Sample Business Contracts

Framework Development and Framework Delivery Contract - IFCO Systems GmbH and Schoeller Wavin Systems AG

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                              [English translation]

                            FRAMEWORK DEVELOPMENT and
                           FRAMEWORK DELIVERY CONTRACT

by and between

Ifco Systems GmbH, represented by managing directors Wolfgang Orgeldinger and
Karl Pohler, 15 Zugspitzstrasse, Pullach 82049, Germany,

                                                       hereinafter Ifco,


Schoeller Wavin Systems AG, represented by its managers Walter Hirsch and
Christian Nobs, Route de la Condemine, Romont 1680, Switzerland,

                                                       hereinafter SWS,

entering into the following contract:

1.) Preface

Ifco is the owner of a worldwide pool of reusable, collapsible multipath plastic
containers (hereinafter crates) for the transport of fruits and vegetables as
well as other goods. SWS manufactures such crates.

Methods for production of, and the technology of, these crates have been
steadily improved in past years, resulting in Ifco's having an number of
different crates currently in circulation in its pool. Ifco, in response to a
need for standardization, which reduces the number of crate types, would like to
partly renew and partly expand the crate pool.

Cooperation between the parties additionally shall contribute to continuous
improvement of the crates and/or joint development of new types of crates.

Since August 22, 1997, a contract regarding Development and purchase of
multi-path plastic containers (1997 supply agreement) has been in effect. At the
time this contract was entered into, Ifco operated under the name Ifco
International Food Container Organization GmbH. On SWS's side, the firm
Schoeller Plast Industries GmbH was partner to the agreement. In a December 1998
contract, Schoeller Plast Industries GmbH, with Ifco's consent, transferred all
rights and duties from the 1997 supply agreement to SWS, effective December 31,
1998. The latter at that time was operating under the name Schoeller Plast AG.
In October 2001, MTS Ecologistics Administration GmbH was merged into Ifco. As a
consequence of this, Ifco inherited the logistics business that was previously
carried on by MTS Ecologistics Administration GmbH.

The parties intend to use this contract to produce a new wording of all rights
and duties from previous contracts by and between them.


2.) Product.

As part of this contract, the crate types specified in greater detail in
attachments 1 and 4 (designated in this contract as Ifco products) are to be
produced and delivered by SWS to Ifco. If the parties agree to the introduction
of new crate types in this contract, then attachments 1 and 4 shall be
appropriately updated.

Two basic production paths shall be provided:
-production from recycled material, and
-production from new material.

Recycled material shall normally be obtained by having SWS take old crates from
Ifco to its manufacturing shops and grind (shred) them down into a granulate,
and produce new crates from this granulate. Ifco shall be obligated to make
ready at SWS shops at least a 2-day, and at most a 2-week supply of crates for
shredding, calculated according to the average daily requirements as per the
particular valid binding production and delivery plan.

By way of exception, after prior agreement of the parties to the production
plan, SWS shall bring mobile shredders to the Ifco depots, in order to grind
crates provided by Ifco into granulate there. The cost of delivering the mobile
shredders to and from the Ifco depots shall be borne by Ifco in an amount which
was communicated by SWS to Ifco prior to the agreement on use of the mobile
shredder. This granulate shall be transported by Ifco at its own expense to the
production shops of SWS. Ownership of the granulate shall remain with Ifco until
crates are produced from this granulate.

With both methods for obtaining recycled material, SWS, with in the framework of
the agreed-on price, shall be obligated to responsibly carry out all the
production steps after delivery of crates until obtaining usable granulate. In
case the shredder is at SWS's plant, Ifco shall be obligated to transport the
Fcrates at it expense to the SWS plant. Any further transport of ground material
from the shredding plant shall become SWS's financial responsibility. Only in
the case of mobile shredders shall Ifco make available crates for shredding at
the agreed-upon Ifco depot, as well as transporting the completed granulate at
its own costs to the production shops of SWS.

Ifco may demand that SWS take crates back and shred them only if the recycled
material obtained thereby can be processed within two weeks for production of
crates, for which there are binding orders from Ifco. It shall be assumed that
the processing will result in a 2% loss of quantity of granulate. If demanded of
it, SWS shall be obligated to keep enough shredder capacity available that the
entire production from recycled material which is to take place according to the
binding production and delivery plan, may be carried out from recycled material.
SWS shall be obligated to come to agreement in the binding production and
delivery plan, regarding the allocation demanded by Ifco on usage of recycled
and new material. If Ifco does not make timely deliveries of crates for
shredding, SWS shall be entitled to manufacture the crates named in the binding
production and delivery plan from new material.

SWS shall produce the minimum delivery quantities set in item 3.2) in German and
Swiss plants. SWS may demand that production be switched to other or additional
locations, as long as this shall not result in higher transport costs for Ifco,
or if the additional costs are assumed by SWS.
SWS shall be obligated to produce quantities of crates that exceed this in other
non-European countries, if Ifco demands it, and takes on an obligation to take
delivery of at least 500,000 units of Ifco products


annually. If Ifco shall take delivery of 1,000,000 units of Ifco products, then
the provisions hereunder shall be valid for delivery from this other production
site. In the event that Ifco shall take delivery of between 500,000 and
1,000,000 units of Ifco products, the parties shall come to a prior agreement on
a reasonable sharing by Ifco in SWS's additional costs of production at the
other site. If SWS shall not meet the above-named obligation, then, without
exclusion of other rights and claims, Ifco shall be entitled to commission a
third party to produce in the other country. In this instance Ifco shall ensure
that the third party enters into a licensing agreement with SWS under reasonable
terms, and that the crates produced by the third party shall be delivered to the
region hereunder or to other regions, such as the United States, filled only
with fruits or vegetables.

3.) Quantities

Beginning on January 1, 2002, SWS shall be obligated to maintain, in a form
always ready for production, at least 12 shape molds for Ifco products according
to the description in attachment 2 hereunder.

Both parties shall pursue the goal that not later than September 30, 2002, SWS
shall at all times be prepared to come up to the annual 16,000,000-crate
production capacity.

SWS shall be obligated not later than September 30, 2002, to maintain 19 shape
molds for production of Ifco products. If, due to technical changes, SWS shall
manage to achieve an annual 16,000,000-crate production capacity with fewer
shape molds, then the acquisition of this smaller number of shape molds by
September 30, 2002, shall suffice.

SWS shall only be obligated to purchase or lease additional shape molds, above
and beyond these shape molds, if Ifco shall obligate itself to take delivery of
an additional minimum of 1,200,000 crates for each additional shape mold for
three years from the time the additional shape mold is made available. Should
the additional shape molds only be needed to serve the Argentina market, then
the minimum delivery of 1,200,000 crates per additional shape mold shall be
credited to the crates produced in Argentina by subordinate licensing and with
tool amortization.

Ifco shall be obligated to take annual delivery from SWS's German and Swiss
plants of not less than 7,000,000 Ifco products of all types (all of the various
types of crates combined) from January 1, 2002 until December 31, 2006.

SWS shall be obligated to increase the annual produced and delivered quantity to
19,000,000 crates, if Ifco has, six months in advance, placed a binding order
for this quantity hereunder.

4.) Production plan

Not later than 6 weeks prior to the start of a quarter, the parties shall agree
to binding quarterly production and delivery plans. These shall specify in
obligatory terms the following for the parties:
- the quantity per type of crate to be delivered, as per attachments 1 and 4.
- the means of production, whether recycled or new material, for each crate
- which types of crate shall be provided and taken delivery of each week, and in
what quantity.
- the number of crates SWS shall shred each week, processing them into


- the production plant and if necessary the country of production.

In addition to the binding production and delivery plans as per 4.1), the
parties shall determine with each other non-binding continuing production and
delivery plans for each 12-month period to follow.

The explanations necessary for the production and delivery plans shall be issued
by Ifco solely from its central office at 15 Zugspitzstrasse, Pullach 82049,

5.) Delivery

Delivery of produced crates, and their collection by Ifco, shall take place
weekly according to the binding production and delivery plan.

SWS shall have met its obligation if it makes available crates in the agreed
quantity per type at its own production shops in the proper packaging (see 5.4)
for Ifco to take delivery of.

Risk shall have been passed in regard to taking delivery when the goods pass
over the edge of the transport vehicle.

SWS shall pack the crates on Europalettes to be specified in more detail by
Ifco, and shall, if Ifco desires it, enclose these in the manner customary in
trade, subject to reimbursement by Ifco in the amount of 0.05 euros per crate.

Ifco shall assume the cost and risk of loading delivered crates and transporting
them to Ifco depots.

6.) Default

The weekly delivery deadlines agreed on in the binding production and delivery
plan shall be binding. If SWS shall default in delivery, then SWS, without
exclusion of other rights and claims by Ifco, shall pay the following default
penalties to Ifco:
- for default of 2 weeks (8 to 14 days), 0.05 euros per crate.
- for default of 3 weeks (15 to 21 days), 0.10 euros per crate.
- after the third week (more than 22 days), 0.15 euros per crate.

Ifco shall only be authorized to invoice these contractual penalties at the end
of the year with the invoices for deliveries by SWS.



SWS shall transmit a written communication to Ifco 7 working days before each
delivery deadline regarding which products are ready for delivery. This delivery
message shall indicate the location at which the goods to be delivered may be
checked by Ifco prior to taking delivery.

7.) Warranty

The parties agree that the granulate used by SWS and the crates to be delivered
by SWS shall exhibit the condition indicated in attachment 4.

However, Ifco shall bear responsibility for ensuring that the crates that are to
be processed into recycled items, shall have originally been produced by SWS,
having no impurities that make them unsuited for production of new crates free
of defects. Excepted from this shall be impurities deriving from SWS's area of

If the crates delivered by SWS contain base materials that may not be used for
food transport as of the time of production, then SWS, with the proviso of the
regulation in the previous paragraph, shall take back the crates and deliver new
crates to Ifco at its own expense which do not exhibit this defect.

SWS shall be obligated to carry out, at its own expense, tests of base materials
that are to be used for food transport, according to the particular valid
guidelines of the European Union.

In an instance that crates produced by SWS, or the production of these crates,
shall violate proprietary rights of third parties, SWS shall hold Ifco harmless
in a relation per se from all claims of such third party for violation of
proprietary rights. No further duties for SWS to make good shall exist. SWS
shall not be obligated to do its own patent research.

Ifco shall immediately notify SWS of claims submitted to Ifco. SWS shall
undertake to defend against these claims at its own expense and independently.
If claims shall be acknowledged by SWS, or if SWS or Ifco shall be convicted,
then SWS shall compensate the creditor directly for the appropriate amounts, or
shall assume the invoice for execution of judgment.

Ifco shall be authorized to refuse delivery of Ifco products that deviate from
the agreed-on condition, and not take delivery of them. Ifco shall have the
right, through submission of a written communication to SWS, to assert a claim,
in which the rejected products and the reason for rejection shall be indicated.
However, such notifications of rejection for technical inadequacies that were
able to be determined by their nature or through spot checks, shall only be
effective if they shall be submitted within fourteen working days after the
crates to be rejected were made available at SWS for delivery. For technical
inadequacies which, due to their nature or through spot checks, could not be
determined, rejection notices shall only be valid, if they are submitted within
four months after the crates to be rejected were made available at SWS for
delivery. Ifco may demand that, within a reasonable time after receipt of such
rejection notices, SWS exert itself to the best of its ability to eliminate the
defect and deliver defect-free crates to Ifco. When rejecting crates, Ifco may,
as it chooses, either demand a credit for the invoice in question, or delivery
of defect-free crates, without Ifco incurring costs thereby. If SWS so demands,
Ifco shall return all rejected crates to SWS at the latter's expense. SWS shall
assume all transportation costs, including packaging, loading, dispatching and
off-loading of such crates, as long as the items shall be returned from
locations in Europe.


The parties are in agreement that a technical defect shall exist in an instance
where crates break, only if a crate of the 64xx generation (manufacture with
64xx shape molds) breaks, in spite of usage in accordance with directions, and
while complying with SWS handling instructions (see attachment IV) within five
years following initial delivery, and the breakage rate of 1.25% per cycle is
exceeded. SWS shall bear the burden of proof that usage was not in accordance
with directions, or that the SWS handling instructions were not complied with.

If in accordance with this, a technical defect does exist, then, if Ifco demands
it, SWS shall take back the following percentages of broken crates which exceed
the above-mentioned breakage rate, and replace them with new crates:

     Age of Ifco  products             Percentage of broken Ifco products which
                                       exceeds the breakage rate, which shall be
                                       taken back by SWS and replaced.

     up to two years                                   100%

     from two to three years                            75%

     from three to four years                           50%

     from four to five years                            35%

If the age of Ifco products cannot be individually determined, the age shall be
determined statistically in such a way that at the end of each calendar year

a)   The number and age (by years) of all crates of the 64xx generation which
     have been delivered by SWS to Ifco, are determined, and
b)   The relationship derived from this of the statistical age of the crates is
     based on the previous calculation of duties to take back. For an example,
     see attachment V.

However, this shall only be valid with the understanding that all crates whose
age exceeds five years shall be removed from the computation. If this shall not
be possible, then the parties shall come to a different agreement regarding a
reasonable rule.

The breakage rate hereunder shall be determined from the number of broken crates
discarded by Ifco in a calendar quarter of the 64xx type (according to Ifco
breakage statistics), divided by the number of 64xx crates retained during that
quarter by Ifco (according to the return vouchers or goods receipt vouchers for
returns from customers), times 100.

In order to check the correctness of Ifco's breakage rate data, SWS shall have
the right to inspect Ifco's breakage statistics, and audit the figures submitted
by Ifco using Ifco's books, as well as to conduct on-location checks of broken
crates. In this regard, at its own expense, SWS may make use of persons who are
obligated to silence due to their profession, such as attorneys, certified
public accountants, or tax consultants.



If nothing contradictory has been specified above, all rights and claims of Ifco
against SWS due to defects of crates delivered or to be delivered, shall be

8.) Price

The price for crates using new materials shall be governed by attachment 3

In the period from January 1, 2002, until December 31, 2006, the production
prices per crate named in attachment 3 shall rise as follows, as long as the
annual quantities of Ifco products are taken delivery on by Ifco as presented in
what follows:

     Number of Ifco products taken                         Price increase
     delivery of per year

     from 11 to 12 million                        0.03 euros per crate
     from 10 to 11 million                        0.06 euros per crate
     from  9 to 10 million                        0.09 euros per crate
     from 8 to 9 million                          0.12 euros per crate
     from 7 to 8 million                          0.15 euros per crate

Computational example:

Assume a production price per crate according to attachment 3 hereunder of 1.15
euros, with 12 million crates produced annually. If delivery is taken annually
of only 9,500,000 crates, then the piece price for the 9,500,000 crates taken
delivery of is 1.24 euros per crate.

If SWS does not make available the 19 form shapes agreed on in item 3.1
hereunder, with a capacity of 16,000,000 crates annually, then the prices agreed
to under attachment 3 shall be valid, as long as Ifco takes delivery of at least
8,000,000 Ifco products per year. If in this instance Ifco remains under the
annual amount of 8,000,000 items, a price increase of 0.15 euros per crate shall
be charged.

Each price increase shall be determined at the end of each calendar year. It
shall be paid by Ifco after being invoiced by SWS within 60 days.

If using recycled material, SWS shall compute a production surcharge on the
price as per section 8.1 of 0.10 euro per kg. In the event a mobile shredder is
used, the price shall be increased by an additional 0.025 euro per kg. All SWS
costs due to the shredder, granulation, production steps connected therewith and
the storage of granulate, shall be subject to these surcharges.


SWS shall submit an invoice typical to the trade for each delivery. This shall
be due within 60 days of Ifco's receipt of the invoice. SWS shall be authorized
to submit the invoice at the earliest one week after production or upon Ifco's
taking delivery of goods, whichever comes first.

9.) Exclusivity


During the term hereunder, SWS shall be the exclusive supplier of Ifco products
(item 2.1) within the area of this contract's validity (item 14.2), to Ifco and
to companies affiliated with Ifco. Ifco and the companies affiliated with Ifco
shall place orders for Ifco Products (item 2.1) within the area of this
contract's validity (item 14.2), exclusively with SWS. Ifco shall ensure that
this exclusivity shall also be observed by the companies affiliated with it.

During the term hereunder, SWS and the companies affiliated with it shall at no
time be authorized, without express prior written consent of Ifco, to offer for
sale Ifco products to persons or companies other than Ifco, to market them, or
to sell them. SWS shall ensure that this prohibition shall also be heeded by the
companies affiliated with it. However, SWS shall remain authorized to
subcontract its own production.

10.) Confidentiality

Both parties shall be obligated in favor of the other party to treat all
information, technical data or knowledge regarding Ifco products, or the
development of new Ifco products, as confidential, as long as nothing else is
expressly permitted hereunder, or required by law. The duties from this section
shall also be valid for legal successors of the particular parties.

11.) Further development of products

SWS shall constantly make careful efforts to improve existing Ifco products, and
shall inform Ifco without delay about the results of such improvement efforts.
In developing and improving, SWS shall pursue the goals of ensuring light-weight
construction, recyclability and maximum stability. SWS shall inform Ifco without
delay about possible improvements, innovations and developmental results.

Ifco shall exert itself to support SWS's improvement in products by providing
information about:
- defects that regularly appear.
- desired improvements, if possible in the form of technical specifications.
- news about new market requirements.
- possible innovations.
- possible additions to the existing product line.
- reports on experience gained, which may contribute to improvement of existing
products, as well as suggestions for newly configuring the outward shape of

Both parties are in agreement that continuous further development of existing
products shall trigger no additional costs for Ifco. If improvements or further
developments as provided for by this section 11 make it necessary to alter the
means of production, then SWS shall be obligated to take these measures only if
the parties shall reach prior agreement regarding the division of costs caused
by these measures.

12.) Development of new products.

New products are all products which either:


- differ from existing Ifco products in certain characteristics (everything
apart from size, color, and/or weight), with these characteristics having been
specially developed for transport of certain goods or a particular type of
goods; or,
- are existing Ifco products, which are improved substantially by an invention.

New products shall be developed either by commission of Ifco, or independently
by SWS with no Ifco commission.

If SWS, not commissioned by Ifco, shall develop a new product in an area of the
spectrum (pool area) of interest to Ifco, then SWS shall be obligated initially
to offer Ifco exclusive rights to purchase it. If, after a reasonable testing
time not to exceed two months after the purchase offer, Ifco declines to
purchase the new product offered, then no costs shall accrue to Ifco. SWS shall
then be free to offer the product to any third party. In the event it is in fact
purchased, then the new product shall be subject to all provisions hereunder,
particularly that of exclusivity.

If Ifco wants a new product to be developed, then Ifco shall provide SWS with a
duties record book, in which are presented the requirements for the new product,
as well as concluding with a description of it. Within about two weeks after
obtaining the duties record book, SWS shall submit to Ifco a notification bid,
which shall provide, as exactly as possible, the conditions for development of
the new product, such as sharing in external development costs, the price of the
new product, future minimum quantities to take delivery of, ownership and usage
rights in commercial proprietary rights, means of inclusion in this contract,
etc. Both parties shall be obligated to negotiate regarding the bid in bona fide
fashion with the goal of ensuring mutual exclusivity. If the parties shall fail
to reach agreement, Ifco shall be authorized to permit the new product to be
developed by a third party.

13.) Intellectual property

The parties are in agreement that all commercial proprietary rights regarding
the Ifco products existing when this contract was entered into, shall remain the
exclusive property of Ifco or of companies affiliated with it. Not included in
this is production know-how, which may be exercised free of charge in unlimited
fashion by SWS, even after the expiration of this contract, as long as such
usage violates no existing commercial proprietary rights of Ifco or of companies
affiliated with Ifco.

The parties further are in agreement that during the term hereunder, SWS shall
have an exclusive and free right to use Ifco's intellectual property, if and
when this shall be necessary for manufacture of Ifco products, as well as for
meeting obligations hereunder. In the event that the necessary rights, patents,
or utility models necessary for meeting obligations hereunder shall be held by
an Ifco subsidiary, Ifco shall be obligated to provide SWS a free license for
the duration hereunder, if and when this should be necessary for the manufacture
of Ifco products as well as for meeting obligations hereunder.

In an instance in which third parties shall make claims for intellectual
property claimed by Ifco, SWS shall inform Ifco without delay. The parties
hereunder shall then jointly decide whether the right, patent or utility


model shall continue to be used. If SWS shall make claim for an invention,
because in SWS's opinion it was made by SWS prior to the 1997 supply agreement
and before this contract, then SWS shall inform Ifco of such inventions. If no
notification shall be made within six months after the signing of this contract,
then SWS shall lose the right to claim an invention in accordance with this.

14.) Term and geographical extent


This contract shall run until December 31, 2009. It shall in each instance be
extended by one year, if neither party shall give one year's notice of intent to
terminate it, effective upon its expiration.

Even after termination of the contract, SWS shall retain ownership rights of all
molded shapes existing for the manufacture of Ifco products. SWS shall be
obligated, if demanded by Ifco, to cede the molded shapes after expiration of
this contract (if no notification for a weighty reason shall be given) to Ifco,
or a third party named by Ifco, for usage in return for payment of a fee of
600.00 euros per day, plus the statutory value added tax. The obligation to cede
shall end at the time at which further usage of molded shapes makes necessary
repair or maintenance measures, unless Ifco or a third party named by Ifco shall
declare its willingness to carry out these measures at its own expense. As part
of the above-mentioned duty to cede, SWS shall also make available to Ifco, or a
third party named by Ifco, the construction drawings of all molded shapes
employed hereunder. During the cession period, the construction drawings may be
used to manufacture Ifco products. As soon as the cession shall lapse, the
construction drawings shall be returned to SWS.

This contract shall be valid for all Ifco transactions in Europe, South Africa
and South America, with the exception of Argentina. Europe shall be understood
to include Greenland, Russia west of the Urals, Turkey, Morocco, Israel and
Cyprus. The contract shall also be applicable to crates that are used for export
from Argentina, and are included in the pool of the importing country following
the initial leasing, regardless of where these crates shall be exported to.
Crates from Argentina shall be filled only with fruits or vegetables for
delivery in the area covered hereunder, or in another area, such as in the
United States.

14.4.) Either party shall have the right to give notice of termination of this
contract for weighty reasons with no delay, if:
- the other party shall commence insolvency proceedings, or bankruptcy
proceedings have been initiated in regard to the property of the other party;
- the other party ceases operations;
- considerable portions of the other party's property have been auctioned off
due to distraint, or this auctioning is imminent.

During the term of this contract, and if this contract shall be terminated
prematurely for a justifiable weighty reason by Ifco, SWS shall be obligated,
over a period of 2 years after its termination, neither on its own nor through
subsidiary companies or legal successors or third parties, regardless of what
type, neither in an operational cooperative, nor as shareholder, licensee,
commercial representative or similar condition, to manufacture, assemble,
market, sell or otherwise distribute in any fashion, Ifco products. If SWS shall
violate this duty, it shall owe Ifco a contractual penalty of 250,000.00 euros
a single instance.


In addition, the parties shall mutually be obligated for the term hereunder, as
well as a period of 2 years following the termination of this contract, not to
hire any employees of the other party who were working there during the term
hereunder. This obligation shall also extend to subsidiary companies. The party
that violates this obligation shall owe the other a contractual penalty of
250,000.00 euros for a single instance.

15.) Cession of contractual rights

Without prior written consent of the other party, neither party shall cede
rights hereunder, except to a subsidiary company of the particular obligee
party. Consent of the other party hereunder shall always be required for
transfer of the overall rights and duties hereunder.

16.) Sundry provisions

Collateral agreements shall not be entered into. Changes and supplements
hereunder shall be in written form. This shall also hold true for the exclusion
of this written-form clause.

Should one of the provisions hereunder be or become null, then the contract
shall in other respects remain valid. The parties shall fill the gap through a
clause that commercially comes the closest to the void clause.

German internal state law shall be valid for this contract, except for the
United Nations law on sales. Agreement is reached that Munich shall be the legal

Pullach, that       28.03.02

         /s/ Karl Pohler   /s/ Wolfgang Orgeldinger
Ifco Company

Romont, that        02.04.2002

         /s/ Walter Hirsch /s/ Christian Nobs
SWS Company

         /s/ Rene Wolfkamp /s/ Erik De Boks