Exhibit 10.24
NOTE: The information designated by a bracketed asterisk ([*]) has been omitted
pursuant to a request for confidential treatment and has been filed separately
with the Securties and Exchange Commission.
SALES AGREEMENT
Nisseki Chemical Texas Inc., a Delaware corporation having facilities
at 10500 Bay Area Boulevard, Pasadena, TX 77507, hereinafter referred to as
"SELLER", manufactures and sells primary carbonless copy paper solvents under
the designations [*] and [*], having the Specifications set forth in Attachment
A ("[*]" and "[*]") and the Material Safety Data Sheets set forth in Attachment
B ("[*]" and "[*]"), hereinafter referred to as "PRODUCTS", and desires to sell
PRODUCTS to Appleton Papers Inc., a Delaware corporation with offices at 825 E.
Wisconsin Ave., Appleton, WI 54911, hereinafter referred to as "BUYER", desires
to purchase PRODUCTS from SELLER.
Now, therefore the parties agree as follows:
ARTICLE 1-0 OBLIGATION OF PARTIES
1-1 SELLER agrees to sell PRODUCTS to BUYER consistent with BUYER's need
for PRODUCTS, and BUYER agrees to purchase PRODUCTS from SELLER, all on
the following terms and conditions.
ARTICLE 2-0 QUANTITY
2-1 The quantity of PRODUCTS to be sold by SELLER and purchased by BUYER is
approximately 12,000,000 pounds of PRODUCTS per year. This amount is
only an estimate, and in no event shall BUYER be obligated to purchase
any certain amount of PRODUCTS from SELLER, except BUYER is obligated
to purchase, and SELLER is obligated to sell, a minimum of [*]
percent ([*]) of BUYER's requirements for petroleum derived primary
carbonless copy paper solvent from SELLER beginning no later than
January 1, 2002, and is obligated to increase this minimum to [*]
percent ([*]) by August 1, 2002. Further, BUYER shall have the
option to purchase, and SELLER agrees to sell, any additional portion
of BUYER's requirements according to procedures established in ARTICLE
5-0.
ARTICLE 3-0 TERM
3-1 The term of the Agreement is from January 1, 2002 through
December 31, 2005 and continuing year-to-year thereafter until
terminated as hereinafter provided.
ARTICLE 4-0 PRICE AND DELIVERY
4-1 The price of PRODUCTS shall be [*] for purchase orders issued from
January 1, 2002, through December 31, 2002.
4-2 For purchase orders issued from January 1, 2003 through December 31,
2005, the price of the PRODUCTS for any given calendar year shall be as
follows:
a) If total PRODUCTS purchased are equal to or greater than
9,000,000 pounds a year [*] for all PRODUCTS purchased in the
year;
b) If total PRODUCTS purchased are equal to or greater than
7,500,000 pounds but less than 9,000,000 pounds a year [*] for
all PRODUCTS purchased in the year;
c) If total PRODUCTS purchased are equal to or greater than
6,000,000 pounds but less than 7,500,000 pounds a year [*] for
all PRODUCTS purchased in the year;
d) If total PRODUCTS purchased are equal to or greater than
3,000,000 pounds but less than 6,000,000 pounds a year [*] for
all PRODUCTS purchased in the year;
e) If total PRODUCTS purchased are less than 3,000,000 pounds a
year [*] for all PRODUCTS purchased in the year.
4-3 The price of PRODUCTS includes all applicable freight and handling
charges to deliver PRODUCTS to BUYER's Portage, WI facility according
to BUYER's instructions.
4-4 The BUYER's forecasted annualized volume, to be provided SELLER in
accord with Article 5-0 herein, will determine the price for the
following year. If the BUYER does not meet the forecasted annualized
volume, BUYER will pay SELLER the difference between price paid based
upon the forecasted annualized volume and the price for the volume
actually shipped that calendar year, pursuant to the provisions of
Section 4-2, above. Such penalty shall be due and owing SELLER January
31 following the applicable calendar year. If the BUYER exceeds the
forecasted minimum, SELLER will pay BUYER the difference between the
price for the volume actually shipped that calendar year, pursuant to
the provisions of Section 4-2, above, and the price paid based upon the
forecasted annualized volume. Such credit shall be due and owing BUYER
January 31 following the applicable calendar year.
4-5 For the calendar year commencing January 1, 2006, and for each calendar
year thereafter, the price of PRODUCTS shall be mutually negotiated and
agreed to no later than October 1 preceding the applicable calendar
year. Once established, the price of PRODUCTS shall be valid for one
calendar year.
ARTICLE 5-0 SCHEDULE; INVENTORY
5-1 BUYER shall issue in writing to SELLER BUYER's estimated quarterly and
annual non-binding forecasts for PRODUCTS.
5-2 BUYER shall issue it's annual forecast so as to be received by SELLER
no later than October 31 for the following calendar year.
5-3 BUYER shall issue its quarterly forecasts so as to be received by
SELLER during the months of November, March, June, and September for
each following calendar quarter.
5-4 In any calendar month BUYER shall be entitled to receive, and SELLER
shall supply upon BUYER's request, up to twenty percent (20%) of
BUYER's respective annual forecast.
5-5 BUYER may reasonably revise estimated annual forecasts, once given, due
to changes in BUYER's actual requirements, provided, however, such
revision shall not place an unreasonable burden on SELLER.
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5-6 SELLER will maintain at least five (5) weeks supply of the PRODUCTS
consistent with the estimates provided by BUYER pursuant to this
ARTICLE 5 to provide BUYER with assurances of an uninterrupted supply
of the PRODUCTS. These quantities of inventory may be reviewed and
adjusted from time to time based upon BUYER'S actual purchases of the
PRODUCTS and based upon mutual agreement of the parties.
ARTICLE 6-0 CONTINGENT LIABILITY
6-1 SELLER recognizes that timely shipment of PRODUCTS to BUYER is of major
importance to BUYER. Subject to the Force Majeure provisions below, if
BUYER fails to receive a scheduled shipment in a timely manner due to
reasons within SELLER's control and BUYER suffers consequential damages
as a result in the form of a "charge back" from BUYER's customer,
SELLER will reimburse BUYER up to fifty percent (50%) of the "charge
back" subject to the following:
(I) The maximum payment for such "charge backs" during the
Agreement, in aggregate during any calendar year, shall not be
more than $150,000.
(II) SELLER reserves the right to, free of charge (including
freight charges), supply PRODUCTS valued at the then current
price to fully satisfy any payment.
ARTICLE 7-0 TITLE AND RISK OF LOSS
7-1 Title to and risk of loss of PRODUCTS shall pass to BUYER at the time
of delivery once the PRODUCTS passes from the dedicated transportation
vessel to the receiving flange of BUYER's receiving vessel in Portage,
WI.
ARTICLE 8-0 PAYMENT TERMS
8-1 Purchase orders will be issued by BUYER for all orders for PRODUCTS.
BUYER shall make payment for all PRODUCTS delivered hereunder-net
forty-five (45) days from the date of the bill of lading for each
shipment, as reflected per individual invoices.
8-2 The bill of lading shall be dated as of the date of shipment of
PRODUCTS from SELLER's facility in Pasadena, TX.
8-3 Notwithstanding any language herein, in no event and under no
circumstances shall BUYER be obligated to make payment for any PRODUCTS
prior to BUYER's receipt of such PRODUCTS at BUYER's facility in
Portage, WI.
ARTICLE 9-0 WARRANTIES AND LIABILITIES FOR PRODUCTS QUALITY
9-1 SELLER's warranty on PRODUCTS quality, characteristics, and performance
shall be that the PRODUCTS will meet the Specifications set forth in
Attachment A ([*]) and will be free from contaminants, and that
PRODUCTS will be in accordance with all applicable federal, state and
local laws and regulations. Except as set forth in this ARTICLE 9 and
in ARTICLE 10 below, all other descriptions, warranties, and guarantees
are hereby excluded, AND WITHOUT LIMITATION OF THE FOREGOING THERE IS
HEREBY EXCLUDED ALL IMPLIED WARRANTIES INCLUDING IMPLIED WARRANTIES OF
FITNESS FOR PURPOSE AND OF MERCHANTABILITY.
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9-2 SELLER shall provide a Certificate of Analysis on each shipment and
such other test data as may be reasonable and mutually agreed upon by
both parties provided that such Certificate of Analysis and other data
shall not alter the specifications for PRODUCTS.
9-3 If PRODUCTS should at any time not meet the warranty given in ARTICLE
9-1 above, then BUYER's sole remedy for such shall be to have SELLER
supply on-specification PRODUCTS to BUYER's plants in such quantity as
was off-specification and SELLER shall bear the shipping costs for such
quantities.
9-4 If PRODUCTS should at any time not meet BUYER's in-process
specifications and performance criteria and BUYER can provide objective
evidence to reasonably demonstrate such non-performance, then BUYER's
sole remedy for such shall be to have SELLER supply performing PRODUCTS
to BUYER's plants in such quantity as was non-performing and SELLER
shall bear the shipping costs for such quantities.
9-5 If SELLER's failure to supply on-specification or non-performing
PRODUCTS results in BUYER failing to receive a scheduled shipment of
on-specification or performing PRODUCTS in a timely manner, and BUYER
suffers consequential damages therefrom, the provisions of ARTICLE 6
shall apply.
ARTICLE 10-0 PATENT
10-1 SELLER represents and warrants that all PRODUCTS delivered hereunder
and the use thereof as delivered will not infringe any valid, unexpired
Letters Patent and that SELLER will at its own expense defend,
indemnify, and hold harmless BUYER from and against all claims,
demands, actions, and liability arising out of such infringements
subject to the following provisions of this Article.
10-2 SELLER's liability pursuant to this Article shall not extend to any
infringement where other materials are used with PRODUCTS such that the
composition or use with such other materials was necessary to
constitute the infringement.
10-3 Provided that SELLER selects counsel reasonably acceptable to BUYER and
pursues the defense diligently, BUYER shall give SELLER full
responsibility in the handling of the defense to any claim of
infringement. BUYER may retain its own counsel to defend the claim at
its own expense.
10-4 SELLER's maximum liability shall not exceed $2,000,000 (USD).
10-5 If such infringements are resolved to the mutual satisfaction of both
BUYER and SELLER, then SELLER reserves the right, free of charge, to
supply non-infringing PRODUCTS valued at the then current contract
price, as set forth herein, to fully satisfy payment. Otherwise,
payments will be made in US dollars.
ARTICLE 11-0 FORCE MAJEURE
11-1 SELLER and BUYER will be excused from the obligations of this Agreement
to the extent that performance of either is delayed or prevented by any
circumstances reasonably beyond its control, including but not limited
to Acts of God, fire, explosion, mechanical breakdown, strikes or other
labor disputes, plant shutdown, unavailability of or interference with
the usual means of transporting the PRODUCTS or inability to obtain raw
materials or energy for the manufacture of PRODUCTS, or compliance with
any law, regulation or request of any governmental authority.
11-2 The obligation of BUYER to pay for PRODUCTS received is never
suspended.
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11-3 If for reasons of Force Majeure SELLER is unable to timely provide
PRODUCTS to BUYER, SELLER will take all reasonable steps to find
substitute PRODUCTS for BUYER for the period of delayed performance.
Such substitute PRODUCTS will be provided to BUYER at the PRODUCTS
Price set forth in ARTICLE 4.
ARTICLE 12-0 INDEMNITIES
12-1 SELLER agrees to indemnify, defend, and hold harmless BUYER and any
contractor, agent, or employee of BUYER from and against all claims,
demands, losses, damages, actions, or liability of any kind, including
attorneys' fees, arising from SELLER's negligence or willful misconduct
under this Agreement.
12-2 BUYER agrees to indemnify, defend, and hold harmless SELLER and any
contractor, agent, or employee of SELLER from and against all claims,
demands, losses, damages, actions, or liability of any kind, including
attorneys' fees, arising from BUYER's negligence or willful misconduct
under this Agreement.
ARTICLE 13-0 LAWS
13-1 The Parties each represent and warrant that it shall, in the
performance of this Agreement, comply with all applicable United States
of America federal, state, and local statutes, rules of law,
ordinances, regulations, and regulatory orders.
ARTICLE 14-0 GOVERNING LAW
14-1 Except where inconsistent with the terms and conditions herein, this
Agreement shall be governed by the Wisconsin Uniform Commercial Code
provisions applicable to transactions in goods.
ARTICLE 15-0 ARBITRATION
15-1 All disputes, controversies, or differences which may arise between the
parties, out of or in relation to or in connection with this Agreement,
or for the breach thereof, shall be finally settled by arbitration in
New York in accordance with the rules of procedure of the American
Arbitration Association, and the awards there of shall be final and
binding upon the parties.
ARTICLE 16-0 ASSIGNMENT
16-1 Neither party shall assign, transfer, or otherwise dispose of this
Agreement in whole or in part, to any person, firm, or corporation
without prior written consent of the other party, which consent shall
not be unreasonably withheld. However, BUYER shall not be required to
obtain written consent from SELLER pursuant to this ARTICLE 16 prior to
the transfer of a majority of BUYER's common stock.
ARTICLE 17-0 TERMINATION
17-1 Either party may terminate this Agreement by giving written notice on
or before December 31, 2004 that termination shall be effective on
December 31, 2005, or by
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giving twelve (12) months written notice of termination on or before
December 31 of any following year, such termination to be effective on
the subsequent contract anniversary date.
17-2 Either party may terminate this Agreement for a material breach by the
other party of its obligations hereunder, if after thirty (30) days
after the defaulting party receives written notice of its default the
default has not been remedied.
17-3 This Agreement shall automatically terminate in either of the two
following situations:
(I) either party makes an assignment for the benefit of creditors, or
(II) a receiver is appointed for either party.
ARTICLE 18-0 ENTIRE AGREEMENT
18-1 This Agreement constitutes the entire agreement between the parties
and there are no understandings, representations, or warranties of any
kind, expressed or implied, not expressly set forth herein. In the
event of any inconsistency between the provisions of this Agreement
and any of BUYER's purchasing terms and conditions, the provisions of
this Agreement shall prevail.
18-2 No modification of this Agreement shall be of any force or effect
unless such modification is in writing and signed by the party to be
bound thereby, and no modification shall be effected by acknowledgment
or acceptance of purchase order forms or receipt of acknowledgement or
invoice forms containing terms and conditions at variance with those
set forth herein or in addition to those set forth herein.
ARTICLE 19-0 WAIVER
19-1 The failure of either party to enforce any right or provision hereof
shall not be considered a waiver by such party of its right to enforce
such right or provision in the future.
ARTICLE 20-0 TECHNICAL EXCHANGE
20-1 Both parties recognize that Technical Service is extremely important
for the carbonless copy paper business. SELLER maintains an ongoing
testing and development facility in SELLER's Research Laboratory in
Kawasaki City Japan. As part of this Agreement, BUYER and SELLER agree
to participate in Technical Exchange Meetings two times per year for
the mutual benefit of both parties. The meetings shall rotate between
Appleton, WI, Pasadena, TX, and Kawasaki City, Japan unless said
locations are changed by mutual agreement of both parties.
21-0 ARTICLE TECHNICAL SUPERIORITY; THIRD PARTY IMPROVEMENTS
21-1 If, during the term of this Agreement, BUYER identifies third-party
product(s) which demonstrate technology, quality, or health or safety
improvements, BUYER may replace the PRODUCTS with the third party
product provided: (1) BUYER provides written notice to SELLER that
BUYER has identified a third party product improvement; (2) BUYER, to
the extent BUYER is able to disclose such information, provides SELLER
with a functional description of the third party product; (3) SELLER
is given one hundred twenty (120) days from the date of BUYER's
written notice to develop a
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product that is equivalent or substantially equivalent, in BUYER's
judgment, to the third party product; and (4) SELLER is unable to
provide an equivalent product at substantially the same cost. BUYER is
not prevented under this clause from using improved products if BUYER
is unable to disclose sufficient information to enable SELLER to
develop an equivalent product. If the third party product improvement
relates to health or safety issues, SELLER agrees to immediately
release the product from the quantity requirements of this Agreement
as of the date of BUYER's written notice and continuing through the
one hundred twenty (120) day development period afforded SELLER. If
SELLER is able to develop an equivalent product, and SELLER and the
third party's product performance is equal, and the only issue is
pricing of the product; SELLER shall have the right of refusal to
either meet the price or release the product from the quantity
requirements of this Agreement.
ARTICLE 22-0 NOTICES
22-1 All notices required to be given hereunder will be in writing and
deemed to have been given if mailed to the other party at the address
given below or at such other address as may have been substituted in
writing therefore.
APPLETON PAPERS INC. NISSEKI CHEMICAL TEXAS INC.
PO Box 359 10500 Bay Area Boulevard
Appleton, WI 54912 Pasadena, TX 77507
Attn: Peter A. Komlos Attn: Smith E. Howland
ARTICLE 23-0 EQUAL OPPORTUNITY
23-1 Because of certain contracts under which BUYER provides goods, either
to the federal government or to others who use BUYER's Services in
connection with federal government contract work, BUYER may be covered
by laws regarding affirmative action in employment. These laws require
that BUYER make certain affirmative action clauses a part of its
contracts with Contractors, vendors, and (sub)Contractors. Therefore,
if applicable, the following clauses are incorporated into this
Agreement by reference, as if they were set forth in their entirety.
(1) For contracts that exceed $10,000 or for contracts in any amount
which, in the aggregate, exceed $10,000 in any twelve month period:
the Federal Equal Employment Opportunity Clause regarding minorities
and females. 41 CFR 60-1.4; FAR 52.222-26.
(2) For contracts exceeding $10,000: the Federal Equal Employment
Opportunity Clause regarding persons with disabilities; and the
Federal Equal Employment Opportunity Clause regarding special disabled
veterans and veterans of the Vietnam era. 41 CFR 60-741.5 and 41 CFR
60-250.5; FAR 52.222-35, 36.
ARTICLE 24-0 EFFECTIVE DATE
24-1 This Agreement shall become effective when executed by both Parties.
When so executed, the effective date of this Agreement shall be deemed
to be January 1, 2002.
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IN WITNESS WHEREOF, each party has duly executed this Agreement by its duly
authorized representative as provided herein below:
APPLETON PAPERS INC. NISSEKI CHEMICAL TEXAS INC
By: /s/ Rick J. Fantini By: /s/ Smith E. Howland
-------------------- ---------------------
Rick J. Fantini Smith E. Howland
Title: Vice President of Operations Title: President and CEO
Date: 1/28/02 Date: 2/4/02
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Attachment A
Product Data Sheet
Nisseki Nisseki Chemical Texas Inc.
[*]
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Attachment B
Material Safety Data Sheet
Nisseki Nisseki Chemical Texas Inc.
[*]
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