AMENDED AND RESTATED PVC RESIN SUPPLY AGREEMENT

Exhibit 10.1

 

 

AMENDED AND RESTATED PVC RESIN SUPPLY AGREEMENT

 

between

 

*******

 

as Seller,

 

and

 

PW EAGLE, INC.

 

as Buyer

 

Effective as of February 1, 2005

 

 

TABLE OF CONTENTS

 

 

Page i

 

Page ii

 

Page iii

 

AMENDED AND RESTATED PVC RESIN SUPPLY AGREEMENT

 

THIS AMENDED AND RESTATED PVC RESIN SUPPLY AGREEMENT (this “Agreement”) effective as of the 1 ^st day of February 2005 is between *** (hereinafter “Seller”), and PW EAGLE, INC., a Minnesota corporation (hereinafter “Buyer”). Each of Seller and Buyer is sometimes hereinafter referred to as a “party” and collectively as the “parties”.

 

WHEREAS, Seller and Buyer entered into that PVC RESIN SUPPLY AGREEMENT dated as of January 1, 2000 (the “2000 PVC Supply Agreement”), pursuant to which Buyer agreed to purchase and Seller agreed to sell certain quantities of PVC resin; and

 

WHEREAS, Seller and Buyer amended the 2000 PVC Supply Agreement by a First Amendment dated December 20, 2001, and a Second Amendment effective as of January 1, 2002; and

 

WHEREAS, Seller and Buyer wish to amend and restate the 2000 PVC supply Agreement so as to incorporate such prior amendments which continue in effect in this Agreement as well, and the amendment provisions hereby, all such amendments and restatements to be made effective as of February 1, 2005.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

SECTION 1.1 Definitions. The following terms, when employed with initial capitalization, shall have the meaning set forth below:

 

“Acquisition Quantity” has the meaning assigned to it in Section 3.2.

 

“ Agreement” means this Amended and Restated PVC Resin Supply Agreement, including all Exhibits.

 

“Business Day” means any calendar day that Seller’s offices are open for the transaction of business.

 

“Buyer” means PW EAGLE, INC. and its subsidiaries.

 

***

 

***

 

***

 

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“ Delivery Month” has the meaning assigned to it in Section 5.2(a).

 

“ Delivery Point(s)” has the meaning assigned to it in Section 6.3.

 

“Expansion Quantity” , “ 5% Expansion Quantity ” and “Excess Expansion Quantity” each has the meaning assigned to them in Section 3.2.

 

“Facility” or “Facilities” means one or more of either Buyer’s PVC pipe plants or Seller’s PVC resin manufacturing plants, as the context requires and as set forth in Exhibit 3.1(a).

 

“ Final Price” has the meaning assigned to it in Section 5.3.

 

“Force Majeure Event” has the meaning assigned to it in Section 11.1.

 

“Initial Term” has the meaning assigned to it in Section 4.1.

 

“ Invoice Price” has the meaning assigned to it in Section 5.2 (b).

 

“ Month” means a calendar month.

 

“Person” means an individual, partnership, corporation (including business trust), joint stock company, trust, unincorporated association, or a joint venture or other entity.

 

“Product” means PVC resin meeting the product specifications set forth in Exhibit A.

 

“ Prime” means the rate per annum announced from time to time by Chemical Bank as its prime or reference rate in effect at its New York office.

 

“Requirement” has the meaning assigned to it in Article III.

 

***

 

“ Superfund Tax” means the assessment on the production and sale of PVC Resin imposed pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, as the same may be from time to time amended or reauthorized.

 

“Term” has the meaning assigned to it in Article IV.

 

“ Year” or “Yearly” means or refers to a calendar year or calendar years.

 

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ARTICLE II

COMMITMENTS OF PURCHASE AND SALE

 

SECTION 2.1 Purchase Commitment. Buyer agrees to purchase and receive from Seller, during the Term, the quantities of Product as hereinafter stated in Article III at the Competitive Contract Price as hereinafter stated in Article V.

 

SECTION 2.2 Sales Commitment. Seller agrees to sell and deliver to Buyer, during the Term, the quantities of Product as hereinafter stated in Article III at the Competitive Contract Price as hereinafter stated in Article V.

 

ARTICLE III

QUANTITY

 

SECTION 3.1 Requirements. Subject to the further provisions of this Agreement,

 

(a) During the Year 2005 and for the remainder of the Term, Buyer shall purchase and receive from Seller and Seller shall sell and deliver to Buyer *** percent (***%) of Buyer’s requirements for PVC resin at its Facilities whose total Requirements for PVC resin will equal *** pounds as further set forth in Exhibit 3.1(a).

 

SECTION 3.2 Seller’s Obligation to Supply Any Increase in Requirements.

 

(a) Subject to the limitations set forth in Section 4.3, beginning in Year 2005, Buyer’s Requirements under this Agreement shall include, subject to the further provisions of this Section 3.2, all or any additional quantities of Product which Buyer may require resulting from (i) expansion of Buyer’s Facilities, being supplied by Seller under this Agreement, by installation of new production facilities or processes, (ii) modernization debottlenecking, installation or implementation of process improvements, or other similar modifications to Buyer’s Facilities being supplied by Seller under this Agreement (such additional quantities of Product described by the preceding clauses (i) and (ii) collectively, the “Expansion Quantity”), and (iii) Buyer’s acquisition, directly or indirectly from any other Person of equipment, plants, business, properties or other assets for the production of PVC pipe, the operation of which requires Product (the “Acquisition Quantity”).

 

(b) After 2005 Seller is obligated to supply additional Expansion Quantities up to five percent (5%) greater than the prior Year’s Requirement (“5% Expansion Quantity”). If in any Year Buyer’s Expansion Quantity is less than the 5% Expansion Quantity, the difference shall not carry forward into subsequent Years. Buyer shall notify Seller of actions to be taken by Buyer that will require Expansion Quantity. Seller shall have the option, but not the obligation, to supply Expansion Quantity in excess of the 5% Expansion Quantity (“Excess Expansion Quantity”). Buyer shall use its best efforts to advise Seller of its Expansion Quantity and Excess Expansion Quantity at least twelve (12) months prior to the need for Expansion Quantity or Excess Expansion Quantity as soon as Buyer is permitted to do so without violating contracts with third parties or its legal obligations. Seller will advise Buyer within sixty (60) days of

 

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receipt of such notice of whether or not it will supply the Excess Expansion Quantity. If Seller does not elect to supply the Excess Expansion Quantity, the parties shall meet to attempt to agree on a mutually acceptable method for Buyer to obtain the Excess Expansion Quantity. In the event that the parties are unable to agree on such a method, Buyer shall be free for a period from the commencement of its need for Excess Expansion Quantity to the end of the second full Year thereafter, to purchase Product from a third party in quantities that are commercially reasonable up to an amount so that Buyer’s Requirement is not below its Requirement for the Year preceding the commencement of its need for Excess Expansion Quantity. Buyer shall have the right to accomplish the purchase of Product from a third party by removing from this Agreement one or more of its Facilities being supplied by Seller under this Agreement. In that event, the parties shall meet to mutually agree on which Facility or Facilities should be removed from this Agreement, taking into consideration the impact on both the Seller and the Buyer. At the end of the period that Buyer is permitted to purchase such Product from a third party, the amount of Product being so purchased shall become Expansion Quantity subject again to the terms of this Agreement.

 

(c) Buyer shall notify Seller of any transaction that will result in Acquisition Quantity as soon as Buyer is permitted to do so without violating contracts with third parties or its legal obligations. In the event that Buyer can terminate any contracts with third parties to supply the Acquisition Quantity without a breach or other cost or expense, Seller shall have the right, but not the obligation, to elect to supply the Acquisition Quantity under this Agreement: provided, however, in no event will the terms under which Buyer is obligated to purchase the Acquisition Quantity from Seller be any less favorable than those under which the third party is supplying the Acquisition Quantity. Seller shall have sixty (60) days after receipt of such notice to elect to supply such Acquisition Quantity under the terms set forth above. If Seller does not elect to supply such Acquisition Quantity or if Seller does not have the right to supply such Acquisition Quantity, Buyer shall be free to contract with a third party to supply the Acquisition Quantity for a period from commencement of its need for Acquisition Quantity to the end of the second full Year thereafter, at which time, the Acquisition Quantity shall again become Acquisition Quantity subject to the terms of this Agreement.

 

ARTICLE IV

TERM

 

SECTION 4.1 ***

 

SECTION 4.2 ***

 

SECTION 4.3 Phase Down of Supply. Notwithstanding anything to the contrary in this Agreement, should Seller not exercise its option to extend this Agreement, in the Year following the termination of this Agreement Seller would supply Buyer with 50% of the quantity supplied under this Agreement in the Year following the final Year of this Agreement under the terms and conditions of this Agreement.

 

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ARTICLE V

PRICE

 

SECTION 5.1 ***

 

SECTION 5.2 ***

 

SECTION 5.3 ***

 

SECTION 5.4 ***

 

SECTION 5.5 ***

 

SECTION 5.6 Invoice Disputes .

 

(a) Subject to the further provisions of this Section 5.5, Buyer shall pay invoices within the applicable time periods set forth in this Agreement without deduction, set-off or counterclaim.

 

(b) Any good faith dispute concerning the price of Product invoiced to Buyer shall be resolved in accordance with the provisions of Sections 5.1 through 5.4 of this Agreement.

 

(c) In case of any other good faith dispute (excluding price) concerning an invoice under this Agreement, Buyer shall pay, by the payment due date, its good faith estimate of the amount due and the parties shall meet within ten (10) days of the payment due date and diligently pursue resolution of the disputed amount of the invoice.

 

(d) Any payments not timely made by Buyer pursuant to the provisions of this Agreement (other than payments being disputed in good faith by Buyer as aforesaid) will accrue interest at a rate per annum of Prime plus two (2) percent (but in no event more than the maximum rate permitted by applicable law) from the date such payment shall have become due up to the date of actual payment thereof, and Buyer shall pay such interest to Seller within ten (10) days of Buyer’s receipt of Seller’s invoice for such charges.

 

ARTICLE VI

DELIVERY

 

SECTION 6.1 Method of Delivery. Product shall be delivered F.O.B. to the Delivery Points by railcars owned or leased by Seller. By written agreement of the parties, delivery may be made by way of bulk trucks.

 

SECTION 6.2 Monthly Delivery Instruction. By the fifteenth (15 ^th ) day of each month, Buyer shall furnish to Seller in writing a good faith estimate of the quantities of Product (reasonably consistent with the Requirements) to be delivered to the Buyer’s Facilities during each of the next three (3) months and such instructions and estimates for the month immediately following such notice shall be final and binding unless subsequently modified by agreement of

 

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