___________________________________________
BREWING AGREEMENT
BETWEEN
UNITED BREWERIES OF AMERICA, INC.
AND
UNITED CRAFT BREWERS, INC.
___________________________________________
BREWING AGREEMENT
TABLE OF CONTENTS
Page
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Clause 1 Definitions 2-4
Clause 2 Appointment 4
Clause 3 Technology and Technical Assistance 4-5
Clause 4 Confidentiality 5-6
Clause 5 Specifications 6-9
Clause 6 Payments 9
Clause 7 Termination 10-11
Clause 8 Trade Marks 11-12
Clause 9 Force Majeure 12
Clause 10 No Assignment 13
Clause 11 Notices 13
Clause 12 Term 13
Clause 13 Arbitration 13
Clause 14 Governing Law 14
Clause 15 Records 14
Clause 16 Limitation of Liability 14-15
Clause 17 Supplying the Products 15-16
Clause 18 Delivery 16
Clause 19 Returns and Allowances 16
Clause 20 Non-Competition 16
Clause 21 Miscellaneous 16-17
Schedule 1 18
19
i
THIS AGREEMENT is made on _____________, 1997
AMONG:
i) UNITED BREWERIES OF AMERICA INC., a Delaware corporation having its
principal place of business at 1 Harbor Drive, Suite 102, Sausalito,
California, 94965 ("UB") which term shall unless repugnant to the
context mean and include its successors or assigns; and
ii) UNITED CRAFT BREWERS, INC., a Delaware corporation ("UCB") which term
shall unless repugnant to the context mean and include its successors
or assigns.
RECITALS:
1. UB has for many years though its affiliates brewed at its Breweries
in India and also has in certain other countries around the world
sold the Kingfisher Products and has established a reputation and
goodwill for its lager beer under its Trade Marks.
2. UB through its affiliates, possesses special technical information
and Know-how relating to the brewing, selling, and manufacture of the
Kingfisher Products and is actively engaged in research and
development of new technical information and Know-how relating
thereto.
3. Following the Consolidation (as defined in the Investment Agreement
dated as of January 30, 1997, among UB, UCB and various other
parties, as amended ("the Investment Agreement")) UCB will have the
technical capability to produce beer.
4. UCB is desirous of entering into co-operation with UB for the purpose
of production and bottling of the Kingfisher Products as per the
Specifications and Know-how provided by UB and upon the terms and
conditions hereinafter contained.
IT IS AGREED as follows:
1. Definitions
In this Agreement (including the Recitals) the following words and phrases
shall, unless the context requires otherwise, have the following meanings:
1.1 Affiliate
Shall mean when used in relation to any Person, any other Person
which shall be at that time directly or indirectly in control of,
controlled by, or under common control with, such Person.
1.2 Agreement
Means this Agreement, any amendments, modifications, supplements,
restatements, or notations thereto or thereof, as applicable.
1.3 Brewery
The brewing plant of UCB where the Kingfisher Products shall be
manufactured.
1.4 Brewery Goods
Ale, beer (clear and opaque), lager, stout, porter, malt liquor, and
all other alcoholic and non-alcoholic brewery goods.
1.5 Effective Date
The Closing Date as set forth in Section 2.2 of the Investment
Agreement.
1.6 Investment Agreement
Shall have the meaning set forth in Recital 3.
1.7 Kingfisher Products
Lager and other beer products brewed and prepared for sale in
bottled, canned, and draught form and any other form required by UB
under the Trade Marks.
1.8 Know-how
All relevant technical information, data, and material not otherwise
generally known relating to manufacture of the Kingfisher Products
and includes characteristics, selection, judgement of properties, and
data relating to materials
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for the manufacture of the Kingfisher Products, processes,
techniques, and methods used or useful in the production of the
Kingfisher Products and equipment and data relating to the packaging
of the Kingfisher Products owned and developed by UB and disclosed to
UCB hereunder.
1.9 Net Sales Revenue
The gross revenues less applicable duties, levies, and taxes related
to sales.
1.10 Person
Includes bodies corporate, individuals, firms, partnerships, and any
other body of persons whether incorporated or unincorporated.
1.11 South East Asian Lager
Any brand of lager:
(a) with sales in a country in South East Asia equal to 50% or more
of the total worldwide sales for such brand of lager; and
(b) which is marketed or sold as originating from such country in
South East Asia.
1.12 Specifications
The specifications for the composition, process procedures, standards
of quality, and presentation of Kingfisher Products as required under
this Agreement.
1.13 Term
Shall mean the period contemplated in Clause 12.
1.14 Trade Marks
1.14.1 The trade marks specified in Schedule 1 of this Agreement and
all trademarks, service marks, logotypes, commercial symbols,
insignias, and designs, and all other registered and unregistered
marks, names, and rights in or relating to the "Kingfisher" name and
the Kingfisher logo (such logo being represented in Schedule 1
thereof) and the names "Taj Mahal" and "Sun Lager", which have been
filed for registration and shall be owned or used or both by UB in
the United States.
1.13.2 Such further trademarks, names and logos as UB may from time
to time make available to UCB during the Term for use in connection
with the manufacture of the Kingfisher Products.
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1.15 UB
United Breweries of America, Inc. together with its Affiliates.
1.16 UCB
United Craft Brewers, Inc. together with its Affiliates.
1.17 Year
Each period of 12 calendar months during the term of this Agreement
commencing on the 1st of January and ending on the 31st of December
except that the first Year shall be the period from the date of this
Agreement to the 31st of December, 1997.
2. Appointment
2.1 UB hereby grants to UCB the personal, non-assignable,
non-transferable, exclusive right during the Term to manufacture,
label, and package Kingfisher Products which are brewed outside of
India for sale in North America for UB and for no other purpose upon
the condition that the Kingfisher Products shall be produced
according to the Know-how and Specifications prescribed by UB under
this Agreement.
2.2 UCB shall manufacture or package the Kingfisher Products with the
Trade Marks as directed by UB.
2.3 UCB may not use the Know-how or Specifications to manufacture Brewery
Goods under the trade marks belonging to UCB or under the trade mark
or name belonging to any other person without the prior written
consent of UB.
3. Technology and Technical Assistance
3.1 UB will, on the terms of this Agreement, make available to UCB, at
UB's option, the Know-how and technology now in the possession of UB
or which shall during the tenure of this Agreement be developed or
acquired by UB, provided that nothing herein contained shall require
UB to disclose to UCB any Know-how or transfer any technology which
is or shall come into UB's possession subject to an obligation not to
disclose the same to any third parties.
3.2 UB may, at its option, twice every year throughout the duration of
this Agreement in accordance with a program to be agreed between the
parties hereto arrange for a member of its technical staff to visit
the Brewery. Such member of the technical staff shall inspect the
Brewery and all concerned laboratory departments and advise as to
processing and quality control of the Kingfisher Products to ensure
implementation of this Agreement from the quality control
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point of view. The cost of such visit shall be incurred by UB
including cost for travel, accommodation, and local expenses.
3.3 If and when so requested by UCB, UB will at UCB's expense, under
special agreement furnish to UCB the services of trained experts in
the Know-how so far only as is necessary to assist UCB in the
manufacture of the Kingfisher Products in accordance with the
Know-how and such trained experts shall only act as advisers who
shall make reports and submit their recommendations.
3.4 If and when so requested by UCB, UB will, at UCB's expense, under
special agreement supply technical assistance and prepare
specifications, plans, and drawings for the construction of new
Breweries or alteration of the existing Brewery. Such material will
be in a form which can be used by local professional advisers and
contractors having the necessary qualified expertise. UB will
provide the services of such technicians as may be reasonably
required to implement any such construction under the terms of the
special agreement.
3.5 During the term of this Agreement technical personnel of UCB shall at
UCB's expense, after agreement with UB, have the right by prior
arrangement to visit the relevant research, development, and
production facilities of UB and obtain the relevant Know-how
practiced, developed or available there.
3.6 Any personnel of UCB visiting the center of research, development,
and production facilities of UB under Clause 3.5 hereof shall be such
personnel as have sufficient knowledge and experience in brewing of
beer to be able to benefit fully from such visits, advice, or
instruction.
3.7 UCB shall make available office space at the Brewery, at UCB's cost,
for UB's technical personnel and logistics personnel and their
secretarial support which personnel shall be employed by and
compensated by UB.
4. Confidentiality
4.1 UCB shall receive in confidence and maintain all disclosure of
Know-how and Specifications and any other information obtained about
UB's business or affairs confidential and shall not at any time
disclose to others or itself use outside of this Agreement any such
information either during the tenure of this Agreement or on the
expiry of the Agreement and to the extent necessary in the exercise
of the rights granted under this Agreement.
4.2 In respect of any particular item of Know-how, Specifications, and
other secrets, UCB shall obtain a pledge of secrecy from any member
of its staff to whom such disclosure is made.
4.3 All Know-how acquired by UCB under the terms of this Agreement and
any improvements in the Specifications made by UCB relating to the
production and
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packaging of the Kingfisher Products shall be and remain the sole
property of UB and shall be used by UCB only in accordance with the
provisions of this Agreement.
5. Specifications
5.1 UCB will brew, bottle, package, and store the Kingfisher Products:
5.1.1 In exact conformity with the Specifications which include
all ingredients, raw materials, formulae, processes, methods
and standards of quality laid down, and the directions
given, by UB;
5.1.2 In full compliance with all applicable laws, by-laws, and
regulations in the United States; and
5.1.3 Under the supervision at all times of a qualified UCB brewer
of a standard of training and ability acceptable to UB.
It is the UCB's responsibility to notify UB of any incompatibility between
5.1.1 and 5.1.2 above. UB reserves the right to alter the Specifications
and other matters specified above at any time.
5.2 Prior to production of the Kingfisher Products, UB shall examine the
Brewery and UCB shall for its own account make such alterations,
renewals or extensions which may be deemed reasonably necessary by UB
for the planned production. The Brewery and any other facilities
shall contain such capacities as may be reasonably necessary in order
to comply with UB's Specifications. Production of the Kingfisher
Products under UB's Trade Marks shall not be started unless, in the
reasonable opinion of UB, UCB establishes a satisfactory brewing
facility. UCB agrees at all times to maintain a high standard of
quality control in the Brewery on behalf of UB.
In the event, after commencement of production of the Kingfisher
Products, further alterations to plant equipment and process are
found to be necessary to obtain the specified quality, such
modifications will be carried out by UCB at its expense upon
notification of such requirements from UB.
5.3 The qualifications and competence of any brewmaster or technician of
UCB for the production of Kingfisher Products will be examined by UB.
In the event that further training or familiarization is deemed
reasonably necessary by UB, the nature of such training will be
defined and UCB shall ensure at UCB's expense that such person shall
undergo such training prior to commencement of production. UCB
covenants and agrees with UB that any brewmaster or technician
assigned to the production of the Kingfisher Products will adhere to
the Specifications to be provided by UB.
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5.4 UCB shall give any officer or representative from UB, who in
pursuance of this Agreement visits the Brewery, full access to the
Brewery and shall furnish all relevant material and information
requested with regard to the Kingfisher Products.
5.5 UCB shall in accordance with the procedure established by UB carry
out quality control including laboratory analyses of the Kingfisher
Products manufactured and/or packaged by UCB. Such data shall be
submitted to UB in accordance with UB's instructions.
5.6 In order to secure a stable and proper quality of Kingfisher
Products, samples of the first production of the Kingfisher Products
in the Brewery of UCB shall, prior to any deliveries, be sent by UCB
to UB for laboratory testing and no sales and no deliveries of
Kingfisher Products from the Brewery shall take place until such
samples are approved in writing by UB, which approval shall not be
unduly delayed.
Thereafter samples from current production (in-process as well as
finished products) shall be sent by UCB to UB for analysis,
comparison, and inspection by UB at such intervals as may be
specified by UB from time to time.
Furthermore, UCB shall regularly, but not more often than monthly,
and in accordance with UB's instructions from time to time supply UB
with samples of raw materials, bottles, crown corks, labels, glue,
and other materials used for UB's approval.
UB shall immediately notify UCB if any samples furnished are approved
or disapproved, and UCB shall immediately take all necessary steps to
comply with UB's instructions to bring the Kingfisher Products or
material involved in the production hereof, up to the required
standard. In the event that raw materials of a quality acceptable to
UB, including malt, is not available, UCB shall use commercially
reasonable efforts to import the same and in case such import is
subject to government approval, UCB shall obtain necessary approvals
and authorizations to import such raw materials from abroad. All
costs of analyses or examination of such samples will be met by UB.
By special agreement further laboratory analyses may at the request
of UCB be carried out by UB in which case the costs will be charged
to UCB.
5.7 In the event that production or analytical data reported by UB or
obtained from UB's analyses indicates, in the opinion of UB,
unacceptable deviations from established standards, UB will send such
person or persons from its technical staff as it may deem necessary
in order to investigate and make remedial recommendations. The cost
of such visit(s) will be charged to UCB.
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5.8 UCB shall always stock the Kingfisher Products under adequate
conditions and shall implement such stock rotation and control
procedures as to prevent the Kingfisher Products from being delivered
or sold to UB after a date two (2) months before the recommended
"best before date".
5.9 In case the quality of any Kingfisher Products do not meet with UB's
requirements, production must forthwith be stopped and all relevant
stocks withdrawn from the market at UCB's expense if UB so demands,
and shall not be marketed until UB's written consent has been
obtained.
A final decision made by UB the effect of which is that the quality
of the Kingfisher Products is not satisfactory to UB shall be final
and binding upon UCB and cannot be re-examined by or submitted to any
third party and neither may the decision be appealed against or
submitted to a court for arbitration or a court of law.
5.10 If at any time UB finds it necessary to introduce special ingredients
or brewing compounds in connection with the manufacture of the
Kingfisher Products, UCB shall be obliged to adhere to the advice of
UB.
5.11 5.11.1 For the purpose of upholding and protecting the good name and
world-wide image of UB it is agreed that UCB shall consult UB as to
the Specifications of the packaging such as type of bottles, cans,
and other containers used by UCB for the sale of the Kingfisher
Products including crown corks, lay-out and text of labels and
materials, shape and text of exterior cartons and cases and shall
adopt and comply with any requests made by UB in such matter which
shall not infringe any relevant laws or official regulations.
5.11.2 UCB shall disclose to UB the purchase price of such materials
mentioned in 5 11.1.
5.11.3 If UB is able to negotiate or obtain price discounts or
procure such materials at prices that will result in cost savings to
UCB, such benefit shall be made available to UB in the pricing by UCB
of the Kingfisher Products.
5.12 In any case whenever UCB is making use of the name or the Trade Marks
of UB on labels, packaging, or the like, such names or Trade Marks
shall be used only in exact conformity with the Specifications
adopted by UB for such names and Trade Marks and particulars of which
have been furnished to UCB. No use shall be made of the name or
Trade Marks of UB otherwise than in exact conformity with such
Specifications without the approval of UB. From the text of the
labels on the Kingfisher Products it shall under all circumstances
clearly appear that the contents have been produced by UCB under a
license from UB.
6. Payments
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6.1 In the event UCB requests UB's technical assistance UCB shall pay to
UB reasonable reimbursable costs and fees as determined by UB in
writing for services provided by special agreement pursuant to
clauses 3.3, 3.4, and 5.6.
6.2 Payment of the reasonable reimbursable costs, if any, under Clause
6.1 of this Agreement shall be effected by UCB within 30 days after
receipt of the relevant bills, statements, etc. from UB.
6.3 Payment of the transport costs, if any, under Clause 18.1 of this
Agreement shall be effected by UB within 30 days after receipt of the
relevant bills, statements, etc. from UCB.
6.4 All payments of amounts due to under this Agreement shall be paid in
US Dollars ($ USD) at the bank account of the principal offices of
UCB or UB or in any other place as such party may direct.
6.5 All costs relating to the forwarding of samples, documents, etc. in
accordance with this Agreement are paid by UCB.
6.6 The prices payable by UB for Kingfisher Products brewed by UCB and
delivered to UB (or such persons as UB may direct) shall be as agreed
between the parties. In the event that UCB's costs to brew the
Kingfisher Products increase as a result of actions taken by UCB
pursuant to Section 5.10 hereof, then the parties will adjust the
prices payable pursuant to this Section 6.6 in a manner to be agreed
upon in accordance with this cost increase.
6.7 UCB shall issue invoices to UB and UB shall pay such invoices in full
within 60 days in which the invoice is issued provided that delivery
of the Kingfisher Products which are the subject of the order is
properly made by UCB in accordance with the terms of the relevant
received order.
7. Termination
7.1 Without prejudice to any rights of action or any claim of damages or
right accrued at the date of termination, UCB and UB may by written
notice forthwith terminate the Agreement if one or more of the
following events occur.
a) In the event of a default by the other party in the performance
of any of the terms and conditions of this Agreement except in
the case of force majeure as defined in Clause 10 below
provided however, that either party retains the right to cure
any such default not later than ninety (90) days after the
notification of such default.
b) In the event of the other party taking steps to file any
voluntary petition under the federal or similar state bankruptcy
laws, or consent to the filing of any such petition or consent
to the appointment of a receiver, liquidator
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or trustee in bankruptcy or a court of competent jurisdiction
enters an order or decree under the federal or any similar state
bankruptcy law (i) for the appointment of a receiver,
liquidator, trustee or assignee in bankruptcy or insolvency of
the other party of all or substantially all of its assets or for
the winding up or liquidation of its affairs, or
(ii) adjudicating the other party a bankrupt or insolvent or
approving a petition seeking reorganization under any bankruptcy
law, and in any event such order or decree has continued in
force undischarged and unstayed for a period of ninety (90)
days.
7.2 Without prejudice to any rights or any claim of damages or right
accrued at the date of termination UB shall have the right, if it so
wishes, forthwith to immediately terminate the Agreement by written
notice in the event of any one or more of the following occurrences
taking place:
a) In the case of any misuse by UCB relating to the Trade Marks or,
if UCB challenges the validity of any registration of the
Trademarks or of any equivalent industrial or intellectual
property rights of UB; provided, however, that UCB retains the
right to cure any such default not later than thirty (30) days
after the notification of such default.
b) If UCB neglects its obligations to package the Kingfisher
Products in such a way that this negligence will damage the name
and reputation of UB; provided, however, that UCB retains the
right to cure any such default not later than thirty (30) days
after the notification of such default.
c) If UCB for any reason produces the Kingfisher Products of
quality which in the opinion of UB is not satisfactory, and the
quality of the Kingfisher Products are not satisfactorily
improved in the opinion of UB within fifteen (15) days after
notification of such default in spite of the instructions given
by UB's technicians.
d) If there is a change in the effective control whether directly
or indirectly of the ownership of UCB except for the
consolidation and investment in UCB by UB as more particularly
described in the Investment Agreement.
e) If more than one half of the assets of UCB relating to the
production, marketing, distributing, and retailing of Brewery
Goods are transferred to a person, company, or organization
otherwise than as a result of a reconstruction not involving a
change of control; or
f) If ten (10) percent or more of the issued voting shares of UCB
are taken over or transferred whether directly or indirectly to
a person, company or group with special interest in the brewing
industry.
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g) If the start of production of the Kingfisher Products has not
taken place at the latest three (3) months after the Effective
Date or any extended period as may be mutually agreed to between
UB and UCB in writing.
7.3 Obligations and rights of parties upon termination or expiration.
7.3.1 In the event of expiration or termination of this Agreement,
UCB shall forthwith discontinue the use of the Trade Marks
and shall not thereafter use, in any manner, or for any
purpose, directly or indirectly, any of the same, or any
trademarks or symbols identical to or deceptively similar
thereto. UCB shall immediately return to UB any written
embodiment including plates, labels, packaging materials,
etc. incorporating the Trade Marks, logos or devices, and
all other items which comprise the Know-how and
Specifications for brewing and packaging the Kingfisher
Products and shall not howsoever make use of the same after
termination. UCB shall indemnify UB for any costs incurred
by UB (including reasonable attorneys fees) in enforcing
this 7.3.1 provision.
7.3.2 The expiration or termination of this Agreement shall be
without prejudice to any other rights or claims of UB
against UCB or UCB against UB, or any other remedy available
to UB or UCB, or relieve UB or UCB of any obligations which
by their nature survive the expiration or termination of
this Agreement.
7.3.3 Upon or following the expiry or termination of this
Agreement, UCB shall cease to manufacture Kingfisher
Products under the Trade Marks and UB shall forthwith
purchase any unsold stocks of Kingfisher Products that UCB
may have in its possession at the then current price for
such products.
8. Trade Marks
8.1 UB authorizes UCB to label and package Kingfisher Products with the
Trade Marks for UB pursuant to the terms and conditions of this
Agreement and upon the condition that the Kingfisher Products shall
be produced and packaged according to the Know-how and Specifications
prescribed by UB under this Agreement.
8.2 UCB acknowledges UB's exclusive right, title and interest in and to
Trade Marks which UB may have at any time adopted, used, registered
or been issued in the United States of America or in any other
location, and UCB agrees that it shall not do, or cause to be done,
any acts or things contesting or in any way impairing or intended to
impair any portion of UB's right, title, and interest in and to the
Trade Marks. UCB acknowledges that, in connection with any reference
to the Trade Marks UCB shall not in any manner represent that it
possesses any ownership interest in the Trade Marks or the
registration thereof,
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nor shall any action taken by UCB or on UCB's behalf create in UCB's
favor any right, title, or interest in and to the Trade Marks.
8.3 UCB acknowledges UB's rights to any and all written material or
packaging or both which UB provides with the Kingfisher Products.
Additionally, UCB recognizes UB's exclusive right to seek copyright
protection for and/or the registration of copyright protection for or
the registration of copyright of any and all literature, promotional
or descriptive materials furnished to UCB by UB.
8.4 When referring to Trade Marks and copyrights, UCB shall comply with
any and all applicable federal, state, and local laws and
regulations.
9. Force Majeure
9.1 In the event that either party hereto shall be rendered wholly or
partially unable to perform its obligations under this Agreement,
other than obligations to render statements and make payments
pursuant to the provisions of the Agreement, by reason or causes
beyond its control, including but not restricted to acts of God,
acts, omissions, or regulations of any Government or subdivision
thereof, judicial action, fire, storm, accident, war, riot, labor
disputes, or transportation failure, then the said performance of the
obligations of such party, in so far as it is affected by such cause,
shall, be excused during the continuance of any inability so caused
provided that the party affected advises the other party in writing
of its inability within seven days after such cause comes into
existence.
9.2 If due to war, warlike conditions, revolt, insurrections or any other
force majeure condition the parties are prevented from maintaining
normal relations, UCB shall to the best of its ability continue its
activities in conformity with this Agreement until normal relations
can be resumed, and in every possible way safeguard the interests of
UB, and all payments and other amounts accruing to UB and which
cannot be remitted to UB shall be deposited in a separate interest
earning bank account in the name of UB until normal conditions are
restored and UCB shall use its best endeavors to negotiate
satisfactory interest terms for such deposited money which interest
shall accrue and belong to UB.
10. No Assignment
10.1 Except as otherwise provided in this Agreement, neither party shall
without the prior written consent of the other assign, transfer,
mortgage, charge or otherwise deal with any of its rights under this
Agreement. Notwithstanding the foregoing, UB is entitled to assign
its rights hereunder to a wholly owned company with fifteen (15) days
notice to UCB.
11. Notices
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11.1 Whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by another, or whatever
any of the parties desires to give or serve upon another any such
communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other
communication shall be in writing and either shall be delivered in
person with receipt acknowledged or by registered or certified mail,
return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback addressed as follows:
IF TO UCB AT:
United Craft Brewers, Inc.
One Harbor Drive, Suite 102
Sausalito, California 94965
Attention: Chief Executive Officer
Telecopy Number: (415) 289-1409
IF TO UB AT:
United Breweries of America, Inc.
One Harbor Drive, Suite 102
Sausalito, CA 94965
Attention: Vijay Mallya
Telecopy Number: (415) 289-1409
WITH A COPY TO:
Alan Talkington
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Building
400 Sansome Street
San Francisco, CA 94111
Telecopy Number: (415) 773-5759
11.2 The parties agree to send such notices to such other address as may
be substituted by notice given as herein provided. The giving of any
notice required hereunder may be waived in writing by the party
entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall
be deemed, request, consent, approval, declaration or other
communication hereunder shall be deemed to have been duly given or
served on the date on which personally delivered, with receipt
acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) Business Days after the same shall have been deposited,
with the United States mail.
12. Term
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12.1 Unless sooner terminated in accordance with the provisions hereof,
this Agreement shall commence on the Effective Date and shall
continue until terminated by either party with six (6) months notice
in writing to the other.
13. Arbitration
13.1 All disputes arising in connection with this Agreement shall be
settled under the American Arbitration Association by a single
Arbitrator to be appointed in accordance with the rules of the
association.
13.2 The arbitration proceedings shall be held in San Francisco,
California and shall be governed by the laws of the United States.
13.3 Judgment upon the award rendered may be entered in any court having
jurisdiction or application may be made to any such court for a
judicial acceptance of the award and an order of enforcement as the
case may be.
14. Governing Law
14.1 This Agreement shall be construed and interpreted in all respects in
accordance with, and governed by, the laws of the State of New York
(without regard to the laws that might be applicable under principles
of conflicts of law).
15. Records
15.1 UCB shall record all production and deliveries of the Kingfisher
Products, by such product categories as UB may reasonably request,
and shall keep and maintain accurate records thereof throughout the
term of this Agreement and any extensions or renewals hereof, and for
one (1) year thereafter.
15.2 UB shall have the right, upon five (5) days' written notice, to enter
UCB's premises or other location where records are maintained to
inspect, audit and make copies of any books of account, documents,
records, papers and files of UCB relating to production and
deliveries of the Kingfisher Products and upon notice by UB, UCB
shall make any such material available for inspection.
15.3 Within ninety (90) days after the end of each Year during the term of
this Agreement and any extensions or renewals hereof, UCB shall
furnish UB with a statement of the gross sales of the Kingfisher
Products to UB for such Year by such product categories as UB may
reasonably request. All such statements shall be prepared in
accordance with generally accepted accounting principles consistently
applied from applicable period to period and shall be certified by an
officer of UCB as being true and correct and as being prepared in
accordance
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with generally accepted accounting principles consistently applied
from applicable period to period.
16. Limitation of Liability
16.1 UB shall not be responsible for damages or otherwise for the
utilization by UCB of the Know-how and the professional services and
advice furnished to UCB by UB.
16.2 Except as may be set forth herein and by law, all express and implied
warranties, guarantees and conditions under statute or general law as
to merchantability, description, quality, suitability, or fitness of
the Know-how or Kingfisher Products for any purpose or otherwise are
hereby expressly excluded and UB shall not be liable for physical or
financial injury, loss, or damage of any kind arising out of the
supply, operation, or use of the Know-how or the manufacture of the
Kingfisher Products or arising out of the negligence of UB or in any
other way whatsoever.
16.3 Notwithstanding anything to the contrary in this Agreement or
otherwise implied or applicable by law, UB shall not be liable to UCB
or any other person by reason of any representation or implied
warranty, condition or other term or any duty at common law, or under
the express terms of this Agreement or implied by statute, for any
consequential loss or damage (whether for loss or profit or otherwise
and whether occasioned by the negligence of UB of its employees or
agents or otherwise) arising out of or in connection with any act or
omission of UB relating to the supply, operation, or use of the
Know-how of the manufacture or sale of the Kingfisher Products or the
consumption by any purchaser.
16.4 If, notwithstanding the foregoing sections, UB shall become liable to
UCB or any other Person or governmental authority for any reason
whatsoever UB's liability shall be limited to the amount of One
Hundred Thousand Dollars (USD 100,000.00) for the relevant Year
during which the cause of action giving rise to such liability has
arisen. UB shall in no event be liable for any incidental or
consequential damages of any kind, whether or not foreseeable,
arising out of or in connection with any breach of any warranty
hereunder or nonconformity or defect in the Kingfisher Products.
16.5 UCB is solely responsible for ensuring that the Kingfisher Products
and their production, bottling, packaging, and storage, conform with
all applicable laws, by-laws, and regulations, and will indemnify and
keep indemnified UB, immediately on demand against all claims,
losses, costs and expenses made against or suffered by UB arising out
of, or in any way connected with, the brewing, bottling, packaging,
storage, or other disposal of the Kingfisher Products by or on behalf
of UB, unless those claims, losses, costs, and expenses are directly
attributable to a defect in any product supplied by UB. UCB will
effect and at all times maintain product liability insurance on the
terms and in
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such amounts, and with insurers as UB approves, and will at all times
note the interest of UB on the insurance policy.
17. Supplying the Products
17.1 UCB agrees with UB to supply Kingfisher Products brewed by UCB to UB
for delivery to UB (or such persons as UB may direct) for domestic or
export sale in response to orders from UB in accordance with the
order and the terms of this Agreement.
17.2 UB shall provide to UCB on a monthly basis a rolling forecast of
their requirements of Kingfisher Products for the following three
months which shall be in reasonable commercial lot size amounts.
Forecasts made in respect of any month may not thereafter be revised
by more than 20% in either direction. UCB may but shall not be
obliged to accept any order for Kingfisher Products from UB in excess
of that party's final forecast for the month which the order is
placed unless UCB receives timely notice to adjust the forecasts to
reflect genuine market movement. UCB shall immediately notify UB in
writing of its inability to meet the forecast for any period of time.
18. Delivery
18.1 The Kingfisher Products shall be delivered to a common carrier
designated by UB or its sublicensee, designee, agent or employee,
F.O.B. UCB's Brewery, within ten (10) business days from the receipt
of the corresponding order by UB. Identification of the product in
the shipment shall occur when it is placed in the hands of the common
carrier. The Kingfisher Products shall be packaged in the usual
containers utilized by UCB. The risk of loss shall pass to UB from
the time the product is placed in the hands of the common carrier.
18.2 UB shall give UCB two (2) weeks' notice before each shipment is
required.
19. Returns and Allowances
UCB shall make additional Kingfisher Products available without any charge
to UB, including without limitation insurance, reimbursement for all
related freight and delivery costs, for any Kingfisher Products which are
produced in defective condition or for shortage in count, provided however,
that UB provides documented proof to substantiate any claim for defective
condition of the product or shortage in count to UCB.
20. Non-Competition
UCB agrees that during the Term of this Agreement and for a period of three
years after its expiration or termination it shall not brew another South
East Asian Lager.
21. Miscellaneous
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21.1 The relationship between the parties hereto is contractual and
nothing under the Agreement or any act performed pursuant thereto
shall howsoever be construed as constituting one party as the agent
of the other party.
21.2 No waiver by either party of any violation or breach shall be deemed
to be a waiver of any subsequent violation, default or breach of like
nature.
21.3 This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and except as herein provided
there are no other oral or written understandings or agreements
between the parties hereto relating to the subject matter hereof.
21.4 No amendment or other modification of this Agreement shall be valid
or binding on either party hereto, unless reduced to writing and
executed by the parties hereto.
IN WITNESS WHEREOF THE PARTIES HERETO HAVE EXECUTED THESE PRESENTS ON THE DAY,
MONTH AND YEAR FIRST ABOVE MENTIONED.
UNITED CRAFT BREWERS, INC.
a Delaware corporation
By: _________________________________________________
________________, President
UNITED BREWERIES OF AMERICA, INC.,
a Delaware corporation
By: __________________________________________________
Vijay Mallya, Chairman
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SCHEDULE 1
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