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Exhibit 10.13
AGREEMENT TO PROVIDE
SCRAP PURCHASING SERVICES*
This Agreement to provide scrap purchasing services and certain priority
purchase rights (the "Agreement") is entered into on this 29th day of October,
1993, by and between OmniSource Corporation, an Indiana corporation with its
principal office and place of business in Fort ▇▇▇▇▇, Indiana ("OmniSource") and
Steel Dynamics, Inc., an Indiana corporation with its principal office and place
of business in Indianapolis, Indiana ("SDI").
WHEREAS, SDI intends to design, construct and operate a new steel production
facility in the Midwest, at a site yet to be selected, using thin slab casting
technology to produce hot rolled sheet steel of varying sizes, grades, and
specifications (hereinafter, from time to time, the "Mini- Mill");
WHEREAS, the Mini-Mill will require a continuous and dependable supply of
steel scrap ("Scrap") as its primary raw material ingredient, and desires to
secure the services of a major Scrap processor and broker with regional,
national, and international access to substantial sources of Scrap supply, to
act as SDI Scrap procurement agency for its periodic, regular, and ongoing
needs; and
WHEREAS, OmniSource considers itself properly qualified to and provide the
foregoing services to SDI, and desires to provide the Scrap purchasing services*
described in this Agreement, all subject to the terms and conditions set forth
herein,
NOW, THEREFORE, in consideration of the mutual covenants and undertakings of
the parties set forth herein, the parties agree as follows:
I.
Appointment of OmniSource as
Scrap Purchasing Agency
SDI hereby appoints and engages the services of OmniSource, and OmniSource
hereby accepts the appointment and agrees to render services to SDI as SDI's
exclusive Scrap purchasing agency, to carry out its functions hereunder either
for and on behalf of SDI, as agent, or in direct seller/purchaser transactions
with SDI, or both. OmniSource agrees to provide SDI with the following services
and rights:
A. General Agreement. OmniSource agrees that, subject to the procedures and
undertakings described in Paragraphs I.B., I.C., and I.D. herein, it
will use its best
* Material has been redacted pursuant to request for Confidential Treatment.
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efforts to locate and secure for SDI's Mini-Mill operations, such Scrap
supplies as SDI may from time to time wish to purchase, at the lowest
then available market prices for material of like grade, quantity, and
delivery dates. OmniSource and SDI shall regularly consult with each
other regarding the Mini-Mill's anticipated needs and requirements of
Scrap, by grade, quantity, and approximate delivery date(s).
B. *. OmniSource represents and warrants to SDI that at the present time it
regularly owns, controls, or otherwise has direct purchase rights with
respect to approximately One Hundred Thousand (100,000) gross tons of
mill grades of scrap of varying kinds and grades, on a monthly basis
("OmniSource's Scrap").
*
1. Communication. On a regular basis, OmniSource will notify SDI by
means of voice, fax, or electronic communication, or in such other
manner (i.e., as described in Paragraph I.D.) as the parties may
mutually agree, of the grade, quantity, location and the prevailing
OmniSource "Market Price" thereof (F.O.B. the Mini-Mill) of
OmniSource Scrap that is available for immediate purchase for the
Mini-Mill (an "OmniSource Available Lot").
2. Response. After its receipt of the foregoing notification, SDI shall
have the * right, for a period of time as agreed to
in connection with each offering, to secure such OmniSource Available
Lot, by communicating its assent (using similar means) that it will
take such OmniSource Available Lot upon the terms presented. If
timely communicated to OmniSource, that will constitute a binding
commitment by SDI to purchase and by OmniSource to sell (an
"OmniSource Scrap Contract") the OmniSource Scrap constituting the
particular OmniSource Available Lot. If a timely assent is not
communicated, OmniSource shall thereafter b free to hold, use, or
dispose of that OmniSource Available Lot in any manner, and upon such
term (including price and other differences reflecting market
conditions), as it deems appropriate.
3. Determination of Market Price. For purposes of determining
"OmniSource's Market Price," with respect to any OmniSource Available
Lot, the price at which OmniSource can actually sell material of like
grade and quantity, F.O.B. the OmniSource Available Lot, shall
constitute OmniSource's Market Price; and that, plus the actual cost
of freight into SDI's Mini-Mill, shall be used to determine SDI's
F.O.B. Mini-Mill price for that OmniSource Available Lot.
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Subject to suitable safeguards to preserve confidentiality,
OmniSource agrees to make available to SDI, for verification
purposes,, OmniSource's Market Price information.
It is agreed, however, that in the event that OmniSource is able to
purchase and bring into one or more of its operating plants
additional tonnages of Scrap, over and above its normal flow, and the
cost of such additional Scrap exceeds the "OmniSource Market Price,"
as defined herein, but is nonetheless lower than additional tonnages
of Scrap that may be available F.O.B. the Mini-Mill pursuant to
brokered General Market Scrap purchases pursuant to Paragraph I.C.,
such higher price shall be deemed the "OmniSource Market Price" for
purposes of only of such additional tonnages.
4. Payment. Payment to OmniSource for all OmniSource Scrap purchased by
SDI pursuant to this Paragraph I.B. shall be by SDI check and shall
be due and made on net thirty (30) day terms after delivery of Scrap
to the Mini-Mill, and OmniSource shall not be required hereunder to
provide extended credit terms to SDI.
5. Other Terms and Conditions of Sale. In addition to grade, quantity,
location, and price terms, as contemplated by OmniSource Scrap
Contracts agreed to in the manner contemplated by Paragraph I.B.2.,
the OmniSource Scrap Contracts between OmniSource and SDI shall be
governed by the Terms and Conditions of Sale for all OmniSource Scrap
Contracts between the parties hereto, as identified to this Agreement
from time to time.
C. * to General Market Scrap. OmniSource agrees to provide SDI, on a
regular basis, with grade, quantity, location, availability, and General
Market Price information, as defined in Paragraph I.C.3., F.O.B. the
Mini-Mill, reflecting the lowest cost Scrap of like grade and quantity,
other than OmniSource Scrap, that is available in the general
marketplace ("General Market Scrap") to meet the Mini-Mill's monthly or
other periodic requirements.
The * Rights to General Market Scrap that constitute the subject of this
Paragraph I.C. will operate as follows:
1. Communication. On a regular basis, OmniSource will notify SDI, by
means of voice, fax, or electronic communication, or in such other
manner (i.e., as described in Paragraph I.D.) as the parties may
mutually agree, of the grade, quantity, location and the "General
Market Price" thereof (F.O.B. the Mini-Mill) of General Market Scrap
that is available for immediate purchase for the Mini-Mill (a
"General Market Available Lot").
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2. Response. After its receipt of the foregoing notification, SDI shall
have the * right, for a period of time, as agreed to in
connection with each offering, to secure such General Market
Available Lot by communicating its assent (using similar means), that
it will take such General Market Available Lot upon the terms
presented. If timely communicated to OmniSource, that will constitute
a binding commitment by SDI to purchase the particular General Market
Available Lot (a "General Market Scrap Contract"). If a timely assent
is not communicated, OmniSource shall thereafter be free to forego,
purchase, or otherwise dispose of that General Market Available Lot
in any manner, and upon such terms (including price and other
differences reflecting market conditions), as it deems appropriate.
3. Determination of General Market Price. For purposes of determining
the "General Market Price" with respect to any General Market
Available Lot, the price at which OmniSource can actually purchase
that General Market Available Lot, F.O.B. the General Market
Available Lot, shall constitute the General Market Price for such
General Market Available Lot and that, plus the actual cost of
freight into SDI's Mini-Mill, shall be used to determine SDI's F.O.B.
Mini-Mill price for that particular General Market Available Lot.
Subject to suitable safeguards to preserve confidentiality,
OmniSource agrees to make available to SDI, for verification
purposes, all General Market Price data in connection with each and
every transaction.
4. Payment. Payment to OmniSource for all General Market Scrap purchased
by OmniSource and resold to SDI pursuant to this Paragraph I.C. shall
be by SDI check and shall be due and made on net thirty (30) day
terms after delivery of the Scrap to the Mini-Mill, and OmniSource
shall not be required hereunder to provide extended credit terms to
SDI.
5. Other Terms and Conditions of Sale. In addition to grade, quantity,
location, and price terms, as contemplated by General Market Scrap
Contracts agreed to in the manner contemplated by Paragraph I.C.2.,
the General Market Scrap Contracts between OmniSource and SDI shall
be governed by the Terms and Conditions of Sale for all OmniSource
General Market Scrap Contracts between the parties hereto, as
identified to this Agreement from time to time.
D. Working Agreements Regarding Scrap Purchasing Procedures. The parties
mutually agree that from time to time their representatives will develop
daily, weekly, or other periodic procedures and forms pursuant to which
OmniSource and SDI will carry out their respective obligations and
rights hereunder. The parties further recognize that the specific rights
granted to-SDI by OmniSource pursuant to Paragraphs I.B. and I.C. are
primarily for SDI's protection during possible conditions of market
undersupply, and for the further purpose of securing for SDI
OmniSource's commitment to use its best efforts
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in good faith to assist SDI in meeting its Scrap requirements on
a-continuous basis at the lowest available market prices for goods of
like quality and amount.
The parties agree, however, that in view of the foregoing, their
respective representatives may from time to time devise operating
procedures that may ignore the formalities contemplated by Paragraphs
I.B. and I.C. hereunder; but such informal procedures shall not be
deemed to constitute a modification or waiver of any of the rights and
obligations described in Paragraphs I.B. and I.C.
E. Compensation to OmniSource. For OmniSource's services rendered to SDI as
its exclusive Scrap purchasing agency and advisor, as well as for the
purchase rights * granted to SDI by OmniSource pursuant to * and
I.C. hereunder, SDI agrees to pay to OmniSource a fee ("OmniSource's
Feel') equal to Two Dollars ($2.00) for every gross ton of Scrap
received by SDI at its Mini-Mill, until such time as SDI's pre-tax
earnings from operations reach the first Thirty Million Dollars
($30,000,000), without regard to prior accumulated losses, if any, at
which time SDI agrees that OmniSource's Fee shall go to Three Dollars
($3.00) per gross ton thereafter. OmniSource's Fees shall be payable in
any and all events based upon the Mini-Mill's receipt of Scrap and
regardless of whether such Scrap derived from OmniSource Scrap Contracts
pursuant to Paragraph I.B. or General Market Scrap Contracts pursuant to
Paragraph I.C., but shall not be payable on SDI's direct purchase from
other sources pursuant to its rights described in Paragraph I.F.
OmniSource's Fees will be billed to SDI periodically by OmniSource, with
reference to specific OmniSource Scrap Contracts or General Market Scrap
Contracts, either separately or accompanying OmniSource invoices for
OmniSource Scrap or General Market Scrap, and shall be payable on net
thirty (30) day terms the same as payments due pursuant to Paragraphs
I.B. and I.C.
OmniSource agrees no other additional charge or ▇▇▇▇-up, over and above
the OmniSource Market Price (in the case of OmniSource Scrap Contracts)
or the general Market Price (in the case of General Market Scrap
Contracts) is to be levied by OmniSource, except as otherwise
specifically contemplated by this Agreement.
F. SDI's Purchase Rights. All final decisions regarding purchases of Scrap
hereunder shall belong to SDI, except insofar as the parties may
otherwise agree pursuant to the procedures contemplated by Paragraph
I.D.
SDI shall have the sole and unfettered discretion to determine its
periodic Scrap needs hereunder, including the extent to which it may
employ so-called Scrap substitutes, in lieu of metallic Scrap, in its
manufacturing process.
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SDI shall also retain the right, in the exercise of its own prudent
discretion, if after reasonable notice to OmniSource, OmniSource is not
able, for whatever reason, to supply sufficient Scrap of a particular
quality and amount at a particular price and at a particular time, or
if, by mutual agreement, there are independent business justifications
for SDI to deal directly with a supplier, to purchase Scrap for its own
account; and such action, unless in connection with a claim of breach,
shall not be deemed to constitute a renunciation by SDI or a waiver by
OmniSource of the exclusivity of OmniSource's Scrap agency rights
hereunder; and OmniSource shall not be entitled to its Fees on such
special transactions as otherwise determined under Paragraph I.E;
provided, however, that such exception shall not be used as a device to
evade OmniSource's compensation hereunder.
G. Additional OmniSource Services. In addition to the services previously
described herein, OmniSource will regularly consult with and advise SDI
with respect to such matters as the nature and extent of its purchasing
services, scheduling of Scrap shipments, quality control, supplier
supervision and control, and any other necessary services to enhance and
facilitate the Mini-Mill's receipt of an orderly supply of quality,
conforming Scrap.
SDI agrees to communicate regularly with OmniSource concerning any
problems of supply, quality, or other operating concerns., so that SDI
and OmniSource can work together to solve any supply issues before they
become problems, and to enable OmniSource to take up any supplier-side
quality or other problems with suppliers.
II.
Additional OmniSource Rights
A. Scrap Processing Facility. SDI represents to OmniSource that it has no
present plans for the establishment of a Scrap processing facility on
site at the Mini-Mill,,and that its current plans provide only for a
Scrap Receiving and Holding Facility. SDI agrees, however, that if it
decides to invite proposals for, install or construct a Scrap.
processing facility in, on, adjacent to or to serve the Mini-Mill or on
near premises OmniSource will be given a first right of refusal, for a
period of not less than one hundred eighty (180) days, to construct
and/or operate such a Scrap processing facility, on terms and conditions
substantially similar to those proposed to or by SDI and set forth and
described in reasonable detail in SDI's written notice to OmniSource.
B. Sale of Scrap by SDI. SDI agrees that OmniSource shall have a first
right of refusal to purchase from SDI any scrap metal or comparable
product that the Mini-Mill may sell from time to time.
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C. Trash Removal or Waste Hauling Agreements. SDI agrees that OmniSource
shall have a first right of refusal to provide any trash removal or
waste hauling' services which SDI may require and not provide for its
own account.
III.
Effective Date and Term of Agreement
The Effective Date of this Agreement shall be the date appearing at the
outset hereof, but the initial term of OmniSource's exclusive Scrap agency
relationship with SDI, as described in this Agreement, shall commence on the
date upon which OmniSource enters into its first OmniSource Scrap Contract
or General Market Scrap Contract pursuant to Paragraphs I.B. or I.C., and
shall thereafter extend for a period of six (6) years, or, alternatively,
shall extend for eight (8) years from the Effective Date, whichever is the
greater period. At the expiration of the initial term, and unless the
parties hereto have specifically extended this Agreement by a specific
renewal term, by written instruction signed by both parties, or replaced
this Agreement with a different agreement by a duly executed instrument
signed by both parties, this Agreement shall be deemed to continue on a year
to year basis, subject to termination by either party, with or without
cause, upon one (1) year's advance written notice.
IV.
Default and Early Termination
A. Breach of Performance by OmniSource. In the event that SDI alleges
OmniSource's failure to perform in accordance with the terms and
conditions of this Agreement, and in the further event that such failure
continues unabated for a period in excess of thirty (30) days after
notification to OmniSource in writing with a particularized statement of
the alleged failure to perform, then SDI, at its option, shall have the
right to terminate this Agreement for cause, based upon OmniSource's
default; provided, however, that in the event that prior to the lapse of
the thirty (30) day "cure" period set forth herein OmniSource has taken
reasonable steps to correct the default and failure of performance and,
if diligent, can reasonably correct and cure the problem within an
additional thirty (30) day period, OmniSource shall be entitled to the
additional period of thirty (30) days before SDI shall be entitled to
declare a default hereunder.
While the parties acknowledge and agree that this Agreement does not
constitute a requirements contract, nor does it constitute an
undertaking by OmniSource to provide SDI with its Mini-Mill's Scrap
needs in accordance with any specific terms or conditions, or at all
costs, or in any event, and while the parties further recognize that
market conditions may be such that adequate Scrap supplies are from time
to time not
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available or, if available, may be unavailable at acceptable price
levels, .OmniSource agrees that SDI (i) has the right hereunder to
priority treatment of Scrap supply, and (ii) has entered into this
Agreement with the expectation that OmniSource, through its regular
acquisition and production of OmniSource Scrap and its access to General
Market Scrap, can provide SDI with adequate sources of Scrap for its
Mini-Mill operation. Subject to any periods of market aberration,
therefore, OmniSource agrees that if, for a continuous period of three
(3) months, it has failed to provide SDI with Scrap purchase contracts
sufficient to cover seventy percent (70%) of its operating needs during
such period, then such condition shall constitute grounds for a
declaration of default.
If OmniSource becomes insolvent, commits any act of bankruptcy, makes a
general assignment for the benefit of creditors, or in the event of the
institution of any voluntary or involuntary proceedings by or against
OmniSource under bankruptcy, insolvency, or similar laws for the relief
of debtors or the protection of creditors, or in the event of the
appointment of a receiver, trustee or assignee for the benefit of
creditors of OmniSource, then, at SDI's election, this Agreement may be
immediately terminated.
B. Breach of Performance by SDI. In the event that OmniSource alleges SDI's
failure to perform in accordance with the terms and conditions of this
Agreement, and in the further event that such failure continues unabated
for a period in excess of thirty (30) days after notification to SDI in
writing with a particularized statement of the alleged failure to
perform, and, in addition to any other remedies to which OmniSource may
be entitled at law or in equity, OmniSource shall be entitled to
terminate this Agreement; provided, however, that in the event that
prior to the lapse of the thirty (30) day "cure" period set forth herein
SDI has taken reasonable steps to correct the default and failure of
performance and, if diligent, can reasonably correct and cure any
non-payment problem within an additional thirty (30) day period, SDI
shall be entitled to the additional period of thirty (30) days before
OmniSource shall be entitled to declare a default hereunder. Any
termination of this Agreement shall not relieve SDI from any liability
which may have arisen hereunder prior to such termination, nor shall any
such termination relieve SDI of any claim for damages or other
liabilities arising as a consequence of its default hereunder.
If SDI becomes insolvent, commits any act of bankruptcy, makes a general
assignment for the benefit of creditors, or in the event of the
institution of any voluntary or involuntary proceedings by or against
SDI under bankruptcy, insolvency, or similar laws for the relief of
debtors or the protection of creditors, or in the event of the
appointment of a receiver, trustee or assignee for the benefit of
creditors of SDI, then, at OmniSource's election, this Agreement may be
immediately terminated.
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V.
Miscellaneous Provisions
A. Confidentiality. Each party hereto agrees to receive and hold any
information acquired by it pursuant to this Agreement or through the
relationships created hereunder and relating to the other party in
confidence and to not use or disclose such information to any other
person unless first authorized by the other party in writing, required
by law, or unless such information is otherwise publicly available.
B. Force Majeure or Extraordinary Circumstances. In the event that
OmniSource or SDI may be delayed or prevented from performing under this
Agreement by reason of strikes, casualties, acts of God, labor troubles,
power failures, inability to obtain replacement parts or other
unanticipated breakdown of equipment, riots, insurrection, acts or
events of local, regional, or national emergency, extraordinary market
conditions beyond the control of a party to this Agreement, or the like,
and which prevents such party from performing its obligations under this
Agreement, such party shall not be deemed to be in default hereunder due
to such non-performance during the pendency of such event or occurrence;
provided, however, that if such condition continues to exist for a
period in excess of three (3) months, the party suffering the
non-performance shall be entitled to terminate this Agreement; and
provided, further, that both parties agree to use their best efforts in
good faith to work around and minimize the effect of any such act,
condition, or circumstance, if it can be done without a materially
adverse effect.
Should an event, act, or circumstance occur hereunder which justifies
OmniSource's non-performance of its Scrap agency functions hereunder,
then, during the course of any such interruption, SDI shall be entitled
to obtain its Scrap from or through sources other than OmniSource
without the obligation to pay OmniSource its Fees and without SDI being
in default under this Agreement. During any such period of interruption,
OmniSource agrees to take all reasonable measures to assist SDI in the
procurement of such alternative sources of supply.
C. Notices. Any notice or other communication required to be given
hereunder, or otherwise appropriate, shall be in writing and deemed
given when delivered personally or sent by certified or-registered mail
addressed to a party at the address set forth below, or at such other
addresses as either party may from time to time designate:
If to OmniSource: OmniSource Corporation
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & McNagny
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to SDI: Steel Dynamics, Inc.
Attention: ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
D. Governing Law. This Agreement shall be governed in all respects in
accordance with the provisions of the laws of the state of Indiana.
E. Independent Contractor Relationship. OmniSource shall act as an
independent contractor to SDI hereunder, and the parties acknowledge and
agree that there is no intention hereunder to act as joint venturers or
partners, and nothing herein shall be so Construed.
F. Litigation Venue. In the event of any dispute hereunder, including (but
not limited to) any dispute relating to a breach of this Agreement, such
dispute shall be heard in any state or federal court, with jurisdiction,
in or serving the county in which SDI's Mini- Mill is located.
G. Entire Agreement. This Agreement constitutes and contains the entire
agreement of the parties and supersedes any and all prior negotiations,
correspondence, understandings and agreements between the parties
respecting its subject matter. No changes or modifications to this
Agreement shall be binding on either party unless in writing and
executed by each party hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
OMNISOURCE CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By: ____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
STEEL DYNAMICS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
By: ____________________________________
▇▇▇▇▇ ▇▇▇▇▇, President
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