Exhibit 10 (VV)
CONFIDENTIAL TREATMENT
CLEVELAND-CLIFFS INC HAS REQUESTED THAT THE
MARKED PORTIONS OF THIS DOCUMENT BE ACCORDED
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934
PELLET SALE AND PURCHASE AGREEMENT
This AGREEMENT (this "AGREEMENT") is entered into, dated as of December
31, 2002, by and among THE CLEVELAND-CLIFFS IRON COMPANY, an Ohio corporation
("CCIC"), CLIFFS MINING COMPANY, a Delaware corporation ("CMC"; CCIC and CMC,
collectively, "CLIFFS"), and ISPAT INLAND INC., a Delaware corporation
("INLAND"). Capitalized terms used herein and not defined in context or defined
(or cross-referenced) in Section 1 shall have the meanings given to them in the
Partnership Agreement (defined below).
RECITALS
WHEREAS, each of Inland and Cliffs Empire, Inc., a Michigan corporation
("CLIFFS EMPIRE"), is a general partner in Empire Iron Mining Partnership, a
Michigan general partnership (the "PARTNERSHIP"), pursuant to that certain
Restated Empire Iron Mining Partnership Agreement dated as of December 1, 1978,
as amended (the "PARTNERSHIP AGREEMENT"), the current parties to which are
Inland, Cliffs Empire, Empire-Cliffs Partnership, a Michigan general
partnership, Wheeling-Pittsburgh/Cliffs Partnership, a Michigan general
partnership, and the Partnership;
WHEREAS, concurrently with the execution and delivery of this Agreement,
Inland and Cliffs Empire are entering into that Purchase and Sale Agreement
("PSA") pursuant to which Cliffs Empire is to acquire Inland's 32.33% general
partnership interest in the Partnership (the date such acquisition is to be
effective, the "EFFECTIVE DATE");
WHEREAS, Cliffs and Inland currently are parties to a Pellet Sale and
Purchase Agreement, dated as of January 1, 1997, as amended (the "PREDECESSOR
PELLET SALE AGREEMENT"), providing for the sale by Cliffs and the purchase by
Inland of up to 1,000,000 tons of pellets annually in excess of Inland's Equity
Entitlements from sources controlled or managed by Cliffs; and
WHEREAS, Inland desires to purchase from Cliffs, and Cliffs desires to
sell to Inland, a tonnage of Cliffs Pellets equal to all of Inland's Excess
Annual Requirements from and after the Effective Date, subject to the terms and
conditions hereof, and Inland and Cliffs desire to terminate the Predecessor
Pellet Sale Agreement as of the Effective Date;
AGREEMENTS
NOW, THEREFORE, in consideration of the premises, their mutual covenants
and other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
The terms quoted in the above parentheses of the first introductory
paragraph of this Agreement, the WHEREAS clauses, other terms quoted throughout
this Agreement, and the
CONFIDENTIAL MATERIAL HAS BEEN
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SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
terms defined below in this Section 1 shall have the meanings assigned to them
for purposes of this Agreement.
(a) "ALTERNATIVE DAY" means, with respect to a given date that is not a
Business Day, (i) the day immediately preceding such date, if such date is a
Saturday which is not also a holiday for which banks in Cleveland, Ohio or
Chicago, Illinois are not permitted or required by law to be closed for
business, and (ii) in all other events, the next following Business Day.
(b) "BASIC CLIFFS PELLETS" means, collectively, Empire Pellets and Wabush
Pellets.
(c) "BUSINESS DAY" means any day on which banks in Cleveland, Ohio or
Chicago, Illinois are not permitted or required by law to be closed for
business.
(d) "CLIFFS PELLETS" means, collectively, Basic Cliffs Pellets and Other
Cliffs Pellets.
(e) "COMPOSITE INDEX" means, for any year, the sum of:
(i) [* * * *], multiplied by a fraction, the numerator of which is
the [* * * *] for such preceding year, and the denominator of
which is the [* * * *] for [* * * *]; plus
(ii) [* * * *], multiplied by a fraction, the numerator of which is
the [* * * *] for such preceding year, and the denominator of
which is the [* * * *] for [* * * *]; plus
(iii) [* * * *], multiplied by a fraction, the numerator of which is
the [* * * *] for such preceding year, and the denominator of
which is the [* * * *] for [* * * *].
The formula for calculating this Composite Index is set forth on Schedule 1(e).
For each year beginning in [* * * *] the Composite Index (x) shall be initially
determined based on Cliffs' good faith reasonable estimate (which shall take
into account all data that is final for the year in determination) given to
Inland not later than December 15 of the prior year and (y) shall be certified
by Cliffs not later than June 15 of such year. Beginning in [* * * *], subject
to adjustment pursuant to Section 7 hereof, payments shall be made by reference
to the Composite Index estimated (with respect to payments made with respect to
such year until June 15 of such year) and certified (with respect to payments
made with respect to such year after June 15 of such year) by Cliffs pursuant
hereto, unless disputed in good faith by Inland.
(f) "CONTRACT YEAR" means a 12-month period commencing on February 1 and
ending on January 31. For example, the 2003 Contract Year commences on 2/1/03
and ends on 1/31/04.
(g) ["* * * * "] means, for any year, the arithmetical average of the [* *
* *], for such year
(h) "EMPIRE EQUITY TONNAGE" means the total tonnage of pellets that Inland
or any subsidiary or affiliate of Inland nominates for purchase from the
Partnership, and which tonnage
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ASTERISKS DENOTE SUCH OMISSIONS.
the Partnership is required to supply in accordance with the terms and
conditions of the EIMP Ore Sales Agreement.
(i) "EXPECTED IRON CONTENT" means (i) for Empire Standard Pellets, 63.47%,
(ii) for Empire Royal Pellets, 59.96%, (iii) for Empire Viceroy Pellets, 58.64%,
(iv) for Wabush 1% Mn Standard Pellets, 64.35%, (v) for Wabush 1% Mn Flux
Pellets, 61.67%, (vi) for Wabush 2% Mn Standard Pellets, 63.57%, (vii) for
Wabush 2% Mn Flux Pellets, 60.84%, and (viii) for any kind of Other Cliffs
Pellets (subject to applicable grade and quality standards set forth in Section
4 hereof) (x) in the first year they are provided by Cliffs, the percentage
specified by Cliffs in good faith, and (y) in all other years, the actual iron
percentage for such kind of Other Cliffs Pellets for the prior year.
(j) "FLUX COMPOSITE INDEX" means, for any year, the sum of:
(i) [* * * *], multiplied by a fraction, the numerator of which is
the average cost per [* * * *] for such preceding year, and
the denominator of which is the average cost per [* * * *] for
[* * * *]; provided, however, that Cliffs shall use
commercially reasonable efforts to obtain the [* * * *]; plus
(ii) [* * * *], multiplied by a fraction, the numerator of which is
the [* * * *] for such preceding year, and the denominator of
which is the [* * * *] for [* * * *].
The formula for calculating this Flux Composite Index is set forth on Schedule
1(j). For each year beginning in [* * * *], the Flux Composite Index (x) shall
be initially determined based on Cliffs' good faith reasonable estimate (which
shall take into account all data that is final for the year in determination)
given to Inland not later than December 15 of the prior year and (y) shall be
certified by Cliffs not later than June 15 of such year. Beginning in [* * * *],
subject to adjustment pursuant to Section 7 hereof, payments shall be made by
reference to the Flux Composite Index estimated (with respect to payments made
with respect to such year until June 15 of such year) and certified (with
respect to payments made with respect to such year after June 15 of such year)
by Cliffs pursuant hereto, unless disputed in good faith by Inland.
(k) The words "INLAND'S EQUITY ENTITLEMENTS", as used herein, means the
total tonnage of pellets which Inland or any subsidiary or affiliate of Inland
actually purchases or acquires annually or otherwise receives annually from the
Minorca iron ore mine, located in Virginia, Minnesota, and the Empire Mine
pursuant to the EIMP Ore Sales Agreement; provided, however, that Inland's
Equity Entitlements with respect to Minorca shall be consistent with Minorca's
production capability as of January 1, 2003 as enhanced by subsequent continuous
production improvements.
(l) The words "IRON UNIT", as used herein, means one percent (1%) of
contained iron, and all prices per iron unit shall be expressed on an iron unit
per ton basis.
(m) [* * * *]
(n) "OTHER CLIFFS PELLETS" means, collectively, Other Cliffs Standard
Pellets and Other Cliffs Fluxed Pellets.
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SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
(o) The word "PELLETS", as used herein, means iron-bearing products at
natural moisture obtained by the pelletizing of iron ore or iron ore
concentrates, suitable for making iron in blast furnaces.
(p) The word "PERSON", as used herein, means any natural person, or any
corporation, limited liability company, limited or general partnership, trust,
association or other legal entity.
(q) [* * * *] means 100%, minus the following quotient, expressed as a
percentage:
(i) the number of tons of pellets actually delivered by Cliffs
during a Contract Year in accordance with the terms and
conditions hereof and the EIMP Ore Sales Agreement, divided by
(ii) the amount of the Excess Annual Requirements that Cliffs has
committed to supply hereunder plus the Empire Equity Tonnage
for such year.
(r) The word "TON", as used herein, means a gross ton of 2,240 pounds
avoirdupois natural weight.
(s) [* * * *] means, at any time, a price per iron unit equal to the sum
of:
(i) [* * * *], multiplied by the [* * * *]; plus
(ii) [* * * *], multiplied by the [* * * *].
Schedule 1(s) illustrates calculation of the [* * * *] for [* * * *], which is
[* * * *] per iron unit.
(t) The word "YEAR", as used herein, means a calendar year commencing on
January 1 and ending December 31.
(u) If any of the information required to calculate the Composite Index,
the [* * * *] or the [* * * *] (either because a particular product ceases to be
available, or because information is no longer [* * * *], the parties will
negotiate in good faith to revise the definition of such term to one based on
then-published information, and any dispute will be resolved pursuant to Section
15.
(v) The following is a locator list of all defined terms used throughout
this Agreement:
AGREEMENT................................................................................................1
ALTERNATIVE DAY..........................................................................................2
BASE PRICE PER IRON UNIT................................................................................13
BASIC CLIFFS PELLETS.....................................................................................2
BUSINESS DAY.............................................................................................2
CCIC.....................................................................................................1
CLIFFS...................................................................................................1
CLIFFS EMPIRE............................................................................................1
CLIFFS PELLETS...........................................................................................2
CMC......................................................................................................1
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COMMISSION..............................................................................................24
COMPOSITE INDEX..........................................................................................2
CONFIDENTIAL INFORMATION................................................................................24
CONTRACT YEAR............................................................................................2
COVERING COSTS...........................................................................................7
[* * * *]................................................................................................3
EFFECTIVE DATE...........................................................................................1
EMPIRE EQUITY TONNAGE....................................................................................3
EMPIRE PELLETS...........................................................................................8
EMPIRE PLANT.............................................................................................8
EMPIRE ROYAL PELLETS.....................................................................................8
EMPIRE SHUTDOWN..........................................................................................8
EMPIRE STANDARD PELLETS..................................................................................8
EMPIRE VICEROY PELLETS...................................................................................8
EXCESS ANNUAL REQUIREMENTS...............................................................................6
EXPECTED IRON CONTENT....................................................................................3
FLUX CHARGE PER TON.....................................................................................13
FLUX COMPOSITE INDEX.....................................................................................3
GRADE AND QUALITY SPECS..................................................................................9
INDIANA HARBOR PLANT.....................................................................................6
INLAND...............................................................................................1, 25
INLAND'S EQUITY ENTITLEMENTS.............................................................................3
IRON UNIT................................................................................................4
KEY OCFP SPECS...........................................................................................8
LAB.....................................................................................................19
[* * * *]................................................................................................4
OTHER CLIFFS FLUXED PELLETS..............................................................................8
OTHER CLIFFS PELLETS.....................................................................................4
OTHER CLIFFS STANDARD PELLETS............................................................................8
PARTNERSHIP..............................................................................................1
PARTNERSHIP AGREEMENT....................................................................................1
PELLETS..................................................................................................4
PERSON...................................................................................................4
PREDECESSOR PELLET SALE AGREEMENT........................................................................1
PSA......................................................................................................1
SAMPLES.................................................................................................18
SHORTFALL NOTICE........................................................................................11
SUPPLY SHORTFALL.........................................................................................7
[* * * *]...............................................................................................15
[* * * *]................................................................................................4
TON......................................................................................................4
WABUSH 1% MN FLUX PELLETS................................................................................8
WABUSH 1% MN STANDARD PELLETS............................................................................8
WABUSH 2% MN FLUX PELLETS................................................................................8
WABUSH 2% MN STANDARD PELLETS............................................................................8
WABUSH PELLETS...........................................................................................8
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WABUSH PLANT.............................................................................................8
[* * * *]................................................................................................4
YEAR.....................................................................................................4
2. SALE AND PURCHASE/VOLUME
(a) Subject to the other provisions of this Section 2, for each of the 12
Contract Years 2003 through 2014, inclusive, and during any extension of the
term of this Agreement, Cliffs shall sell and deliver to Inland, and Inland
shall purchase and receive from Cliffs and pay Cliffs for, a tonnage of Cliffs
Pellets equal to 100% of the total pellet tonnage consumed in the blast furnaces
or other areas that use prime blast furnace pellets (assuming the Cliffs Pellets
meet the applicable quality requirements of those other areas), at Inland's
facility at Indiana Harbor, Indiana (the "INDIANA HARBOR PLANT"), adjusted for
inventory positions, in excess of Inland's Equity Entitlements ("EXCESS ANNUAL
REQUIREMENTS") for such Contract Year; provided, however, that (i) in no
Contract Year shall Inland purchase and receive from Cliffs and the Partnership,
collectively, pursuant to (A) the EIMP Ore Sales Agreement and (B) this
Agreement, and pay Cliffs and the Partnership, collectively, for, less than [* *
* *] tons of Cliffs Pellets, and (ii) by January 31, 2008 Inland shall have
purchased and received from Cliffs and the Partnership, collectively, pursuant
to the EIMP Ore Sales Agreement and this Agreement, and have paid Cliffs and the
Partnership, collectively, for, not less than [* * * *] tons of Cliffs Pellets.
If Inland plans to close any blast furnace at the Indiana Harbor Plant for a
minimum of two years, Inland shall notify Cliffs a minimum of one year prior to
such blast furnace closure date, and the minimum annual tonnage of Cliffs
Pellets to be purchased and received by Inland from Cliffs and the Partnership,
collectively, under clause (i) of the proviso in the foregoing sentence shall be
reduced by (x) 500,000 tons per Contract Year, prorated for the first Contract
Year based upon when during such Contract Year such closure is effective for the
first blast furnace closed, (y) an additional 800,000 tons per Contract Year,
prorated for the first Contract Year based upon when during such Contract Year
such closure is effective for the second blast furnace closed, and (z) an
additional 1,200,000 tons per Contract Year, prorated for the first Contract
Year based upon when during such Contract Year such closure is effective for the
third blast furnace closed, but no change shall be made to the minimum tonnage
under clause (ii) of such proviso. If a blast furnace for which a reduction has
been granted, reopens less than 2 years after the effective date of closure,
Inland's Excess Annual Requirement for the then-current Contract Year shall
immediately be increased by an amount equal to the amount by which actual tons
purchased by Inland in the affected years was less than the then applicable
purchase requirements for such affected years (without regard to the reduction
taken for the re-opened furnace).
(b) For each of the 12 Contract Years 2003 through 2014, inclusive, and
during any extension of the term of this Agreement, Cliffs shall be obligated to
sell and deliver to Inland 100% of its Excess Annual Requirements, up to [* * *
*] tons of Cliffs Pellets per Contract Year. If Inland's Excess Annual
Requirements, as initially fixed pursuant to Section 5(a) or as adjusted
pursuant to Section 5(c), in any Contract Year exceeds [* * * *] tons, Cliffs
shall use commercially reasonable efforts to sell and deliver any pellets in
excess of [* * * *] tons. For purposes of this Section 2(b) the Cliffs Pellets
supplied by the Partnership under the EIMP Ore Sales Agreement shall count as
Cliffs Pellets supplied by Cliffs in discharge of its obligation to supply
Inland's Excess Annual Requirements. In the event that Cliffs fails to supply
Inland's
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Excess Annual Requirements which Cliffs is required to supply in accordance with
the terms and conditions hereof or fails to cause the Partnership to supply
Inland's Empire Equity Tonnage which the Partnership is required to supply in
accordance with the terms and conditions of the EIMP Ore Sales Agreement, which
failure remains uncured for 60 days (or any such shorter period of time after
which all or substantially all of Inland's pellet inventory will be consumed or
used) after notice is given by Inland of such failure (the aggregate shortfall
from Inland's Excess Annual Requirements and Empire Equity Tonnage being
referred to herein as the "SUPPLY SHORTFALL"), then Inland may, at its sole
option, "cover" by making any reasonable purchase of or contract to purchase
pellets in substitution for those due from Cliffs hereunder and from the
Partnership under the EIMP Ore Sales Agreement. Inland shall be entitled to
recover from Cliffs as damages ("COVERING COSTS") the difference between the
cost of covering and the price herein provided for [* * * *] and such other
incidental costs (such as storage and transport) related thereto, but less any
other expenses saved as a result of Cliffs' failure. In addition to the
foregoing, if the aggregate Supply Shortfall in a given Contract Year [* * * *]
of an amount equal to Inland's Excess Annual Requirements plus the Empire Equity
Tonnage, in each case for such Contract Year, and if Inland exercises its rights
to "cover" in accordance with the foregoing sentence, then [* * * *] for such
Contract Year [* * * *]. The [* * * *] shall be applied in full against the next
payment then due under Section 7(a)(ii) (and, if such reduction is larger than
such payment, against the next succeeding payments due under Section 7(a)(ii)
until such [* * * *] is recouped in full, with any unrecouped amounts still
outstanding at the end of the term of this Agreement to be paid in full by
Cliffs at that time). In the event that the [* * * *] is triggered and Inland
proceeds to cover in the manner permitted by this Section 2(b) and to recover
damages from Cliffs on account thereof, the expenses saved referred to in the
fourth sentence of this Section 2(b) shall include the amount by which the [* *
* *] has been reduced, as long as the Supply Shortfall does not exceed [* * * *]
with respect to the first [* * * *] hereunder, [* * * *] for the second [* * *
*] hereunder, and [* * * *] for any additional [* * * *] hereunder.
3. SOURCING
(a) Cliffs shall initially supply Inland with pellets produced at the
Partnership's iron ore pellet plant ("EMPIRE STANDARD PELLETS", "EMPIRE ROYAL
PELLETS" and "EMPIRE VICEROY PELLETS", as the case may be; and, collectively,
"EMPIRE PELLETS") located in Xxxxxx, Michigan (the "EMPIRE PLANT").
(b) As long as Cliffs continues as a participant in the Wabush Mines Joint
Venture, Inland may change pellet sourcing, for up to [* * * *] tons of pellets
annually, from Empire Pellets to pellets produced at the Wabush Mines Joint
Venture iron ore pellet plant ("WABUSH 2% MN STANDARD PELLETS," "WABUSH 2% MN
FLUX PELLETS," "WABUSH 1% MN STANDARD PELLETS" and "WABUSH 1% MN FLUX PELLETS,"
as the case may be; and, collectively, "WABUSH PELLETS") located in Pointe
Noire, Quebec (the "WABUSH PLANT").
(c) Cliffs may change pellet sourcing from Empire Standard Pellets to
standard pellets from other sources controlled or managed by Cliffs, provided
such pellets are of a quality comparable to that required for Empire Standard
Pellets hereunder ("OTHER CLIFFS STANDARD PELLETS"). If Cliffs desires to
provide Inland with Other Cliffs Standard Pellets, Cliffs shall give Inland not
less than three months' prior notice, and then may make such change provided
that Inland has had a reasonable opportunity to purge its stockpile of
conflicting grades of pellets.
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(d) In the event that Empire Pellets are no longer being produced at the
Empire Plant due to a permanent shutdown or a long-term (defined as not less
than 2 years) idle period (an "EMPIRE SHUTDOWN"), Cliffs shall provide one
year's advance notice thereof and shall use commercially reasonable efforts to
identify one or more alternative sources of fluxed pellets ("OTHER CLIFFS FLUXED
PELLETS") and Other Cliffs Standard Pellets to be supplied by Cliffs.
(i) In the event that, at least 90 days prior to the Empire
Shutdown, Cliffs establishes that it can supply Other Cliffs
Pellets having the grades and specifications in chemical and
physical structure described in Exhibit 3(d) attached hereto
and identified as Key OCFP Specs (the "KEY OCFP SPECS") from
one or more sources, excluding Xxxxxx Hematite Pellets (being
those pellets produced at the Xxxxxx Mining Company L.C. iron
ore pellet plant located in Xxxxxx, Michigan), and the
quantity of Wabush Pellets being limited to Inland's
requirements for Wabush Pellets (it being understood that
Cliffs shall limit sources to no more than two sources per
pellet grade type and that Inland shall not be obligated to
use more pellet sources than is commercially reasonable from a
logistical standpoint), then (A) Cliffs shall offer for sale
and delivery, and Inland may, at its option, purchase and
receive, such Other Cliffs Fluxed Pellets and/or Other Cliffs
Standard Pellets, as the case may be, in substitution for
Empire Royal Pellets, Empire Viceroy Pellets or Empire
Standard Pellets, as the case may be, hereunder, (B) Inland
shall notify Cliffs within 90 days of Cliffs' offering such
Other Cliffs Fluxed Pellets and/or such other Cliffs Standard
Pellets of the quantities of each such Pellet grade that
Inland elects to purchase and receive, (C) to the extent that
Inland elects to purchase and receive such Other Cliffs
Pellets, without limitation of the obligation to meet the Key
OCFP Specs or the grade and quality specifications set forth
in Section 3(c), Cliffs shall use commercially reasonable
efforts to ensure that Other Cliffs Fluxed Pellets and/or
Other Cliffs Standard Pellets, as the case may be, meet the
specifications described in Exhibit 3(d) attached hereto that
are identified as Secondary OCFP Specs (the "SECONDARY OCFP
SPECIFICATIONS"), [* * * *].
(ii) In the event that, within 90 days of the Empire Shutdown,
Cliffs cannot establish that it can supply the Other Cliffs
Pellets meeting the Key OCFP Specs, then either party may
immediately terminate this Agreement by written notice to the
other party, in which case each party's obligations under this
Agreement shall immediately terminate (including, without
limitation, Inland's obligation to pay any [* * * *] and such
termination of this Agreement shall be without further
recourse to either party; provided, however, that Inland may
take possession of all Cliffs Pellets for which payment under
Section 7(a)(i) has been made and Cliffs shall deliver such
pellets.
With respect to all Other Cliffs Pellets, pellet cooling, stockpiling, and dust
suppression practices will be optimized on a commercially reasonable basis to
avoid excessive moisture content in pellets. Within the one-year notice period
applicable to an Empire Shutdown, Cliffs shall
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provide Inland with a reasonable opportunity to conduct a blast furnace trial
not less than 90 days prior to the effective date of an Empire Shutdown on the
Other Cliffs Pellets to be supplied pursuant to this Section 3(d).
4. GRADES AND QUALITY
(a) Empire Pellets shall consist of the grades and specifications and
shall have the chemical and physical structure described in Exhibit A - 1 (the
"GRADE AND QUALITY SPECS") attached hereto, unless otherwise mutually agreed.
Cliffs will aim for the mid range of each specification, review production
quality data monthly and adjust procedures where applicable to attempt to
produce at the mid range of the specifications. Should Cliffs Pellets have
values outside of the specification range (quantity and quality as determined by
reference to such Exhibit A-1), then [* * * *]. For purposes of this Section
4(a), the terms "Empire Pellets" and "Cliffs Pellets" shall be deemed to include
pellets supplied by the Partnership under the EIMP Ore Sales Agreement.
(b) Wabush Pellets to be sold hereunder shall consist of the grades and
specifications, and shall have approximately the same general average chemical
and physical structure, as described in Exhibit A-2, and will be in conformance
with Wabush Mine cargo quality specifications as may be agreed to by the Wabush
Mine owners; provided, however, that if there is a material change in such
specifications, Inland may, notwithstanding any limitation contained in Section
5 hereof, adjust its Excess Annual Requirements for the then-current Contract
Year with respect to Wabush Pellets. Should any cargo of Wabush Pellets sold
hereunder have chemical, physical, or metallurgical properties that materially
deviate from those specifications shown in Exhibit A-2 or such changes to those
specifications as agreed to by the Wabush Mine owners, then Cliffs and Inland [*
* * *].
(c) Whenever any material amount of Cliffs Pellets delivered hereunder is
outside of the specification range (determined by reference to the Grade and
Quality Specs), Cliffs shall immediately furnish Inland with an off-spec report
in Inland's designated format, an example of which is attached hereto as Exhibit
A-3, defining parameter, time, cause and corrective action. With respect to any
Cliffs Pellets purchased and sold hereunder that have characteristics [* * * *]
(determined by reference to the Grade and Quality Specs), where applicable [* *
* *] in the Grade and Quality Specs). The [* * * *] referred to in the
immediately preceding sentence [* * * *] (and, if such [* * * *]. With respect
to any Cliffs Pellets purchased and sold hereunder that have characteristics [*
* * *], determined by reference to the Grade and Quality Specs [* * * *], Inland
shall (i) [* * * *] for consumption in an Indiana Harbor Plant blast furnace,
and/or (ii) determine (A) which of any such [* * * *] or (B) which of any such
[* * * *], in either such case, Inland will supply notice to Cliffs within 15
days of the shipment date as to the [* * * *] shall be (including, without
limitation, for purposes of [* * * *] hereof), and Inland shall [* * * *] in the
Grade and Quality Specs) that is equal to [* * * *]. Any [* * * *] shall count
towards Inland's minimum purchase requirements contained in Section 2(a) hereof.
For purposes of this Section 4(c), the term "Cliffs Pellets" shall be deemed to
include pellets supplied by the Partnership under the EIMP Ore Sales Agreement.
(d) During the term of this Agreement and for all subsequent extensions
pursuant to Section 18, Cliffs shall (and shall cause the Partnership to) make a
good faith effort to comply
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with Inland requests for pellet quality improvement or development
recommendations. The costs of such efforts or changes shall be allocated between
the parties as mutually agreed.
5. NOTIFICATION AND NOMINATION
(a) With respect to the tonnage of Cliffs Pellets to be purchased by
Inland for each of the Contract Years 2003 through 2014, inclusive, as provided
for in Section 2(a), on or before October 31 (excluding the Contract Year 2003
which has been provided for in Section 5(e)) of each of the Contract Years prior
to the Contract Years above, Inland shall notify Cliffs in writing of: (i)
Inland's initial preliminary total annual pellet tonnage requirements, (ii)
Inland's initial preliminary Excess Annual Requirements plus the Empire Equity
Tonnage, and (iii) Inland's initial preliminary tonnages of each of the grades
of ore nominated by Inland under the preceding clause (i).
(b) With respect to the tonnage of Cliffs Pellets to be purchased by
Inland for each of the Contract Years 2003 through 2014, inclusive (except as
otherwise provided in Section 5(e) hereof), as provided for in Section 2(a), and
during the period October 31 through November 30 of each of the Contract Years
prior to the remaining Contract Years above, Inland and Cliffs shall meet, as
needed, to discuss: (i) Inland's preliminary total annual pellet tonnage
requirements; (ii) Inland's preliminary Excess Annual Requirements plus the
Empire Equity Tonnage; (iii) the preliminary tonnages and grades of Cliffs
Pellets which Cliffs is required to sell and Inland is required to purchase
pursuant to the terms of Sections 2(a) and 2(b) above; and (iv) a preliminary
delivery schedule by ore grade for each month of the following Contract Year.
Such matters shall be reduced to writing and exchanged by the parties with
Inland confirming its preliminary Excess Annual Requirements by November 30 of
each such Contract Year. If Inland's preliminary Excess Annual Requirements,
when added with its Empire Equity Tonnage, exceed [* * * *] tons, Cliffs may, by
notice to Inland but in any case subject to its obligations to use commercially
reasonable efforts pursuant to Section 2(b) hereof, notify Inland of its
inability (and the extent of such inability) to deliver such excess amount of
Cliffs Pellets (the "SHORTFALL NOTICE"). If Cliffs delivers a Shortfall Notice,
Inland may, notwithstanding anything to the contrary herein, obtain the amount
designated in the Shortfall Notice from other suppliers. If no Shortfall Notice
is received by November 30, Cliffs shall be deemed to have agreed hereunder to
supply the full amount of Inland's Excess Annual Requirements plus Inland's
Empire Equity Tonnage (including any amount in excess of [* * * *] tons).
(c) (i) With respect to the notification of Inland's preliminary Excess
Annual Requirements of Cliffs Pellets as provided for in Sections 5(a) and 5(b)
above, on or before March 15 of the then current Contract Year of the purchase
and sale, Inland may, by written notification to Cliffs, adjust its preliminary
Excess Annual Requirements by tonnage for the then current Contract Year either
up, or by not more than [* * * *] of the total of Empire Equity Tonnage and
Excess Annual Requirements down. If Inland increases its preliminary Excess
Annual Requirements for the then current Contract Year, any such increase must
be approved by Cliffs, and on or before March 31, Cliffs shall notify Inland as
to whether or not Cliffs agrees to such increase or any part thereof. In the
event Cliffs does not agree to such increase or any part thereof, Inland may,
notwithstanding anything to the contrary herein, obtain the increased amount
from other suppliers. If, by March 15 of the then current Contract Year, Inland
shall have adjusted its preliminary Excess Annual Requirements, either up or
down (with any
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increased adjustment having been agreed to by Cliffs), then such adjusted Excess
Annual Requirements by pellet grade (subject to Section 5(d)) and tonnage shall
be deemed Inland's final Excess Annual Requirements for such Contract Year, and
Inland shall be obligated to purchase and Cliffs shall be obligated to sell such
tonnage of Cliffs Pellets in accordance with such final Excess Annual
Requirements.
(ii) If, however, Inland has not adjusted its preliminary Excess
Annual Requirements as provided for in Section 5(c)(i), then
on or before May 15 of the then current Contract Year of the
purchase and sale, Inland may, by written notification to
Cliffs, adjust its preliminary Excess Annual Requirements by
tonnage for the then current Contract Year either up, or by
not more than [* * * *] of the total of Empire Equity Tonnage
and Excess Annual Requirements down. If Inland increases its
preliminary Excess Annual Requirements for the then current
Contract Year, any such increase must be approved by Cliffs,
and on or before May 31, Cliffs shall notify Inland as to
whether or not Cliffs agrees to such increase or any part
thereof. In the event Cliffs does not agree to such increase
or any part thereof, Inland may, notwithstanding anything to
the contrary herein, obtain the increased amount from other
suppliers. If, by May 15 of the then current CONTRACT Year,
Inland shall have adjusted its preliminary Excess Annual
Requirements, either up or down (with any increased adjustment
having been agreed to by Cliffs), then such adjusted Excess
Annual Requirements by pellet grade (subject to Section 5(d))
and tonnage shall be deemed to be Inland's final Excess Annual
Requirements for such Contract Year, and Inland shall be
obligated to purchase, and Cliffs shall be obligated to sell,
such tonnage of Cliffs Pellets in accordance with such final
Excess Annual Requirements.
(iii) If, however, Inland has not adjusted its preliminary Excess
Annual Requirements as provided for in Section 5(c)(i) or
5(c)(ii), then on or before July 15 of the then current
Contract Year of the purchase and sale, Inland may, by written
notification to Cliffs, adjust its preliminary Excess Annual
Requirements by tonnage for the then current Contract Year
either up, or by not more than [* * * *] of the total of
Empire Equity Tonnage and Excess Annual Requirements down. If
Inland increases its preliminary Excess Annual Requirements
for the then current Contract Year, any such increase must be
approved by Cliffs, and on or before July 31, Cliffs shall
notify Inland as to whether or not Cliffs agrees to such
increase or any part thereof. In the event Cliffs does not
agree to such increase or any part thereof, Inland may,
notwithstanding anything to the contrary herein, obtain the
increased amount from other suppliers. If, by July 15 of the
then current Contract Year, Inland shall have adjusted its
preliminary Excess Annual Requirements, either up or down
(with any increased adjustment having been agreed to by
Cliffs), then such adjusted Excess Annual Requirements by
pellet grade (subject to Section 5(d)) and tonnage shall be
deemed to be Inland's final Excess Annual Requirements for
such Contract Year, and Inland shall be obligated to purchase,
and
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Cliffs shall be obligated to sell, such tonnage of Cliffs
Pellets in accordance with such final Excess Annual
Requirements.
(iv) If no adjustment is made on or before July 15, then the
preliminary Excess Annual Requirements by pellet grade
(subject to Section 5(d)) and tonnage for the then current
Contract Year shall be deemed to be Inland's final Excess
Annual Requirements for such Contract Year, and Inland shall
be obligated to purchase, and Cliffs shall be obligated to
sell, such tonnage of Cliffs Pellets in accordance with such
preliminary Excess Annual Requirements.
(d) At any time during the Contract Year, Inland may request an adjustment
in the allocation among pellet grades of pellets provided by Cliffs hereunder
and by the Partnership under the EIMP Ore Sales Agreement, and Cliffs shall (and
shall cause the Partnership to) use commercially reasonable efforts to
accommodate such request. Cliffs shall not produce tonnage in a grade designated
for Inland more than three months ahead of when the grade should be available
for Inland.
(e) During the Contract Year 2003, Cliffs shall sell and deliver and
Inland shall purchase and receive from Cliffs hereunder and the Partnership
under the EIMP Ore Sales Agreement and pay for a tonnage of Cliffs Pellets,
including for purposes of this Section 5(e) pellets within the Empire Equity
Tonnage, of such grades and qualities as set forth in Exhibit 5(e) subject to
the delivery schedule set forth in Exhibit 5(e).
6. PRICE AND ADJUSTMENTS
(a) In each Contract Year the price paid for the Cliffs Pellets purchased
and sold hereunder shall be determined as follows:
(i) First, taking each kind of Basic Cliffs Pellets
separately, the price per iron unit shall be determined
as provided in Section 6(b).
(ii) Second, the price per iron unit for any kind(s) of Other
Cliffs Pellets shall be determined as provided in
Section 6(c).
(b) (i) Empire Pellets shall have the following base price
per iron unit ("BASE PRICE PER IRON UNIT") for the [* *
* *]:
Base Price per
Pellet f.o.b. Iron Unit
------ ----- --------------
Empire Standard [* * * *] [* * * *]
Empire Royal [* * * *] [* * * *]
Empire Viceroy [* * * *] [* * * *]
(ii) In addition to the foregoing Base Price per Iron Unit
for Empire Pellets, for the [* * * *], in the case of
Empire Royal Pellets and Empire Viceroy
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Pellets, the following flux charge per ton ("FLUX CHARGE
PER TON") shall be added:
Flux Charge
per Ton
-----------
Empire Royal [* * * *]
Empire Viceroy [* * * *]
(iii) For the [* * * *], inclusive, the Base Price per Iron
Unit for each of the Empire Pellets, f.o.b. [* * * *],
shall be determined by multiplying the applicable Base
Price Multiplier below by the Composite Index for the
Contract Year in determination:
Base Price per
Pellet f.o.b. Iron Unit
------ ----- --------------
Empire Standard [* * * *] [* * * *]
Empire Royal [* * * *] [* * * *]
Empire Viceroy [* * * *] [* * * *]
(iv) In addition to the foregoing Base Price per Iron Unit
for Empire Pellets, for the [* * * *], inclusive, in the
case of Empire Royal Pellets and Empire Viceroy Pellets,
the following Flux Charge per Ton, determined by
multiplying the applicable flux charge multiplier by the
Flux Composite Index for the Contract Year in
determination, shall be added:
Flux Charge
per Ton
-----------
Empire Royal [* * * *]
Empire Viceroy [* * * *]
(v) Wabush Pellets shall have the following Base Price per
Iron Unit for the [* * * *]:
Base Price
Pellet f.o.b. per Iron Unit
------ ------ -------------
Wabush 2% Mn Standard Vessel at Pointe Noire [* * * *]
Wabush 2% Mn Flux Vessel at Pointe Noire [* * * *]
Wabush 1% Mn Standard Vessel at Pointe Noire [* * * *]
Wabush 1% Mn Flux Vessel at Pointe Noire [* * * *]
(vi) For the [* * * *], inclusive, the Base Price per Iron
Unit for each of the Wabush Pellets, f.o.b. vessel,
shall be determined by multiplying the
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[* * * *] Base Price per Iron Unit by the Composite
Index for the Contract Year in determination.
(c) If in any Contract Year Cliffs supplies any Other Cliffs Pellets to
Inland, the price per iron unit for such kind(s) of Other Cliffs Pellets shall
be that price per iron unit that, after taking into account the difference, if
any, in transportation costs to Inland (transportation costs shall be calculated
by reference to the actual incremental increase in transportation costs based on
Inland models and shall be certified by Inland), results in the same average
cost per iron unit (including transportation costs) delivered to the Indiana
Harbor Plant as the average cost per iron unit (including transportation costs)
delivered to the Indiana Harbor Plant would be if the entire Excess Annual
Requirements were provided from the Empire Plant f.o.b. vessel at Escanaba.
(d) [* * * *]
(e) [* * * *]
(i) [* * * *]
(A) [* * * *].
(B) [* * * *].
(ii) [* * * *].
(A) [* * * *].
(B) [* * * *].
(C) [* * * *].
(D) [* * * *].
(iii) [* * * *].
(iv) [* * * *].
(v) The rights of the parties under Section 14.8 of the Partnership
Agreement shall not be exclusive of any other rights that they may have with
respect to the subject matter of such Section.
(f) Attached as Exhibit B is an example of the application of the
provisions of this Section 6, other than Section 6(e).
7. PAYMENTS AND ADJUSTMENTS
(a) Subject to adjustment as provided in Sections 7(b) and 7(c), and
subject further to the Omnibus Agreement, Inland shall pay Cliffs [* * * *] of
each month (or if such day is not a Business Day, the Alternative Day), an
amount equal to (i) commencing as of [* * * *] 2003, [* * * *] of the total cost
of all of the tons of the various kinds of Cliffs Pellets to be supplied to
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meet Inland's Excess Annual Requirements for such Contract Year, to be
determined in each case by multiplying such Excess Annual Requirements by the
Expected Iron Content and the Base Price per Iron Unit, plus the appropriate
Flux Charge per Ton, [* * * *]. Except as otherwise provided herein, the
payments required to be made by Inland pursuant to Section 7(a)(ii) shall be
made by Inland during the initial term of this Agreement [* * * *].
(b) The payments provided for in Section 7(a)(i) shall be adjusted as
follows:
(i) In the event of any adjustment to the Excess Annual
Requirements pursuant to Section 5(b), any payments to be made
pursuant to Section 7(a)(i) after such adjustment shall be
increased or decreased so that such payments will be equal in
amount.
(ii) Beginning in [* * * *], not later than June 15 of each
Contract Year, Cliffs shall prepare and certify to Inland (x)
Cliffs' calculation of the Composite Index and the Flux
Composite Index for such Contract Year, (y) Cliffs'
recalculation of the Base Price per Iron Unit and Flux Charge
per Ton for each kind of Cliffs Pellets, based thereon, and
(z) the amount of the difference between the amount previously
paid for Cliffs Pellets during the Contract Year and the
amount that would have been paid had such adjusted Composite
Index and Flux Composite Index been in effect from the
beginning of the Contract Year. All subsequent payments to be
made under Section 7(a)(i) shall be adjusted to reflect the
revised Base Price per Iron Unit and Flux Charge per Ton, and
the next such payment shall be adjusted by the amount
specified in clause (z) above. For purposes of this Section
7(b)(ii), the term "Cliffs Pellets" shall be deemed to include
pellets supplied by the Partnership under the EIMP Ore Sales
Agreement.
(c) In addition to the adjustments to be made pursuant to Section 7(b),
not later than January 31 of each Contract Year, Cliffs shall prepare and
certify to Inland: (x) Cliffs' calculation of the actual tonnage of each kind of
Cliffs Pellets and any variance from tonnage forecast to be delivered to satisfy
Inland's Excess Annual Requirements, in each case for the prior Contract Year;
(y) the actual iron units in each kind of Cliffs Pellets, and any variance from
the Expected Iron Content expected therefore, in each case for the prior
Contract Year; and (z) the amount due from Cliffs to Inland, or vice versa, to
adjust to correct for all of the variances in clauses (x) and (y) for the prior
Contract Year. The payment due pursuant to Section 7(a)(i) next occurring after
January 31 shall be adjusted by the amount specified in clause (z).
(d) All payments shall be made by wire transfer of immediately available
funds according to such instructions as Cliffs may from time to time provide,
and shall be made in U.S. dollars.
(e) In the event Inland purchases Cliffs Pellets required to be purchased
under this Agreement in advance of the required date for such purchase, during
the 12-month period following the date of such purchase Inland shall be entitled
to defer a subsequent required purchase of Cliffs Pellets having an aggregate
price equal to the aggregate price of the Cliffs
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ASTERISKS DENOTE SUCH OMISSIONS.
Pellets purchased in advance for the same number of days as the advance purchase
was in advance of its required date. Purchases of Cliffs Pellets required under
this Agreement which are made in advance in January of any Contract Year shall
be counted as purchases of Cliffs Pellets for purposes of Inland's Excess Annual
Requirements for the next following Contract Year.
(f) In the event Inland shall fail to make payment when due of any amounts
(other than amounts disputed in good faith by Inland), Cliffs, in addition to
all other remedies available to Cliffs in law or in equity, shall have the
right, but not the obligation, to withhold further performance by Cliffs under
this Agreement until all claims Cliffs may have against Inland under this
Agreement are fully satisfied.
(g) Exhibit B illustrates the operation of the provisions of this Section
7.
8. SHIPMENTS AND DELIVERY
(a) Cliffs and Inland will agree on a mutually acceptable delivery
schedule for each Contract Year prior to December 1 of the preceding Contract
Year and Cliffs shall make pellets available hereunder in accordance with such
schedule. Such schedule must be established to match both Inland's blast furnace
requirements and Cliffs' pellet availability and will include monthly shipment
tonnage by grade. Cliffs and Inland will balance the delivery schedule by pellet
source and type so that monthly shipments will be relatively equal over the
Contract Year, considering winter shipping restrictions and production schedules
to the locations designated in Section 8(b) below. Cliffs and Inland recognize
that changes in schedule will occur as provided in Section 5, and will use
commercially reasonable efforts to accommodate such changes. For purposes of
this Section 8(a), the term "pellets" shall be deemed to include pellets
supplied by the Partnership under the EIMP Ore Sales Agreement.
(b) Deliveries shall be made as follows:
(i) Deliveries of Empire Pellets shall be made by Cliffs to Inland
f.o.b. [* * * *], and title and all risk of loss (other than
loss associated with shrinkage and, pellet handling and care
in the ordinary course in the stockpile at such Dock), damage
or destruction shall pass to Inland at the time that payment
is received for such delivery of such Pellets (For purposes of
this Section 8(b)(i), the term "Empire Pellets" shall be
deemed to include pellets supplied by the Partnership under
the EIMP Ore Sales Agreement.);
(ii) Deliveries of Wabush Pellets shall be made by Cliffs to Inland
f.o.b. vessel, Port of Pointe Noire, Quebec, or stockpiled at
Wabush Dock in Pointe Noire, Quebec, and title and all risk of
loss (other than loss associated with shrinkage and, pellet
handling and care in the ordinary course in the stockpile at
such Dock), damage or destruction shall pass to Inland at the
time that payment is received for such delivery of such
Pellets; and
(iii) Deliveries of Other Cliffs Pellets shall be made by Cliffs to
Inland f.o.b. [* * * *], and title and all risk of loss (other
than loss associated with
16
shrinkage and, pellet handling and care in the ordinary course
in the stockpile at such locations), damage or destruction
shall pass to Inland at the time that payment is received for
such delivery of such Pellets;
provided, however, that Inland shall not be entitled to take delivery or
possession of any Cliffs Pellets until Cliffs shall have received payment for
such Pellets.
9. WEIGHTS
Vessel xxxx of lading weight determined by railroad scale weights or belt
scale weights, certified in accordance with standard commercial practices, in
accordance with the procedures in effect from time to time at each of the
loading ports (which shall be reasonably acceptable to Inland), shall be
accepted by the parties as determining the amount of Cliffs Pellets delivered to
Inland pursuant to this Agreement. The weighing devices shall be regularly
tested, verified, certified, and maintained. For those scale weights or belt
scale weights Cliffs operates, Cliffs shall maintain records of certification,
which shall be made available from time to time to Inland for review and audit.
In all other cases, Cliffs shall use commercially reasonable efforts, upon the
request of Inland, to obtain from those third parties operating the scale
weights and/or belt weights, proof of certification.
10. EMPLOYMENT OF VESSELS
Inland assumes the obligation for arranging and providing appropriate
vessels for the transportation of the Cliffs Pellets delivered by Cliffs to
Inland hereunder. Inland shall arrange and provide for all vessel shipments, ore
carrier or bulk carrier type vessels suitable in all respects to enter, berth at
and leave the loading ports and suitable for the loading and mooring facilities
at the loading ports. If Cliffs supplies any Other Cliffs Pellets hereunder,
Inland shall (i) use all commercially reasonable efforts to obtain the best
possible price and other terms for transportation of such Other Cliffs Pellets,
and (ii) certify the use of such efforts, and the prices obtained for such
transportation, to Cliffs at the end of each year. Any transportation price
information supplied to Cliffs by Inland pursuant to this Section 10 shall be
kept confidential. Cliffs shall provide Inland with a reasonable opportunity to
bid for the supply of transportation services in connection with the delivery of
flux stone to the Empire Mine. For purposes of this Section 10, the term "Cliffs
Pellets" shall be deemed to include pellets supplied by the Partnership under
the EIMP Ore Sales Agreement.
11. SAMPLING AND TESTING PROCEDURES
(a) All pellet sampling procedures and analytical tests conducted on
Cliffs Pellets sold to Inland to demonstrate compliance with the Grade and
Quality Specs specified in Section 4 shall be performed by Cliffs at the loading
point on each pellet vessel shipment or train shipment, as the case may be.
Cliffs shall retain a split of each sample of whole pellets for 90 days and will
retain a ground pulp sample for chemical analysis for one year (the "SAMPLES").
Test methods to be used shall be the appropriate ASTM or ISO standard methods
published at the time of testing or any other procedures and practices that may
be mutually agreed to by Cliffs and Inland. Inland may, at any time and from
time to time through one or more authorized representatives, be present during
production, loading, or to observe sampling and analysis of
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pellets being processed for shipment to Inland. In the case of a dispute between
Inland and Cliffs as to pellet analyses, a mutually agreed upon ISO 17025
certified (or such future certification standard as may replace ISO 17025)
laboratory (the "LAB") shall be utilized to resolve the dispute. Notwithstanding
Section 15 hereof, the Lab shall act as the final arbiter of all disputes
related to pellet sampling and analysis. The party found to be in error (or if
both parties are in error, both parties) shall bear the cost of the Lab.
(b) If a daily measurement shows a [* * * *] with respect to any Cliffs
Pellets for the previous day, Cliffs will [* * * *]. Cliffs will use its best
efforts to [* * * *] and Inland will [* * * *] at the mine.
12. REPRESENTATIONS AND WARRANTIES
(a) Inland represents and warrants to, and agrees with, Cliffs that the
execution and delivery of this Agreement by Inland, and its consummation of the
transactions contemplated hereby, have been duly authorized in accordance with
all applicable laws and the certificate of incorporation and bylaws of Inland,
and no further corporate action is necessary on the part of Inland to make this
Agreement valid and binding on Inland and enforceable against Inland in
accordance with its terms. The execution and delivery of this Agreement by
Inland, and its consummation of the transactions contemplated hereby, (a) are
not contrary to the certificate of incorporation or bylaws of Inland, (b) do not
now and will not, with the passage of time, the giving of notice or otherwise,
result in a violation or breach of, or constitute a default under, any term or
provision of any indenture, mortgage, deed of trust, lease, instrument, order,
judgment, decree, rule, regulation, law, contract, agreement or any other
restriction to which Inland is a party or to which Inland or any of its assets
is subject or bound, and (c) will not result in any acceleration or termination
of any loan or security interest agreement to which Inland is a party or to or
by which Inland or any of its assets is subject or bound; provided, however that
no representation or warranty is being made regarding the validity or
enforceability of Section 18(b).
(b) Cliffs represents and warrants to, and agrees with, Inland that the
execution and delivery of this Agreement by Cliffs, and its consummation of the
transactions contemplated hereby, have been duly authorized in accordance with
all applicable laws and the articles of incorporation and bylaws of Cliffs, and
no further corporate action is necessary on the part of Cliffs to make this
Agreement valid and binding on Cliffs and enforceable against Cliffs in
accordance with its terms. The execution and delivery of this Agreement by
Cliffs, and its consummation of the transactions contemplated hereby, (a) are
not contrary to the articles of incorporation or bylaws of Cliffs, (b) do not
now and will not, with the passage of time, the giving of notice or otherwise,
result in a violation or breach of, or constitute a default under, any term or
provision of any indenture, mortgage, deed of trust, lease, instrument, order,
judgment, decree, rule, regulation, law, contract, agreement or any other
restriction to which Cliffs is a party or to which Cliffs or any of its assets
is subject or bound, and (c) will not result in any acceleration or termination
of any loan or security interest agreement to which Cliffs is a party or to or
by which Cliffs or any of its assets is subject or bound; provided, however that
no representation or warranty is being made regarding the validity or
enforceability of Section 18(b).
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(c) OTHER THAN AS SPECIFICALLY SET FORTH ELSEWHERE HEREIN (OR ANY EXHIBIT
OR SCHEDULE ATTACHED HERETO OR OTHER DOCUMENT REFERENCED HEREIN), CLIFFS MAKES
NO, AND HEREBY DISCLAIMS AND EXCLUDES ANY, EXPRESS OR IMPLIED WARRANTIES
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY, OF
FITNESS, OR OF FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO ALL CLIFFS
PELLETS. WITH RESPECT TO SUCH WARRANTIES THAT ARE SPECIFICALLY SET FORTH HEREIN
AND FOR WHICH A CORRESPONDING REMEDY IS HEREIN PROVIDED, SUCH REMEDY SHALL BE
THE SOLE AND EXCLUSIVE REMEDY FOR THE BREACH OR INACCURACY OF SUCH WARRANTY.
(d) All claims for material variance in quality of the Cliffs Pellets from
the quality described herein shall be deemed waived unless made in writing
delivered to Cliffs within sixty (60) calendar days after completion of
discharge at port of discharge. No claim will be entertained after the Cliffs
Pellets have been consumed unless it can be substantiated by the Sample
corresponding to those Cliffs Pellets. Each party shall afford the other party
prompt and reasonable opportunity to inspect the Cliffs Pellets as to which any
claim is made as above stated. The Cliffs Pellets shall not be returned to
Cliffs without prior written consent of Cliffs. CLIFFS SHALL NOT BE LIABLE FOR
ANY DAMAGE TO INLAND'S PROPERTY OR LOST PROFITS, INJURY TO GOOD WILL OR ANY
OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
13. [* * * *].
14. COVENANTS
During the term of this Agreement, Inland shall not: (a) purchase Cliffs
Pellets pursuant to this Agreement with the specific intent to resell such
pellets; or (b) sell, lease or otherwise transfer title or the right to use the
Indiana Harbor Plant (including, without limitation, its blast furnaces), or any
material portion thereof, to any Person, or merge, consolidate or reorganize
with any Person unless that Person assumes in writing this Agreement and all of
Inland's obligations hereunder.
15. ARBITRATION
(a) Upon notice by either party to the other, all disputes, claims,
questions or disagreements arising out or relating to this Agreement or breach,
termination, enforcement, interpretation or validity thereof, including the
determination of the scope or applicability of this Agreement to arbitrate,
shall, except as provided in Section 11(a) hereof, be determined by arbitration
administered by the American Arbitration Association in accordance with the
provisions of its Commercial Arbitration Rules, modified as follows:
(i) the place of arbitration shall be Cleveland, Ohio;
(ii) Unless the parties consent in writing to a lesser number, the
arbitration proceedings shall be conducted before a panel of
three neutral arbitrators, one to be appointed by Cliffs; one
to be appointed by Inland, and third to be selected by the two
arbitrators. None of the arbitrators shall be an
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employee, officer, director or consultant of, or of a direct
competitor of, Inland or Cliffs;
(iii) consistent with the expedited nature of arbitration, each
party will, upon the written request of the other party,
promptly provide the other with copies of documents on which
the producing party may rely or otherwise which may be
relevant in support of or in opposition to any claim or
defense; any dispute regarding discovery, or the relevance or
scope thereof, shall be determined by the arbitrators, which
determination shall be conclusive; and all discovery shall be
completed within 45 days following the appointment of the
arbitrators;
(iv) in connection with any arbitration arising out of Section [* *
* *], each of Cliffs and Inland shall have the right to submit
information to the arbitrators to be held in confidence by
them and not disclosed to the other party (or any other
person); provided, however, that: (A) the party providing such
information shall certify its accuracy to the best of its
actual knowledge; and (B) such information shall be made
available to counsel for the other party upon delivery by such
counsel of its undertaking to hold the information (either in
the form provided or in any other form) in confidence and not
to disclose it to its client, or any other person (other than
the arbitrators)
(v) in connection with any arbitration arising out of Section [* *
* *]: (A) before making their determination in any matter, the
arbitrators must request from each of the parties a complete
statement of its proposed resolution of such matter, and the
arbitrators shall select between the two proposed resolutions,
without making any alteration to either of them (or if either
party does not submit a proposed resolution, or submits one
that is materially incomplete, shall select the proposed
resolution of the other party); and (B) the arbitrators shall
be limited to awarding only one or the other proposed
resolution;
(vi) in connection any arbitration arising out of this Agreement,
the arbitrators shall have no authority to alter, amend, or
modify any of the terms and conditions of this Agreement, and
further, the arbitrators may not enter any award that alters,
amends or modifies terms or conditions of this Agreement in
any form or manner;
(vii) the award or decision shall be made within nine months of the
filing of the notice of intention to arbitrate, and the
arbitrators shall agree to comply with this schedule before
accepting appointment; provided, however, that this time limit
may be extended by written agreement signed by both parties or
by the arbitrators, if necessary; and
(viii) in connection with any arbitration arising out of Section [*
* * *], the costs of the arbitrators shall be borne entirely
by the party that did not
20
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
prevail; and in connection with any other arbitration related
to this Agreement, each party shall be responsible for its own
costs and expenses, and the parties will equally split the
cost of conducting the arbitration itself.
(b) The judgment of the arbitrators shall be final and binding on the
parties, and judgment upon the award rendered by the arbitrators may be entered
and enforced by any court of the United States or any state thereof.
16. FORCE MAJEURE
(a) Notwithstanding anything in this Agreement to the contrary, no party
hereto shall be liable for damages resulting from failure to deliver or accept
and pay for all or any of the Cliffs 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, including (a) failure of the mines supplying
the Cliffs Pellets to be delivered under this Agreement to produce the Cliffs
Pellets, or (b) failure of Inland's facilities to produce steel, is caused by or
results directly or indirectly from acts of God, war, insurrections,
interference by foreign powers, acts of terrorism, strikes, hindrances, labor
disputes, labor shortages, fires, flood, 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 the Cliffs Pellets. The inability to use Cliffs
Pellets as a result of any of the foregoing causes shall also be a force majeure
event under this Section, allowing Inland to fail to accept Cliffs Pellets to
the extent of such force majeure event, pro rata, with all other sources of
pellets for the Indiana Harbor Plant. To the extent a 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, except
as provided in Section 16(b) or unless otherwise mutually agreed to by the
parties.
(b) If an event of force majeure is claimed by Cliffs, Inland shall be
obligated to make the payments required by Section [* * * *] and Section [* * *
*] following the date that Cliffs claimed such event of force majeure; provided,
however, that upon any termination of such event of force majeure [* * * *]
after the date that Cliffs claimed the event of force majeure, Inland shall
continue to be obligated to make the payments required by Section [* * * *] and
Section [* * * *] from the date of such termination. In addition to the
foregoing, if Cliffs is able to offer for sale Other Cliffs Pellets in
accordance with Section [* * * *], then Inland shall be obligated to [* * * *]
under such Section [* * * *]. If the event of force majeure claimed by Cliffs
continues for [* * * *] consecutive months or longer, which event covers the
supply of substantially all of Inland's Excess Annual Requirements (including,
for these purposes, the Empire Equity Tonnage) and Cliffs is not able to offer
for sale Other Cliffs Pellets in accordance with Section [* * * *], then either
Cliffs or Inland may terminate this Agreement by written notice to the other. To
the extent that, pursuant to this Section, Cliffs offers for sale pellets
pursuant to Section [* * * *], the parties acknowledge and agree that the [* * *
*] shall be subject to reduction in accordance with Section [* * * *].
21
17. 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 party hereto to whom it is given,
or sent by recognized overnight delivery service, mailed by registered or
certified mail, postage prepaid, or by facsimile, addressed as follows:
If to CCIC or CMC:
0000 Xxxxxxxx Xxxxxx - 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Secretary
Facsimile: (000) 000-0000
cc: Vice President-Sales
Facsimile: (000) 000-0000
If to Inland:
0000 Xxxxxxx Xxxxxx
Xxxx Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
Attention: Manager Raw Materials and Purchasing
Facsimile: (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.
18. TERM
(a) The term of this Agreement shall commence as of 12:01 a.m. on
January 1, 2003 and continue through January 31, 2015 unless the term is ended
earlier pursuant to Section 18(b) hereof. The term of this Agreement shall be
automatically extended annually for one Contract Year starting February 1, 2015
unless either Cliffs or Inland gives notice of termination at least 24 months
prior to the commencement of any automatic 12-month extension or the term is
ended earlier pursuant to Section 18(b). This Agreement shall remain valid and
fully enforceable for the fulfillment of obligations accrued but undischarged
prior to expiration of the term or earlier termination.
(b) This Agreement may be terminated at any time prior to its
termination pursuant to Section 18(a), (i) by Inland, if any of the following
shall occur with respect to any of the entities that make up Cliffs (each Cliffs
entity, a "subject party" with respect to terminations by Inland), or (ii) by
Cliffs, if any of the following shall occur to Inland (the "subject party" with
respect to terminations by Cliffs):
22
(I) 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"), a subject party shall: (i)
commence a voluntary case or proceeding; (ii) consent
to the entry of an order for relief against it in an
involuntary case; (iii) consent to the appointment of
a trustee, receiver, assignee, liquidator, or similar
official; (iv) make an assignment for the benefit of
its creditors; or (v) admit in writing its inability
to pay its debts as they become due; or
(II) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (i) is for
relief against a subject party in an involuntary
case, (ii) appoints a trustee, receiver, assignee,
liquidator, or similar official for the subject party
or substantially all of the subject party's
properties, or (iii) orders the liquidation of the
subject party, and, in each case, the order or decree
is not dismissed within 60 days.
19. AMENDMENT
This Agreement may not be modified or amended except by an instrument
in writing signed by all parties hereto.
20. WAIVER
No waiver of any of the terms of this Agreement shall be valid unless
in writing and signed by all parties hereto. No waiver or any breach of any
provision hereof or default under any provisions hereof shall be deemed a waiver
of any subsequent breach or default of any kind whatsoever.
21. CONFIDENTIALITY; GOVERNING LAW
(a) Cliffs and Inland acknowledge that this Agreement contains certain
volume pricing, adjustment and term provisions which are confidential,
proprietary or of a sensitive commercial nature and which would put Cliffs or
Inland at a competitive disadvantage if disclosed to the public, specifically,
Sections 1, 2, 3, 4, 6, 7 and 13, and all of the Schedules and Exhibits hereto
("CONFIDENTIAL INFORMATION"). Cliffs and Inland further agree that all
provisions of this Agreement shall be kept confidential and, without the prior
consent of the other party, shall not be disclosed to any party not a party to
this Agreement or the legal advisor to a party to this Agreement except as
required by law or governmental or judicial order and except that disclosure of
the existence of this Agreement shall not be precluded by this Section 21.
(b) If either party is required by law or governmental or judicial
order or receives legal process or a court or agency directive requesting or
requiring disclosure of any of the Confidential Information contained in this
Agreement, such party will promptly notify the other party prior to disclosure
to permit such party to seek a protective order or take other appropriate action
to preserve the confidentiality of such Confidential Information. If either
party determines to file this Agreement with the Securities and Exchange
Commission ("COMMISSION") or any
23
other federal, state, provincial or local governmental or regulatory authority,
or with any stock exchange or similar body, such determining party will use its
best efforts to obtain confidential treatment of such Confidential Information
pursuant to any applicable rule, regulation or procedure of the Commission and
any applicable rule, regulation or procedure relating to confidential filings
made with any such other authority or exchange. If the Commission (or any such
other authority or exchange) denies such party's request for confidential
treatment of such Confidential Information, such party will use its best efforts
to obtain confidential treatment of the portions thereof that the other party
designates. Each party will allow the other party to participate in seeking to
obtain such confidential treatment for Confidential Information.
(c) 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 Ohio.
22. ASSIGNMENT
(a) For purposes of this Agreement, the term "Inland" includes and
means not only Inland, but also any successor by merger or consolidation of
Inland and any permitted assigns of Inland.
(b) In case Inland shall consolidate with or merge into another Person
or shall transfer to another Person all or substantially all of its iron and
steel business, this Agreement shall be assigned by Inland to, and shall be
binding upon, the Person resulting from such consolidation or merger or the
Person to which such transfer is made; otherwise no assignment of this Agreement
by Inland shall be valid unless Cliffs shall consent in writing thereto.
(c) In case CCIC or CMC, or any permitted assign of either of them,
shall consolidate with or merge into another corporation or shall transfer to
another Person all or substantially all of its business, this Agreement shall be
assigned by CCIC or CMC, as the case may be, to, and shall be binding upon, the
corporation resulting from such consolidation or merger or the Person to which
such transfer is made; otherwise, no assignment of this Agreement by CCIC or
CMC, as the case may be, shall be valid unless Inland shall consent thereto in
writing.
(d) 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.
23. CONFIDENTIALITY
None of the parties hereto or their Affiliates will issue any press
release or otherwise disclose or make any public statement with respect to the
transactions contemplated hereby without the prior written or oral consent of an
officer of the other parties, except to the extent that the disclosing party
determines in good faith that it is so obligated by law, in which case such
disclosing party shall give notice to the other parties in advance of such
party's intent to make such disclosure, announcement or issue such press release
and the parties hereto or their affiliates shall use reasonable efforts to cause
a mutually agreeable release or disclosure or announcement to be issued.
24
25
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective authorized officers.
THE CLEVELAND-CLIFFS IRON ISPAT INLAND INC.
COMPANY
By: By:
----------------------------- -------------------------
Name: Name:
-------------------- ------------------
Title: Title:
-------------------- -------------------
CLIFFS MINING COMPANY
By:
-----------------------------
Name:
--------------------
Title:
--------------------
[* * * *]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Schedule 1(e)
PELLET SALE AND PURCHASE AGREEMENT
COMPOSITE INDEX FORMULA FOR CONTRACT YEARS [* * * *]
CONTRACT YEAR'S COMPOSITE INDEX CALCULATION
[* * * *]
CONTRACT YEAR'S COMPOSITE INDEX = (A+B+C)
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Schedule 1(j)
PELLET SALE AND PURCHASE AGREEMENT
FLUX COMPOSITE INDEX FOR CONTRACT YEARS [* * * *]
CONTRACT YEAR'S FLUX COMPOSITE INDEX CALCULATION
[* * * *]
CONTRACT YEAR'S FLUX COMPOSITE INDEX = (A + B)
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Schedule 1(s)
PELLET SALE AND PURCHASE AGREEMENT
[* * * *]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Schedule 13
PELLET SALE AND PURCHASE AGREEMENT
[* * * *]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Exhibit A-1
Empire Standard Pellet Specifications
[* * * *]
Empire Royal Flux Pellet Specifications
[* * * *]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Empire Viceroy Flux Pellet Specifications
[* * * *]
NOTES:
(1) [* * * *]
(2) [* * * *]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Exhibit A-2
Wabush Pellet Specifications
STANDARD FLUXED
CHEMICAL % DRY 1% MN 2% MN 1% MN 2% MN
Fe
SiO2
Al2O3
CaO
MgO
Mn [* * * *] [* * * *] [* * * *] [* * * *]
P
S
TiO2
Na2O
K2O
CaO/SiO2
B/A
STRUCTURE
% +1/2"
% -1/2" + 3/8"
% -3/8" + 1/4" [* * * *] [* * * *] [* * * *] [* * * *]
% -1/4"
% -28 MESH
AVG COMPRESSION
LBS [* * * *] [* * * *] [* * * *] [* * * *]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Exhibit A-3
CLEVELAND CLIFFS PELLETS
EMPIRE VICEROY OFF SPECIFICATION QUALITY REPORT
Report No. __________
Report Date __________ Location Detected __________ Date Ispat Notified __________
Reported By __________ Date Detected __________ Notified By __________
Date produced (if known)__________ Cargo (if applicable) __________
Amount Produced (if known) __________ Material Segregated? __________ If not, total material involved __________
[* * * *]
Containment Plan:
Corrective Action Plan:
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
CLEVELAND CLIFFS PELLETS
EMPIRE ROYAL OFF SPECIFICATION QUALITY REPORT
Report No. __________
Report Date __________ Location Detected __________ Date Ispat Notified __________
Reported By __________ Date Detected __________ Notified By __________
Date produced (if known) __________ Cargo (if applicable)__________
Amount Produced (if known)__________ Material Segregated? __________ If not, total material involved __________
[* * * *]
Containment Plan:
Corrective Action Plan:
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
CLEVELAND CLIFFS PELLETS
EMPIRE STANDARD OFF SPECIFICATION QUALITY REPORT
Report No. __________
Report Date __________ Location Detected __________ Date Ispat Notified __________
Reported By __________ Date Detected __________ Notified By __________
Date produced (if known)__________ Cargo (if applicable)__________
Amount Produced (if known)__________ Material Segregated? __________ If not, total material involved __________
[* * * *]
Containment Plan:
Corrective Action Plan:
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Exhibit B
PELLET SALE AND PURCHASE AGREEMENT
PRICING-ADJUSTMENTS-PAYMENTS CALCULATION
EXAMPLE FOR CONTRACT YEARS [* * * *]
(1) SUBMIT INLAND'S EXCESS ANNUAL REQUIREMENTS BY GRADE FOR CONTRACT YEAR
EXCESS ANNUAL
REQUIREMENTS
GRADE TONS (000S)
----- -----------
Empire - Standard 200
Empire - Royal 550
Empire - Viceroy 650
Wabush - 2% Mn Flux 300
-----
Total pellet nomination 1,700
(2) DETERMINE ESTIMATED COMPOSITE INDEX FOR CONTRACT YEAR
ANNUAL AVERAGE
--------------
PRECEDING
CONTRACT WEIGHTED
COMPONENT YEAR [* * * *] WEIGHTING AVERAGE
--------- ---- --------- --------- -------
[* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
--------
(3) MULTIPLY BASE PRICE MULTIPLIER FOR EACH PELLET GRADE BY THE ESTIMATED
COMPOSITE INDEX
ADJUSTED
ESTIMATED BASE PRICE
BASE PRICE COMPOSITE PER
GRADE F.O.B. MULTIPLIER INDEX IRON UNIT
----- ------ ---------- ----- ---------
Empire - Standard
Empire - Royal [* * * *] [* * * *] [* * * *] [* * * *]
Empire - Viceroy
Wabush - 2% Mn Flux
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
(4) MULTIPLY ADJUSTED BASE PRICE PER IRON UNIT BY THE EXPECTED IRON CONTENT
TO DETERMINE ESTIMATED ADJUSTED BASE PRICE PER GROSS TON.
ADJUSTED ADJUSTED
EXPECTED BASE PRICE BASE
IRON PER PRICE
GRADE F.O.B. CONTENT (%) IRON UNIT PER TON
----- ------ ----------- --------- -------
Empire - Standard 63.47
Empire - Royal [* * * *] 59.96 [* * * *] [* * * *]
Empire - Viceroy 58.64
Wabush - 2% Mn Flux 60.84
(5) DETERMINE ESTIMATED FLUX COMPOSITE INDEX FOR CONTRACT YEAR
ANNUAL AVERAGE
--------------
PRECEDING
CONTRACT WEIGHTED
COMPONENT YEAR [* * * *] WEIGHTING AVERAGE
--------- ---- --------- --------- -------
[* * * *]
[* * * *]
---------
ESTIMATED FLUX COMPOSITE INDEX [* * * *]
(6) MULTIPLY FLUX CHARGE MULTIPLIER FOR EACH EMPIRE FLUX GRADE BY THE
ESTIMATED FLUX COMPOSITE INDEX
ADJUSTED
FLUX FLUX FLUX
CHARGE COMPOSITE CHARGE
GRADE F.O.B. MULTIPLIER INDEX PER TON
----- ------ ---------- ----- -------
Empire - Royal [* * * *]
Empire - Viceroy [* * * *]
(7) DETERMINE ESTIMATED ADJUSTED PRICE PER TON FOR EACH PELLET GRADE
ADJUSTED ADJUSTED
BASE FLUX ADJUSTED
PRICE CHARGE PRICE
GRADE F.O.B. PER TON PER TON PER TON
----- ------ ------- ------- -------
Empire - Standard [* * * *]
Empire - Royal
Empire - Viceroy
Wabush - 2% Mn Flux
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
(8) DETERMINE ESTIMATED TOTAL PAYMENTS TO CLIFFS FOR EACH PELLET GRADE
ADJUSTED EXCESS ANNUAL
PRICE REQUIREMENTS AMOUNTS
GRADE PER TON TONS (000S) ($000S)
----- ------- ----------- -------
Empire - Standard 200
Empire - Royal [* * * *] 550 [* * * *]
Empire - Viceroy 650
Wabush - 2% Mn Flux 300
-------- ----- ---------
Total Pellet Payments 1,700 [* * * *]
---------
(9) DETERMINE ESTIMATED PAYMENTS TO CLIFFS FOR THE [* * * *]
AMOUNT
OF EACH
AMOUNTS NUMBER OF PAYMENT
GRADE ($000S) PAYMENTS ($000S)
----- ------- -------- -------
[* * * *] [* * * *] [* * * *] [* * * *]
[* * * *]
--------- --------- ---------
Total [* * * *]
(10) NO LATER THAN JUNE 15 OF THE CONTRACT YEAR, CLIFFS SHALL CERTIFY
CALCULATION OF THE COMPOSITE INDEX AND THE FLUX COMPOSITE INDEX AND
MAKE CHANGES TO PRICE
ANNUAL AVERAGE
--------------
PRECEDING
CONTRACT WEIGHTED
COMPONENT YEAR [* * * *] WEIGHTING AVERAGE
--------- ---- --------- --------- -------
[* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
---------
ACTUAL COMPOSITE INDEX [* * * *]
ANNUAL AVERAGE
--------------
PRECEDING
CONTRACT WEIGHTED
COMPONENT YEAR [* * * *] WEIGHTING AVERAGE
--------- ---- --------- --------- -------
[* * * *]
[* * * *]
[* * * *]
---------
ACTUAL FLUX COMPOSITE INDEX [* * * *]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
ADJUSTED
BASE
BASE ACTUAL PRICE
PRICE COMPOSITE PER IRON
GRADE F.O.B. MULTIPLIER INDEX UNIT
----- ------ ---------- ----- ----
Empire - Standard
Empire - Royal [* * * *] [* * * *] [* * * *] [* * * *]
Empire - Viceroy
Wabush - 2% Mn Flux
ADJUSTED ADJUSTED
EXPECTED BASE PRICE BASE
IRON PER IRON PRICE
GRADE F.O.B. CONTENT (%) UNIT PER TON
----- ------ ----------- ---- -------
Empire - Standard 63.47
Empire - Royal [* * * *] 59.96 [* * * *] [* * * *]
Empire - Viceroy 58.64
Wabush - 2% Mn Flux 60.84
ADJUSTED
FLUX FLUX FLUX
CHARGE COMPOSITE CHARGE
GRADE F.O.B. MULTIPLIER INDEX PER TON
----- ------ ---------- ----- -------
Empire - Royal [* * * *] [* * * *] [* * * *] [* * * *]
Empire - Viceroy
ADJUSTED
ADJUSTED FLUX ADJUSTED
BASE PRICE CHARGE PRICE
GRADE F.O.B. PER TON PER TON PER TON
----- ------ ------- ------- -------
Empire - Standard
Empire - Royal [* * * *] [* * * *] [* * * *] [* * * *]
Empire - Viceroy
Wabush - 2% Mn Flux
(11) DETERMINE ESTIMATED TOTAL PAYMENT TO CLIFFS FOR EACH PELLET GRADE AFTER
JUNE 15 CERTIFICATION OF THE COMPOSITE INDEX AND THE FLUX COMPOSITE
INDEX
EXCESS ANNUAL ADJUSTED ANNUAL
REQUIREMENTS PRICE AMOUNT
GRADE DELIVERED TONS (000S) PER TON ($000S)
--------------- ----------- ------- -------
Empire - Standard
Empire - Royal [* * * *] [* * * *] [* * * *]
Empire - Viceroy
Wabush - 2% Mn Flux
---------
Total Payments [* * * *]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
(12) DETERMINE REVISED ESTIMATED PAYMENTS TO CLIFFS FOR THE [* * * *] FOLLOWING
JUNE 15 CERTIFICATION. MAKE ADJUSTMENT TO PAYMENTS AND THE AMOUNT OF THE
DIFFERENCE BETWEEN THE AMOUNT PREVIOUSLY PAID FOR CLIFFS PELLETS DURING THE YEAR
AND THE AMOUNT THAT WOULD HAVE BEEN PAID.
ADJUSTED PREVIOUS
AMOUNT AMOUNT
OF EACH OF EACH
AMOUNTS NUMBER OF PAYMENT PAYMENT
($000S) PAYMENTS ($000S) ($000S)
------- -------- ------- -------
[* * * *]
[* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
--------- --------- --------- ---------
Total
NUMBER OF AMOUNTS
PAYMENTS ($000S)
PAYMENT BEFORE PAID BEFORE
($000S) JUNE 15 JUNE 15
------- ------- -------
Adjusted Amount of Each Payment [* * * *] [* * * *] [* * * *] [* * * *]
Previous Amount of Each Payment
--------- --------- ---------
Payment Adjustment
June 22nd Pellet Payment Amount [* * * *]
Remaining Pellet Payment Amounts
[The remainder of this page is intentionally left blank]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
(13) NO LATER THAN JANUARY 31 OF THE YEAR FOLLOWING THE CONTRACT YEAR, CLIFFS
SHALL CERTIFY ACTUAL TONNAGE OF CLIFFS' PELLETS DELIVERED TO SATISFY INLAND'S
EXCESS ANNUAL REQUIREMENTS AND THE ACTUAL AVERAGE IRON UNITS OF EACH KIND OF
CLIFFS PELLETS DELIVERED TO INLAND AND THE AMOUNT DUE FROM CLIFFS TO INLAND OR
VICE VERSA
ADJUSTED ADJUSTED
ACTUAL ACTUAL BASE PRICE ADJUSTED FLUX
TONS IRON PER IRON BASE PRICE CHARGE
GRADE DELIVERED (000S) CONTENT (%) UNIT PER TON PER TON
--------------- ------ ----------- ---- ------- -------
Empire - Standard 225 63.75
Empire - Royal 550 59.60 [* * * *] [* * * *] [* * * *]
Empire - Viceroy 650 58.74
Wabash - 2% Mn Flux 275 60.25
PREVIOUS
ADJUSTED ---------------------------
PRICE ACTUAL AMOUNTS TONS AMOUNTS
GRADE DELIVERED PER TON TONS (000S) ($000S) (000S) ($000S)
--------------- ------- ----------- ------- ------ -------
Empire - Standard 225 200
Empire - Royal [* * * *] 550 [* * * *] 550 [* * * *]
Empire - Viceroy 650 650
Wabash- 2% Mn Flux 275 300
------ --------- ----- ---------
Total 1,700 1,700
Payment To (From) Inland [* * * *]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Exhibit 3(d)
PELLET SALE AND PURCHASE AGREEMENT
[* * * *]
[* * * *]
[* * * *]
[* * * *]
[* * * *]
[* * * *]
[* * * *]
[* * * *]
[* * * *]
[* * * *]
[* * * *]
[* * * *]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT 5(e)
PELLET SALE AND PURCHASE AGREEMENT
PRELIMINARY TOTAL EMPIRE EQUITY, EXCESS ANNUAL REQUIREMENTS AND
DELIVERY SCHEDULE
YEARS 2003 - 2014
(1) On or before October 31 of each of the Contract Years prior to the Contract
Year in determination, Inland shall notify Cliffs in writing of Inland's initial
preliminary total Empire Equity Tonnage and Excess Annual Requirements Tonnage
by grade
INLAND'S INITIAL 2003 PRELIMINARY TOTAL EMPIRE EQUITY TONNAGE AND EXCESS ANNUAL
REQUIREMENTS TONNAGE BY GRADE
GRADE TONS ('000'S GT)
----- ----------------
Standard [* * * *]
Viceroy [* * * *]
Royal [* * * *]
Wabush 2% Mn Flux [* * * *]
---------
Total [* * * *]
(2) On or before October 31 of each of the Contract Years prior to the Contract
Year in determination, Inland shall provide to Cliffs Inland's planned shipment
and delivery schedule related to Inland's preliminary total Empire Equity
Tonnage and Excess Annual Requirements Tonnage by grade, and such shipment
schedule shall be updated and provided to Cliffs monthly during the Contract
Year
Ispat Inland SHIPMENTS NOTE: SHIPMENTS ARE SHOWN IN THE MONTH UNLOADING IS COMPLETED
GRADE INV 12/31/02 JAN, 2003 FEB MAR APR MAY JUN JUL AUG
----- ------------ --------- --- --- --- --- --- --- ---
Standard [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
Viceroy [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
Royal [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
Wabush 2% Mn Flux [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
--------- --------- --------- -------- --------- --------- --------- --------- ---------
Total [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
REVISED
NOTE: SHIPMENTS ARE SHOWN IN THE MONTH UNLOADING IS COMPLETED FEB>JAN SHIPS NOMINATION 1/31/2004
GRADE SEP OCT NOV DEC JAN, 04 - BEG. INV. TOTAL INV.
----- --- --- --- --- ------- ----------- ----- ----
Standard [* * * *] [* * * *] [* * * *] [* *] [* * * *] [* * * *] [* * * *] [* * * *]
Viceroy [* * * *] [* * * *] [* * * *] [* *] [* * * *] [* * * *] [* * * *] [* * * *]
Royal [* * * *] [* * * *] [* * * *] [* *] [* * * *] [* * * *] [* * * *] [* * * *]
Wabush 2% Mn Flux [* * * *] [* * * *] [* * * *] [* *] [* * * *] [* * * *] [* * * *]
--------- --------- --------- ----- --------- --------- --------- ---------
Total [* * * *] [* * * *] [* * * *] [* *] [* * * *] [* * * *] [* * * *] [* * * *]
