Sample Business Contracts

Supply Agreement - Coffee People Inc. and Coffee Bean International Inc.

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                           SUPPLY AGREEMENT*

     This Supply  Agreement is dated  February 17, 1997,  between Coffee People,
Inc., an Oregon  corporation  ("Coffee  People") and Coffee Bean  International,
Inc., an Oregon corporation ("CBI").

     It is hereby agreed as follows:

     1.  TERM.  The term of this  agreement  is from  December  1,  1996,  until
November 30, 1997.

     2. PRODUCTS.

          (a) COFFEE  PRODUCTS  NORMALLY  STOCKED BY CBI. Coffee Bean will roast
and supply  Coffee People with coffee in the same manner and of the same quality
as previously established between the parties. All sales by CBI to Coffee People
shall be in accordance  with normal CBI terms of sale except as modified by this
agreement.  All roasted  coffee  supplied by CBI to Coffee People will have been
roasted and vacuum  valve-bagged  less than 30 days prior to delivery.  CBI will
strive for delivery within 2 weeks of the roasting date.

          (b) COFFEE  VOLUME  COMMITMENT.  Coffee  People  agrees to  purchase a
minimum of 75,000 pounds of roasted coffee during each quarter.

          (c) COFFEE PRODUCTS NOT NORMALLY  STOCKED BY CBI. Upon written request
from Coffee  People,  CBI agrees to  purchase  and roast  coffees  not  normally
stocked by CBI; provided, however, that at the end of a period to be agreed upon
in each case,  Coffee  People  agrees that it will  purchase the balance of such
coffee  remaining  unsold by CBI.  With respect to roasted  coffees which Coffee
People is required to  purchase  at the end of such agreed time  period,  Coffee
People  shall pay for such coffee at the roasted  cost plus roaster fee computed
under this  agreement.  With  respect to green  coffee  which  Coffee  People is
required to purchase at the end of such agreed time period,  Coffee People shall
pay CBI's landed cost for the green coffee.  No  outstanding  requests  exist at
this time.

     3. PRICE.

          3.1 PRICE FOR ROASTED COFFEE. For each calendar quarter, for each type
of coffee  purchased from CBI, Coffee People shall pay to CBI an amount equal to
CBI's roasted cost per pound plus a roaster fee, as further defined  herein.  In

- ------------------------------------
* Certain material contained in this exhibit and indicated by "***" has been
omitted and filed separately with the Securities and Exchange Commission
pursuant to an application for confidential treatment under Rule 24b-2
promulgated under the Securities Exchange Act of 1934, as amended.


addition,  for stores  located  outside the Portland  Metro area,  Coffee People
agrees to pay freight  costs less a $***  allowance.  At the  beginning  of each
calendar  quarter the parties shall  establish a base cost (roasted coffee costs
plus a freight factor based upon estimated out of area  shipments) for each type
of coffee purchased by Coffee People.  This base cost shall serve as a basis for
billing purposes during the quarter.  At the end of each calendar  quarter,  the
parties shall compute the total price for coffee purchased by Coffee People plus
actual net  freight  costs for  shipments  outside the  Portland  Metro area and
determine a final adjustment, as follows:

          (a) Determine  CBI's green cost.  First,  the parties shall  determine
CBI's green cost.  CBI's  green cost is CBI's cost of green  coffee  computed in
accordance  with  generally  accepted  accounting  principles  using a  first-in
first-out  cost-flow  assumption.  (For example,  assume CBI has in inventory on
November 1, 1995,  100 lbs. of Green Java Estate #1 at an average  cost of $2.00
per pound.  During the calendar  quarter ending December 31, 1996, CBI purchases
400 pounds of Green Java Estate #1 at a total cost of $1,000.00 [$2.50 per pound
average].  Also during the same calendar quarter,  CBI sells 300 pounds of Green
Java Estate #1. CBI's green cost is determined as follows:

                                   Quantity        Cost/Lb.         Total

Beginning inventory                100 lbs          $2.00         $  200.00

Cost of Purchase (Note 1)          400 lbs          $2.50          1,000.00
                                   -------                        ---------

Goods available for sale           500 lbs          $2.40          1,200.00

Cost of Product Sold (Note 2)      300 lbs          $2.33           (700.00)
                                   -------                        ---------

Ending Inventory                   200 lbs          $2.50         $  500.00
                                   =======                        =========

     Note 1 - Cost of  purchases  is CBI's cost of green  coffee  purchased  and
received during the calendar quarter and delivered at Portland, Oregon.
     Note 2 - 100 lbs at $2.00 = $200 plus 200 lbs. at $2.50 = $500

In this example,  CBI's green cost during the calendar  quarter ending  December
31, 1996 is $2.33 per pound.

          (b) DETERMINE THE ROASTED COST. Second, the roasted cost is determined
by applying a *** shrinkage  factor to CBI's green cost as determined in section
3.1(a)  above.  Roasted  cost is equal to green  cost as  determined  in section
3.1(a) divided by ***.


          (c) DETERMINE THE PRICE TO COFFEE  PEOPLE.  The price to Coffee People
is equal to the roasted  cost per pound as  determined  in section  3.1(b) above
plus the roaster  fee,  the sum of which is  multiplied  by the number of pounds
delivered  to Coffee  People  during the  quarter.  The  roaster fee shall be as

          If the quantity of roasted coffee          Then the  roaster  fee is
          supplied during a particular               as follows:
          month is in the following range:

          *** lbs to 29,999 lbs                      $*** per lb.
          *** lbs to 39,999 lbs                      $*** per lb.
          *** lbs to 49,999 lbs                      $*** per lb.
          *** lbs to 59,999 lbs                      $*** per lb.
          *** lbs to 67,499 lbs                      $*** per lb.
          *** lbs to 74,999 lbs                      $*** per lb.
          *** lbs to 82,499 lbs                      $*** per lb.
          *** lbs or more                            $*** per lb.

          (d) DELIVERY/FREIGHT  COSTS.  Deliveries to Coffee People locations in
the Portland Metro area shall be without charge to Coffee People.  Deliveries to
other  locations shall be by UPS or common carrier as directed by Coffee People.
Freight will be charged on all shipments  outside the Portland Metro area. Since
CBI will not incur local delivery costs for these orders,  a $*** allowance will
be  provided  as an offset to the  freight  charges.  Will Call orders will also
received a $*** pick-up allowance.

          (e) DETERMINE THE QUARTERLY  ADJUSTMENT.  The quarterly  adjustment is
determined by comparing  Coffee People's  actual price for all coffee  delivered
during the  calendar  quarter plus the actual net freight for out of area orders
to the amount billed for the quarter.  If the price to Coffee People exceeds the
amount  billed,  then  Coffee  People  shall be billed  an  amount  equal to the
difference.  If the price to Coffee People is less than the amount billed,  then
Coffee People shall receive a credit for the difference.

          (f) ADDITIONAL  CHARGES.  Grinding and flavoring of coffee shall incur
an additional charge equal to $*** per pound for grinding and $*** per pound for
flavoring without nuts and $*** per pound for flavoring with nuts. Coffee People
currently  supplies CBI with labels for 5 lb bulk private label coffee products.
Consequently,  the label cost is not included in the roaster fee. The additional
cost to supply the label would be $***.

          3.2 PRICE FOR GREEN  COFFEE.  The price for green coffee  purchased by
Coffee People shall be CBI's green cost as  determined  in section  3.1(a) above
plus *** per pound. The minimum order shall be 5 bags assorted, at any one time.


          3.3 PRICE FOR NON COFFEE  PRODUCTS.  The price for non coffee products
currently  purchased from CBI will be based upon CBI's  wholesale  catalog price
less the following discounts:

          CATEGORY                                   DISCOUNT
          Filters, paper                             ***
          Filters, Swiss Gold                        ***
          Candy                                      ***
          Ground chocolate                           ***
          Torani syrup                               ***
          Panache Cocoa                              ***
          Panache Frozen Latte Mix                   ***
          Xanadu Tea                                 ***
          Country Spice Tea                          ***

For products not  addressed in the table above,  pricing will be determined on a
case by case basis.

     4. ORDERING CHARGE. Coffee People will incur an ordering charge of $*** for
each order in excess of the monthly ordering allowance as defined below:

          Order Allowance/Mo. = *** of coffee purchased.

          In  November,  CBI  receives  100 orders for  coffee  totaling  30,000
pounds. The order allowance for November would be:

     Total lbs. in Month     Lbs. divisor    Monthly allotment   Order allowance
       [  30,000          /       ***    ] x       ***         =       ***

The order charge for November would be:

     Orders              Order allowance     Charge/Order        Order Charge
       [     100         -       ***    ]  x      $***         =      $***

     If the order  allowance  exceeds  the  actual  numbers of orders in a given
month,  the difference  will be carried forward as a credit against future order
charges. For example, if in a month that Coffee People is entitled to 50 orders,
Coffee  People only places 48 orders,  then Coffee  People  would be entitled to
place 52 orders the subsequent month.

     5. PAYMENT.  Payment terms for goods  purchased by Coffee People are net 30
days. Balances from zero to 30 days past due shall be charged with interest at a
rate of the prime  interest  rate as published in the  Oregonian  plus 1.75% per
annum. Balances over 30 days past due will be charged with interest at a rate of
the prime interest rate as published in the Oregonian plus 6.75% per annum.


     6. PRODUCT FRESHNESS. CBI agrees to ship all bulk coffee products within 30
days of roasting.  In the event Coffee People stores receive  product(s)  beyond
the 30 day limit,  after considering  normal transit time, CBI agrees to replace
the product(s)  and pay for the transit  charges to return the outdated goods to

     7.  CONFIDENTIALITY.   Coffee  People  acknowledges  that  it  may  receive
confidential  information concerning CBI's product costs, company overhead costs
and proprietary blend recipes.

          7.1 All  confidential or proprietary  information of CBI shall be used
solely for the purposes contemplated by CBI and for no other purpose.

          7.2 The terms of this  agreement,  the evaluation of all  confidential
information  received by Coffee  People,  and all  confidential  or  proprietary
information  of CBI shall be held in  confidence  and not disclosed to any third
party without the prior written approval of CBI;  provided,  however that Coffee
People may  disclose  the  existence  of this Supply  Agreement  itself  without
disclosing the specific terms.

          7.3 Promptly upon written request from CBI, Coffee People will deliver
to CBI all tangible forms of  confidential  or proprietary  information  and all
materials  derived  from or based in  whole or in part on such  confidential  or
proprietary information including, but not limited to, all memoranda, summaries,
notes, drawings, models, samples and prototypes, without retaining any copies.

          7.4 These  confidentiality  provisions  shall not apply to information
which Coffee People can prove was lawfully in its possession prior to disclosure
by CBI or which is or becomes a part of the public  domain  other than by an act
or omission of Coffee People or which is subsequently disclosed to Coffee People
by a third party having the right to do so.

          7.5 The confidentiality provisions of this agreement shall survive the
termination of this agreement.

     8.  NONSOLICITATION.  Coffee  People agrees not to solicit CBI customers or
target CBI accounts  and agrees to cooperate  with CBI with the view that Coffee
People will not be in direct  competition  with CBI for CBI's  wholesale  coffee
business.  CBI recognizes  that Coffee People has the right to provide coffee to
OCS  distributors   (such  as  GCC)  and  retailers  (such  as  Durst's  Market,
Guckenheimers @ Nike, etc) without violating this contract.

     9.  ARBITRATION.  In the event any controversy or claim arising out of this
agreement  cannot be settled by the parties,  such controversy or claim shall be
settled by arbitration in accordance with the then current rules of the American
Arbitration  Association and judgment upon the award may be entered in any court
having jurisdiction hereof.


     10.   INTERPRETATION.   If  a  provision  of  this  Agreement  is  void  or
unenforceable,  then such  provision  shall be enforced  to the  fullest  extent
allowed by law and all other provisions shall remain fully enforceable.

     IN WITNESS WHEREOF, the parties have executed this agreement as of the date
first above written.

an Oregon corporation                        Oregon corporation

By: \s\ Jim Myers                            By: \s\ Jim Roberts
   -----------------------------                -----------------------------
   Jim Myers, President                         Jim Roberts, CEO

By: \s\ Robert Sharp                         By: \s\ Taylor Devine
   -----------------------------                -----------------------------
   Robert Sharp, CFO                            Taylor Devine, COO


                       AMENDMENT NO. 1 TO SUPPLY AGREEMENT

         Coffee People,  Inc. ("Coffee  People") and Coffee Bean  International,
Inc.  ("CBI") are parties to a Supply  Agreement  dated  February  17, 1997 (the
"Supply Agreement"), attached hereto as Exhibit A. In consideration of the terms
and mutual convenants  contained in the Supply  Agreement,  the parties agree to
extend the term of the Supply Agreement until the later of May 31, 1998 or sixty
(60) days after the closing or termination of an agreemnet realteive to the sale
of merger of Coffee People,  but in no event beyond November 30, 1998. All other
terms of the Supply Agreement shall remain unchanged.

         IN WITNESS  WHEREOF,  the  parties  have  executed  this  Agreement  on
November 10, 1997.

Coffee People, Inc.

By:  /s/ Taylor Devine
         Taylor Devine
         President and CEO

Coffee Bean International, Inc.

By:  /s/ Jim M. Myers
         Jim Myers, President