CO-PACKING AGREEMENT
This AGREEMENT ("Agreement") is made and entered into this the 10th Day
of June, 1999 by and between XXXXX XXXXXX, INC., an Illinois Corporation,
("Seller") and Jeremy's Microbatch Ice Cream, LLC., a Delaware Corporation,
("Buyer").
WITNESSETH
Whereas, the Seller is desirous to fulfill the duties and obligations of a
co-packer with the Buyer on a mutually beneficial basis for both parties, and
Whereas, the Buyer is desirous to have the Seller as a co-packer of its
products on a basis which is mutually beneficial for both parties;
NOW THEREFORE, in consideration of the mutual agreements, covenants, terms
and conditions herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
SELLER'S OBLIGATIONS
1.1 Sales of Goods. For the term of this Agreement, Seller agrees to
manufacture and sell to Buyer those goods listed in Exhibit A, a copy of
which is attached hereto and made a part hereof (the "Product List").
Seller further agrees that all goods contained in the Product List will be
produced in accordance with the Buyer's formulas and specifications.
1.2 Raw Materials. Seller shall be solely responsible for securing the
purchasing all raw materials, ingredients, packaging and supplies
(collectively "Product Materials") used in the manufacture of the goods
sold to Buyer. Except as further provided, the buyer shall not be required
to purchase, provide, or be financially liable for any Product Materials
used in the manufacture of the Goods.
1.3 Inventory. Seller shall be responsible for maintaining an acceptable level
of finished goods inventory to ________ prompt delivery to Buyer's order
without unreasonable interruption. However, the levels of finished goods
inventory shall not exceed Ninety (90) days supply without the written
consent of the Buyer.
1.4 Records. At Buyer's request, Seller shall provide accurate and current
levels of finished goods and packaging inventories for Buyer's use.
1.5 Proprietary Information. Seller shall keep and hold all formulas, recipes,
and any other proprietary information of the Buyer confidential and shall
not distribute or disseminate same without the express written consent of
the Buyer. Upon termination of this Agreement, all proprietary information
shall be returned to Seller, along with any copies thereof.
1.6 Seller's Marks. Seller shall not use any of the Buyer's trade names or
marks on any products other than those listed on the Product List, nor
shall the Seller sell any product containing the Buyer's marks or brands to
anyone other than the buyer without the written consent of the Buyer.
ARTICLE II
BUYER'S OBLIGATIONS
2.1 Purchase of Goods. For the term of this Agreement, Buyer agrees to purchase
all goods listed on the Product List which is produced by Seller. However,
nothing in this Agreement shall grant or give the Seller the exclusive
right to produce or sell to the buyer those items on the Product List.
2.2 Pricing. Upon execution of this Agreement, the price for the goods shall be
the Per Gallon Price, F.O.B. Aurora, Illinois as listed on the Product
List. In addition, Buyer further agrees to pay Seller, at Seller's cost,
all freight charges incurred by Seller for delivery of the goods to any
location or destination as directed by Buyer. Buyer agrees to pay all
invoices net Thirty (30) days.
Buyer and Seller mutually agree that the pricing, as listed on the Product
List, will be adjusted on a monthly basis for changes in Seller's cost of
commodities and other raw materials in accordance to the formulas contained
on Schedule A. These commodities include but are not limited to Milk,
Butter, and packaging costs. Seller may also adjust, on an as needed basis,
the price of any item on the Product List, for any changes made by Buyer to
the formulas of the goods.
2.3 Amortization Charge. In addition to the pricing contained on
the Product List, Buyer agrees to pay Seller, 1.5(cent) per pint to cover
the cost of special equipment needed to produce the Goods, including
special plates, a verigator, and heat sealer. This additional charge will
continue until Two Million (2,000,000) pints have been purchased by the
Buyer.
2.4 Product List Changes. Buyer shall have the right to discontinue or add
items to the Product List. Should the buyer choose to discontinue an item,
Buyer agrees to the following:
a) Buyer agrees to give Seller sixty (60) days advance notice of the
discontinuance.
b) Buyer agrees to purchase all finished goods of the discontinued item
in Seller's inventory at the then current price.
c) Paragraph 1.2 notwithstanding, Buyer agrees to purchase all packaging
inventory, as well as all other raw materials specifically used in the
production of that item at Seller's cost.
d) Should Buyer wish to add an item to the Product List, the buyer shall
provide Seller with the formula and packaging specifications,
including film, to Seller. Seller shall then provide Buyer with an
initial price for the added items, after which time the price of the
added items may be adjusted only in accordance with Paragraph 2.2 of
this Agreement.
2.5 Packaging Changes. Should the Buyer change the nature or substance of the
packaging of the goods, then Paragraph 1.2 notwithstanding, Buyer agrees to
purchase all unused discontinued packaging at Seller's cost.
2.6 Inventory Guaranty. Prior to production of goods, Buyer shall deliver to
Seller a fully executed guaranty in the amount of Two Hundred Eighty
Thousand Dollars ($280,000) by Bluestem Capital Partners II Limited
Partnership. Said guaranty shall be in a manner and form acceptable to
Seller and shall remain valid and enforceable for period not less than
Sixty (60) days after the termination of this Agreement.
2.7 Damages and Credits. All products purchased by the Buyer from the Seller,
shall transfer title at the time the product is shipped from the Seller's
location. The Buyer has 48 hours from the time of delivery to inform the
Seller of any product received damages, and to provide proof of same. Upon
receipt of proof of damage, Seller will issue to the buyer a credit, at the
Buyer's purchase price, for the damaged goods. The Buyer will not destroy
or otherwise dispose of any suspected damaged product without the express
authorization of the Seller. The seller will not issue any credit or offset
for any product damaged, lost, altered, mutilated or destroyed after the
product has left the control of Seller.
ARTICLE III
PRODUCT ASSURANCE
3.1 Seller's Product Assurance. The Seller warrants that the product sold to
the Buyer is free of defects, and workmanship, that the Seller has clear
title to the goods sold, and title to the product names under which the
product is sold.
Seller agrees to indemnify and hold harmless Buyer (and its agents,
servants, employees, officers, and directors) from and against any and all
claims, suits, and judgments whatsoever, caused by any defect in the
product of the Seller, and against and from the expense of defending such
claims and suits, including the court costs, attorneys' fees and all other
expenses.
3.2 Buyer's Product Assurance. The Buyer warrants and agrees to keep all
product purchased from the Seller, without regard to whether the products
are included in the Product List, in good and salable condition, free of
damage, mutilation, alteration, or relabeling,. Should any product under
the control of the Buyer, purchased from the Seller become damaged,
mutilated, altered, or relabeled, in form or substance, the Buyer agrees to
withhold selling or transferring that product to any other party without
the express written authorization of the Seller. Should such product,
damaged, mutilated, altered, or
relabeled, in form or substance, while under the control of the Buyer, need
to be destroyed or otherwise disposed of, such destruction and or
disposition shall be the sole expense of the Buyer.
Buyer agrees to indemnify and hold harmless Seller (and its agents,
servants, employees, officers, and directors) from and against any and all
claims, suits, and judgments whatsoever, caused by any damage, mutilation,
alteration, relabeling, in form or substance, of the product while in the
control of the Buyer (or its agents, servants, employees, or customers) and
against and from the expense of defending such claims and suits, including
the court costs, attorneys' fees and all other expenses.
ARTICLE IV
AGREEMENT TERM AND TERMINATION
4.1 Term. This Agreement shall be in effect for a period of two years from the
date first written above, or until Two Million pints have been purchased by
the Buyer, whichever is longer. In addition, this Agreement will
automatically renew for one year periods until such time as either party
notifies the other to the contrary.
4.2 Seller's Cancellation. Should the Seller decide not to renew this
Agreement, it must notify the Buyer as such at least Sixty (60) days prior
to the end of this Agreement. In addition, the Seller may cancel this
Agreement, without cause, at any time, by giving the Buyer at least One
Hundred Twenty (120) day's notice.
4.3 Buyer's Cancellation. Should the Buyer decide not to renew this Agreement,
it must notify the Seller as such at least Sixty (60) days prior to the end
of this Agreement. In addition, the Buyer may cancel this Agreement, with
or without cause, at any time, by giving the Seller at least One Hundred
Twenty (120) day's notice.
4.4 Seller's Obligations Upon Cancellation. Upon cancellation or termination of
this Agreement by either party, the Seller agrees to the following:
Seller shall return all formulas, recipes, and other confidential
information to Buyer, or Buyer's agent.
Seller shall release any finished goods, unused packaging, or other raw
materials used specifically for the production of Buyer's products to Buyer
or any person or entity Buyer designates.
4.5 Buyer's Obligations Upon Cancellation. Upon cancellation or termination of
this Agreement by either party, the Buyer agrees to the following:
a) Buyer agrees to purchase all finished goods then in the possession of
the Seller at the then current price as defined in Paragraph 2.2 of
this Agreement.
b) Paragraph 1.2 notwithstanding, buyer agrees to purchase all unused
packaging and other raw materials used specifically for the production
of Buyer's products at Seller's cost.
c) Buyer agrees to pay a charge for unrecovered equipment amortization.
This charge is calculated by taking the result of Two Million less the
number of pints purchased times 1.5(cent) (2,000,000 - Pints
Purchased) X 1.5(cent) = Unrecovered Equipment Charges). Should Buyer
have purchased Two million pints or more under this agreement, then
this charge is zero.
d) Buyer agrees to pay for all outstanding invoices, within thirty days
of the termination date of this Agreement. Buyer further agrees not to
cancel, withdraw, or otherwise terminate the guarantee as provided in
paragraph 2.6 until all outstanding invoices and charges have been
paid.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of all of the parties hereto and their heirs, executors,
administrators, permitted assigns or successors in interest.
5.2 Assignments. Neither the Buyer nor the Seller may assign their rights,
interests, or obligations under this Agreement without the prior written
authorization of the other party.
5.3 Amendments. This Agreement may be amended in whole or in part at any time
by written instrument setting forth such changes and signed by each of the
parties hereto.
5.4 Entire Agreement. This Agreement and the exhibits hereto set forth the
entire understanding between the parties relating to the transactions
contemplated herein, there being no terms, conditions, warranties or
representations other than those contained herein, and no change or
modification hereto shall be valid unless made in writing and signed by the
parties hereto.
5.5 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
5.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
5.7 Headings. The headings contained herein are for reference only and are not
part of this Agreement.
5.8 Notices. All notices, requests, or demands and other communications from
any of the parties hereto to the other shall be sufficient if in writing
and if sent by registered or certified mail postage prepaid, to the other
party at the address of the other party as contained herein, or at any
other address as any party may later designate by written notice.
To the Seller: Xxxxx Xxxxxx, Inc.
Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
To the Buyer: Jeremy's Microbatch Ice Cream, LLC
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
5.9 Severability. If any portion or portions of this Agreement shall be, for
any reason, invalid or unenforceable, the remaining portion or portions
shall nevertheless be valid, enforceable and carried into effect, unless to
do so would clearly violate the present legal and valid intentions of the
parties hereto.
5.10 Arbitration. Both parties mutually agree that should any dispute or
controversy arise out of or related to this Agreement, that upon failure of
the parties to resolve the dispute among themselves, that the dispute or
controversy will be resolved by binding arbitration, under the Commercial
Arbitration Rule of the American Arbitration Association before one neutral
arbitrator who shall be a member of the AAA's Large Complex Case panel. In
addition, both parties agree to the following rules:
a) Either party may request arbitration at any time after a dispute or
controversy has been unresolved for a period of sixty (60) days.
b) Both parties agree that all documents relevant to the dispute or
controversy will be submitted to the arbitrator at least Ten (10) days
prior to the arbitration hearing. Concurrent with the submission of
documents to the arbitrator, each party will provide the other party a
copy of all documents submitted. Included in the documents will be a
listing of all witnesses, expert and otherwise, as well as a summary
of their relevant proposed testimony.
c) No outside witnesses may be called to testify in the arbitration
hearing unless so included in the provided documentation. Each party
will be given the opportunity to cross examine the other parties'
witnesses at the arbitration hearing.
d) Unless requested by the arbitrator, or otherwise agreed to at the time
of arbitration by both parties, it is mutually agreed that there shall
be only one arbitration hearing.
e) Once the decision of the arbitrator has been reached, both parties
agree to comply with the terms of the arbitration within Thirty (30)
days of the decision's issuance.
f) The cost of the arbitrator shall be split equally between the Buyer
and the Seller.
IN WITNESS WHEREOF, the Seller and the Buyer, each through their own
authorized officer, have executed this Agreement on the day and year first
written above.
Seller: Buyer:
XXXXX XXXXXX, INC. JEREMY'S MICROBATCH ICE CREAM, LLC.
By: By:
XXXX X. XXXXXX XXXXXX XXXXXXX
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Chairman Vice President
EXHIBIT A
PRODUCT LIST AND PRICE CHANGE FORMULAS
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Initial Product List & Per Gallon Price
---------------------------------------
Price Per
Product Flavor Gallon Price
-------------- ------------
Coffee Extra $ 8.18
Smores 7.78
Chocolate Down Under 11.75
Fuzzy Navel 8.01
Chocolate Overload 8.63
Cinnamon Bun 9.06
Price Change Formulas
---------------------
Butter Price Adjustment - The per gallon price will be adjusted by taking the
difference in the current month's per pound butter price less the prior month's
per pound butter price times the multiple of 1.2. The butter price used for this
formula will be the Chicago Mercantile Exchange (CME) Grade AA butter price for
the last Friday of each calendar month.
Milk Price Adjustment - The per gallon product price will be adjusted by taking
the difference between the current month's per pound published milk price less
the prior month's per pound published milk price times a multiple of 2. The
published milk price to be used will be the USDA's Official Class II Order 30
price.
Packaging Price Adjustment - The produce price will be adjusted solely on the
change in actual cost of the product packaging used.
