined in this paragraph, Cohen shall have no further rights under this
Agreement but thereafter shall continue to be subject to the provisions of
Paragraphs 5, 6, 7, and 8 hereof.
10. Notices. All notices, requests, consents and other communications, required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given if delivered personally or sent by prepaid telegram, or
mailed first-class, postage prepaid, by
<PAGE>
registered or certified mail, as follows, (or to such other address as either
party shall designate by notice in writing to the other in accordance herewith):
If to the Company:
BEN & JERRY'S HOMEMADE, INC.
P.O. Box 240
Waterbury, Vermont
If to Cohen:
82 St. George Lane
Williston, VT 05495
11. General.
11.1 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Vermont (other than
conflict of laws).
11.2 Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
11.3 Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior arrangements, arrangements and understandings, written or
oral, between the parties.
11.4 No Other Representations. No representation, promise or inducement has
been made by either party that is not embodied in this Agreement, and neither
party shall be bound or liable for any alleged representation, promise or
inducement not so set forth.
11.5 Assignability. This Agreement may not be assigned by Cohen or the
Company.
<PAGE>
11.6 Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived, only by a written instrument executed by both of the parties hereto,
or in the case of a waiver, by the party waiving compliance. The failure of
either party at any time or times to require performance of any provision hereof
shall in no manner affect the right at a later time to enforce the same. No
waiver in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any other term or
covenant contained in this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.
BEN & JERRY'S HOMEMADE, INC.
By: ______________________
/s/Ben Cohen
<PAGE>
Exhibit 10.4
EMPLOYMENT AGREEMENT:
AGREEMENT made and entered into as of the 1st day of May, 1995, by and between
BEN & JERRY'S HOMEMADE, INC., a Vermont corporation with its principal place of
business in Waterbury, Vermont (the "Company") and JERRY GREENFIELD
("Greenfield"), a resident of Williston, Vermont.
WITNESSETH:
WHEREAS, the Company is desirous of employing Greenfield as Vice
Chairperson of the Board of Directors of the Company and Greenfield is desirous
of committing himself to serve the Company in such capacities, all on the terms
and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Employment. The Company agrees to employ Greenfield, and Greenfield hereby
agrees to accept employment as Vice Chairperson of the Board of Directors of the
Company for the Term in accordance with the terms and conditions set forth in
this Agreement, the by-laws of the Company and the instructions given from time
to time by the Board of Directors of the Company or by the Chief Executive
Officer of the Company.
2. Term. Subject to the termination provisions set forth in Paragraph 9 hereof,
the employment term (the "Term") of this Agreement shall terminate on April 30,
1997, unless extended by the parties.
3. Duties. As Vice Chairman of the Company, Greenfield shall have duties and
responsibilities as set forth in the by-laws and as determined from time to time
by the Board of Directors or by the Chief Executive Officer of the Company.
Greenfield shall use his best efforts
<PAGE>
to advance the best interests of the Company.
4. Compensation and Benefits.
4.1 Base Salary. The Company shall pay to Greenfield a base salary ("Base
Salary") of $132,745 per annum for the fiscal year ending 1995. Within ninety
days of the beginning of each fiscal year the Board of Directors of the Company
will review Greenfield's Base Salary with a view to an upward adjustment thereof
based upon Greenfield's performance, the performance of the Company, inflation,
comparable salaries of other executives with similar responsibilities and other
relevant factors.
4.2 Bonus. The Company shall pay Greenfield for each fiscal year during the
period of Greenfield's employment hereunder, commencing with the fiscal year
ending December 31, 1995, a bonus ("Bonus") in an amount to be determined by the
Board of Directors of the Company in its discretion. The Bonus shall be payable
within 90 days after receipt by the Company of financial statements of the
Company, certified by the independent certified public accountants of the
Company in accordance with generally accepted accounting principles applied on a
consistent basis.
4.3 Out-of-Pocket Expenses. The Company shall promptly pay or reimburse
Greenfield for all reasonable expenses incurred or paid by him in the
performance of his duties hereunder, provided that Greenfield properly accounts
therefor in accordance with the policies of the Company.
4.4 Medical Benefits. The Company will provide Greenfield with medical and
hospitalization insurance and other benefits generally available to employees
during the Term.
<PAGE>
4.5 Vacation. Greenfield shall be entitled to four weeks paid vacation per
annum at times to be mutually selected by Greenfield and the Company.
4.6 Car. As a co-founder Greenfield shall be entitled to a "Company Car",
including gas and maintenance (other than personal).
5. Protection of Confidential Information.
5.1 Covenant. Greenfield acknowledges that his employment by the Company
has and will continue to bring him into close contact with many confidential
affairs of the Company, including information about costs, profits, markets,
sales, products, key personnel, pricing policies, operational methods, strategic
and other business plans, manufacturing processes and other business affairs,
methods of information not readily available to the public, and plans for future
developments. Greenfield further acknowledges that the services to be performed
by him under this Agreement are of a special, unique and extraordinary
character. Greenfield further acknowledges that the business of the Company is
conducted throughout the United States and that he is therefore capable of
competing with the Company from nearly any location in the United States. In
recognition of the foregoing, Greenfield covenants and agrees:
(a) That he will keep secret all confidential of the Company and not
use them himself or disclose them to anyone outside of the Company, either
during or after the Term except in accordance with the performance of his
duties or with the Company's prior written consent; and
(b) That he will deliver promptly to the Company on termination of
this Agreement, or at any time the Company may so request, all memoranda,
notes,
<PAGE>
records, reports and other documents (and all copies thereof) relating to
the Company's business, which he may then possess or have under his
control.
5.2 Specific Remedies. If Greenfield commits a breach, or threatens to
commit a breach, of any of the provisions of paragraph 5.1, the Company
shall have (I) the right and remedy to have such provisions specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed that any such breach or threatened breach will cause irreparable
injury to the Company and that money damages will not provide adequate
remedy to the Company, and (ii) the right and remedy to require Greenfield
to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or other benefits (collectively "Benefits")
derived or received by Greenfield as the result of any transactions
constituting a breach of any of the provisions of paragraph 5.1, and
Greenfield hereby agrees to account for and pay over such Benefits to the
Company.
6. Restriction on Competition
6.1 Covenant. In recognition of the consideration described in Paragraph 4
and below in this Paragraph, Greenfield covenants and agrees that, so long as he
is employed under this Agreement and for a period of two (2) years thereafter,
he will not (i) enter, directly or indirectly, into the employ of or render,
directly or indirectly, any services to any person, firm or corporation engaged
in any business competitive with any business of the Company; (ii) engage,
directly or indirectly, in any such business for his own account; or (iii)
become interested, directly or indirectly, in any such business as an individual
partner, shareholder, creditor, director, officer, principal, agent, employee,
trustee, consultant, advisor or in any other relationship or capacity. In
consideration for the agreement not to compete as set forth
<PAGE>
herein, in addition to the Compensation and Benefits provided in Paragraph 4 of
this Agreement, (A) the Company agrees to pay Greenfield 100% of his then
current Base Salary during the two year period following the expiration of the
Term, provided however, that such payments shall terminate (i) upon the waiver,
following the written request by Greenfield, of the restriction on competition
by the Company with 30 days prior written notice; or (ii) upon Greenfield's
termination of employment by the Company with cause as defined in Paragraph 9
hereof or termination of this Agreement by the Company under Paragraph 6.2 or 9;
(B) the provisions of this Paragraph 6.1 shall not be deemed to preclude
Greenfield from employment by a corporation some of the activities of which are
competitive with the business of the Company if Greenfield's employment does not
relate, directly or indirectly, to such competitive business; and (iv) nothing
contained in this paragraph 6.1 shall be deemed to prohibit Greenfield from
acquiring or holding, solely as an investment, publicly traded securities of any
competitor corporation so long as such securities do not, in the aggregate,
constitute more than 2% of any class of series of outstanding securities of such
corporation.
6.2 Remedies. In the event of the violation by Greenfield of any of the
covenants of Paragraphs 5.1 or 6.1, such violation shall be deemed to be "cause"
for termination pursuant to the terms of Paragraph 9 hereof, and, in addition,
the Company shall have the right and remedy to have the provisions of Paragraph
6.1 specifically enforced, it being acknowledged and agreed that any such
violation or threatened violation will cause irreparable injury to the Company
and that money damages will not provide an adequate remedy to the Company.
7. Independence, Severability and Non-Exclusivity. Each of the rights and
remedies enumerated in Paragraphs 5.2 and 6.2 shall be independent of the other
and shall be severally
<PAGE>
enforceable and all of such rights and remedies shall be in addition to and not
in lieu of any other rights and remedies available to the Company under the law
or in equity. If any of the covenants contained in Paragraphs 5.1 or 6.1 or if
any of the rights or remedies enumerated in Paragraphs 5.2 or 6.2, or any part
of any of them, is hereafter construed to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants or rights or
remedies which shall be given full effect without regard to the invalid
portions. The parties intend to and do hereby confer jurisdiction to enforce the
covenants contained in Paragraphs 5.1 and 6.1 upon the United States Federal
District Court for the District of Vermont and the courts of the State of
Vermont. If any of the covenants contained in Paragraphs 5.1 or 6.1 is held to
be unenforceable because of the duration of such provision or the area covered
thereby, the parties agree that the court making such determination shall have
the power to reduce the duration and/or area of such provision and in its
reduced form said provision shall then be enforceable.
8. Product Development. Greenfield acknowledges that during the Term he may
conceive of, discover, invent or create new products or product improvements
whether patentable or copyrightable or not (all of the foregoing being
collectively referred to herein as "Product Developments") and that various
business opportunities relating to the business of the Company may be presented
to him by reason of his relationship created by this Agreement. Greenfield
acknowledges that all of the foregoing shall be owned by and belong exclusively
to the Company and that he shall not have any personal interest therein,
provided that they are either related in any manner to the business of the
Company, or are conceived or made on or presented to Greenfield during the
Company's time or with the use of the Company's facilities or materials.
Greenfield shall (i) disclose promptly any such Product Developments and
business opportunities
<PAGE>
to the Company; (ii) assign to the Company, without additional compensation, the
entire rights to such Product Developments and business opportunities; (iii)
execute all documents and instruments necessary to carry out the foregoing; and
(iv) give testimony in support of its or his development or creation in any
appropriate case.
9. Termination. This Agreement shall terminate, at the option of the Company,
(i) for cause, which shall be defined as: (a) Greenfield's willful failure to
comply with any of the material terms of this Agreement, including, without
limitation, Greenfield's violation of any covenants in Paragraphs 5.1 and 6.1;
(b) Greenfield's willful engagement, in his capacity as an executive officer of
the Company, in gross misconduct injurious to the Company, and (c) Greenfield's
failure to carry out direction from the Board of Directors of the Company or the
Chief Executive Officer of the Company; and (ii) pursuant to Paragraph 6.2
hereof. In the event of termination of this Agreement by the Company for cause
as defined in this paragraph, Greenfield shall have no further rights under this
Agreement but thereafter shall continue to be subject to the provisions of
Paragraphs 5, 6, 7 and 8 hereof.
10. Notices. All notices, requests, consents and other communications, required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given if delivered personally or sent by prepaid telegram, or
mailed first-class, postage prepaid, by registered or certified mail, as
follows, (or to such other address as either party shall designate by notice in
writing to the other in accordance herewith):
If to the Company:
Ben & Jerry's
Homemade, Inc.
P.O. Box 240
Waterbury, Vermont
<PAGE>
Attention: President
If to Greenfield:
585 South Road
Williston, VT 05495
11. General.
11.1 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Vermont (other than
conflict of laws).
11.2 Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
11.3 Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior arrangements, arrangements and understandings, written or
oral, between the parties. Certain provisions of this Agreement survive the Term
and the expiration, including Paragraphs 5.1, 5.2, 6.1, and 6.2.
11.4 No Other Representations. No representation, promise or inducement has
been made by either party that is not embodied in this Agreement, and neither
party shall be bound or liable for any alleged representation, promise or
inducement not so set forth.
11.5 Assignability. This Agreement may not be assigned by Greenfield or the
Company.
11.6 Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived, only by a written instrument executed by both of the parties hereto,
or in the case of a waiver,
<PAGE>
by the party waiving compliance. The failure of either party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.
BEN & JERRY'S HOMEMADE, INC.
By:________________________________
/s/JERRY GREENFIELD
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
See accompanying notes
$ in thousands, except per share amounts.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-30-1995
<CASH> 35406
<SECURITIES> 0
<RECEIVABLES> 12514
<ALLOWANCES> 0
<INVENTORY> 12616
<CURRENT-ASSETS> 68063
<PP&E> 59600
<DEPRECIATION> 0
<TOTAL-ASSETS> 131074
<CURRENT-LIABILITIES> 17040
<BONDS> 0
0
1
<COMMON> 239
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 131074
<SALES> 155333
<TOTAL-REVENUES> 0
<CGS> 109125
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 597
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1525
<INCOME-PRETAX> 9405
<INCOME-TAX> 3457
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5948
<EPS-PRIMARY> .82
<EPS-DILUTED> .82
</TABLE>
Exhibit 10.8.4
Termination of Subdistributor Agreement
RE: Subdistributor Agreement dated February 7, 1994, by and between
Dreyer's Grand Ice Cream, Inc. ("Dreyer's") and Ben & Jerry's Homemade, Inc.
("Ben & Jerry's").
The following are the terms and conditions upon which we are prepared to
terminate the above referenced Agreement and purchase certain assets.
1. The Agreement will be terminated effective October 29, 1995, and as of
that date, all rights to distribute Ben & Jerry's products in the New
York Territory will revert to Edy's of New York pursuant to the terms
of the Distribution Agreement between Ben & Jerry's and Dreyer's dated
January 6, 1987, as amended.
2. The Subdistribution Payment due from Ben & Jerry's for the last
quarter of 1995 will be prorated to the termination date of the
Agreement. Such prorated payment will be due upon closing of the asset
sales contemplated by this letter.
3. Subdistributors have been notified of this change prior to October 1,
1995 with a letter signed jointly by Edy's of New York and Ben &
Jerry's of New York.
4. As of October 29, 1995, Edy's of New York will occupy and operate the
Ben & Jerry's of New York distribution center located at 38-56 43rd
Street, Long Island City, New York. Such use by Edy's will continue
until the earlier of (a) the termination of the underlying lease; (b)
February 28, 1996; or (c) the facility is sublet to a third party by
Ben & Jerry's of New York. During the period of Edy's occupancy Ben &
Jerry's will remain as the named party on the underlying lease and
will continue to have access to the facility. Expenses related to
Edy's occupancy will be billed to Edy's monthly.
It is Edy's intention to utilize the facility as a distribution
location for the out-of-home class of trade until such time as the
inventory of Ben & Jerry's product purchased pursuant to this letter
is significantly reduced. At such time Edy's will conduct such
distribution from its own facilities.
5. Edy's will offer to the employees of Ben & Jerry's of New York, except
Norman Vogel and Larry Kruysman, positions of employment with
reasonably comparable compensation.
6. Edy's will purchase the salable inventory of Ben & Jerry's products
held at the Ben & Jerry's of New York distribution center as of
October 29, 1995. The quantity of such inventory will be verified by a
join physical count on that date, and with payment will be made by
Edy's promptly thereafter. The price of the inventory will be the
normal distributor price currently charged to Edy's of New York by Ben
& Jerry's Homemade, Inc.
7. Edy's will purchase from Ben & Jerry's the hi/lo lift truck and hand
lift truck currently used by Ben & Jerry's. The purchase price will be
the net book value on the books of the assets on the books of Ben &
Jerry's of New York. In addition, Edy's will purchase the trucks and
truck bodies currently owned and/or leased by Ben & Jerry's of New
York. The purchase price for the truck assets will be negotiated by
the parties in good faith. Ben & Jerry's will deliver good title to
all assets purchased by Edy's pursuant to this paragraph free and
clear of all liens and encumbrances. such asset sales shall be made
pursuant to the terms of an Asset Purchase Agreement to be entered
into by the parties. Ben &
<PAGE>
Jerry's will remove any and all of its remaining assets from the 43rd
Street location prior to the end of the lease term or such date that
the facility is sublet or returned to the landlord, whichever is
earlier.
8. Edy's will provide storage space at the Long Island City facility for
approximately twelve (12) Ben & Jerry's storage carts and/or vendor
freezers. If Edy's needs to utilize the space during its occupancy,
Edy's will give Ben & Jerry's of New York five day's notice to remove
the equipment.
9. Accounts Receivable
(a) Edy's will purchase the Ben & Jerry's of New York Accounts
Receivable for the aggregate amount carried on the books of Ben &
Jerry's of New York on October 1, 1995, excluding those amounts more
than 90 days old as of that date and also excluding those acknowledged
by Ben & Jerry's of New York to be in dispute as of that date. Ben &
Jerry's of New York will provide to Edy's full supporting
documentation (signed invoices) to substantiate these receivables and
will cooperate fully with Edy's to assist in the collection of these
receivables. The aggregate amount of these receivables, less any
collected in the interim by Ben & Jerry's, will be payable to Ben &
Jerry's as collected, but in an event within 180 days after October
28, 1995 whether or not Edy's h as received payment form each account.
Ben & Jerry's of New York will indemnify Edy's for any amounts paid to
purchase Accounts Receivable to the extent such amounts are not
reimbursed to Edy's by the applicable account, provided that this
indemnification will apply only to accounts for which Edy's has not
been furnished full supporting documentation. Edy's agrees that, until
such time as Ben & Jerry's of New York receives payment in full for
accounts which are acknowledged to be in dispute, they will not sell,
distribute or otherwise supply any Ben & Jerry's products to such
accounts.
(b) Edy's shall promptly remit to Ben & Jerry's of New York any monies
received by Edy's for products distributed and sold by Ben & Jerry's
in the New York Territory before the termination date.
(c) Edy's will provide terms to such current distributors who Edy's
determines in its sole discretion will continue to be authorized Ben &
Jerry's distributors.
(d) It is Edy's intention to appoint Jack N'Jill a Ben & Jerry's
distributor to the out-of-home trade in northern New Jersey contingent
upon resolving the outstanding receivables balance owed to Ben &
Jerry's by J & M Distributors. To the extent this can't be resolved,
then J & M Distributors will remain a subdistributor and will be
expected to pay their receivable balance to Ben & Jerry's. This will
be enforced per the control of Ben & Jerry's shipments to J & M.
10. This agreement supersedes all other understanding or agreements
relating to the distribution of Ben & Jerry's products in the New York
out-of-home trade and the parties agree that there are no
representations, promises, inducements or agreement, oral or written,
which shall have any effect unless set forth in this agreement. No
modification of this agreement shall be effective unless in writing,
signed by both parties.
Agreed to this 27th day of October, 1995.
Ben & Jerry's Homemade, Inc. Dreyer's Grand Ice Cream, Inc.
By:______________________ By:_______________________
/s/Tom D'Urso /s/Tom Delaplane,
Its:Manager of Treasury Vice President, Sales
Operations
<PAGE>
Exhibit 10.26.1
INSURANCE BINDER
This binder is a temporary insurance contract, subject to the conditions shown
on the reverse side of this form.
Producer:
Smith Bell & Thompson, Inc.
P.O. Box 730
102 S. Winooski Ave.
Burlington, VT 05402-0730
Company: Federal Insurance Co.
Date Effective: 2/24/96
Time: 12:01 AM
Date Expiration: 04/24/96
Time: 12:01 AM
Description of Operations: Manufacturer of Premium Ice Cream and Frozen
Yogurt
Insured: Ben & Jerry's Homemade, Inc.
P.O. Box 240
Waterbury, VT 05676
This binder is issued to extend coverage in the above named Company per expiring
policy No.: 8121-24-97F
Coverages:
Executive Liability & Defense Coverage: $7,500,000;
$ 500,000 Ded./Org.
Fiduciary liability & Defense Coverage: $1,000,000;
Nil Deductible
Commercial Crime Coverage: $ 500,000;
$ 10,000 Deductible
Kidnap/Ransom & Extortion Coverage: $1,000,000;
Nil Deductible
Agreed Allocation Endorsement: 80%/20%
CONDITIONS
This Company binds the kinds of insurance stipulated on the preceding page. The
Insurance is subject to the terms, conditions and limitations of the policies in
current use by the Company.
<PAGE>
This binder may be cancelled by the Insured by surrender of this binder or by
written notice to the Company stating when cancellation will be effective. This
binder may be cancelled by the Company by notice to the Insured in accordance
with the policy conditions. This binder is cancelled when replace by a policy.
If this binder is not replaced by a policy, the Company is entitled to charge a
premium for the binder according to the Rules and Rates in use by the Company.
APPLICABLE IN NEVADA
Any person who refuses to accept a binder which provides coverage of less than
$1,000,000.00 when proof is required: (a) Shall be fined not more than $500.00,
and (B) is liable to the party presenting the binder as proof of insurance for
actual damages sustained therefrom.
<PAGE>
Exhibit 10.26.1
EMPLOYMENT AGREEMENT
Agreement by and between Ben & Jerry's Homemade, Inc. (the
"Company"), a Vermont corporation with its principal place of business at Route
100, P.O. Box 240, Waterbury, Vermont 05676, and Bruce Bowman of Columbus,
Georgia (The "Executive"), effective as of the 21st day of August, 1995.
WHEREAS, subject to the terms and considerations hereinafter set forth,
the Company wishes to employ the Executive as its Senior Director of Operations
and Executive wishes to accept such employment;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, terms, provisions, and conditions set forth in this Agreement, the
parties hereby agree:
1. Employment.
Subject to the terms and conditions set forth in this Agreement, the
Company hereby offers and the Executive hereby accepts employment as the Senior
Director of Operations, responsible to the Company's Chief Executive Officer and
President..
2. Term.
Subject to earlier termination as hereafter provided, the Executive's
employment hereunder shall be for a term of three (3) years, commencing on the
effective date hereof.
3. Performance.
During the term hereof, the Executive shall devote his full time best
efforts, business judgement, skill and knowledge to the advancement of the
business and interests of the Company.
4. Compensation and Benefits.
As compensation for all services performed by the Executive and subject to
performance of the Executive's obligations:
a. Base Salary. The Company shall pay the Executive a base salary at
the rate One Hundred and Sixty Thousand Dollars ($160,000) per
annum in accordance with the payroll practices of the Company for
its executives, subject to annual merit salary reviews by the
Chief Executive Officer.
b. Annual Incentive Award. The Executive shall be entitled to annual
incentive award (the "Incentive Award") payable in cash or Class
A common stock as determined by the Chief Executive Officer and
President after consultation with the Executive and subject to
the approval of the Compensation Committee of the Board of
Directors. The amount of the Incentive Award shall be as follows:
<PAGE>
b.1 1995 Short Year (August 21 - December 31, 1995) shall be Forty
Thousand Dollars ($40,000) and payable within thirty days after
January 1, 1996. Half of this incentive is guaranteed and
intended to compensate the Executive for any earned bonus that
was forgone by the Executive by leaving his previous position at
his previous employer. The balance of this incentive will be
based upon the Executive's progress in addressing goals which
cover the first five months at the Company primarily addressing
orientation, assessment of the current operations, prioritization
and planning of critical work for the operations of the Company
and the overall transition of the Executive into the position, as
determined upon recommendation of the Chief Executive Officer,
subject to the approval of the Compensation Committee of the
Board of Directors.
b.2 1996 and Future Years shall not exceed 35% of the Executive's
annual base salary. 25/35% of the Incentive Award will be paid in
cash and the balance will be paid in shares of Class A common
stock issued under the Company's Restricted Stock Plan. The
annual incentive will be paid within sixty days after January 1
of the following year. The specific criteria and objectives shall
be established for any year prior to the start of each year and
will be mutually agreed upon by the Executive and the Chief
Executive Officer and President, subject to the approval of the
Compensation Committee of the Board of Directors and the
determination as to the amount of the Incentive Award earned will
be determined upon recommendation of the Chief Executive Officer,
subject to approval of the Compensation Committee.
c. Stock Options. The Executive shall receive options, which are
non-statutory, non-incentive stock options, to purchase 25,000
shares of Class A common stock of the Company exercisable at the
market price at the close of business on August 21, 1995, the
first day of your employment. The Compensation Committee formally
grants the options under the Company's 1995 Equity Incentive Plan
(the "Plan"). The options have a term of ten (10) years and
become exercisable at the rate of 5, 000 shares a year under the
following schedule: 5,000 shares on January 1, 1997, 5,000 shares
on January 1, 1998, 5,000 shares on January 1, 1999, 5000 shares
on January 1, 2000, and 5,000 shares on January 1, 2001. The full
terms of the options shall be set forth in the form of Option
Certificate attached as Exhibit A.
d. Other Benefits. The Executive shall be entitled to participate in
any of the employee benefit plans, including medical and life
insurance, 401(K) plan, personal time, etc and any other employee
benefit plans which effect Executives of the Company, except to
the extent that any benefit excludes participation by executives
of the Company. The Company may alter, modify, add to or delete
its employee benefit plans at any time as it, in its sole
judgment, determines to be appropriate.
e. Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable business expenses of the Executive
in the performance of his duties and responsibilities hereunder,
subject to reasonable substantiation and documentation.
<PAGE>
f. Car Allowance. The Company typically only provides a car
allowance to the field sales force, however, the Company
anticipates that the Executive will frequently travel to the
various operations and locations throughout the State of Vermont.
The Company will provide the Executive with a car allowance of
$542 dollars per month, and reimbursement of 80% of his gasoline
expenses. Theses amounts may be subject to taxation under IRS
guidelines, most likely reflecting what percentage of the use of
the car is for business purposes.
g. Relocation Expenses. The Company will reimburse the Executive for
the following relocation expenses: (i) Closing costs on selling
the existing home, including sales commission and legal fees, not
to exceed $15,000 dollars (ii) Expenses to move all household
goods, not to exceed $8,000 dollars, (iii)Interim living expenses
for sixty (60) days, not to exceed $2,000 dollars, (iv) Expenses
for up to two (2) house-hunting trips for the Executive and his
wife including air fare, lodging, meals and rental car, and (v)
Closing costs on any new purchase of the Executive's primary
residence, including standard mortgage points (not buy down
interest rate expenses) and legal fees, not to exceed $8,500
dollars. The Company is willing to consider reimbursement for any
expenses which exceed the limitations listed above, should the
cost of relocation increase substantially for unforeseen reasons.
All reimbursed amounts will be grossed up for tax purposes.
5. Termination of Employment and Severance Benefits.
The Executive's employment hereunder shall terminate prior to the
expiration of the term of this Agreement under the following circumstances:
a. Death. In the event of the Executive's death during the term
hereof, the Company shall pay to the Executive's designated
beneficiary or if no beneficiary has been designated by the
Executive, to his estate, any Base Salary, bonuses and incentives
that are earned but unpaid, pro-rated through the date of his
death and payment or reimbursement of business expenses accrued
prior to the date of death.
b. By the Company for Cause. The Company may terminate the
Executive's employment hereunder for Cause at any time upon
written notice to the Executive setting forth in reasonable
detail the nature of such Cause, and the Executive's failure to
cure within thirty (30) days. The following, as determined by the
Board in its reasonable judgement, shall constitute Cause for
termination:
I. The Executive's willful failure to perform (other than by
reason of disability) or negligence (measured against
standards generally prevailing in the Company's industry) in
the performance of his duties and responsibilities to the
Company; or
ii. Other deliberate willful action by the Executive that is
materially harmful to the business, interests or reputation
of the Company.
<PAGE>
Notwithstanding the foregoing, the Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
him a notice of termination. Upon giving notice of termination of the
Executive's employment hereunder for Cause following the Executive's failure to
cure, the Company shall have no further obligation or liability to the
Executive, other than for business expenses accrued prior to the date of
termination. Upon termination of employment for Cause, all options shall
terminate.
c. By the Company other than for Cause. The Company may terminate
the Executive's employment hereunder other than for Cause at any
time upon notice to the Executive. In the event of such
termination, then, for a period of one year, the Company shall
continue to pay the Executive the Base Salary and Annual
Incentive Award at the rate in effect on the date of termination
and the prior years Incentive Award and shall continue to
contribute, subject to any employee contribution applicable to
the Executive on the date of termination, for such one year
period, to the cost of the Executive's participation (including
his family) in the Company's group medical and hospitalization
insurance plans, provided that the Executive is entitled to
continue such participation under applicable law and plan terms.
Upon termination of employment for other than Cause, all options
shall terminate.
6. Effect of Termination.
Except for medical and hospitalization insurance coverage continued
pursuant to Section 5.c. and options as provided in the Equity Incentive Plan,
all benefits shall terminate on termination of the Executive's employment or
expiration of this Agreement. Provisions of this Agreement shall survive any
termination if so provided herein or if necessary or desirable to fully
accomplish the purposes of such provision, including without limitation the
obligations of the Executive under Sections 7, 8 and 9 hereof.
7. Confidential Information.
a. The Executive will comply with the policies and procedures of the
Company and its Subsidiaries for protecting Confidential Information and shall
never disclose to any Person (except as required by applicable law) or use for
his own benefit or gain, any Confidential Information obtained by the Executive
incident to his employment or other association with the Company or any of its
Subsidiaries. The Executive understands that this restriction shall continue to
apply after his employment terminates, regardless of the reason for such
termination.
b. All documents, records, tapes and other media of every kind and
description relating to the business, present or otherwise, of the Company or
its Subsidiaries and any copies, in whole or in part, thereof (the "Documents"),
whether or not prepared by the Executive, shall be the sole and exclusive
property of the Company and its Subsidiaries. The Executive shall safeguard all
Documents and shall surrender to the Company at the time his employment
terminates. Or at such earlier time or times as the Chief Executive Officer or
his designee may specify, all Documents that in then in the Executive's
possession or control.
<PAGE>
8. Assignment of Rights to Intellectual Property.
The Executive shall promptly and fully disclose all Intellectual Property
to the Company. The Executive hereby assigns and agrees to assign to the Company
(or as otherwise directed by the Company) the Executive's full right, title and
interest in and to all Intellectual Property. All copyrightable works that the
Executive creates shall be considered "work made for hire".
9. Restricted Activities.
The Executive agrees that some restrictions on his activities during and
after his employment are necessary to protect the goodwill, Confidential
Information and other legitimate interests of the Company and its Subsidiaries,
and that the agreed restrictions set forth below will not deprive the Executive
of the ability to earn a livelihood:
a. While the Executive is employed by the Company and for two years
after his employment terminates (the "Non-Competition Period"),
the Executive shall not, directly or indirectly, whether as
owner, partner, investor, consultant, agent, employee,
co-venturer or otherwise, compete with the Company or any of its
Subsidiaries within the United States, or within any foreign
country in which the Products are sold at the date of termination
of employment, or undertake any planning for any business
competitive with the Company or any of its Subsidiaries.
b. The Executive further agrees that while he is employed by the
Company and during the Non-Competition Period, the Executive will
not hire or attempt to hire any employee of the Company or any of
its Subsidiaries, assist in such hiring by any Person, encourage
any such employee to terminate his or her relationship with the
Company or any of its Subsidiaries, or solicit or encourage any
customer or vendor of the Company or any of its Subsidiaries to
terminate its relationship with them, or, in the case of a
customer, to conduct with any Person any business activity which
such customer conducts or could conduct with the Company or any
of its Subsidiaries.
c. The provisions of this Section 9 shall not be deemed to preclude
the Executive from employment during the Non-Competition Period
following termination of employment hereunder by a corporation,
some of the activities of which are competitive with the business
of the Company, if the Executive's employment does not relate,
directly or indirectly, to such competitive business, and nothing
contained in this Section 9 shall be deemed to prohibit the
Executive, during the Non-Competition Period following
termination of employment hereunder, from acquiring or holding,
solely as an investment, publicly traded securities of any
competitor corporation so long as such securities do not, in the
aggregate, constitute one-half of 1% of the outstanding voting
securities of such corporation.
Without limiting the foregoing, it is understood that the Company shall not
be obligated to continue to make the payments specified in Section 5(b) in the
event of a material breach by the Executive of the provisions of Sections 7, 8
and 9 of this Agreement, which breach continues without having been cured within
30 days after written notice to the Executive specifying the breach in
reasonable detail.
<PAGE>
10. Enforcement of Covenants.
The Executive acknowledges that he has carefully read and considered all
the terms and conditions of this Agreement, including the restraints imposed
upon him pursuant to Sections 7, 8 and 9 hereof. The Executive agrees that said
restraints are necessary for the reasonable and proper protection of the Company
and its Subsidiaries and that each and every one of the restraints is reasonable
in respect to subject matter, length of time and geographic area. The Executive
further acknowledges that, were he to breach any of the covenants contained in
Sections 7, 8 and 9 hereof, the damage to the Company would be irreparable. The
Executive therefore agrees that the Company, in addition to any other remedies
available to it, shall be entitled to preliminary and permanent injunctive
relief against any breach or threatened breach by the Executive of any of said
covenants. The parties further agree that, in the event that any provision of
Section 7, 8 and 9 hereof shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too great
a time, too large a geographical area or too great a range of activities, such
provision shall be deemed to be modified to permit its enforcement to the
maximum extent permitted by law.
11. Indemnification.
The Company shall indemnify the Executive to the extent provided for the
Company executive officers in its then current Articles of Incorporation or By-
laws. The Executive agrees to promptly notify the Company of any actual or
threatened claim arising out of or as a result of his employment with the
Company.
12. Full Settlement.
Following a termination of employment, the Executive shall not be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Executive obtains other
employment.
13. Definitions.
Words or phrases which are initially capitalized or are within quotation
marks shall have the meanings provided in this Section 13 and as provided
elsewhere herein. For purposes of this Agreement the following definitions
apply:
a. "Confidential Information" means any and all information of the
Company and its Subsidiaries that is not generally known by
others with whom they compete or do business, or with whom they
plan to compete or do business and any and all information not
readily available to the public, which, if disclosed by the
Company or its Subsidiaries would assist in competition against
them. Confidential Information includes without limitation such
information relating to (I) the development, research, testing,
manufacturing, plant operational processes, marketing and
financial activities, including costs, profits and sales, of the
Company and its Subsidiaries, (ii) the Products and all formulas
thereof, (iii) the costs, source of supply, financial performance
and strategic plans of the Company and its Subsidiaries, (iv) the
identify and special needs of the customers and suppliers of the
Company and its Subsidiaries and (v) the people and organizations
with whom the Company and its Subsidiaries have business
relationships and those relationships. Confidential Information
also includes comparable information that the Company or any of
its Subsidiaries have received belonging to others or which was
received by the Company or any of its Subsidiaries with any
understanding that it would not be disclosed.
<PAGE>
b. "Intellectual Property" means inventions, discoveries,
developments, methods, processes, formulas, compositions, works,
concepts and ideas (whether or not patentable or copyrightable or
constituting trade secrets) conceived, made, created, developed,
or reduced to practice by the Executive (whether alone or with
others, whether or not during normal business hours or on or off
Company premises) during the Executive's employment that relate
to either the Products or any prospective activity of the Company
and its Subsidiaries.
c. "Products" mean all products planned, researched, developed,
tested, manufactured, sold, licensed, leased or otherwise
distributed or put into use by the Company or any of its
Subsidiaries, together will all services provided or planned by
the Company or any of its Subsidiaries, during the Executive's
employment.
14. Withholding.
All payments made by the Company under this Agreement shall be reduced by
any tax or other amounts required to be withheld by the Company under applicable
law.
15. Assignment.
Neither the Company nor the Executive may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the
prior written consent of the other; provided, however, that in the event that
the Company shall hereafter effect a reorganization, consolidate with, or merge
into, any other Person or transfer all or substantially all of its properties or
assets to any other Person, the Company shall require such Person or the
resulting entity to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it.
16. Severability.
If any portion or provision of this Agreement shall to any extent be
declared illegal or unenforceable by court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
17. Waiver.
No waiver of any provision hereof shall be effective unless made in writing
and signed by the waiving party. The failure of either party to require the
performance of any term or obligation of this Agreement, or the waiver by either
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
18. Notices.
Any and all notices, requests, demands and other communications provided
for by this Agreement, shall be in writing, and shall be effective when
delivered in person or deposited in the United States mail, postage prepaid,
registered or certified, and addressed to the Executive at his last known
address on the books of the Company or, in the case of the Company, at its
principal place of business, attention Chief Executive Officer and President.
<PAGE>
19. Entire Agreement.
This Agreement constitutes the entire agreement between the parties and
supersedes all prior communications, representations and understandings, written
or oral, with respect to the terms and conditions of the Executive's employment.
20. Amendment.
This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an expressly authorized officer of the Company.
21. Governing Law and Consent to Jurisdiction.
This is a Vermont contract and shall be construed and enforced under and be
governed in all respects by the laws of the State of Vermont, without regard to
the conflict of laws principles thereof, and any legal proceeding brought in
connection with the negotiation, construction or performance of this Agreement
or relating to the Executive's relationship with the Company may be initiated
solely in the United States District Court of Vermont or the Washington County
Superior Court, District of Vermont.
IN WITNESS WHEREOF, this Agreement has been executed by the Company, by its
duly authorized officer, and by the Executive, as of the date first above
mentioned.
BEN & JERRY'S HOMEMADE, INC.
___________________________ By: _____________________________
/s/Bruce Bowman, Executive /s/Robert Holland, Jr.,
Chief Executive Officer and
President
<PAGE>
Exhibit 10.32
LEASE AGREEMENT
THIS LEASE dated as of the 1st day of February, 1996, between Technology
Park Associates, Inc., a Vermont corporation with principal place of business in
South Burlington, Vermont; PMF Energy, Inc., a New York corporation with
principal place of business in New York, New York; and Axinn-Vermont, Inc., a
New York corporation with principal place of business in Jericho, New York
(hereinafter collectively called "Landlord") and Ben & Jerry's Homemade, Inc., a
Vermont corporation with principal place of business at Waterbury, Vermont
(hereinafter called "Tenant").
1. DESCRIPTION OF PREMISES.
The Landlord hereby leases to the Tenant the premises shown on Exhibit A
attached hereto and made a part hereof (the "Premises"), in that certain
building (the "Building") located on Lot 8A, Technology Park containing 30.13
acres, more or less, and designated as 115 Kimball Avenue, South Burlington, VT,
(the "Property"). Tenant shall also have the non-exclusive right to use
driveways, parking areas, entrance ways, walks, and other areas now in place and
hereafter from time to time added and made available to other tenants of the
Building by Landlord ("Common Areas"). Landlord shall provide reasonable light
for all driveways, sidewalks and parking areas, and shall maintain such
driveways, walkways and parking areas in a clean condition and in good repair.
Tenant and customers and agents of Tenant shall be entitled to the non-exclusive
use in common with others of all such Common Areas, such use shall be at all
times subject to such reasonable rules and regulations of general applicability
to all tenants of the Building, as Landlord may from time to time promulgate
March 11, 1996
<PAGE>
governing the same. Tenant shall use and require all of Tenant's employees to
use the parking areas designated by Landlord. Tenant shall have 220 spaces
allocated to its exclusive use as shown on Exhibit A-1. In addition, should the
Tenant exercise its expansion option under this lease, the Tenant shall be
entitled to the exclusive use of an additional 10 parking spaces. Tenant's
parking spaces will be reasonably identified by signs or pavement markings.
Tenant shall have the right to establish reasonable controls over its assigned
parking spaces to help insure its exclusive use of said spaces. Prior to
implementing any parking controls, Tenant shall consult with and receive
Landlord's permission, which shall not be unreasonably withheld or delayed. The
parties agree to cooperate on all parking issues.
2. COMMENCEMENT AND TERM.
The initial term of this lease shall be for ten (10) years and shall commence on
January 1, 1996. The first monthly installment of rent shall become due and
payable on April 25, 1996, and the term shall expire on January 1, 2006 (the
"Initial Term"). The Landlord hereby acknowledges that pursuant to Paragraph 4
hereof, the Tenant has paid the first month's rent due hereunder simultaneously
with the execution of this lease.
3. RENTAL PAYMENTS
(a) Base Rent. Tenant agrees to pay the annual rental set forth in Exhibit B
attached hereto and made a part hereof (the "Base Rent") in lawful money of the
United States which shall be legal tender in payment of all debts, public and
private, at the time of payment, in equal monthly installments in advance on the
25th day of the preceding month during the Initial Term (commencing April 25,
1996) at the office of Landlord or such other place as Landlord may
March 11, 1996
2
<PAGE>
designate. If the Initial Term of this lease does not begin on the first day or
end on the last day of a month, the Base Rent for that partial month shall be
prorated by multiplying the Base Rent by a fraction, the numerator of which is
the number of days of the partial month included in the Initial Term and the
denominator of which is the total number of days in the full calendar month.
Except as herein specifically provided, the obligation of the Tenant to pay the
rent specified herein and all other sums payable by Tenant hereunder shall be
absolute and unconditional under any and all circumstances, without notice or
demand and without abatement, deduction or setoff. If Tenant shall not pay the
Base Rent or any other sum payable under this lease within ten (10) days after
it is due, the Tenant shall pay (i) a late charge equal to one (1) percent of
the unpaid amount plus (ii) interest at the rate of fifteen percent (15%) per
annum on the remaining unpaid balance retroactive to the date originally due,
until paid.
(b) Common Area Maintenance Charges ("CAM"). In addition to the Base Rent
described in paragraph 3.A. above, Tenant shall pay to Landlord CAM charges,
which shall be calculated as follows:
(A) For the first twelve (12) months of this Lease, CAM charges should be
$1.38 per square foot (50,388 square feet times $1.38 equals
$69,535.44) $69,535.44, or $5,794.62 per month, commencing April 25,
1996 ("Initial CAM charge"); and
(B) Commencing in year two (2) of this Lease, CAM charges shall be the
total, actual annual costs to Landlord of real estate taxes and other
municipal assessments (net of abatements, including abatements from
prior Lease Years
March 11, 1996
3
<PAGE>
to the extent included in CAM charges and not previously credited),
and the following operating expenses of the Landlord provided the same
are reasonable, actual and necessary, out-of-pocket (except Landlord
may use its normal accrual method of accounting), obtained at
competitive prices and consistent with practice for comparable
facilities in the Burlington, Vermont area, and that are directly
attributable to the operation, maintenance, management, and repair of
the Premises, the Building in which the Premises is located and the
parking areas, driveways, walks and other improvements reasonably
necessary to support the use and occupancy of the Building
("Property"), as determined under generally accepted accounting
principles consistently applied, including:
(1) salaries, and other compensation; including payroll taxes,
vacation, holiday, and other paid absences; and welfare,
retirement, and other fringe benefits; that is paid to employees,
independent contractors, or agents of Landlord engaged in the
operation, repair, management, or maintenance of the Property,
including the following:
(a) inspectors;
(b) window cleaners, miscellaneous repair persons, janitors,
cleaning personnel;
(c) security personnel and caretakers; and
March 11, 1996
4
<PAGE>
(d) engineers, mechanics, electricians, and plumbers; but
not more than two on-premises full-time managers or
superintendents;
(2) the purchase, cleaning, replacement, and pressing of uniforms
of employees;
(3) repairs and maintenance of the Property and the cost of
supplies, tools, materials, and equipment for Property repairs
and maintenance, that under generally accepted accounting
principles consistently applied, would not be capitalized;
(4) premiums and other charges incurred by Landlord for insurance
on the Property and for employees including:
(a) fire insurance, extended coverage insurance, and
earthquake, windstorm, hail, and explosion insurance;
(b) public liability and property damage insurance;
(c) workers' compensation insurance;
(d) boiler and machinery insurance; sprinkler leakage, water
damage, water damage legal liability insurance; burglary,
fidelity, and pilferage insurance on equipment and
materials;
(e) health, accident, and group life insurance;
(f) insurance Landlord is required to carry under Section
15; and
March 11, 1996
5
<PAGE>
(g) other insurance as is customarily carried by operators
of comparable commercial/industry buildings in the
Chittenden County area;
(5) costs incurred for inspection and servicing, including all
outside maintenance contracts necessary or proper for the
maintenance of the Property, such as janitorial and window
cleaning, rubbish removal, exterminating, water treatment,
electrical, plumbing, and mechanical equipment, and the cost of
materials, tools, supplies, and equipment used for inspection and
servicing;
(6) payroll taxes, federal taxes, state and local unemployment
taxes, and social security taxes paid for employees;
(7) sales, use, and excise taxes on goods and services purchased
by Landlord;
(8) license, permit, and inspection fees;
(9) auditor's fees for public accounting;
(10) legal fees, costs and disbursements but excluding those--
(a) relating to disputes with tenants, or
(b) based upon Landlord's breach of leases with other
tenants, negligence or other tortious conduct, or
(c) relating to enforcing any leases except for enforcing
lease provisions for the benefit of the Buildings tenants
generally, or
March 11, 1996
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<PAGE>
(d) relating to the defense of the Landlord's title to or
interest in the Property;
(11) management fees (calculated at fifteen percent (15%) of the
real estate taxes, assessments and operating expenses described
herein) to a person or entity other than the Landlord;
(12) the annual amortization over its useful life with a
reasonable salvage value on a straight-line basis of the costs of
any capital improvements made by Landlord and required by any
changes in applicable laws, rules, or regulations of any
governmental authorities enacted after the Building was fully
assessed as a completed and occupied unit and the Lease was
signed;
(13) the annual amortization over its useful life with a
reasonable salvage value on a straight-line basis of the costs of
any equipment or capital improvements made by Landlord after the
Building was fully assessed as a completed and occupied unit and
the Lease was signed, as a labor-saving measure or to accomplish
other savings in operating, repairing, managing, or maintaining
of the Property, but only to the extent of the savings;
(14) any costs for substituting work, labor, materials, or
services to the extent the same are used in place of any of the
above items, or for any additional work, labor, materials,
services, or improvements to comply with any governmental laws,
rules, regulations, or other
March 11, 1996
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<PAGE>
requirements applicable to the Property enacted after the
Building was fully assessed as a completed and occupied unit and
the Lease was signed, that, at the time of substitution or
addition, are considered operating expenses under generally
accepted accounting principles consistently applied; and
(15) other costs reasonably necessary to operate, repair, manage,
and maintain the Property in a first class manner and condition.
Notwithstanding anything contained herein to the contrary,
operating expenses shall not include (i) costs billed to and paid
by specific tenants; (ii) the cost of repairs or replacements
resulting from insurable casualty losses or eminent domain
takings; (iii) depreciation or amortization of the Property or
any part thereof, except as expressly permitted; (iv) replacement
or contingency reserves; (v) ground lease rents or payment of any
debt or equity obligations; (vi) legal or other professional fees
relating to leasing, financing or other services not related to
the normal operation, maintenance, cleaning, repair and
protection of the Property; (vii) brokerage fees and commissions;
(viii) promotional, advertising or public relations expenses;
(ix) services provided for a particular tenant, and not tenants
in general; (x) capital expenditures; and (xi) costs for services
or expenses that are materially different than those set forth as
items (1) through (14) above, unless such services or expenses
are required by law or are necessary in the reasonable judgment
of the Landlord to keep the Property competitive with similar
March 11, 1996
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<PAGE>
properties in the Burlington, Vermont area. Operating expenses
shall be reduced by the amount any proceeds, awards, payments,
guarantees, credits or reimbursements, which the Landlord
actually receives and which are applicable to operating expenses
less the cost reasonably incurred in recovering such amount.
Operating expenses shall not include payments to affiliates of
the Landlord to the extent such payments exceed customary charges
for the goods or services provided by such affiliate. In the
event that any operating expenses are shared by tenants of the
buildings other than the Building, the Landlord will charge to
the Tenant only its proportionate share of the expenses allocable
to the Building in particular. Tenant's percentage of total CAM
charges shall be eighteen and 32/100 percent (18.32%) (28.6%, if
Tenant exercises its option for additional space under Paragraph
31). The percentage of CAM charges payable by Tenant is
calculated by dividing the Tenant's gross leasable area (50,388
square feet) by the total gross leasable area in the Building
(275,000 square feet). Tenant shall pay to Landlord in equal
monthly installments the Initial CAM charge, due on the 25th day
of each preceding month included in the term of this Lease. If in
the course of a calendar year of the lease year, the CAM charge
costs exceed the Initial or previous year's CAM charge payable by
all Tenants occupying the building for such period, Landlord
shall notify Tenant of this within sixty (60) days after the end
of the calendar year. Notice shall consist of a statement
received by Tenant that sets forth the CAM charge
March 11, 1996
9
<PAGE>
costs for such period and the amount thereof due from Tenant. If
Tenant requests, Landlord shall give Tenant reasonably detailed
documentation to support Landlord's CAM charges. Tenant shall
have fifteen (15) days after the receipt of such notice to pay
the amount to Landlord. If any of the costs to Landlord included
in CAM charges, decrease in subsequent years, the applicable
savings shall be passed on to Tenant by appropriate pro rata
adjustments to the CAM charges. The Landlord represents to the
Tenant that the estimate of $1.38 per square foot in CAM charges
for the first year is reasonable and reflects Landlord's good
faith attempt to determine CAM charges on the building recently
acquired by Landlord. During the term of this Lease, annual
increases of building management fees and maintenance expenses
shall not exceed 6%. Landlord agrees upon request of Tenant to
provide an annual statement of account prepared by Landlord's
accountant, certifying that the CAM charges for the previous year
were consistent with what the lease allowed, and generally
accepted accounting principles. Tenant may, at its own cost,
request an audit of Landlord's CAM charge accounts and records,
and if an audit reveals that Tenant has been overcharged based
upon reasonable accounting principles, Tenant's CAM charges shall
be adjusted accordingly. If an audit reveals a discrepancy in
Tenant's favor by more than 10%,
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Landlord shall reimburse Tenant one-half (1/2) the reasonable
cost of the audit.
4. DEPOSIT.
The Tenant shall pay to the Landlord, no later than the date of the commencement
of the Initial Term of this lease the sum of Thirty-three Thousand Five Hundred
Ninety-two Dollars ($33,592) of which $16,796 shall be applied to the May
rental, and $16,796 shall be held by Landlord as a security deposit, (the
"Security Deposit") as security for the payment of Base Rent and all other sums
which may become due pursuant to this lease and as security for the faithful
performance by the Tenant of all obligations of the Tenant under this lease. The
Security Deposit shall be maintained by the Landlord in a common Security
Deposit account, although it shall not accrue interest. The Landlord may use,
apply or retain the whole or any part of the Security Deposit to the extent
required for the payment of Base Rent or any other sums as to which the Tenant
shall be in default, reimbursement of any sum which the Landlord may expend by
reason of the Tenant's default of any provision of this lease and the payment of
any damages or other sums to which the Landlord may be entitled under this lease
or under applicable law by reason of Tenant's default. Provided that the Tenant
is not in default beyond any applicable notice and cure period hereunder, any
part of the Security Deposit not used by the Landlord as permitted by this
paragraph shall be returned to the Tenant within thirty (30) days after the
expiration of the lease term, or may, at the Tenant's option, be applied to the
last month's rent payable hereunder.
5. NET LEASE.
The Landlord shall not be required to provide any services or do any action in
connection with the Premises except as specifically provided herein.
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6. USE OF PREMISES.
The Tenant may use the Premises for general office use and light warehousing,
and for such other ancillary uses as are consistent with general office use and
light warehousing. The Tenant shall not otherwise use or occupy the Premises or
allow any activity in or about the Premises which would (i) materially impair
the value or usefulness of the Premises or the building of which the Premises
are a part, (ii) adversely affect the fire and comprehensive insurance or
liability insurance premiums payable by the Landlord with respect to the
building of which the Premises are a part, (iii) constitute a public or private
nuisance or waste or a violation of any state, local or federal statute, rule,
regulation or ordinance, or (iv) unreasonably disturb or interfere with the use
and occupancy of any other parts of the building or land of which the Premises
are a part. Tenant shall not use the Premises for any other purpose other than
those specified above without the prior written consent of the Landlord which
consent shall not be unreasonably withheld or delayed. Landlord represents that
the Premises is zoned for such general office light warehousing and ancillary
use.
7. MAINTENANCE AND REPAIR.
The Tenant shall, throughout the term of this lease, at its own cost and
expense, maintain the interior of the Premises (including all interior equipment
and systems used exclusively by Tenant, and such other fixtures as are used in
connection with the occupancy of the Premises, including any and all
replacements made by the Tenant) (except such as are the Landlord's obligation
to maintain hereunder) in such condition, repair and order, as the same now are
or hereafter may be put, reasonable wear and tear, fire or other casualty,
repairs that are the obligation of Landlord to make, or damage caused by the
failure of the Landlord to make repairs hereunder, excepted.
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Landlord shall keep and maintain the HVAC and other major building systems, and
Common Areas, including the roof and structure of the building of which the
Premises are a part in good condition. Tenant shall be responsible for any
repairs, replacement or maintenance of any skylight which Tenant installs after
written approval of the plans from Landlord, which shall not be unreasonably
withheld or delayed. The Tenant shall also keep the Premises in a neat and clean
condition.
8. UTILITIES AND SERVICES.
In addition to the general obligations of the Landlord set forth elsewhere in
this lease, the Landlord shall only furnish those services as set forth in
Exhibit C attached hereto and made a part hereof. The Landlord shall not be
liable for any failure of water supply or electric current or of any service by
any utility, nor for injury or damage to persons (including death) or property
caused by or resulting from steam, gas, electricity, water, rain or snow which
may flow or leak from any part of the Premises, or from any pipes, appliances or
plumbing works of the same or from the street or subsurface or from any other
place, nor from interference with light or other incorporeal hereditaments or
easements, however caused, except as due to the affirmative acts or gross
negligence of the Landlord. Except as set forth in Exhibit C, the Tenant
specifically agrees to pay all charges for electricity, water, light, and sewer
supplied to the Premises, and shall indemnify the Landlord against any and all
liability on such account.
9. COMPLIANCE WITH LAWS.
The Tenant, at its sole expense, shall comply with all laws, orders and
regulations of federal, state, and municipal authorities, with any direction of
any public officer, pursuant to law, any requirements of any insurance carrier
insuring the Premises or the building of which the Premises are a part affecting
the Premises or relating to the use or occupancy of the Premises by the Tenant.
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The Tenant, at its sole expense, shall obtain all licenses or permits which may
be required for the conduct of its business, the use of the Premises by it, or
for the making of repairs, alterations, improvements, or additions to the
Premises and the Landlord, where necessary, will join with the Tenant in
applying for all such permits or licenses. Tenant shall not use or occupy the
Premises for any unlawful purpose. Landlord has no knowledge of any violation of
any permit or approval previously granted in connection with the use or
occupancy of the Building. Any future changes, additions or improvements to the
Building by Landlord shall be performed in conformance with all applicable
rules, ordinances and regulations. Landlord warrants and represents that the
common areas of the Building are in compliance with the requirements of Title
III of the Americans with Disabilities Act of 1990, 42 U.S.C. ss.12101 et seq.
("ADA"). Landlord further covenants and agrees that any alterations,
modification, fit-up or construction performed by Landlord to the common areas
located thereon shall be performed in compliance with the ADA. Tenant represents
and covenants that it shall conduct its occupancy and use of the Premises in
accordance with the ADA (including, but not limited to, modifying its policies,
practices and procedures, and providing auxiliary aids and services to disabled
persons). If the Lease provides that the Tenant is to complete certain
alterations and improvements to the Premises in conjunction with the Tenant
taking occupancy of the Premises, Tenant agrees that that work shall comply with
the ADA and, on request of the Landlord, Tenant shall provide Landlord with
evidence reasonably satisfactory to Landlord that that work was performed in
compliance with
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the ADA. Furthermore, Tenant covenants and agrees that any and all future
alterations or improvements made by Tenant to the Premises shall comply with the
ADA.
10. CONDITION OF PREMISES.
The Tenant acknowledges that it has had sufficient opportunity to inspect the
Premises and accepts the Premises in its present condition and without any
representation or warranty by the Landlord as to the condition of the Premises
or any improvements which are located on the Premises or as to the use or
occupancy which may be made thereof. Tenant acknowledges that Landlord and
Landlord's agents have made no representation or warranties as to the condition
or use of the Premises except Landlord represents and warrants that the Premises
is zoned for general office and light warehousing and ancillary uses, and that
to Landlord's knowledge, the Building does not contain latent defects. At the
expiration or earlier termination of this lease, the Tenant shall remove all
goods and effects not the property of Landlord and shall peaceably surrender the
Premises in as such condition as they are required to be maintained hereunder.
11. ALTERATIONS AND IMPROVEMENTS.
No alteration, addition, or improvement to the Premises shall be made by the
Tenant without the prior written consent of the Landlord, which shall not be
unreasonably withheld or delayed. The Tenant may not place on the Premises any
sign or advertising matter of any kind without obtaining the prior written
approval of the Landlord, which shall not be unreasonably withheld or delayed.
Any alteration, addition, or improvement made by the Tenant shall become the
property of the Landlord upon the expiration or other sooner termination of this
lease unless Tenant notifies Landlord not less than one hundred twenty (120)
days prior to the expiration of the lease, that Tenant desires to remove some or
all of such alterations, additions or improvements. In that event, Tenant
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may remove such alterations, additions or improvements provided that Tenant,
prior to vacating the Premises, restores the Premises and the Building to their
original condition. Tenant shall have the option of removing trade fixtures and
placing the Premises in their original condition at the Tenant's cost upon such
termination of this lease. Tenant may desire to add a mezzanine level of
approximately six thousand (6,000) square feet in the Premises in order to
increase the usable lease area. Landlord is willing to consider Tenant's
proposal in the future, provided that the parties agree to mutually satisfactory
terms and conditions, and an addendum to this Lease is executed. If the other
terms and conditions are agreed to, Landlord shall lease the mezzanine space at
the same rental rate, or such lower rate as may be negotiated by the parties,
and CAM charges per square foot as the original ground floor space described in
Exhibits A and B attached hereto. If approximately six thousand (6,000) square
feet of mezzanine is added by Tenant, Landlord shall provide an additional
twenty four (24) exclusive parking spaces to Tenant.
12. TENANT'S DEFAULT.
A "default" shall be defined for all purposes of the lease as follows:
(a) Failure to make due and punctual payment of any Base Rent or other
sums payable under this lease when and as the same shall become due
and such failure shall continue for a period of ten (10) days after
written notice of default by Landlord to Tenant specifying that such
amounts have not been paid when due; or
(b) Failure by the Tenant in the performance or compliance with any of the
agreements, terms, covenants or conditions in this lease other than
those referenced in the foregoing subparagraph (a), and such failure
shall not be cured within a period of thirty (30) days after written
notice by the Landlord to the Tenant specifying the failure, or, in
the case of a failure
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which cannot with due diligence be cured within said thirty (30) day
period, if the Tenant fails to commence within said thirty (30) day
period the steps necessary to cure the same and thereafter to
prosecute the cure of such failure with due diligence; or
(c) If the Tenant shall file a voluntary petition in bankruptcy or shall
be adjudicated a bankrupt or insolvent, or if there shall be appointed
a receiver or trustee of all or substantially all of the property of
the Tenant, or if the Tenant shall make an assignment for the benefit
of creditors; or
(d) If the Tenant shall vacate the Premises, without taking reasonable
measures to protect the Premises against vandalism, theft or weather,
and any such condition shall continue for a period of twenty days
after written notice from the Landlord.
Upon the occurrence of one or more events of default, in addition to any other
rights or remedies the Landlord may have, the Landlord shall have the right to
immediately re-enter and regain possession of the Premises and to exclude the
Tenant from further use, occupancy, and enjoyment thereof. In particular, but
not by way of limitation, the Landlord may in the event of such uncured default,
remove all persons and property from the Premises and may store such property in
a public warehouse or elsewhere at the cost of and for the account of the
Tenant, all without service of notice or resort to legal process and without
being deemed guilty of trespass or becoming liable for any loss or damage which
may be occasioned thereby. Should the Landlord elect to re-enter, as provided
herein, or should the Landlord take possession pursuant to legal proceedings or
pursuant to any notice provided for by law, this lease shall terminate. The
Landlord shall use reasonable efforts to relet the Premises or any part thereof
for such term or terms which may be for a term extending beyond the term of this
lease, and at such rental and upon such other terms and conditions as the
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Landlord, reasonably deems advisable. Upon such reletting, all rental thereby
received by the Landlord shall be applied: first, to the payment of any
reasonable costs and expenses of such reletting, including brokerage fees and
attorneys' fees, and costs of any such alterations and repairs as the Landlord
may make to facilitate such re-rental; second, to the payment of any Base Rent
or other amounts due hereunder from the Tenant to the Landlord; and, third, the
residue, if any, shall be held by the Landlord and applied in payment of future
rent as the same may become due and payable hereunder. If such rent received
from such reletting during any month be less than that to be paid during the
month by the Tenant hereunder, the Tenant shall pay any such deficiency to the
Landlord. Should the Landlord at any time terminate this lease for any default,
in addition to any other remedies it may have, the Landlord may within twelve
(12) months after such termination upon notice to the Tenant, elect to recover,
in lieu of other remedies, from the Tenant all damages the Landlord may incur by
reason of such default, including the costs of recovering the Premises,
reasonable attorneys' fees, together with the worth at the time of such
termination of the excess, if any, of the amount of rent and other sums payable
by Tenant hereunder for the remainder of the applicable term over the then
reasonable rental value of the Premises for the remainder of such term, all of
which amounts shall be immediately due and payable from the Tenant to the
Landlord.
13. LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS, AND TENANT'S RIGHT TO
PERFORM LANDLORD'S OBLIGATION OF MAINTENANCE AND REPAIR.
If the Tenant is in default of any provision of this lease, other than the
provisions requiring the payment of rent, and the Landlord shall give to the
Tenant written notice of such default, and if the Tenant shall fail to cure such
default within twenty (20) days after the receipt of such notice, then the
Landlord may cure such default for the account of the Tenant, and any sums
reasonably expended
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by the Landlord in connection therewith shall be deemed to be additional rent
and payable with rent which shall next become due. Once Tenant pays the amount
as additional rent, Tenant's default shall be deemed cured for all purposes. If
the Landlord is in default of any of its obligations of repair or maintenance
under this lease, Tenant shall have the right to give Landlord 30 days written
notice of Tenant's intention of making the repairs or required maintenance, and
if Landlord fails to effect the required maintenance or repair within the said
30 days (unless delayed by causes beyond the control of Landlord), Tenant may
contract and perform said repairs or maintenance, and deduct the cost from its
rental payments hereunder. If the Landlord's failure to repair or maintain
causes an emergency situation in the Premises which threatens the health or
safety of Tenant's occupants, or an immediate threat to the property of Tenant,
Tenant shall give reasonable notice to Landlord before performing any repairs or
maintenance itself.
14. RIGHT OF ACCESS.
Upon reasonable prior notice from the Landlord to the Tenant, the Landlord and
its representatives may enter the Premises at reasonable times for the purpose
of inspecting the Premises, performing any work on the Premises or the property
of which the Premises are a part which the Landlord is authorized or obligated
to undertake, exhibiting the Premises for sale or lease, (but only within the
last 12 months of the term), or mortgage financing, or posting any required
notices.
15. INSURANCE.
During the term of this lease, the Tenant, at its sole cost and expense, and for
the benefit of the Landlord, shall carry and maintain the following types of
insurance in the amounts specified:
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(a) Fire and extended coverage insurance covering the betterments and
improvements of Tenant against loss or damage by fire and against loss
or damage by other risks now or hereafter embraced by "extended
coverage", so-called, in an amount not less than full replacement
cost.
(b) Comprehensive public liability insurance, including property damage,
insuring the Landlord against liability for injury to persons or
property occurring in or about the Premises or arising out of the
ownership, maintenance, use, or occupancy thereof. The liability under
such insurance shall not be less than Five Million Dollars
($5,000,000.00) for any one person injured or killed, and not less
than Three Million Dollars ($3,000,000.00) for any one accident and
not less than One Million Dollars ($1,000,000.00) for personal
property damage per accident.
All insurance policies maintained by Tenant pursuant to the terms of this lease
shall be issued by insurance companies reasonably acceptable to Landlord, shall
name Landlord and Tenant as insureds as their respective interests may appear
and shall be written as primary policies which do not contribute to and are not
in excess of coverage which Landlord may carry. All such insurance policies
shall require the insurance carriers to provide the Landlord with at least
fifteen (15) days written notice prior to termination or cancellation of any
policy. At the commencement of the term of this lease and thereafter not less
than fifteen (15) days prior to the expiration date of any policy required
hereunder, Tenant shall deliver to Landlord certificates of insurance in form
and substance acceptable to Landlord.
Landlord shall keep the Building, and the Property insured against damage and
destruction by fire, vandalism, and other perils in the amount of the full
replacement value of the Building, as
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the value may exist from time to time. The insurance shall include an extended
coverage endorsement of the kind required by an institutional lender to repair
and restore the Building.
The Landlord shall maintain contractual and comprehensive general liability
insurance, including public liability and property damage, with a minimum
combined single limit of liability of five million dollars ($5,000,000.00) for
personal injuries or deaths of persons occurring in or about the Building,
Property and the Premises. The Landlord shall name the Tenant as an additional
insured as the Tenant's interest may appear.
16. WAIVER OF SUBROGATION.
Each of Landlord and Tenant hereby releases the other from any and all liability
or responsibility to the other or anyone claiming through or under them by way
of subrogation or otherwise for any loss or damage to Property, including the
Building and the Premises caused by fire or any of the extended coverage or
supplemental contract casualties, even if such fire or other casualty shall have
been caused by the fault or negligence of the other party or anyone for whom
such other party shall be responsible; provided, however that any such release
shall not adversely affect or impair any insurance policies required to be
maintained hereunder, or prejudice the right of the releasor to recover under
such policies. Landlord and Tenant agree that each will require its insurance
carrier to include in its policy a clause or endorsement confirming the
foregoing. If extra costs shall be charged therefor, the insuring party shall
advise the other thereof and the other party, at its election, may pay the same,
but shall not be obligated to do so; provided, however, if the other party does
not pay such extra cost then the first party need not include in its policy such
a clause or endorsement.
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17. TENANT'S PROPERTY.
(a) The Landlord, its agents, contractors, or employees, shall not be liable
for any damage to property of the Tenant or of others located on the
Premises or entrusted to its employees nor for the loss of any such
property by theft or otherwise, and Landlord, its agents, contractors, or
employees shall not be liable for any injury or damage to persons or
property resulting from fire,; explosion, falling plaster, steam, gas,
electricity, wind, water, rain, snow or ice which may leak into the
Premises from pipes, appliances or plumbing systems or from the street or
from any other place, or from dampness or from any other cause whatsoever,
unless caused by or due to the willful or negligent act or omission of the
Landlord or its agents, contractors, or employees. All property of the
Tenant or of others kept or stored on the Premises shall be so kept or
stored at the risk of the Tenant only and the Tenant shall hold the
Landlord harmless from any claims arising out of any damage to the same.
(b) If the Tenant is in default under the terms of this lease and vacates or
abandons the Premises (or after 15 days from the termination or expiration
of this lease), any property that the Tenant leaves on the Premises shall
be deemed to have been abandoned and may either be retained by the Landlord
as its own property or may be disposed of at public or private sale as the
Landlord sees fit. Any property of the Tenant sold at public or private
sale or retained by the Landlord shall have the proceeds of any such sale,
or the then current fair market value of any property retained by the
Landlord as reasonably determined by the Landlord, applied by the Landlord
against (i) any expenses of the Landlord for removal, storage or sale of
such property, (ii) any unpaid Base Rent or other amounts payable under
this lease and (iii) any damages or other amounts to which the Landlord may
be entitled under this lease. The
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balance of such amounts, if any, shall be paid to the Tenant at the address
set forth herein for notices to the Tenant. The Landlord hereby waives any
statutory lien or other security interest that it now or hereafter may have
(unless affirmatively granted by the Tenant) in the goods, equipment and
other personal property of the Tenant presently, or which may hereafter be,
situated on the Premises.
18. QUIET ENJOYMENT.
Landlord covenants and agrees with Tenant that upon Tenant paying said rent, and
performing all the covenants and conditions aforesaid, on Tenant's part to be
observed and performed, Tenant shall and may peaceable and quietly have, hold
and enjoy the premises hereby demised, twenty-four hours a day, seven days a
week, for the term aforesaid, subject, however, to any future underlying
mortgages, in accordance with Paragraph 22 herein.
Landlord agrees to limit other uses in the building to those which would not
unreasonably affect Tenant's peaceful use and occupancy. For example, Landlord
will not allow uses which would cause undue noise, odor or vibrations, such as
cheese-making, oil storage, foundries and other heavy industrial use, or any
other uses which would not be reasonably compatible with office/light
industrial/institutional or educational uses. Landlord shall also take
reasonable measures to provide that any future use of the building will not
interfere with "food grade" (as that term is used in applicable federal
regulations) storage of Tenant.
19. ASSIGNMENT AND SUBLETTING.
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This lease may not be assigned or the Premises sublet by the Tenant without the
express written consent of the Landlord, which shall not be unreasonably
withheld or delayed. However, Tenant may assign this lease or sublease part or
all of the Premises without Landlord's consent to:
(i) any corporation or partnership that controls, is controlled by, or is
under common control with, Tenant; or
(ii) any corporation resulting from the merger or consolidation with Tenant
or to any entity that acquires all or substantially all of Tenant's
assets as a going concern of the business that is being conducted on
the Premises, as long as the assignee or sublessee is a bona fide
entity and assumes the obligations of Tenant.
20. INDEMNIFICATION.
Tenant's Indemnity. Tenant indemnifies, defends, and holds Landlord harmless
from claims which are:
(a) for personal injury, death, or property damage; and
(b) for incidents occurring in or about the Premises or Building or Property;
and
(c) caused by the negligence or willful misconduct of Tenant, or those parties
for whose conduct the Tenant is legally responsible.
When the claim is caused by the joint negligence or willful misconduct of Tenant
and Landlord or Tenant and a third party unrelated to Tenant, except Tenant's
agents, employees, or invitees, Tenant's duty to defend, indemnify, and hold
Landlord harmless shall be in proportion to Tenant's allocable share of the
joint negligence or willful misconduct.
Landlord's Indemnity. Landlord indemnifies, defends, and holds Tenant harmless
from claims which are:
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(a) for personal injury, death, or property damage; and
(b) for incidents occurring in or about the Premises or Building or Property;
and
(c) caused by the negligence or willful misconduct of Landlord, or those
parties for whose conduct the Landlord is legally responsible.
When the claim is caused by the joint negligence or willful misconduct of
Landlord and Tenant or Landlord and a third party unrelated to Landlord, except
Landlord's agents, employees, or invitees, Landlord's duty to defend, indemnify,
and hold Tenant harmless shall be in proportion to Landlord's allocable share of
the joint negligence or willful misconduct.
21. CONDEMNATION.
If at any time during the term of this lease a substantial portion of the
Premises (meaning thereby so much as shall render the Premises substantially
unusable by Tenant, as reasonably determined by Tenant) shall be taken by
exercise of the right of condemnation or eminent domain or by agreement between
Landlord and those authorized to exercise such rights, (all such proceedings
being collectively designated as a "taking in condemnation" or a "taking"), this
lease shall terminate and expire on the date of the taking and the rent and
other amounts payable by Tenant hereunder shall be apportioned and paid to the
date of the taking. Tenant shall have no right to interpose, prosecute or
collect a claim against the Landlord in any proceedings for taking in
condemnation for the loss of the value of this lease or improvements made by the
Tenant to the Premises; provided, however, that the Tenant may claim and recover
from the condemning authority, but not from the Landlord, such compensation as
may be separately awarded or recoverable by the Tenant in Tenant's own right on
account of any and all damage to Tenant's business by reason of any taking in
condemnation and for and on account of any cost or loss to which Tenant might be
put in removing Tenant's
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merchandise, furniture, fixtures and equipment. Except as expressly set forth in
the immediately preceding sentence, any award for the value of the land,
buildings and improvements and loss of rent shall belong to the Landlord, and
Tenant shall not be entitled to share in any such award on account of any
leasehold interest. If the title to less than a substantial portion of the
Premises shall be taken in condemnation so that the business conducted on the
Premises (as reasonably determined by Tenant), can be continued without material
diminution, this lease shall continue in full force and effect. If the taking
does not amount to a substantial portion but does materially adversely affect
the Tenant's ability to conduct Tenant's business on the Premises, the rent from
and after the date of the vesting of title in the condemnor shall be equitably
adjusted by the Landlord to reflect the diminished value of the Premises to the
Tenant as a direct result of the condemnation. Any award for a partial taking
shall be vested as set forth herein relating to total taking in condemnation.
22. PRIORITY OF MORTGAGES.
This Lease shall be subject and subordinated to the lien of all mortgages and
deeds of trust at all times in any amount or amounts whatsoever that may now
exist or hereafter be placed on or against the Building or Property, or on or
against Landlord's interest or estate therein, all without the necessity of
having further instruments executed on the part of Tenant to effectuate such
subordination. Notwithstanding the foregoing, in the event of a foreclosure of
any such mortgage or deed of trust or of any other action or proceeding for the
enforcement thereof or of any sale thereunder, this lease will not be barred,
terminated, cut off, or foreclosed, nor will the rights or possession of Tenant
hereunder be disturbed, if Tenant shall not then be in default in the payment of
rent or other sums or be otherwise in default under this lease, and Tenant shall
attorn to the purchaser at such foreclosure, sale, or other action or
proceeding. Tenant agrees to execute,
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acknowledge, and deliver upon demand such further instruments evidencing such
subordination of this lease to the lien of any such mortgages or deeds of trust
as may reasonably be required by Landlord. Provided, however, that Tenant's
covenant to subordinate this Lease to mortgages or deeds of trust hereafter
executed is conditioned upon each such senior instrument containing the
commitments specified in the preceding sentence. The Landlord represents to
Tenant that as of the date this lease is signed, there are currently no
mortgages or other liens or interests that would take priority over this lease,
and/or would require a third party consent.
23. CUMULATIVE REMEDIES.
The remedies of the Landlord herein shall be cumulative and not alternative, and
not exclusive of any other right or remedy available to the Landlord.
24. HOLDOVER TENANCY.
Any holding over by the Tenant after the termination of this lease shall be on a
day to day basis at the rate of (i) 150% of the Base Rent, plus (ii) applicable
CAM and utility charges in effect at the time of the holding over prorated on a
daily basis. The covenants and agreements contained herein shall remain in force
during the period of any holding over insofar as applicable.
25. HAZARDOUS SUBSTANCES.
Except for materials used, stored or handled in the ordinary course of Tenant's
business, in compliance with all applicable laws and regulations, the Tenant
shall not handle, process, store, release or use any hazardous or toxic
materials in or on the Premises without the express written consent of the
Landlord, which may be withheld in its sole discretion. In connection with the
Tenant's use or occupancy of the Premises, the Tenant shall comply in all
respects with any applicable law, ordinance, regulation or ruling relating to
environmental protection or the presence,
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use, generation, storage, release, containment or disposal of hazardous or toxic
materials. The Tenant shall indemnify, defend and hold the Landlord harmless
from and against any and all damage, cost, loss, liability and expense
(including reasonable attorney's fees) which may be incurred by the Landlord by
reason of, resulting from, or arising in any manner whatsoever out of the breach
of the obligations of the Tenant contained in this Paragraph. The Landlord shall
require all other tenants in the Building to execute leases containing this
Hazardous Substances provision. Landlord has provided copies to Tenant of any
and all available environmental site assessments or reports on the land upon
which the Premises is located, and the Tenant hereby waives any claim against
Landlord in the future regarding toxic substances or hazardous waste disclosed
in said assessments and reports.
The Landlord represents that except as disclosed in said assessments and
reports, it has no knowledge of any toxic or hazardous materials on the
Property.
26. RECORDING OF LEASE.
This lease shall not be recorded by or on behalf of the Tenant, except at the
express request of the Landlord and in the event this lease is recorded without
the permission of the Landlord, then this lease agreement, at the option of the
Landlord, shall become null and void, and of no further force and effect, and
all rights of the Tenant hereunder shall cease. Either of the Landlord or the
Tenant may request that both parties agree to and sign and record a notice of
lease stating the names of the parties, the description of the Premises, the
term of this lease, and such other additional information as may be reasonably
necessary to accurately reflect the terms of this lease, and to protect the
legitimate interests of the Landlord and the Tenant against third parties.
March 11, 1996
28
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27. RENEWAL OF LEASE.
The Tenant shall have the right to extend the Initial Term of this lease set
forth in Exhibit D attached hereto and made a part hereof. If there is no
Exhibit D attached hereto then the Tenant shall have no right to extend the
Initial Term of this lease. Except as set forth in Exhibit D any Renewal Term
shall be upon all of the terms and conditions of this lease, except no further
renewals or extensions of this lease shall be permitted. As a condition
precedent to the Tenant's exercise of any right of renewal provided by Exhibit
D, the Tenant must not be in default beyond any applicable notice and cure
provided herein. Tenant shall exercise each renewal, if at all, not less than
three hundred sixty five (365) days prior to the end of the then existing term.
Renewal shall be by written notice delivered to the Landlord.
28. NOTICES.
All
notices or other communications under this lease shall be in writing and shall
be personally delivered or deposited in the United States mail, first class,
registered or certified mail, postage prepaid and shall be addressed as follows:
(a) Landlord:
PMF Energy, Inc., Axinn-Vermont, Inc. and
Technology Park Associates, Inc.
c/o John Illick
2450 Painter Road
Middlebury, VT 05753
(b) Tenant:
Ben & Jerry's Homemade, Inc.
115 Kimball Avenue
South Burlington, VT 05403
March 11, 1996
29
<PAGE>
Either party may change its address by providing notice to the other party in
accordance with the above requirements.
Notice for the purposes hereof shall be deemed given when mailed, except that if
any time period commences hereunder with notice, such time period shall be
deemed to commence when such notice is delivered or, if earlier, when postal
records indicate delivery was first attempted.
29. FIT-UP.
Landlord and Tenant agree to the fit-up and improvements shown on Exhibit E
attached hereto.
30. TEMPORARY OFFICE SPACE.
The Landlord shall provide Tenant with approximately 34,200 square feet of
temporary office space across the south side of the building as identified on
the plan attached as Exhibit F until May 1, 1996. Tenant shall have this
temporary space rent-free until May 1, 1996, but shall pay its prorated share of
CAM and utility expenses, as follows:
(1) an agreed sum of $15,732 in CAM charges through May 1, 1996, or a
pro-rata amount if Tenant vacates prior to May 1, 1996;
(2) 12.44% of all utility expenses (except for electricity); and
(3) a share of the total electric bill calculated as follows:
(i) the two (2) previous year's electric bills for the entire
Building prior to Tenant's occupancy shall be averaged and
divided by twelve (12) (the "Prior Monthly Average").
(ii) the difference ("Difference") between the Prior Monthly Average
and the monthly electric charge after occupancy ("Current Bill")
shall be determined.
March 11, 1996
30
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(iii)Tenant shall pay to Landlord the Difference, plus an amount
equal to 12.44% of the current bill for the Building.
If the Tenant has not vacated this temporary office space by May 1, 1996, Tenant
shall pay to the Landlord as holdover rental, the sum of $15,000 per month for
each month, or a portion thereof that Tenant occupies said temporary office
space. The parties will use their best efforts to insure that the Premises are
complete and ready for occupancy by the Tenant by May 1, 1996.
31. OPTION TO EXPAND.
(a) Provided there is no default under this lease on the date the option is
exercised, Tenant shall have the exclusive option to lease an additional
27,300 square feet (28,392 square feet including 4% of Common Area),
adjacent to the Premises, as shown on Exhibit A, ("Option Space") at the
same rate per square foot, Base Rent, plus CAM charges, and the prorata
share of utility charges, and under the same terms and conditions described
in this lease.
(b) Tenant shall exercise its option to lease the additional space no later
than December 31, 1996, by notifying Landlord in writing during the term of
the option, and if Tenant does exercise its option rights hereunder, Tenant
shall lease the Option Space on the terms referred to in subparagraph (a)
above except that:
(1) the term for the Option Space shall be coterminous with the term of
Tenant's lease of the Premises;
(2) the space shall be taken by Tenant "as is"; and
(3) A confirmatory amendment to this Lease providing for the lease of the
Option Space shall be executed by Tenant within ten (10) business days
of the receipt by Landlord from Tenant of its intent to exercise the
option. Notwithstanding the foregoing, it is
March 11, 1996
31
<PAGE>
expressly understood and agreed that the Option Space shall
automatically be added to the Premises under this lease once the
expansion option has been validly exercised by the Tenant.
32. LIMITATION OF LIABILITY.
Notwithstanding anything to the contrary contained in this Lease, Tenant agrees
and understands that Tenant shall look solely to the estate in the Property of
Landlord, including, but not limited to, all rents, profits and proceeds
therefrom, for the enforcement of a judgment (or other judicial decree)
requiring the payment of money by Landlord to Tenant by reason of default,
breach or event of default of Landlord in performance of its obligations under
this Lease, it being intended that there will be absolutely no personal
liability on the part of Landlord, and no other assets of Landlord, the
investors in Landlord, or of Landlord's partners, if any, shall be subject to
levy, execution, attachment or any other legal process for the enforcement or
satisfaction of the remedies pursued by Tenant in the event of such default,
breach, or event of default, this exculpation of liability to be absolute and
without exception whatsoever.
33. DAMAGE OR DESTRUCTION OF PREMISES.
(a) In the event that the Premises or the Building is damaged or destroyed by
fire, windstorm, or any other casualty to such an extent that it shall
appear unlikely under the existing conditions that such damage could be
repaired within ninety (90) days from the date such work commences, then
Tenant shall have the privilege of terminating this Lease as of the date of
such event (notwithstanding any provisions in the Lease to the contrary) by
furnishing written notice to Landlord to that effect not more than thirty
(30) days after such event; and
March 11, 1996
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<PAGE>
upon such election by Tenant, the rental hereunder shall be prorated and
paid or refunded, as the case may be, as of the date the damage occurred.
(b) If, however, the nature of such damage is such that the Building could
reasonably be repaired or reconstructed substantially to its former
condition within ninety (90) days from the date such work commences, or if
Tenant did not exercise its aforementioned privilege to terminate this
Lease, then in either or such events, Tenant shall not be entitled to
surrender this Lease, but Landlord shall with reasonable due diligence
commence to repair and restore the Premises to a condition at least
equivalent to that prevailing immediately prior to the happening of such
casualty with all reasonable dispatch, and in any event, in the absence of
unavoidable delay, such repair or restoration to be completed within ninety
(90) days from the date such work commences, or such other period of time
as Tenant and Landlord may agree upon in writing, and if, during the period
of such repair or restoration, Tenant is deprived of occupancy of all or
any part of the Premises for Tenant's accustomed use thereof, then, to the
extent that Tenant may be unable reasonably to conduct its regular business
therein, Tenant shall receive a proportionate reduction from its rental
obligation hereunder corresponding to the time during which, and the
proportion of said Premises from which, Tenant shall have been so deprived.
In all events, the Tenant shall have the further option of terminating this
lease should repairs to or restoration of the Premises not be complete
within six months of the date of the casualty.
(c) Notwithstanding the foregoing provisions in this Paragraph 33, if, as a
result of such casualty, the Building shall be damaged or destroyed to such
an extent as to require substantially the rebuilding of at least sixty
percent (60%) thereof, and if all other leases in
March 11, 1996
33
<PAGE>
the Building are being terminated and the Landlord has determined not to
repair or restore the Building, then, in such event, Landlord shall have
the privilege of terminating this Lease as of the date of such casualty by
furnishing written notice to Tenant to the effect not more than thirty (30)
days after the occurrence of such casualty, in which event the rental
hereunder shall be prorated and paid, or refunded, as the case may be, as
of the date the casualty occurred.
34. MISCELLANEOUS.
(a) Landlord will use reasonable efforts to negotiate favorable utility rates
with the various utilities. Tenant shall pay their own separate utility
charges for water, sewer and electricity, and shall pay its prorata share
of heating and cooling expenses.
(b) At the request of Landlord, Tenant shall deliver current financial
statements to Landlord or Landlord's bank for the purpose of securing
financing.
(c) Tenant acknowledges and agrees that Landlord is in the process of seeking
both state and local approvals and permits for a fourteen (14) lot
subdivision ("Technology Park"). Tenant agrees to cooperate, at no expense
to the Tenant, with Landlord in connection with said permits and approvals.
In addition, Tenant shall not ask for party status in the approval process,
nor shall Tenant directly or indirectly attempt to influence the outcome of
the permit process in any manner deemed adverse to Landlord; Tenant shall
not appeal any permit or approval, nor influence anyone else to appeal any
permit.
(d) In any litigation between the parties regarding this lease, the losing
party shall pay to the prevailing party all reasonable expenses and court
costs including attorneys' fees incurred by the prevailing party. A party
shall be considered the prevailing party if:
March 11, 1996
34
<PAGE>
(1) it initiated the litigation and substantially obtains the relief it
sought, either through a judgment or the losing party's voluntary
action before arbitration (after it is scheduled), trial, or judgment;
(2) the other party withdraws its action without substantially obtaining
the relief it sought; or
(3) it did not initiate the litigation and judgment is entered for either
party, but without substantially granting the relief sought.
(e) The Tenant shall have the right to place 5 sign(s) on the exterior of the
Building with Landlord's prior written consent, which shall not be
unreasonably withheld or delayed, and subject to the Tenant receiving all
approvals and permits necessary under the South Burlington sign ordinance.
(f) In the event the Premises is rendered substantially unusable (through no
fault of Tenant, its employees, agents, invitees, or contractors) by reason
of some event not covered by fire, casualty or business interruption
insurance, and the Premises remains substantially unusable for more than
two (2) weeks, there shall be a prorata abatement of Base Rent and other
charges payable hereunder for the period after two (2) weeks in which the
Premises remains unusable. If the Premises remains unusable for more than
two (2) months, under this subparagraph, the Tenant shall have the option
of terminating this lease, in which event, all payments hereunder shall be
prorated and paid, or refunded as the case may be.
35. RIGHT OF FIRST OFFER OF ADDITIONAL SPACE.
A. Space Subject to First Offer
March 11, 1996
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<PAGE>
The terms of this Paragraph 35 shall apply to the balance of the space in
that one half of the Building to be occupied by Tenant as shown on Exhibit
A, including that portion of such space currently subject to Tenant's
expansion option under Paragraph 31, after Tenant's option has expired by
its terms without having been exercised by Tenant.
B. Notice Procedure
The Landlord shall give the Tenant notice of the proposed rent and any
other material terms upon which any part or all of the subject space is to
be leased to a third party. The Tenant shall then have ten (10) business
days from such notice to determine whether or not it elects to lease any or
all of such space. If the Tenant does elect to lease this space, the lease
for the new space will be coterminous with and on the same terms as the
lease for the rest of the Tenant's Premises, with the exception of Base
Rent, which will be the amount specified by the Landlord in its notice to
the Tenant. If the Tenant does not elect to lease the additional space, the
Landlord shall be free to offer the space to third parties at no lower rent
and on no more materially favorable terms than those presented to the
Tenant; provided, however, that if the Landlord is unable to lease this
space within six (6) months of the date the Tenant rejected the Landlord's
offer, or if the Landlord makes a different, more favorable offer to third
parties, the Landlord shall be required to re-offer the space to the
Tenant.
36. WAIVER.
The failure of the Landlord to insist upon strict performance of any of the
terms, conditions and covenants herein, shall not be deemed a waiver of any
rights or remedies that the Landlord may have and shall not be deemed a waiver
of any subsequent breach or default in the terms, conditions and covenants
herein contained.
March 11, 1996
36
<PAGE>
37. INVALIDITY OR INAPPLICABILITY OF CLAUSE.
If any term or provision of this lease or the application thereof to any person
or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this lease, or the application of such term or provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this lease shall be valid and be enforced to the fullest extent permitted by
law.
38. CAPTIONS.
The headings and captions contained in the lease are inserted for convenience of
reference only, and are not to be deemed part of or to be used in construing
this lease.
39. SUCCESSORS OR ASSIGNS.
The covenants and agreements herein contained shall, subject to the provisions
of this lease bind and inure to the benefit of the Landlord, its successors and
assigns, and Tenant, its successors and assigns, except as otherwise
specifically provided herein.
40. ENTIRE AGREEMENT; AMENDMENTS.
It is expressly understood and agreed by and between the parties hereto that
this lease sets forth all the promises, agreements, conditions, inducements and
understandings between the Landlord and the Tenant relative to the Premises and
that there are no promises, agreements, conditions, understandings, inducements,
warranties or representations, oral or written, express or implied, between them
other than as herein set forth and shall not be modified in any manner except by
an instrument in writing executed by the parties.
March 11, 1996
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this lease the day and year
first above written.
In the presence of: PMF ENERGY, INC.
AXINN-VERMONT, INC.
TECHNOLOGY PARK ASSOCIATES, INC.
By: TECHNOLOGY PARK ASSOCIATES, INC.
_______________________ By:________________________________
/s/Tracy R. Knight /s/John Illick
Its Duly Authorized Agent
TENANT:
BEN & JERRY'S HOMEMADE, INC.
_______________________ By:________________________________
/s/Jeffrey Davis /s/Robert Holland, Jr.
Its Duly Authorized Agent
[drenau.wp.pmc.tpa]lease.bj
4829/1
March 11, 1996
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<PAGE>
EXHIBIT A
DESCRIPTION OF PREMISES
FLOOR PLAN
March 11, 1996
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<PAGE>
EXHIBIT A-1
SITE PLAN
March 11, 1996
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<PAGE>
EXHIBIT B
SCHEDULE OF RENTS
INITIAL TERM
Period Annual Rental for 50,388 square feet
- ------ -------------
Year
1 $201,552 ($4.00 per square foot)
2 214,149 ($4.25 per square foot)
3 226,746 ($4.50 per square foot)
4 226,746
5 226,746
6-10 226,746 adjusted annually for increase in CPI
with a minimum of 2% per year and a
maximum of 6% per year (i.e., year 6
rental shall be $226,746 per year plus
the increase in CPI, as defined in
Exhibit D, from year 5) plus
applicable CAM charges.
March 11, 1996
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<PAGE>
EXHIBIT C
SERVICES SUPPLIED BY LANDLORD
The Landlord shall provide the Premises with the following services:
o Reasonable heating and air conditioning, for which Tenant shall
pay its prorata share as additional rental. Tenant's share of
heating and air conditioning cost shall be 18.32% of Landlord's
total cost. If Tenant exercises its option to lease additional
space pursuant to Paragraph 31 herein, Tenant's share of heating
and air conditioning costs shall be 28.6% of Landlord's total
cost.
o Snow removal from all parking lots, driveways, sidewalks,
emergency exits and roof.
o Landscaping, including maintenance of the parking lot and lawns,
trees, shrubbery, walkways and sidewalks.
o Maintenance of the roof, exterior shell and structural elements
of the Building.
o Maintenance and preservation of the water supply, (excluding
sinks and drains within the Premises), including complying with
and obtaining all necessary permits.
o Maintenance and preservation of sewage system, (excluding
toilets, drains and sinks within the Premises), including
complying with and obtaining all necessary permits.
o Maintenance of HVAC system, including piping to all units.
o Existing exterior lighting or future lighting installed by
Landlord.
o Emergency generator.
o Boiler.
o Sprinkler system; fire alarm system and panel.
o Provision of existing telephone lines into Building.
March 11, 1996
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<PAGE>
EXHIBIT D
RIGHT TO EXTEND TERM
NO RIGHT TO EXTEND INITIAL TERM
X The Tenant shall have the right to extend the Initial Term of
this lease for two (2) additional term(s) of five (5) years each
in accordance with the provisions of Paragraph 27 of the lease.
The Base Rent during each year in any Renewal Term shall be equal
to the Base Rent for the 10th year rate, adjusted annually by
increases, if any, in the Consumer Price Index, (the "Index"),
with a minimum 2% per year increase and a maximum of 6% increase
in any one year. The Index shall mean the Consumer Price
Index-All Urban Consumers published by the Bureau of Labor
Statistics of the United States Department of Labor.
March 11, 1996
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<PAGE>
EXHIBIT E
FIT-UP AND IMPROVEMENTS TO BE PERFORMED
BY LANDLORD AND TENANT
The Landlord shall perform the following improvements to the premises:
1. Separate water meter and separate electric meter for service to the
premises.
2. Landlord shall turn the space over to Tenant in broom-clean condition,
and shall remove all office equipment and the "environmental room".
3. Landlord shall leave in place through May 1, 1996, office partitions
as part of the front office space. Tenant shall have the option to
purchase or lease the existing partitions after May 1, 1996 if the
parties can agree on a lease or sale price.
4. Clean existing condensate drains; provide vented traps to eliminate
pressure differences caused by other AHUs and insure complete drainage
of lines and pans.
5. Adjust, repair or replace flush valves in toilet room as needed.
6. If lab. results on samples from AHUs at Column 8c, 9c, 8e and 9e from
testing performed by Burge Aerobiology are high, remove duct and
casing liner and clean and decontaminate AHU ducts by trained
professionals. If lab. tests are low, remove duct and casing liner;
clean ducts and AHUs; reinsulate casings and ducts with external
insulation; rigid where exposed and wrap, where concealed.
Tenant shall provide the following fit-up and improvements at its expense:
1. Tenant may install a sky-light on the premises provided that it meets
the approval of Landlord for design and structural standards.
2. The remaining fit-up of the premises including the renovating of
entrance ways and windows, shall be at the Tenant's own expense, and
all Tenant fit-up plans shall be first approved in writing by
Landlord, which approval shall not be unreasonably withheld or
delayed.
At the termination of the Lease, Tenant shall not be required to remove any
of its fit-up improvements.
March 11, 1996
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<PAGE>
Exhibit 11
BEN & JERRY'S HOMEMADE, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
(In thousands except per share amounts)
<TABLE>
Thirteen weeks ended Fifty-two weeks ended
-------------------- ---------------------
12/30/95 12/31/94 12/30/95 12/31/94
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding ............................. 7,200 7,153 7,171 7,148
Net effect of dilutive stock options -
based on the treasury stock
method using average
market price .................................... 70 51
------ ------- ------ -------
7,270 7,153 7,222 7,148
====== ======= ====== =======
Net Income (loss) ...................................... $ 859 ($4,900) $5,948 ($1,869)
====== ======= ====== =======
Per share amount ....................................... $ 0.12 ($ 0.69) $ 0.82 ($ 0.26)
====== ======= ====== =======
Fully diluted:
Average shares outstanding ............................. 7,200 7,153 7,171 7,148
Net effect of dilutive stock options -
based on the treasury stock
method using quarter-end
market price which is greater
than average market price ....................... 70 57 1
------ ------- ------ -------
7,270 7,153 7,228 7,149
====== ======= ====== =======
Net Income (loss) ...................................... $ 859 ($4,900) $5,948 ($1,869)
====== ======= ====== =======
Per share amount ....................................... $ 0.12 ($ 0.69) $ 0.82 ($ 0.26)
====== ======= ====== =======
</TABLE>
<PAGE>
Exhibit 21.1
BEN & JERRY'S HOMEMADE, INC.
SUBSIDIARIES
Percentage of
Jursidiction Voting Stock Owned
Name of Subsidiary of Incorporation by Registration
- ------------------ ---------------- ---------------
Ben & Jerry's Canada (1992), Inc. Canada 100%
Ben & Jerry's Children's Center, Inc. Vermont 100%
Ben & Jerry's Homemade, Ltd. United Kingdom 100%
Ben & Jerry's Homemade (FSC), Inc. Barbados 100%
Ben & Jerry's Homemade Holdings, Inc. Vermont 100%
Ben & Jerry's of New York New York 100%
Ben & Jerry's International, Inc. Delaware 100%
<PAGE>
Exhibit 23.1
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-9420, 33-17594 and 33-64421) of Ben & Jerry's Homemade, Inc.
of our report dated January 26, 1996, with respect to the consolidated financial
statements and schedule of Ben & Jerry's Homemade, Inc. included in this Annual
Report (Form 10-K) for the year ended December 30, 1995.
ERNST & YOUNG LLP
Boston, Massachusetts
March 25, 1996
<PAGE>
