SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT ("Supply Agreement"), entered into this 29th day of
December, 1999, is made by and between Dal-Tile Corporation, a Pennsylvania
corporation ("Dal-Tile"), and Wold Talc Company, Inc., a Wyoming corporation
("Wold").
INTRODUCTION
WHEREAS, Wold desires to sell to Dal-Tile talc for use in products
manufactured by Dal-Tile or any of its affiliates or subsidiaries.
WHEREAS, Dal-Tile desires to purchase from Wold talc for use in products
manufactured by Dal-Tile or any of its affiliates or subsidiaries.
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the receipt and sufficiency of which is acknowledged by the parties,
Wold and Dal-Tile hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Supply Agreement, the terms "Wold," "Dal-Tile,"
"Agreement," and "Effective Date" shall have the meanings indicated above.
(b) As used in this Supply Agreement, all other capitalized terms shall
have the meanings assigned such terms below:
(i) "Additional Supply Requirement" shall mean that Product
needed and ordered by Dal-Tile during each Annual Period of
the Term in excess of the Minimum Supply Requirements.
(ii) "Annual Period" shall mean the period from January 1
through December 31 of the specified year of the Term.
(iii) "Annual Shortfall" shall refer to that portion of the
Minimum Supply Requirement that Dal-Tile has not ordered or
paid for in a specified Annual Period.
(iv) "Average Monthly Consumption" shall mean Dal-Tile's monthly
average purchase of Product during the immediately
preceding 12 months but not to exceed Dal-Tile's projected
supply requirements for the next 12 months. For the first
12 month period of the Term, Dal-Tile's Average Monthly
Consumption shall be based on Dal-Tile's consumption of the
Product for the 12-month period prior to the Effective Date
of this Supply Agreement that Dal-Tile represents is 13,000
tons of Product per month.
(v) "Confidential Information" shall have the meaning assigned
to such term in Section 10 below.
(vi) "Effective Date" shall be January 1, 2000.
(vii) "Inventory Reports" shall mean the monthly reports made by
Wold pertaining to Wold's inventory of Product in
stockpiles at Wold's facilities, including the Premises.
(viii) "Minimum Supply Requirement" shall mean no less than
125,000 tons of the Product during each Annual Period.
(ix) "New Plant" shall mean a tile plant that was not operated
by Dal-Tile or any affiliate or division thereof prior to
the Effective Date.
(x) "Plants" shall refer to the three tile plants presently
owned or operated by Dal-Tile located at Monterrey, Mexico;
El Paso, Texas; and Dallas, Texas.
(xi) "Premises" shall refer to the mining operations (including
all mineral leases, real property rights and interests,
plant and equipment used in the mining operation) in
Hudspeth County, Texas, that were purchased by Wold from
Dal-Tile concurrently herewith and that are more
particularly described in Exhibit C hereto.
(xii) "Product" will mean talc meeting the Specifications.
(xiii) "Specifications" will mean the specifications and
requirements for the Product described in Exhibit A, as
amended, supplemented, or modified from time to time, in
writing, by mutual agreement of Wold and Dal-Tile. The
Specifications have been initially determined and agreed to
by Frank A. Alsobrook, consultant to Dal-Tile.
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(xiv) "Supply Requirement Notification" shall mean the forecasted
supply of Product needed and anticipated to be ordered by
Dal-Tile for the specified Annual Period, both in annual
aggregate and on a monthly basis.
(xv) "Term" will have the meaning assigned to such term in
Section 2 hereof.
2. TERM.
The initial term of this Supply Agreement (the "Initial Term") will run
from the Effective Date for a period of ten (10) years through December 31,
2009. The Initial Term shall renew automatically for four (4) successive five
(5) year terms upon the same terms and conditions of this Supply Agreement
(except as otherwise provided herein) unless written notice of intention not to
renew is provided by Dal-Tile at least one year prior to the end of any Term.
Unless otherwise indicated, all references herein to the "Term" shall include
the Initial Term and each renewal thereof that becomes effective pursuant to
this section 2.
3. SUPPLY AND PRODUCTION.
(a) SUPPLY REQUIREMENTS AND OPTIONS: Subject to the provisions of
Section 7(a) of this Supply Agreement, Wold and Dal-Tile agree as follows:
(i) MINIMUM SUPPLY AND PURCHASE REQUIREMENTS: Wold will
guarantee that it will sell and deliver to Dal-Tile as provided in this
Supply Agreement the Minimum Supply Requirement for each Annual Period of
the Term. Dal-Tile guarantees that it shall purchase and/or accept
delivery from Wold of the Minimum Supply Requirement during each Annual
Period of the Term.
(ii) ADDITIONAL SUPPLY AND PURCHASE REQUIREMENTS FOR THE PLANTS:
For each Annual Period, Dal-Tile agrees that it shall purchase from Wold
all Product needs that it has for the Plants, including those supply
requirements created by any expansion of such Plants. Wold agrees that it
shall supply and sell to Dal-Tile such additional Product requirements
provided that (1) Dal-Tile shall not be entitled to resell, transfer or
trade
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additional Product without Wold's written consent, (2) Wold's obligations
to supply additional Product under this Section 3(a)(ii) shall not exceed
125,000 tons for each Annual Period (in addition to the Minimum Supply
Requirement for such Annual Period), and (3) additional requirements for
any Annual Period do not exceed by more than 25% the annual amount of
Product specified in Supply Requirement Notification for such Annual
Period unless waived by Wold. On or before October 1st of the year before
the next Annual Period, Dal-Tile shall provide Wold with its Supply
Requirement Notification; provided, for the initial Annual Period,
Dal-Tile shall provide its Supply Requirement Notification on or before
January 31, 2000. Dal-Tile agrees to use its best efforts to inform Wold
of any changes in the Supply Requirement Notification, and, upon receipt
thereof by Wold, such revised Supply Requirement Notification shall be
the Supply Requirement Notification for the Annual Period covered
thereby.
(iii) ADDITIONAL SUPPLY AND PURCHASE REQUIREMENTS FOR NEW PLANTS:
During the Term of this Supply Agreement, Dal-Tile and Wold agree they
shall cooperate in anticipating Dal-Tile's needed supply for any New
Plant ("New Plant Supply Needs") and providing such supply at market
prices by Wold. The provisions of this section are intended to provide a
formal mechanism for determining and providing supply under those
conditions. However, nothing in this section prohibits Wold and Dal-Tile
from voluntarily utilizing other methods to accomplish those ends in a
more efficient manner.
For any New Plant, Dal-Tile and Wold agree that they shall attempt
to determine if New Plant Supply Needs can be furnished at the price as
provided in section 5.b or at some other selected price ("New Plant
Contract Price"). If Dal-Tile and Wold agree that the New Plant Contract
Price shall be used, this Supply Agreement shall be amended to provide
the New Plant Supply Needs shall be part of this Supply Agreement at the
New Plant Contract Price.
If Dal-Tile and Wold cannot agree upon a New Plant Contract Price
for New Plant Supply Needs, Dal-Tile agrees that it shall grant to Wold
an irrevocable, exclusive
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right of first refusal to supply all Product needs for the New Plant in
question upon the following terms and conditions. If Dal-Tile receives a
bona fide third party offer to sell talc to a New Plant (each, a "New
Plant Proposed Transaction"), Dal-Tile shall first deliver to Wold
written notice (a "New Plant First Refusal Notice") specifying (i) the
aggregate amount of consideration and the form of such consideration,
which consideration shall include freight costs (the "New Plant Offer
Price"), and (ii) all other material terms of the Proposed Transaction,
along with a true and correct copy of the written offer from the third
party (the "New Plant Sale Document"). Wold shall have a period of
fifteen (15) days following receipt of the First Refusal Notice (the "New
Plant Notice Period") to elect to exercise its right to supply Dal-Tile's
Product needs for the New Plant upon the same terms and conditions as are
set forth in the New Plant Sale Document by delivering written notice of
such election (the "New Plant Exercise Notice") to Dal-Tile.
If Wold does not timely exercise its right to supply Product to a
New Plant under this Section 3(a)(iii) or fails to provide the Product,
Wold's rights under this Section 3(a)(iii) shall conditionally terminate
as to the specified Proposed Transaction for the New Plant, and Dal-Tile
may purchase Product for such New Plant for the specified order according
to the New Plant Offer Price. In that case, Dal-Tile shall be free to
conclude the New Plant Proposed Transaction with the third party
purchaser who entered into the New Plant Sale Document (but not to any
other party or person) on substantially the same material terms and
conditions as are contained in the New Plant Sale Document, provided such
New Plant Proposed Transaction is consummated within 30 days following
the expiration of the New Plant Notice Period. If Dal-Tile does not
consummate the New Plant Proposed Transaction within such 30-day period
on substantially the same material terms and conditions as are contained
in the New Plant Sale Document, Wold's rights pursuant to the right of
first refusal under this Section 3 (a)(iii) shall be revived as to the
New Plant Proposed Transaction
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(iv) WOLD'S INVENTORY UNDERTAKINGS: During the Term of this
Supply Agreement, Wold shall use its best efforts to maintain at least
four (4) months inventory but in any event shall maintain not less than
three (3) months of Product based upon Dal-Tile's Average Monthly
Consumption. On or before the first day of each month during the term of
this Supply Agreement and as part of Wold's Inventory Reports, Wold shall
provide written verification to Dal-Tile of the amount of inventory of
Product available at the Premises.
(b) DAL-TILE'S PLACEMENT OF ORDERS: No later than fifteen (15) days
prior to the beginning of any month during the Term of this Supply Agreement (or
no later than five (5) days after the Effective Date for the first month of the
Term), Dal-Tile shall place orders for the Product with Wold for the deliveries
to be made on a weekly basis during the following month. In all orders by
Dal-Tile for the Product, Dal-Tile will specify the quantity ordered and the
required delivery date.
(c) DELIVERY OF PRODUCT: Wold will deliver Product in amounts
necessary to fill all of Dal-Tile's orders as provided above. All deliveries
will be FOB loaded on the railcar in Allamore, Texas, via common carriers
acceptable to Dal-Tile, or as otherwise specified by Dal-Tile. Wold shall be
responsible for the cleaning of all railcars used under this Supply Agreement;
provided, that if any railcar supplied by the rail carrier is damaged or
requires unreasonable efforts to clean, Wold shall notify Dal-Tile of the
condition of such railcar and the extra costs associated with its cleaning.
With Dal-Tile's prior consent, Wold may accomplish additional cleaning and shall
be reimbursed for such cleaning expenses by Dal-Tile. In that case, Wold shall
cooperate in Dal-Tile's efforts to seek reimbursement of the additional cleaning
expense from the responsible railcar supplier.
(d) TITLE AND RISK OF LOSS: Title to Product and risk of loss
shall pass to Dal-Tile upon completion of loading of each railcar or truck and
placement in readiness for haulage.
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4. PRODUCT SPECIFICATIONS.
(a) SUBMISSION OF MINING PLAN BY WOLD: All Product will be produced
and delivered in conformance with (1) the Specifications and (2) the terms and
conditions of this Supply Agreement. Prior to each Annual Period during the
Term of this Supply Agreement, Wold shall submit to Dal-Tile, for Dal-Tile's
reference, Wold's mining plan sufficient to meet Dal-Tile's supply needs for the
Annual Period as projected in the Supply Requirement Notification; provided,
however, Wold shall submit its mining plan on or before March 31, 2000 for the
initial year of the Term.
(b) DAL-TILE'S RIGHT OF INSPECTION: Wold will provide Dal-Tile with
Inventory Reports. Wold shall provide Dal-Tile with reasonable opportunity to
inspect the Product for which Inventory Reports are provided. In its Mining
Plan, Wold shall prepare blended stockpiles of talc that shall meet
Specifications. The stockpiles will be sampled according to sampling procedures
in the Specifications. Stockpile samples and results of Wold's testing of those
samples will be forwarded to Dal-Tile for evaluation and approval. If Dal-Tile
wishes, it may further test the samples at its own cost. If the Specifications
are not met, additional talc will be added so as to assure conformance with
Specifications at Wold's sole expense. Thereafter, Wold may load talc from the
approved stockpiles into railcars or trucks provided by Dal-Tile as required to
meet Dal-Tile's supply orders.
If Wold does not load talc from approved stockpiles and the talc from
unapproved stockpiles does not conform to the Specifications, Wold shall
promptly take steps necessary to meet Specifications. In order to remedy such
non-conformance, Wold shall ship at Dal-Tile's election and instructions such
replacement Product (i) for blending to enable non-conforming talc to meet
Specifications or (ii) for replacement of the non-conforming talc. Such
additional or replacement Product shall be at Wold's cost.
(c) QUALITY DISPUTE: In the event that a dispute arises between
the parties hereto with respect to any matter concerning whether the Product
conforms to the Specifications, either
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party hereto may refer the matter in issue for final determination by the agreed
expert who shall be Frank A. Alsobrook. In the event such expert is unavailable
to make such final determination or unwilling to do so, the parties shall
mutually agree as to another expert to be used. The parties shall use their best
efforts to assist the expert, as necessary. Such expert shall make the
determination within thirty (30) days after the issue is referred to the expert
for final determination, and such determination shall be binding upon the
parties. If either or both of the parties elect to use this provision, the costs
of the expert shall be shared equally.
(d) WOLD'S NON-PERFORMANCE: Subject to the provisions of Section
7(a) of this Supply Agreement, Wold agrees to the following remedies upon its
non-performance to provide Product as specified in this Paragraph:
(i) WOLD'S AGREEMENT TO COVER: In the event that Wold
is unable to deliver the Product in conformance with the Specifications
and the terms and conditions of this Supply Agreement, and such
non-performance continues for a period in excess of fourteen (14)
consecutive days after Dal-Tile's notice of non-performance, Dal-Tile
may, at its option, procure the Product from an alternative source. In
such event, Wold shall pay Dal-Tile, within ten (10) days after receipt
of an invoice, the difference between the commercially reasonable
replacement price (plus freight) paid by Dal-Tile and the Price (as set
forth in Exhibit B) plus freight.
(ii) DAL-TILE'S RIGHT TO REPURCHASE: Dal-Tile shall have the
further remedy for non-performance as provided in this section 4(d)(ii).
In the event that Wold is unable to deliver the Minimum Supply
Requirement of the Product in conformance with the Specifications and
such non-performance continues for a period in excess of sixty (60) days
after Dal-Tile's notice of non-performance and further provided Wold has
not furnished alternative supplies of the Product to fulfill the Minimum
Supply Requirements, Dal-Tile may, at its option, exercisable by written
notice to Wold within thirty (30) days after the expiration of the
foregoing 60-day period, terminate its
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obligations under this Supply Agreement and/or purchase the Premises upon
the following terms and conditions:
(1) If Dal-Tile elects to purchase the Premises under this
section 4(c), the purchase price to be paid shall be an
amount equal to the purchase price paid for the Premises by
Wold to Dal-Tile pursuant to the Purchase and Sale
Agreement dated December 21, 1999 (the "Purchase
Agreement"), LESS an amount equal to (i) the percentage of
talc reserves produced and taken from the Premises (except
the Loyce Nos. 1 and 2 Mining Claims) by Wold from and
after the Effective Date through the time of Dal-Tile's
purchase pursuant to the terms of this section, and (ii)
the percentage of talc reserves located on or under any
part of the Leases and the Mining Claims (as such terms are
defined in Exhibit C hereto) that Dal-Tile acquires (or
that Dal-Tile does not elect to acquire) in accordance with
section 12(l) (except the Loyce Nos. 1 and 2 Mining Claims)
from and after the Effective Date through the time of
Dal-Tile's purchase pursuant to the terms of this section.
For the sole purpose of the foregoing provisions, the
parties hereby agree that the proven talc reserves as of
the Effective Date are nine million (9,000,000) tons for
all of the Premises except the Loyce Nos. 1 and 2 Mining
Claims.
(2) The closing of the purchase of the Premises by Dal-Tile
shall be held at the offices of Dal-Tile, 7834 C.F. Hawn
Freeway, Dallas, Texas 75217, on the date that is
forty-five (45) days after the date of Dal-Tile's election
to purchase the Premises hereunder, or on such earlier date
or at such other place as Dal-Tile may designate by written
notice to Wold. At the closing, (i) Wold shall convey the
Premises to Dal-Tile by general warranty deed (or, in the
case of mineral leases, by assignment with covenants of
general
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warranty, and in the case of equipment and other personal
property, by bill of sale with covenants of general
warranty), subject only to the same title exceptions to
which the Premises were subject when they were sold by
Dal-Tile to Wold, (ii) Dal-Tile shall pay the purchase
price to Wold in cash, and (iii) Wold and Dal-Tile shall
execute and deliver such other instruments and take such
other actions as are reasonably necessary to consummate the
sale and purchase of the Premises and vest title to the
Premises in Dal-Tile.
(3) At any time and from time to time prior to the closing of
Dal-Tile's repurchase of the Premises, Dal-Tile shall have
the right and license to enter reasonably upon the Premises
and commence the operation and production of the Product to
assure production and delivery of the Product to Dal-Tile
in conformance with the Specifications.
(4) Dal-Tile shall be entitled to recover all damages incurred
by Dal-Tile due to the loss of production and/or defective
Product delivered by Wold before Dal-Tile's election to
repurchase the Premises; provided that if Dal-Tile
exercises its election to repurchase the Premises, Wold
shall have no further obligations under this Supply
Agreement except such claims for damages.
5. INVOICE AND PAYMENT.
(a) WOLD'S INVOICE AND PAYMENT: During the Term, Wold shall invoice
Dal-Tile monthly (or, at Wold's option, semi-monthly) for the Product delivered
during such month, or semi-monthly period, as applicable. The invoice shall set
forth the quantities of Product delivered in accordance with this Supply
Agreement, the Price for such Product (determined in accordance with Exhibit B
hereto), and the destination of such Product. Each invoice will be due
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and payable by wire transfer within thirty (30) days after Dal-Tile's receipt of
such invoice. In the event Dal-Tile disputes any portion of the billed amount,
the disputed portion need not be paid until the parties resolve the dispute, at
which time Dal-Tile shall pay the determined amount, together with interest at 1
% per each month that the disputed portion was not paid.
(b) PRICE DETERMINATION: Wold shall invoice Dal-Tile at the price
("Price") for the Product calculated in accordance with Exhibit B.
(c) PAYMENT FOR MINIMUM SUPPLY REQUIREMENT NOT TAKEN : Following
the end of each Annual Period, Wold shall invoice Dal-Tile for the Annual
Shortfall at the Price as determined in section 5(b). Dal-Tile shall pay the
invoice as provided in section 5(a). Wold shall not be required to provide
Product for the Annual Shortfall.
6. INSPECTION, QUALITY CONTROL, COST CONTROL AND INFORMATION
(a) WOLD'S MAINTENANCE OF RECORDS: Throughout the Term and for
three years after the termination or expiration of this Supply Agreement for any
reason, Wold shall keep and maintain full, complete, and detailed records of its
operations under this Supply Agreement. Subject to Section 10 below, Wold will
provide Dal-Tile and its representatives from time to time, as reasonably
requested by Dal-Tile, access during normal working hours to all books, records
and documentation relevant to quality control processes and checks in order for
Dal-Tile or its representatives to audit and verify records regarding, and to
inspect the operations related to, the production and delivery of Product in
accordance with this Supply Agreement. Such access will be exercised in such a
manner as to avoid unreasonable interference with operations. Each party in an
audit shall be responsible for its own costs. In the event of quality disputes,
Wold shall have the right to audit Dal-Tile's quality control process, records
and documentation related to delivery of the Product.
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(b) SAMPLE SUBMISSIONS: As reasonably requested by Dal-Tile, Wold
will submit samples of Product (in quantities reasonably acceptable to Dal-Tile
to allow it to test the Product) to Dal-Tile at no cost to Dal-Tile. The samples
of the Product shall be submitted in the form to be delivered to Dal-Tile
pursuant to the terms of sections 3 and 4 of this Supply Agreement.
7. FORCE MAJEURE; DEFAULT.
(a) FORCE MAJEURE: Non-performance or delays by either party in
the performance of its obligations under this Supply Agreement will be excused
if due to any cause beyond that party's reasonable control, including by way of
example only and not limitation, acts of God, governmental laws, rules, or
regulations, wars, fires, or the elements; provided, however, that such party
will be excused from its obligations under this Supply Agreement only (i) to the
extent and for the period in which such cause delays or prevents performance,
(ii) if such party immediately notifies the other party of any such actual or
anticipated nonperformance, and (iii) if such party, in cases where the
non-performance is curable or its adverse impact on the other party could be
reduced under any reasonable available means (such as, by way of example only
and not limitation, shifting or using additional sources of production or
arranging for alternative transportation), immediately uses its best efforts,
including taking all economically reasonable action necessary, to rectify such
barrier to its performance and permit such party to fully perform as soon as
possible. Upon Dal-Tile's approval, Wold shall be permitted to make up Product
not produced pursuant to this section 7 provided Dal-Tile has not procured
Product from an alternative source in the interim.
(b) DEFAULT NOT EXCUSED BY PARAGRAPH 7(a): If either party defaults
in the performance of its obligations under this Supply Agreement and such
default is not excused under Paragraph 7(a), the non-defaulting party
immediately will notify the defaulting party of such default and the time to
cure such default, which time will be 30 days (except a default, in the
production and delivery of Product in accordance with the Specifications, which
shall be as
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set forth in section 4 herein), after the defaulting party receives such notice
of the default. If the default continues uncorrected beyond the specified time
period, the non-defaulting party will be entitled to give written notice of its
intent to terminate this Supply Agreement if the default is not cured within
three days after such second notice. If the default is not cured within three
days after such second notice, this Supply Agreement may be terminated at the
option of the non-defaulting party. The termination of this Supply Agreement in
whole or in part pursuant to this Section 7(b) will not relieve either party
from the obligations in this Supply Agreement which survive termination and will
not preclude any party from recovering damages resulting from the breach of this
Supply Agreement by the other party, and no pursuit or exercise of any right or
remedy by any party shall preclude pursuit or exercise of any other right or
remedy available to such party; provided, however, that if Dal-Tile exercises
its right under sections 4(d)(ii), 11(c) and 12(l) of this Supply Agreement, it
shall have the right to specifically enforce the provisions of sections
4(d)(ii), 11(c) and 12(l) but shall have no other remedy available to it for any
breach of the Supply Agreement except as provided in such sections.
(c) NO ESTOPPEL OR WAIVER:No failure by any party to exercise any
right given in this Supply Agreement or to insist on strict compliance by the
other party of any obligation under this Supply Agreement will constitute a
waiver of the party's right to later demand exact compliance with the terms of
this Supply Agreement.
(d) LIMITED SURVIVAL OF RIGHTS, OBLIGATIONS AND CAUSES OF ACTION:
Upon termination of this Supply Agreement except pursuant to sections 4(d)(ii)
of this Supply Agreement, all right, obligations, and causes of action accruing
hereunder prior to such termination shall survive, and the provisions of this
Supply Agreement shall continue to be controlling for the purpose of determining
the rights of the party hereto with respect to the subject matter thereof.
8. INDEMNIFICATION/LIABILITY.
(a) Wold agrees to indemnify and hold harmless Dal-Tile from and
against all loss, cost, and expense (including reasonable attorney's fees, but
specifically excluding consequential
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damages) arising out of claims, actions or judgments by third parties against
Dal-Tile to the extent caused by the negligence or willful misconduct of Wold.
(b) Dal-Tile agrees to indemnify and hold harmless Wold from and
against all loss, cost, and expense (including reasonable attorney's fees, but
specifically excluding consequential damages) arising out of claims, actions or
judgments by third parties against Wold to the extent caused by the negligence
or willful misconduct of Dal-Tile.
(c) The parties agree that (i) Dal-Tile shall remain responsible for
any liability resulting from its actions as the former operator of the Premises
prior to the Effective Date, and (ii) Wold shall be responsible for its actions
from and after the Effective Date. The parties agree to cooperate with each
other and any local, state or federal agency to minimize any environmental
liability or other liability.
(d) Wold agrees to defend and indemnify Dal-Tile for any environmental
liability created by Wold's operations of the Premises. Dal-Tile agrees to
defend and indemnify Wold for any environmental liability created by Dal-Tile's
operations of the Premises.
(e) If Wold has not transferred ownership of the Premises, Wold and
Dal-Tile agree that work for which Dal-Tile is responsible that is necessary for
environmental remediation or reclamation at the Premises shall be billed to
Dal-Tile at the same rate at which Wold charges itself internally for such work
if the work is performed by or on behalf of Wold.
(f) The indemnities and liabilities under this Section 8 shall survive
any termination or expiration of this Supply Agreement.
9. NOTICES.
Unless otherwise provided herein, all notices and other communications
hereunder shall be in writing and shall be deemed to have been sufficiently
given or served for all purposes:
(a) when deposited in the mail, if sent by registered or certified mail (return
receipt requested); or
(b) when delivered, if delivered personally or if sent by overnight mail or
overnight courier, in
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each case to the parties at the following addresses, or at such other addresses
as shall be specified by like notice given at least ten (10) days prior to the
effective date of such change of address:
If to Wold: Wold Talc Company, Inc.
Mineral Resource Center, Suite 200
139 West Second Street
Casper, Wyoming 82601-2462
Facsimile: (307) 265-7336
Attention: John S. Wold, Chairman
With a copy to:
James A. Herickhoff, Chief Operating Officer
5123 East County Road 52
Fort Collins, CO 80524
Facsimile: (970) 498-9849
If to Dal-Tile: Dal-Tile Corporation
7834 C.F. Hawn Freeway
Dallas, Texas 75217
Facsimile: (214) 309-4300
Attention: Mark A. Solls, Vice President
With a copy to:
William R. Hanks, Vice-President
Dal-Tile Corporation
7834 C.F. Hawn Freeway
Dallas, Texas 75217
Facsimile: (214) 309-4300
The Parties agree that any notice shall also be sent by facsimile to the number
indicated above or as later changed by written notice; provided that notice
shall be effective if served, mailed or sent by overnight courier as provided
above.
10. CONFIDENTIALITY.
The parties have executed a Confidentiality Agreement of even date, that
by this reference, shall become part of this Supply Agreement.
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11. BENEFICIARIES; ASSIGNMENT; RIGHT OF FIRST REFUSAL.
(a) RIGHTS OF ASSIGNMENT: The rights, benefits, duties and
obligations under this Supply Agreement may be assigned by either party with
prior written consent of the other Party which will not be unreasonably
withheld. However, such assignment shall not relieve the assigning Party of its
duties and obligations under the Supply Agreement should any subsequent assignee
default under the Supply Agreement. Subject to the foregoing, this Supply
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, legal representatives, successors and
assigns; provided that such assignee agrees to be bound by the terms of this
Supply Agreement. By way of illustration, but not limitation, any subsequent
assignee of Wold shall assume the obligations found in Sections 4(d)(ii), 11(c)
and 12(l) of this Supply Agreement.
(b) INSOLVENCY AND BANKRUPTCY: No person, firm, or corporation will
succeed to any of the rights of a party under this Supply Agreement by virtue of
any voluntary or involuntary proceeding in bankruptcy, receivership, attachment,
execution, or assignment for the benefit of creditors, or other legal process.
(c) DAL-TILE'S RIGHT OF FIRST REFUSAL: Wold hereby grants to Dal-Tile
an irrevocable, exclusive right of first refusal to purchase Wold's assets that
would include the Premises or the stock of Wold upon the following terms and
conditions. If there is a bona fide third party offer to purchase (1) a
controlling interest in Wold, (2) the Premises or (3) all or substantially all
of Wold's assets that would include the Premises (each, a "Proposed
Transaction"), Wold shall first deliver to Dal-Tile a written notice (a "First
Refusal Notice") specifying (i) the aggregate amount of consideration and the
form of such consideration (the "Offer Price"), and (ii) all other material
terms of the Proposed Transaction, along with a true and correct copy of the
written offer from the third party (the "Sale Document").
Dal-Tile shall have a period of fifteen (15) days following receipt of
the First Refusal Notice (the "Notice Period") to elect to exercise its right to
purchase Wold's shares or the assets
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being sold upon the same terms and conditions as are set forth in the Sale
Document by delivering written notice of such election (the "Exercise Notice")
to Wold and simultaneously depositing with Wold earnest money in the amount of
$100,000, which shall be applied to the purchase price. In the event that
Dal-Tile exercises its right of first refusal pursuant to this section, then
within ten (10) days after Dal-Tile's election, Dal-Tile and Wold shall enter
into a purchase and sale agreement upon the terms set forth in the Sale Document
(except as otherwise provided herein). Any study or diligence period under such
purchase and sale agreement shall be limited to thirty (30) days from the date
of the Exercise Notice in order to allow Dal-Tile to update title and conduct
diligence related to matters such as environmental compliance; provided that
Dal-Tile shall not require more marketable title than that conveyed to Wold as
part of the Purchase Agreement. Nor shall Dal-Tile require any more specific or
broader representations, warranties or indemnification concerning environmental
mattes than Wold required of Dal-Tile in the Purchase Agreement.
If Dal-Tile exercises its right of first refusal under this Supply
Agreement, the purchase and sale agreement shall provide for a closing date of
not more than sixty (60) days following the date of the Exercise Notice. If
Dal-Tile either fails to timely exercise its right of first refusal or does not
timely conclude the sale with Wold, Wold shall be free to conclude the Proposed
Transaction with the third party purchaser who entered into the Sale Document
(but not to any other party or person) on substantially the same material terms
and conditions as are contained in the Sale Document, provided such Proposed
Transaction is concluded within 180 days following the expiration of the Notice
Period and if concluded, Dal-Tile shall be deemed to have consented to the
assignment of this Supply Agreement to such third-party purchaser. In the case
of assignment, the transferee shall assume all of the transferor's obligations
under this Supply Agreement and Dal-Tile's right of first refusal under this
section shall be continuing and remain
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in effect as to each Proposed Transaction arising during the Term of this Supply
Agreement. If a Proposed Transaction is not consummated within such 180-day
period on substantially the same material terms and conditions as are contained
in the Sale Document, Dal-Tile's rights pursuant to the right of first refusal
shall be revived. For purposes of this Section 1l(c), a bona fide third party
offer for Wold to sell, indirectly or directly, controlling interest in Wold
shall be deemed a "Proposed Transaction" hereunder and shall trigger Dal-Tile's
right of first refusal under this Section 1l(c).
12. MISCELLANEOUS.
(a) SEVERABLE CONDITIONS. If any provision of this Supply
Agreement is held to be void, invalid, or unenforceable, such provision will
be construed as severable and will not in any way affect or render void,
invalid, or unenforceable any other provision of this Supply Agreement, and
this Supply Agreement will be carried out as if such void, invalid, or
unenforceable provision was not a part of this Supply Agreement.
(b) WAIVER AND MODIFICATION. The terms of this Supply Agreement may
not be amended, altered, waived, modified, or discharged except by an express
declaration in writing on behalf of the parties by duly authorized officers and
referring specifically to this Supply Agreement, and no separate oral or other
written agreement which may be made between any of the parties' employees will
in any way modify this Supply Agreement. Furthermore, any waiver of the
requirements of this Section 12(b) likewise must be explicit and in a writing
signed by a duly authorized representative of each party.
(c) SURVIVAL. All of party's rights and privileges provided under
this Supply Agreement, to the extent they are fairly attributable to events or
conditions occurring or existing on or prior to the expiration or termination of
this Supply Agreement, will survive the expiration or termination and be
enforceable by the party and its successors and assigns.
(d) GOVERNING LAW. THIS SUPPLY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
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STATE OF TEXAS, EXCLUDING PROVISONS OF SUCH LAW REFERRING SUCH MATTERS TO THE
LAW OF ANOTHER JURISDICTION.
(e) BINDING ARBITRATION.
(i) GENERAL. Any dispute between Seller and Purchaser as
to the interpretation of any provision of this Purchase and
Sale Agreement or the rights and obligations of any party
hereunder shall be resolved through binding arbitration as
hereinafter provided in Dallas, Texas. The parties agree to
seek amicable resolution before submission to arbitration.
(ii) SELECTION OF ARBITRATOR. If arbitration is required to
resolve a dispute between Seller and Purchaser, either
Seller or Purchaser will notify the Dallas office of the
American Arbitration Association ("AAA") and request AAA to
select one person to act as the arbitrator for resolution
of this dispute.
(iii) RULES OF ARBITRATION. The arbitrator selected
pursuant to Section 12(e)(ii) will establish the rules for
proceeding with the arbitration of the dispute, which will
be binding upon all parties to the arbitration proceeding.
The arbitrator may use the rules of AAA for commercial
arbitration but is encouraged to adopt the rules the
arbitrator deems appropriate to accomplish the arbitration
in the quickest and least expensive manner possible.
Accordingly, the arbitrator may (1) dispense with any
formal rules of evidence and allow hearsay testimony so as
to limit the number of witnesses required, (2) accept
evidence of property values without formal appraisals and
upon such information provided by Seller and Purchaser or
other persons and otherwise minimize discovery procedures
as the arbitrator deems appropriate, (3) act upon his or
her understanding or interpretation of the law on any issue
without the obligation to research the issue or accept or
act upon briefs of the issue
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prepared by any party, (4) limit the time for presentation
of any party's case as well as the amount of information or
number of witnesses to be presented in connection with any
hearing, and (5) impose any other rules that the arbitrator
believes appropriate to effect a resolution of the dispute
as quickly and inexpensively as possible. In any event, the
arbitrator (A) shall permit each side no more than two
depositions (including any deposition of experts), which
depositions may not exceed four hours each, one set of ten
interrogatories (inclusive of sub-parts) and one set of
five document requests (inclusive of sub-parts), (B) shall
not permit any requests for admissions, (C) shall limit the
hearing, if any, to two days, and (D) shall render his or
her decision within 60 days of the filing of the
arbitration.
(iv) COSTS OF ARBITRATION. The arbitrator will have the
exclusive authority to determine and award costs of
arbitration and the costs incurred by any party for its
attorneys, advisors and consultants.
(v) AWARD OF ARBITRATOR. Any award made by the arbitrator shall
be binding on Seller, Purchaser and all parties to the
arbitration and shall be enforceable to the fullest extent
of the law.
(vi) GOVERNING LAW; ACTUAL DAMAGES; ETC. In reaching any
determination or award, the arbitrator will apply the laws
of the State of Texas, excluding provisions of such law
referring such matters to the law of another jurisdiction.
The arbitrator's award will be limited to actual damages
and will not include punitive or exemplary damages. Nothing
contained in this Purchase and Sale Agreement will be
deemed to give the arbitrator any authority, power or right
to alter, change, amend, modify, add to or subtract from
any of the provisions of this Purchase and Sale Agreement.
All privileges under state and federal law, including,
without limitation,
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attorney-client, work product and party communication
privileges, shall be preserved and protected. All experts
engaged by a party must be disclosed to the other party
within 14 days after the date of notice and demand for
arbitration is given.
(f) DESCRIPTIVE HEADINGS. The descriptive headings of the
Sections in this Supply Agreement are inserted for convenience only and do not
constitute a part of this Supply Agreement.
(g) COUNTERPARTS. This Supply Agreement may be executed in two
original counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument representing the
agreement of the parties.
(h) ENTIRE AGREEMENT; EXHIBITS. This Supply Agreement, together with
the Purchase and Sales Agreement and Confidentiality Agreement, supersede all
former agreements, understandings, communication, and negotiations between the
parties relating to any and all of the matters for which provision is made under
this Supply Agreement. The following Exhibits are incorporated by reference;
Exhibit A - Product; Exhibit B - Price; and Exhibit C - Premises.
(i) INDEPENDENT CONTRACTORS. The parties hereto agree that each is
acting as an independent contractor and not in an employer-employee or agency
relationship with one another.
(j) ATTORNEYS' FEES. In the event of arbitration between the
parties in connection with this Supply Agreement, the prevailing party shall be
entitled to recover its reasonable attorneys' fees and costs from the non-
prevailing party.
(k) MEMORANDUM OF AGREEMENT. Concurrently with the full execution
and delivery of this Supply Agreement, the parties hereto shall execute,
acknowledge, and record in the Real Property Records of Hudspeth County, Texas,
a memorandum of this Supply Agreement containing the terms of Dal-Tile's
purchase option under section 4(c), Dal-Tile's right of first refusal under
section 11(c), Dal-Tile's right to acquire portions of the Premises
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under section 12(l), and such other terms of this Supply Agreement as Dal-Tile
shall deem necessary to give third parties notice of Dal-Tile's purchase rights
and other remedies hereunder.
(l) MAINTENANCE OF AGREEMENTS; ENCUMBRANCES. Except as otherwise
provided in this Section, Wold (i) shall timely comply with the terms and
conditions of, and timely pay and perform all obligations of the lessee
under, all mineral leases, easements or surface use agreements that are part
of the Premises as assumed by Wold under the Purchase Agreement, (ii) shall
maintain all such mineral leases, easements or surface use agreements that
are part of the Premises as assumed by Wold under the Purchase Agreement in
full force and effect, (iii) without the prior written consent of Dal-Tile,
shall not modify or amend such mineral leases that would adversely affect the
interests of Dal-Tile under this Supply Agreement or increase the obligations
of the lessee or owner of the Premises, and (iv) shall not encumber the
Premises or grant any person or entity any right, interest or estate in the
Premises or any part thereof; provided, that Wold may grant a deed of trust
and security agreement in favor of its senior lender as long as the lien
thereof and the rights of the secured party thereunder are subordinate to
Dal-Tile's purchase option under section 4(d) (ii), Dal-Tile's right of first
refusal under section 11 (c), and Dal-Tile's right to acquire portions of the
Premises under this section 12(l), and further provided that all funds due
under such sections shall be paid jointly to Wold and the senior lender, if
any, provided Dal-Tile has received written notice from Wold of the name and
address of such senior lender. If Wold determines that the continued
maintenance of a lease, easement or surface use agreement is not economically
feasible, Wold shall provide notice to Dal-Tile of its determination.
Dal-Tile shall have the right to have assigned to it such lease, easement or
surface use agreement for which notice has been given. Dal-Tile's election to
require assignment shall be made by notice to Wold within thirty (30) days
after Wold provides notice of its determination and Wold shall provide
executed documents assigning or conveying its interests to Dal-Tile (with the
same warranties of title and subject to the same exceptions to title as were
contained in the documents under which Dal-Tile conveyed such interests to
Wold pursuant to the Purchase Agreement) within thirty (30) days of such
notice. Until executed
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conveyance documents are delivered by Wold to Dal-Tile, Wold shall maintain and
keep the lease, easement or surface use agreement in full force and effect.
After Wold delivers appropriate conveyance documents to Dal-Tile or if Dal-Tile
does not give notification to Wold of Dal-Tile's election to have the lease,
easement or surface use agreement re-assigned to Dal-Tile, Wold shall have no
further duty to maintain such leases or timely pay or perform the obligations
under such lease, easement or surface use agreement under this section 12(l);
provided, that nothing in this section 12(l) shall release Wold from (i) Wold's
obligations to supply Product to Dal-Tile and to comply with all other terms and
provisions of this Supply Agreement, or (ii) Wold's obligations under any
document evidencing the conveyance or assignment of such lease, easement or
surface use agreement by Dal-Tile to Wold pursuant to the Purchase Agreement
(provided, that nothing is this clause (ii) is intended to prevent Wold from
terminating easements or surface use agreements pursuant to their terms).
(m) DAL-TILE'S TERMINATION OPTION. Dal-Tile shall have the option
to terminate this Supply Agreement at any time upon one hundred eighty (180)
days prior written notice to Wold, provided that the effective termination date
(the "Early Termination Date") shall not be earlier than January 1, 2005. If
Dal-Tile exercises its right to terminate this Supply Agreement under this
section 12(m), Dal-Tile shall pay Wold the Termination Fee (as defined below) on
the Early Termination Date, and the Term shall end on the Early Termination Date
(without automatic renewal under section 2). As used in this Section, the
"Termination Fee" shall mean:
(i) Three million dollars ($3,000,000.00) if the Early Termination
Date occurs before January 1, 2006;
(ii) Two Million Five Hundred Thousand Dollars ($2,500,000.00) if the
Early Termination Date occurs on or after January 1, 2006 but
before January 1, 2007;
(iii) Two Million Dollars ($2,000,000.00) if the Early Termination Date
occurs on or after January 1, 2007 but on or before December 31,
2009; or
(iv) No dollars ($0.00) after December 31, 2009.
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(n) INDEMNIFICATION PROCEDURE. Any claim for indemnity under any
provision in this Supply Agreement shall be made by written notice from the
party seeking indemnification (the "Indemnified Party") to the party required to
provide same (the "Indemnifying Party"), together with a written description of
any third-party claim against the Indemnified Party, stating the nature and
basis of such claim and, if ascertainable, the amount thereof. The Indemnifying
Party shall have a period of thirty (30) days after receipt of such notice
within which to respond thereto or, in the case of a third-party claim which
requires a shorter time for response, then within such shorter period as
specified by the Indemnified Party in such notice (the "Notice Period"). If the
Indemnifying Party denies liability or fails to respond to the notice within the
Notice Period, the Indemnified Party may defend or compromise the claim as it
deems appropriate without prejudice to any of the Indemnified Party's rights
hereunder, with no further obligation to inform the Indemnifying Party of the
status of the claim and no right of the Indemnifying Party to approve or
disapprove any actions taken in connection therewith by the Indemnified Party.
If the Indemnifying Party accepts liability, it shall so notify the Indemnified
Party within the Notice Period and elect either (a) to undertake the defense or
compromise of such third-party claim with counsel selected by the Indemnifying
Party and reasonably approved by the Indemnified Party or (b) to instruct the
Indemnified Party to defend or compromise such claim. If the Indemnifying Party
undertakes the defense or compromise of such third-party claim, the Indemnified
Party shall be entitled, at its own expense, to participate in such defense. No
compromise or settlement of any third-party claim shall be made without
reasonable notice to the Indemnified Party and, unless such compromise or
settlement includes a general release of the Indemnified Party in respect of the
matter with no admission of liability on the part of the Indemnified Party and
no constraints on the future conduct of its business, without the prior written
approval of the Indemnified Party.
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(o) NO THIRD-PARTY BENEFICIARIES. This Supply Agreement is solely for
the benefit of the parties hereto, their respective successors and assigns
permitted under this Supply Agreement, and no provisions of this Supply
Agreement shall be deemed to confer upon any other person or entity (including,
without limitation, any subsequent owner of the Premises) any remedy, claim,
liability, reimbursement, cause of action or other right.
IN WITNESS WHEREOF, this Supply Agreement has been duly executed by the
parties by their duly authorized respective officers as of the date noted above.
DAL-TILE CORPORATION
By:
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Name:
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Title:
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WOLD TALC COMPANY, INC.
By:
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Name:
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Title:
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