EXHIBIT 10.4
CONTRACT
This Agreement is made and entered into this 22nd day of October, 1995,
between ▇▇▇▇ ▇. ▇▇▇▇▇▇ Senior Trust, with domicile at ____________ hereinafter
referred to as ▇▇▇▇ ▇▇▇▇▇▇ and Tesoro Corporation with address at ▇.▇. ▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, hereinafter referred to as Tesoro.
Whereas ▇▇▇▇ ▇▇▇▇▇▇ is the owner of a certain water source, located at
I-90, exit 2, south (1/4 of a mile), with permits of commercial use, and whereas
▇▇▇▇ ▇▇▇▇▇▇ wishes to sell [hand- written and initialed in margin "drinking only
drinking quality"] water in bulk to Tesoro, and
Whereas, Tesoro wishes to buy spring water, from the source, from ▇▇▇▇
▇▇▇▇▇▇.
Now, therefore, for One dollar ($l.00), receipt of which is hereby
acknowledged by ▇▇▇▇ ▇▇▇▇▇▇, and other valuable consideration, it is mutually
agreed as follows:
1. Buyer/Seller. Tesoro shall buy the water and ▇▇▇▇ ▇▇▇▇▇▇ shall sell the
water at a mutually agreed price in accordance with confidential
exhibit "A", which forms an integral part to this contract and which is
attached by reference hereto.
2. Exclusive Nature. ▇▇▇▇ ▇▇▇▇▇▇ agrees that the sale of water to Tesoro
is of the exclusive nature until the first 23 million gallons of water
annually have been maximized. This maximization clause starts over
automatically at each anniversary contract date. Before maximization,
▇▇▇▇ ▇▇▇▇▇▇ may sell any surplus water not used by Tesoro to third
parties, with the understanding that Tesoro demands for water will
always take precedence as to the first twenty three million gallons of
water.
2.1 Tesoro agrees that the exclusive nature also applies to the purchase of
water exclusively from ▇▇▇▇ ▇▇▇▇▇▇ until the first 23 million gallons
of water annually have been maximized. This maximization clause starts
over automatically at each anniversary contract date. Before
maximization, Tesoro agrees not to purchase water from any other
source, but ▇▇▇▇ ▇▇▇▇▇▇.
2.2 As ▇▇▇▇ ▇▇▇▇▇▇'▇ water rights are gradually authorized to increase on
the amount of water it can use commercially, the maximization clauses
referred to on clauses 2. and 2.1. may be increased by common
accordance, provided that both parties agree to such increase in
writing. In such an event, clauses of this contract shall apply to such
additional agreement.
2.3 Tesoro must, by the fifth anniversary date of this agreement, be buying
from ▇▇▇▇ ▇▇▇▇▇▇, more than one million gallons of water per year,
failure by Tesoro to reach and keep this quantity shall cause clauses
2., and 2.1, and 2.2 of this contract to be no longer applicable. The
remainder of this contract shall be unaffected.
2.4 Permits. ▇▇▇▇ ▇▇▇▇▇▇ shall, upon execution of this agreement provide
Tesoro with copies of water permits, tests done to water with an
analysis of any contents, including mineral contents and deposits on
water and survey maps and water formations and information on files.
3. Water sold to Tesoro shall pass requirements imposed by governing
authorities, including FDA and Health Department rules.
-75-
3.1 Should the water at any time, found to be contaminated or unfit for
consumption, by tests effected by Tesoro, or a governing authority,
then ▇▇▇▇ ▇▇▇▇▇▇ shall be notified and required to cure such
contamination or problem within thirty days of notification. Failure of
▇▇▇▇ ▇▇▇▇▇ to cure any contamination or problem shall not be grounds
for termination of this contract, such termination under such failure
may be made only at the election of Tesoro.
3.2 During any periods of water contaminations, or water being unavailable
for any reason, including reasons beyond the control of ▇▇▇▇ ▇▇▇▇▇▇,
Tesoro shall have the right, without breach of contract to acquire
water from any source it deems necessary for the continuance of its
operation.
3.4 ▇▇▇▇ ▇▇▇▇▇▇ shall install, as soon as feasible, but not later than
three months (excepting periods of frozen ground) after commencement of
bottling by Tesoro or its affiliates, an underground pipe system to
reach within 125 inside Tesoro's bottling plant property line
[handwritten and initialed in margin "my property line"].
4. Ownership. Each party is the owner of the product (water) until it
changes hands. The use and application of the purchased water is right
of the exclusive ownership of Tesoro, for any configuration or
commercial or noncommercial use or development. The name, brand or
claims used by Tesoro or its affiliates for the purchased water are the
exclusive property of Tesoro, including any divisibilities applied to
water purchased from alternative suppliers or used from Tesoro's own
sources. ▇▇▇▇ ▇▇▇▇▇▇ shall not claim rights of any kind to benefits of
brand or product development, the only role of ▇▇▇▇ ▇▇▇▇▇▇ being of the
nature of a water supplier to Tesoro. This clause shall survive forever
this contract.
5. Agency. Nothing contained in this agreement shall be construed or
interpreted to create an agency relationship, a partnership, joint
venture, employee-employer relationship or similar between Tesoro and
▇▇▇▇ ▇▇▇▇▇▇, other than the relationship of buyer/seller-
supplier/purchaser contemplated under this agreement.
6 Commencement - Term - Continuity. Tesoro or its affiliates shall start
purchasing water from ▇▇▇▇ ▇▇▇▇▇▇ within a year from execution of this
agreement, failure to meet this requirement shall be grounds for
termination of this contract.
6.1 This being an agreement on the best efforts basis of product
development on the part of Tesoro, with considerable amounts spent on
pre-development, installations and research, then, the term of this
agreement shall, and is considered of continuous nature for 20 (twenty)
years, with automatic yearly renewals with the proviso of adherence to
the terms and conditions of this agreement.
6.2 At the end of twenty years renewal must be negotiated by mutual
accordance on a Meeting of the Minds. Death of any of the executors of
this agreements shall not constitute a default or termination.
7. Sales/Rights. In the case of an attempted sale or sale of ▇▇▇▇ ▇▇▇▇▇▇'▇
property (or it's successor), or that part controlling the water
rights, ▇▇▇▇ ▇▇▇▇▇▇ or it's successor shall give Tesoro or its
successor a notice on land and water rights for Tesoro to compete or
bid at its option on the purchase from ▇▇▇▇ ▇▇▇▇▇▇ of the land and or
the water rights. In any event this contract and its provisions shall
transfer along with any sale, change of ownership or controlling
interest of the property and/or its water rights.
-76-
8. Transfers/Obligations. Notwithstanding anything to the contrary, and
applying clause 7. above, in the event of a sale, transfer, takeover,
or any other legal transaction of both parties of this agreement, this
contract, its exhibits or addendum's clauses shall apply and be binding
to all new parties involved. Failure of any of the parties of this
agreement, to notify or provide each other proof of compliance thereof,
and to notify, disclose and make any new parties to be bound by all the
certain conditions contained herein and as described on clauses 7. and
8. of this contract shall not excuse the conditions and terms of this
agreement and shall be binding to all previous parties.
9. Time. Time is of the essence of this agreement.
10. Inuring. This agreement shall inure to the benefit of the parties
hereto, their heirs, successors and assigns.
11. Entire Agreement. The parties hereto agree that this document
constitutes the entire agreement, and any changes, additions or
modifications shall be only valid when approved mutually and reduced to
a written form and executed by both parties.
12. Governing Law. This contract shall be governed by the laws of the
state of South Dakota.
13. Paragraphs. The titles and captions contained herein are inserted for
convenience only, and do not constitute a part or alter a part or
meaning of this agreement. If any provision or combination contained in
this agreement should be lawfully declared to be illegal or
unenforceable, that provision or combination shall be inoperative and
divisible from this agreement and shall not impair or have any effects
upon the remaining parts, terms and conditions of this agreement.
14. Waiver. The waiver of any provision of this agreement, by either party,
written shall not be deemed a continuing waiver or waivers of any
provision of this agreement by either party. Waivers must be in
writing.
15. Notices. All notices shall be valid when delivered by a certified
server or when deposited in the United States mail, certified mail,
postage pre-paid return receipt requested to the last known address of
the parties.
AGREED AND ACCEPTED ON THE DATE FIRST WRITTEN ABOVE, THE PARTIES TO THIS
AGREEMENT EXECUTE SAME IN TWO COUNTERPARTS (BEING THE TWO ONE AND THE SAME) FOR
THE PURPOSES HEREIN CONTAINED BINDING EACH OTHER PERFORMANCE THEREIN.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇▇
TESORO CORPORATION
BY: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
contract, page # 3
-77-
CONFIDENTIAL
EXHIBIT "A"
This document constitutes Exhibit "A" to a certain contract between ▇▇▇▇
▇. ▇▇▇▇▇▇ Senior Trust (referred to as ▇▇▇▇ ▇▇▇▇▇▇), and Tesoro Corporation
(referred to as Tesoro).
The purpose of this exhibit "A" is to set the price per unit of water
sold by ▇▇▇▇ ▇▇▇▇▇▇ to Tesoro under the above mentioned contract. The unit of
water is the equivalent of One US Gallon of 128 fluid ounces.
It is agreed therefore, that the price per unit that ▇▇▇▇ ▇▇▇▇▇▇ shall
charge Tesoro, and the price per unit Tesoro shall pay ▇▇▇▇ ▇▇▇▇▇▇, is hereby
established at Five cents of a dollar (0.05c) per unit. The basis of the pricing
has been determined in common accordance of the parties hereto and in reliance
to prices believed to be within industry standards for similar water available
in other regions as advertised in national industry publications such as
Beverage World and Beverage Industry, copy samples of advertised water sources
and prices are attached by convenience and reference herein with the
initialization of the parties thereto.
It is also agreed that the unit shall be calculated as follows: Payment
shall be the higher of quantity gallons or cased gallons.
A meter shall be installed at both ends of pipeline. These meters shall
read the gallons flowing for delivery to Tesoro. In addition a count of
production of water filled cases shall be maintained and open for inspection,
the gallonage per case calculated and added to the average of the two meters,
and then the total sum shall be divided by two, from this result a two percent
loss shall be deducted. The below example clarifies this formula:
Meter One reading (at beginning of pipe): ....... 10,730 Gallons
Meter Two reading (at end of pipe)......... 10,580 Gallons
Total added reading ............................. 21,310 Gallons
Average gallons(divided by 2) ................... 10,655 Gallons
2,200 cases of 1.1/2 Liters (4.75 Gls. each): ... 10,450 Gallons
Average gallons plus cased gallons.: ............ 21,105 Gallons
Divided by two............... 10,552.50 Gallons
Minus two percent loss .......................... 211.50 Gallons
Quantity gallons ................................ 10,341 Gallons
Quantity paid to ▇▇▇▇ ▇▇▇▇▇▇
(higher of cases or quantity gallons) ....... 10,450 Gallons Times 0.05=$522.50
The price per unit may have a revision by common accordance and agreement every
fifth anniversary date. The price revision shall use as a guideline an average
price of spring water at the source as provided by advertised water available on
national publications such as Beverage Industry or Beverage World, in the event
of no mutual agreement reached, then an independent consulting firm chosen
mutually shall be hired to find the average, the cost of the consulting firm
shall be equally shared.
In any event, with revisions or not,. the basic price of water shall never be
less than 0.05c per unit and any revision shall never at each revision have an
increase in excess of first agreed price per unit.
-78-
Tesoro shall pay purchase water on the following terms:
Net 30 days from billing date or as otherwise agreed in
writing.
Unless agreed to extensions in writing, a past due ▇▇▇▇ in excess of 90 days of
water purchase under the contract to which this exhibit is attached, shall be
grounds for breach of said contract.
This exhibit and contract to which is attached were prepared by Tesoro and
revised by ▇▇▇▇ ▇▇▇▇▇▇ to both parties satisfaction and agreement.
AGREED AND ACCEPTED ON THE ABOVE TERMS AND CONDITIONS ON THIS THE 22nd
DAY OF OCTOBER, 1995.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇▇
TESORO CORPORATION
BY: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-79-
