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EXHIBIT 10.20
PELLET SALE AND PURCHASE AGREEMENT
THIS AGREEMENT, entered into, dated and effective as of January
1, 1997 ("Agreement"), by and between Eveleth Mines LLC., a Minnesota limited
Liability Company ("Eveleth"), and Rouge Steel Company, a Delaware corporation
("Rouge").
RECITALS
WHEREAS, Eveleth desires to sell to Rouge and Rouge desires to
purchase from Eveleth certain quantities of standard grades of iron ore acid
pellets, such grades of iron ore pellets being those produced at the Eveleth
Mine ("Eveleth Mine"), located in Eveleth, Minnesota, (all such pellets
collectively being referred to herein as "Eveleth Pellets") on conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, Eveleth and Rouge agree as follows:
ARTICLE 1 - SALE AND PURCHASE
Eveleth shall sell and by these presents does sell and shall
deliver to Rouge the tonnages of Eveleth Pellets on the terms and conditions
as hereinafter provided. Rouge shall purchase and by these presents does
purchase and shall receive and pay for such tonnages of Eveleth Pellets on the
terms and conditions as hereinafter provided.
ARTICLE 2 - TONNAGE
(a) During the term of years beginning January 1, 1997
through December 31, 2002, Eveleth shall sell and deliver and Rouge shall
purchase and receive from Eveleth 45% of all Eveleth Pellets produced by
Eveleth in each year to a maximum of 2,250,000 tons annually. In the event
that Eveleth produces more than 5,000,000 tons of Eveleth Pellets in any year
of this Agreement, Rouge shall have a right of first refusal to acquire 45% of
the
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tons exceeding 5,000,000 at the same price established herein. (The word "ton",
as used herein, shall mean a gross ton of 2,240 pounds avoirdupois natural
weight).
(b) On November 1st of each year Eveleth shall advise Rouge
in writing of the tons of Eveleth Pellets that it expects to produce in the
following year. If production for such calendar year is expected to exceed
5,000,000 tons, Rouge shall advise Eveleth by November 15, whether or not it
will exercise its right of first refusal to acquire 45% of such excess. If
Rouge exercises its right Eveleth agrees to sell and deliver the additional
tonnages to Rouge in accordance with the terms and conditions and purchase
price hereinafter provided, and also agrees to offer any remaining unallocated
production for the applicable calendar year to Rouge before offering such
unallocated production to parties unrelated to Eveleth.
ARTICLE 3 - PRICE AND ADJUSTMENTS
(a) The Purchase Price for the Eveleth Pellets sold and
purchased under Article 2 above shall be based on the World Price, as defined
in Article 3(b) during each applicable year.
(b) World Price: Except as is otherwise provided herein, the
amounts calculated under this Article 3(b) shall be equal to the price
thereof, as hereinafter determined, at the time of shipment delivered f.o.b.
Rouge's vessel at Duluth, Minnesota. If delivery is taken in railroad car
f.o.b. Fairlane, Minnesota, the price will be as calculated per Article 3(b)
then adjusted for the maximum annual rail cost per ton from the mine direct to
vessel in Duluth.
The World Price component shall be determined by calculating an
average, as set out below, of the European Price (in dollars) quoted by
Companhia Vale de Rio Doce
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("CVRD") for acid (blast furnace) pellets on a per metric ton iron unit basis
f.o.b. vessel in Tubarao, Brazil, the Iron Ore Company of Canada ("IOCC") acid
(blast furnace) pellets, f.o.b. Sept-Lles, and La Compangnie Miniere Quebec
Cartier ("QCM") acid (blast furnace) pellets f.o.b. Port Cartier, each adjusted
to a gross ton natural iron unit basis (e.g. 2,240, pounds/2,204.62 pounds),
as published in IRON AGE or XXXXXXXXX.
WP = CVRD + IOCC + QCM
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Should one of CVRD, IOCC or QCM discontinue to publish prices as
hereinabove provided, then the World Price component shall be calculated on a
per metric ton iron unit basis (adjusted to a gross ton natural iron unit
basis) as the average of the prices published by the two of CVRD, IOCC or QCM
who shall continue to so publish such prices.
The parties recognize that it is the custom of CVRD, IOCC or QCM
to respectively establish prices effective for all sales of pellets during
that Year, and that such prices are usually established subsequent to the
beginning of the Year for which they are applicable. As such, the amount
calculated pursuant to Article 3(b) shall be subject, from time to time, to
adjustment and readjustment for changes, if any, in the prices established for
the sale of acid (blast furnace) pellets by CVRD, IOCC or QCM which prices are
to apply to all sales during such Year. The amount so adjusted or readjusted
under Article 3(b) shall be applied to all sales of Eveleth Pellets pursuant
to Article 2 made during such Year, as if such amount was the amount
calculated pursuant to Article 3(b) on the dates of shipment of all Tons of
Pellets sold that Year. If the adjusted or readjusted Article 3(b) amount
would have had the effect of causing a different Purchase Price to be
calculated pursuant to Article 3(b) on the date(s) of one or more shipments of
Pellets during such Year, then a corresponding debit or credit shall be issued
on the next invoice.
If all of such publications shall cease publication or cease to
publish such
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quoted prices for CVRD, IOCC or QCM as herein set forth, and such prices shall
be published by some other publication mutually recognized as generally
accepted in trade as reliable, then quotations of such price as published by
such other publications shall be employed for the purpose of establishing the
World Price.
(d) All tons sold by Eveleth to Rouge, as provided for in
Article 2 above, shall be based on actual natural iron content at time and
location of shipment.
(e) All prices are based on U.S. dollar values.
ARTICLE 4 - PAYMENTS AND ADJUSTMENTS
(a) Eveleth shall send Rouge an invoice for the actual
tonnage of Eveleth Pellets delivered during the previous month. Rouge shall
pay Eveleth all amounts due for the Eveleth Pellets purchased under Article 2
on or about the 15th day of the month following delivery of such Eveleth
Pellets.
(b) In the event Rouge shall fail to make prompt payment,
Eveleth, in addition to all other remedies available to it in law or in
equity, shall have the right, but not the obligation, to withhold further
performance by it under this Agreement until all claims it may have against
Rouge under this Agreement are fully satisfied.
(c) All payments shall be made in U.S. dollars.
ARTICLE 5 - ANALYSES
Deliveries hereunder will be sampled and analyzed at the mine
or port in accordance with the usual and customary practice with respect to
Eveleth Pellets shipped. Analyses and practices will be subject to the mutual
annual review of Eveleth and Rouge.
ARTICLE 6 - DELIVERY
Eveleth shall deliver to Rouge the specified tonnage of Eveleth
Pellets, as provided for in Article 2 above, f.o.b. vessel at the Port of
Duluth, Duluth, Minnesota, or in Rouge's rail car at Fairlane, Minnesota, and
title and all risk of loss, damage or destruction shall pass to Rouge at the
time of discharge of Eveleth Pellets from the loading device at
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such location.
ARTICLE 7 - SHIPMENTS
Shipments of Eveleth Pellets for sale in the year in which such
Pellets are shipped will be in approximately equal amounts over the nine month
period of April through December each year during the term of this Agreement,
unless otherwise mutually agreed. In the event that deliveries are materially
different from the foregoing schedule through no fault of Eveleth, Eveleth
shall be entitled to invoice Rouge pursuant to Article 4 for undelivered tons
which are available for delivery and which should have been delivered in any
previous month.
ARTICLE 8 - WEIGHTS
Xxxx of lading weight determined by certified railroad scale
weights shall be accepted by the parties as finally determining the amount of
Eveleth Pellets delivered to Rouge.
ARTICLE 9 - WARRANTIES
There are no warranties, express or implied, which extend beyond
the provisions of this Agreement, including any warranties for merchantability
or fitness for intended purpose. Eveleth and Rouge will meet to review and
determine quality standards on or before January 31, 1997 and each year
thereafter; provided, however that such review shall not relieve Rouge of its
minimum annual purchase obligation as set out in Article 2(a), All claims for
substantial variance in quality of the Eveleth Pellets shall be deemed waived
unless made in writing delivered to Eveleth within thirty (30) calendar days
of delivery to final destination in case of all rail or within thirty (30)
calendar days after completion of discharge at port of discharge. No claim
will be entertained after the Eveleth Pellets have been consumed. Each party
shall afford the other party prompt and reasonable opportunity to inspect the
Eveleth Pellets as to which any claim is made as above stated.
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ARTICLE 10 - FORCE MAJEURE
(a) No party hereto shall be held liable for damages
resulting from failure to deliver or to accept and pay for all or any of said
Eveleth Pellets, as described herein, if and to the extent that such delivery
or acceptance would be contrary to or would constitute a violation of any
regulation, order, or requirement of a recognized governmental body or
agency, or if such failure is caused by or results directly or indirectly
from acts of God, war, insurrections, interference by foreign powers,
strikes, hindrances, labour disputes, labour shortages, fires, floods,
embargoes, accidents or delays at the mines, on the railroads or docks or in
transit, shortage of transportation facilities, disasters of navigation, or
other causes, similar or dissimilar, if such other causes are beyond the
control of the party charged with a failure to deliver or to accept and pay
for said Pellets. The extent or force majeure is claimed hereunder by a
party hereto, such shall relieve the other party from fulfilling its
corresponding agreement hereunder to the party claiming such force majeure,
but only for the period and to the extent of the claimed force majeure, and
except as provided for in Article 10(b) below.
(b) It is the obligation of Eveleth to sell and Rouge to
purchase, pursuant to Article 2 above, 45% of the Eveleth Pellets produced
in each year of the term of this Agreement to a maximum of 2,250,000 tons
annually. To the extent a force majeure is claimed with respect to such sale
or purchase of Eveleth Pellets, the sale or purchase obligations shall be
suspended only for the period and to the extent of the claimed force majeure
and any such tonnage suspended by reason of the force majeure shall be sold
by Eveleth and purchased by Rouge during the calendar years subsequent to the
year December 31, 2002. The tonnage suspended by reason of force majeure
shall be sold and purchased in accordance with Article 2 above, until the
remaining balance of the tonnage suspended under the force majeure has been
sold and purchased. The price applicable to all pellets delivered after the
force majeure shall be calculated in the same manner as the
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price would have been determined during the time the pellets would have been
delivered if not for the suspension caused by the force majeure.
ARTICLE 11 - NOTICES
All notices, consents, reports and other documents authorized
and required to be given pursuant to this Agreement shall be given in writing
and either personally served on an officer of the parties hereto to whom it is
given or mailed by registered or certified mail, postage prepaid, or sent by
telex, telegram or facsimile addressed as follows:
If to Eveleth:
Eveleth Mines LLC.
N.W. U.S. Highway 53
P. 0. Xxx 000
Xxxxxxx, Xxxxxxxxx, 00000
Attention: President
Fax No. [218] 000-0000
If to Rouge:
Rouge Steel Company
Rouge Office Building
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx, X.X.X., 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
provided, however, that any party may change the address to which notices or
other communications to it shall be sent by giving to the other party written
notice of such change, in which case notices and other communications to the
party giving the notice of the change of address shall not be deemed to have
been sufficiently given or delivered unless addressed to it at the new address
as stated in said notice.
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ARTICLE 12 - TERM
This Agreement shall commence as of January 1, 1997 and shall
terminate on December 31, 2002, except for the fulfillment of obligations
incurred prior thereto. In the event Rouge has not purchased all tons of
Eveleth Pellets required to be purchased by it pursuant to this Agreement
prior to December 31, 2002, this Agreement shall not be terminated as of
December 31, 2002 and shall continue in force until such time at which Rouge
shall have purchased its required tonnage at which time the Agreement shall
terminate, but payments, adjustments and settlements shall continue thereafter
until all rights and obligations of the parties hereto which existed on such
later date have been satisfied.
ARTICLE 13 - AMENDMENT
This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
ARTICLE 14 - ASSIGNMENT
No party hereto may assign this Agreement in whole or in part
without the prior written consent of the other party, which said consent shall
not be unreasonably withheld (specifically, consent may be withheld when, in
the reasonable judgment of the non-consenting party, the proposed assignee
does not have the financial net worth and/or the financial ability to meet and
timely discharge all of its obligations hereunder), except as required by law,
governmental or judicial order, or in the case of a corporate reorganization,
consolidation or merger, in which case this Agreement shall be binding on the
parent and/or surviving corporation. All the covenants, stipulations and
agreements herein contained shall inure to the benefit of and bind the parties
hereto and their respective successors and permitted assigns.
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ARTICLE 15 - WAIVER
No waiver of any of the terms of this Agreement shall be valid
unless in writing. No waiver of any breach of any provision hereof or default
under any provision hereof shall be deemed a waiver of any subsequent breach
of default of any kind whatsoever.
ARTICLE 16 - GOVERNING LAW
This Agreement shall in all respects, including matters of
construction, validity and performance, be governed by and be construed in
accordance with the laws of the State of Minnesota.
ARTICLE 17 - PRIOR AGREEMENTS
This Agreement constitutes the complete agreement between the
parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
this 2nd day of December, 1996.
IN THE PRESENCE OF ROUGE STEEL COMPANY
[ SIG ]
------------------------- By: /s/ Xxxx X. Xxxxxxxxxxx
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Attest: [ SIG ]
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IN THE PRESENCE OF EVELETH MINES LLC.
[ SIG ]
------------------------- By: [ SIG ]
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Title: President
------------------------- Attest: [ SIG ]
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