Exhibit 10.2

Constar

- and -

New Century Beverage Company

SUPPLY AGREEMENT

January 1, 2003 - December 31, 2007

 

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TABLE OF CONTENTS

 

Paragraph/
Section         Page

1

   Definitions    3

2

   Term    4

3

   Convenant to Supply and Purchase Containers    4

4

   Quantity    5

5

   Forecast and Inventory Requirements    5

6

   Failure to Buy    6

7

   Failure to Supply    7

8

   Contract Prices    8

9

   Offer to Supply Resin    9

10

   Delivery and Title    10

11

   Payment Terms    10

12

   Right of Rejection    10

13

   Quality and Technical Support    11

14

   Freight and Warehousing    11

15

   Warranty    12

16

   Force Majeure    13

17

   Patents, Trademarks, Copyrights and Unfair Competition    14

18

   Cancellation Upon Default    14

19

   Confidentiality    15

20

   Interpretation    15

21

   Governing Law    15

22

   Prior Agreements and Merger    15

23

   Amendments    15

24

   Exhibits    15

25

   General    16

26

   Notices    16

27

   Assignment    16

28

   Exclusivity    17

Schedule A

   Container Specifications   

Schedule B1

   Base Volume Forecast   

Schedule B2

   Seller Source Locations and Buyer Filling Locations   

Schedule C

   Contract Prices for Containers, Labels and Label Application   

Schedule D

   Examples of Determining Price Change due to Change in Resin Pricing   

Schedule E

   Secondary Packaging Information   

Schedule F

   [ * * * ] Calculations   

Schedule G

   Seller’s [ * * * ]   

 

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SUPPLY AGREEMENT

This Agreement is made as of the 17th day of October, 2002 between Constar, a
Pennsylvania corporation and a division of Crown Cork & Seal, having an office
at One Crown Way, Philadelphia, PA 19154 (“Seller”), and New Century Beverage
Company (NCB), a California corporation, and a subsidiary of PepsiCo Inc.,
having an office at One Pepsi Way, Somers, NY 10589 (“Buyer”).

WHEREAS, Buyer is a manufacturer and seller of various beverages and wishes to
purchase non-refillable polyethylene terephthalate (“PET”) containers in which
to package such beverages for sale to the public.

WHEREAS, Seller is a manufacturer and seller of non-refillable PET containers
and wishes to sell same to Buyer.

NOW, THEREFORE, in consideration of the foregoing premises and the covenants
contained herein, the parties hereto agree as follows:

 

1. DEFINITIONS

1.1 The following are the Schedules that are attached to and form part of this
Agreement:

 

Schedule A    Container Specifications Schedule B1    Base Volume Forecast
Schedule B2    Seller Source Locations and Buyer Filling Locations Schedule C   
Contract Prices for Containers, Labels and Label Application Schedule D   
Examples of Determining Price Change Due to Change in Resin Pricing Schedule E
   Secondary Packaging Information Schedule F    [ * * * ] Calculations Schedule
G    Seller’s [ * * * ] Investments

1.2 As used in this Agreement, the following terms shall have the following
meanings:

(a) “Container” shall mean any of 12 oz., 16 oz., 16.9 oz., 20 oz., 24 oz., 1
liter, 2 liter, or 3 liter and other size PET beverage containers. All
Containers shall meet the specifications referenced in Schedule A annexed
hereto, as may be amended from time to time.

(b) “Conversion Costs” shall mean those costs other than resin as outlined in
Schedule C and as adjusted pursuant to Schedule 8.2 hereof.

 

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(c) “Contract Year” shall mean each 12-month period commencing January 1 and
ending on the following December 31 during the term of the Agreement.

(d) “Period” shall mean any one of 13 four-week periods during a calendar year
as defined by Buyer.

 

2. TERM

2.1 This Agreement shall be effective as of January 1, 2003 and shall remain in
effect until the close of business on December 31, 2007 (the “Term”), unless
terminated earlier in accordance with the provisions of Section 18 hereof.

 

3. COVENANT TO SUPPLY AND PURCHASE CONTAINERS

3.1 Seller agrees to manufacture and sell to Buyer, and Buyer agrees to purchase
from Seller, Containers which conform to the Container specifications and
performance standards attached hereto as Schedule A (the “Container
Specifications”) at the Contract Price (as hereinafter defined) and upon the
terms and conditions contained in this Agreement.

3.2

(a) For any new product, package changes, or package introductions considered or
planned by Buyer, the parties shall discuss timing, estimated volume and cost to
determine the feasibility of Seller supplying beverage Containers for such new
products or packages or whether such Containers should be imported until such
time as it may be economically viable for Seller to supply same. Seller shall,
within the period of 30 days next following the close of such discussions,
communicate to Buyer its desire and ability to supply such Containers upon
mutually acceptable terms and conditions.

(b) Should Buyer and Seller not agree on terms to supply Containers for new
product, package changes, or package introductions, Buyer shall have the right
to source such Containers from alternate sources. Any Containers sourced from an
alternative source as permitted herein will be credited against the Annual
Forecast (as hereinafter defined) or Revised Forecast (as hereinafter defined)
requirements contained therein.

(c) Seller will be responsible for procurement of all blow and injection molds
(both generic and proprietary), applicable mold parts (i.e., carrier, base,
etc.) and mold machine parts to accommodate Buyer’s existing volume of current
Containers, new non-carbonated Containers, and future growth of same. All blow
and injection molds, parts, and related machine parts shall be depreciated over
five (5) years or less. Seller shall promptly advise Buyer by written notice
when buying new molds or making significant refurbishment of existing molds. [ *
* * ] the un-amortized portion of obsolete molds required for a change from an
existing container design to a new design when current molds for that design
have not been fully amortized and when the new design is to be utilized for an
existing brand with no projected incremental volume above the volumes stated in
Schedule B1.

 

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(d) Buyer also agrees to consider Seller as its major supplier of Caribbean
preforms, provided that Seller is competitive on quality and cost and has a
commercially viable product.

 

4. QUANTITY

4.1 For 2003 only, Buyer shall purchase from Seller, and Seller shall sell to
Buyer, 100% of the Containers required by Buyer for the sale of carbonated soft
drink, non-carbonated beverages, or bottled water products in the locations
outlined in Schedule B2. In subsequent years, Buyer shall supply an Annual
Forecast to Seller as outlined in Section 5.2. Buyer agrees that its Annual
Forecasts will contain volume requirements [ * * * ].

4.2 Beyond the 2003 calendar year, Buyer shall have the right to change Buyer
filling locations within each cell from time to time during the Term, provided
the Buyer’s forecasted volumes by cell will be at least equal to the [ * * * ],
and the minimum volume of Containers actually purchased will be at least [ * * *
], as long as Seller’s quality and service conforms to provisions referenced in
Section 13 and Buyer’s overall system growth supports such. Buyer shall also
have the right to add additional filling locations to this Agreement.

4.3 Buyer agrees that an additional [ * * * ] Containers will be awarded to
Constar Newark in [ * * * ] however this volume is not included in the Newark
base volume forecast (Schedule B1) and shall not be included for future year
commitments. Buyer filling locations and packages for this incremental [ * * * ]
Containers shall be finalized in the T1 2003 Annual Forecast.

 

5. FORECAST AND INVENTORY REQUIREMENTS

5.1 Preceding each Contract Year, Buyer shall use its best efforts to estimate
the anticipated requirements for each size Container during the next Contract
Year and report those estimates as they become available, particularly in
September, October and November to facilitate additional capital equipment
decisions by Seller.

5.2 On an annual basis, no later than December 15 of each year of the Term,
Buyer shall advise Seller of its best estimate of the quantity of Containers
required, by period and by location, during the next calendar year (or remainder
thereof) of the Term (the “Annual Forecast”).

5.3 In addition to the Annual Forecast, Buyer shall provide Seller with two
forecast adjustments (“Revised Forecast”) of its requirements by size, revised
on or about the close of periods three and eight.

5.4 Seller shall have available for sale to Buyer a minimum of [ * * * ] of
(i) the 2003 Volume as set forth on Schedule B1, (ii) the Annual Forecast or
(iii) Revised Forecast, as the case may be. Seller shall use its best efforts to
supply any amounts in excess of [ * * * ] of the Annual Forecast requirements by
Container size in each forecast adjustment. If Seller is unable to guarantee the
supply of any portion of the additional requirements in the Revised Forecast,
Buyer has the right to source such Containers from alternate sources at Buyer’s
expense during the period covered by the Revised Forecast.

 

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5.5

(a) Seller shall provide Buyer with a supply plan no later than 30 days from the
receipt of Buyer’s Annual Forecast for each Contract Year, demonstrating
Seller’s ability to meet the Buyer’s Annual Forecast by cell for the Contract
Year.

(b) Seller shall maintain a minimum of [ * * * ] days inventory for each package
of each period’s forecast plus [ * * * ].

(c) Buyer shall use its best efforts to compare actual Container usage with
Container production rates and the Annual Forecast or Revised Forecast so as to
enable Seller to maintain a combined average production inventory of no more
than [ * * * ] days supply of Containers at [ * * * ] of forecast; provided,
however, that during periods of peak demand, Seller may be required to build a
greater production inventory of certain size Containers, in order to meet the
Buyer’s seasonally adjusted requirement for Containers.

(d) Seller shall provide weekly, bi-weekly or period inventory and capacity
planning reports as related to production hereunder and as required to assist in
scheduling hereunder throughout the year.

(e) If additional storage space is required to accommodate a greater production
inventory beyond [ * * * ] days, Seller shall, prior to signing a contract for
such additional space, consult with and only enter into a contract with the
consent of the Buyer. [ * * * ] for any additional rental and handling cost
necessarily incurred, provided that Seller and Buyer shall cooperate to minimize
the quantity of the excess inventory and the cost of acquiring such additional
storage space.

 

6. FAILURE TO BUY

6.1 Buyer agrees to purchase a minimum of [ * * * ] of the base volume forecast
for each cell as referenced in Schedule B1 and also agrees to purchase a minimum
of [ * * * ] of the Annual Forecast provided by December 15 or Revised Forecast,
if mutually agreed upon and committed to by Buyer and Seller, for the upcoming
Contract Year. If Buyer does not purchase such minimum [ * * * ] requirement by
cell, Buyer agrees to [ * * * ] an [ * * * ], according to the calculation set
forth in Schedule F, provided Seller is unsuccessful in utilizing its assets to
produce containers for other customers or other Pepsi business. Buyer has the
option to choose whether it will i) [ * * * ], or ii) [ * * * ] over the next
Contract Year’s purchases, should they exist.

6.2 In the event Buyer changes label design or Container Specifications, or in
the event Buyer discontinues any brand or size of Container during the Term,
Buyer shall be responsible for any Containers produced by Seller and labels
purchased by Seller prior to notification of the change or discontinuance up to
a maximum one month inventory, unless otherwise agreed to in writing, of the
affected Container, and a three month inventory, unless otherwise agreed to in
writing, of the affected label, and [ * * * ] the subsequent discontinuance of
the package by Buyer.

 

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(a) Seller agrees to collate and report potential obsolete container and label
information to Buyer’s filling locations 30 days prior to discontinuance.
Additionally, Seller agrees to provide an accurate report of actual obsolete
inventory 30 days after the close of each period. Buyer agrees to make payment
within 60 days of receipt of Seller’s report. If Seller fails to provide such
reports, Buyer will not be held responsible for respective obsolete material.

 

7. FAILURE TO SUPPLY

7.1 If, in any Period during the Term, Seller fails to supply Containers
required by Buyer in accordance with the Annual Forecast or the Revised
Forecast, as the case may be, whether due to force majeure, as defined in
Section 16.1 hereof, or otherwise, Seller shall immediately notify Buyer in
writing of the nature, extent and estimated duration of such failure. Upon
receipt of such notice, Buyer shall be entitled to purchase suitable beverage
Containers from another source (a “Third Party Supplier”) during such period
without thereby terminating or breaching this Agreement.

7.2 With the exception of a failure to supply caused by Force Majeure, and with
the further exception of a failure to supply in excess of [ * * * ] of orders
the timing and quantities of which are consistent with the latest Annual
Forecast or Revised Forecast, as the case maybe, which has been mutually agreed
upon and committed to by both Buyer and Seller, Seller shall indemnify and hold
harmless Buyer from and against all reasonable and substantiated costs and
expenses incurred by Buyer arising out of Seller’s inability to supply
Containers including but not limited to Buyer’s cost in purchasing replacement
Containers at prices including freight which are in excess of those set forth
herein. These expenses shall not include lost profits of Buyer.

7.3 Buyer shall take all reasonable steps to minimize the damages and expenses
it incurs as a result of Seller’s failure to supply Containers.

7.4 Seller covenants and agrees to utilize its best efforts to assist Buyer in
purchasing suitable beverage Containers in the event that Seller is unable to
supply the quantity of Containers required in accordance with the Annual
Forecast or Revised Forecast, as the case may be, or if Seller is unable to
supply Buyer with its requirements if in excess of [ * * * ] of the Annual
Forecast or Revised Forecast.

7.5 In the event of any interruption of Seller’s ability to meet purchase orders
placed by Buyer, Seller shall notify Buyer in writing when it is able to resume
supply of Containers in accordance with the Annual Forecast or Revised Forecast,
as the case may be. Upon receipt of such notice, Buyer shall, subject to its
remaining contractual obligations with any Third Party Seller and subject to
Section 7.6 hereof, resume purchasing its requirements for Containers from
Seller in accordance with the terms of this Agreement.

7.6 In the event that Seller is unable to supply Containers required by Buyer in
accordance with this Agreement for a period which exceeds [ * * * ]consecutive
days excluding all supply interruptions due to Force Majeure events, Buyer shall
be entitled to terminate this Agreement upon [ * * * ] days’ written notice
without further penalty or damages being payable by Buyer.

 

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7.7 Any Containers secured from alternate sources shall be credited against the
Annual Forecast or the Revised Forecast requirements. The parties shall use
their best efforts to minimize the volume and duration of any such shortfall,
and any commitment to other suppliers necessary to cover such shortfall.

 

8. CONTRACT PRICES

8.1

(a) The contract prices to be charged to Buyer under this Agreement are set
forth in Schedule C attached (the “Contract Prices”) subject to adjustments
described in Section 8.2 below.

(b) The Contract Prices contained herein are based upon the [ * * * ].

(i) Resin is a pass-through cost and Seller’s actual resin cost only shall be
reflected in the Contract Prices, except in cases where Buyer and Seller agree
on a different resin procurement program. If Buyer and Seller cannot agree on a
resin procurement program, Seller agrees that the resin price per pound in any
Contract Year [ * * * ] resin price per pound [ * * * ].

(ii) In the event of a price change in the Seller’s actual delivered cost of
resin effective after the date of this Agreement, there shall be an upward or
downward adjustment to the Contract Prices calculated using the formula set
forth in Schedule D.

(iii) [ * * * ], any adjustment pursuant to Section 8.1(b)(ii) shall be
effective [ * * * ] the effective date of the resin price change to Seller.

(c) Contract Prices are for Containers bulk palletized, stretch wrapped and
strapped only as outlined in Schedule E hereof.

(d) If Seller is required to provide labeling for the Containers covered under
this Agreement, label costs and label application fees as set forth in Schedule
C shall be [ * * * ].

(i) If Buyer [ * * * ] as identified on Schedule G, Buyer agrees to [ * * * ]
for other customer business in which case Buyer shall not be obligated. If
Seller chooses not to [ * * * ] for other business, Buyer has the option to [ *
* * ].

(ii) Seller agrees to work with Buyer to reduce label costs throughout the Term.

(iii) Buyer may supply Seller the quantities of labels necessary to produce all
or a portion of the Containers covered under this Agreement, and will work with
Seller to implement label procurement programs that deliver mutual cost
reduction objectives.

(e) [ * * * ] plastic content (recycled or otherwise) in the manufacture of the
Containers, or [ * * * ] on the manufacture of plastic beverage containers.

(f) Seller guarantees that the conversion costs included in the Contract Price
charged to Buyer will not increase during the Term. [ * * * ]

 

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(g) [ * * * ] for Container sizes covered under this Agreement [ * * * ] Buyer
shall provide Seller with written notification of such [ * * * ]. Seller shall
have 30 days to [ * * * ] with respect to [ * * * ]. [ * * * ] shall remain in
effect as long as [ * * * ]. [ * * * ] Seller shall have the right to [ * * * ]
if any. Buyer shall not be responsible for any [ * * * ] at the expiration or
earlier termination of this Agreement.

[ * * * ]

8.2 Seller agrees that it will not sell 12 oz., 16 oz., 16.9 oz., 20 oz., 24
oz., 1 liter, 2 liter, 3 liter or like containers similar to Containers
manufactured under this Agreement [ * * * ] to Buyer hereunder provided,
however, that if [ * * * ] required by Buyer’s specifications, then [ * * * ].
Except for the foregoing, should Seller decide to [ * * * ].

8.3 If there is a dispute as to the amount of any adjustments to which either
party may be entitled under this Agreement, the parties shall provide all
reasonably necessary information or material to an independent certified public
accounting firm acceptable to both parties, and the parties shall abide by the
determination of such accounting firm. The parties shall equally share the cost
of the fees charged by the said accounting firm. For disputes involving audits
of Seller’s information, the parties agree to use Price Waterhouse LLC, unless
advised differently by Seller. For disputes involving audits of Buyer’s
information, the parties agree to use KPMG Peat Marwick LLP, unless advised
differently by Buyer.

 

9. OFFER TO SUPPLY RESIN

9.1 At any time during the Term, Buyer may [ * * * ], supply Seller [ * * * ] or
less of the quantities of polyethylene terephthalate (“PET”) prime resin,
including recycled resin, necessary to produce the Containers covered under this
Agreement. If Buyer elects to provide quantities of polyethylene terephthalate
(“PET”) prime resin, including recycled resin, [ * * * ], Buyer must notify
Seller [ * * * ] prior to the next calendar year.

9.2 Any resin supplied by Buyer must include the volume, and a warranty of
quality (sufficient for Seller to meet all of Seller’s warranty provisions and
manufacturing performance criteria), and a [ * * * ] for the Containers to be
supplied hereunder. Such supply by Buyer and Seller’s obligation to accept the
same are limited to the amount of resin required to produce bottles per Buyer’s
Annual Forecast or Revised Forecast, as the case may be. Subject to the
foregoing, Seller agrees to accept such [ * * * ] and thereafter the Contract
Price shall be [ * * * ] for manufacture of the specified Containers or reflect
the [ * * * ].

9.3 Any resin supplied to Seller under the terms outlined above shall be subject
to the industry standard warranties regarding losses related to efficiency and
quality. In addition, Buyer will use its best efforts to [ * * * ] for
Containers as supplied hereunder, to Buyer’s other container suppliers. [ * * *
]

9.4 Buyer and Seller shall work together to reach mutual agreement on the cost
and supply arrangement of all resin, including virgin resin, recycled resin, and
Buyer supplied resin. Buyer may supply Seller the quantities of resin necessary
to produce all or a portion of the Containers covered

 

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under this Agreement and shall work with Seller to understand Seller’s
objectives and strategies to [ * * * ]. The parties agree that they will meet
quarterly to discuss resin procurements strategy and [ * * * ]. If Buyer and
Seller cannot agree on a resin procurement program, Seller agrees that it’s [ *
* * ].

 

10. DELIVERY AND TITLE

10.1 Seller shall, at its sole expense, package Containers for delivery in
accordance with the specifications set out in Schedule E attached hereto
(“Secondary Packaging Information”).

10.2 All of the Contract Prices for Containers are FOB Seller’s source
manufacturing plant provided, however, that Seller shall retain title and risk
of loss of all Containers until an authorized signature is obtained from the
Buyer’s location on a bill of lading except in those cases where Buyer arranges
transportation, in which case, title and risk of loss shall pass to Buyer upon
delivery of Containers to the carrier at Seller’s loading dock.

 

11. PAYMENT TERMS

11.1 Seller shall deliver a bill of lading to Buyer promptly after each shipment
of Containers delivered to Buyer. Seller is responsible for obtaining an
authorized signature on the bill of lading from Buyer, which acknowledges
Buyer’s receipt of shipment.

11.2 Each bill of lading shall indicate the name and location to which a
shipment of Containers was made and shall indicate any relevant bill of lading
number.

11.3 Payment shall be made by way of a check or by wire transfer on the basis of
[ * * * ] from receipt of each shipment of Containers delivered to Buyer’s
locations for US Containers and [ * * * ] from receipt of each shipment of
Containers delivered to Buyer’s locations for Caribbean and Puerto Rico preforms
or Containers.

 

12. RIGHT OF REJECTION

12.1 Buyer shall by written notice (“Notices of Rejection”) reject any
Containers found not to be in accordance with this Agreement (“Rejected
Containers”).

12.2 The Notice of Rejection shall indicate the reason(s) for rejection and the
quantity of Rejected Containers.

12.3 Buyer may return the Rejected Containers to Seller at Seller’s risk and
expense upon approval by Seller’s Quality Assurance and Technical Manager and
title to the Rejected Containers shall revert to Seller at the point and time of
shipment to Seller.

12.4 Seller shall within a reasonable time either replace the Rejected
Containers with Containers produced in accordance with this Agreement or
reimburse Buyer for the Rejected Containers.

12.5 Seller shall pay all reasonable direct expenses incurred by Buyer arising
out of or in connection with Rejected Containers.

 

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13. QUALITY AND TECHNICAL SUPPORT

13.1 Seller agrees that it will provide all Containers to Buyer in accordance
with the specifications and warranty provisions set forth herein, and will
maintain an overall quality and service level with respect to the Containers
covered under this Agreement equal to or better than that of Buyer’s other
suppliers of similar plastic Containers.

13.2 Seller agrees to provide, at its sole cost and expense, reasonable
professional, technical and quality support services related to manufacture and
use of the Containers to Buyer on a prompt and timely basis.

13.3 Buyer shall provide Seller with an annual defective material report and
relevant plant surveys comparing Seller’s quality and service levels with those
of Buyer’s other Sellers of comparable Containers.

13.4 If Seller’s quality or service with respect to a specific type of Container
is [ * * * ] of Container, a reasonable period of time shall be granted to
Seller to [ * * * ] without holding Seller as being in breach of this Agreement
provided that Seller promptly and diligently pursues such performance level
improvements. During such time period, Buyer may reduce the quantity of
Containers purchased from Seller, without obligation [ * * * ].

13.5 In addition to the requirements of this section regarding “quality and
service”, the Buyer and Seller agree that in the event that a particular
quality, service or packaging issue arises at any particular cell location,
Seller shall have [ * * * ] in which to resolve the issue, and that if a
successful resolution is not achieved in such time period, then Seller shall not
be permitted to produce the particular package at the particular location until
final resolution is demonstrated to and accepted by Buyer. Buyer shall have the
right to secure such Containers from an alternate source during such period of
noncompliance; however, Buyer shall work with Seller to secure such Containers
from Seller’s alternate locations where possible and where Buyer is not freight
disadvantaged.

13.6 Additionally, Seller agrees to participate in the Pepsi Bottle Audit
Process including but not limited to actively participating in Pepsi filling
plant audits, completing bottle quality evaluations of audit bottles, providing
a formal report on corrective actions, and performing corrective actions. [ * *
* ] with the Pepsi filling location as specified in the standard Pepsi Corporate
Bottle Audit procedure.

 

14. FREIGHT AND WAREHOUSING

14.1 The parties agree to work together to develop and implement additional or
alternative transportation arrangements in an effort to reduce freight costs
throughout the Term. The parties agree that they shall meet prior to September 1
of each Contract Year or 30 days prior to Seller’s carrier negotiations in order
to discuss freight procurement strategy and discuss ways to reduce freight cost.

14.2 Seller shall make best efforts to provide Buyer with most cost effective
freight rates. Seller shall notify Buyer of potential freight cost or supply
sourcing changes for the upcoming Contract Year by September 1. Seller shall
quote freight rates from a minimum of three freight companies for each Buyer’s
plants for the following Contract Year at Buyer’s request. [ * * * ]

 

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14.3 Buyer shall pay [ * * * ] the lowest of the Seller’s three freight
quotations unless mutually agreed otherwise, with the exception of the
following:

(a) The parties agree that the Buyer shall pay the lower of the two freight
rates when Seller elects to utilize a supporting plant in addition to the
Seller’s primary hub plant to support a cell location.

b) In the event that Seller closes, sells or otherwise disposes of a supply
plant during the Term, [ * * * ] the parties agree that Seller shall be
responsible for the Incremental Freight Costs for the balance of the contract
term. As used herein “Incremental Freight Costs” shall mean those freight costs
that arise from shipping Containers from Seller’s new supply plant as compared
to Seller’s original supply plant as referenced in Schedule B2.

14.4 Buyer shall continue to support Seller to move from local warehouses to
direct shipment of Containers from Seller’s source location to Buyer’s filling
locations. Until such time as Seller can document sustained direct shipment
performance equal to or better than the on time, wrong load, and damaged load
2000-2001 baseline performance, Seller will continue to utilize the warehouses
(including, but not limited to, Liberty, Emak, MCS) to support Buyer’s business
at Seller’s cost.

 

15. WARRANTY

15.1 ALL WARRANTIES RELATING TO THE PRODUCTS ARE EXPRESSED IN THIS AGREEMENT
ONLY. THERE ARE NO OTHER WARRANTIES, EXPRESSED OR IMPLIED.

15.2 Seller represents and warrants:

(a) that the Containers it manufactures pursuant to Buyer’s orders will:

(i) conform in all respects to the specifications set forth in Schedule A;

(ii) be merchantable and fit for the purpose for which they are intended;
namely, a commercially acceptable container for soft drink, isotonic or bottled
water products; and

(iii) meet Buyer’s applicable shelf life for the mutually agreed period
specified in the applicable specification for the specific soft drink product;

(b) that the Containers and materials which Seller supplies and uses in
connection with the manufacture of the Containers:

(i) will be free of defects in materials and workmanship;

(ii) are permissible under presently existing regulations under the Federal Food
Additives Amendment and any other applicable federal rules and regulations and
under applicable state laws; and

 

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(iii) are neither unsafe food additives nor adulterated nor misbranded and the
Containers manufactured from such substances may be introduced into interstate
commerce within the provisions of the Federal Food, Drug and Cosmetic Act;

(c) that each pallet of Containers shall have attached thereto a slip indicating
the date and shift when such Containers were produced or such other
documentation as is mutually acceptable; and

(d) that each Container shall be marked (i.e., ink jet ink) indicating the date
and shift when such Containers were produced or such other documentation as is
mutually acceptable.

15.3 If the Containers do not conform to the warranties contained in this
section, Seller shall use its best efforts to replace in a timely manner the
nonconforming Containers. If Seller does not so replace the nonconforming
Containers, Seller shall [ * * * ] such defective Containers, based on the [ * *
* ]. In addition to the foregoing and any other rights and remedies, and subject
to Section 15.4 below, with respect to any claim for such nonconforming
Containers, [ * * * ]

(a) the [ * * * ] of such defective Containers,

(b) the [ * * * ] of such defective Containers (as determined by the [ * * * ]
with respect to such [ * * * ]),

(c) the [ * * * ] of such defective Containers and their [ * * * ] of the
defective Containers, and

(d) any [ * * * ] under this Agreement, which are [ * * * ] Containers.

(e) Seller shall not be responsible to Buyer [ * * * ] and Seller shall have no
liability [ * * * ].

15.4 Seller agrees to indemnify and hold Buyer harmless from and against any and
all costs, losses, liabilities, damages, claims or expenses arising out of
third-party claims for property damage or personal injury (including without
limitation legal fees and expenses incurred in defending against any such
claims) incurred by Buyer and caused in whole or in part by any breach by Seller
of the warranties set forth in this section, provided that Buyer gives Seller
prompt notice of such claim, cooperates in the defense thereof (which shall
include such matters as providing Buyer employees for interview, deposition and
testimony at trial and production of relevant documents) and grants Seller the
right to handle, defend or otherwise dispose of such claim as it may determine.

 

16. FORCE MAJEURE

16.1 Neither party shall be liable for failure or delay in performance under
this Agreement due in whole or in part to causes such as an act of God, strike,
lockout or other labor dispute, civil commotion, sabotage, fire, flood,
explosion, acts of any government, unforeseen shortages or unavailability of
fuel, power, transportation, raw materials or supplies, inability to obtain or
delay in obtaining necessary equipment or governmental approvals, permits,
licenses or allocations, and any other causes which are not within the
reasonable control of the party affected, whether or not of the kind
specifically enumerated above.

 

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16.2 Either party affected by any such circumstances shall promptly give written
notice thereof to the other party. During any such period, Seller shall allocate
its available supply among its customers in the same proportion as existed
before the occurrence of any such circumstances. Performance of this Agreement
shall be resumed as quickly as reasonably possible after the party affected by
any such circumstances has notified the other party that the condition(s) is/are
remedied.

16.3 Buyer’s failure to pay Seller amounts due under this Agreement shall not
under any circumstances be considered a Force Majeure.

 

17. PATENTS, TRADEMARKS, COPYRIGHTS AND UNFAIR COMPETITION

17.1 Seller guarantees to Buyer that the Containers manufactured and the use
thereof in the form furnished by Seller will not in itself infringe any valid
United States patent. In the event of claim of any such patent infringement and
provided that Seller is promptly notified thereof and given the complete
defense, Seller as its only obligation agrees to defend, indemnify and hold
Buyer harmless from and against any awards or claims against Buyer as the result
of such actual or alleged infringement. Upon the institution of any suit or
action alleging infringement against Buyer, Seller may:

(a) pay the royalties claimed, or

(b) furnish non-infringing Containers, provided they are acceptable to Buyer, or

(c) at Seller’s sole option, continue to supply the allegedly infringing
Containers, provided that in such event Seller shall reimburse Buyer for any
loss which Buyer sustains on account of infringement if in such suit or action
it is held that the manufacture or use of such Containers did infringe a valid
United States patent, provided that Buyer shall not be reimbursed for any
incidental or consequential damages arising from such items as loss of profits
or opportunity due to patent infringement and in no event shall Seller be
responsible for damages in excess of the cost of the Containers purchased under
this Agreement and the contents thereof.

17.2 Notwithstanding the foregoing, Buyer agrees to indemnify and defend Seller
from and against any and all court assessed decrees and costs resulting from
infringement of any United States patent to the extent that such infringement
arises from any patent or technology licensed to or by Buyer, or any designs
furnished by Buyer or expressly required by Buyer, provided Seller gives prompt
notice of the alleged infringement, provides reasonable assistance and
information necessary to the defense of such claim, and allows Buyer full
opportunity to defend or dispose of such claim.

 

18. CANCELLATION UPON DEFAULT

18.1 Either party may terminate this Agreement upon written notice in the event
of a material default of the terms and conditions hereof, which remains uncured
after thirty (30) days of receiving a written description of the nature of the
default from the non-breaching party. Nothing in this section shall be construed
to preclude the parties from their other respective remedies provided at law or
in equity, provided that such remedies are not precluded by the terms and
conditions of this Agreement. Buyer shall have no liability for disposal of the
capital assets should Buyer cancel under this section.

 

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19. CONFIDENTIALITY

19.1 Each party shall keep confidential the terms of this Agreement and all
disclosures made by the other party containing business or technical information
relating to the subject matter hereof, and shall neither disclose such
information to anyone else nor use it for the receiving party’s separate
benefit. This confidentiality obligation shall not apply to information that the
receiving party can show was already known to it, became available from another
party who had a right to disclose it, entered the public domain without its
fault, or was subsequently developed independently of the disclosure. This
confidentiality obligation shall survive the termination or expiration of this
Agreement, for any reason, for three years.

 

20. INTERPRETATION

20.1 When applicable, use of the singular form of any word shall mean or apply
to the plural, and the neuter form shall mean or apply to the feminine,
masculine or plural. The captions in this Agreement, including the headings to
sections and paragraphs, are for convenience of reference only and shall not
affect its interpretation or construction.

 

21. GOVERNING LAW

21.1 This Agreement shall be governed by and enforced in accordance with the
laws of the State of New York, without regard to conflict of laws provisions.

 

22. PRIOR AGREEMENTS AND MERGER

22.1 This Agreement contains the entire agreement of the parties and there are
no agreements, representations or understandings with respect to the subject
matter hereof other than those stated or referred to herein. This Agreement
supersedes any and all other agreements, representations or understandings,
written or oral, between the parties to this Agreement with respect to the
subject matter hereof made prior to or contemporaneously herewith.

 

23. AMENDMENTS

23.1 This Agreement may not be amended, except in a writing executed by
authorized officers of both parties. All such revisions shall as of their
effective date automatically become a part of this Agreement.

 

24. EXHIBITS

24.1 All exhibits and schedules or attachments to exhibits or schedules
referenced in this Agreement as annexed hereto are incorporated herein by
reference and made a part hereof. From time to time any exhibit, schedule or
attachment may be amended. Once amended, the restated exhibit, schedule or
attachment incorporating such amendments shall be executed in accordance with
Section 23.1 hereof and then annexed to this Agreement.

 

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25. GENERAL

25.1 If any provision of this Agreement, whether a paragraph, sentence or
portion thereof, is determined by a court of competent jurisdiction to be null
and void or unenforceable, such provision shall be deemed to be severed, and the
remaining provisions of this Agreement shall remain in full force and effect.
Neither party shall be deemed to have waived any right, power, privilege or
remedy unless such waiver is in writing and duly executed by it. No failure to
exercise, delay in exercising or course of dealing with respect to any right,
power, privilege or remedy shall operate as a waiver thereof by either party or
of any other right, power, privilege or remedy. No exercise or partial exercise
of any right, power, privilege or remedy shall preclude any other or further
exercise thereof by either party or the exercise of any other right, power,
privilege or remedy by either party.

 

26. NOTICES

26.1 Any notice required or permitted hereunder shall be in writing and shall be
sent to the address given below for the party to be notified, unless such party
has previously notified the other of a change of address, in which case the
notice shall be sent to such changed address:

 

Seller:    Constar, International    Attn: President    One Crown Way   
Philadelphia, PA 19154    Telephone: 215-698-5089    Facsimile:
                             Buyer:    New Century Beverage Company    Attn:
                                One Pepsi Way    Somers, NY 10589-2201   
Telephone: 914/767-6000    Facsimile: 914/767-1350

 

27. ASSIGNMENT OR CHANGE OF CONTROL

27.1 This Agreement shall not be assigned by either party without the prior
written consent of the other.

27.2 Upon a Change of Control (as defined below), Buyer may terminate this
Agreement pursuant to Section 18. For the purposes of this Agreement, “Change of
Control” shall mean the occurrence of one or more of the following events:
(i) an initial public offering consummated by Seller in which any Person or
group of related Persons, together with any affiliates thereof, purchases
greater than 20% of the securities offered; (ii) any Person or group of Persons
other than Seller or a group controlled by Seller shall become the owner,
directly or indirectly, beneficially or of record, of shares representing
greater than 20% of the issued and outstanding capital stock of Seller;
(iii) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of greater than 20% of the United States based
PET assets of Seller to any Person or group of related Persons, together with

 

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any affiliates thereof; or (iv) the adoption of any plan or proposal for the
liquidation or dissolution of Seller. For the purposes of this section, “Person”
shall mean an individual, partnership, corporation, unincorporated organization,
trust or joint venture, or a governmental agency or political subdivision
thereof.

 

28. EXCLUSIVITY

28.1 Seller covenants and agrees that during the Term hereof it shall not
produce, manufacture, distribute, sell or otherwise supply beverages, either
directly or indirectly, that compete, either directly or indirectly, with the
production, manufacture, distribution or sale of carbonated and noncarbonated
beverages, isotonic beverages or fruit beverages of Buyer, its division,
subsidiaries or affiliates.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

Constar     New Century Beverage Company Per:  

/s/ Mike Hoffman

    Per:  

/s/ Mitchell J. Adamek

  President       Date:  

October 17, 2002

    Date:  

October 17, 2002

      New Century Beverage Company       Per:  

/s/ J. A. Kaluski

      Date:  

October 17, 2002

 

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SCHEDULE A

CONTAINER SPECIFICATIONS

The Container Specifications shall be the “Pepsi-Cola North America PET
Specifications and Qualification Manual”, issue date [ * * * ] for the Buyer
which was submitted and registered to Seller in care of, but not limited to, the
following person(s):

Phil Kraft, Senior Project Engineer

Jim Meyman, Corporate Quality Director

Mark Newcott, Director – Customer Technical Services

The Container Specifications sets forth Buyer’s bottle specifications and
methodology in regards to its:

 

  1. Bottle Design Guidelines,

 

  2. PET Package Qualification Process, and

 

  3. PET Bottle Specifications and Test Methods

The Container Specifications will be updated periodically and revisions issued
to Seller in care of the position(s) listed above (if appropriate) for Seller’s
use in making PET bottles for the Buyer.

 

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SCHEDULE B1

Base Volume Forecast (in Thousand Containers)

Based on [ * * * ] Forecast

 

     

Cell

  

Container

  

[ * * * ]

Forecast

(M units)

  

2003

Volume

(M units)

Cell 1    Havre de Grace    Total    [ * * * ]    [ * * * ]       38mm    [ * *
* ]    [ * * * ]       28mm    [ * * * ]    [ * * * ] Cell 2    Orlando    Total
   [ * * * ]          38mm    [ * * * ]          28mm    [ * * * ]    Cell 3   
Dallas    Total    [ * * * ]    [ * * * ]       38mm    [ * * * ]    [ * * * ]
      28mm    [ * * * ]    [ * * * ] Cell 4    Newark    Total    [ * * * ]    [
* * * ]       38mm    [ * * * ]    [ * * * ]       28mm    [ * * * ]    [ * * *
]    Total       [ * * * ]    [ * * * ]

* Note: 38mm refers to any Containers with a 38mm diameter finish. 28mm refers
to any Containers with a 28mm diameter finish.

 

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SCHEDULE B2

Seller Source Locations and Buyer Filling Locations

Seller’s Source Locations below will be the primary supply point over the term
of this agreement.

Buyer’s Filling Locations are subject to change beyond the 2003 contract year as
per Section 4.2.

Freight rates are subject to change as per Section 14.

 

2003-2007

Seller’s Source Cell and

Supply Plant

  

2003

Buyer’s

Filling

Locations

  

Packages

Cell 1- Havre de Grace

      Charlotte    Baltimore, Roanoke    [ * * * ] Charlotte    Roanoke    [ * *
* ] Clark Rd or Old Bay Lane    Baltimore    [ * * * ] Clark Rd or Old Bay Lane
   Cheverly    [ * * * ] Clark Rd or Old Bay Lane    Marion    [ * * * ] Clark
Rd or Old Bay Lane    Newport News    [ * * * ] Clark Rd or Old Bay Lane   
Philadelphia    [ * * * ] Clark Rd or Old Bay Lane    Roanoke    [ * * * ] Clark
Rd or Old Bay Lane    Williamsport    [ * * * ] Clark Rd or Old Bay Lane   
Whytheville    [ * * * ]

Cell 2- Orlando

      Orlando    Jacksonville    [ * * * ] Orlando    Miami    [ * * * ] Orlando
   Orlando    [ * * * ] Orlando    Tampa    [ * * * ]

Cell 3- Dallas

      Birmingham    Collierville    [ * * * ] Charlotte    Collierville    [ * *
* ] Collierville    Collierville    [ * * * ] Collierville    Reserve    [ * * *
] Dallas    Mesquite    [ * * * ] Dallas    Houston    [ * * * ] Dallas    San
Antonio    [ * * * ] Dallas    Tulsa    [ * * * ] Houston    Houston    [ * * *
] Houston    San Antonio    [ * * * ] Reserve    Reserve    [ * * * ]

Cell 4- Newark

      Hebron    Dayton    [ * * * ] Hebron    Huntington    [ * * * ] Hebron   
Johnstown    [ * * * ] Hebron    Laurel    [ * * * ] Hebron    Twinsburg    [ *
* * ]

 

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SCHEDULE C

Contract Prices for Containers

(Pricing Per One Thousand Containers)

Conversion Cost shall apply for all Carbonated Soft Drink Containers and
Non-Carbonated Containers over the term of this agreement. [ * * * ] to be
specified prior to National Rollout and to be provided on Pepsi Price List.

 

      Container Size and Gram Weight

Contract Year

   12 oz.    12 oz.    16 oz.    16.9 oz.    20 oz.    24 oz.    1 liter    2
liter    3 liter    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]   
[ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]

Year 1

   January 1, 2003 through December 31, 2003
[ * * * ] Resin Cost    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ *
* * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ] Conversion    [ * * *
]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]
   [ * * * ]    [ * * * ] Total    [ * * * ]    [ * * * ]    [ * * * ]    [ * *
* ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]

Year 1

   January 1, 2003 through December 31, 2003
[ * * * ] Resin Cost    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ *
* * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ] Conversion    [ * * *
]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]
   [ * * * ]    [ * * * ] Total    [ * * * ]    [ * * * ]    [ * * * ]    [ * *
* ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]

Year 2

   January 1, 2004 through December 31, 2004
[ * * * ] Resin Cost    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ *
* * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ] Conversion    [ * * *
]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]
   [ * * * ]    [ * * * ] Total    [ * * * ]    [ * * * ]    [ * * * ]    [ * *
* ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]

Year 3

   January 1, 2005 through December 31, 2005
[ * * * ] Resin Cost    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ *
* * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ] Conversion    [ * * *
]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]
   [ * * * ]    [ * * * ] Total    [ * * * ]    [ * * * ]    [ * * * ]    [ * *
* ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]

Year 4

   January 1, 2006 through December 31, 2006
[ * * * ] Resin Cost    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ *
* * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ] Conversion    [ * * *
]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]
   [ * * * ]    [ * * * ] Total    [ * * * ]    [ * * * ]    [ * * * ]    [ * *
* ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]

Year 5

   January 1, 2007 through December 31, 2007
[ * * * ] Resin Cost    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ *
* * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ] Conversion    [ * * *
]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]
   [ * * * ]    [ * * * ] Total    [ * * * ]    [ * * * ]    [ * * * ]    [ * *
* ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]

Contract Prices, based on gram weights indicated, are based on an [ * * * ].

 

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SCHEDULE C

Label and Label Application Prices for Containers

(Pricing Per One Thousand Containers)

For all Containers covered in this agreement:

 

Size

  

2002 [ * * * ]

[ * * * ]

  

[ * * * ]

Label Application Price

  

[ * * * ]

Label Application Price

  

[ * * * ]

Label Application Price

12 oz.

   [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]

16 oz.

   [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]

16.9 oz.

   [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]

20 oz.

  

[ * * * ]

[ * * * ]

   [ * * * ]    [ * * * ]    [ * * * ]

24 oz.

  

[ * * * ]

[ * * * ]

   [ * * * ]    [ * * * ]    [ * * * ]

1 liter

  

[ * * * ]

[ * * * ]

   [ * * * ]    [ * * * ]    [ * * * ]

2 liter

   [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]

3 liter

   [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ]

 

* [ * * * ] subject to annual price adjustments [ * * * ].

 

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SCHEDULE D

EXAMPLES OF DETERMINING PRICE CHANGE

DUE TO CHANGE IN RESIN PRICING

An example of the calculation used for determining price changes based on resin
cost changes is as follows:

Bottle price change per 1,000 Containers = A minus B where,

 

A   =  

New Actual Resin Cost =

 

[ (Bottle Gram Weight X 1000) ÷ 453.6 ] x (New Resin Cost in Cents/Pound)

  B   =  

Current Actual Resin Cost =

 

[ (Bottle Gram Weight X 1000) ÷ 453.6 ] x (Current Resin Cost in Cents/Pound)

 

The above formula is illustrated for a [ * * * ] gram, 2-liter bottle (currently
priced at [ * * * ] resin decrease change as follows:

 

Price Change per Thousand Containers      =      A minus B      where A      =
     [ * * * ]           =      [ * * * ]      and where B      =      [ * * * ]
          =      [ * * * ]      so that A minus B      =      [ * * * ]     
     =      [ * * * ]     

 

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SCHEDULE E

SECONDARY PACKAGING INFORMATION

 

SIZE

 

BOTTLES/

PALLETS

 

LAYERS/

PALLET

 

BOTTLES/

LAYER

 

# OF
STRAPS

 

# OF TIER
SHEETS

 

TOP
FRAME

 

Stretch Wrap

 

TOTAL
PALLET
HEIGHT*
with Plastic Pallet

12 oz.   [ * * * ]   [ * * * ]   [ * * * ]   4   [ * * * ]   1   [ * * * ]  
[ * * * ] 16 oz.   [ * * * ]   [ * * * ]   [ * * * ]   4   [ * * * ]   1  
[ * * * ]   [ * * * ] 16.9 oz.   [ * * * ]   [ * * * ]   [ * * * ]   5  
[ * * * ]   1   [ * * * ]   [ * * * ] 20 oz.   [ * * * ]   [ * * * ]   [ * * * ]
  5   [ * * * ]   1   [ * * * ]   [ * * * ] 24 oz.   [ * * * ]   [ * * * ]  
[ * * * ]   5   [ * * * ]   1   [ * * * ]   [ * * * ] 1 liter   [ * * * ]  
[ * * * ]   [ * * * ]   4   [ * * * ]   1   [ * * * ]   [ * * * ] 2 liter  
[ * * * ]   [ * * * ]   [ * * * ]   4   [ * * * ]   1   [ * * * ]   [ * * * ] 3
liter   [ * * * ]   [ * * * ]   [ * * * ]   4   [ * * * ]   1   [ * * * ]  
[ * * * ]

 

* Includes pallet and top frame.

Plastic Pallet Size = 44” X 56” x 4.38”

Pallets and top frames are the property of Seller and shall be returned to
Seller.

 

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SCHEDULE F

[ * * * ] CALCULATIONS

An example of the calculation used for determining [ * * * ]:

[ * * * ]

 

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SCHEDULE G

SELLER’S [ * * * ]

 

[ * * * ]    [ * * * ]    [ * * * ] [ * * * ]    [ * * * ]    [ * * * ]    [ * *
* ]    [ * * * ]    [ * * * ]    [ * * * ] [ * * * ]    [ * * * ]    [ * * * ]
   [ * * * ]    [ * * * ]    [ * * * ]    [ * * * ] Total    [ * * * ]    [ * *
* ]

 

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