AGREEMENT
This Agreement is made and entered on this 23 day of December, 1993 between
Western Container Corporation ("Seller"), a Texas corporation having its
principal place of business at Houston, Texas, and Coca-Cola Bottling Co.
Consolidated, a Delaware corporation having its principal place of business
at 1900 Rexford Rd., Charlotte, NC 28210 ("Buyer").
WITNESSETH:
WHEREAS, Seller is in the business of manufacturing for sale sixteen ounce,
twenty ounce and 1 liter unlabeled polyethylene terephthalate bottles (PET
Bottles) in what is commonly known as "generic" or straight-walled design
("Generic Bottles"); and
WHEREAS, Buyer wants to purchase from Seller PET Bottles of a contoured
design ("Contoured Bottles") which Seller does not currently manufacture, nor
does Seller have the equipment to so manufacture; and
WHEREAS, Buyer also wants to purchase from Seller additional volumes of
Generic Bottles which Seller currently does not have the capacity to
manufacture; and
WHEREAS, in order for Seller to acquire the manufacturing capacity
necessary to supply Buyer and other customers with their expected volume
of Contoured and Generic Bottles from Seller, Seller will be required to
make substantial capital expenditures for Bottle manufacturing and related
equipment, which expenditures are estimated to be in excess of $16,000,000;
and
WHEREAS, Seller is willing to enter into this agreement to supply
Contoured and Generic Bottles to Buyer only on the condition that Seller is
afforded protection from Buyer that Seller will not be at risk or suffer any
financial loss resulting from its purchase of such additional capital
equipment in the event that Buyer for any reason whatsoever, including
an event of force majeure, either ceases to purchase Bottles from Seller,
or ceases to purchase Bottles in sufficient quantities to substantially
fully utilize such additional capital equipment, all in accordance with
the terms and conditions hereof.
NOW, THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged by both parties, and in consideration
of the following terms and provisions, the parties agree as follows:
1. Sale of PET Bottles to Buyer.
(a) Seller shall be obligated to sell and deliver to Buyer a
cumulative total of 59.6MM 16-ounce, 20-ounce, and/or 1-liter Generic or
Contour Bottles, in such proportions as Buyer may determine, for each twelve
(12) month period beginning the earlier of July 1, 1994, or the first day of
the month after the month in which Seller has available for shipment to Buyer
commercial quality and quantity of Contoured or Generic Bottles (the "Initial
Date"); and
(b) Seller shall be relieved of the obligations in Paragraph 1(a)
above if Seller's failure to sell and deliver such quantity of PET Bottles is
due to an event of force majeure affecting Seller. For the purposes of this
Agreement, an event of force majeure shall mean any act which is beyond the
reasonable control of Seller, including without limitation, fire, explosion,
breakdown or plant failure of machinery, strike, walk-out
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labor dispute, casualty or accident, lack of or failure in whole or in part
of transportation facilities, or lack of or failure in whole or in part of
sources of supply of labor, raw materials and/or power ("Force Majeure").
In the event of an act of Force Majeure which prevents Seller from delivering
Bottles to Buyer and such event is covered by Seller's insurance then in
effect, Buyer shall be relieved of its obligation to take or pay for such
Bottles but only to the extent of the Bottles not delivered as a result of
such event and only to the extent of such payments made to Seller under the
insurance coverage as a result of such event. Seller agrees to maintain with
financially sound and reputable insurers insurance with respect to its
properties and business, including business interruption insurance, against
such liabilities, casualties, risks and contingencies and in such types and
amounts as is customary in the case of persons engaged in the same or similar
businesses and similarly situated.
2. Price.
(a) The price to be paid by Buyer to Seller for PET Bottles purchased
pursuant to this Agreement shall be Seller's price as established from time
to time by Seller's Board of Directors in accordance with the then applicable
provisions of the Seller's bylaws and Seller's written policies relating to
pricing, as such price may be changed from time to time by Seller's Board of
Directors upon not less than five (5) days prior notice in accordance with
Seller's pricing policy then in effect. In addition, Buyer shall be invoiced
on and shall pay a reasonable deposit for all PET Bottle packaging materials
including, without limitation, pallets, tear sheets, top frames and the like,
which deposit shall be credited to Buyer when and if such packaging materials
are returned to Seller in good condition. Payment by Buyer shall be due net
within thirty (30) days from receipt of invoice
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by Seller and payments received within fifteen (15) days from receipt of
invoice may be discounted by an amount established from time to time by
Seller. If Buyer fails to make full payment to Seller on any invoice within
thirty (30) days from the date of such invoice (the "Due Date"), such amounts
shall accrue interest from the Due Date at the rate of eighteen percent (18%)
per annum, or the maximum rate permitted by applicable law, whichever is
lesser, and all future shipments of PET Bottles to Buyer shall be sent by
Seller to Buyer C.O.D. or on any other basis acceptable to Seller, at Seller's
discretion, unless credit terms are reinstated by Seller.
3. Take or Pay.
(a) Except as expressly provided in Paragraphs 1(b) and 4(b), the parties
hereto recognize and agree that in no event or circumstance, regardless of
fault or lack of fault of either party, including lack of consumer acceptance
of or demand for beverage products packaged in the Contoured Bottles, shall
Seller be at risk for any economic loss resulting from Seller's purchase of
the capital equipment necessary to supply Buyer with Contoured Bottles or
additional Generic Bottles hereunder. Accordingly, the parties have agreed
to the provisions in Paragraph 3(b) hereof in order to implement this feature
of the Agreement.
(b) In order to compensate Seller for the purchase of the Contour and
Generic Bottle equipment during the term of this Agreement until termination
thereof,
(1) Buyer promises to make 20 quarterly payments (the "Quarterly
Payment") to Seller of $119,184 beginning with the full three calendar month
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starting with the Initial Date and each 3-month period thereafter during the
term of this Agreement;
(2) In connection with computing each Quarterly Payment as
required by paragraph 3(b)(1) of this Section, Buyer will be entitled to a
credit against such Quarterly Payment of $10.00 for each 1,000 Contour and/or
Generic Bottles (16 oz., 20 oz., or 1 liter size) shipped to and paid for by
Buyer from Seller during the calendar quarter and for each 1,000 Contour and/or
Generic Bottles shipped to other customers of Seller and then filled with
beverages and shipped to Buyer during the calendar quarter up to a maximum
of $119,184 per quarter. The Quarterly Payment is payable to and must be
received by Buyer within 15 days after the end of each such 3-month period;
and
(3) When making each fourth Quarterly Payment during each 12-month
period hereunder, Buyer may use all Bottles purchased during such 12-month
period to determine the credit due on an annual basis to the four quarterly
payments due under Paragraph 3(b)(1). If the quantities purchased during
such twelve months in which the take or pay obligations were assessed exceeds
the annual volume required to negate the take or pay obligation, then any
Quarterly Payments made in such twelve months shall be returned by Seller.
4. Term
(a) The term of this Agreement is for the five year period beginning from
and including the Initial Date.
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(b) Each party hereto shall have the right at its option to terminate this
Agreement prior to the end of the term, only if (1) one party fails to cure a
material breach of any of its obligations under this Agreement within ninety
(90) days after receiving written notice from the other party of such breach,
such termination to be effective ninety (90) days after the other party gives
such written notice; or (2) the other party files a petition in Bankruptcy
Court or is adjudicated a bankrupt; or (3) the other party has a receiver
of assets or property appointed because of insolvency; or (4) the other
party makes a general assignment of all its assets for the benefit of
creditors.
5. Estimates; PET Bottles.
Buyer must provide Seller with good faith written estimates of Buyer's
estimated purchases of PET Bottles by type (Generic or Contour) and size
(16-oz, 20-oz, and 1-liter) from Seller. These estimates will be calculated
for each twelve-month period beginning April 1 with the first such estimate
to cover the period beginning April 1, 1994 through March 31, 1995. These
estimates will be submitted to Seller by Buyer upon execution hereof for
the first twelve-month period, and no later than ninety (90) days before
the beginning of each subsequent twelve-month period. Buyer further agrees
to provide Seller with information reflecting likely material deviations
from then current forecasts within a reasonable period of time after Buyer has
knowledge of the likelihood of such deviations. Buyer shall place all orders
with Seller at least two weeks prior to the requested delivery date of the
order. In no event shall Seller be required to sell to Buyer Bottles in excess
of the quantities set forth in Paragraph 1.
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6. Delivery.
Seller shall ship the PET Bottles to the locations specified by Buyer in
its order within two (2) weeks after receipt of an order (subject, however,
to events of Force Majeure); provided, however, if the designated location
is more than five hundred (500) highway miles from Seller's plant from which
the PET Bottles are to be shipped, then Buyer shall pay all transportation
costs with respect to shipping such PET Bottles from Seller's plant to the
designated location to the extent such costs exceed the cost for shipping
such PET Bottles for the first five hundred (500) highway miles. Buyer
agrees to accept delivery of the PET Bottles unlabeled in bulk pallets.
Buyer agrees that Seller is not required to deliver the PET Bottles in
corrugated boxes.
7. Warranties.
Seller represents and warrants that:
(a) Upon delivery, the PET Bottles shall be acceptable at the time
of manufacture to The Coca-Cola Company.
(b) It will at all times carry products liability insurance in the
amount of $500,000 with an umbrella of $10,000,000.
ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE ARE
HEREBY EXPRESSLY DISCLAIMED AND NEGATED.
(c) A breach of the warranties in this Section shall entitle Buyer to
damages as provided in Paragraph 8(c) only, but shall not permit Buyer to
terminate this
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Agreement unless terminated in accordance with a failure of performance by
Seller pursuant to Paragraph 4(b) hereof.
8. Indemnification.
(A) SELLER SHALL, AT ITS OWN EXPENSE, DEFEND, INDEMNIFY, AND HOLD
HARMLESS BUYER FROM ANY AND ALL LIABILITY, COMPLAINT, CLAIM OR LEGAL
ACTION THAT MAY BE INSTITUTED BY A THIRD PARTY AGAINST BUYER ALLEGING
DAMAGE, DEATH, ILLNESS, OR INJURY RESULTING FROM OR ALLEGING A DEFECT
IN THE MANUFACTURE OR MATERIALS OF THE PET BOTTLES OR FROM CONTAMINATION
OF THE CONTENTS THEREOF BY THE MATERIALS FROM WHICH THE PET BOTTLES ARE
MANUFACTURED (BUT NOT SUCH CLAIMS WHICH RESULT FROM A DEFECT OR
CONTAMINATION WHICH OCCURS AFTER THE BOTTLES LEAVE SELLER'S PLANT,
SUCH AS DURING THE HANDLING, SHIPPING, BOTTLING OR THE DISTRIBUTION
OPERATION UNLESS SUCH DEFECT OR CONTAMINATION IS CAUSED ONLY BY THE
PET BOTTLES AS MANUFACTURED) AND TO ASSUME FULL RESPONSIBILITY AND
EXPENSE OF INVESTIGATION, LITIGATION, NEGOTIATION, AND/OR SETTLEMENT
OF ANY SUCH COMPLAINT, CLAIM OR LEGAL ACTION, BUT SUCH LIABILITY,
RESPONSIBILITY AND EXPENSE SHALL NOT EXCEED THE AMOUNT OF SELLER'S
PRODUCT LIABILITY COVERAGE FOR WHICH THE INSURANCE CARRIER MAKES
PAYMENT TO SELLER (PLUS ANY APPLICABLE DEDUCTIBLE). LIKEWISE, BUYER
SHALL, AT ITS OWN EXPENSE, DEFEND, INDEMNIFY, AND HOLD
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HARMLESS SELLER FROM ANY AND ALL LIABILITY, COMPLAINT, CLAIM OR LEGAL ACTION
THAT MAY BE INSTITUTED BY A THIRD PARTY AGAINST SELLER ALLEGING DAMAGE, DEATH,
ILLNESS, OR INJURY RESULTING FROM OR ALLEGING A DEFECT IN THE PET BOTTLES OR
FROM CONTAMINATION OF THE CONTENTS THEREOF WHICH RESULT FROM A DEFECT OR
CONTAMINATION WHICH OCCURS AFTER THE BOTTLES LEAVE SELLER'S PLANT, SUCH AS
DURING THE HANDLING, SHIPPING, BOTTLING OR THE DISTRIBUTION OPERATION UNLESS
SUCH DEFECT OR CONTAMINATION IS IN THE PET BOTTLES AS MANUFACTURED BY SELLER,
AND BUYER SHALL ASSUME FULL RESPONSIBILITY AND EXPENSE OF ANY INVESTIGATION,
LITIGATION, NEGOTIATION, AND/OR SETTLEMENT OF ANY SUCH COMPLAINT, CLAIM OR
LEGAL ACTION BUT SUCH LIABILITY, RESPONSIBILITY AND EXPENSE SHALL NOT EXCEED
THE AMOUNT OF BUYER'S PRODUCT LIABILITY COVERAGE FOR WHICH THE INSURANCE
CARRIER MAKES PAYMENT TO BUYER (PLUS ANY APPLICABLE DEDUCTIBLE).
(B) BOTH SELLER AND BUYER AGREE THAT NEITHER WILL SETTLE OR COMPROMISE
ANY CLAIM OR SUIT HAVING ANY ADVERSE EFFECT UPON THE OTHER PARTY WITHOUT
PROVIDING THE OTHER PARTY REASONABLE ADVANCE NOTICE THEREOF. IN THE EVENT
EITHER PARTY OBJECTS TO THE PROPOSED SETTLEMENT OF THE OTHER, THE
OBJECTING PARTY MAY ASSUME FULL RESPONSIBILITY FOR THE DEFENSE OF ANY
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SUCH CLAIM OR SUIT AT ITS OWN EXPENSE, CONDITIONED UPON THE OBJECTING PARTY
AGREEING TO PAY FOR ALL DAMAGES OBTAINED AGAINST THE OTHER PARTY OVER AND ABOVE
THE AGREED UPON BASIS OF SETTLEMENT. IT IS EXPRESSLY UNDERSTOOD THAT EITHER
PARTY, AT ITS ELECTION, MAY, AT ITS OWN EXPENSE, RETAIN COUNSEL TO PARTICIPATE
IN THE DEFENSE OF ANY CLAIM OR SUIT BROUGHT AGAINST THE OTHER PARTY WHICH MAY
HAVE AFFECT UPON ITS RIGHT OR LIABILITIES HEREUNDER.
(C) BUYER'S EXCLUSIVE REMEDY, AND SELLER'S SOLE LIABILITY IN RESPECT TO
ANY CLAIM FOR DAMAGES FOR BREACH OF ANY WARRANTY OF SECTION 7 (OTHER THAN AS
PROVIDED WITH RESPECT TO THIRD PARTY CLAIMS COVERED BY SECTION 8(A) WHICH
SHALL BE GOVERNED EXCLUSIVELY BY SECTION 8(A)), SHALL BE LIMITED TO
REIMBURSEMENT OF THE ACTUAL COST TO BUYER, AS DETERMINED BY SELLER'S BOARD
OF DIRECTORS, OF THE PET BOTTLES CLAIMED TO BE DEFECTIVE OR OTHERWISE NOT IN
COMPLIANCE WITH SUCH WARRANTIES, OR THE REPLACEMENT THEREOF, BUT SHALL NOT
INCLUDE ANY CONSEQUENTIAL OR OTHER DAMAGES EXCEPT FOR THE COST OF REMOVING
SUCH DEFECTIVE PET BOTTLES FROM THE FACILITIES OF BUYER. No person not a
party hereto shall have any rights hereunder or with respect hereto, and
no such person shall be considered a third-party beneficiary hereof.
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9. Conflict With Other Agreements; Indemnity.
Buyer represents and warrants to Seller that neither the execution and
delivery of this Agreement nor the performance of the transactions contemplated
herein by Buyer will violate or conflict with (a) any provision of any contract
or agreement to which Buyer is a party or by which it is bound; or (b) any duty
to any third party. Seller represents and warrants to Buyer that neither the
execution and delivery of this Agreement nor the performance of the
transactions contemplated herein by Seller will violate or conflict
with (a) any provision of any contract or agreement to which Seller is a
party or by which it is bound; or (b) any duty to any third party. Each
party hereto shall, at its own expense, defend, indemnify and hold
harmless the other party hereto from any and all liability, complaint,
claim or legal action that may be instituted by a third party involving
a breach of the representations and warranties in this Paragraph 9.
10. Governing Law.
The terms and provisions of this Agreement shall be governed by the
substantive laws of the State of Texas, excluding any rule or principle
that might refer to or apply the substantive law of another jurisdiction.
11. Successors and Assigns.
This Agreement shall be binding upon and inure to benefit of the parties
hereto and their respective successors and assigns; provided, however, this
Agreement shall not be assigned by Buyer or Seller without the prior written
consent of the other party hereto, except that either party may effect a
corporate reorganization from a corporation to a corporate cooperative without
the need for such consent and except that Seller may
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grant to NationsBank of Texas, N.A. a security interest in this Agreement to
secure Seller's obligations to NationsBank of Texas, N.A. without the need for
such consent.
12. Entire Agreement; Amendments.
This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof and supersedes all prior negotiations,
understandings and agreements between the parties relating thereto. No
supplement, modification, waiver or amendment of this Agreement shall be
binding unless executed in writing by the parties, and no waiver shall be
deemed to apply to any continuing default or any subsequent breach or default,
either of a similar or different nature, unless expressly so stated in writing.
13. Notices.
All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given upon receipt
on a business day at the address for notice for the party to whom the notice
is addressed.
The addresses for notice are as follows:
(a) If to Seller:
Western Container Corporation
3801 Distribution Boulevard
Houston, Texas 77018
Attention: Robert H. Jackson
(b) If to Buyer:
Coca-Cola Bottling Co. Consolidated
1900 Rexford Rd.
Charlotte, North Carolina 28210
Attention: Michael A. Perkis
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The respective addresses for notice may be changed by either party hereto
by furnishing to the other party written notice in accordance with the
provision of such change of address.
14. Survival.
The obligations of Paragraphs 2,7,8 and 9 shall survive any termination
of this Agreement.
15. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
16. Exhibits and Headings.
The Exhibits attached hereto are made a part hereof. The paragraph
and section headings contained in this Agreement are for reference
purposes only and shall not affect in any manner the meaning or
interpretation of this Agreement.
17. Invalidity.
In the event any one or more provisions contained in this Agreement shall,
for any reason, be held to be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby and any such invalid, illegal, or unenforceable
provision shall be construed as broadly as is permitted by law so
that only that portion which is invalid, illegal or unenforceable is
impaired.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives or officers.
[BUYER]
By: Michael A. Perkis
Title: Vice President
Date: December 23, 1993
WESTERN CONTAINER CORPORATION
By:
Title:
Date: