EXHIBIT 10.55
[*] DENOTES EXPURGATED INFORMATION
AMENDED AND REINSTATED BREWING SERVICES AGREEMENT
BETWEEN
CITY BREWING COMPANY, LLC
AND
BOSTON BEER CORPORATION
AGREEMENT entered into effective as of the 1st day of August, 2006 (the
"Effective Date"), by and between CITY BREWING COMPANY, LLC, a Wisconsin limited
liability company ("City Brewing"), and BOSTON BEER CORPORATION, a Massachusetts
corporation ("Boston Beer"). Boston Beer and City Brewing are sometimes referred
to herein individually as a "Party" and collectively as the "Parties."
City Brewing and Boston Beer desire to enter into an agreement pursuant to
which Boston Beer's proprietary malt beverages shall be brewed and packaged at
City Brewing's facility located in La Crosse, Wisconsin (the "Brewery").
ACCORDINGLY, in consideration of the mutual agreements contained in this
Agreement, the Parties, intending to be legally bound, hereby agree, as follows:
1. SCOPE OF AGREEMENT.
(a) During the Term of this Agreement, as defined in Section 5 below, and
in accordance with the terms and conditions set forth herein, City Brewing shall
give Boston Beer access to the Brewery and to make available to Boston Beer City
Brewing's production personnel to allow Boston Beer to produce Boston Beer's
proprietary Beer Products.
(b) For purposes of this Agreement, Boston Beer's "Beer Products" shall
include those products set forth in Exhibit A attached hereto. Boston Beer shall
periodically provide to City Brewing an updated schedule of all Boston Beer
products which Boston Beer deems to be Beer Products, subject to this Agreement.
2. CONTROL OF PRODUCTION OF BEER PRODUCTS; PUBLIC STATEMENTS.
(a) It is the intention of the Parties that City Brewing will alternate
proprietorship of the Brewery with Boston Beer so that Boston Beer will function
as the xxxxxx when the Beer Products are brewed and packaged at the Brewery
("Alternating Proprietorship"). All Beer Products shall be brewed and packaged
according to Boston Beer's specifications, including the maintenance of
standards and quality control programs. Boston Beer shall have ultimate
responsibility and authority over every detail of the production process for
Beer Products at the Brewery, with such responsibility and authority as to those
parameters affecting beer taste and quality to be the same as if Boston Beer
were the owner of the Brewery. Boston Beer shall monitor and review the
practices and procedures of City Brewing in the production and packaging of Beer
Products and periodically inspect the Brewery. The Beer Products shall be
separated and identifiable from the beer products by City Brewing for itself or
other brewers at all stages, including prior to fermentation, during
fermentation, during cellar storage and as finished beer after production and
before removal from the Brewery. If a decision made by Boston Beer in the
exercise of its authority under this Section 2(a) results in additional costs
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Securities and Exchange Commission pursuant to a request for confidential
treatment.
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over and above the costs of the then current operations, City Brewing shall be
entitled to be reimbursed by Boston Beer for such costs. In addition, in the
exercise of its authority under this Section 2(a), Boston Beer shall not
interfere with City Brewing's production processes for its own proprietary
brands or for other brands that it produces under contract with third parties.
(b) Consistent with the provisions of Section 2(a) above, City Brewing and
Boston Beer will, in any and all public statements or comments, recognize that
Boston Beer controls the ingredients, recipe, brewing processes and procedures
and quality and taste parameters for all Beer Products produced at the Brewery
and that Boston Beer is the xxxxxx of all such Beer Products. Neither party will
make any public statements inconsistent with the foregoing.
(c) Each Party agrees to take all commercially reasonable steps to prevent
any of its personnel from making disparaging or otherwise adverse remarks about
the products of the other Party.
3. COMMITTED CAPACITY; COMMITMENT FEE.
(a) During the Term, City Brewing shall make available to Boston Beer for
brewing of Beer Products up to [*] per month, and up to [*] per calendar year,
of production at the Brewery (the "Committed Capacity"). The Committed Capacity
is based on anticipated tank usage and availability and shall be increased or
decreased in inverse proportion to the extent that actual average tank usage
varies from five weeks per storage cycle. Boston Beer will, however, endeavor,
to the extent reasonably possible, to provide City Brewing with fifty (50) days
advance written notice of any expected increase or decrease in its expected
production requirements which varies more than [*] from any previously submitted
monthly forecasts for the period in question, in order to allow City Brewing to
plan its capacity utilization at any Brewery. Beer Products shall primarily be
produced in packaged units described in Section 7 below.
(b) Boston Beer shall pay a commitment fee to City Brewing in the amount of
[*] for any year in which Boston Beer does not brew at least [*] of Beer
Products at the Brewery pursuant to this Agreement, such fee to be due and
payable within sixty (60) days after the end of the applicable calendar year.
4. FEE AND MANNER OF PAYMENT.
(a) Boston Beer shall pay City Brewing a brewing fee (the "Fee") for
allowing Boston Beer access to the Brewery and use of City Brewing's employees
for the production of the Beer Products produced at the Brewery as set forth in
the Fee Schedule attached hereto as Exhibit B. The Fee for other packaging units
not listed in Exhibit B shall be set by the Parties based on proportionate
volume and packaging efficiencies relative to the units described in said
Exhibit. City Brewing shall be entitled to increase each Fee, effective as of
January 1 in each year while the Agreement remains in effect (the "inflation
adjustment"), with the first such increase pursuant to this Agreement to be
effective as of January 1, 2007, at a rate equal to [*] of the increase in the
consumer price index in the preceding [*]. On the first January 1st after new or
extended agreements with the bargaining units at the Brewery covering at least
[*] of the Brewery workers are completed, and on each subsequent January 1st, if
so decided by City Brewing, in lieu of the "inflation adjustment", the Fee will
be increased by [*] of the average percentage increase in the wages of those
bargaining units for the preceding [*].
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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(b) The Fee includes compensation for City Brewing's employees, overhead,
profit, and other costs, including lab tests listed in Exhibit D, incurred by
City Brewing in the production of packaged Beer Products suitable for shipment
by truck.
(c) The Fee excludes any federal and state excise taxes, which shall be
paid by Boston Beer.
(d) City Brewing shall invoice daily for wort produced and transferred to
fermentation that day. Boston Beer shall pay such invoice within [*]. Upon
completion of packaging the Beer Products in cases or kegs, City Brewing shall
send Boston Beer a final invoice representing the Fee and any additional Brewing
Materials and non-Boston Beer owned packaging supplied by City Brewing. Boston
Beer shall pay the final invoice within [*].
(e) City Brewing shall provide electronic reports to Boston Beer, in form
and content mutually acceptable to the parties, showing the quantity of Beer
Products actually shipped to customers of Boston Beer on the previous day.
(f) City Brewing shall have the right to increase the Fee to reflect City
Brewing's actual incremental cost for any special services which use a more
expensive brewing process or longer time frames or which have more expensive
packaging processes than used to produce Xxxxxx Xxxxx Boston Lager(R). Fees and
payment terms for special services shall be mutually agreed to in writing and in
accordance with the foregoing provisions of this Section 4, including the timely
invoicing requirements of paragraph (e) above.
Boston Beer shall be entitled to a proportional reduction in the Fee to the
extent that City Brewing is able to achieve variable cost savings through
changes in production procedures initiated by Boston Beer or arising out of any
investment made by Boston Beer in City Brewing facilities, whether made prior or
subsequent to the date of this Agreement.
(h) Volume Rebate: The Fee will be adjusted for each package based on the
following volume reduction schedule, if in any calendar year the volume of
Products produced reaches the following volume levels:
[*]
5. TERM.
The term of this Agreement (the "Term") shall commence as of the Effective
Date and shall continue until terminated pursuant to Section 6 hereof. The
Parties acknowledge that either Party's obligations pursuant to this Agreement
to make payments to the other Party and the Parties' respective obligations
under Sections 4 and 13, and City Brewing's obligations under Sections 14 and 15
shall survive the termination of this Agreement.
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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6. TERMINATION.
(a) Either Party may terminate this Agreement for any reason whatsoever on
not less than twenty-four (24) months' prior written notice to the other Party,
effective at any time on or after [*].
(b) Boston Beer may also terminate this Agreement effectively immediately
upon written notice in the event that City Brewing is in default of any of its
obligations to allow Boston Beer to brew, package and ship any Beer Products,
which default continues for a period of [*] following receipt by City Brewing of
written notice from Boston Beer regarding such default (each such event is
hereinafter referred to as a "City Brewing Production Default".) City Brewing
shall not be deemed to be in default of its obligations for purposes of this
Section 6(b), if it is in good faith both seeking to correct the circumstances
giving rise to its failure to allow Boston Beer to brew, package and ship Beer
Products and honoring its obligations under Section 14 hereof, to the extent
applicable.
(c) Boston Beer may also terminate this Agreement effective immediately if
(i) all or substantially all of City Brewing's business or assets have been
acquired by a third party or (ii) a transaction or series of transactions
results in the majority of voting control of City Brewing being acquired by a
person or persons not currently holding an equity interest in City Brewery.
(d) City Brewing may terminate this Agreement on [*] prior written notice
to Boston Beer in the event that Boston Beer is in arrears in payment of
undisputed amounts (i) for the production of Beer Products in excess of [*] or
(ii) for other charges in excess of [*], and such arrearage has remained
outstanding for in excess of [*] after written demand for payment was made by
City Brewing.
(e) In the event of bankruptcy by either Party, the non-bankruptcy Party
shall have the right to terminate this Agreement.
(f) Upon termination of this Agreement, Boston Beer shall promptly pay to
City Brewing all unpaid invoices in full and all unpaid costs incurred by City
Brewing pursuant to this Agreement. City Brewing will use all reasonable efforts
to minimize such costs upon termination, and Boston Beer will have the right to
review documentation evidencing such costs.
7. PACKAGING, DEPOSITS AND MINIMUM PRODUCTION REQUESTS.
(a) Packaging of Beer Products shall consist of (i) twenty-four 12-ounce
bottles, whether packaged as a 24 bottle loose case, a four 6-pack case or a two
12-pack case (each a "12-oz. Case Unit"), (ii) twelve 24-ounce bottles (a "24
oz. Case Unit"), (iii) 5.2 U.S. gallons (a "One-Sixth Barrel"), (iv) 7.75 U.S.
gallons (a "Quarter Barrel"), and (v) 15.50 U.S. gallons (a "Half Barrel"), and
any other package types or configurations that the parties mutually agree to use
for packaging such Products. All kegs used will be Xxxxxx-style kegs. Boston
Beer has the right, subject to the approval of City Brewing, which approval will
not be unreasonably withheld, to make changes in the packaging used to produce
the Beer Products, including but not limited to, the packaging of the Beer
Products in can units. The price for packaging in cans will be adjusted by the
difference in City Brewing's costs between packaging in bottles and cans.
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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(b) Boston Beer shall have the right to package Beer Products at least [*].
Boston Beer shall submit production requests by the 10th of the preceding month
not less than one production run (at present equivalent to one brew in the brew
house, 200 Kegs on the racking line and 12,000 12-oz. Case Units and 3,000
24-oz. Case Units in the bottling line). Boston Beer acknowledges and agrees
that the minimum production request applies to each beer style, individually,
rather than in combination; provided, however, that production requests for the
bottling line may consist of one shift (currently averaging 12,000 Case Units)
of the Beer Products in combination and any bottling line order shall not be
less than 3,000 Case Units of each beer style, except that for twenty-four ounce
(24 oz.) bottles, an order may be comprised of as many as three styles of at
least 1,000 cases each.
8. PACKAGING MATERIALS AND BREWING MATERIALS.
(a) Crowns, bottles, labels, six-packs, cases, partitions and other packing
materials for Beer products (collectively, "Packaging Materials"), or any
applicable federal or state taxes (but specifically excluding any taxes in the
nature of a tax on income or profits) are not included in the Fee and shall be
borne directly by Boston Beer. All Packaging Materials supplied by Boston Beer
to be used in the production of Beer Products shall be (i) purchased directly by
Boston Beer at its cost for delivery to City Brewing, (ii) the property solely
and exclusively of Boston Beer, and (iii) segregated and identified as such at
the Brewery. City Brewing acknowledges that Boston Beer shall be afforded
unrestricted 24-hour access to the facility.
(b) Boston Beer shall invoice City Brewing for all hops and flavorings
shipped to City Brewing from Boston Beer's cold storage warehouse and City
Brewing shall pay such invoice within [*]. City Brewing shall then provide all
Brewing Materials, including but not limited to [* ], for the brewing of beer
and invoice Boston Beer when liquid is transferred to fermentation in accordance
with the provisions of Section 4 (d).
(c) City Brewing shall provide to Boston Beer perpetual inventory of all
Beer Products in progress, finished goods and Packaging Materials on a weekly
basis and shall perform such inspections, counts, and other receiving checks
similar to those performed on their own materials.
(d) Each quarter, on dates to be chosen by Boston Beer, Boston Beer shall,
at its own expense, perform a physical inventory of all (i) Brewing Materials,
(ii) Beer Products in process, and (iii) finished goods.
9. RISK OF LOSS.
Boston Beer shall bear the risk of loss for the Packaging Materials,
Brewing Materials, Beer Products in process and finished goods, except where
losses arise as a result of negligence or willful misconduct of City Brewing.
10. BREWERY OF RECORD.
(a) To the extent requested by Boston Beer, City Brewing shall use all
commercially reasonable efforts to establish and maintain an Alternating
Proprietorship at the Brewery, and, subject to and in compliance with all
applicable federal, state or local laws, rules and regulations, to identify
Boston, Massachusetts, as the sole label source for Beer Products.
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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Boston Beer agrees to reimburse City Brewing promptly for its reasonable
out-of-pocket costs, including, without limitation, legal expenses and increased
clerical costs, incurred in connection therewith.
(b) City Brewing shall provide to Boston Beer, no less than five (5)
calendar days prior to the date on which Boston Beer is required to submit its
excise tax return and pay taxes as may be due to the TTB on the Beer Products
that have been shipped from the Brewery, all information necessary for Boston
Beer to make such submission and to pay such taxes. City Brewing shall also
provide to Boston Beer on a timely basis such information as may be required in
order for Boston Beer to complete and submit the Monthly Xxxxxx'x Report of
Operations on Form 5130.9 to the TTB when due and such other reports and filings
as may be necessary and or appropriate for Boston Beer to comply with applicable
laws as the alternating proprietor of the Brewery with respect to the Beer
Products.
11. STORAGE.
The Fee shall include storage of reasonable quantities of packaged Beer
Products for [*]. City Brewing shall be entitled to charge Boston Beer a
reasonable fee for the handling and storage of Beer Products beyond [*].
12. FORCE MAJEURE.
(a) If City Brewing is unable, by reason of a labor dispute, governmental
action, act of God or the like, to perform its obligations as Host, it shall, in
any event, to the extent it is still able to maintain production at such
Brewery, continue to perform such services for Boston Beer at such Brewery in
proportion to the capacity at such Brewery dedicated to the production of the
Beer Products prior to the occurrence of the event in question.
13. CHANGE PARTS AND BREWERY MODIFICATIONS.
Boston Beer will pay for all Change Parts and Brewery modifications that
are unique to running Boston Beer's packaged Beer Products, provided that City
Brewing does not have such parts existing at the Brewery in question, Boston
Beer shall retain ownership and title to the Change Parts and Boston Beer will
have the responsibility to pay for any materials and repairs required to keep
the Change Parts functioning to specifications. The Change Parts shall not be
used in the manufacture of products other than those listed in Exhibit A or
otherwise authorized in writing by Boston Beer.
14. AGENCY AND INDEMNIFICATION.
City Brewing and Boston Beer understand and agree that neither Party is, by
virtue of this Agreement or anything contained herein, including City Brewing
affixing to any Product and/or registering the name of "The Boston Beer
Company," "Boston Beer Company," or "Twisted Tea Brewing Company" constituted or
appointed the agent of the other Party for any purpose whatsoever, nor shall
anything herein contained be deemed or construed as granting Boston Beer or City
Brewing any right or authority to assume or to create any obligation or
responsibility, express or implied, for or on behalf of or in the name of the
other, or to bind the other in any manner or way whatsoever. Boston Beer shall
indemnify and hold harmless City Brewing from and against any and all claims,
expenses, causes of action or liabilities of any
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Securities and Exchange Commission pursuant to a request for confidential
treatment.
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nature whatsoever (collectively, "Damages"), to the extent that Damages arise
solely from the independent conduct of Boston Beer; provided that Damages shall
not include any loss, liability, cost or expense incurred by City Brewing as a
consequence of the exercise by Boston Beer of any of its rights under this
Agreement.
15. PRODUCT LIABILITY.
(a) City Brewing and Boston Beer shall each maintain product liability
insurance of not less than [*] and in the amount of [*] combined single limit in
the aggregate relating to the Beer Products produced at the Brewery.
(b) City Brewing shall indemnify and hold harmless Boston Beer and all of
its affiliates from and against any and all loss, liability, cost or expense of
any nature whatsoever, including reasonable attorneys' fees (collectively,
"Product Liability Damages"), arising out of or associated with all claims made
against Boston Beer by any party or parties for personal injury or property
damage caused by impurities, defects, or adulteration of any kind in the Beer
Products manufactured and/or packaged at the Brewery, regardless of when
manufactured or packaged; except to the extent that (i) Product Liability
Damages when caused solely by (i) Boston Beer's improper storage, handling, or
alteration of the Beer Products in question; (ii) Packaging Materials or Brewing
Materials purchased, specified or otherwise approved by Boston Beer subsequent
to written notice from City Brewing reasonably advising that such Packaging
Materials or Brewing Materials should not be used in the Beer Products for
health and safety reasons: or (iii) Product Liability Damages resulting from
inherent properties and/or characteristics of the Beer Products, including, by
way of example and not of limitation, health and intoxicating effects of the
Beer Products.
(c) Boston Beer shall indemnify and hold harmless City Brewing and all of
its affiliates from and against any and all Product Liability Damages to the
extent arising out of the causes except from City Brewing's indemnification
obligations under Section 15(b) above.
(d) Notwithstanding the provisions of Sections 15(b) and (c) above, in no
event shall either Party be liable to indemnify the other Party for
consequential damages suffered by the other Party in an amount greater than one
(1) times the aggregate Fee paid by Boston Beer for all Beer Products produced
hereunder during the twelve (12) months preceding the month in which occurred
the event giving rise to the claim for indemnification, unless such
consequential damages are caused by the negligence or willful misconduct of the
other Party
16. TRADEMARKS.
(a) City Brewing acknowledges that no trademark or trade name rights in any
of the trademarks, trade names, service marks, domain names or logos owned by
Boston Beer, including specifically but without limitation those identified on
the Trademark Schedule attached hereto as Exhibit C (collectively, the
"Trademarks") are granted by this Agreement.
(b) Boston Beer hereby represents, warrants and covenants that it has and
will maintain the right to use the Trademarks and will indemnify and hold
harmless City Brewing from any claim of alleged infringement brought by any
party against City Brewing, including, but not limited to, City Brewing's
reasonable costs of legal expenses.
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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17. SUCCESSORS AND ASSIGNS: FUTURE POTENTIAL ACQUISITIONS.
(a) The Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns, but shall not be assigned
by either Party without the prior written consent of the other Party, which
consent will not be unreasonably withheld. No failure of a Party to consent to a
proposed assignment of this Agreement by the other Party shall be deemed
unreasonable if such Party believes in good faith that the proposed assignee is
not capable of performing the financial or production obligations of the Party
proposing to assign this Agreement. Transfer of ownership to a parent,
subsidiary or affiliate of a Party shall not be deemed an assignment under this
Section 17.
(b) Assignment of this Agreement shall not relieve the assigning Party of
its financial obligations hereunder, including its indemnification obligations,
if an assignee defaults in the performance of its assigned obligations.
(c) In the event that Boston Beer shall acquire substantially all of the
business and assets of another company which produces and/or distributes beer,
or, shall acquire all right, title and interest in and to the brands and
trademarks of another company (hereinafter the "Acquired"), then, in such event,
if the Acquired has products already being produced by City Brewing, then City
Brewing agrees to make available to Boston Beer, for the same period of time
that City Brewing has pre-existing commitments for the Acquired, such additional
capacity which is equivalent to that with the Acquired; provided, however, that
the terms and conditions governing production, including pricing, shall be
governed by the terms of this Agreement.
(d) If City Brewing acquires substantially all of the business and assets
of another company which produces beer or acquires an additional brewery
facility (hereinafter a "City Brewing Acquired Brewery"), then, in such event,
if the City Brewing Acquired Brewery has a pre-existing agreement with Boston
Beer for the production of Beer Products, City Brewing agrees to continue to
make available to Boston Beer, for the same period of time which existed under
the pre-existing agreement between Boston Beer and the City Brewing Acquired
Brewery, the same capacity as had been committed to Boston Beer by the City
Brewing Acquired Brewery; provided, however, that the terms and conditions
governing production, including pricing, shall be governed by the terms of this
Agreement.
18. GOVERNING LAW.
This Agreement shall be interpreted and construed in accordance with the
laws of the Commonwealth of Massachusetts.
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Securities and Exchange Commission pursuant to a request for confidential
treatment.
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19. ARBITRATION.
Any disagreement, dispute, controversy or claim with respect to the
validity of this Agreement or arising out of or in relation to the Agreement, or
breach hereof, shall be finally settled by arbitration in a mutually agreeable
location other than New York, New York, Boston, Massachusetts or Chicago,
Illinois, in accordance with the articles of the American Arbitration
Association for Commercial Arbitration. The arbitrators shall have the right to
assess costs, including legal expenses, in favor of the prevailing Party,
including, if applicable, travel costs. Notwithstanding the foregoing, the
Parties may have recourse to the courts of the United States of America for the
purpose of obtaining preliminary injunctive relief.
20. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together shall constitute one
and the same document.
21. AMENDMENTS.
No amendment, change, or modification of any of the terms, provisions or
conditions of this Agreement shall be effective unless made in writing and
signed or initialed on behalf of the parties hereto by their duly authorized
representatives.
22. NO THIRD PARTY BENEFICIARIES.
City Brewing and Boston Beer agree that this Agreement is solely for their
benefit and does not nor is it intended to create any rights in favor of, or
obligations owing to, any person not a party to this Agreement.
23. MERGER; SEPARABILITY.
This Agreement terminates and supersedes all prior formal or informal
understandings among the Parties with respect to the subject matter contained
herein. Should any provision or provisions of this Agreement be deemed
ineffective or void for any reason whatsoever, such provision or provisions
shall be deemed separable and shall not affect the validity of any other
provision.
24. NON-EXCLUSIVE NATURE OF AGREEMENT.
(a) Nothing contained in this Agreement shall require Boston Beer to avail
itself of the Committed Capacity or preclude Boston Beer from engaging any other
xxxxxx for the purpose of producing and distributing Beer Products.
(b) Boston Beer acknowledges that City Brewing's business includes brewing
specialty malt beverage products, including products that may compete directly
with, use the same brewing ingredients and formulae as, and/or are of the same
style as one or more of the Beer Products. Boston Beer agrees that nothing
contained in this Section 24 shall in any manner prevent, limit, restrict or
otherwise affect City Brewing's right to continue and expand such aspect of its
business, including by introducing new products that compete directly with
existing Beer Products, so long as City Brewing does not intentionally (i) copy
the identical
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Securities and Exchange Commission pursuant to a request for confidential
treatment.
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brewing formulae and ingredients of any Beer Product, (ii) use any
proprietary yeast specifically supplied to City Brewing by Boston Beer solely
for use in producing Beer Products; or (iii) use labeling or other packaging
which infringes any of Boston Beer's Trademarks or copies Boston Beer's
marketing position and strategy.
25. YEAST STRAINS.
City Brewing will keep all yeast strains provided by Boston Beer free of
any contamination and will not use such yeast strains for the brewing of any
beers other than the Beer Products. The obligations of City Brewing under this
Section 25 shall survive any termination of this Agreement. City Brewing shall,
upon the request of Boston Beer, return any proprietary yeast strains it may
have in its possession or under its control.
26. LABORATORY ANALYSIS; QUALITY ASSURANCE
City Brewing will perform the laboratory analysis and monitor production
and packaging of the Beer Products in accordance with standards set forth on
Exhibit D attached hereto. Under such procedures, City Brewing will examine
samples of each Product prior to and after packaging.
27. CONFIDENTIALITY.
The Parties agree that, except as they shall otherwise mutually determine
from time to time, the terms of this Agreement and any notices given hereunder
or other communications with respect to the substance of the relationship
between them shall be maintained in confidence; provided that each Party shall
be permitted to make such disclosures of confidential information to such courts
and other public or governmental agencies as their counsel shall deem necessary
to maintain compliance with and to prevent violation of applicable federal or
state laws.
28. NOTICES.
All notices required herein shall be given by certified mail, return
receipt requested, or by overnight courier service, to the following addresses
(unless change thereof - has previously been given to the party giving notice)
and shall be deemed effective when received:
If to Boston Beer:
Xxxxxxx X. Xxxxx, Chief Operating Officer
Boston Beer Corporation
00 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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with a copy to:
Legal Department
Boston Beer Corporation
00 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
If to City Brewing:
Xxxxx Xxxx, Vice President of Business Development
City Brewing Company, LLC
000 Xxxxx Xxxxx Xxxxxx
Xx Xxxxxx, XX 00000
29. RIGHTS OF OFFSET.
City Brewing and Boston Beer agree that, to the extent that either of them
is at any time owed money by the other Party, including on regular invoices sent
as provided herein, such Party may set off such amount against any undisputed
monies owed by it to such Party from time to time, any such set-off to be
accomplished by written notice to the owing Party, effective upon being sent.
30. DELIVERIES TO JOINT WHOLESALERS.
To the extent permitted by applicable law and at the request of Boston
Beer, City Brewing will combine Beer Products and City Brewing products in
single truckloads for delivery to "Joint Wholesalers," in which case freight
costs shall be pro-rated. For this purpose, a "Joint Wholesaler" is a licensed
beer wholesaler that has been duly authorized by both Boston Beer and City
Brewing to distribute their respective products. City Brewing and Boston Beer
will cooperate with each other in the coordination of order entry so as to
facilitate such single truckload deliveries.
31. LIMITATION ON PERIOD OF CLAIMS.
Except as otherwise provided in this Agreement with respect to specific
issues, all claims hereunder must be brought no later than one (1) year after
such claim arose or the Party having such claim shall be deemed to have waived
or forever released it; provided that, for purposes of this Section 31, a claim
based on a claim by a third party shall be deemed to have arisen at the time
that the Party asserting a claim first became aware of it.
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Securities and Exchange Commission pursuant to a request for confidential
treatment.
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IN WITNESS WHEREOF, City Brewing and Boston Beer have executed this
Agreement as of the date first above written.
CITY BREWING COMPANY, LLC
By: /s/ Xxxx Xxxxx
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Xxxx Xxxxx, Chief Operating Officer
BOSTON BEER CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx, President and CEO
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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Exhibit A
Beer Products
[*]
and any substitutions therefor and such other malt beverages as may be requested
by Boston Beer from time to time and subject to approval by City Brewing, which
approval will not be unreasonably withheld.
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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Exhibit B
Fee Schedule
[*]
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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Exhibit C
Schedule of Trademarks
TRADEMARK REGISTRATION NO., IF APPLICABLE DATE OF ISSUANCE
--------- ------------------------------- ----------------
Xxx Xxxxx(R) 1,987,061 July 16, 1996
Xxx Xxxxx(R) (Stylized) 2,054,509 April 22, 1997
Xxxxxx Xxxxx(R) 1,987,062 July 16, 1996
Xxxxxx Xxxxx Portrait Logo(R) 2,402,492 November 7, 0000
Xxxxxx Xxxxx Xxxxxx Xxxxx(X) 1,522,026 January 24, 1989
Xxx Xxxxx Light(R) 2,597,646 July 23, 2002
Twisted Tea(R) 2,574,263 May 28, 2002
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
-15-
Exhibit D
Laboratory Analysis and Quality Assurance Monitoring Procedures
STANDARD ANALYTICAL TESTING SCHEDULE - BREWING - WORT
TYPE OF TEST MINIMUM TEST FREQUENCY
------------ ----------------------
pH Each Brew
Starch Conversion (Brewing Dept.) Each Brew
Color As Requested
Dissolved Oxygen 1 Brew Weekly
STANDARD ANALYTICAL TESTING SCHEDULE - BREWING - BEER
TYPE OF TEST MINIMUM TEST FREQUENCY
------------ ----------------------
END OF FERMENTATION
Original Gravity Each Tank
Real Extract Each Tank
Alcohol Each Tank
Real Degree of Attenuation Each Tank
VDK Each Tank
pH Each Tank
IBU As Requested
Color As Requested
RUH BEER
Original Gravity Each Tank
Real Extract Each Tank
Alcohol Each Tank
Real Degree of Attenuation Each Tank
Dissolved Oxygen (Brewing Dept.) Each Tank
pH Each Tank
IBU Each Tank
Color Each Tank
Sensory Evaluation Each Tank
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
-16-
Exhibit D cont.
Laboratory Analysis and Quality Assurance Monitoring Procedures
STANDARD ANALYTICAL TESTING SCHEDULE - BREWING - BEER
TYPE OF TEST MINIMUM TEST FREQUENCY
------------ ----------------------
PACKAGE RELEASE BEER
Original Gravity Each Tank
Real Extract Each Tank
Alcohol Each Tank
Color Each Tank
pH Each Tank
Turbidity Each Tank
Dissolved Oxygen (Brewing Dept.) Each Tank
CO2 (Brewing Dept.) Each Tank
Temperature (Brewing Dept.) Each Tank
Sensory Evaluation Each Tank
STANDARD ANALYTICAL TESTING SCHEDULE - BREWING - WATER
TYPE OF TEST MINIMUM TEST FREQUENCY
------------ ----------------------
RAW WATER
pH Weekly
Alkalinity Weekly
Turbidity Weekly
Sensory Evaluation Weekly
CARBON TREATED WATER
Carbon Weekly
BREWING WATER AND R.O. WATER
pH Daily
Alkalinity Daily
Conductance Daily
Turbidity Daily
Sensory Evaluation Daily
DILUENT
Dissolved Oxygen (Brewing Dept.) Each Tank
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
-17-
Exhibit D cont.
Laboratory Analysis and Quality Assurance Monitoring Procedures
STANDARD ANALYTICAL TESTING SCHEDULE - PACKAGING - ALL PRODUCTS
TYPE OF TEST - PRODUCT MINIMUM TEST FREQUENCY
---------------------- ----------------------
Package Air (bottles and cans) 3 units/2 hours and Each Tank Change
CO2 (bottles and cans) 3 units/2 hours and Each Tank Change
Fill Volume (bottles and cans) 5 units/2 hours and Each Tank Change
Product Analysis (alcohol, RE, OG) Start-up and Each Tank Change
NA Beer Analysis (alcohol, RE, OG) Start and End of Each Run
TYPE OF TEST - PACKAGE
Crown Crimp Check (Packaging Dept.) 2 sets/shift/xxxxxxx
Removal Torque 1 set/shift/xxxxxxx or capper
Filled Carton Package Evaluation
(Packaging Dept.) 48 units/2 times/shift/line
Metal Exposure (cans) 12 units/2 times/shift/line
1st Operation Seam Check 1/week and after seamer maintenance
2nd Operation Seam Check 1/shift/seamer
Can Lubricant Contamination 1/shift/seamer
Seamer Lubricant Check
(Packaging Dept.) 2/shift
Can Filtec Rejects Visual
(Packaging Dept.) Every hour/line
Sensory Evaluation Each Tank Change
PACKAGING LINE EQUIPMENT
Glass Inclusion Monitoring
(QA/Packaging) 24 bottles/2 hrs. and100 bottles at Start-up
Pasteurizer Temperature Monitoring
(Packaging Dept.) Every 2 hours/line
Pasteurizer PU Check
(non-Juice products) 1/week/line and at changeovers
Pasteurizer PU Check (Juice products) 2/shift and at changeovers
Pasteurizer Pressure Switch Check
(Packaging Dept.) 1/shift/line
Package Filtec Check
(Packaging Dept.) Every 2 hours/line
Full Case Filtec Check
(Packaging Dept.) 2/shift/line
Date Coding-cans, bottles, carriers,
cartons (Packaging) Every 2 hours and line and changeovers
Carton Set-up and Gluing
(Packaging Dept.) Every 30 minutes/line
STANDARD ANALYTICAL TESTING SCHEDULE - BREWING - BLENDED PRODUCTS
PRODUCT RELEASE TANKS
TYPE OF TEST MINIMUM TEST FREQUENCY
---------------- ----------------------
Original Gravity Each Tank
Specific Gravity Each Tank
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
-18-
Exhibit D cont.
Laboratory Analysis and Quality Assurance Monitoring Procedures
STANDARD ANALYTICAL TESTING SCHEDULE - BREWING - BLENDED PRODUCTS
PRODUCT RELEASE TANKS
TYPE OF TEST MINIMUM TEST FREQUENCY
------------ ----------------------
Refractive Index Each Tank
Real Extract Each Tank
Alcohol Each Tank
Color Each Tank
pH Each Tank
Turbidity Each Tank
Degrees Brix Each Tank
Total Acidity Each Tank
Dissolved Oxygen (Brewing Dept.) Each Tank
CO(2) (Brewing Dept.) Each Tank
Temperature (Brewing Dept.) Each Tank
Sensory Evaluation Each Tank
STANDARD ANALYTICAL TESTING SCHEDULE - MICROBIOLOGY
TYPE OF TEST MINIMUM TEST FREQUENCY
------------ ----------------------
WORT
Cooler Wort (aerobes and anaerobes) 1/week
Pitched Wort (aerobes and anaerobes) Each Fermenter
Pitched Wort Cell Count 1/week
Yeast % Solids (Brewing) Each Brink
Dead Cell Count 1/day
IN-PROCESS PRODUCT
Ruh Storage Tanks (aerobes and
anaerobes) Each Tank
Package Release Tanks (aerobes and
anaerobes) Each/1 week
Filter Series (aerobes and anaerobes) 1/week
Extended Age Product >28 days 1/week/tank
PACKAGED PRODUCT
Bottles and Cans (aerobes and
anaerobes) 1/line/week at start-up
Rinse Water 1/line/week
Xxxxxx Water 1/line/week
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
-19-
Exhibit D cont.
Laboratory Analysis and Quality Assurance Monitoring Procedures
STANDARD ANALYTICAL TESTING SCHEDULE - MICROBIOLOGY
TYPE OF TEST MINIMUM TEST FREQUENCY
---------------------- ----------------------
WATER
Well Water (coliforms) 1/month
Raw Water (aerobes) 1/week
Diluent Water (aerobes) Each/1 week
Brewing Water (aerobes) Each/1week
PITCHING YEAST
Morphology 1/day
Dead Cells 1/day
Aerobes and Anaerobes 1/day
Wild Yeast 1/day
[*] indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
-20-
AMENDMENT TO
AMENDED AND RESTATED
BREWING SERVICES AGREEMENT
CITY BREWING COMPANY, LLC
AND
BOSTON BEER CORPORATION
THIS AMENDMENT, made as of the 10th day of April, 2007 (the "Amendment"),
to the Amended and Restated Brewing Services Agreement (the "Agreement") dated
as of August 1, 2006 between City Brewing Company, LLC ("City Brewing") and
Boston Beer Corporation ("Boston Beer").
WHEREAS, Boston Beer has been brewing and packaging Beer Products under the
Agreement as an alternating proprietor at the brewery owned and operated by City
Brewing pursuant to the Agreement;
WHEREAS, the Alcohol and Tobacco Trade and Tax Bureau of the U.S.
Department of the Treasury (the "TTB"), pursuant to a letter to the parties
dated March 12, 2007, requires that certain modifications to the Agreement be
made in order to comply with the requirements for operating as an alternating
proprietor pursuant to Industry Circular 2005-2, Alternating Proprietors at
Brewery Premises, dated August 12, 2005 (the "Industry Circular"); and
WHEREAS, it is the intention of the parties that Boston Beer be able to
continue to operate at City Brewing's brewery as an alternating proprietor in
accordance with the Industry Circular and, thus, to adopt the changes required
by the TTB;
NOW, THEREFORE, in consideration of the mutual agreements contained in this
Amendment, the parties, intending to be legally bound, hereby agree as follows:
1. Paragraph 4(d) of the Agreement shall be deleted in its entirety and
the following shall be inserted in lieu thereof:
(d) City Brewing shall invoice daily for any Brewing Materials to be
used in that days wort products supplied by City Brewing prior to
initiation of brewing process. Boston Beer shall pay such
invoices within [*]. Upon completion of packaging the Beer
Products in cases or kegs, City Brewing shall send Boston Beer a
final invoice representing the Fee and non-Boston Beer owned
packaging supplies by City Brewing. Boston Beer shall pay the
final invoice within [*].
2. The words "when liquid is transferred to fermentation" shall be
deleted from paragraph 8(b) and the words "prior to initiation of the
brewing process" shall be inserted in lieu thereof.
3. The words "and formulae" shall be deleted from paragraph 24 of the
Agreement.
4. The effective date of this Amendment shall be August 31, 2006.
1
5. Except for the changes enumerated above, all other terms and
conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, City Brewing and Boston Beer have executed this
Amendment as of the date first above written.
CITY BREWING COMPANY, LLC
By: /s/ Xxxx Xxxxx
------------------------------------
Xxxx Xxxxx
Chief Operating Officer
BOSTON BEER CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx,
President and Chief Executive
Officer
2
