printer-friendly

Sample Business Contracts

Settlement Agreement - Plunkett Inc. and Van Den Bergh Foods Co.

Sponsored Links

                    [VAN DEN BERGH FOODS COMPANY LETTERHEAD]

March 16,1995

Mr. Gregory B. Plunkett
Plunkett Inc.
600 California Street
Suite 1300
San Francisco, CA 94108

Dear Greg,

It was a pleasure to meet with you in Salt Lake City last Friday on the progress
of your Mrs. Fields retail cookie dough product introduction. As I stated then,
Van den Bergh Foods believes this product is a real winner that will enjoy much
success in the marketplace.

I would like to take this opportunity to provide a brief summary of the action
items we discussed:

      -     VdB will send a letter to yourself and Larry Hodges recommending a
            change in shelf life from 6 to 9 months. Upon completion of product
            testing and your joint authorization to change, VdB will guarantee
            product performance within the new extended shelf life.

      -     VdB will investigate macadamia nut availability/pricing and advise
            Plunkett Inc. of White Chunk Mac Nut product cost.

      -     VdB will minimize distribution costs by working with Haagen-Dazs
            distributors to direct ship them their orders and eliminate third
            party warehousing costs. VdB will also take aged inventory out of
            Halls and US Cold Storage as fast as our plant storage facilities
            can accommodate it.

      -     Plunkett Inc. and VdB agreed to the following repayment plan out of
            Plunkett Inc.'s monthly revenue checks in order to reimburse VdB for
            the $827,000 of non-salvageable value from aged inventory:

                                                                   continued ...

<PAGE>   2
Mr. Gregory B. Plunkett
March 16, 1995


<CAPTION>
           MONTH'S SALES (CASES)                       DEDUCTIONS
           ---------------------                       ----------
                                                   
           less than 20,000                            $2.00/case
           20,000 - 40,000                             $1.50/case
           more than 40,000                            $1.00/case


      -     The repayment plan will begin with the March 1995 monthly check.
            Based on discussions with our counsel, the terms of this agreement
            will be incorporated in the pending Draft Supply Contract.

      -     February's net check of $36,885.81 was sent via Federal Express to
            your attention yesterday.

      -     Copies of our supply contract, which I have signed, were given to
            yourself and Larry Hodges for review and approval. Please advise if
            you see any issues.

I look forward to meeting your supply needs for Mrs. Fields frozen cookie dough
and any other new products that you may consider. Please give me a call if I can
ever be of any assistance.

Sincerely,

/s/ GERALD W. HANNA
--------------------------
Jerry Hanna
V. P. & General Manager - Bakery Products

cc:   R.E. Cupples, Jr.
      A.I. Friede
      J. Wilhelm
      J. Hau
      J. McVay
      M. Wilhelm
<PAGE>   3
                                                               
________________________________________________________________________________

Author:   Arnold Friede at 2859LIHD
Date:     1/15/96  8:51 PM
Priority:  Normal
To:       Laura Corridan at 2859LIHD
Subject:  Haagen-Dazs/Pillsbury--Meeting with Counsel.

---------------------------------Forwarded w/Changes----------------------------

Author:   Arnold Friede at 2859LIHD  1/15/96  8:50 PM
To:       Jim Busby at 2859liha
To:       Joe Wilhelm at 2859LIHC
CC:       Jerry Hanna at 2859LIHD
CC:       Winston F. Scotland at 2859LIHB
CC:       Ronald Soiefer at LEVERUSLHEXEC
Subject:  Haagen-Dazs/Pillsbury--Meeting with Counsel.

---------------------------------Message Contents-------------------------------

     Please fax to Walter Merkle, Esq. for information. Thanks.

     ARNIE FRIEDE

____________________________________Forward Header

_________________________Subject: Haagen-Dazs/Pillsbury--Meeting
with Counsel.
Author:   Arnold Friede at 2859LIHD
Date:     1/15/96  8:50 PM

Jim/Joe:

     I was pleasantly surprised today in Minneapolis at the cordial and
professional reception that I was accorded by counsel for Haagen-Dazs/Pillsbury
(Dave Schmitt (General Counsel, Pillsbury Specialty Brands) and Jerry Jenko
(Pillsbury General Counsel)).

     In the meeting, I reviewed, among other things, the history of this
transaction and the bases for our conclusion that Haagen-Dazs has no legal
right to offset promotional monies promised by Plunkett against invoices due
and owning to Van den Bergh. In addition, I articulated why, on the basis of
Haagen-Dazs' demand that inventories of "dated" product be built to substantial
levels before distribution would commence, and Haagen-Dazs' ensuing failure
to meet its distribution commitments, it has liability to Van dan Bergh for
some or all of the $1.8 million in obsolete inventory. This was new news to
counsel, and presents a substantial "downside" risk to Haagen-Dazs/Pillsbury in
the event it does not settle the promotional offset claim with us. (I also
offered to help Haagen-Dazs/Pillsbury negotiate a suitable "workout"
arrangement with Plunkett that would provide a possible mechanism for recouping
the amounts that need to be paid to Van den Bergh.

     I offered to put into writing for counsel the picture of the situation I
attempted to paint verbally today. This offer was welcomed; it will give counsel
something to go on as they investigate the matter further internally. Pursuing
this moderate course presents the best opportunity for settlement, which I
continue to believe is preferable in this case to litigation. Accordingly, in
the next
<PAGE>   4
several days, I will send my letter to counsel, and let the process run its
course. While I am not optimistic that we will ultimately be able to settle on
reasonable terms, I firmly believe we need to exhaust all possible roads to
settlement before filing a lawsuit in court.

ARNIE FRIEDE
<PAGE>   5
                    [VAN DEN BERG FOODS COMPANY LETTERHEAD]


                                January 22, 1996


BY FAX; U.S. MAIL


David E. Schmitt, Esq.
Vice-President and General Counsel
Pillsbury Specialty Brands
200 South Sixth Street
Minneapolis, MN 55402

Re: PLUNKETT, INC.

Dear Dave:

     We appreciate the time that you and Jerry Jenko spent with us last Monday.
Our discussion was open and productive. As promised, I write to summarize my
case (and apologize, in advance, for any undue rhetoric below).

     1. HAAGEN-DAZS' PROMOTIONAL OFFSET LIABILITY.

     You understand my point that the relationship we each had with Plunkett was
independently bilateral. Therefore, Haagen-Dazs had no right to offset
promotional monies owed by Plunkett against amounts due and owing Van den Bergh.

     Your argument that Van den Bergh's relationship with Haagen-Dazs was
necessarily a product of the Plunkett/Haagen-Dazs relationship, while arguably
true is so far as it goes, is really beside the point. It overlooks the
objective intent of both Haagen-Dazs and Van den Bergh, as manifested in their
later negotiations and ultimate "contract". In fact, we will be able to prove,
among other things, that the Plunkett/Haagen-Dazs agreement predated any
discussions between Van den Bergh and Haagen-Dazs; that these later discussions
culminated in an independent contract between Van den Bergh and Haagen-Dazs
(albeit a contract not memorialized in a single integrated instrument); that
THIS contract envisioned the relationship between Van den Bergh and Haagen-Dazs
as a direct, arm's length sale and purchase transaction (and that the parties
operated on that basis); and that it was not until Plunkett failed to make
promised promotional payments that Haagen-Dazs first contemplated its self-help
offset strategy.

     So while it is true that the written agreement between Plunkett and
Haagen-Dazs placed responsibility for promotional payments squarely on
Plunkett's shoulders, this does not make Plunkett's failure to pay Van den
Bergh's problem (absent an express assumption of that liability,
<PAGE>   6
David E. Schmitt, Esq.
Page Two
January 22, 1996


which did not occur). It is important to remember that Van den Bergh did not
even have a copy of the Plunkett/Haagen-Dazs agreement until I got it from your
colleague, Eileen Gill, in the course of the early settlement discussions a few
weeks ago. I am hard-pressed to understand how Haagen-Dazs could have intended
for Van den Bergh to be liable for a contractual obligation of Plunkett that Van
den Bergh was not even on notice of. Moreover, under the objective theory of
contracts that remains the law under the Uniform Commercial Code, "it takes two
to tango". So even if Haagen-Dazs subjectively intended for Van den Bergh to be
liable for promotional payments that Plunkett failed to make, this would NOT
bind Van den Bergh.

     At the end of the day, then, Van den Bergh has a strong case for recovery
of the approximately $915,000 that Haagen-Dazs improperly offset against
obligations for goods sold and delivered by Van den Bergh.(1)

     2. HAAGEN-DAZS' OBSOLETE INVENTORY LIABILITY.

     At the meeting, I discussed our contention that approximately $1.8 million
in "dated" MRS. FIELDS inventory became obsolete because of Haagen-Dazs' demand
that large inventories be "built-up" before distribution would commence, and
Haagen-Dazs' ensuing failure to meet its distribution commitments. Even though
the inventory that ultimately became "obsolete" was never formally "sold" as
such to Haagen-Dazs, and remained in third party warehouse, it is nevertheless
true that inventories were "built" in reliance on Haagen-Dazs' projections and
promises.

     You will find in particular that "build-up" demands, and distribution
promises, which induced Van den Bergh to produce almost 5 million pounds of
cookies, were repeatedly made, and broken, by Jay Stewart at Haagen-Dazs. (See
e.g. Jay Stewart's "Mrs. Fields Volume Projections" (copy of poor quality "fax",
dated November 1, 1994, attached), promising distribution in specific markets by
designated dates that were not met). We have reason to believe this was due,
among other things, (a) to Stewart's failure to get the local Haagen-Dazs

------------

(1) As we discussed, there is also a serious question, in at least two respects,
about the underlying validity of a large part of the Haagen-Dazs offsets: (a)
proof is lacking in may cases that actual performance by retailers was rendered
to justify reimbursing Haagen-Dazs for promotional payments; and (b)
Haagen-Dazs' substantial distribution failures undercuts its entitlement to
reimbursement in many cases, even if the retailer performed -- what good is a
"roto" ad for MRS. FIELDS frozen cookies if the product is not available for
purchase. We do not have a firm handle yet on the total of these "invalid"
promotional claims but they are clearly on the order of several hundred thousand
dollars. We expect a firm number from Plunkett's outside auditors in the next
few weeks.
<PAGE>   7
David E. Schmidt, Esq.
Page Three
January 26, 1996


distribution networks throughout the country "on board" before promising what
he could not deliver, and (b) his failure to get clearance in advance from
Pillsbury "corporate" (which delayed the matter while a decision was made
whether to distribute a competing line of frozen cookies).

     We appreciate your commitment to look into this aspect of the matter. We
believe that, under a number of legal theories ("detrimental reliance",
"estoppel", "third party beneficiary", etc.), Van den Bergh has a good claim
against Haagen-Dazs for all or part of the $1.8 million obsolete inventory
liability.(2)

     3.   The "Workout" Arrangement Between Plunkett and Van den Bergh.

     In our meeting, I described the "workout" arrangement that Plunkett and
Van den Bergh are about to conclude--Van den Bergh will continue manufacturing
the Mrs. Fields retail frozen cookies; in consideration, among other things,
Van den Bergh will receive an incremental amount per case to amortize the
obsolete inventory liability, and Van den Bergh will take a security interest
in the License Agreement between Plunkett and Mrs. Fields.

     Based on my discussions with Walter Merkle, Esq., counsel for Plunkett,
and with Steve Kirchner, President of Capital Bay Securities, the investment
banking firm that raised new capital for Plunkett and now controls its
day-to-day operations, Plunkett is prepared to entertain a similar "workout"
arrangement with Haagen-Dazs (once an agreement is reached on the amount of the
valid underlying promotional claims). Under such an arrangement, upon
repayment to Van den Bergh, Haagen-Dazs would similarly be entitled to an
agreed per case payment in respect of its promotional payment claims against
Plunkett.

     I am prepared to do what it takes to facilitate Haagen-Dazs' participation
in an appropriate "workout" arrangement with Plunkett, and I encourage you to
give that option serious consideration. That will address, as best possible at
this time, your stated concern that Haggen-Dazs will be left "holding the bag"
in any settlement.

                                     * * *


     In our meeting, I mentioned the numerous relationships that Pillsbury and
Van den Bergh, and Unilevel and Grand Met, have with one another, as a reason
why settlement of this matter

--------------
  (2) Van den Bergh has a separate claim against Plunkett for this same amount
based on Plunkett's "misforecasts" (which in turn were based largely on
Haagen-Dazs' projections).  This is being addressed in our "workout"
arrangement with Plunkett. Van den Bergh understands that it cannot recover
twice for the same thing.

<PAGE>   8
David E. Schmitt, Esq.
Page Three
January 22, 1996


makes sense for each of us. I firmly believe that litigation should be the
avenue of last resort. But it is something we will pursue if we cannot reach a
fair and equitable negotiated settlement.

     I look forward to hearing from you, Best personal regards.

                              Sincerely,


                              /s/ ARNOLD I. FRIEDE
                              ----------------------------
                              Arnold I. Friede


cc   Jerome J. Jenko, Esq.
       Senior Vice President & General Counsel
       The Pillsbury Company

     Walter Merkle, Esq.
       Kay & Merkle
       Counsel for Plunkett, Inc.

<PAGE>   9
                         MRS. FIELDS VOLUME PROJECTIONS

                                [COPY ILLEGIBLE]
<PAGE>   10
                    [VAN DEN BERGH FOODS COMPANY LETTERHEAD]

June 14, 1996

Mr. Tom Kees
President and CEO
Legacy Brands, Inc.
2200-B Douglas Blvd.
Suite 100
Roseville, CA 95661

Dear Tom,

We have reviewed the long term debt owed to Van den Bergh Foods by Legacy Brands
which now stands at $1.7M after recent adjustments. We are prepared to detail
the amount to your satisfaction.

At the conclusion of our review and in response to your request for a
settlement, we are prepared to accept 2/3 of that amount to settle the debt owed
to us. That would total $1,133,026.00. Rather than go through some lengthy
process, I will simply say this is bottom line from our perspective.

If the above is unworkable, I must advise you that a signed Supply Agreement
that we have negotiated is a requirement to continue to do business per my
Board.

I look forward to your response.

/s/ JERRY HANNA
--------------------------
Jerry Hanna
V. P. & General Manager
<PAGE>   11
                              [LEGACY LETTERHEAD]



October 9, 1996

Gerald W. Hanna
Vice President & General Manager
Bakery Products Group
Van den Bergh Foods
2200 Cabot Drive
Lisle, Illinois 60532

Dear Jerry:

This is to conform our agreement with respect to the liability of Legacy
Brands, Inc., ("Legacy") to Van den Bergh Foods ("Van den Bergh") for certain
out of code inventory in the approximate amount of $1.6 million.

Upon the successful completion of Legacy's initial public offering ("IPO"),
Legacy will agree to pay the lesser of $1,100,000 or .667 of the amount
outstanding as of the date of the IPO in full satisfaction of its obligation
for such out of code inventory.

Any additional amounts that are outstanding as a result of the aforementioned
transaction must be agreed upon by Legacy and Van den Bergh and will be
amortized at a maximum rate of $2 per case of product.



Sincerely,


/s/ THOMAS E. KEES
--------------------
Thomas E. Kees
President and CEO



<PAGE>   12
                    [VAN DEN BERGH FOODS COMPANY LETTERHEAD]

November 01, 1996

Legacy Brands, Inc
2200-B Douglas Blvd., Suite 100
Roseville, CA 95661

Attention: Thomas E. Kees

RE:        Guarantee and Indemnity

Dear Sir:

      We guarantee that no article we sell or otherwise deliver to you is
adulterated or misbranded within the meaning of the Federal Food, Drug, and
Cosmetic Act ("the Federal Act"), or within the meaning of any state statutes
the provisions of which are identical with or substantially the same as those
found in the Federal Act ("the State Acts"), nor is it an article which may not
under the Federal Act or the State Acts be introduced into interstate or
intrastate commerce; provided however that our guaranty does not extend to
violations of the Federal Act or the State Acts because of causes beyond our
reasonable control.

      We agree to indemnify, defend, and same and hold you harmless from and
against any and all losses, claims, damages (except consequential and punitive
damages), and expenses, including reasonable attorneys' fees, arising from
claims of bodily injury or property damage resulting or alleged to result from
the use of an article sold by us to you, unless the claim is based on a
warranty not authorized by us or results from the negligence or other wrongful
act or omission other than our own.

      If articles we sell or otherwise deliver to you are distributed in the
State of California, we guarantee that the same do not contain a listed chemical
for which a warning is required under the California Safe Drinking Water and
Toxic Enforcement Act of 1986 and implementing regulations ("Proposition 65")
or, if any such warning is required, that it is being provided; however, we do
not guarantee against such articles becoming altered in a manner that would
create a violation of Proposition 65 after shipment by us because of causes
beyond our reasonable control.
<PAGE>   13
Page Two

      This guarantee is contingent, of course, on our being promptly notified of
any alleged breach hereof and being permitted to deal therewith in our own
discretion and through our own representative or attorney. This is a continuing
guarantee and may be revoked on written notice thereof; it supersedes any
previous arrangement between us relating to the subject matter.

                                   Sincerely,

                                   VAN DEN BERGH FOODS CO., A DIVISION
                                   OF CONOPCO, INC.

                                   By: /s/ ARNOLD I. FRIEDE
                                       -----------------------------------------
                                       Arnold I. Friede
                                       Assistant Secretary



AIF:jk
<PAGE>   14


------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     DATE (MM/DD/YY)
ACORD                                            CERTIFICATE OF LIABILITY INSURANCE            PAGE 1 OF 1                  11-01-96
------------------------------------------------------------------------------------------------------------------------------------
PRODUCER                                                         THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION
Millis Corroon Corporation of New York          8040             ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE
7 Hanover Square                                                 HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR
New York         NY   10004-2594                                 ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.
(212) 344-8888                                                   -------------------------------------------------------------------
                                                                 COMPANY National Union Fire Insurance Co. of Pittsburgh PA
Guy Johnson                                                         A
------------------------------------------------------------------------------------------------------------------------------------
INSURED                                                          COMPANY Insurance Co. of the State of Pennsylvania
                                                                    B
          Unilever United States, Inc. & Its Subsidiary          ------------------------------------------------------------------
          CONOPCO Inc. & its div Van Den Bergh Foods Co.         COMPANY Illinois National Insurance Company
          2200 Cabot Drive                                          C
          Lisle            IL  60532                             -------------------------------------------------------------------
                                                                 COMPANY
                                                                    D
------------------------------------------------------------------------------------------------------------------------------------
COVERAGES

   THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY
   PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH
   THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE
   TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
------------------------------------------------------------------------------------------------------------------------------------

 CO
LTR         TYPE OF INSURANCE               POLICY NUMBER   POLICY EFFECTIVE   POLICY EXPIRATION             LIMITS
                                                             DATE (MM/DD/YY)    DATE (MM/DD/YY)
------------------------------------------------------------------------------------------------------------------------------------
 A   GENERAL LIABILITY                 RMGL 0179103            01-JUL-1996        01-JUL-1997      GENERAL AGGREGATE      $2,000,000
                                                                                                   ---------------------------------
     [X] COMMERCIAL GENERAL LIABILITY                                                              PRODUCTS-COMP/CP AGG   $2,000,000
                                                                                                   ---------------------------------
         [ ] CLAIMS MADE [X] OCCUR                                                                 PERSONAL & ADV INJURY  $2,000,000
                                                                                                   ---------------------------------
     [ ] OWNER'S & CONTRACTOR'S PROT                                                               EACH OCCURRENCE        $2,000,000
                                                                                                   ---------------------------------
     [ ] ____________________________                                                              FIRE DAMAGE
                                                                                                   (Any one fire)         $   25,000
     [ ]                                                                                           ---------------------------------
                                                                                                   MED EXP
                                                                                                   (Any one person)       $    5,000
------------------------------------------------------------------------------------------------------------------------------------
 A   AUTOMOBILE LIABILITY              RMCA1353468 (A/S)       01-JUL-1996          01-JUL-1997
                                                                                                   COMBINED SINGLE LIMIT  $2,000,000
     [X] ANY AUTO                      RWCA1353469 (TX)                                            ---------------------------------
     [X] ALL OWNED AUTOS                                                                           BODILY INJURY          $
     [X] SCHEDULED AUTOS                                                                           (Per person)
     [X] HIRED AUTOS                                                                               ---------------------------------
     [X] NON-OWNED AUTOS                                                                           BODILY INJURY          $
     [ ] ___________________________                                                               (Per accident)
     [ ]                                                                                           ---------------------------------
                                                                                                   PROPERTY DAMAGE        $
------------------------------------------------------------------------------------------------------------------------------------
     GARAGE LIABILITY                                                                              AUTO ONLY - EA         $
                                                                                                   ACCIDENT
     [ ] ANY AUTO                                                                                  ---------------------------------
     [ ] ___________________________                                                               OTHER THAN AUTO ONLY
     [ ]                                                                                           ---------------------------------
                                                                                                         EACH ACCIDENT    $
                                                                                                   --------------------------------
                                                                                                             AGGREGATE    $
------------------------------------------------------------------------------------------------------------------------------------
     EXCESS LIABILITY                                                                              EACH OCCURRENCE        $
                                                                                                   ---------------------------------
     [ ] UMBRELLA FORM                                                                             AGGREGATE              $
     [ ] OTHER THAN UMBRELLA FORM                                                                  ---------------------------------
                                                                                                                          $
------------------------------------------------------------------------------------------------------------------------------------
 A   WORKERS COMPENSATION AND          RMWC2119659 (A/S)       01-JUL-1996        01-JUL-1997      [X] WC STATU-  [ ] OTH-
     EMPLOYERS' LIABILITY                                                                              TORY LIMITS    ER
 A                                     RMWC2119660 (AZ, ID, OR)                                    ---------------------------------
     THE PROPRIETOR/                                                                               EL EACH ACCIDENT       $2,000,000
 B   PARTNERS/EXECUTIVE   [ ] INCL     RMWC1362530 DED MC, VA                                      ---------------------------------
 B   OFFICERS ARE:        [ ] EXCL     RMWC1362529 DED (A/S)                                       EL DISEASE-POLICY      $2,000,000
                                                                                                   LIMIT
                                                                                                   ---------------------------------
                                                                                                   EL DISEASE-EA          $2,000,000
                                                                                                   EMPLOYEE
------------------------------------------------------------------------------------------------------------------------------------
 B   OTHER                             RMWC1362531 DED (TX)
 C                                     RMWC1362532 DED (IL)
     EXCESS WORKERS COMP &                                                                         COV A - STAT X/S $350,000
 A   EMPLOYERS LIABILITY               RMQS10174560            01-JUL-1996        01-JUL-1997      COV B - $1,650,000 X/S $350,000
------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS



------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE HOLDER                                       CANCELLATION
------------------------------------------------------------------------------------------------------------------------------------

     Legacy Brands, Inc.                                     SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
     2200-B Douglas Blvd. Suite 100                          EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL
                                                             30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT,
     Roseville, CA 95661                                     BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR LIABILITY
                                                             OF ANY KIND UPON THE COMPANY, ITS AGENTS OR REPRESENTATIVES.

     Attention: Thomas E. Kees                           AUTHORIZED REPRESENTATIVE

                                                                [SIG]
------------------------------------------------------------------------------------------------------------------------------------
ACORD 25-5 (1/95)                                                                                          (c)ACORD CORPORATION 1988
------------------------------------------------------------------------------------------------------------------------------------


<PAGE>   15
                        [LEGACY BRANDS, INC. LETTERHEAD]


December 11, 1996

Mr. Gerald W. Hanna
Vice President and General Manager
Bakery Products Group
Van den Bergh Foods Company
2200 Cabot Drive
Lisle, IL 60532

Re:    Obsolete Inventory Obligation

Dear Jerry:

I felt it appropriate to forward this letter to you to put in writing some of
our recent discussions and my hope that we will be able to satisfy the Legacy
obligation to Van den Bergh in a professional manner that is satisfactory to
both parties. Although neither of us created this problem, I know that we both
realize that it is one that needs to be resolved promptly.

As I know you are aware, both myself and Legacy are very pleased to have
developed the relationship with you and Van den Bergh over the past year. Legacy
has generated approximately $3.5 million in sales and Van den Bergh has been
instrumental in helping Legacy to date, with only some correctable "hiccups."
Through this year, in addition to the profit that Van den Bergh has made on
sales, Legacy has also been able to pay down approximately $400,000 on the
obsolete inventory obligation.

As we discussed, Jerry, the initial public offering for Legacy Brands which was
scheduled to proceed as early as last September, is now slated on the National
Securities calendar for early February 1997. The reason for the delay has
nothing to do with National Securities, or investor enthusiasm, or the stock
market, but rests primarily in the hands of the independent accountants, Coopers
& Lybrand. C & L had to get their hands around an abundance of missing
documentation, litigation and capital formation issues remaining from prior
management. These issues have all now been addressed and the registration
statement for Legacy will be filed with the Securities and Exchange Commission
within the next twenty days.
<PAGE>   16
You have offered Legacy a reduced pay-off of the inventory obligation by
December 31, 1996 to help clean up the Van den Bergh financial statements with
regard to the merger of Van den Bergh and the Thomas J. Lipton Company.
Initially we thought we could take advantage of that offer by December 31, 1996;
however, the only source of capital available to accomplish that pay off now is
through the initial public offering. To restructure or re-characterize the
obligation at this time would force us to completely redo the Legacy financial
and registration statements and could seriously impair our initial public
offering. With the initial public offering less than ninety days away, this
certainly is not a prudent move on Legacy's part.

I would, however, suggest that in the spirit of attempting to accommodate Van
den Bergh and ensure the success of the offering and enable us to pay Van den
Bergh off in full, that we could allow Van den Bergh to deduct an additional 20%
of each gross check after the $2.00 per case allowance has been deducted until
the total obligation is satisfied. While I understand that the $2.00 per case
payment applies dollar for dollar to the obligation, I would expect that the
extra 20% payment would apply to the previously agreed upon discounted amount
upon payment in full. We would need to discuss the mechanics.

Again, Jerry, we cannot express enough our appreciation of both you and Van den
Bergh, and the cooperation you have demonstrated over the past year. Both of us
have worked diligently to recover the inventory loss for the benefit of Van den
Bergh when we all know that the likelihood of recovery a year ago was slim at
best. It would be greatly appreciated if you could bear with us for just this
last final push so that we can resolve the whole matter in its entirety.

Please give me a call with any thoughts you might have.

Sincerely,


/s/ THOMAS E. KEES
--------------------------
Thomas E. Kees
President and CEO
Legacy Brands, Inc.
<PAGE>   17
                                   Post-It #            Fax Note 7671
                                   --------------------------------------------
                                   DATE                 # of pages
                                   --------------------------------------------
                                   TO Rob Kresimir      FROM               
                                   --------------------------------------------
                                   Co./Dept.            Co.
VAN DEN BERGH                      --------------------------------------------
FOODS COMPANY                      Phone #              Phone #
                                   --------------------------------------------
                                   Fax #                Fax #
2200 Cabot Drive                   --------------------------------------------
Lisle, Illinois 60532                         
(708) 805-5300                     --------------------------------------------
                                   Vice President & General Manager
                                   Bakery Products Group

December 27, 1996

Mr. Thomas E. Kees
President and CEO
Legacy Brands, Inc.
2200-B Douglas Blvd. Suite 100
Roseville, CA 95661

RE: Obsolete Inventory Obligation

Dear Tom:

I am in receipt of your letter of December 11, 1996 which discusses your IPO
and your proposal to pay down the existing Obsolete Inventory Obligation that
now stands at approximately $1,450,000 through December, 1996.

First let me say how pleased I am with progress made by the new management
group and I am further encouraged by the IPO and the strength of the support of
your pending investment community. The reversal of fortunes is a tribute to
your group, and certainly makes the future look bright. In that context, we are
pleased to be your vendor of choice and hope to play an even more valuable role
as you continue to grow.

As you are aware we offered to reduce the principle of the obligation to 2/3's
of amount if paid in 1996, however, delaying the IPO plus the extraordinary
cost of a bridge loan has made that repayment in 1996 not possible. In your
letter of December 11, 1996 you have offered to continue to pay off the
principle amount at $2.00 per case plus an additional 20% of the gross check
(less the $2.00 per case amount) with the 20% applied to the 2/3's of the
principle. On a prolonged basis this method would take around 1-1/2 years to
eliminate the debt.

In our conversations you made it clear to me that your intentions always were
to repay Van den Bergh once the IPO funds were received which would be in the
March-April, 1997 timeframe as of today's present knowledge. Let me propose two
options:

<PAGE>   18
1.   Legacy continues to pay $2.00/case until the debt is eliminated, however
     the debt will stay constant at $1,000,000.00 regardless of the per case
     repayment amount. In other words, it is in your best financial interests
     to pay the $1,000,000.00 as early as possible.

2.   Legacy repays at the rate of $4.00/case until the entire debt is repaid.
     The debt as of January 1, 1997 becomes an interest bearing note at 1-1/2
     over prime -- compounded monthly. A monthly premium amount of $60,000.00
     is established in case the volume falls below 15,000 cases. The debt can
     be paid in full at any time by paying the principle amount.

Either method is acceptable but no mixing of the two. As always we will provide
the legal paperwork which will be beneficial to the IPO. I will be back in the
office after January 8, 1997 to finalize this agreement. I hope you are having
a happy holiday and will talk to you next year.

Sincerely,

/s/ Jerry Hanna
-------------------
Gerald W. Hanna
V.P./G.M. - Bakery Division
Van den Bergh Foods Company

<PAGE>   19
                    [VAN DEN BERGH FOODS COMPANY LETTERHEAD]




March 4, 1997



Mr. Thomas E. Kees
President & CEO
Legacy Brands, Inc.
2200-B Douglas Blvd.
Suite 100
Roseville, CA 95661

Dear Tom:

The purpose of this letter is to confirm to you that Van den Bergh Foods Company
and Haagen Dazs (a division of the Pillsbury Company, Grand Metropolitan PLC)
settled their dispute involving promotional offsets taken by Haagen Dazs on
invoicing of products supplied by Van den Bergh Foods Company. Additionally, Van
den Bergh Foods Company will take no further action against Haagen Dazs
regarding the obsolete inventory issue reference earlier in the dispute. We
consider these matters closed. Terms of the settlement are confidential and will
not be disclosed.


Sincerely,

/s/ GERALD W. HANNA
----------------------------------
Gerald W. Hanna
Vice President and General Manager