EXHIBIT 10.16
CAN SUPPLY AGREEMENT
This Agreement is made this 7th day of November, 1995 between AMERICAN
NATIONAL CAN COMPANY, a Delaware corporation, with its principal offices
at 0000 X. Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 ("ANC"), and
COCA-COLA BOTTLING COMPANY CONSOLIDATED, with its principal offices at
0000 Xxxxxxx Xxxx, Xxxxxxxxx, XX 00000-0000 ("Buyer"), and covers the
manufacture and supply by ANC to Buyer and the purchase by Buyer of
two-piece aluminum beverage can bodies and ends (herein collectively
referred to as "cans" or "containers") of the specifications and
quantities referred to hereinbelow.
WHEREAS, the parties are desirous of entering into a long-term supply
agreement covering certain of Buyer's requirements of Containers; and
WHEREAS, the parties are desirous of establishing pricing for the
containers to be purchased and sold hereunder, with a floor and ceiling
cost for aluminum ingot ("Ingot Band") which will, over the term of this
Agreement, limit the extreme volatility which both parties have
experienced in the recent past with respect to can pricing and
particularly with respect to aluminum costs; and
WHEREAS, in order to accomplish this goal of predictability of pricing,
the parties are willing to commit themselves to purchase and sell, as
the case may be, the quantity of containers stated herein utilizing
aluminum covered by an Ingot Band, and the parties recognize that each
of them has the ability to protect itself against the fluctuation in the
cost of aluminum above or below the Ingot Band by purchasing the
appropriate downside or upside protection, which is available in the
marketplace.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Description of Products. This Agreement relates to containers of the
specifications set forth on Exhibit A attached hereto, required by Buyer
at its can filling location(s) set forth on Exhibit B (and at any
additional or substitute facilities where Buyer may fill cans if this
contract covers all of Buyer's can requirements).
2. Term. The initial term of this Agreement shall be five (5) years
commencing January 1, 1996 and terminating December 31, 2000. This
Agreement shall be automatically extended for one additional year beyond
the initial term (i.e., until December 31, 2001) if, during the period
July 1, 1999 through December 31, 1999, the daily London Metal Exchange
cash settlement price for aluminum ingot plus the Midwest premium for
that ingot (the "Midwest Ingot Price") is outside of the Ingot Band
referenced on Exhibit C attached hereto, on more than 75% of the dates
when the market is open.
3. Volume.
(a) Buyer agrees to buy and ANC agrees to sell, in each calendar year
during the term of this Agreement: choose one (i) 70% of Buyer's total
requirements of cans; or (ii) million cans. Can bodies and ends shall be
purchased by Buyer and supplied by ANC in substantially equal volumes.
(b) The foregoing annual volume of containers to be purchased hereunder
may not be changed by Buyer during the terms of this Agreement without
the written consent of ANC although ANC will use its commercially
reasonable best efforts to accommodate year over year changes hereafter
requested by Buyer in its annual volume.
(c) ANC will not be required to provide more than 55% of Buyer's annual
band-priced volume hereunder in either of the following six month
periods throughout the term hereof: (i) April 1 through September 30;
(ii) October 1 through March 31.
4. Pricing
(a) Prices under this Agreement shall be established and adjusted in
accordance with the terms, conditions and limitations set forth on
Exhibit C attached hereto. In addition to the price adjustment
mechanisms set forth on Exhibit C, any changes in the specifications of
containers supplied hereunder may result in an upward or downward price
adjustment.
(b) ANC will in no event be required to meet competitive band formulas
or other competitive offers driven by lower metal costs; however, and
notwithstanding the foregoing, ANC intends to be competitive with
specific offers not driven by lower metal costs.
(c) Buyer and ANC recognize and agree that fluctuations in the price of
aluminum may drive the spot price of aluminum above the ceiling price or
below the floor price of the Ingot Band, as such ceiling and floor
prices may be adjusted from time to time in accordance with Exhibit C.
However, Buyer and ANC agree to purchase and sell the quantities agreed
to hereunder with aluminum ingot costs no higher than such ceiling
prices nor lower than such floor prices notwithstanding any such
fluctuations. The parties recognize that protection against any such
market fluctuation is available to be purchased in the marketplace.
5. Payment Terms. Payment terms shall be: 1% 10, net 30 days. Interest
shall be assessed on all past-due amounts at the annual rate of two (2%)
percent above the prime rate of interest at the First National Bank of
Chicago, Chicago, Illinois.
6. Delivery. Buyer shall advise ANC, prior to October 31, of its annual
requirements of containers under this Agreement for the upcoming
calendar year (the "Forecasted Volume"). ANC shall not be required under
any circumstances to sell band priced containers to Buyer in excess of
such Forecasted volume. If the Forecasted Volume is in excess of or less
than the volume referred to in subparagraph 3(a) above, ANC shall only
be required to use its commercially reasonable best efforts to provide
such excess to Buyer or accommodate such shortfall. In the event that
the Forecasted Volume is in excess of the volume referenced in
subparagraph 3(a), ANC shall first attempt to secure metal within the
then current band pricing range. If ANC is unsuccessful in securing band
pricing for such excess, then pricing for the excess volume will be
based on the Midwest Ingot Price on the date ANC purchases metal to
satisfy Buyer's excess requirements.
7. Effect of Termination. Upon termination of this Agreement, for any
reason, Buyer shall accept all completed, specially fabricated or
lithographed containers and related items previously ordered, acquired
or committed for by ANC in reasonable quantities in anticipation of
Buyer's normal can requirements.
8. Warranties, Claims and Limitation of Liability.
(a) ANC hereby warrants to Buyer that the containers to be manufactured
and sold to Buyer hereunder shall be free from defects in workmanship
and materials, and shall conform to the specifications set forth in
Exhibit A attached hereto. EXCEPT AS EXPRESSLY STATED ABOVE, THERE ARE
NO OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
(b) ANC shall not be liable to Buyer or to any other person where the
claimed damages result from: (1) Buyer's faulty assembly or closure of
the can body and loose end; (2) rust or outside corrosion on containers
occurring after Buyer's receipt, except when caused by ANC's faulty
workmanship or imperfect materials; (3) the failure of Buyer (or any
other party from time to time having custody or control of allegedly
defective goods) to exercise reasonable care in conveying, warehousing,
using, packing, handling, distributing or storing filled or unfilled
containers; or (4) the failure of empty or filled containers exported or
used in foreign countries unless a special warranty has been
specifically approved by ANC to cover such exported containers.
(c) Seller shall give immediate consideration to settlement of Buyer's
claims, but in no event shall Seller be liable on any claim unless
notice thereof is received by ANC by the earliest of: (i) 30 days after
discovery of an alleged defect; (ii) 60 days after the alleged defect
reasonably should have been discovered; and (iii) 365 days after Buyer's
filling of allegedly defective containers. Failure to assert a claim
within such period shall constitute a waiver of the claim, and shall
discharge Seller from any responsibility.
(d) ANC's liability to Buyer hereunder shall be limited to Buyer's cost
of the defective containers, cost of the contents of the containers lost
as a direct result of the defect, and the reasonable cost of recovery
and disposition of defective containers (but as to the latter, only to
the extent reasonably required). ANC shall also be responsible for the
defense of claims by third parties to the extent arising out of a
container defect provided that ANC is given adequate advance notice of
such claim and the opportunity to defend such claim by counsel of its
own choosing.
9. Force Majeure. Except for the payment of money due hereunder, ANC and
Buyer shall be excused for failure to perform under this Agreement where
such failure results from circumstances beyond the affected party's
reasonable control including, without limitation, such circumstances as
fire, storm, flood, earthquake, strikes, work stoppages or slowdowns,
delay or failure of transportation or suppliers, acts of the public
enemy, acts of God or acts, regulations, priorities or actions of the
United States, a state or any local government or agents or
instrumentalities thereof.
10. Notices. All notices, requests or other communications shall be in
writing, and shall be deemed given when delivered personally or
deposited in the United States mail, postage
prepaid, or to a courier service and properly addressed to Buyer at:
0000 Xxxxxxx Xxxx, Xxxxxxxxx, XX 00000-0000 and to ANC at: 0000 X. Xxxx
Xxxx Xxx., Xxxxxxx, XX 00000, Attn: Sales Department, or to such other
address as either party may, from time to time, designate to the other
in writing.
11. Assignability. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the parties hereto
including, without limitation, a purchaser, transferee or successor by
merger of substantially all of the business or assets of either Buyer or
ANC. Buyer hereby agrees to require the purchaser or transferee of all
or any portion of its can filling operations to assume that portion of
this requirements contract that relates to the portion of its operations
being sold or transferred.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
AMERICAN NATIONAL COCA-COLA BOTTLING
CAN COMPANY COMPANY CONSOLIDATED
By: (sig of Xxxxx X. Xxxxxx) By: (sig of Xxxxx X. Xxxxxx)
Xxxxx X. Xxxxxx Xxxxx X. Xxxxxx
Title: Title: Vice President and Chief
Senior Vice President, Sales Financial Officer
