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Exhibit 10.9
RAW MATERIAL REQUIREMENTS AGREEMENT
THIS AGREEMENT (herein called "Agreement") made as of
____________________, 1997, between Arcilla Mining & Land Co., a corporation
organized and existing under the laws of the state of Georgia and having an
office at P.O. Box 1371, Milledgeville, Georgia 31061 ("Seller"), and CARBO
Ceramics Inc., a corporation organized and existing under the laws of the state
of Delaware and having an office at 600 East Las Colinas Boulevard, Suite 1520,
Irving, Texas 75039 ("Purchaser").
W I T N E S S E T H:
WHEREAS, Purchaser desires to purchase a supply of kaolin, a naturally
occurring mineral more particularly described (and meeting the specifications
set forth) in Exhibit A hereto (the "Product"), and,
WHEREAS, Seller is able and desires to supply Purchaser with such
Product,
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties agree as follows:
1. TERM
The term of this Agreement shall be twenty (20) years commencing
January 1, 1998, and ending December 31, 2017.
2. SELLER'S RESPONSIBILITIES
Seller shall be specifically responsible for the following (herein
called the "Work"):
A. Obtaining and maintaining a valid mining permit from the State
of Georgia and any other governmental body which requires
Seller to have a license or permit to mine and remove Product
from the Subject Properties pursuant to this Agreement.
B. Removing overburden from the Subject Properties in a manner so
as to allow Purchaser unimpeded access to a minimum of 40,000
tons of Product at any given time.
C. Maintaining roads to, from and across the Property in a manner
suitable to mine and remove from the Property the Product
described in this Contract.
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D. Reclaiming the Property in accordance with the permit(s)
Seller has obtained.
E. Providing to Purchaser a site of location, size and character
upon which to stockpile approximately 5,000 tons of the
Product and Seller shall mine such stockpile of 5,000 tons of
the Product at a cost to Purchaser of $1.35 per ton to be paid
upon completion of the stockpile. Seller shall maintain such
stockpile at all times during this Agreement.
F. Seller shall mine sufficient quantities of the Product to fill
orders made by Purchaser on an "as needed" basis.
G. Seller shall deliver to the Purchaser's manufacturing plant
(the "Plant") in Wilkinson County, Georgia the quantities of
the Product ordered by Purchaser.
3. QUANTITY
A. During the term of this Agreement, Seller shall make available
for sale to Purchaser and Purchaser shall have the right to
purchase from Seller up to 2,500,000 tons of the Product. For
the purposes of this agreement, a "ton" shall be defined as a
weight of 2000 pounds of wet, crude Product. "Wet" shall be
defined as any moisture content up to and including the
maximum amount specified in Exhibit A hereto.
B. In each year during the term of this Agreement, Purchaser
shall be obligated to purchase from Seller, as a minimum,
eighty percent (80%) of its actual annual requirements of the
Product during such year for its operations in Wilkinson
County, Georgia. In the event Seller fails to deliver Product
in a timely manner which has been ordered by Purchaser and
Purchaser purchases such Product from another source,
Purchaser shall deduct the amount of such purchase from the
minimum purchase requirements set out in the preceding
sentence.
4. PRICE
A. The price for the Product purchased from Seller shall be $6.00
per ton (the "Base Price Per Ton") delivered to Purchaser's
plant in Wilkinson County, Georgia.
B. The Base Price Per Ton, as adjusted from time to time, shall
be adjusted on May 1 of each year, beginning May 1, 1998,
using the percentage change between the previous two calendar
years' average monthly Producer Price Index ("PPI") for Kaolin
and Ball Clay (Product Code 1455) as published by the U.S.
Department of Labor, Bureau of Labor Statistics. (For an
example of the calculation, see Appendix B.)
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C. Beginning May 1, 1998, in addition to the Base Price Per Ton,
for each ton of Product mined and delivered to Purchaser,
Purchaser shall pay to Seller or Seller shall credit to
Purchaser a fuel cost adjustment (the "Fuel Cost Adjustment").
The Fuel Cost Adjustment shall be $1.20 multiplied by the sum
of one plus the percentage change between 1997 and the year
immediately preceding the calculation in the average monthly
Producer Price Index ("PPI") for No. 2 Diesel Fuel (product
code 2911-413) as published by the U.S. Department of Labor,
Bureau of Labor Statistics, less $1.20. (For an example of
the calculation, see Appendix B.)
D. In addition to the Price Per Ton, Purchaser shall pay to
Seller any royalty costs in excess of $1.40 per ton of Product
mined and delivered to Purchaser, which are payable by Seller
pursuant to the terms of written agreements with the
landowners of the Subject Properties in effect on the date
hereof.
5. DELIVERY
A. Purchaser shall advise Seller within 180 days prior to the
start-up of its Wilkinson County, Georgia, plant of the
tonnage of its projected 1998 and 1999 purchases, and shall
thereafter advise Seller on or before October 1 of each year,
beginning October 1, 1999, of the tonnage of the Product it
projects to purchase during the next calendar year. Such
projections should be estimates only and Purchaser shall not
be committed to purchase such amounts. Purchaser shall use
reasonable efforts to advise Seller promptly in the event of
any change in its annual purchase projections for any year.
B. Purchaser and Seller shall communicate regularly, and Seller
shall ensure the availability of Product for sale hereunder on
an "as needed" basis. Purchaser shall use its best efforts
(to the extent feasible) to space evenly its actual purchases
of the Product, and Seller shall be obligated to fill such
orders.
C. Risk of loss and title shall pass to Purchaser upon delivery
to Purchaser's plant in Wilkinson County, Georgia.
6. PAYMENT
Invoices for Product sold and delivered hereunder shall be sent to
Purchaser on a monthly basis. Payment for the Product sold and
delivered hereunder shall be net thirty (30) days from date of
invoice.
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7. ASCERTAINMENT OF WEIGHT
The weight of the Product delivered shall be determined by weighing on
state-certified scales located at Purchaser's manufacturing facility
in Wilkinson County, Georgia. Invoices shall include a copy of the
weight- ticket covering the Product being invoiced.
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8. WARRANTY
Seller warrants that the kaolin material when delivered to Purchaser's
facility will conform to all chemical and physical properties for the
Product listed in Exhibit A hereto. Seller warrants that the Product
delivered hereunder shall be free of contaminants and other foreign
substances rendering the Product unsuitable for the economic use of
Purchaser. In the event that kaolin material delivered to Purchaser
does not conform to all chemical and physical properties listed in
Exhibit A hereto, or is contaminated with foreign substances, all such
non-conforming kaolin material shall be removed by Seller and there
shall be no invoice issued by Seller for the non-conforming kaolin
material.
9. RESERVED ORE & SELLER'S REPRESENTATION OF TITLE AND INDUCEMENTS TO
PURCHASER
Seller hereby represents that it holds title to or the right to mine
crude Product located on the real property listed herein (herein
called the "Subject Properties" or "Property") which will be reserved
by Seller for sale to Purchaser:
Property Tons of Product
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(a) Approximately 70 acres described 2,000,000+ tons
on Exhibit B
(b) 8 acres described 500,000 tons
on Exhibit C
(c) 101.6 acres described on Exhibit D Back Up Tonnage Only
Seller covenants that it has a good and marketable title, in fee
simple or leasehold estate, to the Subject Properties, that there are
no liens, mortgages or encumbrances against the same and Seller
warrants the title to all Product which Purchaser, its successors and
assigns may remove or receive from the Subject Properties for
processing and/or sale as against the lawful claims of all persons
whomsoever. Seller shall provide to Purchaser evidence, such as a
current title report or title insurance commitment, of (i) Seller's
good and marketable title to the portions of the Subject Properties
which Seller owns in fee simple and (ii) Seller's lessor's good and
marketable title to the portions of the Subject Properties as to which
Seller holds a leasehold estate. Also, Seller shall provide to
Purchaser a copy of the lease agreement covering these portions of the
Subject Properties as to which Seller holds a leasehold estate and
letter signed by the lessor in the form of Exhibit E attached hereto.
Seller further covenants that hereafter Seller will not create nor
permit the existence of any liens or encumbrances against the minerals
or surface which will in any way adversely affect the rights of
Purchaser hereunder. Upon any default of Seller with respect to the
covenants and warranties herein contained, it is agreed that the
Purchaser shall have the privilege of paying-off, discharging and
satisfying any such lien
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or encumbrance and that the amount of any such payment or payments
made by Purchaser for such purposes, together with interest thereon at
the prime rate (as published in the Wall Street Journal on the date of
default declaration) plus two (2) per cent per year, may be deducted
by Purchaser from the payments herein provided to be paid to the
Seller.
Seller further warrants that (a) Seller has a good and lawful right,
and full power to convey the Product on the Subject Properties and to
authorize entry for the purposes(s) herein set forth, that the same
are free from all encumbrances; (b) the Subject Properties connect to
adjacent public roads and all present exits and entrances to the
Subject Properties via adjacent public roads are without restriction;
(c) Seller is not a party to any litigation affecting the Subject
Properties, the Product thereon, or Seller's rights to sell the
Product on said Subject Properties or any interest therein and the
Seller knows of no litigation or threatened litigation affecting the
said Product and/or the Subject Properties; (d) Seller has no
knowledge or information of any facts or circumstances that would
adversely affect the use of the Subject Properties for mining
operations that are not set forth herein; and (e) that Seller has not
committed, except as otherwise set forth herein, nor will Seller in
the future commit, any act or acts which will encumber or cause a lien
to be placed against said Product and/or the Subject Properties.
10. INDEMNIFICATION
To the fullest extent permitted by law, the Seller shall indemnify and
hold harmless the Purchaser, and agents and employees of Purchaser
from and against claims, damages, losses and expenses, including but
not limited to attorneys' fees, arising out of or resulting from
performance of the Work, provided that such claim, damage, loss or
expense is attributable to bodily injury, sickness, disease or death,
or to injury to or destruction of tangible property (other than the
Work itself) including loss of use resulting therefrom, but only to
the extent caused in whole or in part by negligent acts or omissions
or breach of this Agreement by the Seller or anyone directly or
indirectly employed by Seller or anyone for whose acts Seller may be
liable, regardless of whether or not such claim, damage, loss or
expense is caused in part by the negligence of a party indemnified
hereunder.
11. INSURANCE
The Seller shall purchase from and maintain in a company or companies
lawfully authorized to do business in the jurisdiction in which the
Subject Properties are located such insurance as will protect the
Seller from claims set forth below which may arise out of or result
from the Seller's operations under the Agreement and for which the
Seller may be legally liable, whether such operations be by the Seller
or by a subcontractor or by anyone directly or indirectly employed by
any of them, or by anyone for whose acts any of them may be liable:
A. claims under workers' or workmen's compensation, disability
benefits and other similar employee benefit acts which are
applicable to the Work to be performed;
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B. claims for damages because of bodily injury, occupational
sickness or disease, or death of the Seller's employees;
C. claims for damages because of bodily injury, sickness or
disease, or death of any person other than the Seller's
employees;
D. claims for damages insured by usual personal injury liability
coverage which are sustained (1) by a person as a result of an
offense directly or indirectly related to employment of such
person by the Seller, or (2) by another person;
E. claims for damages because of injury to or destruction of
tangible property, including loss of use resulting therefrom;
F. claims for damages because of bodily injury, death of a person
or property damage arising out of ownership, maintenance or
use of a motor vehicle; and
G. claims involving contractual liability insurance applicable to
the Seller's obligations under Paragraph 10.
The insurance required by this paragraph shall be written for not less
than limits of liability specified herein or required by law, whichever
coverage is greater. Coverages shall be written on an occurrence basis and
shall be maintained without interruption from date of commencement of the Work
until date of termination of this Agreement.
Certificates of Insurance acceptable to the Purchaser shall be filed
with the Purchaser prior to commencement of the Work. These Certificates and
the insurance policies required by this Paragraph 11 shall contain a provision
that coverages afforded under the policies will not be canceled or allowed to
expire until at least 30 days' prior written notice has been given to the
Purchaser. Seller shall provide evidence of continued insurance on the
anniversary date of each policy of insurance.
Seller shall maintain worker's compensation in at least the minimum
amount stipulated under the Georgia worker's compensation statutes, including
Employers Liability with a limit of at least:
Statutory - Georgia Benefits
Employer's Liability $100,000 Each Accident
$1,000,000 Disease - Policy Limit
$1,000,000 Disease - Each Employee
Seller shall maintain Commercial General Liability, written on an
occurrence basis, including Seller's Liability; Independent Contractors
Liability; Contractual Liability; Completed
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Operations and Products Liability; Personal Injury Coverage and broad form
Property Damage extended to apply to completed operations; and no property
damage liability exclusions pertaining to loss by explosion, collapse or
underground damage.
Bodily Injury and Property Damage Liability:
General Aggregate per Project $2,000,000
Products Completed Operations Aggregate $2,000,000
Personal and Advertising Injury $1,000,000
Each Occurrence $1,000,000
Products Completed Operations shall be maintained for a minimum period of
one (1) year after final payment.
Umbrella/Excess Liability:
Annual Aggregate $5,000,000
Each Occurrence $5,000,000
Automobile Liability including non-ownership and hired car coverage
as well as owned vehicles:
Bodily Injury and Property Damage:
Combined Single Limit $1,000,000
Contractor shall not commence Work at the Subject Properties under
this Agreement until it has obtained all required insurance and until such
insurance has been approved by the Purchaser. Approval of the insurance by the
Purchaser shall not relieve or decrease the liability of the Seller hereunder.
Certificates of Insurance shall be filed with the Seller prior to commencing
Work.
The required insurance shall be written by a Company licensed to do
business in the state in which the Subject Properties are located, at the time
the policy is issued. In addition, the Company shall be acceptable to the
Owner. All liability insurance policies shall name Purchaser additional
insured, IT BEING THE INTENT THAT SUCH POLICIES AFFORD SELLER AND PURCHASER
COVERAGE AGAINST THEIR NEGLIGENCE ARISING OUT OF PERFORMANCE OF THE WORK, and
shall provide that coverage of Purchaser thereunder is primary in the event of
overlapping coverage which may be carried by Purchaser.
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The Seller shall not cause any insurance to be canceled nor permit any
insurance to lapse. All insurance policies shall include a clause to the
effect that the policy shall not be canceled or reduced, restricted or limited
until thirty (30) days after the Purchaser has received written notice.
Certificates of insurance shall contain transcripts from the proper office of
the insurer, evidencing in particular those insured, the extent of insurance,
the location and operations in which the insurance applies, the expiration date
and the above mentioned notice of cancellation clause. An acceptable
Certificate of Insurance Form shall be insurance industry standard ACORD Form
27.
12. FORCE MAJEURE
A. The term "Force Majeure" as used herein shall mean acts of
God, natural calamities, acts of the public enemy, blockades,
insurrections, strikes, slowdowns, riots, wars, disorders,
civil disturbances, fires, explosions, storms, floods,
landslides, washouts, labor or material shortages, boycotts,
breakdowns or damage to plants, equipment or facilities,
interruptions to transport, embargoes, acts of military
authorities, acts of local or federal governmental agencies or
regulatory bodies, court actions, arrests and constraints and,
without limitation by enumeration, any other cause or causes
not reasonably within the control and without the fault or
negligence of the party affected which wholly or partly
prevents the mining, processing, loading or transportation of
Product by Seller or the receiving, transporting, accepting or
using of the Product by Purchaser.
B. If because of Force Majeure, either party hereto is unable to
carry out its obligations under this Agreement and if such
party shall promptly give to the other written notice of such
Force Majeure, including a complete description thereof, then
the obligation of the party giving such notice shall be
suspended to the extent made necessary by Force Majeure and
during its continuance; provided, however, that the party
giving such notice shall use its best efforts to eliminate
such Force Majeure insofar as possible with a minimum of
delay. No event of Force Majeure shall relieve Purchaser of
its obligation to make payments due for Product delivered by
Seller under this Agreement.
13. EVENTS OF DEFAULT
In the absence of the existence of force majeure as defined in
paragraph 12, if any of the following events ("Events of Default")
shall occur and be continuing:
A. Any amount due hereunder, unless being disputed in good faith,
shall remain unpaid for thirty (30) days after becoming due,
and the party adversely affected shall have delivered a notice
to the party owing such amount stating the amount due and
unpaid, and the party owing (and not disputing same in good
faith) shall not have paid such amount within thirty (30) days
after the delivery of such notice; or
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B. Seller shall fail or refuse to provide to Purchaser the amount
of Product as specified from time to time hereunder by
Purchaser at the time requested by Purchaser; or
C. Any deliveries of kaolin materials to Purchaser hereunder
shall fail to meet the quality specifications provided in
Exhibit A; or
D. Any other covenant, obligation or agreement by either party
hereunder shall not be performed or observed within twenty
(20) days after written notice of the nonperformance thereof
shall have been delivered to the nonperforming party by the
other party; or
E. Either party shall:
(1) Fail to pay any judgment in an amount which would
materially affect the net worth of such party within
sixty (60) days after issuance of a writ of execution
upon such final judgment;
(2) Apply for or consent to the appointment of a
receiver, trustee or liquidator of such party or of
all or a substantial part of its assets;
(3) Make a general assignment for the benefit of its
creditors;
(4) Be adjudicated bankrupt or insolvent, or file a
voluntary petition in bankruptcy;
(5) File a petition or an answer seeking reorganization
under any insolvency law; or
(6) File an answer admitting the material allegations of,
or consent to, or default in answering, a petition
filed against it in any bankruptcy, reorganization or
insolvency proceeding; or
F. An order, judgment or decree shall be entered by any court of
competent jurisdiction approving a petition seeking
reorganization of such party or appointing a receiver, trustee
or liquidator of a party or of all or a substantial part of
its assets and such order, judgment or decree shall continue
unstayed and in effect for a period of thirty (30) consecutive
days;
G. Any of the representations or warranties made by a party
herein shall be or become untrue in any material respect; or
H. Seller shall be in default under any lease of any portion of
the Subject Properties after expiration of any cure periods
permitted by the lease.
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then the party adversely affected by such Event of Default shall, in addition
to other remedies available to such party at law or in equity, have any one (1)
or more of the following remedies:
(1) The party adversely affected by such Event of Default
may by written notice delivered to the other party
decline to perform under this Agreement until such
Event of Default shall have been cured or shall no
longer exist, without relieving the defaulting party
of any of its obligations hereunder;
(2) The party adversely affected by such Event of Default
may, effective upon twenty (20) days' written notice
to such effect delivered to the other party,
terminate this Agreement without relieving the other
party from any liability which shall have accrued or
attached on or prior to the effective date of such
termination; and/or
(3) If Seller is in default for failure to deliver
Product at the time requested or for delivering
kaolin materials failing to meet quality
specifications, Purchaser may recover all damages
caused by such failure or Purchaser may purchase such
quantities of Product from another source and Seller
shall reimburse Purchaser within twenty (20) days
from invoice for any additional cost incurred by
Purchaser above the Price Per Ton provided herein and
for any costs incidental to obtaining such other
supply. Termination of this Contract for any of the
causes herein contained shall be without prejudice to
any other right or remedy provided by this Contract
or at law or in equity. Failure of either Purchaser
or Seller immediately to exercise its rights in any
Event of Default will not constitute waiver of the
injured party's rights. Both parties agree to use
their best efforts to minimize the amount of damages
that may be incurred as the result of an Event of
Default.
14. NOTICE
All notices under this Contract required or permitted to be given by
Purchaser to Seller and all payments to be made by Purchaser to Seller
hereunder shall be delivered personally to Seller or sent to Seller at
Seller's address: Arcilla Mining & Land Co., P.O. Box 1371,
Milledgeville, Georgia 31061, or at such other address as Seller may
hereafter furnish (by "Notice" as hereinafter described) to Purchaser.
All notices herein required or permitted to be given by Seller to
Purchaser shall be sent by registered or certified United States mail,
return receipt requested, addressed to Purchaser at CARBO Ceramics
Inc., Attn. Paul G. Vitek, 600 East Las Colinas Boulevard, Suite
1520, Irving, TX 75039, or at such other address as Purchaser may
hereafter furnish (by "Notice" as hereinafter described) to Seller.
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15. ENTIRE AGREEMENT
This written instrument contains the entire agreement between the
parties hereto concerning the subject matter hereof, and there are no
other understandings or agreements between said parties or either of
them in respect hereto. No change, addition to or waiver of the terms
and provision hereof shall be binding upon either party unless
approved in writing by an authorized representative of such party, and
no modifications shall be effected by the acknowledgment or acceptance
of forms containing other or different terms and conditions. This
Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall
constitute a single instrument.
16. ASSIGNMENT
This Agreement shall be binding on the legal successors of the parties
hereto, but shall not otherwise be assignable by either party without
the written consent of the other.
17. INDEPENDENT CONTRACTOR
Seller shall be considered an independent contractor and shall not be
considered a partner, employee, agent or servant of Purchaser.
18. APPLICABLE LAW
This Agreement and the language used herein shall be construed and
enforced in accordance with the laws of the State of Georgia.
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19. MEMORANDUM OF THIS AGREEMENT
Seller and Purchaser agree to execute and record in the real property
records of the county where the Subject Properties are located a
memorandum of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
ARCILLA MINING & LAND CO.
By
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Name:
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Title:
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CARBO CERAMICS INC.
By
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Name:
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Title:
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