EXHIBIT 10(fff)
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AMENDED AND RESTATED PELLET SALE AND PURCHASE AGREEMENT
THIS AMENDED AND RESTATED PELLET SALE AND PURCHASE AGREEMENT (the
"Agreement"), entered into, dated and effective as of January 1, 2006 (the
"Effective Date"), by and among CLIFFS SALES COMPANY, an Ohio corporation
("Cliffs Sales"), THE CLEVELAND-CLIFFS IRON COMPANY, an Ohio corporation
("Iron"), CLIFFS MINING COMPANY, a Delaware corporation ("Mining") ("Cliffs
Sales", "Iron" and "Mining" being collectively referred to herein as "Cliffs")
and SEVERSTAL NORTH AMERICA, INC., a Delaware corporation ("Severstal").
RECITALS
WHEREAS, Cliffs and Rouge Steel Company ("Rouge") are parties to that
certain Pellet Sale, Purchase and Trade Agreement dated January 1, 1991, as
amended (the "Original Contract"), pursuant to which Cliffs provided Rouge with
iron ore pellets in connection with Rouge's steel manufacturing and processing
activities; and
WHEREAS, on October 23, 2003, Rouge filed for protection under Chapter 11
of the United States Bankruptcy Code in the bankruptcy case styled In re: Rouge
Industries, Inc., et al., case number 03-13272 (the "Bankruptcy Case") in the
United States Bankruptcy Court for the District of Delaware; and
WHEREAS,on or about January 30, 2004, in connection with the Bankruptcy
Case, OAO Severstal acquired substantially all of Rouge's assets, including an
assignment by Rouge of the Original Contract pursuant to Xxxxxxx 000 xx xxx
Xxxxxx Xxxxxx Bankruptcy Code to Severstal, a subsidiary of OAO Severstal, which
Severstal has expressly agreed to assume; and
WHEREAS, during the years 2004 and 2005 respectively, Cliffs sold to
Severstal and Severstal purchased from Cliffs 3,276,317 tons and approximately
3,450,000 tons of standard grades of iron ore pellets upon the terms and
conditions set forth in the Original Contract, as
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amended, including the amendments contained in the January 29, 2004 Letter
Agreement by and between Rouge, Iron, Mining and Severstal (the "2004 Letter
Agreement"); and
WHEREAS, Cliffs desires to continue to sell to Severstal and Severstal
desires to continue to purchase from Cliffs certain quantities of standard
grades of iron ore pellets upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, Cliffs and Severstal agree as follows:
SECTION 1. - DEFINITIONS.
The terms quoted in the above parentheses of the first introductory
paragraph of this Agreement and the WHEREAS clauses, other terms quoted
throughout this Agreement, and the terms defined below in this Section 1 shall
have the meanings assigned to them for purposes of this Agreement. Attached as
Appendix I to this Agreement is a locator list of all defined terms used
throughout the Agreement.
(a). The word "ton", as used herein, shall mean a gross ton of 2,240
pounds avoirdupois natural weight.
(b). The word "pellets", as used herein, shall mean a product obtained by
pelletizing iron ore or iron ore concentrates, suitable for iron making in blast
furnaces.
(c). The words "[*****] Pellets", as used herein, shall mean pellets to
which have been added sufficient quantities of [*****] and [*****] so as to
increase the percentage of [*****] content of the pellet to a minimum of [*****]
and the percentage of [*****] content of the pellet to a minimum of [*****]
(unless such specifications are changed pursuant to Section 4), such pellets
being those currently produced at the [*****], located in [*****].
(d). The words "[*****] Pellets", as used herein, shall mean pellets with
approximately [*****] content produced at the [*****] iron ore plant located at
[*****].
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(e). The words "iron unit", as used herein, shall mean one percent (1%)
iron contained in a ton.
(f). The word "year", as used herein, shall mean a calendar year.
SECTION 2. - SALE AND PURCHASE.
(a). Cliffs shall sell and by these presents does sell and shall deliver
to Severstal, the tonnages and grades of [*****] Pellets and [*****] Pellets or
other mutually agreed pellets (the [*****] Pellets, [*****] Pellets and any
other mutually agreed pellets collectively referred to herein as "Cliffs'
Pellets") on the terms and conditions as hereinafter provided. Severstal shall
purchase and by these presents does purchase and shall receive and pay for such
tonnages and grades of Cliffs' Pellets on the terms and conditions as
hereinafter provided.
SECTION 3. - TONNAGE/IRON UNITS.
(a). During the term of this Agreement, Cliffs shall sell to Severstal and
Severstal shall purchase from Cliffs all of Severstal's annual iron ore pellet
tonnage requirements, such requirements being equal to Severstal's total annual
iron ore pellet tonnage requirements, based on Severstal's operating
configuration as of the Effective Date of this Agreement, for consumption in
Severstal's iron and steelmaking facilities in any year ("Severstal's Annual
Pellet Tonnage Requirements").
(b). The iron ore pellets to be purchased by Severstal during the term of
this Agreement shall consist of [*****] Pellets, [*****] Pellets, or other
mutually agreed pellets, provided that Cliffs has available for sale [*****]
Pellets. In the event Cliffs has [*****] Pellets available, Severstal may
purchase up to [*****] of Severstal's Annual Pellet Tonnage Requirements in
[*****] Pellets. In the event Cliffs does not have sufficient [*****] Pellets
available, Severstal and Cliffs shall mutually agree on another acceptable
Cliffs' iron ore pellet, which substituted pellet shall be priced at a per iron
unit that would yield a comparable delivered cost to Severstal had Severstal
been able to purchase the [*****] Pellets.
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(c). During the years [*****], (i) Severstal shall purchase from Cliffs
all of Severstal's Annual Pellet Tonnage Requirements at prices to be
established in accordance with the Agreement, and (ii) such purchases shall be
in amounts equal to a minimum aggregate tonnage of [*****] tons of Cliffs'
Pellets and shall in each year of the years [*****] be in accordance with the
following schedule:
YEAR MINIMUM TONNAGE
--------------------- ---------------
[*****] [*****]
Non-allocated [*****] [*****]
TOTAL [*****]
The non-allocated tonnage shall be purchased during the years [*****] and, for
the purchases in year 2006, shall be in addition to the minimum tonnage
purchased during such year.
(d). [*****]
(e). All tons sold by Cliffs to Severstal, as provided for in this Section
3, shall be based on actual natural iron content and determined as herein
provided.
SECTION 4. - NOTIFICATION AND NOMINATION.
(a). With respect to the tonnage of Cliffs' Pellets to be purchased by
Severstal for the year 2006 (and during any years after 2006 in the event the
Agreement is extended pursuant to Section 16), on or before [*****] of the prior
year thereto, Severstal shall notify Cliffs in writing of the preliminary total
number of iron units which Severstal shall purchase from Cliffs.
(b). With respect to the preliminary tonnage nominations as provided for
in Section 4(a) above, on or before [*****] of the then current year, Severstal
may, by written notification to Cliffs, adjust its preliminary tonnage
nominations by not more than [*****], up or down. If, by [*****] of the then
current year, Severstal shall have adjusted its preliminary tonnage nominations,
then such adjusted tonnage nominations shall be deemed their final tonnage
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nominations for such year, and Severstal shall be obligated to purchase such
tonnage in accordance with such final tonnage nominations.
(c). If, however, Severstal has not adjusted its preliminary tonnage
nomination as provided for above, then on or before [*****] of the then current
year, Severstal may, by written notification to Cliffs, adjust its preliminary
tonnage nominations by not more than [*****], up or down. Such adjusted tonnage
nominations shall be deemed to be Severstal's final tonnage nominations for such
year, and Severstal shall be obligated to purchase such tonnage with Cliffs in
accordance with such final tonnage nominations.
(d). If no adjustment is made on or before [*****], then the preliminary
tonnage nomination, as provided above, shall be deemed to be Severstal's final
tonnage nominations for such year, and Severstal shall be obligated to purchase
such tonnages with Cliffs in accordance with such preliminary tonnage
nominations.
SECTION 5. - PRICE AND ADJUSTMENTS.
(a). Quarterly Adjustments. Effective as of the quarter ended [*****],
prices for Cliffs' Pellets shall be adjusted on a calendar quarterly basis based
upon estimated and actual changes in the published pricing factors and indices
specified in Section (d)(i) below (a "Quarterly Price Adjustment"). Cliffs shall
calculate the Quarterly Price Adjustment and provide Severstal with such
Quarterly Price Adjustment by the 15th day after the end of each calendar
quarter, or on such later date as may be mutually agreed between Cliffs and
Severstal. The adjusted prices for [*****] Pellets and [*****] Pellets
determined in such Quarterly Price Adjustment shall have prospective effect
until the next Quarterly Price Adjustment and shall have retroactive effect for
the prior calendar quarters for the applicable year. Any overpayment or
underpayments for such prior calendar quarters shall be promptly paid, by Cliffs
or Severstal as applicable, within thirty (30) days of the determination of any
such Quarterly Price Adjustment.
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(b). Year End Adjustments. A final adjustment shall be made to the prices
for Cliffs' Pellets for each year on or about [*****] of the following year once
final pricing factors and indices for the applicable year have been published in
accordance with Section (d)(i) below (the "Year End Adjustment").
(c). [*****] Pellets. The price for [*****] tonnage of [*****] Pellets
sold by Cliffs and purchased by Severstal shall have a [*****] price per iron
unit of [*****], which is comprised of [*****] per iron unit paid in the [*****]
plus [*****] per iron unit in excess of [*****] carried forward to [*****].
(d). Adjustment to [*****] Price. The price for the [*****] Pellets as
provided for in (c) above, purchased in the year [*****] (and during any years
after [*****] in the event the Agreement is extended pursuant to Section 16)
shall be adjusted. In order to determine the adjusted price to be paid for the
[*****] Pellets for each such year, the price per iron unit for the year [*****]
and for each of the respective years thereafter, as then calculated, for [*****]
Pellets shall be further adjusted, up or down, each year for the year in
determination by an amount equal to the sum of the adjustment factors (i), (ii),
(iii) and (iv) below:
(i). [*****] of the amount obtained by multiplying the as then
adjusted price per iron unit for [*****] Pellets for the year in determination
by a fraction (as converted to a decimal) determined by,
(y) dividing the numerator of which is the amount by which the
[*****] for the calendar year in determination changes (up to down) from [*****]
for the immediately preceding year; and
(z) by the denominator of which is [*****] for the immediately
preceding year.
Plus;
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(ii) [*****] of the amount obtained by multiplying the as then
adjusted price per iron unit for [*****] Pellets for the year in determination
by the fraction (as converted to a decimal) determined by,
(y) dividing the numerator, which is the amount by which
[*****] for the calendar year in determination changes (up or down) from the
immediately preceding calendar years [*****];
(z) by the denominator, which is the immediately preceding
calendar year's [*****];
Plus;
(iii) [*****] of the amount obtained by multiplying the [*****] by
the fraction (as converted to decimal) determined by
(y) dividing the numerator, which is the amount by which
[*****] for the calendar year in determination changes (up or down) from the
immediately preceding calendar years [*****];
(z) by the denominator, which is the immediately preceding
calendar year's [*****];
Plus;
(iv) [*****] of the amount obtained by multiplying [*****] for the
year in determination by the fraction (as converted to decimal) determined by
(y) dividing the numerator, which is the amount by which
[*****] for the calendar year in determination changes (up or down) from the
immediately preceding calendar years [*****];
(z) by the denominator, which is the immediately preceding
calendar year's [*****].
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An example of the calculation of the adjustment under this Section 5(d) is
included as Exhibit I to this Agreement.
(e). [*****]
(f). [*****]
(g). [*****]
(i). [*****]
(ii). [*****]
(iii). [*****]
(h). [*****] Pellets. The price for any tonnage of [*****] Pellets shall
be the price for [*****] Pellets calculated as provided in Section 5(d) above,
[*****]. Sample price calculations for [*****] Pellets are attached as Exhibits
II(a), II(b), III(a) and III(b) and are incorporated herein by reference.
(i). The price for any other mutually agreed upon Cliffs' iron ore
pellets, which are substituted for the [*****] Pellets, shall be priced so as to
provide Severstal with a delivered price equal to the price for the substituted
[*****] Pellets, as the case may be.
(j). [*****]
SECTION 6. - DELIVERY, CREDIT AND PAYMENT.
(a). For all cargoes of Cliffs' Pellets shipped to Severstal beginning as
of the date hereof, Cliffs shall retain title to the cargoes of Cliffs' Pellets
so shipped until Severstal makes payment for the Cliffs' Pellets. Severstal
shall pay Cliffs for each cargo of Cliffs' Pellets shipped during the month by
wire transfer to Cliffs no later than [*****] following the shipment of a cargo.
Title to the Cliffs' Pellets for each such cargo of Cliffs' Pellets shipped
shall pass to Severstal [*****].
(b). [*****]
(c). In the event Severstal shall fail to make prompt payment, Cliffs, in
addition to all other remedies available to it in law or in equity, shall have
the right, but not the obligation, to
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withhold further performance by it under this Agreement until all claims it may
have against Severstal under this Agreement are fully satisfied.
SECTION 7. - GRANT OF SECURITY INTEREST.
(a). Severstal acknowledges and agrees that, except [*****], it is the
intent of the parties that title to the Cliffs' Pellets shall pass to Severstal
solely upon [*****] in accordance with the terms of this Agreement. However, to
secure the payment and performance of all obligations of Severstal due to Cliffs
pursuant to this Agreement, Severstal hereby grants, pledges and assigns to
Cliffs a purchase money security interest ("PMSI") in all of Severstal's right,
title and interest in and to the Cliffs' Pellets to the extent that Severstal
takes possession of any Cliffs' Pellets in any fashion prior to making payment
as required under this Agreement as well as the proceeds of any of the Cliffs'
Pellets, including the proceeds of any insurance related thereto (collectively,
the "Collateral").
(b). Upon delivery of any of the Collateral to Severstal by Cliffs, the
Collateral shall be located at the addresses set forth on Attachment A hereto.
Severstal will deliver written notice to Cliffs at least thirty (30) days prior
to any change in the locations of any of the Collateral.
(c). The PMSI granted to Cliffs that attaches to a specific shipment of
inventory shall automatically terminate upon the date of Cliffs' receipt from
Severstal of payment in full for said shipment (the "PMSI Termination Date").
Prior to the applicable PMSI Termination Date, the Collateral will at all times
be free and clear of any lien, security interest, mortgage, charge or
encumbrance created by or through Severstal or any of its affiliates that is
senior to the security interest granted to Cliffs pursuant to this Agreement.
(d). Severstal hereby authorizes Cliffs to file UCC financing statements
and any amendments, modifications or continuation statements thereto, as Cliffs,
in its sole discretion, deems necessary or advisable to perfect its security
interest in the Cliffs' Pellets granted hereunder, that describes the Collateral
and to include any information required for the
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sufficiency or filing office acceptance of any such financing statements,
amendments, modifications or continuation statements. Severstal covenants and
agrees to (i) provide promptly any information requested by Cliffs for inclusion
on such financing statements, amendments, modifications or continuation
statements and to provide prompt notice of any change in such information and
(ii) to take such further actions and duly execute and deliver such further
documentation as Cliffs may request in order to fully protect its security
interest in the Cliffs' Pellets granted hereunder.
(e). Prior to the applicable PMSI Termination Date, Severstal will keep
and preserve the Collateral in a commercially reasonable manner and will not
use, sell or offer to sell, pledge or encumber, process, destroy or consume the
Collateral.
(f). Severstal and Cliffs acknowledge that in the event of a default
hereunder by Severstal, Cliffs will have all the rights and remedies afforded a
secured party under the Uniform Commercial Code as adopted in the State of
Michigan with respect to the Collateral.
SECTION 8. - ANALYSES.
The [*****] Pellets delivered hereunder will be sampled at the [*****]
Mine and analyzed by mine technicians or such independent chemists as may be
mutually agreed upon, and said analyses shall be final and the weighted average
of all such analyses of each grade of [*****] Pellets delivered hereunder shall
constitute the basis of settlement hereunder for such grade of [*****] Pellets.
The cost of sampling and analyzing by independent chemists, if requested by any
party, shall be borne by the party requesting such sampling and analyzing.
The [*****] Pellets delivered hereunder will be sampled at the [*****]
iron ore pellet plant and analyzed by mine technicians or such independent
chemists as may be mutually agreed upon, and said analyses shall be final and
the weighted average of all such analyses of each grade of [*****] Pellets
delivered hereunder shall constitute the basis of settlement hereunder for
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such grade of [*****] Pellets. The cost of sampling and analyzing by independent
chemists, if requested by any party, shall be borne by the party requesting such
sampling and analyzing.
SECTION 9. - QUALITY.
Cliffs' Pellets, when loaded for shipment, will be consistent with the
typical specifications and analysis limits set forth on Exhibit IV. Both parties
acknowledge the need for defining measurement of product characteristic
capabilities and quality system requirements. The basis for agreement will be
the use of statistical calculation of capabilities and a quality system based on
ISO 9001:2000 requirements.
SECTION 10. - SHIPMENTS.
Within thirty (30) days prior to the first shipment of Cliffs' Pellets of
each year, Cliffs and Severstal will establish a schedule of shipments for the
Cliffs' Pellets for such year, which schedule may be changed during such year by
mutual agreement. In the event Cliffs and Severstal are unable to agree upon a
shipping schedule, the Cliffs' Pellets will be available for shipment in
approximately equal amounts over the nine month period of April through December
of each year during the term of this Agreement and shipment and delivery shall
be made in accordance with such availability.
SECTION 11. - WEIGHTS.
Vessel xxxx of lading weight determined by certified railroad scale
weights, certified belt scale weights or certified bin scale weights in
accordance with the procedures in effect from time to time at each of the
loading ports shall be accepted by the parties as finally determining the
amounts of the Cliffs' Pellets delivered to Severstal pursuant to this
Agreement.
SECTION 12. - EMPLOYMENT OF VESSELS OR RAILROAD CARS.
Severstal shall assume the obligation for arranging, providing and paying
for the appropriate vessels for the transportation of all of the Cliffs' Pellets
delivered by Cliffs to Severstal.
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Cliffs shall be responsible for any and all demurrage charges incurred
during the loading of [*****]Pellets for Severstal at [*****].
SECTION 13. - WARRANTIES.
THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED, WHICH EXTEND BEYOND THE
PROVISIONS OF THIS AGREEMENT, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR INTENDED PURPOSE. All claims for substantial variance in quality of
the Cliffs' Pellets, as described herein, shall be deemed waived unless made in
writing delivered to Cliffs within the thirty (30) calendar days after
completion of discharge at port of discharge. No claim will be entertained after
the Cliffs' Pellets have been consumed. 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 without
prior written consent of Cliffs. In no event shall Cliffs be liable for
Severstal's cost of processing, lost profits, injury to good will or any other
special or consequential damages.
SECTION 14. - FORCE MAJEURE.
Neither party hereto shall be liable for damages resulting from failure to
produce, deliver or accept and pay for all or any of the Cliffs' Pellets, as
described herein, if and to the extent that such production, 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, labor
disputes, labor shortages, fires, floods, embargoes, accidents, acts of
terrorism, or uncontrollable delays at the mines, steel plant, 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. A party claiming a
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force majeure shall give the other party prompt notice of the force majeure,
including the particulars thereof and, insofar as known, the probable extent and
duration of the force majeure. 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, unless
otherwise mutually agreed, to by the parties. The party that is subject to a
force majeure shall use commercially reasonable efforts to cure or remove the
force majeure event as promptly as possible to resume performance of its
obligations under this Agreement.
SECTION 15. - 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, postage prepaid, or sent by facsimile addressed as follows:
If to Cliffs:
Cliffs Sales Company
0000 Xxxxxxxx Xxxxxx - 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Secretary
cc: General Manager - Sales and Traffic
Facsimile: (000) 000-0000
If to Severstal:
Severstal North America, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Director, Purchasing and Transportation
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
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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.
SECTION 16. - TERM.
The initial term of this Agreement shall commence as of the Effective Date
and continue in effect until [*****]. The Agreement shall continue annually from
and after [*****] for the obligation of Severstal to purchase from Cliffs and
Cliffs to sell to Severstal all of Severstal's Annual Pellet Tonnage
Requirements pursuant to Section 3(a) above. Notwithstanding the above,
Severstal shall have the right to terminate the Agreement if at any time after
[*****], blast furnace production is no longer maintained by Severstal at the
former Rouge Steel Company facilities and Severstal no longer requires iron ore
pellets for consumption at such facilities in connection with blast furnace
production. In accordance with Section 3(d), during the years [*****], in the
event Severstal requires iron ore pellets for consumption in Severstal's iron
and steel making at the former Rouge Steel Company facilities in any year,
Severstal shall purchase from Cliffs and Cliffs shall sell to Severstal all of
Severstal's Annual Pellet Tonnage Requirements for each of the years [*****] and
except as otherwise stated in Section 3(c) Severstal shall have no minimum
annual purchase obligation under the Agreement. Notwithstanding the foregoing,
in the event that in any of the years following the year [*****] Severstal
purchases less than [*****] tons of Cliffs' Pellets in any such year, Cliffs
shall have the right to terminate the Agreement by written notice six (6) months
prior to the end of the following year.
SECTION 17. - AMENDMENT.
This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.
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SECTION 18. - MERGER, TRANSFER AND ASSIGNMENT.
(a). Severstal shall not merge, consolidate or reorganize with any person,
partnership, corporation or other entity unless the surviving or resulting
person, partnership, corporation or other entity assumes in writing all of
Severstal's obligations under this Agreement. Any obligations required to be
assumed by a surviving or resulting person, partnership, corporation or entity
in accordance with this Section 18(b) shall be limited to the Severstal
obligations under this Agreement. Severstal shall not sell or transfer all or
substantially all of its business to any other person, partnership, corporation,
joint venture or other entity ("Severstal Transferee") unless the Severstal
Transferee assumes in writing all of Severstal's obligations under this
Agreement.
(b). Cliffs shall not merge, consolidate or reorganize with any person,
partnership, corporation or other entity unless the surviving or resulting
person, partnership, corporation or other entity assumes in writing all of
Cliffs' obligations under this Agreement. Cliffs shall not sell or transfer all
or substantially all of its iron ore business to any other person, partnership,
corporation, joint venture or other entity ("Cliffs Transferee") unless the
Cliffs Transferee assumes in writing all of Cliffs' obligations under this
Agreement.
(c). All the covenants, stipulations and agreements herein contained shall
inure to the benefit of and bind the parties hereto and their respective
successors, transferees and permitted assigns, and any of the latter's
subsequent successors, transferees and permitted assigns.
SECTION 19. - 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
provisions hereof shall be deemed a waiver of any subsequent breach or default
of any kind whatsoever.
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SECTION 20. - CONFIDENTIALITY
(a). Cliffs and Severstal acknowledge that this Agreement contains certain
pricing, adjustment and term provisions which are confidential, proprietary or
of a sensitive commercial nature and which would put Cliffs or Severstal at a
competitive disadvantage if disclosed to the public (the "Confidential
Information"). Cliffs and Severstal agree that all provisions of this Agreement
shall be kept confidential and, without the prior written consent of the other
party, shall not be disclosed to any party not 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 20.
(b). If either party is required by law or governmental or judicial order
or receives legal process or 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 other federal, state 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.
- 16 -
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
SECTION 21. - 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 Michigan.
SECTION 22. - REPRESENTATIONS AND WARRANTIES.
(a). Severstal represents and warrants to Cliffs that (i) the execution
and delivery of this Agreement by Severstal and the performance of its
obligations hereunder have been duly authorized by all requisite corporate
action, (ii) neither the execution and delivery of this Agreement, nor the
performance of its obligations hereunder by Severstal shall, or after the lapse
of time or giving of notice shall, conflict with, violate or result in a breach
of, or constitute a default under the certificate of incorporation or bylaws of
Severstal or any law, statute, rule or regulation applicable to it, or conflict
with, violate or result in a breach of or constitute a default under the
material agreement to which it is a party or by which it or any of its
properties is bound, or any judgment, order, award or decree to which Severstal
is a party or by which it is bound, or require any approval, consent,
authorization or other action by any court, governmental authority or regulatory
body or any creditor of Severstal or any other person or entity, and (iii) this
Agreement constitutes a valid and binding obligation of Severstal and is
enforceable against Severstal in accordance with its terms.
(b). Cliffs represents and warrants to Severstal that: (i) the execution
and delivery of this Agreement by Cliffs and the performance of its obligations
hereunder have been duly authorized by all requisite corporate actions, (ii)
neither the execution and delivery of this Agreement nor the performance of its
obligations hereunder by Cliffs shall, or after the lapse of time or giving of
notice shall, conflict with, violate or result in a breach of, or constitute a
default under the certificate of incorporation or bylaws of Cliffs or any law,
statute, rule or regulation applicable to it, or conflict with, violate or
result in the breach of or constitute a default under any material
- 17 -
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
agreement to which it is a party or by which it or any of its properties is
bound, or any judgment, order, award or decree to which Cliffs is a party or by
which it is bound, or require any approval, consent, authorization or other
action by any court, governmental authority or regulatory body or any creditor
of Cliffs or any other person or entity, and (iii) this Agreement constitutes a
valid and binding obligation of Cliffs and is enforceable against Cliffs in
accordance with its terms.
SECTION 23. - COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
SECTION 24. - 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 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 Severstal,
and third to be selected by the two arbitrators. None of the arbitrators shall
be an employee, officer, director or consultant of, or of a direct competitor
of, Severstal or Cliffs;
(iii). Either party may apply to the arbitrators seeking injunctive
relief until the arbitration award is rendered or the controversy is otherwise
resolved. Either party also may, without waiving any remedy under this
Agreement, seek from any court having jurisdiction any interim or provisional
relief that is necessary to protect the rights or property of that party,
- 18 -
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
pending the establishment of the arbitral tribunal (or pending the arbitral
tribunal's determination of the merits of the controversy);
(iv). 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;
(v). 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;
(vi). 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
(vii). In connection with any 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.
SECTION 25. - ENTIRE AGREEMENT
This agreement, the Recitals and the Exhibits attached to this Agreement
(all of which shall be deemed to be incorporated into the Agreement and made a
part hereof) set forth the
- 19 -
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements, understandings or letters of intent among
any of the parties hereto, including, without limitation, that certain Pellet
Sale and Purchase and Trade Agreement, dated and effective as of January 1,
1991, by and between Iron and Rouge Steel Company, as amended by the letter
agreements dated as of [*****] and the 2004 Letter Agreement.
[Signature Page Follows This Page]
- 20 -
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first written above.
CLIFFS SALES COMPANY SEVERSTAL NORTH AMERICA, INC.
BY: /s/ X. X. Xxxxxx BY: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------- -----------------------------
NAME: Xxxxxxx X. Xxxxxx NAME: Xxxxxxx X. Xxxxxxxxxx
TITLE: Executive V. P. - Commercial TITLE: EVP
THE CLEVELAND-CLIFFS IRON COMPANY
BY: /s/ X. X. Xxxxxx
-------------------------------
NAME: Xxxxxxx X. Xxxxxx
TITLE: Executive V. P. - Commercial
CLIFFS MINING COMPANY
BY: /s/ X. X. Xxxxxx
-------------------------------
NAME: Xxxxxxx X. Xxxxxx
TITLE: Executive V. P. - Commercial
- 21 -
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
APPENDIX I
GLOSSARY
2004 Letter Agreement............................................. 2
[*****]........................................................... 8
Agreement......................................................... 1
Bankruptcy Case................................................... 1
Cliffs............................................................ 1
Cliffs' Pellets................................................... 3
Cliffs Sales...................................................... 1
Cliffs Transferee................................................. 17
Collateral........................................................ 11
Commission........................................................ 18
Confidential Information.......................................... 18
Effective Date.................................................... 1
Iron.............................................................. 1
iron unit......................................................... 2
Mining............................................................ 1
Original Contract................................................. 1
pellets........................................................... 2
PMSI.............................................................. 11
PMSI Termination Date............................................. 12
[*****]........................................................... 7
[*****]........................................................... 8
[*****]........................................................... 7
[*****]........................................................... 7
Quarterly Price Adjustment........................................ 5
Rouge............................................................. 1
Severstal......................................................... 1
Severstal Transferee.............................................. 17
Severstal's Annual Tonnage Requirements........................... 3
shipment week..................................................... 11
[*****]........................................................... 9
- 22 -
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
[*****]........................................................... 9
[*****] Pellets................................................... 2
[*****]........................................................... 2
ton............................................................... 2
[*****] Pellets................................................... 2
year.............................................................. 2
Year End Adjustment............................................... 6
- 23 -
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
LIST OF EXHIBITS
[*****] PRICE ADJUSTMENT FORMULA FOR YEARS [*****]....................................... EXHIBIT I
EXAMPLES OF ADJUSTMENTS IN [*****] PELLET PRICING........................................ EXHIBIT II(a)
EXAMPLES OF [*****] PELLET PRICING....................................................... EXHIBIT II(b)
EXAMPLES OF YEAR-TO-YEAR PELLET PRICE CALCULATIONS [*****]............................... EXHIBIT III(a)
EXAMPLES OF YEAR-TO-YEAR PELLET PRICE CALCULATIONS [*****]............................... EXHIBIT III(b)
CLEVELAND-CLIFFS INC PELLET TYPICAL ANALYSIS AS LOADED TO VESSEL FOR SHIPMENT............ EXHIBIT IV
- 24 -
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
AMENDED AND RESTATED PELLET SALE AND PURCHASE AGREEMENT
[*****] PRICE ADJUSTMENT FORMULA FOR YEARS [*****]
CURRENT YEAR'S PRICE ADJUSTMENT CALCULATION EXHIBIT I
(1) [*****]
[*****] - [*****] = [*****]
----------------- [(*****)]
[*****]
[*****] X [*****] X [*****] = A
(2) [*****]
[*****] - [*****] = [*****]
----------------- [(*****)]
[*****]
[*****] X [*****] X [*****] = B
(3) [*****]
[*****] - [*****] = [*****]
----------------- [(*****)]
[*****]
[*****] X [*****] X [*****] = C
(4) [*****]
[*****] - [*****] = [*****]
----------------- [(*****)]
[*****]
[*****] X [*****] X [*****] = D
CURRENT YEAR'S ADJUSTED PRICE PER IRON UNIT
- PRECEDING YEAR'S ADJUSTED PRICE PER IRON UNIT + (A + B + C + D) = CURRENT YEAR'S ADJUSTED PRICE PER
IRON UNIT
CURRENT YEAR'S ESTIMATED PELLET PRICE PER TON
- CURRENT YEAR'S ADJUSTED PRICE PER IRON UNIT X CURRENT YEAR'S EXPECTED = CURRENT YEAR'S ESTIMATED PELLET PRICE
NATURAL IRON CONTENT PER TON
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
AMENDED AND RESTATED PELLET SALE AND PURCHASE AGREEMENT EXHIBIT II(a)
EXAMPLES OF ADJUSTMENTS IN [*****] PELLET PRICING
-------
[*****] [*****]
------- ------------------------------------------------------------------------------------
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
------- ------- ------- ------- ------- -------
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
------- ------- ------- ------- ------- -------
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****]
-------
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****]
-------
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****]
------- ------------------------------------------------------------------------------------
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
------- ------- ------- ------- ------- -------
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
------- ------- ------- ------- ------- -------
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****]
-------
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****]
-------
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
------- ------- ------- ------- ------- -------
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
AMENDED AND RESTATED PELLET SALE AND PURCHASE AGREEMENT EXHIBIT II(b)
EXAMPLES OF [*****] PELLET PRICING
[*****] [*****]
------- ----------------------------------------------------------------------------------------------
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
------- ------- ------- ------- ------- ------- -------
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****]
------- ----------------------------------------------------------------------------------------------
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
------- ------- ------- ------- ------- ------- -------
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
------- ------- ------- ------- ------- ------- -------
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT III(a)
AMENDED AND RESTATED PELLET SALE AND PURCHASE AGREEMENT
EXAMPLES OF YEAR-TO-YEAR PELLET PRICE CALCULATIONS
[*****]
[*****] [*****] [*****]
--------- --------- ---------
[*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
--------- --------- ---------
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
--------- --------- ---------
[*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
--------- --------- ---------
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
--------- --------- ---------
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
--------- --------- ---------
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****]
[*****] [*****] [*****] [*****]
[*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
EXHIBIT III(b)
AMENDED AND RESTATED PELLET SALE AND PURCHASE AGREEMENT
EXAMPLES OF YEAR-TO-YEAR PELLET PRICE CALCULATIONS
[*****]
[*****] [*****] [*****]
------- ------- -------
[*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
------- ------- -------
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
------- ------- -------
[*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
------- ------- -------
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
------- ------- -------
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****]
[*****] [*****] [*****] [*****]
[*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****]
CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
AMENDED AND RESTATED PELLET SALE AND PURCHASE AGREEMENT EXHIBIT IV
CLEVELAND-CLIFFS INC PELLET TYPICAL ANALYSIS
AS LOADED TO VESSEL FOR SHIPMENT
[*****] [*****] [*****]
[*****] --------------------------- --------------------------- -------------------------
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
--------- ------- ------- ------- ------- ------- ------- ------- ------- -------
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
A. [*****] [*****] [*****]
----------
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****]
B. [*****]
----------
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
C. [*****]
----------
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****] [*****]
D. [*****]
----------
[*****] [*****] [*****] [*****] [*****]
[*****] [*****] [*****] [*****] [*****][*****] [*****]
[*****] - [*****]
[*****] - [*****]
[*****] - [*****]
