2
EXECUTION COPY
00281
Exhibit 10.20
SUPPLY and CONSIGNMENT AGREEMENT
This Supply and Consignment Agreement ("Agreement") is entered into this
29th of December, 2000, by and between SerVaas, Inc., an Indiana corporation,
("Supplier"), and USRR Acquisition Corp., an Indiana corporation, ("USRR").
Recitals
Whereas, Supplier is the owner of Six Million Four Hundred Thousand
pounds (6,400,000) road worn domestic and foreign scrap inner tubes and factory
reject tubes (the "SerVaas Scrap Butyl"), which USRR has determined is suitable
for use by USRR in its business of reclaiming butyl rubber and the sale and
distribution of same; and
Whereas, the SerVaas Scrap Butyl is currently located at USRR's
facility located at 0000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx; and
Whereas, Supplier desires to sell and USRR desires to purchase the
SerVaas Scrap Butyl on the following terms and conditions.
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the Supplier and USRR do hereby
agree as follows:
1. Agreement to Purchase SerVaas Scrap Butyl: Supplier Relationship: During the
term of this Agreement, USRR shall purchase the SerVaas Scrap Butyl from
Supplier in twenty-four (24) equal monthly orders of Two Hundred Sixty Six
Thousand Six Hundred Sixty Seven (266,667) pounds each. The price to be paid for
each such monthly purchase shall be Forty One Thousand Six Hundred Sixty Seven
Dollars ($41,667.00). Such monthly purchases of SerVaas Scrap Butyl shall
commence on January 1, 2001 and shall be evidenced by a blanket purchase order
for the entire SerVaas scrap butyl inventory of 6,400,000 pounds in
substantially the same form set forth on Exhibit A, attached hereto. The amount
of the SerVaas Scrap Butyl over which Supplier shall retain exclusive ownership
shall be reduced by 266,667 pounds per month as USRR orders the SerVaas Scrap
Butyl on a monthly basis.
2. Consignment. Supplier hereby entrusts the SerVaas Scrap Butyl to USRR on
consignment to be purchased and used by USRR in its operations pursuant to the
terms of this Agreement. USRR hereby acknowledges receipt of the SerVaas Scrap
Butyl at its facility located at 0000 Xxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000. USRR
shall pay all expenses incident to the storage, handling, insurance, processing
and sale of the SerVaas Scrap Butyl.
3. Ownership and Identification of the SerVaas Scrap Butyl. The SerVaas Scrap
Butyl is fungible and not otherwise readily distinguishable from scrap butyl
owned by USRR and carried on its books as raw material inventory. So long as
this Supply Agreement is in effect, USRR shall maintain a separate inventory
accounting of the SerVaas Scrap Butyl, and shall take all steps necessary to
ensure that the volume and value of the SerVaas Scrap Butyl is not intermingled
on USRR's books with raw material inventory owned by it. In addition to the
reports made pursuant to paragraph 6, below, each month USRR shall cause its
President or other responsible officer to certify to Supplier the amount of
SerVaas Scrap Butyl used by USRR in its production in the preceding calendar
month and the balance of SerVaas Scrap Butyl remaining pursuant to a
Certification of Consigned Goods Status in the form set forth in Exhibit "B".
USRR covenants and agrees that it will not use SerVaas Scrap Butyl in its
production, and further, will not tender a Certification of Consigned Goods
Status in any month, unless and until it has remitted to SerVaas the sum of
Forty One Thousand Six Hundred Sixty-Seven Dollars for the previous calendar
months usage. SerVaas may reject any calendar months order for SerVaas Scrap
Butyl in the event that USRR has not remitted payment in full for the previous
calendar months order for SerVaas Scrap Butyl Rubber.
4. Financing Statements. USRR shall sign and deliver to Supplier such UCC
financing statements and continuation statements, in a form satisfactory to
Supplier, as Supplier may reasonably request. The parties intend that title to
the SerVaas Scrap Butyl remain in Supplier, and that the Supply Agreement deals
with consigned goods in all respects.
5. Loss or damage to the SerVaas Scrap Butyl. USRR shall be responsible to and
shall reimburse Supplier for all loss and expense to Supplier resulting from
damage to or loss of the SerVaas Scrap Butyl, and shall keep the same free and
clear from any liens or encumbrances except as may be expressly permitted by
Supplier. USRR shall obtain such insurance coverage for the SerVaas Scrap Butyl
as the parties may agree.
6. Report of Sales. In accordance with the Blanket Purchase Order, and without
any action on the part of the Supplier, USRR shall no later than the 15th
business day of each month make a report to Supplier on the amount of the
consigned SerVaas Scrap Butyl used during the previous calendar month, which
report shall be accompanied by USRR's remittance of Forty-One Thousand Six
Hundred Sixty Seven ($41,667.00) Dollars. Such report shall also be accompanied
by the Certification of Consigned Goods Status referred to in paragraph 3,
above. Immediately after receiving such report, payment, and certification,
Supplier shall provide an invoice to USRR covering the sales shown on such
report, such invoice to bear a date not later than the date of the month on
which the report is made.
7. Records. USRR shall keep true and accurate records of all raw materials used
in its process, including the SerVaas Scrap Butyl, and shall submit such records
to Supplier on a monthly basis. USRR shall allow Supplier and its designated
representatives access to such other records relating to the purchase and
consumption of raw materials as Supplier may reasonably request, and shall allow
Supplier and its designated representatives to make inspections during normal
business hours and at reasonable intervals of the SerVaas Scrap Butyl.
8. Personal Property Taxes. Supplier shall pay any Mississippi personal property
taxes assessed and owed on SerVaas Scrap Butyl. As an accommodation to Supplier,
USRR shall prepare or cause to be prepared the appropriate personal property tax
return to be filed with the State of Mississippi and shall forward the same to
Supplier for filing.
9. Warranties. USRR is familiar with the SerVaas Scrap Butyl and, prior to
entering into this Agreement has determined it is useable in USRR's butyl
reclaiming process. Accordingly, USRR specifically waives any rights it may have
to reject the SerVaas Scrap Butyl or refuse to use it in its processes based on
warranty of merchantability, warranty of fitness for a particular purpose, or
any other warranty available under the Uniform Commercial Code or at common law.
10. Term and Termination. This Agreement shall terminate when all SerVaas Scrap
Butyl has been purchased by USRR and the balance in the SerVaas Scrap Butyl
account is zero.
11. Supplier's Remedies upon Default: The following shall constitute an Event of
Default under this Agreement: (i) failure by USRR to remit any monthly payment
due under this Agreement; (ii) failure to certify to Supplier the status of the
consigned goods required by paragraph 3, above, and failure to provide same
within 3 business days of written notice; (iii) USRR admitting in writing its
inability to pay its debts as they mature or an administrative or judicial order
of dissolution or determination of insolvency being entered against USRR, or
USRR applying for, consenting to, or acquiescing in the appointment of a trustee
or receiver for USRR, or any property thereof, or USRR making a general
assignment for the benefit of creditors; or in the absence of such application,
consent, or acquiescence a trustee or receiver being appointed for USRR or for a
substantial part of the property of USRR, and not being discharged within sixty
(60) days; or any bankruptcy, reorganization debt arrangement or other
proceeding under any bankruptcy or insolvency law is instituted by or against
USRR. Upon an Event of Default by USRR, and in addition to any other remedies
provided in this Agreement or a bylaw, Supplier may, but is not obligated to,
immediately enter upon USRR's premises and take possession of the SerVaas Scrap
Butyl and resell it in a commercially reasonable or unreasonable manner and
without notice to USRR. USRR shall be liable for any deficiency between the
amount received on the sale and the amount remaining unpaid under this
Agreement.
12. Intercreditor Agreement. This Agreement is subject to an Intercreditor
Agreement between Supplier and Bank One, Indiana, National Association, a copy
of which is attached hereto as Exhibit "B".
13. Benefit. This Agreement shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and assigns, but it shall
not be assigned by USRR without the prior written consent of Supplier.
14. Governing Law: This Agreement shall be governed by the laws of the State of
Mississippi without regard to conflicts of laws principles.
15. Miscellaneous. This Agreement constitutes the entire Agreement of the
Supplier and USRR with respect to the matters set forth herein. Captions are for
the ease of reference only and shall not affect the meaning of the relevant
provisions. The meanings of all defined terms used in this Agreement shall be
equally applicable to the singular and the plural forms of the terms defined. No
amendment or waiver of any provisions of this Agreement, nor consent to any
departure by the Supplier or USRR therefrom shall be effective, unless the same
shall be in writing, and signed by the Supplier and USRR.
IN WITNESS WHEREOF, the parties have executed this Supply Agreement on
the date first above written.
SerVaas, Inc. USRR Acquisition Corp.
BY:________________________ By:_____________________
Beurt X. XxxXxxx, President
EXHIBIT "A"
U.S. RUBBER RECLAIMING, INC.
P. 0. Xxx 000000
Xxxxxxxxx, XX 00000
BLANKET PURCHASE AGREEMENT NO. 1
Date: December 29, 2000
VENDOR: SerVaas, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000
MATERIAL: Scrap butyl rubber consisting of domestic and foreign
road-worn and factory reject tubes
QUANTITY 6,400,00 POUNDS
RELEASE: 266,667 POUNDS on the First Business day of Each Month
PRICE: $41,667.00 per month
THIS ORDER IS NOT SUBJECT TO SALES AND USE TAX
PER MISSISSIPPI EXEMPTION CERTIFICATE NO. __________________________
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Authorized Signature
EXHIBIT "B"
OFFICER'S CERTIFICATE
The undersigned, being the President of U.S. Rubber Reclaiming, Inc. (USRR),
hereby by certifies to SerVaas, Inc., consignee of certain Scrap Butyl Rubber
held on consignment by USRR and used by USRR pursuant to that certain Supply and
Consignment Agreement dated as of December 29, 2000, that:
The amount of SerVaas Scrap Butyl used by USRR during the month of
___________________ was 266,667 pounds.
That the balance of the SerVaas Scrap Butyl remaining on consignment at
USRR as of ________________ is _______________ pounds.
Dated:_____________________ ______________________________
, President
