Sample Business Contracts
Supply Agreement - Rock of Ages Corp., Keystone Memorials Inc. and Imex International Inc.
SUPPLY AGREEMENT
SUPPLY AGREEMENT made this 20th day of August, 2001 is by and between ROCK OF AGES CORPORATION, a Delaware corporation with a principal place of business at 772 Graniteville Road, Graniteville, Vermont 05654 ("Rock"); KEYSTONE MEMORIALS, INC., a Georgia corporation with a principal place of business at Elberton, Georgia ("KMI"); and IMEX INTERNATIONAL, INC., a Georgia corporation with a principal place of business at 1519 Woodyard Road, Elberton, Georgia ("IMEX").
WHEREAS, Rock and KMI have entered into a Purchase and Sale Agreement dated August 20, 2001 ("Purchase and Sale Agreement") pursuant to which Rock has agreed to sell, and KMI has agreed to purchase, certain real property and equipment owned by Rock's wholly-owned subsidiary, Childs & Childs Granite Co., Inc.;
WHEREAS, in payment of the purchase price under the Purchase and Sale Agreement, KMI has executed a Promissory Note dated August 20, 2001 ("Note") in the principal amount of $840,000, together with interest thereon at 8% per annum, payable in 12 quarterly installments of principal and interest in accordance with the terms of a certain amortization schedule attached to the Note as Exhibit A;
WHEREAS, Rock and KMI have agreed that the Note may be paid by KMI in kind rather than in United States currency, provided that KMI is not in default of its obligations under the Purchase and Sale Agreement, the Note and this Agreement;
WHEREAS, IMEX supplies diamond tools and supplies used in the granite quarrying and manufacturing industry and also distributes certain granite products, including curbing and slabs;
WHEREAS, KMI supplies granite products, including slabs, curbing and other products; and
WHEREAS, in exchange for the supply of granite slabs and curbing by KMI to IMEX, IMEX is willing to supply Rock with diamond tools and supplies of equal value, and Rock is willing to accept such supplies in exchange for the payment of KMI's obligations under the Purchase and Sale Agreement and the Note.
NOW THEREFORE, in consideration of the mutual promises and undertakings set forth in this Agreement and in the Purchase and Sale Agreement, the parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
Unless defined below or elsewhere in this Agreement, all capitalized terms shall have the meanings set forth in the Purchase and Sale Agreement or the Note.
a. "KMI Product" shall mean granite curb products and granite slabs used for making granite curb products.
b. "IMEX Product" shall mean diamond tools used in granite quarrying, cutting, polishing and manufacturing applications, including, but not limited to diamond segments and diamond wire used in sawing applications.
c. "Total Quarterly Invoice Amount" shall mean the total dollar amount of invoices for product shipped during a quarter, including any taxes and shipping charges, less any credits given for defective products.
2. KMI's SUPPLY OBLIGATION
a. Products
KMI shall supply IMEX with KMI Product, subject to the terms and conditions set forth below:
b. Price
(i) Prices shall be those in effect at the time the order is placed. KMI shall ensure that the prices charged to IMEX for KMI Product shall be no higher than the lowest prices charged to customers purchasing like quantities of products.
(ii) Any applicable duties and sales, use, excise, value-added, and/or similar taxes will be for the account of IMEX and will be added to the invoice as a separate charge
(iii) Delivery shall be made FOB seller's factory. All transportation charges shall be for the account of IMEX and shall be added to the invoice as a separate charge. IMEX shall designate the freight carrier to be used by KMI for shipment of KMI Product.
(iv) Payment by IMEX for KMI Product shipped shall be made in kind in accordance with section 3.a below.
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c. Minimum Supply
In each quarter from the date hereof, IMEX shall place orders for, and KMI shall supply IMEX at least that quantity of KMI Products so that the Total Quarterly Invoice Amount for KMI Product is equal (as nearly as possible) to the quarterly payment due under the Note. To facilitate verification of KMI's supply obligation, no later than 15 days after the end of each quarter during the term of this Agreement, KMI shall provide Rock and IMEX copies of all invoices for product shipped during that quarter, together with a statement of credit given for any defective KMI Product.
d. Shipment; Invoicing
IMEX shall place orders for the then current quarter within the first 45 days of that quarter, and KMI shall ship and invoice IMEX for the KMI Product in each quarter during the term of this Agreement. KMI shall use its best efforts to ship that amount of KMI Product so that the Total Quarterly Invoice Amount is equal to the quarterly payment of principal and interest due under the Note.
e. Warranty
KMI warrants that the KMI Product will conform to KMI specifications and will be of KMI's standard quality for granite curbing or granite slabs used in curbing applications. IMEX's exclusive remedy under this warranty shall be the replacement of any product that does not conform to this warranty. KMI shall not be liable for any incidental or consequential damages.
3. IMEX's SUPPLY OBLIGATION
a. Products
In exchange for KMI's supply of product to IMEX, IMEX shall supply Rock with IMEX Product, subject to the terms and conditions set forth below:
b. Price
(i) Prices shall be those in effect at the time the order is placed. IMEX shall ensure that the prices charged to Rock for IMEX Product shall be no higher than the lowest prices charged to customers purchasing like quantities of products.
(ii) Any applicable duties and sales, use, excise, value-added, and/or similar taxes will be for the account of Rock and will be added to the invoice as a separate charge
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(iii) Delivery shall be made FOB seller's factory. All transportation charges shall be for the account of Rock and shall be added to the invoice as a separate charge. Rock shall designate the freight carrier to be used by IMEX for shipping IMEX Product.
(iv) Payment by Rock for product shipped shall be made in kind in accordance with section 3.e below.
c. Minimum Supply
In each quarter from the date hereof, IMEX shall supply Rock at least that quantity of IMEX Products that is equal in value to the quarterly amount due under the Note, or the Total Quarterly Invoice Amount for KMI Product shipped to IMEX during that quarter, whichever is lower. For the purposes of this section, the value of IMEX Product supplied shall be the Total Quarterly Invoice Amount for IMEX Product during the quarter. To facilitate verification of IMEX's supply obligation, no later than 15 days from the end of each quarter during the term of this Agreement, IMEX shall provide Rock and KMI copies of all invoices for product shipped during that quarter, together with a statement of credits for defective IMEX Product.
d. Order Placement
Rock shall place orders on IMEX for the IMEX Product from time to time during each quarter. Rock shall place, and IMEX shall ship, such orders so that the Total Quarterly Invoice Amount for the IMEX Product will equal, as nearly as possible, the total quarterly payment due under the Note.
d. Warranty
IMEX warrants that the products conform to Rock's specifications and will be of IMEX's highest quality and will be merchantable and fit for the applications in which such products are used. In the event that a product supplied by IMEX proves defective or otherwise does not conform to warranty, IMEX shall replace the product or, if such IMEX product proves unsuitable for the application in which it is used, IMEX shall supply Rock with suitable product from a different manufacturer.
e. Note Payments
In exchange for the supply of diamond tool products by IMEX, Rock shall apply the Total Quarterly Invoice Amount for the IMEX Product shipped during a quarter to the quarterly amount due on the Note.
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4. PROCEDURE FOR APPLYING NOTE PAYMENTS
It is the general intent of the parties that the Total Quarterly Invoice Amount of the products supplied under this Agreement in each quarter equal as nearly as possible the amount of principal and interest due under the Note each quarter. Each party recognizes that it will be impossible for the quarterly payments in kind to exactly equal the amount due in a particular quarter under the Note. Accordingly, the parties agree that the following procedures apply:
a. Quarterly Reporting and Revised Amoritzation Schedule
Within 30 days of the end of each quarter, Rock shall prepare a report showing:
(i) The Total Quarterly Invoice Amount for KMI Product shipped to IMEX during the quarter;
(ii) the Total Quarterly Invoice Amount of IMEX Product shipped to Rock during the quarter;
(iii) the total amount applied against the outstanding principal and interest due on the Note (which amount shall be equal to the lesser of the quarterly payment due under the Note or the Total Quarterly Invoice Amount of IMEX Product shipped to Rock during that quarter); and
(iv) a calculation of the remaining principal balance of the Note and a revised amortization schedule, with a demand for payment of any deficiency, if applicable.
b. Overpayment/Deficiency
In the event that the Total Quarterly Invoice Amount for IMEX Product supplied during a quarter is greater than the quarterly amount due under the Note, the excess over the amount due shall be treated as a prepayment under the Note. Subject to the limitations below, any such prepayment shall be applied first to interest due on the outstanding principal balance and then to reduction of principal. In the event that the Total Quarterly Invoice Amount of the IMEX Product supplied during a quarter is less than the amount due under the Note, the payment shall be applied first to the interest due on the outstanding principal balance and then to reduction of principal, and any unpaid principal shall continue to bear interest until it is paid. KMI and IMEX shall have 15 days from the date that they receive Rock's quarterly report to cure any deficiency, unless Rock waives such deficiency in writing and allows it to be carried over to the next quarterly payment, in which case Rock shall issue a revised amortization schedule. KMI and IMEX each agree and understand that while they must use their best efforts to ensure that the Total Quarterly Invoice Amount for their respective products will equal as nearly as possible the quarterly payment due under the Note, in no event shall the Total Quarterly Invoice Amount exceed 5% of the total quarterly payment due under the Note. If the Total Quarterly Invoice Amount does exceed 5% in a quarter, then any amount over the 5% shall be applied to the next quarterly payment under the Note and shall not be treated as a prepayment.
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c. KMI and IMEX Supply Relationship
IMEX shall only be obligated to supply that amount of IMEX Product as is equal in value to the amount of KMI Product supplied to IMEX. Notwithstanding the foregoing, KMI and IMEX may agree amongst themselves, with written notice of such agreement given to Rock, to purchase and ship more or less KMI Product in a given quarter, provided, however that such an agreement shall have no effect on IMEX's supply obligation to Rock and IMEX shall continue to meet the minimum supply obligation to Rock.
5. DEFAULT; REMEDIES
a. KMI and IMEX
The occurrence of any one or more of the events with respect to KMI or IMEX shall constitute and event of default hereunder ("Event of Default"):
(i) If KMI or IMEX defaults in their performance of their respective obligations, whether to Rock or to each other, under this Supply Agreement.
(ii) If KMI defaults in its performance of its obligations to Rock under the Purchase and Sale Agreement or the Note.
(iii) If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (a "Bankruptcy Law") either KMI or IMEX shall: (a) commence a voluntary case or proceeding; (b) consent to the entry of an order for relief against it in an involuntary case; (c) consent to the appointment of a trustee, receiver, assignee, liquidator or similar official; (d) make an assignment for the benefit of creditors; or (e) admit in writing its inability to pay its debts as they become due.
(iv) If a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (a) is for relief against either KMI or IMEX in an involuntary case; (b) appoints a trustee, receiver, assignee, liquidator or similar official for either KMI or IMEX or substantially all of their respective properties; or (c) orders the liquidation of either KMI or IMEX, and in each case the order or decree is not dismissed within 90 days.
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b. Remedies
Upon the occurrence of an Event of Default under this Supply Agreement, Rock shall have such remedies as are provided for in this Supply Agreement, the Note and the Mortgage, including, but not limited to, the right to declare the entire unpaid principal balance of the Note, together with interest thereon, due and payable in lawful currency of the United States. Rock shall also have any and all rights to foreclose on any security and collateral taken in connection with the execution and delivery of the Note.
6. AUDIT RIGHTS
Rock, KMI and IMEX shall each have the right, upon reasonable notice to the other, to review the books and records of each party to ensure their compliance with the terms of this Supply Agreement, the Purchase and Sale Agreement, and the Note.
7. MISCELLANEOUS
a. This Supply Agreement, together with the Purchase and Sale Agreement, the Note and the Mortgage, including all exhibits thereto, contains the entire agreement among the parties with respect to the subject matter hereof and thereof. This Supply Agreement may only be amended in writing, signed by all of the parties hereto.
b. Any notice required or permitted to be given hereunder shall be given in accordance with Section 14.f of the Purchase and Sale Agreement.
c. This Supply Agreement will be governed by the laws of the State of Georgia without regard to conflicts of laws principles.
d. Any disputes, controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules and judgment on the award may be entered in any court having jurisdiction thereof. The arbitration shall take place in the City of Baltimore, Maryland.
e. This Supply Agreement shall be binding on each party's successors and assigns. This Supply Agreement shall not be assigned by any party hereto without the express prior written consent of each of the other parties.
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f. The headings of Sections in this Supply Agreement are provided for convenience only and will not affect its construction or interpretation. All references to "Section" or "Sections" refer to the corresponding Section or Sections of this Supply Agreement unless otherwise specified.
IN WITNESS WHEREOF, the parties have executed this Supply Agreement as of the date first above written.
WITNESSES: KEYSTONE MEMORIALS, INC.
By: __________________________________
George T. Oglesby, III, Duly Authorized
WITNESS IMEX INTERNATIONAL, INC.
By: __________________________________
Massoud Besharat, President
WITNESS ROCK OF AGES CORPORATION
By: __________________________________
Kurt M. Swenson, Chairman/Chief Executive Officer