EXHIBIT 10.5
Contract No.
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AGREEMENT FOR THE SALE AND PURCHASE OF PULP
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Agreement made as of the 28" day of November, 2000, by and between WEYERHAEUSER
COMPANY, a Washington Corporation ("Seller"), and Paragon Trade Brands, a
Delaware Corporation ( "Buyer").
Seller hereby agrees to sell to Buyer and Buyer hereby agrees to purchase in
each year during the term of this Agreement, the following:
DESCRIPTION Southern Bleached Softwood Kraft Fluff Woodpulp produced at
Seller's Southern United States xxxxx, as described in exhibit B,
hereinafter referred to as "Woodpulp."
QUANTITY Subject to reductions contemplated below under, "DURATION", 100%
of Buyer's Woodpulp requirements for Buyer's North American
operations that seller is able to provide in a timely manner,
such requirements being estimated to be approximately * Dry
Metric Tons ("DMT") in each contract year. Any volume greater
than * DMT for a contract year must be mutually agreed upon in
writing by October 1st of the year prior to the year in which the
increase will occur.
DURATION This Agreement shall become effective on January 1, 2001, and
shall terminate on December 31, 2003; provided, however, that if
either party materially defaults in the performance of this
Agreement and such default or noncompliance shall not have been
remedied, or steps initiated to remedy the same, to the other
party's reasonable satisfaction, within ninety (90) days (or ten
(10) days in the case of non-payment) after receipt by the
defaulting party or a written notice thereof from the other
party, the party not in default may terminate this Agreement on
written notice of termination.
Buyer and Seller shall begin negotiations to renew this Agreement
no later than January 1, 2003. In the event Buyer and Seller have
not agreed in writing on renewal by June 30, 2003, either party
may elect to reduce purchases and sales in the last six-month
period of this Agreement (July 1, 2003 through December 31,
2003), in accordance with the following schedule, using normal
two (2) month volume as the base quantity for reductions (the
"Base"):
PERIOD QUANTITY TO BE PURCHASED AND SOLD
July 1, 2003 - August 31, 2003 75% of Base
Sept. 1, 2003 - Oct. 31, 2003 50% of Base
Nov. 1, 2003 - Dec. 31, 2003 25% of Base
No reduction pursuant to this Section shall be effective unless
the party electing the
* Material omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Commission.
reduction shall have notified the other party in writing prior
to June 30, 2003 that it desires to make such a reduction.
SHIPMENTS Shipments will be made in approximately equal monthly
shipments to buyer's plants as described in exhibit A. The
volume to be shipped to each of buyer's plants in a quarter
shall be mutually agreed upon prior to the beginning of each
quarter.
QUANTITY AND Unless a specific number of car load lots are specified in
GRADE any order under this agreement, the quantity described in
ADJUSTMENTS any such order may be increased or decreased by not more than
5%. In the event that either Seller or Buyer shall propose a
change in the quantity or grade of pulp covered by this
agreement, Seller and Buyer agree to negotiate in good faith in
response to such proposal, but neither party is obligated to
agree to the other party's proposal.
VALUE If at any time during the term of this Agreement Buyer notifies
COMPETITIVENESS Seller in writing of its intention to convert its manufacturing
process to a technology which is not compatible with the then
current form of Woodpulp being supplied by Seller to Buyer
hereunder, Seller shall have 90 days from the date Seller
receives Buyer's notice to provide a fluff pulp product
compatible with Buyer's new technology. In the event that Seller
is unable to provide a compatible product within such time
period, Buyer shall have the right to purchase varieties of
fluff pulp, or other material, compatible with its new
technology from other suppliers, and Buyer's obligations to
purchase Woodpulp from Seller shall be reduced to the Buyer's
requirements of Woodpulp produced by Seller which remain
compatible with Buyer's technology and which Seller is able to
provide in a timely manner, subject to reductions contemplated
above under, "DURATION". The parties shall work together in
reducing purchases from Seller so as to minimize disruptions to
either party.
PRICE* The price per ADMT for Woodpulp invoiced by Seller in a month
for Buyer's locations in North America shall be the price as
published by Resource Information Systems, Inc. ("RISI") for *
delivered to United States for the month preceding the month to
which the price relates (the "RISI NA Price") plus, if
applicable, a treatment or semi-treatment upcharge as specified
by Seller. By way of example, for Woodpulp for Buyer's locations
in North America invoiced by Seller in May, the RISI price used
in the price calculation would be the RISI price published for
the preceding April. Prices are delivered to Buyer's locations
in North America, and all prices shall be in U.S. dollars.
*
* Material omitted pursuant to request for confidential treatment. The omitted
material has been filed separately with the Commission.
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*
In the event that RISI ceases to publish a RISI NA Price or
changes the methodology of calculation of such prices such that
their use in calculating the price of Woodpulp would no longer
reflect the intent of the parties at the time of entering into
this Agreement, the parties shall promptly agree on a substitute
method of determining Woodpulp prices.
FORCE MAJEURE Fire, flood, strikes, lock-out, epidemic, accident, shortage of
customarily used transportation equipment (or suitable
substitute), or other causes beyond the reasonable control of
the parties, which prevent Seller from delivering or Buyer from
receiving and/or using the commodity covered by this Agreement,
shall operate to reduce or suspend deliveries during the period
required to remove such cause. In the event of reduced
deliveries by Seller under the provisions of this paragraph,
Seller shall allocate its available supply of commodity,
component raw materials, and related manufacturing facilities at
the designated producing mill among purchasers and Seller's
divisions, departments, and affiliates on such basis that
Buyer's percentage reduction will not be greater than the
overall percentage reduction in total quantity of commodity,
component raw materials and related manufacturing facilities at
the designated producing mill Seller has available for supply.
Any deliveries suspended under this paragraph shall be canceled
without liability, and the Agreement quantity shall be reduced
by the quantities so omitted.
CONTINUOUS As resources permit, Buyer and Seller agree to work together to
IMPROVEMENT improve product quality and total delivered cost. Seller also
plans to work on the development of new products for use by its
customers.
SPECIFICATIONS Woodpulp purchased and sold hereunder will be suitable for
Buyer's use as determined by Buyer's specifications as agreed to
by Seller. This includes any treatments added to the Woodpulp.
The Woodpulp shall be of merchantable quality and any subsequent
additions and alterations shall be mutually agreed to by Buyer
and Seller.
COMPLIANCE Seller warrants that all goods and services sold hereunder shall
have been produced, sold, delivered and furnished in strict
compliance with all applicable laws and regulations, including
the Federal Toxic Substances Control Act of 1976, and the
Federal Occupational Safety and Health Act of 1970, to which
they are subject. Seller shall execute and deliver such
documents as may be required to effect or evidence compliance.
All laws and regulations required in agreements of this
character are hereby incorporated by reference, including but
not limited to (a) provisions of Executive Orders 10925, 11141,
11246, 11375 and 11598, as
* Material omitted pursuant to request for confidential treatment. The omitted
material has been filed separately with the Commission.
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amended, and any subsequent Executive Orders relating to equal
opportunity for employment on government contracts and all
rules and regulations of the President's Committee on Equal
Employment Opportunity, and (b) the rehabilitation Act of 1973
and the Viet Nam Era Veterans Readjustment Assistance Act of
1974 and regulations issued thereunder.
ASSIGNMENT This Agreement may not be assigned, nor any obligations
delegated, in whole or in part, by operation of law or
otherwise, by one party without the prior written consent of the
other party. Seller may terminate this Agreement on not less
than sixty (60) days written notice in the event of a change of
control of Buyer.
FINAL AGREEMENT This Agreement is the final and complete Agreement of the
parties with respect to the purchase and sale of Woodpulp,
superseding and merging all prior writings and communications.
This Agreement may be modified or amended only in writing signed
by both parties.
OTHER TERMS This Agreement is also subject to the General Terms of Sale as
attached.
PARAGON TRADE BRANDS, (Buyer) WEYERHAEUSER COMPANY, (Seller)
By /s/ Xxxxxxx Xxxxxxx By /s/ Xxx Xxxxxxxx
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Title V.P. Materials and Technology Title GSM General Sales Manager
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GENERAL TERMS OF SALE
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1. MOISTURE, WEIGHT, AND DEFINITIONS
This contract is made and the pulp covered thereby is to be invoiced on the
basis of air-dry fiber containing by weight 90% bone-dry fiber and 10% moisture.
"Short ton" means 2,000 pounds, "metric ton" means 2,204.6 pounds of wood pulp
on an air-dry basis. Unless otherwise specified, all references to tonnage shall
mean metric tons, dimensions shall mean the International Metric System (SI),
and monetary amounts shall be in U.S. dollars.
2. TAXES
Any and all taxes or charges of any nature (other than taxes imposed on the
gross or net income of Seller), imposed by any governmental authority, which
shall become payable by reason of the sale, delivery and/or use of Pulp
hereunder shall be deemed for Buyer's account, and Seller may either xxxx the
same to Buyer, separately, or add the same to the price of Pulp shipped
hereunder. Seller will notify Buyer in writing of the nature of any such tax or
charge and of the law imposing same.
3. DELAYS
Seller may suspend performance of this agreement when its manufacture or
delivery of products is prevented, and Buyer may suspend performance of this
contract when its receipt or consumption of products is prevented, in either
case to the extent caused by act of God, labor difficulty, shortage of
transportation facilities, governmental acts or orders, the public enemy, or
any like or different circumstance beyond reasonable control of such party,
provided that goods specially manufactured or in transit must be accepted by the
Buyer. If suspension by either party continues for sixty days or more, the other
party may elect to cancel this agreement.
4. TERMS OF PAYMENT
Net cash 30 days from date of invoice, subject to continued compliance with
Seller's normal credit standards. A late payment charge of 1.75% per month on
the unpaid balance will be made on all past due accounts. Should this rate
exceed the maximum rate that is lawful under the circumstances, that maximum
rate shall apply. The maximum rate shall be governed by the law of the state of
the Buyer's designated billing office. Buyer also agrees to pay reasonable
attorney's fees and other costs incurred at collection.
5. WARRANTY AND LIMITATIONS
Seller warrants that its products are of good, merchantable quality, in
accordance with specifications and tolerances published by it or adopted by
reference in this order. If Buyer gives written notice to Seller of any failure
to meet the foregoing standards within 30 days after delivery of the products,
and if such failure of any article is established under procedures customary in
the industry or otherwise established to Seller's satisfaction, then at Seller's
option Seller will furnish a replacement product conforming to this warranty,
make a fair allowance therefor, or refund the purchase price.
THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE FOREGOING, AND SELLER'S
SOLE RESPONSIBILITY THEREUNDER IS AS STATED. SELLER SHALL NOT BE LIABLE
FOR CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES, OR FOR ANY AMOUNT IN
EXCESS OF THE PRICE FOR THE SHIPMENT INVOLVED, UNDER THE FOREGOING
WARRANTY OR ANY OTHER PART OF THIS AGREEMENT, ANY LEGAL ACTION AGAINST
SELLER FOR BREACH OF
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THIS AGREEMENT, INCLUDING ANY WARRANTIES HEREUNDER, MUST BE INSTITUTED
WITHIN ONE YEAR AFTER DELIVERY.
6. TRANSPORTATION COSTS AND SHORTAGES
When prices include any costs of transportation from point of manufacturer, any
increase in such costs greater than $5.00 ADMT becoming effective after the
applicable price is quoted or established by Seller, and any costs greater than
$50.00 ADMT for service beyond those provided by the carrier at no charge other
than the applicable freight rate for tariff, may, at Seller's option, be for
Buyer's account. Any extra costs of utilizing substitute methods of delivery,
including when the intended type of carrier, vehicle or loading or unloading
facilities become unavailable, may also at Seller's option, be for Buyer's
account.
7. CLAIMS
All claims of whatever nature applying upon any shipment made under this
Agreement must be made within thirty (30) days after arrival at Buyer's plant;
and Buyer shall hold not less than one half the shipment in dispute, pending
examination by Seller or its nominee for this purpose. Seller shall examine the
goods with 10 days of notification by Buyer, and shall immediately advise
disposition of the goods.
8. SHIPMENT AND TITLE PASSAGE
Unless Seller expressly guarantees an indicated or scheduled shipping date, all
advance information as to date of shipment is an approximation only based on
Seller's best judgment at the time. Irrespective of any provision concerning
freight or price, title and risk of loss or damage shall pass to buyer upon
delivery of goods to any carrier, except a motor vehicle operated by Seller, at
Seller's plant or other shipping point. Seller reserves the right to route all
shipments, and may assist Buyer in processing claims against carriers without
incurring liability therefor.
When a mill or other point is specified in this agreement, or when an order is
scheduled for shipment from such a place, it shall be the exclusive source of
supply.
9. WAIVER
No right of either party hereunder shall be deemed to have been waived by any
failure of such party to exercise any right in any prior instance or instances.
10. GOVERNING LAW
The law of the State of Washington, including the Uniform Commercial Code as in
force therein, shall govern all aspects of this agreement including its
validity, interpretation, performance, operation and enforcement.
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EXHIBIT A
BUYER'S PLANTS
Harmony, PA
Macon, GA
Waco, TX
Tijuana, Mexico
0
XXXXXXX X
XXXXXX'X XXXXXXXX XXXXXX XXXXXX XXXXX
Plymouth, NC
New Bern, NC
Flint River, GA
Columbus, MS
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