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Exhibit 10.11
CONVERSION AGREEMENT
--------------------
THIS AGREEMENT is made effective as of the 29th day of February, 1996
("Effective Date") by and between Unifrax Corporation formerly named The
Carborundum Company, (hereafter known as the "Company") a Delaware corporation
having offices at 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxx Xxxx 00000 and
Societe Europeenne des Produits Refractaires, a French corporation having
offices at "Les Miroirs", 18 Avenue d'Alsace, 92400 Courbevoie (hereinafter
known as "SEPR") with reference to the following facts:
Whereas, Company desires to have SEPR die cut XPE in order to produce
Finished Products; and
Whereas, affiliates of SEPR owns facilities at Dusseldorf, Germany and
in Brazil where XPE is die cut, and SEPR, through such affiliates, is willing to
die cut XPE supplied by Company in accordance with the terms and conditions of
this Agreement.
SEPR AND COMPANY AGREE AS FOLLOWS:
ARTICLE 1 - DEFINITIONS
-----------------------
Whenever used in this Agreement the following terms shall have the
meaning ascribed to them hereunder.
1.01 "Agreement" shall mean this Conversion Agreement.
1.02 "Company" shall mean Unifrax Corporation, a Delaware
corporation being as of the date hereof an indirect wholly
owned subsidiary of The British Petroleum Company p.l.c.
("BP"), which owns, as of the date hereof, NAF, including
patents, trademarks and other intellectual property relating
to the XPE Products.
1.03 "Conversion Fee" shall mean the fee computed in accordance
with APPENDIX A attached hereto.
1.04 "Defaulting Party" shall have the meaning specified in SECTION
9.01.
1.05 "Effective Date" shall mean the date this Agreement is
executed by all the parties hereto.
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1.06 "NAF" shall mean the ceramic fibers business of the Company,
located in the United States (and its territories), Canada and
Mexico.
1.07 "Nondefaulting Party" shall have the meaning specified in
SECTION 9.01.
1.08 "XPE" shall mean expanding mat containing ceramic fiber and at
least twenty-five percent (25%) by weight vermiculite that is
used for catalytic converters ("XPE").
1.09 "Finished XPE Products" shall mean die cut shapes from XPE
meeting NAF's customers' specifications in terms of shape,
dimension within given tolerances, statistical control
parameters and specified or assumed product performance
factors that can be influenced by storage and fabrication such
as Kpa compression, tensile, etc.
1.10 "SEPR's Plant" shall mean the facilities of SEPR's affiliates
located in Dusseldorf, Germany and Brazil.
1.11 "XPE License Agreement" shall mean the license relating to XPE
entered into between the Company and SEPR the date hereof.
ARTICLE 2 - QUANTITY AND SHIPMENT OF FINISHED PRODUCT
-----------------------------------------------------
2.01 During the term of this Agreement, SEPR shall be the Company's
exclusive sub-contractor for production of Finished XPE
Products from jumbo rolls of XPE, for Finished XPE Products
sold by the Company outside of the United States (and its
territories), Canada and Mexico except for (a) prototypes and
(b) if mutually agreed on a case by case basis, small
production runs. In the event that there is a requirement for
Finished XPE Product in any country outside of Europe and
South America, then the following arrangements shall apply.
SEPR will be informed of the requirement including first
delivery dates for commercial quantities of Finished XPE
Products and asked to build the appropriate facility, having
regard to capacity, quality, cost, customer delivery
dates(such customer delivery dates being reasonable with
regard to generally acceptable time period required to install
such additional capacity) and other relevant specifications
necessary to meet projected Finished XPE Product requirements
on a cost competitive basis. SEPR will have one month's
notice, from the time of being first informed, in which to
decide to establish a new facility and become a sub-contractor
to the Company on terms and conditions consistent with the
general terms and conditions of this Agreement. If SEPR does
so decide, then SEPR will build and commission the facility in
time to meet customer requirements for first delivery of
commercial quantities of Finished XPE Products of acceptable
quality. Subject to provisions of ARTICLE 10.01, should SEPR
fail to meet this
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delivery deadline as a result of SEPR's fault (the fault of a
third party being reasonably evidenced by SEPR), then with
respect to the country concerned and any other country as
regards a future new or additional facility to meet new or
additional Finished XPE Product production from jumbo rolls of
XPE, this Agreement will become void and the Company will be
able to make its own arrangements for such new or additional
conversion. Should SEPR decide not to establish a facility,
then the Company shall be entitled to seek and establish an
alternative source of Finished XPE Products conversion and
will not be bound by this Agreement in the country concerned.
2.02 SEPR shall produce the Finished XPE Products requested by the
Company from the jumbo rolls of XPE supplied by the Company
pursuant to ARTICLE 3 using the equipment and Quality
Assurance tools currently in use. Changes in equipment or
Quality Assurance Tools must be approved in advance by the
Company, such approval not to be unreasonably withheld. The
Company agrees to pay the Conversion Fee for, and take
delivery from SEPR of, Finished XPE Products as reasonably
requested by the Company.
2.03 To assist SEPR in planning production of Finished XPE Products
for Company, Company shall provide SEPR an annual forecast and
in advance of each calendar month a rolling three month
forecast of its anticipated delivery schedule for XPE jumbo
rolls, and its requirements for Finished XPE Product.
2.04 Unless otherwise mutually agreed, all shipments of the
Finished XPE Products by SEPR shall be prepared for shipment
by surface vessel, ex works SEPR's manufacturing facility
packaged in Company's packaging ready for shipment to
Company's customer.
ARTICLE 3 - SUPPLY OF XPE JUMBO ROLLS
-------------------------------------
3.01 Company shall deliver to SEPR's plant, quantities of XPE jumbo
rolls to enable SEPR to produce Finished XPE Products called
for under ARTICLE 2 hereof. SEPR shall produce a minimum
number of parts to the given specifications from each jumbo
roll equal to the output of fully complying Finished XPE
Products for each part number per jumbo roll at the 1996
standard attached as APPENDIX B.
3.02 Company and SEPR shall agree upon a mutually acceptable
schedule for delivery of XPE jumbo rolls to SEPR's affiliates
plants' compatible with SEPR's reasonable production schedule
and Company's arrangements for delivery of XPE to Company's
customers.
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3.03 Company shall replace any XPE not meeting the Company's
written and customer accepted specifications for XPE. SEPR
will dispose of all scrap and nonconforming XPE on behalf of
the Company in accordance with all applicable laws and
regulations. SEPR shall bear all costs associated with the
disposal of scrap resulting from the production of Finished
XPE Products and off-spec Finished XPE Products. Company shall
be responsible for SEPR's reasonable costs for disposal of
non-conforming XPE.
3.04 Should it be necessary to expand capacity to meet increased
requirements for Finished XPE Products conversion, then
Company and SEPR shall discuss and agree to the extra
investment needed to meet the increased conversion
requirement. SEPR undertakes to make the necessary investment,
on a cost competitive basis, and any such capital expenditure
shall be recognized in the calculation of charges for fixed
costs as set out herein under APPENDIX A, by making
commensurate changes to fixed assets and depreciation.
ARTICLE 4 - PAYMENT TERMS
-------------------------
4.01 Payment Procedures. Payments of the Conversion Fee shall be
made by wire transfer in Deutsche Marks when the production
service is done by the German plant and Reals (with
appropriate indexing using normal commercial practice in
Brazil to protect against inflation when the production
services done by the Brazilian plant is for sales to customers
in Brazil. Payment terms for sales to customers outside of
Brazil will be as agreed between the parties.)when done by the
Brazilian plant, depending on which facility is providing the
production service, to an appropriate bank account designated
in writing by SEPR for such purpose. The terms shall be net
thirty (30) days from the invoice dates specified in APPENDIX
A.. Payments will be subject to any applicable adjustments or
reimbursements specified in APPENDIX A. In addition to any
rights it may have under this Agreement or under any law, rule
or regulation, SEPR shall have the right to cancel orders
placed thereunder or to refuse or delay the shipment thereof,
if Company wrongfully and repeatedly fails to make timely
payments of amounts due hereunder. Lastly, in the event that
any invoiced amount remains unpaid after sixty (60) days from
the invoice date, Company agrees to pay interest from that
date forward on such outstanding balance at an interest rate
of one and one-half (1 1/2) percent above the rate quoted from
time to time as its prime rate as announced in New York City,
New York by Chase Manhattan Bank when the currency used is not
the Real, and, when the currency used is the Real, the
equivalent rate of interest in Brazil; provided, however, that
Company's agreement to pay interest on such overdue
obligations does not imply that SEPR will extend any maturity
dates for such overdue obligations.
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4.02 Terms of Conversion Orders. All orders for Finished XPE
Products will be deemed to reference this Agreement and will
be governed by the terms of this Agreement. Any term or
condition set forth on any order or other document submitted
by either party which is inconsistent with any term or
condition of this Agreement shall be of no force or effect,
unless accepted in writing by an authorized officer of the
other party. Acknowledgment of an order shall not constitute
acceptance of any inconsistent term unless specifically so
stated therein. Subject to the provisions of ARTICLE 10.01,
SEPR agrees to fill all orders tendered by Company within a
reasonable period.
ARTICLE 5 -WARRANTY
-------------------
5.01 Product Warranty
----------------
(a) Company warrants that the XPE provided to SEPR shall
conform to Company's written and customer accepted
specifications (which shall be sent to SEPR from time
to time) and shall be free from defects in material
and workmanship under normal and proper use in
accordance with instructions and directions of
Company applicable thereto; provided that SEPR
notifies Company in writing of the nature of any
defect within thirty (30) days after such defect is
first recognized by or reported to SEPR.
(b) SEPR warrants that its production service to be
performed in accordance with this Agreement shall
conform to Company's written and customer accepted
specifications and shall be free from defects in
material and workmanship under normal and proper use
in accordance with instructions and directions of
Company applicable thereto; provided that, Company
notifies SEPR in writing of the nature of any defect
within thirty (30) days after such defect is first
reported to Company.
(c) Should XPE provided to SEPR hereunder fail to perform
in accordance with Company's written and customer
accepted specifications, Company shall repair or
replace, as appropriate, the defective XPE in
question provided that:
i) such defect is reported to Company in
accordance with the provisions of ARTICLE
5.01(a); and
ii) cannot be proven to be the result of the
acts or omissions of SEPR.
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(d) Should Finished XPE Products sold hereunder fail to
perform in accordance with the Company's written and
customer accepted specifications as a result of
SEPR's action or fault, SEPR shall repair or replace,
as appropriate, the defective Finished XPE Products
in question. SEPR shall establish a credit in favor
of Company against the purchase price otherwise
payable by Company for Finished XPE Products
purchased hereunder in an amount equal to the cost of
replacing or repairing such Finished XPE Products;
provided that:
i) such defect is reported to SEPR in
accordance with the provisions of ARTICLE
5.01(B); and
ii) is proven to be the result of the acts or
omissions of SEPR.
5.02 Exclusive Warranty and Limitation of Liability. THE EXPRESS
WARRANTIES SET FORTH IN ARTICLE 5.01 CONSTITUTE THE ONLY
WARRANTIES WITH RESPECT TO THE XPE OR THE FINISHED XPE
PRODUCTS SOLD HEREUNDER. NEITHER SEPR NOR COMPANY MAKES ANY
OTHER REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR
IMPLIED (EITHER IN FACT OR BY OPERATION OF LAW), WITH RESPECT
TO THE XPE OR THE FINISHED XPE PRODUCTS, WHETHER AS TO
MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE, OR ANY OTHER
MATTER. THE STATED EXPRESS WARRANTIES ARE IN LIEU OF ALL, AND
IN NO EVENT SHALL EITHER SEPR OR THE COMPANY BE HELD LIABLE TO
THE OTHER FOR, LIABILITIES OR OBLIGATIONS FOR DAMAGES,
INCLUDING BUT NOT LIMITED TO SPECIAL, INDIRECT, OR
CONSEQUENTIAL DAMAGES OR LOSS OF USE, REVENUE, OR PROFITS, IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY BREACH
OR REPUDIATION OF THIS AGREEMENT BY SEPR OR THE COMPANY OR THE
FURNISHING, FUNCTIONING OR COMPANY'S OR ANY THIRD PARTY'S USE
OF ANY FINISHED XPE PRODUCTS PROVIDED FOR IN THIS AGREEMENT.
COMPANY'S OR SEPR'S SOLE REMEDY FOR MANUFACTURER LIABILITY OF
ANY KIND INCLUDING NEGLIGENCE, WITH RESPECT TO ANY FINISHED
XPE PRODUCTS FURNISHED UNDER THIS AGREEMENT, WHETHER THE
CLAIMED LIABILITY IS BASED ON A DEFECT, WHETHER DISCOVERABLE
OR LATENT, SHALL BE LIMITED TO THE REMEDIES PROVIDED IN
ARTICLE 5.01. ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY
ANY PERSON, INCLUDING EMPLOYEES OR REPRESENTATIVES WHICH ARE
INCONSISTENT HEREWITH SHALL BE DISREGARDED AND
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SHALL NOT BE BINDING UPON SEPR OR COMPANY. THE WARRANTIES SET
FORTH HEREIN MAY BE ASSERTED BY COMPANY OR SEPR AS THE CASE
MAY BE, ONLY, AND NOT COMPANY'S CUSTOMERS.
ARTICLE 6 - TITLE AND RISK OF LOSS
----------------------------------
6.01 Company shall retain at all times title to all XPE, and
Finished XPE Products, including while in SEPR's possession.
All risk of loss of or damage to XPE and Finished XPE Products
shall be with Company, except while at SEPR's premises. SEPR
shall be responsible for any risk of loss or damage to any XPE
or Finished XPE Products on SEPR's premises.
ARTICLE 7 - INDEMNIFICATION
---------------------------
7.01 SEPR shall indemnify and hold Company harmless from and
against:
i) all claims, losses, liability, damages, fines,
penalties and expenses of every kind on account of
any injury or damage to property arising directly or
indirectly out of SEPR's conversion of, receipt,
storage and handling of XPE or Finished XPE Products;
and,
ii) the disposal by SEPR on behalf of Company of any
scrap or non-conforming XPE or Finished XPE Products
in contravention of any applicable law or regulation.
However, for non-conforming XPE or Finished XPE
Products, if the parties cannot agree on what are
reasonable costs to dispose of such products (as
provided by ARTICLE 3.03), SEPR shall dispose of them
in accordance with the Company's instructions and, in
such a case, Company shall be responsible for such
disposal and Company shall reimburse SEPR for the
cost incurred to comply with Company's instructions.
This indemnity obligation of SEPR shall survive expiration or
termination of this Agreement for any reason.
ARTICLE 8 - TERM
----------------
8.01 Term and Additional Term. This Agreement shall, when executed,
become effective and will remain in effect unless terminated
by the Nondefaulting Party pursuant to ARTICLE 9.01, or on a
date decided by SEPR, subject to six (6) month's notice, but
in no event later than the last to expire of the patents
listed on SCHEDULE B of the XPE License Agreement.
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ARTICLE 9 - DEFAULT AND TERMINATION AND EXPIRATION
--------------------------------------------------
9.01 Termination. Either party not in default under this Agreement
(the "Nondefaulting Party") may terminate this Agreement at
any time upon ninety (90) days written notice to the other
party in default (the "Defaulting Party") upon the occurrence
of any of the following events:
(a) SEPR repeatedly and wrongfully rejects or revokes
acceptance of purchase orders for the conversion of
XPE tendered by Company into Finished XPE Products
under this Agreement.
(b) The Defaulting Party repeatedly and wrongfully:
i) fails to make payments when due; or
ii) fails to ship Finished XPE Products in the
manner and within the time limits set forth
in this Agreement and such failure is not
cured within a reasonable period after
notice of the failure is given by the
Nondefaulting Party.
(c) The Defaulting Party repeatedly and wrongfully
breaches any other term or condition of this
Agreement and such breach is not cured within a
reasonable period after notice of the breach is given
by the Nondefaulting Party.
(d) If at any time the Defaulting Party shall generally
not pay the Defaulting Party's debts as they become
due or shall admit in writing its inability to pay
its debts, or shall make a general assignment for the
benefit of creditors.
(e) If the Defaulting Party shall commence any case,
proceeding or other action seeking to have an order
for relief entered on its behalf as debtor or to
adjudicate the Defaulting Party as bankrupt or
insolvent, or seeking the reorganization,
arrangement, adjustment, liquidation, dissolution or
composition of the Defaulting Party or its debts
under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors or seeking
appointment of a receiver, trustee, custodian or
other similar official for the Defaulting Party or
for all or a substantial party of its assets, or any
such case, proceeding, or other actions against the
Defaulting Party shall commence after the Effective
Date of this Agreement and such case, proceeding or
other action:
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i) results in the entry of any order for relief
against the Defaulting Party which is not
fully stayed within seven (7) business days
after entry thereof; or
ii) shall remain undismissed for a period of
forty-five (45) days.
9.02 Effect of Termination or Expiration. Upon termination of this
Agreement:
(a) In the event SEPR is the Defaulting Party pursuant to
ARTICLE 9.01, all unfilled orders for Finished XPE
Products shall at the Company's option, be canceled.
(b) SEPR shall immediately return to Company all items of
proprietary or confidential information delivered to
SEPR hereunder.
(c) The XPE License Agreement shall become effective
except for termination under ARTICLE 9.01.
ARTICLE 10 - FORCE MAJEURE AND LAWS
-----------------------------------
10.01 Force Majeure. The parties hereto shall not be held liable or
responsible for delay or failure to take any actions called
for under this Agreement occasioned by acts of God, force
majeure or any cause beyond the control of the parties,
including but not limited to war; civil disturbances; fire;
flood; earthquake; windstorm; unusually severe weather; acts
or defaults of common carriers; accidents; strike or other
labor trouble; lack of or inability to obtain raw materials,
transportation, labor, fuel or supplies; governmental laws,
acts, regulations, embargoes, or orders (whether or not such
later prove to be invalid); any of which shall release the
parties from the performance of this Agreement.
10.02 Compliance with Laws and Regulations. This Agreement shall
comply with and its obligations shall be performed in
accordance with the laws, whether national or supranational,
of all jurisdictions in which the Agreement is to be performed
(including the United States). If any provision of this
Agreement constitutes a breach of any applicable law or is
considered to be or will be void or unenforceable, such
provision shall be deemed to be deleted and the remaining
provisions shall continue in full force and effect.
10.03 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of Ohio without regard to rules on choice of law and
SEPR hereby consents to submit to the jurisdiction of the
American Arbitration Association located in New York, New
York in the event of any dispute between the parties and to
the
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jurisdiction of applicable courts in the United States and
elsewhere to enforce any award of said American Arbitration
Association, or to grant any interim relief as set forth in
ARTICLE 10.04.
10.04 Dispute Resolution. In the event of any dispute, claim,
question, or disagreement arising out of or relating to this
Agreement or the breach thereof, the parties hereto shall use
their best efforts to settle such disputes, claims, questions,
or disagreements. To this effect, they shall consult and
negotiate with each other in good faith and, recognizing their
mutual interests, attempt to reach a just and equitable
solution satisfactory to both parties. If they do not reach
such solution within a period of thirty (30) days, either
party may submit the dispute to binding arbitration
administered by the American Arbitration Association under its
International Arbitration Rules. The place of arbitration
shall be New York, New York and the language of arbitration
shall be English. The number of arbitrators shall be three,
unless the parties agree otherwise. Both parties agree that
time is of the essence in any arbitration. Each party shall
submit their choice of an arbitrator to the Association within
five (5) business days after receiving notice from the
Association of an arbitration proceeding. The arbitrators so
selected shall have five (5) business days to select a third
arbitrator. If the arbitrators selected by the parties cannot
agree on a third arbitrator within this time period, then a
third arbitrator shall be selected by the Association to
complete the panel. The parties agree that an arbitrator may
grant a party's request for a preliminary injunction to
minimize damage in an appropriate circumstance. As an aid to
arbitration, either party may also seek assistance from
judicial authorities to provide interim relief, such as an
injunction, if necessary.
ARTICLE 11 - GENERAL
--------------------
11.01 Notices. All notices, requests, demands and other
communications required or permitted to be given under this
Agreement shall be deemed to have been duly given if in
writing and delivered personally, or five (5) business days
after being mailed first class, postage prepaid, registered or
certified mail, or if telecopied and confirmed by one of the
preceding methods, as follows:
If to SEPR:
Societe Europeenne des Produits Refractaires
Les Miroirs
18 Avenue d'Alsace
92400 Courbevoie
Attention: Legal Affairs Department
Fax: 00-0-00-00-0000
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If to Company:
Unifrax Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxx 00000
Attention: Vice President Sales & Marketing
Fax: 000-000-0000
Any party may change the address to which such communications
are to be directed to it by giving written notice to the other
in the manner specified in this ARTICLE 11.01.
11.02 Entire Agreement. This Agreement and the attached schedules
referred to herein set forth the entire agreement and
understanding of the parties in respect to the transactions
contemplated hereby and supersede all prior agreements,
arrangements and undertakings relating to the subject matter
hereof.
11.03 Sucessors and Assigns. This Agreement shall be binding on and
inure to the benefit of SEPR and Company and their respective
successors. Except that Company must assign all of its rights
and obligations herein to any purchaser or assignee of
substantially all of NAF's assets, this Agreement and the
rights and obligations of the parties thereto may not be
assigned without the prior written consent of the other party
hereto.
11.04 Amendment. This Agreement may be amended, modified, superseded
or canceled, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a
written instrument executed by the parties hereto, or, in the
case of a waiver, by or on behalf of the party waiving
compliance. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner
affect the right at a later time to enforce the same. No
waiver by any party of any condition, or of any breach of any
term, covenant, representation or warranty contained in this
Agreement, in any one or more instances, shall be deemed to be
or construed as a further or continuing waiver of any such
condition or breach or waiver of any other condition or of any
breach of any other term, covenant, representation or
warranty.
11.05 Headings/Counterpart. The article or section headings
contained in this Agreement are for convenient reference only,
and shall not in any way affect the meaning or interpretation
of this Agreement. This Agreement may be executed
simultaneously in two or more counterparts, each of which
shall be deemed an original, but all of which shall constitute
but one.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in two original copies by their duly authorized representatives as of
the day and year first above written.
UNIFRAX CORPORATION SOCIETE EUROPEENNE DES
PRODUITS REFRACTAIRES
By: ______________________ By: _________________________
Name: Xxxxxxxxxxx X. Xxxxxx Name:_______________________
Title: Attorney-In-Fact Title:
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APPENDIX A
Price Adjustment
On a quarterly basis, NAF will carry out a reconciliation of deliveries of jumbo
rolls to SEPR and SEPR's inventory of jumbo rolls and uninvoiced die-cut pieces
on hand produced against a specific order from NAF (excluding any substandard or
off-specification parts), against the number of toll die-cut pieces invoiced by
SEPR using the standard yield for each part number as the benchmark. NAF shall
submit the reconciliation calculation to SEPR within 30 days of the end of each
quarter. In the event that the total produced is lower than the standard yield
multiplied by the number of jumbo rolls used, then SEPR shall pay NAF for the
shortfall. The reimbursement for the shortfall shall be made by way of a credit
note against the next month invoices.
The adjustment shall be calculated by multiplying the total area (in cm2) of the
difference between the standard and actual yield for each part number by the
Standard Cost of Production per cm2 for such grade of XPE produced as a jumbo
roll.
In the event that the total produced is higher than the standard yield then NAF
shall pay an additional amount to SEPR. The adjustment shall be calculated by
multiplying the total area (in cm2) of the difference between the standard and
the actual yield for each part number by the Standard Cost of Production per cm2
for such grade of XPE produced as a jumbo roll.
If SEPR disagrees with the reconciliation, they shall notify NAF within 10 days.
The parties will then meet during the next 20 days in a good faith attempt to
resolve the difference. In the event that they fail to reach agreement, the
dispute will be put to arbitration, which will be binding. The parties will
select an independent accounting firm having no business relationship with
either NAF in the USA or SEPR either in France or in the country in question.
Reimbursement for Off-specification Production
In the event that a customer of NAF rejects a delivery or number of parts of
die-cut XPE through failure to comply with the specification or for other reason
of defect then the following compensation mechanism shall be employed.
In the event that the defect or failure to meet specification is the fault of
NAF, then NAF shall pay the invoices for the production of such parts by SEPR
and shall return to SEPR, at NAF's cost, such defective parts and pay SEPR for
the disposal thereof.
In the event that the defect or failure to meet specification is the fault of
SEPR, then NAF shall return to SEPR, at SEPR's cost, such defective parts and
SEPR shall dispose of the parts at SEPR's cost. SEPR shall compensate NAF for
the die-cutting fee for the defective parts and shall further reimburse NAF for
the material cost of the defective parts. Such reimbursement shall be calculated
by multiplying the area of defective parts returned, by the Standard Cost of
Production of such grade of XPE produced as a jumbo roll. SEPR shall further
compensate NAF for carriage costs to the customer and freight and import costs
for replacement jumbo rolls. Compensation shall be made in the form of a credit
note against future toll die-cutting fees unless the amount of compensation is
such that the period for recovery of the credit would run beyond the expiry date
of this Agreement in which case the total amount of the compensation shall be
paid in cash.
NB: Standard Cost of Production excludes Factory Administration.
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EXAMPLE
GERMANY 1994 & 1995
- Total Fixed = [ * ]
- Total Variable = [ * ]
- Total CM(2) for 1994 = [ * ]
- Fixed rate monthly charge = [ * ]
- Base variable reimbursement rate for '94 = [ * ]
- Inflation rate for 1995 = [ * ]
- Base variable reimbursement rate for 1995 = [ * ]
- Variable reimbursement rate for [ * ]
- Review cost experience semi-annually and adjust variable rate as
necessary.
* Brackets indicate confidential material omitted and filed separately
with the S.E.C.
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APPENDIX A
GERMANY
1994 DIE CUTTING COSTS
(EXCLUDING MATERIALS)
See Schedules Attached (2 & 3)
DM $
-- -
Fixed Costs
Building Use [ * ]
Maintenance [ * ]
Supervision
[ * ] x direct cost excluding paper
[ * ] [ * ]
Depreciation [ * ]
ROCE (NFA year-end)
[ * ]
Variable Costs
Labor [ * ]
Utilities, etc. [ * ]
Total Die Cutting Costs
Note exchange rate [ * ] except NFA
* To nearest $000.
* Brackets indicate confidential material omitted and filed separately
with the S.E.C.
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APPENDIX A
German Operation
Revised 1994 Submission
Fixed Assets and Depreciation 1994
BALANCE DEPRECIATION
ASSET DESCRIPTION 31/12/94 1994 BASIS 1994
----------------- -------- ---- ----------
DM DM
Direct Assets
Die Cutter [ * ]
Stepmotor [ * ]
Heating [ * ]
Tools, etc [ * ]
QC Assets
Instrar Machine [ * ]
XPE Lab Equipment [ * ]
Ionizer [ * ]
Scales [ * ]
[ * ]
TOTAL COSTS
Production [ * ]
Add
QQ Occupancy [ * ]
QC Dep [ * ]
[ * ]
Less
Paper [ * ]
Dep [ * ]
Occupancy [ * ]
Repairs [ * ]
Labor [ * ]
Utilities & Consumables [ * ]
* Brackets indicate confidential material omitted and filed separately with the
S.E.C.
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APPENDIX A
BRAZIL
NFA
As previous schedule [ * ]
Building additions for XPE included in previous submission in error
NBV @31/12/84 [ * ]
As previously submitted [ * ]
Depreciation Basis
Machinery/Equipment [ * ]
Furniture/Fittings [ * ]
Hardware [ * ]
Software [ * ]
Note building additions [ * ]
Total Costs - As 1994 Schedule [ * ]
Make-Up
Material [ * ]
Packaging [ * ]
Labor, etc. [ * ]
Maintenance [ * ]
Depreciation [ * ]
Other [ * ]
* Brackets indicate confidential material omitted and filed separately with the
S.E.C.
8
18
APPENDIX A
1996 CHARGES & INFLATION
BRAZIL GERMANY
------ -------
Labor [ * ] [ * ]
[ * ] [ * ]
Utilities, etc. [ * ] [ * ]
[ * ] [ * ]
Maintenance (labor) [ * ] [ * ]
[ * ] [ * ]
Supervisor (labor) [ * ] [ * ]
[ * ] [ * ]
ROCE
20% on 1995 balance [ * ](1) [ * ](2)
1 [ * ]
2 [ * ]
* Brackets indicate confidential material omitted and filed separately
with the S.E.C.
9
00
XXXXXXXX X*
BRAZIL
FINAL WEIGHT OF YIELD EXPECTED GROSS PIECE
ITEM NO. PIECE [LBS.] [%] WEIGHT [LBS.]
-------- ------------ --- -------------
67471 [ * ]
67472 [ * ]
67474 [ * ]
67480 [ * ]
67486 [ * ]
67475 [ * ]
GERMANY
ITEM NO. FINAL WEIGHT OF YIELD EXPECTED GROSS PIECE
(FFX-NO. PIECE [KG]** [%] WEIGHT [KG]
-------- ------------ --- -----------
2013 [ * ]
2148 [ * ]
2258 [ * ]
2528 [ * ]
2598 [ * ]
2598A [ * ]
2633 [ * ]
2652 [ * ]
2668 [ * ]
2708 [ * ]
2776 [ * ]
2785 [ * ]
2797 [ * ]
2799 [ * ]
2812 [ * ]
2812A [ * ]
2817 [ * ]
2836 [ * ]
2837 [ * ]
2850 [ * ]
2893 [ * ]
2894 [ * ]
2895 [ * ]
2896 [ * ]
2900 [ * ]
2901 [ * ]
2902 [ * ]
2906 [ * ]
* Brackets indicate confidential material omitted and filed separately
with the S.E.C.
10
20
GERMANY
(continued)
ITEM NO. FINAL WEIGHT OF YIELD EXPECTED GROSS PIECE
(FFX-NO. PIECE [KG]** [%] WEIGHT [KG]
-------- ------------ --- -----------
2916 [ * ]
2917 [ * ]
2955A [ * ]
2959 [ * ]
2972 [ * ]
2976 [ * ]
2977 [ * ]
2979 [ * ]
2983 [ * ]
2988A [ * ]
2999 [ * ]
3000 [ * ]
3018 [ * ]
3021 [ * ]
3036 [ * ]
3054 [ * ]
3058 [ * ]
3061 [ * ]
3087 [ * ]
3088 [ * ]
3089 [ * ]
3093 [ * ]
3096 [ * ]
3097 [ * ]
3098 [ * ]
3104 [ * ]
3107 [ * ]
3108 [ * ]
3115 [ * ]
3116 [ * ]
3120 [ * ]
3121 [ * ]
3143 [ * ]
3153 [ * ]
3154 [ * ]
3158 [ * ]
3159 [ * ]
3160 [ * ]
3161 [ * ]
3162 [ * ]
* Brackets indicate confidential material omitted and filed separately
with the S.E.C.
11
21
GERMANY
(Continued)
ITEM NO. FINAL WEIGHT OF YIELD EXPECTED GROSS PIECE
(FFX-NO. PIECE [KG] [%] WEIGHT [KG]
3175 [ * ]
3183 [ * ]
3186 [ * ]
* To calculate the number of good pieces in any given roll, the following
is needed:
1) roll weight
2) weight of piece
3) yield expected
For example:
Roll weight = [ * ]
Weight of piece = [ * ]
Yield expected = [ * ]
Gross piece weight = [ * ]
Gross piece per roll = [ * ]
** 1 Kilogram = 2.205 Lbs.
* Brackets indicate confidential material omitted and filed separately
with the S.E.C.
12
