1
EXHIBIT 10.9
[Certain information has been omitted herein
pursuant to a request for confidential
treatment pursuant to Rule 24b-2]
SECOND AMENDED AND RESTATED
PULP SALES SUPPLY CONTRACT
Between
GRAYS HARBOR PAPER, L.P.,
a Washington limited partnership,
successor by assignment to
Grays Harbor Industrial, Inc.,
a Washington corporation,
"Buyer"
and
XXXX & XXXXXX, INC.
a Delaware corporation
"Seller"
Dated: 12/17 , 1997
--------------------------
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TABLE OF CONTENTS
Page
----
1. Incorporation by Reference; Purchase and Sale; Quantity
and Quality ................................................... 2
2. Term .......................................................... 3
3. Price ......................................................... 3
4. Payment Terms ................................................. 4
4A. Credit ........................................................ 5
5. Security ...................................................... 5
6. Care of Collateral ............................................ 6
7. Specifications ................................................ 6
8. Warranty and Liability ........................................ 7
9. Relationship of Parties ....................................... 8
10. Costs and Attorney Fees ....................................... 8
10.1 No Suit or Action Filed .................................. 8
10.2 Arbitration or Mediation; Trial and Appeal ............... 8
10.3 Definitions .............................................. 9
11. Assignment .................................................... 9
12. Standards of Performance ...................................... 9
13. Additional Terms and Conditions ............................... 9
14. Entire Agreement .............................................. 9
15. Notice ........................................................ 9
16. Time of Essence ............................................... 10
EXHIBIT A - MARKETING AGREEMENT
EXHIBIT B - SPECIFICATIONS
EXHIBIT C - ADDITIONAL TERMS AND CONDITIONS
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SECOND AMENDED AND RESTATED
PULP SALES SUPPLY CONTRACT
DATE: As of January 1, 1998
PARTIES: GRAYS HARBOR PAPER, L.P.,
a Washington limited partnership,
successor by assignment to
Grays Harbor Industrial, Inc.,
a Washington corporation
0000 Xxxxxx
Xxxxxxx, XX 00000 ("Buyer")
Fax No. 000-000-0000
XXXX & XXXXXX, INC.
a Delaware corporation
0000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, XX 00000 ("Seller")
Fax No. 000-000-0000
PREAMBLES:
A. Pursuant to agreement dated as of June 3, 1993 ("original supply
contract") as amended and restated in its entirety by agreement dated as of
September 28, 1994 ("amended and restated supply contract"), Seller agreed to
sell to Buyer and Buyer agreed to purchase from Seller substantially all of the
Pulp requirements for Buyer's uncoated free sheet paper mill in Hoquiam,
Washington ("Hoquiam mill"). As used herein, the term "Supply Contract" means
this Second Amended and Restated Pulp Sales Supply Contract.
B. (Confidential Treatment Requested)
C. Circumstances of the parties have changed as have their expectations
with respect to the pricing mechanism, volume and mix of Pulp to be sold and
purchased under the amended and restated supply contract as well as the duration
of the contract itself and the payment and security provisions after the
additional bonus price increase notes have been fully satisfied.
D. It is the intention and desire of the parties that the amended and
restated supply contract be further amended and restated in its entirety all as
more particularly set forth herein to reflect the parties' changed expectations.
As used herein the term "Supply Contract" means this Second Amended and Restated
Pulp Sales Supply Contract.
1 - SECOND AMENDED AND RESTATED PULP SALES SUPPLY CONTRACT
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AGREEMENTS:
1. Incorporation by Reference; Purchase and Sale; Quantity and Quality.
1.1 By this reference the Preambles are incorporated in and made
a part of this Supply Contract.
1.2 For the calendar year 1998, Seller agrees to sell and deliver
to Buyer and Buyer agrees to purchase and take from Seller 72,000 air dried
metric tons ("ADMT") of Xxxxxx bleached Kraft baled pulp ("Pulp") of which at
least 36,000 ADMT shall be sawdust pulp ("Sawdust Pulp") and approximately
36,000 ADMT shall be softwood pulp ("Softwood Pulp"). Seller shall deliver Pulp
at approximately 275 ADMT per day.
1.3 Any year after 1998 for which the parties, pursuant to
Section 3.5 herein, agree in writing as to (1) an extension of the Supply
Contract, and (2) the price, volume and mix of Pulp to be sold and purchased
during such year is an "Extension Year." Any year after 1998 which is not an
Extension Year is a "Phase Down Year." During a Phase Down Year Seller agrees to
sell to Buyer and Buyer agrees to purchase from Seller 50,000 ADMT of Pulp of
which at least 25,000 ADMT shall be Sawdust Pulp and approximately 25,000 ADMT
shall be Softwood Pulp. Seller shall deliver Pulp at approximately 200 ADMT per
day.
1.4 Buyer may adjust tonnage from week to week to accommodate the
mill's production changes on a day-to-day basis, provided, however, that the mix
of Pulp purchased by Buyer hereunder shall remain substantially 50% Sawdust Pulp
and 50% Softwood Pulp. Seller reserves the right to provide Pulp in satisfaction
of its obligations under this Supply Contract either through its pulp
manufacturing facilities in Halsey, Oregon or from other sources, provided such
pulp meets the specification requirements or the functional equivalent thereof
of this Supply Contract.
1.5 If Seller's softwood fiber costs escalate disproportionately
to the increase in price for Softwood Pulp hereunder, at Seller's written
request the parties in good faith will negotiate adjustments to the volume, mix
and price of Softwood Pulp to be sold and purchased hereunder in an attempt to
ameliorate the adverse economic effect of such disproportionate escalation in
softwood fiber costs.
2 - SECOND AMENDED AND RESTATED PULP SALES SUPPLY CONTRACT
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2. Term.
2.1 Subject to earlier termination as provided herein, this
Agreement shall become effective as of January 1, 1998 and shall continue
through December 31, 1999 unless extended as herein provided.
2.2 Buyer will promptly notify Seller in writing of any material
modification or amendment of the marketing agreement ("Marketing Agreement"),
copy of which is attached hereto as Exhibit A between Buyer and Weyerhaeuser
Company ("Weyerhaeuser"), and of any election by Weyerhaeuser or by Buyer to
cancel or terminate the Marketing Agreement. Notwithstanding any other
provisions to the contrary herein, (a) in the event of any material modification
or amendment of the Marketing Agreement which Seller in good faith determines
will adversely affect Seller, Seller may terminate this Supply Contract upon
twelve (12) months written notice of termination to Buyer; and (b) in the event
of any cancellation or termination of the Marketing Agreement during the term of
this Supply Contract, Seller may terminate this Supply Contract as of the
termination of the Marketing Agreement by giving Buyer written notice of
termination no later than sixty (60) days after Seller's receipt of written
notice from Buyer that Buyer or Weyerhaeuser has elected to terminate the
Marketing Agreement.
3. Price.
3.1 The price of the Pulp purchased and sold under this Supply
Contract shall be a delivered price for Pulp to the Buyer or Buyer's agent
(including common carrier) at Seller's Xxxxxx, Oregon facility. Buyer or Buyer's
agent shall have the authority to accept or reject the goods with the right of
inspection upon delivery at the Seller's Halsey, Oregon facility. Seller shall
arrange for and bear the cost of all freight and insurance in connection with
the transportation of the Pulp to Buyer's Hoquiam paper mill.
3.2 The price per ADMT for Sawdust Pulp sold and delivered in any
month during the first year of this Supply Contract shall be the price reported
in the publication Pulp & Paper Week for Southern mixed (U.S.) bleached hardwood
Kraft for such month, less the following adjustments: (Confidential Treatment
Requested)
3 - SECOND AMENDED AND RESTATED PULP SALES SUPPLY CONTRACT
6
3.3 The price per ADMT for Softwood Pulp sold and delivered in
any month during the first year of this Supply Contract shall be (Confidential
Treatment Requested).
3.4 For any Phase Down Year the price per ADMT for Sawdust Pulp
and Softwood Pulp shall be the then prevailing market price to be determined by
the parties as a result of good faith negotiations.
3.5 Commencing no later than September 1, 1998 and September 1 of
any Extension Year, except as otherwise herein provided, the parties shall
review the pricing, payment terms, volume, mix and any other provisions of this
Supply Contract to determine whether the Supply Contract is meeting the parties'
expectations. If the parties reach agreement as to such modifications by October
31, 1998 or by October 31 of any succeeding Extension Year, as the case may be,
the modifications will become effective as of January 1, 1999 or January 1 of
such succeeding Extension Year. If such agreement is not reached by October 31,
1998 or by October 31 of any succeeding Extension Year, as the case may be, this
Supply Contract will terminate as of December 31, 1999 or as of December 31 of
any such succeeding Phase Down Year. During any Phase Down Year, the volume,
mix, pricing and payment terms shall be as otherwise provided herein for a Phase
Down Year.
4. Payment Terms.
4.1 As used herein the term "invoice month" means the calendar
month for which Seller has invoiced Buyer for Pulp sold and delivered during
such period. Seller will invoice Buyer weekly for Pulp delivered during the
week. Weekly invoices of Pulp will be based upon the price reported in the issue
of Pulp & Paper Week most recently published before the invoice and will be
adjusted at the end of the invoice month to reflect any increase or decrease in
the price reported in Pulp & Paper Week for the invoice month in which the Pulp
was sold and delivered. Payment will be due within fifty-five (55) days from
date of invoice. Any amount not paid within fifty-five (55) days from date of
invoice will bear interest at the rate per annum (360-day year) equal to one
percentage point above the Prime Rate from time to time published by the Wall
Street Journal or if the Wall Street Journal is not then being published, or if
a quotation of the Prime Rate is for any reason not available therein, then the
Prime Rate as published in another national financial reporting publication, as
selected by Seller. Interest will accrue from the fifty-fifth day after the date
of invoice until paid, and will be payable upon demand of the Seller.
4 - SECOND AMENDED AND RESTATED PULP SALES SUPPLY CONTRACT
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4.2 Buyer shall cause Weyerhaeuser to pay directly to Seller
fifty percent (50%) of the "Purchase Price" (as defined in the Marketing
Agreement) receivable by Buyer from Weyerhaeuser pursuant to the Marketing
Agreement. If Seller fails to receive full payment when due under this Supply
Contract, Seller shall immediately notify Buyer in writing and Buyer shall have
five (5) business days to make payment. If payment is not made by Buyer to
Seller within said five (5) day period, then Seller, at its option, may cease
delivery of Pulp to Buyer.
4A. Credit.
If at any time Buyer's financial responsibility becomes impaired
or unsatisfactory to Seller, based on Seller's reasonable judgment, Seller may
demand satisfactory proof of Buyer's financial responsibility or satisfactory
additional security for performance given by Buyer. Failing this, payment shall
be made in cash on delivery, otherwise Seller shall have the right to decline to
make further shipments or deliveries. Nothing in this clause shall affect the
obligation of the Buyer to pay for the Pulp contracted for.
5. Security.
5.1 Under the original supply contract and the indemnification
and security agreement executed concurrently therewith, and under the amended
and restated supply contract, Buyer granted to Seller security interests in
various assets. Contemporaneously with the execution of the amended and restated
supply contract, the parties entered into an "Amended and Restated Security
Agreement" which is an amendment and restatement of the indemnification and
security agreement. In the Amended and Restated Security Agreement, as the same
may be amended, the security interests granted in the original supply contract
and in the indemnification and security agreement are continued in full force
and effect and a security interest in certain additional collateral was granted
by Buyer to Seller as security for payment and performance of Buyer's
obligations hereunder as more fully specified therein. At Seller's request,
Buyer will execute such UCC financing statements and other instruments as Seller
and Seller's counsel consider appropriate to continue Seller's security interest
and to implement the provisions of this Section 5. Seller shall have and be
entitled to execute all rights and remedies available to a secured party under
the laws of the states of Washington and Oregon.
5.2 At Buyer's request, Seller will enter into an intercreditor
agreement with Buyer's lender(s) by the terms of which Seller will agree to
subordinate to such lender(s) Seller's security interest as to an undivided 50%
of Buyer's work in process, finished goods (including the UCFS paper produced
from the Pulp), proceeds from the sale thereof and accounts receivable, provided
that such lender(s) acknowledge the priority
5 - SECOND AMENDED AND RESTATED PULP SALES SUPPLY CONTRACT
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of Seller's security interest as to an undivided 50% of such collateral and
consent to the direct payment by Weyerhaeuser to Seller of 50% of the Purchase
Price receivable by Buyer from Weyerhaeuser as provided in this Section 5. The
form and content of the intercreditor agreement must be reasonably acceptable to
Seller and Seller's counsel.
6. Care of Collateral.
6.1 At all times subsequent to the delivery of the Pulp to Buyer
or Buyer's agent (including a common carrier) at Seller's Xxxxxx, Oregon
facility, or elsewhere, title to and risk of loss as to the Pulp will remain in
Buyer, and Buyer at all times shall refrain from waste and shall exercise
reasonable care as to the stored Pulp. During storage, Buyer will (a) not
commingle the stored Pulp with other property of Buyer or others, (b) clearly
identify the storage area, (c) limit access to the storage area to only those
persons specifically authorized by Buyer and (d) provide adequate on-site
security to prevent theft and vandalism of the Pulp.
6.2 While Buyer is not in default under this Supply Contract,
Buyer may withdraw Pulp from storage for the exclusive purpose of converting
same into UCFS paper under this Supply Contract. Buyer shall not use or dispose
of the Pulp for any purpose other than to convert same into UCFS paper in
accordance with the terms of this Supply Contract.
6.3 In the event that production is reduced at Seller's Xxxxxx
pulp mill due to causes beyond the control of Seller, Seller will allocate that
pulp which is produced at its Xxxxxx pulp mill ratably among all Seller's
regular contractual pulp customers, including Buyer. Notwithstanding any other
provision of this Supply Contract, if Seller completely discontinues the
operation of its Xxxxxx pulp facility, Seller will be relieved of any further
duty or obligation under this Supply Contract as of one year following Seller's
written notice to Buyer of such discontinuance. Seller has no plans to
discontinue operations of the Xxxxxx pulp facility.
7. Specifications.
7.1 Pulp to be purchased and sold hereunder shall substantially
conform with the specifications attached hereto as Exhibit B and by this
reference made a part hereof. Any amendment or modification of the
specifications shall only become effective when Buyer and Seller agree in
writing to such amendment or modification.
7.2 Seller shall furnish Buyer, on a regular basis, with
information compiled by Seller at the Xxxxxx pulp mill (including quality
reports and tests performed in the ordinary
6 - SECOND AMENDED AND RESTATED PULP SALES SUPPLY CONTRACT
9
course of Seller's production of Pulp) to verify Seller's substantial compliance
with the specifications.
7.3 Seller and Buyer shall meet once per calendar quarter (more
often if needed) to review quality issues.
8. Warranty and Liability.
Seller warrants that Pulp sold hereunder conforms to the
specifications contained in this Supply Contract, that the Pulp does not
infringe any valid U.S. patent and that title is unencumbered. THERE ARE NO
WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. SPECIFICALLY, SELLER MAKES
NO WARRANTY THAT PULP SUPPLIED BY SELLER HEREUNDER WHICH MEETS THE
SPECIFICATIONS OF THIS SUPPLY CONTRACT WILL BE SUITABLE FOR THE PRODUCTION OF
UCFS PAPER AT BUYER'S HOQUIAM PAPER MILL. BUYER ENTERS INTO THIS SUPPLY CONTRACT
HAVING CONDUCTED OR HAVING CAUSED TO BE CONDUCTED SUCH TEST RUNS UTILIZING
SELLER'S PULP AS BUYER HAS CONSIDERED APPROPRIATE. UNDER NO CIRCUMSTANCE SHALL
SELLER HAVE ANY OBLIGATION UNDER THIS SUPPLY CONTRACT OR OTHERWISE EXCEPT TO
PROVIDE BUYER WITH PULP WHICH MEETS THE SPECIFICATIONS OF THIS SUPPLY CONTRACT.
SELLER SHALL NOT BE LIABLE FOR ANY CONSEQUENTIAL, INCONSEQUENTIAL, INCIDENTAL OR
SPECIAL DAMAGES OF ANY KIND WHATSOEVER. BUYER'S SOLE REMEDY AND SELLER'S SOLE
LIABILITY FOR DEFECTIVE PULP SHALL BE REPLACEMENT OR CREDIT. IN NO EVENT SHALL
SELLER'S LIABILITY EXCEED THE PURCHASE PRICE OF DEFECTIVE PULP.
BUYER SHALL HAVE NO REQUIREMENT OR LIABILITY TO TAKE OR PAY FOR
ANY CERTAIN QUANTITY OF PULP OTHER THAN AS PROVIDED IN SECTIONS 1.2, 1.3 AND 3.5
HEREIN. IN NO EVENT SHALL BUYER BE LIABLE TO SELLER FOR ANY CONSEQUENTIAL,
INCONSEQUENTIAL, INCIDENTAL, SPECIAL, DIRECT OR INDIRECT LOSS, HARM, CLAIMS OR
DEMANDS ARISING OUT OF OR RELATED TO BUYER'S FAILURE OR INABILITY TO PURCHASE
PULP, INCLUDING WITHOUT LIMITATION ANY CURTAILMENT OR SUSPENSION OF PRODUCTION
OF UCFS PAPER, WHETHER OR NOT DUE TO THE FAULT OF BUYER OR OTHERS.
HOWEVER, IF DURING ANY 30-DAY PERIOD WHICH BEGINS AFTER THE
EARLIER OF (A) THE DATE AS OF WHICH BUYER COMMENCED OPERATION OF TWO PAPER
MACHINES AT THE HOQUIAM PAPER MILL, OR (B) MARCH 31, 1994, BUYER (EXCEPT FOR
FORCE MAJEURE AS HEREIN DEFINED) SHOULD FAIL TO TAKE OR PAY FOR SEVENTY-FIVE
PERCENT (75%) OF THE VOLUMES OF PULP SELLER IS OBLIGATED TO DELIVER UNDER THIS
SUPPLY CONTRACT, SELLER SHALL NOTIFY BUYER IN WRITING OF SUCH SHORTFALL. IF
WITHIN FIVE (5) BUSINESS DAYS OF ITS RECEIPT OF SUCH NOTICE BUYER HAS NOT
RESUMED TAKING PULP AT THE RATE OF AT LEAST SEVENTY-FIVE PERCENT (75%) OF THE
MAXIMUM VOLUMES SELLER IS OBLIGATED TO DELIVER UNDER THIS SUPPLY CONTRACT OR HAS
NOT MADE OTHER SUITABLE ARRANGEMENTS WITH SELLER FOR THE DISPOSITION OF THE
SHORTFALL, SELLER MAY TAKE SUCH ACTION AS SELLER CONSIDERS APPROPRIATE TO
DISPOSE OF THE SHORTFALL. BUYER ACKNOWLEDGES THAT
7 - SECOND AMENDED AND RESTATED PULP SALES SUPPLY CONTRACT
10
SUCH ACTION MAY INVOLVE SELLER'S COMMITMENT ("THIRD PARTY COMMITMENT") TO SELL
TO THIRD PARTIES A PORTION OF THE VOLUME OF PULP SELLER OTHERWISE WOULD BE
OBLIGATED TO SELL TO BUYER UNDER THIS SUPPLY CONTRACT. IF IN CONNECTION WITH THE
DISPOSITION OF A SHORTFALL SELLER MAKES THIRD PARTY COMMITMENTS, AT BUYER'S
REQUEST SELLER WILL MAKE REASONABLE GOOD FAITH EFFORTS TO RESUME DELIVERIES TO
BUYER OF PULP AT PRE-SHORTFALL LEVELS UPON THE EXPIRATION OF SUCH THIRD PARTY
COMMITMENT IF BUYER IS THEN PURCHASING THE MAXIMUM TONNAGE SELLER IS THEN
OBLIGATED TO SELL UNDER THIS SUPPLY CONTRACT AND IF BUYER IS NOT OTHERWISE IN
DEFAULT HEREUNDER.
9. Relationship of Parties.
Nothing in this Supply Contract or in any related dealings
between Seller and Buyer shall be construed or interpreted to mean that the
relationship between the parties is other than the relationship of seller and
buyer, or secured party and debtor, as the came may be, as more particularly set
forth in this Supply Contract. The parties specifically disclaim any intention
that their relationship under this Supply Contract be interpreted or construed
as a partnership or joint venture relationship.
10. Costs and Attorney Fees.
10.1 No Suit or Action Filed. If this Supply Contract is placed
in the hands of an attorney due to a default in the payment or performance of
any of its terms, the defaulting party shall pay, immediately upon demand, the
other party's reasonable attorney fees, collection costs, even though no suit or
action is filed thereon, and any other fees or expenses incurred by the
nondefaulting party.
10.2 Arbitration or Mediation; Trial and Appeal. If any
arbitration, mediation, or other proceeding is brought in lieu of litigation, or
if suit or action is instituted to enforce or interpret any of the terms of this
Supply Contract, or if suit or action is instituted in a Bankruptcy Court for a
United States District Court to enforce or interpret any of the terms of this
Supply Contract, to seek relief from an automatic stay, to obtain adequate
protection, or to otherwise assert the interest of Seller in a bankruptcy
proceeding, the party not prevailing shall pay the prevailing party's costs and
disbursements, the fees and expenses of expert witnesses in determining
reasonable attorney fees, and such sums as the court may determine to be
reasonable for the prevailing party's attorney fees connected with the trial and
any appeal and by petition for review thereof.
10.3 Definitions. For purposes of this Supply Contract, the term
attorney fees includes all charges of the prevailing party's attorneys and their
staff (including without limitation legal assistants, paralegals, word
processing, and
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11
other support personnel) and any post-petition fees in a bankruptcy court. For
purposes of this Supply Contract, the term fees and expenses includes but is not
limited to long distance telephone charges; expenses of facsimile transmission;
expenses for postage (including costs of registered or certified mail and return
receipts), express mail, or parcel delivery; mileage and all deposition charges,
including but not limited to court reporter's charges, appearance fees, and all
costs of transcription; costs incurred in searching records; and the cost of
title reports or surveyor's reports.
11. Assignment.
This Supply Contract shall be binding on and shall inure to the
benefit of the respective successors of the parties, but shall not be assigned
without the prior written consent of the parties which shall not be unreasonably
withheld.
12. Standards of Performance.
Both parties agree that their performance pursuant to this Supply
Contract shall be judged by standards of good faith and commercial
reasonableness. Both parties agree to take or refrain from such action and to
execute such documents as are reasonably necessary to implement this Supply
Contract and to carry out its intent and purposes and to avoid impairing or
interfering with the reasonable expectations of the parties.
13. Additional Terms and Conditions.
Exhibit C attached hereto listing Additional Terms and Conditions
is incorporated and made a part of this Agreement.
14. Entire Agreement.
This Supply Contract together with the attached exhibits
constitutes the entire understanding and agreement of the parties hereto, and
may only be modified or amended by an agreement in writing signed by the
parties.
15. Notice.
Any notice required or permitted to be given or made by the terms
of this Supply Contract shall be deemed to have been duly given or made (a) if
personally delivered to Buyer or Seller, as the case may be, at its address
first above written, or (b) as of and when transmitted by facsimile transmission
to Buyer or Seller, as the case may be, at its address first above written, or
(c) as of and when deposited in the United states mail in a sealed envelope,
postage prepaid, by registered or certified mail, return receipt requested,
addressed to Buyer or Seller, as the case may be, at its address first above
written. Any party may change the address to which notice shall be
9 - SECOND AMENDED AND RESTATED PULP SALES SUPPLY CONTRACT
12
delivered or sent by notice to the other parties transmitted as herein provided.
16. Time of Essence.
Time is of the essence hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
GRAYS HARBOR PAPER, L.P.,
a Washington limited partnership
By: Grays Harbor Industrial, Inc.,
a Washington corporation, its
general partner
By: /s/ XXXXXXX X. XXXXX
-------------------------------
Title: President
----------------------------
XXXX & TALBOT, INC.
By: /s/ XXXXXXX X. XXXXXXXXXX
-------------------------------
X.X. Xxxxxxxxxx
Vice President/General
Manager-Fiber Products
Division
10 - SECOND AMENDED AND RESTATED PULP SALES SUPPLY CONTRACT
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EXHIBIT A
MARKETING AGREEMENT
(13 pages)
14
EXHIBIT A
MARKETING AGREEMENT
THIS AGREEMENT is entered into the date indicated on the last page of
this Agreement by and between GRAYS HARBOR INDUSTRIAL, INC., a Washington
corporation, or its permitted assigns as set forth in paragraph 11.5 ("Seller"),
and WEYERHAEUSER COMPANY, a Washington corporation ("Buyer").
RECITALS
I. The Seller is contemplating the purchase of a paper mill (the
"Hoquiam Paper Mill") located in Hoquiam, Washington, from its current owners
and operators, Grays Harbor Paper Company and ITT/Rayonier, and if purchased,
Seller intends to operate the Hoquiam Paper Mill and produce uncoated free sheet
paper ("UCFS").
II. Prior to acquiring and operating the Hoquiam Paper Mill, however,
Seller desires to enter into a Marketing Agreement with Buyer whereby Buyer
would market and sell the entire output of UCFS paper which Seller will produce
from the Hoquiam Paper Mill (the "UCFS Paper").
THEREFORE, Buyer and Seller, in the event Seller is successful in
acquiring the Hoquiam Paper Mill and all necessary support facilities, systems
and machines and commences operation, and in consideration of the mutual
agreements, undertakings and promises contained in this Agreement, do now agree
and commit with and to one another as follows:
1. Purchase and Sale; Quantity and Quality.
1.1 Entire Output. For the term of this Agreement, Seller agrees
to sell and Buyer agrees to purchase and take from Seller the entire output of
UCFS Paper meeting Buyer's specifications and standards from the Hoquiam Paper
Mill, estimated to be
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approximately 135,000 short tons per year when the mill is operating at full
capacity. UCFS Paper which does not meet Buyer's specifications and standards
will not be sold by Seller (neither to Buyer nor any third party), but will be
used by Buyer as waste furnish in the paper making process at the Hoquiam Paper
Mill. Notwithstanding the foregoing, during the start-up of the Hoquiam Paper
Mill, Buyer may, at its option, purchase start-up tonnage which, while not
meeting Buyer's specifications and standards, is deemed by Buyer to be of
sufficient quality for Buyer to sell as off-grade paper in the market place.
1.2 UCFS Paper Delivery. The UCFS Paper will be packaged in the
manner reasonably required by Buyer, for loading, as specified by Buyer, from
Seller's docks by Seller's personnel directly onto trucks or into containers and
then onto trucks. Buyer shall identify to Seller the truck carriers with whom
Buyer has made arrangements to transport UCFS Paper from the Hoquiam Paper Mill,
and Seller shall schedule specific pick-ups with such identified truck carriers.
The UCFS Paper and its packaging material will bear Buyer's brand and marks or
other brands and marks as specified by Buyer, and Seller will, at Seller's
expense, procure all necessary packaging and labelling materials meeting Buyer's
specifications.
1.3 Delivery Schedule. Seller and Buyer shall reasonably agree on
a schedule for the pickup of UCFS Paper by Buyer from Seller. All risk of loss
as to the UCFS Paper passes to Buyer at the moment it is loaded onto the trucks
of Buyer's identified truck carrier. Sales of the UCFS Paper to Buyer are FOB
the Hoquiam Paper Mill.
1.4 UCFS Paper to Be Manufactured. Buyer shall have the right to
direct the Seller as to the quantity, quality, grade, and packaging (including
labeling, wrapping, and roll or sheet form) of
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specific UCFS Paper to be manufactured, with reasonable notice, within the
existing capabilities of the Hoquiam Paper Mill, and the raw materials on hand
or available.
2. Marketing of UCFS Paper.
2.1 Capacity. Seller shall reasonably use its best efforts to
manufacture sufficient UCFS Paper to meet Buyer's specific or anticipated needs,
and to enable Buyer to fulfill its contractual commitments to its customers, but
seller shall not be obliged to expand its operations beyond the facilities
currently contemplated for the Hoquiam Paper Mill (which is a capacity of
135,000 short tons per year of UCFS Paper). The parties agree to use their best
efforts to coordinate production and delivery to accommodate Buyer's market
demands and Seller's production capabilities and efficiencies.
2.2 Marketing. Subject to Section 9.1, Buyer will be responsible
for and will reasonably use its best efforts, through Buyer's marketing
organization, experience, and market research, to sell and market the entire
output of UCFS Paper meeting Buyer's specifications and standards of the Hoquiam
Paper Mill. It is understood that Buyer will be marketing the UCFS Paper to the
markets traditionally served by Buyer in western North America and the Pacific
Rim.
2.3 Trademarks. It is understood that (a) all trademarks, trade
names and watermarks heretofore or hereafter used, applied for, registered or
licensed by Buyer shall be deemed to be the property of Buyer; and (b) all
trademarks, trade names and watermarks heretofore or hereafter used, applied
for, registered or licensed by Seller shall belong to Seller.
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2.4 Technical Assistance During the Term of This Agreement.
2.4.1 Buyer, at no charge to Seller, will (i) schedule
production of the Hoquiam Paper Mill and arrange transportation from the Mill of
product purchased by Buyer (but such scheduling and arranging shall not include
detailed machine scheduling or shipping assembly functions), and (ii) subject to
mutual agreement of Buyer and Seller on the nature, scope and amount of service,
provide market research and technical assistance; and
2.4.2 Subject to mutual agreement of Buyer and Seller on
the nature, scope and amount of services and Buyer's charge for services, Buyer
will perform product development work with respect to products of the Hoquiam
Paper Mill.
3. Term.
3.1 The initial term of this Agreement shall begin on the first
day (Monday) of the first week during which Seller makes delivery of UCFS Paper
to Buyer at the Hoquiam Paper Mill pursuant to paragraphs 1.2 and 1.3, including
delivery of start-up tonnage purchased by Buyer (such first day of such first
week being hereinafter referred to as the "Start Date"). The initial term shall
end three (3) years from the Start Date. For example, if the first delivery of
UCFS Paper to Buyer occurred on Wednesday, October 20, 1993, the Start Date
would be Monday, October 18, 1993, and the ending date of the initial term would
be October 17, 1996. On each anniversary of the Start Date, the term of this
Agreement shall extend one year, unless either party has given written notice to
the other party not less than twenty-five (25) months prior to the then current
ending date of the term that the Agreement will terminate on such then current
ending date.
3.2 Notwithstanding the foregoing,
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3.2.1 In the event Seller has not closed its purchase of
the Hoquiam Paper Mill by September 30, 1993, this Agreement shall automatically
terminate on September 30, 1993 and be of no further force and effect; and
3.2.2 In the event Seller has not commenced production at
the Hoquiam Paper Mill of commercial quantities of UCFS Paper meeting Buyer's
specifications by January 4, 1994, Buyer may terminate this Agreement by written
notice to Seller given not later than January 31, 1994.
4. Pricing and Payment.
4.1 The purchase price for UCFS Paper purchased and sold
hereunder (the "Purchase Price") shall be the Net Price (as defined below) less
3.5%.
4.2 "Net Price" shall mean the gross sales price as invoiced
("Invoice Amount") by Buyer to Buyer's customer for the UCFS Paper, less
freight, discounts, rebates, prompt payment discounts, adjustments from returns
and allowances, duties, insurance, and mutually agreed upon warehousing costs.
4.3 For each one week period during the term hereof, Buyer shall
pay the Purchase Price for UCFS Paper invoiced by Buyer to Buyer's customers
during such one week period, and such payment shall be made not later than three
weeks following the end of such one week period. By way of example, if the one
week period were March 7, 1994 to March 13, 1994, Buyer would pay the Purchase
Price of UCFS Paper invoiced by Buyer to Buyer's customers during that one week
period, and such payment would be due not later than April 3, 1994. Buyer's
payment shall be accompanied by a statement showing the aggregate of Invoice
Amounts for the one week period, the aggregate deductions by type for such
aggregate Invoice Amounts to arrive at the aggregate Net Price, and the 3.5%
deduction to
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arrive at the aggregate Purchase Price paid. Payment of the Purchase Price is
not dependent upon or subject to Buyer's collection of Invoice Amounts from
Buyer's customers for the UCFS Paper. Notwithstanding the foregoing, it is
contemplated by the parties that Buyer will have received a purchase order or
similar order for sale of paper delivered to Buyer prior to delivery of such to
Buyer. In the event that this is not the case, Buyer shall advise Seller and
Seller's obligation to deliver will be subject to mutual agreement by the
parties. Seller agrees to maintain stock inventories of finished UCFS Paper in
amounts to be mutually agreed upon by the parties.
4.4 Seller directs and Buyer agrees that the Purchase Price due
Seller hereunder shall be paid by Buyer as follows: (i) fifty percent (50%) of
the Purchase Price shall be paid by Buyer to Seller and (ii) fifty percent (50%)
shall be paid directly by Buyer to Seller's pulp supplier, Xxxx and Xxxxxx, at
such address as Xxxx and Talbot from time to time shall direct, by check payable
solely to Xxxx and Xxxxxx. Buyer's willingness to split payment of the Purchase
Price as directed by Seller shall not give Xxxx and Talbot any rights under this
Agreement; however, Buyer does acknowledge that Seller has granted to Xxxx and
Xxxxxx a security interest in its accounts receivables, including its
receivables from Buyer under this Agreement. Except as otherwise provided
herein, Xxxx and Talbot shall have no right to give any instructions, directions
or otherwise to Buyer.
5. Costs of Marketing, Delivery, Insurance and Related Expenses;
Manufacturing Costs; Audit.
5.1 Buyer agrees to use its reasonable best efforts to keep its
costs and charges which are deductions from the Invoice Amount as low as
reasonably possible. Seller agrees to use its reasonable best efforts to keep
its managerial, manufacturing,
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operating, maintenance, and other costs of the Hoquiam Paper Mill as low as
reasonably possible.
5.2 Buyer agrees to use its reasonable best efforts, on Buyer's
sale of the UCFS Paper, to obtain the highest price reasonably possible
consistent with then current market conditions.
5.3 Subject to Section 9.1, Buyer agrees to not discriminate in
its marketing, sale, distribution and pricing policies with respect to similar
products from its Longview Mill and the Hoquiam Paper Mill. However, it is
understood that it may be necessary in times of market decline for Buyer to
accept lower prices for product produced at the Hoquiam Paper Mill in order to
keep the mill in operation.
5.4 Seller and Buyer shall reasonably agree on and implement
audit and accounting procedures to adequately track, confirm, display and
exchange information and data on all costs and revenues associated with sale of
UCFS Paper, including Invoice Amounts, Purchase Price and any other relevant
invoice and expense figures. Buyer, however, shall not be obligated to provide
Seller with data on specific transactions, and any disclosure by Buyer to Seller
shall be limited to aggregated data which does not reveal individual sales
transactions of Buyer. Any audit by Seller of Buyer's records shall be conducted
by an independent accountant at reasonable times and on reasonable notice, shall
be limited to Buyer's records relevant to purchases and payments hereunder, and
such independent accountant shall not reveal or disclose to Seller information
of Buyer on individual sales transactions of Buyer.
6. Limitations to Seller's Obligations. Seller's obligations under this
Agreement are subject to and limited by the following:
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6.1 Suspension of Operations. Seller shall have the right to
suspend or curtail manufacturing operations at the Hoquiam Paper Mill for UCFS
Paper in the event that the Seller is not able to receive from Buyer sufficient
revenue to provide a commercially reasonable and consistent financial return to
Seller for its sales of UCFS Paper to Buyer. Such suspension or curtailment
would only be possible after reasonable notice from Seller to Buyer and in any
event notice of not less than 60 days. Seller shall have the right to
immediately cancel, suspend or curtail production, with as much notice as
possible to Buyer, in the event Seller, through no fault of Seller, is unable to
obtain raw material.
7. Sales of Product to Others. Seller shall have the right to
manufacture and sell UCFS Paper to persons or entities other than Buyer, but
only if:
7.1 Buyer has given notice of its intention to terminate this
Agreement and less than twelve months remain in the effective term of this
Agreement; provided, however, Seller shall give Buyer not less than six months
notice of Seller's intention to reduce sales to Buyer and sell to others during
such final twelve month period, such notice shall specify the amount of
reduction of sales to Buyer (which reduction shall not be greater than 50% of
the output of the Hoquiam Paper Mill), and Buyer's purchase obligations shall be
reduced by the amount of the reduction specified by Seller in its notice to
Seller;
7.2 Buyer is in material breach of its obligations set forth in
this Agreement;
7.3 Buyer has curtailed or suspended its purchases pursuant to
Section 9.1 herein.
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In no event will Seller use Buyer's trademarks, trade names or
watermarks on or in connection with UCFS Paper sold to other than Buyer without
Buyer's consent.
8. Breach. Seller and Buyer shall each have the right, at their option,
to immediately terminate or suspend the performance of their obligations under
this Agreement if the other party is in material breach or default of its
obligations in this Agreement. The parties shall not be in material breach or
default pursuant to this Agreement unless, with regard to a monetary default,
one party shall not have cured the monetary default within twenty (20) days
after notice. As to non-monetary defaults, one party shall not be in default if
it cures the default within thirty (30) days after notice, provided that if more
than thirty (30) days are reasonably required to cure the default that no right
to terminate or suspend shall exist so long as the party is reasonably
prosecuting a cure to completion.
9. Limitations to Buyer's Obligations. Buyer's obligations under this
Agreement are subject to and limited by the following:
9.1 Suspension of Purchases. Buyer shall have the right to
suspend or curtail purchases of UCFS Paper from the Hoquiam Paper Mill in the
event Buyer is unable to sell all of the output of the Hoquiam Paper Mill, and
Buyer shall have no obligation to suspend or curtail operations at Buyer's
Longview or other xxxxx. Such suspension or curtailment will be with as much
notice to Seller as possible, and Buyer shall give Seller at least a sixty (60)
day written alert of declining market conditions which may necessitate a
suspension or curtailment and at least seven (7) days written notice of
suspension or curtailment. At the time of executing this Agreement, Buyer does
not anticipate any reason why it will not be able to purchase all of the output
of UCFS Paper during the term of this Agreement. For approximately the last ten
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years, Buyer has not taken market downtime at its North American UCFS xxxxx, and
does not anticipate that it would be necessary to suspend or significantly
curtail purchases from Seller; however, Buyer cannot give assurances that
curtailment or suspension will not occur.
10. Warranty and Liability. SELLER WARRANTS THAT UCFS PAPER SOLD
HEREUNDER WILL CONFORM TO WEYERHAEUSER'S SPECIFICATIONS AND STANDARDS AND WILL
NOT INFRINGE ANY VALID U.S. PATENT. BUYER IS SOLELY RESPONSIBLE FOR DETERMINING
THE SUITABILITY OF UCFS PAPER PURCHASED HEREUNDER FOR ANY PARTICULAR USE.
10.1 In the event UCFS Paper fails to conform to this warranty,
Seller, at Buyer's option, will provide replacement paper conforming to the
warranty (delivered, freight prepaid by Seller), or refund the purchase price
(plus freight costs incurred by Buyer). Buyer, at Buyer's option, may (i) return
nonconforming paper to the Hoquiam Paper Mill at Seller's expense (where such
returned paper will be used as waste furnish in the paper making process at the
Hoquiam Paper Mill), or (ii) dispose of the non-conforming paper in the field.
In the case of such disposal, if Seller has replaced the nonconforming paper or
refunded the purchase price, Buyer will pay to Seller the amount received by
Buyer on disposal less costs of disposal and less 3.5%. Seller shall further be
liable to Buyer for costs incurred and payments made by Buyer in connection with
resolving claims, in accordance with Buyer's customary claims procedures, of
Buyer's customers relating to non-conforming paper.
EXCEPT AS PROVIDED ABOVE, IN NO EVENT SHALL SELLER BE LIABLE TO BUYER
FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, DIRECT OR INDIRECT LOSS, HARM,
CLAIMS OR DEMANDS ARISING OUT OF OR RELATED TO SELLER'S FAILURE OR INABILITY TO
DELIVER UCFS PAPER, INCLUDING
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WITHOUT LIMITATION ANY CURTAILMENT OR SUSPENSION OF PRODUCTION, WHETHER OR NOT
DUE TO THE FAULT OF SELLER OR OTHERS.
11. General Agreement Provisions. All of the respective rights and
obligations of the parties to this Agreement are subject to the following
provisions:
11.1 Force Majeure. For all purposes of this Agreement, the
expression "Force Majeure" includes any Act of God, war, mobilization, strike,
lockout, drought, flood, total or partial fire, obstruction of navigation by
ice, or loss, damage or detention at sea, acts of governmental agencies, or
other contingency or cause beyond the control of the Seller or Buyer. The Buyer
or the Seller, as the case may be, may suspend performance under this Agreement
pending Force Majeure, neither party being responsible to the other party for
any damage resulting from such suspension. The Buyer or the Seller, as the case
may be, shall give prompt notice to the other party of any Force Majeure which
may affect performance under this Agreement.
During any period of Force Majeure, the party whose performance
is not excused or suspended pending Force Majeure may sell or buy, as the case
may be, UCFS Paper to third parties and not be in breach of this Agreement.
If Force Majeure should extend for longer than 90 consecutive
days, then the party whose performance hereunder is not excused or suspended by
Force Majeure may terminate this Agreement and the parties' respective rights,
duties and obligations hereunder by giving written notice to the other party of
its election to terminate.
11.2 Choice of Law. The rights and obligations of the parties
arising out of or related to this Agreement shall be
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25
governed by and construed in accordance with the laws of the State of
Washington.
11.3 Attorneys' Fees. In any lawsuit arising out of or related to
this Agreement where the interests or positions are adverse, the substantially
prevailing party shall be entitled to an award of its reasonable attorney's fees
and costs.
11.4 Standards of Performance. Both parties agree that their
performance pursuant to this Agreement shall be judged by standards of good
faith and commercial reasonableness. Both parties agree to take or refrain from
such action and to execute such documents as are reasonably necessary to
implement this Agreement and to carry out its intent and purposes and to avoid
impairing or interfering with the reasonable expectations of the parties.
11.5 Assignment. This Agreement shall be binding on and shall
inure to the benefit of the respective successors of the parties, but shall not
be assigned without the prior written consent of the parties which shall not be
unreasonably withheld; provided that notwithstanding the foregoing, Seller may
assign this Agreement to a limited partnership or other entity which may be
formed for the purpose of acquiring the Hoquiam Paper Mill, provided Xxxxxxx X.
Xxxxx or a company controlled by him acts as its general partner, or in the case
of a corporation, acts as its controlling shareholder.
11.6 Notices. Any notices required or permitted to be given
hereunder shall be in writing and hand delivered, mailed by first class mail
(postage prepaid), or sent by fax (with telephone verification of receipt) as
follows:
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to Seller: Grays Harbor Industrial, Inc.
Attn: Xxxxxxx X. Xxxxx
Grays Harbor Industrial, Inc.
000 - 00xx Xxxxxx
Xxxxxxx, XX 00000
Fax No.: 0-000-000-0000
Verify No.: 000-000-0000
to Buyer: Weyerhaeuser Company
Attn: Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000
Fax No.: 000-000-0000
Verify No.: 000-000-0000
11.7 Final Agreement. This Agreement is the final agreement
between the parties with respect to the subject matter hereof, superseding and
merging all prior writings and communications. This Agreement may be modified or
amended only in a writing signed by both parties.
DATED this 24th day of May, 1993.
GRAYS HARBOR INDUSTRIAL, INC. WEYERHAEUSER COMPANY
By /s/ Xxxxxxx X. Xxxxx By /s/ Xxxxxx X. Xxxxx
-------------------------- ------------------------------
Its President Its VP Fine Paper
---------------------- ---------------------------
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EXHIBIT B
SPECIFICATIONS
(2 pages)
28
EXHIBIT B
SPECIFICATIONS
WHITE GOLD SHEETED PULP GRADE 312
BLEACHED SAWDUST SOFTWOOD KRAFT
TEMPORARY
MAY 1993
SPECIES XXXXXXX FIR
This bleached softwood sawdust kraft performs well in applications for
printing papers. Its sawdust content produces a much shorter fiber than
conventional softwood kraft, making it ideal for use in paper furnishes to
improve formation, sheet density, and printing surfaces; refining improves the
pulp's tensile strength without much loss in tear strength.
White Gold 312 is press dried allowing quick and complete repulping.
Future supply will include dried sheeted pulp which will require some additional
refining to develop the strength characteristics.
PRODUCT CHARACTERISTICS
TYPICAL MINIMUM MAXIMUM
-------- -------- -------
Bale Weight, Pounds 3,400 3,300 3,450
Bale Size 80x38x40 N/A N/A
Air Dry, Percent 50 N/A N/A
ISO Brightness 88 84.5 N/A
TAPPI Total Dirt and
Xxxxx Count, PPM 5 0 10
TYPICAL PULP PHYSICAL PROPERTIES
Freeness CSF 640 550 400
TAPPI Burst Factor
gf/cm2 / g/m2 25 33 38
TAPPI Tear Factor
100gf.m2/g 80 75 70
Breaking Length km 4.0 5.0 6.0
Tensile gf/ln 6,000 8,000 9,500
Exhibit B
1 of 2
29
WHITE GOLD GRADE 112
BLEACHED SOFTWOOD KRAFT
MAY 1993
SPECIES XXXXXXX FIR
This Xxxxxxx Fir kraft pulp has excellent initial tear strength and
develops good tensile strength with refining.
White Gold 112 is press dried, allowing quick and complete repulping.
Future supply will include dried sheeted pulp which will require some additional
refining to develop peak strength characteristics.
PRODUCT CHARACTERISTICS
TYPICAL MINIMUM MAXIMUM
---------- ------- -------
Bale Weight, Pounds 3,400 3,300 3,450
Bale Size 80x37.5x38 N/A N/A
Air Dry, Percent 50 N/A N/A
ISO Brightness 86 84.5 N/A
TAPPI Total Dirt and
Xxxxx Count, PPM 3 0 5
TYPICAL PULP PHYSICAL PROPERTIES
Freeness CSF 740 550 400
TAPPI Burst Factor
gf/cm2 / g/m2 27 55 60
TAPPI Tear Factor
100gf.m2/g 200 120 100
Breaking Length km 3.5 7.0 8.0
Tensile gf/ln 5,500 11,000 12,000
Xxxx and Xxxxxx - Xxxxxx, Oregon U.S.A.
Exhibit B
2 of 2
30
EXHIBIT C
ADDITIONAL TERMS AND CONDITIONS
(2 pages)
31
EXHIBIT C
ADDITIONAL TERMS AND CONDITIONS
1. TESTS: Buyer shall not dispute the quality of any Pulp delivered to
Buyer hereunder, unless the results (when averaged) of tests performed
by Buyer with respect to a representative sampling of the xxxxx of Pulp
shipped in the truckload which included such delivered Pulp show that
the Pulp tested does not meet the specifications received in this Supply
Contract.
2. CLAIMS: All claims of every nature, including but not limited to the
quality, quantity, or condition of the Pulp and the time, place or
manner of delivery, must be made in writing or by telegram to Seller
within thirty (30) days from the date of delivery at Buyer's mill. The
Buyer shall make payment when due, subject to final adjustment according
to the results of retesting or arbitration.
In no event shall any claim exceed the price for the quantity of Pulp
which is established to be inferior in quality or to be improperly
delivered. Neither party shall be liable for any indirect, special, or
consequential damages resulting from any breach hereof.
3. TAX: The amount of any federal, state, or municipal sales or excise tax
imposed and payable or accruing on or by reason of this Supply Contract
shall be added to the price and paid in full without discount by the
Buyer.
4. FORCE MAJEURE: For all purposes of this Supply Contract the expression
"Force Majeure" includes any Act of God, war, mobilization, strike,
lockout, drought, flood, total or partial fire, obstruction of
navigation by ice, or loss, damage or detention at sea, acts of
governmental agencies, or other contingency or cause beyond the control
of the Seller which prevents the manufacture and/or shipment of Pulp, or
beyond the control of the Buyer which prevents the manufacture or
delivery of Pulp or paper. The Buyer or the Seller, as the case may be,
may suspend performance under this Supply Contract pending Force
Majeure, neither party being responsible to the other party for any
damage resulting from such suspension. Pulp lost or damaged in transit
need not be replaced by Seller nor accepted by Buyer.
The Buyer or the Seller, as the case may be, shall give prompt notice to
the other party of any Force Majeure which may, according to previous
section of this clause, affect the performance under this contract, and
also which such Force Majeure ceases, and as soon as practicable, notify
to what extent it will necessitate a suspension. Shipments in transit
from Seller's mill must be accepted by the Buyer.
1- Exhibit C
32
In case Seller's stock of Pulp is totally or partially destroyed, and/or
damaged by fire, the Seller is entitled to cancel such quantity which as
a consequence cannot be delivered.
During any period of Force Majeure, the party whose performance is not
excused or suspended pending Force Majeure may sell or buy, an the case
may be, Pulp to third parties and not be in breach of this Supply
Contract. If Force Majeure should extend for longer than 90 consecutive
days, then the party whose performance hereunder is not excused or
suspended by Force Majeure may terminate this Supply Contract and the
parties' respective rights, duties and obligations hereunder by giving
written notice to the other party of its election to terminate this
Supply Contract.
5. UNEXCUSED FAILURE TO PERFORM: If Buyer refuses to accept delivery of
Pulp under this Supply Contract, except for reasons excused by this
Supply Contract, the Pulp cannot afterwards be claimed by the Buyer but
may be sold by the Seller for the Buyer's account. That is, Buyer shall
remain obligated to Seller for any deficiency in the price realized by
Seller from sales of pulp to third parties below the price which would
have been payable by Buyer for the Pulp hereunder. If Seller refuses to
make delivery of Pulp under this Supply Contract, except for reasons
excused by this Supply Contract, Buyer, after fifteen (15) days' written
notice to the Seller during which xxxx Xxxxxx may remedy such refusal,
may purchase equivalent Pulp from other sources for the Seller's
account. That is, Seller shall be obligated to Buyer for any increase in
price paid by Buyer for Pulp purchased from third parties over the price
which would have been payable to Seller for the pulp hereunder.
6. WAIVER: No right of any party shall be deemed waived by any failure to
exercise a right in any prior instance. All valid waivers must be in
writing.
7. TERMINATION. Termination of this Supply Contract as provided herein,
other than for Force Majeure as permitted above, shall not release Buyer
from the obligation to accept and pay for all Pulp delivered hereunder
prior to the effective date of termination nor release the Seller from
the obligation to deliver Pulp to Buyer which had previously been
ordered and to which Buyer is entitled under this Agreement.
8. APPLICABLE LAW. This Agreement shall be governed in all respects by the
law of the State of Washington.
9. USE: Buyer is responsible for determining the suitability of Pulp
purchased hereunder for any particular use.
2- Exhibit C
