SECTION 23.—Especial additions to the refining premiums for small alcohol factories.

Small factories receive the following additions to the refining premiums fixed in section 22, which are regulated by the amounts which appear as their output in the account kept by the tax officials during any business year.

For less than 600,000 liters of pure alcohol they receive an addition of 0.80 mark; for more than 600,000 but less than 1,000,000 liters of pure alcohol an addition of 0.40 mark; for more than 1,000,000 but less than 1,500,000 liters of pure alcohol an addition of 0.20 mark per hectoliter of pure alcohol reckoned upon the whole amount of refined brandy sent by the factory concerned during the business year.

SECTION 24.-Collective committee.

The collective committee of the association consists of 14 regular and 14 substitute members and is made up of 7 members to be chosen by the head board of the union of distillers and 7 substitute members (distillers' group), and by 7 regular and 7 substitute members of the council of supervision of the association (group of manufacturers).

The committee is assembled by the chairman, in case of his inability by a substitute, both of whom are to be chosen from the representatives of the distillers.

A meeting must be called when the chairman of the council of supervision or the business managers of the association or a member of the distillers (sec. 25) authorized for that purpose, or more than three members of the committee wish it.

Four members or substitutes of each of the two groups must be present in order that the meeting shall be regarded as having a quorum.

If the number of members of each group present is unequal, only as many members of that group of which the larger number of members is present have a right to vote as there are members of the other group present.

Questions are decided by a majority of the votes of those members who have the right to vote.

In case of a tie the chairman has a casting vote in those cases in which, according to this agreement, the union of distillers has the right to decide; in those cases in which, according to this agreement, the association has a right to decide the chairman of the council of supervision of the association has the casting vote, while in all other cases recourse must be had to a referee proceeding.

The committee dictates the order of business at its meetings and also regulates the calling in of a referee or referees.

SECTION 25.-Committee of distillers.

The committee of distillers has the right to delegate one or more of its members to carry out the rights to which the committee is entitled, according to this agreement, in relation to the association. Whenever a remuneration is to be paid to the members of the committee of distillers in accordance with the statutes adopted for the union of distillers, this remuneration is to be made at the expense of the company as a whole.

SECTION 26.-Council of the purchasers.

A council is formed from the number of purchasers (large distillers, liqueur manufacturers, and others), which consists of 7 members and 7 substitutes and determines its own order of business. While regulating the selling price in the home market (sec. 28), this council shall have a hearing before the collective committee and the association. The chairman of the collective committee or the business managers of the association send the invitations. The council of supervision or the business managers can at any time question the council upon pertinent matters; a hearing must be given it in those cases in which a referee proceeding is necessary in determining the price in the home market. Traveling and daily expenses allowed to the council (of purchasers) by the collective committee must be paid by the company as a whole.

SECTION 27.-Examining office.

The committee of distillers is required to establish an examining office in connection with its seat in Berlin, at the head of which it must place either one of its members or a merchant, or one of its members and a merchant. In the latter case the committee can define the powers of both heads as it sees fit. Whenever a merchant is put at the head of the office his actions must be confirmed by the council of supervision of the association,

The head of the examining office must oversee the entire business management of the association and of the individual associates in all cases in which their business is affected by this agreement, and for this purpose he must at any time be given permission by the business managers of the association, or by the associates, to inspect their business books and papers and also to enter the rooms and buildings of the association and of the associates (with the exception of the factory rooms). He must, further, perform the duties laid upon him in this agreement and in the decisions made in carrying out the same. Whenever differences of opinion arise between the head of the examining office and the business management or the council of supervision of the association the question must be settled by the collective committee.

The expenses of the examining office are considered expenses of the company as a whole.

SECTION 28.-Regulation of purchase and sale.

The collective committee makes decisions in regard to the purchase of raw spirit, as well as in regard to the sale of refined, unrefined, and denaturalized spirit, whether in the domestic or foreign market. As often as either the delegate of the committee of distillers or the head of the examining office or the business management or the council of supervision of the association demand it the collective committee must decide whether an alteration is to be made in the arrangements.

SECTION 29.-Reckoning of the average yearly proceeds.

The average yearly proceeds are ascertained in the following manner, all taxable varieties being reduced to the basis of 70 per cent spirit:

The whole amount of the partial payments made to the distillers during the business year is increased or decreased by the balance yielded from the year's balance sheet, and the sum resulting herefrom is divided by the number of hectoliters shipped by the distillers in the course of the year. The balance sheet which is to be made for the 1st of December of every year is subject to the investigation and acceptance of the collective committee.

SECTION 30.-Competition forbidden.

The distillers are forbidden to take part, either directly or indirectly, during the duration of this agreement, in a spirit-refining plant under the control of the excise commissioners, or in the erecting of a spirit warehouse, in case these plants have not entered the association.

This regulation does not apply in case a distiller obtains such a plant through inheritance or as the holder of a mortgage after it has been sold at a forced public auction. However, such a distiller is under obligation within a year either to unite the plant thus obtained to the association or to give up the management of the same. For every violation of these regulations the offender has to pay a fine of 10,000 marks to the company as a whole, by the payment of which, however, he is not freed from his obligation to fulfil the agreement.

SECTION 31.-Reports of the distillers.

The distillers are required to make to the association all those communications in regard to the management of their distilleries, to their quota, in regard to the tax for mash room to be paid by them, in regard to the shipments to be expected, in regard to the probable and definite proceeds of the potato harvest, as well as all other reports which the committee, after hearing the council of supervision, requires of the association.

SECTION 32.-Right of appeal.

Grievances of the associates which can not be settled by correspondence with the association are referred to the examining office, and, in case they are not settled here, are referred to the committee of distillers. If the latter can not bring about a compromise they must be settled by the court of arbitrators (sec. 33).

SECTION 33.-Court of arbitrators.

All variances between the associates which can not be settled according to section 32 are settled, exclusive of the ordinary course of the law, by a court of arbitrators. Each division of the distillers' union appoints 2 persons each for 3 years as members of the court of arbitrators. The association appoints 14 persons, of whom 4 must be dealers in spirits, and the collective committee appoints 5 persons.

For the purpose of arbitration each side appoints an arbitrator from the number of the members of the court of arbitrators appointed by the divisions of the distillers' union and by the association. If, after a written request by the opposite side, one side fails to appoint its arbitrator within 2 weeks, then the opposite side has the right of appointing the arbitrator for that side. If the two arbitrators appointed to decide the matter can not agree, then they have to choose a referee from the number of those members of the court of arbitrators whom the collective committee has appointed. If the arbitrators can not agree upon the choice of a referee, then the latter must be appointed by the collective committee out of the number of members appointed by it.

The arbitrators appointed to arrive at a decision decide upon the method of procedure. Whenever the cooperation of the regular court is called upon, the national court (Landgericht), Berlin I, is agreed upon as competent court.

The expenses of arbitration are borne by the defeated side; they are to be fixed according to their amount in the decision of the arbitrators. Reimbursement can not be made for extraordinary costs.

In case that within a year from the day that the court of arbitrators was formed the decision has not been properly reached, submitted, and deposited at the national court, Berlin I, either side has a right to resort to the ordinary course of the law. In this case the national court, Berlin I, is exclusively competent to decide.

SECTION 34.-Alteration of laws.

In computing the shares of the proceeds of both sides the price to be obtained on the basis of the existing tax conditions for raw spirit, subject to a consumption tax of 70 marks, is decisive. Alterations of the tax laws, by which the prices are increased or decreased, affect the shares of the profits of the distillers and the association. Whenever this occurs, the collective committee is authorized to undertake the alteration of this agreement necessitated thereby.

If the two groups of the committee can not come to an agreement, each of them has to appoint a lawyer who has been judge or attorney for at least 15 years, and these two lawyers have to choose a third with like qualifications.

The collective committee, reinforced by these lawyers, decides, by a majority vote, whether there is occasion for changing the agreement, and, in case there is, it makes the needed alterations of the agreement, and these are binding upon all the associates.

SECTION 35.-Dissolution.

Liquidation takes place according to the legal provisions.
The liquidators are chosen by the collective committee.

SECTION 36.-Arrangements for transition period.

The association will notify its members at least 5 days beforehand when its business is to open. Beginning with the third day after receiving this notification, no associate is allowed to buy or sell raw and refined brandy on his own or other account, for October delivery, 1899, and later, on penalty of a fine, paid to the company as a whole, of 10 marks for every hectoliter of pure alcohol bought or sold in violation of this regulation.

Settlements of transactions previously entered into in open markets and exchanges are referred to the association after the notification above-mentioned.

Questions arising in the winding up of the current transactions and in taking over the stocks of goods on hand are to be settled by a commission, to which the committee of distillers and the council of supervision each send three delegates. If both groups can not come to a decision, then a referee proceeding is to be held, as in section 24. The decisions thus arrived at are final and binding for all associates. The commission must observe the regulations fixed in Appendix B in arriving at decisions.

SECTION 37.

The contracting parties agree that, according to section 8 of the statutes of the Selling Union of German Spirit Manufacturers, a tax of 5 pfennigs for every hectoliter of pure alcohol, which in the execution of this agreement is shipped for sale in common, is at the expense of the whole company to be transferred to the account of the union by the association.

EXHIBIT A.

The business dealings of the distiller (providing casks, advances, etc., as nearly as possible in the previous manner) can be managed by alcohol factories, spirit-selling associations and unions, and dealers in spirits.

To these dealings the following regulations apply:

I.

(a) Shipments through alcohol factories.-For the spirits of those distillers which have shipped directly to the alcohol factories during the business year 1898-99 and have not made a binding declaration of their admission into a selling association by the 1st of January, 1899, the alcohol factories receive 30 pfennigs for every hectoliter of pure alcohol shipped to the association from the distiller concerned during the duration of the principal agreement.

If the alcohol factories consequently furnish in addition spirits ready for sale of distillers entering the union, who at the beginning of the business transactions of the association had not entered the union, they receive for these quantities of spirits 30 pfennigs per hectoliter.

If the alcohol factories furnish spirits from members of the union who in the business year 1898-99 had sold their spirits to other agents, then the factory receives 20 pfennigs for every hectoliter ready for use that they ship.

(b) Shipments through spirits-selling associations and unions.-The associations receive 60 pfennigs per hectoliter for shipment of spirits ready for use of those distillers who have become members of a selling association or union which was in activity on the 1st of January, 1899, or who have declared their intentions of entering such a union by the 26th of January, 1899, and themselves enter the union.

If one of these associations or unions in consequence furnishes spirits ready for use of such distillers as enter the union, who at the beginning of the business transactions of the association had not yet joined the union, then it (the association) receives likewise for these amounts of spirits 60 pfennigs per hectoliter.

If such an association or union furnishes spirit from members of the union who had sold their spirits to dealers during the business year 1898-99, and had not made a declaration of their entrance into such a union by the 26th of January, then the association receives 40 pfennigs for every hectoliter of spirits ready for use shipped, while 20 pfennigs per hectoliter is paid as satisfaction to the dealer during the duration of the principal agreement.

Associations or unions not beginning business until later receive 40 pfennigs per hectoliter of pure alcohol for spirits ready for sale which they ship from those distillers who had pledged themselves to enter by the 1st of January, 1899, and do enter the union. In case of damage by transportation in the two classes of sales mentioned above, these associations or unions receive indemnities of 40 and 20 pfennigs, respectively.

(c) Shipments through dealers in spirits. For shipment of spirits ready to use of those members of the union who have appointed a certain dealer to transact their business, the latter receives a commission of 30 pfennigs per hectoliter at the most.

In case a member of the union withdraws the above-mentioned appointment and transfers the transaction of his business to another agent, the dealer receives 20 pfennigs per hectoliter as satisfaction as long as the main agreement lasts. This indemnity can, in particular provinces, be raised to 40 pfennigs per hectoliter for dealers on a larger scale whenever distilleries are concerned with which the dealer has contracted for the business year 1898–99. For shipment of spirits ready for sale of such distillers as had not up to that time entered the union, the dealers receive 30 pfennigs per hectoliter.

If a dealer furnishes spirits from members of the union who up to that time had shipped through other agents, he receives a commission of 20 pfennigs per hectoliter. All dealers who undertake the shipment of spirits as agents for the association, are required, whenever it is possible, to induce those distilleries from which during the distilling year 1898-99, or later, they have bought spirits, to join the union, and in case they do not succeed in this, to offer for sale to the association the spirits bought by them according to their own conditions of sale. The association must, in accepting the offer, pay the dealer the commission fixed in the agreement, but has the right to refuse the offer.

After January 26, 1899, the dealers acting as agents for the association are not allowed any longer to buy spirits from distilleries with which they had not already at that time made contracts for the business year 1898-99 or later. In case of the violation of this requirement the dealer has to pay to the association, in favor of the company as a whole, a fine of 10 marks per hectoliter of pure alcohol for the spirits bought in violation of this regulation.

II.

In case that an alcohol factory or a dealer voluntarily breaks the contract with a member of the union or necessitates the breaking of the contract by culpable proceedings, the remunerations guaranteed in I (a) and (c) are abolished.

III.

The above statements of commissions comprise-

(a) Remuneration for fulfillment of the requirements stated in section 7 of the principal agreement.

(b) Remuneration for furnishing credit to distillers in the previous manner.

If a factory or dealer withdraws from a distiller the advance demanded, according to the usual conditions up to this time, then the factory or dealer loses claim to the percentages of commission fixed in I (a) and (c) only when another factory or dealer, or the association itself, declare themselves ready to furnish the credit desired in return for the transference of the commission fixed therefor.

The distiller also has the right to make the request for credit directly to the association, which decides upon the terms for granting this credit. The association is allowed to give credit only when it undertakes the security for the same, for which it receives the half of the commission fixed therefor.

EXHIBIT B.
I.

For the goods on hand at the beginning of the business of the association, or to be handled by it immediately after the undertaking the same, the discounted price fixed according to the main agreement by the association for distillers is to be paid, in the case of refined spirits, with an addition of 3 marks, the refining premium for primary refined spirits, and 1.50 marks for secondary refined spirits and alcohol. Berlin is taken as the freight basis.

In so far as the goods accepted by the 15th of October, 1899, are sold by the association, the amount actually obtained above or below the discounted price is to be counted to the credit or debit of the associate concerned.

The goods sold after the 15th of October, 1899, are reckoned in with the average yearly profits. The difference arising from this is transferred to the credit or debit of the associate concerned at the close of the business year.

II.

Whenever associates, before the conclusion of the agreement, have contracted business engagements for October delivery, 1899, and later upon the basis of the actual prices current at the time of the transaction, the following regulations must be observed:

(a) Sales are carried out by the association according to the agreements entered into between the associates. The association has the choice whether it will carry on the sale on the account of the company as a whole or on the account of the original seller. In the latter case the associate receives the refining premium agreed upon with the purchaser, not the refining premium fixed in the main agreement.

(b) Contracts for the business year with distillers who have entered the Selling Union of German Spirit Manufacturers are subject to the regulations of the main agreement.

(c) Purchases made by distillers not belonging to the union are to be transferred to the association on the account of the company as a whole. The original terms of purchase are to be observed. The commission to be granted for these purchases, according to the main agreement, is to be paid to the associate who has brought about the purchase before the 1st of January. In case the purchasing price agreed to by the associate varies considerably from the current price at that time, the difference is at the expense of the associate.

III.

From the conclusion of this agreement until the opening of business the associates are allowed to make business contracts, which are to be filled after the 1st of October, 1899, only with previous permission of one of the appointed business managers.

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