Sample Business Contracts

Agreement to Supply Sand & Gravel In Place - John Hancock Mutual Life Insurance Co. and Crown Paper Co.

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     Agreement entered into as of the 30th day of October, 1997, between JOHN
HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Massachusetts corporation, having its
principal place of business at 99 High Street, Boston, Massachusetts 02117
(hereinafter referred to as "Seller"), and CROWN PAPER CO., a Virginia
corporation having its principal place of business at 300 Lakeside Drive,
Oakland, California 94612-3592 (hereinafter referred to as "Buyer").

WHEREAS, Buyer desires to obtain a long-term supply of sand and gravel for use
at its landfill in Success, New Hampshire, where it disposes of wastewater
treatment plant sludge from its Berlin pulp mill and Gorham paper mill, as well
as for other uses;

WHEREAS, Seller has purchased from Buyer, pursuant to a Timberland Acquisition
Agreement dated as of October 21, 1997, the land in Success, New Hampshire, from
which Buyer has heretofore obtained the sand and gravel needed for its landfill;

WHEREAS, Buyer and Seller desire to enter into a long-term agreement under which
Seller will supply Buyer with sand and gravel from Seller's newly acquired land
in Success, New Hampshire,

NOW THEREFORE, for and in consideration of the mutual promises and benefits
herein contained, Buyer and Seller agree to the purchase and sale of sand and
gravel in accordance with the terms and subject to the conditions set forth


     Seller agrees to supply and sell sand and gravel to Buyer, on the terms and
conditions set forth in this agreement, in, on, and under the following
described land in the unincorporated Town


of Success, Coos County, New Hampshire, described more fully in Exhibit A hereto
(the "Subject Properties").


     Buyer shall have the exclusive right to enter on the Subject Properties at
any and all times during the term of this agreement to remove the sand and
gravel for Buyer's use and not for resale, in accordance herewith. Seller
reserves to itself the right to go on and use the Subject Properties, for any
purpose, without unreasonable interference with the sand and gravel operations
of Buyer. However, Seller shall not remove sand and gravel from the Subject
Properties except for use in operating and managing timberlands owned by Seller
in the Town of Success and contiguous towns. Seller shall not sell, or grant,
lease, or license any rights to remove, sand and gavel from the Subject
Properties to any person other than Buyer.


     (a) Initial Term and Automatic Extension. The initial term of this
Agreement shall be deemed to have commenced as of the effective date of this
Agreement as set forth in the first paragraph on the first page of this
Agreement (the "Effective Date") and shall continue for a period of twelve (12)
years from the Effective Date of this Agreement and shall be automatically
extended for successive terms of three years unless written notice is given by
either party of such party's intent to terminate this Agreement at least
thirty-three months prior to the end of the term (including any extension
thereof). This Agreement may be terminated prior to the end of the term (or any
extension thereof) in accordance with the provisions of Sections 3(b) and 3(c).

     (b) Termination by Buyer. Buyer may terminate this Agreement upon one
hundred twenty (120) days notice to Seller.



     (c) Termination by Either Party. This Agreement may be terminated by either
party upon or after the occurrence of any of the following events;

          (i) the failure by the other party to make any payment due hereunder
     within ten (10) days after receipt of written demand therefor;

          (ii) a breach by the other party of any of the material terms or
     conditions of this Agreement which is not cured within ninety (90) days
     after receipt of written notification thereof, provided, however, that the
     ninety-day cure period shall be extended to account for any period during
     which cure is made impossible or impractical by seasonal or weather

          (iii) the depletion of sand and gravel reserves on the Subject

          (iv) if buyer sells its Berlin pulp mill or Gorham paper mill and the
     purchaser of such sold mill does not accept assignment of this Agreement
     within thirty (30) days of such sale;

          (v) the entry of an "Order for Relief" naming the other party as a
     "Debtor" under Title 11 of the United States Code or upon the entry of a
     decree or order by a court having competent jurisdiction in respect to any
     petition filed or action respecting a party directly involved in a
     reorganization, arrangement, creditors composition, readjustment,
     liquidation, dissolution, bankruptcy or similar relief under any other
     present or future statute, law or regulation, whether or not resulting in
     the appointment of a receiver, liquidator, assignee, trustee, custodian, or
     other similar official, and the continuation of any such decree or order is
     unstayed and in effect for a period of ninety (90) consecutive days; or


          (vi) the making by the other party of an assignment for the benefit of
     creditors, or the admission by such party in writing of its inability to
     pay its debts generally as they become due, or the taking of action by such
     party in furtherance of any such action.


     (a). Buyer agrees to pay the following initial prices for sand and gravel
removed from the Subject Properties:

          Sand $ 1.00 per cubic yard

          Gravel $ 2.25 per cubic yard

     Cubic yard quantities shall be calculated based upon the number of
truckloads of sand and gravel removed from the Subject Properties multiplied by
the rated cubic yard capacity of the dump body of each truckload hauled away. No
payment is due for sand and gravel stockpiled on the Subject Properties until
such stockpiled material is hauled away and removed from the Subject Properties.
Within 30 days of the end of every month during which Buyer has removed sand or
gravel from the Subject Properties, Buyer shall submit to Seller a report
detailing the daily quantities of sand and gravel removed, accompanied by
payment for such quantities.

     (b) Prices for sand and gravel will be subject to adjustment on January 1,
2000, and on January 1 of every second year thereafter (the "price adjustment
dates"). Thirty (30) days prior to each price adjustment date, Buyer and Seller
shall negotiate in good faith and according to commercially reasonable standards
in order to agree upon appropriate price adjustments, if any. If Buyer and
Seller are unable to agree upon price adjustments prior to a price adjustment
date, this Agreement shall nonetheless remain in full force and effect, and
Buyer shall continue to pay for purchases after such price adjustment date based
upon the prices in effect immediately prior to



such price adjustment date, with Buyer or Seller, as appropriate, making a
subsequent and retroactive adjustment (payment or credit) for such purchases
within thirty (30) days of the date on which new prices are determined. If Buyer
and Seller have not agreed to price adjustments within sixty (60) days after a
price adjustment date, the adjusted prices are to be determined as follows:
Buyer and Seller shall each name a competent appraiser within seven (7) days,
and the two appraisers shall select a third within fourteen (14) days, and the
three appraisers shall determine fair and reasonable prices within twenty-one
(21) days of the selection of the third appraiser. Prices agreed upon by a
majority of the appraisers shall be accepted as final by Buyer and Seller.

     (c) Buyer agrees to purchase during each calendar year during the term
hereof a minimum quantity of twenty thousand (20,000) cubic yards of sand and/or
gravel (the "annual minimum"). For example, the annual minimum will be met if
Buyer purchases during a calendar year any combination of sand and/or gravel
totaling twenty thousand cubic yards, such as twelve thousand cubic yards of
sand and eight thousand yards of gravel. The amount by which Buyer's purchases
of sand and gravel in a given year fall short of the annual minimum shall be
referred to as the "shortfall" for such year, which shall be referred to as a
"shortfall year." To determine the effect, if any, of a shortfall, quantities of
sand and gravel purchased in excess of the annual minimum ("excess purchases")
in the year immediately before and in the year immediately after a shortfall
year shall be added to the actual purchases in the shortfall year, and if the
total of such excess purchases plus the actual purchases in the shortfall year
exceed the annual minimum, then there will be no breach of the annual minimum
requirement for such shortfall year. By way of example, if actual purchases are
14,000 cubic yards in year 2000, then that year is a shortfall year; however,



if purchases in 1999 were 22,000 cubic yards and purchases in 2001 are 24,000
yards, then the 6,000 cubic yards of excess purchases compensate for the
shortfall and there is no breach of the annual minimum requirement for year
2000. If there is a breach of the annual minimum requirement due to a shortfall
that is not compensated for by excess purchases, Buyer shall have no obligation
to pay for the shortfall. The only consequence of such a breach of the annual
minimum requirement is that Buyer's rights under this Agreement shall cease to
be exclusive, in which case (i) Seller may sell sand and gravel to anyone, and
(ii) Buyer's obligation under Section 6(a) to pay any costs of maintaining and
obtaining permits and licenses shall cease. No annual minimum will be applicable
to any partial calendar year during the term hereof if such partial calendar
year is less than one hundred eighty (180) days duration, but a prorated annual
minimum will apply to any such partial year of one hundred eighty (180) days
duration or longer.

     (d) Seller agrees to allow Buyer to remove and purchase an indeterminate
quantity of sand and gravel from the Subject Properties, with no annual or
cumulative maximum quantities, limited only by the depletion of sand and gravel
reserves on the Subject Properties.


     (a) Buyer agrees to perform all labor and provide all equipment necessary
for the exploration, extraction, processing, loading, and hauling of the sand
and gravel.

     (b) Buyer and Seller will consult, confer, and cooperate in exploring for,
planning and locating new sand and gravel pits, expanding pits, establishing
stockpile or processing areas, and clearing brush and timber as needed for such
purposes. Before commercial timber is to be cut for the above purposes, Buyer
and Seller will, in good faith and with commercial reasonableness, consult and
agree upon the quantities, varieties, and current stumpage value of such timber.



     (c) In order to obtain access to the Subject Properties, and to carry on
its operations, Buyer shall have the right to make use of and, if Buyer so
desires, improve all roadways now existing on the Subject Properties, and shall
have the right to build such additional roads as may be necessary for the
excavation, processing, stockpiling and removal of sand and gravel. In
maintaining, improving, or building such roads, Buyer may use sand, gravel, and
fill from the Subject Properties. Buyer shall not be required to pay for such
materials so used. Any road not in use by Buyer shall be left in a condition at
least as good as existed before use by Buyer under this agreement. Buyer shall
consult and confer with Seller as to the location, layout, and standards of new
roads that may be required, but Seller shall not unreasonably withhold approval
of any such new road. Buyer and Seller shall negotiate in good faith to share
the costs of construction and maintenance of any such roads that will be used to
a significant extent by Seller, based on the relative use of such roads by Buyer
and Seller. Buyer and Seller may construct and maintain gates on roads as either
may require, at the cost of the party so requiring, provided that the other
party shall be given keys thereto.

     (d) Buyer shall have the right to place on the Subject Properties
machinery, equipment, sand and gravel processing plants, tool sheds, and other
structures required by it in connection with its operations, with the full right
to remove all the machinery, equipment and structure within one hundred eighty
(180) days after termination of this agreement.

     (e) Buyer shall have the right to drill water wells on the described land
for use in connection with sand and gravel operations. On permanent cessation of
the use of any well, or on termination of this agreement, Buyer shall leave the
well and the well casing for the use of Seller, but Buyer may remove any pumps
or motors it has installed or caused to be installed.




     (a) Buyer shall be responsible for obtaining and/or maintaining all permits
and licenses required by law for sand and gravel extraction operations on the
Subject Properties, and Buyer shall pay all costs associated with such
permitting and licensing, including, but not limited to, engineering studies,
application fees, monitoring tests, and environmental studies. Seller and Buyer
shall cooperate, consult and confer to plan sand and gravel operations in
accordance with existing permits and licenses and to obtain new permits and
licenses as needed, and Seller, as property owner, shall provide any and all
approvals and signatures that are necessary to maintain and/or obtain such
permits and licenses.

     (b) Seller shall be responsible for payment of and filing all reports and
returns for Property Taxes, Excavation Taxes, and Excavation Activity Taxes
relating to the Subject Properties.

     (c) Buyer shall be responsible for any taxes on any machinery, equipment,
or structures that it owns.


     On conclusion of operations of any significant portion of the Subject
Properties and on termination of this agreement, Buyer shall perform at its cost
any reclamation work required by law or under the applicable permits, and remove
Buyer's machinery, equipment, and structures.


     Each party agrees to comply with all applicable laws, statutes, ordinances,
and governmental rules and regulations applicable to the subject matter of this




     (a) Buyer will hold Seller harmless from all claims that may arise solely
out of its occupation of the Subject Properties and operations conducted thereon
by it, its employees, agents, or contractors and shall indemnify and defend
Seller against any suit, claim, judgment or demand whatsoever arising out of the
breach of this agreement by Buyer or the negligence or willful misconduct of
Buyer in the exercise of any of its rights pursuant to this agreement, provided
that Seller is not a contributing cause to the events giving rise to such suit,
claim, demand or judgment.

     (b) Seller will hold Buyer harmless from all claims that arise solely out
of its ownership of the Subject Properties and shall indemnify and defend Buyer
against any suit, claim, judgment or demand whatsoever arising out of the breach
of this agreement by Seller or the negligence or willful misconduct of Seller,
provided that Buyer is not a contributing cause to the events giving rise to
such suit, claim, demand or judgment.

     (c) The obligations of the parties under this section shall survive the
expiration or termination of this agreement.


     Neither Buyer nor Seller shall be liable for failure to perform any of its
obligations under this Agreement during any period in which performance is
prevented by any cause beyond such party's control, which causes are called
"force majeure" below. For purposes of this Agreement, "force majeure" includes,
but is not limited to, acts of God, fire, flood, undue shortage of energy or
power, strikes, insurrection or mob violence, requirements or regulations of
government with which a party cannot reasonably comply, and other causes of a
similar nature that are beyond the



control of a party. The party whose performance is prevented will notify the
other party of the date of commencement and cause of each period of force
majeure and the time of removal of such cause.


     This Agreement shall not constitute or give rise to a partnership or joint
venture between the parties. All activities by either party under the terms of
this Agreement shall be carried on as independent contracting parties and not as
an agent for or employee of the other party, and each party shall be solely
responsible for the acts of its agents and employees. Neither party shall have
any right, power, or authority to create any obligation, express or implied, on
behalf of the other party.


     All notices, reports, and consents required or permitted to be given under
this Agreement shall be in writing and deemed given when hand delivered or by
documented overnight delivery service, or sent by telecopy, telefax, or other
electronic transmission service, provided a confirmation copy is also sent no
later than the next business day by first class mail, return receipt requested,
to the party to whom the same is directed at its address as set forth below or
to such other address as such party shall designate by notice under this

If to Buyer:                  A. Bradford Wyman
                              Wood Department
                              Crown Vantage
                              650 Main Street
                              Berlin, NH 03570-2489
                              Telecopy No. (603) 342-2301



With a copy to:               Chris McLain, Esq.
                              Grown Vantage
                              300 Lakeside Drive, Rm. 1451
                              Oakland, CA 946-12-3592
                              Telecopy No. (510) 874-3939

If to Seller:                 Hancock Timber Resources Group
                              99 High Street, 26th Floor
                              Boston, Massachusetts 02117
                              ATTN: Mr. Bruce McKnight
                              Telecopy No. (617) 747-1502

With a copy to                Henry L. Whittemore
                              Hancock Timber Resources Group
                              77 Water Street
                              Hallowell, Maine 04347
                              Telephone No. (207) 621-4020

                              Robert H. Golden, Esq.
                              John Hancock Mutual Life Insurance Company
                              Trinity Place - Home Office Receiving
                              Mortgage and Real Estate Law
                              Boston, Massachusetts 02117
                              Telecopy No. (617) 572-9268

                              Thomas J. Colgan
                              Wagner Forest Management, Ltd.
                              Route 10 North
                              P0 Box 160
                              Lyme, New Hampshire 03768
                              Telecopy No. (603) 795-2002

                              Karen A. Huber
                              Eaton, Peabody, Bradford & Veague, P.A.
                              Fleet Center - Exchange Street
                              P0 Box 1210
                              Bangor, Maine 04402-1210
                              Telecopy No. (207) 947-0111



     (d) Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be effective and valid under applicable
law. The determination by any court of competent jurisdiction that one or more
of the sections or provisions of this Agreement are unenforceable shall not
invalidate this Agreement, and the decision of such court shall be given effect
so as to limit to the extent possible the sections or provisions of this
Agreement which are deemed unenforceable. To the extent such determination has a
material impact upon the economic expectations of the parties hereto, the
parties agree to make appropriate modifications to this Agreement to take such
impact into account.

     (e) Headings; Construction. Section headings contained in this Agreement
are for convenient reference only, and shall not in any way affect the meaning
or interpretation of this Agreement. The language used in this Agreement will be
deemed the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction will be applied against any person.

     (f) Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, including by means of telefaxed signature pages, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

     THIS AGREEMENT has been executed by the duly authorized representative of
the parties as of the date first hereinabove set forth.

WITNESS                            CROWN PAPER CO.

/s/ R. Carl Anderson               By: /s/ Christopher M. McLain
-----------------------------          -----------------------------
                                   Name: Christopher M. McLain
                                   Its: Senior Vice President,
                                   Duly Authorized
                                   [Execute in Black Ink]



                                   JOHN HANCOCK MUTUAL LIFE
                                   INSURANCE COMPANY

                                   By: Hancock Natural Resources Group, Inc.,
                                   its Investment Manager, duly authorized

/s/ R. Carl Anderson               By: /s/ John P. Lollis
-----------------------------          -----------------------------
                                   Name: John P. Lollis
                                   Its: Account Manager,
                                   Duly Authorized
                                   [Execute in Black Ink]