Exhibit 10.11
COKE SALE AGREEMENT
BETWEEN
WCI STEEL INC.
AND
ISG XXXXXX INC.
DATE NOVEMBER 10, 2005
COKE SALE AGREEMENT
THIS AGREEMENT is entered into this 10th day of November, 2005, by and
between ISG Warren Inc., a Delaware corporation having offices at 0000 Xxxx
Xxxxxx, Xxxxxx, Xxxx, (hereinafter "Seller") and WCI Steel, Inc., an Ohio
corporation located at 0000 Xxxx Xxxxxx X.X., Xxxxxx, Xxxx 00000 (hereinafter
"Buyer").
WITNESSETH:
THAT, in consideration of the promises herein set forth and intending to be
legally bound, the parties hereby agree as follows:
I. TERM
This Agreement shall be effective August 1, 2005, and unless sooner
terminated pursuant to the various provisions of this Agreement, shall continue
for a period of seventeen calendar months through December 31, 2006 ("Term") and
shall thereafter automatically renew for successive one (1) year renewal terms
unless written notice of non-renewal given by either party to the other not less
than (6) months prior to expiration provided, however, that no automatic renewal
shall occur or become effective until the parties agree in a separate writing to
the Purchase Price for Blast Furnace Coke during the first and, as applicable,
any subsequent renewal term with such Purchase Price agreement being contingent
upon specific approval by Seller's Board of Directors.
II. PRODUCT
The product to be purchased and sold hereunder shall be blast furnace coke
("Blast Furnace Coke") produced at the Seller's Warren, Ohio, Coke Plant ("Coke
Plant").
2
III. QUANTITY AND SCHEDULING
During the Term, Seller shall sell and deliver to Buyer and Buyer shall
purchase and accept delivery from Seller, pursuant to the terms and conditions
of this Agreement, 50% of the Blast Furnace Coke produced by Seller's Coke
Plant. Buyer acknowledges that the production rate of Blast Furnace Coke at
Seller's Coke Plant will vary from time to time. Seller understanding the
critical nature of coke supply, will provide Buyer with prior notice of any
planned outage of coke producing capability at the Coke Plant. The aggregate
amount of Blast Furnace Coke to be purchased and sold hereunder shall not exceed
[*****](1) Net Tons (consisting of 2,000 pounds avoirdupois). Blast Furnace Coke
deliveries hereunder shall be approximately [*****] Net Tons per calendar week
(Monday through Sunday) or [*****] Net Tons per day subject to change as a
result of production rate variations.
IV. DELIVERY
A. Seller shall deliver Blast Furnace Coke hereunder to Buyer F.O.B. the
Blast Furnace surge bin at Buyer's Plant. A reasonable alternative delivery
point at Seller's Coke Plant may be identified by either Buyer or Seller.
However, in the event that an alternative delivery point is used, all delivery
costs associated with utilizing the alternative delivery point shall be borne by
the party requesting the change. Alternative methods and points of delivery must
be approved by Seller.
B. Blast Furnace Coke shall be delivered daily for the twelve hour period
beginning at approximately at 4pm and ending at approximately 4am. Seller and
Buyer may adjust starting times from time to time as mutually agreed.
----------
(1) CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSION.
3
C. Blast Furnace Coke weights used for billing purposes shall be determined
by Seller's 8A conveyor belt scale and shall be the basis upon which Buyer shall
pay Seller for Blast Furnace Coke delivered hereunder. Seller may identify an
alternative weight determination method subject to acceptance by Buyer. Seller
shall evaluate the calibration of its weight measuring instrumentation on a
monthly basis and share the results of such evaluation with Buyer. Seller will
provide advance notification to Buyer of any belt scale calibration test. Buyer
will have the right but not the obligation to observe any belt scale calibration
test. Said weights shall be conclusive, unless objected to in writing by Buyer
within 30 days of receipt of the invoice that contains the objectionable
weights, as to the quantities of Blast Furnace Coke delivered and purchased
hereunder. Buyer's payment of objectionable invoices shall be as set forth in
Section VII.
V. QUALITY
A. On a monthly average basis, Blast Furnace Coke shall conform as closely
as practicable to the specification set forth on Exhibit A, with price
adjustments for deliveries that deviate as to certain standards as set forth on
Exhibit A.
B. Seller shall sample, twice each shift each Sunday through Thursday, the
Blast Furnace Coke produced according to Seller's standard written protocol and
have performed chemical and physical analyses on a daily composite sample
according to ASTM standards/guidelines, or other guidelines as may be mutually
agreed between the parties hereto in writing, and average the results of the
daily composite analyses of said samples to determine a monthly weighted average
analysis that shall be deemed to be the analysis of Blast Furnace Coke delivered
for Buyer's account during said calendar month. The results of each daily
composite sample analysis shall be transmitted to such persons or places as
Buyer may from time to time
4
direct. Such analysis shall be determinative of product value for purposes of
billing and payment of the purchase price and, unless objected to in writing by
either party within 30 days after its receipt thereof, such monthly average
analysis shall be conclusive for all billing purposes. Buyer shall have the
right but not the obligation to review at their discretion the Xxxxxx Xxxx Plant
ISO Quality Standard Operating Procedures. Seller shall retain the daily
composite samples used for the proximate analyses for not less than thirty (30)
days. Each such sample shall be appropriately labeled so as to identify the
production date and sample preparation date. Splits of the samples retained by
Seller shall be provided to Buyer upon reasonable request.
C. Buyer shall at all times reserve the right to have an independent third
party conduct its own sampling according to Seller's standard written sampling
protocol and ASTM compliant analysis should a dispute arise as to the result of
Seller's analysis. Buyer's selection of an independent third party shall be
subject to Seller's prior written approval, which approval shall not be
unreasonably withheld. Seller shall have the right but not the obligation to
observe the sampling and analyses by the independent third party. Unless the
sample taken by Buyer's independent third party is statistically representative
of the Blast Furnace Coke lot for which Seller's analysis is disputed in
accordance with applicable ASTM standards, the results of the independent third
party cannot be used as the basis for penalizing or rejecting the entire lot.
The two parties agree to meet and resolve any discrepancies between the Seller's
analysis and Buyer's analysis that are statistically different with regards to
the coke quality specs.
VI. PURCHASE PRICE
A. During the initial Term of this Agreement for each Net Ton of Blast
Furnace Coke delivered hereunder, Buyer shall pay Seller U.S. $[*****] F.O.B.
Blast Furnace surge bin at Buyer's Plant. The Purchase Price for Blast Furnace
Coke during any renewal term of this
5
agreement shall be according to separate written agreement between the parties
as provided in Section I hereof.
B. i) Exhibit A provides for a price penalty to be imposed on Seller if
Seller delivers to Buyer Blast Furnace Coke that fails to meet the quality
standards set forth in Exhibit A. Should Seller be obligated to pay a price
penalty to Buyer pursuant to Exhibit A, such penalty shall be paid in the form
of a credit against invoices delivered by Seller to Buyer subsequent to the time
it is determined that such penalty is owed. Buyer and Seller shall endeavor to
arrange the appropriate accounting procedure to provide all credits due
hereunder.
ii) Exhibit A provides for a price premium to be imposed on Buyer if
Seller delivers Blast Furnace Coke that: 1) exceeds the specified standard for
stability of [*****]%; or 2) contains a moisture content of less than [*****]%.
Should Buyer be obligated to pay a price premium, such premium shall be paid
pursuant to separate invoice delivered by Seller to Buyer. Payment of such
invoice shall be as set forth in Section VII.
VII. PAYMENT
Seller shall invoice Buyer no less frequently than weekly for Blast Furnace
Coke delivered hereunder. Buyer shall pay Seller the amount invoiced within
[*****] ([*****]) calendar days following the date of invoice by wire transfer
to an account identified by Seller from time to time or through other payment
method specified by Seller. Buyer shall, upon request by Seller, provide Seller
with all information concerning Buyer's financial condition that Seller may
reasonably require to determine Buyer's capability to satisfy its obligations
hereunder. Buyer shall, upon request by Seller, provide such financial
assurances that Seller may require to satisfy Seller that Buyer will complete
its obligations hereunder.
VIII. USE OF PRODUCT
6
Buyer represents and warrants that Coke purchased hereunder is intended for
consumption as its steelmaking plant in Warren, Ohio. Buyer may not trade or
resell Coke, except fines and/or screenings derived therefrom unless prior
written consent is obtained from Sell, which consent shall not be unreasonably
withheld.
IX. FORCE MAJEURE
A. In the event of any delay in Seller's performance or if Buyer is unable
to accept deliveries due to fire, explosion, mechanical difficulty, strike or
other difference with workmen, shortage of coal supply, utility, material or
labor, breakdown or accident at Seller's or Buyer's facilities, a party's
compliance with or other action taken to carry out the intent or purpose of any
law or regulation or any cause beyond that party's reasonable control (any of
which events shall be deemed to be an event of "force majeure"), the party whose
performance is delayed or prevented thereby shall be excused and at Seller's
sole option, the term of this Agreement shall be extended for a period equal to
the total length of such delays or failures to perform to permit delivery of the
quantities whose delivery was delayed (hereinafter "Extended Term"); provided,
however, that should any event of force majeure prevent Seller from performing
its obligations under this Agreement for a period of two (2) consecutive months
or longer, Buyer shall have the right, while said force majeure remains in
effect, to terminate this Agreement upon written notice received by Seller.
B. The party that suffers a delay or fails to perform hereunder by virtue
of an event of force majeure shall promptly notify the other party of the
occurrence of such event, giving particulars, including but not limited to the
expected duration of such force majeure event, and shall notify the other party
of the cessation of such event.
X. WAIVERS AND REMEDIES
7
A. The failure of Buyer or Seller to insist in any one or more instances
upon performance of any of the provisions of this Agreement or to take advantage
of any of their rights hereunder shall not be construed as a waiver of any such
provision or the relinquishment of any such right, but the same shall continue
and remain in full force and effect.
B. Buyer's sole remedies for deliveries of Blast Furnace Coke that do not
meet the "maximum" or "minimum" specifications set forth on Exhibit A shall be
the price adjustments identified on Exhibit A provided, however that in the
event of material non-compliance by Seller with the Quality Specifications on
Exhibit A for two (2) consecutive months such that Buyer must purchase
alternative coke, Buyer may at their option, suspend purchases of Coke until
such time that Seller's production conforms to said Quality Specifications. In
the event of Substantial Non-Compliance of Coke for three (3) consecutive
months, Buyer may terminate the contract.
C. If Buyer fails to accept delivery of Blast Furnace Coke, and such
failure is not excused under Article IX, Seller may resell such Blast Furnace
Coke to any entity. Where such resale is made in good faith and in a
commercially reasonable manner, Buyer shall pay to Seller any difference between
(i) the Purchase Price that would have applied to such Blast Furnace Coke had
Buyer taken delivery hereunder and (ii) the price that Seller was able to
realize in such resale, plus Seller's reasonable costs incurred in making such
resale.
D. In no event shall either Buyer or Seller be liable to the other, by
reasons of a default in the performance of any of its obligations hereunder, for
special damages of any kind or for consequential damages, in either case,
relating to damage to property, personal injury, disruptions in production, lost
profits or business opportunities. Specific performance shall not be sought by,
or awarded to, Buyer as a remedy for any unexcused failure of Seller to deliver
the quantities and quality of product specified herein.
8
E. SELLER HEREBY DISCLAIMS, AND BUYER HEREBY WAIVES, ANY AND ALL IMPLIED
WARRANTIES, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
XI. DEFAULT
A. Except for default and/or termination as provided for in paragraphs IX.
A. and XI. B., no default by Buyer or Seller in the performance of any of its
obligations hereunder which, except for this provision, would be legal basis for
rescission or termination of this Agreement by the other party, shall give or
result in such right unless and until the party in default shall fail to correct
the default within fifteen (15) days after having received written notice of a
claim of such default from the other party.
B. In the event of default of Buyer in payment or other obligations
provided in paragraph VII, Seller may suspend further deliveries hereunder until
such default has been corrected. If such default is not corrected with fifteen
(15) days of Seller giving written notice of such default, then Seller may
terminate this Agreement.
XII. ASSIGNMENT
This Agreement is assignable by either party hereto only with the written
consent of the non-assigning party, which consent shall not be unreasonably
withheld. Upon an effective assignment as provided for in this paragraph XII,
the assigning party shall thereafter be fully released from its obligation
hereunder; provided, however, that the assignor and assignee shall be jointly
and severally liable for payment for Blast Furnace Coke delivered to Buyer prior
to assignment. Subject to the limitations set forth in this paragraph XII, all
the terms of this Agreement shall be binding upon inure to the benefit of the
parties hereto and their respective successors and assigns.
9
XIII. TERMINATION UPON CESSATION OF OPERATIONS
This Agreement shall be terminated automatically upon Seller permanently
discontinuing operations at Seller's Coke Plant. The agreement shall be
terminated automatically upon Buyer's permanently discontinuing its blast
furnace operations.
XIV. NOTICES
Except as otherwise provided in this Agreement, all notices under this
Agreement shall be in writing and shall be deemed to have been duly given if
sent: (1) by first class registered or certified mail, postage prepaid; or (2)
by overnight delivery service which provides proof of delivery; or (3) by hand
delivery; or (4) by telecopy with a duplicate copy sent via first class mail,
postage prepaid, addressed as follows:
SELLER: ISG WARREN INC.
0000 Xxxx Xxxxxx, X.X.
Xxxxxx, Xxxx 00000
Attention: Xxxx Xxxxxx
BUYER: WCI STEEL INC.
0000 Xxxx Xxxxxx, XX
Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. O'Bruba
or to the address the intended recipient shall have most recently specified for
such purpose in writing delivered to the other party.
XV. CHOICE OF LAW
This Agreement shall be construed in accordance with the laws of the State
of Ohio, without regard to such state's conflict of law provisions that would
cause the law of another jurisdiction to apply.
10
XVI. FINAL AGREEMENT
This Agreement constitutes the final and complete agreement between the
parties with respect to the subject matter hereof, and all other prior
documents, negotiations, agreements, and communications between the parties with
respect to the subject matter hereof. This Agreement may not be modified or
amended except by a written agreement executed by authorized representatives of
Buyer and Seller.
XVII. SEVERABILITY
If any provision of this Agreement, or the application thereof to any party
hereto, is held illegal, unenforceable, or otherwise invalid by government
promulgation or court decree, such holding shall not affect the other provisions
or applications of this Agreement which can be given effect without the invalid
provision, provided that the parties shall promptly negotiate in good faith as
to adjustments in this Agreement as may be necessary to eliminate any inequity
created by the provision being declared invalid.
XVIII. AUDIT
Each party shall have the right to audit the other's records insofar as
necessary to ensure compliance with all of the terms and conditions of this
Agreement. Such audits shall be performed by an internal or external auditor,
provided however, that the party being audited shall have the right to require
that any audit be conducted by a mutually agreeable independent auditor and that
the details of the information examined in such audit be kept confidential from
the party requesting the audit, except to the extent necessary to confirm
compliance with the Agreement and to resolve any controversy that is pursued in
good faith.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written by their duly authorized corporate
officers.
11
WCI STEEL, INC.
By:
------------------------------------
Its:
-----------------------------------
ISG XXXXXX INC.
By:
------------------------------------
Its:
-----------------------------------
12
EXHIBIT A
QUALITY SPECIFICATIONS
FOR
ISG XXXXXX INC.
PENALTY
PARAMETER TYPICAL RANGE/LIMIT REJECTION PENALTY OR PREMIUM FREQUENCY
--------- ------- ----------------- --------- ------------------------- ---------------
Stability, % 60.0 [*****] - [*****] < [*****] $[*****] per percentage Monthly Average
point per ton, pro rata.
An adder of $[*****] per
percentage point per ton,
pro rate on any stability
[*****]
Hardness, % 69.0 n/a n/a n/a Monthly Average
Moisture, % 4.50 [*****] - [*****] > [*****] $[*****] per percentage Monthly Average
point pro rata. An adder
of $[*****] per
percentage point, pro
rata on any moisture
[*****]
Ash, % 8.5 [*****] - [*****] > [*****] $[*****] per percentage Monthly Average
point per ton pro rata
Sulfur, % 0.71 [*****] - [*****] > [*****] $[*****]per 1/10th Monthly Average
percentage point per ton
pro rata
Volatile Matter, % 0.65 n/a > [*****] None Monthly Average
Fixed Carbon, % By diff n/a n/a None Monthly Average
Size, %
+ 3 inch cumulative 11.0 -- -- None Monthly Average
+ 2 inch cumulative 50.0 -- -- None Monthly Average
+ 1.5 inch cumulative 78.0 -- -- None Monthly Average
+ 3/4 inch cumulative 97.8 [*****] > [*****] $[*****] per percentage Monthly Average
point per ton pro rata
Mean size -- -- -- None Monthly Average