Confidential Treatment
EXHIBIT 10.8
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO REGISTRANT'S APPLICATION OBJECTING TO
DISCLOSURE AND REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406. THE OMITTED
PORTIONS HAVE BEEN MARKED WITH BRACKETS.
EQUIPMENT USE AGREEMENT
-----------------------
This Equipment Use Agreement (the "Equipment Agreement") dated as of
January 20, 1996, is made among WINCUP HOLDINGS, L.P., a Delaware limited
partnership (the "Partnership") and XXXXX RIVER PAPER COMPANY, INC., a Virginia
corporation ("JR").
RECITALS
a. JR and WINCUP HOLDINGS, INC., a Delaware corporation ("Wincup"),
have entered into a certain Limited Partnership Agreement dated as of
the date hereof (the "Partnership Agreement"), whereby each of JR and
Wincup have agreed to execute a Capital Contribution Agreement and to
contribute designated assets to the Partnership which shall engage in
the Foam Business.
b. In addition to the respective obligations of the parties to the
Partnership Agreement to consummate the Closing, the parties have
agreed to the execution and delivery of this Equipment Agreement
pursuant to which the Partnership shall have the right to use certain
equipment owned by JR.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
i. Definitions.
Terms used herein and not otherwise defined herein shall have the meanings
ascribed to them in the Partnership Agreement and the Related Agreements
attached thereto. In addition, the following terms, as used herein, have the
following meanings:
"Equipment" shall mean collectively the Extruder Equipment and the Former
Equipment, as they are defined below.
"Extruder Equipment" means the JR extruder used to produce Lids and more
particularly described on Schedule A attached hereto, located at the West
Chicago Facility as defined below.
"Former Equipment" means the JR thermoformer, trim press, molds, moldbeds
and other tooling used to produce Lids and more particularly described on
Schedule A attached hereto, located at the West Chicago Facility as defined
below.
"Lids" means polystyrene lids for paper drinking cups used for hot and cold
drinks, conforming to and meeting the specifications of the lids currently
produced at the West Chicago Facility, and more particularly described on
Schedule B.
"Related Agreements" means the Wincup Capital Contribution Agreement, the
Xxxxx River Capital Contribution Agreement, the Confidentiality Agreement, the
Patent License Agreement, and the License Agreement with respect to the Xxxxx
trademark executed and delivered by the parties at Closing pursuant to the
Partnership Agreement.
"Variable Product Cost" means the Partnership's variable cost to be
determined in accordance with Schedule B.
2
"West Chicago Facility" means the Handi-Kup plant located at 0000 Xxxxxxxxx
Xxxx, Xxxx Xxxxxxx, Xxxxxxxx 00000.
ii. Term of Agreement.
This Equipment Agreement shall be effective for a term beginning on the
Closing Date and continuing until terminated, provided, however, that this
Equipment Agreement, as it relates to the Extruder Equipment, shall be effective
for at least one (1) year after the Closing Date (the "Term").
iii. Termination.
JR may, at its option, at any time, move the Former Equipment from the West
Chicago Facility at its own expense by providing the Partnership with sixty (60)
days' written notice. JR must provide the Partnership with ninety (90) days'
notice to remove the Extruder Equipment from the West Chicago Facility at its
own expense. JR shall provide such written notice to the Partnership with
respect to the Extruder Equipment no earlier than October 1, 1996. Once JR
removes either of the Extruder Equipment or the Former Equipment, this Equipment
Agreement shall terminate and none of the parties shall have any further
liability to the other under this Equipment Agreement as to such Extruder
Equipment or Former Equipment, as the case may be.
iv. Equipment Use.
During the Term, the Partnership: (i) may operate the Equipment for use in
the Partnership's Foam Business in the usual, regular and ordinary manner in
which the Equipment has been operated by JR consistent with JR's past practice;
and (ii)
3
shall sell to JR Lids at the Partnership's Variable Product Cost. The quantity
of Lids sold to JR shall not exceed 12,000 stat cases per week, the price of
such lids shall be F.O.B. the West Chicago Facility, and the payment terms shall
be net thirty (30) days from date of invoice. JR shall have no obligation to
pay for Lids which are not comparable in quality to Lids manufactured by JR as
of the effective date of this Equipment Agreement, and do not meet product
specifications.
v. Maintenance of Equipment; Storage and Security.
(a) During the Term hereof, the Partnership or its designee, at the
Partnership's sole expense, shall perform routine inspection and maintenance
and/or repair.
(b) During the term hereof, the Partnership shall provide, at no cost to
JR, such space and secure storage as is necessary to store the Equipment or any
component thereof. During the Term hereof, the Partnership shall be responsible
for providing such level of security with respect to the Equipment as the
Partnership would provide for its own equipment in a similar situation.
vi. Loss or Damage; Insurance until Removal.
(a) During the Term of this Equipment Agreement, the Partnership shall
use reasonable care to protect the Equipment from physical damage; provided,
that the Partnership shall not be responsible for any loss, damage, liability or
expense for failure to protect the Equipment, unless such failure results
4
from the Partnership's negligence or willful misconduct. In connection with the
foregoing, during the Term hereof, the Partnership shall post a notice
indicating that unauthorized personnel are not permitted near the Equipment;
provided, that the Partnership shall not incur any liability to JR for failure
to post such notice or the manner in which it posts such notice, unless such
failure results from the Partnership's negligence or willful misconduct.
(b) During the Term hereof, the Partnership shall provide, maintain and
pay for all risk insurance providing coverage for the Equipment for its full
insurable value with loss payable to JR, irrespective of whether such loss is
caused by the Partnership's negligence or willful misconduct. In addition, the
Partnership shall provide, maintain and pay for commercial general liability and
property damage insurance, with JR named as an additional insured, protecting
against liability for damages for personal injury or death and property damage
caused by the Equipment in a face value of not less than $1,000,000 per
occurrence for both personal injury, death and property damage. The commercial
general liability limits required in this Section will be dedicated for JR use
only. All such insurance shall be (i) primary as to any other applicable
insurance that JR may carry and (ii) reasonably satisfactory to JR as to form,
amount and insurer. The Partnership will be responsible for all deductibles, co-
insurance, retentions or payments due including but not limited to retrospective
adjustments and deductible
5
program xxxxxxxx. In addition, all such insurance shall contain the insurer's
agreement to give 30 days' written notice to JR before cancellation of, or
material changes to, any insurance policy required hereunder. Upon JR's
request, the Partnership shall deliver the insurance policies or copies thereof
required by this Section 6(b) for review by JR and certificates of insurance
evidencing coverage as requested to JR.
vii. Removal.
(a) At the end of the Term hereof, JR, shall use its good faith efforts
to remove, at its sole expense, or to contract with a third party to remove, the
Equipment. Upon such removal, JR shall leave, or cause its designee to leave,
the machine rooms and/or buildings in which the Equipment or any component
thereof is located in broom clean condition. JR shall reimburse the Partnership
for any damages caused to the Partnership property during the course of the
removal of the Equipment.
(b) The Partnership shall cooperate with JR or its designee in the
removal of the Equipment, and shall allow JR, its agents or its designees
reasonable access to the Equipment for such purpose during normal working hours,
and, to the extent the Partnership is specifically requested by JR, the
Partnership shall supply, at no cost to JR, such electricity, water, plumbing
facilities, compressed air and other services as are reasonably necessary for JR
or its contractors to perform the removal of the Equipment in a workmanlike
manner; provided, that the Partnership shall not be required to supply any
service that is not available
6
to the areas in which the Equipment is located at the time of such removal. If
JR desires to install a new or increased service to facilitate the removal of
the Equipment, the Partnership shall cooperate with such installation and shall
apply in its own name for any necessary permits, all at the sole cost of JR.
(c) JR shall be responsible for the payment of any contractors or
Partnership employees employed by JR or its designee in connection with the
removal or disposal of the Equipment.
viii. Indemnification.
Each party shall indemnify and hold the other harmless from any third party
claim, liability, action, suit, judgment, damage, expense or cost (including
reasonable attorney's fees and court costs) arising out of such party's
respective activities under this Equipment Agreement.
ix. Force Majeure.
JR, may suspend or reduce, in whole or in part, the use of any or all
of the Equipment to the extent JR is materially impeded in its ability to
provide the use of such Equipment as a result of an act of God, labor dispute,
war, riot, fire or other casualty, acts of any governmental body, or other cause
or conditions beyond its reasonable control ("Force Majeure Event"). JR shall
use its reasonable best efforts to restore the Partnership's use of the
Equipment as promptly as reasonably practicable after the elimination of the
Force Majeure Event.
7
Likewise, the Partnership may suspend or reduce, in whole or in part, the
supply of Lids described in Paragraph 3 to the extent the Partnership is
materially impeded in its ability to provide such Lids as a result of a Force
Majeure Event. The Partnership shall use its reasonable best efforts to restore
the suspended or reduced supply of Lids as promptly as reasonably practicable
after the elimination of the Force Majeure Event.
x. Notices.
All notices and other communications required or permitted hereunder shall
be in writing (including telex, telefax or similar writing) and shall be given:
(a) If to JR to:
Xxxxx River Corporation
P. O. Box 6000
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxx X. Xxxx
Telefax No.: (000) 000-0000
with a copy to:
Xxxxx River Paper Company, Inc.
P. O. Box 0000
Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Telefax No.: (000) 000-0000
(b) If to Wincup or to the Partnership to:
Wincup Holdings, Inc.
Wincup Holdings, L.P.
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxxx
Telefax No.: (000) 000-0000
8
with a copy to:
Duane, Morris & Heckscher
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
Telefax No.: (000) 000-0000
or to such other person or to such other address or telefax number as the party
to whom such notice is to be given may have furnished the other parties in
writing by like notice. If mailed, any such communication shall be deemed to
have been given on the third business day following the day on which the
communication is posted by registered or certified mail (return receipt
requested). If given by any other means it shall be deemed to have been given
when received.
xi. Interpretation.
The headings contained in this Equipment Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Equipment Agreement.
xii. Miscellaneous.
This Equipment Agreement (i) together with the Partnership Agreement and
the Related Agreements, 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 in the event of a conflict
between this Equipment Agreement and the Partnership Agreement, the terms of
this Equipment Agreement shall control; (ii) is an independent agreement, the
rights and obligations of the parties to which shall not be affected by any
provision of,
9
or remedy arising under or with respect to, the Partnership Agreement or any
other agreement between the parties, except to the extent expressly provided in
any such agreement; (iii) is not intended to and shall not confer upon any other
person or business entity, other than the parties hereto or any permitted
assignees, any rights or remedies with respect to the subject matter hereof;
(iv) shall not be assigned by operation of law or otherwise; (v) shall be
governed by and construed in accordance with the laws of the state of Delaware
without regard to its conflicts of law or choice of law rules.
xiii. Counterparts.
This Equipment 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.
IN WITNESS WHEREOF the parties have caused this Equipment Agreement to be
executed by their duly authorized officers.
XXXXX RIVER PAPER COMPANY, INC.
By:[SIGNATURE APPEARS HERE]
---------------------------
Name:
-------------------------
Title:
------------------------
WINCUP HOLDINGS, L.P.
By:[SIGNATURE APPEARS HERE]
---------------------------
Name:
-------------------------
Title:
------------------------
10
Schedule A
Equipment
Serial
Model Number Description
----- ------- ------------
Xxxxx Standard 60-T E2316 Extruder
Xxxxx MC-4240 7697 Thermoformer
Xxxxx T300 03-8214 Trim Press
Molds, moldbeds and other
tooling required to
manufacture products
(SKU's) listed on
Schedule B of the
Equipment Use Agreement
Schedule B
Variable Product Costs
The Partnership's Variable Product Costs will be based on the following formula.
For each lid produced on Xxxxx River's equipment, the Variable Product Costs
will be the estimated standard costs listed below. Resin and carton costs
listed below will be revised monthly based on the Partnership's current contract
price net of rebates and discounts over the term of the Equipment Use Agreement.
All other variable costs will remain over the term of the Equipment Use
Agreement at the cost listed below.
SKU [ ] [ ] [ ] [ ] [ ]
Case Count [ ] [ ] [ ] [ ] [ ] lids
lids lids lids lids
Costs Per 1000 Lids
Resin $ [ ] $ [ ] $ [ ] $ [ ] $ [ ]
Carton [ ] [ ] [ ] [ ] [ ]
Bag [ ] [ ] [ ] [ ] [ ]
Direct Labor [ ] [ ] [ ] [ ] [ ]
Var. Operating Supplies [ ] [ ] [ ] [ ] [ ]
Utilities [ ] [ ] [ ] [ ] [ ]
Repair Labor & Material [ ] [ ] [ ] [ ] [ ]
-------- -------- -------- -------- --------
Variable Product Cost $ [ ] $ [ ] $ [ ] $ [ ] $ [ ]
======== ======== ======== ======== ========
Cost Per Case $ [ ] $ [ ] $ [ ] $ [ ] $ [ ]
======== ======== ======== ======== ========
EQUIPMENT USE EXTENSION AND MODIFICATION AGREEMENT
This EQUIPMENT USE EXTENSION AND MODIFICATION AGREEMENT ("Agreement") is
made as of December 5, 1996 by and between WINCUP HOLDINGS, L.P., a Delaware
limited partnership (the "Partnership") and XXXXX RIVER PAPER COMPANY, INC., a
Virginia corporation ("JR").
BACKGROUND
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a. The Partnership, WinCup Holdings, Inc., ("WinCup"), Radnor
Holdings Corporation ("Radnor") and JR intend to enter into a
Partnership Interest Purchase Agreement pursuant to which Radnor
shall purchase the entire limited partnership interest of JR in the
Partnership, as such interest is described in the Limited
Partnership Agreement between WinCup and JR, dated as of January 20,
1996 (the "Purchase Transaction").
b. The Partnership and JR are parties to that certain Equipment Use
Agreement, dated as of January 20, 1996 (the "Equipment Agreement"),
which such agreement terminates upon JR's removal of certain of its
equipment from the Partnership's West Chicago, Illinois facility (the
"Facility").
c. The Partnership and JR have determined that it would be in each
of their best interests to enter into a modification of the Equipment
Agreement in order to extend the term of the Equipment Agreement.
d. All capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Equipment Agreement.
NOW THEREFORE, in consideration of the agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
i. Extension Period. Pursuant and subject to the terms and
----------------
conditions of the Equipment Agreement, the Partnership and JR
agree to enter into an extension of the Equipment Agreement.
(1) Paragraph 2 (Term of Agreement) of the Equipment
Agreement is deleted in its entirety and is replaced with:
"This Equipment Agreement shall be effective for a Term commencing on the date
of closing of the Purchase Transaction and ending on January 20, 2002
(the"Termination Date").
(2) Paragraph 3 (Termination) of the Equipment Agreement is deleted
in its entirety and is replaced with:
"JR may not remove the Former Equipment or the Extruder Equipment prior to the
Termination Date."
(3) Schedule B to the Equipment Agreement is hereby deleted in its
entirety and replaced with the attached Schedule B.
ii. Effect of Modification. Except as hereby expressly extended, amended
----------------------
and modified, all of the terms, conditions, provisions and covenants of the
Equipment Agreement shall continue in full force and effect.
iii. Assignment of Equipment Agreement. The Partnership shall have the
right to assign the Equipment Agreement to any Affiliate of the Partnership
without the consent of Xxxxx River, provided that such assignee assumes all
of the Partnership's rights, obligations and liabilities in connection with
the Equipment Agreement and this Agreement in writing and the Partnership
shall remain primarily obligated for the performance by such assignee of
all of its rights, obligations and liabilities under the Equipment
Agreement and this Agreement. For purposes of this Paragraph 3, "Affiliate"
shall mean any person, corporation, partnership, association, joint stock
company, trust or unincorporated organization which, directly or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with the Partnership.
iv. Successors and Assigns. This Agreement shall bind and enure to the
----------------------
benefit of the parties to the Equipment Agreement and their respective
successors and assigns.
v. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Delaware, without regard to its
conflict of laws or choice of law rules.
vi. Counterparts. This Agreement may be executed in as many counterparts
------------
as may be deemed necessary or convenient, and by the different parties
hereto on separate counterparts, each of which, when so
executed, shall be deemed an original, but all of which such counterparts
shall constitute but one and the same instrument.
Equipment Use Extension Agreement-3
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
XXXXX RIVER PAPER COMPANY,
INC.
By: [SIGNATURE APPEARS HERE]
------------------------------------
Name:
Title:
WINCUP HOLDINGS, L.P.
By: WinCup Holdings, Inc., its general
partner
By: [SIGNATURE APPEARS HERE]
-------------------------------
Name:
Title:
Equipment Use Extension Agreement-4
Schedule B
Variable Product Costs
The Partnership's Variable Product Costs will be based on the following formula.
For each lid produced on Xxxxx River's equipment, the Variable Product Costs
will be the estimated standard costs listed below. Resin and carton costs
listed below will be revised monthly based on the Partnership's current contract
net of rebates and discounts over the term of the Equipment Use Agreement. All
other variable costs will remain over the term of the Equipment Use Agreement at
the cost listed below.
SKU [ ] [ ] [ ] [ ] [ ]
Case Count [ ] lids [ ] lids [ ] lids [ ] lids [ ] lids
Costs Per 1000 lids
Resin $ [ ] $ [ ] $[ ] $[ ] $[ ]
Carton [ ] [ ] [ ] [ ] [ ]
Bag [ ] [ ] [ ] [ ] [ ]
Direct Labor [ ] [ ] [ ] [ ] [ ]
Var. Operating Supplies [ ] [ ] [ ] [ ] [ ]
Utilities [ ] [ ] [ ] [ ] [ ]
Repair Labor & Material [ ] [ ] [ ] [ ] [ ]
-------- --------- ------ ------ ------
Variable Product Cost $ [ ] $ [ ] $[ ] $[ ] $[ ]
-------- --------- ------ ------ ------
Cost Per Case $ [ ] $ [ ] $[ ] $[ ] $[ ]
======== ========= ====== ====== ======
Additional Products
The parties hereby agree to the addition of the following products, at such
prices to be mutually agreed upon by the parties within five (5) business days
of the closing of the Purchase Transaction :
SKU Description PK Size
----------- --------------- -------
[ ] [ ] [ ]
Equipment Use Extension Agreement - 5
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
The parties hereby acknowledge and agree that JR may require lids in
addition to those described on this Schedule B, and the Partnership agrees to
produce such lids for Xxxxx River on such pricing as the parties shall mutually
agree.
Equipment Use Extension Agreement-6
