MANUFACTURING AGREEMENT
Exhibit 10.18
THIS AGREEMENT is made this 16th day of
December, 2008 between O-AT-KA MILK PRODUCTS COOPERATIVE, INC.
("Vendor") and ATTITUDE DRINK COMPANY
("Vendee").
RECITALS
WHEREAS,
Vendor is a New York cooperative corporation engaged in the manufacture and
production of dairy-based products at its facility in Batavia. New York (the
"Facility"); and
WHEREAS,
Vendee desires to purchase from Vendor. and Vendor desires to sell to Vendee.
the products listed from time to time on Exhibit A attached hereto (the
“Products").
NOW,
THEREFORE. in consideration of the promises by Vendor to sell the
Products to Vendee and Vendee to purchase the Products from Vendor and in
consideration of the mutual covenants herein. Vendor and Vendee agree as
follows:
1. Services Provided by
Vendor.
a) Manufacture. Vendor
shall manufacture, package and ship the Products for purchase by Vendee. All
Products shall be purchased F.O.B. the Facility by Vendee.
b) Materials and
Specifications. Unless otherwise agreed by the parties. Vendor shall
procure the ingredients, supplies and packaging materials used in the
manufacturing of the Products (the "Materials"). All Products and Materials
shall conform to Vendee's approved specifications (the "Specifications"),
attached hereto as Exhibit B.
Vendee may change the Specifications pursuant to Section 1(d). Vendor shall
examine all Materials furnished by Vendee or other suppliers and shall exercise
reasonable due diligence in accepting or rejecting items which do not conform in
all material respects to the Specifications. or do not comply with any laws or
regulations of the United States. the State of New York. Genesee County. and the
City and Town of Batavia. New York (collectively. the "Laws").
c) Inventory of
Materials. Vendor shall provide and/or procure a sufficient quantity of
Materials to meet the production requirements imposed on Vendor pursuant to the
terms of this Agreement. If provided by Vendee. Vendee shall ship to Vendor all
other necessary materials in such quantities as may be requested by Vendor from
time to time.
d) Changes
to Specifications. Vendee may modify the Specifications upon thirty (30)
calendar days prior written notice. If Vendor cannot make such modifications
within the thirty (30) calendar day notice period, Vendor shall implement such
modifications as soon thereafter as reasonably possible. Regardless of the
number or frequency, changes to the Specifications shall not relieve Vendor of
any of its obligations or excuse its performance if such changes do not increase
the cost of performance by Vendor. If changes result in an increase or decrease
in the production cost of the Products, the parties will negotiate and reach
mutual agreement on the actual effect of any such change and the actual increase
or decrease in the cost of production. The price paid to Vendor. determined in
accordance with Section 5(a), will be adjusted accordingly. If
changes result in an increase in the production cost of the
Products.
Vendor
will not be obligated to implement such change until the parties agree upon the
price adjustment.
e. Shipping and
Delivery. Vendor shall load Products onto shipping vehicles designated by
the Vendee at the Facility. Vendee shall pay all expenses associated therewith.
Vendor shall deliver all orders on the day specified in the applicable purchase
order. Partial orders may' he delivered from time to time so long as an
applicable order is completed and delivered within the time specified. Delivery
shall occur when Vendor delivers Products to the shipping vehicle at the
Facility. Title to the Products and all risk of loss or damage thereto shall
transfer to Vendee at the time Vendor delivers the Products.
2. Production
Schedule. During the Initial Term_ Vendor shall maintain sufficient production
capacity to manufacture and package both the annual number of cases of Products.
and the monthly number of cases of Products. as listed on Exhibit A. Vendor will supply Products
to Vendee under the labels listed on Exhibit A pursuant to written purchase
orders submitted from time to time by Vendee. Vendee shall submit its purchase
orders to the following address
O-AT-KA
Milk Products Cooperative. Inc.
000
Xxxxxxxx Xxxxxx
X.X. Xxx
000
Xxxxxxx,
XX 00000-0000
Facsimile
No. 000-000-0000
Unless
Vendee and Vendor mutually agree on a different system. Vendee shall provide
Vendor with a yearly estimate of its Products needs. In addition, no later than
the seventh (7th) day of every month the Vendee shall provide Vendor with a
rolling three (3) month forecast with a firm order for the first month. updated
every month thereafter (e.g.. by December seventh (7th) the Vendee will provide
a forecast for January. February and March. with the month of January being a
firm order and the months of February and March being non-binding estimated
requirements: by January seventh (7th) the Vendee will provide a forecast for
February, March and April with the month of February being a firm order and the
months of March and April being non-binding estimated requirements; etc.) (the
"Estimated Production Schedule"). Vendor shall notify Vendee within ten ( 10)
calendar days if Vendor cannot comply with all or part of an Estimated
Production Schedule.
3. Vendee's
Requirements. Provided that Vendor can offer the Products at competitive
prices (including its prices for any Materials it furnishes) and meet the volume
and time requirements of Vendee. Vendee agrees to offer all of its business with
regard to the manufacture and packaging of the Products to Vendor. To the extent
Vendor cannot meet Vendee's request, Vendee can direct its business to another
vendor.
4. Payment for Unused Materials
and Products. If for any reason Vendee discontinues operation or ceases
to purchase from Vendor, it will pay to Vendor the costs of any Materials on
hand and under order and also the value of the Products which are fit for sale.
Such payment shall be due and paid within twenty (20) calendar days after such
discontinuance or termination. The value of such Products and Materials shall be
determined by the price paid by Vendee
for similar quantities of Products and Materials at the time notice of
discontinuance or termination was received or discovered by Vendor. All unused
Products and Materials provided by Vendor and all unused Products shall be
purchased F.O.B. the Facility by Vendee. Vendee shall take all reasonable steps
to remove all Products and Materials on a timely basis.
-2-
5. Price of Products - Payment
to Vendor. Prices for Products shall be calculated as set
forth in Section 5(a) below. The price shall be F.O.B. the Facility, unless
otherwise indicated.
a. Price of Products.
Vendee shall pay Vendor a price for each case of Products based on Vendor's
actual costs of production, which price shall be the sum of Vendor's: (i) cost
of Materials; and (ii) cost of manufacturing, including overhead expenses and
profit. The price for each case of Products shall be determined in the month of
shipment. The initial components of the case price are set forth on Exhibit C. Formulas for the components
and case configurations are also shown on Exhibit C. Such component prices and
Exhibit C may be amended from
time to time as follows:
|
(1)
|
Cost of Materials. The cost of
Materials shall be adjusted
monthly.
|
|
(2)
|
Cost of Manufacturing. The cost
of manufacturing shall be adjusted
annually.
|
b. Payment. Vendor shall
submit its invoices to the following address:
Attitude
Drink Company
00000
X.X. Xxxxxxx 0, Xxxxx 000
Xxxxx
Xxxx Xxxxx, XX 00000
Vendor
will provide a preliminary invoice to Vendee thirty (30) calendar days before
production is scheduled. Vendor must receive payment two weeks before commercial
production is scheduled. Within 10 days from commercial production vendor will
adjust the preliminary pricing to actual providing vendee with either a credit
or debit.
c. Price Adjustments.
The parties shall negotiate pricing at least one hundred twenty (120) calendar
days prior to the end of each year of the Initial Term (defined below) and prior
to the end of each Extension Period (defined below), and shall attempt to agree
on pricing within thirty (30) calendar days. If the parties cannot agree on the
price for the next succeeding period of performance by the end of the current
period, then the price in effect at the end of such period will continue for an
additional ninety (90) calendar days. At the end of such ninety (90) calendar
days, this Agreement will terminate.
d. Pricing Review.
Vendee may examine, during normal business hours and upon reasonable notice,
Vendor's books and records that directly relate to the computation of prices for
the Products.
6. Reports. Vendor shall
maintain adequate records of all Materials supplied by Vendee and no later than
the fifteenth (15th) day of each month Vendor shall furnish Vendee a
report
showing the quantity of all Materials received. used and on hand for the prior
month from Vendee.
-3-
7. Warranties. Except
as discussed herein. Vendor warrants that all Products manufactured, packaged
and shipped for Vendee under this Agreement: (i) shall be manufactured in
accordance with the Specifications: (ii) shall be manufactured in accordance
with Good Manufacturing Practices as set forth in Title 21 of the Code of
Federal Regulations. Section 11() ( shall be manufactured in
accordance with the Laws and shall not, at the time of delivery. be adulterated,
contaminated or misbranded within the meaning of the Federal Food. Drug and
Cosmetic Act (the "Act") and regulations promulgated pursuant thereto: and (iv)
shall not constitute an article prohibited from introduction into interstate
commerce under the Act and regulations. In addition to Vendee's other remedies.
Products which do not comply with this warranty may be rejected by Vendee at any
time upon notice to Vendor specifying the reason therefor.
8. Recall Procedure. In
the event that Vendee reasonably determines that is necessary or advisable to
recall or otherwise remove a shipment of Products from the distribution system
or marketplace for any reason, Vendor shall cooperate fully in such recall or
removal under such procedures as Vendee shall reasonably proscribe or as
mandated by applicable Laws. Vendor shall be responsible for the actual cost of
a recall only if, and only to the extent. such recall is attributable to
Vendor's negligence or willful misconduct in manufacturing the Products.
Notwithstanding anything herein to the contrary. in no event shall Vendor be
responsible for the internal cost incurred by Vendee as a result of a recall.
Furthermore. if the recall is attributable to Vendee's negligence or willful
misconduct, or to the Specifications, Vendee shall assume all costs, including
those incurred by Vendor associated with such recall.
9. Term. This Agreement
shall have an initial term of three (3) years commencing as of the date hereof
(the "Initial Term"). After the Initial Term. this Agreement shall automatically
renew for consecutive one (1) year periods. subject to mutually agreeable
pricing (determined in accordance with Section 5(c)) (the "Extension Periods"),
unless either party provides notice of cancellation at least one hundred twenty
(120) calendar days prior to the end of the Initial Term or subsequent Extension
Period.
10. Ownership
and Confidentiality of Product Information.
a. Ownership. Vendee
represents and warrants that it is the sole and complete owner of. or has the
right to use the trademarks and trade name(s) used in the labels as listed on
Exhibit A (the "Product information"), and that it has full power and authority
to use the Product Information and to contract with Vendor with respect to the
manufacture and packaging of the Products. Any Products or Materials bearing the
trademarks and trade name(s) used in the labels listed on Exhibit A may not be
sold to anyone other than Vendee or its assigns without the written consent of
Vendee. Vendee acknowledges that Vendor has its own proprietary information and
items. including, but not limited to, its manufacturing processes.
-4-
b. Confidentiality. In
order to protect the confidentiality and proprietary nature of the parties'
Confidential Information (as hereinafter defined), the parties desire to set
forth certain terms, provisions and restrictions with respect thereto. As used
in this Agreement, the term
"Confidential Information- shall mean any information disclosed In one party to
the other party_ whether transmitted in oral. written or graphical form or
obtained by observation or otherwise during laboratory. plant or facility
visits, including, without limitation. all scientific. medical. clinical.
engineering, statistical. technical, process, method or commercial data.
information or know-how. including, without limitation, that relating to
research. development. manufacturing, customer lists, trade secrets, Formulas,
intellectual property. drawings. models. prototypes or samples and all
information regarding pricing. business plans, product lines. methods of
business operation and the general business operations and financial
information, together with any analyses. compilations, studies or other
documents or records prepared by a party or any of its employees or
representatives pertaining to such information. With respect to Confidential
-Information disclosed under this Agreement. the receiving party of such
Confidential Information shall:
(1) use the
Confidential Information solely for performance of its obligations hereunder and
reproduce the Confidential Information only to the extent necessary for such
purposes:
(2) disclose
the Confidential Information to its responsible employees or representatives.
but only to the extent necessary to carry out the purpose of the disclosure
pursuant to this Agreement;
(3) hold the
Confidential Information in confidence. restrict disclosure of the Confidential
Information solely to those employees or representatives with a need to know the
Confidential Information and not disclose, transfer or offer to disclose or
transfer any Confidential Information to any other person or entity without the
prior written consent of the disclosing party; and
(4) advise
its employees or representatives receiving Confidential Information of their
obligations with respect to the Confidential Information pursuant to the terms
of this Agreement and exercise a degree of care not less than the care used by
the disclosing party to protect its Confidential Information. but in no event
less than a reasonable degree of care.
The
Confidential Information shall be deemed the property of the disclosing party
and the receiving party will return or destroy. in the discretion of the
disclosing party, all Confidential Information received in tangible form
immediately upon request. Any Confidential Information not so returned or
destroyed will remain subject to this Agreement. The provisions of this Section
10(b) shall commence on the date of execution by both parties as indicated above
and shall expire five (5) years after the date on which the receiving party
returns the Confidential Information as provided herein. Notwithstanding the
foregoing, a party shall have no obligation to preserve any Confidential
Information that: (i) was previously known to the receiving party, as can be
documented. free of any obligation to keep confidential and free of any
restriction on use or disclosure: (ii) is or becomes generally known to the
public other than as a result of disclosure by the receiving party; (iii) is or
becomes available to the receiving party on a nonconfidential basis from a
source other than the disclosing party, provided that such source is not bound
by any contractual, legal or fiduciary obligations prohibiting the disclosure or
transfer of the
Confidential information: or lip is independently, developed by the receiving
party. as evidenced by the receiving party's written records.
-5-
If the
receiving party is compelled by lawful process ( whether by interrogatories.
requests for information or documents. subpoena. civil investigative demands or
other process) to disclose any Confidential Information, such party will provide
the other party with prompt written notice of any such demand so that the
disclosing party may seek a protective order or other appropriate remedy or
waive compliance with the provisions of this Agreement. If, failing the entry of
a protective order or other appropriate remedy or the receipt of a waiver
hereunder. the receiving party is. in the opinion of its outside legal counsel.
legally required to disclose the Confidential Information. such party may
disclose that portion of the Confidential Information which its outside legal
counsel advises that it is legally required to disclose and will use its best
efforts to obtain assurance that confidential treatment will be accorded to that
portion of the Confidential Information which is being disclosed. In no event
will the receiving party oppose action by the disclosing party to obtain a
protective order or other appropriate remedy or reliable assurance that
confidential treatment will be accorded to the Confidential
Information.
11. Indemnification. Each
party hereto agrees to defend. indemnify and hold the other harmless from all
liabilities, losses. damages. claims, suits, costs and expenses (including court
costs and reasonable attorney's fees) including. without limitation, injury to
any person or damage to any property, arising out of the indemnifying party's
breach of or failure to perform any of its representations, warranties.
covenants, agreements or undertakings under this Agreement. Notwithstanding the
foregoing, neither party shall have any liability for lost profits sustained by
the other party or damage to the other party's good will. which shall include,
but not be limited to damage to trademarks and trade names. which loss or damage
results from a party's performance of its obligations under this Agreement or
failure to perform its obligations under this Agreement. Further, Vendee agrees
that any damages which it claims in connection with the recall of Products
manufactured by Vendor under this Agreement shall include only costs and
expenses paid to third parties. Further. Vendee agrees to defend. indemnify, pay
and hold Vendor harmless from all liabilities, losses. damages. claims, suits,
costs and expenses (including court costs and reasonable attorney's fees)
including, without limitation, injury to any person or damage to any property,
arising out or resulting from Vendee's marketing, distribution, and or delivery
of the Products to Vendee's customer: and/or that result from any actions, uses
or breach of intellectual property rights of third parties related to the
labeling, manufacturing, marketing and or sale of the Products, including but
not limited to the licensing of the Product trademarks.
12. Insurance. Vendor
represents and warrants that it currently has and will continue to maintain in
full force and effect for the duration of this Agreement a minimum of
$1,000,000.00 general liability, product liability and broad form vendor's
insurance. Vendor shall supply a new insurance certificate each year to Vendee
upon request. Vendee shall be named as an additional insured upon
request.
-6-
13. Force Majeure.
Failure of either party to perform any of its obligations under this Agreement
resulting from any cause or causes beyond its control (including but not limited
to strikes, labor disputes, fire, acts of God, terrorism or acts or orders of
the government) shall not constitute an actionable default or breach of this
Agreement; provided, however, that if any event makes
Vendor unable to meet Vendee's production schedules. Vendee. after notice to
Vendor. shall have the right to utilize any other vendor for so long
as Vendor's inability continues. If such inability continues for more than one
hundred twenty (120) calendar days. then Vendee may terminate this Agreement
immediately upon giving notice thereof and Vendee and Vendor shall he relieved
of any and all further obligations hereunder to each other, except that Vendee
shall he obligated to continue to make payment to Vendor for Products shipped
and for Products which have been manufactured and produced and are ready for
shipment. The time for performance of any duty or obligation hereunder which
cannot be performed as a result of an event of Force Majeure, shall he extended
for a period equal to the duration of such inability to perform: notwithstanding
the foregoing. it is understood that events of Force Majeure shall not extend
the time for payment of any money which is due and payable or extend the term of
this Agreement.
14. Termination. Either
party may immediately terminate this Agreement if the other party has failed to
perform or meet any material term or condition of this Agreement and has not
cured such failure within thirty (30) calendar days of receiving written notice
of such failure.
15. Remedies Cumulative.
The remedies granted in this Agreement are cumulative and in addition to other
remedies to which the parties may be entitled arising from any violation.
default or breach of this Agreement.
16. Miscellaneous.
a. Compliance with Laws.
Vendee shall comply with all laws applicable to the performance of its
obligations under this Agreement.
b. Effect of Agreement.
This Agreement sets forth the entire understanding of the parties, and
supersedes any and all prior agreements. arrangements and understandings,
written or oral. relating to the subject matter hereof.
(c) Governing Law. This
Agreement shall he governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed entirely
within such State.
(d) Disputes. All
disputes arising in connection with this Agreement shall be brought in. and the
parties expressly consent to the jurisdiction and venue of the federal or state
courts located in the Monroe County. New York.
(e) Amendment and Waiver.
This Agreement may be amended only by a writing executed by each of the parties
hereto. No waiver of compliance with any provision or condition hereof, and no
consent provided for herein. shall be effective unless evidenced by an
instrument in writing duly executed by the party sought to be charged therewith.
No failure on the part of any party to exercise. and no delay in exercising, any
of its rights hereunder shall operate as a waiver thereof nor shall any single
or partial exercise by any party of any right preclude any other or future
exercise thereof or the exercise of any other right.
(f) Assignment. No party
shall assign or attempt to assign any of its rights or obligations under this
Agreement without the prior written consent of the other party
hereto.
-7-
g. Notices. Etc. Each
notice, report, demand, waiver, consent and other communication required or
permitted to be given hereunder shall be in writing and shall be sent either by
registered or certified first-class mail, postage prepaid and return receipt
requested. or by telex or telecopier, addressed as follows:
|
(1)
|
If
to Vendee, to:
|
|
Attitude
Drink Company
|
|
|
00000
X.X. Xxxxxxx 0, Xxxxx 000
|
|
|
Xxxxx
Xxxx Xxxxx, XX 00000
|
|
|
Attn: _____________________
|
|
|
Telephone
No.: 000-000-0000
|
|
|
Facsimile
No.: 000-000-0000
|
|
|
(2)
|
If
to Vendor, to:
|
|
0-AT-KA
Milk Products Cooperative, Inc. 000 Xxxxxxxx Xxxxxx
|
|
|
X.X.
Xxx 000
|
|
|
Xxxxxxx,
XX 00000-0000
|
|
|
Attn:
C. A. XxXxxxxxxx, Chief Operating Officer
|
|
|
Telephone
No.: 000-000-0000
|
|
|
Facsimile
No.: 000-000-0000
|
Either
party may specify in writing, in the manner above provided, another address to
which subsequent notice to such party shall be given. Any notice or
communication given hereunder shall be deemed to have been given as of the date
immediately following the date so mailed; provided, however, that if such
following date shall be Saturday, Sunday, or a legal holiday, then the date of
the notice shall be the next regular business day.
h. Binding Effect.
Subject to the provisions of Section 16(f), this Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and assigns. This Agreement creates no rights of any nature in any person not a
party hereto.
i. Independent
Contractors. Vendor and Vendee are independent contractors with respect
to the rights and obligations created by this Agreement, and nothing herein
shall be construed to create any agency, joint venture, partnership or other
similar relationship. In addition, nothing herein shall be construed to
authorize either party to represent or commit the other party in negotiations or
transactions with third parties.
j. Headings;
Counterparts. The headings used in this Agreement are for convenience of
reference only and do not form a part hereof and shall not in any way modify,
interpret or construe the intent of the parties. This Agreement may be executed
in more than one
counterpart.
each of which shall he deemed an original. and all of which together shall
constitute the same instrument.
-8-
k. Survival. The
provisions Of this Agreement that h\ their sense and context are intended to
survive termination of this Agreement shall so survive this
Agreement.
IN WITNESS WHEREOF. the parties hereto
have executed this Agreement.
|
ATTITUDE
DRINK COMPANY
|
O-AT-KA
MILK PRODUCTS COOPERATIVE, INC.
|
|
|
By: /s/ Xxx X. Xxxxxx
|
By: /s/ C.A.
XxXxxxxxxx
|
|
|
Xxx
X. Xxxxxx, CEO
|
C.A.
XxXxxxxxxx
Chief
Operating Officer
|
|
-9-
Exhibit
A
Products and Production
Schedule
1. Products:
Slammers 35g
Protein Drink -- chocolate and other flavors TBD
Just
8g Protein Drink – chocolate and other flavors TBD
2. Packaging
Configuration:
Slammers 24
– 14.5 ft oz. Alumi-Tek bottles in trays
Skimmers 24
(6-4 pack) 14.5 fl. oz. Alumi-Tek bottles in trays
Just 24
– 8 fl. oz. Alumi-Tek bottles in trays
Just 24
(6-4 pack) 8 fl. oz. Alumi-Tek bottles in trays
3 Production Schedules:
a. Production
Forecast
|
1.
|
Annual
Slammers
|
Annual
Just
|
2.
|
Monthly
Slammers
|
Monthly
Just
-10-
Exhibit
B
Specifications
TO BE
COMPLETED UPON SIGN OFF OF FINAL FORMULA'S.
-11-
Exhibit
C
Price of
Products
TO BE
COMPIFTED UPON SIGN OFF OF FINAL FORMULA'S.
