EXHIBIT 10.7
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY
BNSFC 302606
REGULATED TRANSPORTATION CONTRACT
Effective Date: 01-01-1999 Expiration Date: 12-31-2003
1. INTRODUCTION
This Transportation Contract ("Contract"), governed and construed in accordance
with the laws of the State of Texas is entered into January 01, 1999 by and
between the party ("Customer") named below and the rail carrier(s) ("Railroad")
named below. Address(es) for Railroad will be as shown in The Official Railway
Guide.
Customer: CALIFORNIA STEEL INDUSTRIES INC
Participating Carrier: THE BURLINGTON NORTHERN AND SANTA FE RAILWAY
COMPANY having an office at 0000 Xxx Xxxx Xxxxx, X.X.
Box 961069, Fort Worth, TX 76161-0069
Railroad agrees to perform the transportation for its portion of the Route(s) as
specified in this Contract and all Amendments thereto in exchange for Customer's
utilization of Railroad in said movements. The Bill of Lading date will govern
as the day on which a shipment has been made. The date of shipment will govern
as to the applicable rate or charges and tonnage requirements as covered by this
Contract and all Amendments thereto. This Contract and all Amendments thereto
comprise the entire Contract and merges and supersedes all prior understandings
and representations between Customer and Railroad concerning the subject matter.
The terms as set forth in this Contract and all Amendments thereto have been
arrived at after mutual negotiation and, therefore, it is the intention of the
parties that its terms may not be construed against any of the parties by reason
of the fact that it was prepared by one of the parties. The parties to this
Contract and all Amendments thereto will protect the confidentiality of the
terms and conditions of this Contract and all Amendments thereto. Only where a
party is required by a court of competent jurisdiction or federal agency to
reveal any of the terms and provisions of this Contract and all Amendments
thereto, or where all parties give their written consent to disclosure, will
disclosure be allowed. The party making disclosure will notify the others in
advance of such disclosure. If a third party requests a transportation contract
to cover traffic moving in whole or in part under this Contract or Amendments
thereto, Customer or Railroad may advise that a Contract or Amendment covering
the traffic exists and may reveal its duration and the identity of the parties
to the Contract or Amendments. Nothing in this confidentiality provision will
preclude the use of this Contract or Amendments by any party hereto to obtain
financing.
Customer warrants it is the purchaser of transportation services covered by this
Contract and all Amendments thereto.
At the request of Railroad, Customer shall make available to Railroad, or its
designated agent, at a reasonable time during normal business hours, records
relating to this Contract or Amendments.
2. TERM
This Contract will become effective on 01-01-99 and shall remain in effect
through 12-31-03.
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3. RENEWABILITY
This Contract may only be renewed by mutual consent of the parties, and any such
renewal shall be in the form of an Amendment.
4. TRANSPORTATION SERVICE ATTACHMENT
Railroad shall transport the commodity(ies) ("Commodity") as named in the
Transportation Service Attachment attached hereto and made a part of this
Contract for Customer from the origin(s) ("Origin(s)") to the destination(s)
("Destination(s)") via the ("Route(s)") as set forth in the Transportation
Service Attachment.
5. EQUIPMENT
Equipment used under this Contract/Amendment shall be as described in the
Official Railway Equipment Register, RER 6412 Series and as identified in the
aforementioned Transportation Service Attachment.
Railroad will provide this equipment consistent with its common carrier
obligations.
Railroad reserves the right to furnish any type or size of equipment that meets
the above description to fill car orders under this Contract.
6. GOVERNING PROVISIONS
Except as otherwise provided for in this Contract, shipments moving under this
Contract or Amendments thereto will be governed by the tariffs, exempt
circulars, rate memorandums, rules and regulations which would apply if this
Contract or Amendments thereto were not in effect, except that origin and
destination intermediate application rules will not apply. If, for any reason,
any rule, regulation, or provision of any tariff, exempt circular or rate
memorandum referenced under this Contract or Amendments thereto is canceled or
becomes inapplicable, the last published provision that would have been applied
will govern. In the event of conflict between the above-referenced rules,
regulations, etc., which are herein incorporated by general reference, this
Contract or Amendments thereto shall govern.
Railroad's obligation to provide service under this Contract or Amendments
thereto shall be no greater than it would be as a common carrier. Services or
other matters not specifically addressed in this Contract or Amendments thereto,
including but not limited to, loss and damage liability and settlement, credit
and collection, and track weight limitations, shall continue to be governed by
rules, regulations, tariffs, and statutory provisions, as amended from time to
time, which would apply if it were not for this Contract or Amendments thereto,
and which are incorporated herein by reference.
This Contract or Amendments thereto shall not relieve Railroad of its common
carrier obligations as set forth in the Uniform Straight Bill of Lading terms
and conditions. Said terms and conditions shall govern all shipments made
hereunder and are incorporated herein by reference and made a part hereof as if
fully herein set forth; provided, however, that in the event of any
inconsistency between said terms and conditions and any other provisions of this
Contract or Amendments thereto, the provisions of this Contract or Amendments
thereto shall govern.
7. SERVICE GUARANTEE FOR LOADED MOVEMENT
The service guarantee applies to unit trains loaded with steel slabs which are
moved from Los Angeles Harbor or Long Beach, California to Kaiser, California.
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Burlington Northern Santa Fe agrees to, either actively or constructively, place
loaded trains at CSI's designated unloading facility, at Kaiser, California, at
or prior to 9:00 A.M. of the morning subsequent to the release of trains at
origin. When train does not meet the above service commitment, CSI agrees to
notify Burlington Northern Santa Fe by fax @ 000-000-0000 within 12 hours of
train's actual arrival, indicating the actual time of arrival.
Burlington Northern Santa Fe guarantees that all trains shall meet the
applicable standard for rail transit time set forth above, during each Service
Period. A Service Period is defined as a period of one calendar month. The first
Service Period will commence on the first day of January, 1999. Each Service
Period will include all trains which were placed or released in interchange with
CSI during such Service Period.
If at the end of a Service Period, Burlington Northern Santa Fe fails to meet
this Service Guarantee on one or more trains, Burlington Northern Santa Fe will
pay CSI $597.00 per train, for each train Burlington Northern Santa Fe fails to
deliver at, or before 9:00 A.M. on any day. For CSI's convenience, Burlington
Northern Santa Fe will make every effort to place loaded trains at CSI's
unloading facility at Kaiser, California prior to 6:30 A.M.
The service commitment specified above shall not apply where Burlington Northern
Santa Fe is unable to perform due to an Act of God, strikes, lockouts, wrecks,
mechanical breakdowns in equipment of facilities of Burlington Northern Santa
Fe, CSI or its agent, or any act or failure on the part of CSI or its agent.
8. SERVICE COMMITMENT
If CSI or its agent meets its obligations in the next paragraph, Burlington
Northern Santa Fe agrees to place an empty train at CSI's designated loading
facility located at the Port of Long Beach or Los Angeles Harbor, California at
or prior to the time for which CSI or its agent had ordered placement.
CSI or its agent shall give Burlington Northern Santa Fe notice by a telephone
call at 000-000-0000, to place an empty train, or a portion thereof, at CSI's
designated loading facility at the Port of Long Beach or Los Angeles Harbor,
California no later than 22 hours before the time at which CSI or its agent
desires the train to be placed.
If Burlington Northern Santa Fe fails to meet the service commitment as above
stated for reasons other than those set forth in the next paragraph, Burlington
Northern Santa Fe agrees to pay CSI a sum not to exceed $900.00 per hour (CSI
will submit invoice furnished by their agent (RDP) outlining actual per hour
out-of-pocket cost but not to exceed $900.00 per hour) up to a maximum, of eight
(8) hours for each hour or portion thereof, that elapses between the time of
actual placement and the time for which placement was ordered. Notwithstanding
the foregoing if Burlington Northern Santa Fe is not able to furnish empty cars
for the 8:00 A.M. or 1:00 P.M. loading shift but telephones CSI's agent (RDP)
not later than 7:00 A.M. of the same day; Burlington Northern Santa Fe agrees to
pay CSI a sum not to exceed $900.00 per hour (CSI will submit invoice furnished
by their agent (RDP) outlining actual per hour out-of-pocket costs but not to
exceed $900.00 per hour) for a total of (4) hours in lieu of (8) hours as
provided above. Provided however that Burlington Northern Santa Fe shall not be
obligated to make such payment unless CSI or its agent has given Burlington
Northern Santa Fe notice of CSI's intent to invoke this Section, within the
first two (2) hours of such delay, by telephone call at 000-000-0000 and has
followed such notice with a Telefax (fax 000-000-0000).
The service commitment specified above shall not apply where Burlington Northern
Santa Fe is unable to perform due to an Act of God, strikes, lockouts, wrecks,
mechanical breakdowns in equipment or facilities of Burlington Northern Santa
Fe, CSI or its agent, or any act or failure to act on the part of CSI or its
agent.
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By way of clarification, derailments of empty unit trains, or any portion
thereof, or collisions with other vehicles or objects while enroute to CSI or
its agent at Los Angeles Harbor to meet a prescheduled empty train loading
appointment, shall not constitute grounds for exclusion from Service Commitment
requirements and responsibilities.
9. DEMURRAGE PROVISIONS
"Thirty-six (36) hours free time will be allowed for loading cars at Origin and
thirty-six (36) hours free time will be allowed for unloading cars at
Destination, regardless of the number of cars placed. The free time shall be
computed from the first 7:00 A.M. after time of initial, actual or constructive
placement of the cars, excluding Saturday, Sunday or Holidays."
10. BILLING
Each shipment made under this Contract or Amendments thereto shall be evidenced
by a Standard Uniform Straight Bill of Lading, Order Notify Bill of Lading
("Bill of Lading") or Shipping Order. All cars for each shipment are to be
billed on one (1) Bill of Lading or Shipping Order. At the time shipment is
tendered the original and all copies of the Bill of Lading or Shipping Order or
other shipping orders shall contain reference to the BNSF Contract Number
assigned to this Contract or Amendments thereto.
11. PAYMENT PLAN
BNSF is the carrier collecting freight charges from Customer on shipments moving
under the provisions of this Contract. Payment of all charges shall be prepaid
and made according to ICC or Canadian Credit Regulations and subsequent
amendments. If payments are not made within the prescribed credit period, or if
Customer does not have credit with BNSF, payment may be required in advance of
service.
12. ASSIGNMENT
Either (Any) party hereto may assign its rights and benefits under this Contract
or Amendments thereto, other than the right to receive transportation services;
but neither (no) party hereto may assign its obligations or duties hereunder,
including but not limited to, the obligation to provide transportation services
to any other person.
13. LOSS AND DAMAGE
Standard common carrier liability pursuant to 49 U.S.C. 11706 will apply on
shipments made under this Contract and Amendments thereto. Accordingly, Railroad
shall not be liable for any loss, damage or injury caused by an act of God, the
public enemy, act of the Customer, a public authority, or inherent vice or
nature of the goods. Railroad shall not be liable for any loss, damage or injury
due to improper loading. Pursuant to 49 U.S.C. 11706, all claims against
Railroad must be brought within nine (9) months and all civil actions against
Railroad must be brought within two (2) years.
14. FORCE MAJEURE
In the event any party cannot perform under this Contract or Amendments thereto
due to or as a result of the following causes: acts of God, including, but not
limited to flood, storm, earthquake, hurricane, tornado, or other severe weather
or climatic conditions; acts of public enemy, war, blockade, insurrection,
derailment, vandalism, sabotage, fire, accident, wreck, washout or explosion;
labor strike or interference, lockout or labor dispute, shortage of diesel fuel,
embargo or AAR service order or governmental law, orders or regulation, or
breakage of machinery; and/or any like causes beyond the reasonable control of
Customer or Railroad, the parties' obligations under this Contract and
Amendments thereto shall be suspended to the extent made necessary by the Force
Majeure event at the affected origin(s) and/or
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destination(s) during any such disability period insofar as it applies to the
affected location(s). Suspension shall not result in extension of the term of
this Contract or Amendments thereto.
This Contract and Amendments thereto contains a minimum percentage requirement
("Minimum Volume"). Any shipments made contrary to the route(s) specified in
this Contract or Amendments thereto due to a Force Majeure will be excluded in
determining compliance with any minimum percentage requirement.
The party claiming the Force Majeure shall take all reasonable steps to remove
the Force Majeure event, and shall promptly notify the other party(ies) within a
period of five (5) days, excluding weekends and holidays when it learns of the
existence of a Force Majeure condition and will similarly notify the other
party(ies) within a period of five (5) days, excluding weekends and holidays,
when the Force Majeure is terminated.
15. NOTICES
Any notice given under this Contract or Amendments thereto shall be effective
when received. Notices, except as otherwise provided herein, shall be delivered
to the party(ies) entitled to receive the same by personal delivery, by
Registered or Certified Mail, Return Receipt Requested, or by any electronic
means which can produce a written copy provided that acknowledgment of receipt
of the electronic communication is obtained. Notices shall be addressed to the
appropriate party(ies) as shown in this Contract.
Any notices pertaining to a Force Majeure or to matters of an emergency or
operating nature may be given by an reasonable means. Any notice given verbally
shall be confirmed in writing by First Class Mail as soon as practicable, if
requested by party(ies) receiving such notice.
16. LINE ABANDONMENT
The Terms of this Contract or Amendments thereto in no way obligates the
Railroad to continue ownership, maintenance (including weight standards) or
operations of any rail lines. Railroad will not be liable for any increased
transportation costs or consequential damages that may result from such
discontinuation.
If Customer fails to satisfy the Minimum Volume requirements of this Contract or
Amendments thereto due solely to Railroad's discontinuation of service(s) named
in the above paragraph then, as Customer's remedy, the Minimum Volume for the
then current period shall be waived.
17. AMENDMENT
All amendments to the terms of this Contract shall be in writing and signed by
the parties.
18. DEFAULT
If any party shall default in any material covenant, condition or obligation of
this Contract or Amendments thereto which is not excused by Force Majeure, and
continues in default for a period of ten (10) days after written notice is given
to the defaulting party, the nondefaulting party may without prejudice to other
rights and remedies, terminate this Contract or Amendments thereto by giving
thirty (30) days written notice to the party in default.
If this Contract is terminated by Customer due to Railroad default, and Contract
contains a Minimum Volume requirement, then all shipments which moved under this
Contract during the then current Period shall be determined as if the Minimum
Volume requirements of this Contract has not met the Minimum
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Volume requirements of this Contract for the then current Period, liquidated
damages will be assessed in accordance with provisions contained in the
Liquidated Damages section of the Contract.
19. SEVERABILITY
Any part, term or provision of this Contract or Amendments thereto that is held
to be unenforceable, illegal, against public policy, or in conflict with any
federal, state or local laws, shall be severable from the rest of the Contract.
The remaining portions of the Contract or Amendments thereto shall not be
affected. The rights and obligations of the parties shall be construed and
inferred as if the Contract did not contain the particular term, part, or
provision held to be invalid, unless the invalid provisions contain the material
financial terms of this Contract, or when considered in the aggregate, render
the administration of this Contract unreasonably burdensome, in which case
(unless new terms or provisions can be negotiated within three (3) months of
written request for renegotiation by either party) this Contract and Amendments
thereto shall be terminated. In the event of termination, the Minimum Volume
requirement of this Contract and Amendments thereto will be waived for the then
current Period.
If on 12/31/2000 CSI elects to change port of entry from Long Beach, CA or Los
Angeles Harbor, CA, CSI will notify BNSF of such anticipated change at least
three (3) months prior to 12/31/2000. CSI and BNSF will then commence
negotiations for transportation charges from the new port of entry.
20. MINIMUM VOLUME REQUIREMENT
The Minimum Volume Requirement in this contract will be 1,400,000 Metric Tons
per year. The 1,400,000 Metric Ton commitment is not limited to slab or coil
tonnage originating at Long Beach, CA or Los Angeles Harbor, CA. Volume
commitment can be satisfied with slab or coil tonnage from other ports or from
domestic sources. Customer must submit written certification to the following:
The Burlington Northern and Santa Fe Railway Company
Attention: Manager Liability Rating
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, XX 00000
with a copy to Railroad at address(es) as shown in The Official Railway Guide,
within thirty (30) days after the close of each Period stating whether the
Minimum Volume has or has not been met. Customer will, upon request, permit
Railroad or its authorized agent to inspect Customer's shipping documents to
verify that certification is correct.
Railroad or its agent will protect the confidentiality of such documents.
21. LIQUIDATED DAMAGES
If Customer fails to meet the Minimum Volume requirements of this Contract or
Amendments thereto during any Period, Customer will pay Railroad, in addition to
the freight charges that have already been assessed pursuant to this Contract or
Amendments thereto, the amount as indicated on the Transportation Service
Attachment.
Payments for liquidated damages, along with supporting calculation, will be made
within thirty (30) days after the close of the Period, with added interest at a
rate of one and one-half percent (1-1/2%) for each month or portion thereof to:
The Burlington Northern Santa Fe Railroad
Attention: Manager Liability Rating
000 X. 0xx Xxxxxx
Xx. Xxxx, XX 00000
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22. SIGNATURES
Intending to be legally bound, the parties hereto have caused this Contract to
be executed by their representatives as written below:
CALIFORNIA STEEL INDUSTRIES INC
By: /s/ Xxxx Xxxxxxxx Xxxxxxxxx
------------------------------------
Title: President & CEO
---------------------------------
Date: 11/19/98
----------------------------------
BURLINGTON NORTHERN RAILROAD COMPANY
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Title: V.P. Metals & Minerals
---------------------------------
Date: 11/19/98
----------------------------------
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THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY
BNSFC 302606
REGULATED TRANSPORTATION CONTRACT
* Transportation Service Agreement *
Origin Long Beach, CA
Los Angeles Harbor, CA
Destination Kaiser, CA
Equipment
Price applies in Coil Cars (General Car Types: OC -
Open Coil Cars, CD-Closed Coil Cars, CL -
Coil Cars) or Flat Cars (General Car Type: FP - Flat
Pedestal Cars). Price applies in railroad owned or
leased equipment.
Route BNSF
Commodity
00-000-00 - SLAB BKDN IORS
33-123 - IRON OR STEEL SHEET OR
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Effective Expiration Commodity Base Rate Volume in
Date Date (Per Metric Ton) Metric Tons
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Minimum Weight will be 81.8 Metric Tons per car
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01/01/1999 12/31/1999 33-121-50 $4.35 0 to 1,400,000
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01/01/1999 12/31/1999 33-121-50 $4.00 over 1,400,000
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01/01/1999 12/31/1999 33-123 $4.55 no volume
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01/01/2000 12/31/2000 33-121-50 $4.40 0 to 1,400,000
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Ol/01/2000 12/31/2000 33-121-50 $4.05 over 1,400,000
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01/01/2000 12/31/2000 33-123 $4.62 no volume
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01/01/2001 12/31/2001 33-121-50 $4.48 0 to 1,400,000
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01/01/2001 12/31/2001 33-121-50 $4.12 over 1,400,000
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01/01/2001 12/31/2001 33-123 $4.70 no volume
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01/01/2002 12/31/2002 33-121-50 $4.57 0 to 1,400,000
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01/01/2002 12/31/2002 33-121-50 $4.20 over 1,400,000
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01/01/2002 12/31/2002 33-123 $4.79 no volume
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01/01/2003 12/31/2003 33-121-50 $4.66 0 to 1,400,000
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01/01/2003 12/31/2003 33-121-50 $4.28 over 1,400,000
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01/01/2003 12/31/2003 33-123 $4.88 no volume
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