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EXHIBIT 10.23
KEG MANAGEMENT AGREEMENT
This Keg Management Agreement ("Agreement") dated effective as of December 2,
1996, is between MicroStar Keg Management, L.L.C., a Delaware Limited Liability
Company whose address is 0000 000xx Xxxxxx X.X., Xxxxxxx, Xxxxxxxxxx 00000
("MicroStar") and HERITAGE Brewing Company, whose address is 0000 Xxxxxxxxx
Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx, 00000 (referred to herein and in the Exhibits
hereto either as "Brewing Company" or "HERITAGE").
RECITATIONS AND DEFINITIONS
1. MicroStar is engaged in the logistical management of stainless steel kegs,
primarily for the craft beer/micro-brewing industry and has developed
proprietary concepts, arrangements and systems for the ownership, licensing of
the use of, tracking and retrieval of kegs.
2. Brewing Company is engaged in the business of brewing premium and/or special
quality or custom beers and desires to more efficiently service existing markets
while simultaneously expanding its business in both existing and potential new
market areas.
3. Brewing Company desires to utilize the services of MicroStar in order to
avoid the capital outlay and manpower/administrative costs and risks associated
with keg ownership, thereby enabling Brewing Company to direct additional
resources to its brewing business.
4. For purposes of this Agreement the term "kegs" shall mean and refer to beer
kegs which are either a) straight-sided with a single opening and an American
Xxxxxx-type neck, having a full U.S. half-barrel capacity, with chimes
constructed of spring steel, within the relationship of chime thickness to
sidewall thickness of .092 inches to .052 inches, which meet the "Anheuser-Xxxxx
drop test" standard, or b) kegs having a twenty (20) liter capacity that are
manufactured by Spartanburg Steel Products, Inc.
In consideration of the premises and of the mutual covenants and
agreements of the parties as hereinbelow set forth, the parties have agreed as
follows:
SECTION 1. PROCUREMENT OF KEGS, DELIVERY, AND ACCEPTANCE.
1.1. Purchase Agreement.
a. MicroStar will acquire from Brewing Company any kegs which
Brewing Company now or hereafter may own and desire to make subject to this
Agreement, provided that such kegs conform to the definition of "keg" set forth
in this Agreement and are of a condition and quality acceptable to MicroStar.
The purchase price for any and all kegs purchased from Brewing Company shall be
separately agreed upon in writing after verification of condition and quality
and the quantity of kegs shall be subject to acquisition audit verification by
MicroStar. The final acquisition inventory of kegs shall be approved in writing
by authorized representatives of MicroStar and Brewing Company. Payment by
MicroStar for the kegs so purchased from
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Brewing Company shall be made when MicroStar has verified that such kegs may be
sold and assigned to MicroStar free of any lien or encumbrance and the subject
kegs have been physically marked by MicroStar with its proprietary markings,
which shall be done at Brewing Company's facilities in lots no smaller than one
hundred (100) kegs. Placement of physical markings shall be performed by
MicroStar's field personnel as expeditiously as possible and shall be initiated
no more frequently than once per month, until all kegs so sold by Brewing
Company to MicroStar shall have been identified. An appropriate Xxxx of Sale
identifying the kegs acquired by MicroStar shall be executed and delivered
contemporaneously with the payment by MicroStar.
b. In the event that Brewing Company does not presently own kegs (as
herein defined) or does not own a sufficient quantity of kegs to conduct and/or
expand its business, or in the event that Brewing Company does not desire to
subject its entire existing inventory of owned kegs to this Agreement, Brewing
Company shall provide MicroStar with a projection of its anticipated keg
requirements during a ninety (90) day time period commencing thirty (30) days
after the effective date of this Agreement. Contemporaneously, with the
furnishing of such ninety (90) day projection, Brewing Company shall submit its
initial request for deliveries of kegs and MicroStar will thereupon obtain and
provide the requisite quantity of kegs in accordance with the provisions of
Section 2.2 hereof.
1.2. Incidents of Ownership and Control
All kegs purchased by MicroStar from Brewing Company and/or
otherwise obtained and provided by MicroStar for purposes of this Agreement
shall be owned and subject to the exclusive right of control and disposition of
MicroStar, subject however to the rights of Brewing Company hereunder as a
licensee of the right to use such kegs for the purposes and in the manner
contemplated by this Agreement.
SECTION 2. LICENSE OF KEG USE
2.1 Basic Use Fee
Brewing Company shall pay a use fee of fifteen dollars ($15.00) per
keg, per filling, which shall be invoiced and payable on net thirty (30) day
terms for each keg delivered to the Brewing Company location(s) designated by
Brewing Company. With respect to kegs so utilized by Brewing Company which are
filled by Brewing Company and delivered to the wholesalers identified in Exhibit
"A" hereto (whose proximity of location to Brewing Company facilitates
MicroStar's retrieval administration) the use fee shall be adjusted by rebate or
credit to Brewing Company in the amount of seven and 50/100ths dollars ($7.50)
per keg. In the event Brewing Company currently incurs no freight expense for
the return of kegs from certain wholesalers identified on Exhibit "A" and if
Brewing Company further agrees to continue to directly assume all cost of
freight (if any) for the return of all kegs from such specific wholesaler(s),
Brewing Company may designate up to three (3) wholesalers from among those
listed on Exhibit "A" with respect to whom Brewing Company will assume any and
all freight expenses associated with the shipment of empty kegs from such
wholesaler(s) to Brewing Company. For each full keg sold by Brewing Company to
such designated local wholesaler, the applicable adjustment by rebate or credit
to Brewing Company will be ten dollars ($10.00) per
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keg (resulting in an effective use fee to Brewing Company hereunder of five
dollars ($5.00) per keg). With respect to kegs used by Brewing Company in
on-site pub operations, the use fee shall be five dollars ($5.00) per keg, per
filling. Invoices for such fees will be based upon the monthly report of sales
submitted by Brewing Company to applicable state authorities in relation to its
on-site pub operations, a copy of which shall be furnished to MicroStar at the
time such report is filed. The use fee is subject to an increase of up to ten
percent (10%) during any given twelve (12) consecutive month time period in the
event of an increase of twenty-five percent (25%) or more in national or
applicable regional trucking charges incurred by MicroStar in relation to the
performance of this Agreement during any such twelve (12) consecutive month time
period. In the event that the use fee hereunder is increased by more than ten
percent (10%) during any such twelve (12) consecutive month time period, Brewing
Company shall have the right to cancel this Agreement and to purchase the kegs
covered hereby in accordance with the provisions of Section 7.4 hereof.
2.2 Delivery of Kegs per Brewing Company's Requirements
Brewing Company shall notify MicroStar of Brewing Company's specific
keg delivery date requirements by written notice, including facsimile
transmittal or other notification arrangements approved in writing by Brewing
Company and MicroStar, to be received not less than thirty (30) days prior to
Brewing Company's requested delivery dates. Such notice shall include a
specification of all requested keg quantities in lots of two hundred (200) or
more. MicroStar will forward a written confirmation of its receipt of Brewing
Company's notice of requirements by facsimile or U.S. Mail prior to the close of
the business day following the date of MicroStar's receipt of such notice.
Brewing company shall use its best efforts to ensure that Brewing Company's
inventory of MicroStar kegs does not exceed Brewing Company's actual thirty (30)
day requirements. In the event that Brewing Company's requirements at any time
or for any reason (e.g. seasonal product demand, business expansion, etc.) will
exceed its most recently specified prior requirements by twenty percent (20%) or
more and/or relate to deliveries to new locations of Brewing Company or
wholesalers, Brewing Company shall be required to provide ninety (90) days
advance written notice to MicroStar of such requirements. MicroStar shall
endeavor to effectuate the delivery of the requested kegs to Brewing Company at
its designated locations within the continental United States in accordance with
Brewing Company's timely notification of keg requirements. Delivery shall be
deemed to conform to the requirements of this Agreement if the actual time of
delivery is within seventy-two (72) hours prior or subsequent to the
specifically requested delivery time and the quantities so delivered are within
a ten percent (10%) variance of the specifically requested quantity of kegs. In
the event that MicroStar is unable to meet the foregoing requirements of a
conforming delivery to Brewing Company, MicroStar shall impose no use fee with
respect to any such non-conforming keg shipment.
SECTION 3. ARRANGEMENTS AND AGREEMENTS WITH WHOLESALERS
3.1. Notification and Compliance Obligations of Brewing Company
a. Brewing Company will join with MicroStar in the issuance of a
notice to all wholesalers to whom Brewing Company delivers product in kegs
subject to this Agreement that
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such kegs shipped by Brewing Company are owned by MicroStar as of the effective
date specified in such notice (being the date on which keg ownership was
acquired by MicroStar hereunder). Such notice will further evidence the
authority of MicroStar to collect and administer the deposits required to be
made by wholesalers in accordance with this Agreement, to perform audits as
contemplated by this Agreement, and to retrieve all kegs delivered to the
wholesaler. The form of notice of terms and conditions applicable to wholesalers
is attached hereto as Exhibit "B" and is intended to apprise wholesalers of the
rights and responsibilities of MicroStar pursuant to this agreement and to
express and evidence the agreement of wholesalers to the specified terms and
conditions applicable to wholesalers.
Brewing Company will require in pertinent negotiations and
agreements with its wholesalers that all wholesalers agree to remit to MicroStar
a security deposit based upon the amount of fifteen dollars ($15.00) per keg, to
be billed by and paid to MicroStar to cover the loss (based on a charge of one
hundred twenty-five dollars ($125.00) per keg) of any keg owned by MicroStar
which cannot be located by such wholesaler. As set forth in the form of notice
of terms and conditions attached as Exhibit "B", wholesalers shall be required
to acknowledge that periodic charges to and withdrawals from the security
deposit will be made by MicroStar for kegs which cannot be located and that
credit memos will be issued whenever kegs are returned and whenever kegs
previously classified as lost are located. Wholesalers will be invoiced in the
amount of $125.00 as a "loss" call whenever any loss is charged to the deposit
and will receive a credit memo and refund of a previously billed lost keg charge
whenever such "lost" keg for which a loss charge was made is located and
returned.
b. Pursuant to the notice of terms and conditions to wholesalers,
all wholesalers shall be required to provide a monthly written report of
movement of MicroStar kegs in a form prescribed by MicroStar, including
inventory by xxxxxx (including Brewing Company and any other brewers contracting
with MicroStar who deliver product to the affected wholesaler), empty kegs on
hand and kegs in the retail system. Wholesalers shall also agree to respond to
weekly verbal inquiries by MicroStar representatives concerning the extent of
empty MicroStar kegs in the wholesaler's system. MicroStar shall be authorized
to conduct periodic audits of the wholesaler's inventory of MicroStar kegs,
including kegs in the retail system, which audits will be performed either
quarterly or semi-annually, depending upon the extent of the wholesaler's
inventory and any discrepancies ascertained as a result of prior audits, etc.
c. In the event that a wholesaler to whom Brewing Company delivers
product fails to remit the security deposit of fifteen dollars ($15.00) per keg
to MicroStar within ninety (90) days after MicroStar's date of invoice for such
deposit, then Brewing Company agrees to promptly issue Brewing Company's own
invoice to the affected wholesaler and to use reasonable efforts to collect the
applicable deposit and remit the same to MicroStar.
SECTION 4. TERM AND EXCLUSIVITY OF AGREEMENT
4.1. Term of Agreement
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This Agreement shall be for an initial term of five (5) years. Upon
the expiration of the initial term the parties agree to negotiate in good faith
in an effort to conclude mutually acceptable terms for continuation of the
arrangements effectuated by this Agreement.
4.2 Exclusivity of Arrangements
Except in the instance of Brewing Company's retention of any
pre-existing owned keg inventory for its own local market use, during the
initial and any extended term of this Agreement, Brewing Company shall use
MicroStar as the exclusive source of all beer kegs utilized in its brewing
operation. Without limitation of the foregoing, Brewing Company agrees that
during the term of this agreement or any extension hereof, Brewing Company shall
not conclude or enter into any agreement or understanding with any third-party
regarding sale of any of its Xxxxxx kegs or regarding the purchase, lease or
licensing of any kegs (whether of the Xxxxxx type or otherwise) for use in
Brewing Company's business.
SECTION 5: CLEANING OF KEGS
5.1. Cleaning Responsibilities of Brewing Company
Brewing Company acknowledges the responsibility to clean all kegs
delivered to Brewing Company by MicroStar in accordance with the minimum washing
standards for either a sterilizing sequence (steam) or a sanitizing sequence
(oxine) and to implement the quality control checks prescribed by MicroStar, as
specifically set forth in Exhibit "C" hereto.
SECTION 6: INFORMATION AND RECORDS/ACCOUNTING PROCEDURES
6.1. Responsibilities of Brewing Company
During the term of this Agreement, Brewing Company shall provide
MicroStar with copies of all bills of lading from all of its brewery locations
for all draft beer shipments to wholesalers within twenty-four (24) hours of the
time of shipment. Additionally, Brewing Company shall maintain accurate records
reflecting monthly beginning and ending inventories of kegs, keg locations and
verification of deliveries of kegs from MicroStar to Brewing Company and of all
deliveries to wholesalers, and shall provide copies of such records to MicroStar
on a monthly basis. Brewing Company agrees to report all requisite information
on such forms as MicroStar may from time-to-time prescribe and furnish for such
purposes.
Brewing Company shall not utilize any MicroStar-owned kegs in its
operations which are not specifically subject to this agreement. Brewing Company
shall be charged the sum of one hundred twenty-five dollars ($125.00) per keg
for any keg subject to this agreement which an audit substantiates to have been
lost while under Brewing Company's control and the sum of five hundred dollars
($500.00) per keg per occurrence in the event of any instances of unauthorized
use of MicroStar kegs in Brewing Company's operations which are not subject to
this agreement.
6.2. Responsibilities of MicroStar
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MicroStar shall provide to Brewing Company such information and
records as may be appropriate to substantiate all use fees, and all charges and
credits associated with the deposit arrangements to be established between
Brewing Company and wholesalers in accordance with the provisions of Section
3.1.b. hereof.
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6.3. Audit Rights of the Parties
MicroStar and Brewing Company each shall have the right to review
and audit at reasonable intervals the records and information maintained or
acquired by the other party hereto for the purpose of determining, verifying or
analyzing any deliveries, retrievals, charges or credits arising in the course
of performance of this Agreement. Any expenses incurred by a party in relation
to record keeping or reporting of information contemplated by this Agreement,
shall be borne by the party charged with maintaining such records and providing
such information. Expenses incurred by a party in relation to audits performed
hereunder shall be borne by the party undertaking such audit.
6.4. Accounting Procedures
MicroStar shall specify and may periodically supplement or revise
the basic accounting procedures to be implemented by the parties in relation to
the transactions contemplated by this Agreement. The initial accounting
procedures formulated by MicroStar are set forth in Exhibit "D" hereto.
SECTION 7: MISCELLANEOUS
7.1. Amendment and Supplementation
This Agreement may be amended or supplemented only by a written
instrument executed by MicroStar and Brewing Company.
7.2. Third-Party Beneficiary Status of MicroStar Under Agreements
between Brewing Company and Wholesalers
To the extent necessary to accord MicroStar the full scope of
entitlements, rights and authorities in relation to Brewing Company's agreements
and arrangements with wholesaler as contemplated hereby, MicroStar shall be
recognized as a third-party beneficiary of such agreements and arrangements.
7.3. Force Majeure
In the event that any obligation hereunder, other than the
obligation to remit any payment due hereunder, cannot be timely performed due to
circumstances beyond the reasonable control of a party hereto, the time period
for the performance of such obligation shall be reasonably extended until the
conditions precluding, impairing or delaying performance have been resolved.
7.4. Changes in Economic Conditions/Right of Termination
In the event that as a result of business or economic developments
occurring after the effective date hereof, the transactions contemplated by this
Agreement cannot be
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implemented by a party hereto without undue cost, loss or detriment to such
party, the party experiencing such adverse consequences shall have the right,
upon notification to the other party of the particulars of such developments, to
cancel this Agreement effective thirty (30) days after the giving of such
written notice. In the event of any such termination, Brewing Company shall
repurchase kegs from MicroStar in a quantity and at a price to be separately
agreed upon in writing at the time the purchase price for kegs purchased from
Brewing Company is determined pursuant to Section 1, 1.1.a.. In the event of
Brewing Company's exercise of the foregoing right of termination for economic
reasons, Brewing Company shall agree not to utilize the services of any company
engaged in performing the same or substantially similar services to those of
MicroStar for a period of three (3) years from the date of such termination.
7.5. Choice of Law
This Agreement and the performance hereof shall be construed in
accordance with, and governed by the internal laws of the state of Colorado.
7.6. Ad Valorem or Use Taxes
Any ad valorem, personal property, use or similar taxes imposed as a
result of Brewing Company's physical custody or use of MicroStar-owned kegs
shall be the responsible of Brewing Company.
7.7. Notices
Notice and communications required or permitted hereunder shall be
in writing and any communication hereunder shall be deemed to be duly made if
actually delivered, transmitted by facsimile, or mailed, prepaid to the parties
as follows:
MicroStar Keg Management, L.L.C. ______________________
0000 000xx Xxx. X.X. ______________________
Xxxxxxx, Xxxxxxxxxx 00000 ______________________
Attention: Xxxxxx X. Xxxxxx Attention:____________
7.8. Captions
The headings and captions in this Agreement are for convenience only
and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
7.9. Exhibits
All Exhibits attached to or referred to in this Agreement are
incorporated into and made a part of this Agreement.
KEG MANAGEMENT AGREEMENT
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THIS AGREEMENT is executed on the date set forth below each party's
respective signature to be effective however as of the day of December, 1996.
MICROSTAR KEG MANAGEMENT, L.L.C.
By:
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Name: Xxxxxx X. Xxxxxx
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Title: Manager and Chief Executive Officer
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Date:
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By:
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Name:
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Title:
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Date:
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EXHIBIT "B" TO KEG MANAGEMENT AGREEMENT
MICROSTAR KEG MANAGEMENT, L.L.C.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
December 2, 1996
TO: ALL WHOLESALERS PURCHASING FROM HERITAGE BREWING COMPANY ("HERITAGE")
RE: KEG MANAGEMENT AGREEMENT CONCLUDED BETWEEN HERITAGE BREWING COMPANY AND
MICROSTAR KEG MANAGEMENT, L.L.C.; TERMS AND CONDITIONS APPLICABLE TO WHOLESALERS
HERITAGE Brewing Company delivers its products in kegs to ____________________
("Wholesaler"). HERITAGE and MicroStar Keg Management, L.L.C. ("MicroStar")
hereby notify Wholesaler that effective December 2, 1996 all shipments from
Heritage Brewing Company will be made in kegs owned by MicroStar and subject to
MicroStar's administration and retrieval rights and responsibilities under a Keg
Management Agreement between HERITAGE Brewing Company and MicroStar dated
December 2, 1996 ("the Keg Management Agreement").
Pursuant to the Keg Management Agreement, HERITAGE Brewing Company is required
to obtain Wholesaler's agreement to the terms and conditions applicable to the
MicroStar-owned kegs and to the administrative services being performed by
MicroStar for HERITAGE Brewing Company. The pertinent requirements applicable to
Wholesaler are as follows:
1) DEPOSITS. A deposit computed based upon the amount of $15.00 per keg
("the Deposit") for each MicroStar keg delivered to Wholesaler will be billed to
Wholesaler by MicroStar and shall be payable directly to MicroStar. The Deposit
shall serve as security to MicroStar against the loss of any keg owned by
MicroStar, based on a charge of $125.00 per keg, for any keg the location of
which cannot be ascertained. Periodic charges to and withdrawals from the
Deposit will be made for kegs which cannot be located. Similarly, credit memos
will be issued whenever kegs are returned and whenever kegs previously
classified as lost are located. Wholesaler will be invoiced in the amount of
$125.00 as a loss call whenever any loss is charged to the Deposit and will
receive a credit memo and refund of the loss call whenever a previously lost keg
for which a loss charge was made is located and returned.
2) AUDITS. Wholesaler shall be required to provide a monthly written
report of the movement of MicroStar kegs in the form(s) prescribed by MicroStar,
including inventory by xxxxxx (including HERITAGE Brewing Company and any other
brewers contracting with MicroStar who deliver product to Wholesaler), empty
kegs on hand and kegs in the retail system. Wholesaler also agrees to respond to
weekly verbal inquiries by MicroStar representatives concerning the extent of
empty MicroStar kegs in Wholesaler's system. MicroStar shall be authorized to
conduct periodic audits of Wholesaler's inventory of MicroStar kegs, including
kegs in the retail system, which audits will be performed either quarterly or
semi-annually, depending upon the extent of Wholesaler's inventory and any
discrepancies ascertained as a result of prior audits, etc. A summary of the
accounting procedures applicable to Wholesaler is set forth in Attachment "A"
hereto.
Wholesaler's acceptance of deliveries of MicroStar kegs from HERITAGE Brewing
Company will evidence Wholesaler's agreement to the foregoing terms, conditions
and policies.
Please confirm receipt of this notice and Wholesaler's agreement to the
foregoing terms by signing below and returning a copy of this notice and
agreement to MicroStar at the address shown above.
HERITAGE BREWING COMPANY MICROSTAR KEG MANAGEMENT, L.L.C.
By:____________________________________ By:_____________________________
ACKNOWLEDGED AND AGREED TO AS OF THE DATE FIRST ABOVE WRITTEN:
WHOLESALER:
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By:____________________________________
KEG MANAGEMENT AGREEMENT
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EXHIBIT "A" TO KEG MANAGEMENT AGREEMENT
List of Local Wholesalers
Wine Warehouse, City of Commerce, Cal.
.Southern Wines & Spirits, Cerritos, Cal.
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EXHIBIT "D" TO KEG MANAGEMENT AGREEMENT
MICROSTAR KEG MANAGEMENT, L.L.C.
ACCOUNTING PROCEDURES
STANDARD ACCOUNTING PROCEDURES:
MicroStar provides kegs which meets quality standard on a per usage basis
at a rate of $15.00 with certain adjustments rebate for local (as agreed)
shipments.
Procedure: The ongoing standard policy is as follows:
1. Brewing Company shall order kegs 30 days prior to any requested delivery
date. Brewing Company will be required to provide ninety (90) days advance
written notice to MicroStar for all orders which are 20% or more in excess of
normal order quantity. All orders will be confirmed by fax or US mail by
close of next business day. All Order(s) shall be deemed incomplete if not
confirmed by MicroStar.
2. Brewing Company will be invoiced $15.00 per keg upon the receipt of each
delivery of kegs (30 day terms). This invoicing is generated by shipment date
and cross checked with the xxxx of lading returned by Brewing Company and
trucking company invoice. In the event of delinquent payment of any invoice,
MicroStar has the right to suspend deliveries of kegs and/or to require
future payments to be made prior to delivery of kegs.
3. Brewing Company must provide MicroStar with a xxxx of lading for all
shipments from Brewing Company to its wholesaler(s) within 24 hours of
shipment. This xxxx of lading will be required for inventory control and will
generate an invoicing of deposit to wholesaler. Brewing Company is held
responsible for lost/unaccounted for kegs and misuse of kegs under Brewing
Company's control (subject to $125 per lost keg fee or a $500 penalty for
unauthorized use).
4. If Brewing Company effectuates a local shipment to agreed upon wholesaler(s),
a $7.50 credit rebate will be provided to the Brewing Company by MicroStar.
In the event Brewing Company currently incurs no freight expense for the
return of kegs from certain wholesalers identified on Exhibit "A" to the Keg
Management Agreement and if Brewing Company further agrees to continue to
directly assume all cost of freight (if any) for the return of all kegs from
such specific wholesaler(s), Brewing Company may designate up to three (3)
wholesalers from among those listed on Exhibit "A" with respect to whom
Brewing Company will assume any and all freight expenses associated with the
shipment of empty kegs from such wholesaler(s) to Brewing Company. For each
full keg sold by Brewing Company to such designated local wholesaler, the
applicable adjustment by rebate
EXHIBIT "D" TO KEG MANAGEMENT AGREEMENT
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or credit to Brewing Company will be ten dollars ($10.00) per keg (resulting
in an effective use fee to Brewing Company hereunder of five dollars ($5.00)
per keg). This information concerning local shipments and return of kegs from
specific wholesalers shall be cross checked against the xxxx of lading and/or
the signed loading report. Such credit will be applied to next Brewing
Company's next invoice for kegs or, if a net credit is generated, the credit
will be refunded during normal processing within 30 days. With respect to
kegs used by Brewing Company in on-site pub operations, the use fee shall be
five dollars ($5.00) per keg, per filling. Invoices for such fees will be
based upon the monthly report of sales submitted by Brewing Company to
applicable state authorities in relation to its on-site pub operations, a
copy of which shall be furnished to MicroStar at the time such report is
filed.
5. MicroStar will invoice wholesaler for a deposit of $15.00 per keg from the
xxxx of lading or, if no xxxx of lading, a signed loading report as provided
by Brewing Company.
6. MicroStar will credit wholesaler for each empty keg shipped from the
wholesaler by and at the direction of MicroStar. The credit will be generated
by the xxxx of lading on shipment and will be corrected for any errors for
incorrect shipments including wrong kegs being shipped, mistakes in number of
kegs and the damage of kegs at wholesaler level. The information on shipment
errors will be provided by Brewing Company upon Brewing Company's receipt of
such kegs.
7. Brewing Company is required to provide a written monthly keg movement report
including opening inventory, number of kegs received from MicroStar during
the month, shipments out (summarized by wholesaler) and ending inventory.
Brewing Company will also provide MicroStar or its representative with state
and federal tax reports for purpose of cross checking shipments upon request.
8. Brewing Company shall be subject to inspection and audit of inventory by
MicroStar with 24 hour notice.
9. Wholesaler will provide a weekly report on empty and full kegs in their
system.
10.Wholesaler will provide monthly written reports on MicroStar forms for
inventory of empty, full and at retail.
11.Wholesaler will be subject to audit at least twice a year.
12.Brewing Company will be responsible for inventorying kegs received from
MicroStar as to the number of kegs received, verification of MicroStar
ownership of kegs and identification of any damaged kegs.
13.Wholesaler refund credits will be adjusted for wrong kegs shipped to Brewing
Company or damage which occurs at its level.
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EXHIBIT "D" TO KEG MANAGEMENT AGREEMENT
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EXHIBIT "C" TO KEG MANAGEMENT AGREEMENT
MINERAL WASHING/STERILIZING SEQUENCE (STEAM)
WASH HEAD
Purge out ullage beer with air until clear. 3 sec.
Pre-rinse keg with fresh or recovered water. 8 sec.
Purge out ore-rinse water with air. 5 sec.
Hot caustic or acid wash. 12 sec.
Low flow hot caustic or acid wash 12 sec.
Purge out hot caustic or acid to recovery tank with air. 6 sec.
Final rinse keg with hot water. 12 sec.
Low flow hot water rinse. 12 sec.
Purge out hot water rinse with steam. 18 sec.
Pressurize to 20 p.s.i.g. with steam. 1 sec.
Release pressure from process head. 1 sec.
STERILIZE HOLD STATION
Steam 60 sec.
RACKING HEAD
Steam conn. head and keg neck. 5 sec.
Steam pressure release from keg. 5 sec.
Gas purge keg. 8 sec.
Counter pressurize to 20 p.s.i.g. 2 sec.
Product fill. 50 sec.
Spear out. 1 sec.
Water scavenge and/or gas scavenge. 5 sec.
EXHIBIT "D" TO KEG MANAGEMENT AGREEMENT
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EXHIBIT "C" TO KEG MANAGEMENT AGREEMENT
MINERAL WASHING/SANITIZING SEQUENCE (OXINE)
WASH HEAD
Purge out ullage beer with air until clear. 3 sec.
Pre-rinse keg with Oxine water. 8 sec.
Purge out Oxine water with air. 5 sec.
Hot caustic or acid wash. 12 sec.
Low flow hot caustic or acid wash 12 sec.
Purge out hot caustic or acid to recovery tank with air. 6 sec.
Final rinse keg with Oxine water. 12 sec.
Low flow Oxine water rinse. 12 sec.
Oxine water fill. 18 sec.
Spear out. 1 sec.
Purge head. 1 sec.
SANITIZE HOLD STATION
Oxine sanitize hold. 60 sec.
RACKING HEAD
Gas purge Oxine water from keg. 10 sec.
Gas counter pressurize to 20 p.s.i.g. 2 sec.
Product fill. 50 sec.
Spear out. 1 sec.
Oxine water scavenge and/or gas scavenge 4 sec.
EXHIBIT "D" TO KEG MANAGEMENT AGREEMENT
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EXHIBIT "C" TO KEG MANAGEMENT AGREEMENT
KEG PLANT
QUALITY CONTROL CHECKS
A. DETERGENT TANK TITRATION
The detergent set, detergent tank(s), Quality Control checks should be made
before starting and at least twice during each eight (8) hour operating shift.
Adjust frequency to meet the Quality Control department "comfort level". The
acid titration level (phosphoric) should be in the range of 0.25% to maximum of
0.4% v/v and alkali titration level (caustic) in the range of 1.5 to 2.0% v/v.
B. KEG WATER CARRY-OVER AND TITRATION CHECKS
1) After the keg has completed the wash head(s) sequence(s), the keg must be
allowed to continue through the sterilizing sequence and then rejected (stopped)
immediately prior to commencing the racking head(s) sequence(s). When the keg is
retrieved at the discharge end of the machine, the keg can be cooled down by
placing a cold water hose over the outer surfaces (if steam is used). A Quality
Control keg coupler or funnel coupler (with the C02 and beer check valves
removed) is then used to tap the keg. The keg must be inverted to remove the
contents via the C02 port of the coupler by allowing the keg to drain or forcing
the contents out with air or C02. The condensate or rinse residuals in a 50
liter or 1/2 half barrel keg normally measures between 40 to 80 ml.. A limit of
100 ml. should be set as a maximum allowable limit. If the levels are in excess
of these amounts then the machine operation must be checked together with that
of the steam quality and relevant steam main condensate traps.
2) The condensate obtained from the keg can be titrated to ensure that there is
no acid and/or alkali carry-over from the wash heads.
NOTE 1: For this check the pH. of the condensate should be a known factor if
steam is used for purging.
NOTE 2: This check should be carried out once a day for each machine lane and
then reduced to the Quality Control department "comfort level".
3) Another keg is used to do a similar check after it has been allowed to
complete the sequences through the racker head(s) up to the point of immediately
prior to commencing the beer filling sequence. Reject the keg prior to starting
the beer filling sequence and remove the conveyor
EXHIBIT "D" TO KEG MANAGEMENT AGREEMENT
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after discharging from the machine. When checking for the quantity of condensate
present in the keg, it should be less than 15 ml.
NOTE: This check should be carried out once a day for each machine lane and then
reduced to the Quality Control department "comfort level".
C. MICROBIOLOGICAL CHECKS TO THE KEG
Introduce a liter of sterile liquid, (preferably beer), into a keg having
completed the sequence as described in Procedure 3) above, via a sterilized keg
valve and "funnel" coupler. This allows the keg to be checked for microbial
integrity by removing 250 ml. of the sterile liquid into a sterile flask. Split
the sample into two, 100 ml. samples via Millipore type membranes, plate and
incubate the membranes on agar suitable for aerobic and anaerobic organisms.
Methods of doing this vary slightly. The main objective, however, is to ensure
that consistency in sampling is maintained, i.e. having introduced the sterile
liquid into the keg, each keg should be rotated a set number of times to ensure
all surfaces have been covered equally before it is extracted. A known quantity
should always go into the keg and a known quantity should always be extracted,
filtered and plated.
NOTE 1: This procedure should be carried out at least once every two weeks.
NOTE: 2: Funnel couplers can be purchased via IDD to suit your keg valve type.
D. AFTER A C.I.P. SEQUENCE
After the C.I.P. sequence, the process mains, bright beer tank and racker
connection head(s), can be swabbed and checked for visual cleanliness to ensure
that the cleaning operation frequencies are effective and adequate.
NOTE: This should be carried out at least once a week.
E. BEER STABILITY SAMPLING
Samples are taken from the bright beer tank and keg at a frequency laid down by
the brewery Quality Control department. A suitable stability test is to set
aside a keg of beer from the leg line after filling and "forcing" the contents
by leaving the keg in an environment of 70(degree) F. (21(degree)C). Taste, odor
and clarity tests can then be taken after 72 hours and at regular durations
thereafter as desired to suit the Quality Control departments standards.
SUMMARY
EXHIBIT "D" TO KEG MANAGEMENT AGREEMENT
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It is possible to determine the following about the keg machine function and
cleaning procedures from the aforementioned.
1) The wash water and detergent is being cleared from the keg by the final C02
or steam purge sequence on the final wash head.
2) The final rinse water on the final wash head is removing the detergent
residual from the keg.
3) The C02 purge is removing the condensate trace from the keg on the racker
head prior to filling with beer.
4) The microbial integrity, via steam sterilizing or Oxine (Cl02) sanitizing of
the keg is being achieved.
5) The separate plant C.I.P. sequence is effective in removing all traces of
beer protein and other residuals from the keg plant connection head(s) and
piping system(s).
6) The cleanliness and microbial integrity is being maintained by the separate
plant C.I.P. regime.
If you have any questions, please contact Xxxx Xxxx at IDD Process & Packaging,
Inc. 0-000-000-0000 or 805-529-9890.
JWG/9/16/94
EXHIBIT "D" TO KEG MANAGEMENT AGREEMENT
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XXXX OF SALE
For and in consideration of the sum of eighty two thousand three hundred
sixty four dollars ($82,364) paid by MicroStar Keg Management, L.L.C. to
Heritage Brewing Company the receipt of which is hereby acknowledged, Heritage
Brewing Company, whose address 0000 Xxxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, has bargained, sold and delivered, and by these
presents does bargain, sell and deliver unto the said MicroStar Keg Management,
L.L.C., a Delaware limited liability company whose address is X.X. Xxx 0000,
Xxxxxxx, Xxxxxxxxxx 00000, 983 kegs which are specifically identified by
manufacturer, serial number (where available), date of manufacture (where
available), MicroStar-assigned UPC number and other information as scheduled on
Exhibit "A" attached hereto and made a part hereof.
BREWING COMPANY hereby binds itself, its successors and assigns to warrant
and defend title to the aforesaid personal property unto MicroStar Keg
Management, L.L.C.. its successors and assigns, against the lawful claims of any
and all persons whomsoever.
EXECUTED this 13th day of December, 1996.
HERITAGE BREWING COMPANY
By:_____________________________
Name:___________________________
Title:__________________________
EXHIBIT "D" TO KEG MANAGEMENT AGREEMENT
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EXHIBIT "A"
to
Xxxx of Sale
from
HERITAGE BREWING COMPANY to MicroStar Keg Management, L.L.C.
dated December 13, 1996
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KEG SERIAL MICROSTAR-
KEG MANUFACTURER DATE OF NUMBER ASSIGNED UPC LOCATION AT TIME OF
MANUFACTURE (IF AVAILABLE) NUMBER PURCHASE
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EXHIBIT "D" TO KEG MANAGEMENT AGREEMENT
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Signed for identification:
HERITAGE BREWING COMPANY MICROSTAR KEG MANAGEMENT, L.L.C.
By:________________________________ By:___________________________________
EXHIBIT "D" TO KEG MANAGEMENT AGREEMENT
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