Exhibit 10.18
MANUFACTURING
AGREEMENT
THIS AGREEMENT
is made this 16th day of December, 2008 between
O-AT-KA MILK PRODUCTS COOPERATIVE, INC . ("Vendor") and
ATTITUDE DRINK COMPANY ("Vendee").
RECITALS
WHEREAS
, Vendor is a New York cooperative
corporation engaged in the manufacture and production of
dairy-based products at its facility in Batavia. New York (the
"Facility"); and
WHEREAS
, Vendee desires to purchase from
Vendor. and Vendor desires to sell to Vendee. the products listed
from time to time on Exhibit A attached hereto (the
“Products").
NOW,
THEREFORE . in
consideration of the promises by Vendor to sell the Products to
Vendee and Vendee to purchase the Products from Vendor and in
consideration of the mutual covenants herein. Vendor and Vendee
agree as follows:
1.
Services Provided by Vendor .
a) Manufacture . Vendor
shall manufacture, package and ship the Products for purchase by
Vendee. All Products shall be purchased F.O.B. the Facility by
Vendee.
b) Materials and
Specifications . Unless otherwise agreed by the parties. Vendor
shall procure the ingredients, supplies and packaging materials
used in the manufacturing of the Products (the "Materials"). All
Products and Materials shall conform to Vendee's approved
specifications (the "Specifications"), attached hereto as
Exhibit B . Vendee may change the Specifications pursuant to
Section 1(d). Vendor shall examine all Materials furnished by
Vendee or other suppliers and shall exercise reasonable due
diligence in accepting or rejecting items which do not conform in
all material respects to the Specifications. or do not comply with
any laws or regulations of the United States. the State of New
York. Genesee County. and the City and Town of Batavia. New York
(collectively. the "Laws").
c) Inventory of
Materials . Vendor shall provide and/or procure a sufficient
quantity of Materials to meet the production requirements imposed
on Vendor pursuant to the terms of this Agreement. If provided by
Vendee. Vendee shall ship to Vendor all other necessary materials
in such quantities as may be requested by Vendor from time to
time.
d) Changes to Specifications.
Vendee may modify the Specifications upon thirty (30) calendar days
prior written notice. If Vendor cannot make such modifications
within the thirty (30) calendar day notice period, Vendor shall
implement such modifications as soon thereafter as reasonably
possible. Regardless of the number or frequency, changes to the
Specifications shall not relieve Vendor of any of its obligations
or excuse its performance if such changes do not increase the cost
of performance by Vendor. If changes result in an increase or
decrease in the production cost of the Products, the parties will
negotiate and reach mutual agreement on the actual effect of any
such change and the actual increase or decrease in the cost of
production. The price paid to Vendor. determined in accordance with
Section 5(a), will be adjusted accordingly. If changes
result in an increase in the production cost of the
Products.
Vendor will not be obligated to
implement such change until the parties agree upon the price
adjustment.
e. Shipping and Delivery .
Vendor shall load Products onto shipping vehicles designated by the
Vendee at the Facility. Vendee shall pay all expenses associated
therewith. Vendor shall deliver all orders on the day specified in
the applicable purchase order. Partial orders may' he delivered
from time to time so long as an applicable order is completed and
delivered within the time specified. Delivery shall occur when
Vendor delivers Products to the shipping vehicle at the Facility.
Title to the Products and all risk of loss or damage thereto shall
transfer to Vendee at the time Vendor delivers the
Products.
2. Production
Schedule. During the Initial Term_ Vendor shall maintain sufficient
production capacity to manufacture and package both the annual
number of cases of Products. and the monthly number of cases of
Products. as listed on Exhibit A . Vendor will supply
Products to Vendee under the labels listed on Exhibit A
pursuant to written purchase orders submitted from time to time by
Vendee. Vendee shall submit its purchase orders to the following
address
O-AT-KA Milk Products Cooperative.
Inc.
700 Ellicott Street
P.O. Box 718
Batavia, NY 14021-0718
Facsimile No.
585-343-4473
Unless Vendee and Vendor mutually agree on a
different system. Vendee shall provide Vendor with a yearly
estimate of its Products needs. In addition, no later than the
seventh (7th) day of every month the Vendee shall provide Vendor
with a rolling three (3) month forecast with a firm order for the
first month. updated every month thereafter (e.g.. by December
seventh (7th) the Vendee will provide a forecast for January.
February and March. with the month of January being a firm order
and the months of February and March being non-binding estimated
requirements: by January seventh (7th) the Vendee will provide a
forecast for February, March and April with the month of February
being a firm order and the months of March and April being
non-binding estimated requirements; etc.) (the "Estimated
Production Schedule"). Vendor shall notify Vendee within ten ( 10)
calendar days if Vendor cannot comply with all or part of an
Estimated Production Schedule.
3.
Vendee's Requirements . Provided that Vendor can offer the
Products at competitive prices (including its prices for any
Materials it furnishes) and meet the volume and time requirements
of Vendee. Vendee agrees to offer all of its business with regard
to the manufacture and packaging of the Products to Vendor. To the
extent Vendor cannot meet Vendee's request, Vendee can direct its
business to another vendor.
4.
Payment for Unused Materials and Products . If for any
reason Vendee discontinues operation or ceases to purchase from
Vendor, it will pay to Vendor the costs of any Materials on hand
and under order and also the value of the Products which are fit
for sale. Such payment shall be due and paid within twenty (20)
calendar days after such discontinuance or termination. The value
of such Products and Materials shall be determined by the price
paid by Vendee for similar quantities of Products and Materials at
the time notice of discontinuance or termination was received or
discovered by Vendor. All unused Products and Materials provided by
Vendor and all unused Products shall be purchased F.O.B. the
Facility by Vendee. Vendee shall take all reasonable steps to
remove all Products and Materials on a timely basis.
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5.
Price of Products - Payment to Vendor . Prices
for Products shall be calculated as set forth in Section 5(a)
below. The price shall be F.O.B. the Facility, unless otherwise
indicated.
a.
Price of Products . Vendee shall pay Vendor a price for each
case of Products based on Vendor's actual costs of production,
which price shall be the sum of Vendor's: (i) cost of Materials;
and (ii) cost of manufacturing, including overhead expenses and
profit. The price for each case of Products shall be determined in
the month of shipment. The initial components of the case price are
set forth on Exhibit C . Formulas for the components and
case configurations are also shown on Exhibit C . Such
component prices and Exhibit C may be amended from time to
time as follows:
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(1)
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Cost of Materials. The cost of
Materials shall be adjusted monthly.
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(2)
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Cost of Manufacturing. The cost of
manufacturing shall be adjusted annually.
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b.
Payment . Vendor shall submit its invoices to the following
address:
Attitude Drink Company
11300 U.S. Highway 1, Suite
207
North Palm Beach, FL
33408
Vendor will provide a preliminary invoice to
Vendee thirty (30) calendar days before production is scheduled.
Vendor must receive payment two weeks before commercial production
is scheduled. Within 10 days from commercial production vendor will
adjust the preliminary pricing to actual providing vendee with
either a credit or debit.
c.
Price Adjustments . The parties shall negotiate pricing at
least one hundred twenty (120) calendar days prior to the end of
each year of the Initial Term (defined below) and prior to the end
of each Extension Period (defined below), and shall attempt to
agree on pricing within thirty (30) calendar days. If the parties
cannot agree on the price for the next succeeding period of
performance by the end of the current period, then the price in
effect at the end of such period will continue for an additional
ninety (90) calendar days. At the end of such ninety (90) calendar
days, this Agreement will terminate.
d.
Pricing Review . Vendee may examine, during normal business
hours and upon reasonable notice, Vendor's books and records that
directly relate to the computation of prices for the
Products.
6.
Reports . Vendor shall maintain adequate records of all
Materials supplied by Vendee and no later than the fifteenth (15th)
day of each month Vendor shall furnish Vendee a report showing the
quantity of all Materials received. used and on hand for the prior
month from Vendee.
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7.
Warranties . Except as discussed herein. Vendor
warrants that all Products manufactured, packaged and shipped for
Vendee under this Agreement: (i) shall be manufactured in
accordance with the Specifications: (ii) shall be manufactured in
accordance with Good Manufacturing Practices as set forth in Title
21 of the Code of Federal Regulations. Section 11() (
shall be manufactured in accordance with the Laws and shall not, at
the time of delivery. be adulterated, contaminated or misbranded
within the meaning of the Federal Food. Drug and Cosmetic Act (the
"Act") and regulations promulgated pursuant thereto: and (iv) shall
not constitute an article prohibited from introduction into
interstate commerce under the Act and regulations. In addition to
Vendee's other remedies. Products which do not comply with this
warranty may be rejected by Vendee at any time upon notice to
Vendor specifying the reason therefor.
8.
Recall Procedure . In the event that Vendee reasonably
determines that is necessary or advisable to recall or otherwise
remove a shipment of Products from the distribution system or
marketplace for any reason, Vendor shall cooperate fully in such
recall or removal under such procedures as Vendee shall reasonably
proscribe or as mandated by applicable Laws. Vendor shall be
responsible for the actual cost of a recall only if, and only to
the extent. such recall is attributable to Vendor's negligence or
willful misconduct in manufacturing the Products. Notwithstanding
anything herein to the contrary. in no event shall V
