Boston Beer Co. Contracts
Sample Business Contracts
Production Agreement - The Stroh Brewery Co. and Boston Beer Co. LP
AMENDED AND RESTATED
PRODUCTION AGREEMENT
BETWEEN
THE STROH BREWERY COMPANY
AND
BOSTON BEER COMPANY LIMITED PARTNERSHIP
AGREEMENT entered into effective as of the 1st day of November, 1998 (the
"Effective Date"), by and between THE STROH BREWERY COMPANY, an Arizona
corporation ("Stroh", which term shall also include each Permitted Assignee, as
hereinafter defined, as the context admits), and BOSTON BEER COMPANY LIMITED
PARTNERSHIP, a Massachusetts limited partnership ("Boston Beer"). Boston Beer
and Stroh are sometimes referred to herein individually as a "Party" and
collectively as the "Parties".
Stroh and Boston Beer are currently parties to an Agreement dated as
of January 14, 1997, as amended, pursuant to which Stroh agreed to brew, package
and sell certain Boston Beer products to Boston Beer ("1997 Production
Agreement") at Stroh's Allentown (Lehigh Valley), Pennsylvania brewery. Stroh
also produces products for Boston Beer at the Portland, Oregon brewery
(formerly, the "Heileman Brewery"), sometimes referred to hereinafter as the
"Portland" brewery. When Stroh acquired the Heileman Brewery, it assumed
certain production arrangements contained in an Agreement between Boston Beer
and G. Heileman Brewing Company, Inc., dated as of November 29, 1995 (the
"Heileman Agreement"), as well as the terms and conditions of each of the Sankey
Project agreement, dated July 5, 1995, (the "Sankey Agreement") and the Wort
Clarifier Project agreement, dated July 6, 1995 (the "Wort Clarifier
Agreement"). Copies of the Sankey Agreement and the Wort Clarifier Agreement
are attached hereto as Exhibits A and B, respectively. Stroh and Boston Beer
are also parties to a certain Letter Agreement dated January 14, 1997, as
amended, which related to certain potential investments ("Letter Agreement").
Stroh and Boston Beer now desire to enter into a new production agreement,
effective as of the Effective Date, to supersede the existing arrangements, and
which will govern the production of products by Stroh for Boston Beer, provide
Boston Beer with greater control over the production process, and give Boston
Beer access to greater brewing capacity through the inclusion of other Stroh
breweries.
ACCORDINGLY, in consideration of the mutual agreements contained in this
Agreement, the Parties, intending to be legally bound, hereby agree, as follows:
1. Scope of Agreement.
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a. During the Term, as defined in Section 7, and in accordance with
the terms and conditions set forth herein, Stroh shall give Boston Beer access
to the Stroh production facilities identified in subsection (c), below, and make
available to Boston Beer Stroh's production personnel to allow Boston Beer to
produce Boston Beer's proprietary Beer Products.
b. For purposes of this Agreement, Boston Beer's "Beer Products"
shall include those products set forth in Exhibit C attached hereto, together
with certain specially ordered and seasonal malt beverage products identified as
such by Boston Beer ("Special Orders and Seasonals") and such other beer
products as Boston Beer may introduce from time to time. Boston Beer shall
periodically provide to Stroh an updated schedule of all Boston Beer products
which Boston Beer deems to be Beer Products, subject to this Agreement. Boston
Beer agrees, however, that Stroh need not permit in excess of * or in excess of
* . The Parties agree that they may subsequently mutually agree in writing to
amend the foregoing specifications with respect to the maximum number of *.
c. The breweries that are subject to this Agreement (individually a
"Brewery" and collectively the "Breweries") are as set forth in the following
chart. *
*: * *
-
Allowed Locations
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Initial Allowed Location: Lehigh Valley, PA Portland, OR
* * *
- - -
The foregoing Breweries are sometimes hereinafter referred to simply as "Lehigh
Valley", "Portland", *, * and * respectively. For purposes hereof, the terms
"Brewery" and "Breweries" shall include (i) other breweries owned by Stroh at
which it may be proposed
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by Stroh that Beer Products be produced pursuant to this Agreement and (ii)
except as otherwise agreed between Boston Beer and a Permitted Assignee at the
time a Permitted Assignee takes on production responsibilities for Boston Beer,
all breweries owned by a Permitted Assignee (all of which shall be deemed to be
Allowed Locations), whether or not acquired from Stroh.
2. Control of Production of Beer Products: Public Statements.
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a. All Beer Products shall be brewed and packaged according to Boston
Beer's specifications, including the maintenance of standards and quality
control programs. Boston Beer shall have ultimate responsibility and authority
over every detail of the production process for Beer Products at each of the
Breweries, with such responsibility and authority as to those parameters
affecting beer taste and quality to be the same as if Boston Beer were the owner
of the Brewery. Boston Beer shall have the right, at any time, to monitor and
review the practices and procedures of Stroh in the production and packaging of
Beer Products and to inspect each of the Breweries and any other Brewery at
which it is proposed by Stroh that Beer Products be produced. If a decision made
by Boston Beer in the exercise of its authority under this Section 2(a) results
in additional costs over and above the costs of the then current operations,
Stroh shall be entitled to be reimbursed by Boston Beer for such costs. In
addition, in the exercise of its authority under this Section 2(a), Boston Beer
shall not interfere with Stroh's production processes for its own proprietary
brands.
b. Consistent with the provisions of paragraph (a), Stroh and Boston Beer
will, in any and all public statements or comments, recognize that Boston Beer
controls the ingredients, recipe, brewing processes and procedures and quality
and taste parameters for all Beer Products produced at Breweries and that Boston
Beer is the brewer of all such Beer Products. Neither party will make any public
statements inconsistent with the foregoing.
3. Committed Capacity: Commitment Fee.
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a. During the Term, Stroh shall, except as otherwise provided herein,
make the following minimum production capacities available to Boston Beer for
the production of Beer Products:
Brewery Committed Capacity
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* *
* *
The Committed Capacity at each Initial Location or at subsequent Allowed
Locations is based on anticipated tank usage and availability and shall be
increased or decreased in inverse proportion to the extent that actual average
tank usage varies from *. Boston Beer will, however, endeavor, to the extent
reasonably possible, to provide Stroh with * advance written notice of any
expected increase or decrease in its expected production requirements which
varies more than * from any previously submitted monthly forecasts for the
period in question, in order to allow Stroh to plan its capacity utilization at
any Brewery. Beer Products shall primarily be produced in units consisting of
(i) twenty-four 12-ounce bottles, whether packaged as a 24 bottle loose case, a
four 6-pack case or a two 12-pack case (each a "12-oz. Case Unit"), (ii) twelve
22-ounce bottles (a "22 oz. Case Unit"), (iii) 7.75 U.S. gallons (a "Half-Keg"),
and (iv) 15.50 U.S. gallons (a "Keg").
b. Commitment Fee. In consideration of Stroh's willingness to
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(i) enter into this Agreement, (ii) waive its rights under the Letter Agreement,
and (iii) commit the Committed Capacity to Boston Beer, Boston Beer shall pay to
Stroh, *, which shall be non-refundable except in the event of a Stroh
Production Default (as defined in Section 8(b)), and assign to Stroh Boston
Beer's ownership interest in the Wort Clarifier, as set forth in and subject to
the provisions of Section 14 hereof.
c. Packaging. * Stroh agrees to comply with such specifications mutually
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agreed to between Stroh and Boston Beer regarding the sterilization process for
use of used glass and inspection of used glass to insure, to the maximum extent
possible, that no foreign objects remain following the sterilization of such
used glass. The Parties agree that a copy of such specifications shall be
attached hereto as Exhibit D.
4. Closure or Sale of Breweries.
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a. Non-Final Closure. In the event that Stroh proposes to
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close ("Close" or a "Closure", which terms shall include a sale of a Brewery to
a party not intending to continue brewing operations at the location in
question) a Brewery at which Beer Products are then being produced (the "Closed
Brewery"), at a time when Stroh continues to operate a Brewery or Breweries *
Stroh shall:
(i) provide written notice to Boston Beer (the "Closure
Notice") at least * prior to the effective date of any such
proposed Closure and shall advise Boston Beer in its Closure
Notice of the Incremental Costs (hereinafter defined), if any,
arising out of a relocation to each potential Allowed Location;
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(ii) offer to make all arrangements necessary to relocate
Boston Beer's displaced business to an Allowed Location, which,
if there is more than one remaining Allowed Location, shall be
the Allowed Location that represents the closest geographic
location * that is a Brewery which can meet the quality, taste
and service requirements of this Agreement; and
(iii) if such offer is accepted, insure that the
displaced production of Beer Products shall continue to be
supplied without disruption.
b. Final Closure. In the event that Stroh proposes a Closure at a time
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when Stroh no longer operates another Brewery *, but does operate another
Brewery, Stroh shall:
(i) provide written notice to Boston Beer (the "Final
Closure Notice") of Stroh's intent to close the current location;
and
(ii) offer replacement production at any other brewery
owned or operated by Stroh during the Final Closure Period, which
is defined as the longest of * or * after the date of the actual
Closure of the Closed Brewery or through *, such production to be
provided by Stroh in a manner which is economically equivalent to
the then economic arrangements for production of Beer Products at
the Brewery then subject to Closure (i.e., Stroh shall pay any
capital or Incremental Costs, including any increase in freight
costs to Boston Beer associated with Stroh continuing to supply
Boston Beer with Beer Products during the Final Closure Period,
over and above those amounts already being paid by Boston Beer
prior to and as of the date of the Final Closure Notice), and in
a manner that, in the reasonable judgement of Boston Beer,
provides the same level of quality, taste and service as was
enjoyed by Boston Beer at the Closed Brewery; provided that if
Boston Beer accepts such replacement production for periods
beyond the Final Closure Period, Boston Beer shall pay any
Incremental Costs (defined below) and the brewery at which such
replacement production shall occur shall then be deemed to be an
"Allowed Location" *
If Stroh proceeds with the actions contemplated by this subsection (b), Stroh
would have the right to move the production of Boston Beer's Beer Products from
the Initial Location subject to Closure to any other Stroh location approved by
Boston Beer, such approval not to be unreasonably withheld or delayed, provided,
however, that there shall be no disruption in the supply of Beer Products to
Boston Beer during the Final Closure Period.
c. Continuing Option. In the event that Boston Beer elects not to accept
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an offer of replacement production capacity for Beer Products made by Stroh in
connection with a Closure, then, in such event, Stroh agrees that its offer of
replacement production capacity to Boston Beer (the "Option for Replacement
Production") shall remain open until the expiration of *. In the event that
Boston Beer fails to elect, during such *, to have Beer Products produced in
accordance with the Option for Replacement Production made by Stroh, then such
failure shall be deemed to be a termination of this Agreement solely with
respect to production of Beer Products *, and as referred to in the Closure
Notice pursuant to which Stroh has offered the replacement production capacity.
If, on the other hand, Boston Beer should elect, subsequent to Closure but prior
to expiration of the Option for Replacement Production, to have Stroh produce
Beer Products in accordance with the replacement production capacity outlined in
the Option for Replacement Production, then, in such event, Boston Beer shall be
responsible for all Incremental Costs with no Contribution Allocation (as
hereinafter defined) to be credited against Incremental Costs. Nothing contained
in this subsection (c) shall require Stroh to refrain from Closing a Brewery.
d. Partial Sale. In the event that Stroh proposes to sell
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("Sell" or a "Sale") a Brewery at which Beer Products are then being produced
(the "Sold Brewery"), in a transaction not involving all Breweries owned by
Stroh, Stroh shall:
(i) provide written notice to Boston Beer (the "Sale
Notice") at least * prior to the effective date of any such
proposed Sale;
(ii) cause the proposed purchaser of the Sold Brewery to
offer in writing to assume all of Stroh's obligations to Boston
Beer at the Sold Brewery; and
(iii) offer to relocate production from the Sold Brewery
to another Allowed Location or another Brewery then owned by
Stroh, in accordance with and subject to the provisions of
subsections (a) and (b), above, as applicable.
<PAGE>
Boston Beer shall have the right, in its reasonable discretion, to approve an
assignment of Stroh's obligations at the Sold Brewery, so that production
remains at the Sold Brewery, or permit relocation of such production to another
Stroh Brewery, in accordance with subsections (a) and (b), above.
e. Sale of All Breweries. In the event that Stroh proposes a Sale of
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its Breweries or a planned combination of Sales and/or Closures involving all
Breweries owned by Stroh, Stroh shall:
(i) provide written notice to Boston Beer (the "Sale
Notice") at least * prior to the effective date of any such
proposed Sale or Closure; and
(ii) cause all of Stroh's obligations to Boston Beer to be
assumed by one or more Permitted Assignees for the balance of the
Term (as defined in Section 7).
f. Approval of Assignees. Notwithstanding any implication to the
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contrary arising out of Stroh's obligations under subsections (d)(ii) and
(e)(ii) of this Section 4, Stroh may not assign any of its rights and
obligations hereunder other than to a Permitted Assignee. For all purposes of
this Agreement, a "Permitted Assignee" is an entity that:
(i) is actively engaged in the business of producing beer
or other malt beverages at one or more breweries owned by it;
(ii) conducts its brewing operations generally in
accordance with service and quality standards reasonably
acceptable to Boston Beer, which in any event shall be consistent
with the levels of service and quality and product taste enjoyed
by Boston Beer in its relationship with Stroh, as discussed in
Section 27 hereof;
(iii) is, in the reasonable judgment of Boston Beer, able to
meet those of Stroh's obligations hereunder to be assigned to it,
including producing Beer Products to Boston Beer's product
specifications, including quality and product taste;
(iv) is also, in the reasonable judgment of Boston Beer,
financially able to meet those of Stroh's obligations hereunder
to be assigned to it, it being understood that Boston Beer
reserves the right to reasonably request a performance bond or
other assurances of such financial ability; and
(v) executes a written instrument, in form and substance
reasonably acceptable to Boston Beer, pursuant to which it
formally undertakes to carry out and perform all of Stroh's
obligations hereunder with respect to those Stroh obligations
being assigned to it (except to the extent otherwise provided in
this Agreement).
g. Lehigh Valley Equipment. In the event of the Closure of Lehigh
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Valley, unless the equipment identified on Exhibit E attached hereto, all of
which was originally purchased for Lehigh Valley by Boston Beer, is then
relocated to another Brewery at which Beer Products are to be produced, Boston
Beer shall have the option, exercisable at any time within * after receipt of
the Closure Notice with respect to Lehigh Valley, to purchase any or all of such
equipment for the aggregate price of * provided that Boston Beer shall bear all
dismantling and moving costs.
h. Timing of * Closures. Stroh agrees that, if it Closes * and
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production of Beer Products is relocated to *, and it subsequently determines to
* prior to the expiration of at least * after the relocation from Portland,
Stroh shall pay any incremental freight costs incurred by Boston Beer during the
balance of said *, as a result of the second relocation. This subsection (h)
shall not apply to a Permitted Assignee that purchases * Portland * from Stroh.
i. Effect of Contract Brewing. A decision by Stroh to Close a
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Brewery and enter into a contract to produce its products at a brewery owned by
a third party shall be deemed to be a Sale to the third party, subject to
subsections (d) and (e), and the brewery at which the Stroh products are to be
contract brewed shall be deemed to be a Sold Brewery for purposes of the
application of such subsections.
5. Incremental Costs.
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a. For purposes hereof, Incremental Costs shall include those incremental
capital and operating costs incurred by Stroh specifically to accommodate Boston
Beer's production at a facility other than *. Incremental operating costs
("Incremental Operating Costs") shall include any incremental freight costs
("Incremental Freight") incurred by Stroh due to displaced Stroh product volume
caused by Boston Beer's volume at the new location, and shall also include
variable costs incurred by Stroh over and above the normal
<PAGE>
operating costs associated with the direct production of Beer Products (where
normal operating costs are equivalent to those operating costs under the current
arrangements and processes at *). Incremental capital costs shall include any
specific equipment needed in order to meet Boston Beer's liquid process
specifications or package configurations, and any reasonable capacity expansions
of the brewery tankage required to economically accommodate Boston Beer's
production. Incremental capital costs must be approved by Boston Beer in writing
prior to commencement of the capital project, and shall in no event exceed * and
*, each in the aggregate, during the period *. Boston Beer and Stroh shall make
all reasonable efforts to minimize Incremental Costs to Boston Beer.
b. Incremental Costs arising as a result of each Closure by Stroh shall
be estimated and presented to Boston Beer and included in the Closure Notice. In
connection with such Incremental Costs, Stroh shall contribute the following in
reduction of such Incremental Costs to be borne by Boston Beer: * of the Price
for actual displaced production for the * after each Closure, and * of actual
displaced production for the * of such actual displaced production following the
Closure (hereinafter collectively referred to as the "Contribution Allocation").
The Contribution Allocation shall be credited against the Incremental Operating
Costs on a * basis, and the balance of the Incremental Costs, subject to
approval by Boston Beer as set forth in subparagraph 4(a) above, shall be
invoiced by Stroh to Boston Beer * with a full reconciliation prepared by Stroh
and submitted to Boston Beer within * following the close of each * in which
Incremental Costs have been incurred. If Boston Beer continues to have Beer
Products produced at the Allowed Location where Incremental Costs are required
in order to meet the production requirements for the Beer Products, then Boston
Beer shall continue to pay the Incremental Costs, less the Contribution
Allocation of Stroh. If, however, the normal operating costs of producing the
Beer Products of Boston Beer at the replacement or Allowed Location shall be
less than those normal operating costs of producing the Beer Products at *, the
amount of the reduction (the "Reduction in Cost") will be added to the
Contribution Allocation to be credited against Incremental Costs, and the
Reduction in Cost shall remain in effect as a credit by Stroh to Boston Beer
during the first * following the Closure described above.
c. In no event shall Boston Beer be obligated to pay a Permitted Assignee
more than * in Incremental Freight with respect to the Permitted Assignee's own
displaced volume.
d. In no event shall Incremental Costs to be borne by Boston Beer with
respect to * relocation exceed the costs that would have arisen (whether or not
passed through) out of a relocation from * to *
e. In the event of the Sale or Closure of a Brewery, or termination by a
Permitted Assignee pursuant to Sections 8(h) and (i) that terminates production
at a Brewery, in which Boston Beer previously made a capital investment from and
after the Effective Date, upon such Sale or Closure, the owner of such Brewery
shall pay to Boston Beer an amount equal to the unamortized portion of its
investment, based on an amortization period of * from the date on which the
equipment purchased with each investment was first placed in service.
f. If, as a result of a proposed Closure or Sale, production of Beer
Products is relocated to another Brewery, but the Closure or Sale that was the
subject of the Closure Notice or Sale Notice is not consummated within * after
the date on which it was to have been consummated, Boston Beer shall be entitled
to an immediate repayment of any Incremental Costs it may have paid as a result
of the relocation and production at the successor Brewery shall continue but on
the same cost basis, including Boston Beer's own freight costs, as Boston Beer
enjoyed at the predecessor Brewery for so long as the predecessor Brewery
remains in operation and for a further period of * thereafter.
6. Price and Manner of Payment.
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a. Boston Beer shall pay Stroh for Beer Products an amount (the
"Price") equal to the sum of *. The Fixed Charge for other packaging units
shall be set by the Parties based on proportionate volume and packaging
efficiencies relative to the units described above. Stroh shall be entitled to
increase each Fixed Charge applicable to each Brewery, effective as of * in each
year while the Agreement remains in effect, with the first such increase
pursuant to this Agreement to be effective as of * at a rate equal to *.
b. The Price is F.O.B. the carrier's trucks at Stroh's dock
(i.e., the Price includes the cost and risk of loading trucks at Stroh's dock)
and includes labor, overhead, profit, and other costs incurred in the production
of packaged Beer Products suitable for shipment by truck.
c. The Price excludes any federal and state excise taxes, which
Stroh may pass along to Boston Beer, if Stroh pays such taxes in compliance with
Federal and state laws.
In those instances where there is an alternating proprietorship
between Boston Beer and Stroh with Boston Beer being the brewer of record,
Boston Beer is required to submit reports to the Federal Alcohol, Tobacco and
Firearms Department ("ATF") on Form 5000.24 (or any substitute form hereafter
adopted by ATF) and to pay the required excise tax, which such tax is based upon
the number of barrels, or fraction thereof, that leave the Brewery premises. In
order to complete Form 5000.24 and to timely pay the excise taxes on such
production, Stroh agrees to provide Boston Beer, to the Attention of its Tax
Manager, with the following number
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of barrels of Beer Products so produced by Stroh and which have left the Brewery
("Production/Tax Data"), on or before the following dates: (i) With respect to
Production/Tax Data during each calendar month, except for September, Stroh
shall provide such information within no more than five calendar days following
the fifteenth and last day of each month in order that Boston Beer may submit
and pay the applicable excise taxes which are due within fourteen days following
the 15th and last day of each month (or which is due on the preceding business
day if the fourteenth day, as aforesaid, should fall on a Saturday, Sunday or
legal holiday); (ii) With respect to Production/Tax Data for the month of
September in each year, Stroh agrees to provide Boston Beer with Production/Tax
Data for the following periods within the time frames hereinafter set forth: For
the period from September 1 through September 15, such Production/Tax Data must
be received by Boston Beer no later than September 20; for the period from
September 16 through September 26, Production/Tax Data must be received by
Boston Beer no later than September 28; and for the period from September 27
through September 30, Stroh agrees to provide the Production/Tax Data no later
than October 5. In the event that the provisions of 27 CFR, Subpart K are
amended, Boston Beer shall supply Stroh with written notice of any changes
required in the reporting schedule set forth above.
d. Assuming Boston Beer uses pallets interchangeable with Stroh, the
Price also excludes any charge for Boston Beer's use of pallets owed by Stroh.
Stroh shall invoice Boston Beer on * for Boston Beer's proportionate share
(based on pallets shipped) of the cost of pallets incurred at each Brewery
during *. Such invoices shall be paid by Boston Beer promptly in the ordinary
course.
e. Stroh will invoice Boston Beer electronically * for the Price of Beer
Products shipped * and Boston Beer shall pay such invoices * by wire or other
mutually agreed upon method. All other amounts otherwise chargeable to Boston
Beer hereunder shall be invoiced by Stroh reasonably promptly in accordance with
normal business *. Such timely invoices shall similarly be paid by Boston Beer
promptly in the ordinary course in accordance with normal business practices.
Neither party shall be liable for any liability if such notification and invoice
is issued more than * following the date on which such expense is incurred.
f. Stroh shall have the right to increase the Price to reflect Stroh's
actual incremental cost for any Special Orders or Seasonals which use a more
expensive brewing process or longer time frames or which have more expensive
packaging processes than used to produce Samuel Adams Boston Lager. Other
pricing and payment terms for Special Orders or Seasonals shall be in accordance
with the foregoing provisions of this Section 5, including the timely invoicing
requirements of paragraph (e), above.
g. Boston Beer shall also be entitled to a proportional reduction in the
Fixed Charge to the extent that Stroh is able to achieve variable cost savings
through changes in production *
7. Term.
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The term of this Agreement (the "Term") shall commence as of * and shall
continue until terminated pursuant to Section 8 hereof. The Parties acknowledge
that either Party's obligations pursuant to this Agreement to make payments to
the other Party and the Parties' respective obligations under Sections 8(g), 18
and 19, and Stroh's obligations under Sections 14, 17 and 31 shall survive the
termination of this Agreement.
8. Termination.
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a. Either Party may terminate this Agreement for any reason whatsoever on
not less than * prior written notice to the other Party, effective at any time
on or after *
b. Boston Beer may also terminate this Agreement effectively immediately
upon written notice in the event that Stroh is in default of any of its
obligations to brew, package and ship any Beer Products, which default continues
for a period of * following receipt by Stroh of written notice from Boston Beer
regarding such default or if Stroh is the subject of an acquisition of
substantially all of its business or assets by an acquirer who Boston Beer
reasonably believes will not be a Permitted Assignee [each such event is
hereinafter referred to as a "Stroh Production Default".] Stroh shall not be
deemed to be in default of its obligations for purposes of this Section 8(b), if
it is in good faith both seeking to correct the circumstances giving rise to its
failure to brew, package and ship Beer Products and honoring its obligations
under Section 16 hereof, to the extent applicable.
c. Stroh may terminate this Agreement on * prior written notice to Boston
Beer, in the event that Boston Beer is in arrears in payment of undisputed
amounts representing * and such arrearage has remained outstanding for in excess
of * after written demand for payment was made by Stroh. Normal credit terms are
as defined in Section 5(e).
d. Stroh may also terminate this Agreement on * prior written notice
provided to Boston Beer not later than * following the effective date of the
following described event, *.
<PAGE>
e. In the event that Stroh should fail to become Year 2000 Compliant, as
set forth in Section 15 hereof, and such failure shall disrupt the production of
the Beer Products by Stroh, then, in such event, Boston Beer shall provide *
written notice of its intention to so terminate this Agreement, unless within *
Stroh cures or demonstrates to Boston Beer's reasonable satisfaction that Stroh
is using its best efforts to cure the problems arising from its failure to be
Year 2000 Complaint.
f. In the event of bankruptcy by either party, the non-bankruptcy party
shall have the right to terminate this Agreement.
g. Upon termination of this Agreement, Boston Beer shall (i) promptly pay
to Stroh all unpaid invoices in full and all unpaid costs incurred by Stroh
pursuant to this Agreement in the brewing, packaging, shipping and storage of
Beer Products, and (ii) purchase from Stroh at Stroh's cost all Stroh's
inventory of (i) work in process of Beer Products, (ii) ingredients and raw
materials unique to the Beer Products, and (iii) Packaging Materials. Stroh will
use all reasonable efforts to minimize such costs upon termination, and Boston
Beer will have the right to review documentation evidencing such costs.
h. A Permitted Assignee * obligations may terminate such obligations on
not less * notice, effective at any time after the expiration of * from the date
of the first assignment of such obligations to a Permitted Assignee; provided
that Boston Beer shall be relieved of any obligation to pay Incremental Costs
during the notice period.
i. A Permitted Assignee * obligations may terminate such obligations on
not less *, effective at any time after the expiration of * from the date of the
first assignment of such obligations to a Permitted Assignee; provided that
Boston Beer shall be relieved of any obligation to pay Incremental Costs during
the notice period.
j. In the event of a Stroh Production Default, whether or not Boston Beer
then terminates this Agreement pursuant to subsection (b), or termination by
Boston Beer pursuant to subsection (e) or (f), in addition to such other rights
and remedies it may have at law or in equity, Boston Beer shall be entitled to
repayment of the Commitment Fee, *.
9. Packaging, Deposits and Minimum Orders.
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a. Packaging of Beer Products shall consist of twelve ounce (12 oz.)
bottles, twenty-two ounce (22 oz.) bottles, Half-Kegs and Kegs, and such other
units as Boston Beer may from time to time require, exclusive of any units which
are proprietary to Stroh and which are not then being produced for Boston Beer
by Boston Beer or any third party. Except for one way pallets paid for by Boston
Beer, a deposit per pallet and per keg as set forth in Section 6(a) hereof shall
be charged to Boston Beer with corresponding credit applied upon the safe return
in good working order of the pallets or kegs to Stroh. *
b. Boston Beer shall order at any given time not less than *. Boston Beer
acknowledges and agrees that the minimum order applies to each beer style,
individually, rather than in combination; provided, however, that orders for the
bottling line may consist of * of the Beer Products in combination and any
bottling line order shall not be less than * of each beer style, except that for
twenty-two ounce (22 oz.) bottles, an order may be comprised of as many as * of
at least * each.
10. Packaging Materials and Hops.
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Crowns, bottles, labels, six-packs, cases, partitions and other packing
materials for Beer products (collectively, "Packaging Materials"), or any
applicable federal or state taxes (but specifically excluding any taxes in the
nature of a tax on income or profits) are not included in the Fixed Charge and
shall be borne directly by Boston Beer. All Packaging Materials and all hops to
be used in the brewing of Beer Products ("Hops") shall be (i) purchased directly
by Boston Beer at its cost for delivery to Stroh, (ii) the property solely and
exclusively of Boston Beer, and (iii) segregated and identified as such. Boston
Beer shall be responsible for the storage of Hops and shall release Hops to
Stroh for production on a bi-weekly basis. Stroh acknowledges that Boston Beer
shall be afforded unrestricted 24-hour access to all Packaging Materials and
Hops when under Stroh control for purposes of removal or otherwise. Delivery of
Packaging Materials and Hops (on such bi-weekly basis) to Stroh shall be
coordinated between Stroh and Boston Beer, provided that Stroh shall be
ultimately responsible for coordinating the timely delivery of Packaging
Materials and Hops to the appropriate Breweries and other Breweries. *. All
vendors shall be selected by Boston Beer, in its discretion, subject only to
meeting Stroh's customary quality and performance requirements.
11. Risk of Loss.
------------
Stroh 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 Stroh. 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 Beer Products, once
the carrier's truck leaves Stroh's loading dock.
<PAGE>
12. Brewery of Record.
-----------------
a. To the extent requested by Boston Beer and consistent with applicable
laws and regulations, Stroh shall provide all Beer Products brewed hereunder
under the name of "The Boston Beer Company" as the Brewer of Record. Stroh
shall, to the fullest extent permissible, secure any permits, licenses,
approvals and the like related to the production of beer, required by any
federal, state or local governmental agency on behalf of Boston Beer. Boston
Beer agrees to reimburse Stroh promptly for any reasonable out-of-pocket costs,
including, without limitation, legal expenses and increased clerical costs,
incurred in connection therewith.
b. To the extent requested by Boston Beer, Stroh shall use all
commercially reasonable efforts to establish and maintain an alternating
proprietorship at each of the Initial Allowed Locations and at such other
Breweries to which production of Beer Products has been transferred, if
necessary, and, subject to and in compliance with all applicable federal, state
or local laws, rules and regulations, to identify Boston, Massachusetts, as the
sole label source for Beer Products. Boston Beer agrees to reimburse Stroh
promptly for its reasonable out-of-pocket costs, including, without limitation,
legal expenses and increased clerical costs, incurred in connection therewith.
c. Boston Beer's obligation to reimburse Stroh for its reasonable out-of-
pocket costs shall not apply to costs incurred by Stroh with respect to
establishing an alternating proprietorship at a brewery to which production
hereunder is relocated because of Stroh's decision to Sell or Close a Brewery.
13. Storage.
-------
The Price shall include storage of reasonable quantities of packaged Beer
Products for up to thirty (30) days. Stroh shall be entitled to charge Boston
Beer a reasonable fee for the storage of Beer Products beyond thirty (30) days.
14. The Wort Clarifier Project.
--------------------------
Stroh's obligations under the Wort Clarifier Agreement are hereby
terminated, except that Boston Beer shall continue to enjoy the benefit of
material yield savings for its own beers resulting from the Wort Clarifier
Project. In addition, Boston Beer hereby assigns to Stroh all of Boston Beer's
right, title and interest in and to the Wort Clarifier, subject to the
following:
(i) for so long as this Agreement remains in effect, in the absence of a
Stroh Production Default, the Wort Clarifier shall remain in the
possession of Stroh at Portland or such other Brewery as Stroh and
Boston Beer shall jointly agree; and
(ii) in the event of a Stroh Production Default, if so instructed by Boston
Beer, Stroh shall reassign ownership of the Wort Clarifier to Boston
Beer and shall deliver the Wort Clarifier to Boston Beer, in
accordance with Boston Beer's instructions, the dismantling and
transportation costs of which would be borne by Stroh.
15. Year 2000 Compliance.
--------------------
a. Stroh has heretofore advised Boston Beer that its software, firmware,
equipment and systems (collectively, hereinafter referred to as "Systems") is
not as yet Year 2000 Compliant and that the System is not designed to be used
immediately prior to, during and after the calendar year 2000 and thus cannot
warrant that the Systems will operate consistently, predictably and accurately,
without interruption or manual intervention, and in accordance with all
requirements to facilitate the production of the Beer Products under the terms
of this Agreement, including, without limitation, all specifications and/or
functionality and performance requirements, during each such time period, and
the transitions between them, in relation to dates it encounters or processes.
Stroh hereby represents that it is taking and shall continue to take steps to
become Year 2000 Compliant.
b. Boston Beer is in the process of reviewing all of its internal
Systems, with a view to assuring that such Systems are or will in a timely
fashion be Year 2000 Compliant, and Boston Beer currently has no reason to
believe that Year 2000 Compliance will not be achieved.
c. Stroh and Boston Beer agree to communicate periodically regarding
their respective Year 2000 Compliance status.
16. Force Majeure.
-------------
a. If Stroh is unable, by reason of a labor dispute, governmental action,
act of God or the like, to produce Beer Products at any Brewery to the extent
contemplated by this Agreement, it shall, in any event, to the extent it is
still able to maintain production at such Brewery, continue to produce Beer
Products at such Brewery in proportion to the capacity at such Brewery dedicated
to Beer Products prior to the occurrence of the event in question. For purposes
hereof, disruptions caused by the failure of Stroh to be Year 2000
8
<PAGE>
Compliant (as further discussed in Section 15 hereof) shall not be deemed to be
an event of force majeure. In addition, Stroh shall advise Boston Beer of the
terms on which Stroh is then willing to produce Beer Products at other Breweries
while the reduction in capacity at the affected Brewery continues.
b. If Boston Beer is unable, by reason of a labor dispute, governmental
action, act of God or the like, to produce Beer Products at any brewery not
owned by Stroh but at which from time to time Boston Beer produces Beer
Products, and at that time Stroh has available production capacity at any of its
Breweries, Stroh shall make such production capacity available to Boston Beer at
a price equal to Stroh's variable out-of-pocket cost plus standard margin under
this Agreement for such production.
17. Change Parts and Brewery Modifications.
--------------------------------------
Except as otherwise provided in Section 4 and 5 of this Agreement in
connection with a Closure, Boston Beer will pay for all change parts and Brewery
modifications that are unique to running Boston Beer's package Beer Products,
provided that (i) Stroh does not have such parts existing at the Brewery in
question, and (ii) Stroh notifies Boston Beer in advance of making any such
expenditures. Boston Beer shall be entitled to be reasonably compensated for any
such investment, whether made prior to or after the date hereof, to the extent
that any change parts and/or modifications are used in the production of
products other than Beer Products, such compensation to be as agreed from time
to time to time by Stroh and Boston Beer. Boston Beer shall be entitled to a
refund of any investment made pursuant to this Section 17, if the Brewery in
which the investment was made is Closed or Sold prior to the expiration of *
after the change parts or Brewery modifications were placed in service.
18. Product Liability.
-----------------
a. Stroh and Boston Beer shall each maintain product liability insurance
of not less than */* and in the amount of * combined single limit in the
aggregate relating to the Beer Products produced by Stroh for Boston Beer.
b. Stroh shall indemnify 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 attorneys' fees (collectively, "Product
Liability Damages"), arising out of or associated with all claims made against
Boston Beer by any party or parties for personal injury or property damage
caused by impurities, defects, or adulteration of any kind in the Beer Products
manufactured and packaged by Stroh, regardless of when manufactured or packaged;
except that Stroh shall have no such indemnification obligations with respect to
(i) Product Liability Damages when caused by (i) Boston Beer's improper storage,
handling, or alteration of the Beer Products in question or (ii) Packaging
Materials or ingredients purchased, specified or otherwise approved by Boston
Beer subsequent to written notice from Stroh reasonably advising that such
Packaging Materials or ingredients should not be used in the Beer Products for
health and safety reasons, it being understood that Stroh's sole obligation with
respect to providing any such notice shall be to inform Boston Beer of matters
which come to Stroh's attention and Stroh shall have no independent duty to
analyze any Boston Beer Packaging Materials, ingredients or specifications, and
(iii) Product Liability Damages resulting from inherent properties and/or
characteristics of the Beer Products, including, by way of example and not of
limitation, health and intoxicating effects of the Beer Products.
c. Boston Beer shall indemnify and hold Stroh and all of its affiliates
harmless from and against any and all Product Liability Damages to the extent
arising out of the courses excepted from Stroh's indemnification obligations
under paragraph (b), above.
d. Notwithstanding the provisions of subparagraphs (b) and (c) of this
Paragraph 18, in no event shall either Party be liable to indemnify the other
Party for consequential damages other than consequential damages arising out of
willful managerial misconduct (including an arbitrary refusal by a Party to
honor its obligations hereunder) suffered by the other Party or through material
default by reason of the failure of either Party to be Year 2000 Compliant, and
even in such events, the Party so liable shall not be liable in an amount
greater than *.
19. Trademarks.
----------
a. Stroh acknowledges that no trademark or trade name rights in any of
the trademarks, trade names, service marks, or logos owned by Boston Beer,
including specifically but without limitation those identified on the Trademark
Schedule attached hereto as Exhibit G (collectively, the "Trademarks") are
granted by this Agreement.
b. Boston Beer hereby represents, warrants and covenants that it has and
will maintain the right to use the Trademarks and will indemnify and hold
harmless Stroh from any claim of alleged infringement brought by any party
against Stroh, including, but not limited to, Stroh's reasonable costs of legal
expenses.
20. Successors and Assigns: Future Potential Acquisitions.
-----------------------------------------------------
9
<PAGE>
a. The Agreement shall be binding upon and insure to the benefit of the
Parties and their respective successors and assigns, but shall not be assigned
by Boston Beer without the prior written consent of Stroh, which consent will
not be unreasonably withheld, and shall not be assigned by Stroh or any
successor-in-interest to Stroh, in whole or in part, except to a Permitted
Assignee.
b. A transaction or series of transactions, as a result of which a
majority voting control of Stroh is acquired by a person or persons not
currently holding an equity interest in Stroh shall be deemed to be an
assignment requiring that, after such transaction or series of transactions,
Stroh meets the requirements of a Permitted Assignee.
c. Except in the case of an assignment by Stroh of all of its rights and
obligations hereunder in connection with this Agreement to a Permitted Assignee
in connection with a sale of all or substantially all of its business and
assets, no assignment of this Agreement by Stroh shall relieve it of its
financial obligations hereunder, including its indemnification obligations, if
an assignee defaults in the performance of its assigned obligations.
d. In the event that Boston Beer shall acquire substantially all of the
business and assets of another company which produces and/or distributes beer,
or, shall acquire all right, title and interest in and to the brands and
trademarks of another company (hereinafter the "Acquired"), then, in such event,
if the Acquired has products already being produced by Stroh, then Stroh agrees
to make available to Boston Beer, for the same period of time that Stroh has
pre-existing commitments for the Acquired, such additional capacity which is
equivalent to that with the Acquired; provided, *.
e. If Stroh acquires substantially all of the business and assets of
another company which produces beer or acquires an additional brewery facility
(hereinafter a "Stroh Acquired Brewery"), then, in such event, if the Stroh
Acquired Brewery has a pre-existing agreement with Boston Beer for the
production of Beer Products, Stroh agrees to continue to make available to
Boston Beer, for the same period of time which existed under the pre-existing
agreement between Boston Beer and the Stroh Acquired Brewery, the same capacity
as had been committed to Boston Beer by the Stroh Acquired Brewery; provided, *.
21. Governing Law.
-------------
This Agreement shall be interpreted and construed in accordance with the
laws of the State of New York.
22. Arbitration.
-----------
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 finally settled by arbitration in New York, New York, in
accordance with the articles of the American Arbitration Association for
Commercial Arbitration. The arbitrators shall have the right to assess costs,
including legal expenses, in favor of the prevailing Party, including, if
applicable, Stroh travel costs. Notwithstanding the foregoing, the Parties may
have recourse to the courts of the United States of America for the purpose of
obtaining preliminary injunctive relief.
23. Execution in Counterparts.
-------------------------
This Agreement may 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.
24. 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.
25. No Third Party Beneficiaries.
----------------------------
Stroh and Boston Beer agree that this Agreement is solely for their benefit
and 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.
26. Merger: Separability.
--------------------
Subject to the provisions of Section 27(a) below, this Agreement terminates
and supersedes all prior formal or informal understandings among the parties
with respect to the subject matter contained herein, except that the provisions
in the Heileman Agreement, entitling Boston Beer to indemnification for product
liability claims and the Sankey Agreement shall remain in full force and effect.
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.
10
<PAGE>
27. Current Practice: Cooperation.
-----------------------------
a. Except as set forth in this Agreement, the Parties agree to continue
their current business practices with respect to the Beer Products produced by
Stroh for Boston Beer, subject to modification from time to time as the parties,
exercising reasonable business judgment, shall mutually agree in writing. The
Parties agree to use all commercially reasonable efforts to maintain the current
service standards enjoyed by Boston Beer in the various service factors
described on Exhibit H attached hereto.
b. Stroh agrees to provide consulting and technical services to Boston
Beer, as reasonably requested by Boston Beer, with respect to projects in which
Boston Beer may from time to time be engaged at non-Stroh facilities, for which
services Stroh shall be compensated on a reasonable direct time, out-of-pocket
expenses and materials basis.
c. The Parties also agree to cooperate with one another, consulting on a
regular basis, with a view to achieving further financial economies, e.g.,
through joint purchasing efforts for the purchase of raw materials and supplies
to be used by either of the Parties, whether at Lehigh Valley, Portland or any
of the other Allowed Locations, or otherwise.
d. Stroh shall advise Boston Beer of opportunities that may from time to
time become available to purchase from Stroh any breweries or any brewing,
bottling or packaging equipment. In addition, if Stroh embarks on a strategy to
Close or Sell Breweries , Stroh shall, to the extent not inconsistent with
Stroh's own prudent business management practices or confidentiality agreements
with third parties, afford Boston Beer an opportunity to purchase any such
equipment.
e. All publicity concerning this Agreement shall be subject to the
restrictions contained in Section 2(b) of this Agreement and otherwise as
approved by the Parties.
28. Lab Tests.
---------
Stroh will perform at its expense all lab tests currently performed by
Stroh for Boston Beer on all Beer Products.
29. Non-Exclusive Nature of Agreement.
---------------------------------
Nothing contained in this Agreement shall require Boston Beer to avail
itself of the Committed Capacity or preclude Boston Beer from engaging any other
brewer for the purpose of producing and distributing Beer Products.
30. Competing Products.
------------------
a. Except as hereinafter set forth, for so long as this Agreement remains
in effect, without the prior written consent of Boston Beer, Stroh shall not, on
behalf of any unaffiliated person, produce at * a beer or other "micro-brewery"
or "craft" beer brand malt beverage product, which is substantially similar in
taste, color, and marketing position to any of the Beer Products at any of the
Breweries, except for products brewed by Stroh at either of such Breweries as of
the Effective Date of this Agreement. In the event that * undergoes an event of
Closure, and product on the *, is moved to a new facility, Boston Beer agrees to
waive the exclusivity provision set forth above as it applies to any competing
brand produced at the new facility at the time that production of Beer Products
of Boston Beer is so moved. In addition, Boston Beer agrees to waive the
exclusivity provision set forth above in connection with any competing brand to
be produced on * and for which Stroh obtains export licensing rights; provided,
however, that the foregoing waiver shall only apply to export shipments for such
competing brand, with such exports to be made pursuant to Stroh's export license
and conditioned further upon such exports being in the Canadian returnable
bottle (also known as the T-bottle). *, and the production at the Brewery so
subject to Closure is moved to *, then, in such event, Boston Beer agrees to
waive the exclusivity clause set forth above, but only to the extent of any
competing brands produced at * at the time on which the Closure Notice is
issued. Stroh's obligations under this Section 30(a) shall not apply to a
Permitted Assignee.
b. Boston Beer acknowledges that Stroh's business includes brewing craft
and specialty malt beverage products, including products that may compete
directly with, use the same brewing ingredients and formulae as, and/or are of
the same style as one or more of the Beer Products. Boston Beer agrees that
nothing contained in this Section 30 shall in any manner prevent, limit,
restrict or otherwise affect Stroh's right to continue and expand such aspect of
its business, including by introducing new products that compete directly with
existing Beer Products, so long as Stroh does not intentionally (i) copy the
identical brewing formulae and ingredients of any Beer Product, (ii) use any
proprietary yeast specifically supplied to Stroh by Boston Beer solely for use
in producing Beer Products; or (iii) use labeling or other packaging which
infringes any of Boston Beer's Trademarks or copies Boston Beer's marketing
position and strategy.
31. Yeast Strains.
-------------
11
<PAGE>
Stroh will not use yeast strains supplied by Boston Beer to brew any beers
other than the Beer Products. The obligations of Stroh under this Section 31
shall survive any termination of this Agreement.
32. Confidentiality.
---------------
The Parties agree that, except as they shall otherwise mutually determine
from time to time, the terms of this Agreement and any notices given hereunder
or other communications with respect to the substance of the relationship
between them shall be maintained in confidence; provided that each Party shall
be permitted to make such disclosures of confidential information to such courts
and other public or governmental agencies as their counsel shall deem necessary
to maintain compliance with and to prevent violation of applicable federal or
state laws.
33. Notices.
-------
All notices required herein shall be given by registered airmail, return
receipt requested, or by overnight courier service, to the following addresses
(unless change thereof - has previously been given to the party giving notice)
and shall be deemed effective when received:
If to Boston Beer:
C. James Koch, President
Martin F. Roper, Chief Operating Officer
The Boston Beer Company, Inc.
75 Arlington Street, 5th Floor
Boston, MA 02116
with a copy to:
Frederick H. Grein, Jr., Esq.
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, MA 02110
If to Stroh:
James R. Avery, Executive Vice President-Operations
and Christopher T. Sortwell, Executive Vice President
and Chief Financial Officer
The Stroh Brewery Company 100 River Place
Detroit, MI 48207
with a copy to:
George E. Kuehn, Executive Vice President and General
Counsel
The Stroh Brewery Company
100 River Place
Detroit, MI 48207
34. Rights of Offset.
----------------
Stroh and Boston Beer agree that, to the extent that either of them is at
any time owed money by the other Party, including on regular invoices sent as
provided herein, such Party may set off such amount against any undisputed
monies owed by it to such Party from time to time, any such set-off to be
accomplished by written notice to the owing Party, effective upon being sent.
35. Deliveries to joint Wholesalers.
-------------------------------
To the extent permitted by applicable law, if so requested by Boston Beer,
Stroh will combine Beer Products with Stroh products in single truckloads for
delivery to joint Wholesalers, in which case freight costs shall be
appropriately pro-rated. For this purpose, a "Joint Wholesaler" is a licensed
beer wholesaler that has been duly authorized by both Boston Beer and Stroh to
distribute their
12
<PAGE>
respective products. Stroh and Boston Beer will cooperate with each other in the
coordination of order entry so as to facilitate such single truckload
deliveries.
36. Adverse Product Statements.
--------------------------
Each Party agrees to take all commercially reasonable steps to prevent any
of its personnel from making disparaging or otherwise adverse remarks about the
products of the other Party.
37. Limitation on Period of Claims.
------------------------------
Except as otherwise provided in this Agreement with respect to specific
issues, all claims hereunder must be brought no later than one year after such
claim arose or the Party having such claim shall be deemed to have waived or
forever released it; provided that, for purposes of this Section 37, a claim
based on a claim by a third party shall be deemed to have arisen at the time
that the Party asserting a claim first became aware of it.
IN WITNESS WHEREOF, Stroh and Boston Beer have executed this Agreement as
of the date first above written.
BOSTON BEER COMPANY LIMITED PARTNERSHIP
By: Boston Brewing Company, Inc., its General Partner
By: /s/ James Koch
President
THE STROH BREWERY COMPANY
By: /s/ Christopher T. Sortwell,
Executive Vice President and Chief
Financial Officer
13
<PAGE>
EXHIBIT A
---------
THE BOSTON BEER COMPANY
The Brewery, 30 Germania St.
Boston, MA 02130
617-522-3400
617-338-0765 - Martins fax
TO RANDY HULL
FROM JIM KOCH
DATE 7/5/95
RE SANKEY PROJECT
This memo confirms Boston Beer Company's interest in proceeding immediately with
the installation of a Sankey line at the Blitz facility in Portland.
We propose the following financial arrangements.
1. Boston Beer will pay up to * of the capital and installation costs of the
project on the following timetable -
I) Upon commencement of project *
II) Upon evidence of project being *
III) Upon evidence of project being *
IV) Upon completion and successful operation of project - final installment of
balance of projects cost not to exceed *
Before payment of final installment, Heileman to provide documentation of
project expenses if requested by Boston Beer.
2. a). In return for Boston Beer financing the project, Heileman agrees to
rebate Boston Beer * at the rate of $*for the first *.
b). Therefore, Heileman agrees to rebate Boston Beer * of the operational
savings, up to a maximum of *, generated in running Sankey's versus Hoff-
Stevens.
3. In the event that Heileman cancels the contract between Heileman and Boston
Beer, then Heileman will pay to Boston Beer * less all amounts theretofore paid
to Boston Beer under paragraph 2(a).
4. To secure its obligation to make rebates to Boston Beer under Section 2 and
to make payments to Boston Beer upon cancellation under Section 3, Heileman
grants Boston Beer a security interest in the Sankey equipment installed at
Blitz, Portland, and in the event that Heileman defaults on any of such
obligations, Boston Beer, in addition to any other rights it might have, shall
be entitled to take physical possession of the Sankey equipment.
If this is acceptable, please sign and return this to us.
Accepted by:
Jim Koch G. Heileman Brewing Company
Boston Beer Company
14
<PAGE>
EXHIBIT B
---------
THE BOSTON BEER COMPANY
The Brewery, 30 Germania St.
Boston, MA 02130
617-522-3400
617-338-0765 - Martins fax
TO RANDY HULL
FROM JIM KOCH
DATE 7/6/95
RE WORT CLARIFIER PROJECT
This memo confirms Boston Beer Company's interest in proceeding immediately with
the installation of a Wort Clarifier (Trub Handling Equipment) at the Blitz
facility in Portland.
We propose the following financial arrangements.
1. Boston Beer will pay up to * of the capital and installation costs of the
project on the following timetable -
I) * upon receipt of equipment invoice
II) Upon completion and successful operation of project - final installment of
balance of projects, total cost not to exceed*
Before payment of final installment, Heileman to provide documentation of
project expenses if requested by Boston Beer.
2. In return for Boston Beer financing the project, Heileman agrees to rebate
Boston Beer an amount representing Heileman's verified ongoing operational
savings incurred through use of the Wort Clarifier to brew Boston Beer's
products.
These savings are designed to represent the operational savings reflected
in reduced sewer costs, increased output from brewhouse per brew, increased
capacity of the brewery etc.....
3. In the event Heileman cancels the contract between Heileman and Boston
Beer, then Heileman will pay to Boston Beer * less all amounts theretofore paid
to Boston Beer under paragraph 2.
4. To secure its obligation to make rebates to Boston Beer under Section 2 and
to make payments to Boston Beer upon cancellation under Section 3, Heileman
grants Boston Beer a security interest in the Wort Clarifier installed at Blitz,
Portland, and in the event that Heileman defaults on any of such obligations,
Boston Beer, in addition to any other rights it might have, shall be entitled to
take physical possession of the Wort Clarifier equipment.
If this is acceptable, please sign and return this to us.
Accepted by:
Jim Koch G. Heileman Brewing Company
Boston Beer Company
<PAGE>
EXHIBIT C
---------
List of Beer Products
Samuel Adams(R) Products Oregon Ale & Beer -- Oregon Originals(R) Products
-------------------------------------------------------------------------------
Boston Lager IPA
Boston Ale NBA
Cream Stout ESB
Scotch Ale Raspberry Wheat
Honey Porter Honey Red
Cherry Wheat Honey Ale
White Ale
Double Bock
Summer Ale
Octoberfest
Winter Lager
Old Fezziwig
Golden Pilsner
<PAGE>
EXHIBIT D
---------
Specifications for Cleaning and Use of Used Glass
To be mutually agreed upon by Stroh and Boston Beer and to be consistent with
current specifications adhered to by Stroh in its facilities.
<PAGE>
EXHIBIT E
---------
<TABLE>
<CAPTION>
------------------------------------
THE STROH BREWERY COMPANY NO. DATE
MAJOR EXPENDITURE AUTHORIZATION - SCHEDULE A 04-5425 1-24-96
-----------------------------------------------------------------------------------------------
<S> <C> <C>
PROJECT TITLE PLANT
AUTOMATE BOSTON BEER'S 2/12/12 PACK PRODUCTION LEHIGH
-----------------------------------------------------------------------------------------------
DEPARTMENT OR COST CENTER BUILDING FLOOR
PACKAGING
-----------------------------------------------------------------------------------------------
</TABLE>
DESCRIPTION AND ALTERNATIVES CONSIDERED
---------------------------------------
The Lehigh plant will automate BBC's 2/12/12 oz. production by receiving and
installing existing equipment from *.
JUSTIFICATION
-------------
Senior Management direction. Boston Beer Company has requested these
modifications and has agreed to reimburse Stroh for the cost of this project *.
ALTERNATIVES
------------
Continue producing this package with the current system and cost structure. *.
-------------------------------------------------------------------------------
PREPARED BY DATE
F.R. Toporowski 1/17/96
-------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
THE STROH BREWERY COMPANY NO. DATE
MAJOR EXPENDITURE AUTHORIZATION - SCHEDULE B 04-5425 1-24-96
-----------------------------------------------------------------------------------------------
<S> <C> <C>
PROJECT TITLE PLANT
AUTOMATE BOSTON BEER'S 2/12/12 PACK PRODUCTION LEHIGH
-----------------------------------------------------------------------------------------------
DEPARTMENT OR COST CENTER BUILDING FLOOR
PACKAGING
-----------------------------------------------------------------------------------------------
CALCULATION OF EXPENDITURE REQUIRED
-----------------------------------------------------------------------------------------------
EQUIPMENT LABOR SPARE MATERIAL LABOR
ITEM COSTS COSTS PARTS COSTS COSTS RUN-IN TOTALS
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
PREPARED BY DATE
F.R. Toporowski 1/17/96
-----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT F
---------
Pricing Schedule
[SUBJECT TO INCREASE BASED ON * PER (S)6(A)]
PRICING SCHEDULE 1
------------------
in effect for * or in event termination notice is given
* *
---------------------------
BULK GLASS, PER 12 OZ CASE UNIT
Loose, 4/6 packs, 2/12 packs * *
2/12 packs in tray * *
PACKAGED GLASS, PER 12 OZ CASE UNIT * *
* * * *
BULK GLASS, PER 22 OZ CASE UNIT * *
PACKAGED GLASS, PER 22 OZ CASE UNIT * *
KEGS per 1/4 keg * *
per 1/2 keg * *
NOTE 12 oz Case Unit = 24 bottles 12 oz
---------------
22 oz Case Unit = 12 bottles 22 oz
Above pricing does not include Sankey Keg Rebate at Portland
- Pricing net of Sankey Keg Rebate at Portland is *
<PAGE>
Exhibit F (continued)
---------------------
PRICING SCHEDULE 2
------------------
takes effect * but is not in effect during termination notice
* *
-----------------------------
BULK GLASS, PER 12 OZ CASE UNIT
Loose, 4/6 packs, 2/12 packs * *
2/12 packs in tray * *
PACKAGED GLASS, PER 12 OZ CASE UNIT * *
* * * *
BULK GLASS, PER 22 OZ CASE UNIT * *
PACKAGED GLASS, PER 22 OZ CASE UNIT * *
KEGS per 1/4 keg * *
per 1/2 keg * *
NOTE 12 oz Case Unit = 24 bottles 12 oz
---------------
22 oz Case Unit = 12 bottles 22 oz
Above pricing does not include Sankey Keg Rebate at Portland
- Pricing net of Sankey Keg Rebate at Portland is *
<PAGE>
Exhibit G
---------
<TABLE>
<CAPTION>
SCHEDULE OF TRADEMARKS
----------------------
Trademark Reg./App.No. Date Issued
--------- ------------ -----------
<S> <C> <C>
Samuel Adams Boston Lager(R) Reg. #1,522,026 01/24/89
Samuel Adams Boston Ale(R) Reg. #1,610,302 08/14/92
Lightship(R) Reg. #1,639,234 03/26/91
Samuel Adams(R) Cream Stout
Samuel Adams(R) Cherry Wheat
Samuel Adams(R) Cranberry Lambic
Samuel Adams(R) Double Bock
Samuel Adams(R) Honey Porter
Samuel Adams(R) Golden Pilsner
Samuel Adams(R) Octoberfest
Samuel Adams(R) Scotch Ale
Samuel Adams(R) Spring Ale
Samuel Adams(R) Summer Ale
Samuel Adams(R) White Ale
Samuel Adams Winter Lager(R) Reg. #1,623,925 11/20/90
Samuel Adams Triple Bock(R) Reg. #2,052,984 04/15/97
Oregon Original(TM) App. #74/730,463 09/18/95
Oregon Original(TM) India Pale Ale
Oregon Original(TM) Raspberry Wheat
Hardcore(R) Reg. #2,109,887 10/28/97
Hardcore(R) Crisp Hard Cider
Hardcore(R) Apple Cranberry Cider
Hardcore(R) Black Cider
Novemberfest(TM) App. #75/007,625 10/19/95
Samuel Adams Portrait Logo App. #75/478,992 05/04/98
</TABLE>
<PAGE>
Exhibit H
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SERVICE STANDARDS
The following factors are illustrative but not necessarily exhaustive of the
factors that define "service": brewing frequency, frequency of packaging,
shipping hours, carrier selection, customer service, warehouse space, multi-
stop loads, arrangements for order submission and changes and order fulfillment,
electronic access to order status, billing and shipment information,
pallets/cooperage handling, material release to Boston Beer suppliers, inventory
reports and physical inventory frequency, analysis of in process and finished
Beer Products, and production to Boston Beer quality specifications and
consistent taste matches with other production locations of the same style.
</TEXT>
</DOCUMENT>