EXHIBIT 10.22
* denotes expurgated
information
AGREEMENT BETWEEN
BOSTON BEER COMPANY LIMITED PARTNERSHIP
AND
THE SCHOENLING BREWING COMPANY
AGREEMENT entered into effective as of the 22nd day of May,
1996 (the "Effective Date") by and between BOSTON BEER COMPANY
LIMITED PARTNERSHIP, d/b/a THE BOSTON BEER COMPANY, a
Massachusetts limited partnership ("Boston Beer"), and THE
SCHOENLING BREWING COMPANY, an Ohio corporation ("Schoenling").
Schoenling and Boston Beer are sometimes referred to herein
individually as a "Party" and collectively as the "Parties".
Schoenling and Boston Beer desire to enter into an agreement
pursuant to which Schoenling shall supply to Boston Beer and
Boston Beer shall purchase from Schoenling on an as ordered
basis, proprietary beer products developed and marketed from time
to time by Boston Beer ("Products").
ACCORDINGLY, for and in consideration of the mutual
agreements contained herein, the Parties, intending to be legally
bound, hereby agree as follows:
SCOPE OF AGREEMENT
During the term of this Agreement as set forth in
Paragraph 4 hereof and in accordance with the terms set forth
herein, Schoenling agrees to brew, package and sell Products to
Boston Beer and Boston Beer agrees to purchase Products from
Schoenling. Brewing of Products shall commence for commercial
purposes promptly after Boston Beer reasonably approves test
brews of Products produced by Schoenling to Boston Beer's
specifications.
PRICE AND MANNER OF PAYMENT: ANNUAL FEE.
(a) Except as otherwise provided in the following
subparagraphs of this Paragraph 2, Boston Beer shall pay
Schoenling for Products an amount (the "Unit Price") equal to:
(i) with respect to Products packaged in bottles, a "Fixed
Charge" of * per unit of twenty-four 12-ounce bottles
or twelve 22-ounce bottles (in either instance, a "Case Unit"; it
being the intent that the Fixed Charge for other 22 ounce package
configurations produced by Schoenling be prorated), or (ii) with
respect to Products packaged in kegs, a Fixed Charge of *
per unit of one-half barrel consisting of 15.5 U.S. gallons (a
"Keg"), plus (iii) in both cases, the net cost to Schoenling of
all Brewing Ingredients (as defined in Paragraph 3(a)) purchased
by Schoenling and used in producing Products; all federal, state
and local excise taxes attributable to Products that are paid by
Schoenling; and a deposit charge of * per pallet. For
this purpose, "net cost to Schoenling" shall include purchase
discounts, but not discounts resulting from credit terms.
(b) Unit Prices are F.O.B. the carrier's trucks at
Schoenling's docks (i.e., the Unit Price includes the cost and
risk of loading trucks at Schoenling's dock) and include
Schoenling's labor costs, overhead, profit and other costs
incurred in the brewing and packaging of Products.
(c) Schoenling will invoice Boston Beer for the Fixed
Charge, all applicable Brewing Ingredients purchased by
Schoenling attributable to Products shipped, all federal, state
and local excise taxes attributable to Products that are paid by
Schoenling, and the pallet deposit charged on the date Products
are shipped. All invoices will be sent to Boston Beer by
telecopier and Boston Beer will pay on each Friday by electronic
funds transfer all invoices received by Monday that relate to the
previous week. If Schoenling should elect, in its sole
discretion, to utilize electronic invoicing, Boston Beer will pay
on each Wednesday all invoices received by Monday that relate to
the previous week.
(d) Schoenling shall be entitled to such price
increases, as are negotiated in good faith from time-to-time by
Schoenling and Boston Beer. When negotiating production price
increases, the parties shall analyze the historical financial
information accumulated for Schoenling's production and packaging
operations and attempt to determine pricing levels for Boston
Beer products and for Schoenling proprietary products which will
fairly recover normal and necessary costs and provide a level of
operating income which will allow prudent, stable reinvestment in
Schoenling's real property located in Cincinnati, Ohio (the "Real
Property") and Schoenling's fixed assets and equipment as are
used or useable in the brewing and packaging of beer products or
in the administration of such operations ("Production
Equipment"). It is not intended, however, that Boston Beer pay a
price for Products which guarantees a fixed or minimum level of
facility profitability nor replace dollar-for-dollar the margins
formerly generated by other contract customers, whether or not
Boston Beer avails itself of production capacity previously
dedicated to former third-party customers. Boston Beer and
Schoenling agree to consult and cooperate with one another to
achieve cost reductions or to minimize cost increases to the
extent possible, especially with respect to the cost of raw
materials and packaging materials.
(e) Boston Beer shall also pay to Schoenling an annual
administrative fee equal to * , the first such fee to be
due and payable upon the execution of this Agreement and
thereafter on April 1 in each year during which this Agreement
remains in effect.
3. BREWING INGREDIENTS. PACKAGING MATERIALS AND
BREWING SUPPLIES
(a) For purposes of this Agreement, "Brewing
Ingredients" shall be defined as all malt, yeast and hops used to
produce Products. Brewing Ingredients shall be purchased and
supplied as follows:
(i) All malt used in the brewing of Products
shall be purchased by Schoenling directly from commercial malt
suppliers. Schoenling and Boston Beer will use their best efforts
to agree upon malt specifications for malt that will allow
Schoenling to commingle storage of malt used to produce Products
with malt used by Schoenling to produce other products. If
Schoenling and Boston Beer cannot agree upon standard malt
specifications, the Fixed Charge shall be increased to reflect
any additional cost incurred by Schoenling for separate handling
and storage of malt used in Products.
(ii) All hops used in the brewing of Products
shall be purchased by Schoenling from Boston Beer. Delivery of
hops shall be coordinated between Schoenling and Boston Beer.
(iii) All yeast used in the brewing of Products shall
be supplied by Boston Beer at no charge to Schoenling. All yeast
supplied by Boston Beer shall remain the property solely and
exclusively of Boston Beer and shall be segregated and identified
by Schoenling as such. Delivery of yeast to Schoenling shall be
coordinated between Schoenling and Boston Beer.
(b) For purposes of this Agreement, "Packaging
Materials" shall be defined as all bottles, crowns, labels,
cases, cartons, kegs, tap covers, pallets and dust covers and the
like used in the packaging and shipment of Products. Packaging
Materials shall be purchased and supplied as follows:
(i) Bottles, crowns, labels, cases, cartons, tap covers and
the like shall be purchased by Boston Beer and supplied to
Schoenling as needed to meet the Packaging Schedule for Products.
(ii) Kegs, pallets and dust covers in quantities adequate
for the volume of Products to be packaged under this Agreement
shall be purchased by Boston Beer and supplied to Schoenling from
time to time. All such kegs, pallets and dust covers shall be
returned and reused in accordance with Schoenling's standard
policies for keg and pallet return and reuse. From time to time
during the term of this Agreement, Boston Beer shall purchase and
supply to Schoenling additional kegs, pallets and dust covers in
numbers adequate to replace kegs, pallets and dust covers lost or
otherwise rendered unusable. All kegs, pallets and dust covers
shall conform to the specifications of kegs, pallets and dust
covers used by Schoenling in packaging and shipping its own
products. Upon each delivery to Schoenling of new pallets
purchased by Boston Beer, Schoenling shall issue to Boston Beer a
credit of * per pallet and the pallets shall thereafier
be the property of Schoenling.
(iii) Schoenling shall purchase and supply at its own
cost Lock n' Pop, shrink wrap, label adhesive, hot melt glue and
bungs used in packaging and shipping of Products.
(c) For purpose of this Agreement, "Brewing
Supplies" shall be defined as * . Schoenling shall
purchase and supply at its own cost all Brewing Supplies used in
the brewing of Products.
(d) Boston Beer shall have sole responsibility
for the selection and approval of all Brewing Ingredients,
Packaging Materials and Brewing Supplies used to produce
Products. Boston Beer shall have sole responsibility for the
content and design of all labels, tap covers, crowns, cartons,
cases and other Packaging Materials.
(e) Upon the termination of this Agreement for any reason:
(i) Boston Beer will purchase from Schoenling (x) all finished
Products at the Fixed Charge, (y) all inventory of work in
process of Products at Schoenling's cost, and (z) all inventory
of Brewing Ingredients, Packaging Materials and Brewing Supplies
purchased by Schoenling that are not reasonably useable by
Schoenling in its own products at Schoenling's cost; and (ii)
Schoenling will make available for pick up by Boston Beer at
Schoenling's dock all finished Products and all Brewing
Ingredients, Packaging Materials and Brewing Supplies referred to
in Subparagraph 3(e)(i) hereof. In the event sales of Products
are substantially less than forecasted by Boston Beer resulting
in abnormally excess inventories of Brewing Ingredients,
Packaging Materials and Brewing Supplies purchased by Schoenling,
Boston Beer will purchase such excess from Schoenling at
Schoenling's cost.
4. TERM
(a) The term of this Agreement shall be * years
beginning on the Effective Date, unless sooner terminated
pursuant to Paragraph 5 hereof. The Parties acknowledge that
Boston Beer's obligations pursuant to this Agreement to make
payments to Schoenling and the Parties' respective rights and
obligations under Paragraphs 3(e), 11, 12, 14, 16(a), 16(c), 17
and 26 shall survive the termination of this Agreement.
5. TERMINATION
(a) Either Party may terminate this Agreement effective
immediately upon written notice to the other Party in the event
that the other Party is in default of any of its obligations
under this Agreement, which default continues for a period of
thirty (30) days following receipt of written notice of such
default.
(b) Either Party may terminate this Agreement effective
immediately upon written notice to the other Party in the event
that: (i) the other Party makes an assignment for the benefit of
creditors or files a voluntary bankruptcy, insolvency,
reorganization or similar petition seeking protection from
creditors petition; (ii) the other Party fails to vacate any
involuntary banknuptcy, insolvency or reorganization petition
filed against such Party within sixty (60) days after the filing
of such petition; or (iii) the other Party liquidates, dissolves
or ceases to do business as a going concern.
(c) Schoenling may terminate this Agreement, if Boston Beer
fails to meet certain minimum purchase requirements, as specified
in Section 6(b).
(d) Schoenling may terminate this Agreement effective upon
the termination of the Option Agreement (the "Option Agreement")
of even date herewith pursuant to which Schoenling granted to
Boston Beer an option (the "Option") to acquire the Real Property
and certain of the Production Equipment.
(e) Upon termination of this Agreement pursuant to this
▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇ Beer shall promptly pay to Schoenling all
unpaid invoices in full and all unpaid costs incurred by
Schoenling pursuant to this Agreement in the brewing, packaging,
shipping and storage for Products. Schoenling will use all
reasonable efforts to minimize such costs upon termination and
Boston Beer will have the right to review documentation
evidencing such costs. Also upon termination, Schoenling shall
have the right to terminate the Option, as provided in the Option
Agreement.
6. PACKAGING. DEPOSITS AND MINIMUM ORDERS
(a) Packaging of Products shall consist of Kegs and twelve
ounce (12 oz.) and twenty-two ounce (22 oz.) bottles. Except for
one-way pailets paid for by Boston Beer, a deposit per pallet, as
set forth in Paragraph 2(a) hereof, shall be charged to Boston
Beer with a corresponding credit applied upon the safe return in
good working order of the pallets to Schoenling. Boston Beer has
the right, subject to the approval of Schoenling which approval
will not be unreasonably withheld, to make changes in the
Packaging Materials, including but not limited to packaging
Products in can units in quantities consistent with Schoenling's
operational capacities. Costs incurred by Schoenling in making
such changes shall be paid by Boston Beer.
(b) Boston Beer shall purchase not less than *
barrels of Products from Schoenling during the balance of
calendar year 1996. Minimum production/purchase requirements for
1997 and beyond shall be determined based on 6-month planning
cycles, with, for example, proposed commitments for the period
January 1 through June 30, 1997 to be submitted to Schoenling by
Boston Beer on or about July 1, 1996. Minimum requirements for
1997 and 1998 shall in any event be * barrels and
* barrels, respectively. Minimum requirements for 1999 and
subsequent years shall also be * barrels. If Boston
Beer fails to meet such minimum purchase requirements starting in
1999, Schoenling shall have the right to terminate the Supply
Contract, as follows:
(i) If Boston Beer fails to
purchase at least * barrels in any six
(6) month period January through June and *
barrels in any six (6) month period July through
December, Schoenling may give written notice to
Boston Beer of its intention to terminate the
Supply Contract if the shortfall iS not made up
during the succeeding six (6) month period (the
"Make-Up Period"). Any such notice of intention to
terminate must be given prior to the end of the
first month of the Make-Up Period.
(ii) If Boston Beer does not
purchase sufficient quantities of beer products
during the Make-Up Period such that for the twelve
(12) month period ending on the last day of the
Make-Up Period, Boston Beer shall have met its
minimum purchase requirements, Schoenling shall
have the right to terminate the Supply Contract on
one hundred twenty (120) days prior written
notice, given at any time prior to the expiration
of thirty (30) days after in the end of the Make-
Up Period.
(iii) If Schoenling terminates the Supply
Contract pursuant to clauses (i) and (ii), it
shall also have the right to terminate the Option,
effective on termination of the Supply Contract.
Boston Beer's commitments are inclusive of any beer products
produced for * , other Boston Beer licensees and other
parties brought to Schoenling by Boston Beer. Boston Beer shall
have the right to avail itself of all of Schoenling's production
capacity, excepting only such capacity as is identified on
Schedule B attached hereto, such other third-party commitments as
shall be approved in advance by Boston Beer, which approval shall
not be unreasonably withheld, except that it shall not be
unreasonable for Boston Beer to withhold approval if the proposed
commitment involves competing products as defined in Section
16(b) hereof, and up to * (or such increased amount as
may from time to time be approved in advance by Boston Beer,
which approval shall not be unreasonably withheld) cases per year
of production of Schoenling's own proprietary alcoholic and non-
alcoholic products. Notwithstanding the foregoing, Schoenling
shall be entitled to utilize its facilities for third-party
products marketed by Schoenling (e.g., * ale), provided
that to the extent such products utilize Schoenling's production
capacity, they will be included within the * case
capacity (as such amount may be increased from time to time in
accordance with the preceding sentence of this subsection (b))
reserved for Schoenling's proprietary products.
(c) Prior to commencing brewing of Products for
commercial purposes and on a weekly basis thereafter, Boston Beer
shall provide Schoenling with a twelve (12) week Production Plan
for Products (the "Production Plan"). The Production Plan shall
be a rolling twelve week schedule setting forth brewing and
packaging requirements for Products for each week during the
twelve weeks covered by the Production Plan. All brewing
requirements for Products during the first six weeks of the
Production Plan shall constitute firm orders by Boston Beer. All
brewing requirements for Products during the second six weeks of
the Production Plan and all packaging requirements set forth in
the Production Plan shall be a forecast of Boston Beer's best
estimate of brewing and packaging requirements for Products and
shall be used by Schoenling for capacity planning purposes.
Boston Beer shall update the Production Plan each week by
providing its best estimate of brewing and packaging requirements
for the twelfth week and by revising the schedule for brewing and
packaging requirements in the sixth through eleventh weeks of the
Production Plan. The brew size that Boston Beer shall utilize in
the Production Plan shall be Schoenling's maximum brew based on
Schoenling's current brewing vessels, currently estimated to
yield approximately * barrels of Products (a "Brew").
The minimum brewing requirement that Boston Beer may specify
during any week in which it elects to brew shall be *
Brews. Schoenling shall have the right, in its sole discretion,
to set the actual time and date on which each Brew shall be
brewed, provided that Schoenling shall use its best efforts to
minimize the length of time that Products remains in storage
prior to packaging.
(d) Boston Beer shall place all orders for packaging
and shipment of Products by the eighth business day of each month
(the "Packaging Schedule"). The Packaging Schedule shall set
forth the quantity of Products by package type and the week in
which each order shall be shipped in the following month.
Packaging shall be scheduled in increments of * cases
for 22 oz. boffles and * cases for 12 oz. bottles in
new glass. The minimum order for packaging Products in Kegs shall
be * Kegs.
7. RISK OF LOSS
Boston Beer shall have sole responsibility for
selecting carriers and making all arrangements for shipment of
Products to its customers. Boston Beer shall pay for all costs
associated with shipment of Products from Schoenlingts facility.
Schoenling and Boston Beer acknowledge and agree that, consistent
with the F.O.B. pricing terms, the risk of loss in loading the
carrier's trucks shall be borne by Schoenling. However, the
carrier's driver shall have the right to inspect each shipment
for damage prior to leaving the loading dock and, accordingly,
Boston Beer shall bear the risk of loss on any shipment of
Products, once the carrier's truck leaves loading dock.
8. BREWERY OF RECORD
(a) Schoenling shall provide all Products brewed
hereunder under the ▇▇▇▇▇ of "The Boston Beer Company," as the
Brewery of Record. Schoenling shall secure and maintain any
permits, licenses, approvals and the like required by any
federal, state or local governmental agency on behalf of Boston
Beer. Boston Beer agrees to reimburse Schoenling promptly for
any out-of-pocket costs, including, without limitation, legal
expenses, incurred in connection therewith.
(b) Schoenling shall, to the extent reasonably
possible, by establishing and maintaining an alternating
proprietorship if necessary, but subject to and in compliance
with all applicable federal, state or local laws, rules and
regulations, identfy Boston, Massachusetts, as the sole label
source for Products. Boston Beer agrees to reimburse Schoenling
for its out-of-pocket costs, including, without limitation, legal
expenses, incurred in connection therewith.
9. FORCE MAJEURE
(a) Schoenling shall not be liable to Boston Beer in
the event that Schoenling shall delay in or fail to deliver
Products to Boston Beer hereunder for any reason or cause beyond
its control, including but not limited to a slowdown, stoppage or
reduction of Schoenling's production or delivery due to strikes,
fire, flood, labor stoppage or slowdown, inability to obtain
materials or packages, shortage of energy, acts of God, a
limitation or restriction of its-production by action of any
military or governmental authority, or any other such causes.
(b) In the event of any such slowdown, stoppage or
reduction of Schoenling's production or deliveries, Schoenling
will allocate its remaining capacity pro rata between Products
and other products then produced by Schoenling, provided that
Boston Beer shall use reasonable efforts to move production of
Products to its other suppliers for the duration of any such
slowdown, stoppage or reduction so as to minimize the amount of
Products that Schoenling is required to produce for Boston Beer
during such slowdown, stoppage or reduction. If the event
causing slowddown, stoppage or reduction of Schoenling's
production or delivery shall occur within two hundred seventy
(270) days after the beginning of commercial brewing of Products,
then the pro rata allocation of Schoenling's remainig production
capacity shall be based on the proportionate volume of other
products produced by Schoenling during the six (6) month period
immediately preceding the month in which occurred the event which
gave rise to the slowdow, stoppage or reduction and two (2) times
the volume of Products produced by Schoenling during the three
(3) month period immediately preceding the month in which
occurred the event which gave rise to the slowdow, stoppage or
reduction. If the event causing the slowdow, stoppage or
reduction of Schoenling's production or delivery shall occur more
than two hundred seventy (270) days after the beginning of
commercial production of Products, then the pro rata allocation
of Schoenling's remaining production capacity shall be based on
the proportionate volume of Products and other products produced
by Schoenling during the six (6) month period immediately
preceding the month in which occurred the event which gave rise
to the slowdown, stoppage or reduction of Schoenling's production
or delivery.
10. CHANGE PARTS AND BREWERY MODIFICATIONS
Boston Beer will pay for * , provided that
Schoenling notifies Boston Beer in advance of making any such
expenditures; and provided further that Boston Beer hereby
acknowledges its obligations to pay for such expenses incurred by
Schoenling prior to the Effective Date. Boston Beer shall own all
* paid for by Boston Beer and Schoenling shall allow Boston
Beer to remove all such * at the termination or
expiration of this Agreement, provided that Boston Beer shall
restore, or reimburse Schoenling for its cost to restore
Schoenling's equipment or facilities to their condition prior to
the installation of such * , ordinary wear and tear
excluded. The cost and ownership of any change parts or brewery
modifications that can also be used by Schoenling to produce its
own products shall be allocated between Schoenling and Boston
Beer by prior written agreement. Schoenling agrees to execute an
appropriate UCC financing statement to reflect Boston Beer's
ownership of any change parts or brewery modifications owned by
Boston Beer. Schoenling shall have no obligation to make any
modifications to its equipment or facilities to accommodate the
production of Products unless agreed to by Schoenling in writing.
11. AGENCY AND INDEMNIFICATION
Schoenling and Boston Beer understand and agree that
neither Party is, by virtue of this Agreement or anything
contained herein, including Schoenling affixing to any Products
and/or registering the name of "The Boston Beer Company" or
"Boston Beer 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
Schoenling 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 Schoenling from and against any and all claims,
expenses, causes of action or liabilities of any nature
whatsoever (collectively, "Damages"), to the extent that Damages
arise from the independent conduct of Boston Beer; provided that
Damages shall not include any loss, liability, cost or expense
incurred by Schoenling as a consequence of the exercise by Boston
Beer of any of its rights under this Agreement.
12. PRODUCT LIABILITY
(a) Schoenling and Boston Beer shall each malntain
products liability insurance coverage in the respective amounts
of not less than * per occurrence and *
combined single limit, and in the amount of not less than *
combined single limit in the aggregate relating to Products
produced by Schoenling for Boston Beer hereunder.
(b) Schoenling shall indernnify 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 attorney's fees (collectively, "Products
Liability Damages"), arising out of or associated with the
manufacture and/or packaging of Products by Schoenling,
regardless of when manufactured or packaged, and whether under
this Agreement or otherwise, except to the extent that (i)
Products Liability Damages were caused by improper storage,
handling or alteration of Products after delivery to Boston Beer,
(ii) Products Liability Damages are based on or result from a
claim that any Products are inherently defective, or (iii)
Products Liability Damages were caused by Brewing Ingredients,
Packaging Materials or Brewing Supplies specified or otherwise
approved by Boston Beer.
(c) Boston Beer shall indemnily and hold harmless
Schoenling and all of its affiliates from and against any and all
Products Liability Damages to the extent arising out of the
causes excepted from Schoenling's duty to indemnify Boston Beer
under clauses (i), (ii) and (iii) of subparagraph (b) of this
Paragraph 12.
(d) Notwithstanding the provisions of subparagraphs
(b) and (c) of Paragraph 12, in no event shall either Party be
liable to indemnily the other Party for product liability-related
consequential damages suffered by the other Party in an amount
greater than the lesser of (i) * or (ii) *
plus * by Boston Beer for all Products during the
twelve (12) months preceding the month in which occurred the
event giving rise to the claim for indemnification.
13. RECIPE AND QUALITY
(a) Schoenling shall produce Products using the
ingredients and brewing formula and procedures specified from
time-to-time by Boston Beer. Boston Beer shall have the right to
change ingredients and/or brewing formula and procedures upon
reasonable prior written notice, provided that the cost of any
such change shall be borne by Boston Beer and, provided further,
that the specified ingredients are readily available in the
necessary time frame.
(b) Schoenling shall use its best efforts to meet the
specifications for Products attached hereto as Schedule A. Boston
Beer has the right to reject batches of Products which it
determines to taste materially different from representative
sample of Products, such rejection not to be arbitrary or
unreasonable. Any rejected batches may be blended by Schoenling
into other runs of Products.
14. TRADEMARKS
(a) Schoenling acknowledges that no trademark or trade
name rights in "▇▇▇▇▇▇ ▇▇▇▇▇ Cream ▇▇▇▇▇", "▇▇▇▇▇▇ ▇▇▇▇▇ Boston
Ale", "▇▇▇▇▇▇ ▇▇▇▇▇ Boston Lager," "Boston Lightship Lager," and
"The Boston Beer Company" and any other trademarks, trade names,
service marks or logos owned by Boston Beer (collectively, the
"Trademarks") are granted by this Agreement.
(b) Boston Beer hereby represents, warrants and
covenants to Schoenling that it has and will maintain its right
to use the Trademarks and will indemnify and hold harmless
Schoenling from any alleged infringement by any Party against
Schoenling including, but not limited to, Schoenling's reasonable
costs of legal expenses.
15. TEST BREWING
Notwithstanding anything to the contrary in this
Agreement, Boston Beer may, at any time after notice to
Schoenling engage any other ▇▇▇▇▇▇ for the purpose of conducting
test production and distribution of Products in order to ensure
the delivery of Products following termination of this Agreement.
16. COMPETING PRODUCTS
(a) Schoenling will not at anytime use the brewing
formula for Products for which Boston Beer has supplied brewing
formulas to Schoenling or any yeast supplied to Schoenling by
Boston Beer to produce a malt beverage product for itself (or any
of its affiliates) or on behalf of any unaffiliated person.
(b) For so long as this Agreement remains in effect,
Schoenling shall not, without the prior written consent of Boston
Beer, which consent may be withheld by Boston Beer in its
discretion, produce for or on behalf of any person unaffiliated
with, Schoenling or Boston Beer a malt beverage product for sale
in the United States which (i) has a wholesale F.O.B. price that
is within * of the average of the ten (10) highest then
current wholesale F.O.B. prices charged by Boston Beer for
Products, and (ii) is part of a family of malt beverage products
having aggregate sales volume for the past twelve (12) months in
excess of * of Boston Beer's aggregate sales volume
during the same twelve (12) months, except for those malt
beverage products being produced by Schoenling pursuant to the
arrangements disclosed on Schedule C attached hereto, and except
for products marketed by Schoenling, as provided in the last
sentence of Section 6(b) hereof.
(c) Boston Beer acknowledges that Schoenling is
currently in the business of brewing craft and specialty malt
beverage products that are sirnilar to and compete with Products,
and Boston Beer agrees that nothing in this Agreement shall
prevent Schoenling from continuing or expanding its craft and
specialty business, provided that Schoenling shall not
intentionally copy the brewing formula for Products or use any
yeast supplied to Schoenling by Boston Beer to produce craft and
specialty products for itself or any of its affiliates. All
Products produced by Schoenling for purposes of this Agreement,
including all work in process, shall be produced solely for the
benefit of Boston Beer and used for no other purpose.
17. RIGHTS OF OFFSET
The parties acknowledge and agree that, to the
extent a Party is at any time owed money by the other Party, such
Party may set off such amount against any monies owed by such
Party from time to time to such other Party, said set-off to be
accomplished by written notice to such other Party effective upon
being sent.
18. NOTICES
All notices required herein shall be given by
registered airmail, return receipt requested, or by overnight
courier service, in both cases with a copy also sent by
telecopier, to the following addresses (unless change thereof has
previously been given to the Party giving the notice) and shall
be deemed effective when received:
If to Boston Beer: C. ▇▇▇▇▇ ▇▇▇▇, President
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., COO
The Boston Beer Company
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Schoenling: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, President
Schoenling Brewing Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esquire
Cors & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
19. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Parties, but shall
not be assigned by any Party, whether by merger, consolidation,
reorganization, operation of law or otherwise, without the prior
written consent of the other Party, which consent will not be
unreasonably withheld. Notwithstanding the foregoing, Boston Beer
may assign this Agreement without the consent of Schoenling to
its successor corporation or other successor entity in the event
of any reorganization, public offering or change in the form of
entity of Boston Beer, provided that Boston Beer or its current
stockholders shall own and control at least * of the
outstanding stock of the successor corporation or other successor
entity taking assignment of this Agreement. 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. Assignment of this Agreement
shall not relieve the assigning Party of its financial
obligations hereunder, including its indemnification obligations
hereunder.
20. GOVERNING LAW
This Agreement shall be interpreted and construed
in accordance with the laws of the Commonwealth of Massachusetts.
21. DISPUTE RESOLUTION
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 submitted to
arbitration in Boston, Massachusetts, in accordance with articles
of the American Arbitration Association for Commercial
Arbitration. The arbitrator(s) shall have the right to assess
costs including legal expenses, in favor of the prevailing parry,
including, if applicable, Schoenling's travel costs. The decision
of the arbitrator(s) shall be final and binding on both Parties.
Notwithstanding the foregoing, the Parties may, prior to
submitting a dispute to arbitration, have recourse to the courts
of the United States of America or the Commonwealth of
Massachusetts for the purpose of obtaining a temporary
restraining order or other preliminary injunctive relief. In
particular, in the event of an unsettled dispute between the
parties to this Agreement, Boston Beer shall have recourse to the
Courts of the Commonwealth of Massachusetts for the purpose of
obtaining a temporary restraining order or other preliminary
injunctive relief to require Schoenling to continue to brew,
package and ship any Products ordered by Boston Beer under this
Agreement until Boston Beer shall have secured a new source for
production of its Products; provided that under such
circumstances Schoenling shall be entitled to payment in advance
of production.
22. EXECUTION IN COUNTERPARTS
This Agreement rnay 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.
23. 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.
24. NO THIRD-PARTY BENEFICIARIES
Schoenling and Boston Beer agree that this
Agreement is solely for their benefit and it 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.
25. MERGER; SEPARABILITY
This Agreement terminates and supersedes all prior
formal or informal understandings between the Parties with
respect to the subject matter contained herein, provided that the
confidentiality and all other obligations of the parties under
(i) the Confidentiality Agreement dated ▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇) the
letter agreement between the parties dated March 7, 1996 and
(iii) the Option Agreement shall remain in full force and effect
in accordance with the terms thereof. 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 effect the validity of any other
provision.
26. LIMITATION PERIOD ON CLAIMS
All claims hereunder must be brought no later than
one (1) year after such claims arose or the Party having such
claim shall be deemed to have waived and forever released it:
provided that for this purpose, a claim will be deemed to have
arisen at the time the Paty asserting the claim first became
aware of it.
IN WITNESS WHEREOF, the parties hereto enter into
this Agreement as of the date first above written.
BOSTON BEER LIMITED PARTNERSHIP
d/b/a The Boston Beer Company, Inc.
By: Boston Brewing Company, Inc.
its General Partner
Witness:
By: C. ▇▇▇▇▇ ▇▇▇▇, President
_________________________________
THE SCHOENLING BREWING COMPANY
Witness:
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, President
_________________________________
SCHEDULE A
TO
SUPPLY CONTRACT BETWEEN
BOSTON BEER COMPANY LIMITED PARTNERSHIP
AND
THE SCHOENLING BREWING COMPANY
Product Specifications
As determined from time to time by Boston
Beer and submitted by Boston Beer to Schoenling.
SCHEDULE B
TO
SUPPLY CONTRACT BETWEEN
BOSTON BEER COMPANY LIMITED PARTNERSHIP
AND
THE SCHOENLING BREWING COMPANY
CURRENT PRODUCTION COMMITMENTS
*