1
EXHIBIT 10.4
CONSIGNMENT AGREEMENT
BUYER: SINTER METALS, INC. SELLER: HOEGANAES CORPORATION
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & Taylors Lane
Suite 3200 Riverton, New Jersey 08077
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
I. This Agreement sets forth the legally binding terms and conditions
governing the consignment of Hoeganaes' metallurgical grade powders according
to grade designation and specification described in Schedule A.
BUYER and SELLER are also parties to an agreement of even date (the
"Purchase Agreement") pursuant to which BUYER agrees to buy and SELLER agrees
to sell certain quantities of Metal Powders. This Consignment Agreement
governs with respect to matters specifically addressed in this Agreement, while
the Purchase Agreement governs over all other matters.
II. Deliveries shall be made based upon the description of materials and
proposed delivery dates in BUYER'S release. Releases will be based on 90 day
lead time with routine 30 day update to establish firm delivery dates.
III. A. CONSIGNMENT
SELLER agrees to ship to BUYER'S plant designated accordingly
on a consignment basis such quantities of powders (product)
which SELLER deems it is reasonably able to supply during the
period of this Agreement.
BUYER will continue to place releases according to Article II.
Consignment quantities will be subject to quarterly review.
Changes will be mutually agreed by both parties.
B. ORDERING AND SHIPPING
BUYER shall place a release with SELLER for product to be
shipped freight ___________ to Emporium, Pennsylvania and/or
to Conover, North Carolina; and/or to Riverdale, Illinois
and/or Richton Park, Illinois; and/or to Zeeland, Michigan "on
consignment".
The release will give BUYER'S sales tax license number and
exemption declaration and BUYER'S sales tax number.
A Certificate of Analysis showing screen and chemical
analyses, as well as certain green and sintered properties,
shall be provided by SELLER for each lot of product released
to BUYER.
- 1 -
2
BUYER shall draw upon the consignment inventory in the same
consecutive order as received (first in - first out).
C. OWNERSHIP OF INVENTORY
Any product received by BUYER pursuant to this Agreement shall
remain the property of SELLER until drawn upon by BUYER or
until it has remained on BUYER'S premises in excess of _______
(__) days, whereupon it shall become the property of BUYER.
"Drawn upon" shall mean transferred from a designated area for
the consigned inventory.
D. RESPONSIBILITY FOR INVENTORY
During the period in which consigned product is in the
possession of BUYER, but still the property of Seller, BUYER
Agrees that it shall:
Store the product in a suitable dry, heated building at
BUYER'S Emporium, Pennsylvania or Conover, North Carolina
plant free of charge, and keep all product on consignment,
secure and separate or separately identifiable from any other
goods or materials.
Pay any and all expenses incurred in order to properly handle
the product including, but without limiting the generality of
the foregoing, unloading trucks, moving and handling into and
out of storage and into production.
Risk of loss passes to Buyer and BUYER shall be liable to
SELLER for any damage or loss of product from any cause
whatsoever deemed to be BUYER'S fault or negligence.
Pay all associated costs related to the product arising out of
BUYER'S possession of the product or its subsequent
consumption thereof.
For itself, its successors and assigns, indemnify and hold
SELLER harmless from and against all claims, actions, suits,
demands and the like by whomsoever made in respect of any
bodily injury or loss or damage to property attributable in
any way to product held by BUYER.
Allow SELLER to take a physical inventory of the consignment
product on any normal working day with at least ten (10) days
notice.
Provide SELLER with results of BUYER'S own physical
inventories taken twice a year.
- 2 -
3
E. REPORTING OF USAGE
BUYER agrees that at the end of the Interlake calendar month,
Exhibit 1, (no later than 4PM Thursday) it shall FAX a report
to SELLER indicating:
The amount of product, by lot number, which has been consumed
during the reporting period. This shall include any product
that has been in BUYER'S possession for more than _________
(__) days, and any product not located in the designated
consignment area.
F. INVOICING, PAYMENTS AND PRICES
Upon receipt of the FAX report (or the closest working day
thereafter) SELLER shall invoice in U.S. dollars at a
specified prevailing price at the time of invoicing for the
amount reported as consumed since the previous report of
product.
SELLER shall also invoice BUYER for shortage of stock SELLER
may discover during the course of any physical inventory
conducted in accordance stated above.
IV. TERMS AND CONDITIONS
For all products purchased by BUYER other than those described in
Schedule A, SELLER standard terms and conditions apply.
------------------------------
------------------------------
V. CANCELLATION
This Agreement can be canceled by either party giving a thirty (30)
days notice in writing of the desire to discontinue the Agreement.
If BUYER wishes to cancel this Agreement in accordance with its
rights under this clause, BUYER shall report the remaining consigned inventory
to SELLER as having been consumed and BUYER will pay SELLER on the termination
date for the aggregate amount of all product supplied by SELLER under this
Agreement.
If SELLER wishes to cancel this Agreement with its rights under this
clause, BUYER shall continue to make its monthly report of usage, and SELLER
shall continue to invoice BUYER as provided in Article III, Item F, until
product supplied under this Agreement is reported as consumed, subject to all
prior provisions related to consumption, usage, and invoicing.
VI. MISCELLANEOUS
This Agreement shall be binding on the parties referenced throughout
and their respective successors and assigns PROVIDED that neither party shall
assign this Agreement without the prior
- 3 -
4
written consent of the other, except in the event of an assignment by SELLER to
a subsidiary or affiliated company.
SINTER METALS, INC. HOEGANAES CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------- --------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Sales and Marketing
Title Chief Financial Officer
------------------------ --------------------------
Date 9/17/96 Date 9/18/96
-------------- ------------
- 4 -
5
HOEGANAES CORPORATION
POWDER METALLURGY GRADES
PRICE LIST - JANUARY 1, 1996
--------------------------------------------------------------------------------
ATOMIZED STEEL POWDER
--------------------------------------------------------------------------------
39,000 lbs. 3,000 to 500 to 100 to
Minimum 38,500 lbs. 2,500 lbs.* 400 lbs.**
----------- ----------- ----------- ----------
Ancorsteel 1000 $.363 $.393 $.468 $.783
Ancorsteel 1000 P/F .374 .404 .479 .794
Ancorsteel 1000B .384 .414 .489 .804
Ancorsteel 1000 C .415 .445 .520 .835
Ancorsteel 1015 .384 .414 .489 .804
Ancorsteel 45 P .458 .488 .563 .878
Ancorsteel 2000 .505 .535 .610 .925
Ancorsteel 2000 P/F .509 .539 .614 .929
Ancorsteel 4600 V .572 .602 .677 .992
Ancorsteel 4600 V P/F .577 .607 .682 .997
Ancorsteel 85 HP .483 .513 .588 .903
Ancorsteel 150 HP .617 .647 .722 1.037
--------------------------------------------------------------------------------
SPONGE IRON POWDER
--------------------------------------------------------------------------------
Ancor MH 100 .364 .394 .469 .784
Ancormet 101 .380 .410 .485 .800
Ancor EP 1024* .529 .559 .634 .949
-----------------------------------
CONDITIONS OF SALE
-----------------------------------
PRICES ARE F.O.B. SHIPPING PLANT AND ARE SUBJECT TO CHANGE. PRICE IN EFFECT ON
DATE OF SHIPMENT WILL BE APPLIED. MINIMUM ORDER, 100 LBS. TERMS: NET 30 DAYS
STANDARD PACKING 5,000 lb. FIBERBOARD CONTAINERS ON 38" x 38" SINGLE
FACED PALLETS. *PACKED IN 500 LB. FIBER DRUMS
**PACKED IN 100 lb. STEEL PAILS
PACKING OPTIONS 50.015 PER lb. FOR PACKING IN 500 lb. CAPACITY FIBER
DRUMS, 3,000 lbs. ON 38" x 48" SINGLE FACED PALLET.
50.002 PER lb. FOR PACKING IN 3,000 lb. CAPACITY
FIBERBOARD CONTAINER ON 38" X 38" SINGLE FACED
PALLET.
LOS ANGELES
WAREHOUSE PRICES ADD $0.065 PER lb. TO F.O.B. PRICE. NOT ALL PRODUCTS
ARE AVAILABLE.
6
EXHIBIT 1
INTERLAKE - 1996 FISCAL CALENDAR
1ST QUARTER 2ND QUARTER
------------------------------------ -------------------------------------
JANUARY APRIL
------------------------------------ -------------------------------------
5 Weeks 4 Weeks
------------------------------------ -------------------------------------
MON TUE WED THR FRI SAT SUN MON TUE WED THR FRI SAT SUN
------------------------------------ -------------------------------------
1 2 3 4 5 6 7 1 2 3 4 5 6 7
------------------------------------ -------------------------------------
8 9 10 11 12 13 14 8 9 10 11 12 13 14
------------------------------------ -------------------------------------
15 16 17 18 19 20 21 15 16 17 18 19 20 21
------------------------------------ -------------------------------------
22 23 24 25 26 27 28 22 23 24 25 26 27 28
------------------------------------ -------------------------------------
29 30 31 1 2 3 4
------------------------------------ -------------------------------------
------------------------------------ -------------------------------------
FEBRUARY MAY
------------------------------------ -------------------------------------
4 Weeks 4 Weeks
------------------------------------ -------------------------------------
MON TUE WED THR FRI SAT SUN MON TUE WED THR FRI SAT SUN
------------------------------------ -------------------------------------
5 6 7 8 9 10 11 29 30 1 2 3 4 5
------------------------------------ -------------------------------------
12 13 14 15 16 17 18 6 7 8 9 10 11 12
------------------------------------ -------------------------------------
19 20 21 22 23 24 25 13 14 15 16 17 18 19
------------------------------------ -------------------------------------
26 27 28 29 1 2 3 20 21 22 23 24 25 26
------------------------------------ -------------------------------------
------------------------------------ -------------------------------------
MARCH JUNE
------------------------------------ -------------------------------------
4 Weeks 5 Weeks
------------------------------------ -------------------------------------
MON TUE WED THR FRI SAT SUN MON TUE WED THR FRI SAT SUN
------------------------------------ -------------------------------------
4 5 6 7 8 9 10 27 28 29 30 31 1 2
------------------------------------ -------------------------------------
11 12 13 14 15 16 17 3 4 5 6 7 8 9
------------------------------------ -------------------------------------
18 19 20 21 22 23 24 10 11 12 13 14 15 16
------------------------------------ -------------------------------------
25 26 27 28 29 30 31 17 18 19 20 21 22 23
------------------------------------ -------------------------------------
24 25 26 27 28 29 30
------------------------------------ -------------------------------------
3RD QUARTER 4TH QUARTER
------------------------------------ -------------------------------------
JULY OCTOBER
------------------------------------ -------------------------------------
5 Weeks 4 Weeks
------------------------------------ -------------------------------------
MON TUE WED THR FRI SAT SUN MON TUE WED THR FRI SAT SUN
------------------------------------ -------------------------------------
1 2 3 4 5 6 7 30 1 2 3 4 5 6
------------------------------------ -------------------------------------
8 9 10 11 12 13 14 7 8 9 10 11 12 13
------------------------------------ -------------------------------------
15 16 17 18 19 20 21 14 15 16 17 18 19 20
------------------------------------ -------------------------------------
22 23 24 25 26 27 28 21 22 23 24 25 26 27
------------------------------------ -------------------------------------
29 30 31 1 2 3 4
------------------------------------ -------------------------------------
------------------------------------ -------------------------------------
AUGUST NOVEMBER
------------------------------------ -------------------------------------
4 Weeks 4 Weeks
------------------------------------ -------------------------------------
MON TUE WED THR FRI SAT SUN MON TUE WED THR FRI SAT SUN
------------------------------------ -------------------------------------
5 6 7 8 9 10 11 28 29 30 31 1 2 3
------------------------------------ -------------------------------------
12 13 14 15 16 17 18 4 5 6 7 8 9 10
------------------------------------ -------------------------------------
19 20 21 22 23 24 25 11 12 13 14 15 16 17
------------------------------------ -------------------------------------
26 27 28 29 30 31 1 18 19 20 21 22 23 24
------------------------------------ -------------------------------------
------------------------------------ -------------------------------------
SEPTEMBER DECEMBER
------------------------------------ -------------------------------------
4 Weeks 5 Weeks
------------------------------------ -------------------------------------
MON TUE WED THR FRI SAT SUN MON TUE WED THR FRI SAT SUN
------------------------------------ -------------------------------------
2 3 4 5 6 7 8 25 26 27 28 29 30 1
------------------------------------ -------------------------------------
9 10 11 12 13 14 15 2 3 4 5 6 7 8
------------------------------------ -------------------------------------
16 17 18 19 20 21 22 9 10 11 12 13 14 15
------------------------------------ -------------------------------------
23 24 25 26 27 28 29 16 17 18 19 20 21 22
------------------------------------ -------------------------------------
23 24 25 26 27 28 29
------------------------------------ -------------------------------------
7
EXHIBIT 2
TO: ▇▇▇ ▇▇▇▇▇▇, HOEGANAES
FAX: 609/▇▇▇-▇▇▇▇
CONSIGNMENT USAGE FROM TO
----------------- -----------------
==========================================================================================================================
ON HAND REC'D SINCE TOTAL TO USED SINCE CURRENT
POWDER LOT NO. LAST REPORT LAST REPORT ACCOUNT FOR LAST REPORT BALANCE
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
8
PURCHASE AGREEMENT
SINTER METALS, INC.
BUYER: SINTER METALS, INC. SELLER: HOEGANAES CORPORATION
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & Taylors Lane
Suite 3200 Riverton, New Jersey 08077
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
This Agreement is made and is to be effective as of September 30,
1996 by and between the above named Buyer ("BUYER") and Seller ("SELLER").
I. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
(a) "Fiscal Year" means the period which begins on the Monday
immediately following the last Sunday in December and which
ends on the last Sunday in the following December.
(b) "Fiscal Quarter" means the fiscal quarter year periods used by
SELLER for its accounting purposes. A copy of SELLER'S fiscal
calendar for Fiscal Year 1996, which shows the Fiscal
Quarters, is attached hereto as Exhibit 1 (1997 and 1998 are
not available at this time).
(c) "Metal Powder" or "Metal Powders" means those grades of virgin
atomized steel powder and virgin sponge iron powder described
on Schedule A hereto, and blends made therefrom.
(d) "Contract year" means the four consecutive Fiscal Quarters
which begin on the effective date of this Agreement and on or
about each anniversary of such effective date; provided,
however, in accordance with the provisions of Paragraph V
hereof, any such Contract Year shall be extended (and thus the
commencement of each following Contract year shall be
postponed) by the occurrence of a force majeure.
II. BUY AND SELL. During each Contract year during the term of
this Agreement, BUYER agrees to purchase ________________ pounds of Metal Powder
from SELLER, and SELLER will sell, to the extent ordered by BUYER, at least
____________ pounds of Metal Powder.
Actual purchases and deliveries shall be made in reasonably
even monthly quantities, as ordered by BUYER. BUYER shall place its
preliminary order 90 days in advance of the anticipated desired date of
delivery and the parties shall routinely establish firm delivery dates 30 days
prior thereto.
- 1 -
9
The terms of this Agreement will be limited to the following
delivery locations:
Sinter Metals, Inc. Emporium
▇▇ #▇, ▇.▇. ▇▇▇ ▇▇
Emporium, Pennsylvania 15834-9740
Sinter Metals, Inc. Conover
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Sinter Metals, Inc. Chicago
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Sinter Metals, Inc. Zeeland
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
During the first and second contract year of this Agreement,
acquisitions by Sinter Metals, Inc. that result in new delivery locations will
be added based on minimum 30 day written notification to SELLER. Incremental
volume related to new delivery locations will be applied toward minimum and
rebate schedule thresholds not to exceed _______ pounds total for each new
location.
However, in the event a new delivery location is added in the
first Contract Year, during the second Contract Year the qualified sales of the
new location recognized by Hoeganaes in their Fiscal Year will be used as the
new base and added to the minimum and rebate schedule thresholds less then the
_______ pound consideration noted above.
III. TERM. This Agreement shall be effective as of the date
specified in the Heading above and shall remain in effect until 11:59 p.m. on
(the last day of the fourth Fiscal Quarter of the second year of the term of
this Agreement).
IV. PRICE.
(a) During the first Contract Year of the term of this Agreement,
the base price for the various grades of Metal Powders, excluding blends, shall
be the price specified therefore on Schedule A, _______________________ and,
subject to paragraph IV(c) below, the purchase price hereunder for such grades
of Metal Powders shall be the price specified for them on Schedule A, less the
appropriate discount shown on Table I (the "Discount"). The discount applies
to virgin Metal Powders only, that is, to those base powder grades identified
on Schedule A which are purchased in their virgin state, and to blends of such
Metal Powders made by SELLER for BUYER.
(b) Effective as of the first day of the second Contract Year
hereunder and continuing during all of such second Contract
- 2 -
10
year, the base price for each grade of Metal Powder shall be the lower of (i)
SELLER'S published price for each grade of powder which is in effect on the
first day of such Contract Year, or (ii) the price for such grade of Metal
Powder specified on Table I and Schedule A, adjusted upward or downward by the
same percentage as the percentage of the increase or decrease, respectively, in
the Producer Price Index for Industrial Commodities (Unadjusted Index) 1982 =
100) as published by the Bureau of Labor Statistics of the U.S. Department of
Labor, from its level in the second calendar month preceding the calendar month
in which this Agreement becomes effective, to its level in the same calendar
month in the following year, provided that no price adjustment will be made
pursuant to this clause (b)(ii) unless the aforementioned change in the
Producer Price Index exceeds plus or minus 2%.
Subject to Paragraph IV(c) below, the purchase price for Metal
Powders, excluding blends, bought and sold hereunder during the second Contract
Year shall be such adjusted base price less the appropriate discount shown on
Table 1.
TABLE I
HOEGANAES MATERIAL GRADE DISCOUNTED PRICE/LB.
------------------------ --------------------
Ancorsteel 4600V P/F
-------
Ancorsteel 1000
-------
Ancorsteel 1000B
-------
Ancorsteel 4600V P/M
-------
Ancorsteel 2000 P/M
-------
Ancorsteel 2000 P/F
-------
Ancorsteel 1000 P/F
-------
All other grades purchased will be discounted _____ from
prevailing published Powder Metallurgy Grade Price sheet (Schedule A).
(c) The purchase price of those Metal Powders which are
designated "Ancorsteel" on Schedule A ("Ancorsteel Powder") will be subject to
additional adjustments as of the first day of any Fiscal Quarter based on
changes in the costs of #1 scrap steel, nickel, and moly as follows:
(i) Steel scrap -- #1 Grade
The base purchase prices for Ancorsteel Powders in each Fiscal
Quarter will be adjusted by the amount shown on the right side of Table 2 which
corresponds to the "Scrap Amount" for the prior Fiscal Quarter. "Scrap Amount"
means the sum of $3.00 (handling charge) plus the average price per gross ton
for #1 grade steel scrap, determined as described below.
The average price per gross ton for #1 Grade steel scrap for
any Fiscal Quarter shall be (the average composite
- 3 -
11
price per gross ton for #1 Grade steel scrap in Philadelphia, Pittsburgh and
Chicago, as reported in each weekly edition of Iron Age) which has a cover date
on or after the first day of the Fiscal Quarter in question and before the
beginning of the fourth week of the third fiscal month of such Fiscal Quarter.
The average price so determined shall be rounded to the nearest whole Dollar.
These adjustments apply without regard to changes in the published price list.
Table 2 - Scrap Adjustments ($/lb.)
92 - 96 -0.0180
97 - 101 -0.0155
102 - 106 -0.0130
107 - 111 -0.0105
112 - 116 -0.0080
117 - 143 0.0000
▇▇▇ - ▇▇▇ ▇.▇▇▇▇
▇▇▇ - ▇▇▇ 0.0105
154 - 158 0.0130
159 - 163 0.0155
164 - 168 0.0180
169 - 173 0.0205
174 - 178 0.0230
179 - 183 0.0255
184 - 188 0.0280
The above scrap ranges and resultant adjustments represent what should be the
majority experience during the term of the Agreement. However, Table 2 would
be extended appropriately (up or down) should the scrap price fall outside the
ranges shown in Table 2.
(ii) Nickel
The base purchase price for Metal Powders identified in Table
3 below in each Fiscal Quarter will be adjusted by the amounts shown in Columns
B and C of Table 3 which correspond to the Nickel Amount for the prior Fiscal
Quarter. "Nickel Amount" means the sum of $.15 (handling charge) plus the
average price per pound of Nickel determined as described below.
The average Nickel Price in any Fiscal Quarter shall be an
amount equal to the average of the daily closing prices per pound of Nickel
(1/2204ths of the price specified for a ton), for cash transactions, on the
London Metal Exchange, for each trading day during the first two fiscal months
and the first three weeks of the third
- 4 -
12
fiscal month of such Fiscal Quarter, as published in the Financial Times.
These adjustments apply without regard to changes in the published price list.
Table 3 - Nickel Adjustments ($/Lb.)
A B C
Nickel Price A-2000 A-4600V
------------ ------ -------
1.85-2.04 -0.0101 -0.0340
2.05-2.24 -0.0092 -0.0311
2.25-2.44 -0.0084 -0.0281
2.45-2.64 -0.0075 -0.0252
2.65-2.84 -0.0066 -0.0222
2.85-3.04 -0.0057 -0.0192
3.05-3.24 -0.0048 -0.0163
3.25-3.44 -0.0040 -0.0132
3.45-3.64 -0.0031 -0.0104
3.65-3.84 -0.0022 -0.0074
3.85-4.64 0.0000 0.0000
4.65-4.84 0.0022 0.0074
4.85-5.04 0.0031 0.0104
5.05-5.24 0.0040 0.0133
5.25-5.44 0.0048 0.0162
5.45-5.64 0.0057 0.0192
5.65-5.84 0.0066 0.0222
5.85-6.04 0.0075 0.0252
6.05-6.24 0.0084 0.0281
6.25-6.44 0.0092 0.0311
6.45-6.64 0.0101 0.0340
6.65-6.84 0.0110 0.0370
6.85-7.04 0.0119 0.0400
7.05-7.24 0.0128 0.0429
7.25-7.44 0.0136 0.0459
7.45-7.64 0.0145 0.0488
7.65-7.84 0.0154 0.0518
7.85-8.04 0.0163 0.0548
8.05-8.24 0.0172 0.0577
- 5 -
13
8.25-8.44 0.0180 0.0607
8.45-8.64 0.0189 0.0636
The above nickel ranges and resultant adjustments represent
what should be the majority experience during the term of the Agreement.
However, Table 3 would be extended appropriately (up or down) should the Nickel
Price fall outside the ranges shown in Table 3.
(iii) Molybdenum (Moly)
The base purchase prices for Metal Powders identified in Table
4 below in each Fiscal Quarter will be adjusted by the amounts shown in Columns
B, C, D and E of Table 4 which correspond to the Moly amount for the prior
Fiscal Quarter. "Moly Amount" means the sum of $.15 (handling charge) plus the
average price per pound of Moly determined as described below.
The average Moly Price in any Fiscal Quarter shall be an
amount equal to the average of the weekly closing prices per pound for cash
transactions for each trading week during the first two fiscal months and the
first three weeks of the third fiscal month of such Fiscal Quarter as published
in ▇▇▇▇▇'▇ Metals Week under the classification, Molybdenum Dealer Oxide
Prices. These adjustments apply without regard to changes in the published
price list.
==========================================================================================================
TABLE 4 - Molybdenum Adjustments ($/Lb.)
----------------------------------------
----------------------------------------------------------------------------------------------------------
A B C D E
Moly Amount A-2000 A-4600V 85 HP 150 HP
----------- ------ ------- ----- ------
----------------------------------------------------------------------------------------------------------
$ 3.50 .003 .003 .04 .0075
----------------------------------------------------------------------------------------------------------
4.00 .006 .006 .085 .0150
----------------------------------------------------------------------------------------------------------
4.50 .009 .009 .0128 .0225
----------------------------------------------------------------------------------------------------------
5.00 .012 .012 .0170 .0300
----------------------------------------------------------------------------------------------------------
5.50 .015 .015 .0212 .0375
----------------------------------------------------------------------------------------------------------
6.00 .018 .018 .0255 .0450
----------------------------------------------------------------------------------------------------------
6.50 .021 .021 .0298 .0525
----------------------------------------------------------------------------------------------------------
7.00 .024 .024 .0340 .0600
----------------------------------------------------------------------------------------------------------
7.50 .027 .027 .0382 .0675
----------------------------------------------------------------------------------------------------------
8.00 .030 .030 .0425 .0750
----------------------------------------------------------------------------------------------------------
8.50 .033 .033 .0468 .0825
----------------------------------------------------------------------------------------------------------
9.00 .036 .036 .0510 .0900
----------------------------------------------------------------------------------------------------------
9.50 .039 .039 .0552 .0975
==========================================================================================================
- 6 -
14
==========================================================================================================
TABLE 4 - Molybdenum Adjustments ($/Lb.)
----------------------------------------
----------------------------------------------------------------------------------------------------------
10.00 .042 .042 .0595 .0105
----------------------------------------------------------------------------------------------------------
10.50 .045 .045 .0638 .1125
----------------------------------------------------------------------------------------------------------
11.00 .048 .048 .0680 .1200
----------------------------------------------------------------------------------------------------------
11.50 .051 .051 .0722 .1275
----------------------------------------------------------------------------------------------------------
12.00 .054 .054 .0765 .1350
----------------------------------------------------------------------------------------------------------
12.50 .057 .057 .0808 .1425
----------------------------------------------------------------------------------------------------------
13.00 .060 .060 .0850 .1500
----------------------------------------------------------------------------------------------------------
13.50 .063 .063 .0892 .1575
----------------------------------------------------------------------------------------------------------
14.00 .066 .66 .0935 .1650
----------------------------------------------------------------------------------------------------------
14.50 .069 .069 .0978 .1725
----------------------------------------------------------------------------------------------------------
15.00 .072 .072 .1020 .1800
----------------------------------------------------------------------------------------------------------
15.50 .075 .075 .1062 .1875
----------------------------------------------------------------------------------------------------------
16.00 .078 .078 .1105 .1950
----------------------------------------------------------------------------------------------------------
16.50 .081 .081 .1148 .2025
----------------------------------------------------------------------------------------------------------
17.00 .084 .084 .1190 .2100
==========================================================================================================
The above Moly ranges and resultant adjustments represent what
should be the majority experience during the term of the Agreement. However,
Table 4 would be extended appropriately (up or down) should the moly price fail
outside the ranges shown in Table 4.
(d) Blend Prices. During the first Contract Year of this
Agreement, the price per pound of any blended composition of Metal Powders will
be equal to (i) the sum of the amounts determined by multiplying the price
(determined as herein provided) of each base grade of Metal Powder included in
such composition by the percentage thereof included in the blend, plus (ii)
Seller's prevailing charge as of the effective date of this Agreement for
ingredients other than base grade Metal Powders included in the blend
("Purchased Ingredients"), plus (iii) Seller's blending charge shown on Table 5
below.
During the second year of the effective date of this Agreement
the price for blended Metal Powders will be adjusted -- in addition to the
periodic adjustments made to reflect changes in the price of the base grade
Metal Powder included in the blend -- to reflect the amounts of the difference,
if any, (x) between Seller's then prevailing charge for Purchased Ingredients
and the amount of the charge for Purchased Ingredients which was included in
the purchase price hereunder for blended Metal Powders during
- 7 -
15
the preceding Contract Year, and (y) between Seller's then prevailing blending
charge and the amount of the blending charge which was included in the purchase
price hereunder for blended Metal Powders during the preceding Contract Year.
TABLE 5
--------------- ---------- ---------
--------------- ---------- ---------
--------------- ---------- ---------
V. Force Majeure. Seller shall not be liable to Buyer in respect of
a delay in or failure to make the deliveries which Seller agrees to make in
Paragraph II hereof, and Buyer shall not be liable to Seller in respect of a
delay in or failure to purchase the quantities of Metal Powders which Buyer
agrees to buy in Paragraph II hereof, if and to the extent that such delay or
failure is caused by, as applicable, Seller's inability to manufacture and/or
deliver the Metal Powders or by Buyer's inability to accept or use the Metal
Powders, as result of, in either case, a force majeure, which includes an act
of God, actions of any governmental authority (whether valid or invalid),
fires, floods, windstorms, explosions, riots, natural disasters, wars,
sabotage, labor problems (including lockouts, strikes and slowdowns), inability
to obtain powder, material, labor, equipment or transportation, or court
injunction or order, or other causes beyond the reasonable control of the part
affected.
In case either party's ability to perform hereunder is
affected by force majeure, such party shall promptly advise the other party of
the nature and expected duration thereof and of such other details concerning
the situation as are reasonable under the circumstances.
The Contract Year in which any such force majeure occurs shall
be extended by an amount of time equal to the duration of the force majeure.
Notwithstanding any provision hereof to the contrary, in the event of a force
majeure, the duration of which is at least three (3) consecutive months, Buyer
shall be entitled, upon notice to Seller, to cancel this Agreement and,
following any such cancellation, Buyer shall have no further responsibilities,
obligations or liability hereunder.
VI. Specification. Conformance to specification shall be based on
Seller's certified test data. Seller shall be responsible to maintain and
supply required quality assurance documentation per Buyer's quality assurance
requirements.
Seller's facility and quality process records will be
available for Buyer audit based on 10 days notification.
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Certified test data will be determined by mutual agreement between Buyer and
Seller.
Goods and services supplied under this Agreement will be
manufactured and handled using QS 9000 Standards as the fundamental quality
system requirement.
VII. Limited Warranty. Seller warrants that the material Seller
sells to Buyer under this contract will conform to specifications based on
Seller's test data. If Buyer claims that the material sold hereunder is
defective and Seller determines such claim is justified, Seller agrees to
replace the material, or at Seller's option, to refund the purchase price.
VIII. Limitation of Liability. The total liability of Seller (and
any subcontractors) on any claim (whether in contract, tort, sole or concurrent
negligence or otherwise) arising out of or related to any material or service
or the manufacture, sale, delivery, resale, repair, replacement or use thereof,
shall be limited to the purchase price of the material or service or part
thereof which gave rise to the claim.
IX. Terms and Conditions of Sale. The parties agree that this
Purchase Agreement will govern all transactions between the parties. Any terms
or conditions in any purchase order or other forms or documents of buyer or
Seller or their agents, other than descriptions of material and shipping dates,
delivered in the past or future, shall not become part of any contract and
shall b of no effect whatsoever, unless signed by both parties and explicitly
identified as modifying this Purchase Agreement.
X. Entire Agreement; Waiver. These standard terms and conditions
supersede all prior discussion and writings and constitute the entire agreement
between the parties with respect to terms and conditions. No waiver or
modification is binding upon Buyer or Seller unless made in writing and signed
by a duly authorized representative. Buyer's or Seller's failure to insist on
any of these terms or conditions in any instance shall not thereafter cause
waiver in any other instance.
XI. ______________________________
XII. Assignment. This Agreement is not assignable by Buyer without
the prior written consent of Seller.
XIII. Dispute Resolution. Any dispute or controversy which may
arise between the parties out of, or in relation to this Agreement, shall be
settled amicably by consultations between them and in accordance with the tenor
and intent of this Agreement. Should a dispute arise and not be settled by
consultations, any litigation shall be subject to the law and exclusive
jurisdiction and venue of the state of Pennsylvania should Seller initiate
legal proceedings, and subject to the law and exclusive jurisdiction and venue
of the state of New Jersey should Buyer initiate legal proceedings.
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IN WITNESS WHEREOF the parties have signed this Agreement as of the
date first above written.
SINTER METALS, INC. HOEGANAES CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------- -----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Title: Chief Financial Officer Sales and Marketing
------------------------
Date: 9/17/96 Date 9/18/96
----------------------- ---------------
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REBATE AGREEMENT
This Agreement is made and effective as of September 30, 1996 by and
between Sinter Metals, Inc. ("Buyer") and Hoeganaes Corporation ("Seller").
RECITALS
Buyer and Seller are parties to an agreement of even date (the
"Purchase Agreement") pursuant to which Buyer agrees to buy and Seller agrees
to sell certain quantities of Metal Powders. Buyer and Seller now desire to
provide for the payment of a rebate to Buyer, based on Buyer's purchase of a
specified minimum quantity of Metal Powders.
Therefore, in consideration of the mutual promises set forth herein
and in the Purchase Agreement, Buyer and Seller agree as follows:
1. Definitions. All terms which are used herein as defined terms --
as indicated by initial capitals -- which are not defined herein shall have the
same meaning herein as in the Purchase Agreement.
2. Rebate and Discount. Any rebate payable hereunder will be in
addition to and not in lieu of any discount allowed to Buyer under the Purchase
Agreement.
3. Quantity Rebate. If during any Contract Year, Buyer purchases
from Seller pursuant to the Purchase Agreement the minimum quantities of Metal
Powders specified below, then Buyer shall be entitled to the applicable
specified rebate on all Metal Powders purchased under the Purchase Agreement
during such Contract Year:
----------------
--------------- -----------------
--------------- -----------------
--------------- -----------------
--------------- -----------------
--------------- -----------------
The foregoing rebate will be payable by means of a quarterly and
year-end rebate, as follows: Within 30 days after the end of each fiscal
Quarter (other than the last Fiscal Quarter of the Contract Year), Seller shall
determine the quantity of Metal Powders which Buyer has purchased under the
Purchase Agreement during the period from the beginning of the Contract Year in
question to the end of such Fiscal Quarter. Quantities purchased from new
shipment locations will be applied up to ____________________________ for each
new location for attainment of threshold. Rebate calculation will include
total
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quantities of all locations (new location(s) quantities will start at the date
of notification). Seller shall then "annualize" such quantity by calculating
the total quantity of Metal Powders which buyer would purchase during the
Contract Year in question assuming that Buyer continues to purchase at the same
rate for the remainder of the Contract Year as it did during the preceding
Fiscal Quarter(s) of such year. Then, using such annualized quantity, Seller
shall determine from the foregoing table the appropriate cents-per-pound rebate
which is applicable to Buyer's purchases during the preceding Fiscal Quarter.
Such cents-per-pound rebate shall be multiplied by the total number of pounds
of Metal Powders purchased under the Purchase Agreement by Buyer during the
Fiscal Quarter in question, and an amount equal to 40% of the product of such
multiplication shall be rebated to Buyer within 30 days after the end of the
Fiscal Quarter in Question.
Within 30 days after the end of each Contract Year, Seller shall
determine the total quantity of Metal Powders which Buyer has purchased under
the Purchase Agreement during such Contract Year and shall by reference to the
foregoing table determine the total amount of the rebate, if any, which is due
to Buyer in respect of such purchases. If such total amount exceeds the
aggregate amount of the quarterly rebates theretofore made by Seller to buyer
in respect to Buyer's purchases during such Contract Year, Seller shall pay
such excess to Buyer within 30 days after the end of such Contract Year. If
the aggregate amount of such quarterly rebates exceeds the total amount of the
rebate due to Buyer in respect of Buyer's purchases during the Contract Year in
question, Seller shall notify Buyer of the particulars thereof and Seller shall
recover the excess by deducting it from subsequent payments due to Buyer
hereunder. If this Agreement is terminated before Seller recovers the amount
due to it pursuant to the preceding sentence, Buyer shall promptly pay such
amount to Seller.
4. Term. This Agreement shall remain in effect as long as the
Purchase Agreement is in effect and shall terminate when the Purchase Agreement
terminates.
5. Assignment. This Agreement is not assignable by Buyer without
the prior written consent of Seller.
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