April 14,1997
Xx. Xxxxxx X. Xxxxxxxxxx
Vice Chairman
Xxxxxx Beverage Company
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Re: Packaging Agreement between Xxxxxx Beverage Company and
U.S. Continental Packaging, Inc.
Dear Xx. Xxxxxxxxxx:
U.S. Continental Packaging, Inc., a California corporation ("USCP"), is
pleased to provide packaging, bundle wrapping and distribution services for
Xxxxxx Beverage Company ("Xxxxxx") beverage products pursuant to the terms and
conditions set forth herein.
1. Primary Engagement
x. Xxxxxx hereby engages USCP as its primary distribution center
for Xxxxxx beverage products for truck delivery other than for
products shipped directly from Xxxxxx Co-packers in the
"Territory" as described on Schedule "1" hereto (the
"Territory"). As such, USCP shall have responsibility for
loading trucks with Xxxxxx beverage products scheduled for
delivery. USCP shall manage inventory at the distribution
center and assemble and load it, as appropriate, for truck
delivery in accordance with the procedures set forth in
Schedule "'2" hereto. USCP will provide all personnel and
equipment necessary to meet its obligations hereunder.
b. USCP will provide such dry packaging services and bundle
wrapping of Xxxxxx beverage products as may be requested by
Xxxxxx and in accordance with the procedures set forth in
Schedule "2" hereto. The parties hereto acknowledge that USCP
is not responsible for filling any beverage products in cans,
bottles or other containers.
c. USCP will case pack and hand load trucks with Xxxxxx beverage
products, all such loading to take place at the loading dock
of the "Facility" (as defined herein).
2. Compensation
x. Xxxxxx will compensate USCP in accordance with the terms set
forth in Schedule "3" hereto for services rendered by USCP.
Prices charged to Xxxxxx by USCP will not increase during the
first year of this agreement. Thereafter, prices may increase,
but such increases shall be limited to actual increases in
direct costs incurred by USCP. USCP shall provide reasonable
support for any such increases to Xxxxxx.
b. After six (6) months from the inception of this Agreement,
USCP will, in good faith, evaluate its costs of actual
operations as compared to its estimated costs of operations at
the commencement of this agreement and in the event of such
actual costs being lower, it shall pass an appropriate price
reduction onto Xxxxxx. Such costs shall be determined on an
ongoing basis and shall exclude costs incurred during the
start up phase of the business.
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3. Facility Lease and Related Expense
x. Xxxxxx will lease such industrial facilities as are necessary
for USCP to discharge its services in accordance herewith. The
parties contemplate that Xxxxxx will lease a facility (the
"Facility") of an appropriate size and which is estimated too
be approximately 50,000 square feet. Xxxxxx will be respon-
sible for and pay the rent for such facility; provided,
however, that if by agreement between the parties, a larger
facility is leased by Xxxxxx with a view to an agreed portion
up to 10,000 square feet being utilized by USCP for its other
business activities, then USCP shall be responsible to xxxx-
xxxxx Hanse for such excess area on the basis set out below
and to the extent necessary USCP will sign an appropriate
sublease on the same terms as the main lease mutatis mutandis,
but for a period of 2 years and on the basis that Xxxxxx shall
be entitled to terminate such sublease on 60 days written
notice at any time, in the event that such excess area is
required for Xxxxxx products.
b. In the event of any portion of the Facility being subleased to
USCP, then Xxxxxx and USCP shall be responsible for the rent
as follows. Xxxxxx will make all payments due to the landlord
(or the sublessor, as the case may be) for its lease of the
Facility. USCP shall reimburse Xxxxxx, on a monthly basis, for
a portion of rent as follows:
Monthly Rent Reimbursement =
Monthly rent for the Facility x (area of the Facility occupied
by USCP for its own business divided by total area of the
Facility)
c. All expenses associated with said lease and occupation of the
facility including, but not limited to, utilities, insurance,
repairs, maintenance and cleaning, will be paid by USCP. If so
paid, Xxxxxx will reimburse USCP its agreed share on demand or
if paid by Xxxxxx, USCP will reimburse Xxxxxx on demand or
Xxxxxx will deduct it from any amounts owing, save and except
for the following which shall be paid for by Xxxxxx.
(i) Alarm service
(ii) Insurance over Xxxxxx Inventory, but not relating to
the operations of USCP in the Facility
(iii) Xxxxxx'x pro rata share of the utilities attributable
to that portion of the Facility that is utilized for
storage of the products. It is specifically recorded
that the electrical costs of operating any equipment
for the activities of USCP shall be borne and paid
for in full by USCP. USCP shall procure that such
electricity costs are separately monitored.
x. Xxxxxx shall permit USCP to have exclusive use of the Facility
for the purpose of providing services to Xxxxxx in accordance
herewith and as otherwise permitted under Section 3 (b)
hereof, except that approximately 7,000 square feet of space
will be set aside as office space for Xxxxxx personnel.
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4. Obligations of USCP. USCP shall be liable to Xxxxxx on an annual basis for
any damage or loss of Xxxxxx products in excess of $25,200.00 while in
possession and control of USCP prior to delivery of such products to
carriers (from and after which, USCP's responsibility for damage or loss of
products shall cease), except to the extent that Xxxxxx employees,
independent contractors acting on behalf of Xxxxxx (other than USCP) or
agents of Xxxxxx are responsible for any such damage or loss. USCP shall
also be responsible for any other loss suffered by Xxxxxx as a result of
USCP's breach of its obligations hereunder, except to the extent that such
loss is attributable to Xxxxxx employees, independent contractors acting on
behalf of Xxxxxx (other than USCP) or agents of Xxxxxx. Damage or loss
shall be monitored on a monthly basis.
5. Representations, Warranties and Covenants of Parties
5.1 Representations and Warranties by Xxxxxx. Xxxxxx represents
and warrants to, and agrees with USCP as follows:
a. Binding Agreement. This Agreement has been duly
executed and delivered by Xxxxxx and constitutes a
valid and legally binding agreement of Xxxxxx,
enforceable in accordance its terms subject, as to
enforcement, to bankruptcy, insolvency,
reorganization and other laws of general
applicability relating to or affecting creditors'
rights and provided that the remedy of specific
performance and injunctive and other forms of
equitable relief may be subject to equitable defenses
and to the discretion of the court before which any
proceeding therefor may be brought.
b. Non-Contravention. The execution and delivery of this
Agreement by Xxxxxx and the consummation of the
business matters contemplated thereby will not
violate any provision of any mortgage, lien, lease,
agreement, license or instrument to which Xxxxxx (or
any affiliate thereof) is a party.
5.2 Representations and Warranties by USCP. USCP represents and
warrants to, and agrees with, Xxxxxx as follows:
a. Binding Agreement. This Agreement has been duly
executed and delivered by USCP and constitutes a
valid and legally binding agreement of USCP
enforceable, in accordance with its terms subject, as
to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general
applicability relating to or affecting creditors'
rights and provided that the remedy of specific
performance and injunctive and other forms of
equitable relief may be subject to equitable defenses
and to the discretion of the court before which any
proceeding therefor may be brought.
b. Non-Contravention. The execution and delivery of this
Agreement by USCP and the consummation of the
business matters contemplated thereby will not
violate any provision of any mortgage, lien, lease,
agreement, license or instrument to which USCP (or
and affiliate thereof) is a party.
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6. Mutual Indemnification.
a. USCP shall be indemnified by Xxxxxx for any loss
suffered by USCP due to product liability claims, any
negligence or reckless conduct of Xxxxxx or its
agents and independent contractors (other than USCP)
or the breach of any obligation, representation,
warranty or covenant of Xxxxxx as contained herein.
x. Xxxxxx shall be indemnified by USCP for any loss
suffered by Xxxxxx due to any negligence or reckless
conduct of USCP or its independent contractors and
agents or the breach of any obligation,
representation, warranty or covenant of USCP as
contained herein.
7. Term; Termination Rights.
a. The term of this agreement shall be co-terminous with
the initial period of the lease of the facility, but
not less than two (2) years [("Term")]. This
agreement shall be renewed annually thereafter (each
such annual renewal constituting a "Renewal Term"),
unless a party hereto gives the other not less than
sixty (60) days prior written notice of its intention
to terminate the agreement at the end of the then
current Term or Renewal Term, as the case may be.
b. Notwithstanding Section 7(a), this Agreement may be
terminated by Xxxxxx prior to expiration of the Term
in the vent that USCP fails to satisfy in material
respects its duties or obligations hereunder with
respect to Xxxxxx beverage products on more than two
percent (2.0%) of the bills of lading executed in any
calendar month (a "Default" hereunder); provided,
however, that USCP shall not be deemed to be in
Default hereunder unless it is notified in writing by
Xxxxxx of the facts constituting a Default and such
failure is not corrected with thirty (30) days of
USCP's receipt of such notice, except that in no
event shall Xxxxxx be required to provide an oppor-
tunity to cure with respect to more than one (1)
Default in any consecutive twelve-month period.
c. Notwithstanding Section 7(a), this Agreement may be
terminated by USCP prior to expiration of the Term in
the event that Xxxxxx fails to pay any amount due
hereunder within ten (10) days of being notified by
USCP in writing of Xxxxxx'x failure to make timely
payment.
8. Obligations in the Event of Termination.
a. In the event that this Agreement is terminated by
Xxxxxx prior to the expiration of the Term or the
Renewal Term in accordance with the terms hereof,
then Xxxxxx shall have the right, but not the obliga-
tion, to purchase and/or assume the lease of all (but
not less than all) equipment used by USCP at the
Facility for the purposes of repacking and handling
of Xxxxxx product. In the event that USCP owns
equipment subject to purchase by Xxxxxx in accordance
herewith, the purchase price therefor shall be as
mutually agreed to between the parties; provided,
however, that if they do not agree, then the purchase
price shall be determined by appraisal by Xxxxx
Brothers Company. Xxxxxx may assume a lease for
equipment subject to acquisition by Xxxxxx hereunder
by assuming all payment obligations thereunder and
indemnifying USCP for any claim of the lessor of such
equipment.
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b. In the event of any termination hereof, each party
shall promptly return property belonging to the
other.
9. Notices. Any notice, direction or instrument required or permitted to be
given hereunder shall be given in writing by telegram, facsimile
transmission or similar method if confirmed by mail as herein provided, by
mail, if mailed postage prepaid, by certified mail, return receipt
requested, or by hand delivery to any party at the address set forth below;
and, if by telegram or facsimile transmission or similar method or hand
delivery, shall be deemed to have been given or made on the day on which it
is given, and if mailed, shall be deemed to have been given or made on the
day the fifth business day following the day after which it was mailed. Any
party, may, from time to time by like notice, give notice of any change of
address, and in such event, the address of such parties shall be deemed to
be changed accordingly. The address for each party is:
(a.) If to Xxxxxx:
Xx. Xxxxxx X. Xxxxxxxxxx
Vice Chairman
Xxxxxx Beverage Company
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
with a copy to:
Mr. Xxx Xxxxx
Xxxxxx Beverage Company
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
(b.) If to USCP:
Mr. Xxxxx Xxxxxxxx
President
U.S. Continental Packaging
0000 Xxxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
10. Severability. In the event any provision of this Agreement shall be void or
unenforceable for any reason whatsoever, then such provision shall be
stricken and of no force and effect. The remaining provisions of this
Agreement, however, shall continue in full force and effect, and to the
extent required, shall be modified to preserve their validity.
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11. Remedies Not Exclusive. Except as otherwise specifically provided, no
remedy conferred by any of the specific provisions of this Agreement is
intended to be exclusive of any other remedy, and each and every remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. The election by a party of any one or more remedies shall not
constitute a waiver of the right to pursue other available remedies.
12. Compliance with Laws. The consummation of the transactions hereunder shall
be subject to compliance with all applicable laws.
13. Expenses. Each party shall be responsible for its own expenses, including
legal and accounting fees, in connection with this Agreement and any
subsequent matters pertaining to the transactions contemplated hereby.
14. Governing Law. This Agreement shall be interpreted in accordance with, and
governed by, the internal substantive laws of the State of California,
without regard to the choice of law rules thereof.
15. Attorney's Fees. If any action, arbitration or proceeding in contract or
tort arising out of or relating to this Agreement is commenced by any party
to this Agreement, the prevailing party shall be entitled to receive from
the other party, in addition to any other relief that may be granted, the
reasonable attorney's fees, costs (including court costs) and expenses
incurred in the action or proceeding by the prevailing party, along with
any reasonable attorneys' fees, costs (including court cost) and expenses
incurred to collect any amount awarded in connection with any such action
or proceeding.
16. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the making, performance, breach or interpretation thereof,
shall be settled by binding arbitration in Orange County, California in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA") then existing. Any claim concerning whether
a particular matter or issue is subject to arbitration in accordance
herewith shall also be so determined by arbitration. The arbitration shall
be held before a single arbitrator. Any award by the AAA shall be final and
binding between the parties; and judgment on the arbitration award may be
entered in any court having jurisdiction over the subject matter of the
controversy. All parties may pursue discovery in accordance with California
Code of Civil Procedure Section 1283.05, the provisions of which are
incorporated herein by reference, with the following exceptions: (i) the
parties hereto may conduct all discovery, including depositions for
discovery purposes, without leave of the arbitrator; and (ii) all discovery
shall be completed no later than the commencement of the arbitration
hearing or one hundred twenty (120) calendar days after the date that a
proper demand for arbitration is served, whichever occurs earlier, unless
upon a showing of good cause, the arbitrator extends or shortens that
period. Any disputes relating to such discovery will be resolved by the
arbitrator. The parties agree that in rendering an award, the arbitrator
shall have no jurisdiction to consider evidence with respect to, or render
any award or judgment for, punitive or exemplary damages or any other
amount awarded for the purposes of imposing a penalty. The parties
specifically waive any claims for punitive or exemplary damages or any
other amount awarded for the purposes of imposing a penalty that arise out
of or are related to this Agreement or the breach thereof, or the conduct
of the parties in connection with this Agreement. The arbitrator shall have
the power to award reasonable attorneys' fees and costs. Either party may
submit the controversy or claim to arbitration.
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17. No Assignment. USCP may not assign any of its rights or delegate any of its
duties hereunder, without the prior written consent of Xxxxxx, which
consent may be withheld irrespective of the reason therefor; provided,
however, that USCP may assign its duties and rights hereunder to a wholly
owned subsidiary of USCP.
18. Entire Agreement; Amendment. This Agreement, including Exhibits, Schedules
and other documents delivered pursuant to the terms hereof, constitutes the
entire agreement between the parties pertaining to the subject matter
contained herein and such agreements supersede any and all prior and
contemporaneous agreements, representations and understandings of the
parties. No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by both parties hereto. This
Agreement may not be altered, modified, amended, canceled, rescinded,
discharged or terminated, except by an instrument in writing signed by all
parties hereto.
19. Multiple Counterparts; Facsimile Signature. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. A
signed copy of this Agreement delivered by facsimile transmission shall be
deemed to have the same legal effect as delivery of an original signed copy
of this Agreement.
20. Headings. The headings of this Agreement are included for purposes of
convenience only, do not constitute a part hereof and shall not affect the
construction or interpretation of any of the provisions hereof.
21. All Terms Material. The parties hereby expressly acknowledge and agree that
each and every term and condition of this Agreement is of the essence of
this Agreement, constitutes a material part of the bargained-for
consideration without which this Agreement would not have been executed and
is a material part of this Agreement.
Thank you for your execution and return to USCP of this binding Agreement. USCP
looks forward to a long mutually beneficial relationship with Xxxxxx.
U.S. Continental Packaging, Inc.
a California Corporation
By: ______________________________
Xxxxx X. Xxxxxxxx, President
ACCEPTED AND AGREED TO THIS
_______ DAY OF APRIL, 1997
By: ______________________________
Xxxxxx X. Xxxxxxxxxx, Vice Chairman
Xxxxxx Beverage Company
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SCHEDULE 1
"TERRITORY"
The "TERRITORY" consists of the following areas:
A. State of California - If during the term of this Agreement, Xxxxxx requires a
primary repacking and bundling facility in North California, it shall grant a
right of first refusal to USCP to establish and manage such facility in Northern
California and perform the necessary services contemplated with respect to
Xxxxxx Beverage products; provided that its prices are at least as low as or
lower than and its terms of business are at least as or more favorable to Xxxxxx
than, those offered by any competitor and are consistent with the terms of this
Agreement. USCP shall be given fourteen (14) days within which to match or
better any competitor's offer.
B. The State of Arizona
C. The State of Nevada
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