Exhibit 10.2
BREWING AGREEMENT
THIS AGREEMENT, dated and effective as of May 15th, 2001, by and between
ORIGINAL BEVERAGE CORPORATION, (hereinafter referred to as "Xxxx'x"), a Florida
corporation located at 00000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx, and THE LION
BREWERY, INC., (hereinafter referred to as "The Lion"), a Pennsylvania
corporation, located at 000 X. Xxxxxxxxxxxx Xxxxxx, Xxxxxx-Xxxxx, Xxxxxxxxxxxx
00000.
W I T N E S S E T H :
WHEREAS, The Lion is engaged in the brewing, production and bottling of
alcoholic malt and non-alcoholic beverages at its production facility located in
Xxxxxx-Xxxxx, Pennsylvania (hereinafter referred to as "Plant"); and
WHEREAS, Xxxx'x has certain rights to the use of trademarks and tradenames of
products known as Xxxx'x Original Ginger Brews, Virgil's Root Beer and China
Cola and Cherry Cola (hereinafter referred to as "Products") as more fully set
forth on Exhibit "A" hereto; and
WHEREAS, Xxxx'x desires The Lion to brew/produce, bottle, and package the
Products on its behalf (as well as other such products as may be added from time
to time).
NOW, THEREFORE, in consideration of the terms, conditions, agreements and
covenants contained herein, the parties hereto intending to be legally bound
agree as follows:
I. PRODUCTION
The Lion shall brew/produce, bottle and package such quantities under the
trademark as Xxxx'x may specify from time to time in accordance with Article II
hereof.
Xxxx'x grants to The Lion the limited right to use its corporate name solely for
purposes of bottling and registration of the Products. This right is limited in
duration to the duration of this Agreement or any extension hereof. Xxxx'x
agrees to furnish The Lion in writing with the formulations, process
descriptions, packaging specifications and related technical information
necessary for the fulfillment of this Agreement. This information is considered
to be trade secrets of Xxxx'x and shall remain the exclusive property of the
Xxxx'x. The Lion agrees to keep the information on such material confidential,
and to restrict the disclosure thereof to those of its employees directly and
necessarily concerned with the production of the Products. The Lion also agrees
that it will not disclose such information to any third parties without the
prior written authorization of Xxxx'x.
In order to preserve the value and reputation of the trademark and to assure
that the Products will be of highest quality and uniformity, The Lion agrees
that it shall:
Comply with all applicable laws, regulations and ordinances pertaining to the
operation of the brewing/producing and packaging facilities.
It shall maintain the Plant in a clean and sanitary condition consistent with
"good manufacturing practices".
Grant an authorized person of Xxxx'x the right to be present during any
production run of the Products. An authorized person of Xxxx'x shall also have
the right, during regular business hours and upon reasonable notice, to inspect
the plant where the Products are produced, bottled, packaged and stored; and any
property or characteristics of The Lion are deemed confidential and proprietary
of The Lion and shall be treated as such and not disclosed or utilized by any
authorized person.
The Products shall be manufactured, brewed and packaged in accordance with the
written instructions of Xxxx'x.
In order to assure quality control, The Lion shall apply an identification code
on each case and bottle indicating date of production.
(e) The Lion shall maintain at all times, in full force and effect for the
benefit of Xxxx'x and itself, general liability insurance coverage, applicable
to the Products, including broad form vendor's coverage and product liability
insurance in an amount not less than Two Million ($2,000,000.00) Dollars. The
Lion shall furnish Xxxx'x with a certificate of insurance evidencing that it has
such insurance coverage upon the execution of this Agreement and furnish Xxxx'x
with evidence of such insurance coverage on an annual basis thereafter.
PRODUCTION SCHEDULING
Xxxx'x shall submit written orders for Products at least four (4) weeks prior to
required packaging date. The Lion will package the Products within four (4)
weeks of the receipt of such order, assuming all materials are on hand to
produce one week before production. This includes the materials that are the
responsibility of Xxxx'x to have the same delivered to The Lion. See Exhibit "A"
for minimum production run per Product.
(2) All Products shall be loaded and delivered to a public warehouse in
Xxxxxx-Xxxxx, Pennsylvania at the completion of production, with the cost of
shipping the products to be borne exclusively by The Lion.
II. BREWING AND PACKAGING MATERIALS
The Lion shall maintain on hand a sufficient supply of brewing and packaging
materials required that are not supplied by Xxxx'x, except flavoring, to
manufacture the Products and fill orders. All flavorings are the responsibility
of Xxxx'x. Xxxx'x will be responsible for all excess packaging (crowns, basket
carriers, labels, corrugated).
The Lion shall package the Products in particular forms and packages described
in Exhibit "B".
III. PRICE/PAYMENT
(a) Xxxx'x hereby agrees to pay The Lion a fee for all Products ordered by
Xxxx'x and processed by The Lion for such price as set forth in Exhibit "B".
(1) All payments for packaging items for Xxxx'x that is paid for by The Lion are
to be received within fifteen (15) days.
(2) All payments for Products shall be made within thirty (30) days of receipt
of invoice detailing production.
IV. REPRESENTATION AND WARRANTIES OF XXXX'X
Xxxx'x represents and warrants to The Lion that no trademark, tradename or
design used on the Products and specified by Xxxx'x shall infringe upon the
rights of any third party, and Xxxx'x will indemnify and save harmless The Lion
from any claims, demands, suit, cause of action or damages, including, but not
limited to, counsel fees for violations thereof. Xxxx'x agrees that it will
provide The Lion with minimum orders of at least 150,000 cases (of brewed sodas)
annually or all of its production requirements in the United States east of the
Mississippi River. In the event that Xxxx'x seeks to have its products produced
west of the Mississippi, The Lion has the option to meet any competitive offer.
As consideration of adjusting the prices for Virgil's and China Cola, it is
agreed The Lion will be the sole producer for any soda products Xxxx'x requires
or purchases east of the Mississippi. It is mutually agreed by both parties
that: It is not the intent of The Lion to terminate this Agreement for just
cause except for non-payment and still obligate Xxxx'x for recycled glass as
outlined in Paragraph V, Section (b). It is not the intent of Xxxx'x to
terminate this Agreement for just cause and not utilize the recycled glass as
outlined in Paragraph V, Section (b). In the event of termination by either
party without just cause, it is understood that in The Lion's case, Xxxx'x will
not be obligated to the recycled glass and in Reeds case, Xxxx will use and/or
pay for the inventory of recycled glass.
V. TERM
This Agreement shall be for an initial term of two (2) years beginning as of the
date of the execution of this Agreement and ending two (2) years from that date.
This Agreement shall automatically renew itself for a like term (i.e., two (2)
years), unless either party gives to the other at least ninety (90) days written
notice prior to the termination date of the initial term of its intention to
terminate the Agreement, and the Agreement shall continue to renew itself for
like terms unless either party gives ninety (90) days written notice to the
other prior to the termination date of any subsequent term of its intention to
terminate the Agreement at the end of said term.
However, should Xxxx'x exercise the termination notice, Xxxx'x will be
responsible for recycled glass purchased by The Lion for the production of the
Product as stated in letter dated April 14, 1999, which is attached hereto and
incorporated into this Agreement. If Agreement is terminated by Xxxx'x, Xxxx'x
shall use up the recycled glass inventory (volume as outlined below) in their
normal course of business, and not move production until recycled glass is
depleted or, at Xxxx'x option, pay for the remaining inventory. Xxxx'x agrees
that it will be responsible for the cost of at least eight (8) months of
recycled glass (Xxxx'x) inventory. The cost of recycled glass bottles as of
January 1, 2001 is $1.05/case, as is. The volume of glass will be determined by
the average case sales per month for the past calendar year, but in no event
less than 200,000 cases or whatever the actual inventory is at such time, which
ever is lesser.
VI. TERMINATION
(a) Termination by Xxxx'x
In the event the Lion shall fail to perform any of its obligations under this
Agreement and such failure is not corrected within thirty (30) days after date
of written notice to The Lion specifying the nature of such failure, this
Agreement shall terminate.
(b) Termination by The Lion
In the event Xxxx'x shall fail to perform any of its obligations under this
Agreement, The Lion may notify Xxxx'x in writing of such determination,
whereupon Xxxx'x shall have thirty (30) days within which to remedy the failure.
If Xxxx'x refuses to or fails to remedy the failure, The Lion may give further
notice to Xxxx'x terminating this Agreement effective as of the date of receipt
of such further notice. This provision shall not relate to the obligations of
Xxxx'x as regard to the provisions for payment.
(c) Events Following Upon Termination
Upon termination: The Lion will immediately cease all production. All
obligations of either party shall be adjusted up to and including the date of
termination; provided, however, that upon termination, Xxxx'x shall purchase at
the applicable Purchase Price, all Products and all packaging which comply with
the specifications and which are in storage or in process at the Plant or any
bonded warehouse. The Lion will return all unused packaging materials that
Xxxx'x had purchased for production use. Xxxx'x shall purchase at cost any
unused packaging materials The Lion had purchased specifically for production of
Xxxx'x Products. The Lion shall return all equipment owned by Xxxx'x and all
confidential materials that are the property of Xxxx'x.
(d) Miscellaneous
It is agreed by and between the parties that The Lion shall act as an
independent contractor in the performance of its duties and obligations set
forth herein and shall not, under any circumstances, be considered an agent for
Xxxx'x. The relationship between
the parties is solely that set forth in this Agreement and no representations or
warranties shall be made by either party to any third person or party to the
contrary. The Lion shall use its best efforts to cause production of the
Products to be completed in a timely fashion as soon after receipt of Xxxx'x
order as is reasonably practical, delays, incident to riots, sabotage, fire,
floods, differences with workmen, insurrections, acts of God, wars, governmental
acts, difficulties with contractors or suppliers, or other force majeure
excepted. During such periods, Xxxx'x has the right to have its Products
brewed/produced at another facility.
No waiver by either party of a breach of the obligations, agreements or
covenants herein set forth shall be a waiver of any subsequent breach or any
other obligation, agreement or covenant, nor shall any forbearance by any party
to seek a remedy for any breach by the other be a waiver by such party of its
rights and remedies with respect to that or any other breach.
Any dispute, difference, or controversy arising in connection with this
Agreement shall be determined by arbitration in Xxxxxx-Xxxxx, Pennsylvania, in
accordance with the rules for commercial arbitration of the American Arbitration
Association. The determination of the arbitrators shall be final, conclusive,
and binding upon the parties hereto, and judgement thereon may be entered in any
court having jurisdiction thereof. It is agreed by the parties that this
Agreement shall be maintained pending completion of arbitration, unless
otherwise agreed to in writing, for any reason other than termination due to
non-payment.
This Agreement may not be amended except by an instrument in writing signed by
the parties.
(6) This Agreement constitutes a single integrated, written contract expressing
the entire agreement of the parties hereto relative to the subject matter
hereof. No other covenants, agreements, representations, or warranties of any
kind whatsoever have been made by any party hereto, except as specifically set
forth in this Agreement. All prior discussions and negotiations have been and
are merged and integrated into, and are superseded by, this Agreement except as
noted above.
(7) In the event that any provision of this Agreement should be held to be void,
voidable, or unenforceable, the remaining portions hereof shall remain in full
force and effect.
ATTEST: Original Beverage Corporation
____________________ By: /s/ Xxxxxxxxxxx Xxxx
Secretary
ATTEST: THE LION BREWERY, INC.
____________________ By: /s/ Xxxxxxx X. Xxxxxx
Secretary Xxxxxxx X. Xxxxxx, President
