Exhibit 10.5
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AMENDED AND RESTATED
COATING AGREEMENT
Dated as of July 23, 1999
By and Between
BETHLEHEM STEEL CORPORATION
and
WALBRIDGE COATINGS,
AN ILLINOIS PARTNERSHIP
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions.......................... 2
ARTICLE II
General Terms of Purchase and Sale............... 2
ARTICLE III
Other Terms and Conditions
3.01. Title to Steel; Liability for Defective Steel................... 2
3.02. Reserved Production Time........................................ 3
3.03. Injuries to Persons............................................. 3
3.04. Major Loss...................................................... 3
3.05. Shipping........................................................ 3
3.06. Warehousing..................................................... 3
3.07. Invoices and Payment............................................ 4
ARTICLE IV
Operations
4.01. Scheduling of Production Time................................... 4
4.02. Production Priorities........................................... 5
ARTICLE V
Coating Fees
5.01. Coating Fees.................................................... 6
5.02. Fixed Fee....................................................... 8
5.03. Scrap Credit.................................................... 9
5.04. Proportionate Adjustment........................................ 9
5.05. Cost Disclosure................................................. 9
5.06. No Minimums..................................................... 10
ARTICLE VI
Miscellany
6.01. Entire Agreement................................................ 10
6.02. Limitations on Liabilities...................................... 10
6.03. Amendments...................................................... 11
6.04. Notices......................................................... 11
6.05. Headings........................................................ 12
6.06. Waiver of Default............................................... 12
6.07. Severability.................................................... 13
6.08. Assignment...................................................... 13
6.09. Governing Law................................................... 13
6.10. Execution in Counterparts....................................... 13
6.11. Confidentiality................................................. 13
6.12. Third Party Beneficiaries....................................... 13
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EXHIBIT 1: Standard Terms and Conditions for Sales of EG Services by the
Partnership (the "Seller") to the Purchaser (the "Buyer")
EXHIBIT 2: Standard Terms and Conditions for Sales of Organic Coating
Services by the Partnership (the "Seller") to the Purchaser (the
"Buyer")
ANNEX I: ▇▇▇▇▇▇ Edge Conditioning Equipment Capital Recovery and Surcharge
Agreement
ANNEX II: Billing Policy for Electric Buy-Through Rates
ANNEX III: Billing Agreement for Additional Quality Inspector
APPENDIX A: Definitions of Terms and Phrases
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AMENDED AND RESTATED
COATING AGREEMENT
THIS AMENDED AND RESTATED COATING AGREEMENT (this "Agreement"), dated
as of this 23rd day of July, 1999, by and between BETHLEHEM STEEL CORPORATION, a
Delaware corporation, having a place of business at ▇▇▇▇▇▇ Tower, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Bethlehem" or the "Purchaser") and
WALBRIDGE COATINGS, AN ILLINOIS PARTNERSHIP, having a place of business at ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (the "Partnership"),
W I T N E S S E T H :
WHEREAS the Partnership was formed under the laws of Illinois for the
purpose, among others, of owning (or leasing) and operating a facility designed
to coat sheet metal with electrogalvanized zinc, zinc alloy or other coatings;
and
WHEREAS, pursuant to the Initial Transfer Agreement and the 1998
Transfer Agreement, EGL Steel purchased Inland EG's entire Partner's Interest in
the Partnership so that, after giving effect to such purchase, EGL Steel had a
50% Financial Interest and a 50% Voting Interest in the Partnership; and
WHEREAS, pursuant to the Purchase Agreement, LTV-W is purchasing a
portion of EGL Steel's Partner's Interest so that, after giving effect to such
purchase, LTV-W shall have a 16.5% Financial Interest and a 16.5% Voting
Interest in the Partnership and EGL Steel shall have a 33.5% Financial Interest
and a 33.5% Voting Interest in the Partnership; and
WHEREAS, on the date hereof, EGL Steel, LTV-W and MSCWC are entering
into the Partnership Agreement; and
WHEREAS, the Partnership Agreement provides, in part, that: (a) the
EG Facility will be primarily dedicated to the electrogalvanizing of coiled
sheet steel for the Primary Purchasers, including Purchaser, while developing
new products and markets using Organic Coatings in conjunction with EG Services,
and (b) the Partnership will provide the highest quality coating service
primarily for sale to Primary Purchasers; and
WHEREAS, Purchaser and the Partnership desire to amend and restate the
Original Coating Agreement to provide for the purchase by Purchaser of various
coating services from the Partnership on the terms and conditions set forth
herein;
WHEREAS, the Partnership and LTV Steel, as the other Primary
Purchaser, are entering into the LTV Steel Coating
Agreement as of the date hereof with respect to 33% of available Production
Time; and
WHEREAS, the Partnership and MSCWC are entering into the MSCWC Coating
Agreement as of the date hereof relating to certain coating services for MSCWC
at the EG Facility and the Partnership and Ispat Inland have previously entered
into the Inland Tolling Agreement providing for certain pure zinc EG Services
for Ispat Inland at the EG Facility;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the Purchaser and the Partnership do
hereby agree to amend and restate the Original Coating Agreement to read as
follows:
ARTICLE I
Definitions
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Capitalized terms used herein and not otherwise defined shall have the
meanings assigned thereto in Appendix A (which is attached hereto and
incorporated herein by reference), such definitions to be equally applicable to
both the singular and the plural forms of the terms defined.
ARTICLE II
General Terms of Purchase and Sale
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Except as otherwise expressly provided in this Agreement, Purchaser
will purchase from the Partnership, and the Partnership will sell to Purchaser,
coating services in accordance with the terms and conditions set forth in
Exhibits 1 or 2 hereto, whichever is applicable, as amended from time to time by
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agreement between the Partnership and Purchaser. The term of this Agreement
shall be for a period commencing on the date hereof and ending at the end of the
Term (including renewals), unless this Agreement is earlier terminated or is
extended to a later date by mutual agreement of the parties hereto.
ARTICLE III
Other Terms and Conditions
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SECTION 3.01. Title to Steel; Liability for Defective Steel.
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Purchaser or an Affiliate thereof shall, at all times, retain title to all sheet
metal being processed for it at the EG Facility. Purchaser shall indemnify and
hold harmless the Partnership, the Operator and its Affiliates from and against
any and all customer claims (net of insurance and other recoveries) to the
extent resulting from Purchaser supplying defective or faulty metal substrate
for coating at the EG Facility, and
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Purchaser shall not assert any such claim against the Partnership, the Operator
or its Affiliates.
SECTION 3.02. Reserved Production Time. Purchaser shall be entitled
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to certain priority rights during each month to available Production Time for EG
Services and Other Services at the EG Facility, all in accordance with the terms
and conditions set forth in Article IV of this Agreement.
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SECTION 3.03. Injuries to Persons. Purchaser shall be responsible
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for and shall indemnify and hold harmless the Partnership, all Partners and
their respective Affiliates from and against any and all damages, liabilities,
losses, expenses and costs, including reasonable attorneys' fees, incurred by
any of them as a result of injuries to persons at the EG Facility caused by the
gross negligence or willful misconduct of Purchaser or its Affiliates; provided
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that if at any time the Partnership determines not to obtain the insurance
specified in Section 3.08(a)(iii) of the Operating Agreement with respect to
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injuries caused by the negligence of Purchaser and its Affiliates, then the
indemnification set forth in this Section 3.03 shall be deemed to apply to
injuries caused by such negligence during any period when such insurance is not
in force.
SECTION 3.04. Major Loss. If, after the occurrence of a Major Loss,
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Section 3.10(c) of the Operating Agreement is applicable, Purchaser and the
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Partnership shall amend this Agreement to take into account the repairs made
pursuant to such Section 3.10(c) and their effects on the provisions of this
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Agreement. Such amendments shall be commercially reasonable as between the
Partnership and Purchaser.
SECTION 3.05. Shipping. (a) Purchaser shall be responsible for
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arranging all of its shipments of sheet metal to the EG Facility and all such
shipments shall be at the risk and expense of Purchaser.
(b) The Partnership shall arrange shipments of Purchaser's finished
product from the EG Facility from shipping alternatives provided by Purchaser;
provided that all of such shipments shall be made at the risk and at the expense
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of Purchaser.
(c) The Partnership shall provide cooperation and assistance in
scheduling shipments of metal substrate from the EG Facility and shall provide
dockside assistance in receiving, handling and shipping materials at the EG
Facility.
SECTION 3.06. Warehousing. Purchaser shall ship to the EG Facility
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sheet metal as it reasonably anticipates
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purchasing coating services. The Partnership shall warehouse and provide
customary protection at the EG Facility for metal substrate and finished product
of Purchaser stored at the EG Facility, subject to the terms and conditions set
forth in Exhibits 1 or 2, whichever is applicable, in accordance with the
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standards of MSCWC at the EG Facility on the date hereof.
SECTION 3.07. Invoices and Payment. Except in cases in which
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payment is otherwise expressly provided herein, the Partnership shall issue
invoices for the Coating Fees payable pursuant to Article V from time to time on
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the date that the relevant coating service is rendered and Purchaser shall pay
the total amount of each such invoice to the Partnership within thirty days
after the date of such invoice; provided, however, that effective upon the
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completion of installation of electronic data interchange (EDI) capability at
the EG Facility (at the expense of LTV Steel) and the successful electronic
transmission, as determined by Operator's Information Systems Manager, of
invoices to Purchaser utilizing a X.12 data format, Purchaser may elect by
notice to the Operator to be invoiced with respect to each coating service
rendered thereafter on the date of shipment from the EG Facility of the products
to which such coating service is applied; provided, however, that each such
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invoice shall provide for payment (and Purchaser shall pay such invoice) within
fifteen (15) days after the date of such invoice in the total amount stated
therein plus, if applicable, one and one-half percent (1.5%) of such total
amount per each month (or fraction thereof) from the fifteenth (15th) day after
the date such coating service is rendered to the date as of which Operator is
instructed by Purchaser to ship such products from the EG Facility. Except as
provided in this Agreement, including Section 3.01, and Exhibits 1 or 2 hereto,
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whichever is applicable, Purchaser shall not, at any time, be obligated to pay
the Partnership any Coating Fee under Section 5.01 hereof with respect to EG
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Services or Other Services rendered by the Partnership which result in a product
that is not Commercially Saleable.
ARTICLE IV
Operations
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SECTION 4.01. Scheduling of Production Time. (a) On or before the
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15th day of each calendar month, Purchaser shall deliver to the Partnership and
to the other Primary Purchaser a binding notice ("Production Forecast") of the
number of hours of Production Time which at the then current rates of production
of the EG Facility will be required for the Partnership to perform the EG
Services and Other Services (stated separately) for Purchaser during the third
succeeding calendar month (the "Forecast Period"). Subject to the availability
of Production
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Time, each such Production Forecast shall constitute a "Firm Order" under this
Article IV with respect to the numbers of hours of Production Time stated in
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the Production Forecast for the Forecast Period.
(b) Purchaser shall order EG Services and Other Services in a
reasonably level manner so that excessive productivity demands will not be
placed on Operator's operation of the EG Facility during any unit of time.
SECTION 4.02. Production Priorities. (a) In scheduling available
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Production Time for EG Services during each month, the Partnership shall give
priority to purchase orders of Purchaser for EG Services and Other Services up
to the amount of Production Time for EG Services and Other Services set forth in
the timely Firm Order of Purchaser for such month; provided that (i) Purchaser's
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right of priority for EG Services and Other Services shall be limited to sixty-
seven percent (67%) of all available Production Time during such month less (x)
the Production Time required by the Partnership to perform the services
requested by MSCWC pursuant to the MSCWC Coating Agreement, subject to Section
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7.07 of the Partnership Agreement, and (y) the Production Time specified in a
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timely "Firm Order" of Ispat Inland as defined in Section 6.3 of the Inland
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Tolling Agreement; and (ii) Purchaser shall have a right of first refusal for
additional EG Services and Other Services for any available Production Time
which the other Primary Purchaser, MSCWC or Ispat Inland has the right to
reserve under their respective Coating Agreements or the Inland Tolling
Agreement, as the case may be, but which the Partnership notifies Purchaser has
not been so reserved; provided, however, that if the other Primary Purchaser or
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MSCWC desires to exercise a similar right of first refusal with respect to such
available Production Time under its Coating Agreement, such available Production
Time shall be shared as Purchaser and the other Primary Purchaser or MSCWC, as
the case may be, shall agree or, in the absence of such agreement, (A) Purchaser
and MSCWC shall share any such available Production Time of the other Primary
Purchaser in accordance with the relative rights to Production Time of Purchaser
and MSCWC at the time and (B) Purchaser shall have priority to any such
available Production Time of MSCWC or Ispat Inland. The foregoing rights of
first refusal shall be exercisable by Purchaser by giving notice to the
Partnership not more than five days after receipt of such notice from the
Partnership. Each such right of first refusal shall expire upon the expiration
of such five-day period. Purchaser acknowledges that the LTV Steel Coating
Agreement contains a priority right for the benefit of the other Primary
Purchaser with respect to thirty-three percent (33%) of all available Production
Time without any of the deductions set forth in clause (i) of the proviso to the
first sentence of this
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Section 4.02, and the LTV Steel Coating Agreement and the MSCWC Coating
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Agreement contain rights of first refusal with respect to Production Time that
Purchaser has the right to reserve under this Coating Agreement if Purchaser
should fail to reserve it.
(b) In giving effect to the above priorities, however, the
Partnership may make such adjustments from time to time as are reasonably
necessary or advisable to achieve economic and efficient order sizes, to make
efficient use of available metal substrate and raw materials needed for such
production and otherwise to maximize efficiency and levels of production.
(c) If Purchaser shall fail to deliver its Production Forecast by the
date specified in Section 4.01(a) of this Coating Agreement, the Partnership
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shall attempt to contact the appropriate personnel at Purchaser to obtain such
Production Forecast, but if in the Partnership's judgment such Production
Forecast is not received within a reasonable time thereafter, (i) the priority
set forth in Section 4.02(a) for Purchaser shall not be in effect for the
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Forecast Period involved and (ii) the rights of first refusal of LTV Steel and
MSCWC provided in Section 4.02(a) of their respective Coating Agreements shall
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be in effect for such Forecast Period.
(d) Notwithstanding the foregoing, if the General Manager of the
Operating Partner causes the Partnership to sell electrogalvanizing, coating and
associated services to parties other than the Primary Purchasers, Ispat Inland
or MSCWC during any Forecast Period in accordance with guidelines established
from time to time by the Management Committee and Section 10.04 of the
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Partnership Agreement, the Partnership shall give priority to orders for such
sales equal to Purchaser's rights to priority under this Section 4.02 and the
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rights to priority of the other Primary Purchaser and MSCWC under Section 4.02
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of the other Coating Agreements, but only to the extent necessary to permit the
filling of such orders; provided, however, that to the extent that Production
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Time is committed by the Partnership for sales to outside parties for a period
of time greater than six months, which shall require the consent of all
Partners, the Production Time required for such sales shall have the same
priority as the rights to production time of Purchaser, the other Primary
Purchaser and MSCWC during the term of such commitment.
(e) The Partnership shall cause Operator to furnish to Purchaser a
copy of each Production Schedule established by Operator in accordance with
Section 4.01 of the Operating Agreement not less than the fifth day before the
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beginning of each Forecast Period.
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ARTICLE V
Coating Fees
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SECTION 5.01. Coating Fees. In consideration of the services to be
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rendered to Purchaser and its other benefits under this Agreement, and subject
to Section 7.07 of the Partnership Agreement, Purchaser agrees to pay the
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following fees to the Partnership:
(a) For each Standard Ton of pure zinc electroplating produced, the
Purchaser shall pay a Coating Fee equal to (i) for the period beginning and
including January 1, 1999 and concluding and including December 31, 2000, ***
and (ii) for the period beginning and including January 1, 2001 and concluding
and including December 31, 2001, ***. Such fees may be adjusted for changes in
the cost of zinc or electricity (i.e., the twelve month average variable
kilowatt hour cost per Standard Ton) since July 1, 1998, pursuant to the same
procedure as is provided for Ispat Inland in Section 4.2 of the Inland Tolling
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Agreement.
(b) For each Standard Ton of ZnNi electroplating produced, the
Purchaser shall pay a Coating Fee equal to (i) for the period beginning and
including January 1, 1999 and concluding and including December 31, 2000, ***
and (ii) for the period beginning and including January 1, 2001 and concluding
and including December 31, 2001, ***. Such fees may be adjusted for changes in
the cost of zinc, nickel or electricity (i.e., the twelve month average variable
kilowatt hour cost per Standard Ton) since July 1, 1998, pursuant to the
procedure provided in Section 4.2 of the Inland Tolling Agreement (using a price
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for nickel equal to the 3-month forward quotation for nickel determined by the
London Metal Exchange and published in The Wall Street Journal).
(c) For each transition from pure zinc production to ZnNi production
and back to pure zinc production, the Partnership shall charge Purchaser an
additional Coating Fee (subject to the last sentence of this paragraph) equal to
the product of (a) *** (the agreed number of Tons of Reference Strip that could
have been produced at standard utilization rates and at Design Capacity during
the transition time) times (b) *** (equal to the transition fee per Ton of
Reference Strip in effect immediately prior to July 1, 1998, which shall be
applicable during the entire term of this Agreement, subject to adjustment only
for certain changes in the cost of electricity since July 1, 1998 under the same
procedure provided for Ispat Inland under Section 4.2 of the Inland Tolling
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Agreement). Such additional Coating Fee shall be prorated among the Primary
Purchasers and MSCWC in accordance with the number of Tons of Reference Strip
produced for each of them during the particular ZnNi production run.
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(d) The Coating Fee for any other items (such as special packaging
supplies) furnished by the Partnership shall be the same as the Partnership's
cost for such items.
(e) The Coating Fee for any Organic Coating shall be the same as the
Operator's Fees for such services and shall be determined by negotiations
between the Primary Purchasers and the Operator to yield a *** profit to the
Operator (i.e., Coating Fees = Operator's total costs divided by ***). Any such
negotiated Coating Fees shall be subject to review from time to time to reflect
increases or decreases in costs.
(f) The Purchaser's Coating Fee for base slitting services shall be
*** per Ton processed, for critical inspection processing shall be *** per Ton
inspected and for VW-type packaging shall be *** per Ton packaged. The
provisions of the agreements for the ▇▇▇▇▇▇ edge conditioning equipment (as set
forth in Annex I hereto), electric buy-through rates (as set forth in Annex II
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hereto) and additional quality inspections (as set forth in Annex III hereto)
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will continue in effect during the term of this Agreement; provided, however,
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that each reference in such agreements to Inland shall be deemed to be a
reference to LTV Steel. The Purchaser's Coating Fee for mode changes shall be
*** per hour of downtime, plus the cost of any lead strip furnished by the
Partnership, subject to a minimum charge for each mode change of *** (for 15
minutes).
(g) For warehousing finished steel coils more than 90 days after
completion of coating services, the Purchaser shall pay a Coating Fee equal to
*** per Ton stored per calendar month or fraction of a calendar month after such
90-day period.
SECTION 5.02. Fixed Fee. (a) The Purchaser shall pay to the
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Partnership each month, commencing in August, 1999 and ending in January, 2005,
in each case for the immediately preceding month, an additional Coating Fee
equal to a portion of the Partnership's estimated fixed costs for real estate
taxes, personal property taxes, Insurance Costs, rent and fixed electricity (the
"Allocated Fixed Costs"), during the immediately preceding month. The portion
of the Allocated Fixed Costs to be paid by Purchaser each month shall equal the
product of one-twelfth of the estimated total Allocated Fixed Costs of the
Partnership for the then current Fiscal Year times sixty-seven percent (0.67),
less (i) an amount equal to the product of *** times the total number of
Standard Tons of products produced by the Partnership for Ispat Inland and its
subsidiaries during the immediately preceding month; provided, however, that
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such amount shall be limited to the amount which when divided by one-twelfth of
the estimated total Allocated Fixed Costs for the then current Fiscal Year
results in the total percentage of Production Time to
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which Ispat Inland is entitled under the Inland Tolling Agreement for the
immediately preceding month; (ii) with respect to the payment due in each month
from February, 2000 to January, 2001, both inclusive, each payment relating to
the immediately preceding month, an amount equal to the product of (x) one-
twelfth of the estimated total Allocated Fixed Costs for the then current Fiscal
Year times (y) *** (i.e., ***); and (iii) with respect to the payment due in
each month from February, 2001 to January, 2005, both inclusive, each payment
relating to the immediately preceding month, an amount equal to the product of
(x) one-twelfth of the estimated total Allocated Fixed Costs for the then
current Fiscal Year times (y) *** (i.e., ***); provided, further, that clauses
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(ii) and (iii) of this sentence shall be subject to Section 7.07 of the
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Partnership Agreement.
(b) The Partnership shall forward to Purchaser a copy of each invoice
or other statement for Allocated Fixed Costs within 15 days after the
Partnership's receipt thereof. Within 90 days after the end of each Fiscal Year,
the Partnership shall reconcile the estimated total annual Allocated Fixed Costs
used to calculate Purchaser's payments for such Fiscal Year pursuant to Section
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5.02(a) hereof to the actual Allocated Fixed Costs incurred by the Partnership
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during such Fiscal Year and give credit to Purchaser for any excess of
Purchaser's total amount paid under this Section 5.02 for such Fiscal Year over
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the total reconciled amount receivable from Purchaser under this Section 5.02
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for such Fiscal Year or charge Purchaser for any excess of such total reconciled
amount receivable for such Fiscal Year over such total amount paid for such
Fiscal Year; provided, however, that such reconciliation for Fiscal Year 1999
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shall be as set forth in a separate letter agreement dated as of the date hereof
among the Partnership, Bethlehem, LTV Steel and MSCWC.
SECTION 5.03. Scrap Credit. The Partnership is hereby authorized to
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sell all scrap metal generated by the Partnership's performance of EG Services
or Other Services for Purchaser under this Agreement and to retain all proceeds
of such sales; provided, however, that the Partnership shall issue monthly scrap
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credits equal to (a) the product of (i) the actual weight of scrap generated by
such performance during the particular month times (ii) the price for #1 dealer
bundles (low side) as quoted in Iron Age's "New Steel" magazine for such month
for Detroit, less (b) a *** per Ton handling fee, plus (c) *** of any excess of
the proceeds of the sale of such scrap over the product of (i) the actual weight
of scrap generated by such performance during the particular month times (ii)
the price for #1 dealer bundles (low side) as quoted in Iron Age's "New Steel"
magazine for such month for Detroit.
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SECTION 5.04. Proportionate Adjustment. In each case under this
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Article V in which a Coating Fee is specified per "Standard Ton," (a) the
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Coating Fees for services to produce Reference Strip shall be calculated by
multiplying the specified amount of Coating Fees times the actual number of Tons
of product produced, and (b) the Coating Fees for services to produce any EG
Product other than Reference Strip shall be calculated by multiplying the
specified amount of Coating Fees times the product of the actual number of Tons
of product produced times the Standard Ton Factor for such EG Product.
SECTION 5.05. Cost Disclosure. (a) Purchaser represents and
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warrants that as of the date hereof, neither Purchaser nor any of its Affiliates
is entitled to receive any discount, rebate, refund or other similar payment or
credit from the Partnership or the Operator or any of Operator's Affiliates
other than as provided in this Coating Agreement or in the Operating Agreement.
(b) Purchaser covenants that during the term of this Coating
Agreement, neither Purchaser nor any of its Affiliates shall accept any
discount, rebate, refund or other similar payment or credit from the Partnership
or the Operator or any of Operator's Affiliates with respect to services
rendered to such Purchaser by the Partnership, other than as provided for
herein, unless Purchaser shall promptly disclose such discount, rebate, refund
or other similar payment or credit to the other Primary Purchaser.
SECTION 5.06. No Minimums. The Partnership acknowledges that
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Purchaser assumes no obligation to order any minimum amounts of EG Services or
Other Services.
ARTICLE VI
Miscellany
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SECTION 6.01. Entire Agreement. (a) This Agreement, the other
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Definitive Agreements referred to herein or executed contemporaneously herewith
and the Purchase Agreement supersede all prior oral and written agreements and
understandings of the parties hereto with respect to the transactions
contemplated hereby, including but not limited to the Original Coating Agreement
and the 1998 Extension Agreement, and the parties shall look only to this
Agreement, such other Definitive Agreements and the Purchase Agreement for the
rights and obligations of the parties with respect to each other in relation to
the subject matter hereof; provided, however, that nothing herein shall
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supersede any agreements or understandings heretofore set forth in the minutes
of proceedings of the Management Committee that
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are not superseded in effect by this Agreement, such other Definitive Agreements
or the Purchase Agreement; and provided, further, that no such agreements or
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understandings heretofore set forth in the minutes of proceedings of the
Management Committee shall be applicable to or binding on LTV-W or its
Affiliates.
(b) Purchaser covenants that during the term of this Coating
Agreement, neither Purchaser nor any of its Affiliates will enter into or become
a party to any agreement with any Partner or any Affiliate thereof relating to
the use of the EG Facility that does not include both LTV Steel and MSCWC (or
their respective Affiliates) as parties, unless such agreement shall be fully
disclosed to whichever of them is not also to become a party thereto (for
purposes of this Section 6.01(b), the "Excluded Party"), and the Excluded Party
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shall have a reasonable amount of time to review such agreement before it
becomes effective. If such agreement could reasonably be expected to have an
adverse impact on the Excluded Party (or any of its Affiliates), the Excluded
Party shall have the right to seek relief with respect thereto pursuant to
Article XIV of the Partnership Agreement; provided, however, that this Section
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6.02(b) shall not apply to any agreement for the sale of sheet metal pursuant to
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the proviso in Section 3.01 of the MSCWC Coating Agreement.
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SECTION 6.02. Limitations on Liabilities. The liability of the
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Partnership, Operator, the other Partners and their respective successors and
assigns to Purchaser for any loss, damage or injury of any nature or kind
resulting from the breach of the Partnership's covenants herein shall not,
except as expressly provided herein, include any amounts in respect of indirect
or consequential damages or commercial loss, damage or injury, such as loss of
profits or production. The liability of Purchaser to the Partnership, Operator,
the other Partners and their respective successors and assigns for any loss,
damage or injury of any nature or kind resulting from the breach of Purchaser's
covenants herein shall not, except as expressly provided herein, include any
amounts in respect of indirect or consequential damages or commercial loss,
damage or injury, such as loss of profits or production.
SECTION 6.03. Amendments. This Agreement may not be modified or
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amended except by written agreement of the parties hereto.
SECTION 6.04. Notices. Any notice, consent, request, report or
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other document required or permitted under the terms of this Agreement shall be
in writing and shall be effective (a) when personally delivered on a business
day during normal business hours to the party to be given such notice at the
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address designated by it for such delivery below or (b) on the business day
following the day such notice shall have been sent by telecopier or similar
electronic device (providing confirmation of transmission) or by reputable
overnight courier (providing proof of delivery) sent to such address, whichever
shall first occur. Until otherwise specified by notice, the addresses for such
notice shall be:
(i) if to Purchaser:
Bethlehem Steel Corporation
Room 2036, ▇▇▇▇▇▇ tower
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Counsel
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Partnership:
▇▇▇▇▇▇▇▇▇ Coatings, An Illinois Partnership
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Management Committee
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
(Together with copies to the Partners)
(iii) if to the Partners:
(A) EGL Steel Inc.
In care of Bethlehem Steel Corporation
Room 2036, ▇▇▇▇▇▇ Tower
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
(B) LTV-Walbridge, Inc.
In care of The LTV Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
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(C) MSC ▇▇▇▇▇▇▇▇▇ Coatings Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Group Vice President and General
Manager
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Material Sciences Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
provided, however, that any entity listed above may change the address to which
-------- -------
notices and other communications to it shall be sent by giving to the other
entities listed above written notice of such change, in which case notices and
other communications to the entity giving the notice of the change of address
shall not be deemed to have been sufficiently given or delivered unless
addressed to it at the new address as stated in said notice; provided further,
----------------
that notices and other communications to the Partnership shall not be deemed to
have been sufficiently given or delivered unless and until a copy thereof shall
be given or delivered as above provided to each of the Partners.
SECTION 6.05. Headings. The headings of the Articles, Sections and
--------
Exhibits of this Agreement are for the convenience of reference only and shall
not be construed to be part of this Agreement.
SECTION 6.06. Waiver of Default. Any waiver at any time by any
-----------------
party hereto of its rights under this Agreement shall not constitute a waiver of
any other default hereunder. No delay or omission by any party to exercise any
right or power accruing upon a default hereunder shall impair any such right or
power or shall be construed to be a waiver of any such default or acquiescence
therein.
SECTION 6.07. Severability. In case any one or more of the
------------
provisions contained herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein unless the deletion of
such provision or provisions would result in such a material change as to cause
performance of the remaining obligations to be
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unreasonable, in which case the parties hereto shall negotiate in good faith to
amend this Agreement and the other Definitive Agreements to take into account
such material change in a manner that is fair and equitable to all parties
hereto and to achieve the purposes of Section 2.1 of the Operating Agreement.
-----------
SECTION 6.08. Assignment. Except as otherwise provided in the
----------
Partnership Agreement, no party hereto shall assign this Agreement or any of its
rights or obligations hereunder except with the consent of the other party and
upon the express assumption by the assignee of the obligations of such party
hereunder.
SECTION 6.09. Governing Law. This Agreement shall be governed by
-------------
the laws of the State of Illinois.
SECTION 6.10. Execution in Counterparts. This Agreement may be
-------------------------
executed in one or more counterparts, each of which shall be deemed an original,
and shall become a binding agreement when each of the parties hereto shall have
executed and delivered a counterpart of this Agreement to the other party.
SECTION 6.11. Confidentiality. The parties acknowledge that this
---------------
Agreement contains confidential information regarding the operation of the
Partnership. Except as required by law, including applicable securities laws, or
otherwise agreed to by the parties hereto, the parties agree to maintain the
contents of this Agreement confidential in accordance with Article XVI of the
-----------
Partnership Agreement.
SECTION 6.12. Third Party Beneficiaries. Each of the Partners of
-------------------------
the Partnership, including the Operator, shall be an express third party
beneficiary of this Agreement and entitled to enforce the rights of the
Partnership hereunder.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed and delivered as of the date first above written.
BETHLEHEM STEEL CORPORATION
By:________________________________________
Name:
Title:
WALBRIDGE COATINGS, AN ILLINOIS PARTNERSHIP
By: MSC ▇▇▇▇▇▇▇▇▇ COATINGS
INC., General Partner
By:__________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Vice President, Chief
Financial Officer
and Secretary
By: EGL STEEL INC., General Partner
By:__________________________________
Name:
Title:
By: LTV-WALBRIDGE, INC.,
General Partner
By:__________________________________
Name:
Title:
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ANNEX I
▇▇▇▇▇▇ Edge Conditioning Equipment Capital
Recovery and Surcharge Agreement
-16-
ANNEX II
Billing Policy for Electric Buy-Through Rates
-17-
ANNEX III
Billing Agreement for Additional Quality Inspector
-18-
APPENDIX A
TO THE
PARENT AGREEMENT,
PARTNERSHIP AGREEMENT,
OPERATING AGREEMENT and
COATING AGREEMENTS
Definitions of Terms and Phrases
--------------------------------
The following terms and phrases shall have the following definitions when
capitalized in each of the Parent Agreement, the Partnership Agreement, the
Operating Agreement, and the Coating Agreements unless the context shall
otherwise require:
"Affiliate" shall mean, with respect to any specified person, a person (as
defined in Section 2(2) of the Securities Act of 1933, as amended) that
directly, or indirectly through one or more intermediaries, Controls or in
Controlled By, or is Under Common Control With, the person specified.
"Allocated Fixed Costs" shall have the meaning set forth in Section 5.02
------------
of the Coating Agreements.
"Appraised Partnership Interest Dissolution Value" shall have the meaning
set forth in Section 15.06 of the Partnership Agreement.
-------------
"Bethlehem" shall mean Bethlehem Steel Corporation, a Delaware
corporation.
"Bethlehem Coating Agreement" shall mean that certain Amended and Restated
Coating Agreement dated as of July 23, 1999 by and between the Partnership and
Bethlehem as amended from time to time in accordance with its terms.
"Coating Agreement" shall mean: (a) individually, the Bethlehem Coating
Agreement, the LTV Steel Coating Agreement or the MSCWC Coating Agreement, as
amended from time to time in accordance with the terms thereof, and (b)
collectively, all of such agreements.
"Coating Fee" shall mean the various fees charged by the Partnership for
performing coating services pursuant to the Coating Agreements.
"Coating Weight" shall mean the amount of zinc ordered to be applied by
the EG process to the steel substrate, expressed in grams per square meter of
coated substrate surface area.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commercially Saleable" shall mean with respect to coating services such
coated sheet metal as is capable of being marketed and sold as a prime product
(satisfying the Coating Weight and other specifications ordered) at the then
current market price for such prime product.
"Control" (including the terms "Controlling," "Controlled By" and "Under
Common Control With") shall mean the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
person (as defined in Section 2(2) of the Securities Act of 1933, as amended),
------------
whether through the ownership of voting securities, by contract, or otherwise.
"Definitive Agreements" shall mean the Parent Agreement, the Partnership
Agreement, the Operating Agreement and the Coating Agreements.
"Design Capacity" shall mean the capacity of the EG Facility to produce
*** Tons, net of all Yield Loss, of Reference Strip annually, subject to
adjustment pursuant to Section 5.03 of the Operating Agreement, and with respect
------------
to any other unit of time shall mean the pro rata amount based on such annual
rate.
"EG" shall mean electroplating, which is the process of applying zinc or
alloy coatings to sheet steel by an electrolytic plating process.
"EG Facility" shall mean the entire coil coating facility located at ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, together with all fixtures, furnishings,
machinery, equipment and improvements located at such facility.
"EGL Steel" shall mean EGL Steel, Inc., a Delaware corporation.
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"EG Product" shall mean electroplated steel coils produced at the EG
Facility.
"EG Services" shall mean all services rendered in connection with the
production of EG Product.
"Financial Interest" shall mean, with respect to any Partner, such
Partner's percentage financial interest in the Partnership as set forth opposite
the Partner's name indicated below:
Partner Financial Interest
------- ------------------
EGL Steel 33.5%
LTV-W 16.5%
MSCWC 50.0%
"Firm Order" shall mean an order placed by a Primary Purchaser or by MSCWC
for coating services pursuant to Section 4.01(a) of the relevant Coating
---------------
Agreement.
"Fiscal Quarter" shall mean each of the periods of three calendar months
ended on the last day of May, August, November and February of each Fiscal Year.
"Fiscal Year" shall mean the period commencing on the first day of March
of each calendar year and ending on the last day of February of the next
successive calendar year.
"Force Majeure" shall mean any cause or causes beyond the control of, and
without fault or negligence of, the entity asserting a claim of Force Majeure,
including but not limited to any acts of God, strikes, lockouts or other labor
disputes or industrial disturbances, acts of the public enemy, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
hurricanes, tornadoes, other storms, floods, washouts or other acts of nature,
civil disturbances, explosions, temporary or permanent failure of electrical
supply, acts, directives or binding orders of any court or governmental
authority or persons purporting to act therefor and such orders or regulations
of governmental bodies or agencies asserting jurisdiction as would materially
inhibit or prohibit the entity from performing under the Definitive Agreements
or would require such entity to accept a condition reasonably unacceptable to
it, so long as such occurred without the fault or negligence of such entity.
"Forecast Period" shall have the meaning set forth in Section 4.01 of the
------------
Coating Agreements.
-3-
"Guarantor" shall mean: (a) with respect to EGL Steel, Bethlehem; (b)
with respect to LTV-W and LTV Steel, LTV; (c) with respect to MSCWC, MSCPFM and
MSC; and (d) with respect to ▇▇▇▇▇▇, ▇▇▇.
"Initial Transfer Agreement" shall mean the Transfer Agreement dated as of
May 29, 1991, among Ispat Inland, Inland, Inland EG, Bethlehem and EGL Steel, as
amended April 23, 1992 and June 5, 1992.
"Inland" shall mean Inland Steel Company, a Delaware corporation (which
has been merged into Ispat Inland).
"Inland EG" shall mean Inland Steel Electrogalvanizing Corporation, a
Delaware corporation.
"Inland Option Tons" shall mean the coating services which Ispat Inland
may require the Partnership to perform pursuant to Section 3.2 of the Inland
-----------
Tolling Agreement.
"Inland Tolling Agreement" shall mean that certain Tolling Agreement dated
as of June 30, 1998 entered into by and between Ispat Inland (as successor to
Inland) and the Partnership.
"Insurance Costs" shall mean all costs of the insurance coverages required
to be maintained pursuant to Section 3.08 of the Operating Agreement or
------------
otherwise maintained with the approval of the Partnership, including premiums,
the cost of maintaining any records required by such insurance coverages, and
the amount of any casualty losses incurred which are not reimbursed under such
insurance coverages due to deductible or co-insurance requirements. Insurance
Costs shall also include the costs of any self-insurance program approved by the
Partnership for the EG Facility or its operations, including all costs
associated with administering such program as well as all losses incurred
thereunder.
"Intellectual Property" shall have the meaning given to such term in
Section 3.01(g) of the Parent Agreement.
---------------
"Ispat Inland" shall mean Ispat Inland Inc., a Delaware corporation
(formerly known as Inland Steel Industries, Inc.).
"LTV" shall mean The LTV Corporation, a Delaware corporation.
-4-
"LTV Steel" shall mean LTV Steel Company, Inc., a New Jersey corporation
and a wholly-owned subsidiary of LTV.
"LTV Steel Coating Agreement" shall mean that certain Coating Agreement
dated as of July 23, 1999 by and between the Partnership and LTV Steel, as
amended from time to time in accordance with its terms.
"LTV-W" shall mean LTV-Walbridge, Inc., a Delaware corporation and a
wholly-owned subsidiary of LTV Steel.
"Major Loss" shall mean substantial damage or destruction by fire or other
casualty of the EG Facility or any portion thereof, or the taking,
requisitioning or sale of the use, occupancy or title to the EG Facility or any
substantial portion thereof in, by or on account of any actual or threatened
eminent domain proceeding or other action by any person or entity having the
power of eminent domain.
"Management Committee" shall mean the management committee of the
Partnership established by Article VIII of the Partnership Agreement.
------------
"MSC" shall mean Material Sciences Corporation, a Delaware corporation.
"MSCPFM" shall mean MSC Pre Finish Metals Inc., an Illinois corporation
(formerly known as Pre Finish Metals Incorporated) and a wholly-owned subsidiary
of MSC.
"MSCPFM Lease" shall mean that certain lease dated as of December 1, 1980
by and between MSCPFM and Corporate Property Associates/Corporate Property
Associates 2, as amended.
"MSCWC" shall mean MSC Walbridge Coatings Inc., a Delaware corporation
(formerly known as Pre Finish Metals (EG) Incorporated) and a wholly-owned
subsidiary of MSCPFM.
"MSCWC Coating Agreement" shall mean that certain Coating Agreement dated
as of July 23, 1999 by and between the Partnership and MSCWC, as amended from
time to time in accordance with its terms.
"Net Fair Market Value" shall mean the following:
(a) In the case of a Partner's Interest, the fair market value of the
assets and interests being valued, less any liabilities associated therewith
(determined in
-5-
accordance with generally accepted accounting principles), on a going concern
basis and assuming a willing buyer and a willing seller, neither of whom is
under any compulsion to buy or sell and each of whom has equal access to all
pertinent facts, all as determined by appraisal under Section 13.05 of the
-------------
Partnership Agreement, or
(b) In the case of the EG Facility, the fair market value of the assets
thereof, less any liabilities associated therewith (determined in accordance
with generally accepted accounting principles) which are assumed by the
purchaser in accordance with the governing instruments thereof or with the
consent of the persons or entities to whom the obligation is owed, on a going
concern basis and assuming a willing buyer and a willing seller, neither of
whom is under any compulsion to buy or sell and each of whom has equal access
to all pertinent facts, all as determined by appraisal under Section 15.04 of
-------------
the Partnership Agreement.
"1998 Extension Agreement" shall mean that certain 1998 Extension
Agreement dated as of December 31, 1998 entered into by and among EGL Steel,
Bethlehem, MSCWC, MSCPFM and MSC.
"1998 Transfer Agreement" shall mean the Transfer Agreement dated as of
June 30, 1998 among Ispat Inland, Inland, Inland EG, Bethlehem and EGL Steel.
"Operating Agreement" shall mean that certain Amended and Restated
Operating Agreement dated as of July 23, 1999 by and between the Partnership and
MSCWC, as amended from time to time in accordance with its terms.
"Operating Partner" shall mean MSCWC, its successor or assign.
"Operator" shall mean MSCWC, its successor or assign, as Operating Partner
under the Operating Agreement.
"Operator's Fee" shall mean the various fees charged by Operator for
rendering services to the Partnership pursuant to the Operating Agreement.
"Organic Coating" shall mean any organic (non-metal) coating on sheet
metal, including Zincrometal(R).
"Original Coating Agreement" shall mean that certain Coating Agreement
dated as of October 15, 1984 by and
-6-
between the Partnership and Bethlehem, as amended up to the date immediately
prior to the execution and delivery of the Bethlehem Coating Agreement.
"Original Operating Agreement" shall mean that certain Operating Agreement
dated as of October 15, 1984 by and between the Partnership and MSCWC, as
amended up to the date immediately prior to the execution and delivery of the
Operating Agreement.
"Original Parent Agreement" shall mean that certain Parent Agreement dated
as of October 15, 1984 by and among Bethlehem, Inland, Ispat Inland, MSCPFM and
MSC, as amended up to the date immediately prior to the execution and delivery
of the Parent Agreement.
"Original Partnership Agreement" shall mean that certain Partnership
Agreement dated as of August 30, 1984 by and among EGL Steel, Inland EG and
MSCWC, as amended up to the date immediately prior to the execution and delivery
of the Partnership Agreement.
"Other Services" shall mean all services (including any Organic Coating
services) rendered by the Partnership, but excluding EG Services.
"Parent Agreement" shall mean the Amended and Restated Parent Agreement
dated as of July 23, 1999 by and among each of Bethlehem, LTV, MSCPFM and MSC,
as amended from time to time in accordance with its terms.
"Partner" or "Partners" shall mean a general partner or partners of the
Partnership and shall include each of EGL Steel, LTV-W and MSCWC and their
respective successors and assigns as Partners who become such in a manner
consistent with Article XIII of the Partnership Agreement.
------------
"Partner's Account" shall mean, in respect of any Partner, the account
maintained for such Partner in accordance with Section 9.03 of the Partnership
------------
Agreement.
"Partner's Interest" shall mean, with respect to each Partner, (i) such
Partner's general partner interest in the Partnership (including all its
advances to, and any other claims against, the Partnership) and (ii) the
interest, if any, of such Partner or any Affiliate of such Partner in the Parent
Agreement, the Partnership Agreement, the Operating Agreement and the Coating
Agreements.
-7-
"Partnership" shall mean ▇▇▇▇▇▇▇▇▇ Coatings, An Illinois Partnership,
continued and governed by the Partnership Agreement.
"Partnership Agreement" shall mean that certain Amended and Restated
Partnership Agreement dated as of July 23, 1999 by and among EGL Steel, LTV-W
and MSCWC, as amended from time to time in accordance with its terms.
"Primary Purchaser" shall mean: (a) individually, either of Bethlehem or
LTV Steel and (b) collectively, both of them.
"Prime Commercial Paper" shall mean commercial paper which is rated P-1 by
▇▇▇▇▇'▇ Investors Services, Inc., or A-1 by Standard and Poor's Corporation,
having a remaining term until maturity of not more than one year.
"Production Forecast" shall mean the forecast described in Section 4.01 of
------------
each Coating Agreement.
"Production Schedule" shall mean the schedule described in Section 4.01(b)
---------------
of the Operating Agreement.
"Production Time" shall mean the time, as determined by Operator,
available for the production of EG Product or the rendering of Other Services in
accordance with the Operating Agreement and the Inland Tolling Agreement during
which the EG Facility is not shut down for testing, for transition to ZnNi
production or back to pure zinc production, for other scheduled or estimated
unscheduled downtime, for maintenance or repairs, for the making of capital
improvements, for national holidays, or due to Force Majeure.
"Purchase Agreement" shall mean the Purchase Agreement dated as of July
23, 1999 among LTV-W, LTV, EGL Steel, Bethlehem, MSCWC and MSC.
"Purchaser" shall mean (a) with respect to the LTV Steel Coating
Agreement, LTV Steel, (b) with respect to the Bethlehem Coating Agreement,
Bethlehem and (c) with respect to the MSCWC Coating Agreement, MSCWC.
"Reference Strip" shall mean a *** wide,***-inch minimum thickness steel
coil to which a minimum Coating Weight of *** grams of zinc per square meter has
been applied on one side only by the EG process.
"Reporting Period" shall mean a calendar month.
-8-
"S, G & A Expenses" shall mean all expenses of Operator or its Affiliates
for administrative support of the EG Facility and its operations.
"Standard Capacity" shall mean for any EG Product the product of (a) the
Width Capacity for such EG Product times (b) the quotient of the specified
thickness of the processed steel substrate divided by *** times (c) the quotient
of *** divided by the Coating Weight applied to the processed steel substrate.
"Standard Costs" shall mean the standard costs developed by the
Partnership and the Operating Partner as specified in Section 6.4 of the
-----------
Original Operating Agreement.
"Standard Ton Factor" shall mean for any EG Product the quotient of ***,
divided by the Standard Capacity for such EG Product. Accordingly, the Standard
Ton Factor for Reference Strip shall be one (1).
"Standard Tons" shall mean a Ton of Reference Strip, subject to Section
-------
5.05 of the Operating Agreement and Section 5.04 of the Coating Agreements.
---- ------------
"Sublease" shall mean the Sublease dated as of May 30, 1986, as amended,
between MSCPFM and the Partnership.
"Subsidiary" shall mean (i) with respect to Bethlehem, EGL Steel; (ii)
with respect to LTV, LTV-W or LTV Steel; (iii) with respect to LTV Steel, LTV-W;
(iv) with respect to MSC, MSCPFM or MSCWC; and (iv) with respect to MSCPFM,
MSCWC.
"Taxes" shall mean all taxes (except income taxes) paid or incurred by
Operator in the operation of the EG Facility and of a type in existence as of
this date hereof, such taxes to include, but not be limited to, all real estate
and personal property taxes and assessments on the EG Facility or the equipment,
supplies or inventories contained therein, all sales and use taxes, and all
governmental franchises, licenses and permits; provided, however, that if any
-------- -------
other taxes are enacted after the date hereof, such taxes shall also be included
in the terms "Taxes" to the extent appropriate to do so in accordance with the
provisions of Article II of the Partnership Agreement.
----------
"Technical Representative" shall mean the person designated by Operator
and each Partner (other than the Operating Partner) from time to time to
represent such party
-9-
in connection with any of the matters specified as being the responsibility of
the Technical Representatives.
"Term" shall have the meaning set forth in Section 5.01 of the Partnership
------------
Agreement.
"Termination Notice" shall have the meaning set forth in Section 5.01 of
------------
the Partnership Agreement.
"Ton" shall mean an avoirdupois unit of two thousand pounds.
"Voting Interest" shall mean, with respect to any Partner, such Partner's
percentage voting interest in the Partnership as set forth opposite the
Partner's name below:
Partner Voting Interest
------- ---------------
EGL Steel 33.5%
LTV-W 16.5%
MSCWC 50.0%
The Voting Interest of any Partner shall be adjusted only to reflect a transfer
of its Partner's Interest under the Partnership Agreement in accordance with the
provisions of Article XIII thereof.
------------
"Width Capacity" shall mean the theoretical annual capacity in Tons of the
EG Facility to produce EG Product having a given width, assuming (1) *** inch
specified thickness steel substrate, (2) a Coating Weight of *** grams of pure
zinc per square meter of coated substrate surface area (on one side), (3) ***
hours per year of Production Time and (4) *** Yield Loss and no defective steel
substrate, all as determined in the reasonable judgment of the Technical
Representatives.
"Yield Loss" shall mean steel substrate scrap losses and rejections of EG
Product caused by quality failures in the operation of the EG Facility and shall
be calculated based on the difference between the weight of the substrate
delivered to the EG Facility and the weight of the EG Product shipped from the
EG Facility. Such term shall not include losses or rejections caused by any
defective steel substrate which (a) is rejected by Operator prior to being
processed as being unfit or unsuitable for coating or processing (other than due
to improper handling by Operator) or (b) was included in EG Product but was the
primary cause for rejection of the EG Product. Responsibility for rejected EG
Product shall be determined by agreement of the
-10-
Technical Representatives of Operator and the Partner whose Affiliate supplied
the steel substrate.
"Zincrometal(R)" is a registered trademark (United States Registration
Number 839,031) for a coated steel previously used extensively for the
manufacture of automobiles because of its corrosion resistance properties.
"ZnNi" shall mean zinc-nickel alloy coatings.
-11-