Exhibit 10.1

 

June 3, 2014

 

CONTRACT MANUFACTURING AGREEMENT

 

This CONTRACT MANUFACTURING AGREEMENT (“Agreement”) is entered into as of
May 30, 2014 (“Effective Date”) by Amrep, Inc., a company organized under the
laws of the State of Delaware with its principal place of business at c/o Zep
Inc., 1310 Seaboard Industrial Blvd., Atlanta, GA 30318 and doing business as
“Zep Commercial Sales & Service” (“Zep”), and Apollo Technologies, Inc., a
company organized under the laws of the State of Georgia with its principal
place of business at 1850 South Cobb Industrial Blvd., Smyrna, GA 30082
(“Apollo”) (Zep and Apollo are referred to collectively as the “Parties”). As
used in this document the term “Agreement” shall include all exhibits attached
hereto and all supply orders issued hereunder.

 

1.                                      Subject Matter; Background

 

a.                                      Zep and Apollo are entering into this
Agreement because Zep’s aerosol manufacturing facility located in Marietta,
Georgia was damaged by fire and, as a result, Zep will be unable to manufacture
its aerosol products at its facility for an indefinite period of time.
Therefore, Apollo agrees to provide contract manufacturing services on behalf of
Zep for certain aerosol products (as from-time-to-time agreed by the Parties,
the “Products”) for Zep and Zep agrees to pay Apollo for those services to
supply such aerosol products to Zep. Zep currently estimates that it will
require that Apollo supply between approximately 3.5 million and approximately
5.0 million aerosol cans per month, comprised of products of the following
types: solvent-based parts cleaners, adhesives, air fresheners, insecticides and
jan/san cleaning products. Apollo acknowledges that timely delivery of the
required quantities of the Products is of significant importance to Zep. Apollo
represents that it is capable of delivering such quantities of the Products and
that it will use its commercially reasonable efforts to accommodate Zep’s
requirements for such quantities of the Products.

 

b.                                      Apollo agrees to provide contract
manufacturing services on behalf of Zep to supply the Products using the
formulae and specifications provided by Zep and agrees that such formulae and
specifications are “trade secrets” within the meaning of the Georgia Trade
Secrets Act, O.C.G.A. §§ 10-1-760 through 10-1-767 (2011). Apollo in supplying
the contract manufacturing service to manufacture for Zep its Products will
adhere to Zep’s formulae and specifications for its Products that Zep provides
to Apollo. Such trade secrets are, and other information to be provided by Zep
to Apollo hereunder is, “Confidential Information” as defined in that certain
Mutual Confidentiality Agreement, dated as of May 26, 2014 between the Parties,
which the Parties agree remains in full force and effect as of the Effective
Date. However, nothing in this Agreement will make any specification, formulae,
information or data fall within the category of “Confidential Information” if
same is subject to paragraph “2. Exclusions” of said Mutual Confidentiality
Agreement.

 

2.                                      Term

 

The term of this Agreement shall commence on the Effective Date and shall
continue indefinitely until either side terminates it pursuant to Section 12.

 

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3.                                      Specification of Products and Prices

 

a.                                      As promptly as practicable following the
Effective Date, Zep will provide to Apollo a list of the Products and the
specifications and formulae for Zep’s Products to be contract manufactured by
Apollo. As promptly as practicable after its receipt of such information, Apollo
will notify Zep of the prices that it proposes to charge for its services to
contract manufacture on behalf of Zep its Products. Unless otherwise requested
by Zep, the price for the services to supply Zep’s Products will be quoted on
the basis of individual units (i.e., finished aerosol cans) of the Product.
Within two business days of its receipt of proposed prices, Zep will indicate
its acceptance or rejection of the proposed prices. If Zep rejects a proposed
price, it will propose an alternate price. Apollo will indicate its acceptance
or rejection of a proposed alternate price within two business days of receipt.
If Apollo and Zep are then unable to agree on a price within two business days,
the corresponding Product will be excluded from this Agreement. As Zep and
Apollo agree on Products and prices, the agreed Products and prices will be
described by Zep in reasonable detail in a document, which may be an Excel
spreadsheet. Zep will send the document to Apollo by e-mail and, if Apollo
agrees with the document, Apollo shall so indicate by reply e-mail to Zep. The
document shall constitute a supplement to this Agreement. The Parties
acknowledge that the circumstances may require that Zep provide the information
with respect to the Products described above on multiple occasions rather than
providing it all at one time. If so, the Parties will follow the process
described above with respect to each occasion on which Zep provides such
information.

 

b.                                      The initial unit prices for the Products
determined as provided above in Section 3.a., will be reviewed every 30 days
during the term to determine adjustments for raw material cost
increases/decreases. If the Parties fail to reach mutual agreement within 15
days of a Product unit price change, Apollo may then terminate supply of that
Product with right of payment under Section 8. Price changes mutually agreed to
by the Parties shall be evidenced by an exchange of e-mails that clearly
evidences the intent of the Parties to revise the prices. Such e-mail exchanges
shall constitute a supplement to this Agreement. Such price changes shall take
effect immediately, unless the Parties agree otherwise.

 

4.                                      Forecast

 

a.                                      On or before five (5) days before the
end of the month following the Effective Date, and on or before five (5) days
before the end of each subsequent month, Zep will provide a sixty (60) day
forecast (the “Forecast”) of Zep’s requirements for its Products during the
expected term of this Agreement, specifying in reasonable detail its Products
that it wants Apollo to supply, including the quantities and the requested
delivery dates if available. As promptly as practicable after its receipt of the
Forecast, Apollo will notify Zep as to whether it is able to supply to Zep the
Products in the quantities and on the schedule provided in the Forecast. If
Apollo rejects the proposed Forecast, in whole or in part, it will propose an
alternate Forecast, in whole or in part, as the case may be. Zep will indicate
its acceptance or rejection of a proposed alternate Forecast within two business
days of receipt. If Apollo and Zep are then unable to agree on a Forecast within
two business days, the corresponding Product will be

 

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excluded from this Agreement. As Zep and Apollo agree on the Forecast, the
agreed Products, quantities and delivery dates will be described by Zep in
reasonable detail in a document, which may be an Excel spreadsheet. Zep will
send the document to Apollo by e-mail and, if Apollo agrees with the document,
Apollo shall so indicate by reply e-mail to Zep. The document shall constitute a
supplement to this Agreement. The Parties acknowledge that the circumstances may
require that Zep provide the information with respect to the Forecast described
above on multiple occasions rather than providing it all at one time. If so, the
Parties will follow the process described above with respect to each occasion on
which Zep provides such information.

 

b.                                      If Zep’s requirements for how and when
it wants Apollo to supply Zep’s Products to Zep change during the term of this
Agreement, Zep will provide prompt notice of such change to Apollo. Promptly
following receipt of a revision of the Forecast, Apollo will notify Zep as to
whether Apollo is capable of supplying Zep the Products in accordance with the
revised Forecast. If Apollo is unable to do so, Apollo will promptly advise Zep
of the quantities that Apollo is able to supply and the date on which Apollo is
able to deliver them, which quantities will not be less than the quantities set
forth in the original Forecast and which delivery dates will not be later than
the delivery dates set forth in the original Forecast. Zep authorizes Apollo to
purchase chemical and packaging raw materials based upon Zep’s forecast.

 

5.                                 Delivery and Payment Terms

 

The Products shall be supplied to Zep and Zep will pay for Apollo’s services to
manufacture on behalf of Zep its Products on the basis of FOB Apollo’s plants.
Zep will pay each supply service invoices received from Apollo on a Net, 30 days
basis. If Zep disputes the amount of any invoice received from Apollo, it will
advise Apollo within two business days of discovering the basis for the dispute
and will work with Apollo to resolve the dispute as promptly as practicable and
Apollo will issue credit within ten (10) days of mutual resolution of the
disputed amount.

 

6.                                 Orders

 

Zep will place orders for the supply of its Products by submitting a supply
order to Apollo. The type and quantity of the Products that Zep requires, and
the date on which Zep requires delivery of such Products, will be specified in
the supply orders. If Apollo cannot produce the required quantity of the
Products by the required delivery date, Apollo shall so notify the Zep issuer of
the supply order within two business days of receiving the supply order, and
will propose an alternate quantity and/or an alternate delivery date as soon as
practicable. Zep will immediately accept the proposed delivery date or propose
another date. Upon agreement between Zep and Apollo regarding the delivery date,
Zep will issue a revised supply order to Apollo.

 

7.                                 Transportation of Products

 

Apollo shall pack and label all of Zep’s Products in the manner specified by
Zep. Zep will arrange for the transportation of its Products, at its expense,
from Apollo’s dock to Zep’s customer or distribution center. Pack type pallet
pattern to be determined by final BOM specifications (Zep Red Book).

 

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8.                                   Surplus Products, etc.

 

Upon the termination of this Agreement, (i) Apollo shall cancel (if possible)
open purchase orders with third parties for materials and components and, at
Zep’s request, shall assign non-cancelable orders to Zep and (ii) Zep will
purchase Apollo’s inventory of finished goods and raw materials,
work-in-process, supplies and components that are unique to the Products. Zep
will pay for the finished goods an amount equal to the agreed prices for such
Products and Zep will pay for the raw materials, work-in-process, supplies and
components an amount equal to 110% of Apollo’s documented cost. The provisions
of this paragraph, applicable upon termination of this Agreement, do not negate
the obligations of both Parties, as may be applicable, under Sections 9, 10 and
14, and the Mutual Confidentiality Agreement, dated as of May 26, 2014, which
obligations continue after termination of this Agreement.

 

9.                                   Insurance

 

a.                                      Zep represents and warrants that (i) the
insurance schedule attached as Exhibit A is an accurate description of its
current insurance coverage; (ii) Zep has designated Apollo as an additional
insured with respect to its applicable liablity insurance policies; and
(iii) Zep will maintain such insurance in force and will pay when due all
premiums with respect thereto during the term of this Agreement.

 

b.                                      Apollo represents and warrants that
(i) the insurance schedule attached as Exhibit B is an accurate description of
its current insurance coverage; (ii) Apollo has designated Zep as an additional
insured with respect to its applicable liablity insurance policies; and
(iii) Apollo will maintain such insurance in force and will pay when due all
premiums with respect thereto during the term of this Agreement.

 

10.                                 Indemnity

 

a.                                      The Parties hereby agree to indemnify,
defend and hold harmless each other and their respective successors, assigns,
affiliates, partners, co-ventures, subsidiaries, shareholders, principals,
agents, directors, officers and employees as now and hereafter constituted
(collectively, the “Indemnified Parties”, and each individually an “Indemnified
Party”), from and against any and all losses, claims, liabilities, obligations,
damages (including, without limitation, any punitive or exemplary damages or
consequential damages), costs (including, without limitation, any response costs
and attorneys’ fees and costs), deficiencies, demands, judgments, suits,
proceedings, disbursements, penalties and expenses of every kind, character and
nature which any or all the Indemnified Parties may incur, suffer or be required
to pay as set forth below:

 

(i)             a breaching party shall indemnify the other party, as set forth
above, for any material breach of this Agreement;

 

(ii)          Apollo will indemnify Zep for any claims, demands, suits,
investigations, proceedings or actions by any third party relating to or arising
solely out of: the acts or omissions of Apollo in failing to follow Zep’s
formulae, specification and art work or any error, omission or fault of Apollo
in the performance of Apollo’s services under this Agreement outside of
following Zep’s directions including adhering to Zep’s formulae, specification
and art work;

 

(iii)       Zep will indemnify Apollo for any claims, demands, suits,

 

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investigations, proceedings or actions by any third party relating to or arising
solely out of: the acts or omissions of Zep in providing any directions to
Apollo including instructions to follow Zep’s formulae, specifications and art
work or any error, omission or fault of Zep in the handling, transportation,
marketing or sale of a Product after Apollo’s delivery of the Product to Zep;

 

(iv)      infringement of any trade names, trademarks, copyrights or patents of
any third party; however, Apollo shall have no indemnity obligations under this
subpart to Zep arising out of Zep’s formulae, specification or art work that is
provided by Zep to Apollo.

 

11.                               Compliance with Laws and Ordinances: Permits

 

a.                                      Each Party will be responsible for
complying with all applicable federal, state, local and other laws, statutes,
rules, regulations, ordinances, and guidance (including any amendments to any of
the foregoing) applicable to manufacturing, distribution, sale, handling,
disposal, and labeling of the Products, including, without limitation, any
federal, state, local or foreign law, statute, ordinance, rule, regulation,
code, license, permit, written authorization, written approval, written consent,
order, consent agreement, or any applicable judicial or administrative decision
relating to (i) pollution or the protection, preservation, remediation or
restoration of health, safety or the environment or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of any hazardous substances, including
without limitation, the Toxic Control Substances Act (TSCA), 15 U.S.C. 2601, et
seq., the Clean Water Act (CWA), 33 U.S.C. 1251, et seq., the Clean Air Act
(CAA), 42 U.S.C. 7401 et seq., the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601, et seq., the Resource
Conservation and Recovery Act (RCRA), 42 U.S.C. 6901, et seq., Hazardous
Materials Transportation Act (HMTA), 49 U.S.C. 5101, et seq., and Federal
Insecticide, Fungicide, and Rodenticide Act (FIFRA), 7 U.S.C. 136, et seq.

 

b.                                      Zep will create and provide to Apollo
labels for the Products or will provide electronic files of the artwork for the
labels. All labels provided by Zep will comply with all applicable federal,
state, local and other laws, statutes, rules, regulations, and ordinances,
including without limitation the standards established by the American National
Standards Institute (ANSI), as well as applicable Department of Transportation
(DOT) hazardous materials regulations at 49 C.F.R. Parts 171-180, including
descriptions, hazard warnings and disposal instructions. Zep will also
create/provide MSDS for the Products. Ultimate responsibility for any MSDS or
labels created by Zep for the Products will solely belong to Zep. In the event
Apollo deviates from Zep created/approved labels or MSDS, Apollo will be
responsible for such deviated label or MSDS.

 

c.                                       Each Party shall obtain and maintain at
its expense at all times during the term of this Agreement all permits,
licenses, orders, authorizations, certifications, registrations and approvals
required by any governmental authority necessary for it to perform the
manufacture, distribution, sale, handling, storage, transport, use and disposal
of the Products, as applicable.

 

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12.                            Termination

 

a.                                      Termination for Failure to Provide
Quality Products in a Timely Manner: If at any time during the term of this
Agreement, Apollo does not provide high quality Products at the agreed upon
delivery times, Zep may terminate its purchase obligations to Apollo in whole or
in part without further obligations under this Agreement other than as set forth
in Section 8. Zep shall provide written notice to Apollo of such termination
that identifies the reason(s) for termination and specifies a termination date
of at least ten business days after the date of notice.

 

b.                                      Termination Due to Insolvency: If during
the Term of this Agreement, Apollo or Zep becomes insolvent or bankrupt, or
bankruptcy or insolvency proceedings are filed by or against Apollo or Zep under
either federal or state law (an “Insolvent Party”), then the party that is not
the Insolvent Party (“Non-Insolvent Party”) may terminate this Agreement
immediately by sending the Insolvent Party written notice thereof. Such
termination shall be effective as of the date of the written notice, and the
Non-Insolvent Party shall have no further obligation for payment under this
Agreement other than as set forth in Section 8.

 

c.                                       Termination Due to Breach of Agreement:
If a party breaches this Agreement (“Breaching Party”) in any particular, then
the other party (“Non-Breaching Party”) may terminate this Agreement immediately
by sending the Breaching Party written notice thereof. Such termination shall be
effective as of the date of the written notice, and the Non-Breaching Party
shall have no further obligations under this Agreement other than as set forth
in Section 8.

 

d.                                      Termination for any Reason. Either
Apollo or Zep may terminate this Agreement with 90 days written notice for any
reason. The provisions of Section 8 will apply to any termination of this
Agreement under this Section 12.d.

 

13.                            Records

 

Each party shall maintain complete and accurate records with respect to all
Products and services provided to the other party. All written records shall be
retained for a period of three years from the completion date of this Agreement.

 

14.                            Covenant regarding Employees

 

During the term of this Agreement and for a period of 365 consecutive days
following termination of this Agreement, Zep will not solicit to hire any
employee now or subsequently employed by Apollo without Apollo’s prior written
consent. During the term of this Agreement and for a period of 365 consecutive
days following termination of this Agreement, Apollo will not solicit to hire
any employee now or subsequently employed by Zep without Zep’s prior written
consent.

 

15.                            Entire Agreement; Waiver

 

This Agreement constitutes the entire Agreement between the parties, and, except
as otherwise provided in Sections 3 and 4, no agreement or other understanding
amending, adding to or omitting terms and conditions from this Agreement shall
be binding until made in writing and signed by Zep and Apollo. This Agreement
may not be modified orally. A party’s failure to enforce any of the provisions
of this Agreement at any time shall not be construed as a waiver of such
provisions, or in any way affect the validity of this Agreement.

 

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16.                          Applicable Law and Severability

 

This Agreement shall be governed by and construed in accordance with the
substantive laws of the State of Georgia, other than its conflict of laws
principles. Each party agrees and acknowledges that the sole and exclusive forum
for litigation arising under or related to this agreement shall be the state or
federal court of competent jurisdiction venued in the principal place of
business of the party named a defendant in such action. In any such action, the
prevailing party as judicially determined shall be entitled to recover
reasonable attorneys’ fees and cost. Prior to initiating any such action, each
party shall give written notice not less than ten days to the other of the claim
intended to be asserted, and shall participate not more than ten days
thereafter, in mediation, each party shall be represented by its president or
chief financial officer, at the office of the party against whom the claim has
been made, in a good faith effort to resolve any such dispute, which mediation
is acknowledged and agreed to be an express condition precedent to either
party’s right to initiate judicial action.

 

In the event that any provision contained in this Agreement shall be found
invalid or unenforceable, the balance of the Agreement shall remain in full
force and effect.

 

17.                          Assignment of Agreement

 

Neither party shall assign this Agreement or any of its rights, benefits,
duties, nor obligations hereunder to a third party without the written consent
of the other party, which consent shall not be unreasonably withheld.

 

18.                          Counterparts

 

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which taken together shall constitute one
single agreement between the parties. The parties may exchange executed
counterparts of this Agreement by facsimile or by electronic transmission of
.pdf files comprising scanned copies of this Agreement. Each of such .pdf files
shall be deemed an original of this Agreement and all of them taken together
shall constitute one single agreement between the parties.

 

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19.                          Notices

 

Notices to Apollo:

 

Apollo Technologies, Inc.

1850 South Cobb Industrial Blvd.
Smyrna GA 30082

Attn: Chris Callas, President

 

Notices to Zep:

 

Zep Inc.

Attn: General Counsel

1310 Seaboard Industrial Blvd.
Atlanta, GA. 30318

 

20.                          Survival

 

The parties hereto acknowledge and agree that the provisions of this Agreement
necessary or desirable to enforce or interpret the provisions of Section 10
shall survive the termination or expiration of this Agreement.

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized officers as of the Effective Date.

 

AMREP, INC.

 

APOLLO TECHNOLOGIES, INC.

 

 

 

 

 

 

By:

/s/ Jeff Fleck

 

By:

/s/ Chris Callas

 

Name: Jeff Fleck

 

 

Name: Chris Callas

 

Title: Vice President, Chief Supply Chain Officer

 

 

Title: President

 

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