Exhibit 10.27
NOTE: PORTIONS OF THIS EXHIBIT ARE THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST BY THE REGISTRANT TO THE SECURITIES AND EXCHANGE COMMISSION. SUCH
PORTIONS HAVE BEEN REDACTED AND ARE MARKED WITH A "[*]" IN PLACE OF THE
REDACTED LANGUAGE.
SUPPLY AGREEMENT
Date: 19th January, 1998
Parties:
1. 'The Supplier': Carbery Milk Products Limited a company incorporated in
Ireland whose registered office is at Ballineen, County Cork, Ireland
2. 'The Customer': The Roaring Water Bay Spirits Company Limited a company
incorporated in Ireland whose registered office is at Xxxxxxx Xxxxx, 00
Xxxxxxxxxxx Xxxxxx, Xxxxxx 0.
RECITALS:
(A) The Supplier carries on, inter alia, the business of manufacturing and
selling the Products.
(B) The Customer intends, with effect from 1 March, 1998 to carry on the
business of manufacturing and selling branded vodkas ant other alcoholic
drinks and wishes to purchase the Products from the Supplier for that
business, and the Supplier is willing to supply the Products to the
Customer, on the terms set out in this Agreement.
Operative Provisions:
1 Interpretation
1.1 In this Agreement, unless the context otherwise requires:
'CREAM LIQUEUR PRODUCTS' means alcohol beverages which contain alcohol and
dairy, or alternative fats, which in combination with sweetening and sugars
are intended to compete with or replicate existing cream or fat based
alcoholic beverages
'FORCE MAJEURE' means, in relation to either party, any circumstances
beyond the reasonable control of that party (including, without limitation,
any strike, lock-out or other industrial action)
'PRODUCTS' means neutral spirit with an alcohol level as set out in the
Specification
'SPECIFICATION' means the specification of the Products described in
Schedule I or any other specification of the Products agreed in writing
between the Supplier and the Customer from time to time
'PROCESS PROCEDURE' refers to the matters set out in Schedule II
1.2 Any reference in this Agreement to 'writing', or cognate expressions,
includes a reference to any communication effected by telex, cable,
facsimile transmission or any comparable means.
1.3 The headings in this Agreement are for convenience only and shall not
affect its interpretation.
2 Sale of the Products
2.1 During the continuance of this Agreement the Supplier shall sell and the
Customer shall exclusively purchase all quantities of the Products and
other neutral spirit requirements of the Company required by the Customer
subject to the terms and conditions of this Agreement.
2.2 Each order shall specify the quantities of each of the Products by volume
and type. The Products or any of them shall be delivered in bulk tanker
container form.
2.3
2.3.1 The Customer shall, where the expected requirement for any one year
of the Products is greater than twice that set out for that year in
clause 5.1 below, inform the Supplier of such projected increased
requirements at least six months in advance of that year;
2.3.2 The Customer shall give the supplier not less than three months
notice of its estimated requirements of the Products for each month
and shall promptly notify the Supplier of any changes in circumstances
which may affect its requirements.
2.4 If the Customer's orders for the Products exceed (or it appears from any of
the estimates or revised estimates given pursuant to clause 2.3 or 5.1 that
they will exceed) the output capacity or stocks of the Supplier, whether
produced by the Supplier or obtained by the Supplier from a third party the
Supplier shall as soon as practicable notify the Customer and, the customer
shall, be entitled to obtain from any other person such quantity of the
Products as the Supplier is unable to supply in accordance with the
Customer's orders.
2.5 For the avoidance of doubt, in the event that the Supplier is unable to
supply sufficient quantities of the Products to the Customer and the
Customer, as a result of such inability obtains Products from a third party
at a cost greater than that which the Customer would have paid to the
Supplier, the Supplier shall forthwith repay the difference in price
between the price charged by the third party and the price which would have
been charged by the Supplier. Any price negotiated with a third party shall
be a price negotiated on a commercial basis and at arms length.
3 Conditions of sale
All sales of the Products sold pursuant to this Agreement shall be subject
to the terms and conditions of this Agreement and shall prevail over any
other terms and conditions unless this Agreement is varied by the parties
hereto. This Agreement shall not be and shall not be deemed to be varied by
the parties hereto unless the parties state in writing that this Agreement
is so varied.
4 Specification of the products
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4.1 All Products sold by the Supplier to the Customer pursuant to this
Agreement shall conform in all respects to the Specification.
4.2 The parties shall consult with each other from time to time during the
continuance of this Agreement in order to ensure that the Specification is
acceptable to both parties, and the Specification may subsequently be
changed by agreement in writing by the parties.
4.3 Testing of the Products shall take place in accordance with the provisions
of Schedule II.
4.4 If as a result of inspection or testing the Customer is lot satisfied that
the Products will comply in all respects with the Specification and the
Customer so informs the Supplier within 7 days of inspection of testing,
the Supplier shall take such steps as are necessary to ensure compliance.
4.5 The Products shall be marked in accordance with the Customer's instructions
and any applicable regulations or requirements of the carrier, and properly
packed and secured so as to reach their destination in an undamaged
condition in the ordinary course.
5 Orders & Supply
5.1 The Customer projects (but without commitment to purchase) that it will
purchase from the Supplier the following quantities of Product in the years
set out below (where reference to Year 1 refers to the 12 month period
commencing on 1 June, 1998 and reference to each subsequent year refers to
each 12 month period thereafter).
No. of Cases Litres of Alcohol
------------ -------------------
Year 1 * * litres p.a.
2 * * litres p.a.
3 * * litres p.a.
4 * * litres p.a.
5 * * litres p.a.
6 Trade Secrets
6.1 The parties agree that notwithstanding any termination in accordance with
clause 12 hereof, they shall not use any name, trademark, trade name or
logo of the other party. The Supplier shall not be entitled either by
implication or otherwise to any title, or right of interest in any
trademarks, trade names, logos or symbols employed, designed, or developed
by the Customer in connection with the Products. The Supplier further
acknowledges that it is granted no rights in relation to copyright or other
rights of whatever nature subsisting in any Product produced or developed
by the Customer.
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In particular the Supplier acknowledges that all and any sights subsisting
in any bottle or graphic representation (including any label on any bottle)
belongs to the Customer.
6.2 The Supplier acknowledges that it has no right to sell any brands of vodka
or other branded alcoholic product produced or developed by the Customer
throughout the world. The Customer acknowledges that the provisions of
clause 15.2 do not apply insofar as they relate to Cream Liqueur Products.
7 Manufacture and delivery of the Products
7.1 The Supplier shall use its best endeavours to manufacture and maintain
sufficient stocks of the Products to fulfill its obligations under this
Agreement.
7.2 The Supplier shall ensure delivery of each of the Customer's orders of the
Products on the date specified in the order, and time of delivery stall be
of the essence.
7.3 Delivery of the Products shall be on a CIF basis and shall take place at
the premises of Terra Limited at Institute Road, Bailieboro, Co Cavan or
such other location as the Customer may agree with the Supplier. The
obligation to store the Products in bonded warehouse storage shall pass
from the Supplier to the Customer or its nominee upon delivery of the
Products pursuant to clause 7.3 to the Customer or its agents.
7.4 The Supplier shall comply with all applicable regulations or other legal
requirements concerning the manufacture and delivery of the Products.
7.5 The Customer, or its nominee, shall be entitled to reject any Products
delivered which are not in accordance with the Specification within 14 days
of delivery of the Products to the Customer or its nominee as the case may
be and failing such rejection, be deemed to have accepted the Products one
day after expiry of such 14 day period.
7.6 The Supplier shall supply the Customer or its nominee in good time with any
instructions or other information required to enable the Customer or its
nominee to accept delivery of the Products.
7.7 If the Customer or its nominee rejects any delivery of the Products which
are not in accordance with clause 7.5 the Supplier at its own cost shall
forthwith take possession of such Products and remove them from the
premises of Terra Limited or from such other location to which such
Products were delivered and the Supplier shall within 10 days of being
requested to do so by the Customer or its nominee supply replacement
Products which are in accordance with the Specification (in which event the
Supplier shall not be deemed to be in breach of this Agreement or have any
liability to the Customer) or shall notify the Customer or its nominee that
it is unable to do so, whereupon the Customer or its nominee shall be
entitled to obtain from any other person such quantity of the Products as
the Supplier has been unable so to supply, and the provisions of clause 2.5
shall apply accordingly.
7.8 The Supplier on request, shall, at the Suppliers cost, send to the Customer
or its nominee samples of the Products or any other Products manufactured
by the Supplier.
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8 Risk and Property
8.1 Risk of damage to or loss of the Products shall pass to the Customer upon
delivery to the Customer or its nominee in accordance with clause 7.3.
8.2 The property in each consignment of the Products delivered shall pass to
the Customer upon payment in full for all of the Products contained in such
consignment unless payment for such Products is made prior to delivery,
when it shall pass to the Customer once payment has been made and the
Products have been appropriated to the Customer.
8.3 If the Customer shall sell or otherwise dispose of the Products, or any of
them before payment in full by the Customer has been made to the Supplier,
the Customer shall in such case hold all monies received by it from such
sale or disposal in trust for the Supplier and shall on request furnish the
Supplier with the names and addresses of the persons to whom such disposals
have been made together with all necessary particulars to enable the
Supplier to recover any outstanding sums due from such persons. So long as
the property in the Products shall remain in the Supplier, the Customer
shall hold the Products as bailee for the Supplier and store the Products
so as to clearly show them to be the property of the Supplier, and the
Supplier shall have the right in default of payment by the Customer for
such Products as and when due, without prejudice to the obligations of the
Customer to purchase the Products, to retake possession of the Products
(and for that purpose to go upon any premises occupied by the Customer).
Nothing in this clause shall confer any right upon the Customer to return
the Products. The Supplier may maintain an action for the price
notwithstanding that property in the Products shall have vested in the
Customer.
Default by Customer
(a) If the Customer: -
(i) fails to comply with any material term of this Agreement
(including stipulations as to payment);
(ii) commits an act of bankruptcy, makes an arrangement or
composition with the creditors or suffers any distress or
execution; or
(iii) resolves to or is ordered to be wound up or has a receiver
or examiner appointed
then, in any such event, the Supplier shall have the right (without
prejudice to any other remedies) to cancel any completed order and withhold
or suspend delivery of further Products, and to demand payment forthwith of
all sums due by the Customer to the Supplier.
(b) In the event the Supplier exercises any rights it may have, under
this Agreement to stop goods in transit which have been ordered
by the
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Customer, the Supplier may at its option resell such Products at
public or private sale without notice to the Customer and without
affecting the Supplier's rights to hold the Customer liable for
any loss or damage caused by breach of contract by the Customer.
9 Warranties and liability
9.1 The Supplier warrants to the Customer that the Products:
9.1.1 will be of satisfactory quality (within the meaning of the Sale of
Goods Act, 1893 and the Sale of Goods and Supply of Services Act, 1980
as amended) and fit for any purpose held out by the Supplier;
9.1.2 will be free from defects in design, material and workmanship;
9.1.3 will correspond with the Specification or any relevant sample; and
9.1.4 will comply with all statutory requirements and regulations relating
to the sale of the Products;
9.2 Without prejudice to any other remedy, if any Products are not supplied in
accordance with this Agreement, then the Customer shall be entitled:
9.2.1 following rejection of Product in accordance with clause 7.5 to
require the Supplier to supply replacement Products in accordance with
this Agreement within 7 days; or
9.2.2 at the Customer's sole option, require the repayment of any part the
price which has been paid for such Products.
9.3 The Supplier shall indemnify and keep indemnified the Customer in full
against all liability, loss, damages, costs and expenses (including legal
expenses) awarded against or incurred or paid by the Customer as a result
of or in connection with:
9.3.1 breach of any warranty given by the Supplier in relation to the
Products:
9.3.2 any claim that the Products infringe, or their importation, use or
resale, infringes, the patent, copyright, design right, trade xxxx or
other intellectual property rights of any other person, except to the
extent that the claim arises from compliance with any Specification
supplied by the Customer;
9.3.3 any act or omission of the Supplier or its employees, agents or
sub-contractors in supplying or delivering the Products.
9.4 The procedures described in Schedule II shall be employed by the parties in
order to facilitate the ascertainment of responsibility for any defect in
the products or any failure to comply with the Specification.
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9.5 Infringement
The Customer shall indemnify and keep indemnified the Supplier against all
damages, penalties, costs and expenses to which the Supplier may become
liable as a result of work done or the supply of goods in accordance with
the Customer's specifications which involves the infringement of any
letters patent, registered design, copyright, trademark or trade name or
other rights of confidentiality of information or industrial, commercial or
intellectual property.
10 Price of the products
10.1 The price for the Products shall be as set out in Schedule III and is: -
10.1.1 inclusive of any costs of carriage and insurance of the Products;
and
10.1.2 exclusive of any value added tax or other applicable sales tax or
duty, which shall be added to the sum in question.
10.2 the Supplier shall invoice the Customer by the fifth day after delivery of
the Products in respect of each such delivery and the customer or its
nominee shall make payment in respect of such deliveries within 60 days of
the receipt thereof;
10.3 The price of the Products, until 31 March, 1999 shall be those as set out
in Schedule III hereto;
10.4 There shall be no variation in the prices charged by the Supplier as set
out in Schedule III prior to 31 March 1999.
10.5 Any proposal to increase prices of the Products shall be notified in
writing to the Customer not less than 90 days prior to implementation of
such increases.
11 Force majeure
11.1 If either party is affected by Force Majeure it shall promptly notify the
other party of the nature and extent of the circumstances in question.
11.2 Notwithstanding any other provision of this Agreement, neither party shall
be deemed to be in breach of this Agreement, or otherwise be liable to the
other, for any delay in performance or the non-performance of any of its
obligations under this Agreement, to the extent that the delay or
non-performance is due to any Force Majeure of which it has notified the
other party, and the time for performance of that obligation shall be
extended accordingly.
11.3 If at any time the Supplier claims Force Majeure in respect of its
obligations under this Agreement with regard to the supply of the Products,
the Customer shall be entitled to obtain from any other person such
quantity of the Products as the Supplier is unable to supply.
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12 Duration and termination
12.1 This Agreement shall come into force on the date of final completion in
accordance with the terms of the Shareholders Agreement referred to at
clause 12.6 below and, subject to the following provisions of this clause,
shall, continue in force for an initial period of five years, thereafter
renewable on terms to be agreed by the parties.
12.2 Either party shall be entitled forthwith to terminate this Agreement by
written notice to the other if:
12.2.1 that other party commits any continuing or material breach of any of
the provisions of this Agreement and, in the case of such a breach
which is capable of remedy, fails to remedy the same within 30 days
after receipt of a written notice giving full particulars of the
breach and requiring it to be remedied;
12.2.2 an encumbrancer takes possession or a receiver is appointed over any
of the property or assets of that other party;
12.2.3 that other party makes any voluntary arrangement with its creditors
or becomes subject to an administration order;
12.2.4 that other party goes into liquidation (except for the purposes of
an amalgamation, reconstruction or other reorganisation and in such
manner that the company resulting from the reorganisation effectively
agrees to be bound by or to assume the obligations imposed on that
other party under this Agreement);
12.2.5 an examiner is appointed to that other party under Section 2 of the
Companies (Amendment) Act, 1990; or
12.2.6 that other party ceases, or threatens to cease, to carry on
business;
12.2.7 the Supplier is unable or unwilling to supply the Customer with its
full requirements of the Products pursuant to this Agreement.
12.3 Any waiver by either party of a breach of any provision of this Agreement
shall not be considered as a waiver of any subsequent breach of the same or
any other provision.
12.4 The rights to terminate this Agreement given by this clause shall not
prejudice any other right or remedy of either party in respect of the
breach concerned (if any) or any other breach.
12.5 Upon the termination of this Agreement for any reason, subject as otherwise
provided in this Agreement and to any rights or obligations which have
accrued prior to termination, neither party shall have any further
obligation to the other under this Agreement.
12.6 This Agreement shall automatically terminate upon the termination (n
accordance with the terms thereof) of a certain Shareholders Agreement
dated 19 December, 1997 entered
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into between Xx. Xxxxxxx Xxxxxx, Mr. Xxxxx Xxxxxx, Xxxxx Investment
Limited, the Supplier and the Customer.
13 Nature of agreement
13.1 This Agreement is personal to the parties, and neither of than may, without
the written consent of the other, assign, mortgage, charge (otherwise than
by floating charge) or dispose of any of its rights hereunder, or
sub-contract or otherwise delegate any of its obligations under this
Agreement;
13.2 Nothing in this Agreement shall create, or be deemed to create, a
partnership between the parties.
13.3 This Agreement contains the entire agreement between the parties with
respect to its subject matter, supersedes all previous agreements and
understandings between the parties, and may not, without prejudice to the
provisions of clause 3 hereof, be modified except by an instrument in
writing signed by the duly authorised representatives of the parties.
13.4 If any provision of this Agreement is :held by any court or other competent
authority to be void or unenforceable in whole or part, the other
provisions of this Agreement and the remainder of the affected provisions
Shall continue to be valid.
13.5 (i) This Agreement shall be governed by and construed in all
respects in accordance with the laws of Ireland;
(ii) In the event that there shall be any dispute between the
parties hereto in relation to this Agreement, then any party
may serve notice on the others specifying the nature of the
dispute and if such dispute is not settled within 60 days
from the date of the service of such notice, then either
party may serve on the other a notice requiring the matter
to be submitted to arbitration. The arbitrator shall be
agreed by the parties within 30 days of the date of such
notice and failing such agreement the arbitrator shall be
determined by the President for the time being of the Law
Society. The decision of such arbitrator as to the dispute
shall be final and binding on the parties and the provisions
of the Arbitration Act, 1954 and 1980 shall apply to such
arbitration.
14 Notices and service
14.1 Any notice. or other information required or authorised by this Agreement
to be given by either party to the other may be given by hand or sent (by
first class pre-paid post, telex, cable, facsimile transmission or
comparable means of communication) to the other party at the address of
each of the parties hereinbefore referred to.
14.2 Any notice or other information given by post under clause this clause 14
which is not returned to the sender as undelivered shall be deemed to have
been given on the third day
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after the envelope containing the same was so posted; and proof that the
envelope containing any such notice or information was properly addressed,
and sent by first class, pre-paid post, and that it has not been so
returned to the sender, shall be sufficient evidence that such notice or
information has been duly given.
14.3 Any notice or other information sent by telex, cable, facsimile
transmission or comparable means of communication shall be deemed to have
been duly sent within 24 hours of the date of transmission.
14.4 Service of any legal proceedings concerning or arising out of this
Agreement shall be effected by causing the same to be delivered to the
company secretary of the party to be served at its registered office, or to
such other address as may be notified by the party concerned in writing
from time to time.
15 Confidentiality Clause and Covenant
15.1 Each of the Parties hereto irrevocably undertake that they shall keep all
information of a confidential nature in particular, but not limited to,
that concerning the business, organisation, processes, methods, technology,
compositions, systems, techniques used, data, finances, dealings
transactions or other affairs of each party hereto confidential and shall
not at any time, without prior written consent, disclose or permit the
disclosure of any such information to any person, and shall take all steps
and do all things that are reasonably necessary or prudent or desirable in
order to safeguard the confidentiality of any such information and shall
not publish any information so disclosed in written form or verbally, or
make use of or divulge to third parties any information so disclosed or any
sample of material so provided to it, its directors, employees, agents and
consultants by the other party hereto or its employees, agents or
representatives concerning or in connection with any manufacturing,
marketing or engineering operations or any research, development or testing
activities carried out by the Supplier or the Customer in relation to the
Products.
15.2 The Supplier shall not during the period of this Agreement do any of the
following without the prior written consent of the Customer.
15.2.1 either solely or jointly with or on behalf of any person directly or
indirectly carry on or be engaged or interested (except as a holder
for investment purposes of securities dealt with on a recognised stock
exchange) in any business in Ireland which competes directly or
indirectly with the business of the Customer, in so far as it relates
to the development, manufacture or supply of vodka or whiskey;
15.2.2 solicit the custom of any person in Ireland who is or has been at
any time during the period of this Agreement a customer of the
Customer for the purposes of offering to such customer vodka or
whiskey which compete directly or indirectly with those manufactured
and/or supplied by the Customer; or
15.2.3 solicit or entice away or endeavour to solicit or entice away any
director or employee of the Customer save that such restriction shall
be without prejudice to
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the right of the Customer to terminate arrangements under which any
executive personnel of Carbery are seconded to the Customer from time
to time;
PROVIDED HOWEVER that nothing herein will preclude or restrict the Supplier
from offering any goods similar to those previously supplied by the
Customer but subsequently discontinued and not supplied by the Customer at
the time when such similar goods are offered by the Supplier.
Notwithstanding the above and for the avoidance of doubt, the supply or
provision of neutral spirits alcohol, Cream Liqueurs, cream or other raw
materials by the Supplier to competitors of the Customer or to any other
party or parties is not restricted by this clause 15.2.
16 Severability
Each of the provisions of this Agreement is separate and severable and
enforceable accordingly and if at any time any provision is adjudged by any
court of competent jurisdiction to be void or unenforceable the validity,
legality and enforceability of the remaining provisions hereof and of that
provision in any other jurisdiction shall not in any way be affected or
impaired thereby.
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SCHEDULE I
Specification
Specification Standard
------------- --------
Clarity *
Organoleptic *
Alcohol Strength % v/v *
*Diacetyl *
*Absorbance (@270mm) *
*Aldehydes *
*Esters (as Ethyl Acetate) *
*Methanol *
*Higher Alcohols *
*Total Acidity *
*Volatile Bases *
*Furfural *
*Dry Extract *
*Note: All deliveries made to customer must be accompanied by a Certificate of
Conformance.
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SCHEDULE II
PROCESS PROCEDURE FOR CUSTOMERS
(1) Bulk Spirit, on ordering is produced to RWBS specifications from the
Supplier, Carbery Milk Products.
(2) on arrival from Carbery the product is accompanied by a Certificate of
Conformance and weighed to ensure that the correct volume has been
received. Samples of 250m1 are retained by Terra and the customer and a
sample is lifted for Carbery.
(3) The spirit is then transferred to RWBS premises.
(4) Manufacturing of Vodka commences by transferring the quantity of spirit
delivered to a product dilution tank.
(5) This product is diluted with de-ionised water to 55% v/v.
(6) The Product is then manufactured by pumping the 55% v/v spirit through
activated carbon beds for approximately 15 mins. At this stage, the product
is tested for taste and clarity and when approved is pumped through a final
clarifying filter to the final bottling product tank.
(7) The manufactured product in the bottling tank is then diluted with
de-ionised water to the desired bottling strength as per specification.
Five samples of final product are taken, two samples for Terra, one for
retaining and one for testing, two samples for Carbery, one for retaining
and one for testing.
(8) All samples following manufacture, including the bulk spirit samples, are
sent to Carbery the day after production.
(9) The manufactured product is jointly approved by both Terra and Carbery
within three days. If there are any issues regarding the samples a joint
decision between all parties will be decided upon. One sample is retained
by RWBS. The procedures in this paragraph shall be reviewed by all the
parties after the production of the first six batches of the manufactured
product.
(10) The approved product is transferred to Terra.
(11) The product is filtered to bottling line and bottled to the required
specification. Two samples are retained from the bottling line, one for
RWBS and one for Terra.
(12) Once bottling is completed and approved by Terra, the product is then
released to meet the customer's order.
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SCHEDULE III
PRICES
Year l * per litre
Year 2 * per litre
Year 3 no greater than * per litre
Year 4 & 5 to be agreed
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Signed for and on behalf of
CARBERY MILK PRODUCTS LIMITED
in the presence of:
/s/ Xxxx Xxxx
AOL Xxxxxxxx Solicitors /s/ Xxxx Xxxx
Xxxxxx 0 ----------------------------------------
Director
----------------------------------------
Director / Secretary
Signed for and on behalf of
THE ROARING WATER BAY SPIRITS COMPANY LIMITED
in the presence of:
/s/ Xxxxxx Xxxxxxx
Xxxxxxxx Xxxxxx Xxxxxxxx /s/ Xxxxx Xxxxxx
Solicitors ----------------------------------------
00 Xxxxxxx Xxxxxx Xxxxxxxx
Xxxxxx 0
/s/ Xxx Xxxxxx
----------------------------------------
Director / Secretary
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