CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
ASTERISKS (*) DENOTE SUCH OMISSIONS
EXTENSION AND AMENDMENT AGREEMENT
THIS EXTENSION AND AMENDMENT AGREEMENT is made as of October 1, 1991 by
Northwest aluminum Company, an Oregon corporation ("NAC"), and Clarendon Ltd., a
Zug, Switzerland corporation acting though its Connecticut branch ("Clarendon").
Recitals
A. NAC and Clarendon have entered into an Aluminum Toll Conversion
Agreement dated as of September 15, 1986 (the "1986 Toll Agreement") pursuant to
which Clarendon is currently providing NAC's alumina requirements for both
Potline Nos. 1 and 2 as provided therein, and NAC is converting such alumina
into aluminum as provided therein.
B. The parties now wish to extend the terms of the 1986 Toll Agreement for
an additional four years, and to amend certain of the terms of the 1986 Toll
Agreement in connection with such extension.
Terms of Agreement
Section 1. Defined Terms. Terms defined in the 1986 Toll Agreement shall
have the same meanings for purposes of this Agreement.
Section 2. Extension Period.
2.1 The term of the 1986 Toll Agreement shall be extended for an
additional four year period, which shall commence on October 1, 1991 and end on
September 30, 1995 (the "Extension Period"), and, except as specifically amended
by this Agreement, all of the terms and conditions of the 1986 Toll Agreement
shall continue to be binding on each of the parties during the Extension Period.
2.2 It is agreed that, in accordance with the foregoing:
(i) Clarendon shall provide the Smelter's entire Alumina
requirements (that is, for both Potline Nos. 1 and 2) during the Extension
Period;
(ii) NAC shall Convert the same and make the necessary Aluminum
Deliveries to Clarendon in the manner required under the 1986 Toll Agreement;
(iii) For purposes of Section 3.1.3 of the 1986 Toll Agreement,
the parties shall agree by September 30, 1991 on the schedule for Alumina
Deliveries and the amount of Alumina inventory required at the Smelter both
during the final calendar quarter of 1991 and during calendar year 1992;
(iv) Clarendon shall continue through December 31, 1991 to take
offgrade Aluminum as per the parties' agreement dated March 2, 1988, with all
discounts for such offgrade. Aluminum to be as set forth in item 3 of that
agreement, and any taking of offgrade Aluminum after December 31, 1991 shall be
at Clarendon's option and subject to the parties' mutual agreement and their
renegotiation of such discounts; and
(v) Notwithstanding any provisions of the 1986 Toll Agreement (as
amended hereby) to the contrary, NAC shall have the option to deliver Aluminum
from other production facilities in place of Aluminum from the Smelter, provided
that Clarendon may require that certain specific shipments be composed of
Aluminum from the Smelter.
Section 3. Amendments to 1986 Toll Agreement. Effective upon the
commencement of the Extension Period, the following provisions of the 1986 Toll
Agreement shall be amended in the following manner:
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3.1 The term "Renewal Tonnage" shall mean, during the Extension
Period, all Aluminum required to be produced from the Alumina Deliveries
referred to in Section 2 of this Agreement.
3.2 Section 2.1.2 of the 1986 Toll Agreement shall be amended by
adding the following sentence at the end thereof:
"In addition, during all periods after October 1, 1991 NAC shall use
its best efforts and take all reasonable steps to ensure that the
output of the Smelter shall be approximately eighty-two thousand
(82,000) MT of Aluminum per twelve-month period, subject to
Clarendon's satisfying its Alumina Delivery obligations under Section
3.1.4, and NAC further agrees not to reduce production at the Smelter
below such minimum amount (other than due to Clarendon's failure to
satisfy such obligations, or by reason of force majeure and subject to
NAC's compliance with Article 8) without Clarendon's prior written
consent."
3.3 Section 3.3 of the 1986 Toll Agreement shall be amended by adding
NALCO (Indian Alumina) as an additional permitted source of Alumina.
3.4 Section 4.2.3 of the 1986 Toll Agreement (it being recognized that
there is no Section 4.2.2) shall be amended by adding an additional clause (iii)
as follows:
"(iii) Notwithstanding the foregoing, it is agreed that, effective
from and including October 1, 1991, (a) the additional charge payable
for Aluminum homogenized extrusion billet under this Section 4.2.3
shall be a flat $*** (*** cents) per Pound, and (b) Clarendon may
request that Aluminum be delivered in the form of A356.2 (Foundry),
modified or unmodified, for which the additional charge payable under
this Section 4.2.3 shall be a flat $*** (*** cents) per Pound."
3.5 Section 6.1.2 of the 1986 Toll Agreement shall be amended by
deleting the phrase "the greater of" as well as clauses (i) and (ii) immediately
following that phrase, and inserting in the place of that deleted text the
following:
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"(i) for the last calendar quarter of 1991, *** percent (***%) of the
average of the "Aluminum Metal Price" (as defined in Section 6.1.4)
applicable for the months of August and September 1991, as more fully
provided in Section 6.1.4, and (ii) thereafter, *** percent (***%) of
the "Aluminum Metal Price" (as defined in Section 6.1.4) applicable
for the three calendar months in the calendar quarter immediately
preceding the calendar quarter in which the Aluminum Delivery occurs,
as more fully provided in Section 6.1.4.".
3.6 Section 6.1.4 of the 1986 Toll Agreement shall be amended as follows:
3.6.1 by deleting the text of the initial paragraph preceding clause
(i) (up to but not including the words "subject to") and inserting in the place
of the deleted text the following:
"For purposes of this Section 6.1, "Aluminum Metal Price" means (a)
for Aluminum Deliveries occurring in the fourth calendar quarter of
1991, the arithmetic average of the settlement prices for aluminum on
the London Metal Exchange ("LME"), for each LME trading day during the
months of August and September 1991, as published in "Metal Bulletin"
as the seller's Midday official price for that day under the caption
"Daily Metal", and (b) thereafter, the arithmetic average of the
settlement prices for aluminum on the LME, for each LME trading day
during the three calendar months in the calendar quarter immediately
preceding the calendar quarter in which the Aluminum Delivery occurs,
as published in "Metal Bulletin" as the seller's Midday official price
for that day under the caption "Daily Metal",";
3.6.2 by deleting the text of clause (i) commencing with the words
"and LME three month seller's prices" through the end of clause (i); and
3.6.3 by deleting the first two sentences of clause (iii) and
inserting in the place of the deleted text the following:
"If the LME ceases to trade aluminum or ceases to publish the
reference price specified in clause (i), the "Aluminum Metal
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Price* shall mean the generally accepted substitute for LME reference
prices.".
3.7 Section 6.3 of the 1986 Toll Agreement shall be amended by
deleting the text thereof and inserting in the place of the deleted text the
following:
"Each of NAC's invoices shall be payable in Dollars in immediately
available funds ten (10) days after Clarendon's receipt of such
invoice through March 31, 1992, and each invoice received by Clarendon
after March 31, 1992 shall be payable in Dollars in immediately
available funds thirty (30) days after Clarendon's receipt of such
invoice; provided that if any payment date is a Saturday, Sunday or
day of which banks in Oregon or New York are authorized or required to
close, payment shall be due on the next day which does not constitute
any of the foregoing. Each payment shall be provisional and subject to
Clarendon's right to audit and challenge NAC's determination of
quality and quantity or calculation of amounts payable."
Section 4. Miscellaneous.
4.1 Ratification of 1986 Toll Agreement as Amended. The 1986 Toll
Agreement, as specifically amended by this Agreement, is hereby ratified in all
respects, and, effective upon the commencement of the Extension Period, the term
"this Agreement" as used in the 1986 Toll Agreement shall be deemed to refer to
the 1986 Toll Agreement as amended hereby.
4.2 No Implied Amendments, Undertakings or Waivers. No additional
amendment of the 1986 Toll Agreement, nor any undertaking to further amend or
extend the 1986 Toll Agreement, nor any waiver of any right or remedy arising
under the 1986 Toll Agreement prior to the Extension Period, shall be implied
from the fact that the parties have agreed to the terms of this Agreement.
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4.3 Incorporation of Provisions of Article 14 of the 1986 Toll
Agreement. The terms of Sections 14.1 [entire agreement; amendment], 14.3
[governing law, etc.], 14.6 [illegality; severability], 14.7 [no brokers, etc.]
and 14.8 [counterparts) of the 1986 Toll Agreement are incorporated into this
Agreement as if fully stated herein.
4.4 Interpretation. The parties acknowledge that this Agreement has
been the subject of full opportunity for negotiation and amendment, and that the
party which has assumed initial responsibility for drafting this Agreement shall
not suffer adverse construction of any terms or language thereof because of such
role.
Execution
IN WITNESS WHEREOF# each of the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, in each
case effective as of the date first written above.
NORTHWEST ALUMINUM COMPANY
By ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
CLARENDON LTD.
By S. D. ▇▇▇▇▇▇
Name: ___________________________________
Title: Authorized Signatory
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