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Exhibit 10.56
Portions hereof have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment in accordance with rule 24b-2.
SOUTHEAST GLASS BOTTLE SUPPLY AGREEMENT
This SOUTHEAST GLASS BOTTLE SUPPLY AGREEMENT dated May 26, 1999 (the
"Agreement"), is between ANHEUSER-XXXXX, INCORPORATED, a Missouri corporation
("AB") and ANCHOR GLASS CONTAINER CORPORATION, a Delaware corporation
("Anchor").
Background
AB and Anchor have agreed to enter into a supply agreement under which
Anchor will provide to AB the requirements of AB for glass bottle containers for
beverages at certain AB breweries, subject to the following terms and
conditions.
THEREFORE, in consideration of the foregoing premises and the mutual
promises set forth below, the parties to this Agreement have agreed as follows:
1. DEFINITIONS.
Capitalized terms shall have the following meanings:
1.1 "Affiliate" shall mean, with respect to either party, any
individual, corporation, company, partnership, joint venture or other business
entity which owns a majority of the equity of or otherwise controls, is
controlled by or is under common control with, such party.
1.2 "Base Price" shall mean the glass only portion of the
Selling Prices, as set forth on Attachment 3.1.
1.3 "Bottle" shall mean a returnable or non-returnable glass
receptacle of specified size, shape and color used in the packaging of AB's
beverage products, and which otherwise conforms to the applicable
Specifications.
1.4 "Beverage Bottle" shall mean a returnable or
non-returnable glass receptacle used as a container for any beverage, including
but not limited to malt beverages, carbonated or uncarbonated soft drinks,
flavored and unflavored waters and any other fluids intended for human
consumption.
1.5 "Brewery" shall mean the AB breweries located in
Jacksonville, Florida and Cartersville, Georgia.
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1.6 "Contract Year" shall mean any twelve (12) month period
during the Term starting on a January 1 and ending the following December 31.
1.7 "Lightweighting" shall mean any reduction in the weight of
a given size and shape Bottle, which does not materially alter the size or shape
of such Bottle.
1.8 "Manufacturing Costs" shall mean the aggregate of all
actual costs incurred by Anchor or its Affiliates in producing the Bottles and
delivering them to AB, including transportation, warehouse and insurance costs,
and net of all discounts, rebates or allowances received by Anchor or its
Affiliates with respect to any services or materials acquired by Anchor in
connection with its performance of this Agreement.
1.9 "Maximum Production Quantity" shall mean the total actual
capacity of Bottles available from the Production Facilities, to the extent it
may exceed the Rated Production Capacity.
1.10 "Packaging Components" shall mean any of the corrugated
boxes, trays, carriers and cartons used to package Bottles, and which conform to
the Specifications.
1.11 "Production Facilities" shall mean the Bottle production
facilities located in Jacksonville, Florida and Warner Robins, Georgia operated
by Anchor.
1.12 "Rated Production Capacity" shall mean an annual quantity
of * * *
or their equivalent, to the extent different size or shape Bottles are produced,
or as such quantity may be subsequently adjusted in accordance with Section
2.1(d) below.
1.13 "Requirements" shall mean the annual Bottle requirements
of AB at both Breweries during the applicable Contract Year.
1.14 "Selling Price" shall mean the net delivered (F.O.B.
Brewery), selling price of each color, size and shape Bottle (including the Base
Price plus carton, carrier, carton setup, carrier insertion and pallet allowance
fees) as determined in accordance with the provisions of Article 3 of this
Agreement.
1.15 "Specifications" shall mean the Bottle and Packaging
Component specifications, and also shall include packaging and unit load
specifications for Bottle
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deliveries to each Brewery, as communicated from time to time by AB to Anchor
(provided AB gives Anchor at least sixty (60) days' advance notice) * * *
the current Specifications are attached hereto as Attachment 1.15.
1.16 "Term" shall mean the term of the Agreement, including
any extensions thereof, as described in Section 8.1 below.
2. PURCHASE AND SALE OF PRODUCT.
2.1 Purchase Quantities.
(a) Each Contract Year, Anchor shall make available
for purchase by AB, in the Specifications requested by AB, the Maximum
Production Quantity of Bottles, subject to AB's release of any portion of such
production in accordance with this Article 2. Each Contract Year AB shall
purchase from Anchor, in the Specifications requested by AB, the Requirements,
subject to the limit stated in subsection (c) below.
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(b) To the extent that Anchor may determine, from
time to time, that the Maximum Production Quantity exceeds the sum of the
Requirements and any additional Bottles being purchased by AB under this
Agreement, Anchor shall so notify AB. AB shall have fifteen (15) days after it
receives such notice within which to notify Anchor that AB will purchase such
excess production, and the location to which such Bottles are to be delivered;
provided, that AB shall never be obligated to notify Anchor before October 1 of
the year prior to the Contract Year in which AB would purchase such production.
Any such purchases shall be under the same terms and conditions set forth in
this Agreement, except that if AB requests such deliveries to locations other
than the Breweries, any added charge for transportation, delivery, insurance and
warehousing shall be as negotiated, * * *
Anchor shall be free to sell to any third party any
such excess which AB has not committed to purchase under the foregoing
provisions.
(c) In no event shall Anchor be obligated to provide
under this Agreement any Bottles in excess of the Maximum Production Quantity.
Without AB's express written consent, Anchor may neither reduce the Maximum
Production Quantity to less than the Rated Production Capacity nor reduce the
Rated Production Capacity.
(d) To the extent that AB anticipates that its future
Requirements may exceed the Maximum Production Quantity available, AB shall
discuss such needs with Anchor, and subject to Anchor obtaining, under terms
acceptable to it, any capital funding needed to fund any improvements needed to
meet such Requirements, Anchor shall implement the construction of any such
capacity increase so that such additional capacity is available to AB within
nine months after Anchor has received the financial commitment and any
environmental permits necessary for such capital improvements. Upon completion
of any such improvements, the Maximum Production Quantity shall be increased by
the amount of any such capacity increase (pro-rated for the year in which such
capacity increase is completed).
2.2 Annual Estimates. On or before September 1 of each year,
beginning September 1, 2000, Anchor shall advise AB of the estimated Maximum
Production Quantity available from the Production Facilities in the following
year. On or by October 1 of the same year, AB shall advise Anchor of AB's
estimated Requirements for the following Contract Year for each Brewery, stated
separately for each Bottle size, shape and color to be produced for AB by Anchor
and any additional Bottles AB wishes to purchase. Any excess between such
request of AB and the estimated Maximum Production Quantity provided by Anchor
at this time, and subsequently in accordance
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with Sections 2.2 and 2.3, shall be deemed to be released in accordance with
Section 2.1(b) above. On or before February 1 of each Contract Year, AB shall
refine such estimates, to the extent necessary, and advise Anchor accordingly.
2.3 Revised Estimates and Shipment Instructions. Each Contract
Year, AB shall provide Anchor with the following revised estimates monthly and
weekly:
(a) On or before the last business day of each month,
AB's estimated Bottle requirements at each Brewery for each of the succeeding
three months, by Bottle size, shape and color.
(b) On or before the last business day of each week,
AB's requirements for Bottles at each Brewery in the succeeding week, by Bottle
size, shape, color and carton style.
(c) On or before the last business day of each week,
AB shall provide a running eight (8) week forecast of such requirements by
Bottle size, shape, color and carton style at each Brewery.
2.4 Inventory. Anchor shall maintain at no additional cost to
AB a finished goods inventory of Bottles at either Production Facility or a
warehouse maintained by Anchor in the vicinity of the applicable Brewery * * *
However, to the extent that Anchor may elect to
maintain an inventory in excess of * * * for sixty (60) days with respect to any
Bottle or carton style, AB shall have no responsibility for any costs incurred
by Anchor because of any graphics or other changes to the Bottles or their
Packaging Components. Without limiting the foregoing, Anchor agrees that it will
always maintain in such inventory * * * for each Brewery, allocated by carton
style and based on * * * as provided to Anchor in accordance with Section 2.3(c)
above.
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3. PRICE.
3.1. Selling Price.
(a) The Selling Price for each size, color and shape
Bottle ordered by AB from Anchor hereunder for delivery during the initial five
(5) year Term shall be as set forth in Attachment 3.1, subject to any applicable
changes provided in one or more of the other provisions of this Article 3.
(b) If AB exercises its option to extend the initial
five (5) year Term of the Agreement in accordance with the option provided in
Section 8.1(b) below, Anchor may increase the Base Prices by a maximum of * * *
for the duration of such * * * extended Term; provided, that if the Base Prices
have been increased pursuant to Section 3.7 below because of costs incurred by
Anchor, the amount of any previous increase in the Base Price because of such
costs shall be deducted from the increase in the Base Prices Anchor may
otherwise be entitled to under this Section.
(c) In addition to any other allowances provided
under this Agreement, AB shall receive a * * * discount each Contract Year of
the difference that results when a pallet allowance of * * * is subtracted from
the Base Prices set forth on Attachment 3.1. Anchor shall pay the amount of the
discount accrued from Bottle purchases for that quarter within fifteen (15) days
after the end of such quarter, with a final payment at the end of each Contract
Year in accordance with Subsection 3.2(b) below. Anchor agrees not to withhold
payment of any disputed portion of such amount, and AB agrees to promptly return
any overpayment on settlement of any such dispute.
3.2 * * *
3.3 Specification Changes.
(a) If AB makes any changes to the Specifications of
an existing Bottle other than those directly relating to Lightweighting which
result in an increase or decrease to the Manufacturing Costs for those
particular Bottles, then the Base Price
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for such Bottles shall be changed to a Base Price which provides Anchor with the
same margins provided on the nearest equivalent shape, size and color set forth
in Attachment 3.1. This changed Base Price shall not exceed the price paid by
AB, as adjusted for any difference resulting from different delivery costs or
charges, for Bottles provided by another supplier with the same Specifications.
Anchor shall provide documentation of such changes in cost as AB may reasonably
request.
(b) If at any time during the Term, AB should add a
new Bottle shape, size or color to its existing family of Bottles (a "New
Bottle"), the Base Price for such New Bottle shall be the Base Price calculated
to provide Anchor with the same margins as provided on the nearest equivalent
size, shape and color Bottle. The Base Price for such New Bottle shall not
exceed the price paid by AB, as adjusted for any difference resulting from
different delivery costs or charges for Bottles provided by another supplier
with the same Specifications. Anchor shall provide documentation of such charges
or costs as AB may reasonably request.
(c) Notwithstanding the foregoing, Anchor shall not
be obligated to produce green colored Bottles at the existing Bottle price
schedule (as set forth in Attachment 3.1) unless AB's estimated Requirements for
green Bottles exceed * * * of Bottles. Once AB's estimated Requirements for
green Bottles (the Specifications currently provide for flint or amber color)
exceeds * * * of Bottles, it shall have the right to include such color in the
Specifications at no additional cost to AB.
3.4 * * *
3.5 * * *
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3.6 Packaging Materials.
(a) Anchor shall purchase its inventory of Packaging
Components using the following procedure. Anchor shall purchase such inventory
of Packaging Components from a supplier designated by AB at a price designated
by AB (such price may be different from the price agreed to between AB and such
supplier), and then Anchor will charge AB for Packaging Components, as delivered
to AB with a Bottle shipment, at a price not greater than the price originally
paid by Anchor to purchase such Packaging Components. AB will pay Anchor for the
handling, assembly and insertion of the Packaging Components in accordance with
the charges set forth in Attachment 3.1.
(b) Some of the Bottles being delivered from the
Production Facilities prior to the start of this Agreement have been delivered
in the form of bulk shipments, as further described below. Anchor will continue
to deliver those Bottles in bulk, and AB shall have the option, on six (6)
months' written notice to Anchor, to require it to ship and deliver any or all
of the remaining Requirements in bulk. If AB exercises this option, Anchor shall
not insert or use any of the Packaging Components in the affected deliveries.
For such bulk deliveries, Anchor shall subtract the cost of the Packaging
Components and the service charges of Anchor for their handling, assembly and
insertion from the Selling Prices for Bottles, but it may add to the Selling
Prices for bulk delivery the costs of bulk palletizing materials used and paid
for by Anchor, including pallets, top frames and tier sheets; provided, that
such additional costs shall not exceed those approved by AB. However, if AB
exercises this option it will (i) repurchase any remaining inventory of
Packaging Components that it had previously supplied to Anchor, and which Anchor
is not able to use otherwise for AB and (ii) reimburse Anchor for its net
capital costs incurred to change to bulk delivery, taking into consideration any
salvage value obtained for equipment no longer needed by Anchor. Examples for
determining existing bulk pricing and any future conversions to bulk pricing are
set forth in Attachment 3.6.
3.7 Base Price Adjustment for Cost Changes.* * *
4. WARRANTY.
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4.1 Express Warranties. Notwithstanding any independent
investigation by AB, Anchor represents and warrants to AB that: Each Bottle (i)
will be merchantable and fit for the purpose intended, which is a commercially
acceptable container for beverages; (ii) will be manufactured in accordance with
the Specifications and all function and taste requirements specified therein;
(iii) will conform to samples previously delivered to and approved by AB; (iv)
and the substances and materials used to produce such Bottle will be free from
defects in materials and workmanship and will be permissible under applicable
Federal and State laws and regulations; and (v) will be delivered free from any
security interest, lien or other encumbrance.
4.2 FDA Compliance. Anchor represents and warrants that each
Bottle and each related article contained in and comprising each shipment or
other delivery to AB and all information and ingredient lists furnished for use
by AB in labeling such articles for resale, is (i) not adulterated or misbranded
(or, in the case of labeling information and ingredient lists not a cause of
misbranding when applied to such articles) within the meaning of the Federal
Food, Drug and Cosmetic Act, as amended, and not an article which may not be
introduced into interstate commerce, (ii) complies with the requirements of the
Poultry Products Inspection Act, the Meat Inspection Act and the Federal Food,
Drug and Cosmetic Act, as amended, to the extent that said Acts are then
effective and applicable, (iii) registered, if required, and not adulterated or
misbranded within the meaning of the terms of the Federal Insecticide, Fungicide
and Rodenticide Act, any state pure food act, or any other applicable Federal,
State or local law, (iv) not banned or misbranded within the meaning of the
terms of the Federal Hazardous Substances Act, (v) not an article which cannot
be legally transported or sold under the provisions of any Federal, State or
local law, and (vi) if an article which is or which contains a color additive,
such color additive is or will be from a batch certified by the Seller, its
subsidiaries, if any, or its suppliers, in accordance with the Federal Food,
Drug and Cosmetic Act, as amended, and all regulations issued under said Act.
4.3 Fair Labor Standards. To the extent work is performed in
the United States in connection with the performance of Anchor's obligations
under this Agreement, Anchor represents that all such work will be performed in
compliance with the requirements of the Fair Labor Standards Act of 1938, as
amended. Anchor further represents that all work performed in meeting its
obligations under this Agreement complies with the provisions of Executive Order
No. 11246.
4.4 Flavor Standards. AB and Anchor acknowledge that the
delivery of Bottles under this Agreement are subject to their respective rights
and obligations as stated in the flavor standards addendum marked as Attachment
4.4 to this Agreement.
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4.5 Indemnification. AB shall have all rights and remedies of
a buyer under the Uniform Commercial Code of Missouri (the "UCC"). Any purchases
of Bottles under the "cover" provision of Section 2-712 of the UCC shall be
applied in satisfaction of AB's Requirements under this Agreement. Anchor shall
in addition indemnify and hold harmless AB, its parent, subsidiary and
Affiliates and their respective directors, officers, employees, agents and other
representatives, from and against any and all costs, losses, liabilities,
damages, claims, judgments or expenses, including without limitation court
costs, attorneys fees and other legal expenses resulting from any alleged or
actual breach by Anchor of any representation or warranty set forth herein or
the failure by Anchor to perform in a timely manner any of its obligations
hereunder.
4.6 Pricing. The pricing provided to AB under this Agreement,
including but not limited to each Selling Price, is lawful.
5. DELIVERY.
5.1 Delivery Terms. Anchor shall package each Bottle shipment
in accordance with the Specifications, load the packaged Bottles for shipment,
and deliver the Bottles F.O.B. the applicable Brewery. AB shall be responsible
for unloading the Bottles at the Brewery, at which time title and risk of loss
shall pass to AB. Anchor shall bear all freight costs for delivery of the
Bottles, and Anchor shall be required to use any reasonable method or mode of
delivery designated by AB for all Bottle delivery points; provided, however,
that any changes in such delivery method or mode which increase Anchor's costs
shall require Anchor's consent, which Anchor will provide if AB agrees to pay or
reimburse Anchor for such increased costs.
5.2 Delivery Option.
(a) Notwithstanding anything to the contrary in
Section 5.1 above, AB shall have an option, exercisable individually by AB with
respect to each Brewery and each Production Facility, to control the selection
of freight carrier and insurance provider used for shipments of Bottles from
such Facility or delivered to such Brewery, subject to the following conditions:
First, AB may only exercise this option in a way that does not increase Anchor's
operating costs or adversely affect Anchor's production and delivery
efficiencies. * * *
(c) Anchor shall cooperate and assist AB in
implementing such shipping arrangements if AB exercises such option, subject to
the foregoing conditions.
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With respect to each shipping or delivery location for which AB exercises such
option, AB shall be responsible for and pay all related freight and insurance
charges, and Anchor shall deduct from the Base Price for all affected Bottles
the freight charges (per 1000 gross of Bottles) incurred by Anchor applicable to
such Bottle deliveries or shipments, based on the average charges of such
deliveries or shipments prior to the exercise of such option by AB.
6. PAYMENTS.
6.1 Payment Due Date. AB shall pay Anchor for all Bottles
purchased hereunder, based on the date of delivery to the applicable Brewery.
Terms of payment shall be payment in full within ten (10) days after AB receives
the Bottles.
6.2 Purchase Orders. AB and Anchor may exchange standard form
documents (such as purchase orders) for administrative and informational
purposes, and the terms and conditions stated thereon shall neither modify,
amend or supplement the terms and conditions stated in this Agreement.
6.3 Electronic Transactions. AB and Anchor acknowledge that
this Agreement is subject to the agreement pertaining to the electronic exchange
of information between the parties in the form of a "Trading Partner Agreement"
marked as Attachment 6.3 to this Agreement and signed by each of them; provided,
that AB shall have no right to terminate, suspend, delay or modify its
obligations under Section 3.2 above, based on the exercise by AB of any of its
rights under the Trading Partner Agreement. AB's right of set-off for any
amounts due under Section 3.2 above shall be limited to those arising under this
Agreement, and AB shall have no right of set-off for amounts due under Section
3.2 above arising out of any other transactions between the parties.
7. FORCE MAJEURE.
7.1 The Events.
(a) Each party shall be relieved of its obligation to
perform any part of this Agreement to the extent its performance is prevented or
rendered impracticable by events beyond its reasonable control, which events may
include, without limitation, fire, storm, flood, earthquake, and other Acts of
God, and explosion, accident, acts of the public enemy, riots and other civil
disturbances, sabotage, court injunctions, transportation embargoes, shortages
of materials, strikes, lockouts, work stoppages and other labor disputes, acts,
regulations or other requirements of domestic or foreign federal, state, county,
municipal, or local governments or branches, subdivisions or agencies thereof,
including, without limitation, any such acts, regulations or other governmental
requirements making it unlawful (such as by an outright ban) or commercially
impractical (such as by the imposition or increase of deposit requirements
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or other action directly or indirectly affecting beer or its packaging) to
manufacture or package beer in bottles, or to sell or distribute beer in
packaging of any type (the "Force Majeure"), subject to the various limitations
provided in this Article 7. Force Majeure shall further include, without
limitation, any imposition or increase of any excise tax or similar charge by
any governmental authority on the manufacture, packaging, possession, storage,
sale or distribution of beer, and AB's obligations to purchase shall be deemed
to have been rendered impracticable thereby, without any direct proof of
causation, to the extent that there is any decrease in the demand of beer
manufactured, sold or distributed by AB after such Force Majeure event occurs.
(b) Notwithstanding the foregoing, Anchor
acknowledges that Force Majeure will not include a strike, lockout, work
stoppage or other labor dispute affecting any of the Production Facilities, and
in the event of such a labor dispute at any of the Production Facilities, Anchor
agrees to use its commercially reasonable best efforts to operate any affected
Production Facility with management personnel to the full extent necessary to
satisfy the Requirements. Anchor further acknowledges that Force Majeure shall
not include the failure for any reason of any software, hardware, system or
other item of equipment to: (i) properly process, manage and manipulate data
involving dates, including, without limitation, single century and multi-century
formulae and leap year calculations or properly calculate, compare and sequence
from, into and between the twentieth and twenty-first centuries; (ii) not cause
an abnormally ending scenario within any application or the generation of
incorrect values or data or invalid results involving such dates; or (iii)
include the correct date in all date-related and data-related functions and data
fields.
7.2 Notice. Each party will immediately notify the other party
of the occurrence of any Force Majeure which may affect its performance of this
Agreement. If any Force Majeure event occurs affecting a Production Facility or
deliveries, Anchor will use its commercially reasonable best efforts to provide
to AB Bottles from alternate sources not affected by the Force Majeure. The
prices to be charged AB for such Bottles will be set so as to yield the same
margins as Anchor would have obtained on the sale of such Bottles to East Coast
breweries. Anchor will use commercially reasonable efforts to ship such Bottles
from an Anchor facility that will minimize freight charges. At all times AB will
have priority of production on the Production Facilities and their equipment and
furnaces which are dedicated exclusively to production of Bottles at the time of
occurrence of such Force Majeure. If a Force Majeure event occurs affecting a
Brewery, AB will use its commercially reasonable best efforts to allocate to
Anchor Bottle requirements at other AB brewery locations, subject to AB's other
contractual commitments.
7.3 Rights. If Anchor's performance hereunder is suspended due
to Force Majeure, then AB shall have, in addition to such other rights which it
may have as a buyer under the Uniform Commercial Code or otherwise, the right to
procure alternative sources of Bottle supply on commercially reasonable terms
with respect to all Bottles not delivered by Anchor because of the Force
Majeure, which may require an
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alternative Bottle purchase commitment by AB for a period of time which extends
beyond the Force Majeure affecting Anchor. Any such alternative purchases of
Bottles by AB shall be applied to its obligation to purchase the Requirements.
7.4 * * *
7.5 Termination Because of Force Majeure. If all or a
substantial part of either party's performance hereunder is prevented or
suspended by reason of Force Majeure for more than ninety (90) consecutive days
at any one time, or more than one hundred eighty (180) days in the aggregate
during the Term, then the other party shall have the right to immediately
terminate this Agreement (upon notice to the party affected by the Force
Majeure) with respect to those elements of performance and the reciprocal
obligations of the other party. Such termination shall be without liability with
respect to the obligations so terminated, but shall be subject to the continuing
obligations of AB under Section 7.4 above, which are not subject to termination
under this Section 7.5.
8. TERM AND TERMINATION.
8.1 Term.
(a) The Term of this Agreement shall begin on January
1, 2001. Unless terminated earlier in accordance with its terms, the Term shall
remain in effect until December 31, 2005, and may be extended for * * * in
accordance with subsection 8.1(b) below.
(b) AB shall have * * *
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under the same terms and conditions as are set forth in this Agreement. * * *
(c) Anchor shall notify AB no later than January 1 of
the year in which AB may exercise * * * option described in (b) above of any
substantial capital improvements necessary within such option period at either
of the Production Facilities. If such improvements are required, AB and Anchor
shall negotiate in good faith with respect to the assurances necessary for
Anchor to fund such capital investment, including, without limitation, a
commitment by AB to purchase a quantity of Bottles over the extended Term
sufficient for Anchor to recover any capital investment necessary to fund such
improvement, including a longer term or such other arrangement as may be
satisfactory to both AB and Anchor. If AB and Anchor fail to agree on such
assurances, Anchor shall have the option, if exercised by so notifying AB before
March 1 of the year in which AB must exercise such option (and thirty (30) days
before AB must exercise its option to extend the Term) to reduce the Rated
Production Capacity during this two year option period to the extent reasonable
and necessary in the absence of such capital investment.
8.2 Rights of Termination. In addition to any right of
termination granted elsewhere in this Agreement, either party shall have the
right at any time to terminate this Agreement, without prejudice to any other
legal rights to which such terminating party may be entitled, upon the
occurrence of any one or more of the following:
(a) Material breach by the other party in the
performance of any of the provisions of this Agreement, which breach is not
cured within thirty (30) days following written notice of such breach to the
defaulting party;
(b) The making by the other party of an assignment
for the benefit of creditors;
(c) The appointment of a trustee or receiver or
similar officer of any court for the other party or for a substantial part of
the property of the other party, whether with or without the consent of the
other party; or
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(d) The institution of bankruptcy, reorganization,
insolvency or liquidation proceedings by or against the other party without such
proceedings being dismissed within thirty (30) days from the date of the
institution thereof; or
(e) A material breach by either party of the
representations or warranties set forth herein.
8.3 Notice of Termination. Either party which exercises a
right of termination under the foregoing provisions of Section 8.2 may exercise
such right by delivery of a termination notice which shall provide that such
termination is effective not less than ninety (90) days nor more than twelve
(12) months after the date such notice is issued, at the choice of the party
exercising such right of termination.
8.4 Quality Requirements.
(a) Anchor has agreed to use its commercially
reasonable best efforts to achieve at the Production Facilities "Select Status,"
as described in the Anheuser-Xxxxx Supplier Quality Assurance program; a copy of
the applicable Standards and the applicable Facility Management Inspection Form
are attached as Attachment 8.4. If either Production Facility fails to maintain
a Facilities Management Inspection score of seven (7) or higher Anchor agrees to
cause such Facility to take prompt corrective action to raise such score to at
least a seven (7). Anchor understands that a score of less than four (4) would
constitute a material breach of this Agreement. Anchor's obligations and AB's
rights as set forth in this Section 8.4 are in addition to and are not a part of
AB's on-going qualification/disqualification procedures applicable to all Bottle
vendors and by which Anchor is bound.
(b) Anchor acknowledges the unusually stringent
appearance standards maintained by AB with respect to not only its own
facilities, but those of its suppliers. Anchor accordingly agrees to ensure that
the Production Facilities, the delivery vehicles used to deliver Bottles to the
Breweries, and the warehouse used to store Bottles prior to such delivery are
each maintained using the highest practicable standards for sanitation and
housekeeping. Anchor further agrees to ensure that such warehouse and delivery
vehicles and the Production Facilities are each maintained so that they present
a clean, high quality appearance. These obligations are in addition to the
Flavor Standards contained in Attachment 4.4 of this Agreement.
16
9. AUDITS.
9.1 The Auditors. Each party shall have the right to audit
information (i) used to determine the Selling Price and any changes to it and
its constituent components and (ii) pertaining to improper payments referred to
in Section 15.5 below. All audits shall be performed by a nationally recognized
public accounting firm mutually acceptable to the parties, or in the absence of
other agreement between the parties, PriceWaterhouse Coopers (the "Auditor").
9.2 Costs. The full cost of any audit shall be borne by the
requesting party, unless a "material discrepancy" caused by the actions or
inactions of the other party and adverse to the requesting party is uncovered by
the audit; in which case the audited party shall then bear 100% of the cost of
the audit. A "material discrepancy" shall be any discrepancy or group of
discrepancies which, in the aggregate for any one audit, would result in an
adjustment payment by one party to the other of an amount equal to or greater
than $25,000.
9.3 Maintenance of Records. Each party shall maintain records
in sufficient detail to permit an acceptable audit, and shall maintain each such
record (i) for a full year after the year in which such record is created and
(ii) for so long as any audit pertaining to such record is pending. The Auditor
shall be given access to any and all records which it deems necessary to conduct
the audit.
9.4 Notice. Prior to requesting an audit, the requesting party
shall notify the other of its intent to exercise its audit rights. The other
shall then be allowed a reasonable amount of time (not to exceed 30 days) to
explain/resolve the question to the satisfaction of the requesting party, and
thus eliminate the need for an audit.
9.5 Audit Procedures. If after completion of the foregoing
resolution procedure the requesting party determines that an audit should be
conducted, the parties shall in good faith make reasonable efforts to mutually
agree upon a joint letter of instruction for the Auditor which shall describe
the format and procedure the Auditor shall undertake and the documents it will
examine in the course of its audit. If the parties are unable to agree on the
terms of the letter of instruction, the Auditor shall make its examination and
determination in accordance with written instructions provided by the requesting
party. A copy of said written instruction shall be provided to the other party
no later than five (5) business days prior to the Auditor commencing its audit;
provided that, prior to commencing such audit, the Auditor shall have agreed to
hold in confidence and not disclose to anyone, including the other party, any of
the information that the parties have designated as confidential under the above
joint letter of instruction to the auditor. Each party is obligated to furnish
or make available to the Auditor such information in the party's possession as
is required in the Auditor's reasonable opinion to conduct the audit. Any
information which either party desires the Auditor to consider and which is not
maintained or in the possession of the other party shall be submitted to the
Auditor with copies to the other party. The Auditor shall
17
provide both parties with a final written conclusion of compliance or
non-compliance and the amount of the discrepancy, if any, but shall not
otherwise disclose any confidential information of either party. If there is any
discrepancy in the information made available by one party to the other under
this Agreement, the Auditor's conclusions shall specify the amount owed to AB if
Anchor overcharged AB, or if Anchor undercharged AB, the amount owed Anchor by
AB, and, in either event, a general statement as to the basis for the
discrepancy.
9.6 Survival of Rights. The provisions of this Section 9 shall
expressly survive expiration or termination of this Agreement for a period of
one (1) year.
10. PLANT VISITS.
Subject to Section 11 below, Anchor shall allow employees and
representatives of AB and Anheuser-Xxxxx Companies, Inc. who have a legitimate
and non-competitive purpose to visit the Production Facilities during normal
business hours and upon at least three (3) business days' notice; provided,
however, where the purpose of the visit is for health, sanitation or quality
control inspections, no notice need be given to Anchor. Such employees and
representatives shall have full access to all phases of operation but shall not
unreasonably interfere with Anchor's operations. All such employees and
representatives shall abide by all applicable rules and regulations of the
Production Facilities with respect to visitors.
11. CONFIDENTIALITY
Each party, and their respective employees, officers,
directors, representatives, subsidiaries, affiliates, assigns, subcontractors
and any and all persons or business entities acting under one or any of them
(the "Disclosees"), shall treat in confidence and not disclose to others any
confidential information of the other, which such Disclosees may have furnished
to them by the other party hereto or by any third party, or which such
disclosees may have accessed in the performance of this Agreement, except to the
extent that any such information is (i) generally available to those skilled in
the art, (ii) acquired from a third party rightfully having such information and
under no obligation to not disclose it to the Disclosees, (iii) already lawfully
in the Disclosee's possession or (iv) developed by a Disclosee independently of
any confidential information disclosed to such party by, or learned by such
party from, the other party (the "Information"). For purposes of this Agreement,
subject to the four exceptions set forth in the preceding sentence, information
regarding a party's cost of materials, production, raw materials, labor and
other costs, suppliers, customers and technology, whether or not labeled or
described by such party as "confidential," shall be considered "confidential
information" and within the definition of "Information," in
18
addition to any other information identified from time to time by such party as
"confidential." * * *
12. PUBLIC STATEMENTS.
In the event that Anchor is required under applicable law to
file the Agreement or any related document pertaining to the Agreement or its
performance with the Securities and Exchange Commission or any other regulatory
authority, Anchor shall promptly notify AB of such requirement and (i) use
reasonable efforts to obtain confidential treatment of any portion of the
Agreement or related document for which such treatment is requested by AB, (ii)
to the extent requested by AB and permitted by law, delete the most highly
confidential elements of the form of Agreement submitted for filing, including
but not limited to all price and other financial terms, (iii) promptly notify AB
of any attempt by any party to obtain access to any portion for which
confidential treatment has been requested and (iv) at the request of AB, use
reasonable efforts to defend against any such attempt. Prior to including any
discussion of the Agreement or any related document in any document to be filed
with the Securities and Exchange Commission or any other regulatory authority,
Anchor shall provide such discussion to AB and shall make such changes thereto
as may be requested by AB within 20 days after AB has received a copy of such
proposed discussion, except to the extent that such changes would violate
applicable law. Anchor shall be free to file any proposed discussion for which
AB has not requested changes within such 20 day period.
13. NOTICES.
-----------------
*** Portions hereof have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment in
accordance with Rule 24-b.
19
All notices from one party to the other under the terms of
this Agreement, unless otherwise directed, shall be hand delivered or sent by
fax or certified mail or by a responsible overnight courier, addressed to the
parties at the addresses indicated below and shall be deemed delivered on the
date of receipt, or the business day next succeeding the date of posting if
mailed:
If to AB:
ANHEUSER-XXXXX, INCORPORATED
c/o Anheuser-Xxxxx Companies, Inc.
Xxx Xxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Vice President, Corporate Purchasing
Fax Number: 314/000-0000
If to Anchor:
ANCHOR GLASS CONTAINER CORPORATION
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: President
Fax Number: 813/000-0000
14. ASSIGNMENT.
Neither party hereto shall assign its rights or obligations
under this Agreement to any third party without the prior written consent of the
other; provided, however, that Anchor may pledge any payments to be received by
Anchor hereunder as a part of the financing by Anchor of the capital
improvements contemplated by it under this Agreement.
15. INDEPENDENT CONTRACTOR.
Nothing contained in this Agreement shall create an
association partnership, joint venture or the relation of principal and agent
(except as specifically set forth herein). Neither of the parties hereto shall
have any authority to bind the other in any way except as stated herein. The
parties recognize that during the Term of this Agreement, there will be
employees of either party upon the premises of the other. It is understood and
agreed that on such occasions the employees of each party shall remain the
employees of that party solely, and that party shall be solely responsible for
the wages and benefits for its employees, and any injuries which are sustained
by such
20
employees shall be covered under the Worker's Compensation insurance contracts
of the respective employers.
16. ADDITIONAL AGREEMENTS.
16.1 Maintenance of Corporate Existence. Either party shall at
all times maintain its corporate existence. Each party will do or cause to be
done all things necessary to preserve and keep in full force and effect its
rights (charter and statutory), licenses and franchises.
16.2 Merger, Consolidation, Asset Sale.
(a) Subject to subsection (c) below, AB may terminate
this Agreement upon at least ninety (90) days' notice to Anchor, if it or any
successor corporation (i) sells, conveys or assigns the stock of either it or
any direct or indirect majority owner of Anchor to a third party not affiliated
through common majority ownership, as of the date of this Agreement, with
Anchor, (ii) consolidates with, merges into, or becomes an Affiliate of any
other corporation (or other form of business organization) which is a competitor
of AB by engaging in any of the following lines of business: marketing or
distribution of any brand of beverage products or the operation of public
entertainment parks; or (iii) consolidates with or merges into, or becomes an
Affiliate of any other corporation (or other form of business organization),
other than an existing Affiliate of Anchor, the result of which is a change in
Anchor's financial condition which materially adversely affects Anchor's ability
to perform this Agreement, or (iv) if Anchor sells, leases or otherwise
transfers control or ownership of either Production Facility to any third party
not Controlled by Anchor or an Affiliate. As used in this Section 16.2,
"Controlled" shall mean ownership, directly or indirectly, of a majority of the
outstanding equity securities of a company and an ability to control the
selection of a majority of the members of the board of directors of such company
or its equivalent highest level of management.
(b) In addition to the rights granted under
sub-section (a) above, AB shall have a sixty (60) day right of first refusal
prior to any sale or transfer to a third party by Anchor of either Production
Facility (either directly or as a part of a larger transaction involving the
stock or additional assets of Anchor or any of its Affiliates). Anchor may not
accept any offer of any third party to purchase either of the Production
Facilities (independently or as part of a larger transaction) until AB has had
sixty (60) days within which it may exercise its right of first refusal in
accordance with this Section 16.2(b). Anchor shall require any third party
proposing to purchase the Production Facilities to submit either (i) a written
offer for one or both of the Production Facilities, independent of other assets
or interests of Anchor or its Affiliates, or (ii) dual offers for the stock or
assets of Anchor that in the alternative would include assets in addition to the
Production Facilities or an offer for the other assets or the stock of Anchor
which excludes both Production Facilities. In that event, the price to AB for
the Production Facilities for purposes of its exercise of this right of first
refusal shall be the difference
21
between the two prices offered for Anchor or its assets, either including or
excluding the Production Facilities. Any non-monetary portion of the offered
consideration which is impossible or impractical for AB to perform or otherwise
satisfy shall be valued at its fair market value, and such amount shall be added
to the monetary portion of such third party's offer for purposes of determining
the amount of AB's right of first refusal. AB shall have a period of sixty (60)
days after receiving such offer to notify Anchor that AB is electing to purchase
the Production Facilities at the proposed price, as adjusted, if necessary, as
described above, and in accordance with all other applicable terms and
conditions of such offer. If AB does not notify Anchor of its exercise of such
right of first refusal, Anchor shall be free to complete the sale of the
Production Facilities to such third party in accordance with the particulars of
such offer, as disclosed to AB.
(c) AB understands that Anchor and its Affiliates
intend to engage in a restructuring of the ownership of Anchor and its
Affiliates. Notwithstanding anything to the contrary in subsections (a) and (b)
above, AB agrees to waive any right of termination or purchase that may arise in
connection with such a restructuring; provided, that (i) Xx. Xxxx X. Xxxxxxxx
retains Control of Anchor, (ii) Anchor does not transfer to any other person,
including an Affiliate, ownership or operating control with respect to a
material portion of its capital assets, other than those replaced in the
ordinary course of business (and except as otherwise agreed to by AB in
writing), and (iii) Anchor does not assign or transfer this Agreement by
operation of law to any other person, including another Affiliate, without AB's
written consent. Anchor further agrees to keep AB informed of all material
changes to Anchor's ownership structure.
16.3 Insurance. At all times during the Term of this
Agreement, Anchor shall maintain in full force and effect with insurance
carriers of recognized national standing subject to commercially reasonable
self-insured retention levels: (i) Vendor's Broad Form liability insurance
naming AB as an additional insured, with limits of liability of at least * * *
combined limits covering any liability which AB may incur as a result of Anchor
supplying Bottles reasonably demonstrated or stipulated to be defective and any
defense costs which AB may incur as a result of Anchor supplying Bottles alleged
to be defective; (ii) fire and extended coverage insurance insuring the Anchor
facilities producing Bottles, at full replacement cost; and (iii) workers
compensation insurance, including employers liability coverage, of at least one
million dollars. Within thirty (30) days of execution of this Agreement, Anchor
shall provide AB with a certificate from its licensed insurance broker,
evidencing the foregoing coverage and providing that AB shall be given at least
thirty (30) days notice of cancellation, non-renewal or restrictive endorsement
with respect to any of the foregoing coverages. Anchor shall provide AB with
similar certificates evidencing renewal of such coverage prior to the expiration
of any such policies of insurance, and shall use its best efforts to provide
such certificates at least thirty (30) days prior to expiration.
-----------------
*** Portions hereof have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment in
accordance with Rule 24-b.
22
16.4 Efforts to Minimize Costs.
(a) Anchor shall at all times use reasonable
diligence to seek and procure its requirements of all materials and equipment at
the lowest available prices (taking into account all relevant factors, including
quality and service), and shall likewise minimize all plant costs in a manner
consistent with prudent management practices, including, without limitation,
adherence to total quality management practices and statistical process control.
(b) The long-term objective of AB and Anchor is to
implement any cost saving measures that result in declining costs over the life
of the Agreement and beyond. To accomplish the goal, joint "Cost Reduction
Teams" will be formed between AB and Anchor to study areas of cost and recommend
changes to reduce the costs. Any savings generated will be distributed as agreed
to by Anchor and AB's Corporate Purchasing Department.
16.5 Improper Payments. Anchor hereby warrants that no
payments have been or shall be made, directly or indirectly, by or on behalf of
Anchor to or for the benefit of any AB employee or agent who may reasonably be
expected to influence the decision to purchase Bottles. As used herein
"payments" shall include money, property, services and all other forms of
consideration. AB may verify this warranty in accordance with the audit
provisions in Article 9 above.
16.6 Cullet. Anchor shall offer AB (or its designated
Affiliate) the opportunity to sell cullet to Anchor at market prices, so long as
such sales do not conflict with Anchor's cullet supply agreements in effect on
the date hereof, or with Anchor's internal cullet supply system, and so long as
Anchor is then buying cullet.
17. REPRESENTATIONS AND WARRANTIES OF ANCHOR.
Anchor covenants, represents and warrants to AB as follows:
17.1 Corporate Existence and Power. Anchor is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, has full corporate power and authority to carry on its
business as now conducted and as currently proposed to be conducted, and to
execute, deliver and carry out the terms of this Agreement, has all permits and
authorizations necessary to carry on its business as presently conducted, and is
duly qualified to do business as a foreign corporation in good standing in each
jurisdiction wherein the nature of Anchor's business and operations or the
character of the properties owned or held under lease by Anchor makes such
qualification necessary and in which the failure to so qualify would have a
materially adverse effect on the business, prospects, profits, condition or
operations, financial or otherwise, of Anchor.
23
17.2 Authorization; No Legal Bar. The execution, delivery and
performance by Anchor of this Agreement have been duly authorized by all
necessary corporate action on the part of Anchor and do not require any approval
of Anchor's shareholders or approval or consent of any holder (or trustee of any
holder) of any indebtedness or other obligations of Anchor except such as have
been duly obtained, certified copies whereof have been delivered to AB, and
neither the execution and delivery nor the performance by Anchor of this
Agreement does or will contravene any law or governmental rule or regulation, or
any judgment or order, applicable to or binding on Anchor or any of its
subsidiaries, or Anchor's charter documents, or result in any breach of or
constitute any default under, or result in the creation of any lien upon any
property of Anchor under, any indenture, mortgage or other agreement or
instrument to which Anchor or any of its subsidiaries is a party or by which it
or any of its subsidiaries, or any of its or their respective properties, may be
bound or affected.
17.3 Governmental Approvals. Neither the execution and
delivery nor the performance by Anchor of this Agreement requires any consent or
approval of, giving notice to, registration with, or taking of any other action
in respect of, any federal or state governmental authority or agency.
17.4 Other Agreements. Anchor is not a party to any agreement
or instrument, or subject to any charter or any corporate restriction, which
individually, or in the aggregate would materially adversely affect Anchor's
financial condition, business or operations or would adversely affect the
ability of Anchor to perform its obligations under this Agreement.
17.5 Execution, Delivery and Enforceability. This Agreement
and all related documents have been duly executed and delivered by Anchor;
assuming the due authorization (corporate and otherwise), execution and delivery
thereof by AB, this Agreement constitutes a legal, valid and binding agreement
or obligation of Anchor enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, and similar laws affecting the
enforcement of creditors' rights generally.
24
18. REPRESENTATIONS AND WARRANTIES OF AB.
AB covenants, represents and warrants to Anchor as follows:
18.1 Corporate Existence and Power. AB is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Missouri, has full corporate power and authority to carry on its business as now
conducted and as currently proposed to be conducted, and to execute, deliver and
carry out the terms of this Agreement, has all permits and authorizations
necessary to carry on its business as presently conducted, and is duly qualified
to do business as a foreign corporation in good standing in each jurisdiction
wherein the nature of AB's business and operations or the character of the
properties owned or held under lease by AB makes such qualification necessary
and in which the failure to so qualify would have a materially adverse effect on
the business, prospects, profits, condition or operations, financial or
otherwise, of AB.
18.2 Authorization; No Legal Bar. The execution, delivery and
performance by AB of this Agreement have been duly authorized by all necessary
corporate action on the part of AB and do not require any approval of AB's
shareholders or approval or consent of any holder (or trustee for any holder) of
any indebtedness or other obligations of AB except such as have been duly
obtained, certified copies whereof have been delivered to Anchor, and neither
the execution and delivery nor the performance by AB of this Agreement does or
will contravene any law or governmental rule or regulation, or any judgment or
order, applicable to or binding on AB or any of its subsidiaries, or AB's
charter documents, or result in any breach of or constitute any default under,
or result in the creation of any lien upon any property of AB under any
indenture, mortgage or other agreement or instrument to which AB or any of its
subsidiaries is a party or by which it or any of its subsidiaries, or any of its
or their respective properties, may be bound or affected.
18.3 Governmental Approvals. Neither the execution and
delivery nor the performance by AB of this Agreement requires any consent or
approval of, giving notice to, registration with, or taking of any other action
in respect of, any federal or state governmental authority or agency.
18.4 Other Agreements. AB is not a party to any agreement or
instrument, or subject to any charter or any corporate restriction, which
individually or in the aggregate would materially adversely affect AB's
financial condition, business or operations or would adversely affect the
ability of AB to perform its obligations under this Agreement.
18.5 Execution, Delivery and Enforceability. This Agreement
and all related documents have been duly executed and delivered by AB; assuming
the due authorization (corporate and otherwise), execution and delivery thereof
by Anchor, this Agreement constitutes a legal, valid and binding agreement or
obligation of AB
25
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, and similar laws affecting the enforcement of creditors'
rights generally.
19. MISCELLANEOUS.
19.1 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability of any jurisdiction shall not of itself invalidate or render
unenforceable such provision in any other jurisdiction.
19.2 Waivers; Modifications. 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 which enforcement of the
change, waiver, discharge or termination is sought.
19.3 Authorization; Binding Effect; Successors and Assigns.
Each of the individuals executing this Agreement certifies that he or she is
duly authorized to do so. The terms and provisions of this Agreement and the
respective rights and obligations of the parties hereunder shall be binding upon
and inure to the benefit of the parties, their respective successors and
permitted assigns. Any permitted assignee of this Agreement, including but not
limited to an Affiliate of Anchor, shall, prior to such assignment furnish to
the other party evidence of such assignee's assumption of all liabilities and
obligations of the applicable assignor.
19.4 Reproduction of Documents. This Agreement and all
documents relating hereto, may be reproduced by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process. Each
party hereto stipulates that, to the extent permitted by law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
19.5 Entire Agreements. This Agreement, including each
Attachment referred to in this Agreement, represents the complete agreement of
the parties with respect to the transactions contemplated hereunder, and
supersedes all prior or contemporaneous agreements, representations, promises or
understandings in connection therewith, whether orally or written. All
statements contained in any certificate or other instrument delivered hereafter
by or on behalf of any party hereto pursuant hereto or in connection with the
performance of the transactions contemplated hereby shall be deemed
representations and warranties by such party hereunder.
19.6 Captions; References. The captions in this Agreement and
in the table of contents are for convenience of reference only and shall not
define or limit any
26
of the terms or provisions hereof. Reference herein to sections and subsections
without reference to the document in which they are contained are references to
this Agreement.
19.7 Governing Law. This Agreement is entered into in the
State of Missouri and shall be governed by the provisions of the Missouri
Uniform Commercial Code. To the extent that there is to be a delivery or
performance of services hereunder, such services shall be deemed "goods" within
the meaning of the Uniform Commercial Code. In any event, this Agreement shall
be governed by and construed in accordance with the laws of the State of
Missouri.
19.8 Equal Opportunity. Anchor shall sign a copy of the Equal
Employment Opportunity Compliance Certificate, in the form attached hereto as
Attachment 19.8, at the time this Agreement is executed by the parties and upon
receipt, shall submit another signed copy to AB prior to December 31 of each
Contract Year.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its duly authorized representative on the day and year first set
forth above.
ANHEUSER-XXXXX, INCORPORATED (AB)
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx, Vice President
and authorized representative
ANCHOR GLASS CONTAINER CORPORATION
(Anchor)
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx, President and
Chief Operating Officer
