1
EXHIBIT 10.3
COOPERATIVE PRODUCTION AGREEMENT
This agreement is effective as of the 10th day of March, 1997, by and between
Delta Steel, Inc., a Texas Corporation herein referred to as "Delta" or
"party", and FWT, Inc., a Texas corporation herein referred to as "FWT" or
"party". By this Agreement, the parties hereby adopt the terms and conditions
of the Memorandum of Understanding dated June 26, 1996 and attached as Addendum
A to this Agreement, except that the terms and conditions relating to the lease
are excluded and replaced by the Lease Agreement dated March 10, 1997 between
the parties.
Both parties understand the character of the services to be provided under this
Agreement and represents itself as competent to perform such services. Each
party also represents itself as having the authority and licenses to do
business and perform the services in the area and state in which the work is to
be performed.
TERM
1.1 This Agreement shall be for an initial term of five years and shall be
automatically renewable at the end of the initial five year period.
Terms and conditions for the renewal period will be negotiated at the
end of the third year of the initial period.
CONFIDENTIALITY
2.1 The terms of this Agreement and the aforementioned Lease Agreement
shall be maintained in confidence by the parties. A Confidentiality
Agreement dated March 10, 1997 is attached as Addendum B to this
Agreement.
INSURANCE
3.1 To the extent that work is done by Delta or FWT personnel under the
supervision or direction of an employee of the other company, for
purposes of liability and indemnification, that work will be deemed to
have been performed solely by the company responsible for performing
such work.
3.2 Each party, at its sole expense, shall provide, at all times during
the performance of this Agreement, the following minimum insurance
coverage.
A. WORKER'S COMPENSATION INSURANCE providing statutory benefits
under the law in the state where the work is to be performed.
EMPLOYER'S LIABILITY INSURANCE with limits of
1,000,000/$1,000,000/$1,000,000.
Each party's policy shall include an alternate employer
endorsement naming the other party as an alternate employer.
Each party shall file workers' compensation claims, for
workers on its payroll, under its respective insurance
policy.
B. COMMERCIAL GENERAL LIABILITY INSURANCE providing coverage for
premises - operations, and products/completed operations; to
include contractual liability coverage, personal injury, x, c,
and u, broad form property damage and independent contractors
working for the parties. Limits of liability shall not be
less than the following:
$1,000,000 each occurrence
$1,000,000 aggregate-products/completed operations
$1,000,000 aggregate-general
$1,000,000 personal injury/advertising injury liability
$1,000,000 legal liability
FWT's CGL policy shall contain a legal liability form
endorsement which shall include fire, explosion, smoke and
water damage.
- --------------------------------------------------------------------------------
Page 1
2
COOPERATIVE PRODUCTION AGREEMENT
C. BUSINESS-AUTOMOBILE LIABILITY AND PROPERTY DAMAGE INSURANCE
providing coverage for all owned, non-owned and hired
vehicles. Combined single limits of liability for bodily
injury/property damage of $1,000,000 each accident.
D. UMBRELLA INSURANCE providing excess liability over General
Liability, Auto Liability and Employer's Liability with
minimum limits of $10 million each occurrence and $10 million
aggregate.
3.3 UNDERWRITERS SHALL HAVE NO RIGHT OF RECOVERY OR SUBROGATION AGAINST
THE OTHER PARTY, as the parties to this Agreement intend that the
insurance each has in force shall protect both parties and be liable
for all losses covered. All of the above policies must include a
waiver of subrogation in favor of the other party. Policies specified
in 3.2.B, C and D must name the other party as an additional insured.
3.4 CERTIFICATES AND ACKNOWLEDGMENT - Each party must provide current
certificates of insurance and proof of acknowledgement by the
respective insurance carrier prior to beginning any work. Insurers
must give 30 days notice of any cancellations of policies identified
in the certificates of insurance.
INDEMNIFICATION
4.1 Each party agrees to protect, indemnify, defend and hold the other
party free and harmless from all losses, costs and expenses -
including the amount of judgments, penalties, interest, court costs
and legal fees - of legal liabilities (claims, demands, and causes of
action, etc.) imposed in favor of or asserted by governmental agencies
or third parties (including employees of the other party or of its
contractors or subcontractors) caused by or associated with its (or
its contractors or subcontractors) failure to pay any tax, wage, debt
or other sum incurred by the indemnifying party (or its contractors or
subcontractors).
4.2 It is the intention of each party to maintain the insurance coverage
and limits specified in paragraph 3.2 above and indemnify the other
for claims or other liabilities caused by its actions or inactions.
For liability and indemnification purposes, each party shall be
responsible for the operations and products from its normal work
activities under the Agreement. This includes work performed under
the supervision or direction of managers or foremen who supervise the
work of both parties.
Each party agrees to indemnify and hold the other party harmless from
all losses, costs and expenses - including the amount of judgments,
penalties, interest, court costs and legal fees - of alleged or actual
legal liabilities (including settlements) for personal injuries,
illnesses, deaths or property damage founded upon occurrences in the
course of, or incident to, services performed or products or equipment
provided under the Agreement due to its negligence or gross
negligence. This indemnification obligation includes, but is not
limited to, claims made by its employees or employees of its
contractors or subcontractors, if the injury, illness or death is
sustained while the employee is in, on, or about the premises of
Delta, or is otherwise associated with services performed for, or
products or equipment provided to, the other party.
4.3 DEFENSE - Each party to the Agreement agrees to investigate, handle,
respond to, provide defense of, and defend any claim or other
potential legal liability for which it is responsible under this
Agreement's indemnification provisions at its sole expense, and agrees
to bear all other related costs and expenses, even if such claim, etc.
is groundless, false or fraudulent. The indemnification provisions
are intended to survive the termination of this Agreement.
4.4 ENFORCEMENT OF INDEMNITY OBLIGATIONS - All indemnity obligations
assumed by the parties are in no way limited by the insurance
provisions of this Agreement, as the parties intend that each be fully
responsible for liabilities assumed under this Agreement. All
indemnity obligations in this Agreement shall be enforced in the
courts of Tarrant County, Texas, with all costs of enforcement and
attorneys' fees of the prevailing party to be paid by the other party.
Each party to this Agreement hereby waives all defenses to such
enforcement which do not turn on factual issues affecting the
applicability of indemnity obligations.
- --------------------------------------------------------------------------------
Page 2
3
COOPERATIVE PRODUCTION AGREEMENT
DISPUTE RESOLUTION
5.1 Both parties agree to work together to resolve any issues or disputes
that arise under the Agreement. If a dispute cannot be resolved
between the parties within thirty (30) days of written notice to the
other party, then the dispute will be submitted to mediation through
the procedures then in effect by a dispute resolution organization
selected by mutual agreement of both parties. Both parties agree that
the mediation will be scheduled to begin no later than sixty (60) days
after the initial written notice of a dispute. If mediation is not
successful, both parties agree that the dispute will be submitted to
binding arbitration through an organization selected by mutual
agreement of both parties and the arbitration is to begin no later
than 30 days after the mediation is concluded.
GENERAL TERMS AND GOVERNING LAWS
6.1 The Agreement shall bind the parties, their respective successors,
heirs and assigns; but this Agreement shall not be assignable without
the prior written consent of the other party.
6.2 In the case of a change in ownership, management or corporate
organization of FWT, the successor owner(s), et. al. shall continue
operations under this Agreement, for the remainder of the then-term of
the Agreement, with a minimum monthly purchase volume from Delta equal
to the previous 12 months average. All other terms and conditions of
the Agreement shall remain in force.
6.3 "Party" means Delta or FWT, as applicable. Reference in this
Agreement to Delta, FWT or party includes any subsidiary, affiliated
or parent companies, and employees, officers, directors, agents,
representatives and contractors of the respective companies provided,
however, that the use of the term 'party' shall not impose any
personal liability on any such employees, officers, directors, agents,
representatives or contractors of the parties.
6.4 Obligations of the parties are subject to all valid applicable
federal, state, and local laws, rules and regulations. Venue for any
dispute or controversy relating to or arising out of this Agreement
shall lie in Tarrant County, Texas.
6.5 No conduct by a party, including waiver of any single performance of
obligations of the other party, shall affect required subsequent
performance of the other party's obligations under this Agreement.
6.6 The Agreement and referenced addenda comprise the entire agreement of
the parties; no changes shall be effective unless made in writing and
executed by both parties. The terms of the Agreement and addenda
shall govern in case of conflict with any previous or subsequent
writing, except any subsequent addenda executed by both the parties.
6.7 This Agreement is not intended to and shall not create a joint venture
or partnership between Delta and FWT.
NOTICES
7.1 Every notice, request, statement or bill provided for in the Agreement
shall be in writing and mailed or delivered to the following
addresses):
ADDRESSES:
FWT, Inc.: DELTA STEEL, INC: (Corporate Office) FORT WORTH DIVISION:
Delta Steel, Inc. Delta Steel Inc.
P.O. Box 8597 P.O. Box 2289 9217 South Freeway
Fort Worth, TX 76124 Houston, TX 77252 Fort Worth, TX 76140
Executed in duplicate original on the 24th day of March, 1997.
FWT, Inc.: DELTA STEEL, INC.
By: /s/ T. W. MOORE By: /s/ R. A. EMBRY
--------------------------- ---------------------------
Title: President Title: President
------------------------ ------------------------
- --------------------------------------------------------------------------------
Page 3