EXHIBIT 10
EXCEPT TO THE EXTENT THAT THE UNITED STATES ARBITRATION ACT APPLIES, THIS
AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO CHAPTER 48 OF TITLE 15 OF
THE CODE OF THE LAWS OF SOUTH CAROLINA.
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT ("Agreement") is made and entered into
this 31st day of March, 1996, by and between AVONDALE MILLS, INC., an
Alabama corporation ("Mills"), and C.H. PATRICK & CO., INC., a South
Carolina corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Mills, Avondale Incorporated, of which Mills is a
wholly owned subsidiary ("Avondale"), Triarc Companies, Inc. and
Graniteville Company ("Graniteville") intend to enter into an Asset
Purchase Agreement (the "Purchase Agreement"), pursuant to which
Graniteville will agree to sell to Mills substantially all of
Graniteville's textile assets and business;
WHEREAS, the execution of this Agreement is a condition to the
consummation of the transactions contemplated by the Purchase Agreement
(the "Closing"); and
WHEREAS, the parties have executed this Agreement as of the
date hereof, but recognize that this Agreement shall not be effective
until the Closing;
WHEREAS, Mills wishes to grant to Seller the opportunity to
sell to Mills and its Affiliates (as defined below) (collectively,
"Buyer") the textile dyes and chemicals purchased by Buyer during the
term of this Agreement, all in accordance with the terms and conditions
of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual promises and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
"Affiliate(s)" shall mean with respect to any entity, any
corporations, partnerships or other entities that, directly or
indirectly, are controlled by, control or are under common control with
such entity; provided that with respect to Mills, the term "Affiliate"
shall not include any corporation, partnership or other entity other than
Avondale that (i) directly or indirectly
controls Mills and (ii) is not directly or indirectly controlled by
Avondale or G. Stephen Felker, members of his immediate family, his or
their heirs or representatives or any trusts established for their benefit
(collectively, "Felker"). The word "control", with respect to a person,
shall mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of such person, whether
through the owning of voting securities, contract or otherwise.
"Business Day" shall mean any day other than a Saturday, Sunday
or day on which banks are authorized to be closed under the laws of the
State of South Carolina.
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"Prime Rate", as of the date of determination, shall mean the
"Prime Rate" as published in the "Money Rates" table of The Wall Street
Journal on the Business Day immediately preceding such date.
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"Purchase Order" shall mean, at any time, the form of purchase
order then generally utilized by Buyer for purchases of Products, as such
form is provided to Seller from time to time. The initial form of
Purchase Order is attached hereto as Exhibit B.
"Qualified Supplier" shall mean, with respect to any particular
Product that is included in a Bid Package, any company or other entity
other than Buyer that (i) provides, or is able to provide, such Product
in accordance with the Specifications therefor, (ii) has appropriate
production and/or delivery capacity (as applicable) and resources to
provide the amount of such Product to Buyer in accordance with the
requirements of the Bid Package and (iii) has previously supplied such
Product to Buyer or Graniteville or has provided a sample of such Product
to Buyer that has completed all plant trials to Buyer's reasonable
satisfaction prior to the Deadline Date (as defined below) set forth in
the Bid Package.
"Specifications" shall mean the written specifications and
standards for Products as established from time to time by Buyer and made
available to its potential suppliers.
ARTICLE 2
PURCHASE AND SALE OF PRODUCTS
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2.2 Purchase Order. Not later than five (5) Business Days
after Seller makes a Low Bid or a Last Bid. Buyer shall submit a
Purchase Order to Seller for the required portion of the Product(s) that
were the subject of such Low Bid or Last Bid. The Purchase Order shall
be subject to any modifications set forth in the Bid Package, the Low Bid
and/or the Lowest Price Notice. All purchases and sales of Products
between Buyer and Seller shall be subject to the terms and conditions of
this Agreement, such Purchase Orders and applicable law.
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2.5 Current Purchases. Effective upon the Closing, all then-
existing purchase orders and other agreements (if any) between Seller and
Graniteville that are assumed by Mills pursuant to the Purchase Agreement
will be terminated without any further action by the parties.
Notwithstanding the foregoing, until such time as Buyer has completed the
initial bid process set forth in Section 2.1 with respect to a Product
that has been supplied by Seller to Graniteville during the past six
months, Buyer will continue to purchase the requirements of the former
Graniteville operations for such Product from Seller on the same terms
and conditions on which such Product was most recently supplied to
Graniteville by Seller.
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2.7 Periodic Reporting. On or prior to January 31 and July 31
of each year during the term of this Agreement, Mills shall prepare and
submit to Seller a statement setting forth (i) the quantity of each
Product delivered to Buyer by Seller during the approximately six-month
period ending on the last day of Buyer's fiscal accounting period ending
closest to the immediately preceding December 31 or June 30 (as the case
may be) and (ii) the quantity of each Product delivered to Buyer by all
suppliers (including Seller) during such approximately six-month period;
provided that the first such report shall be delivered to Seller on or
prior to January 31, 1997, with respect to the fiscal accounting period
ending closest to December 31, 1996. The quantities on such statement
shall be expressed in dollars and pounds/gallons with respect to those
Products which Seller has supplied to Buyer during the applicable period
and in pounds/gallons only for all other Products delivered to Buyer
during such period. Such statement shall be certified as accurate and
correct by the chief financial officer of Mills and shall be accompanied
by a certificate signed by the chief financial officer of Mills that to
this knowledge and belief (except as expressly described in such
certificate) all purchases of Products during such six-month period from
Seller and any other supplier have complied in all material respects with
Section 2.3 hereof. The exceptions identified on such statement will not
operate as a waiver by Seller of any of its rights under this Agreement.
2.8 Qualified Supplier. Buyer agrees that, as of the date
hereof, Seller is a Qualified Supplier of each of the Products listed on
Exhibit C.
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2.10 Existing Commitments. Buyer represents to Seller that
Exhibit D sets forth a complete and correct list of all existing
commitments by Buyer of longer than one month's
duration for the purchase of Products, and, at the Closing, Buyer shall
deliver a revision of Exhibit D to Seller that is true and correct
as of the date of Closing and not in violation of Section 5.15 of the
Purchase Agreement.
2.11 Change in Specifications. If Buyer intends to change the
Specifications of any Product as to which Seller is a Qualified Supplier,
Buyer will use its good faith reasonable efforts to give Seller notice of
such change sufficiently in advance of Buyer's next purchase of such
Product so as to permit Seller a reasonable opportunity to complete any
sampling and plant trial procedures prior to the commencement of the bid
process for such purchase, provided that Buyer will not be required to
delay any bid process if such delay would have more than an insignificant
adverse effect on Buyer's business.
ARTICLE 3
TERM AND TERMINATION; REMEDIES
3.1 Term. The term of this Agreement shall commence on the
date of the Closing and continue until the tenth anniversary of the
Closing, unless earlier terminated pursuant to Section 3.2 below.
3.2 Termination.
(a) This Agreement shall terminate on June 1, 1996, if the
Closing has not occurred prior to such date, or, if earlier, upon the
termination of the Purchase Agreement.
(b) Mills shall have the right to terminate this Agreement in
the event of a pattern (a "Pattern") of repeated, material failures by
Seller to satisfy its obligations with respect to delivery schedules,
Product Specifications or any other material terms of any of the material
terms of the agreements between Buyer and Seller with respect to the
supply of Products (each such material failure being referred to herein
as a "Material Breach"). Any termination of this Agreement by Mills
pursuant to this Section 3.2(a) must comply with the following
procedures:
(i) Buyer must have given written notice (the "Initial
Notice") to Seller specifying in reasonable detail one or more
Material Breaches.
(ii) Within one year following the giving of the Initial
Notice, another Material Breach must have occurred and,
promptly thereafter, Buyer must have provide Seller with notice
(the "Second Notice") specifying in reasonable detail such
Material Breach and stating Buyer's determination that a
Pattern has occurred.
(iii)If Seller does not give Buyer notice of its objection
to such determination within fifteen (15) days following the
Second Notice and another
Material Breach occurs within two (2)
years following the Second Notice, Buyer will have the right to
terminate this Agreement and all then-existing purchase orders
and other agreements between Buyer and Seller relating to the
Products without any further liability (other than for payment
of outstanding invoices).
(iv) If Seller gives such notice of its objection within
such 15-day period, the issue as to whether a Pattern has
occurred will be submitted to arbitration pursuant to Section
5.12. If the arbitrators determine that a Pattern has
occurred, Buyer will have the right to terminate this Agreement
and all then-existing purchase orders and other agreements
between Buyer and Seller relating to the Products without any
further liability (other than for payment of outstanding
invoices) if another Material Breach occurs at any time during
the two-year period following the Second Notice.
(c) Termination under this Section 3.2 will not be deemed a
waiver of any right or remedy either party may have for breach hereunder.
3.3 Specific Performance. In the event of a breach of this
Agreement, the aggrieved party shall be entitled to seek specific
performance or other equitable relief in addition to any other remedies
that may be available to such party.
3.4 Damages. Notwithstanding any remedy otherwise available
to Seller, if Mills willfully and in bad faith materially breaches its
obligations under or willfully and in bad faith terminates this Agreement
at a time when Mills is not controlled, directly or indirectly, by
Felker, Mills shall pay to Seller an amount equal to treble damages with
respect to any damages suffered or incurred by Seller as a result of any
such breach.
ARTICLE 4
CONFIDENTIALITY
4.1 Confidential Information. In the performance of their
respective obligations under this Agreement, Buyer and Seller may
disclose to each other certain confidential and proprietary information
relating to their respective businesses ("Confidential Information").
All information exchanged by the parties under this Agreement shall be
considered Confidential Information unless it is subject to any of the
exceptions in Section 4.3.
4.2. Non-Disclosure. Each recipient of Confidential
Information agrees that it shall:
(a) make no use of any Confidential Information belonging to
the other except as necessary for the performance of its
obligations under this Agreement;
(b) not disclose to third parties any of the Confidential
Information belonging to the other without the prior
written consent of the other party; and
(c) take such precautions as it normally takes with its own
confidential and proprietary information to prevent
disclosure of Confidential Information to third parties.
4.3 Exceptions. Notwithstanding any of the foregoing, the
obligations under Section 4.2 shall not apply to:
(a) any information which at the time of disclosure is
publicly available or public knowledge;
(b) any information which, after disclosure, lawfully becomes
public knowledge through publication or otherwise, but
through no fault of the party hereto who received such
information;
(c) any information which the receiving party possess at the
time of disclosure of the Confidential Information and
which was not acquired, directly or indirectly, from the
other party; and
(d) any information acquired from a third party who has a
right to disclose such information.
ARTICLE 5
MISCELLANEOUS
5.1 Force Majeure. Neither Buyer nor Seller shall be
responsible or liable to the other for failure or delay in performance of
this Agreement due to war, fire, accident or other casualty, or any labor
disturbance or act of God or the public enemy, or any other contingency
beyond such party's reasonable control ("Force Majeure Event"). In
addition, in the event of the applicability of this Section 5.1, the
party affected by such Force Majeure Event shall use all commercially
reasonable efforts to eliminate, cure and overcome any of such causes and
resume performance of its obligations.
5.2 Governing Law. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of South
Carolina.
5.3 Severability. Should any part of this Agreement or any of
the provisions hereof for any reason be declared to be invalid, such
decision or determination shall not in any way affect the validity of the
remaining portions of this Agreement, all of which shall remain in
full force and effect as if the portion declared to be invalid had not been
contained herein at the time of the execution of this Agreement.
5.4 Headings; Number. The subject headings of this Agreement
are included for purposes of convenience only, and shall not affect the
construction or interpretation of any of its provisions. Whenever the
context so requires, the singular shall include the plural and the plural
shall include the singular.
5.5 Survival of Terms. Article 4 shall survive the expiration
or termination of this Agreement.
5.6 No Rights of Offset. Neither Buyer nor Seller nor any of
Seller's respective Affiliates shall be entitled to offset any rights
under the Purchase Agreement against any obligations under this
Agreement.
5.7 Assignment. This Agreement shall be binding on, and shall
inure to the benefit of, Mills and Seller and their respective successors
and permitted assigns. Except as provided in this Section 5.7 or by
operation of law, neither Mills nor Seller shall be permitted to assign
their respective rights or obligations under this Agreement without the
express written consent of the other party. A change in control of a
party hereto shall not be deemed an assignment and shall not in any way
affect the parties' obligations hereunder. Notwithstanding the
foregoing, Seller shall be permitted (i) to assign all of its rights and
obligations under this Agreement to any acquiror (by purchase, merger or
otherwise) of all or substantially all of Seller's assets so long as such
entity delivers to Mills a written assumption agreement signed by such
entity in form reasonably satisfactory to Mills (provided that any such
assignment shall not relieve Seller of its obligations under Section 4)
and (ii) to pledge its rights (but not its obligations) to a bank, bank
holding company or financial institution in connection with any financing
obtained by Seller. In the case of a sale by Mills of all or
substantially all of its assets, Mills will be (i) permitted and required
to assign its rights and obligations hereunder to the purchaser of such
assets and (ii) required to cause such purchaser to execute and deliver
to Seller a written assumption agreement in form reasonably satisfactory
to Seller.
5.8 Entire Agreement. This Agreement constitutes the entire
agreement between Mills and Seller regarding the subject matter hereof,
and supersedes all prior agreements, negotiations or understandings
between them concerning the subject matter thereof.
5.9 Amendments. This Agreement may not be amended,
supplemented or modified except in a writing signed by the parties
hereto.
5.10 Waiver. No waiver of any default hereunder by either
party or any failure to enforce any rights hereunder shall be deemed to
constitute a waiver of any subsequent default with respect to the same or
any other provision hereof.
5.11 Notices. Any notice required or permitted to be given
hereunder shall be made in writing and shall be given to the party to
receive such notice by (i) hand delivery, (ii) first-class registered or
certified mail, postage prepaid, return receipt requested, (iii)
overnight courier service, postage prepaid (iv) telecopy with evidence of
confirmation of transmission in each case at the address or telecopy
number set forth below:
To Seller: C. H. Patrick & Co., Inc.
200 Tanner Drive
Greenville, South Carolina 29687
Attention: Thomas J. Reardon
Telefax No. (864) 244-3090
If provided other than under Triarc Companies, Inc.
Section 2.1, with a copy to: 900 Third Avenue
31st Floor
New York, New York 10022
Attention: Brian L. Schorr
Telefax No. (212) 230-3216
To Buyer under Section 2.1: Avondale Mills, Inc.
900 Avondale Avenue
Sylacauga, Alabama 35150
Attention: Director of Purchasing
Telefax No. (205) 249-1317
To Mills or Buyer under all other Sections: Avondale Incorporated
506 South Broad Street
Monroe, Georgia 35150
Attention: G. Stephen Felker
Telefax No. (770) 267-2543
If provided other than under King & Spalding
Section 2.1, with a copy to: 191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Michael J. Egan III
Telefax No. (404) 572-5145
All notices shall be deemed to have been given five (5) days after the
date of mailing thereof or on receipt, which is earlier. Either party
may change the information specified herein for the receipt of notices by
giving written notice to other party.
5.12 Arbitration.
(a) Any controversy, claim or question of interpretation
arising out of or relating to this Agreement or the breach thereof shall
be finally settled by arbitration in the City of Charlotte, North
Carolina under the then-effective Commercial Arbitration Rules of the
American Arbitration Association as modified by this Agreement, and
judgment on the award rendered by the arbitrators may be final and
binding on the parties and not subject to further appeal. Such
arbitration can be initiated by written notice by either party to the
other party, which notice shall identify the claimant's selected
arbitrator. The party receiving such notice shall identify its
arbitrator within five (5) Business Days following its receipt of such
notice. The arbitrator selected by the claimant and the arbitrator
selected by the respondent shall, within five (5) Business Days of their
appointment, select a third neutral arbitrator. In the event that they
are unable to do so, either party may request the American Arbitration
Association to appoint the third neutral arbitrator. The arbitrators
shall have the authority to award any remedy or relief that a court in
South Carolina could order or grant, including, without limitation,
specific performance of any obligation created under this agreement, the
awarding of punitive damages, the issuance of injunctive or other
provisional relief, or the imposition of sanctions for abuse or
frustration of the arbitration process. The arbitration awards will be
in writing and specify the factual and legal basis for the award.
(b) It is the intent of the parties that any arbitration shall
be concluded as quickly as practicable (but, barring extraordinary
circumstances in any event not more than twenty (20) days after the date
the third arbitrator is selected). Unless the parties otherwise agree,
once commenced, the hearing on the disputed matters shall be held four
days a week until concluded with each hearing date to begin at 9:00 a.m.
and to conclude at 5:00 p.m. The arbitrators shall use their best
efforts to issue the final award or awards within a period of five (5)
Business Days after closure of the proceedings. Failure of the
arbitrators to meet the time limits of this Section 5.12(b) shall not be
a basis for challenging the award.
(c) The arbitrators shall instruct the non-prevailing party to
pay all costs of the proceedings, including the fees and expenses of the
arbitrators and the reasonable attorneys' fees and expenses of the
prevailing party. If the arbitrators determine that there is not a
prevailing party, each party shall be instructed to bear its own costs
and to pay one-half of the fees and expenses of the arbitrators.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be signed as of the date first above written.
AVONDALE MILLS, INC.
By: /S/ JACK R. ALTHERR, JR.
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Name: Jack R. Altherr, Jr.
Title: Vice President & CFO
C.H. PATRICK & CO., INC.
By: /S/ JOHN L. BARNES, JR.
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Name: John L. Barnes, Jr.
Title: Vice President
EXHIBIT A
Products Utilized by Buyer
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EXHIBIT B
Form of Purchase Order
EXHIBIT C
Current Products of Seller
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EXHIBIT D
Existing Commitments of Buyer
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