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EXHIBIT 10.10
PRODUCTION AGREEMENT dated as of March 1, 1999
Between:
MATT BREWING CO., INC., a New York corporation with its principal
office at 000 Xxxxxx Xxxxxx, Xxxxx, Xxx Xxxx 00000 ("Matt")
and
The RED XXXX BREWING COMPANY, a Pennsylvania corporation with its principal
office at 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX, 00000 ("Red Xxxx").
RECITALS:
A. Red Xxxx is the owner of (1) the formula for Philadelphia
Original Lager, which it currently produces at its own brewery
in Philadelphia, (2) the trademark Philadelphia Original Lager
for beer, and (3) the trade name Red Xxxx Brewing Company.
B. Red Xxxx is in need of additional capacity to produce its
Philadelphia Original Lager.
C. Matt is an experienced xxxxxx with production capacity
available and the parties are confident that Matt will be able
to produce beer according to the Philadelphia Original Lager
formula.
D. Matt and Red Xxxx wish to enter into this Production
Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Representations and Warranties of Red Xxxx, Red Xxxx represents and
warrants to Matt that the statement made in Recital A above is true.
2. Disclosure of Formula; Evaluation and Testing; Early Termination.
Promptly after the signing of this Agreement, Red Xxxx will disclose to Matt, in
writing, the Philadelphia Original Lager formula, along with any processing
instructions. Following such disclosure the parties will do whatever evaluation
and testing they deem necessary in order to assure themselves that Matt is able
to produce beer according to the Philadelphia Original Lager formula. If test
brews are required (and are unusable), Matt will charge only its direct costs
for power and materials. Should the parties
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not agree that Matt is able to produce beer according to the Philadelphia
Original Lager formula, either party may terminate this Agreement before
production commences by giving written notice to the other.
3. Licenses Red Xxxx hereby licenses Matt to use, exclusively in the
testing, production, packaging and sale of Philadelphia Original Lager pursuant
to this Agreement: (1) the Philadelphia Original Lager formula, together with
all processing instructions, and any additions to or changes in such formula and
processing instructions, (2) the Philadelphia Original Lager trademark, and (3)
the Red Xxxx Brewing Company trade name, together with all package designs and
labels included in packaging and labeling specifications provided to Matt by Red
Xxxx, and any additions to or changes in such packaging and labeling
specifications. The licenses granted under this paragraph shall terminate upon
any termination of this Agreement. Except as provided in the following paragraph
4, Matt agrees not to use the Philadelphia Original Lager formula and processing
instructions, the Philadelphia Original Lager trademark, the Red Xxxx Brewing
Company trade name, or package designs or labels provided to Matt by Red Xxxx
other than pursuant to this Agreement.
4. Confidentiality. Matt understands that Red Xxxx regards the
Philadelphia Lager formula and processing instructions provided, and to be
provided, to Matt as trade secrets and proprietary and confidential information
belonging to Red Xxxx, and both parties recognize that business information
regarding the other, including but not limited to, production volume, marketing
plans, and pricing, are sensitive and should not be disclosed to third parties.
Matt agrees not to disclose the Philadelphia Original Lager formula and
processing instructions to anyone other than persons employed by Matt with need
to know without the prior written consent of Red Xxxx, and prior to such
disclosure, to obtain, or have in place, agreements requiring brewing
supervisors and laboratory personnel employed by it to whom it does disclose the
Philadelphia Original Lager formula and processing instructions not to disclose
them to others. Matt further agrees not to copy the Philadelphia Original Lager
formula and processing instructions developed or supplied by Red Xxxx to produce
any products for itself, its affiliates, or any other party; provided, however,
that nothing shall prevent Matt from making for itself and/or others products
which another brewery, not having received disclosure of Philadelphia Original
Lager's formula and processing instructions, would be free to make. Both parties
agree not to reveal information about the other, without the consent of the
other, except for information contained in press releases or trade
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advertisements and mutually agreed; but neither party to engage in public
offering, change in corporate ownership, or similar corporate event. The
obligations imposed by this paragraph shall survive any termination of this
Agreement, but this paragraph shall not apply to information that:
(a) was known to Matt or Red Xxxx, as the case may be, before its
disclosure pursuant to this Agreement;
(b) has since become general knowledge within the industry, other than
through a breach of this Agreement;
(c) is subsequently disclosed to Matt or Red Xxxx, as the case may be,
by a third party having a legal right to do so.
(d) is required to disclosed by law or court order.
5.(a)Production by Matt; Purchase by Red Xxxx; Quantity; Meetings.
Subject to the terms and conditions of this Agreement Matt agrees to produce for
Red Xxxx and Red Xxxx agrees to purchase from Matt, such qualities of
Philadelphia Original Lager beer as Red Xxxx may require, up to 10,000 barrels
per year. All such beer shall be of the quality required by paragraph 11. The
parties agree to meet in the first quarter of each year (after 1999) in order to
review: (i) Red Xxxx'x anticipated volume for that year, and (ii) any other
matters related to this Agreement of concern to either party.
5.(b) Yeast Red Xxxx understands and agrees that Matt will use its own
yeast in producing Philadelphia Original Lager pursuant to this Agreement, and
that Matt regards such yeast as proprietary and an asset of Matt's business. Red
Xxxx agrees, upon any termination of this Agreement, to discontinue all use of
Matt's yeast and to certify in writing that is has done so. Further, Red Xxxx
agrees not to give Matt's proprietary yeast to any third party without Matt's
agreement.
5.(c) Packaging Unless otherwise agreed, all Philadelphia Original
Lager produced by Matt pursuant to this Agreement will be packaged either in the
standard 12 ounce bottle used by Matt or in 1/2 barrel Xxxx-Steven's/Xxxxxx kegs
supplied by Red Xxxx. Packaging will be done in one packaging run per brew with
Red Xxxx to specify the qualities desired for bottles and half barrels.
5.(d) Pallets. All Philadelphia Original Lager, when produced, will be
placed on pallets ready for shipment. Matt will charge Red Xxxx its standard
deposit on all pallets (currently
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$8.00). Matt will refund this deposit upon the return of Matt pallets in useable
condition. Red Xxxx will be responsible for ensuring that all its distributors
follow Matt pallet procedures. (Schedule 2).
6. Scheduling of Production. Scheduling of production of Philadelphia
Original Lager will be a joint responsibility of the parties, with Matt
determining the actual brewing and packaging dates, but Red Xxxx being
responsible for furnishing timely and accurate information as to its
requirements. In that regard, the parties recognize that the minimum time
required between brewing and packaging is four to five weeks and that Matt needs
lead time for scheduling and ordering supplies. The lead time currently needed
by Matt is two (2) to three (3) weeks, so information as to Red Xxxx'x projected
requirements must be in Matt's hands at least six (6) to eight (8) weeks before
any desired shipment date, but Red Xxxx agrees to use good faith efforts to
cooperate with Matt in furnishing information as toll its projected requirements
sooner if Matt's need for lead time increases. The parties also recognize that
over-production will result in excessive inventory, which involves expense and
may result in product not being fresh when they are shipped. Accordingly, Red
Xxxx will use its best efforts to make sales forecasts it delivers to Matt as
accurate as possible. In the absence of instruction from Red Xxxx, Xxxx xxx
schedule brewing and packaging dates for Philadelphia Original Lager based on
sales forecasts received from Red Xxxx and/or historical patterns. At its
option, Red Xxxx may request that brewing and packaging of Philadelphia Original
Lager be scheduled during specified weeks, and Matt will attempt to accommodate
such requests provided they are received in time and take into account the
minimum four (4) to five (5) week period between brewing and packaging.
7. Ingredients and Supplies. Except as may be otherwise agreed with
respect to ingredients and supplies that are unique to Philadelphia Original
Xxxxx, Xxxx will order and pay for all ingredients and supplies required for the
production of the Philadelphia Original Lager pursuant to this Agreement.
Ingredients and supplies that are not unique to Philadelphia Original Lager,
including, but not limited to , malt, hops, yeast and bottles, will be taken
from Matt's own inventory, and are included in the prices set forth in Schedule
1 to this Agreement. Packaging materials and supplies that are unique to
Philadelphia Original Lager, including, but not limited to, crowns, labels, six
packs and cartoons will be ordered by Matt from sources mutually agreed upon and
their cost will be included in the price set forth in Schedule 1. However any
such unique materials or supplies that
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have been held by Matt for more than three (3) months will be billed to Red Xxxx
for payment and Matt shall not be obligated to store any of Red Xxxx'x
ingredients or supplies beyond one hundred eighty (180) days. Matt will use the
same quality control procedures for ingredients, and supplies it orders for Red
Xxxx as its uses on its own materials. Matt confirms that all unused ingredients
and supplies for which Red Xxxx has paid will be physically segregated and
identified as property of Red Xxxx. Matt further agrees to take reasonable care
in storing such ingredients and supplies and to replace, at its expense, any
ingredients or supplies that are damaged through Matt's negligence or willful
misconduct, or that of Matt's employees, agents, or contractors.
8.(a) Shipment of Finished Goods; Temporary Warehousing: Dumping: All
Philadelphia Original Lager packaged by Matt will be delivered into inventory at
Matt's brewery pending shipment, which will be arranged and paid for by Red
Xxxx. Red Xxxx will use its best efforts to cause finished goods to be shipped
(i.e., picked up) from Matt's brewery within thirty (30) days after date of
invoice, Xxxx xxx notify Red Xxxx of inventory problems and, unless Red Xxxx
removes such inventory within seven (7) days:
(i) in the event that the goods are in cases, Xxxx xxx, and at the
request of Red Xxxx will, cause such goods to be moved to an outside warehouse,
for which, at present rates, there would be an transportation cost of $50.00 for
20 pallets, an inventory charge of $4.00 per pallet per month (prorated for
partial months) and a $2.00 per pallet "in and out" charge, or
(ii) in the event that the goods are in kegs, Xxxx xxx impose a storage
fee per pallet of $.50 per day.
If finished goods are not shipped within six (6) months (for cases) or two (2)
months (for kegs), as the case may be after the date of invoice, Xxxx xxx cause
them to be dumped. Matt agrees to give Red Xxxx fourteen (14) days' written
notice before causing goods either to be dumped or to be moved to an outside
warehouse, but noting shall prevent Matt from giving such notice so that the
expiration of the fourteen (14) days notice period coincides with the first date
on which Matt would be entitled to take the action in question if no such notice
were required. Red Xxxx agrees to pay, or reimburse Matt for, all reasonable
transportation costs and all charges of any outside warehouse, to pay all
reasonable charges imposed by Matt and to pay Matt dumping fees in the amount of
$.33 per case and $2.00 per keg if goods are dumped.
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8.(b) Risk of Loss Matt and Red Xxxx acknowledge and agree that,
consistent with F.O.B. pricing terms, the risk of loss in loading the carrier's
trucks shall be borne by Matt. However, the carrier's driver shall have the
right to inspect each shipment for damage prior to leaving the loading dock and,
accordingly, Red Xxxx shall bear the risk of loss on any shipment of
Philadelphia Original Lager, once the carrier's truck leaves Matt's loading
dock.
9. Pricing The prices to be charged by Matt to Red Xxxx for the
Philadelphia Original Lager to be produced under this Agreement are set forth in
Schedule 1 to this Agreement. (All prices are F.O.B., Utica). However, Matt
shall have the right to pass along direct cost increases in excess of 2.5% in
the costs listed in said Schedule I on thirty (30) days' written notice. Such
notice will specify the price increase amount, and the new price.
10.(a) Payment Terms; Property Rights Prior to Payment for Philadelphia
Original Lager produced under this Agreement shall be due fifteen (15) days from
date of invoice. Matt will invoice Red Xxxx on a weekly basis for all
Philadelphia Original Lager when produced. Payment for all other charges and
amounts owing under this Agreement shall be due fifteen (15) days from date of
invoice. Xxxx xxx invoice Red xxxx for such other charges and amounts owing at
any time after it has the right to impose a charge or be paid or reimbursed for
any other amount owing. If Red Xxxx is repeatedly late in making payments, Xxxx
xxx require future payments to be made by Electronic Funds Transfer, and/or
refuse to extend credit terms at all. Invoices not paid within fifteen (15)
days, shall bear interest at the greater of (i) one (1) percent per month or
(ii) two (2) percent above the rate designated and published in The Wall Street
Journal as the "prime rate", or such other comparable rate as the parties shall
agree upon if such "prime rate" is not available. Prior to payment, all
Philadelphia Original Lager in Matt's possession, including any product for
which a brewing process has begun and any product which Matt has caused to be
moved to an outside warehouse, and all ingredients and supplies (whether or not
unique to Philadelphia Original Lager) in Matt's possession, except for
ingredients and supplies supplied by or paid for by Red Xxxx, shall be
considered the property of Matt. Title for all Philadelphia Original Lager shall
pass to Red Xxxx upon the first to occur of (i) the date of payment, and (ii)
the date of shipment.
10.(b) Initial Deposit. At the time of placing its initial order, Red
Xxxx shall deposit with Matt an amount equal to (I) the cost of all materials
unique to Philadelphia Original Lager which Matt will be required to order on
its first order of
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Philadelphia Original Lager, (estimated to be $10,000), plus (ii) the sum of
$5,000, to cover start-up brewing and processing costs. The parties agree that
Matt will have the right to adjust deposit amounts to cover packaging materials
and beer costs required to support Red Xxxx'x business.
11. Quality; Quality Control Reports. All Philadelphia Original Lager
produced by Matt shall be of salable quality and brewed, packaged and labeled by
Matt according to specifications provided by Red Xxxx and agreed to by Matt,
including the maintenance of standards and quality control programs. Matt shall
use its best efforts to meet all of the specifications for the Philadelphia
Original Lager, provided it establishes a satisfactory procedure that does not
unduly delay bottling, Red Xxxx may, if it wishes, preapprove brew batches
before bottling. Matt will code and date each production run and will furnish
Red Xxxx with quality complaints it receives, and Matt agrees to take, at its
own expense, such commercially reasonable measures to remedy any material
problems or deficiencies as it would take in the case of one of its own
products. In the event of a dispute over how to handle problems, Matt agrees to
make available records of how similar problems have been handled.
12. Right to Inspect and Be present; Rejection of Batches. Red Xxxx
shall have the right to monitor and review the practices and procedures of Matt
in the production, packaging, and labeling of Philadelphia Original Lager. To
that end, Red Xxxx shall have the right to inspect Matt's plant during
reasonable business hours. In addition, Red Xxxx may have a representative
present at the brewery during production of its Philadelphia Original Lager and
shall, unless it chooses not to, have a representative present for the initial
brewing and bottling of Philadelphia Original Lager which objective testing
determined to taste or look materially different from a representative sample of
Philadelphia Original Lager, such rejection not to be arbitrary or unreasonable.
Any rejected batches may be blended by Matt into other batches of Philadelphia
Original Lager or Matt products with Red Xxxx'x prior consent, such consent not
to be unreasonably withheld.
13. Compliance with Laws, Etc. Matt represents and warrants that all
production facilities and manufacturing, packaging and storage practices comply
with, and will continue to comply with, applicable federal, state and local
laws, ordinances, regulations and health and safety standards. Red Xxxx
represents and warrants that any processing instructions, product formula and
packaging instructions furnished by it comply with, and will continue to comply
with, applicable federal, state and local laws, ordinances,
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regulations and health and safety standards.
14. Brewery of Record: Alternating Premises,
(a) Red Xxxx shall be identified as the brewery of record on
all Philadelphia Original Lager produced pursuant to this Agreement. At Red
Xxxx'x request, Matt shall apply for, and provide assistance in obtaining any
permits, licenses or approvals required by federal, state or local authorities
on behalf of Red Xxxx. Red Xxxx agrees to reimburse Matt promptly for any
reasonable out-of- pocket costs, including, without limitation, reasonable legal
expenses, incurred in connection with any such applications.
(b) Matt shall, by establishing an alternating proprietorship
if necessary, but subject to and in compliance with all applicable federal,
state or local laws, rules and regulations, identify Red Xxxx, as the sole label
source for all Philadelphia Original Lager produced pursuant to this Agreement.
Red Xxxx agrees to reimburse Matt promptly for ant reasonable out-of-pocket
costs, including, without limitation, legal expenses, incurred in complying with
this paragraph.
(c) Notwithstanding the other provisions of this paragraph 14,
Red Xxxx is permitted to list Utica, New York, as the actual place of brewing,
whether required to by law or not.
15. Product Liability Insurance. Matt and Red Xxxx each agree, during
the term of this Agreement and for a period of four years afterward:
(a) to maintain product liability insurance coverage in the
amount of $1,000,000 Per Occurrence and $3,000,000 Aggregate CSL (Combined
Single Limit).
(b) to cause Red Xxxx or Matt, as the case may be, to be named
as an additional insured (or additional insured vendor in the case of Matt's
naming of Red Xxxx on its product liability insurance), with a thirty(30) day
notice of cancellation provision, and
(c) to furnish Red Xxxx or Matt, as the case may be, with an
appropriate certificate or certificates evidencing such insurance coverage.
16. Force Majeure. Notwithstanding any other provision contained in
this Agreement, if either party shall be prevented from performing, or delayed
in the performance of its obligations
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under this Agreement by any cause beyond its control, including, but not limited
to, acts of God, war, fire, traffic interruptions, governmental orders,
regulations, or shortage or raw materials, or by strikes or labor disturbances,
then performance of this Agreement by that party (other than payment of amounts
due) shall, be suspended and excused, without damages, costs or penalties, while
such cause exists; provided, however that if the period of duration of such
cause is more than fifteen (15) days, and depending on the inventory of
Philadelphia Original Lager product on hand at the time.
(a) if the party whose performance is prevented or delayed is
Matt, both parties will use all reasonable efforts to obtain an alternative
source for Philadelphia Original Lager until the situation is remedied, and Matt
shall, to the extent it is still able to maintain production, continued to
produce Philadelphia Original Lager in proportion to the capacity at the
brewery, dedicated to Philadelphia Original Lager prior to the occupance of the
event in question.
(b) if the party whose performance is prevented or delayed is
Red Xxxx, Red Xxxx will not unreasonable withhold its consent to Matt's selling
on commercially reasonable terms any inventory of Philadelphia Original Lager
for Red Xxxx'x account (after deducting any amounts owing from Red Xxxx to
Xxxx). The parties agree, commercially reasonable terms, for the purposes of
this paragraph, will be no lower than one (1) dollar per case less than the
lowest price Red Xxxx has itself sold Philadelphia Original Lager.
17. Bankruptcy, Etc. of Red Xxxx In the event Red Xxxx, voluntarily or
involuntarily, enters a bankruptcy proceeding, or takes advantage of any
insolvency proceeding, or makes an assignment for the benefit of creditors, Xxxx
xxx, at its option, terminate this Agreement on 30 days written notice to Red
Xxxx or, without terminating, suspend the performance of its obligations under
this Agreement, or any of them, until it has received adequate assurance of
payment in full. In addition, Matt (whether or not it terminated this
Agreement), may exercise all the rights granted to it under paragraph 29 of this
Agreement in a situation where Red Xxxx fails to purchase inventory, etc. upon a
termination of this Agreement.
18. Bankruptcy, Etc. of Matt. In the event Matt, voluntarily or
involuntarily, enters into a bankruptcy proceeding, or takes advantage of any
insolvency proceeding, or makes an assignment for the benefit of creditors, Red
Xxxx may, at its option, terminate
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this Agreement on 30 days written notice to Matt.
19. No Assignment. This Agreement is entered into by Red Xxxx and Xxxx
in reliance upon the stability and reputation of each other and, therefore, may
not be assigned without the written consent of the other party. If either party
has entered into a Memorandum of Understanding or other binding, legal document
contemplating a sale of assets, merger or similar corporate transaction, that
party shall notify the other party to this Agreement as soon as possible and in
not event later than seven (7) days after the execution of such Memorandum of
Understanding or other legal document. In the event that a sale of assets,
merger or similar corporate transaction actually occurs, this Agreement shall
survive such sale of assets, merger or similar corporate transaction, but for a
period of six(6) months following the effective date of such sale of assets,
merger or similar corporate transaction, the other party to this Agreement shall
have the unconditional right to terminate this Agreement upon sixty(60) days'
notice subject to the provisions of paragraph 29 of this Agreement. The
foregoing provisions of this Paragraph notwithstanding, RED XXXX may assign this
Agreement to any subsidiary or affiliate of Red Xxxx which is controlled by the
dame management as RED XXXX as of the date this contract is executed.
20. No Joint Venture or Agency. This Agreement is a production
agreement only and shall not in any way constitute a joint venture between Matt
and Red Xxxx, nor in any way make either party the agent of the other.
21. Matt's Right to Produce and Sell Other Products. Red Xxxx
acknowledges Matt's right to produce and sell other beers and beverages which do
not bear the Philadelphia Original Lager trademark or Red Xxxx'x trade name.
22. Entire Agreement: Amendment. This Agreement supersede and replaces
all other prior agreements between the parties, and it represents the entire
agreement between the parties. In the event there is a conflict between any
memorandum, purchase order or invoice generated under this Agreement and the
provisions of this Agreement, or between this Agreement and any other agreement
or alleged agreement between the parties, this Agreement shall control. This
Agreement may be amended only in writing signed by both parties.
23. Governing Law. This Agreement shall be governed by the laws of the
State of New York.
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24. Dispute Resolution. Any dispute, controversy or claim arising out
of or in relation to this Agreement or breach thereof shall be submitted to
arbitration in Albany, New York, in accordance with the Rules of the American
Arbitration Association for Commercial Arbitration. Arbitration shall take place
before a panel of three (3) arbitrators, one to be chosen by each party and the
third to be chosen by the arbitrators selected by the parties and according to
the Rules of the American Arbitration Association. The arbitrators shall have
the right to assess costs including reasonable legal expenses in favor of the
prevailing party. The decision of the arbitrators shall be binding on both
parties and the award of the arbitrators may be rendered a final judgment by any
court of competent jurisdiction. Notwithstanding the foregoing, the parties may,
prior to submitting a dispute to arbitration, have recourse to the courts of the
United States of America or the State of New York for the propose of obtaining a
temporary restraining order or other preliminary injunctive relief.
25. Claims Limitation Period. All claims by either party arising out of
or relating to this Agreement must be brought no later than (1) one year after
such claims arose or the party having such claim shall be deemed to have waived
and forever released it; provided that for this purpose, a claim will be deemed
to have arisen at the time the party asserting the claim first became aware of
it.
26. Authorization. Each of the parties to this Agreement represents and
warrants that this Agreement is within its corporate or other powers and has
been authorized by all appropriate corporate action and that the persons signing
this Agreement on its behalf have been duly authorized to do.
27. Notices. Notices pursuant to this Agreement shall be given by
telephone or facsimile transmission and confirmed by letter forwarded by
certified mail, return receipt requested, addressed
if to Matt, to:
Xxxxxxxx X. Xxxx, President
Matt Brewing Co. Inc.
000 Xxxxxx Xxxxxx
Xxxxx, Xxx Xxxx 00000
Telephone (000) 000-0000
Fax: (000) 000-0000
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if to RED XXXX, to:
Xxxxx X. Xxxx, President
The Red Xxxx Brewing Co.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as the party shall have designated.
28. Term of Agreement: Termination. This Agreement shall be for a term
of one (1) year, and will automatically renew for successive one (1) year terms
on each anniversary of this Agreement. However, this Agreement may be terminated
by either party at any time upon six (6) months written notice to the other
party. This Agreement may also be terminated:
(a) by Matt, (i) on written notice to Red Xxxx, if Red Xxxx
either (a) fails to make any payment called for by this Agreement within the
time provided for such payment and fails to remedy the situation within fourteen
(14) days after receipt of notice from Matt, or (b) defaults in the performance
of any of its other obligations under this Agreement and fails to remedy the
situation within thirty (30) days after receipt of notice from Matt, (ii) on
three (3) months written notice to Red Xxxx, if the total volume of Philadelphia
Original Lager product by Matt is less than 5,000 barrels during any calendar
year (other than 1999), or (iii) as provided in paragraph 2, 17, or 19 of this
Agreement.
(b) by Red Xxxx, (i) on written notice to Matt, if Matt
defaults in the performance of any of its obligations under this Agreement and
fails to remedy the situation within thirty (30) days after receipt of written
notice from Red Xxxx, or (ii) as provided in paragraph 2, 18, or 19 of this
Agreement.
Upon any termination of this Agreement, Matt shall furnish to Red xxxx a
statement showing (1) the inventory of Philadelphia Original Lager that Matt
then has on hand, including (a) finished product, (b) product for which a
brewing process has begun but has not been completed, and (c) unused ingredients
and supplied that are unique to Philadelphia Original Lager (and which were
stocked at Red Xxxx'x request or were reasonably believed necessary to fulfill
Red Xxxx'x requirement), and (2) all amounts owing by Red Xxxx under this
Agreement. Within fifteen (15) days after receipt of such statement or, in the
case of product for which the brewing process
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has been completed, Red Xxxx shall buy from Matt (to the extent owned by Matt)
and cause to removed from Matt's brewery the inventory of finished product (then
finished, and to be finished) at the then current price (per attached Schedule
I, as it may be amended by price changes), and all unused ingredients and
supplies that are unique to Philadelphia Original Lager (and which were stocked
at Red Xxxx'x request or were reasonably believed necessary to fulfill Red
Xxxx'x requirement) at Matt's cost. If for any reason Red Xxxx fails, without
legal justification, to comply with the preceding sentence, or if Red Xxxx owes
Matt money, whose payment has not been provided for by bond or otherwise, Xxxx
xxx call the personal guarantee of Xxxxx X. Xxxx as detailed in Schedule III. In
addition, Xxxx xxx, to the extent necessary to remedy Red Xxxx'x default, (i)
purchase from Red Xxxx, at Red Xxxx'x cost, any ingredients and supplies unique
to Philadelphia Original Lager and/or finished product for which Red Xxxx has
not paid but which remains at Matt's Brewery (ii) continue to use Philadelphia
Original Lager formula, processing instructions, trademark, package designs
and/or finished product for which Red Xxxx has not paid (or which Matt has
purchased as provided above), and (iii) package and sell for its own account, on
commercially reasonable terms, all Philadelphia Original Lager then in its
possession, or for which a brewing process has begun (or is begun in order to
use up any ingredients and supplies unique to Philadelphia Original Lager). The
parties agree, the commercially reasonable terms, for the purposes of this
paragraph, will be no lower than two (2) dollars per case less than the lowest
price Red Xxxx has itself sold Philadelphia Original Lager. Upon completion of
the brewing process and after the packaging, sale and delivery of Philadelphia
Original Lager, and receipt of payment for such product, this authorization
shall end. Red Xxxx shall retain all rights to the Philadelphia Original Lager
formula, processing instructions, trademark, package designs and Philadelphia
Original Lager labels, and Matt shall do nothing to impair Red Xxxx'x rights
thereto.
29. Construction. In the event a court of competent jurisdiction
finally determines that any portion of this Agreement is invalid or
unenforceable, such decision shall affect only that portion so determined and
all remaining provisions of the Agreement shall remain in full force and effect.
30. Effective Date. This Agreement shall be deemed to take effect on
March 1, 1999.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
MATT BREWING CO., INC,
By: Xxxxxxxx X. Xxxx
----------------------------
Xxxxxxxx X. Matt, President
THE RED XXXX BREWING CO.
By: Xxxxx X. Xxxx
---------------------------
Xxxxx X. Xxxx, President
