OWNERS AGREEMENT
BETWEEN
NSA, LTD.,
a Kentucky limited partnership,
GLENCORE ACQUISITION I LLC,
a Delaware limited liability company,
AND
CENTURY ALUMINUM OF KENTUCKY LLC,
a Delaware limited liability company
DATED AS OF
APRIL 2, 2001
Table of Contents
Page #
Article I DEFINITIONS..........................................................1
Section 1.1 Definitions..................................................1
Article II JOINT USE; NO ENTITY; GUARANTEES....................................6
Section 2.1 Joint Use....................................................6
Section 2.2 Intent.......................................................7
2.2.1 No Entity or Agency.............................................7
2.2.2 Tax Election....................................................7
Section 2.3 Joint Ownership; Waiver of Partition.........................7
2.3.1 Ownership of Jointly-Owned Property as Tenants in Common........7
2.3.2 Waiver of Partition.............................................7
2.3.3 Disposition of Jointly-Owned Property, Owner's Plant Assets.....7
Section 2.4 Parent Guarantees............................................7
Article III ACTION BY OWNERS; OWNERS COMMITTEE.................................8
Section 3.1 Authority to Bind Owners.....................................8
3.1.1 Action by Owners Required.......................................8
3.1.2 Operator's Actions..............................................8
3.1.3 No Unilateral Action............................................8
Section 3.2 Owners Committee.............................................8
Section 3.3 Appointment of Representatives...............................8
3.3.1 Appointment Procedure...........................................8
3.3.2 Dismissals and Replacements.....................................8
3.3.3 General.........................................................9
Section 3.4 Meetings of the Owners Committee; Written Consents in
Lieu of Meetings.............................................9
3.4.1 Holding of Meetings.............................................9
3.4.2 Quorum; Calling of Meetings.....................................9
3.4.3 Written Consents................................................9
Section 3.5 Intentionally Omitted........................................9
Section 3.6 Voting Requirements..........................................9
3.6.1 In General......................................................9
3.6.2 Matters Requiring Unanimous Consent.............................9
Section 3.7 Other Committees............................................11
Section 3.8 Minutes.....................................................11
Section 3.9 No Liability of Committee Members...........................11
Article IV OPERATIONS AND MANAGEMENT..........................................12
Section 4.1 Intent......................................................12
Section 4.2 Operations..................................................12
Section 4.3 Compliance with Law.........................................12
Section 4.4 Operator's Ownership of Intellectual Properties.............12
Article V FINANCIAL MANAGEMENT; MANAGEMENT FEE................................12
Section 5.1 Budgets.....................................................12
Section 5.2 Implementation of Approved Budgets..........................13
Section 5.3 Emergency or Unexpected Expenditures........................13
Section 5.4 Accounting Principles and Procedures........................13
Section 5.5 Books, Records, Reports and Auditors........................13
5.5.1 Books and Records..............................................13
5.5.2 Reports........................................................13
5.5.3 Auditors.......................................................13
Section 5.6 Bank Accounts...............................................14
5.6.1 Establishment of Accounts......................................14
5.6.2 Deposits and Disbursements of Funds............................14
5.6.3 Signatory Powers...............................................14
Section 5.7 Charges.....................................................14
5.7.1 Operating Costs................................................14
5.7.2 Extras.........................................................15
5.7.3 Calculation of Charges.........................................15
5.7.4 Payment of Charges.............................................15
5.7.5 Year End Adjustments...........................................16
5.7.6 Resolution of Disputed Charges.................................16
5.7.7 Financing and Other Costs......................................16
5.7.9 Management Fee.................................................17
Article VI OBLIGATIONS OF THE OPERATOR........................................17
Section 6.1 Plant Operation Services....................................17
Section 6.2 Management Services.........................................19
Section 6.3 Authorization to Act........................................19
Section 6.4 Liability of the Operator...................................20
Article VII CONVERSION........................................................20
Section 7.1 Conversion Rights and Obligations...........................20
7.1.1 Obligation to Convert..........................................20
7.1.2 Reduction of Basic Tonnage.....................................21
7.1.3 Failure to Convert Basic Tonnage...............................21
7.1.4 Available and Allocated Excess Tonnage.........................22
7.1.5 Production Deficiencies........................................22
Section 7.2 Alumina Supply..............................................22
7.2.1 Alumina Delivery Obligations...................................22
7.2.2 Unloading of Alumina...........................................22
7.2.3 Quality of Alumina.............................................23
Section 7.3 Title.......................................................23
Section 7.4 Shipment, Delivery, Sampling and Weighing...................23
7.4.1 Production Schedules and Deliveries............................23
7.4.2 Failure to Take Delivery.......................................24
7.4.3 Sampling, Analysis and Weights.................................24
7.4.4 Storage........................................................25
7.4.5 Markings.......................................................25
Section 7.5 Cast House..................................................25
7.5.1 Use of Equipment in Cast House.................................25
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Article VIII INSURANCE AND CASUALTY...........................................26
Section 8.1 Insurance...................................................26
8.1.1 Coverage Requirements..........................................26
8.1.2 Product Liability Coverage.....................................26
Section 8.2 Casualty....................................................26
Section 8.3 Condemnation................................................26
Article IX RESTRICTIONS ON DISPOSITION OF PROPERTY OR INTERESTS...............27
Section 9.1 Transfers of Interests......................................27
9.1.1 Restriction....................................................27
9.1.2 Transfers to Affiliates........................................27
9.1.3 Transferee to Become Party to this Agreement...................27
9.1.4 Reconstitution of Interests....................................27
9.1.5 Transfers of Part of an Interest...............................27
9.1.6 Minimum Interest...............................................28
Section 9.2 Voluntary Encumbrances......................................28
9.2.1 Restrictions...................................................28
9.2.2 Acknowledgment of Liens........................................28
9.2.3 Condition Precedent to Enforcement of Voluntary Encumbrances...29
9.2.4 Secured Party's Rights; Non-Granting Owners' Rights............29
Section 9.3 Right of First Refusal......................................29
9.3.1 Restrictions...................................................29
9.3.2 Right and Procedure............................................30
Section 9.4 Involuntary Transfers or Encumbrances.......................31
9.4.1 Deemed Offer to Transfer.......................................31
9.4.2 Fair Market Value..............................................32
Section 9.5 Transfer of Ownership of an Owner...........................32
Section 9.6 Appointment of Operator Upon Transfer.......................33
Section 9.7 Closings....................................................33
Article X DEFAULT.............................................................33
Section 10.1 Events of Default...........................................33
Section 10.2 Constitution of Owners Committee Upon Event of Default......34
Section 10.3 Notification of Secured Party; Right to Cure................34
Section 10.4 Use of Defaulting Owner's Interest..........................34
10.4.1 Right of Non-Defaulting Owner..................................34
10.4.2 Non-Defaulting Owner's Costs, etc..............................35
Section 10.5 Option to Purchase Defaulting Owner's Interest..............35
10.5.1 Agreement on Liquidated Damages................................35
10.5.2 Exercise of Right to Purchase..................................36
10.5.3 "Gross Profits"; "Market Price"................................36
Section 10.6 Attorney-in-Fact............................................36
Section 10.7 Monetary Defaults...........................................37
Section 10.8 Appointment of Operator.....................................37
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Article XI COVENANTS..........................................................37
Section 11.1 Inspection..................................................37
Section 11.2 Liens.......................................................37
Section 11.3 Notification................................................37
Section 11.4 Performance of Contracts....................................38
Section 11.5 Organization, Power and Authority...........................38
Section 11.6 Easements...................................................38
Section 11.7 Further Assurances..........................................38
Article XII REPRESENTATIONS...................................................39
Section 12.1 Owners' Representations.....................................39
12.1.1 Organization, Powers and Authority.............................39
12.1.2 Compliance with Other Instruments..............................39
12.1.3 Litigation.....................................................39
Article XIII MISCELLANEOUS....................................................39
Section 13.1 Term........................................................39
Section 13.2 Disposition of Plant and Other Assets.......................39
Section 13.3 Liability...................................................40
Section 13.4 Notices.....................................................40
Section 13.5 Entire Agreement and Modification...........................41
Section 13.6 Best Efforts and Cooperation................................42
Section 13.7 Force Majeure...............................................42
Section 13.8 Binding Effect..............................................42
Section 13.9 Survival....................................................42
Section 13.10 Governing Law...............................................42
Section 13.11 Disputes....................................................42
Section 13.12 Captions....................................................42
Section 13.13 Singular and Plural.........................................43
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OWNERS AGREEMENT
THIS AGREEMENT, dated as of April 2, 2001, between NSA, LTD., a Kentucky
limited partnership ("NSA"), GLENCORE ACQUISITION I LLC, a Delaware limited
liability company ("GAC") and Century Aluminum of Kentucky LLC, a Delaware
limited liability company ("CAK").
Recitals
A. NSA and GAC (collectively, the "Owners") own, directly and indirectly,
all of the Plant.
B. The Owners desire to provide for the operation, management and
maintenance of the Plant, as well as certain rights and obligations with respect
to their interests therein, all as more fully set forth in this Owners
Agreement.
C. The Owners desire that CAK perform, in its capacity as "Operator" under
this Agreement and on behalf and for the benefit of the Owners, certain
responsibilities of the Owners and provide certain additional management
services, all as herein set forth.
THE PARTIES AGREE AS FOLLOWS:
Article I
DEFINITIONS
Section 1.1 Definitions. The following terms, whenever used and capitalized
herein, shall have the following meanings:
"Acquisition Agreement" shall mean that certain asset purchase agreement
dated as of April 2, 2001 by and between Century, Century Kentucky, Inc., NSA
and Glencore providing for the purchase by GAC of GAC's Interest.
"Affiliate" shall mean, with respect to any Owner, any Person which
directly or indirectly controls, is controlled by, or is under common control
with, such Owner. For purposes of this definition, "control" shall mean the
direct or indirect power to vote, or direct or determine the manner of voting by
others, of one hundred percent (100%) of the shares of stock of a corporation
having ordinary voting power (other than stock having such power only by reason
of the happening of a contingency), or any other similar equity interest giving
the right to vote with respect to determining the management or business
policies of a Person which is not a corporation, in each of the foregoing cases
whether through record or beneficial ownership of voting securities or such
other equity interest, by contract or proxy, or otherwise.
"Alumina" shall mean alumina meeting the minimum specifications set forth
in Exhibit A to this Agreement and shall also include any alumina not meeting
such specifications which is tendered by an Owner and is accepted by the
Operator.
"Aluminum Product" shall mean Molten Metal or Primary Aluminum.
"Aluminum Supply Agreement" shall mean the Aluminum Supply Agreement
entered into as of the date hereof by Century and Southwire, as the same may be
amended, modified or supplemented from time to time.
"Auditors" shall have the meaning specified in Section 5.5.3.
"Available Excess Tonnage" and "Allocated Excess Tonnage" shall each have
the meanings specified in Section 7.1.4.
"Basic Tonnage" of an Owner shall mean the percentage equal to that Owner's
Interest, unless adjusted pursuant to this Agreement, in the actual production
at the applicable time of Molten Metal at the Plant, calculated on a one hundred
percent (100%) aluminum basis. Basic Tonnage shall not include Allocated Excess
Tonnage taken by a particular Owner.
"Capital Lease Obligations" shall mean, for any Person, all obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP (including Statement of Financial Account Standards No. 98 of
the Financial Accounting Standards Board), and, for purposes of this Agreement,
the amount of such obligations shall be the capitalized amount thereof,
determined in accordance with GAAP (including such Statement No. 98).
"Cast House" shall mean the land, improvements and personal property at the
Plant for the casting of Molten Metal into Primary Aluminum.
"Century" shall mean Century Aluminum Company, a Delaware corporation, and
its successors.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collective Bargaining Agreement" shall mean the collective bargaining
agreement dated September 25, 2000 and effective as of the date hereof, between
CAK and the United Steelworkers of America, AFL-CIO-CIC.
"Employee Benefit Plans" shall have the meaning specified in Section 5.7.1.
"Environmental Access and Cooperation Agreement" shall mean the
Environmental Access and Cooperation Agreement entered into by the Owners and
Southwire as of the date hereof, as the same may be amended, modified or
supplemented from time to time.
"Extras" shall mean the following services in respect of the Plant: (i) any
special service performed at the request of an Owner in the conversion of
Alumina, (ii) any manufacturing process required to cast Molten Metal into
Primary Aluminum or as otherwise specified by an Owner or any other process
performed at the request of an Owner to produce any product other than Molten
Metal, and (iii) transportation of Primary Aluminum from the Plant.
"Fair Market Value" shall have the meaning specified in Section 9.4.2.
"GAAP" shall mean U.S. generally accepted accounting principles.
"Glencore" shall mean Glencore AG, a Swiss corporation.
"Groundwater Treatment Building Lease Agreement" shall mean the Groundwater
Treatment Building Lease Agreement entered into by the Owners with Southwire as
of the date hereof, as the same may be amended, modified or supplemented from
time to time.
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"Guarantee" shall mean a guarantee, an endorsement, a contingent agreement
to purchase or to furnish funds for the payment or maintenance of, or otherwise
to be or become contingently liable under or with respect to, the Indebtedness,
net worth, working capital or earnings of any Person, or a guarantee of the
payment of dividends or other distributions upon the stock or equity interests
of any Person or an agreement to purchase, sell or lease (as lessee or lessor)
Property or services primarily for the purpose of enabling a debtor to make
payment of such debtor's obligations or an agreement to assure a creditor
against loss, and including, without limitation, causing a bank or other
financial institution to issue a letter of credit or similar instrument for the
benefit of another Person, but excluding endorsements for collection or deposit
in the ordinary course of business. The terms "Guarantee" and "Guaranteed" used
as a verb shall have a correlative meaning.
"Indebtedness" shall mean, for any Person: (a) obligations created, issued
or incurred by such Person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such Property
from such Person); (b) obligations of such Person to pay the deferred purchase
or acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred in the
ordinary course of business so long as such trade accounts payable are payable
within ninety (90) days of the date the respective goods or services are
delivered or rendered; (c) Indebtedness of others secured by a Lien on the
Property of such Person, whether or not the respective Indebtedness so secured
has been assumed by such Person; (d) obligations of such Person in respect of
letters of credit or similar instruments issued or accepted by banks and other
financial institutions for account of such Person; (e) Capital Lease Obligations
of such Person; and (f) Indebtedness of others Guaranteed by such Person.
Notwithstanding the foregoing, the term "Indebtedness" shall not include swap
agreements entered into to hedge against fluctuations in the prices of
commodities and currencies, deferred revenue accounts arising from forward sales
or Guarantees of either thereof.
"Intellectual Properties" shall have the meaning specified in Section 4.4.
"Interest", as applied to an Owner, shall mean the entire interest of such
Owner and its Affiliates (i) as an owner of Property comprising a part of the
Plant, including without limitation the Owner's Plant Assets, (ii) as an owner
of membership units in CAK, (iii) as a tenant in common of the Jointly-Owned
Property, (iv) in this Owners Agreement, including in respect of the
Intellectual Properties, (v) its joint interest with the other Owner in any
agreements in effect from time to time for the supply of material used to
produce Aluminum Product at the Plant or to sell such Aluminum Product, and (vi)
any other rights hereunder or otherwise of the Owner to participate in the
conversion of alumina into aluminum at the Plant, but shall not include such
Owner's Inventory. It is the intent of the Owners that they shall share all of
the benefits and burdens of the operation of the Plant pro rata in accordance
with their respective Interests, and for such purpose, in all instances in this
Agreement in which the Owners' Interests are expressed with reference to a
percentage or pro rata portion, the Interests, as of the date of this Agreement,
are agreed to be as follows: NSA, eighty percent (80%) and GAC, twenty percent
(20%).
"Interest Rate" shall mean the United States prime rate as quoted by
Reuters News Service on page US Prime, in effect from time to time calculated on
a daily basis.
3
"Interested Party" shall have the meaning specified in Section 9.4.2.
"Inventory" shall mean, with respect to an Owner, such Owner's Alumina,
work-in-process and Aluminum Product held at the Plant, title to which shall
(subject to such Liens as may be granted thereon by the Owner) at all times
remain with such Owner.
"Jointly-Owned Property" shall mean, collectively, (i) such personal
property constituting Plant Assets under the Acquisition Agreement in which a
twenty percent (20%) undivided interest is conveyed by NSA to GAC, (ii) such
real property constituting Plant Assets under the Acquisition Agreement in which
a twenty percent (20%) undivided interest is conveyed by NSA to GAC and (iii)
such personal property constituting Plant Assets as may be subsequently jointly
acquired by or on behalf of the Owners.
"Lien" shall mean with respect to any Property, any mortgage lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
Property. For purposes hereof, a Person shall be deemed to own, subject to a
Lien, any Property that it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement (other than an operating lease) relating to such
Property.
"Management Fee" shall have the meaning specified in Section 5.7.9.
"Molten Metal" shall mean Alumina reduced to aluminum in molten form at the
Plant.
"Notes" shall mean the 11 3/4% Senior Secured First Mortgage Notes due 2008
issued by Century and any registered notes issued in exchange therefor.
"Operating Costs" shall mean all costs, expenses and charges incurred by
the Operator and billed by the Operator to or otherwise incurred by the Owners
for the operation, maintenance and repair of the Plant, and shall include,
without limitation, costs and expenses incurred by the Owners in performance of,
or otherwise payable under, the Shared Services Agreement and the Environmental
Access and Cooperation Agreement. All such costs, expenses and charges shall be
computed on an accrual basis in accordance with GAAP, and shall exclude (i)
interest and other costs related to financing, (ii) Alumina costs, (iii)
depreciation and amortization, (iv) Extras, (v) costs of Century employees in
performing services for the Operator, unless otherwise expressly approved by the
Owners Committee and (vi) such costs, expenses or charges as are excluded from
time to time by the Owners Committee.
"Operator" shall mean CAK and any subsequent operator of the Plant
appointed in accordance with the provisions of this Agreement.
"Owners" shall have the meaning specified in the Recitals to this Agreement
and shall include their respective successors and assigns who become parties to
this Agreement.
"Owners Agreement" or "Agreement" shall mean this agreement, including all
Exhibits and Schedules attached hereto.
"Owners Committee" shall mean the committee established by the provisions
of Article III of this Agreement.
4
"Owner's Plant Assets" shall mean the Property comprising a part of the
Plant, title to which is now or hereafter held individually by an Owner.
"Parent Guarantee" or "Parent Guarantees" shall mean those certain
agreements of guarantee and undertaking referred to in Section 2.4, the forms of
which are attached as Exhibits B-1, B-2 and B-3 to this Agreement, or any
similar agreement delivered by a Parent Guarantor of a transferee pursuant to
Section 9.3.2.
"Parent Guarantor" shall mean a corporation named in Section 2.4 or a
parent company of a transferee, which executes and delivers a Parent Guarantee
relating to an Owner.
"Person" shall mean any individual, corporation, limited liability company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Plant" shall mean (i) the land, pot lines and related facilities and
fixtures at the NSA aluminum reduction facility located at Hawesville, Hancock
County, Kentucky, (ii) all facilities and fixtures necessary for the current
operation of the Plant such as the power substations, Cast House and Cast House
equipment, anode bake oven, paste plant, alumina silo, rodding shop, water
treatment and pollution control facilities, and (iii) any additional land, and
any additional facilities and fixtures, acquired or constructed after the date
hereof by joint agreement of the Owners and at their joint expense. The Plant,
as currently existing under clauses (i) and (ii), is described in Exhibit C.
"Plant Assets" shall mean all Property comprising the Plant, and shall
include the Owner's Plant Assets of each Owner and the Jointly-Owned Property.
"Primary Aluminum" shall mean aluminum products (e.g., T-ingot, foundry
ingot and sow) resulting from the casting of Molten Metal.
"Property" shall mean any interest of any kind in property or assets,
whether real personal or mixed, and whether tangible or intangible.
"Rated Capacity" shall mean, assuming normal operating conditions and
taking into account maintenance and other technical requirements, 237,000 Tons
of Molten Metal per year.
"Reconstitution" shall have the meaning specified in Section 9.1.4.
"Related Company" shall have the same meaning as Affiliate except that the
reference in the definition of Affiliate to one hundred percent (100%) control
shall be changed to twenty percent (20%) control.
"Representative" shall have the meaning specified in Section 3.1.1.
"Secured Party" shall have the meaning specified in Section 9.2.1(a).
5
"Shared Services Agreement" shall mean the Shared Services Agreement
entered into by the Owners with Southwire as of the date hereof, as the same may
be amended, modified or supplemented from time to time.
"Southwire" shall mean Southwire Company, a Delaware corporation.
"Tangible Net Worth" shall mean as at any date the sum for a Parent
Guarantor and its consolidated subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP or international accounting
standards, as applicable, in each case consistently applied), of the following:
(a) the gross book value of assets (excluding goodwill, patents, trademarks,
tradenames, organization expense, treasury stock, unamortized debt discount and
expense, deferred charges and other intangibles) minus (b) the sum of the
following: (i) reserves applicable to the assets referred to in the foregoing
clause (a), (ii) all liabilities (including accrued and deferred income taxes)
and subordinated indebtedness to the extent they are not subordinated to the
Owners' obligations under this Agreement, and (iii) all minority interests.
"Ton" shall mean a metric ton of 1,000 kilograms (2,204.6 pounds).
Section 1.2 References in Agreement. In this Agreement, unless the context
otherwise requires:
1.2.1 References to an Article, Section or Exhibit shall be construed
as references to that specified Article or Section of or Exhibit to this
Agreement.
1.2.2 References to a document (including this Agreement), or to any
provision of any agreement, shall be construed as references to that
document or provision as amended or supplemented from time to time upon the
written agreement of the parties thereto and with any further consent which
may be required.
Article II
JOINT USE; NO ENTITY; GUARANTEES
Section 2.1 Joint Use. The Owners, each owning its Owner's Plant Assets and
holding an undivided interest in the Jointly-Owned Property as a tenant in
common, hereby agree to cause the Operator to use and operate the Plant for
their joint use and benefit in accordance with the terms and provisions of this
Agreement. The Operator agrees to use and operate the Plant for the joint use
and benefit of the Owners and for its own benefit in accordance with the terms
set forth in this Agreement.
6
Section 2.2 Intent.
2.2.1 No Entity or Agency. The Owners intend by this Agreement to
provide for the use of their respective Interests in the Plant for the
conversion of Alumina into Molten Metal or Primary Aluminum, as provided
for in this Agreement. The parties do not intend by this Agreement to
establish a corporation, association, partnership or other entity of any
kind. This Agreement is not entered into for the production of profit to
the parties, except with respect to (i) each Owner's own use or disposition
of Aluminum Product produced at the Plant and (ii) the Management Fee
payable hereunder to the Operator.
2.2.2 Tax Election. At the earliest opportunity, the parties shall
take all action necessary to elect, to the extent that this Owners
Agreement or any related agreements give rise to an organization treated as
a partnership for tax purposes, that such organization shall be excluded
from the application of all of the provisions of Subchapter K of the
Internal Revenue Code of 1986, as amended, pursuant to the provisions of
Section 761(a) thereof and the regulations thereunder.
Section 2.3 Joint Ownership; Waiver of Partition.
2.3.1 Ownership of Jointly-Owned Property as Tenants in Common. The
Jointly-Owned Property, both as currently existing and as hereafter
acquired or constructed, shall be owned by the Owners as tenants in common,
in undivided interests in proportion to their respective Interests, and not
owned by the Operator or any partnership or association of any kind of the
Owners. The Owners acknowledge that their respective Owner's Plant Assets,
their respective Interests and their respective tenancy in common interests
in the Jointly-Owned Property are separate.
2.3.2 Waiver of Partition. Except as provided in Section 13.2, each of
the Owners waives all rights to partition any portion of the Plant by
judicial proceedings.
2.3.3 Disposition of Jointly-Owned Property, Owner's Plant Assets.
Except as provided in Article IX, all sales or other dispositions of any
Jointly-Owned Property shall require the unanimous consent of the Owners,
provided that (a) any sale or disposition not exceeding $2 million with
respect to a single transaction, or any separate but related transactions
not exceeding $5 million in the aggregate, during any twelve (12)
consecutive calendar months, shall be effectuated upon the majority vote of
the Owners on the basis of their respective Interests, and (b) any sale or
other disposition for which a majority vote is sufficient under clause (a)
may be effectuated by an Owner whose Interest exceeds fifty percent (50%)
without the need for a vote by the Owners, and such Owner shall give notice
of any such sale or other transfer to the other Owners. Except in
connection with a disposition of all or part of its Interest as may be
permitted pursuant to Article IX, neither Owner shall dispose of its
Owner's Plant Assets without the prior written consent of the other Owner.
Section 2.4 Parent Guarantees.
2.4.1 The parties acknowledge that Century and Glencore have executed
and delivered the Parent Guarantees in the forms attached as Exhibits B-1
and B-2 to this Agreement, respectively.
7
Article III
ACTION BY OWNERS; OWNERS COMMITTEE
Section 3.1 Authority to Bind Owners.
3.1.1 Action by Owners Required. With respect to the subject matter of
this Agreement and subject to Sections 3.1.2 and 10.2, the Owners shall
only act (i) through resolutions adopted by the Owners Committee which
shall be composed of a minimum of one and a maximum of two persons per
Owner (collectively, the "Representatives"), selected in the manner
specified in Section 3.3, (ii) through resolutions adopted by other
committees to the extent authorized by the Owners Committee pursuant to
Section 3.7, or (iii) by written consent of the Owners executed in one or
more counterparts on behalf of each Owner by its President or other
authorized officer or signatory. Action taken by the Owners by written
consent as provided by clause (iii) shall not constitute an amendment of
this Agreement.
3.1.2 Operator's Actions. In addition to actions taken by the Owners
as provided in Section 3.1.1, the Owners shall be bound by all actions
taken by the Operator within the scope of authority delegated to it under
the terms of this Agreement.
3.1.3 No Unilateral Action. No Owner shall have the right or authority
by its own act to bind any other Owner, any of the Plant or the
Jointly-Owned Property (except for encumbrances on its Owner's Interest or
its Owner's Plant Assets as permitted under Section 9.2 or as provided in
Section 2.3.3), or any of the assets or property of the other Owner or the
Operator, nor shall any Owner represent or hold itself out to any third
party as having such right or authority.
Section 3.2 Owners Committee. The Owners, acting through the Owners
Committee, shall be responsible for the general management of the Plant's
operations and facilities, including supervision and control of the Operator's
performance of those responsibilities delegated to the Operator under this
Agreement. The Owners Committee also shall have the responsibility of
supervising and controlling the activities of any committee appointed pursuant
to Section 3.7.
Section 3.3 Appointment of Representatives.
3.3.1 Appointment Procedure. Each Owner shall appoint upon execution
of this Agreement, and may appoint from time to time thereafter subject to
the provisions of Section 10.2, up to two Representatives to serve on the
Owners Committee. If two Representatives are appointed by an Owner, one
shall be designated its "Principal Representative" and the other its
"Alternate Representative". If only one Representative is serving on the
Owners Committee for an Owner, that Representative shall be the Principal
Representative of that Owner. If all Representative positions allotted to
an Owner are vacant, the Owner's President shall be deemed to be the
Principal Representative of that Owner, and shall serve in such capacity
until that Owner appoints a Representative to serve on the Owners
Committee.
3.3.2 Dismissals and Replacements. Subject to Section 10.2, any
Representative appointed by an Owner may only be dismissed from the Owners
Committee or replaced as a Principal Representative or Alternate
Representative by that Owner. Any vacancies in positions on the Owners
Committee allotted to an Owner may only be filled by that Owner, in each
case by delivering written notice to the other Owner. Any such notice shall
be effective immediately upon receipt by the other Owner unless a later
effective date is specified in the notice.
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3.3.3 General. Each Representative appointed by an Owner shall
represent the interests and act on behalf of that Owner. Representatives
shall not be deemed to be employees or agents of the Plant or the Operator,
and except as specifically provided for herein, their salary, expenses and
other compensation shall be the responsibility of the appointing Owner.
Section 3.4 Meetings of the Owners Committee; Written Consents in Lieu of
Meetings.
3.4.1 Holding of Meetings. The Owners Committee shall meet quarterly,
with additional meetings if required to effectuate the intent and purpose
of this Agreement. Meetings of the Owners Committee may be (i) held at the
Plant facilities or at such other place as agreed to by a Representative of
each Owner, or (ii) conducted by conference telephone, which for purposes
of this Article III shall include any means of audio transmission which
permits each Representative participating in such a meeting to hear and be
heard by each other participating Representative.
3.4.2 Quorum; Calling of Meetings. Subject to Section 10.2, meetings
of the Owners Committee shall require the attendance, or participation in a
telephone conference, of at least one (1) Representative appointed by each
Owner in order to constitute a quorum for the transaction of business. Any
Representative may call a meeting of the Owners Committee upon ten (10)
calendar days prior notice to each of the other Representatives. Meetings
of the Owners Committee may be held at any time without notice if the
Principal Representatives of each Owner participate in the meeting. Notice
to Representatives shall be given care of the appointing Owner at such
Owner's address and in the manner specified for notices under this
Agreement. Any Representative may request the attendance of officers of the
Operator or advisors at a meeting.
3.4.3 Written Consents. In lieu of holding a meeting, the Owners
Committee may act by means of a written consent containing the text of the
resolutions proposed for adoption, and such written consent shall become
effective upon receipt by each Owner of a fully executed original (or set
of original counterparts) signed by the Principal Representative of each
Owner.
Section 3.5 Intentionally Omitted.
Section 3.6 Voting Requirements.
3.6.1 In General. Except as provided in Section 3.6.2, decisions of
the Owners Committee shall require a majority of the votes cast for
approval.
3.6.2 Matters Requiring Unanimous Consent. Decisions regarding any of
the following shall require the unanimous consent of the Owners Committee
or, in the alternative, written consent of the Owners as provided in
Section 3.1.1(iii) (for purposes of this Section 3.6.2, references to
"Plant Assets" shall be deemed not to include any Owner's Plant Assets):
9
(a) Approval of the annual operating budgets and annual capital
budgets for the operation and maintenance of the Plant, and any
increases in such budgets in excess of five percent (5%) (it being
understood that increases in such budgets of five percent (5%) or
less, which shall not require unanimous consent of the Owners
Committee, shall not include any costs of the type identified in
paragraph (j) of this Section 3.6.2);
(b) Approval of any capital expenditures for the Plant in excess
of $2.5 million and approval of separate but related capital
expenditures in excess of $3.5 million in the aggregate;
(c) Sales of any Plant Assets where such sales exceed $2 million
with respect to a single transaction or $5 million in the aggregate
with respect to separate but related transactions during any twelve
(12) consecutive calendar months, except as permitted by Article IX;
(d) Placing of Liens on any Plant Assets, except as permitted by
Article IX;
(e) Entering into any lease or lease purchase for equipment or
other Property for the Plant exceeding $2.5 million in total payments
in a single transaction or transactions aggregating in excess of $5
million in total payments with respect to separate but related
transactions in any twelve (12) consecutive calendar months;
(f) Selecting the Auditors as provided in Section 5.5, or
dismissing the Auditors prior to completion of their term of
engagement;
(g) Except as otherwise may be expressly permitted hereunder,
entering into, amending, modifying, supplementing, renewing,
extending, terminating or rescinding any agreement that is necessary
for the operation of the Plant and that has a fixed term of more than
one year;
(h) Any action for the abandonment or total or partial suspension
of operations of the Plant or the resumption of operations after a
suspension of operations;
(i) Approving any contract between the Operator and any Owner or
any Related Company of the Operator or an Owner or any amendment
thereto or waiver thereunder;
(j) Approving the engagement of any employees of either Owner or
any of their Affiliates (other than the Operator) at the Plant or
otherwise in connection with the operation of the Plant, and
allocating the costs thereof as Operating Costs as provided for in
this Agreement (such costs to be reflected in the operating budgets
for the Plant);
(k) Adopting or changing any rules of the Owners Committee, or
any rules regarding Cast House allocation pursuant to Section 7.5.1;
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(l) Subject to the terms of Section 9.2, 9.4 and 10.5 to the
extent that they relate to enforcement or bankruptcy proceedings,
commencing or settling any litigation, proceeding or claim involving
any Plant Assets or the operation of the Plant where (i) all Owners
are parties, (ii) the relief sought affects title to assets having a
value in excess of $1,000,000 or (iii) expenditures or losses would
exceed $1,000,000;
(m) Changing the accounting principles and procedures referred to
in Section 5.4, the cost accounting system referred to in Section
5.7.2, or the insurance requirements referred to in Section 8.1.1;
(n) Amending, modifying, supplementing, renewing, extending,
terminating or rescinding any contract or agreement which required
Owners Committee approval for execution;
(o) Establishing other committees of the Owners and delegating
responsibilities to them, provided that any such committee shall have
at least one member designated by the Principal Representative of each
Owner as the "Representative" of that Owner for purposes of voting;
(p) Subject to Section 10.8, terminating, or amending or
modifying the terms of, the appointment of or replacing the Operator
at any time during which Century or its Affiliates hold a fifty
percent (50%) or greater Interest in the Plant;
(q) Selecting the general manager for the Plant, who shall direct
all personnel at the Plant in accordance with the policy decisions of
the Owners Committee; and
(r) Such other matters as the Owners may agree to in writing from
time to time.
Section 3.7 Other Committees. The Owners Committee may from time to time
establish such other committees, in accordance with Section 3.6.2(o), with such
responsibilities and authority as may be specified by resolution.
Section 3.8 Minutes. Minutes shall be taken at each Owners Committee
meeting or other committee meeting by the person designated as meeting
secretary, and copies of such minutes shall be sent to each member of the Owners
Committee or such other committee and shall be deemed approved if no objection
is raised within fourteen (14) days after receipt by all members of the relevant
committee.
Section 3.9 No Liability of Committee Members. None of the members of the
Owners Committee or any other committee shall be personally liable to the Owners
or the Operator for any loss, cost or damage arising out of or in connection
with the management, operation or conduct of such committees and/or of the
business and affairs of the Plant.
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Article IV
OPERATIONS AND MANAGEMENT
Section 4.1 Intent. The Owners intend by this Agreement to provide for the
use of their respective Interests to convert Alumina owned separately or
otherwise separately supplied by the Owners into Aluminum Product. Except as
otherwise specifically provided in this Agreement, no agency is created or is to
be implied with respect to any Owner or the Operator.
Section 4.2 Operations. Unless otherwise unanimously agreed by the Owners,
the Owners' obligations regarding the operation of the Plant shall be performed
by the Operator pursuant to the terms of this Agreement. The Operator shall
operate and manage the Plant on behalf of and for the benefit of the Owners in
accordance with the terms hereof and in an efficient and cost effective manner
pursuant to budgets and programs approved by the Owners Committee in accordance
herewith.
Section 4.3 Compliance with Law. The Owners desire that the operation of
the Plant will be carried out in compliance with all laws and regulations
applicable thereto, and the Operator will use its best efforts to ensure that
the operation of the Plant so complies.
Section 4.4 Operator's Ownership of Intellectual Properties. The Operator
in the performance of its duties hereunder may develop, invent or improve
technologies, practices, procedures, methods, materials or equipment at the
Plant or may obtain the right to use intellectual properties developed by third
parties (collectively, "Intellectual Properties"). The Operator shall retain all
right and title in and to all Intellectual Properties notwithstanding any
payment of fees or other expenses to the Operator by the Owners. Each Owner
shall have the non-exclusive right to use and enjoy the benefits of the
Intellectual Properties at the Plant and shall have the right to sell world-wide
any Aluminum Product produced at the Plant by employing any of the Intellectual
Properties. An Owner shall have no other rights in or to the Intellectual
Properties and shall have no license to use, sell or enjoy the Intellectual
Properties except as expressly set forth in this Section 4.4. This limitation on
each of the Owner's rights shall not apply to any (i) information which was
known to an Owner prior to the date of this Agreement and such prior knowledge
can be reasonably demonstrated by reference to existing written records; (ii)
information which appears in issued patents, published patent applications or
other publications of general public circulation, including those of the
aluminum industry, other than by acts or omissions of an Owner; (iii)
information which an Owner lawfully obtained from any third party which is
legally in possession of such information and has a right to reveal same to
Owners; or (iv) information which is independently developed by an Owner without
breaching this Agreement.
Article V
FINANCIAL MANAGEMENT; MANAGEMENT FEE
Section 5.1 Budgets. On or before November 1 of each year the Operator
shall submit to the Owners Committee a proposed operating budget for the next
calendar year and a proposed capital expenditure budget for the next calendar
year. Such proposed budgets shall include the amounts estimated to be payable by
each Owner for the calendar year and each quarter thereof, taking into
consideration all cash balances anticipated to be held or generated by the
Operator. As early as possible before the beginning of each calendar year, the
Owners Committee, by unanimous vote, shall approve in principle the operating
budget and the capital budget for that calendar year. The Owners Committee by
unanimous vote may amend any budget from time to time.
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Section 5.2 Implementation of Approved Budgets. The Operator shall use its
best efforts to implement each approved operating budget and each approved
capital expenditure budget and to carry out all its activities and operations
hereunder in accordance therewith.
Section 5.3 Emergency or Unexpected Expenditures. In case of emergency, the
Owners agree that the Operator may take any reasonable action it deems necessary
to protect life, limb or property or to comply with law or government
regulation. The Operator may also make reasonable expenditures for unexpected
events which are beyond its reasonable control. The Operator shall promptly
notify each member of the Owners Committee of the emergency or unexpected
expenditure, and all resulting costs shall thereupon be charged to the Owners in
proportion to their respective Interests at the time the emergency or unexpected
expenditures are incurred.
Section 5.4 Accounting Principles and Procedures. The Owners Committee
shall review accounting principles and procedures that are utilized by the
Operator in operating the Plant, which shall include the types of books and
records to be maintained, the procedures for collections of amounts required
from the Owners and disbursements relating to operations of the Plant and the
nature of data and reports provided to the Owners or the Owners Committee.
Section 5.5 Books, Records, Reports and Auditors.
5.5.1 Books and Records. The Operator shall maintain such books and
records relating to Plant Assets and the operation of the Plant as are
required by applicable law or the Owners Committee. Such books and records
shall contain such data as are reasonably required by each of the Owners
necessary to record and reflect the financial position (including an asset
register) and obligations of the Owners in accordance with the terms of
this Agreement.
5.5.2 Reports. The Operator shall furnish to every member of the
Owners Committee periodic cash forecasts and reasonable advance notice,
pursuant to the procedures established from time to time by the Owners
Committee, of any major payments that may be required to be made by the
Owners, and furnish to every member of the Owners Committee within thirty
(30) days after the end of each calendar month a statement of operations of
the Plant for such calendar month in such form as is approved by the Owners
Committee, including any adjustments of the type required under Section
5.7.6.
5.5.3 Auditors. The Owners Committee shall designate a firm of
independent auditors to opine upon the statements relating to the
operations of the Plant as of the end of each calendar year and for the
calendar year then ended (the "Auditors"). The firm initially designated by
the parties is Deloitte & Touche LLP. The audited statements shall be
received by each of the members of the Owners Committee within ninety (90)
days after the end of such calendar year.
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Section 5.6 Bank Accounts.
5.6.1 Establishment of Accounts. The Operator shall maintain one or
more bank accounts in its name as approved from time to time by the Owners
Committee.
5.6.2 Deposits and Disbursements of Funds. The Operator shall deposit
into such account(s) all payments which it receives from any Owner under
this Agreement, all amounts which it receives as damages or under
warranties relating to any Plant Assets, and all proceeds which it receives
as a result of the sale, lease, license or other disposition of any Plant
Assets, and the Operator shall pay from such account(s) all expenses
permitted to be paid by it under this Agreement and all distributions to
the Owners of amounts received with respect to any Plant Assets (which
shall not include an Owner's Plant Assets); provided that the Operator
shall be permitted to offset amounts due from and payable to a particular
Owner.
5.6.3 Signatory Powers. Subject to the limitations specified in
Section 3.6.2 and any other conditions determined from time to time by the
Owners Committee, all checks, notes, bills of exchange, drafts or other
documents for the payment of money for Plant purposes shall be signed in
the name of the Operator by the Plant's General Manager or controller or by
such other employees of the Operator as shall be approved by unanimous vote
of the Owners Committee.
Section 5.7 Charges.
5.7.1 Operating Costs.
(a) Each Owner shall be charged and obligated to pay the
Operator, in the manner provided in Sections 5.7.3 and 5.7.4, the
Operating Costs for each Ton of Molten Metal produced at the Plant
pursuant to this Agreement as part of such Owner's Basic Tonnage and
Allocated Excess Tonnage.
(b) The Operating Costs per Ton of Molten Metal produced during
any period shall be the Operating Costs for such period divided by the
number of Tons of Molten Metal produced for all of the Owners in such
period.
(c) The Operator shall use its best efforts to ensure that
Operating Costs are kept at a minimum consistent with the legal,
proper and efficient operation of the Plant.
(d) The Operating Costs billable by the Operator to the Owners
shall include all costs, expenses and charges incurred by the Operator
for the operation, maintenance and repair of the Plant, computed on an
accrual basis in accordance with GAAP and subject to confirmation by
the Auditors as provided in Section 5.5.3 of this Agreement, and shall
include without limitation the cost to Operator of the funding of
actuarial cost obligations accruing under any pension plans determined
under the funding methods used to determine costs under the plans, and
the payment of other obligations accruing under any employee benefit
plans, group life insurance plans, major medical plans, medical
(including drug) reimbursement plans, salary continuation plans,
supplemental unemployment benefit plans and welfare plans, severance
14
or termination of pay plans, and retiree benefit, savings, bonus or
profit-sharing plans (collectively with all such pension plans, the
"Employee Benefit Plans"), but only to the extent the expenses
incurred by the Operator with respect to any Employee Benefit Plan do
not exceed the funding or payment requirements, for employees
generally or for particular classes of employees, approved by
unanimous vote of the Owners Committee or (in the absence of such
action by the Owners Committee) such funding or payment requirements
as are based on the terms of such Employee Benefit Plans as they
existed as of the date hereof, it being understood that no unanimous
approval of the Owners Committee for expenses incurred by Operator
with respect to actuarial cost obligations under the pension plans
shall be required if such expenses are within the range proposed in
the annual actuarial study for the relevant year based on actuarial
funding methods and assumptions consistent with those contemplated
under the then applicable funding or payment requirement terms of that
pension plan, as provided above.
5.7.2 Extras.
(a) Each Owner agrees to pay the Operator, in the manner provided
in Section 5.7.3, for each Extra requested by it as determined in
accordance with the cost accounting system for the Plant established
by the Owners Committee. The cost accounting system shall be installed
and used throughout the term of this Agreement by the Operator to
determine the proper allocation among the Owners of the costs of
operating the Cast House.
(b) If the Owners Committee does not approve a proposed change in
the cost accounting system requested by an Owner, the Owner requesting
a change shall have the right to request the Auditors to review the
cost accounting system then being employed to ascertain whether such
system should be changed in the manner sought by such Owner in order
more accurately to allocate costs among the Owners. The expenses of
such Auditors' review shall be borne by the Owner which requested the
review, if the Auditors determine no change is required, or by the
Owner which voted against the requested change, if the Auditors
recommend such change. Any change in such system recommended by the
Auditors shall be effective for the calendar months following the
calendar month in which the request was made for review by the
Auditors.
5.7.3 Calculation of Charges. The Operator shall calculate charges for
Operating Costs, Extras and other amounts as may be due from the Owners or
a particular Owner, prepare statements to the Owners relating to their
respective shares of Operating Costs and such other amounts, and receive
and deposit into the Operator's bank account(s) all sums paid to the
Operator for the account of the Owners, all in the manner provided in the
procedures established by the Owners Committee.
5.7.4 Payment of Charges.
(a) Charges for Operating Costs, Extras and other amounts as may
be due under this Agreement shall be collected from the Owners by the
Operator at the times and in the manner provided in the procedures
established by the Owners Committee.
15
(b) In general, it is intended that the Operator shall have
neither more than nor less than such funds as are required to operate
the Plant efficiently. Each Owner shall make funds available so they
may be drawn on a daily basis through the Operator's bank account. The
procedures to be established by the Owners Committee shall require the
Operator to give the Owners Committee periodic cash forecasts and
reasonable advance notice of any major payments that may be required
to be made.
(c) Notwithstanding any dispute with respect to the amount
requested to be paid by an Owner, each Owner shall pay the amount
requested within ten (10) days after the receipt of such request, all
payments being subject to adjustment as provided in Sections 5.7.5 and
5.7.6.
5.7.5 Year End Adjustments.
(a) Within ninety (90) days after the end of each calendar year
the Operator shall submit to the Owners: (i) financial statements
showing the items of the Operating Costs for such year, (ii) a
statement showing the Extras performed during such year, and (iii) a
statement showing any other amounts payable by each Owner or received
from each Owner under this Agreement, all of which statements shall
reflect adjustments for partial calendar months included in such
calendar year and shall be audited by the Auditors.
(b) Within ten (10) days after the receipt of such statements,
all such adjustments, including any repayment from the Operator, shall
be made as may be necessary to make the respective payments of each
Owner for such year conform to its respective obligations under this
Agreement for such calendar year, as shown by such statements.
5.7.6 Resolution of Disputed Charges.
(a) If any Owner disputes the calculation or allocation of
charges for Operating Costs, Extras or any other amounts hereunder, it
shall give notice of such dispute to the Operator and the other Owners
setting forth the details of its dispute. If the disputing Owner and
the Operator cannot satisfactorily resolve the dispute within thirty
(30) days, the disputing Owner may request the dispute to be referred
to the Auditors, whose decision shall be binding on the parties.
Payments arising out of resolution of such disputes shall be made
within ten (10) days of the resolution.
(b) If the Auditors recommend an adjustment which exceeds the
lesser of $100,000 or five percent (5%) of the amount in dispute, the
Auditors' fees shall be paid by the Operator. Otherwise, the disputing
Owner shall pay the Auditors' fees.
5.7.7 Financing and Other Costs. Each of the Owners shall pay and be
responsible for its own (i) charges for interest and other costs related to
financing its payments required to be made hereunder, and (ii) costs of
transportation of Alumina.
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5.7.8 Power Contract. In the event that the Owners agree that the
current power contracts entered into by the Operator for the supply of
electrical power to the Plant may be assigned to an Owner, pro rata, the
Owners shall enter into an agreement containing terms and conditions
acceptable to the Owners which provides, inter alia, that the Owners shall
have the obligation to supply their pro rata share of electrical power to
the Plant for the operation thereof at its then rated capacity and that the
Owner to which its pro rata portion of the power contract is assigned shall
reimburse the other Owner for any increase in Operating Costs attributable
to any replacement source of electrical power and for any reduction in
capacity of such other Owner as a result of any failure to provide such
electrical power.
5.7.9 Management Fee. For each calendar quarter during the term of
this Agreement, GAC shall pay to the Operator, quarterly in arrears, a fee
(the "Management Fee") as full compensation for all services of the
Operator provided under this Agreement. The Management Fee payable by GAC
shall be based solely upon the value of Aluminum Product produced at the
Plant. The Management Fee for a calendar quarter shall be an amount equal
to the product obtained by multiplying (x) the amount in pounds of Aluminum
Product produced for the account of GAC as an Owner during the applicable
calendar quarter and (y) 3/4 of 1% of the arithmetic average of the daily
settlement price per pound of aluminum on the London Metal Exchange ("LME")
as published in "Metal Bulletin" as the seller's price under the caption
"Daily Metal" for each calendar month during the calendar quarter
immediately preceding the calendar quarter for which payment is to be made.
The LME settlement price is a basis agreed to by the parties upon which a
value of Primary Aluminum in major free world markets can be established.
If a significant change occurs in its historic relationship to free world
values, and such change is for a duration of nine (9) months or longer, the
parties, upon the request of either of them, agree to meet to discuss in
good faith an alternative basis for establishing such value. If the LME
shall cease to trade aluminum or the aluminum settlement price of the LME
is no longer published, the "value of Primary Aluminum" shall mean the
generally accepted substitute for the aluminum settlement price of the LME.
If there is no such generally accepted substitute the parties in good faith
shall select a substitute. Failing such agreement, the "value of Primary
Aluminum" shall be submitted to arbitration as provided in Section 13.11.
The Operator shall invoice GAC for the amount of the Management Fee due for
each calendar quarter promptly after the end of such calendar quarter and
GAC shall pay such amount within ten (10) calendar days after receipt of
such invoice.
Article VI
OBLIGATIONS OF THE OPERATOR
Section 6.1 Plant Operation Services. In addition to the obligations of the
Operator specified in Article V and elsewhere in this Agreement, and subject to
the supervision by the Owners through the Owners Committee and to the limits
imposed on the Operator herein, the Operator shall perform, in its own name as
agent for an undisclosed principal, but in all cases on behalf and for the
benefit of the Owners, all tasks required for the operation, maintenance and
repair of the Plant in the manner contemplated by this Agreement; and without
limiting the generality of the foregoing the Operator shall:
17
6.1.1 purchase and store all materials, supplies and other personal
property necessary for the operation, maintenance and repair of the Plant
(other than Alumina, which the Owners shall be required to deliver pursuant
to Article VII hereof);
6.1.2 purchase or otherwise arrange for the provision of all services
and utilities necessary for the operation, maintenance and repair of the
Plant, and for that purpose the Operator shall continue to perform on
behalf and for the benefit of the Owners all contracts or other agreements
relating to such services and utilities which are currently in force and to
which an Owner is a party or in which an Owner has an interest;
6.1.3 receive delivery of all Alumina delivered by or on behalf of the
Owners, unload such Alumina and store such Alumina and provide for the
conversion of such Alumina into Aluminum Product, deliver to the Owners
their allocable portions of the Aluminum Product in accordance with the
Owners Agreement upon completion of production, and keep complete records
with respect to the Alumina furnished and converted for each Owner;
6.1.4 take all commercially reasonable actions in order to permit the
Owners to perform their obligations under the Aluminum Supply Agreement
including without limitation the obligations for the delivery of Aluminum
Product to Southwire;
6.1.5 if and to the extent so requested by an Owner, place such
Owner's non-molten Aluminum Product in storage at the Plant for a handling
charge determined by the Operator and billed to that Owner as provided in
this Agreement, take such commercially reasonable measures as appropriate
to segregate all Aluminum Product stored for that Owner, issue a holding
certificate in customary form and execute financing statements and
documents of similar nature provided by such party, and mark all Aluminum
Product owned by an Owner with a distinctive mark acceptable to such Owner
which shall be sufficient to identify that Aluminum Product as the property
of such Owner;
6.1.6 repair and maintain the Plant in good operating condition and in
accordance with generally accepted repair and maintenance standards;
6.1.7 secure all operating permits, licenses and approvals necessary
to the continued operations of the Plant, conduct operations of the Plant
in accordance with applicable laws and regulations, maintain Plant
security, and not permit actions to occur which would cause default or
violations of any such operating permits, licenses and approvals; provided,
however, that Operator shall have no liability or obligation with respect
to permits and approvals that were to have been obtained by Southwire
before the date hereof, except to use Operator's reasonable efforts to
obtain same;
6.1.8 recruit and employ all personnel necessary to operate and manage
the Plant, instruct and train such employees in the processes and
procedures used in the Plant, and advise the Owners Committee concerning
employee training programs for the Plant and, in furtherance of its
obligations under this Section 6.1.8, perform all of the obligations of CAK
under the Collective Bargaining Agreement;
6.1.9 perform, on behalf of the Owners, all of the obligations of the
Owners under the Shared Services Agreement, the Environmental Access and
Cooperation Agreement and the Pump and Treat Building Lease Agreement and
any other contracts which may be entered into by the Owners with a third
Person relating to the operation of the Plant; and
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6.1.10 perform all obligations required of the Operator under
contracts entered into by the Operator under this Section 6.1, and exercise
its best efforts to cause the other parties to perform all obligations
required to be performed by such other parties under such contracts.
6.1.11 Nothing in this Agreement shall be deemed to authorize the
Operator to perform any act on behalf of the Owners which requires the
unanimous consent of the Owners Committee under Section 3.6.2 hereof unless
such consent has been given in the manner required under Section 3.6.2
hereof.
Section 6.2 Management Services. In addition to its other undertakings set
forth in this Agreement, the Operator agrees to provide to the Owners all
management, advisory and consultation services reasonably necessary for the
efficient operation and management of the Plant, and in particular will:
6.2.1 from time to time make available to the Owners for consultation,
engineers and experts familiar with the processing and engineering problems
relating to the efficient operation and maintenance of aluminum reduction
plants, including pot room operations, power utilization, computer usage,
testing, carbon plant operations, cast house operations, environmental
controls and maintenance procedures;
6.2.2 advise the Owners in relation to the acquisition of equipment
and supplies for the Plant;
6.2.3 advise the Owners concerning financial and general
administrative and control, and employee relations and remunerations;
6.2.4 advise the Owners on the uses of processes and other changes
resulting from the Operator's continuing experience and study in the
operation of aluminum reduction plants, which processes and changes shall
be made available to the Owners on a non-exclusive royalty free basis, but
without right to sublicense; and
6.2.5 provide guidance and advice as requested by the Owners or the
Owners Committee.
Section 6.3 Authorization to Act.
6.3.1 The Owners hereby authorize CAK, in its capacity as the
"Operator" under this Agreement, to do the following acts without need for
further Owners Committee approval, until such time as the Owners Committee
shall determine otherwise by unanimous vote:
(a) sell any Plant Assets (other than an Owner's Plant Assets)
where such sales do not exceed $2 million with respect to a single
transaction or $5 million in the aggregate with respect to separate
but related transactions during any twelve (12) consecutive calendar
months;
(b) enter into any lease or lease purchase for the Plant not
exceeding $2.5 million in total payments in a single transaction or
transactions aggregating in excess of $5 million in total payments
with respect to separate but related transactions during any twelve
(12) consecutive calendar months;
(c) enter into, amend or terminate any agreement that is
necessary for the operation of the Plant and that has a fixed term of
one year or less;
19
(d) commence or settle any litigation, proceeding or claim
involving any Plant Assets (other than an Owner's Plant Assets) where
none of the following conditions is satisfied: (i) both Owners or any
of their affiliates are parties, (ii) the relief sought affects title
to assets having a value in excess of $1,000,000 and (iii)
expenditures or losses would exceed $1,000,000.
6.3.2 If the Plant is damaged or destroyed in whole or in part, the
Owners and the members of the Owners Committee, on behalf of themselves and
any subsequent transferee of all or part of their respective Interests,
hereby authorize CAK, independently of its capacity as "Operator" under
this Agreement and for so long as the Interest of NSA or any Affiliate of
NSA is greater than fifty percent (50%), to repair the damaged portion or
rebuild or replace the destroyed portion on behalf of the Owners in such
manner as CAK shall reasonably deem appropriate so as to restore the same
as nearly as possible to the capacity thereof immediately prior to such
damage or destruction, provided the cost of repairing such damage does not
exceed $2.5 million. In connection with any such repair activities, CAK
shall consult with the Owners Committee and keep it informed of its repair
activities, and shall bill the Owners directly for such repair costs.
Section 6.4 Liability of the Operator. The Operator shall be liable to the
Owners for, and shall indemnify and hold each of them and their respective
officers, employees and agents harmless from, any claims, losses or expenses
arising as a result of acts or omissions of the Operator's management personnel
(first line supervisor or higher) constituting, on a repetitive basis, gross
negligence or willful misconduct. The preceding sentence shall not be deemed to
limit the Operator's obligation to repay any amounts billed to and paid to it as
Operating Costs which are ultimately determined by the Auditors not to be
Operating Costs.
Article VII
CONVERSION
Section 7.1 Conversion Rights and Obligations.
7.1.1 Obligation to Convert. The rights and obligations of the Owners
to convert Alumina to Molten Metal or Primary Aluminum at the Plant are set
forth in this Article VII.
(a) Except as otherwise provided in this Agreement
(i) the Operator shall endeavor to operate the Plant at
Rated Capacity or higher;
(ii) each Owner agrees to supply or cause to be supplied to
the Plant the quantity of Alumina necessary for the production of
such Owner's Basic Tonnage and Allocated Excess Tonnage, if any;
and
(iii) each Owner will be entitled to Molten Metal produced
at the Plant in proportion to its Basic Tonnage and its Allocated
Excess Tonnage, if any, provided it supplies Alumina for
conversion in accordance with the provisions of this Article VII.
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7.1.2 Reduction of Basic Tonnage.
(a) If, from time to time, an Owner desires to reduce its Basic
Tonnage, it shall notify the other Owner, at least ninety (90) days
prior to the date that it desires the reduction to become effective,
of the amount of the reduction, the date the reduction is to be
effective and the period of time (which shall not be less than ninety
(90) days) that such reduction is to be in effect.
(b) If an Owner gives notice to reduce its Basic Tonnage, the
other Owner (the "eligible Owner") shall have the right to assume all
or part of the available tonnage or conversion capacity, for all or a
portion of the time that such tonnage or conversion capacity shall be
made available, such right to be exercised by giving notice to the
Owner seeking to reduce its Basic Tonnage, within sixty (60) days of
receipt of the notice of reduction, specifying the amount of the
available tonnage to be assumed and the period of time that such
assumption is to be in effect.
(c) The giving of the notice of assumption specified in paragraph
(b) shall thereby commit the eligible Owner to convert the tonnage in
the amount and for the time therein designated upon the terms herein
provided. Any portion of the reduction in tonnage or tolled tonnage of
an Owner which is committed for by the other Owner pursuant to this
Section 7.1.2 for any period of time shall not be part of the Basic
Tonnage of the Owner making the reduction for such period and shall
for such period be part of the Basic Tonnage of the Owner which
committed for the tonnage made available by such reduction or offer to
Toll.
7.1.3 Failure to Convert Basic Tonnage. If (i) an Owner has given
notice to the other Owner pursuant to Section 7.1.2 to reduce its Basic
Tonnage and the other Owner does not commit to convert all of the tonnage
made available by such reduction pursuant to Section 7.1.2, or (ii) an
Owner fails (for any reason, including a reason constituting force majeure)
to supply Alumina sufficient for the production of its Basic Tonnage and
the other Owner does not utilize the tonnage made available by such
failure, then the Owner making the reduction or failing to supply, as the
case may be, shall pay to the other Owner, within thirty (30) days after
the end of each calendar month, the amount of any increase in the Operating
Costs per Ton incurred by such other Owner during such calendar month which
is attributable to such reduction or failure to supply. The amount of any
such increase shall be determined by the Operator by reference to the cost
accounting system utilized for the Plant, and shall be subject to possible
adjustment as provided in Section 5.7.5.
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7.1.4 Available and Allocated Excess Tonnage.
(a) The Operator shall promptly notify the Owners of the
availability of any capacity to produce Primary Aluminum in excess of
Rated Capacity (the amount of such excess expressed in Tons being
herein referred to as "Available Excess Tonnage"). The notice shall
specify the amount of Available Excess Tonnage and the approximate
date such tonnage can be delivered. Each Owner may request the
Operator at any time to determine the amount of Available Excess
Tonnage. Each of the Owners shall give the Operator notice within
thirty (30) days after receipt of the Operator's notice stating the
portion of its share of such Available Excess Tonnage, such share to
be based upon each Owner's Basic Tonnage, that it desires to utilize
and the period during which it desires to commit for such use. If any
Owner fails to give such notice or commits for less than all of its
proportionate share of such Available Excess Tonnage the other Owner
shall have the option to convert all or any part of the remaining
portion of the Available Excess Tonnage. An Owner that has elected to
take less than all of its Available Excess Tonnage shall have the
right, upon six months notice to the other Owner, to convert all or
any part of its proportionate share of Available Excess Tonnage
allocated to the other Owner.
(b) Available Excess Tonnage which is allocated to an Owner for
any period of time is herein called the "Allocated Excess Tonnage" of
such Owner for such period.
(c) The Owners shall bear any increase in Operating Costs per Ton
of Molten Metal incurred because the Plant is being operated in excess
of Rated Capacity in proportion to their respective Allocated Excess
Tonnages. The amount of any such increase shall be determined by the
Auditors, and the costs of such determination shall be borne by the
Owners in proportion to their respective Allocated Excess Tonnages.
7.1.5 Production Deficiencies. If at any time for any reason (not
attributable to the default of an Owner) the production of the Plant is
insufficient to meet scheduled deliveries of Molten Metal, deliveries of
Molten Metal shall be reduced as follows: (i) the delivery of Allocated
Excess Tonnages, if any, shall be reduced in proportion to the Owners'
respective Allocated Excess Tonnages and, if there is any remaining
deficiency, (ii) deliveries of Basic Tonnages to the Owners shall be
reduced in proportion to their respective Basic Tonnages.
Section 7.2 Alumina Supply.
7.2.1 Alumina Delivery Obligations. Alumina shall at all times be
delivered to the Plant by each Owner or for that Owner's account in
sufficient quantities so that, with due consideration for the quality of
Alumina and the capacity of the alumina storage facilities at the Plant,
there shall be sufficient Alumina on hand at all times for the Plant to
produce the particular Owner's Basic Tonnage and Allocated Excess Tonnage.
7.2.2 Unloading of Alumina.
(a) Alumina to be provided by each Owner shall be delivered at
the Plant in a vessel with acceptable storage conditions and unloading
characteristics reasonably adapted to the characteristics of the
facilities for the delivery of Alumina at the Plant. Alumina furnished
by an Owner may be commingled and shipped in common with Alumina
belonging to the other Owner, and commingled at the Plant, provided
that Alumina from different sources shall not be commingled.
22
(b) Each Owner shall pay all freight and shall be responsible for
all other charges to effect delivery of its Alumina to the Plant. All
unloading costs shall be Operating Costs.
(c) If extra demurrage, freight or other costs are incurred by an
Owner by reason of any other Owner's failure to comply with an agreed
upon delivery schedule or otherwise through the fault of any other
Owner, the Owner at fault shall pay the non-defaulting Owner upon
demand an amount determined by such non-defaulting Owner as sufficient
to compensate the non-defaulting Owner for excess costs so incurred by
them. The defaulting Owner shall have the right to review the records
upon which such calculation was based.
(d) The Operator shall keep complete records with respect to the
Alumina furnished and converted for each Owner.
7.2.3 Quality of Alumina. If for any reason an Owner does not supply
Alumina which meets the minimum specifications set forth in Exhibit A to
this Agreement, the Operator may, but shall not be required to, accept such
Alumina for conversion. If such Alumina is accepted for conversion, the
Operator shall determine the difference, if any, in costs of handling and
processing such Alumina into Molten Metal, and any increase in costs shall
be for the account of such Owner. The amount of any such increase shall be
determined by the Operator, and shall be subject to possible adjustment as
provided in Section 5.7.5.
Section 7.3 Title.
7.3.1 Title to the Alumina furnished by an Owner and to the Molten
Metal to which that Owner is entitled hereunder and to the Primary Aluminum
cast therefrom shall be in that Owner, provided that where Alumina or
Molten Metal is commingled in storage or processing each Owner shall have
an undivided interest in such Alumina to the extent of the amount supplied
and in such Molten Metal to the extent of its Basic Tonnage plus Allocated
Excess Tonnage, if any.
7.3.2 At an Owner's request, the Operator shall (i) issue a holding
certificate in customary form, or (ii) execute such financing statements or
documents of similar nature as may be requested by the Owner to evidence
its ownership of Alumina, Molten Metal or Primary Aluminum, as the case may
be.
Section 7.4 Shipment, Delivery, Sampling and Weighing.
7.4.1 Production Schedules and Deliveries.
(a) So long as the Aluminum Supply Agreement shall be in effect,
Molten Metal produced at the Plant shall be allocated first to
delivery under and in accordance with the terms of the Aluminum Supply
Agreement, for the credit of each Owner in accordance with its
Interest.
(b) Primary Aluminum produced at the Cast House shall be
delivered to the Owner entitled thereto pursuant to its instructions
immediately upon completion of production of such Primary Aluminum.
Deliveries shall be made to the Owners at the Plant on rail cars,
trucks or other forms of transport.
23
(c) The Owners shall be advised periodically of Plant production
schedules and the Owners shall arrange among themselves to take
delivery of Molten Metal or Primary Aluminum in amounts and at
intervals which are consistent with the Plant's production capacity
and storage facilities. If the Owners are unable to agree upon a
schedule consistent with the Plant's production capacity and storage
facilities, deliveries shall be made by the Operator pursuant to this
Section 7.4.1 in as equitable a manner as possible, giving due regard
to the Basic Tonnages and Allocated Excess Tonnages of the Owners.
7.4.2 Failure to Take Delivery. If production is lost or increased
costs are incurred due to the failure of an Owner to take delivery of
Primary Aluminum in accordance with established schedules, the costs
resulting from such reduced production or increased costs shall be for the
account of such Owner. The amount of any such costs shall be determined by
the Operator, and shall be subject to possible adjustment as provided in
Section 5.7.5.
7.4.3 Sampling, Analysis and Weights.
(a) The Owners Committee shall from time to time establish
procedures for representative sampling and analysis of Alumina, Molten
Metal and Primary Aluminum in accordance with good industry practice
to insure that the Alumina delivered to the Plant, the Molten Metal
produced at the Plant and Primary Aluminum received by the Owners from
the Plant comply with the quality standards established by the Owners
Committee. The Operator shall conduct such representative sampling and
analysis in accordance with the procedures established by the Owners
Committee.
(b) Unless the Owners Committee unanimously agrees otherwise, the
Operator shall use its best efforts to produce Molten Metal (i) first,
in accordance with the specifications therefore in the Aluminum Supply
Agreement, and (ii) thereafter, which has a minimum purity of
ninety-nine and seven-tenths percent (99.7%) aluminum and Primary
Aluminum which meets Aluminum Association standards.
(c) The quantity of Alumina delivered in each shipment shall be
taken from the bill of lading for that shipment, provided that such
weight may be confirmed or checked by vessel displacement survey in
light and loaded condition at the Plant or, at the Operator's
discretion, may be determined or checked by scale weights. The
quantities of Molten Metal and Primary Aluminum delivered shall be
determined by scale weights. Weights shall be certified by the
Operator to the Owners and the same weighing devices or methods shall
be uniform on shipments to the Owners. Analyses and weights so made
shall be presumptively correct, but each Owner shall have the right to
investigate such analyses and weights and the method of determining
same and to check the same by other analyses and weights made at its
own expense, and mistakes when ascertained shall be promptly
corrected.
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7.4.4 Storage.
(a) If an Owner so requests, the Operator shall place such
Owner's Primary Aluminum in storage at the Plant for a handling charge
covering costs which shall be determined by the Operator and billed to
that Owner.
(b) At an Owner's request, the Operator shall take such
commercially reasonable measures as appropriate to segregate all
Primary Aluminum stored for that Owner.
(c) As of the end of each calendar month, the Operator shall
inform each of the Owners regarding the quantity and composition of
Primary Aluminum products in storage.
7.4.5 Markings. At an Owner's request and at such Owner's cost, the
Operator shall mark all Primary Aluminum products owned by that Owner with
a distinctive mark acceptable to that Owner which shall be sufficient to
identify that product as the property of that Owner.
Section 7.5 Cast House.
7.5.1 Use of Equipment in Cast House.
(a) The Cast House time available for casting Molten Metal on
behalf of the Owners shall be allocated between the Owners in
proportion to their respective Basic Tonnages and Allocated Excess
Tonnages, if any.
(b) Not later than 25 days before the beginning of each calendar
month, the Owners shall notify the Operator as to the Cast House
capacity for which they wish to subscribe with respect to each form of
Primary Aluminum. When the Cast House capacity so subscribed for a
particular form of Primary Aluminum exceeds the available capacity,
then the Operator shall allocate the available capacity between the
Owners in proportion to their Basic Tonnages and Allocated Excess
Tonnages, if any, and shall consult with each Owner regarding
alternative forms of Primary Aluminum. Not later than 18 days before
the beginning of such calendar month the Operator will notify the
Owners of the Cast House capacity allocated to them with respect to
each form of Primary Aluminum.
(c) If during any calendar month the actual production of any
form of Primary Aluminum by the Cast House is less than the Cast House
capacity subscribed for in such period for that form of Primary
Aluminum, the Cast House capacity allocated to each Owner with respect
to that form of Primary Aluminum shall be reduced in proportion to the
Owners' respective Allocated Excess Tonnages and, if there is any
remaining deficiency, such allocated capacity shall then be reduced in
proportion to the Owners' respective Basic Tonnages. Similar
adjustments shall be made to the extent that the Cast House has
insufficient capacity to produce alternative forms of Primary Aluminum
requested by an Owner as a result of a reduction in allocated capacity
under the preceding sentence.
(d) The rules governing the allocation of Cast House capacity to
give effect to the provisions of clauses (a) - (c) of this Section
7.5.1 shall be determined by the Owners Committee.
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Article VIII
INSURANCE AND CASUALTY
Section 8.1 Insurance.
8.1.1 Coverage Requirements. The Operator shall be, and shall cause
each of the Owners to be, a named or additional insured on all public
liability, property and casualty insurance policies applicable to the Plant
and the Plant Assets. The Operator shall also maintain such other insurance
relating to conversion operations of the Plant necessary to protect the
Owners' interests, including insurance on Alumina upon discharge at the
Plant and Primary Aluminum while in storage at the Plant. The initial
insurance requirements are set forth in Exhibit E, and such requirements
may be changed from time to time by the unanimous vote of the Owners
Committee.
8.1.2 Product Liability Coverage. The Owners agree that each will
separately insure for all product liability claims relating to Primary
Aluminum sold by such Owner. The Owners further agree that each will
indemnify and hold the other Owner and the Operator harmless from any loss,
cost, damages or liability of any nature whatsoever arising out of any
product liability claim relating to such Owner's Primary Aluminum, and that
any such liability shall survive the termination of this Agreement. Each
Owner will deliver to the Operator and to the other Owner certificates of
insurance evidencing their product liability coverage with commercially
reasonable limits and containing endorsement naming the other Owner, its
Affiliates and the Operator as additional named insureds, waiving
subrogation against the other Owner, its Affiliates and the Operator,
providing that such coverage shall be primary to any other coverage as to
such Owner's Primary Aluminum and product liability claims arising
therefrom and providing at least ten (10) business days notice of
modification or cancellation of coverage.
Section 8.2 Casualty. If the Plant or the Plant Assets are damaged or
destroyed in whole or in part, in any respect, the Operator shall repair the
damaged portion or rebuild or replace the destroyed portion in such manner as to
restore the same as nearly as possible to the capacity thereof immediately prior
to such damage or destruction, except that if the cost of repairing such damage
exceeds $2.5 million, the Owners must consent unanimously to such repairs. The
Operator shall not be obligated to expend for such purpose more than the
proceeds of its insurance plus any amounts paid to it by the Owners on account
of any deductibles and self-insurance.
Section 8.3 Condemnation. In the event of condemnation of a portion of the
Plant which adversely affects the production capacity or efficiency of the
Plant, the Owners shall share in the production of the Plant in the manner
specified in Section 7.1.5. The Operator shall take such action as is necessary,
consistent with prudent business practice, to use the proceeds of condemnation
to restore the capacity and efficiency of the Plant as it or they existed prior
to such condemnation, unless otherwise instructed by the Owners, in which case
the proceeds shall be divided between the Owners in proportion to their
respective Interests.
26
Article IX
RESTRICTIONS ON DISPOSITION
OF PROPERTY OR INTERESTS
Section 9.1 Transfers of Interests.
9.1.1 Restriction. Except as otherwise provided in this Article IX or
in Article X, neither this Agreement nor any Interests shall at any time be
transferred by any Owner without the express prior written consent of the
other Owner. For purposes of this Article IX and Article X, transfer shall
mean any sale, assignment, conveyance, exchange or other transfer.
9.1.2 Transfers to Affiliates. An Owner may transfer its entire
Interest to an Affiliate, provided (a) such Affiliate shall become a party
to this Agreement and shall expressly assume the due and punctual
performance of all of the obligations of the transferor hereunder, (b) any
such assignment shall not release the transferor from any obligations under
this Agreement except to the extent that such obligations are performed by
the transferee, and (c) the Parent Guarantee delivered by a Parent
Guarantor with respect to the obligations of the transferor Owner is
amended, if requested by the other Owner, to include a guarantee of the
obligations of such transferee.
9.1.3 Transferee to Become Party to this Agreement. In the event of a
transfer to a third Person of all or a portion of an Interest, such third
Person shall execute and become a party to this Agreement and such transfer
shall become effective only upon such execution. This Section 9.1.3 shall
not apply to a Secured Party which shall acquire an Interest in accordance
with Section 9.2.3, unless such Secured Party shall retain and not transfer
its ownership of the acquired Interest, but shall apply to any Person to
which a Secured Party shall transfer such Interest.
9.1.4 Reconstitution of Interests. The Owners acknowledge that,
subject to their unanimous consent, it may at some future time be in their
mutual best interests to reconstitute each of their Interests by each Owner
conveying to the other Owner an undivided interest in the conveying Owner's
Owner's Plant Assets (the "Reconstitution"), so that thereafter each Owner
would hold a pro rata undivided interest as tenant in common (having waived
all rights of partition) in all of the fixed and movable property and
assets then comprising the Plant. Any such Reconstitution shall not affect
the rights and obligations of the parties set forth in this Agreement
except as specifically provided for in this Article IX and Article X.
9.1.5 Transfers of Part of an Interest. Subject to Section 9.1.6, in
the event of a transfer by an Owner of a portion of an Interest, as
provided for herein, before the occurrence of the Reconstitution, the
transferring Owner and the transferee shall agree upon the percentage of
the total Owner's Plant Assets of all of the Owners that is represented by
the Owner's Plant Assets of the transferring Owner to be transferred to the
transferee (assuming that the five pot lines at the Plant constitute one
hundred percent (100%) of such total Owner's Plant Assets and that one pot
line constitutes twenty percent (20%) of such total Owner's Plant Assets),
and the remainder of the portion of the Interest to be transferred by the
transferring Owner to the transferee shall consist of an undivided
interest, as tenant in common, in an equal percentage in the Jointly-Owned
Property and an equal percentage of the membership units of CAK. In the
event of a transfer by an Owner of a portion of an Interest as provided for
herein after the occurrence of the Reconstitution, the portion of the
Interest so transferred shall consist of an undivided interest, as tenant
in common, in the Plant Assets, in an equal percentage in all of such Plant
Assets, together with an equal percentage of the membership units of CAK.
27
9.1.6 Minimum Interest. Except for the transfers involving all of an
Owner's Interest or as a result of the application of Section 10.5, no
transfer shall be permitted under this Owners Agreement if, as a result of
such transfer, either the new Owner or the Transferring Owner would hold
less than a twenty percent (20%) Interest in the Plant.
Section 9.2 Voluntary Encumbrances.
9.2.1 Restrictions. An Owner (for purposes of this Section 9.2, the
"Granting Owner") may agree to grant a mortgage or otherwise agree to grant
a Lien on its Interest or any portion thereof, provided
(a) the rights of the mortgagee or lienholder (for purposes of
this Agreement, the "Secured Party") are expressly limited to the
Interest of the Granting Owner (to the extent so encumbered) in such
assets and shall not impair or otherwise affect title to the Interest
of the non-granting Owner (including its transferees under this
Article IX) or its right to any increase in the value of its Interest,
and any rights in the encumbered Interest which the Secured Party may
assert, acquire or transfer, whether through foreclosure or otherwise,
shall in all events be subject to the non-granting Owner's rights
under this Agreement (including without limitation the rights of the
non-granting Owner under Section 2.3.2 and Articles IX and X), and
(b) prior to the granting of any such Lien by a Granting Owner
the non-granting Owner shall have approved in writing the form and
substance of the provisions required under clause (a) and the validity
and enforceability of the document in which such provisions are
contained, and
(c) the Granting Owner shall notify the non-granting Owner and
the Operator in writing of the identity, address and contact
information of the Secured Party and, promptly upon the occurrence
thereof, the Granting Owner shall notify the non-granting Owner of the
exercise of any rights with respect to the Lien by the Security Party
(other than rights to access and/or information) and/or the release of
the Lien.
9.2.2 Acknowledgment of Liens.
(a) GAC acknowledges that NSA and its Affiliates are, as of the
date hereof, granting a Lien on the Interest of NSA to secure in part
the Notes (and may grant a Lien in connection with any refinancing
thereof), and that GAC has reviewed and approved the form and
substance of the mortgage and other documents and instruments
evidencing such Lien and the validity and enforceability of the
provisions setting forth the rights of GAC, as Owner hereunder, as
incorporated therein, and that the grant of such Lien and the filing
of such mortgage and other documents, in and of themselves, shall not
give rise to any rights of GAC to acquire the Interest of NSA set
forth in this Article IX, including without limitation under Section
9.3.
28
(b) The Owners acknowledge and agree that either Owner shall be
entitled to grant a Lien on its Inventory or any portion thereof;
provided however, that any such Lien shall be subject to the right of
the non-granting Owner, if such Owner shall exercise its rights to use
the Interest of a Defaulting Owner under Section 10.4.1, to use the
Inventory of such Granting Owner or Defaulting Owner. The Operator
shall be entitled to take such actions as may be required in
connection with the enforcement of the rights of such Secured Party,
provided that any increased costs incurred by the Operator in
connection therewith shall not be Operating Costs but shall be
chargeable to the Owner granting such Lien as a cost related to
financing.
9.2.3 Condition Precedent to Enforcement of Voluntary Encumbrances.
Prior to the exercise by a Secured Party of any foreclosure rights under
any Lien granted by a Granting Owner on its Interest, the Secured Party
shall give at least sixty (60) days' prior written notice to the other
Owner of its intent to exercise such rights and the principal amount (and
not any interest) secured by the Lien which is in default, and the other
Owner shall have the right (but not the obligation) to acquire all or part
of the Interest of the Granting Owner upon payment to the Granting Owner
(without prejudice to the rights of the Secured Party in such proceeds)
within that sixty (60) day period of the Fair Market Value of the Interest
or part thereof being purchased. The Granting Owner shall take all
necessary steps to ensure that the transfer of the Interest (or portion
thereof as applicable) is free and clear of the Lien of the Secured Party.
In the event that the other Owner shall have delivered a written notice to
the Granting Owner of its intent to exercise the right granted pursuant to
this Section 9.2.3 and shall have made payment of the amount provided for
in the immediately preceding sentence, then the Granting Owner shall
execute and deliver to the non-granting Owner instruments evidencing the
transfer of its Interest (or if appropriate, portion of its Interest) to
the non-granting Owner. The non-granting Owner's rights under this Section
9.2.3 are in addition to its rights under the provisions required under
Section 9.2.1 and in addition to any claims for damages which such
non-granting Owner may have against the Granting Owner.
9.2.4 Secured Party's Rights; Non-Granting Owners' Rights. If the
non-granting Owner fails to exercise its right to purchase all or a part of
the Granting Owner's Interest as provided in Section 9.2.3, the Secured
Party shall have the right in the name and on behalf of the Granting Owner,
to sell the Granting Owner's Interest or that part not acquired by the
other Owner, subject in all events to the prohibition against partition
provided for in Section 2.3.2 and the requirements of Sections 9.1.3 and
9.1.5, but not subject to the provisions of Sections 9.3.2(a), (b), (c) or
(f) or 9.4. The transferee shall be subject to the provisions of Sections
9.3.2(d)(ii), (iii) and (iv) and 9.3.2(g).
Section 9.3 Right of First Refusal.
9.3.1 Restrictions. Absent the express prior written consent of the
other Owner and except for transfers permitted pursuant to Sections 9.2.3
and 9.4.1 and transfers to the other Owner pursuant to Section 10.5, no
Owner shall offer to transfer, or transfer, all or any part of its Interest
to any Person (other than as provided in Section 9.1.2) except as provided
in this Section 9.3.
29
9.3.2 Right and Procedure.
(a) An Owner that desires to transfer its Interest or a part of
the Interest ("Transferring Owner") to a third Person, and has reached
basic agreement with such third Person regarding the terms and
conditions of the transfer, must give notice to the other Owner
specifying in detail the price and other terms and conditions upon
which the Transferring Owner proposes to sell its Interest or part
thereof to the third Person, the percentage of such Interest being
transferred and the name of the third Person.
(b) Within sixty (60) days after such notice, the other Owner
shall notify the Transferring Owner whether it desires to acquire, at
the price and on the terms and conditions contained in the
Transferring Owner's notice, the Transferring Owner's Interest or part
thereof being offered. If the other Owner does not so notify the
Transferring Owner it shall be deemed to have rejected the
Transferring Owner's offer.
(c) If the other Owner accepts the Transferring Owner's offer,
the Transferring Owner and the other Owner shall be deemed to have
contracted for the sale and purchase of the Transferring Owner's
Interest or part thereof on the terms and conditions offered, and a
closing of the transaction in accordance with the terms and conditions
of the offer shall be made within ninety (90) days after the deemed
acceptance.
(d) If the other Owner does not elect to purchase the
Transferring Owner's Interest or part thereof, the Transferring Owner
during the one hundred eighty (180) days following the sixty (60) day
period under clause (b) may transfer (on the same terms and conditions
offered to the other Owner) its Interest or part thereof to the
proposed transferee identified as provided in subsection (a) above (if
applicable), provided that the Transferring Owner or the proposed
transferee, as the case may be, shall deliver to the other Owner at
such closing, as a condition to the transfer, executed originals (in
form and substance reasonably satisfactory to the other Owner) of the
following documents:
(i) certificates of officers of each of the Transferring
Owner and the transferee confirming the terms under which the
Transferring Owner is transferring the Interest or part thereof
to the transferee;
(ii) if the transferee does not have a Tangible Net Worth at
least equal to $200,000,000, it shall (i) provide to each other
Owner and the Operator a guarantee, in the form of the Parent
Guarantee attached hereto as Exhibit B-3, of an Affiliate of the
proposed transferee or other corporation which has a Tangible Net
Worth at least equal to $200,000,000, with Tangible Net Worth
under this clause 9.3.2(d)(ii) to be evidenced by the most recent
audited financial statement of the transferee or its guarantor,
or by a written opinion of a nationally recognized independent
accounting firm; or (ii) deliver to the other Owner an
irrevocable letter of credit drawn on a U.S. bank holding a long
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term rating not less than "A" or equivalent from a nationally
recognized financial rating agency. Such letter of credit shall
be in a form reasonably acceptable to the other Owner, shall name
the Operator as beneficiary, shall be in an amount equal to one
half of the Owner's Interest times the annual operating and
capital budget then in effect in respect of the Plant, and shall
have an expiry date not shorter than twelve (12) months, and a
replacement letter of credit or Guarantee meeting the
requirements of this Section 9.3.2(d)(ii) shall be delivered to
the Operator no less than thirty (30) business days prior to the
expiry of the then current letter of credit.
(iii) the proposed transferee's written undertaking to be
bound by all of the terms and conditions of this Agreement as an
Owner; and
(iv) such opinions of legal counsel to the proposed
transferee and any guarantor as the other Owner shall reasonably
require.
(e) The Transferring Owner shall pay all costs of transfer of its
Interest.
(f) If the Transferring Owner fails to consummate the third party
transfer within the one hundred eighty (180) day period referred to in
Section 9.3.2(d), the first rights of the other Owner in the
Transferring Owner's Interest shall be deemed to be revived and notice
under clause (a) and compliance with the other terms of this Section
9.3 shall be required in respect of any transfer thereafter.
(g) Following a transfer of an Interest or part thereof in
accordance with the provisions of this Section 9.3, if at any time the
Parent Guarantor providing a guarantee of the obligations of the
transferee shall cease to have a Tangible Net Worth at least equal to
$200,000,000, as evidenced by such Parent Guarantor's most recent
unaudited quarterly financial statements, then the transferee Owner or
such Parent Guarantor shall promptly notify the other Owner or Owners
and shall deliver promptly to the other Owner or Owners an irrevocable
standby letter of credit meeting the requirements of Section
9.3.2(d)(ii) and replacements thereof as required thereby.
Section 9.4 Involuntary Transfers or Encumbrances.
9.4.1 Deemed Offer to Transfer. Except for transfers pursuant to
Section 9.2.3, if the Interest (or any portion thereof) of an Owner is
involuntarily transferred or encumbered as a result of judicial process,
attachment, execution or judicial sale and such involuntary transfer or
encumbrance is not set aside or discharged within sixty (60) days, then the
Interest held by that Owner shall be deemed to have been offered for sale
to the other Owner on the date the other Owner receives actual notice of
the involuntary transfer or encumbrance. The other Owner shall have the
option, exercisable before the earlier to occur of (i) the date on which
the involuntary transfer or encumbrance is set aside or discharged, or (ii)
the date which is sixty (60) days after such actual notice to it, to
purchase all or, if the Reconstitution shall have occurred, such part as
the other Owner shall determine, of the involuntarily transferred or
encumbered Interest for a price equal to Fair Market Value thereof as
determined pursuant to Section 9.4.2, payable in cash. The provisions of
Section 9.3 shall not apply to any such involuntary transfer.
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9.4.2 Fair Market Value. "Fair Market Value" shall mean for purposes
of this Agreement the fair market value of the relevant Interest or portion
thereof agreed upon by the purchasing Owner and the other Owner, a Secured
Party and/or a trustee in bankruptcy, as the case may be (an "Interested
Party"), subject to the proviso below, or as otherwise determined as
provided in this Section 9.4.2. In the event that, within ten (10) days (i)
after receipt by the Owner entitled to exercise a right to purchase
pursuant to Section 9.2.3 or 9.4.1, of the notice provided for under the
relevant Section, or (ii) delivery of notice by a non-defaulting Owner of
an exercise of its rights pursuant to Section 10.5, as the case may be, the
purchasing Owner and the Interested Party cannot agree upon the fair market
value of the Interest or portion thereof to be transferred, then, within
five (5) days after such ten (10) day period has expired, such Owner and
Interested Party will select an independent appraiser, who will determine
the then-current fair market value of the Interest or portion thereof. The
Owners hereby agree that (x) any appraiser selected shall be an investment
bank or other independent appraiser with expertise in the appraisal of
aluminum reduction facilities and (y) the value of the Interest or portion
thereof shall be calculated as (A) a value per Ton of production capacity,
multiplied by (B) the rated production capacity, in Tons of Molten Metal
per year, represented by the Interest or portion thereof to be transferred,
provided that, in the case of an appraisal of the Interest or a portion
thereof of NSA, the Fair Market Value determined for purposes of any
transaction shall in no event be less than the amount determined using the
applicable methodology set forth in the indenture entered into by Century
with respect to the Notes (or such methodology as may be required by
applicable law governing such indenture), so long as such indenture is in
force. Such appraiser will determine the fair market value of the Interest
or portion thereof within twenty-five (25) days following its selection. In
the event that, within the five (5) day period provided for the parties to
select an appraiser, the relevant parties are unable to agree upon an
appraiser, each of them will within an additional five (5) days after
expiration of such period select a professional designee and such designees
together shall select an appraiser within five (5) days of their selection.
In the event that, within the five (5) day period provided for the
designees to select an appraiser, the designees are unable to agree upon an
appraiser, each of the relevant parties will within an additional five (5)
days after expiration of such period select an independent appraiser and
such appraisers together will select a third independent appraiser meeting
the criteria specified above, whose determination of the fair market value
of the Interest or portion thereof will be final and binding on all
parties. This third (3rd) appraiser will have thirty (30) days following
its selection to determine the fair market value of the Interest or portion
thereof. The costs and expenses of appraisal shall be borne by the Granting
Owner or Defaulting Owner, as the case may be. In the event that an
appraisal in the manner described above is not completed within the
relevant sixty (60) day period provided for a purchasing Owner to purchase
an Interest or portion thereof pursuant to Section 9.4.1 (but not Section
9.2.3 or 10.5.2(b)), then such period shall be extended as necessary for
the completion of the appraisal, but not for a period longer than an
additional thirty (30) days, and payment of the Fair Market Value as so
determined shall be made by the purchasing Owner within ten (10) days of
the final determination thereof.
Section 9.5 Transfer of Ownership of an Owner. Each Owner shall remain,
either directly or indirectly, wholly-owned by its respective parent which in
the case of NSA shall be Century, and in the case of GAC shall be Glencore or,
in the case of an Owner which acquired its Interest under this Article IX, by
its ultimate parent company on the date of transfer of the Interest to that
32
Owner. Failure to maintain such ownership of an Owner without the prior written
consent of the other Owner (which consent may be freely withheld) shall be
deemed to be a default of that Owner under this Agreement and, in addition to
any claims for damages which the other Owner may have against the defaulting
Owner and its Parent Guarantor (if any), the other Owner may require that the
defaulting Owner's Interest be sold and purchased in the manner provided for
under Section 10.5. The restrictions on transfer of ownership of an Owner by its
parent company set forth in this Section 9.5 shall not apply to a Secured Party
which shall acquire ownership of an Interest through the enforcement of its
rights under a Lien on such Interest (unless such Secured Party shall retain for
its own interest, and not transfer, such Interest), but shall apply to any
Person to which such Secured Party transfers such Interest.
Section 9.6 Appointment of Operator Upon Transfer. In the event of a
transfer by GAC to a non-Affiliate of GAC of all or part of its Interest in
accordance with the provisions of this Article IX, NSA or an Affiliate of NSA
shall have the right (but not the obligation), in its sole discretion, to
terminate the appointment of CAK as Operator and to appoint an Affiliate of NSA
as replacement Operator. In the event of a transfer of the Interest of NSA
pursuant to a foreclosure on a voluntary Lien in accordance with Section 9.3.2,
or an involuntary transfer as specified in Section 9.4, GAC or an Affiliate of
GAC shall have the right but not the obligation, in its sole discretion, to
terminate the appointment of CAK as Operator and to appoint a replacement
Operator. In the event of the termination of the appointment of CAK as Operator
in accordance with the first or second sentence of this Section 9.6, the
appointment of a replacement Operator shall become effective upon the acceptance
by the replacement Operator of such appointment.
Section 9.7 Closings. The closings for any transfer of an Owner's Interest
pursuant to Section 9.2.3, 9.3.2(c), 9.3.2(d), 9.4.1 or 10.5 shall take place at
the principal office of the Operator or at such other location as the parties to
the closing may mutually agree. The Transferring Owner shall deliver (i) the
requisite instruments of conveyance, sale and assignment with respect to the
Transferring Owner's Interest in the Owner's Plant Assets and in the
Jointly-Owned Property as tenant in common, and (ii) all other documents as may
be reasonably requested by any purchasing owner in order to confirm the
Transferring Owner's title to and transfer of its Interest and the authority of
its agent, officer or attorney to act in connection with each of the transfers
referred to in clauses (i) and (ii) above.
Article X
DEFAULT
Section 10.1 Events of Default. Each of the following shall constitute an
"Event of Default" with respect to an Owner (the "Defaulting Owner") for
purposes of this Article X:
10.1.1 the failure by that Owner to pay amounts due to the Operator or
the other Owner under this Agreement within three (3) full business days
(based on recipient's business days and its local banking hours) after
notice by the Operator or such other Owner demanding such payment be made;
10.1.2 that Owner transfers or encumbers, or attempts to transfer or
encumber, any of its Interest in violation of the terms of Sections 9.2 or
9.3;
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10.1.3 any default by that Owner (as an owner in any material
obligation under this Agreement (other than as described in clauses 10.1.1
or 10.1.2 above) which remains uncured for thirty (30) days after notice of
such default from the other Owner;
10.1.4 the filing by that Owner, or any other Person which directly
owns fifty-one percent (51%) or more of that Owner's shares of voting stock
(that Owner's "Parent"), or (if different from the Parent) the Parent
Guarantor of that Owner's obligations under this Agreement, of a voluntary
petition in bankruptcy, or for reorganization, rehabilitation or
dissolution or other proceeding analogous in purpose or effect;
10.1.5 the filing against that Owner or its Parent or (if different
from the Parent) the Parent Guarantor of that Owner's obligations under
this Agreement, by its creditors of a petition in bankruptcy or for
reorganization, rehabilitation, involuntary liquidation or dissolution or
other proceeding analogous in purpose or effect, which is not dismissed or
stayed within sixty (60) days of filing; or
10.1.6 any act by that Owner or its Parent or (if different from the
Parent) the Parent Guarantor of that Owner's obligations under this
Agreement, which results in a default under Section 9.5.
Section 10.2 Constitution of Owners Committee Upon Event of Default. Upon
the occurrence of an Event of Default and until that Event of Default is cured,
the Defaulting Owner shall lose its membership and voting rights on the Owners
Committee, and the attendance of a Representative of the Defaulting Owner shall
not be required to constitute a quorum for actions by the Owners Committee.
Section 10.3 Notification of Secured Party; Right to Cure. Notwithstanding
anything to the contrary set forth in this Article X, prior to the exercise of
any remedies provided for herein by a non-defaulting Owner upon the occurrence
of an Event of Default by a Defaulting Owner, such non-defaulting Owner shall
have provided or caused to be provided, to any Secured Party of whose existence
it has received written notice pursuant to Section 9.2.1(c) at its address
provided in such notice, written notice of such Event of Default and a period of
(a) five (5) days, in the case of an Event of Default which consists of a
payment default or (b) thirty (30) days with respect an Event of Default which
is not a payment default, shall have elapsed since the date of such notice
during which the non-defaulting Owner has permitted the Secured Party the
opportunity to cure the Event of Default.
Section 10.4 Use of Defaulting Owner's Interest.
10.4.1 Right of Non-Defaulting Owner.
(a) If an Event of Default is not cured within the applicable
time period provided therefor after notice of default is given to the
Defaulting Owner by the nondefaulting Owner of its intent to exercise
its rights under this Section 10.4, the nondefaulting Owner may
exercise the right to use the Defaulting Owner's Interest and perform
the obligations of the Defaulting Owner in place of the Defaulting
Owner, including using the Defaulting Owner's Alumina or supplying
quantities of Alumina sufficient for the production of the Defaulting
Owner's Basic Tonnage and Allocated Excess Tonnage. The nondefaulting
Owner shall thereby become entitled to sell for the account of the
Defaulting Owner all Molten Metal or Primary Aluminum to which the
Defaulting Owner would otherwise be entitled.
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(b) Proceeds received from such sales in excess of one hundred
six percent (106%) of the total cost of producing the Defaulting
Owner's share of Primary Aluminum, including without limitation the
cost of Alumina, Operating Costs, Extras and freight in (for Alumina)
and freight out (for Primary Aluminum) (collectively, for purposes of
this Section 10.4 and Section 10.5, "Total Costs") shall be applied
first to payment of any amounts owed by the Defaulting Owner to the
non-defaulting Owner, then to payment of any amounts owed by the
Defaulting Owner to the Operator, and the remainder of the excess
above 106%, if any, shall be paid to the Defaulting Owner. The
non-Defaulting Owner shall be entitled to retain the excess remaining
from the one hundred six percent (106%) of Total Costs after payment
of such costs, to defray its own expenses.
10.4.2 Non-Defaulting Owner's Costs, etc. The non-defaulting Owner
which has elected to exercise its right to use the Defaulting Owner's
capacity under this Section 10.4 shall have the right at any time to elect
to treat the costs, loss or damage resulting to it from such use as a
monetary default as provided in Section 10.7. It shall exercise such right
by giving notice to the Defaulting Owner of the amount of expense it has
incurred on behalf of the Defaulting Owner.
Section 10.5 Option to Purchase Defaulting Owner's Interest.
10.5.1 Agreement on Liquidated Damages.
(a) The Owners acknowledge that if a Defaulting Owner fails to
cure an Event of Default within thirty (30) days of notice by the
non-defaulting Owner of its intent to exercise its rights under this
Section 10.5, it will be difficult to measure all of the damages
resulting from such failure to cure. Therefore, the Owners agree that,
in addition to the rights of the non-defaulting Owner provided for in
Section 10.4.1, if an Event of Default is not cured within thirty (30)
days after such notice to the Defaulting Owner, then, as reasonable
liquidated damages, the Defaulting Owner shall be deemed to have
offered its Interest for sale to the non-defaulting Owner, and the
non-defaulting Owner shall be entitled to purchase the Interest of the
Defaulting Owner, at the price and in the manner provided for in
Section 10.5.2 below.
(b) In the event that the non-defaulting Owner shall purchase
part but not all of the Defaulting Owner's Interest pursuant to
Section 10.5.1(a), and shall continue to exercise its rights provided
for in Section 10.4.1 with respect to the remaining portion of the
Interest retained by the Defaulting Owner, then at any time and from
time to time thereafter, subject to Section 10.5.2(d) below, the
non-defaulting Owner shall be entitled upon notice given thirty (30)
days in advance, to purchase all or any part of the remaining portion
of the Interest retained by the Defaulting Owner at the then current
Fair Market Value thereof.
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10.5.2 Exercise of Right to Purchase. In the event of a deemed offer
of sale by a Defaulting Owner of its Interest pursuant to Section 10.5.1,
the non-defaulting Owner shall be entitled to exercise its right to
purchase as follows:
(a) the non-defaulting Owner shall give notice of its intent to
purchase the Interest or portion thereof within thirty (30) days of
the time at which the offer to sell has been deemed to be made;
(b) with respect to a purchase by GAC of the Interest of NSA, so
long as the indenture entered into by Century with respect to the
Notes and any registered notes for which such Notes may be exchanged
is in force, payment shall be made in the manner and to the extent
required under such indenture, including payment within sixty (60)
days of the date on which the offer to sell was deemed to be made, but
no later than the date of transfer of the Interest, of an amount in
cash at least equal to seventy-five percent (75%) of the total
purchase price, with the balance to be paid in accordance with the
provisions of Section 10.5.2(c) below; and
(c) the non-defaulting Owner shall be entitled to make payment of
(i) the balance of the purchase price of the Interest or portion
thereof after the payment required pursuant to paragraph (b) above, or
(ii) in the event that the indenture referred to in such paragraph (b)
is no longer in force, the total purchase price of the Interest or
portion thereof which it has elected to purchase, in either case from
fifty percent (50%) of the amount of Gross Profits as hereafter
defined, if any, derived from the Interest of the Defaulting Owner
during each calendar year and not from any other source.
(d) Nothing in this Section 10.5 shall prohibit a Secured Party
from transferring any Interest of a Defaulting Owner prior to the
exercise of a right of purchase by the non-defaulting Owner, and the
non-defaulting Owner shall have no rights under Section 10.2, 10.4 or
10.5 against the transferee with respect to the default by the
Defaulting Owner, provided that the Secured Party shall have complied
with Section 9.2.3 or 9.4.1, as applicable.
10.5.3 "Gross Profits"; "Market Price". For purposes of this Section
10.5:
(a) "Gross Profits" means an amount, determined on a cumulative
annual basis, with respect to Primary Aluminum produced by use of the
relinquished Interest of the Defaulting Owner, equal to the excess, if
any, of (i) the Market Price of Primary Aluminum determined on a daily
basis over (ii) the Total Costs, determined by reference to billings
from the Operator. If the Plant is operating at less than Rated
Capacity, it shall be assumed for purposes of calculating "Gross
Profits" that the relinquished Basic Tonnage is the operating capacity
first reduced.
(b) "Market Price" means the mid-point of the bid and asked
prices for unalloyed ingot, New York Merchant Price (99.7%), as
published in American Metal Market under the heading "AMM Closing
Prices - Aluminum" or, if such publication ceases, an equivalent
publication.
Section 10.6 Attorney-in-Fact. Each Owner hereby irrevocably appoints the
other Owner its attorney-in-fact to execute, file and record all instruments
necessary to perfect or effectuate the provisions of this Article X during the
continuance of an Event of Default. This power of attorney shall be deemed
coupled with an interest.
36
Section 10.7 Monetary Defaults. If an Owner fails to make any payment
required under this Agreement, the non-defaulting Owner may advance the amount
of the defaulted payment on behalf of the Owner in default and treat the same,
together with accrued interest, as a demand loan bearing interest from the date
of the advance at the Interest Rate plus two percent (2%). Each Owner hereby
grants to the other a lien upon its Interest and a security interest in its
rights under this Agreement and in its Interest, and the proceeds therefrom,
which shall be junior to any Lien granted in compliance with Section 9.2.2, to
secure (a) any loan made hereunder, including interest thereon, which shall be
in an amount no greater than is reasonably required in order to pay the
Operating Costs attributable to the Defaulting Owner, and (b) reasonable
attorneys fees and all other reasonable costs and expenses incurred in
recovering the loan with interest and in enforcing such lien or security
interest, or both.
Section 10.8 Appointment of Operator. In addition to the other rights of a
non-defaulting Owner specified in this Article X, in the event of a default by
NSA which is not cured within thirty (30) days after notice of default is given
to NSA by GAC of its intent to exercise its rights under this Section 10.8, GAC
shall have the right to terminate the appointment of the Operator and to appoint
a replacement Operator, provided that such replacement Operator shall enter into
an agreement providing for its appointment on terms and conditions substantially
similar to those applicable to the Operator provided for in this Agreement.
Article XI
COVENANTS
Section 11.1 Inspection. The Operator shall afford to the Owners, their
agents, employees, accountants and attorneys, during normal business hours and
on reasonable notice, access to and the opportunity to examine and make copies
of all books, records, documents, instruments and papers of or pertaining to the
Plant, any Owners' Plant Assets, the Jointly-Owned Property and the operations
of the Plant, all as they may reasonably request, except for documents which
pertain only to an Owner's activities in purchasing Alumina, selling Primary
Aluminum, arranging for transportation and other confidential matters of an
Owner.
Section 11.2 Liens. Except as may be permitted pursuant to Sections 7.3,
9.2, 10.7 and 11.6, none of the Owners or the Operator shall cause any Liens
(other than tax Liens for taxes not past due) to be created or to exist upon the
Plant, any Owner's Plant Assets or any Jointly-Owned Property. Each Owner shall
notify the other Owner and the Operator or the Operator shall notify the Owners
Committee promptly after discovery of the creation of any Liens on such
property, and shall discharge forthwith all Liens not so permitted for which it
or its employees, agents or contractors are responsible.
Section 11.3 Notification. Each Owner shall promptly notify the other Owner
and the Operator, or the Operator shall promptly notify the Owners Committee, of
the occurrence of any fact or circumstance which has or might tend to have a
material adverse effect upon the ownership and operation of the Plant, including
without limitation adverse rulings by government agencies having jurisdiction
over the Plant or the institution of any litigation or proceeding or the threat
of any claim of the type described in Section 3.6.2(l).
37
Section 11.4 Performance of Contracts. Each Owner and the Operator shall
use its best efforts to perform all of the obligations required of it under the
terms of any material contract, agreement or arrangement entered into in
connection with the operation of the Plant. Each Owner shall notify the other
Owner and the Operator or the Operator shall notify the Owners Committee
promptly of any fact or circumstance known to it which does or may constitute a
material default under, or which might materially adversely affect the ability
of the Owners or the Operator to carry out their obligations under any contract
material to the operation of the Plant.
Section 11.5 Organization, Power and Authority. Each of the Owners and the
Operator shall remain a partnership, corporation or limited liability company,
as the case may be, duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized, and (if not organized in
the State of Kentucky) in good standing as a foreign partnership, corporation or
limited liability company, as the case may be, in the State of Kentucky. Each of
the Owners and the Operator shall maintain full corporate power and authority to
own, in the case of an Owner, its Interests and to perform its obligations under
this Agreement, and shall promptly obtain any consent or approval of or license
or permission from any governmental authority which may be required for the
performance of such obligations.
Section 11.6 Easements. Each Owner shall grant to the other Owner
non-exclusive rights of way and easements on, over, through, under and across
the real estate comprising a part of its Owner's Plant Assets and such rights of
access and use of such Owner's Plant Assets and the other assets comprising its
Interest as may be necessary for the operation by the other Owner of the assets
comprising such other Owner's Interest. The Owner's hereby agree that the
Operator shall be entitled to the free use of all of such rights in the
performance of its duties as Operator hereunder. The rights and obligations set
forth in this Section 11.6 and Section 11.7 shall be binding upon and inure to
the benefit of a transferee of all or a portion of an Owner's Interest.
Section 11.7 Further Assurances. Each Owner, including any transferee of
all or a portion of an Owner's Interest, shall, upon the reasonable request of
another Owner or the Operator, and the Operator shall, upon the reasonable
request of an Owner, from time to time, execute and deliver to the other Owner
or the Operator all such instruments and documents of further assurance or
otherwise, and do all such acts and things, as may reasonably be required to
carry out such Owner's or the Operator's obligations hereunder, including
without limitation the obligations set forth in Section 11.6, and to consummate
and complete this Agreement and the transactions contemplated hereby.
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Article XII
REPRESENTATIONS
Section 12.1 Owners' Representations. Each of NSA and GAC represents and
warrants to the other that as of the date of this Agreement:
12.1.1 Organization, Powers and Authority. It is a partnership or
limited liability company duly organized, validly existing and in good
standing under the laws of the jurisdiction as indicated on the first page
of this Agreement, and has the corporate power to own its Interest. It has
the corporate power to carry on its business now being conducted and it has
full corporate power and authority to enter into and perform this
Agreement. It requires no consent or approval of or license or permission
from any governmental authority for the execution or delivery or
performance by it of this Agreement which has not been obtained. It
requires no consent of any party to any contract or agreement to which it
is a party or to which any of its property or assets is subject for the
execution, delivery or performance of this Agreement other than such
consents which have been obtained. The execution, delivery and performance
of this Agreement by it have been duly authorized and approved by all
requisite corporate action of it. This Agreement has been duly executed and
delivered by it, and is valid and binding upon it.
12.1.2 Compliance with Other Instruments. Neither it nor any Affiliate
of it is in violation of or in default with respect to any term or
provision of any indenture, contract, agreement or instrument to which it
is a party or by which it is bound, or of any judgment, order or decree of
any court or to its knowledge of any governmental authority or to its
knowledge any statute, rule or regulation applicable to it or by which it
is bound, in any case and in any manner so as presently or at any future
time to affect it adversely in any material respect in connection with the
ownership or operation of the Plant.
12.1.3 Litigation. Neither it nor any Affiliate of it is a party to
any action, suit or proceeding in which an adverse determination has or
would have any material effect on its ability to perform its obligations
under this Agreement or would have any material adverse effect upon the
ownership or operation of the Plant.
Article XIII
MISCELLANEOUS
Section 13.1 Term. The obligations of the Owners to provide Alumina as
provided in this Agreement shall terminate on the date on which the Plant
permanently ceases operating, and this Agreement shall terminate and be of no
further force and effect on the date on which any Owner becomes the sole owner
of all of the Interests, provided that neither event shall relieve any party
from liability arising out of or in connection with ownership of its Interest.
Section 13.2 Disposition of Plant and Other Assets. If Plant operations
cease permanently, the Owners shall confer to determine whether any Owner is
willing to purchase the Interest of the other Owner at a price and under
conditions acceptable to the other Owner, whether the Plant and any remaining
Jointly-Owned Property or Plant Assets are usable for another purpose acceptable
to the Owners, or whether the Plant and any remaining Jointly-Owned Property and
Plant Assets should be sold. If unanimous agreement of the Owners is not reached
within three months of cessation of Plant operations, either Owner may seek
partition.
39
Section 13.3 Liability. Each Owner hereby acknowledges, agrees and
understands that to the extent of its Interest it is and shall remain liable to
third parties for any loss, cost, damages or liability of any nature whatsoever
arising out of the ownership of an Interest and that any such liability shall
survive the termination of this Owners Agreement.
Section 13.4 Notices. All notices, demands or other communications
(collectively, "notices") required or permitted to be given under this Agreement
shall be in writing, either delivered by hand to the other party at that party's
address set forth below, or sent by postage prepaid certified mail (return
receipt requested) or by telegraph or telephonic facsimile transmission, to the
other party's address and facsimile number (if applicable) set forth below, and
shall be effective on the date the hand delivery, telegraph or telephonic
facsimile transmission is received by the other party or, in the case of a
notice by mail, five (5) business days after deposit in the mail. A copy of the
text of any notice given by telegraph or telephonic facsimile transmission shall
be mailed by postage prepaid certified mail (return receipt requested), or
delivered by hand, to the address set forth below within a reasonable time
thereafter, provided such confirmation shall not be required if the recipient
acknowledges receipt of the notice. Notices shall be sent:
If to NSA or to an NSA Representative on the Owners Committee:
NSA, Ltd.
2511 Garden Road
Building A, Suite 200
Monterey, CA 93940
Attention: Gerald A. Meyers
Facsimile No.: (831) 642-9328
with a copy to:
Century Aluminum Company
2511 Garden Road
Building A, Suite 200
Monterey, CA 93940
Attention: Gerald J. Kitchen
Facsimile No.: (831) 642-9328
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If to GAC or to a GAC Representative on the Owners Committee:
Glencore Acquisition I LLC
c/o Glencore Ltd.
301 Tresser Boulevard
Stamford, Connecticut 06901-3244
Attention: Aluminum Department (or Representative's name, if applicable)
Facsimile No. (203) 978-2600
with a copy to:
Glencore AG
Baarermattstrasse 3
P.O. Box 666
CH-6341 Baar
Switzerland
Attention: Aluminum Department
Facsimile No.: 011-4141-709-2980.
if to the Operator:
Century Aluminum of Kentucky LLC
1627 State Route 271 North
Hawesville, KY 42348-0500
Attention: Plant Manager
Facsimile No.: (270) 927-9058.
with a copy to:
Century Aluminum Company
2511 Garden Road
Building A, Suite 200
Monterey, CA 93940
Attention: Gerald J. Kitchen
Facsimile No.: (831) 642-9328
Any change in the address or facsimile transmission number of a party (or copy
recipient) for the purposes of notice under this Section shall be communicated
to the other parties in the manner set forth in this Section for providing
notice.
Section 13.5 Entire Agreement and Modification. This Agreement and the
agreements contained in Exhibits hereto constitute and contain the entire
agreement of the Owners and supersede any and all prior negotiations,
correspondence, understandings and agreements between the parties respecting the
subject matter hereof. This Agreement may be amended only by a written
instrument signed by the Owners.
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Section 13.6 Best Efforts and Cooperation. Each of the Owners shall exert
its best efforts to obtain all consents and approvals necessary for its due and
punctual performance of this Agreement and each shall cooperate with the other
with respect thereto.
Section 13.7 Force Majeure. Except as specifically provided herein, the
performance by the Owners or the Operator of their respective obligations under
this Agreement shall be suspended for such period of time as they are prevented
from performing such obligations by reason of acts of God, fire, flood,
explosion, insurrection, riot, enemy attack, strike or work stoppage, malicious
mischief, orders of court or other governmental authority, inability to secure
of delay in securing governmental consents or authorizations, rights of way,
privileges franchises, permits, equipment, and other events reasonably beyond
the control of the party subject thereto. A force majeure shall not relieve an
Owner from the monetary obligations under this Agreement incurred during a
period of force majeure. Any force majeure shall be remedied with all possible
diligence but such requirement shall not require the settlement of strikes,
lockout or other labor difficulties by the party concerned on terms contrary to
its wishes. How such difficulties shall be handled shall be entirely within the
discretion of the party concerned.
Section 13.8 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Owners and their respective successors and permitted
assigns.
Section 13.9 Survival. All representations, warranties and indemnities made
herein or in any agreement, certificate or other instrument delivered pursuant
hereto by each Owner shall survive the termination of this Agreement.
Section 13.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the conflict of laws provisions thereof, except to the extent that the
terms hereof relate to the use of real property constituting Plant Assets, in
which case such terms shall be governed by and construed in accordance with the
laws of the State of Kentucky.
Section 13.11 Disputes. Any controversy or claim arising out of or relating
to this Agreement, or any breach thereof, shall be settled by arbitration
administered by the American Arbitration Association under its Commercial
Arbitration Rules, which shall take place in New York City, New York. The panel
of arbitrators shall consist of three arbitrators. Each party shall select one
arbitrator and the two selected arbitrators shall select a third to complete the
panel. The determination of the arbitrators shall be final and binding on the
parties and judgment on the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof.
Section 13.12 Captions. The captions to Articles and Sections of this
Agreement are for convenience and are to be ignored in construing and
interpreting the provisions of this Agreement.
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Section 13.13 Singular and Plural. In this Agreement where the context
admits, the singular includes the plural and vice versa.
IN WITNESS WHEREOF, the parties have executed this Owners Agreement as of
the date first above written.
ATTEST: NSA, LTD.
_______________________________ By______________________________
Title___________________________
STATE OF NEW YORK,
COUNTY OF NEW YORK, to-wit:
The foregoing instrument was acknowledged before me this _____ day of
April, 2001, by __________________________, the ________________________, of
METALSCO LTD, a Georgia corporation, the General Partner of NSA, LTD, a Kentucky
limited partnership, on behalf of said limited partnership.
My commission expires ________________________________.
_______________________________
NOTARY PUBLIC
[SEAL]
ATTEST: GLENCORE ACQUISITION I LLC
_______________________________ By______________________________
Title___________________________
STATE OF NEW YORK,
COUNTY OF NEW YORK, to-wit:
The foregoing instrument was acknowledged before me this _____ day of
April, 2001, by ___________________________, the _________________________, of
GLENCORE ACQUISITION I LLC, a Delaware limited liability company, on behalf of
said company.
My commission expires ________________________________.
_______________________________
NOTARY PUBLIC
[SEAL]
ATTEST: CENTURY ALUMINUM OF KENTUCKY
_______________________________ By______________________________
Title___________________________
STATE OF NEW YORK,
COUNTY OF NEW YORK, to-wit:
The foregoing instrument was acknowledged before me this _____ day of
April, 2001, by ____________________________, the ________________________, of
CENTURY ALUMINUM OF KENTUCKY LLC, a Delaware limited liability company, on
behalf of said company.
My commission expires ________________________________.
_______________________________
NOTARY PUBLIC
[SEAL]
This instrument was prepared in
consultation with counsel in Kentucky
by, and when recorded return to:
__________________________________
David Bayrock, Esq.
Curtis, Mallet-Prevost, Colt & Mosle LLP
101 Park Avenue
New York, NY 10178
LIST OF EXHIBITS
- - Exhibit A - Specifications for Alumina
- - Exhibit B-1 - Guaranty of Century Aluminum Company for the benefit
of Glencore Acquisition I LLC
- - Exhibit B-2 - Guaranty of Glencore AG for the benefit of NSA, Ltd.
- - Exhibit B-3 - Guaranty of Affiliate of Transferee
- - Exhibit C - Description of Plant
- - Exhibit D - Insurance Requirements