PULP PURCHASE AGREEMENT
This PULP PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of the 24th day of March, 1999 by and between CROWN PAPER CO. ("Buyer"), a
corporation with its principal offices at 000 Xxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxxxx 00000, and PULP & PAPER OF AMERICA LLC ("Seller"), having its
principal offices at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000.
W I T N E S S E T H:
WHEREAS, Buyer desires to obtain and purchase a three-year supply of
northern bleached hardwood kraft pulp and northern bleached softwood kraft pulp,
and Seller wishes to supply and sell same; and
WHEREAS, Seller and Buyer intend to establish a mutual understanding
concerning such sales and purchases and, in so doing, and in performing
hereunder, meet the parties' respective needs for a well-defined and stable
relationship in an atmosphere of close cooperation and mutual trust and
reliance; provided, however, that the parties do not intend to create a legal
partnership or joint venture.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer hereby agree as
follows:
1. Goods. The goods to be provided hereunder are northern bleached hardwood
kraft pulp and northern bleached softwood kraft pulp produced at Seller's
Berlin, New Hampshire mill (the "Mill") which meet specifications as agreed upon
from time to time by Buyer and Seller that are consistent with the then existing
process capabilities of the Mill (each, a "Good" and collectively, the "Goods").
2. Term. This Agreement is effective upon its execution by the parties and
continues thereafter for a period of three (3) years from the date hereof (the
"Term") unless canceled as provided in Section 9 below.
3. Quantity. During the Term, Seller shall produce and sell to Buyer, and
Buyer shall order and purchase from Seller, an aggregate volume of Goods of
forty thousand (40,000) Air Dried Short Tons ("ADST") during each twelve (12)
month period following the execution of this Agreement for which this Agreement
is in effect (the "Committed Volume"). Buyer agrees to purchase, and Seller
agrees to sell, ten thousand (10,000) ADST in each calendar quarter ("Committed
Quarterly Volume") provided, however, that the Committed Quarterly Volume shall
be prorated for the incomplete portion of the first and last calendar quarter of
the Term. Simultaneous with the execution hereof, Buyer will provide Seller with
its estimated pulp purchases in each month of the first calendar quarter
commencing after the date of this Agreement, and thereafter Buyer shall provide
thirty (30) days prior notice to Seller of its estimated pulp purchases in each
month
of the next succeeding calendar quarter, and Buyer and Seller shall otherwise
cooperate to plan production by Seller of Goods under this Agreement; provided,
however, that Seller shall not be obligated to sell to Buyer northern bleached
softwood kraft pulp unless Seller has determined that it will produce northern
bleached softwood kraft pulp at the Mill during such calendar quarter.
4. Pricing. During the Term, price(s), payment terms, freight terms and
discount shall be as follows:
(a) The price for each Good shall be the price as published in the
"Price Watch" section of Pulp and Paper Week, as adjusted monthly and
subject to discounts calculated in accordance with Section 4(b) below,
provided that if the price for any item of the Goods is stated in Price
Watch as a range of prices, the price hereunder shall be the midpoint of
such range.
(b) Prices for the Goods shall be subject to discounts determined as
follows:
(i) during the first twenty-four month period of the Term, the
discount shall be six percent (6%); and
(ii) during the final twelve month period of the Term, the
discount shall be three percent (3%).
The foregoing discounts shall be taken from the published price as set forth in
Section 4(a).
(c) Seller shall provide monthly summary billing with payment terms of
net twenty (20) days from the date of such billing. Each monthly summary
billing shall be transmitted to Accounts Payable at the "ship to" mill.
Payment terms are firm for the entire Term unless changed by mutual written
agreement of the parties. If Buyer shall fail to make a payment for the
Goods delivered by Seller to Buyer hereunder when due, then until such
payment has been made (i) such unpaid balance shall bear interest from the
original due date of such payment at two (2%) percent over the prime rate
of Citibank, N.A., or any successor thereof, in effect from time to time
and (ii) Seller shall be under no obligation to make further deliveries of
Goods hereunder until such overdue payment, with interest as provided
herein, is made.
(d) Delivery to Buyer's designated "ship to" xxxxx is for the account
of Seller and included in the price calculated according to Sections 4(a)
and 4(b) above (i.e., freight terms are F.O.B. the place of destination
with respect to those destinations listed on Schedule A annexed hereto and
made a part hereof).
5. Quality. Seller and Buyer shall implement quality improvement teams and
shall mutually establish quality standards for the Goods which will utilize
statistical process control techniques and measure performance in order to
endeavor to improve quality. Seller shall endeavor to require similar programs
of its suppliers and subsuppliers of goods intended for resale to Buyer or
incorporation into the Goods. Quality measurements and improvement initiatives
may include without limitation: "Order Fill Rates"; "On Time Deliveries"; "Order
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Cycle Time Reduction"; "Error Rates"; "Buyer Inventory Reduction"; "Use
Surveys"; and "Reduction of Administrative Burden".
6. Warranty; Limitation on Liability.
(a) Seller warrants to Buyer that all Goods shall meet the quality and
grade specifications as agreed from time to time by Buyer and Seller and
that all Goods delivered to Buyer shall, upon delivery and transfer of
title to Buyer, be free of any encumbrances on title.
NO OTHER WARRANTY OF ANY KIND, WHETHER EXPRESS OR IMPLIED, IN FACT OR
BY LAW, WHETHER OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR
USE OR OTHERWISE, SHALL SUBSIST HEREUNDER OR HAS OR IS MADE BY SELLER
NOTWITHSTANDING ANY PROVISION OF THE UNIFORM COMMERCIAL CODE ("UCC") TO THE
CONTRARY. REPLACEMENT OF THE GOODS IS THE EXCLUSIVE REMEDY. IN NO EVENT
SHALL SELLER BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES OR
PROFITS ARISING OUT OF, RELATING TO OR IN CONNECTION WITH ANY BREACH OF ANY
WARRANTY ON ANY GOODS HEREUNDER. BUYER IS NOT OBLIGATED TO ACCEPT GOODS NOT
CONFORMING WITH THE RELEVANT GRADE SPECIFICATIONS SET FORTH IN THE PURCHASE
ORDERS; PROVIDED THAT SELLER WILL NOT ACCEPT THE RETURN OF ANY
NONCONFORMING GOODS AFTER THEY HAVE BEEN PROCESSED BY BUYER OR BUYER'S END
USER.
SELLER SHALL NOT BE LIABLE FOR ANY LOSS OR DAMAGE CAUSED BY DELAY IN
FURNISHING GOODS OR ANY OTHER PERFORMANCE UNDER OR PURSUANT TO THIS
AGREEMENT.
(b) SELLER SHALL HAVE NO LIABILITY TO BUYER AND BUYER SHALL HAVE NO
LIABILITY TO SELLER HEREUNDER FOR INDIRECT, CONSEQUENTIAL, EXEMPLARY OR
PUNITIVE DAMAGES ARISING OUT OF ANY ACT OR OMISSION OF EITHER PARTY
HEREUNDER ATTRIBUTABLE TO ANY CLAIM FOR BREACH OF CONTRACT, TORT OR OTHER
CAUSE OF ACTION.
7. Reports. Within thirty (30) days after the close of each calendar
quarter, Seller shall provide Buyer with a report which details Buyer's
purchases of the Goods by item and quantity, showing total tonnage shipped,
total dollars invoiced, returns, percent of on-time and on-quality orders and
such other information as Buyer and Seller may mutually determine is
appropriate. Reports shall be sent to Buyer's respective purchase locations, and
a report detailing Buyer's total purchases shall be sent to Buyer's primary
contact listed in Section 10.1.
8. Force Majeure. Buyer and Seller shall not be liable to each other for
any failure or delay in delivering or acceptance of the Goods where such failure
or delay is due to any cause or contingency beyond that party's reasonable
control, including without
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limitation: acts of God; acts or omissions of civil or military authority; fire;
flood; tempest; epidemic; earthquake; volcanic activity; quarantine restriction;
labor dispute (e.g., lockout, strike, work stoppage or slowdown, or grievance);
embargo; war; political strife; compliance with any regulation or directive of
any national, state or local government, or any department or agency thereof; or
any other cause which by the exercise of reasonable diligence the affected Party
is unable to overcome (collectively referred to as a "Force Majeure Event").
Each party shall use its best efforts to minimize the duration and consequences
of any failure or delay in delivery or acceptance of delivery resulting from a
Force Majeure Event and shall give the other party immediate notice of a Force
Majeure Event and of the time when the party affected by such Force Majeure
Event is no longer affected. These causes will not excuse Buyer from paying
amounts due to Seller through any available lawful means acceptable to Seller.
9. Cancellation. Either party may cancel this Agreement under any one of
the following circumstances: (i) if the other party shall default in the
performance of any of its material agreements or obligations herein and such
default continues for (A) fifteen (15) days in the case of a monetary default or
(B) sixty (60) days as to any other default, after receipt of written notice of
cancellation from the other party; provided, however, in the case of a
nonmonetary default, if such default cannot be cured within such sixty (60) day
period, if the defaulting party shall promptly commence, within such sixty (60)
day period, the steps necessary to cure such default and shall thereafter
proceed with due diligence to complete the steps necessary to cure such default
as expeditiously as possible, and thereby upon such cure, notice of cancellation
hereof shall be deemed rescinded; and (ii) if a party liquidates or winds up all
or a material portion of its business, dissolves or terminates its existence,
becomes insolvent or unable to pay its debts as they mature, commits any act of
bankruptcy, makes an arrangement, composition or assignment for benefit of
creditors, files, has filed against it or consents to filing of any petition in
bankruptcy for liquidation or reorganization, or otherwise is the subject of any
insolvency proceeding of any kind or nature, immediately upon receipt by such
party of written notice of cancellation from the other party. Any such
termination of this Agreement shall not constitute a waiver by either party of
its other rights and remedies hereunder, at law, in equity or otherwise.
10. General Provisions.
10.1 Notices. All notices required to be given hereunder shall be in
writing and shall be deemed to have been given if (i) delivered personally, (ii)
delivered via one-day overnight courier, (iii) transmitted by telefax, or (iv)
mailed by registered or certified mail (return receipt requested and postage
prepaid) to the following listed persons at the addresses and telefax numbers
specified below, or to such other persons, addresses or telefax numbers as a
party entitled to notice shall give, in the manner hereinabove described,
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to the others entitled to notice:
a. If to Buyer:
Crown Paper Co.
000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: General Counsel
Telefax No.: (000) 000-0000
b. If to Seller:
Pulp & Paper of America LLC
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx
Telefax No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx P.C.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Telefax No.: (000) 000-0000
If given personally or transmitted by telefax, a notice shall be deemed to have
been given when it is received. If given by one-day overnight courier, notice
shall be deemed to have been given on the next business day following delivery
to the courier. If given by mail, it shall be deemed to have been given on the
third business day following the day on which it was posted. Notices and other
communications given by attorneys for Seller and Buyer shall be deemed given by,
respectively, Seller and Buyer.
10.2 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
10.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.4 Waiver. No modification or waiver of, amendment to or release from any
provision of this Agreement nor a waiver of or release from any breach or
default hereunder shall be of any force or effect unless contained in a writing
which is signed by the party who is sought to be bound thereby or be held or
considered to be a modification or waiver of, or amendment to or release from
any other provision nor a waiver of or release from any other breach or default.
No modification or waiver of, amendment to or release from any provision of this
Agreement nor a waiver of or release from any breach or default
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hereunder shall result from any different or conflicting provisions or any
printed provisions of any subsequently dated sales or purchase order, order
acknowledgment, or a confirmation thereof, for the Goods. The parties
contemplate that from time to time such forms may be utilized, and the
provisions of this Agreement shall supersede and control such forms.
10.5 Modification. This Agreement may not be orally canceled, changed,
modified or amended, and no cancellation, change, modification or amendment
shall be effective or binding, unless in writing and signed by all of the
parties to this Agreement.
10.6 Severability. If any provision of this Agreement is found to be void
or unenforceable by a court of competent jurisdiction, the remaining provisions
of this Agreement shall nevertheless be binding upon the parties with the same
effect as though the void or unenforceable part had been severed and deleted.
10.7 Number and Gender. All terms and words used in this Agreement,
regardless of the number or gender in which they are used, shall be deemed to
include any other number and any other gender as the context may require.
10.8 Entire Agreement. This Agreement (i) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and thereof;
(ii) is not intended to and shall not confer upon any other person or business
entity, other than the parties hereto, any rights or remedies with respect to
the subject matter hereof; (iii) shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns; (iv) shall be
binding upon and shall inure to the benefit of a person or business entity
acquiring one or more of the "ship to" xxxxx designated in Schedule A hereto,
with such acquirer obligated to purchase for the remainder of the term and under
the terms and conditions of this Agreement, the fraction of the Committed Volume
that has as numerator the volume of Goods shipped to the acquired mill(s) during
the twelve (12) month period immediately prior to such acquisition and as
denominator the total volume of Goods shipped to all the "ship to" xxxxx
designated in Schedule A during the same period; and (v) shall not be assigned
by operation of law or otherwise without the prior written consent of the
parties hereto, not to be unreasonably withheld.
10.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York. Seller and Buyer
hereby expressly consent to the jurisdiction of the Supreme Court of the State
of New York with respect to any action or proceeding between Seller and Buyer
with respect to this Agreement or any rights or obligation of such party
pursuant to this Agreement and each of Seller and Buyer agrees that the venue
shall lie in Suffolk County.
10.10 Dispute Resolution. Seller and Buyer shall attempt in good faith to
resolve all disputes under this Agreement by mutual agreement before initiating
any legal action or attempting to enforce any rights or remedies hereunder;
provided that nothing herein shall prevent either party from giving notice at
any time of cancellation as provided in Section 9 above. In the event of a
dispute, and as a required precondition to initiating legal action (other than
for an injunction or restraining or protective order), either party must give
notice to the other party, and within five (5) days after receipt of the notice,
Buyer's
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procurement representative and his/her corresponding functional-level
counterpart at Seller shall discuss and attempt to resolve the dispute either in
person or by teleconference. If a resolution mutually recognized as such by both
parties is not achieved within ten (10) days thereafter, the dispute shall be
referred to the senior officers including Chief Operating Officers and Chief
Executive Officers of the parties. If within fifteen (15) days after referral
the dispute remains unresolved, both parties may pursue any or all rights and
remedies as may exist at law or in equity, as affected by this Agreement. If
either party fails to meet or discuss a dispute as provided above, such party
covenants not to commence a suit as to that dispute, other than for an
injunction or restraining or protective order. The failure or refusal of either
party to meet and discuss any dispute as provided above shall entitle the other
party immediately to commencement of a suit as to the dispute. Nothing herein
shall prevent either party, at any time, from suggesting referral of any dispute
to mediation before a mutually acceptable mediator under mutually acceptable
rules and procedures.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
CROWN PAPER CO.
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
President
PULP & PAPER OF AMERICA LLC
By: /s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxxxx
Manager
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