EXHIBIT (10p)
SUPPLY AGREEMENT
This Agreement made this 28th day of December, 2001, by and between
Xxxxxxx Corporation, a corporation organized and existing under the laws of the
State of Alabama, with its offices at 0000 Xxxxxxxxxx Xxxx., Xxxxx 000, Xxxxxxx,
XX ("Xxxxxxx"), Frontier Yarns, LLC, a limited liability company organized and
existing under the laws of the State of Alabama, with its offices at 0000
Xxxxxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxx 00000 ("Manufacturer") and Frontier
Spinning Xxxxx, Inc., a corporation organized and existing under the laws of the
State of North Carolina, with its offices at 0000 Xxxxx Xxxxx Xxxx, Xxxxxxx,
Xxxxx Xxxxxxxx 00000 ("Frontier").
WHEREAS, Xxxxxxx is engaged in the business of manufacturing, marketing
and selling apparel products; and
WHEREAS, Manufacturer is a joint venture limited liability company
formed by Xxxxxxx and Frontier to operate certain yarn manufacturing facilities;
and
WHEREAS, Xxxxxxx desires to purchase yarn from Manufacturer and
Manufacturer is willing to supply yarn to Xxxxxxx, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Xxxxxxx and Manufacturer agree as follows:
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1. Definitions
The following terms used in this Supply Agreement shall have the
following meanings unless otherwise expressly provided herein:
(a) "Additional Capacity" shall mean an amount of Yarn in excess
of the Annual Minimum [PROVISION REDACTED](*).
(b) "Annual Minimum" shall mean the agreed upon production
capacity of the Manufacturer. Said capacity will be based upon
an average yarn count per plant and the total capacity
determined on the basis of a fifty (50) week production year
as specified in Schedule A. The Annual Minimum may be adjusted
as agreed upon in writing by Xxxxxxx and the Manufacturer but,
in any event, shall be based upon the full capacity of the
mill.
(c) "Anticipated Shortfall" shall mean in any month the difference
between the pro-rated monthly portion of the Annual Minimum
and the amount of Yarn that Xxxxxxx anticipates purchasing
from Manufacturer.
(d) "CPI" shall mean the Index now known as the "United States
Bureau of Labor Statistics, Consumer Price Index for Urban
Wage Earners and Clerical Workers-Revised", All items for
Birmingham, Alabama, SMSA (1982-84 = 100).
(e) "Idle Capacity Charge" shall be determined in accordance with
the following formula:
[PROVISION REDACTED] (*)
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(*) Material omitted pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission (the "SEC"). The omitted material has
been filed separately with the SEC.
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(f) "Idle Capacity Payment" shall mean the amount determined in
accordance with the formula specified above.
(g) "Manufacturer's Shortfall" shall mean in any month the
difference between the pro-rated monthly portion of the Annual
Minimum and/or the Additional Capacity that Manufacturer
determines that it will not be able to produce and deliver to
Xxxxxxx.
(h) "Manufacturer's Shortfall Payment" shall mean the difference
between the replacement cost to Xxxxxxx of Shortfall Yarn and
the agreed upon price in Paragraph 3.
(i) "Marginal Revenue" shall refer to a method of calculation of
cost per pound of Yarn whereby the revenue per frame is
determined as a constant value and is divided by the number of
pounds of production per frame to determine cost per pounds of
Yarn. This method of calculation is more specifically
described in the example contained in Paragraph 3(a) herein.
(j) "Non-conforming Yarn" shall mean Yarn that fails to meet the
Specifications and Quality Control Standards of Xxxxxxx.
(k) "Price" shall mean the purchase xxxxx Xxxxxxx shall pay to
Manufacturer for the Yarn as determined in accordance with
Paragraph 3.
(l) "Price Adjustment Notice" shall mean a written notice
delivered by either Manufacturer or Xxxxxxx in which the
delivering party proposes an adjustment to the Price of the
Yarn.
(m) "Price Adjustment Notice Period" shall mean a period of 45
days after delivery of a Price Adjustment Notice in which the
parties attempt to negotiate an adjustment to the Price of the
Yarn.
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(n) "Purchase Order" shall mean a document delivered to
Manufacturer by Xxxxxxx for the purchase of specific
quantities of Yarn. A copy of Xxxxxxx'x form of Purchase Order
is attached as Schedule 1(n).
(o) "Quality Control Standards" shall mean the quality control
procedures, specifications, processes and measurements as
specified by Xxxxxxx in Schedule 1(o), as may be amended from
time to time upon written agreement of the parties, to be
utilized by Manufacturer in producing the Yarn.
(p) "Raw Materials" shall mean the raw materials, fiber,
components and supplies for the Yarn.
(q) "Reimbursement Notice" shall mean a written notice from
Manufacturer to Xxxxxxx stating that it has been unable to
secure order(s) for all or part of the Shortfall.
(r) "Shortfall Notice" shall mean the written notice delivered to
Manufacturer by Xxxxxxx that states that there will be an
Anticipated Shortfall.
(s) "Specifications" shall mean Xxxxxxx'x specifications for the
Yarn as set forth in Schedule 1(o), as may be amended from
time to time, or in a Purchase Order.
(t) "Term" shall have the meaning specified in Paragraph 5 below.
(u) "Yarn" shall mean the yarn meeting the Specifications and
Quality Control Standards purchased from Manufacturer by
Xxxxxxx in accordance with the terms of this Agreement.
(v) "Year" shall mean the fiscal year of the Manufacturer
consisting of either fifty-two (52) or fifty-three (53) weeks,
which period shall commence on December 28, 2001. The initial
year of the
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Manufacturer shall consist if a period shorter than 52 or 53
weeks and will be measured from the closing until the end of
the fiscal year of the Manufacturer. All computations in the
initial year of the Manufacturer shall be pro-rated according
to the actual number of weeks the Manufacturer is in
existence.
2. Supply
(a) Obligations of Xxxxxxx and Manufacturer
(i) Xxxxxxx agrees to purchase Yarn from Manufacturer in
mutually agreed upon counts for Xxxxxxx'x use in
manufacturing apparel products. Subject to the terms
and conditions of this Agreement, during each Year of
the Term of this Agreement, Manufacturer agrees to
supply to Xxxxxxx the Annual Minimum and Xxxxxxx
agrees to purchase from Manufacturer at least the
Annual Minimum.
(ii) Xxxxxxx shall have the right to purchase Additional
Capacity within the terms outlined in Forecasts and
Orders (as specified in Paragraph 2(e) herein). The
price for Additional Capacity will be determined in
accordance with Schedule C. The terms and conditions
for the purchase of the Additional Capacity shall be
in accordance with the terms of this Agreement.
(iii) If during any month Xxxxxxx fails to timely notify
Manufacturer of its intent to utilize all or a
portion of the Additional Capacity, or if Xxxxxxx
notifies Manufacturer that it intends to use a
portion of the Additional Capacity, Manufacturer
shall be free to sell any unused portion of the
Additional Capacity to a third party. Manufacturer
may sell any capacity of Yarn in excess of the Annual
Minimum and the Additional Capacity to a third party.
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(iv) If Xxxxxxx determines that it will not purchase the
monthly pro rata share of the Annual Minimum during a
month, Xxxxxxx shall deliver a Shortfall Notice to
Manufacturer as soon as reasonably practicable to
enable Manufacturer to sell such Anticipated
Shortfall to a third party or parties. Upon receipt
of the Shortfall Notice, Manufacturer shall use its
best efforts to secure orders from third parties to
utilize such Anticipated Shortfall; provided,
however, that if Manufacturer is unable to secure
orders from third parties for all of the Anticipated
Shortfall within thirty (30) days of receipt of a
Shortfall Notice, it shall deliver a Reimbursement
Notice to Xxxxxxx. The Reimbursement Notice shall
include a calculation of the Idle Capacity Payment in
accordance with the sample formula contained in
Paragraph 1(e). If Manufacturer sells the Anticipated
Shortfall to a third party, the Idle Capacity Payment
will be adjusted for the difference between the
outside selling price conversion and the agreed upon
conversion by Xxxxxxx. If Manufacturer's sales of
Anticipated Shortfall exceed the amount which would
have constituted the Price if Xxxxxxx had purchased
the Anticipated Shortfall, such excess will be used
by Manufacturer as an offset to future Idle Capacity
Payments due from Xxxxxxx.
(v) Xxxxxxx shall remit the Idle Capacity Payment to
Manufacturer within thirty (30) days from the date of
receipt of the Reimbursement Notice.
(vi) If, prior to or during a month, Manufacturer
determines that there will be a Manufacturer's
Shortfall, Manufacturer shall provide prompt written
notice to Xxxxxxx. Within ten (10) days of the date
Manufacturer provides notice to Xxxxxxx of a
Manufacturer's Shortfall, Frontier will provide
written notice to Xxxxxxx of either: (A) its
agreement to supply the Manufacturer's Shortfall in
accordance with the terms and
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conditions of this Agreement or (B) its inability to
supply the Manufacturer's Shortfall in accordance
with the terms and conditions of this Agreement. In
the event of a Manufacturer's Shortfall and
Frontier's notice of inability to supply
Manufacturer's Shortfall or its failure to supply
Manufacturer's Shortfall in accordance with the terms
of this Agreement, Xxxxxxx shall have the right to
purchase an amount of yarn equal to the
Manufacturer's Shortfall from a third party. In this
event, Xxxxxxx'x obligation to purchase the Annual
Minimum shall be reduced by the amount of the
Manufacturer's Shortfall and Manufacturer shall pay
to Xxxxxxx the Manufacturer's Shortfall Payment
within thirty (30) days of receipt of written notice
from Xxxxxxx.
(b) Raw Materials, etc.
(i) All Raw Materials required by Manufacturer to fulfill
its obligations under this Agreement shall be
acquired by Manufacturer at its sole cost and
expense. The Raw Materials shall be of such grade and
quality as shall be necessary to meet the
Specifications for the Yarn set forth in Schedule
1(o) or as specified by Xxxxxxx in a Purchase Order.
(ii) All cotton for use in the Yarn shall be purchased by
contracts, with fixation of prices set by Xxxxxxx.
All polyester for use in the Yarn shall be purchased
from vendors approved by Xxxxxxx at mutually agreed
upon prices. Manufacturer covenants and agrees that
Xxxxxxx shall be entitled to all rebates on the
purchase of Raw Materials, including cotton. Such
rebates shall be reflected as credits to Xxxxxxx in
Manufacturer's invoices for Yarn purchases hereunder.
(c) Manufacturing
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Either Manufacturer or Frontier shall manufacture the Yarn in
accordance with (i) the Specifications set forth in Schedule 1(r), as
may be amended from time-to-time, (ii) the Purchase Orders, (iii) any
other documentation provided by Xxxxxxx (iv) good manufacturing
practices and (v) applicable laws and regulations.
If the Specifications, excluding issues with Non-conforming Yarn and
Quality Control Standards, affect the "full running capacity" of the
mill (as agreed upon by Xxxxxxx and Manufacturer), an adjustment will
be made to the Price based upon Marginal Revenue.
(d) Title and Risk of Loss
All Yarn sold to Xxxxxxx by Manufacturer under this Agreement shall be
F.O.B. mill. All Yarn sold to Xxxxxxx by Frontier shall be delivered to
Xxxxxxx F.O.B. Xxxxxxx'x dock, less a freight allowance to Frontier of
[PROVISION REDACTED](*).
(e) Forecasts and Orders
(i) By the fifteenth (15th) of each month, Xxxxxxx shall
deliver to Manufacturer a non-binding rolling
forecast by specific yarn counts of its requirements
of Yarn for the next succeeding six (6) months.
(ii) Xxxxxxx shall deliver Purchase Orders for its Yarn
requirements to Manufacturer at least fifteen (15)
days before the required delivery date. The Purchase
Orders will list the next two (2) weeks'
requirements. A Purchase Order is a purchase
commitment and will not be considered as Anticipated
Shortfall.
--------------
(*) Material omitted pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission (the "SEC"). The omitted material has
been filed separately with the SEC.
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(iii) Manufacturer shall acknowledge all Purchase Orders in
writing within two (2) business days of receipt.
(f) Non-conforming Yarn
(i) All claims for Non-conforming Yarn shall be made by
Xxxxxxx to the Manufacturer within sixty (60) days of
the date of receipt by Xxxxxxx or, if the
non-conformity is of such a nature that it cannot be
readily discovered with the exercise of reasonable
diligence within sixty (60) days of the date Xxxxxxx
receives such Non-conforming Yarn, then within thirty
(30) days of Xxxxxxx'x discovery of the
non-conformity. In the event the Manufacturer should
discover that a defect has occurred before delivery
of Yarn to Xxxxxxx, then the Manufacturer will
immediately notify Xxxxxxx of such defect. In no
event will any claim for Non-conforming Yarn be
allowed after three hundred sixty five (365) days
after delivery of the Non-conforming Yarn to Xxxxxxx.
(ii) Manufacturer shall replace all Non-conforming Yarn as
soon as reasonably possible at no cost to Xxxxxxx and
shall reimburse Xxxxxxx for all costs of handling
and/or disposal of Non-conforming Yarn.
Notwithstanding any other provision of this
Agreement, Manufacturer shall not be required to
reimburse Xxxxxxx for Non-conforming Yarn if the
non-conformity resulted solely from Xxxxxxx'x
negligence or willful misconduct in the handling of
the Yarn.
(g) Sale of MVS and Other Yarns
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At Xxxxxxx'x request, Manufacturer may sell MVS or other yarn
to third parties. In this event, Frontier covenants and agrees
to replace from its other facilities the displaced capacity
resulting from such sale(s).
3. Price for Yarn
(a) Initial Price
[PROVISION REDACTED (APPROXIMATELY ONE-HALF PAGE)](*)
(b) Adjustment of Price
[PROVISION REDACTED (APPROXIMATELY ONE PAGE)](*)
(c) Payment Terms
(i) Manufacturer shall invoice Xxxxxxx whenever Yarn is
shipped to Xxxxxxx, based upon a Xxxx of Lading that indicates the
quantity shipped. Xxxxxxx shall pay Manufacturer's invoices within
thirty days of receipt thereof.
(ii) Xxxxxxx shall have the right to offset any amounts
Manufacturer may owe to Xxxxxxx hereunder against any amounts Xxxxxxx
owes Manufacturer hereunder, unless such dispute involves an issue over
whether the Yarn has been manufactured in accordance with the Quality
Control Standards. In the case of such a dispute over quality issues,
the right to offset will not apply until the dispute is resolved.
4. Quality Control
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(*) Material omitted pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission (the "SEC"). The omitted material has
been filed separately with the SEC.
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(a) To insure compliance with applicable laws and regulations and
to assure that only Yarn meeting the Specifications and
Quality Control Standards is sold to Xxxxxxx hereunder,
Manufacturer shall strictly conform to such Quality Control
Standards as Xxxxxxx may reasonably request from time to time.
(b) Upon reasonable prior notice, Xxxxxxx'x representatives shall
have the right to inspect the premises, equipment, procedures,
and facilities of Manufacturer prior to and during the period
of manufacturing of the Yarn. Xxxxxxx'x representatives shall
have access to all portions of the storage, production, and
other facilities of Manufacturer that are involved in, or
committed to, the production of the Yarn. Manufacturer shall
have the right to accompany Xxxxxxx'x representatives during
any such inspection. In the event that an inspection shall
require access to any plant owned by Frontier, Xxxxxxx'x
representatives shall have access to such plants upon the
execution of a confidentiality agreement reasonably designed
to protect Frontier's confidential and proprietary
information.
(c) Manufacturer shall immediately notify Xxxxxxx of any
inspection of its facility by any governmental agency, and
shall thereupon xxxxxxx Xxxxxxx with copies of all reports
relating to such inspections if such inspections involve or
may involve the production and storage of the Yarn.
(d) Manufacturer shall inspect all Raw Materials in accordance
with industry standards. Should Manufacturer discover any
non-conforming (whether by defect or otherwise) Raw Materials,
it shall discontinue any use of such non-conforming Raw
Materials and immediately notify Xxxxxxx if non-conforming Raw
Materials have been used in Yarn supplied to Xxxxxxx.
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(e) Manufacturer shall comply with the Business Partner Guidelines
of Xxxxxxx, a copy of which is attached as Schedule 4(e)
hereto, and agrees to submit to any on-site monitoring of its
manufacturing facilities in order to verify compliance with
such Business Partner Guidelines.
5. Term of Agreement
The Term of this Agreement shall commence on October 15, 2001, or upon the
establishment of Manufacturer, whichever is later, and continue indefinitely
unless terminated pursuant to Paragraph 6 below.
6. Early Termination
(a) Either party may immediately terminate this Agreement in the
case of:
(i) The breach by any party of a material covenant or
obligation under this Agreement and the failure of
the breaching party to cure, or to make substantial
progress toward curing, such breach within thirty
(30) days after receipt of written notice of the
breach from the terminating party; or
(ii) A party becoming insolvent, bankrupt, entering into
an arrangement with creditors or similar action, or a
petition or action for dissolution or liquidation of
the other party; or
(iii) Any of the circumstances of force majeure set forth
in Paragraph 9 occurs and continues for a period of
ninety (90) days; or
(iv) Assignment, in whole or in part, of any rights and
obligations derived from this Agreement without prior
and express authorization from the other party.
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(b) If Manufacturer fails to comply in any material way with any
of its material obligations three (3) or more times in any
consecutive 12-month period, such repeated failures shall
constitute grounds for immediate termination, regardless of
the corrections of such failures.
(c) After the first five (5) years of the Term of this Agreement,
Xxxxxxx may terminate this Agreement for any reason and at any
time upon two (2) years prior written notice to Manufacturer.
(d) At Xxxxxxx'x option, if there is a change of control in
Manufacturer resulting in Frontier no longer having at least a
fifty-one percent (51%) interest.
(e) If there is a change of control of Frontier resulting in the
current shareholders of Frontier owning less than fifty-one
percent (51%) of the voting control of Frontier, Xxxxxxx shall
have the option to purchase the assets of Manufacturer at book
value.
(f) Upon the termination of this Agreement for any reason, Xxxxxxx
will only be liable for any confirmed Purchase Orders pursuant
to Paragraph 2(e).
(g) Upon termination of this Agreement, all rights, obligations,
and causes of action accruing hereunder prior to such
termination shall survive and the provisions of this Agreement
shall continue to be controlling for the purpose of
determining the rights of the parties hereto. The waiver or
repeated waiver by either party hereto of any breach of any
provision of this Agreement by the other party shall not be
deemed a waiver of a future breach.
(h) In the event of either a fundamental decrease in the demand
for Yarn or the cost of the Yarn becoming uncompetitive,
Xxxxxxx shall have the right to cause the Manufacturer to
close any plant
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operated by the Manufacturer upon sixty (60) days notice. If
Xxxxxxx shall exercise this right, the Manufacturer will sell
the assets of the plant to be closed and Xxxxxxx shall
reimburse the Manufacturer the difference between the asset
selling price and the book value of the asset sold, in
addition to the reasonable expenses of closing the plant.
7. Indemnification and Insurance
(a) Manufacturer shall indemnify, defend, and hold Xxxxxxx, its
employees and agents and/or any direct or indirect customer of
Xxxxxxx, harmless from and against any and all liabilities,
injuries, claims, suits, costs, expenses, losses and damages,
including reasonable attorneys' fees, (i) brought by any
lawful governmental authority against or concerning the Yarn
or (ii) that may in any way arise out of damage, death,
illness, or injury to any person or property, in connection
with Manufacturer's performance or failure to perform in
accordance with this Agreement or other liabilities arising
out of any act or omission on the part of the Manufacturer;
provided, however, that (A) Xxxxxxx shall give Manufacturer
prompt notice of any such claim and Xxxxxxx shall cooperate
with Manufacturer in defending against any such claim and (B)
such liabilities, damages, etc. are not caused solely by the
negligence or willful misconduct of Xxxxxxx. Damages of an
indirect or consequential nature, such as lost profits, shall
not be recoverable hereunder.
(b) Xxxxxxx shall indemnify, defend, and hold Manufacturer, its
employees and agents, harmless from and against any and all
liabilities, injuries, suits, costs, expenses, losses and
damages, including reasonable attorneys' fees, arising out of
damage, death, illness, or injury to any person or property
arising from Xxxxxxx'x performance or failure to perform in
accordance with this Agreement or other liabilities arising
out of any act or omission on the part of Xxxxxxx; provided,
however, that (i)
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Manufacturer shall give Xxxxxxx prompt notice of any such
claim and Manufacturer shall cooperate with Xxxxxxx in
defending against any such claim and (ii) such liabilities,
damages, etc. are not caused solely by the negligence or
willful misconduct of Manufacturer.
(c) Manufacturer agrees to obtain and maintain at its own expense,
through and until the expiration of the last of the
limitations periods under any applicable legislation,
insurance coverage written on an occurrence basis and
providing protection to Xxxxxxx from any and all losses,
liabilities, claims, demands, fines, damages, judgments,
settlement actions and causes of action of every kind and
nature, including all legal fees and all expenses in
connection therewith, arising out of Manufacturer's operations
or Manufacturer's negligence or intentional misconduct. Such
insurance shall be maintained as follows: (i) comprehensive
general liability, including bodily injury and/or property
damage in amounts not less than [PROVISION REDACTED](*) per
occurrence/[PROVISION REDACTED](*) aggregate; (ii) workers'
compensation insurance at statutory limits; and products
liability coverage in the amount of [PROVISION REDACTED](*).
Within thirty (30) days from the date of execution of this
Agreement, Manufacturer shall submit to Xxxxxxx a copy of such
insurance policy or policies, or an acceptable certificate of
insurance from a licensed carrier acceptable to Xxxxxxx,
evidencing the insurance coverage required herein and naming
Xxxxxxx, its subsidiaries, divisions, and affiliates and each
of their respective officers, directors and employees as
additional insured parties and loss payees. Such policies
shall provide that the insurer shall not terminate or
materially modify such coverage without written notice to
Xxxxxxx at least thirty (30) days in advance thereof.
Manufacturer acknowledges and agrees that its acquisition of
the
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(*) Material omitted pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission (the "SEC"). The omitted material has
been filed separately with the SEC.
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insurance coverage required hereunder shall in no way affect
or limit its duties of indemnity provided for in this
Agreement. Manufacturer shall provide Xxxxxxx with renewal
policies or certificates of insurance in accordance with the
terms hereof on an annual basis.
8. Independent Contractor
Manufacturer is an independent contractor. This Agreement does not make
or constitute Manufacturer as the agent or representative of Xxxxxxx or Frontier
for any purpose whatsoever. Manufacturer shall have no power or authority to act
on behalf or in the name of Xxxxxxx or Frontier or to bind Xxxxxxx or Frontier,
either directly or indirectly, in any manner or thing, without the express
written authorization of Xxxxxxx or Frontier. The operation of any equipment or
machinery or devices used by Manufacturer and the employment of labor to
manufacture, store, assemble, load and deliver the Yarn shall be the sole
responsibility of Manufacturer. Neither Xxxxxxx nor Frontier shall be liable for
any injuries or damages incurred by Manufacturer or its agents or employees as a
result of its activities in the performance of this Agreement. The duty of
Frontier to supply Additional Capacity under the terms of this Agreement shall
not affect the status of Manufacturer as an independent contractor.
9. Force Majeure
Delay or failure of performance of either party shall be excused to the
extent that such failure shall be caused by an act of God, strike or other labor
dispute, war or war conditions, riot, civil disorder, government regulation or
action, embargo, fire, flood, accident or other casualty not resulting from the
negligence of either party hereto or by any other cause beyond the control of
the party whose performance shall be delayed or prevented thereby. The party
invoking the provisions of this section shall give the other party prompt notice
in writing of the pending of or the occurrence of any such cause and shall make
all reasonable efforts to remove such force majeure within thirty (30) days of
such notice. The time
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for performance hereof shall be extended for a period equal to the duration of
such disabling cause, unless this Agreement is terminated pursuant to the
provisions of Paragraph 6 of this Agreement.
10. Records
(a) Manufacturer shall maintain and retain, for a period of three
(3) years, accurate records of production, shipments, rejected
Raw Material, rejected or Non-conforming Yarn, quality control
records, records of production, and records of shipment for
the Yarn, as well as other records required to be kept by
applicable local, state or federal law or as may be reasonably
requested by Xxxxxxx or Frontier. All records required
hereunder shall be maintained at yarn count level detail where
applicable. Such records shall be available to Xxxxxxx or
Frontier for audit verification upon reasonable prior notice
during Manufacturer's regular business hours and shall be
retained in Manufacturer's files for inspection by Xxxxxxx or
Frontier for a period of not less than two (2) years after
completion of production, unless otherwise agreed upon in
writing by the parties. Notwithstanding anything to the
contrary contained herein, Manufacturer shall retain any
financial, accounting, tax, fixed asset or any other records
relevant to tax and financial information for a period of time
corresponding to the relevant statute of limitations for
examination of tax returns of Manufacturer.
(b) Manufacturer shall provide Xxxxxxx and Frontier with monthly
accounting reports of Raw Material purchases (including at
Xxxxxxx'x or Frontier's request, copies of paid invoices),
usage's, inventory values, Yarn manufactured for Xxxxxxx under
this Agreement as well as Yarn held in storage by Manufacturer
at the end of each month.
11. Notices
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All notices or other communications necessitated under the provisions of this
Agreement shall be deemed given if delivered by hand or if sent by U.S.
certified mail, postage prepaid, return receipt requested, or by facsimile, with
confirmation sent by certified mail, to the parties at the following addresses:
If to Xxxxxxx: Xxxxxxx Corporation
Attn: Legal Department
0000 Xxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
If to Manufacturer: Frontier Yarns, LLC
0000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
If to Frontier: Frontier Spinning Xxxxx, Inc.
Attn: Xx. Xxxxxx Xxxxxxx
0000 Xxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
12. Governing Law
This Agreement shall be governed by and construed in all matters in accordance
with the laws of the State of Alabama, including questions regarding validity,
construction, performance and compliance.
13. Severability
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If any provision of this Agreement shall be held illegal, unenforceable, or in
conflict with any law governing this Agreement, the offending provision shall be
deleted and the remaining provisions of the Agreement shall not be affected
thereby.
14. Assignment
This Agreement may not be assigned by any party hereto without the prior written
consent of the other parties. A consent to one assignment shall not relieve the
assignee of the obligation to obtain the consent of the other parties to a
subsequent assignment.
15. Modification or Waiver
The terms of this Agreement may not be modified nor shall any provision be
waived as it applies to one party unless such modification or waiver shall be
incorporated in a written amendment to this Agreement, executed by all parties
with respect to a modification, or executed by the party which has the benefit
of any term or provision which the other parties desire to have waived.
16. Confidentiality
(a) In order for Manufacturer to perform the services provided in
this Agreement, the parties must disclose to Manufacturer
certain trade secrets, including but not limited to,
processes, equipment, specifications, manufacturing techniques
and business data which the parties consider to be proprietary
and confidential. Manufacturer shall regard as confidential
and proprietary all of the information communicated to it by
the parties in connection with this Agreement (which
information shall at all times be the property of the party
disclosing such information).
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(b) Manufacturer shall not at any time (i) use such information
for any purpose other than in connection with the performance
of its obligations under this Agreement or (ii) disclose any
portion of the such information to third parties.
(c) Manufacturer shall promptly upon the termination of this
Agreement return to the disclosing party, without retaining
copies thereof, all such information which is in written or
tangible form (including, without limitation, all copies,
summaries and notes of the contents thereof), regardless of
the party causing the same to be in such form, and destroy all
written materials prepared by Manufacturer which incorporates
or include any such information.
(d) Manufacturer shall disseminate such information to its
employees only on a "need-to-know" basis. Manufacturer shall
cause each of its employees who have access to such
information to comply with the terms and provisions of this
paragraph 16 in the same manner as Manufacturer is bound
hereby, with Manufacturer remaining responsible for the
actions and disclosures of any such employees. In addition,
except as otherwise provided herein, Manufacturer shall not
disclose to third parties any such information disclosed by
the parties or developed for the parties by Manufacturer or
the terms and conditions of this Agreement. Manufacturer
agrees that any breach of this paragraph 16 by Manufacturer or
its employees shall cause irreparable injury to Xxxxxxx, that
the parties shall be entitled, among other remedies, to
specific performance and injunctive or other equitable relief
as a remedy against Manufacturer and/or the employee(s), as
the case may be, for any such breach.
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IN WITNESS WHEREOF the parties have executed this Supply Agreement in
three (3) counterparts, all of which shall be deemed an original instrument, in
the presence of the undersigned witnesses.
XXXXXXX CORPORATION
By
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Its
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FRONTIER YARNS, LLC
By
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Its
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FRONTIER SPINNING XXXXX, INC.
By
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Its
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SCHEDULE A
[PROVISION REDACTED (APPROXIMATELY ONE PAGE)](*)
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(*) Material omitted pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission (the "SEC"). The omitted material has
been filed separately with the SEC.
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SCHEDULE B
[PROVISION REDACTED (APPROXIMATELY ONE PAGE)](*)
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(*) Material omitted pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission (the "SEC"). The omitted material has
been filed separately with the SEC.
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SCHEDULE C
(Not Final)
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SCHEDULE 1(n)
Xxxxxxx Purchase Order
(not final)
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Schedule 1(o)
Quality Control Standards and Specifications
(not final)
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SCHEDULE 4(e)
Xxxxxxx'x Business Partner Guidelines
Xxxxxxx Corporation will only do business with companies and individuals that
share the company's adherence to high legal, ethical and moral standards.
Xxxxxxx'x goal is to create and encourage creation of model operations that
provide good jobs at fair wages and also improve conditions in their
communities.
All suppliers, joint ventures, vendors and other business partners (the
"Business Partners") are expected to comply with the Xxxxxxx International
Operating Principles attached hereto and to assure compliance in all
contracting, subcontracting or other relationships. In establishing these
guidelines, Xxxxxxx believes it is effectively exercising its economic leverage
with business partners to encourage their full compliance with laws designed to
protect their employees and to support the highest standards of business
conduct.
The following Guidelines have been developed to ensure consistent compliance by
all Business Partners. Xxxxxxx recognizes that the Guidelines will also assist
management in selecting business partners that follow work place standards and
practices consistent with Xxxxxxx'x International Operating Principles.
Selection Guidelines
Legal and Ethical Standards
Xxxxxxx will require that all Business Partners fully comply with all applicable
legal and ethical standards and requirements of the countries in which they are
doing business, including the United States. Xxxxxxx will not do business with
any Business Partner that violates the legal and ethical rights of employees in
any way.
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EMPLOYMENT PRACTICES
Wages and Benefits
Xxxxxxx will only do business with Business Partners who provide reasonable
wages and benefits that equal or exceed the prevailing local industry standard.
Working Hours
Xxxxxxx will only do business with Business Partners that comply with the
prevailing local work hours and do not exceed them, except for appropriately
compensated overtime.
Child Labor
Xxxxxxx will not do business with Business Partners that use child labor.
Xxxxxxx will not use vendors/suppliers who employ people in violation of local
mandatory school age or under the legal employment age in each country. If
Xxxxxxx xxxxx the work being done is inappropriate or poses possible risk to
employees at the legal minimum employment age, it reserves the right to
establish its own minimum age limit for Business Partners on a
country-by-country basis. Under no circumstances will the minimum age be under
15. Xxxxxxx supports the development of legitimate workplace apprenticeship
programs for the educational benefits of younger people.
Prison/Forced Labor
Xxxxxxx will not knowingly do business with Business Partners that use
involuntary, indentured or forced labor, including prison labor that is not on a
voluntary basis. This includes labor that is required as a means of political
coercion or as punishment for holding or for peacefully expressing political
views.
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Discrimination
While Xxxxxxx recognizes and respects cultural differences, the company believes
that employees should be employed on the basis of their ability to do the job,
rather that on the basis of personal characteristics or beliefs. In-country
laws, however, will take precedent over company policies and directions.
DISCIPLINARY PRACTICES
Xxxxxxx will not do business with Business Partners that use corporal punishment
or other forms of mental or physical coercion.
HEALTH AND SAFETY
Xxxxxxx will use Business Partners that who provide employees with safe,
adequate work environments and protections from exposure to hazardous conditions
or materials. Any Business Partner that provides residential facilities for
employees must ensure that it is safe, healthy and adequate housing.
ENVIRONMENTAL REQUIREMENTS
Xxxxxxx will use only those Business Partners that share the company's
commitment to the community and to the environment. They must conform to all
legal requirements regarding environmental codes and guidelines. Further,
Xxxxxxx will seeks Business Partners who demonstrate a commitment to progressive
environmental practices and to preserving the earth's resources.
RIGHT OF INSPECTION
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Xxxxxxx will assure proper implementation of and compliance with the standards
set forth in these Guidelines by implementing affirmative measures such as on
site inspection of Business Partners' facilities.
XXXXXXX CORPORATION
OPERATING PRINCIPLES
XXXXXXX CORPORATION is a manufacturer and marketer of the highest quality
apparel products with superior customer value. To maintain its tradition and
reputation as a superior employer and a responsible corporate citizen, Xxxxxxx
has established International Operating Principles for the corporation and its
business partners.
Xxxxxxx expects its commitment to the highest standards of business ethics and
regards for human rights throughout the world to extend to all locations in
which it operates. While Xxxxxxx recognizes that legal and cultural differences
exist and standards may vary by country, there are certain fundamental
principles that should apply universally. As Xxxxxxx expands operations and
businesses internationally, these principles provide the foundation for ongoing
evaluation of employment practices and environmental compliance.
Xxxxxxx has also defined certain standards and guidelines for our business
partners, including vendors, suppliers, contractors, and joint ventures. In
developing these guidelines, it is Xxxxxxx'x desire to identify and give
preference to potential partners who share our commitment to quality products as
well as to quality business and community relationships.
LEGAL AND ETHICAL PRACTICES
Xxxxxxx expects operating facilities and employees to comply with all applicable
laws, practices and regulations of the countries in which they are
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doing business, including those of the United States. The company will not
condone any violation of any such regulation or laws.
Xxxxxxx believes in maintaining high ethical standards in conducting business
activities and will not approve or be involved in practices of questionable
conduct.
EMPLOYMENT PRACTICES
Use of child labor is not permissible. Employees must be over the applicable
minimum legal age requirements or be at least 17 years old, whichever is
greater. Xxxxxxx facilities must observe all child labor laws, specifically
wages, working conditions, hours of work and education.
Xxxxxxx will not condone or permit the use of forced, involuntary or
uncompensated labor under any circumstances. The use of corporal punishment,
other mental or physical disciplinary actions or sexual harassment will not be
allowed. Xxxxxxx will not knowingly use or purchase materials or products
manufactured by involuntary or forced labor of any type, including prison labor
that is not on a voluntary basis.
Xxxxxxx will provide reasonable wages and benefits that match or exceed the
prevailing local industry practices and that are at or above legal mandates.
Paying employees at competitive levels supports the company's goal to motivate
and keep the best employees within its business activity. Xxxxxxx strongly
encourages employee participation through the sharing of ideas, which fosters an
open relationship. There is also an ongoing emphasis on employee training,
education, and development.
While Xxxxxxx recognizes and respects cultural differences, the company believes
that employees should be hired on the basis of their ability to do the job, not
on the basis of their personal characteristics or beliefs. Xxxxxxx strictly
prohibits discrimination with regard to race, color, national origin,
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religion, gender, age, sexual orientation or disability. Xxxxxxx will actively
respect, promote and manage diversity within its employees. In-country laws
will, however, always take precedent over company policies.
Xxxxxxx believes in positive employee relations that are firmly established in
mutual respect, fairness, and openness in the expression of ideas and opinions.
Xxxxxxx recognizes and rewards excellent performance and encourages its
employees to participate in the decision making process because this permits the
company to successfully compete in a global economy.
HEALTH AND ENVIRONMENTAL
Xxxxxxx is committed to protect and preserve the environment, as well as to
fully comply with all local government laws and international standards. All
operations must adhere to national laws regarding the protection and
preservation of the environment.
Xxxxxxx believes in providing a safe and healthy workplace in compliance with
local laws, including adequate facilities and protections from exposure to
hazardous conditions or materials. Employees will be trained in safety rules,
practices and use of protective equipment.
COMMUNITY RELATIONS AND CONTRIBUTIONS
Xxxxxxx Corporation is committed to being a good corporate citizen in every
country where it operates. All facilities are encouraged to contribute to
improving their communities by participating and sponsoring activities, such as
adopting schools, promoting educational programs and involvement in service
organizations.
COMMUNICATION
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Xxxxxxx Corporation believes in maintaining appropriate confidential records,
but strongly encourages open communication with its employees and business
partners.
INSPECTION
Xxxxxxx will make it clear to all employees that the company expects them to
comply with all laws and with its broader Operating Principles. To further
assure proper implementation of and compliance with its established standards,
Xxxxxxx Corporation, or a third party designated by Xxxxxxx Corporation, will
undertake affirmative measures, such as on-site inspection of the facilities, to
implement and monitor these standards.
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