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Exhibit 10.42
STRATEGIC SUPPLY AGREEMENT
This Strategic Supply Agreement is made to be effective between the
parties hereto as of and from January 1, 1996, by and between Anchor Glass
Container Corporation, a Delaware corporation with offices located at 0000
Xxxxxx Xxxxx Xxxxxxx, Xxxxx, Xxxxxxx 00000-0000 ("Seller"), and Bacardi
International Limited, a Bermuda company with offices located at 00 Xxxxx Xxx
Xxxx, Xxxxxxxx XX CX, Bermuda ("Buyer").
WITNESSETH:
WHEREAS, Seller and Vitro Envases Norte America, S.A. de C.V. have formed
a strategic alliance to supply the North American glass container needs of
certain members of the Bacardi-Martini group of companies;
WHEREAS, Buyer has been authorized by Bacardi Limited, the ultimate
parent company of the Bacardi-Martini group of companies, to negotiate and enter
into a long-term, strategic supply agreement for the glass container needs of
Castleton Beverage Corporation ("Castleton"), Bacardi Corporation,
Bacardi-Martini Canada, Inc. and Bacardi & Company Limited (these four companies
are hereinafter referred to as the "North American Affiliates");
WHEREAS, Buyer desires to enter into arrangements under which the
North American Affiliates and such other affiliates of the Buyer as Buyer and
Seller may from time to time agree will buy from Seller glass containers to be
used by the purchasing companies in connection with their bottling operations,
all upon and subject to the terms and conditions hereinafter set forth; and
WHEREAS, Seller desires to sell glass containers to the North
American Affiliates and such other affiliates of the Buyer as Buyer and Seller
may from time to time agree, all upon and subject to the terms and conditions
hereinafter set forth;
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NOW THEREFORE, in consideration of the foregoing premises and the
mutual promises set forth herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. The following terms, when used in this
Agreement, shall, except where the context otherwise requires, have the
following meanings:
"Added Production Costs" means the additional cost of producing
Bacardi-Martini Products attributable to an Untimely Delivery, including but not
limited to downtime, spoilage and disposal costs.
"Agreement" means this agreement and all exhibits, schedules and
attachments hereto.
"Amortization Rate" means, for any given Specified Glass Container,
a fraction, the numerator of which is the Seller's Mold Cost and the denominator
of which is the Mold Life of such Specified Glass Container.
"Annual Forecast" has the meaning set forth in Article VIII.
"Bacardi-Martini Group" means Bacardi Limited and its direct and
indirect subsidiaries.
"Bacardi-Martini Products" means those products marketed by the
Bacardi-Martini Group for which the Bacardi-Martini Group owns or possesses the
relevant trademarks.
"Base Price" has the meaning set forth in Schedule B.
"Basic Index" has the meaning set forth in Schedule B.
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"Buyer" has the meaning set forth in the first paragraph hereof.
"Castleton" has the meaning set forth in the preamble.
"Change of Control" means a change in the control of Seller or any
Seller's Parent, which shall be deemed to have occurred if (and only if) (a) any
persons other than the stockholders of Seller or any Seller's Parent as of the
date hereof acquire the right, by virtue of their ownership of voting securities
of Seller or the Seller's Parent or otherwise, to elect or designate a majority
of the members of the board of directors of Seller or the Seller's Parent; (b)
Seller's or any Seller's Parent's stockholders approve an agreement to merge or
consolidate with another corporation, unless following the consummation of such
merger or consolidation Seller's or a Seller's Parent's stockholders as of the
date hereof, singly or jointly, have the right, by virtue of their ownership of
voting securities or otherwise, to elect or designate a majority of the members
of the board of directors of the surviving corporation; or (c) Seller's or any
Seller's Parent's stockholders approve an agreement (including a plan of
liquidation) to sell or otherwise dispose of all or substantially all of the
business or assets of Seller or the Seller's Parent to any entity other than an
entity as to which Seller's or a Seller's Parent's stockholders as of the date
hereof, singly or jointly, have the right, by virtue of their ownership of
voting securities or otherwise, to elect or designate a majority of the members
of the board of directors.
"Date of Determination" has the meaning set forth in Schedule B.
"Mold Life" has the meaning set forth in Section 14.2.
"New Glass Containers" means glass containers other than the
Specified Glass Containers.
"North American Affiliates" has the meaning set forth in the
preamble.
"One-Year Period" has the meaning set forth in Section 14.2.
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"Pre-existing Purchase Obligations" means binding contractual
obligations of the Purchasing Affiliates to purchase glass containers from third
party sellers of glass containers during the Startup Period.
"Purchase Order" has the meaning set forth in Article V.
""Purchasing Affiliate" shall mean the North American Affiliates and
such other current or future members of the Bacardi-Martini Group as Buyer and
Seller may from time to time agree in writing.
"Qualification Process" means the procedures required to qualify
Seller as an approved supplier of a particular Specified Glass Container, as
such procedures are set forth in Schedule F.
"Rebate Agreement" has the meaning set forth in Section 26.9.
"Seller" has the meaning set forth in the first paragraph hereof.
"Seller's Mold Cost" has the meaning set forth in Section 14.2.
"Seller's Parent" means any corporation or other entity having the
direct or indirect right, by virtue of its ownership of voting securities or
otherwise, to elect or designate a majority of the members of the board of
directors of Seller.
"Specified Glass Containers" means glass containers the
specifications for which are set forth in Schedule A.
"Startup Period" means the period of time commencing on January l,
1996, and ending on June 30, 1996.
"Territory" means the Bahamas, Canada, and the United States of
America, its territories and possessions (including Puerto Rico) and such other
countries or parts thereof as the Buyer and Seller may from time to time agree
in writing.
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"Tropicana" means Tropicana Products, Inc., a Delaware corporation.
"Unreflected Cost Reduction" means any reduction in Seller's costs
arising as a result of changes in the design, production, packaging or shipping
of Specified Glass Containers hereunder to the extent the same is not fully
reflected in price reductions resulting from the application of the provisions
of Sections 12.3, 13.2 and 13.3 and Schedule B.
"Untimely Delivery" means a failure by Seller to deliver conforming
Specified Glass Containers within the time limits specified in the applicable
Purchase Order; provided, however, that in no event shall the period applicable
for purposes of determining whether an Untimely Delivery has occurred commence
earlier than the sixtieth (60th) day following the date of the applicable
Purchase Order. In addition, delay due to Force Majeure as set forth in Section
25.1 of this Agreement shall not give rise to an Untimely Delivery. Included
within events giving rise to an Untimely Delivery are deliveries of
nonconforming goods, including Specified Glass Containers not in an amount and
quality as specified in this Agreement and the applicable Purchase Order, even
if such nonconforming delivery is subsequently corrected.
"Vitro Agreement" has the meaning set forth in Section 26.9.
Section 1.2 Cross-References. Unless otherwise specified, references
in this Agreement to any section are references to such section of this
Agreement and, unless otherwise specified, references in any section or
definition to any clause are references to such clause of such section or
definition.
Section 1.3 General Provisions Relating to Definitions. Terms for
which meanings are defined in this Agreement shall apply equally to the singular
and plural forms of the terms defined. Whenever the context may permit or
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The term "including" means including,
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without limiting the generality of any description preceding such term. Each
reference herein to any person shall include a reference to such person's
successors and permitted assigns. Unless otherwise specified, references to any
agreement, instrument or other document in this Agreement refer to such
agreement, instrument or other document as originally executed or, if
subsequently varied, replaced or supplemented from time to time, as so varied,
replaced or supplemented and in effect at the relevant time of reference
thereto.
ARTICLE II
SUPPLY AND PURCHASE OF GLASS CONTAINERS
Section 2.1 Supply of Glass Containers. Seller shall supply, at the
prices and in accordance with and subject to the other terms and conditions set
forth herein, including the Startup Period provisions of Section 3.4, all
Specified Glass Containers required by the Purchasing Affiliates for use at
facilities located in the Territory in connection with the bottling of
Bacardi-Martini Products.
Section 2.2 Purchase of Glass Containers. Buyer shall cause the
Purchasing Affiliates to purchase from the Seller, at the prices and in
accordance with and subject to the other terms and conditions set forth herein,
including the Startup Period provisions of Section 3.4, all of their
requirements for Specified Glass Containers for use at facilities located in the
Territory in connection with the bottling of Bacardi-Martini Products.
Section 2.3 New Glass Containers. Seller and Buyer agree to
negotiate in good faith with respect to the terms and conditions upon which any
New Glass Containers required by Purchasing Affiliates for use at facilities
located in the Territory in connection with the bottling of Bacardi-Martini
Products may be supplied by Seller and purchased by Purchasing Affiliates
pursuant hereto. Upon agreement between Seller and Buyer with respect to the
terms and
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conditions upon which any such New Glass Container is to be supplied and
purchased pursuant hereto, (i) appropriate amendments shall be made to the
provisions hereof, including to Schedule A, and (ii) such New Glass Container
shall be qualified in accordance with the Qualification Process set forth in
Schedule F. Upon the successful completion of the Qualification Process, the New
Glass Container which is the subject of such amendments shall thereafter be
deemed for all purposes hereof to be a Specified Glass Container. In the event
that, following such good faith negotiations, Seller and Buyer are unable to
reach agreement with respect to the terms and conditions upon which the New
Glass Container is to be supplied by Seller and purchased by the Purchasing
Affiliates pursuant hereto, Buyer and the Purchasing Affiliates shall thereafter
be free to obtain such New Glass Container from such source or sources, as Buyer
and the Purchasing Affiliates may determine.
ARTICLE III
TERM, RENEWAL AND STARTUP
Section 3.1 Term. The term of this Agreement shall, as between the
parties hereto, commence on January 1, 1996, and shall end on *** .
Section 3.2 First Renewal. The term of this Agreement shall be
renewed without further action by either party for an additional term of two (2)
years, commencing on *** provided, however, that Buyer may terminate this
Agreement as of the end of the initial term by providing notice to Seller not
later than the *** .
Section 3.3 Second and Subsequent Renewals. Beginning ***
the term of this Agreement shall be renewed without further action by either
party for an additional term of *** ; provided, however, that the parties may by
written agreement, executed prior to *** of the then-current term, extend the
term of any such
*** Confidential Treatment request pursuant to Rule 406.
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renewal to *** . For terms commencing after *** , either party may
terminate this Agreement as of the end of its then-current term by notice given
not later than the*** immediately preceding the date on which the then-current
term ends.
Section 3.4 Startup. During the Startup Period, Buyer shall cause
the Purchasing Affiliates to purchase from the Seller such of their requirements
for Specified Glass Containers as is consistent with their Pre-existing Purchase
Obligations and inventory. Buyer agrees to use its best efforts to increase as
quickly as possible during the Startup Period the share of the Purchasing
Affiliates' requirements for Specified Glass Containers that are purchased from
the Seller.
Section 3.5 Early Termination by Buyer. Buyer shall have the right
to terminate this Agreement by notice to Seller immediately upon the termination
or expiration of the Rebate Agreement and the Vitro Agreement or either one of
them.
ARTICLE IV
EXTENSION OF SCOPE OF AGREEMENT
Upon Buyer's request, Seller agrees, and agrees to cause its
affiliates, to enter into good faith negotiations with Buyer regarding the
extension of the terms of this Agreement to cover glass container needs of
members of the Bacardi-Martini Group other than the North American Affiliates
and glass container needs of members of the Bacardi-Martini Group in countries
outside the Territory. Any such extension of the terms of this Agreement to
which the parties or their affiliates may agree shall be effected by appropriate
written instruments, including if necessary amendments to this Agreement.
Following the extension of the terms of this Agreement to any Specified Glass
Container needs of members of the Bacardi-Martini Group in
*** Confidential Treatment request pursuant to Rule 406.
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a country outside the Territory, the price payable by Buyer or its affiliates
for Specified Glass Containers supplied by Seller or its affiliates in such
country shall be subject to a *** percent *** discount applicable to all
Specified Glass Containers delivered by Seller or its affiliates to the
Bacardi-Martini Group member(s) in such country during a period commencing on
the date of the delivery of the first shipment of such Specified Glass
Containers, or after the successful completion of the Qualification Process
pursuant to Section 2.3 if applicable, and ending on the date six (6) months
from such date.
ARTICLE V
PURCHASE ORDERS
This Agreement is intended to set forth the terms upon which purchase
orders may be placed by Buyer or the Purchasing Affiliates for Specified Glass
Containers. Each purchase order placed hereunder (a "Purchase Order") shall be
governed by and subject to the terms set forth herein. A Purchase Order is a
written purchase order or a written release placed by a Purchasing Affiliate
with the Seller to purchase a certain number of Specified Glass Containers for
delivery on a date or dates certain. Each Purchasing Affiliate shall use its
best efforts to make its Purchase Orders consistent with the Annual Forecast
then in effect. However, if a conflict regarding quantity, product mix or
delivery date exists between a Purchase Order and the Annual Forecast, the
Purchase Order shall take precedence.
*** Confidential Treatment request pursuant to Rule 406.
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ARTICLE VI
PRICES
The prices applicable to all Specified Glass Containers to be
supplied by Seller to the Purchasing Affiliates hereunder are set forth in
Schedule B. Such prices are subject to adjustment in accordance with the
provisions set forth in Schedule B. All prices set forth herein are D.D.U. (as
defined in Incoterms 1990) at the Purchasing Affiliate's facilities in, as the
case may be, Jacksonville, Florida, San Xxxx, Puerto Rico, Nassau, Bahamas, or
Brampton, Ontario.
ARTICLE VII
TERMS OF PAYMENT
Section 7.1 Delivery of Invoices. Invoices shall be submitted by
Seller to the Purchasing Affiliate which received or took delivery of the
Specified Glass Containers which are the subject of the invoice.
Section 7.2 Terms. The invoice payment terms shall be net thirty
(30) days, with a one percent (1%) discount allowed for cash if payment is made
by the tenth day of the month following the month of invoicing.
ARTICLE VIII
ANNUAL FORECAST
Buyer shall cause each Purchasing Affiliate to give notice to Seller
not later than October 31 of each calendar year during the term of this
Agreement of the Purchasing Affiliate's requirements for the following calendar
year, or, in the case of the Purchasing Affiliate's requirements for calendar
year 1996, not later than ten (10) days after the date first written above,
based on good faith projections made by the Purchasing Affiliate, for Specified
Glass Containers
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(each, an "Annual Forecast"). Each Annual Forecast shall state the quantity and
product mix required and the date and location for delivery. The Purchasing
Affiliate may adjust the quantity, product mix, delivery date or location of any
scheduled delivery in the Annual Forecast, without penalty. The Purchasing
Affiliates shall use good faith efforts to make all adjustments to the Annual
Forecast at least ninety (90) days in advance of the delivery date affected by
the adjustment (or at least ninety (90) days in advance of the adjusted delivery
date if sooner).
ARTICLE IX
DELIVERY DATES; SUPPLY DISRUPTION
Section 9.1 Delivery Dates. Delivery dates stated on each Purchasing
Affiliate's Purchase Order shall be the date of receipt of the Specified Glass
Containers at the Purchasing Affiliate's facilities as specified in such
Purchase Order. Seller agrees to use its best efforts to provide deliveries
hereunder on the exact date specified by the relevant Purchasing Affiliate. To
this end, Seller shall use its best efforts to work with local warehousing and
transportation companies that are familiar with the relevant Purchasing
Affiliate in order to ensure timely delivery. Buyer shall cause each Purchasing
Affiliate to assist Seller in providing timely deliveries hereunder by
identifying minimum and maximum inventory levels for each type of Specified
Glass Container required by the Purchasing Affiliate.
Section 9.2 Supply Disruption. Time is of the essence for this
Agreement. Seller shall notify the relevant Purchasing Affiliate immediately in
the event that Seller anticipates any delay in deliveries hereunder to the
Purchasing Affiliate. In the case of supply disruptions affecting Seller's
ability to supply Specified Glass Containers to a particular Purchasing
Affiliate from Seller's primary glass plant for such Purchasing Affiliate as set
forth in Schedule C on a timely basis, Seller shall supply Specified Glass
Containers to such Purchasing Affiliate from a
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secondary glass plant for such Purchasing Affiliate at no additional cost to
Buyer or any Purchasing Affiliate. Furthermore, in preparation for such a
circumstance, Seller shall maintain a spare set of molds for those primary items
set forth in Schedule D hereto and shall run those molds at the secondary glass
plant set forth in Schedule C hereto for such Purchasing Affiliate as often as
is reasonably necessary in order to ensure that the secondary glass plant can
supply the Purchasing Affiliate's needs for those primary items in the event of
a supply disruption at the primary glass plant for the Purchasing Affiliate. In
the event that Seller employs such secondary molds to produce Specified Glass
Containers, Sellers shall adjust the price for any such Specified Glass
Containers to reflect any advance payment made by any Purchasing Affiliate for
such secondary mold pursuant to Section 14.2(a).
Section 9.3 Compensation for Untimely Deliveries. In the event of an
Untimely Delivery, Seller shall compensate the Purchasing Affiliate by paying to
such Purchasing Affiliate an amount equal to the Added Production Costs caused
by such Untimely Delivery.
Section 9.4 Purchases from Alternative Suppliers. With respect to
any delivery hereunder that is seven (7) or more days late, the affected
Purchasing Affiliate may at its option purchase the Specified Glass Containers
from a third party seller of glass containers. Seller agrees to pay the affected
Purchasing Affiliate the positive difference, if any, between the costs
reasonably incurred by the Purchasing Affiliate in purchasing Specified Glass
Containers from such third party seller pursuant to this Section and the costs
that the Purchasing Affiliate would have incurred had Seller timely supplied
Specified Glass Containers in accordance with the Purchase Order. The provisions
of this Section are in addition to, and not by way of limitation of, the
provisions of Section 9.3.
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Section 9.5 Right of Set-Off. Amounts payable by Seller to a
Purchasing Affiliate pursuant to this Article may be set off by the Purchasing
Affiliate and taken as a credit against amounts otherwise owed by such
Purchasing Affiliate to the Seller.
ARTICLE X
DELIVERY
Each Purchasing Affiliate shall take delivery of the Specified Glass
Containers specified in a Purchase Order at the location specified in such
Purchase Order during regular business hours at such location. Specified Glass
Containers delivered more than three (3) working days in advance of schedule are
subject to return at the risk and expense of Seller.
ARTICLE XI
COMMUNICATION AND CONTINUOUS IMPROVEMENT PROGRAM
Section 11.1 Designated Personnel. Seller shall designate for each
Primary Glass Plant as set forth in Schedule C one person employed by Seller to
serve as production coordinator for the Specified Glass Container requirements
of the Purchasing Affiliates under this Agreement. The designated production
coordinator shall devote substantially all of his or her time to the needs of
the Purchasing Affiliates. Seller shall also designate one salesperson employed
by Seller who shall travel to the production facilities of the Purchasing
Affiliates on a regular basis to service the needs of the Purchasing Affiliates.
The designated salesperson shall devote seventy-five percent (75%) of his or her
time to the needs of the Purchasing Affiliates.
Section 11.2 Strategic Partner Service Teams. Seller shall establish
a strategic partner service team for each Primary Glass Plant as set forth in
Schedule C. Each such team shall have a cross-functional representation,
including sales, marketing and scheduling personnel,
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and shall consist of individuals of sufficient seniority to permit them to
respond quickly and directly to requests of the Purchasing Affiliates. The
designated production coordinator and the designated salesperson described in
Section 11.1 shall be members of the strategic partner service teams. These
teams shall meet regularly with representatives of each of the Purchasing
Affiliates. Unless otherwise agreed by the parties, such meetings shall take
place no less frequently than monthly and shall take place at the facilities of
the Purchasing Affiliates. Personnel participating in such meetings shall set
objectives, measure progress and explore opportunities for total system cost
reductions. A Purchasing Affiliate shall have the right to request the presence
of particular Seller personnel at the meetings with its strategic partner
service team, and Seller agrees to use its best efforts to meet such requests.
Section 11.3 Semi-Annual Review Meetings. Seller and Buyer shall,
unless they otherwise agree, meet at least twice each year to review performance
under this Agreement and other matters of mutual interest. These meetings shall
take place at mutually agreed times and locations. Seller's representatives at
such meetings shall include individuals at the senior vice president level.
Buyer shall have the right to request the presence of particular Seller
personnel at these meetings, and Seller agrees to use its best efforts to meet
such requests.
Section 11.4 Annual Review Meeting. Senior management of Buyer and
Seller shall meet once each year to review performance under this Agreement.
This meeting shall take place at a mutually agreed time and location.
ARTICLE XII
DESIGN IMPROVEMENT PROGRAM
Section 12.1 Lightweighting. Seller agrees to undertake a program to
design and develop versions of the Specified Glass Containers that will weigh
less than those currently
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specified in Schedule A. Such program shall seek to make use of the narrow neck
press and blow process to produce lighter weight versions of the Specified Glass
Containers. With respect to any item not suited for narrow neck press and blow,
such program shall seek to develop methods by which such item can be produced by
the blow/blow process at the lightest possible weight. Seller shall be solely
responsible for all costs associated with this development program. Buyer
agrees, and agrees to cause the Purchasing Affiliates, to provide advice to
Seller in support of the program. Costs incurred by Buyer and its affiliates in
connection with such advice shall be borne by them.
Section 12.2 New Products. Seller agrees to provide support to Buyer
and the Purchasing Affiliates in their new product development efforts. Seller's
personnel shall be available to provide support such as, but not limited to,
creative design work, engineering services and technical assistance, subject to
any legal limitations that Seller shall have by law, agreement or otherwise.
Such support by Seller shall be at no cost to Buyer or the Purchasing
Affiliates.
Section 12.3 Pressure Sensitive Label Decorating Capabilities.
Seller agrees to cooperate with Castleton in order to establish
pressure-sensitive label decorating capabilities at either Seller's plant in
Jacksonville, Florida or with outside designers located in Jacksonville, Florida
by the beginning of the first calendar quarter of 1997. Seller shall purchase
and install the equipment necessary to establish such pressure-sensitive label
decorating capabilities, subject to the prior written approval by Castleton of
the cost and design of such equipment. Upon the installation of such
pressure-sensitive label decorating capabilities, and notwithstanding the
provisions of Section 13.1, the prices paid by Castleton hereunder shall be
adjusted so as to afford Castleton the full benefit of savings realized in
freight handling and material costs as a
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result of such pressure-sensitive label decorating capabilities, less an
allowance for the amortization of Seller's capital expenditures for the relevant
decorating equipment.
ARTICLE XIII
SHARING COST REDUCTIONS
Section 13.1 Unreflected Cost Reductions. In the event a particular
Unreflected Cost Reduction neither increases the costs of any member of the
Bacardi-Martini Group nor negatively affects the sales of the Bacardi-Martini
Group, then such Unreflected Cost Reduction shall be shared equally between
Seller and the relevant Purchasing Affiliate. In the event a particular
Unreflected Cost Reduction either increases the costs of the Bacardi-Martini
Group or negatively affects the sales of the Bacardi-Martini Group, then Buyer
shall be allocated such portion of the Unreflected Cost Reduction as is
necessary to fully compensate it for any detriment incurred by the
Bacardi-Martini Group, and the balance of the Unreflected Cost Reduction, if
any, shall be shared equally between Seller and the relevant Purchasing
Affiliate. An appropriate adjustment to achieve the allocation of any
Unreflected Cost Reduction that is contemplated in this Article shall be made in
the prices then payable with respect to orders placed by relevant Purchasing
Affiliates hereunder.
Section 13.2 Packaging. Notwithstanding the provisions of Section
13.1 and Schedule B, paragraph 2, when Castleton converts its facility to enable
Castleton to process in bulk, the prices paid by Castleton hereunder as
specified in Schedule B shall be adjusted so as to afford Castleton the full
benefit of resulting savings by Seller in packaging costs.
Section 13.3 Freight. Notwithstanding the provisions of Section 13.1
and Schedule B, paragraph 2, when Seller changes shippers to reduce Seller's
freight cost for the transportation of Specified Glass Containers from Seller's
facility in Jacksonville, Florida to
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Bacardi Corporation's facility in Puerto Rico, the prices paid by Bacardi
Corporation hereunder as specified in Schedule B shall be adjusted so as to
afford Bacardi Corporation the full benefit of all savings attributable to such
reduced freight cost.
ARTICLE XIV
MOLDS
Section 14.1 Ownership of Molds. All molds used by Seller for the
production of' Specified Glass Containers hereunder (and all rights, title and
interest therein) shall, unless otherwise agreed by the Purchasing Affiliate
that commissioned or delivered such mold, be (a) the sole and exclusive property
of the Purchasing Affiliate that commissioned or delivered such mold; (b) marked
"Property of Bacardi"; and (c) identified as the property of the commissioning
or delivering Purchasing Affiliate in Seller's records. Seller shall cooperate
with the commissioning or delivering Purchasing Affiliate to make such filings
as may be, in the sole judgment of the Purchasing Affiliate, necessary,
appropriate or advisable under applicable law to give third parties proper
notice of the Purchasing Affiliate's ownership of the molds. Seller shall not
use such molds, or allow anyone other than Seller to use such molds, without the
express written consent of the relevant Purchasing Affiliate.
Section 14.2 Commissioned Molds. Purchasing Affiliates may
commission Seller to acquire molds and mold equipment for the production of
Specified Glass Containers, as follows:
(a) In the case of molds and mold equipment acquired for the
expected production and sale of ten thousand (10,000) or more gross units
of Specified Glass Containers within one (1) year of the date when Seller
has acquired the mold and mold equipment for the Specified Glass
Containers (the "One-Year Period"), the
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commissioning Purchasing Affiliate(s) and Seller shall enter into a letter
of intent. Such letter of intent shall state (i) the expected total number
of Specified Glass Containers (expressed in gross terms) that can be
produced with such mold and mold equipment ("Mold Life") and (ii) the cost
to Seller of acquiring the mold and mold equipment ("Seller's Mold Cost").
The commissioning Purchasing Affiliate(s) shall agree in such letter of
intent that in the event that such Purchasing Affiliate(s) does not
purchase Specified Glass Containers in an amount equal to the Mold Life
for such Specified Glass Container before this Agreement, or renewals
thereof, expires or terminates, or such Specified Glass Container is
discontinued, then the commissioning Purchasing Affiliate(s) shall make a
payment to Seller in an amount equal to the product of (i) the
Amortization Rate for the Specified Glass Container multiplied by (ii) the
difference between (A) the total number of gross units of the Specified
Glass Container purchased by the Purchasing Affiliate(s) and (B) the Mold
Life.
(b) In the case of molds and mold equipment acquired for the
expected production and sale of fewer than ten thousand (10,000) gross
units of Specified Glass Containers within one (1) year of the date when
Seller has acquired the mold and mold equipment for the Specified Glass
Containers, Seller may require the commissioning Purchasing Affiliate to
pay in advance such mold costs, as stated in an agreed upon letter of
intent. If the commissioning Purchasing Affiliate makes such an advance
payment, Seller agrees not to include such Mold cost (or an amortization
of such Mold Cost) in the price of such Specified Glass Container.
Section 14.3 Existing Molds. Any Purchasing Affiliate that wishes
Seller to utilize mold equipment currently held by a third party seller of glass
containers shall provide to
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Seller mold engineering prints for such mold equipment. Seller shall make a
determination of whether such mold equipment can be modified and used by Seller
and communicate its conclusions regarding the same to the Purchasing Affiliate.
Section 14.4 Payment for Certain Existing Molds. Seller shall pay to
Tropicana, for and on behalf of Castleton, an amount (not to exceed two hundred
thousand United States dollars ($200,000)) necessary to compensate Tropicana for
unamortized mold life remaining on up to five sets of mold equipment held by
Tropicana in its capacity as a supplier of glass containers to Castleton. Seller
shall thereafter have the right to use the said mold sets if the same are
compatible with Seller's machinery.
Section 14.5 Mold Availability. Seller shall ensure availability of
primary molds (and secondary molds where required in Schedule D) allowing full
production of all Specified Glass Containers by the target dates set forth on
Schedule E. To this end, Seller shall also comply for each Specified Glass
Container with the intermediate target dates set forth on Schedule E for
container design, container engineering, unit mold, mold approval, unit mold
sampling, full set mold and mold to production.
ARTICLE XV
PACKAGING
Seller shall cooperate with each Purchasing Affiliate on an ongoing
basis to reduce packaging material costs. To the extent possible, Seller shall
deliver in bulk using returnable pallets, frames, and tier sheets. For Specified
Glass Container items that cannot be palletized in bulk, each Purchasing
Affiliate shall propose packaging specifications for approval by Seller.
Seller's approval of such proposed packaging specifications shall not be
unreasonably withheld.
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ARTICLE XVI
QUALITY
Section 16.1 Quality. All Specified Glass Containers supplied by
Seller to Purchasing Affiliates hereunder shall be of design and manufacture
approved the Purchasing Affiliate purchasing the same, or its designated agent.
The review or approval by Buyer or the Purchasing Affiliates of any designs,
engineering drawings, quality control procedures, or any other aspect of the
design and manufacture of Specified Glass Containers hereunder shall not relieve
Seller of the responsibility for producing Specified Glass Containers which
comply with all current local, state, and federal governmental specifications
and standards existing at the time of the sale of such Specified Glass
Containers to the Purchasing Affiliates.
Section 16.2 Applicable Standards. Seller is responsible for
producing and delivering Specified Glass Containers which are of good
workmanship and performance and of merchantable quality and fit for the purpose
intended. All Specified Glass Containers sold by Seller to Purchasing Affiliates
hereunder shall meet commercial standards and the quality standards set forth in
Schedule G. Buyer or any Purchasing Affiliate may propose additional quality
standards for mutual consideration and agreement at any time and from time to
time. Seller shall not unreasonably withhold its consent to any such proposed
quality standard. Nothing contained in this Agreement shall relieve in any way
the Seller from its obligation with respect to testing, inspection and quality
control.
Section 16.3 Rights of Inspection. Payment for Specified Glass
Containers delivered hereunder shall not constitute acceptance thereof.
Purchasing Affiliates shall have the right to inspect such Specified Glass
Containers and to reject any Specified Glass Containers which are in the
judgment of the Purchasing Affiliate purchasing the same defective or
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nonconforming. Purchasing Affiliates shall be informed in advance of (i) the
dates of production and (ii) the quantity of Specified Glass Containers to be
produced and shall be entitled to send representatives to be present at the time
such Specified Glass Containers are produced and Seller performs the required
quality checks. Authorized personnel of the Seller may be present at a
Purchasing Affiliate during bottling operations involving Specified Glass
Containers. Specified Glass Containers supplied in excess of five percent (5%)
of the quantities called for herein and all Specified Glass Containers rejected
may be returned to Seller at Seller's expense and, in addition to any other
rights, the Purchasing Affiliate returning the same may charge Seller all
expenses of unpacking, examining, repacking and reshipping such Specified Glass
Containers. Purchasing Affiliates shall have the right to require Seller to
replace defective or nonconforming Specified Glass Containers at the Seller's
expense.
Section 16.4 Unresolved Quality Problems. Should Seller be unable to
solve a quality problem within a reasonable length of time, affected Purchasing
Affiliates may purchase the Specified Glass Containers that are the subject of
the quality problem from a third party seller of glass containers. Seller agrees
to pay the relevant Purchasing Affiliates the positive difference, if any,
between the costs reasonably incurred by the Purchasing Affiliates in purchasing
Specified Glass Containers from such a third party seller pursuant to this
Section and the costs that the Purchasing Affiliates would have incurred had
Seller supplied conforming Specified Glass Containers in accordance with the
terms of this Agreement.
Section 16.5 ISO 9002 Requirements. Seller agrees to work with Buyer
and the Purchasing Affiliates in order to meet ISO 9002 requirements with
respect to Specified Glass Containers to be supplied hereunder.
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ARTICLE XVII
HAZARDOUS CONDITIONS
Section 17.1 Hazardous Conditions. In the event that Seller, Buyer
or any Purchasing Affiliate learns of any issue relating to a potential safety
hazard or unsafe condition in any Specified Glass Container supplied hereunder,
or is advised of such by competent authorities of any government having
jurisdiction over the manufacture, transportation, storage or use of the
Specified Glass Containers, it shall immediately advise the other party by the
most expeditious means of communication. Seller and Buyer shall cooperate, and
Buyer shall cause the Purchasing Affiliates to cooperate, in communicating with
the public and governmental agencies and in correcting any such condition that
is found to exist.
Section 17.2 Public Announcements. Buyer and its affiliates shall
consult with Seller prior to making any statements to the public or to any
governmental agency concerning issues related to safety hazards or unsafe
conditions affecting Specified Glass Containers delivered hereunder except in
circumstances in which a failure to do so would prevent the timely notification
which may be required to be given under an applicable law or regulation. Seller
shall not, except to the extent required by law, make any statement to the
public or to any governmental agency concerning issues related to safety hazards
or unsafe conditions affecting the Specified Glass Containers delivered
hereunder without first obtaining the consent of the Buyer to the making of any
such statement and its contents.
Section 17.3 Expenses of Correction. Expenses associated with the
correction of safety hazards or unsafe conditions caused by or associated with
Specified Glass Containers supplied by Seller hereunder, including reasonable
attorneys' fees and court costs, shall be solely
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Seller's responsibility, subject only to any other arrangement negotiated by the
parties in light of the particular facts and circumstances then existing.
ARTICLE XVIII
CONFIDENTIAL INFORMATION
Each of the parties understands and agrees that information
concerning the business practices and strategies of the other party set forth
herein is confidential to such other party and shall, except as may otherwise be
required by law, only be disclosed to third parties, whether in writing, orally
or by any other means, upon the specific prior written agreement of the other
party. Seller and Buyer agree that any confidential business, financial or
marketing information, including product concepts and names, and any technical
information, including engineering and manufacturing know-how, data, and designs
(including appearance designs), whether written, oral, or in the form of
drawings; photographs, electronic media or any other medium, furnished by either
party or its affiliates to the other party or its affiliates under this
Agreement shall be deemed to be proprietary to the person furnishing such
information and shall be maintained in confidence by the party receiving such
information and its affiliates. Buyer agrees to procure the compliance of the
Purchasing Affiliates with the terms of this Article.
ARTICLE XIX
INTELLECTUAL PROPERTY
Section 19.1 No Infringement. Seller hereby represents that, to the
best of its knowledge, there are no third-party patent, trade secret, trademark,
copyright or other intellectual
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property rights which would be infringed by the manufacture, use, or sale of the
Specified Glass Containers to be supplied hereunder.
Section 19.2 Defense of Infringement Actions. Seller will defend any
suit or proceeding brought against Buyer, any Purchasing Affiliate, or any of
their customers based on a claim that the manufacture, use, or sale of any
Specified Glass Containers supplied by the Seller hereunder constitutes an
infringement of any patent, trade secret, trademark, copyright, or other
intellectual property, provided Seller is notified in writing and given
authority, information, and assistance (at Seller's expense) for the defense of
same, and shall pay all damages and costs awarded in connection therewith
against Buyer, any Purchasing Affiliate or any of their customers.
ARTICLE XX
PRODUCT LIABILITY
Section 20.1 Indemnification. Seller agrees to protect, defend, hold
harmless, indemnify, and reimburse Buyer, the Purchasing Affiliates and their
distributors, dealers, affiliates, insurers, and customers during the term of
this Agreement and at all times thereafter for any and all costs and expenses
(including reasonable attorneys' fees and expenses, overhead, settlements,
judgments, and court costs) arising out of or related to any liability, demand,
lawsuit, or claim alleging or asserting, in whole or in part, (a) any failure of
Specified Glass Containers supplied hereunder to comply with applicable
specifications, warranties, and certifications under this Agreement; (b) the
negligence or fault of Seller in design, testing, development or manufacture, or
otherwise, with respect to Specified Glass Containers supplied hereunder; or,
(c) with respect to Specified Glass Containers supplied hereunder or any parts
thereof, product liability, strict liability, or any variation thereof.
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Section 20.2 Insurance. Seller shall maintain, at its own
expense, appropriate insurance in the amount of at least *** United States
dollars *** per occurrence for injury, death, or property damage and shall
name Buyer and each Purchasing Affiliate as a co-insured party. Satisfactory
evidence thereof by copy of certificate of insurance shall be submitted annually
to Buyer upon the request of Buyer or any Purchasing Affiliate. Such insurance
shall be carried during the term of this Agreement, including extensions
thereof, and for at least three (3) years thereafter.
ARTICLE XXI
PRODUCT RECALL
In the event that any of the Specified Glass Containers supplied
hereunder is found by Seller, Buyer, any Purchasing Affiliate or any
governmental agency or court having jurisdiction to contain a defect, serious
quality or performance deficiency, or not to be in compliance with any standard
or requirement so as to require or make it advisable to recall such Specified
Glass Container, Seller shall promptly communicate all relevant facts to Buyer
and the relevant Purchasing Affiliate and undertake all necessary or appropriate
corrective actions, including those required to meet all obligations imposed by
applicable law, rules and regulations, and shall file all necessary papers,
corrective action programs, and other related documents; provided, however, that
Buyer and any relevant Purchasing Affiliate shall cooperate with and assist
Seller in any such filings and corrective actions. Nothing contained in this
Article shall preclude Buyer and the Purchasing Affiliates from taking such
action as may be required of them under any applicable law, rule or regulation.
*** Confidential Treatment request pursuant to Rule 406.
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ARTICLE XXII
WARRANTIES
Seller represents and warrants the following:
Section 22.1 Good Title. Seller will convey to the Purchasing
Affiliates good title to all Specified Glass Containers sold under this
Agreement. All Specified Glass Containers delivered to Purchasing Affiliates by
Seller under this Agreement shall be free and clear of any and all security
interests, liens and encumbrances.
Section 22.2 Conformance to Plans and Specifications. All Specified
Glass Containers delivered to Purchasing Affiliates by Seller under this
Agreement will conform to all agreed plans and specifications.
Section 22.3 Merchantability and Fitness for Intended Use. All
Specified Glass Containers delivered to Purchasing Affiliates by Seller under
this Agreement will be of merchantable quality and fit for their designated
uses.
Section 22.4 Asbestos, PCBs, and CFCs Certification. Specified Glass
Containers supplied by Seller hereunder will not contain asbestos or PCBs and
will not in any event be manufactured with CFCs.
ARTICLE XXIII
SURVIVAL
The provisions of Articles XVII, XVIII, XIX, XX, XXI and XXII shall
survive any termination or expiration of this Agreement and continue in full
force and effect thereafter.
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ARTICLE XXIV
NON-WAIVER OF DEFAULT
The failure or delay of Buyer or any Purchasing Affiliate in
enforcing any provision of this Agreement shall not operate thereafter as a
waiver of that provision or any other provision hereof.
ARTICLE XXV
FORCE MAJEURE
Section 25.1 Failure to Perform. Seller's failure to perform its
obligations under this Agreement shall be excused when such performance is
impracticable due to causes beyond Seller's control, including such causes as
national disasters, wars, inability to secure raw materials, acts of God, and
governmental or judicial regulations or orders. Seller shall give prompt written
notice to Buyer and any affected Purchasing Affiliate of the occurrence of any
such event which may make Seller's performance impracticable. Upon receipt of
any such notice, any affected Purchasing Affiliate shall have the right to make
other arrangements to assure itself of a steady supply of Specified Glass
Containers or substitutes therefor sufficient to meet its requirements.
Section 25.2 Costs. In the event Seller is unable to perform its
obligations and a Purchasing Affiliate invokes its right pursuant to this
Article to make other arrangements to assure itself of a steady supply of
Specified Glass Containers or substitutes therefor sufficient to meet its
requirements, Seller agrees to pay the affected Purchasing Affiliate the
positive difference, if any, between the costs reasonably incurred by the
Purchasing Affiliate in purchasing Specified Glass Containers from such a third
party seller pursuant to this Section and the costs that the Purchasing
Affiliate would have incurred had Seller supplied conforming
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Specified Glass Containers in accordance with the terms of this Agreement
without regard to the provisions of Section 25.1.
Section 25.3 Cessation. Upon cessation of causes excusing
performance by Seller, this Agreement shall continue in full force and effect
for the remainder of its term.
ARTICLE XXVI
MISCELLANEOUS
Section 26.1 Notices. All notices required or desired to be given
hereunder shall be in writing and shall be sent by (a) registered or certified
mail, return receipt requested, postage prepaid, (b) a reputable overnight
courier service, or (c) facsimile transmission. Notices shall be addressed as
follows:
(a) If to Buyer:
Bacardi International Limited
00 Xxxxx Xxx Xxxx
Xxxxxxxx XX-CX
Bermuda
Attention: President
Fax: 000-000-0000
and
Xxxxxxx Xxxxxx
Central Packaging Manager
Castleton Beverage Corporation
X.X. Xxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000
XXX
(b) If to Seller:
Anchor Glass Container Corporation
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxx
Fax: (000) 000-0000
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(c) If to any Purchasing Affiliate:
at the address for such Purchasing Affiliate set forth
on Schedule H hereto
and
Xxxxxxx Xxxxxx
Central Packaging Manager
Castleton Beverage Corporation
X.X. Xxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000
XXX
or to such other address as either party shall designate for itself or its
affiliates by notice to the other. Any notice given by Seller hereunder shall be
given to Buyer and each Purchasing Affiliate. Notices given in accordance with
the requirements of this Section shall be deemed given (a) seven days after
mailing if given by mail, (b) on the next regular business day in the
jurisdiction to which such notice is addressed following delivery of the notice
to an authorized representative of an overnight courier service if given by
overnight courier service, and (c) on the next regular business day in the
jurisdiction to which such notice is addressed following confirmed facsimile
transmission of the notice.
Section 26.2 Assignment. Neither this Agreement nor any of the
rights or interests of Buyer or Seller hereunder may be assigned, transferred,
or conveyed by operation of law or otherwise without the prior written consent
of the other party, except to a parent or subsidiary thereof, in which event the
party so assigning shall remain obligated and liable to the other party for the
full and complete performance of this Agreement by the parent or subsidiary to
which this Agreement is assigned.
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Section 26.3 ***
Section 26.4 Law and Jurisdiction. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York,
regardless of the laws that might govern under that state's principles of
conflicts of laws. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the rules of the American Arbitration Association in effect at the time
such arbitration is instituted. The arbitration panel shall be composed of three
arbitrators, one of whom shall be chosen by Buyer, one of whom shall be chosen
by Seller, and one of whom shall be chosen by the two arbitrators previously
designated. If both or either Buyer and/or Seller fails to choose an arbitrator
within fourteen (14) days after receiving notice of commencement of arbitration
or if the two arbitrators fail to choose a third arbitrator within fourteen (14)
days of their appointment, such arbitrators shall be chosen by the American
Arbitration Association. Unless the parties to the arbitration shall otherwise
agree, the place of arbitration shall be Washington, D.C., and the arbitration
shall be conducted in the English language. The
*** Confidential Treatment request pursuant to Rule 406.
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arbitration award shall be final and binding upon the parties thereto and may be
entered in any court having jurisdiction.
Section 26.5 Survival of Rights of Parties. The termination or
expiration of this Agreement shall not release either party from any liability,
obligation, or agreement which, pursuant to any provision of this Agreement, is
to survive or be performed after such termination or expiration.
Section 26.6 Subject Headings. The subject headings in this
Agreement have been placed herein for the convenience of the parties and shall
not be considered in any question of interpretation or construction of this
Agreement.
Section 26.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which taken together shall constitute one and the same instrument.
Section 26.8 Amendments. No term or provision of this Agreement may
be changed, waived, discharged, or terminated orally, but only by an instrument
in writing signed by the party against whom the enforcement of such change,
waiver, discharge, or termination is sought.
Section 26.9 Entire Agreement. All prior understandings, agreements,
and negotiations had by and between the parties hereto are merged in this
Agreement, which alone constitutes the entire agreement of the parties. The
parties, together with Vitro Envases Norte America, S.A. de C.V., are
simultaneously herewith entering into an agreement regarding rebates to be paid
by Seller and Vitro Envases Norte America, S.A. de C.V. on sales of glass
containers to the Bacardi-Martini Group hereunder (the "Rebate Agreement") and
under that certain Strategic Supply Agreement, of even date herewith (the "Vitro
Agreement"), between
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Bacardi-Martini (Monaco) X.X.X. and Vitro Envases Norte America, S.A. de C.V.
The Rebate Agreement and this Agreement constitute the entire agreement between
the parties relative to the supply of Specified Glass Containers by Seller to
Buyer and the Purchasing Affiliates.
Section 26.10 Breach of Rebate Agreement. A breach of the Rebate
Agreement shall be a breach of this Agreement and shall give rise in Buyer and
the Purchasing Affiliates to all such rights and remedies as Buyer and the
Purchasing Affiliates would have if the terms of the Rebate Agreement were set
out and incorporated in their entirety herein.
Section 26.11 Purchasing Affiliates. The Purchasing Affiliates are
intended beneficiaries of the rights accorded Buyer under this Agreement and
each Purchasing Affiliate shall have the right to enforce any such right
directly against Seller without the need to join Buyer in any such action.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives on the date(s) and places
set forth below.
SELLER: BUYER:
ANCHOR GLASS CONTAINER BACARDI INTERNATIONAL
CORPORATION LIMITED
/s/ Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx Xxxxx Xxxxxxx
By: Xxxxxxx X. Xxxxxxxx
By: Xxxxxxx Xxxxx Xxxxxxx ------------------------
------------------------
Title: Director
Title: President and CEO ------------------------
------------------------
Date: September 6, 1996
Date: August 27, 1996 ------------------------
------------------------
Executed In: Hamilton, Bermuda
Executed In: Tampa, Florida ------------------
------------------ Xxxx, Xxxxx
Xxxx, Xxxxx
00
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STRATEGIC SUPPLY AGREEMENT
dated as of January 1, 1996,
between
Anchor Glass Container Corporation
and
Bacardi International Limited
Schedule A
Specifications for Specified Glass Containers:
Attached hereto are blueprint specifications corresponding with the following
blueprint codes:
***
*** Confidential Treatment request pursuant to Rule 406.
34
Schedule A
(cont'd)
***
*** Confidential Treatment request pursuant to Rule 406.
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STRATEGIC SUPPLY AGREEMENT
dated as of Jan. 1, 1996,
between
Anchor Glass Container Corporation
and
Bacardi International Limited
Schedule B
Prices and Price Adjustments:
1. Prices for Specified Glass Containers.
Prices for Specified Glass Containers ordered during 1996 are set forth
below. For purposes of the price adjustment provisions of Section 2 of this
Schedule B, Invoice Price shall be referred to as the "Base Price."
***
*** Confidential Treatment request pursuant to Rule 406.
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Schedule B
(cont'd)
***
*** Confidential Treatment request pursuant to Rule 406.
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Schedule B
(cont'd)
***
*** Confidential Treatment request pursuant to Rule 406.
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Schedule B
(cont'd)
***
*** Confidential Treatment request pursuant to Rule 406.
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2. Price Adjustments.
***
*** Confidential Treatment request pursuant to Rule 406.
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STRATEGIC SUPPLY AGREEMENT
dated as of Jan. 1, 1996,
between
Anchor Glass Container Corporation
and
Bacardi International Limited
Schedule C
Primary and Secondary Glass Plants:
Bacardi-Martini Bacardi & Company
Castleton Bacardi Corporation Canada, Inc. Limited
--------- ------------------- --------------- -----------------
Primary Glass *** *** *** ***
Plan
Secondary Glass *** *** *** ***
Plan
*** Confidential Treatment request pursuant to Rule 406.
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STRATEGIC SUPPLY AGREEMENT
dated as of January 1, 1996,
between
Anchor Glass Container Corporation
and
Bacardi International Limited
Schedule D
Primary items for which secondary molds are to be maintained:
Description Anchor Glass Container Code
----------- ---------------------------
(AGCC Item)
*** ***
*** Confidential Treatment request pursuant to Rule 406.
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STRATEGIC SUPPLY AGREEMENT
dated as of Jan. 1, 1996,
between
Anchor Glass Container Corporation
and
Bacardi International Limited
Schedule E
Primary and Secondary Mold Availability:
Bacardi Bacardi-Martini Bacardi &
Castleton Corporation Canada, Inc. Company Limited
--------- ----------- ------------ ---------------
Primary Mold
Availability *** *** *** ***
Secondary Mold *** *** *** ***
Availability
*** Confidential Treatment request pursuant to Rule 406.
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STRATEGIC SUPPLY AGREEMENT
dated as of Jan. 1, 1996,
between
Anchor Glass Container Corporation
and
Bacardi International Limited
Schedule F
Qualification Process:
A. Seller shall submit two samples of each cavity to the applicable
Purchasing Affiliate.
1. These units will be checked for dimensional verification as per
blueprint
2. These units will also be checked for capacity verification as per
blueprint
B. After the submitted units have passed the first step, Seller shall supply
Specified Glass Containers on the following schedule:
1. For the first run, one truckload shall be scheduled, but only the
first four pallets shall be run to verify the quality and
performance of the product.
2. If the first four pallets run well, then the balance of the
truckload shall be run.
3. After the first truckload is run successfully, then 10,000 cases
shall be scheduled to be run. This production will be supervised as
per the incoming inspection procedure.
4. If there are no rejections in the first 10,000 cases, a second
10,000 cases shall be scheduled and run.
5. If there are no rejections in the first 20,000 cases then a third
run shall be scheduled for 10,000 cases.
C. If there are no rejections of the Specified Glass Containers after 30,000
cases, then the Seller will be an approved supplier.
D. If at any xxxx Xxxxxx'x quality constantly drops below Buyer's standards,
Buyer may requalify Seller, at the Buyer's option.
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STRATEGIC SUPPLY AGREEMENT
dated as of January 1, 1996
between
Anchor Glass Container Corporation
and
Bacardi International Limited
Schedule G
Quality Standards:
Seller shall inspect each batch of Specified Glass Containers and shall submit
to the Purchasing Affiliate a declaration for each batch that Seller has
inspected such batch under procedures and frequencies at least as strict as
Military Standard 105E, Inspection Level II as amplified by Part I below. Seller
shall identify each batch of Specified Glass Containers according to its date of
production and Seller's identification procedures.
1. Definition and Acceptable Quality Level (AQL) for Defect
Classification
1.1 CRITICAL DEFECTS
Defects that could potentially harm the health of the consumer
as a result of the presence inside the bottles of glass chips
or other foreign bodies and substances, or that cause the
product to become dangerous to health or inconsumable. These
critical defects include but are not limited to:
a. Overpressed Finish - The inside of the finish is pulled
up and extends over the sealing surface.
AQL - No tolerance
b. Press Up Flange - When the inside of the finish is
"pulled up" on the inner lip of the finish, creating a
moderately sharp inner edge. Very similar to
"over-press".
AQL - No tolerance
c. Birdswing - A thin string of glass which extends from
side to side or at the base of the glassware. Could
break into the product.
d. AQL - No tolerance
e. Checks and Slit Finish - An actual break in the finish
which may or may not break off.
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AQL - No tolerance
f. Choked Necks - The inside diameter is smaller than the
Purchasing Affiliate's filler tube due to excess glass.
AQL - No tolerance
g. Chipped Sealing Surface - Where a piece of glass is
broken off or still sitting on the sealing surface. It
could fall into the product.
AQL - No tolerance
h. Slug Necks - Excess glass on only one side of the neck
preventing the filler tube from entering straight.
AQL - No tolerance
i. Contamination - When received, bottles shall be clean
and free of foreign material that would contaminate the
product.
AQL - No tolerance
j. Unfilled Finish - Bottles which are not completely
formed cause problems on the line.
AQL - No tolerance
k. Unfilled Sharp Handle - A 1.75 liter handle has a rough
edge. A consumer could get cut.
AQL - No tolerance
l. Stuck Glass - (inside bottle) - A piece of glass which
has fallen into the bottle.
AQL - No tolerance
1.11 MAJOR DEFECTS
Those defects that cause or could cause inconveniences or
interruptions along the bottling lines; those defects that
make the bottle unusable, illegal or unmarketable, and could
cause breakage of accidents, or alteration of the
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product as a result of inadequate sealing. These include but
are not limited to:
a. Rocker Bottom - A sunken bottom which extends below the
bearing surface, causing the bottle to rock.
AQL - 0.65
b. Leaner - A bottle which leans from the heal parting away
from the vertical line.
AQL - 0.65
c. Bent Neck - A bottle which leans away from the base of
the parting vertical line.
AQL - 0.65
d. Soft Blister - An air bubble which is on the surface of
the bottle and can be broken very easily.
AQL - 0.65
e. Cocked Finish - The whole finish is tilting away from
the parting vertical line, but only from the transfer
bead up.
AQL - 0.65
f. Chipped Beads - Where a piece of glass has broken off
the transfer bead.
AQL - 0.65
g. Stones - Irregularly shaped pieces of refractory
material or unmelted material which can also cause the
bottle to crack.
AQL - 0.65
h. Stuck Glass - Bottles which stick together on the
outside surface, giving it a rough cutting edge.
AQL - 0.65
i. Blow Out - Where the bottle has a thin spot condition.
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AQL - 0.65
j. Cracked Bottom - A bottle which is cracked on the
bottom.
AQL - 0.65
k. Checked Handle Base - 1.75 liter handles which have a
cracked handle base.
AQL - 0.65
l. Dip Finish - The sealing surface dips down a maximum of
0.015" from its surface parting line.
AQL - 0.65
1.111 MINOR DEFECTS
Those that affect the aesthetic appearance of bottles, without
in any way affecting the product's quality or causing
interruptions during bottling. This could include but are not
limited to:
a. Seed - Air bubbles of glass embedded in the glass,
caused in the operation process.
AQL - 2.5
b. Hard Blister - Air bubbles embedded well within the
middle of the glass walls. It is more of an appearance
problem.
AQL - 2.5
c. Body Xxxxx - Xxxxx which appear in the exterior surface
of the bottle, causing a poor appearance.
AQL - 2.5
d. Bottles Packed Wrong Way - If the 1.75 liter handle is
packed the wrong way it cannot run on the line.
AQL - 2.5
e. Swung Baffle - A baffle seam that extends too far away
from the center of the bottom which in turn could cause
thin glass.
AQL - 2.5
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f. Out of Round - Bottles that are not round, but oval
shaped, maximum out of round is 0.047".
AQL - 2.5
g. Heavy Offset Seam - Where the molds meet and pronounced
seam is manufactured from the blank or finished bottle
mold seam, making it a poor package appearance. Limit
samples are needed.
AQL - 2.5
2. BREAKAGE
Any breakage on the production line, except those due to
depalletization operations, shall not exceed 0.2/1000 of the bottles used on a
daily basis.
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STRATEGIC SUPPLY AGREEMENT
dated as of Jan. 1, 1996,
between
Anchor Glass Container Corporation and
Bacardi International Limited
Schedule H
Notice address for Purchasing Affiliates:
(a) Castleton Beverage Corporation
00000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
U.S.A.
X.X. Xxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
X.X.X.
Attention: President
Fax: 000-000-0000
(b) Bacardi Corporation
Xxxxxxx 000, Xxxxxxxxx 2.6
Xxxxxxx Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxx Xxxx 00000
X.X. Xxx 000000
Xxx Xxxx, Xxxxxx Xxxx 00000-0000
Attention: President
Fax: 000-000-0000
(c) Bacardi-Martini Canada, Inc.
0000 Xxxxxxx Xxxxxx X
Xxxxxxxx, Xxxxxxx X00 XX0
Xxxxxx
Attention: President
Fax: 000-000-0000
(d) Bacardi & Company Limited
Xxxxxx Xxxx
X.X. Xxx X-0000
Xxxxxx
Bahamas
Attention: President
Fax: 000-000-0000
17
