Sample Business Contracts

Round Wood Supply Agreement - Prime Timber Co. LLC and Crown Paper Co.

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                           ROUND WOOD SUPPLY AGREEMENT

     This Agreement is made as of the 28th day of June, 1999 between Prime

Timber Company LLC, a New Hampshire limited liability company ("Prime"), and

Crown Paper Co., a Virginia corporation ("Crown").


     A. Crown owns a pulp mill located in Berlin, New Hampshire (the "Berlin

     B. Prime has acquired cutting rights to the timber on certain timberlands

in the States of New Hampshire and Maine which are more particularly described

on Exhibit A hereto (the "Timberlands").

     C. The Timberlands have been a material source of roundwood supply for the

Berlin Mill and the parties hereto intend to utilize this Agreement to continue

a long-term relationship with respect thereto.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements

contained herein and intending to be legally bound, the parties agree as


1.   Quantities of Hardwood Pulpwood to be Supplied.

     (a) During the period commencing on the date hereof and ending on
     ________(the "Initial Period") and during each Six-Month period thereafter
     commencing on December 1 or June 1 (the Initial Period and each such six
     month period being a "Six-Month Period"), until the supply obligations
     under this Section of this Agreement are terminated in accordance with the
     provisions of Section 6, Prime shall supply to Crown at the Berlin Mill
     from any timberland owned by Prime at such time, and Crown shall purchase
     from Prime, the quantity of Hardwood Pulpwood set forth in Exhibit B. The
     quantities of Hardwood Pulpwood to be delivered during the Initial Period
     shall be prorated based upon the actual number of days within the Initial
     Period in relation to the 365-day year.

     (b) Prime shall deliver such Hardwood Pulpwood so that the total quantity
     of Hardwood Pulpwood to be purchased by Crown and supplied by Prime in each
     Six-Month Period shall be delivered substantially in accordance with
     Exhibit B.


     (c) The quantity of Hardwood Pulpwood to be supplied hereunder shall be
     purchased according to the specifications and the scaling rules set forth
     in Exhibit C hereto in accordance with the usual business practice of the
     timber industry in the State of New Hampshire.

2.   Prices.

     (a) The price at which Hardwood Pulpwood supplied hereunder is to be
     purchased by Crown shall be established by the parties hereto for each
     Six-Month Period during the term of this Agreement Crown shall make payment
     no later than Friday for Hardwood Pulpwood delivered during the previous
     week (Monday through Sunday).

     (b) The prices for the Hardwood Pulpwood for each Six-Month Period shall be
     market price in the vicinity. The parties shall use their best efforts to
     agree on such market prices for each Six-Month Period at least 15 days
     prior to the beginning of each such period, but if the parties are unable
     to do so by such time, then neither party shall have any obligation to
     supply or purchase Hardwood Pulpwood pursuant to this agreement for such
     Six-Month Period. Prime shall have available for sale to Crown at the
     beginning of each such Six-Month Period sufficient quantities of Hardwood
     Pulpwood to satisfy the volumes provided for in Exhibit B.

     (c) The price for Hardwood Pulpwood supplied hereunder shall be f.o.b. the
     Berlin Mill or other point of delivery designated by Crown and shall be
     determined on the basis of green tons of delivered wood.

     (d) In addition to the payment provided for in paragraph 2(a), Crown shall
     pay to Prime, within 30 days after the end of each Six-Month Period, a
     performance premium of four percent (4%) of the agreed price of the
     Products delivered to the Berlin Mill during such Six-Month Period,
     provided Prime has delivered no less than 95% of the volume specified in
     Exhibit B for such Product during such period and provided such premium
     shall be paid on not less than 95% of such volume and on not more than 110%
     of such volume.

     (e) If Crown shall fail to make a payment for Hardwood Pulpwood delivered
     by Prime to Crown hereunder when due, and such failure shall continue for
     fifteen (15) days after Crown receives written notice of such failure, then
     until such payment has been made (i) such unpaid amount shall bear interest
     from the original due date of such payment at one percent over the prime
     rate of Citibank, N.A. (New York City) in effect from time to time and (ii)
     Prime shall be under no obligation to make further Hardwood Pulpwood
     deliveries hereunder until such delinquent payment is made.


3.   Deliveries

     Title to the Hardwood Pulpwood shall pass to Crown at the point of delivery
     and the risk of loss or damage shall be borne by Prime until delivery.

4.   Force Majeure.

     Prime and Crown shall not be liable to each other or any failure or delay
     in delivery or acceptance of delivery of Hardwood Pulpwood where such
     failure or delay is due to circumstances beyond that party's control,
     including, without limitation, extraordinary weather conditions, fires,
     labor disputes, acts of God and acts of any governmental body or, as to
     Crown, in the event Crown, with at least 90 days notice to Prime,
     substantially curtails operations at the Berlin Mill (collectively referred
     to herein as a "Force Majeure Event"), nor shall any such failure or delay
     give either party the right to terminate this Agreement except as provided
     in Section 6. Each party shall use its best efforts to minimize the
     duration and consequences of any failure or delay in delivery or acceptance
     of delivery resulting from a Force Majeure Event and shall give the other
     party immediate notice of the occurrence of a Force Majeure Event and of
     the time when the party affected by such Force Majeure Event is no longer
     affected thereby. Notwithstanding the foregoing, if, as a result of a Force
     Majeure Event pursuant to which a delay in Prime's performance is excused
     hereunder, or for any other reason deliveries from Prime are reduced to the
     extent that Crown cannot maintain its scheduled production level at the
     Berlin Mill, Crown shall thereafter have the right to obtain the Hardwood
     Pulpwood, or substitutes therefor (in either case, "Substitute Hardwood
     Pulpwood"), from sources other than Prime until such time as Prime is again
     able to commence delivery of Hardwood Pulpwood to Crown hereunder. After
     Prime gives notice to Crown that it is again able to commence delivery of
     Hardwood Pulpwood to Crown hereunder, Crown will notify Prime of any
     commitments for Substitute Hardwood Pulpwood that Crown has entered into
     and Crown shall not be required to again accept delivery from Prime until
     it has accepted delivery of all Substitute Hardwood Pulpwood contracted by
     Crown, provided that no such contract shall be entered into for a term
     longer than three months without the consent of Prime, which consent shall
     not be unreasonably withheld, and Crown's obligation to take Hardwood
     Pulpwood hereunder (and Prime's obligation to deliver such) shall be
     reduced, at Crown's election, by the quantity of all such Substitute
     Hardwood Pulpwood. Notwithstanding the foregoing, if as a result of a Force
     Majeure Event Crown cannot accept the quantity of Hardwood Pulpwood
     determined hereunder, Crown shall promptly notify Prime of the same, and
     Prime shall thereafter have the right to contract for the sale of any such
     Hardwood Pulpwood Crown is unable to accept. After Crown gives notice to
     Prime that it is again able to accept delivery of Hardwood Pulpwood to
     Crown hereunder, Prime will notify Crown of any commitments for the sale of
     Hardwood Pulpwood that Prime has entered into and


     Prime shall not be required to again deliver Hardwood Pulpwood to Crown
     until such contract shall be entered into for a term longer than three
     months without the consent of Crown, which consent shall not be
     unreasonably withheld, and Prime's obligation to deliver Hardwood Pulpwood
     hereunder (and Crown's obligation to accept such Hardwood Pulpwood) shall
     be reduced, at Prime's election, by the quantity of all such Hardwood

5.   Confidentiality.

     (a) It is recognized that both parties may disclose to each other certain
     information regarding the subject of this Agreement which they consider to
     be private and confidential, the disclosure of which could prove injurious
     to either party. Therefore, the parties agree to use such information
     solely for the use, sale and pricing of Hardwood Pulpwood, and to use their
     best efforts to prevent the disclosure of such information (other than
     information which is a matter of public knowledge or which has been filed
     as public information with any governmental authority) to third parties
     without the prior written consent of the affected party, unless such
     disclosure is required by law.

     (b) Notwithstanding the provisions of paragraph 5(a), either party may make
     any such disclosure necessary in connection with a legal action to enforce
     its rights hereunder and, in the event there is a material breach by Prime
     of its obligations pursuant to Section 7, Crown may disclose to any third
     party purchaser of Timberlands involved in such breach the terms of Section
     7 as they relate to such Timberlands.

6.   Termination of Supply Obligations.

     (a) Although it is the intent of the parties that this Agreement shall
     result in a long term, mutually beneficial supply relationship, the wood
     supply obligations pursuant to Section 1 of this Agreement may be
     terminated by either party, at its option exercisable by written notice to
     the other party, but only under any one of the following circumstances:

          (i) As of November 1st, 2009 (the "initial Termination Date") or as of
          any November 1st thereafter which is a multiple of three years after
          the Initial Termination Date, provided (A) such notice is given not
          less than three years prior to such termination date, and (B) such
          notice is accompanied by a certificate of an officer of the party
          providing such notice to the effect that the notice is being given due
          to a change in management practices of the terminating party such
          that, if Prime is the terminating party, the Hardwood Pulpwood is no
          longer available, and, if


          Crown is the terminating party, the Hardwood Pulpwood can no longer be
          utilized at the Berlin Mill; or

          (ii) Through no default by either party, no Hardwood Pulpwood has been
          delivered pursuant to the terms of this Agreement during the initial
          twelve year term or any subsequent three year term; or

          (iii) By either party if the other party shall default in the
          performance of any of its agreements or obligations herein, and such
          default continues unremedied for a period of sixty (60) days after
          written notice from the nondefaulting party; or

          (iv) In the event Crown sells the Berlin Mill, then by either party,
          as to the supply obligations associated as provided in Exhibit B, (A)
          on 30 days prior written notice if such supply obligations were not
          assigned to the purchaser of such mill or (B) upon one year's prior
          written notice effective as of any November 1st following such sale if
          such supply obligations were assigned to the purchaser of such mill.

     (b) Any such termination of the supply obligations shall not constitute a
     waiver by either party of its rights to damages or other remedies for any
     breach of this Agreement by the other party.

7.   Transfer of Cutting Rights.

     (a) Transfer. In the event Prime desires to sell, assign or otherwise
     transfer all or any part of its cutting rights on the Timberlands, other
     than exempt Property as described below, transfers shall be made subject to
     this Agreement and Prime shall submit to Crown for its approval, not to be
     unreasonably withheld or delayed, a proposal for equitable allocation of
     Prime's obligations to provide the Hardwood Pulpwood volumes set forth in
     Exhibit B for each Annual Period of the remaining term of this Agreement to
     which property transferred shall be subject, with the overall objective of
     ensuring that such volumes are provided to Crown during the term of this
     Agreement and taking into consideration the following factors for
     determining such reduction: (i) species and product mix; (ii) site index
     (productivity); and (iii) time remaining under this Agreement Easements
     (including conservation easements), mineral leases and recreational leases
     shall not be considered a sale or transfer for purposes of this section.

     (b) Exempt Property. Notwithstanding anything to the contrary set forth
     above, the sale of any part of Prime's cutting rights on the Timberlands
     shall be exempt from the obligations of this Wood Supply Agreement herein;
     provided (A) the aggregate of all such exempt property ("Exempt Property")
     shall not exceed 4,000 acres; and (B) until such 4,000 acre limit has been
     reached, any parcel containing 500 acres or less the cutting rights on
     which are sold or otherwise transferred shall be deemed Exempt Property.
     The transfer of any


     Exempt Property pursuant to the provisions of this subsection (a) shall
     relieve the Exempt Property from the obligations under this Agreement, but
     shall not relieve Prime of its obligations under this Agreement including
     the obligations to make available to Crown the Hardwood Pulpwood volumes in
     Exhibit B.

8.   Representations and Covenants.

     (a) Prime hereby covenants and agrees that:

          (i) it shall give Crown no less than 30 days prior notice of any
          transfer of any of any of the cutting rights on the Timberlands or any
          other transaction related thereto which would have any effect on
          Prime's obligations under this Agreement; and

          (ii) it has the right, power and authority to grant the rights hereby
          purported to be granted Crown.

     (b) Crown represents and warrants that it has the right, power and
     authority to enter into this Agreement and consummate the transactions
     contemplated hereby.

9.   Relationship of Parties.

     In all matters relating to this Agreement, both parties shall be acting
     solely as independent contractors and shall be solely responsible for the
     acts of their employees; and employees of one party shall not be considered
     employees of the other party. Neither party shall have any right, power or
     authority to create any obligation, express or implied, on behalf of the
     other party.

10.  SF1.

     Prime agrees to manage the Timberlands in accordance with the Sustainable
     Forestry Initiative of the American Forest and Paper Association ("SFI).
     This commitment will last until the first occurrence of either one of the
     following two scenarios: (1) the SFI program is no longer a viable, ongoing
     program, or (2) the Wood Supply Agreement between Crown and Prime is no
     longer in effect.

11.  Compliance with Law.

     Each party agrees to comply with all applicable laws, statutes, ordinances
     and governmental rules and regulations applicable to the conduct of its


12.  Waiver.

     No waiver shall be deemed to be made by either party of any of its rights
     hereunder unless the same shall be in writing, and each waiver, if any,
     shall be a waiver only with respect to the specific instance involved and
     shall in no way impair the rights of the waiving party or the obligations
     of the other party in any other respect at any other time.

13.  Assignment.

     (a) Either party may assign this Agreement to any corporation which
     controls, is controlled by or is under common control with such party,
     formed by consolidation of such party with another corporation or
     corporations, or into which such party shall be merged, or to which
     substantially all the property of such party shall be conveyed or
     transferred as an entirety (the "Successor Corporation"), or to a trustee
     under any deed of trust mortgaging or pledging all, or substantially all,
     of such party's plants and real property. Upon any such transfer, all the
     terms and provisions of this Agreement binding upon, or inuring to the
     benefit of, the assigning party shall be binding upon, the inure to the
     benefit of, its successor or assign, whether so expressed or not, provided,
     however, in any such case the assignee shall assume in writing the
     obligations of the assigning party and the assigning party shall remain
     primarily liable hereunder. Except as above provided, this Agreement shall
     not be assignable or transferable by either party without the consent of
     the other party.

     (b) In the event Crown sells the Berlin Mill, Crown may assign to any such
     purchaser its supply rights under this Agreement as provided in Exhibit B,
     and, in such event, such assignment shall also be deemed a delegation and
     assumption by such purchaser of all Crown's duties and obligations
     hereunder related to such supply rights, and upon the assumption in writing
     by such purchaser of all Crown's duties and obligations hereunder, Crown
     shall be released from all future obligations hereunder with respect to
     such supply rights and Prime shall thereafter look only to such assignee
     for performance under this Agreement with respect to such rights.

14.  Separability.

     If any provision of this Agreement is held to be invalid, illegal or
     unenforceable, the balance of this Agreement shall remain in effect.

15.  Notices.

     Any notices which may be required or are appropriate hereunder shall be in
     writing or by electronic means producing a written record (facsimile
     machine, telex, telecopier or telegraph), personally delivered or mailed by
     Registered or Certified United States Mail or reputable overnight courier,
     postage prepaid,


return receipt requested, effective on personal delivery, one day after mailing
if by reputable overnight courier or three days after mailing if by United
States mail:

         To Crown at the following address:

                  Mr. A. Bradford Wyman
                  Crown Vantage, Inc.
                  650 Main Street
                  Berlin, NH 03570
                  Telephone: (603) 342-2500
                  Facsimile: (603) 342-2301

         Copy to:

                  Chris McLain, Esq.
                  Crown Vantage
                  300 Lakeside Drive, Room 1451
                  Oakland, CA 94612-3592
                  Telephone: (510) 874-3869
                  Facsimile: (510) 874-3939

         To Prime at the following address:

                  Mr. Thomas I. Colgan
                  Prime Timber Company LLC
                  do Wagner Forest Management, Ltd.
                  P.O. Box 160
                  150 Orford Road
                  Lyme, NH 03768
                  Telephone: (603) 795-2002
                  Facsimile: (603) 795-4631

         Copy to:

                  Karen Huber, Esq.
                  Eaton, Peabody, Bradford & Veague
                  144 Exchange Street, Fleet Center
                  Bangor, ME 04402
                  Telephone: (207) 947-0111

16.  Headings.

The headings in this Agreement are solely for convenience of reference and shall
be given no effect in the construction or interpretation of this Agreement.


17.  Counterparts.

     This Agreement may be executed in several counterparts, each of which shall
     be deemed an original, but all of which together shall constitute one

18.  Governing Law.

     This Agreement shall be construed and enforced in accordance with the laws
     of the State of New Hampshire, without regard to the principles of conflict
     of law thereof.

19.  Nonrecordation.

     Neither this Agreement nor a memorandum of the terms hereof shall be
     recorded in the land records of any jurisdiction where any of the
     Timberlands are located except in connection with a lawsuit filed by Crown
     as a result of a breach by Prime of its obligations.

     IN WITNESS WHEREOF, the parties hereto each of have caused this Agreement
to be duly executed as of the date first above written.

WITNESSED BY:                                PRIME T1MBER COMPANY LLC
                                             By: Wagner Forest Management, Ltd.,
                                             Its Manager

                                             By: /s/ J.F. Sobetzer
                                             Name: J.F. Sobetzer
                                             Its: Vice President
                                             Duly Authorized

WITNESSED BY:                                          CROWN PAPER CO.

/s/ [ILLEGIBLE]                              By: /s/ Michael J. Hunter
-------------------------                        -------------------------------
                                             Name: Michael J. Hunter
                                             Its: Senior Vice President
                                             Duly Authorized



     The foregoing instrument was acknowledged before me this 23 day of June,
1999. by J. F. Sobetzer, in his capacity as Vice President of Wagner Forest
Management, Ltd., a New Hampshire corporation, the Manager of Prime Timber
Company LLC, a New Hampshire limited liability company, on behalf of such
limited liability company.

[EXECUTE IN BLACK INK]                  /s/ Donna Brenner
                                        Notary Public
                                        Name: Donna Brenner, Notary Public
                                        My Commission expires: April 29, 2003

                                  (AFFIX SEAL]



     The foregoing instrument was acknowledged before me this 29th day of June,
1999, by Michael J. Hunter, Senior Vice President of Crown Paper Co., a Virginia
corporation, on behalf of the corporation.

[EXECUTE IN BLACK INK]                       /s/ Laurel Avi
                                             Notary Public
                                             Name: Laurel Avi
                                             My Commission expires: 9/2/2000

                                  [AFFIX SEAL]