Exhibit 10.2
LUMBER SUPPLY AGREEMENT
THIS LUMBER SUPPLY AGREEMENT (the "AGREEMENT") is made and entered
into as of March 28, 1997 by and between CROWN PACIFIC LIMITED PARTNERSHIP, a
Delaware limited partnership ("CROWN PACIFIC"), and TEAM MILLWORK, LLC, an
Oregon limited liability company ("BRIGHT WOOD").
RECITALS:
A. Pursuant to that certain Agreement for Sale and Purchase of Business
Assets dated as of March 28, 1997 (the "PURCHASE AGREEMENT"), Crown Pacific has
sold to Team Millwork certain assets used in connection with a lumber
remanufacturing business located in Redmond, Oregon (the "BUSINESS").
B. As contemplated by the Purchase Agreement, Crown Pacific and Team
Millwork wish to provide for Crown Pacific's sale to Team Millwork and Team
Millwork's purchase from Crown Pacific of certain lumber requirements associated
with the Business, on the terms and conditions set forth herein.
AGREEMENTS:
In consideration of the foregoing and the mutual covenants of the parties
set forth in this Agreement, the parties, intending to be legally bound, agree
as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 MINIMUM VOLUMES. Subject to the provisions of Sections 1.2
through 1.4, inclusive, Crown Pacific agrees to make available for sale to Team
Millwork, on the terms and conditions set forth in this Agreement, the following
volumes of 1-9/16 inch Grade 3 and Better Random Width Random Length Ponderosa
Pine Shop Lumber ("SHOP LUMBER"):
1.1.1 During each calendar month commencing in April 1997 and
continuing to and including the month of March 1999 (as such period may be
extended pursuant to Section 1.3.2, the "INITIAL SUPPLY PERIOD"), 2.0 million
board feet ("MMBF") of Shop Lumber; and
1.1.2 During each of the 36 consecutive calendar months
commencing with the calendar month immediately following the end of the Initial
Supply Period (as such 36-month period may be extended pursuant to Section
1.3.3, the "SECOND SUPPLY PERIOD"), the lesser of (i) 2.0 MMBF of Shop Lumber,
or (ii) 26% of the aggregate volume of Shop Lumber produced in Crown Pacific's
sawmill in Gilchrist, Oregon (the "GILCHRIST MILL") and its sawmill in
Prineville, Oregon (the "PRINEVILLE MILL" and, together with the Gilchrist Mill,
the "XXXXX") during the calendar month in question.
The minimum volume of Shop Lumber that Crown Pacific is required to make
available for sale to Team Millwork during any calendar month pursuant to
Section 1.1.1 or 1.1.2, as applicable, is
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referred to herein as the "MINIMUM VOLUME." The Initial Supply Period and the
Second Supply Period are together referred to herein as the "TERM." Nothing in
this Agreement is intended or shall be construed to prevent Crown Pacific from
selling to Team Millwork, or Team Millwork from purchasing from Crown Pacific,
Shop Lumber in excess of the Minimum Volume.
1.2 EFFECT OF MILL CLOSURE OR SALE. In the event that Crown Pacific
permanently closes or sells either of the Xxxxx at any time during the Initial
Supply Period, the Minimum Volume shall be reduced for each calendar month
during the remainder of the Initial Supply Period from and after the month
during which such closure or sale occurs to 26% of the volume of Shop Lumber
produced in the remaining Mill during such calendar month. In the event that
Crown Pacific permanently closes or sells both the Xxxxx at any time during the
Term, Crown Pacific's obligation to sell Shop Lumber to Team Millwork pursuant
to this Agreement shall automatically terminate and be of no further force and
effect.
1.3 FORCE MAJEURE.
1.3.1 For purposes of this Agreement, a "FORCE MAJEURE EVENT"
shall be deemed to have occurred if the production of Shop Lumber at one or both
of the Xxxxx is substantially reduced or prevented due to (i) any strike,
lockout, or other labor difficulty; (ii) any fire or other casualty; (iii)
weather, (iv) the unavailability of sufficient raw materials or supplies
resulting from any of the events described in the foregoing clauses (i) through
(iii), inclusive, governmental restrictions on the harvest of timber, or
transportation difficulties; or (iv) any act of God.
1.3.2 If a Force Majeure Event during the Initial Supply
Period reduces, but does not prevent, the production of Shop Lumber at the
Xxxxx, the Minimum Volume shall be reduced to 26% of the aggregate volume of
Shop Lumber produced in the Xxxxx during each month that such Force Majeure
Event continues. If a Force Majeure Event during the Initial Supply Period
prevents the production of Shop Lumber at the Xxxxx, Crown Pacific shall have no
obligation hereunder to sell Shop Lumber to Team Millwork during the period when
production is so prevented. If, as a result of a Force Majeure Event during the
Inital Supply Period, Crown Pacific has made available for purchase by Team
Millwork hereunder less that the Minimum Volume during any calendar month, Team
Millwork shall have the following options with respect to the purchase of the
resulting shortfall in the Minimum Volume (the "SHORTFALL"):
(a) Team Millwork may purchase some or all of the Shortfall
in any subsequent month during the Initial Supply Period; PROVIDED that the
amount so purchased added to the Minimum Volume for such month does not
exceed 26% of the aggregate volume of Shop Lumber produced in the Xxxxx
during the month in question;
(b) Team Millwork may, by notice to Crown Pacific, extend
the Initial Supply Period by one calendar month for each 2.0 MMBF (or
fraction thereof) of the Shortfall that has not recovered been by Team
Millwork pursuant to Section 1.3.2(a); and
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(c) Team Millwork may, by notice to Crown Pacific, extend
the Second Supply Period by one calendar month for each 2.0 MMBF (or
fraction thereof) of the Shortfall that has not been recovered by Team
Millwork pursuant to Section 1.3.2(a) or reflected in an extension of the
Initial Supply Period pursuant to Section 1.3.2(b).
1.3.3 If a Force Majeure Event occurs during the Second
Supply Period and prevents the production of Shop Lumber at the Xxxxx, Crown
Pacific shall have no obligation hereunder to sell Shop Lumber to Team Millwork
during the period when production is so prevented, and the Second Supply Period
shall be extended by the number of months during which production of Shop Lumber
continues to be prevented due to such Force Majeure Event.
1.4 EFFECT OF DELINQUENT PAYMENTS.
1.4.1 In the event that Team Millwork fails to pay when due
any invoice for Shop Lumber sold pursuant to this Agreement, Crown Pacific may,
at its sole option and in addition to any other remedies it may have as a result
of such delinquent payment, to suspend the sale of Shop Lumber under this
Agreement until the invoiced amount has been paid in full. The Minimum Volume
for any partial calendar month during which such a suspension occurs shall be
reduced pro rata based upon the number of days during such month that such
suspension continues.
1.4.2 In the event any invoice for Shop Lumber sold pursuant
to this Agreement is not paid in full within 30 days after the due date for such
invoice, Crown Pacific may, at its sole option and in addition to any other
remedies it may have as a result of such delinquent payment, terminate this
Agreement by notice given to Team Millwork at any time prior to the date on
which the delinquent invoice is paid in full.
1.4.3 Crown Pacific's failure to exercise its right to
suspend the sale of Shop Lumber pursuant to Section 1.4.1 or to terminate this
Agreement pursuant to Section 1.4.2 on account of any delinquent payment shall
not constitute a waiver of its right to do so at any time that such payment
remains unpaid or in the event of any future delinquent payment.
2. NO OBLIGATION TO PURCHASE; PRODUCTION ORDERS. Team Millwork shall not
be obligated to purchase any minimum volume of Shop Lumber pursuant to this
Agreement, but any Shop Lumber purchased by Team Millwork from Crown Pacific
during the term of this Agreement shall be sold and purchased on the terms and
conditions set forth herein. At any time during the last week of any calendar
month during the Term, Team Millwork may give notice to Crown Pacific (each a
"PRODUCTION ORDER") setting forth the volume of Shop Lumber that Team Millwork
wishes to purchase during the following calendar month and when during such
calendar month Team Millwork wishes to take delivery of specified volumes of
such Shop Lumber. Unless otherwise specified by Crown Pacific, Production
Orders shall be submitted to Crown Pacific's office located at 0 Xxxxxxx Xxxx,
X.X. Xxx 000, Xxxxxxxxx, XX 00000 (fax no. (000) 000-0000), Attn: Xxxx Xxxxxx.
Upon submitting a Production Order, Team Millwork shall be obligated to purchase
the Shop Lumber specified in such Production Order on the terms and
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conditions set forth herein. Crown Pacific shall notify Team Millwork promptly
when Shop Lumber sold and purchased pursuant to this Agreement is available for
pickup.
3. PRICE AND PAYMENT.
3.1 PURCHASE PRICE. The purchase price for all Shop Lumber shall be
F.O.B. the Mill at which such Shop Lumber is produced. The purchase price for
all Shop Lumber included in any Production Order shall be equal to the price for
such Shop Lumber set forth in RANDOM LENGTHS (or, if RANDOM LENGTHS ceases to be
published, such comparable industry publication as may be selected by Crown
Pacific) for the Friday prior to shipment of such Shop Lumber, plus the premium
or minus the discount, as the case may be, generally quoted by Crown Pacific to
its customers for the purchase of comparable lumber at the time the applicable
Production Order is submitted. At the time each Production Order is submitted,
Crown Pacific shall specify the premium or discount to be applied in determining
the purchase price for the Shop Lumber included in such Production Order.
3.2 PAYMENT TERMS. Crown Pacific shall invoice Team Millwork for
Shop Lumber purchased pursuant to this Agreement on or promptly after the date
such Shop Lumber is first available for pickup at the Gilchrist Mill or the
Prineville Mill, as applicable. Each invoice shall be payable in full on or
before the 14th day after the invoice date; PROVIDED that any invoice paid in
full on or before the 13th day after the invoice date shall be subject to a
discount equal to 1.0% of the amount of such invoice. Notwithstanding the
foregoing, in the event Crown Pacific modifies its standard billing and payment
procedures at any time and from time to time during the term of this Agreement,
such modified procedures shall apply to all Shop Lumber purchased by Team
Millwork pursuant to this Agreement from and after the date on which Crown
Pacific gives Team Millwork notice of such change.
4. TRANSPORTATION. Team Millwork shall be solely responsible for
arranging, and for paying all costs and expenses associated with, the shipment
of Shop Lumber purchased pursuant to this Agreement from the Mill at which such
Shop Lumber is produced.
5. REPRESENTATIONS AND WARRANTIES. Crown Pacific represents and warrants
to Team Millwork that (i) Crown Pacific has title to all Shop Lumber sold
pursuant to this Agreement, (ii) such Shop Lumber is free and clear of all liens
and encumbrances, (iii) Crown Pacific has the right to transfer such Shop Lumber
to Team Millwork as contemplated by this Agreement, and (iv) such Shop Lumber is
merchantable. CROWN PACIFIC HEREBY EXPRESSLY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE SHOP LUMBER,
INCLUDING ANY WARRANTY THAT IT IS FIT FOR A PARTICULAR PURPOSE.
6. GENERAL PROVISIONS.
6.1 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Team Millwork may not assign its rights under this Agreement
without the prior written consent of Crown Pacific, which may be withheld in
Crown Pacific's sole and absolute discretion.
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6.2 NOTICES. All notices under this Agreement shall be in writing.
Notices may be (i) delivered personally, (ii) transmitted by facsimile, (iii)
delivered by a recognized national overnight delivery service, or (iv) mailed by
certified United States mail, postage prepaid and return receipt requested.
Except as provided in Section 2 with respect to Production Orders, notices to
any party shall be directed to the applicable address set forth below, or to
such other address as either party may specify by notice to the other party.
Any notice delivered in accordance with this Section 6.2 shall be deemed given
when actually received or, if earlier, (a) in the case of any notice transmitted
by facsimile, on the date on which the transmitting party receives confirmation
of receipt by facsimile transmission, telephone, or otherwise, (b) in the case
of any notice delivered by a recognized national overnight delivery service, on
the next business day after delivery to the service or, if different, on the day
designated for delivery, or (c) in the case of any notice mailed by certified
U.S. mail, two business days after deposit therein.
If to Crown Pacific: Crown Pacific Limited Partnership
000 X.X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxxxx X. Xxxxx
If to Team Millwork: Team Millwork, LLC
X.X. Xxxxxx 000
Xxxxxx, XX 00000
Facsimile No: (000) 000-0000
Attn: Xxxxxx Xxxxxxx
6.3 AMENDMENT; WAIVER. This Agreement may not be modified or
amended, nor may any of its provisions be waived, except by a written instrument
signed by the party against whom enforcement of such modification, amendment, or
waiver is sought.
6.4 ATTORNEYS' FEES. If a suit, action, or other proceeding of any
nature whatsoever (including any proceeding under the U.S. Bankruptcy Code) is
instituted in connection with any controversy arising out of this Agreement or
to interpret or enforce any rights hereunder, the prevailing party shall be
entitled to recover its attorneys', paralegals', accountants', and other
experts' fees and all other fees, costs, and expenses actually incurred and
reasonably necessary in connection therewith, as determined by the court at
trial or on any appeal or review, in addition to all other amounts provided by
law.
6.5 SEVERABILITY. If any provision of this Agreement is found by a
court of competent jurisdiction to be invalid, illegal, or unenforceable, then
(i) such provision shall be enforceable to the fullest extent permitted by
applicable law, and (ii) the validity and enforceability of the other provisions
of this Agreement shall not be affected and all such provisions shall remain in
full force and effect.
6.6 CONSTRUCTION AND INTERPRETATION. The headings or titles of the
sections of this Agreement are intended for ease of reference only and shall
have no effect whatsoever on the construction or interpretation of any provision
of this Agreement; references herein to sections
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are to sections of this Agreement unless otherwise specified. Meanings of
defined terms used in this Agreement are equally applicable to singular and
plural forms of the defined terms. As used herein, (i) the term "party" refers
to a party to this Agreement, unless otherwise specified, (ii) the terms
"hereof," "herein," "hereunder," and similar terms refer to this Agreement as a
whole and not to any particular provision of this Agreement, and (iii) the term
"including" is not limiting and means "including without limitation." In the
event any period of time specified in this Agreement ends on a day other than a
business day, such period shall be extended to the next following business day.
All provisions of this Agreement have been negotiated at arm's length and this
Agreement shall not be construed for or against any party by reason of the
authorship or alleged authorship of any provision hereof.
6.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oregon (without regard to the
principles thereof relating to conflicts of laws).
6.8 EXECUTION. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one and the same agreement.
Each party may rely upon the signature of each other party on this Agreement
that is transmitted by facsimile as constituting a duly authorized, irrevocable,
actual, current delivery of this Agreement with the original ink signature of
the transmitting party.
6.9 FURTHER ASSURANCES. Each party agrees to execute and deliver
such additional documents and instruments as may reasonably be required to
effect this transaction fully, so long as the terms thereof are consistent with
the terms of this Agreement.
6.10 NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered
into for the sole protection and legal benefit of Seller, Buyer, and their
respective successors and permitted assigns, and no other person or entity shall
be a direct or indirect legal beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above written.
Crown Pacific: CROWN PACIFIC LIMITED PARTNERSHIP,
a Delaware limited partnership
By: CROWN PACIFIC MANAGEMENT
LIMITED PARTNERSHIP,
its General Partner
By: /s/Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, Secretary
Team Millwork: TEAM MILLWORK, LLC,
an Oregon limited liability company
By: /s/ Xxxxxx X. Xxxxxxx
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Title: Managing Member
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