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Exhibit 10.8
SUPPLY AGREEMENT
(SUPPLY TO BUYER)
This AGREEMENT, made and entered into this 25th day of March, 1997, by
and between HENKEL CORPORATION, a Delaware corporation ("HENKEL") and Geo
Specialty Chemicals, Inc., an Ohio corporation ("COMPANY");
W I T N E S S E T H :
WHEREAS, XXXXXX and COMPANY have executed and delivered an Asset Sale
and Purchase Agreement dated February 10, 1997 (the "Asset Sale and Purchase
Agreement") pursuant to which COMPANY is acquiring certain of the assets of the
Business (as such term is defined in the Asset Sale and Purchase Agreement); and
WHEREAS, prior to the Closing Date (as defined in the Asset Sale and
Purchase Agreement), the Business obtained certain products for use in
connection with the Business from other HENKEL plants and businesses which are
not part of the Business; and
WHEREAS, COMPANY desires to continue to obtain the Business'
requirements of such products from HENKEL and HENKEL desires to provide the
Business' requirements for such products on the terms set forth herein.
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants, agreements and conditions contained herein and in the
Asset Sale and Purchase Agreement, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used herein without definition have
the meanings assigned to them in the Asset Sale and Purchase Agreement.
"Products" means those products supplied to the Business by other
HENKEL businesses prior to the Closing Date, namely:
(i) products for use as raw materials or intermediates in the
manufacture of products by the Business, which products will be sold by HENKEL
to COMPANY at market prices ("Henkel Products"). A complete listing of Henkel
Products is attached as Schedule I to this Agreement; and
(ii)products made for the Business at XXXXXX'x Charlotte,
North Carolina, Mauldin, South Carolina and Lock Haven, Pennsylvania and other
facilities, which products will be sold by HENKEL at prices set forth on
Schedule II on a cost basis ("Toll Products"). A complete listing of Toll
Products is attached as Schedule II to this Agreement.
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2. SUPPLY OF PRODUCTS.
(a) During the term of this Agreement, COMPANY shall purchase from
HENKEL and HENKEL shall supply to COMPANY the Business' requirements for Henkel
Products.
(b) During the term of this Agreement, COMPANY shall take and
HENKEL shall manufacture and package the Business' requirements for Toll
Products listed on Schedule II. COMPANY shall pay HENKEL a manufacturing fee as
set forth in Schedule II for Toll Products produced and delivered to COMPANY
pursuant to this Agreement.
(c) (i) From time to time during the term of this Agreement,
COMPANY will issue orders for Products setting forth specific Products and
quantities of each and indicating the shipping designations and desired delivery
dates. COMPANY shall issue orders in advance of desired delivery dates
consistent with the past practice of the Business.
(ii) HENKEL shall provide certificates of analysis for all
manufactured Toll Products.
(iii) The manufacture and transfer of Products to COMPANY
shall be subject to the terms and conditions of sale attached hereto as Schedule
III (which terms and conditions have been modified to delete Article 2, Article
3, Article 13, Article 14, Article 15 and Article 16 and to change the time
period in Article 7 by which claims may be made to thirty (30) days). In the
event that there are any inconsistencies between the terms of this Agreement and
the terms on Schedule III, the terms of this Agreement shall govern.
(d) Products shall be manufactured and packaged in accordance with
the specification for Products used by HENKEL immediately prior to the Closing
Date.
(e) During the first year of this Agreement, HENKEL shall have no
obligation to sell or manufacture more than One Hundred Ten Percent (110%) of
the annual volume of each class of Product set forth on Schedule IV. Thereafter,
HENKEL shall have no obligation to sell or manufacture more than One Hundred Ten
Percent (110%) of the amount of each class of Product that was sold or
manufactured during the previous year. In the event that HENKEL agrees to sell
or manufacture quantities of Product in excess of the aforesaid quantities, the
purchase price or manufacturing fee for such Product shall be as mutually agreed
in writing.
(f) For purposes of calculating volumes, to the extent that any
Toll Product or Henkel Product is modified slightly to create a new, but closely
related product, it shall be considered to be the Product that was modified. It
shall also be considered to be the Product that was modified for purposes of
pricing unless HENKEL can document that the cost of manufacturing the new
Product is greater than the cost of manufacturing the original Product.
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(g) The manufacturing fee for Toll Products may be adjusted on the
first day of each calendar quarter but only upon thirty (30) days prior written
notice to COMPANY and only to the extent of an actual, documented change in the
purchase price of raw materials used to produce the Product. The overhead cost
of producing Toll Products may be increased on the first day of each calendar
year upon thirty (30) days advance written notice but only to reflect an
increase in labor costs and energy costs, which increase shall be determined as
follows: The overhead shall be increased by ten percent (10%) of the annual
increase in the energy component of the Producer Price Index for Finished Goods,
as reported for the month of October by the Department of Labor and by ninety
percent (90%) of the annual increase in the Employment Cost Index (Total
Compensation) as reported for the third quarter by the Department of Labor. For
example, if the overhead cost for a product is Ten Cents ($.10) and the energy
component of the Producer Price Index for Finished Goods increases by three
percent (3%) as compared to the previous October and the Employment Cost Index
(Total Compensation) increases by four percent (4%) as compared to the previous
third quarter, the increase in the overhead cost will be calculated as follows:
10% x 3% x $.10 + 90% x 4% x $.10 = $.0003 + $.0036 = an increase of $.0039.
Therefore, the new overhead cost would be $.1039.
(h) The price of Henkel Products may be adjusted on the first day
of each calendar quarter upon twenty (20) days written notice to COMPANY.
(i) Payment for Product shall be made within thirty (30) days of
the date of shipment.
(j) Each Monday during the term of this Agreement, COMPANY shall
provide a forecast of its requirement for Products for the following four (4)
weeks.
3. ASSIGNMENT.
This Agreement may not be assigned by either party without the
prior written consent of the other party; PROVIDED, HOWEVER, that this Agreement
shall be assignable by either party without prior written consent to an
Affiliate or to a purchaser of substantially all of the assets of the business
or manufacturing plant to which this Agreement relates.
4. INTELLECTUAL PROPERTY.
Nothing contained herein shall grant, or be construed to grant,
COMPANY any rights or licenses in the technology or patents relating to Henkel
Products supplied hereunder or in the trademarks under which such Products are
supplied.
5. TERM AND TERMINATION; DEFAULT.
This Agreement shall remain in effect for an initial term of five
(5) years with respect to Henkel Products and three (3) years with respect to
Toll Products beginning on the Closing Date. Thereafter, this Agreement shall be
automatically renewed for successive one-year periods, unless
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either party provides prior written notice, at least one-year in advance, of its
intent to terminate this Agreement at the end of the initial term or at any time
thereafter.
Any such termination of this Agreement shall be without prejudice
to any other remedies which either party may have against the other arising out
of such breach or default and shall not affect any rights or obligations of
either party arising under this Agreement prior to such termination. In the
event of termination by COMPANY, COMPANY shall pay the manufacturing fee for all
Toll Products ordered, processed, packaged and available for shipment prior to
the effective date of termination and shall reimburse HENKEL for all unused raw
materials for Toll Products.
This Agreement and any rights granted hereunder may be terminated as
follows:
(i) in whole or in part by the mutual written consent of the
parties hereto;
(ii) By either party by written notice to the other party upon any
material breach or default of any provision or obligation of this Agreement,
including without limitation a material breach of the representations,
warranties or covenants set forth herein, and failure to cure such breach or
default within sixty (60) days after notice thereof; or
(iii) upon termination of the Supply Agreement of even date
between the parties, relating to the supply of products by COMPANY to HENKEL, at
the election of the non-terminating party.
6. CONFIDENTIALITY AND VERIFICATION. The parties shall use reasonable
efforts to maintain the confidentiality of any proprietary or confidential
information provided by either party in connection with this Agreement. Each
party hereto shall provide the other party with reasonable access to its books
and records to permit verification of each party's compliance with the terms of
this Agreement
7. MISCELLANEOUS. This Agreement is a complete and exclusive statement
of the terms of this Agreement between the parties with respect to the subject
matter hereof and may not be changed, terminated, modified or waived except by
an instrument in writing executed by both parties hereto. This Agreement may be
executed in counterparts, each of which shall be considered an original, but all
of which together shall constitute the same instrument. No waiver by COMPANY or
HENKEL of any breach of or default under this Agreement shall constitute a
wavier of any subsequent breach or default. The parties hereby acknowledge that
HENKEL is acting solely in the capacity as an independent contractor and nothing
in this Agreement shall be construed to constitute HENKEL as an agent of
COMPANY. This Agreement shall be binding and inure to the benefit of the parties
hereto and their respective successors and assigns.
8. NOTICES. Any notice or other communication given under this
Agreement shall be in writing and shall be (i) delivered personally; (ii) sent
by documented overnight delivery service; (iii) sent by facsimile transmission,
provided that a confirmation copy thereof is sent no later than the business day
following the day of such transmission by documented overnight delivery service
or
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first class mail, postage prepaid; or (iv) sent by first class mail, postage
prepaid. Such notice shall be deemed to have been duly given (i) on the date of
delivery, if delivered personally; (ii) on the business day after dispatch by
documented overnight delivery service, if sent in such manner; (iii) on the date
of facsimile transmission, if so transmitted; or (iv) on the fifth business day
after sent by first-class mail, postage prepaid, if sent in such manner. Notices
or other communications shall be directed to the following addresses:
Notices to Seller:
Xxxxxx Corporation
0000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxx 000, The Triad
Gulph Xxxxx, Pennsylvania 19406
Attention: Xxxxxx Xxxx, Vice President
with a copy to:
Xxxxxx Corporation
0000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxx 000, The Triad
Gulph Xxxxx, Pennsylvania 19406
Attention: Xxxxxx X. Xxxxx, Vice President
Notices to Buyer:
Geo Specialty Chemicals, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
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with a copy to:
Xxxxxxxx Xxxx & Xxxxx L.L.P.
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Either party may, by notice given in accordance with this Section 8, specify a
new address for notices under this Agreement.
9. GOVERNING LAW. The parties hereto agree that all of the provisions
of this Agreement and any questions concerning its interpretation and
enforcement shall be governed by the laws of the State of Delaware.
10. FORCE MAJEURE. Neither party shall be responsible for suspension of
its performance under this Agreement if such suspension is caused by shortage of
raw materials, fire, flood, labor trouble, strikes, riots, acts of God or
compliance with rules or regulations or any governmental authority, or by
compliance with any order or decision of any court, board or other governmental
authority or by any cause beyond the reasonable control of such party. The party
claiming the benefit of this Section shall promptly give verbal notification,
promptly confirmed in writing, to the other party of the nature and extent of
the matter causing the delay and estimated duration of the suspension period.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, thereunto duly authorized, as of the
date and year first above written.
XXXXXX CORPORATION GEO SPECIALTY CHEMICALS, INC.
By: /s/ Xxxxxx Xxxx By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx Xxxx, Vice President Xxxxxx X. Xxxxxx, President
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