FIRST ADDENDUM TO AGREEMENT
THIS FIRST ADDENDUM TO AGREEMENT, made and entered into this 23rd
day of December, 1996, by and between KENTUCKY ELECTRIC STEEL, INC.
( KES ) and XXXXXX POMINI COMPANY ( MPC ).
W I T N E S S E T H :
WHEREAS, on the 14th day of March, 1994, KES and MPC entered into that
certain Agreement (the Agreement ; capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in the
Agreement), to modify KES s Manufacturing Facility to achieve KES s
Requirements; and
WHEREAS, KES and MPC have agreed to amend the Agreement to relieve
MPC of MPC s obligation to achieve KES s Requirements for narrow products
of less than .291" in thickness ; and
WHEREAS, KES has requested: (i) the extension of that certain
Guaranty Agreement of Xxxxxx Construction Company, Inc. and Pomini S.p.A.
from December 31, 1996 through December 31, 1999; and (ii) the assumption
by Xxxxxx Construction Company of the service obligations set forth in
Article 8.5 of the Agreement; and
WHEREAS, the parties desire to amend and supplement the Agreement in
furtherance of the above;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth herein and in the Agreement and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, it is agreed by and between KES and MPC as follows:
1. The Preamble provisions set forth above are made a part of this
Addendum.
2. KES s Requirements are hereby amended by amending and restating
the third paragraph of the Preamble in the Agreement as follows:
WHEREAS, KES has sought proposals to modify and improve the
rolling and finishing end of KES's Manufacturing Facility to meet
KES's requirement that upon completion of said modifications and
improvements, KES's Manufacturing Facility will be capable of
producing prime bar flats and squares, with square and round
edges in widths 2" through 12" and in thicknesses .236" through
3" in grades described in Exhibit 1 and pass schedules for new
sizes described in Exhibit 2 at production rates of greater of
(i) one hundred (100) tons per hour for sizes above 0.660.73
square inches in cross sectional area, or (ii) the cycle times
and capacity in MPC's proposal--"Quotation for Finishing End
Modernization Contract Scope Document, No. MPC93-424-001" dated
January 18, 1994, and such that a 5160 grade material .236" in
thickness and 2" in width will be delivered to the first notch of
the cooling bed above the transitional temperature with
sufficient temperature that the bar will remain above the
transitional temperature until the following bar packs (the
aforementioned size ranges in the grades and pass schedules
described together with the aforementioned production rates and
transitional temperature requirements are sometimes referred to
herein collectively as "KES's Requirements"); and
3. As reflected in the approved Change Orders, the Contract Sum
shall be Six Million Nine Hundred Eighty-Three Thousand Two Hundred Thirty-
Three and 89/100 (US $6,983,233.89) -- $7,307,050.00 - $323,816.11 =
$6,983,233.89. MPC shall reimburse KES or the Contract Sum shall be
further reduced to reimburse KES for: (i) the cost of replacing welded
strips on the cooling bed chill sections ( Chill Sections ) (see also,
Change Order No. 0596-018B); and (ii) repairing existing Chill Sections as
may be required until all the Chill Sections are supplied by MPC as
required by paragraph 4 below.
4. Pursuant to Section 8.3 of the Agreement, at no cost to KES
(except for removal and installation of the Chill Sections), MPC shall
design modifications to and deliver replacements for the Chill Sections to
eliminate the breakage that is occurring on the first notch of the Chill
Sections. If MPC s new design requires a change in the cooling beds or
the cooling beds drop wall, such changes shall be at MPC s cost and
expense. On or before January 15, 1997, MPC shall submit to KES MPC s
design of the modifications to the Chill Sections which shall be a seven
(7) notch Chill Section of approximately the same dimensions or other
design acceptable to KES. Said replacements shall be scheduled for
delivery in up to three (3) increments so as to afford MPC and KES an
opportunity during the subsequent rolling cycle to evaluate the performance
of the first increment of the replaced Chill Sections prior to delivery of
additional Chill Sections. Within nine (9) months from the execution of
this Addendum, MPC agrees to deliver replacements of the first increment
which shall consist of at least forty (40) Chill Sections. Should MPC be
unable to complete delivery of the first increment of Chill Sections within
nine (9) months as required herein due to any failure of a foundry to
timely fabricate the Chill Sections, MPC shall promptly provide notice to
KES. All the Chill Sections shall be delivered within twenty-four (24)
months from the execution of this Addendum. Any review by KES of MPC s
design of modifications to the Chill Sections shall not be deemed a waiver
of KES s rights, and shall not relieve MPC of its obligations, with respect
to the replacement Chill Sections. If the new Chill Sections alter KES s
products in such a manner as the Project will not continue to achieve KES s
Requirements, MPC will correct the problem to achieve KES s Requirements by
further modification and/or the supply of replacement castings to the Chill
Sections. As soon as practicable (on a down-day basis), KES shall be
responsible for the removal and installation of the Chill Sections and
replacements to the Chill Sections, through its own forces or by contract
with others. All Chill Sections removed shall remain the property of KES.
5. The Warranty Period for all the Chill Sections shall be extended
one (1) year from the date on which the final delivery of the replacement
Chill Sections is made. Any breakage of castings under normal operating
conditions and without misuse, abuse or alteration, will be deemed to be a
defect in material and workmanship.
6. The modified two piece drop table and clevis designed to air
cushion the roll during shearing and correct the east end roll breakage at
the shear entry will be installed at no cost to KES by March 10, 1997. KES
will provide a PLC programmer for any control changes required for
operation of the table, hold down roll and roll line sequencing as directed
by MPC providing that those changes will not slow down production.
7. The pins and bearings for the stacker that have been delivered
to KES will be installed by MPC at no cost to KES by March 10, 1997.
8. The Equipment for the modifications to the top and bottom shear
knife locking wedges and brass liners will be installed at no cost to
KES. This installation will be completed by March 10, 1997, subject to KES
making the Equipment available to MPC for two (2) outages (not to exceed
three (3) days for the bottom wedges and four (4) days for the top wedges),
and KES agrees to make the Equipment available for such outages as soon as
practicable. If on or before March 10, 1997, the bottom wedges have been
installed so as to allow the blades to be changed without having to cut a
bar or bump the blade and KES has not made the equipment available for
installation of the top wedges, KES shall not withhold the retention of
Three Hundred Twenty-Five Thousand Nine Hundred Eighty Dollars (US
$325,980.00) under paragraph 14 by reason of the work required under this
paragraph 8. The Warranty Period shall be extended three (3) years from
the Effective Date hereof for the Equipment described in the Agreement as
Group 4.00 - Cold Shear and Equipment. In addition to the warranty
provided by Article 8, MPC warrants that under normal operating conditions
and with proper maintenance, care, and lubrication, the shear s brass ways
will not need to be replaced within the extended Warranty Period and that
the modifications will allow the blades to be changed without having to cut
a bar or bump the blade. MPC further warrants that, under normal operating
conditions and with proper maintenance, care, and lubrication, at the end
of the extended Warranty Period, there will be no wear on the casting
surface that interfaces with the wedges.
9. The twelve (12) month Warranty Period for Groups 1 and 3 under
the Agreement -- the Vertical Stand and Cooling Bed (excluding the Chill
Sections described in paragraph 4 above) shall be deemed to have commenced
on November 28, 1995, and has expired.
10. The twelve (12) month Warranty Period for Group 2 under the
Agreement -- the Replacement Run-In Table shall be deemed to have commenced
on April 1, 1995, and has expired.
11. The twelve (12) month Warranty Period for Group 7 under the
Agreement -- the Banding Machine shall be deemed to have commenced on
August 1, 1995, and has expired.
12. The twelve (12) month Warranty Period for Group 6 under the
Agreement -- the Flat Stacker System shall be deemed to have commenced on
September 26, 1996, but the sprockets, chains, forks, and other wear parts
are excluded from the warranty.
13. The twelve (12) month Warranty Period for Group 5:00--Shear
Gauge Beam with Two Traveling Heads and Back Sear Table with Reject System
shall be deemed to expire when the modifications required by paragraph 8
will allow the blades to be changed without having to cut a bar or bump the
blade.
14. KES shall withhold payment of the lesser of Five Hundred
Thousand Dollars (US $500,000.00) or the delivered F.O.B. cost of the
replacement Chill Sections, until the Work required by paragraph 4 is
completed. Within ten (10) days after MPC presents to KES the amount of
its committed reasonable costs for the replacement Chill Sections, along
with reasonably estimated delivery and transportation charges, KES shall
release to MPC (a) the amount by which the withheld payment of Five Hundred
Thousand Dollars (US $500,000.00) exceeds the amount of such costs and
charges, and (b) a prorata amount of the remaining withheld payment
attributable to the first increment of Chill Sections. KES shall withhold
payment of Three Hundred Twenty-Five Thousand Nine Hundred Eighty Dollars
(US $325,980.00) until the Work required by paragraphs 6 and 8 is
completed. [$846,000 (Group 4.00) + $783,900 (Group 5.00) = $1,629,900 x
20% = $325,980]. Within ten (10) days after MPC completes the Work
required by paragraphs 6 and 8, KES shall release to MPC the withheld
payment of Three Hundred Twenty Five Thousand Nine Hundred Eighty Dollars
(US $325,980.00). On the Effective Date of this Addendum, KES shall pay to
MPC the sum of Three Hundred Eleven Thousand Six Hundred Thirteen Dollars
and 90/100 (US $311,613.90) representing the balance of the Contract Sum
as set forth in paragraph 3 of this Addendum, less the amounts to be
withheld pursuant to this paragraph 14 of this Addendum.
15. The obligations of MPC set forth in Article 8.5 of the Agreement
shall be assumed by the Xxxxxx Construction Company, Inc. by execution and
delivery of the Assumption Agreement attached hereto as Exhibit A.
16. The term of the April 4, 1995 Guaranty of the Agreement by
Xxxxxx Construction Company, Inc. and Pomini S.p.A. shall be extended
through December 31, 1999 by execution and delivery of the First Amendment
to Guaranty Agreement attached hereto as Exhibit B, subject to the terms
thereof.
17. The effective date ( Effective Date ) of this Addendum shall be
the date on which this Addendum, the Assumption Agreement, and First
Amendment to Guaranty Agreement are properly executed and delivered to KES.
KES shall have the option of declaring this Addendum null and void if the
Assumption Agreement and First Amendment to Guaranty Agreement are not
executed and delivered to KES prior to December 27, 1996.
18. Except as set forth in paragraph 2 above, KES s Requirements are
not modified by this Addendum and all provisions of the Agreement as
amended or supplemented by this Addendum shall remain in full force and
effect. Article 16.9 shall apply during the Warranty Period as extended
herein in the event that MPC fails to perform in accordance with the terms
of this Addendum, but the amount of any requested letter of credit shall
not exceed Two Million Dollars (US $2,000,000.00), less amounts, if any,
then withheld by KES.
IN WITNESS WHEREOF, the parties have hereunto executed this First
Addendum to Agreement in Xxxx County, Kentucky, this 23rd day of
December, 1996.
KENTUCKY ELECTRIC STEEL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Its: President
XXXXXX POMINI COMPANY
By: /s/ X. X. Xxxxxxxxx
Its: President
EXHIBIT A
ASSUMPTION AGREEMENT
THIS AGREEMENT, by and between KENTUCKY ELECTRIC STEEL, INC. ( KES ),
XXXXXX POMINI COMPANY ( MPC ) and XXXXXX CONSTRUCTION COMPANY ( Xxxxxx ).
W I T N E S S E T H :
WHEREAS, MPC has entered into an Agreement to modify KES s facility in
Xxxx County, Kentucky (the Contract ) dated as of March 14, 1994; and
WHEREAS, Xxxxxx is a stockholder in MPC; and
WHEREAS, Xxxxxx desires for KES to enter into that certain First
Addendum to the Contract; and
WHEREAS, KES would not enter into the First Addendum unless Xxxxxx
assumed the service obligations of MPC set forth Article 8.5 of the
Contract; and
WHEREAS, Xxxxxx is willing to assume the service obligations set forth
in Article 8.5 of the Contract;
NOW, THEREFORE, in consideration thereof, the parties agree as
follows:
1. Xxxxxx hereby assumes the obligations of MPC arising from
Article 8.5 of the Contract.
2. MPC and Xxxxxx shall not destroy or dispose of any equipment or
parts patterns developed for the Project (as this term is defined in the
Contract) without providing KES with notice and the opportunity of securing
such patterns upon payment by KES of reasonable handling and transportation
charges.
3. The service obligations assumed by Xxxxxx hereunder shall be
deemed personal and may not be further assigned except with the express
written consent of KES.
IN WITNESS WHEREOF, the parties have executed this Assumption
Agreement in Xxxx County, Kentucky this 23rd day of December, 1996.
KENTUCKY ELECTRIC STEEL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx 12/28/96
Its: President
XXXXXX POMINI COMPANY
By: /s/ X. X. Xxxxxxxxx
Its: President
XXXXXX CONSTRUCTION COMPANY
By: /s/ Xxxxxx X. Xxxxxx
Its: President
PAGE
EXHIBIT B
FIRST AMENDMENT TO GUARANTY AGREEMENT
THIS FIRST AMENDMENT TO GUARANTY AGREEMENT, made as of and effective
the 23rd day of December, 1996, by and between XXXXXX CONSTRUCTION
COMPANY ( Xxxxxx ), a Massachusetts corporation, having its principal place
of business in Worcester, Massachusetts, and by POMINI S.p.A. ("Pomini"),
an Italian corporation, having its principal place of business in
Castellanza, Italy (each of Xxxxxx and Pomini a "Guarantor" and
collectively, the "Guarantors") to and for the benefit of KENTUCKY ELECTRIC
STEEL, INC. ("KES"), a Delaware corporation, having its principal place of
business in Ashland, Kentucky.
W I T N E S S E T H:
WHEREAS, Xxxxxx-Pomini Company, a Pennsylvania corporation (the
"Company") has entered into an agreement to modify a facility in Xxxx
County, Kentucky (the "Contract") with KES dated March 14, 1994; and
WHEREAS, the Guarantors entered into that certain Guaranty Agreement
made as of April 4, 1995, but effective as of March 14, 1994 ( Guaranty
Agreement ) to guarantee the performance of the Company under the Contract;
and
WHEREAS, the Company desires for KES to enter into that certain First
Addendum (the First Addendum ) to the Contract; and
WHEREAS, KES will not enter into the First Addendum unless the
Guarantors agree to extend the termination date of the Guaranty Agreement
from December 31, 1996, to and including December 31, 1999; and
WHEREAS, the Guarantors are willing to extend the termination date of
the Guaranty Agreement as aforestated;
NOW, THEREFORE, as an inducement to KES to enter into the First
Addendum to the Contract, Guarantors and KES agree as follows:
1. Paragraph 1 of the Guaranty Agreement is hereby amended as
follows:
The Guarantors hereby guarantee performance of all of the
obligations of the Company under the Contract, as amended and
supplemented by the First Addendum and all change orders in
accordance with the terms and conditions therein. In the event
of breach of any such obligations of the Company or default in
performance, the Guarantors shall undertake performance of the
obligations of the Company to KES at such time and in such manner
as specified in the Contract, as amended and supplemented by the
First Addendum and all change orders. Notwithstanding the
foregoing, the maximum aggregate amount which Xxxxxx will be
obligated to expend or be liable for pursuant to this Guaranty
shall in no event exceed 58 percent of the Contract Price or
$4,118,000.00 $1,160,000.00 and the maximum aggregate amount
which Pomini will be obligated to expend or be liable for
pursuant to this Guaranty shall in no event exceed 42 percent of
the Contract Priceor $2,982,000.00 $840,000.00. The Guarantors
further agree that this is a continuing guarantee and shall not
terminate until December 31, 1996 December 31, 1999.
2. The Guaranty Agreement, as amended and supplemented hereby,
remains in full force and effect and subject to its terms and conditions.
3. This First Amendment to Guaranty agreement may be executed in
counterparts, each of which shall constitute an original, but such
counterparts when taken together shall constitute but one agreement.
IN WITNESS WHEREOF, the parties have executed this instrument on the
day and date first above written by and through their duly authorized
officers.
XXXXXX CONSTRUCTION COMPANY
By: /s/ Xxxxxx X. Xxxxxx
Its: President
POMINI S.p.A.
By: /s/ Xxx Xxxxxxxx
Division Director
Its: Rolling Mill Division
December 23, 1996
KENTUCKY ELECTRIC STEEL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Its: President
