by and between REPUBLIC ENGINEERED PRODUCTS, INC. and UNITED STATES STEEL CORPORATION
2007
- 2008 ROUNDS SUPPLY AGREEMENT
by
and between
REPUBLIC
ENGINEERED PRODUCTS, INC.
and
UNITED
STATES STEEL CORPORATION
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TABLE
OF CONTENTS
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ARTICLE
I - DEFINITIONS
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2
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1.1
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General.
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3
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1.2
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Certain
Defined Terms.
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3
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ARTICLE
II - ROUND SALES
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4
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2.1
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Quantities.
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4
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2.2
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Prices.
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5
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2.3
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Orders.
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7
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2.4
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Payment.
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8
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2.5
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Delivery,
Title and Risk of Loss.
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9
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2.6
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Terms
and Conditions of Sale.
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9
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2.7
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Warranty.
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10
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2.8
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Cross
Default; Right of Set-off.
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11
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2.9
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Mill
Scale; Scrap.
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11
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ARTICLE
III - TERM AND TERMINATION
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13
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3.1
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Term.
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13
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3.2
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Termination.
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13
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ARTICLE
IV - MISCELLANEOUS
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14
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4.1
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Payment
Errors.
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14
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4.2
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Dispute
Resolution.
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14
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4.3
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Audit.
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15
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4.4
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Confidentiality.
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15
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4.5
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Severability.
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17
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4.6
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Rights
and Remedies; No Consequential Damages.
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17
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4.7
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Costs
and Expenses.
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17
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4.8
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Notices.
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17
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4.9
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Assignment.
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18
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4.10
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Counterparts.
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18
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4.11
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Entire
Agreement.
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18
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4.12
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Headings.
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19
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4.13
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Governing
Law.
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19
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4.14
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No
Third Party Rights.
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19
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4.15
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Waiver
and Amendments.
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19
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4.16
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Force
Majeure.
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19
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SCHEDULE
A:
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Prices
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22 |
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SCHEDULE
B:
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Seller’s
Standard Terms and Conditions of Sale
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25 |
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SCHEDULE
C:
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Weight
Calculation
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28 |
2007-2008
ROUNDS SUPPLY AGREEMENT
▇▇▇▇
▇▇▇▇-▇▇▇▇ ROUNDS SUPPLY AGREEMENT (“Agreement”) made and entered into on this
22nd
day of
September 2006,
with an effective date of January 1, 2007 (the “Effective Date”), by and between
REPUBLIC ENGINEERED PRODUCTS, INC., a Delaware corporation (hereinafter referred
to as “Seller”, “REP” or “Republic”), and UNITED
STATES STEEL CORPORATION,
a
Delaware corporation (hereinafter referred to as “Buyer” or “USS”).
W
I T N E S S E T H:
WHEREAS,
Buyer desires, commencing April 1, 2006 and during the term hereof, to obtain
a
reliable and continuing source of rounds for its pipe/tubemaking facility
in
Lorain, Ohio (hereinafter referred to as the “Pipemill”); and
WHEREAS,
Seller desires, commencing April 1, 2006 and during the term hereof, to supply
to Buyer rounds produced by Seller at its Lorain Works facility, in accordance
with the terms and conditions set forth herein; and
WHEREAS,
the parties hereto (i.e., REP, as successor by an assignment from Republic
Engineered Products, LLC, and USS, in its own right and on behalf of its
Lorain
Pipe ▇▇▇▇▇ operating unit), heretofore entered into (i) a certain Rounds
Supply
Agreement dated effective as of August 16, 2002 covering REP’s supply to USS of
tubular rounds produced at REP’s Lorain Works facility (hereinafter the “2002
Rounds Supply Agreement”), and (ii) certain related Coke and Pellet Supply
Agreements also dated effective as of August 16, 2002 covering USS’s supply to
REP of coke and pellets for use at its Lorain Works facility (said 2002 Rounds
Supply Agreement and related Coke and Pellet Supply Agreements dated August
16,
2002 being hereinafter referred to collectively as the “2002 Agreements”); and
WHEREAS,
the 2002 Rounds Supply Agreements was extended and supplemented/amended by
the
parties several time, most recently by the 2006 Rounds Supply Agreement covering
April 1, 2006 through December 31, 2006; and
WHEREAS,
REP and USS desire to enter into this Agreement in order to provide for REP’s
continued production and sale and USS’s continued purchase of tubular rounds
produced at REP’s Lorain Works facility through September 30, 2008, all upon and
subject to the stated terms and conditions as herein provided; and
WHEREAS,
this Agreement is being entered into in conjunction with the parties also
entering into (i) an existing or new Coke Supply Agreement and (ii) an existing
or new Pellet Supply Agreement covering (respectively) USS’s supply of coke and
pellets to REP for use at its Lorain Works facilityto facilitate REP’s continued
production and supply of rounds to USS under this Agreement.
NOW,
THEREFORE, Seller and Buyer have agreed and do hereby agree as
follows:
ARTICLE
I - DEFINITIONS
1.1 General.
Each
capitalized term used herein shall have the meaning assigned to it in this
Agreement (including the Schedules hereof) or as set forth in this Article
I.
1.2 Certain
Defined Terms.
As
used
herein, the following terms shall have the meanings set forth
below:
"Coke
Supply Agreement" means the Coke Supply Agreement entered into effective
of even
date herewith by and between Seller and USS.
“Late
Payment Rate” means the prime interest rate as publicly announced by the ▇▇▇▇▇▇
Guaranty Trust Co. (or its successor) on the first business day of the month
for
each month throughout the period during which any amount is due and unpaid.
“Lorain
Tubular Operations” or “LTO” means USS Tubular Products Division’s Pipemill
facility in Lorain, Ohio, located adjacent to the Lorain Works.
“Lorain
Works” means Seller’s steelmaking facilities located in Lorain, Ohio, which
facilities produces, inter
alia,
Rounds.
“LTO
▇▇▇▇▇” means the LTO No. 3 Seamless Mill that utilizes Rounds that equals or
exceeds 10½ ” (OD) and the LTO No. 4 Seamless Mill that utilizes 6” (OD)
Rounds.
“Pellet
Supply Agreement” means the Pellet Supply Agreement entered into effective of
even date herewith by and between Seller and USS.
“Person”
means any individual, partnership, joint venture, firm, corporation, limited
liability company, association, trust or other entity or government or political
subdivision or any agency, department or instrumentality thereof.
“Rounds”
means continuously cast carbon steel rounds, high strength steel rounds and
alloy steel rounds of the type produced by Seller at the Lorain Works which
are
of the dimensions and chemistry set forth in the Specifications and meet
the
specifications set forth in Buyer’s orders as acknowledged by Seller hereunder.
“Seller’s
Standard Terms and Conditions of Sale” means the terms and conditions set forth
on Schedule B.
“Services
Agreement” means the Administrative and Utility Services Agreement dated
August 16, 2002 by and between Buyer and Seller.
“Specification”
means the TQR-09-02-LC, as the same may be amended from time to time by mutual
agreement of the parties.
“Tons,”
“net ton” and “NT” each means 2,000 pounds avoirdupois in weight.
ARTICLE
II - ROUNDS SALES
2.1 Quantities.
(a) Subject
to the terms hereof, during the term hereof, Seller agrees to sell, and Buyer
agrees to buy Rounds for use at the Pipemill. Seller
will sell and Buyer will buy 25,000 to 30,000 tons of tube rounds per month
at
the
price(s) (according to Melt Line of Rounds purchased) set forth in Article
2.2
“Prices” hereof. The parties agree that Buyer shall have the right to designate
the production of Rounds in the following sizes: (i) 6 Inches; 10½ Inches; 12¼
Inches, which are available monthly; (ii)13½ Inches which are available on a
semiannual basis or more often with the consent of Seller, which consent
will
not be unreasonably withheld; and (iii) 11 5/8 Inches upon request by Buyer
as
agreed by Seller; provided, however, that no greater than 50% of such Rounds
may
be designated by Buyer as 6 Inch Rounds for production by Seller in any single
month. If REP’s ability to produce hot metal is constrained because USS fails to
provide Coke pursuant to the provisions of the Coke Supply Agreement and/or
Pellets pursuant to the provisions of the Pellet Supply Agreement, REP may
reduce shipments of Rounds to USS hereunder before curtailing shipments to
other
customers. If REP’s ability to produce hot metal is constrained for reasons
unrelated to the supply of Coke and/or Pellets by USS, then REP shall reduce
shipments of steel products to other customers before curtailing shipments
of
Rounds to USS hereunder.
(b) If,
during the term hereof, Seller agrees in good faith to cast and deliver volume
(of Rounds) to Buyer in excess of the 30,000 tons, such increased volume
at the
prices set forth on Schedule A (unless another pricing arrangement is agreed
to
by both parties) shall be a binding commitment of Seller under this Agreement.
In no event shall additional volume sold to Buyer in any month during the
term
hereof, constitute volume to be counted in any proceeding month (i.e. - no
extra
volume produced in a prior commitment period shall carry over to another
commitment period for either the Buyer or the Seller).
(c) Seller
shall pay to Buyer (as a credit or otherwise as agreed to by the Parties)
a
penalty of $50/ton for every ton that Seller fails to deliver under 75,000
tons
during any quarter hereunder unless such failure is due solely to the act
or
omission of Buyer).
| 2.2 |
Prices.
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(a) For
all
orders of Rounds placed hereunder (effective January 1, 2007), Buyer shall
pay
Seller the applicable purchase price(s) based upon the type/grade of Rounds
sold
by Seller and purchased by Buyer as set forth on Schedule
A
of this
Agreement, according to the “Melt Line Tubular” and corresponding “Base Line Per
Ton As Cast” prices as set forth in Schedule A, which shall include an
additional $15.00 per ton. The designated Base Line Per Ton prices for Rounds
as
set forth on Schedule A (“Base Prices for Rounds”) shall be subject to the
adjustments for coke and pellets as set forth in Article 2.2 below. The
designated Base Line Per Ton prices for Rounds as set forth on Schedule A
(“Base Prices for Round”) shall be subject to the following
adjustments:
| (1) |
Coke
Adjustment
|
In
the
event of any change(s) (increase or decrease) in the Coke price(s) paid by
REP
to USS under the Coke Supply Agreement from the price(s) being paid thereunder
as of April 1, 2006, the Base Prices for Rounds shall be subject to adjustment
(increase/decrease) according to the following formula:
Coke
Adjustment
Increase/Decrease
= .481 x .825 / .914 x (new coke price - old coke price)
coke
rate
x hot metal factor x liquid to round yield x change in price.
The
above
shall only apply when the price of the coke actually utilized to produce
Rounds
for the Buyer increases or decreases. The price of coke used for the production
other than Rounds for the Buyer shall have no effect on Rounds pricing
hereunder.
| (2) |
Pellet
Adjustment
|
In
the
event of any change(s) (increase or decrease) in the Pellet price(s) paid
by REP
to USS under the Pellet Supply Agreement from the price(s) being paid thereunder
as of April 1, 2006, the Base Prices for Rounds shall be subject to adjustment
(increase/decrease) according to the following formula:
Pellet
Adjustment
Increase/Decrease
= (1.557 x .825 / .914 x (new WAC pellet price - old WAC pellet price) Pellet
rate x hot metal factor x liquid to round yield x change in price.
The
above
shall only apply when the price of the pellets actually utilized to produce
Rounds for the Buyer increases or decreases. The price of pellets used for
production other than Rounds for the Buyer shall have no effect on Rounds
pricing hereunder.
| (3) |
Alloy
Adjustment
|
The
parties agree that the affected Base Prices for Rounds (i.e., the Melt Line
Tubular Grades which require the use of alloying elements in their production)
(“alloy Rounds”) shall be subject to adjustment (increase or decrease) on a
monthly basis (i) for changes in the monthly average prices for Molybdenum,
Chrome and Vanadium as shown in Platts Metals Week, and (ii) for such changes
to
Nickel based on the London Metals Exchange (“LME”) average. Such monthly
adjustments shall be determined for the affected alloy Rounds (listed by
Melt
Line Tubular Grades/Specs), Alloy elements and formula calculations as shown
in
the sample Lorain Tubular Alloy adjustment computation set forth in Schedule
A-1
of this Agreement.
| 4) |
Natural
Gas Adjustment
|
A
natural
gas monthly surcharge will be billed monthly as a separate invoice using
a base
of $8.00 / MMBTU. The difference between the actual month cost and $8.00
will be
multiplied by 2.7 usage per ton, and this $8.00 base shall be subject to
adjustment (increase or decrease) on a monthly basis (i) for changes in the
monthly average prices of natural gas.
To
the
extent practical, the adjustments for alloys and natural gas provided for
hereunder shall not be added to or subtracted from the affected Base Prices
for
Rounds, but each adjustment shall be instead billed monthly on a separate
invoice. .
(b) The
weights used for purposes of determining the amount of Rounds actually sold
hereunder shall be calculated on the basis set forth in Schedule
C,
and
such weights shall be conclusive as to the quantities of Rounds sold hereunder,
and such weight calculation shall exclusively govern and be used for billing
and
payment purposes; provided,
however,
that if
Buyer should encounter material discrepancies between weights so determined
and
weights measured by Buyer, Buyer and Seller shall meet to discuss reasons
for
such discrepancies and whether remedial action is necessary.
2.3. Orders.
(a) The
following procedures shall be used by the parties for ordering Rounds:
(i) Rounds.
(A) On
or before the 10th day of December 2006 and the 10th
day of
each succeeding month during the term hereof, Seller will furnish Buyer with
Seller’s tentative schedule for producing the designated volume, as described in
section 2.1, of Rounds for the next succeeding month. (B) After receipt by
Buyer of Seller’s schedule for producing Rounds, Buyer shall, on or before the
fifteenth (15th)
day of
each such month, submit to Seller a forecast, by Rounds size, of the number
of
Rounds heats required to melt for Rounds to be delivered in the next succeeding
month, said number of Rounds heats as may be adjusted shall become final
and
binding on both parties as of the last business day of such month. (C) On
or before the seventh (7th)
day
prior to the scheduled monthly date for the production of Rounds as set forth
in
subparagraph (A) above, Buyer will issue to Seller a written order, which
shall
be conclusive, final and binding on both parties, setting forth the number
of
heats of each grade specification, and number of Rounds required by Rounds
Billet Number, for each Rounds size.
(b)
Within seven (7) business days of Seller’s receipt of any order from Buyer, or
prior to the scheduled monthly date of production, whichever is earlier,
Seller
shall email Buyer the quantity and specification of Rounds which Seller will
deliver to Buyer and the anticipated delivery dates. Any proposed changes
by
Seller from Buyer’s order shall be negotiated by the parties before
acknowledgement.
(c)
Seller will only be required to produce a requested size of ordered Rounds
twice
per month per LTO Mill at a minimum of ten heat quantity for 6” Rounds and
twelve heat quantity for larger Rounds. Seller may deliver to Buyer during
any
month a quantity of Rounds that exceeds Buyer’s orders for such month by up to
the next whole heat (on a grade page/Round size combination), and Buyer shall
be
obligated to accept such excess quantity as if, and to the same extent as,
such
excess quantity had been ordered by Buyer.
(d) Notwithstanding
the foregoing, Seller shall use reasonable efforts to minimize excess Rounds
production. By way of example, if Buyer orders 7.6 heats of a grade page/Rounds
size combination, Buyer will be obligated to accept a quantity up to 8.0
heats
on such grade page/Rounds size combination.
(e) The
Base
Prices for Rounds on Schedule A are based on minimum three-heat sequence
per Melt Line per size. The quantity extras for less than a three-heat sequence
of a size and grade are: for two (2) heats, plus $10/ton; for one (1) heat,
plus
$35/ton. Such quantity extras where applicable shall be billed monthly on
a
separate invoice. The quantity extras set forth in this paragraph shall apply
only when USS requires a less than three-heat sequence. If REP, for any other
reason, utilizes a less than three-heat sequence, no quantity extras shall
apply. REP shall provide USS within 24 hours of each melt campaign written
notice of actual
production
by RB Number. Buyer will pay the amounts due under this subparagraph on the
next
Payment Date as defined in Article 2.5 below.
(f) If
for
any reason Seller fails to produce items sufficient to fulfill a particular
Rounds order as agreed upon and specified within the order, Seller shall,
upon
discovery, provide Buyer with immediate verbal notification (verbal/email)
of
such insufficient production, followed by written/email confirmation within
a
reasonable and practical time period after Seller’s discovery of the shortage.
Notice pursuant to this Section 2.3(f) shall not be deemed of itself, a shortage
subject to Section 2.1(c).
(g) Should
Seller elect to curtail its Rounds production operations at any time prior
to ,
September 30, 2008, Seller must provide Buyer with at least twelve (12) months
advance written notice of such intended curtailment. Should such a curtailment
arise, Buyer and Seller will then work together in good faith during the
twelve
(12) month notice period to adjust the volume of Rounds to be supplied by
Seller
to Buyer for the balance of the contract, as well as in any transition period
and/or extension of the Agreement made necessary due to the curtailment.
Also,
should such curtailment arise, in no event will Buyer be required to forecast
more than two (2) months of supply in advance for Seller to melt and place
into
inventory for shipment to Buyer in later months (i.e. curtailment at any
given
time shall not be used by Seller to force Buyer to forecast further into
the
term than as provided in this Agreement). For the avoidance of doubt, under
such
a curtailment, Seller will pay Buyer the $50/ton penalty (for
every
ton under the minimum tonnage) per
the
provisions of Section 2.1 (c) herein.
(h) Should
Seller curtail its Rounds production operations at any time prior to September
30, 2008as provided in subsection (g) hereof, Seller shall only be obligated
to
supply committed volume for specific requirements that are received from
the
Buyer at least thirty (30) days prior to the scheduled curtailment.
(i) Buyer
shall provide Seller with at least thirty (30) days written notice of any
planned outages at Lorain Pipe ▇▇▇▇▇. The notice requirement may be satisfied
via the use of email. During any such timely noticed planned outage, Buyer
may
reduce its monthly requirement by up to twenty-five percent (25%) per week
during such outage, and such reduction shall be for no longer than the period
of
the outage.
2.4 Payment.
(a)
For
each railroad car of Rounds loaded for Buyer, Seller shall create a computer
file (“Manifest Sheet”) containing the shipped date, manifest number, roll order
number, heat number and number of pieces. The Manifest Sheet shall be
transferred to Buyer’s pipe computer system by electronic data transfer. Buyer
shall pay Seller via wire transfer, the net amount due per such Manifest
Sheet
in accordance with the payment provisions set forth in Article 2.4(b)
below.
(b)
Subject to Article 2.8 below, payment shall be made for each Settlement Period
(as hereinafter defined) on the Payment Date (as hereinafter defined). A
“Settlement Period” shall
be
the
period falling from Sunday to and including Saturday. On the Monday following
each Settlement Period (the “Settlement Date”), Buyer shall provide to Seller a
summary of all payments to be made on the Payment Date. The Payment Date
for the
Settlement Period shall be the Tuesday immediately following that Settlement
Date (i.e. the next day) with payment to occur via wire transfer to occur
simultaneously with Seller’s wire payment to Buyer for its purchase of Coke and
Pellets from Buyer, subject to the following: If Seller does not send its
wire
payment on the wire due date or by the end of the following business day,
Buyer’s Treasury Department, in its sole discretion may revert to first
requiring confirmation of receipt of Seller’s payment prior to Buyer’s making
its wire payment hereunder. In the event a Payment Date falls on a holiday,
The
Payment Date shall be the day immediately following. Any deliveries of Rounds,
which are not on a Manifest Sheet provided by Seller prior to the otherwise
applicable Settlement Period (e.g.,
due to
delays in the normal cycle) will be settled in the next Settlement
Period.
2.5 Delivery,
Title and Risk of Loss.
(a) Delivery
of Rounds to Buyer shall take place at the handoff between the N&T Railroad
and IRSS, unless otherwise agreed, or in such manner or at such other place
as
shall be agreed upon by the parties in writing prior to the shipment of Rounds.
Title and risk of loss and damage to the Rounds shall pass from Seller to
Buyer
when the Rounds are delivered in accordance with this Article 2.5(a). Seller
shall be responsible for truck detention and/or rail demurrage charges incurred
by Buyer which arise out of delays to carrier equipment at Lorain Works
receiving shipments of Rounds ordered hereunder which have been scheduled
by
Seller, it being understood that Seller will ordinarily schedule such shipments.
Seller shall accept direct billing from carriers for any such detention and/or
demurrage.
(b) Delivery
of Rounds to USS shall take place F.O.B. railcar at the mainline carrier
interface, unless otherwise agreed, or in such manner or at such other place
as
shall be agreed upon by the parties in writing prior to the shipment of Rounds.
Title and risk of loss and damage to the Rounds shall pass from Seller to
USS
when the Rounds are delivered in accordance with this Article 2.5(b). Seller
shall be responsible for truck detention and/or rail demurrage charges incurred
by USS which arise out of delays to carrier equipment at the Lorain Works
receiving shipments of Rounds ordered hereunder which have been scheduled
by
Seller, it being understood that Seller will ordinarily schedule such shipments.
Seller shall accept direct billing from carriers for any such detention and/or
demurrage.
2.6 Terms
and Conditions of Sale.
(a) Seller’s
Standard Terms and Conditions of Sale set forth in Schedule B shall govern
the
purchase and sale of Rounds hereunder except to the extent that a provision
of
this Agreement otherwise applies.
(b) In
the
event of a conflict between the terms and conditions of this Agreement and
the
terms or conditions contained in any notice, shipment, specifications, purchase
order, sales order, acknowledgment or other document which may be used in
connection with the transactions contemplated by this Agreement, the terms
and
conditions of this Agreement shall supersede and govern, unless expressly
waived
in accordance with Article 4.16. In the event of a conflict between the terms
and conditions of this Agreement and the terms or conditions contained in
any
Schedule or Annex hereto, the terms and conditions of this Agreement shall
supersede and govern.
2.7 Warranty.
(a) Seller
warrants that the Rounds supplied hereunder shall be (i) in full conformity
with
the Specifications and with Buyer’s orders, (ii) free from defects in material
and workmanship, (iii) of good quality, and (iv) fit and sufficient for use
at
Buyer's Pipe mill (or USS’s Fairfield Works, as applicable) for the production
of seamless pipe.
(b) Seller
agrees that it will maintain adequate internal quality management system
controls, including but not limited to documented procedures, process
monitoring, testing and inspection to guarantee that Buyer receives Rounds
meeting the warranty set forth in Paragraph (a) above. Seller shall submit
to
Buyer, within twenty four (24) hours of each occurrence, a written report
documenting such occurrence of nonconformance with Seller’s process. Such report
shall also include Seller’s action plan to prevent nonconforming Rounds that may
result from such nonconformance from being shipped to Buyer. Buyer’s
representative shall be permitted unrestricted access to Lorain Works at
all
times during the production of Rounds to conduct an audit and to monitor
operations and Buyer’s representative shall also be permitted access to Lorain
Works to review Seller’s quality records relating to the production of
Rounds.
(c) When
Rounds are supplied by Seller that are not in conformance with the warranty
set
forth in Article 2.7. (a) above and such non-conformance is determined by
Buyer
to be caused by steelmaking, casting, cutting or the maintenance of
traceability, including but not limited to failure to meet the Specifications,
gross or excessive seams, laps, cracks, porosity, flux entrapment, inclusions,
and non-metalics exceeding commercially acceptable levels for the melt line,
mixed steel, or any other quality problem that may cause damage to Buyer’s
equipment or present a risk of harm to Buyer’s personnel during processing,
Buyer shall provide a written disqualification notice to Seller notifying
Seller
of Buyer’s intent to disqualify the affected product line from Buyer’s
requirements obligations hereunder. Seller shall have five (5) days to
investigate the identified warranty problem and to cure the problem or to
provide Buyer assurances that the problem will be remedied and which remedy
is
sufficiently satisfactory to Buyer to cause Buyer to cancel disqualification
notice, which cancellation shall not be unreasonably withheld.
(d) In
the
event that Seller supplies Rounds to Buyer that do not conform to the
specifications as identified in Buyer’s orders or the Specifications hereunder,
Buyer shall notify Seller of such non-conformity. Seller will reimburse Buyer
for all of Buyer’s costs and expenses associated with identifying, sorting and
testing non-conforming Rounds and suspected non-conforming Rounds including
third party inspection and testing costs and expenses (including all
transportation
costs associated with transportation to and from customer’s or third party
inspector’s facilities), subject to prior Buyer notification and
approval.
2.8 Cross Default; Right of Set-off.
2.8 Cross Default; Right of Set-off.
(a) The
parties hereby agree that Buyer’s obligations to make payments to Seller
hereunder for Rounds during each Settlement Period are expressly conditioned
upon and subject to the prior satisfaction in full by Seller of any and all
of
its payment obligations to USS under the Coke Supply Agreement, the Pellet
Supply Agreement and the Services Agreement.
(b)
Only
in the event of a payment default by Republic, which is defined as any failure
by Republic at any time to make a payment when due under Article 2.4 of the
Pellet Supply Agreement, Article 2.5 of the Coke Supply Agreement and/or
Article 3.2 of the Services Agreement (for any reason other than exercising
its
rights upon a payment default by USS), USS may (a) defer payment of any
amounts due for Rounds hereunder until such time as any and all delinquent
amounts due and owing USS under the Services Agreement, Pellet Supply Agreement
and/or the Coke Supply Agreement (the “Delinquent Amount”) are paid, and/or
(b) deliver to Republic a “Notice of Intent to Effect Set-off.” Provided
that Republic has not remitted to USS the Delinquent Amount within 5 days
of
Republic’s receipt of the Notice of Intent to Effect Set-off, USS may, on the
5th day following the delivery of such Notice, set-off the Delinquent Amount
against the amounts owed by USS to Republic hereunder for Rounds as of the
date
of such Notice. Interest on the Delinquent Amount shall accrue at the Late
Payment Rate specified in this Agreement.
(c) Notwithstanding
any provision herein to the contrary, in the event that (i) USS ceases operation
at the Pipemill either on a temporary or permanent basis or (ii) USS enters
into
an agreement to sell or otherwise transfer ownership of the Pipemill assets
or
operations to a third party, then USS shall have the express, immediate and
continuing right to set-off any and all amounts owed by USS to Republic
hereunder against any and all amounts owed by Republic to USS under the Coke
Supply Agreement, the Pellet Supply Agreement and/or the Services Agreement.
In
addition to the set-off right contained in the immediately preceding sentence,
Buyer and USS may also substitute new or revised payment terms and conditions
for the payment terms which are then in effect hereunder.
(d) REP
hereby agrees to continue to perform fully its obligations hereunder and
under
the Coke Supply Agreement, the Pellet Supply Agreement and the Services
Agreement notwithstanding the exercise by USS of any of its rights
hereunder.
2.9 Mill
Scale; Scrap.
(a) Mill
Scale.
LTO
will deal directly with ▇▇▇▇▇ or other third party for the handling of mill
scale. Republic will have no right, title, interest, ownership, obligation
or
liability in, to or in connection with such mill scale generated by LTO.
(b) Vehicle
Scrap.
LTO
will not send vehicle scrap to Republic.
(c) Miscellaneous
Scrap.
With
regard to other steel scrap (e.g.,
crop
ends, test coupons, burned-to-length scrap and the like) (“Miscellaneous Scrap”)
generated by Buyer, the following procedures shall apply:
|
(i)
|
Where
rail access is readily available, LTO will load the Miscellaneous
Scrap
onto rail cars used to deliver the Rounds to LTO hereunder, at
which time
ownership of such Scrap shall pass to Republic, and LTO shall have
no
further claim, right, title, interest, obligation or liability
in, to or
in connection with such Scrap. Republic shall pay LTO for the
Miscellaneous Scrap based upon weight received from the Lake Terminal
scale. All costs associated with the transportation and weighing
of such
Scrap shall be borne by Republic;
|
| (ii) |
Where
rail access is not readily available, LTO will load the Miscellaneous
Scrap into scrap boxes (“Boxes”) provided and maintained by LTO. When a
Box is full, LTO will arrange for delivery of such Box to Republic,
with
the costs of such delivery to be borne by LTO. Republic shall pay
to LTO
the amount set forth below for the Miscellaneous Scrap based on actual
weight, as measured on the truck scales located at the ▇▇▇▇▇, Inc.
Lorain,
Ohio facility, with the costs of such weighing to be borne by LTO.
Ownership of the Miscellaneous Scrap shall pass to Republic upon
delivery
of such Scrap to Republic, and LTO shall have no further claim, right,
title, interest, obligation or liability in, to or in connection
with such
Scrap.
|
|
(iii)
|
For
Miscellaneous Scrap Republic will pay to LTO an amount equal to
the
arithmetic average of the low and high scrap prices for the Chicago,
Cleveland and Pittsburgh areas for plate and structural 5’ maximum, as
published by American Metal Market on the fifth working day of
the month
such scrap is delivered, less $6.00 per Gross ton for
handling.
|
|
(iv)
|
LTO
agrees to prepare the Miscellaneous Scrap to lengths of approximately
5
feet or less, and will segregate carbon versus alloy wherever
possible.
|
(d) LTO
will
provide to Republic a monthly Metals Balance setting forth quantity of scrap
sold to Republic under this Articles 2.9(b) and (c). All amounts payable
to LTO
by Republic under this Article 2.9 shall be paid as a credit taken by LTO
on a
monthly basis against amounts due to Republic under Article 2.4.
(e) Terms
of Sale.
All
Miscellaneous Scrap sold to Republic hereunder shall be delivered pursuant
to
the terms and conditions contained in LTO’s order acknowledgement and
IS
SOLD AS IS, WITHOUT ANY WARRANTIES OR GUARANTEES WHATSOEVER.
LTO
makes no, and hereby disclaims any and all, representations, warranties or
guaranties, whether express or implied, including without limitation, warranties
as to the condition,
composition
or other physical characteristics of such materials and any implied warranties
of merchantability or fitness for a particular purpose. All such material
is
being transported for recycling purposes as defined in applicable tariffs
and
other laws, rules and regulations.
ARTICLE
III - TERM AND TERMINATION
3.1 Term.
This
Agreement and the rights and obligations of the parties incident thereto,
shall
be effective as of January 1, 2007 set forth in the preamble hereto and shall
remain in full force and effect through September 30, 2008, unless thereafter
extended upon the written mutual agreement of the parties or earlier terminated
as follows:
| (i) |
By
written mutual consent of the parties at any
time;
|
|
(ii
)
|
By
either party if the other party is in default under any of the
provisions
of this Agreement and fails to correct such default within 30 days
of
written notice of such default;
|
|
(iii
)
|
By
Seller if Buyer at any time fails to make any payment when due
under the
terms of this Agreement; or
|
(iv)
By Buyer, upon 30 days’ prior written notice, if Seller terminates the
Coke Supply Agreement, the Pellet Supply Agreement or the Services Agreement
for
any reason other than default of USS thereunder
In
addition to the rights of Buyer to terminate this Agreement pursuant to
subsection (iv) above, Buyer shall have the right, upon the occurrence of
any of
the events set forth therein, (X) to suspend production and/or refuse to
make
further shipments or deliveries of Coke and/or Pellets or otherwise suspend
its
further performance under the Coke Supply Agreement, the Pellet Supply Agreement
and/or the Services Agreement or (Y) to declare immediately due and payable
all
then outstanding and unpaid invoices covering Coke and/or Pellets previously
delivered under the Coke Supply Agreement and/or the Pellet Supply Agreement.
In
addition to its other remedies set forth elsewhere herein and as provided
under
applicable law, upon notice to Seller, Buyer may withhold and retain from
time
to time out of monies due Seller hereunder, amounts sufficient to fully
reimburse and compensate Buyer for any loss or damage which it sustains,
or may
sustain, as a result of any default or any breach by Seller of any of the
provisions of the Coke Supply Agreement, the Pellet Supply Agreement and/or
the
Service Agreement, or by reason of any other claims LTO and/or USS may have
against REP under any other agreement between them.
As
used
herein, "default" means failure of either party to perform, keep or observe
any
material obligation, provision, warranty or condition contained herein, unless
such performance is otherwise excused by the terms of this
Agreement.
3.2 Termination.
(a) Seller
and Buyer agree that upon and after termination of this Agreement:
|
(i)
|
All
orders previously accepted by Seller hereunder, and Buyer’s obligation to
pay for such orders, shall continue in full force and
effect.
|
|
(ii)
|
Buyer
shall remain obligated to make any payment that became due and
owed to
Seller hereunder prior to
termination.
|
|
(iii)
|
Liabilities
and obligations of any party arising from any act, omission, default
or
occurrence prior to termination shall remain with such
party.
|
|
(iv)
|
The
parties’ rights and obligations under Articles 2.4, 2.7, 4.1, 4.2, 4.3,
4.4, 4.5, 4.6, 4.7, 4.13, 4.14, 4.15 and this Article III shall
survive
the termination of this Agreement.
|
ARTICLE
IV - MISCELLANEOUS
4.1 Payment
Errors.
(a) If
either
Buyer or Seller believes that there has been an error in an amount paid or
the
timing of any payment hereunder, then such party shall notify the other party
of
such alleged error and shall provide such written evidence of the error as
is
available at the time of such notice. Each party shall provide the other
with
sufficient records relating to the matter so as to permit the parties to
attempt
to resolve the inconsistency.
(b) Following
the determination of whether an error occurred, any overpayment or underpayment
found shall be remedied, by the party that benefited from such
error.
(c) Notwithstanding
the foregoing, neither party may question the accuracy, correctness, timing
or
amount of any payment under this Agreement unless it notifies the other party
of
its disagreement within the 12 months immediately following the date such
payment was due.
4.2 Dispute
Resolution.
At
any
time and from time to time, if the parties are unable to resolve a dispute
concerning Buyer’s or Seller’s performance or nonperformance of their
obligations under this Agreement (excepting any disputes excluded herefrom),
Buyer or Seller, as the case may be, shall provide written notice to the
other
of such dispute as provided in Article 4.9 hereof. It is mutually agreed
that
any default by USS in its payment obligations hereunder (or any dispute relating
thereto), and/or any dispute relating to USS’s exercise of its rights under
Article 2.10 hereof shall not be subject to (and are excluded from) the
provisions of this Article 4.3; it being agreed that any such excluded disputes
(as aforesaid) shall be pursued and adjudicated by the
parties
in a court of competent jurisdiction. Any other dispute shall be resolved
by
using the procedures for Mediation and Arbitration set forth below:
(a) Mediation.
At any
time after a party has provided a written notice of dispute to the other
party,
but prior to the time that either party commences arbitration pursuant to
Article 4.3(b) herein, the parties may agree to submit the dispute to
non-binding mediation under terms and conditions satisfactory to both
parties.
(b) Arbitration.
At any
time after a party has provided a written notice of dispute to the other
party,
including at any time during any non-binding mediation agreed to by the parties,
either party may submit the matter in dispute to a pre-designated arbitrator
or,
in the event such arbitrator has not been selected or is unavailable, to
a three
member arbitral panel to which each Party shall appoint one member and those
two
members shall appoint a third member. Such arbitration shall be governed
by the
CPR Rules for Non-Administered Arbitration of Business Disputes. Pending
the
issuance of an arbitral decision, the Parties shall continue their full and
normal operations and obligations in accordance with this Agreement. All
arbitral awards for the payment of money and/or for any retroactive adjustment
of any interim prices paid hereunder shall accrue interest at the Late Payment
Rate starting from the date on which any amount is due or the date on which
the
interim payment was due.
(c) Consent
to Enforceability.
Each of
the Parties consents and agrees that any arbitral award rendered pursuant
to
Subsection 4.3(b) shall be final, non-appealable and binding against the
Parties
and their respective assets, and may be enforced by any court of competent
jurisdiction.
4.3 Audit
(a) Each
party shall maintain such books and records as may be reasonably necessary
to
verify amounts due under this Agreement and Buyer shall maintain records
to
verify compliance with its requirement obligations under Article 2.2 above.
Such
books and records shall be open to audit by the other party’s third party
accounting firm during reasonable business hours during the life of this
Agreement and for a period of one (1) year thereafter. The costs associated
with
such audit shall be paid by the requesting party and the audit firm shall
sign a
confidentiality agreement satisfactory to the party being audited.
4.4 Confidentiality
(a) Buyer
and
Seller acknowledge that all information about the businesses, properties,
finances, prospects, marketing, processes, products, methods, computer programs,
procedures, machinery, apparatus or trade secrets owned, or held or used
(including under license from or agreement with third parties) by the other
that
is disclosed to Buyer or Seller, as the case may be, during the course of
performing its obligations under this Agreement is the
property
of, and is proprietary and confidential to the disclosing party (the
“Proprietary Information”).
(b) Buyer
and
Seller agree that they shall use reasonable efforts not to make any disclosure
of the other’s Proprietary Information (including methods or concepts utilized
therein other than those commonly known to professionals in the field) to
any
Person other than officers, employees and agents of and consultants to Buyer
or
Seller to whom such disclosure is necessary or convenient for performance
of its
obligations hereunder and except as may be required by applicable legal
requirements or by a court of competent jurisdiction. Buyer and Seller shall
appropriately notify each officer, employee, agent and consultant to whom
any
such disclosure of the other’s Proprietary Information is made that such
disclosure is made in confidence and shall be kept in confidence by such
Person.
(c) Each
of
Buyer and Seller agrees to use diligent efforts in accordance with customary
and
reasonable commercial practice and at least with the same degree of skill
and
care that it would manifest in protection of its own proprietary and
confidential property to protect the other’s Proprietary
Information.
(d) Each
of
Buyer and Seller agrees to notify the other immediately in the event that
it
becomes aware of the unauthorized possession or use of the other’s Proprietary
Information (or any part thereof) by any third Person, including any of its
officers, employees, agents or consultants. Each of Buyer and Seller further
agrees to cooperate with the other in connection with its efforts to terminate
or prevent such unauthorized possession or use of such Proprietary Information.
Seller or Buyer, as the case may be, shall pay the nonproprietary party’s
reasonable out-of-pocket expenses in so cooperating, unless the unauthorized
possession or use of the Proprietary Information resulted from the fault
or
negligence of such nonproprietary party.
(e) Notwithstanding
any other provision of this Agreement, the obligation of Buyer and Seller
to
maintain the confidentiality of the other’s Proprietary Information shall not
apply to any portion of such Proprietary Information that:
|
(i)
|
was
in the public domain at the time of Buyer’s or Seller’s disclosure to the
other;
|
|
(ii)
|
enters
the public domain through no fault of the nonproprietary
party;
|
| (iii) |
was
communicated to the nonproprietary party by a third party free of
any
obligation of confidence known to the nonproprietary party;
or
|
| (iv) |
was
developed by officers, employees or agents of or consultants to the
nonproprietary party independently of and without reference to the
Proprietary Information;
|
provided,
however,
that
Proprietary Information which is specific shall not be considered to be within
the exception provided by this Article 4.5(e) merely because it is embraced
by
general information in the public domain; provided
further,
that
any combination of features within the Proprietary Information shall
not
be
deemed within such exception merely because individual features are within
the
public domain, but only if the combination itself is within the public
domain.
4.5 Severability.
In
case
any one or more of the provisions contained in this Agreement is adjudged
to be
invalid, illegal or unenforceable in any respect, the validity, legality
and
enforceability of the remaining provisions contained herein shall not in
any way
be affected or impaired thereby, except to the extent necessary to avoid
an
unjust or inequitable result.
4.6 Rights
and Remedies; No Consequential Damages.
The
rights and remedies granted under this Agreement shall not be exclusive but
shall be in addition to all other rights and remedies available at law or
in
equity, including, but not limited to, claims for breach of contract, except
that Buyer and Seller agree that in no event shall either party be liable
to the
other for any indirect, special or consequential damages or lost profits
as a
result of a breach of any provision of this Agreement.
4.7 Costs
and Expenses.
Each
of
Buyer and Seller shall bear its own expenses incurred in connection with
the
negotiation, preparation and execution of this Agreement.
4.8 Notices.
All
notices or other communications required or permitted by this Agreement shall
be
effective upon receipt and shall be in writing and (i) personally delivered,
or
(ii) mailed by registered or certified mail, return receipt requested, or
(iii)
sent by overnight delivery service which provides proof of delivery, or (iv)
sent by telecopy, with a duplicated copy sent via first class mail postage
prepaid, addressed as follows:
If
to
Seller:
REPUBLIC
ENGINEERED PRODUCTS, INC.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
Attention:
Vice President - Commercial
Facsimile:
(330) 670 - 7030
If
to
Buyer:
UNITED
STATES STEEL CORPORATION
Room
2001
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ - 2800
Attention:
General Manager Tubular Products
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
or
to
such other address as hereafter shall be furnished as provided in this Article
4.9 by either of the parties hereto to the other.
4.9 Assignment.
(a) Except
as
provided in Article 4.10(c), neither party can without the prior written
consent
of the other assign any of its rights or benefits or delegate any of its
duties
or obligations under this Agreement, and any attempted assignment or delegation
which is not permitted under Article 4.10(c) shall be null, void and without
effect; provided,
however,
that
Buyer may grant a security interest in Buyer's rights, benefits, duties and
obligations under this Agreement without the consent of Seller. Buyer shall
provided Seller written notice of the granting or revision of any such security
interest.
(b) The
rights, benefits, duties and obligations of each party hereto shall inure
to the
benefit of, and be binding upon, any successors, assigns or delegates permitted
under Article 4.10(c).
(c) Either
party hereto may delegate any of its duties or obligations under this Agreement
to any Person, but except as otherwise provided in this Agreement such party
shall remain liable for the full performance of such duties and obligations.
Either party hereto may assign or delegate any of its rights, benefits, duties
or obligations hereunder (i) to any Person if it has received the prior written
consent of the other party, which consent shall not be unreasonably withheld
or
delayed, (ii) to its legal successor if it merges (whether or not it is the
surviving corporation) or consolidates with one or more other Persons or
(iii)
to any Person to whom either party has made any sale, lease, transfer or
other
disposition of all or substantially all of its assets; provided,
however,
that
neither party may make an assignment or delegation described in clauses (ii)
and
(iii) above unless there are delivered to the other party such written
assumptions, affirmations and/or legal opinions as such other party may
reasonably request to preserve its rights and remedies under this
Agreement.
4.10 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, but all of which together shall constitute a single
instrument.
4.11 Entire
Agreement.
This
Agreement (including the Schedules hereto) sets forth the entire understanding
and agreement between the parties as to the matters covered herein and
supersedes and replaces any prior understanding, agreement or statement of
intent, in each case written or oral. All Schedules
attached
hereto and referenced hereby are incorporated by reference and made a part
of
this initial Agreement.
4.12 Headings.
The
headings contained in this Agreement are for convenience of reference only
and
do not modify or affect in any way the meaning or interpretation of this
Agreement.
4.13 Governing
Law.
This
Agreement shall be construed and enforced in accordance with, and governed
by,
the laws of the State of Ohio, excluding its conflict of laws
provisions.
4.14 No
Third Party Rights.
This
Agreement is intended to be solely for the benefit of the parties hereto
and is
not intended to confer any benefits upon, or create any rights in favor of,
any
Person other than the parties hereto, except as expressly provided to the
contrary elsewhere in this Agreement.
4.15 Waiver
and Amendments.
No
waiver
shall be deemed to have been made by either party of any of its rights under
this Agreement unless the same shall be in a writing that expressly refers
to
this Article 4.16 and is signed on its behalf by its authorized officer.
Any
such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time. This Agreement
shall not be amended or modified except by an instrument in writing signed
by
the party against whom enforcement is sought.
4.16 Force
Majeure.
| (a) |
Except
for obligations to make payments hereunder, neither party hereto
shall be
liable for any failure to perform the terms of the Agreement when
such
failure is due to Force Majeure. “Force Majeure” means acts of God,
strikes, lockouts, or other labor disputes or disturbances, civil
disturbances, arrests and restraint from rulers or people, interruptions
or terminations by or as a result of government or court action or
orders,
or present and future valid orders of any regulatory body having
jurisdiction, acts of the public enemy, wars, riots, blockades,
insurrections, inability to secure or delay in securing labor or
materials
by reason of allocations promulgated by authorized governmental agencies,
epidemics, landslides, lightning, earthquakes, fire, storm, floods,
washouts, explosions, breakdowns or accidents, inability to obtain
transportation services, or any other cause, whether of the kind
herein
enumerated or otherwise, not reasonably within the control of the
party
claiming Force Majeure. The Force Majeure shall, so far as possible,
be
remedied with all reasonable
|
|
dispatch.
The settlement of strikes or lockouts or other labor disputes or
disturbances shall be entirely within the discretion of the party
having
the difficulty, and the above requirement that any Force Majeure
shall be
remedied with all reasonable dispatch shall not require the settlement
of
strikes, lockouts, or labor disputes or disturbances by acceding
to the
demands of any opposing party therein when such course is inadvisable
in
the discretion of the party having the
difficulty.
|
| (b) |
The
party whose performance is affected or who has reason to believe
such
performance may be affected by reason of Force Majeure shall as promptly
as possible give notice thereof to the other party and shall confirm
such
notice in writing if requested, giving the particulars of the event,
including supporting documentation if available. The party so affected
shall also take reasonable steps to resume performance hereunder
with the
least possible delay
|
IN
WITNESS WHEREOF, this Agreement has been executed and delivered as of the
date
first written above.
REPUBLIC
ENGINEERED
PRODUCTS,
INC.
By:/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Name: ▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇, ▇▇.
Title: V.
P.
Commercial
UNITED
STATES STEEL
CORPORATION
By:/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
General Manger Tubular Products