CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY [*]. THE
CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
KANSAS CITY / HARRISONVILLE, MO
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT ("Agreement") is entered into as of
December 18, 1996 by and between XXXXX-XXXXXXXX PLASTIC PRODUCTS INC., a
Delaware corporation, ("Xxxxx") and USA DETERGENTS, INC., a[n] _____________
corporation ("USA").
NOW THEREFORE, in consideration of the mutual covenants and
agreement set forth herein, the parties hereto covenant and agree to as follows:
ARTICLE I
PRODUCTS AND SERVICES
Subject to the terms and conditions set forth herein, Xxxxx
agrees to manufacture and make available to USA drainback spout ("DBS") type
bottles for use in USA's Harrisonville, Missouri fill plant (the "Facility") and
USA agrees to purchase from Xxxxx [*] of the Facility's requirements for DBS
type bottles (sometimes referred to as "USA's DBS Package Requirements" or
"Bottles"). All Bottles shall be stack packed in 30-pack transfer cartons
provided by USA or other packing material as agreed to by the parties. The DBS
Package is defined as a bottle, cup and spout all supplied by Xxxxx.
ARTICLE II
XXXXX KANSAS CITY PRODUCTION
SECTION 2.1 SUPPLY TERM. The parties hereto agree that
commencing April 30, 1997, and concluding November 30, 2002 (the "Initial
Term"), Xxxxx shall supply USA's DBS Package Requirements in whole pursuant to
the terms and conditions of this Article II. At the end of the Initial Term,
this Agreement shall automatically renew for [*] period unless either party
gives the other party one hundred and eighty (180) days advance written notice
prior to the expiration of the Initial Term, of its intent not to renew this
Agreement. In the event USA elects not to renew the term of this Agreement, such
election shall not be effective unless prior to the expiration of the Initial
Term USA makes a payment to Xxxxx in the amount of [*] to partially offset
relocation cost of this specialized equipment, unless equivalent business can be
secured by Xxxxx from USA or another customer during the final 180 days of the
term of the Agreement. Upon renewal and completion of the second term of this
agreement, the [*] payment liability expires. In the event additional machines
beyond the [*] machines are dedicated pursuant to Section 2.7, the parties agree
to a one year extension to the term of this Agreement for each machine that is
added.
SECTION 2.2 PLACEMENT AND DEDICATION OF MACHINE. On or before
April 30, 1997 Xxxxx shall install at its Kansas City, Missouri facility (the
"Facility") [*] machine solely dedicated to manufacturing USA's DBS Package
Requirements. Prior to September 30, 1997, Xxxxx shall add a second RSW wheel
machine, and a third RSW wheel machine with the estimated timing of fourth
quarter 1997 / First quarter 1998 dependent on USA Detergents product demand.
The dedicated RSW wheel machines described in this Section 2.2 shall be referred
to in the singular as the "Dedicated Machine" or collectively as the "Dedicated
Machines".
SECTION 2.3 MACHINE COMMITMENT FEE. The annual fee for each
Dedicated Machine is set forth on attached Schedule "A" ("Machine Fee"). USA
shall be billed the monthly Machine Fee on the first of each month beginning
April 30, 1997 for each Dedicated Machine in service. Payments shall be due and
payable by the 10th day of the month. After March 31, 1998 the Machine Fee may
be increased by a maximum of [*] once each contract year, provided that ninety
(90) days advance written notification has been given and reasonable
justification has been provided.
SECTION 2.4 CONVERSION PRICES. The conversion price for USA's
Bottles is set forth on attached Schedule "A" ("Conversion Price"). The
Conversion Price, exclusive of the cost of resin which is addressed in Section
2.5 below, shall be considered firm through March 31, 1998. After March 31,
1998, Bottle prices may be increased by [*] once each contract year, exclusive
of resin, provided that ninety (90) days advance written notification has been
given and reasonable justification has been provided. Pricing assumes that all
regrind is reusable in Bottles.
SECTION 2.5 RESIN COST ADJUSTMENT. Prices for Bottles are
based on resin prices as of July 15, 1996. Prices for resin are subject to
change with thirty (30) days advance written notice. For each [*] change in
Xxxxx' cost of resin, selling prices for Bottles will be adjusted up or down at
the rate of [*] Bottles. Pricing index will be based on Chem Data.
SECTION 2.6 F.O.B. POINT AND BILLING. DBS Package Requirements
supplied pursuant to this Article II shall be F.O.B. [*].
SECTION 2.7 ADDITIONAL MACHINES. Additional machines may be
dedicated to production of USA's DBS Package Requirements upon mutual written
agreement by the parties hereto.
ARTICLE III
MISCELLANEOUS
The terms and conditions of this Article III shall apply to
all transactions undertaken pursuant to this Agreement.
SECTION 3.1 PRODUCTION CAPACITY. Each Dedicated Machine is
scheduled to operate a minimum of [*] machine operating days ("MOD's") annually.
This schedule takes into account holidays, preventive maintenance, production
downtime, etc. If USA needs Xxxxx to
2
manufacture on any holiday, USA will be responsible for all incremental costs
incurred, including incremental time. This cost will be negotiated between USA
and Xxxxx. USA will be responsible for all additional cash or variable costs.
SECTION 3.2 TERMS OF PAYMENT. Except as otherwise set forth
herein, payment under this Agreement shall be [*] days from the date of invoice.
At Xxxxx' sole discretion, interest may be charged for late payments in
accordance with Xxxxx' standard terms and conditions of sale described in
Section 4.12 below.
SECTION 3.3 SURGE CAPACITY/OPTION FOR ADDITIONAL DEDICATED
MACHINES. Since USA agrees to purchase [*] of their DBS Package Requirements
from Xxxxx, Xxxxx recognizes the need to provide USA with additional capacity
for temporary business surges that exceed the production output of the Dedicated
Machines as set forth above. The bottles would be priced at the non-machine fee
price and sold F.O.B. plant of manufacture.
A Xxxxx also recognizes that USA may desire additional dedicated bottle
machines to support its anticipated growth objectives. In that regard, Xxxxx
will use its best effort to obtain the necessary expansion capital to support
USA's anticipated growth objectives, provided that USA will make firm long-term
commitment to purchase that equivalent output from that Dedicated Machines to
justify the investment. If Xxxxx decides not to add capacity for USA, USA shall
be able to move bottle requirements exceeding the existing Dedicated Machine
capacity at the time to induce another supplier to service USA's bottle demand.
If Xxxxx decides not to add capacity for USA Detergents, the [*] payment in
Section 2.1 would be waived.
SECTION 3.4 FORCE MAJEURE. In the event of a force majeure
condition affecting either party due to circumstances beyond either party's
control which restricts or affects the performance of this agreement, Xxxxx and
USA, as the case may be, shall undertake its best efforts to remedy the
situation by removing the cause of the problem. Such effort shall, however, not
include the settlement of a strike or labor controversy by acceding to the
demand(s) of the opposing party or parties. Where production is temporarily
stopped, impeded, or reduced by a process or mold condition, Xxxxx shall extend
its best effort to make available production at an alternate facility, but such
effort shall not be at the exclusion of Xxxxx' or other DBS customers. Likewise,
USA shall undertake its best efforts to resume full production as soon as
possible. In either case, neither party will suffer at the expense of the other.
Also, it is understood that a force majeure condition shall not excuse the
payment of any outstanding xxxxxxxx for any packaging components due Xxxxx. In
the event of a strike, Xxxxx will use its best efforts to fulfill its
obligations under this Agreement during a work stoppage if one should occur.
SECTION 3.5 PRODUCTIVITY IMPROVEMENT/COST REDUCTIONS. Both
Xxxxx and USA agree that the success of the parties' mutual objectives depends
upon continuing to improve the efficiency of the DBS package system and the use
of the system by USA.
3
SECTION 3.6 CONDITIONS OF SALE. Except as inconsistent
herewith, all Xxxxx' standard terms and conditions of sale under which business
is conducted shall apply, as set forth in Xxxxx' order acknowledgment sent to
USA from time to time.
SECTION 3.7 TERMINATION. This Agreement may be terminated by
either party for material breach of the other party if such breach remains
uncured for a period of [*] after receipt of written notification from the party
alleging such breach.
SECTION 3.8 NOTICES. All notices or other communications
required or permitted under this Agreement shall be in writing and shall be sent
either (a) through the United States Postage Service, designated as registered
or certified mail, return receipt requested and bearing adequate postage, (b) by
means of an express delivery service if it obtains a written receipt to confirm
delivery, (c) by hand delivery or (d) by facsimile transmission. Each such
notice shall be effective upon the receipt thereof by the addressee. Rejection
or refusal to accept or inability to deliver because of change of address of
which no notice was given as provided herein shall be deemed to be receipt of
the notice sent. By giving the other parties hereto at least seven (7) days
notice thereof, any party hereto shall have the right from time to time and at
any time while this Agreement is in effect to change its address for purposes of
this Section 5.14, and each party shall have the right to specify as its address
any other address within the continental United States of America.
Each notice or other communication shall be addressed, until notice of change of
address as aforesaid, as follows:
Xxxxx: Xxxxx-Xxxxxxxx Plastic Products Inc.
One XxxXxxx
Xxxxxx, Xxxx 00000
Attn: General Manager of Plastic Products
Fax # 000-000-0000
with copy to:
Xxxxx-Illinois, Inc.
Xxxxx Xxxxxxxxxx
Xxx XxxXxxx
Xxxxxx, Xxxx 00000
Attn: General Counsel
Fax # (000) 000-0000
Vendor: U.S.A. Detergents, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Executive Vice President
Fax # 000-000-0000
4
SECTION 3.9 ASSIGNABILITY. [*].
SECTION 3.10 ARBITRATION. Any dispute, which can not be
resolved through negotiations at the vice-president level, shall be finally
resolved through arbitration in Chicago, Illinois under the rules of the
American Arbitration Association. A written demand by either party shall be
sufficient to initiate such proceedings.
SECTION 3.11 [*].
IN WITNESS WHEREOF, each of the parties hereto have caused
this Agreement to be duly executed as of the day and year first above written.
XXXXX-XXXXXXXX PLASTIC USA DETERGENTS, INC.
PRODUCTS INC.
By: /s/ Xxxxx X. Xxxxxxxxxx 12/12/96 By: /s/ Xxxxx Xxxxxx
-------------------------------------------- --------------------------------------------
Title: V.P. and General Sales Manager Title: President and COO
-------------------------------------------- --------------------------------------------
Date: December 13, 1996 Date: December 18, 1996
-------------------------------------------- --------------------------------------------
5
SCHEDULE A - PAGE 1
PRICE SCHEDULE FOR XXXXX-XXXXXXXX KANSAS CITY OPTION
[*]
KANSAS CITY PLANT
NICE N FLUFFY XTRA
------------- -----
Machine Fee / Year [*] [*] [*] [*]
MACHINE FEE / MONTH [*] [*] [*] [*]
Machine Fee / Day [*] [*] [*] [*] [*]
Estimated Pcs / Day [*] [*] [*] [*]
Annual Capacity / Machine [*] [*] [*] [*]
Bottle Weight [*] [*] [*] [*]
Color [*] [*] [*] [*]
Bottle Conversion [*] [*] [*] [*]
Spout [*] [*] [*] [*]
Unitizing [*] [*] [*] [*]
SPOUTED BOTTLE CONVERSION [*] [*] [*] [*]
"CONVERSION PRICE"
Implied Machine Fee [*] [*] [*] [*]
Total Bottle [*] [*] [*] [*]
Includes spout unitizing, resin effective 7/15/96.
* Subject to resin cost adjustments set forth in Section 2.5 and annual
increases occurring after [*] set forth in Section 2.3 and Section 2.4.
[*] [*] [*] [*]
1
SCHEDULE A - PAGE 2
PRICE SCHEDULE FOR XXXXX-XXXXXXXX KANSAS CITY OPTION
[*]
KANSAS CITY PLANT
NICE N FLUFFY XTRA
------------- -----
Machine Fee / Year [*] [*] [*] [*]
MACHINE FEE / MONTH [*] [*] [*] [*]
Machine Fee / Day [*] [*] [*] [*] [*]
Estimated Pcs / Day [*] [*] [*] [*]
Annual Capacity / Machine [*] [*] [*] [*]
Bottle Weight [*] [*] [*] [*]
Color [*] [*] [*] [*]
Bottle Conversion [*] [*] [*] [*]
Spout [*] [*] [*] [*]
Unitizing [*] [*] [*] [*]
SPOUTED BOTTLE CONVERSION [*] [*] [*] [*]
"CONVERSION PRICE"
Implied Machine Fee [*] [*] [*] [*]
Total Bottle [*] [*] [*] [*]
Includes spout unitizing, resin effective 7/15/96.
* Subject to resin cost adjustments set forth in Section 2.5 and annual
increases occurring after [*] set forth in Section 2.3 and Section 2.4.
[*] [*] [*] [*]
2
KANSAS CITY PACKOUT - RAMP UP SCHEDULE
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Difference between [*] and [*]
1. Impact of Layoff and Job Restructuring initially.
2. [*] - Start-up and Debug vs. Existing Machine Conversion.
3. Possible Color Changes / SKU Changes vs. [*].
3
