WELDWOOD
Weldwood of Canada Limited
X.X. Xxx 0000, Xxxxxxxxx, X.X.. X0X 0X0
Tel: (000) 000-0000
Fax: (000) 000-0000
Street Address: 0000 X. Xxxxxxxx Xxxxxx X0X 0X0
For Direct Contact, Tel:
Fax:
2 May 1997
Riverside Carbon Products, Inc.
0000 Xxxxxxxx Xxxx
Xxxxx, X.X. X0X 0X0
Attention: Xx. Xxxxx X. Xxxxxxx President
Dear:
Re: Fiber Supply Contract
We enclose for your records a fully executed copy of the Fiber
Supply Agreement entered into between Houston Forest Products
Company and Riverside Carbon Products, Inc. and Southern
Ventures, Inc.
Yours truly,
WELDWOOD OF CANADA LIMITED
per:
"Xxxxxxx X. Xxxxx"
Xxxxxxx X. Xxxxx
Corporate Solicitor
/k
Encl.
FIBER SUPPLY AGREEMENT
BETWEEN
RIVERSIDE CARBON PRODUCTS INC.
AND
SOUTHERN VENTURES
AND
HOUSTON FOREST PRODUCTS COMPANY
-1-THIS AGREEMENT made and entered into as of the 1st day of May ,
1997
BETWEEN:
RIVERSIDE CARBON PRODUCTS INC., a corporation having an office
at 0000 Xxxxxxxx Xxxx, Xxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
(hereinafter referred to as "RIVERSIDE")
OF THE FIRST PART
AND:
HOUSTON FOREST PRODUCTS COMPANY, a joint venture operation of
Weldwood of Canada Limited and Xxxx Xxxxxx Xxxxx Limited having
an office at
X.X. Xxx 0000, Xxxxxxx, X.X. X0X 0X0
(hereinafter referred to as "HFP")
OF THE SECOND PART
AND:
SOUTHERN VENTURES, INC., a corporation having an office at 00000
Xxxxxxx 00 Xxxxx, Xxxxxxxxxx, Xxxxxxx X.X.X. 00000
(hereinafter referred to as "SVI")
OF THE THIRD PART
WHEREAS:
A. RIVERSIDE intends to construct, own and operate a facility
for making charcoal from Wood Waste at a new plant at or near
Houston, British Columbia,( hereinafter referred to as the
"Charcoal Plant");
B. HFP owns and operates a sawmill facility at or near Houston,
British Columbia
(hereinafter referred to as the Sawmill ) which produces Wood
Waste as a by-product of its operations;
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C. RIVERSIDE requires a secure, long-term supply of Wood Waste
for the purpose of making charcoal;
D. HFP wishes to provide to RIVERSIDE and RIVERSIDE wishes to
take from HFP the Wood Waste, free of charge, in the quantity,
for the term and subject to the terms and conditions set out in
this Agreement; and
E. SVI wishes to unconditionally guarantee the obligations of
RIVERSIDE under this Agreement.
NOW THEREFORE in consideration of the mutual promises, covenants
and terms herein contained the parties hereby agree as follows:
1. DEFINITIONS
1.01 Agreement, means this agreement including any extensions or
amendments thereto.
1.02 Bone-Dry Tonnes or BDT means 1000 kilograms of moisture
free oven dried Wood Waste determined by using standard moisture
test sampling.
1.03 Brownwood Residue or Bark means the xxxxx tissue in the
cylindrical axis of a tree, outside the cambium, which is
composed of inner living bark and outer dead xxxxx bark.
1.04 Force Majeure means any causes or events beyond the
reasonable control of a Party, including fire, lightning, flood,
extreme weather conditions, riot, civil commotion, war, strike,
lockout or other labour disputes, acts of God, substantial loss
of or damage to equipment, shortage of material and supplies,
and any law, regulation or order by any governmental body or
authority of competent jurisdiction, which prevents the
performance by a Party of any of its duties, liabilities and
obligations under this Agreement and not caused by its default
or act of commission ( except lockouts) or omission and not
avoidable by the exercise or reasonable efforts or foresight by
that Party.
1.05 Indemnitor has the meaning set out in Section 12.02.
1.06 Parties means RIVERSIDE, HFP and SVI and "Party" means any
one of them;
1.07 Permits means all permits, licences and approvals from all
governmental agencies necessary to construct and operate the
Charcoal Plant in accordance with all applicable federal,
provincial, municipal and local laws, regulations, orders and
by-laws;
1.08 Planer Shavings, means the wood fibres which are
mechanically planed from the outer surfaces of rough lumber in
order to bring the lumber to its finished dimensions.
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1.09 Raw Material, means Sawdust and Planer Shavings.
1.10 Sawdust means the short wood fibres displaced by the
cutting surfaces of saws in the processing of logs, cants,
lumber and other wood products and shall include wood chips
which are smaller than the size limitations for use in the
manufacture of pulp.
1.11 Term, means the term of this Agreement as set forth in
paragraph 2.01.
1.12 Wood Waste, means Bark and Raw Material.
2. TERM
2.01 Term. The Term of this Agreement shall begin as of the date
hereof and shall continue for the subsequent twenty (20)
consecutive years thereafter, unless extended as provided in
paragraph 2.02, or is terminated in accordance with the
provisions contained in this Agreement.
2.02 Extensions. The Term will automatically be extended in five
(5) year increments unless either Party provides written notice
to the other Party of its intent to terminate this Agreement.
Such notice will be provided not less than six (6) months prior
to the expiration of the Agreement or any extensions authorized
under this Agreement.
3- QUANTITY
3.01 Wood Waste Commitment. Subject to the terms of this
Agreement, HFP shall provide to RIVERSIDE, and RIVERSIDE will
accept all that amount of Wood Waste produced at the Sawmill,
which is in excess of the internal needs of HFP as specified in
paragraph 3.05, and subject to paragraphs 3.02 and 3.03, which
is estimated on an annual basis by HFP to be approximately
73,899 BDT, comprised of approximately 42,343 BDT/annum of Bark
and approximately 31,556 BDT/annum of Raw Material.
3.02 HFP Option. HFP shall retain an option to withdraw and
redirect the volume of Raw Material to be provided hereunder for
other or more economic purposes and accordingly notwithstanding
paragraphs 2.02 and 3.01, the obligation of HFP to supply the
Raw Material component of the Wood Waste shall be for a period
of five (5) years only from the commencement of the Term. HFP
shall have the option at its sole discretion to extend the
supply of Raw Material hereunder for such further period or
periods of five years each. HFP shall exercise its option by
providing notice to RIVERSIDE not less than six months prior to
the expiration of each five year period, of its intention to
withdraw or continue the supply of Raw Material pursuant to this
Agreement. In the event HFP exercises its option to withdraw the
Raw Material portion of the Wood Waste the estimated volume of
Wood Waste provided by HFP pursuant to paragraph 3.01 shall be
reduced accordingly.
3.03 Quantity Warranty. HFP does not warrant the quantity of
Wood Waste it will provide to Riverside hereunder. The quantity
of Wood Waste to be delivered may vary and shall be subject to
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a) the withdrawal of the Raw Material component pursuant to
paragraph 3.02;
b) fluctuations in the annual volume of Wood Waste produced
at the Sawmill due to variations in mill production as a
result of operational considerations and normal business
economic decisions;
c) fluctuations in the annual volume of Wood Waste produced at
the Sawmill as a result of technological change in the Sawmill;
d) fluctuations in the annual volume of Wood Waste produced at
the Sawmill due to changes in the HFP's Allowable Annual Cut;
e) mill closures or shutdowns due to labour issues or any
matters beyond the control of HFP; and
f) Force Majeure.
3.04 HFP agrees that it will use reasonable efforts to ensure
that fluctuations in the production of Wood Waste as a result of
causes enumerated in paragraphs 3.03(b) and 3.03(c) will not
decrease the annual quantity of Wood Waste to be delivered
hereunder by an amount greater than 20% of the estimated annual
volume in paragraph 3.01.
3.05 Use of Wood Waste. Subject to paragraph 3.02, HFP shall not
use Wood Waste for any purpose other than supplying Wood Waste
to RIVERSIDE and shall not sell Wood Waste to any third party;
PROVIDED however that HFP may use up to 20,000 BDT per annum of
Raw Material as required for its internal needs to generate heat
for buildings and lumber drying at the Sawmill and HFP's planer
mill..
306 Changes. HFP shall, within a reasonable period of time,
notify RIVERSIDE of any anticipated changes in its operations
which would substantially affect the quantity of Wood Waste
produced at the Sawmill and made available to RIVERSIDE.
4. QUALITY
4.01 Specifications. The Wood Waste provided hereunder shall be
a product of milling operations at the Sawmill or other mutually
agreed upon sources and shall, consistent with good normal
milling practices, be essentially free of rocks, dirt, metal,
and other noncombustible material. It will be the sole
obligation of RIVERSIDE to inspect loads of Wood Waste prior to
pick-up to determine that such Wood Waste conforms with the
quality specifications set out in this paragraph. RIVERSIDE may
not reject loads of Wood Waste after pick-up.
4.02 Wood Waste Separation. RIVERSIDE shall not require HFP to
keep separate the various Wood Waste components included under
this Agreement.
5. USE
5.01 disposal Riverside will use Wood Waste accepted under this
Agreement to produce charcoal at the Charcoal Plant and will not
use the Wood Waste for any other purpose except with the written
consent of HFP, such consent not to be unreasonably withheld.
-5-
6. MEASUREMENT
6.01 Weighing Methodology. RIVERSIDE shall determine the weight
of each truck load of Wood Waste by weighing the loaded truck
and trailer and deducting the actual weight of the empty truck
and trailer. All scales and related equipment shall be
maintained by RIVERSIDE in good order and condition. RIVERSIDE
shall maintain accurate records of the weight of each load of
Wood Waste and allow HFP to inspect such records and equipment
at reasonable times.
6.02 Wood Waste Commitment Determination. The net as delivered
weight of Wood Waste shall be the basis for determining annual
and monthly deliveries and quantities committed under this
Agreement.
6.03 The number of Bone-Dry Tonnes of Wood Waste delivered by
HFP to RIVERSIDE will be determined by standard moisture
sampling done by RIVERSIDE. The test sample shall be prepared so
as to be representative of the entire load and shall be tested
in accordance with standard moisture testing procedures
generally in effect in the Forest Industry. RIVERSIDE agrees to
advise HFP as soon as reasonably practicable, in writing, of the
green weight of Wood Waste, the moisture content and the
Bone-Dry Tonnes resulting.
6.04 HFP shall be entitled to inspect Riverside's procedures and
records for the determination of bone-dry weight of Wood Waste.
If in the opinion of HFP there exists a material error in
Riverside's methods or practices for determining bone-dry
weights, and if RIVERSIDE agrees that such a material error
exists, then RIVERSIDE will make such modifications as may be
mutually agreed upon between the parties to conform with the
standard moisture sampling usually prescribed in the Forest
Industry in British Columbia.
7. LOADING AND TRANSPORT.
7.01 Loading. HFP will supply, operate and maintain title to
such loading facilities at the Sawmill as are necessary to
provide the Wood Waste volume set out in paragraph 3.01.
RIVERSIDE will be responsible to hog the Wood Waste.
7.02 transportation Costs. RIVERSIDE shall arrange and pay for
the pick-up and transportation of Wood Waste from the Sawmill to
the Charcoal Plant on a continuous basis to ensure a constant
flow of Wood Waste from HFP to RIVERSIDE and so that Wood Waste
does not accumulate at the Sawmill in volumes exceeding the
capacity of the loading facilities set out in paragraph 7.01.
7.03 Unloading. Hours of unloading of Wood Waste at the
Charcoal Plant shall be established by RIVERSIDE and shall allow
for continuous Wood Waste shipments from the sawmill during all
operating hours of the Sawmill and RIVERSIDE will pick-up the
Wood Waste committed by HFP to RIVERSIDE under this Agreement
from HFP on a continuous basis during the Sawmill's operating
hours which may include operating on a 24 hour basis.
-6-
7.04 Stockpiling. Unless necessitated by (i) transportation
delays, (ii) Sawmill equipment malfunctions, or (iii) requested
by RIVERSIDE stockpiling of Wood Waste by HFP will not be
permitted; provided however if stockpiling is requested by
RIVERSIDE then the incremental Wood Waste handling costs
reasonably incurred by HFP as a result of the stockpiling shall
be paid by RIVERSIDE.
8. TITLE AND PRICE
8.01 Title. Title and risk of loss of Wood Waste shall pass
from HFP to RIVERSIDE upon loading of the Wood Waste into
Riversides transportation equipment.
8.02 Price. Title to all Wood Waste accepted hereunder shall
transfer from HFP to RIVERSIDE with no payment to HFP from
RIVERSIDE.
8.03 Other Contracts. RIVERSIDE has not entered into any
agreement with any other party in British Columbia for the
acquisition of Wood Waste that is more favourable for such other
party than this Agreement is for HFP. If RIVERSIDE hereafter
enters into such an agreement, RIVERSIDE will forthwith offer to
HFP to amend this Agreement so that this Agreement is not less
favourable than such other agreement, with any dispute as to
HFP's right to and the terms of such amendment to be resolved
pursuant to paragraph 10.01.
9. CURTAILMENT OR DISCONTINUANCE
9.01 Curtailment. If for any reason HFP curtails or discontinues
the operation of the Sawmill so as to effect its production of
Wood Waste, HFP shall not be liable in any manner for failing to
provide all or part of the Wood Waste during the period of such
curtailment or discontinuance.
9.02 RIVERSIDE shall under no circumstances refuse to pick-up
Wood Waste committed to RIVERSIDE by HFP under this Agreement
10. REMEDIES
10.01 Arbitration. The Parties will work to resolve all
disputes arising out of or in connection with this Agreement
though direct negotiations. Any dispute which cannot be resolved
by the Parties within sixty days of the matter in dispute first
being brought to the attention of one Party by the other Party
for resolution will be submitted to arbitration under the rules
of the British Columbia International Commercial Arbitration
Centre (the BCICAC). The appointing authority for arbitration
shall be the BCICAC and the case shall be administered by the
BCICAC in accordance with its Procedures for Cases under BCICAC
Rules". The place of arbitration shall be Vancouver, B.C.
Canada. The arbitration shall be conducted by a panel of three
arbitrators, one chosen by each party, the third selected by
mutual agreement of the first two.
10.02 Solicitors Fees. Solicitor's fees and disbursements
arising out of any dispute which may develop in connection with
this Agreement and which is arbitrated or otherwise litigated or
-7-
appealed shall be recoverable as damages by the ultimate
prevailing party in amounts deemed to be reasonable by the
arbitrator or the court, as the case may be.
11. FORCE MAJEURE
11.01 Excuse. Except as set out in paragraph 9.02, complete
performance by either of the Parties of the duties set out in
this Agreement will be excused for so long as such complete
performance is prevented by an event of Force Majeure.
11.02 Reasonable Efforts. The Party whose complete performance
is excused under paragraph 11.01 will give prompt notice to the
other Party, will undertake all reasonable efforts to partially
perform its obligations under this Agreement during the period
in which complete performance is excused, and will use due
diligence to remove such Force Majeure conditions promptly.
11.03 Term not extended. No period of excused or partial
performance will extend the term unless agreed to in writing by
the Parties.
11.04 Notice and Termination. If either Party seeks to have
it's performance excused under paragraph 11.01, notice will be
given by that Party to the other Xxxxx setting out the basis for
such excuse of performance and the estimated duration. If a
Force Majeure continues for more than one year from its
commencement date, either Party may without penalty terminate
this Agreement effective thirty (30) days after written notice
of termination is given to the other Party.
12. WARRANTIES - INDEMNITIES
12.01 Warranty. HFP warrants that it has title and ownership to
any Wood Waste provided hereunder.
12.02 Indemnification. Each Party ("Indemnitor") will indemnify
and hold the other Party ("Other Party") harmless from and
against any loss, costs, claims, actions, causes of action or
damages arising from the Indemnitor's or its agent's, servant's
or contractor's activities or obligations hereunder; save and
except where such loss, costs, claims, actions, causes of action
or damages arise out of the negligence of the Other Party.
13. CONDITIONS
13.01 Conditions Precedent. The obligations of HFP under this
Agreement are subject to
RIVERSIDE:
(a) not being in default of any of its covenants, terms or
conditions contained herein;
(b) receiving from the Ministry of Environment for British
Columbia on or before January 31,1997, a Waste Management Permit
for the operation of the Charcoal Plant at or near Houston,
British Columbia;
(c) continuing to hold the Permits in a manner which allow
RIVERSIDE to fulfill its obligations under this Agreement;
-8-
(d) constructing the Charcoal Plant and having the Charcoal
Plant fully operational and able to accept the daily equivalent
of the volume of Wood Waste set out in paragraph 3.01 on a
continuous basis on or before December 31,1997, (the "Start-up
Date") unless an extension to the Start-up Date is granted by
HFP. HFP may extend the Start-up Date if requested in writing by
RIVERSIDE. In deciding whether to extend the Start-up Date, HFP
will act reasonably taking into consideration the status of the
Charcoal Plant construction and any extension that may be
granted to HFP by the Ministry of Environment, Lands and Parks
for the elimination of HFP's beehive burner located in Houston,
B.C.
13.02 Default. Except as provided in paragraph 13.03 hereof, if;
a) either party should fail or neglect to perform or observe any
of the terms and conditions contained herein (the "Defaulting
party") and (such failure or neglect referred to hereinafter as
a "default") such default shall continue after written notice of
the default from the other Party for fifteen days or up to
thirty days where the Defaulting party is making reasonable
efforts to remedy the default;
b) a bankruptcy or receivership proceeding, whether voluntary or
involuntary, shall be commenced against the Party; or
c) assignment of a Party's property shall be made for the
benefit of any of its creditors;
then, in any such events, the non-defaulting or solvent Party
may, in its sole discretion, by written notice, terminate this
Agreement forthwith.
13.03 Other Remedies. The rights to terminate set forth in this
Article 13 are not exclusive remedies and are without prejudice
to any other remedy available to a Party at Law or in equity
including a right to damages or to specific performance. Where
this Agreement is terminated pursuant to this Article 13, the
right of either Party to damages as defined and limited by this
Agreement, shall survive.
14. SVI GUARANTEE
14.01 SVI Guarantee. In consideration of HFP entering into this
Agreement with RIVERSIDE and otherwise dealing with RIVERSIDE
and for other good and valuable consideration (the receipt and
sufficiency whereof is acknowledged) SVI covenants and agrees
with HFP to unconditionally and irrevocably guarantee to HFP the
performance by RIVERSIDE of all of Riverside's covenants and
agreements under this Agreement from time to time. HFP will be
entitled to make demand under this guarantee upon any default by
RIVERSIDE under this Agreement. HFP will not be bound to exhaust
its remedies against RIVERSIDE before calling upon SVI's
guarantee.
15. MISCELLANEOUS
15.01 Further Assurances. Each of the Parties shall, upon the
reasonable request of any other Party hereto, make, do, execute
or cause to be made, done or executed all further and other
lawful acts, deeds, things, devices, documents, instruments, and
assurances whatever for the better and more perfect and absolute
performance of the terms and conditions of this Agreement.
-9-
15.02 Entire Agreement. This Agreement shall constitute the
entire agreement between the Parties.
15.03 Amendments. This Agreement may be modified or amended
only by written instrument executed by a duly authorized
representative of each Party.
15.04 Severability. If any covenant, obligation or provision
contained in this Agreement shall be invalid or unenforceable
the remainder of this Agreement shall not be affected thereby
and each covenant, obligation and provision of this Agreement
shall separately be valid and enforceable to the fullest extent
permitted by law.
15.05 Captions. The captions used herein are for convenience of
reference only and shall not affect the construction or
interpretation of this Agreement.
15.06 No Waiver. Failure by a Party, at any time, to require
strict performance by the other Party of any provision of this
Agreement will in no way affect that Party's right to enforce
such provision at any other time nor will any waiver by a Party
of any provision hereof at any time be held to be a waiver of
such provision at any other time or of any other provision.
15.07 Counterparts. This Agreement, and any amendments or
modifications thereto or extensions thereof, may be executed in
any number of counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same
document.
15.08 Successors and Assigns. This Agreement shall be binding
upon any purchaser or transferee of the sawmill or the Charcoal
Plant. If either Party transfers or sells assets which might
affect the supply or use of Wood Waste hereunder, said Party
shall promptly notice the other Party and neither Party shall
transfer or sell such assets unless and until the transferee or
purchaser of those assets first assumes all or a pro rata share
of the obligations of the transferor or the vendor under this
Agreement.
15.09 Governing Law. The laws of the Province of British
Columbia shall apply to any dispute arising under this Agreement.
15.10 Notices. Any notice required or permitted to be given
pursuant to this Agreement or by law shall be in writing signed
by an authorized representative of the Party giving such notice
and shall be hand delivered, sent by registered mail or by
telefacsimile to the other Party at such address as set forth
below:
if sent to RIVERSIDE to:
RIVERSIDE CARBON PRODUCTS INC.
0000 Xxxxxxxx Xxxx
Xxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attention : Mr. Xxxxx Xxxxxxx, President
Telefacsimile Number: (000) 000-0000
-10-
if sent to SVI to:
SOUTHERN VENTURES, INC.
00000 Xxxxxxx 00 Xxxxx
Xxxxxxxxxx, Xxxxxxx, 00000
Attention: Xx. Xxxxxx Xxxxxx, President
Telefacsimile Number: (000) 000-0000
if sent to HFP to:
HOUSTON FOREST PRODUCTS COMPANY
Xxx 0000, Xxxxxxx, X.X. X0X 0X0
Attention: General Manager
Telefacsimile Number: (000) 000-0000
Any notice or other communication so given or made shall be
deemed to have been given or made and to have been received on
the day of delivery, if hand delivered or if sent by
telefacsimile on the day faxed, provided such day is a business
day for the recipient and, if not on the first business day of
the recipient thereafter, or if sent by registered post on the
seventh business day following the date of mailing.
Any Party may from time to time change its address for notice by
notice to the other Party given ion the manner aforesaid.
IN WITNESS WHEREOF the Parties have caused this Agreement to be
executed by their duly authorized representatives as of the day
and year first above written.
HOUSTON FOREST PRODUCT COMPANY
By: "Xxxxxx X. Xxxx" Date: "May 1, 1997"
Title: "President"
RIVERSIDE CARBON PRODUCTS INC.
By: "Xxxxx X. Xxxxxxx" Date: "April 29, 1997"
Title" "President"
SOUTHERN VENTURES, INC.
By: "Xxxxx X. Xxxxxxx" Date: "April 29, 1997"
Title: "Vice President"
