AGREEMENT TO TOLL CONVERT ALUMINA INTO ALUMINUM
(TOLLING CONTRACT)
CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
ASTERISKS (*) DENOTE SUCH OMISSIONS
The parties to this agreement to toll convert alumina into aluminum
are:
1. HYDRO ALUMINUM LOUISVILLE, INC., a Delaware corporation ("Hydro")
and
2. GOLDENDALE ALUMINUM COMPANY, a Delaware corporation, formerly known
as Columbia Aluminum Corporation (the "Company").
This is an Agreement by Hydro to supply alumina for toll conversion by the
Company into standard aluminum ingot and related products as specified by Hydro
at the Company's aluminum smelter near Goldendale, Washington, U.S.A. The
Company agrees to convert the alumina so provided. Hydro agrees to pay for the
conversion. This Agreement is subject to and conditioned upon the execution by
Hydro Aluminium a.s., a Norwegian corporation ("HAN"), and the Company of the
Third Amendment to the Agreement to Toll Convert Alumina into Aluminum, dated as
of July 12, 1987, as amended, between HAN and the Company.
The parties agree as follows:
1. Term. The term of this Tolling Contract is ten years from 1 January 1997
through 31 December 2006.
2. Alumina Delivery. Throughout the contract term, Hydro will deliver
alumina to the Company's unloading facility in Portland, Oregon for consignment
to the Company under appropriate bills of lading or other documents of title.
Delivery will be in accord with the shipping requirements specified in Exhibit
A. The costs of unloading and storage, at the facility in Portland, and transfer
to Goldendale will be borne by the Company and are included in the tolling fee.
At all times, Hydro will maintain for the Company's use at Goldendale or its
related storage facility, at a minimum, sufficient alumina inventory to support
30 days' scheduled production. The Company shall not use or process any alumina
provided by Hydro hereunder for any purpose other than the conversion thereof
into aluminum for Hydro in accordance with the terms of this Tolling Contract.
3. Metal Production. Throughout the contract term, the company will operate
its potlines and the casting facility at the smelter exclusively to convert
Hydro's alumina into standard aluminum products as specified by Hydro. Subject
to the Company's product meeting the quality requirements of paragraph 11, Hydro
will pay to the Company, a tolling fee for all aluminum metal manufactured using
the entire production capability of the production facilities, which the Company
shall dedicate solely to the tolling of Hydro's
alumina in the quantity of at least 157,000 metric tons of aluminum metal
annually. Subject to this annual requirement, the quantity of aluminum metal
produced by the Company in any rolling three-month period from tolling Hydro's
alumina hereunder may be not less than 37,288 metric tons and not more than
41,213 metric tons. If Hydro fails to deliver alumina sufficient for the Company
to produce 157,000 metric tons of aluminum annually at a rate of 1.94 tons of
alumina per ton of aluminum, and if such failure results in a production loss
for the Company, Hydro will pay a tolling fee measured by the resulting lost
production.
4. Tolling Fee. The tolling fee to be paid by Hydro to the Company will be
a fraction of the London Metal Exchange ("LME") price for contracts for High
Grade aluminum (99.7 or P1020), as follows:
LME INDEX TOLLING FEE % OF
$/TON LME CONTRACT P1020
--------- ------------------
Below 1,450 ***
1,450-1,700 ***
Above 1,700 ***
Effective from 1 January 1997 through 31 December 1997, the tolling fee shall be
not less than $*** per metric ton.
The LME price used for measurement purposes will be the LME cash settlement
price as published in Metals Week, averaged for the three-month period
immediately preceding the month of production. The tolling fee is applicable to
all production of aluminum metal hereunder, as adjusted for the production of
casthouse products as set forth in Section 5 or for the production of off-grade
aluminum as set forth in Section 11.
If during any three-month period, the weekly LME cash price on average is
more than $20 per metric ton above the average LME three-month contract price
(which condition is called "excess backwardation"), then the LME price for
measuring purposes computed for such period (and for any continuing period until
such excess backwardation ends) shall be the lower of the LME cash or
three-month contract price. Thereafter, the measuring price shall again be the
LME cash price.
The tolling fee covers all costs of handling, storing and loading the
aluminum metal produced hereunder until loaded on board railcar or truck at
Goldendale. Hydro will have the right to store a maximum of 90 days inventory at
Goldendale without additional charge and the Company shall issue to Hydro a
warehouse receipt evidencing the finished goods stored. Hydro shall be entitled,
at any time, to direct the Company to release some or all of such stored
aluminum for sale. As may be directed by Hydro, and in accordance with
appropriate bills of lading or other documents of title, the Company will load
Hydro's
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converted aluminum, for shipment to such location as Hydro directs. On average,
at least 90% of the annual production will be delivered by the Company as P1020,
subject to the production of casthouse products as set forth in Section 5 or the
production of off-grade aluminum as set forth in Section 11.
5. Casthouse Production; Profit Sharing. It is understood that Hydro will
require that substantial quantities of the aluminum be delivered in such forms
(such as extrusion billet, foundry tee or sheet ingot) or with such alloy
contents as shall cause the Company to incur operating production costs above
those required to produce standard P1020 ingots (collectively "casthouse
products"). All products of casthouse production delivered to Hydro shall be
made from aluminum metal tolled for Hydro under this Tolling Contract or from
additional aluminum metal provided by Hydro pursuant to the last paragraph of
this Section 5. The Company will charge and Hydro will pay an additional casting
charge for each casthouse product as follows:
(a) For standard 6063 billet, the additional casting charge shall be ***
cents per pound;
(b) For standard unalloyed 1070 sheet ingot, the additional casting charge
shall be *** cents per pound;
(c) For other alloys or other forms, such additional charges shall be
established by mutual agreement between Hydro and the Company as are
appropriate to reflect the additional costs of producing such forms
and alloys, in a manner consistent with the establishment of the
additional charges set forth in paragraphs (a) and (b).
The parties agree to meet f rom time to time, at the request of either
party, to determine if changes in the casting charges are appropriate, taking
into account the long-term, material changes, if any, in the Company's costs
arising as a result of causes beyond the Company's reasonable control.
In addition, for each alloy or form, Hydro agrees to pay the Company an
amount (the "Profit Share") equal to ***% of the excess of the premium received
by Hydro for such alloy or form under the terms of its contracts with its
customers over the additional charges for such alloy or form payable by Hydro to
the Company under the terms of this Tolling Contract. Such Profit Share shall be
calculated on the basis of the relevant economic factors existing at the time
Hydro enters into contracts with its customers. The calculation of Profit Share
in each particular case shall be done in a manner consistent with the examples
set forth in Exhibit B.
In the event that Hydro and the Company mutually agree to a profit sharing
arrangement with respect to a specific customer contract of Hydro different from
that
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specified herein, then Hydro and the Company shall enter into a written
memorandum evidencing such other arrangement.
Hydro agrees to place orders for at least 70,000 metric tons of casthouse
products each year. Hydro will place orders for casthouse products in
commercially reasonable lots that shall not exceed the reasonable capacity of
the casthouse as determined by the mutual agreement of the parties from time to
time.
Hydro shall have the unilateral right to modify its production schedules
within 45 days of production if the Company is physically able to accommodate
the modifications taking into account its then existing commitments and labor
force upon payment by Hydro of any extra costs incurred by the Company as a
result of the modifications.
The parties agree to pursue increasing casthouse production through the use
of additional aluminum metal for the production of value-added products in the
casthouse, on such terms and conditions as may be mutually agreed upon by the
parties. Supplies of additional aluminum metal provided by Hydro for use in
casthouse production shall be subject to such additional casthouse charges as
may be mutually agreed upon by the parties, but not to the tolling fee for
alumina hereunder.
6. Production Schedules. By the 15th of each calendar month, the parties
will agree upon a schedule establishing estimated production requirements in
reasonable detail for the next 120 days. Hydro may unilaterally modify any such
schedule at any time and from time to time with respect to production to occur
more than 45 days from the date of modification. Modification affecting
production within the next 45 days may be made upon mutual agreement or
unilaterally by Hydro upon payment of any extra costs incurred by the Company as
a result of the modification. All production and delivery schedules will
incorporate commercially reasonable conditions, including minimum quantity
requirements and schedule adjustments for tooling changes and orderly staffing
changes. It is understood that the parties will work together (a) to optimize
productivity, production output, and quality, and (b) to permit Hydro and the
Company to capitalize on market opportunities. Exhibit C states Scheduling
Criteria and Delivery Schedules.
7. Alumina Source and Specification. The parties recognize that the
smelting process and related environmental control is sensitive to the nature of
alumina. By November 30 of each year the parties will seek to mutually agree
upon an approximate schedule of alumina deliveries for the following year. Hydro
will have the right to supply alumina so long as the alumina supplied by Hydro
meets the specifications of Exhibit D. A set of core sources and a procedure for
qualification of new sources will be mutually agreed upon. Hydro will use its
best efforts to give the Company at least two months prior notice of any
impeding change in the sources of its alumina, to the extent consistent with the
alumina delivery schedule agreed upon for that year.
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8. Alumina Usage. The Company will manufacture aluminum as specified by
Hydro, which meets United States industry standards, f rom alumina at the rate
of 1.94 tons of alumina per ton of aluminum computed on an annual basis,
provided that the alumina meets the specifications of paragraph 7. Except as the
parties may otherwise expressly agree, the rate referred to in the preceding
sentence shall not be affected for any reason, including any event of force
majeure. In the event of a failure by the Company to meet this production
requirement from alumina supplied by Hydro, the Company shall be obliged to
procure additional alumina or aluminum metal sufficient to meet such production
requirement, without additional cost to Hydro. Hydro will credit the Company
with the market value of any alumina saved by the Company's achieving greater
than the required production efficiency, computed on an annual basis, provided
that the aluminum produced as a result of such increased efficiency shall be
credited to Hydro's account. The parties shall mutually agree upon the
procedures for implementing such credits. It is understood that the alumina
usage rate is to be based on the production of molten aluminum in accordance
with industry standards as mutually agreed upon by Hydro and the Company, and
shall be subject to verification in accordance with the provisions of Section
10. Alumina sampling and weight control will be in accordance with Exhibit E.
The Company will bear the risk of loss or damage for alumina and aluminum from
the time alumina is accepted at the unloading dock until aluminum is certified
as loaded for shipment at Hydro's instructions.
9. Consumable Inventory. Hydro and the Company will discuss mutually
agreeable arrangements for Hydro to offer magnesium, grain refiner and other raw
materials to the Company at competitive prices.
10. Invoices and Payment. The Company will invoice Hydro weekly before 5:00
p.m. Eastern time, on Mondays (or if Monday is a holiday, then on the next
business day) by facsimile transmission with each invoice reflecting the tolling
fee for finished production for a seven-day period, plus charges for finished
casthouse production in accordance with Section 5 hereof (taking into account
any additional aluminum metal provided by Hydro) and such other charges as may
be appropriate. Finished production means product in shipping condition, whether
or not immediately shipped for Hydro. Cast metal which is not sawed at the time
of such invoicing shall be invoiced at its P1020 value, with the applicable
additional charge subsequently invoiced when such metal is sawed.
Invoices will be paid by Hydro and received by the Company's bank within 25
days of facsimile transmission generally on a Thursday (or if Thursday is a
state or national holiday, then on the immediately preceding business day). At
the time of the payment of each invoice, Hydro shall also pay an amount equal to
Hydro's good faith estimate of the Profit Share corresponding to such invoice in
accordance with Section 5. Payments will be made in U.S. dollars by wire
transfer to the Company's bank in immediately available Federal funds.
The Company shall use its best efforts to provide Hydro with a report, in
reasonable detail as specified by Hydro, by 5:00 p.m. Eastern time on the first
business day of each
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month, of the inventory, production and shipment tonnages for the immediately
preceding month.
Within 30 days following the end of each calendar quarter, Hydro shall
determine the aggregate Profit Share corresponding to all invoices submitted by
the Company during such quarter. If such aggregate Profit Share is greater than
the aggregate estimated payments of Profit Share made by Hydro on such invoices,
Hydro shall promptly remit the difference to the Company. If such aggregate
Profit Share is less than the aggregate estimated payments of Profit Share made
by Hydro on such invoices, then the Company shall credit such difference to
Hydro's account on future payments to be made by Hydro to the Company hereunder.
The parties agree to meet from time to time, at the request of either party, to
review the Profit Share calculations, with each party to provide such work
papers and other documentation as are reasonably necessary to conduct such a
review.
For a period of not more than one year after the end of each quarter, Hydro
shall permit its books and records to be inspected upon reasonable notice and
during normal business hours by an independent accounting firm of national
standing of the Company's choice and at the Company's expense. The scope of such
inspection shall be limited to determining the Profit Share due to Hydro under
Section 5 for such quarter, and such accounting firm shall execute, prior to
such inspection, an agreement with Hydro not to disclose the results of such
inspection to any person or entity other than the Company and not to disclose to
any person or entity, including the Company, the terms or provisions of any
contract between Hydro and a customer of Hydro if that customer is also a
competitor of the Company with respect to a particular product.
Hydro shall have the right, at reasonable times and on reasonable notice,
to conduct an audit, using its own personnel and/or an accounting firm of
national standing of Hydro's choice and at Hydro's expense, of the Company's
books of account, production records and physical inventory in order to verify
the alumina usage rate, the invoices and reports submitted by the Company, and
such other matters as Hydro may reasonably need to verify in connection with the
Company's performance of its obligations hereunder.
11. Product Quality. The Company will manufacture all aluminum metal and
casthouse products to the specifications established in writing by Hydro,
provided that if the Company does not believe that it can meet such
specifications, it shall so notify Hydro within 10 days after its receipt of
such specifications. The Company will provide both metallurgical and physical
inspection of all products prior to release for shipment. In case of defective
production, Hydro and the Company will have the rights provided in paragraph 12.
Hydro will have no obligation to take a product or pay a tolling fee for any
product which fails to meet specification. Hydro may take out-of-specification
product pursuant to Section 3, in which event the tolling fee for such
out-of-specification product shall be reduced, on a per pound basis, as follows:
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Below 99.7 grade aluminum to and
including Alcoa P1535 *** cent
Below Alcoa P1535 to and
including Alcoa 2060 *** cents
Below Alcoa 2060 to and
including Alcoa 2590 *** cents
Below Alcoa 2590 to and
including MTO *** cents
Below MTO to and including MT1 *** cents
Below MT1 to and including MT2 *** cents
Below MT2 *** cents
Otherwise the Company shall purchase the related alumina from Hydro at Hydro's
documented cost and disposition of such product is at the Company's risk.
12. Production Default Provisions. it is understood that each party will
have made substantial commitments in expectation that deliveries of alumina and
production will take place in accordance with the terms of this Tolling
Contract. The following provisions are intended to assure that both parties have
every opportunity to achieve the intended benefits of this Tolling Contract, but
to provide an orderly process for contract termination if necessary.
Hydro will have the right at all times to inspect product and the
production process and to offer technical assistance and advice. Hydro shall
notify the Company as promptly as possible and in any event within 10 days of
discovery of any substandard product or other failure of performance by the
Company. If for any period exceeding 90 days more than 4% of the Company's
production fails to meet the specifications and/or production schedules required
hereunder, then Hydro shall undertake in good faith to provide technical
assistance and advice and to propose changes in the Company's production
techniques in order to enable performance by the Company of its obligations
hereunder. A reasonable time shall be allowed for the good faith efforts of
Hydro to provide such advice and of the Company to implement changes proposed by
Hydro. Hydro shall give written notice to the Company at such time as it
believes that a reasonable time has elapsed for such good faith efforts by Hydro
and the Company. If more than 4% of the Company's production fails to meet the
specifications and/or production schedules required hereunder for an additional
90 days following such notice by Hydro, then Hydro may terminate this Tolling
Contract on 120 days notice. Such remedy shall be in addition to, and not in
lieu of, all other remedies as Hydro may have at law or in equity for any breach
or default by the Company under this Tolling Contract, including the recovery by
Hydro of its cost of settling Hydro's position on LME
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forward contracts based on this Agreement, and Hydro shall not be required to
make an election with respect to its remedies for any such breach or default by
the Company. During the termination period, production will be maintained at the
maximum level necessary or possible to work off inventories of raw materials
while permitting an orderly transfer or closure of operations at the end of the
period.
If by reason of force majeure, performance by a party of its obligations
hereunder is substantially impaired for a period which is reasonably expected to
continue for more than 180 days, then the other party may by 30 days prior
written notice, terminate this Agreement.
13. Facility Maintenance and Insurance. At all times, the Company will
maintain the smelter and all ancillary loading and unloading facilities in first
class operating condition. The Company will maintain all-risk casualty insurance
in amounts sufficient to repair or replace any facilities damaged in an insured
loss, and comprehensive general liability insurance covering liability for
personal injury, death or property damage, with policy limits of not less than
$____________ per occurrence and $____________ total liability. All such
policies shall name Hydro as an insured, to the extent of its insurable
interests, shall provide that the insurer may not cancel or refuse to renew such
policies without providing Hydro 30 days' prior written notice thereof and shall
be in form and substance reasonably satisfactory to Hydro.
Hydro will certify to the Company's insurance underwriter on request and
from time to time the amount and provisions of its product liability insurance
coverage applicable to products manufactured by the Company. On request by the
Company, and to the extent permitted by Hydro's insurers, Hydro agrees to name
the Company as an additional insured on such insurance, the additional premium,
if any, to be paid by the Company.
14. Technology. Hydro agrees to make its expertise and technical
assistance available to the Company in order to optimize and upgrade its
Soederberg potlines, upon such terms as the parties may mutually agree. Hydro
also agrees to discuss its possible participation in the improvement and
expansion of the Company's casthouse. At the request of the Company within two
years after the date hereof, Hydro will cause an engineering audit of the
Company's Soederberg potlines to be performed at no charge to the Company.
15. Ownership of Aluminum and Alumina; Insurance.
(a) Title to all inventories of alumina and title to all aluminum
metal delivered from the casthouse within the scope of this Tolling Contract
will at all times remain vested in Hydro and not in the Company, and the Company
shall use and process such alumina in strict accordance with the provisions of
Section 1 hereof. All work-in-process, including molten aluminum not yet
delivered from the casthouse, will belong to the Company and not to Hydro. The
Company shall have title to all residue and slag, including dross, resulting
from conversion of the alumina and all conversion process by-products of the
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alumina, and the Company shall process, recycle or dispose of the same in
accordance with all applicable laws.
(b) Subject to paragraph 15, the Company covenants that all alumina
delivered by Hydro pursuant to this agreement that has not been converted into
aluminum and all converted aluminum (except molten aluminum in pots) that has
been produced f or Hydro's account shall be at all times free and clear of any
lien, charge or encumbrance of any nature whatsoever excluding only those in
favor of persons other than the Company created by Hydro and that, upon request
by Hydro following the occurrence of a default by the Company as defined below,
it will surrender all such alumina or converted aluminum and alumina subject to
paragraph 12, to Hydro.
(c) Solely in order to protect Hydro's property interest in all
alumina and all converted aluminum to which this Agreement relates against any
claim made in respect thereof by a creditor of the Company or others claiming
through the Company, the Company grants Hydro a security interest in all of the
Company's right, title and interest in alumina delivered by Hydro (whether at
the Company's unloading facilities or at the smelter) and in finished aluminum
goods now and hereafter produced for Hydro's account in the Company's
possession, whether located at the Company's address set forth herein or
elsewhere, and all proceeds thereof (the "Collateral"), to secure performance of
all obligations of the Company to Hydro arising out of the preceding
subparagraph, which security interest shall be prior to all other security
interests in the Collateral. The following shall constitute defaults by the
Company under this security agreement:
(i) If the Company shall (A) be generally not paying its debts as
they become due, or (B) file any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future bankruptcy, insolvency or similar
statute, law or regulation, or (C) file any answer admitting or not contesting
the material allegations of a petition filed against the Company in any such
proceeding, or (D) seek or consent or acquiesce in the appointment of any
trustee, custodian, receiver or liquidator of the Company or of all or any
substantial part of its properties or, (E) take corporate action for the purpose
of any of the foregoing, or (F) if without the consent or acquiescence of the
Company, an order shall be entered constituting an order for relief or approving
a petition for relief or reorganization, or any other petition seeking any
reorganization, arrangement, competition, readjustment, liquidation, dissolution
or other similar relief under any present or future bankruptcy, insolvency or
similar statute, law or regulation, or (G) if, without the consent or
acquiescence of the Company, an order shall be entered appointing a trustee,
custodian, receiver or liquidator of the Company or of all or any substantial
part of the properties of the Company;
(ii) The Company's demonstrated and continuing inability pursuant
to paragraph 12 to deliver finished aluminum goods to Hydro in the quantities
and quality required under this Agreement, when called for by the terms hereof;
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(iii) Breach by the Company of a material obligation under this
Agreement; or
(iv) Any assertion of any right in the Collateral by any other
creditor.
In the event of a default under this provision, Hydro shall immediately
have the rights of a secured party after default under a security agreement, and
the Company agrees to pay reasonable attorneys' fees and legal expenses incurred
by Hydro in enforcing such rights. The exercise by Hydro of its rights set forth
in this subparagraph 14(c) shall be solely for the purpose of protecting its
property interest in alumina and converted aluminum and shall not effect a
termination of this Agreement nor alter the rights and obligations of the
parties under paragraph 12 or any other provision hereof.
(d) The Company agrees that it shall execute and deliver to Hydro such
financing or continuation statements as Hydro may request evidencing the
Company's status as consignee with respect to alumina delivered by Hydro and
with respect to finished aluminum held for the account of Hydro and with respect
to finished aluminum held for the account of Hydro, and evidencing Hydro's
status as a secured party with respect to the Collateral. Hydro may, at its
expense, record any such financing or continuation statements. The Company shall
deliver to Hydro any negotiable document of title received for alumina or
converted aluminum, title to which, in accordance with this paragraph 14 is in
Hydro, forthwith upon the Company's receipt thereof.
(e) Each party will maintain casualty insurance in amount and form
desired to protect its interests in such inventory. Each party waives its right
of subrogation against the other for matters which are or could be insured
against pursuant to this subparagraph.
16. Non-Payment. If for any reason other than the Company's failure of
performance (and then only after notice to the Company and only to the extent of
such non-performance) Hydro fails to deliver alumina to the Company or fails to
pay the Company in accordance with paragraph 10, the Company shall be entitled
to sell finished product to third parties in such quantities as may be necessary
to compensate the Company for all tolling fees and other amounts earned and for
the additional costs related to such non-delivery or non-payment. Such sales may
be made only after 21 days actual notice or notice by certified mail to Hydro
and shall be made in accordance with the Uniform Commercial Code. Hydro hereby
grants to the Company a limited security interest in the aluminum inventories on
hand from time to time for this purpose, which the Company may assign to its
lenders.
17. Force Majeure. Without limiting the Company's obligations set forth in
the last sentence of paragraph 8, each party will be excused from performance
hereunder as a result of an event of force majeure. Force majeure is defined as
any event not reasonably within the control of a party, including but not
limited to damage, destruction, or failure of the works or facilities required
for performance of a party's obligation hereunder (other than
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as a result of the Company's breach of its obligations under Section 13),
natural disasters, injunctions, and work stoppages whether lawful or not
resulting from any labor dispute, but excluding changes in rates for electric
power. Each party will promptly notify the other party of such an occurrence,
and performance hereunder shall be suspended so long as any such event prevents
such performance. Each party will maintain appropriate business interruption
insurance to protect its interests. Nevertheless, each party will take all
reasonable steps to maintain deliveries of alumina and production of aluminum
and to overcome the effects of force majeure.
In the event that a party invokes an event of force majeure hereunder on
one or more occasions, the term of this Tolling Contract may be extended, at the
option of the other party exercisable from time to time on or before the
otherwise applicable expiration of the term hereof, for a period of time not in
excess of the aggregate amount of time for which the party claimed to be excused
from performance hereunder due to one or more events of force majeure.
18. Economic Hardship. In the event that a party believes that its
performance as agreed hereunder has been made impracticable by, or all or part
of its capacity to perform has been affected by, the occurrence of a contingency
the nonoccurrence of which was a basic assumption on which this Tolling Contract
was made, such party may give written notice to the other, and the parties agree
to meet to discuss a solution that will not unduly prejudice the rights of
either party hereunder.
19. Environmental Matters.
(a) As used in this Tolling Contract, the following terms shall have
the following meanings:
(i) "Property" means the Goldendale Smelter near Goldendale,
Washington, and related facilities, including an alumina unloading facility in
Portland, Oregon.
(ii) "Hazardous Materials" mean all chemicals, materials,
substances or wastes (A) which are designated or defined, or included in any
definition under any Environmental Law as a hazardous, dangerous or toxic
substance, material or waste, or (B) the handling of, use of, disposal of or
exposure to which is prohibited, limited or regulated by any Environmental Law.
(iii) "Environmental Laws" means any and all applicable federal,
state and local laws (whether under common law, statute, rule, regulation or
otherwise), permits, orders and other requirements of Governmental Agencies
relating to the protection of human health or the environment.
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(iv) "Governmental Agency" means all federal, state and local
administrative bodies with jurisdiction to promulgate or enforce Environmental
Laws.
(v) "Environmental Claims" means any and all claims (A) by any
Governmental Agency for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any Environmental Laws, and (B) by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
(vi) "Release" means disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and
the like, into, from or upon any land or water or air, or otherwise entering
into the environment.
(b) Except as set forth on Exhibit F, the Company represents and
warrants that, to the best of its knowledge:
(i) It has obtained all permits, licenses and other
authorizations required under all present Environmental Laws, except to the
extent that failure to have any such permit, license or authorization would not
have a material adverse effect on the business, financial condition or
operations of the Company.
(ii) It is in compliance with the terms and conditions of all
such permits, license and authorizations, and is also in compliance with all
applicable orders, decrees, judgments and injunctions, issued, entered,
promulgated or approved under any present Environmental Laws, except to the
extent that the failure to comply with such permits, licenses, authorizations,
orders, decrees, judgments and injunctions would not have a material adverse
effect on the business, financial condition or operations of the Company.
(iii) It has not received any notice of any material
Environmental Claims with respect to the conduct of the business. No
Environmental Claims have been commenced or threatened alleging any material
failure by the Company to comply with any present Environmental Laws with
respect to the business.
(iv) No lien or encumbrance has been created on any of the
Property under any of the present Environmental Laws.
(v) No Environmental Claims are pending or threatened regarding
the presence of any Hazardous Materials at, on or under the Property.
(c) The Company covenants and agrees as follows:
(i) The Company will (A) comply with all Environmental Laws
applicable to the ownership or use of the Property and with all Environmental
Laws
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applicable to its activities or use of or with respect to the Property, (B)
cause all tenants and other persons occupying the Property to comply with all
Environmental Laws, (C) promptly pay or cause to be paid all reasonable costs
and expenses incurred in providing for such compliance with Environmental Laws,
and (D) keep or cause the Property to be kept free and clear of any liens
imposed thereon pursuant to any Environmental Laws.
(ii) The Company shall maintain and no less than annually review,
and if necessary revise, the Company's corporate environmental policy and
environmental compliance program. Upon Hydro's reasonable request, and subject
to a confidentiality agreement, the Company shall provide Hydro with copies of:
the Company's corporate environmental policy; the Company's environmental
compliance program; compliance audit results; documentation of actions to
correct any material noncompliance; a list of all off-site locations to which
Hazardous Materials were shipped from the Property for purposes of treatment,
storage or disposal ("Off-Site Locations"), and status report regarding all
Environmental Claims, if any, resulting from activities either at the Property
or at Off-Site Locations. Such information shall be gathered at the Company's
sole cost and expense. If the Company fails to deliver to Hydro such information
within 60 days after being requested to do so by Hydro pursuant to this Section,
Hydro may obtain the same at the Company's cost, and the Company hereby grants
to Hydro and its agents access to the Property and specifically grants to Hydro
an irrevocable non-exclusive license, subject to the rights of tenants, to
obtain such information and undertake the preparation of such report, and the
reasonable cost of such report will be payable by the Company on demand.
(iii) The Company will promptly advise Hydro in writing upon
learning of any of the following: (i) any pending or threatened Environmental
Claim against the Company or any part of the Property; (ii) any condition or
occurrence on the Property or an Off-Site Location that, to the best of the
Company's knowledge may result in material noncompliance by the Company with any
applicable Environmental Law or could reasonably be anticipated to form the
basis of an Environmental Claim against the Company or the Property. Each such
notice shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and, if
applicable or as to the Property, the Company's response thereto. In addition,
the Company will provide Hydro with copies of all material communications to or
from the Company and any Governmental Agency relating to Environmental Laws or
any other person or entity relating to Environmental Claims, as may reasonably
be requested by Hydro.
(iv) Notwithstanding the foregoing provisions of subsections
(c)(ii) and (c)(iii), the Company shall not be required to include in such
written report or notice (A) any portions of documents, materials or information
that would disclose confidential communications made for the purpose of
facilitating the rendition of professional legal services to the Company and
that would constitute an attorney-client privileged communication
("Attorney-Client Privileged Communications"), (B) any portions of documents,
materials or information that were prepared in anticipation of litigation or for
trial by the Company's attorneys and that would constitute attorney work product
("Attorney
13
Work Product Materials"), or (C) any environmental audit report, as defined in
Section 468.963(6)(b) of the Oregon Revised Statutes, or any portion thereof, to
the extent it is privileged under Section 468.963 of the Oregon Revised Statutes
or any comparable federal or state statute or rule ("Environmental Audit
Report"); provided, however, that the Company shall disclose all of the
information described in subsections (c)(ii) and (c)(iii) hereof ("Environmental
Information") in the written report or notice to Hydro, even if part or all of
such underlying Environmental Information is also included in an Attorney-Client
Privileged Communication, Attorney Work Product Materials, or an Environmental
Audit Report, although the Company need not disclose the Attorney-Client
Privileged Communication, the Attorney Work Product Materials, or the
Environmental Audit Report themselves. The provision of underlying Environmental
Information pursuant to this Tolling Contract is not intended, and shall not be
construed, to constitute a waiver, express or implied, of the attorney-client
privilege, the attorney work product doctrine or the Environmental Audit Report
privilege.
(v) Hydro shall have the right but not the obligation to
participate in, as a party if it so elects, any legal proceeding or action
initiated in connection with any material Environmental Claim. Without Hydro's
prior knowledge thereof, the Company shall not enter into any material
settlement, consent or compromise with respect to any Environmental Claim that
might materially interfere with the performance of this Tolling Contract;
provided, however, that Hydro's prior knowledge shall not be necessary for the
Company to take any removal or remedial action if ordered by a court of
competent jurisdiction or any Governmental Agency or if the presence of
Hazardous Materials at the Property poses an immediate significant threat to the
health, safety or welfare of any individual or otherwise requires an immediate
removal or remedial response or if the Company reasonably believes that
immediate action will mitigate or reduce further liability.
(vi) Without expense to Hydro, the Company will conduct any
investigation, study, sampling and testing, and undertake any cleanup, removal,
remedial or other action necessary to remove and clean up all Hazardous
Materials from the Property which must be so removed or cleaned up in accordance
with the requirements of any applicable Environmental Laws, to the reasonable
satisfaction of each Governmental Agency having jurisdiction in the matter, and
in accordance with all such requirements and with orders and directives of each
Governmental Agency having jurisdiction in the matter.
(d) The Company agrees to defend (with attorneys reasonably
satisfactory to Hydro), protect, indemnify and hold harmless Hydro and its
respective officers, directors, employees, attorneys and agents from and against
any and all liabilities, obligations, losses, damages, penalties, assessments,
actions, judgments, suits, claims and expenses (including but not limited to
reasonable attorneys' and consultants, fees and disbursements and the costs of
investigations, repairs, cleanup, removal, detoxification, closure and other
remedial actions) of any kind or nature whatsoever that may at any time be
incurred by, imposed on or asserted against any of them directly or indirectly
based on, or arising or resulting from or out of (i) the actual or alleged
presence of Hazardous Materials on the Property or any Off-
14
Site Locations, in any quantity or manner in violation of Environmental Laws,
and the removal, handling, transportation, disposal or storage of such Hazardous
Materials, whether or not such presence, removal, handling, transportation,
disposal or storage was caused by the Company and whether or not the Company has
any knowledge thereof, except to the extent that such violations of
Environmental Laws and/or liability for the presence, removal, handling,
transportation, disposal or storage of Hazardous Materials was caused by Hydro
or any agent acting on behalf of Hydro, (ii) any Environmental Claim with
respect to the Property, (iii) any failure or refusal by the Company comply with
paragraph (c) of this Section, (iv) the failure of any of the representations
and warranties contained in paragraph (b) hereof to be true and complete in all
materials respects, and (v) the exercise and enforcement of Hydro's rights under
this Agreement (collectively, the "Indemnified Matters"), regardless of when
such Indemnified Matters arise.
(e) The Company and Hydro intend that Hydro shall have the
non-exclusive benefit of the environmental indemnities to which the Company may
be entitled, including such indemnities as may be available to the Company under
its contracts with predecessor owners of all or part of the Property. To the
extent that its indemnity is unenforceable because it violates any law or public
policy, the Company agrees on a joint and several basis to it is permitted to
contribute and satisfaction of all contribute the maximum portion that under
applicable law to the payment Indemnified Matters.
(f) The Company agrees to reimburse Hydro for all reasonable sums paid
and costs, losses and expense reasonably incurred by Hydro as a direct result of
any Indemnified Matter, within 60 business days following written demand
therefor, with interest thereon if not paid within such 60-business day period.
20. Arbitration of Disputes.
(a) Except for the right of either party to apply to a court of
competent jurisdiction for a temporary restraining order or preliminary
injunction to preserve the status quo or prevent irreparable harm pending the
selection and confirmation of a panel of arbitrators, any dispute arising under
this Tolling Contract shall be resolved through a mediation-arbitration
approach. The parties agree to first try to resolve the dispute informally with
the help of a mutually agreed-upon mediator. If it proves impossible to arrive
at a mutually satisfactory solution through mediation, the parties agree, upon
the written demand of either party, to submit their dispute to binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association.
(b) The arbitration may be conducted by one impartial arbitrator by
mutual agreement or by three arbitrators if the parties are unable to agree on a
single arbitrator within 30 days of first demand for arbitration. All
arbitrators are to be selected from a panel of candidates having a background or
training in the production, distribution or marketing of aluminum. The
arbitrator or arbitrators shall determine the place or places of arbitration
15
having due regard for the convenience of the parties and witnesses and the
location of records.
(c) Upon request of a party, the arbitrators shall have the authority
to permit discovery to the extent they deem appropriate. A court reporter shall
record the arbitration hearing and the reporter's transcript shall be the
official transcript of the proceeding. The arbitrators shall have no power to
add or detract from the agreements of the parties and may not make any ruling or
award that does not conform to the terms and conditions of this Agreement. The
arbitrators shall have the authority to grant injunctive relief in a form
substantially similar to that which would otherwise be granted by a court of
law. The arbitrators shall have no authority to award punitive damages or any
other damages not measured by the prevailing party's actual damages. The
arbitrators shall specify the basis for any damage award and the types of
damages awarded. The decision of the arbitrators shall be final and binding on
the parties and may be entered and enforced in any court of competent
jurisdiction by either party.
(d) The prevailing party in the arbitration proceedings shall be
awarded reasonable attorney fees, expert witness costs and expenses, and all
other costs and expenses incurred directly or indirectly in connection with the
proceedings, unless the arbitrators shall for good cause determine otherwise.
21. Right of First Offer.
(a) During the year prior to the final year of the term of this
Tolling Contract, the Company and Hydro agree to negotiate in good faith with
respect to a renewal of this Tolling Contract or a new tolling contract in
replacement of this Tolling Contract.
(b) The Company agrees that, during the term of this Agreement and for
a period of 180 days thereafter, if the Company wishes to seek a proposal to
operate the production capacity of the Company's Goldendale facilities for a
third party after the term of this Tolling Contract, the Company shall first
notify Hydro of the terms and conditions it wishes to obtain in such proposal.
Hydro shall have 45 days following its receipt of the Company's notice to submit
a proposal to the Company. In the event that Hydro does not submit such a
proposal to the Company within such 45-day period, then the Company shall be
free to seek such proposals from third parties. In the event that the Company
receives a proposal that is materially less favorable to the Company than the
proposal originally requested by the Company from Hydro, then the Company shall
not accept such proposal without first giving Hydro written notice of such
proposal; for a period of 30 days following such notice Hydro shall have the
right to evaluate any proposal and decide whether to match said proposal. If
Hydro does not match the proposal within this time, then the Company shall be
free to immediately proceed with the proposal and begin producing aluminum under
the terms of said proposal. If, after meeting the requirements of this paragraph
(b), the Company accepts a proposal to operate the production capacity of the
Company's Goldendale
16
facilities for a third party after the term of this Tolling Contract, the
Company shall have no further obligations to Hydro under this paragraph (b).
(c) During the term of this Tolling Contract, Hydro shall have the
right, but not the obligation, to use any increase in production capacity at the
facilities for tolling Hydro's alumina under this Tolling Contract. The Company
shall allow Hydro 30 days to evaluate whether to use such increase in production
capacity. If Hydro does not elect to use such increased capacity under the same
terms as this Tolling Contract, then the Company agrees to negotiate with Hydro
in good faith on the terms for using such increased capacity to toll Hydro's
alumina.
(d) If the Company elects to operate production capacity for its own
account following the expiration of the term of this Tolling Contract, the
Company will grant Hydro the right to make a first offer to supply alumina at
market prices for such operations. Hydro shall have 30 calendar days to exercise
such right of first offer.
22. Compliance with Laws. The Company agrees to operate the smelter and all
ancillary loading and unloading facilities in compliance with all United States,
state and local laws, including without limitation all laws relating to
environmental protection, pollution or contamination.
23. Taxes. In the event of any change after the date hereof in any taxes
imposed on or related to the production or storage of raw materials and finished
products under this Tolling Contract, the parties agree to meet to discuss a
solution that will not unduly prejudice the rights of either party hereunder or
with respect to a possible contest of such taxes.
24. Assignment. No party may assign its interest in this agreement without
the consent of each other party, except that Hydro may assign this agreement to
wholly-owned subsidiaries, to Norsk Hydro a.s., and to subsidiaries of Norsk
Hydro a.s. No assignment hereunder (other than a collateral assignment), even if
consented to by the non-assigning parties, shall be effective until the
assigning party has presented to the nonassigning parties an executed instrument
by which the proposed assignee commits to assume all of the assigning party's
obligations under this Agreement.
25. Choice of Law, Currency. This Agreement shall be governed by the laws
of the United States of American and the State of Washington, applicable to
agreements formed in and to be performed entirely within that state. Without
limiting the foregoing, it is acknowledged and agreed by the parties that this
Agreement shall not be construed under or governed by the United Nations
Convention on Contracts for the International Sale of Goods, or by any other
international convention or treaty, without regard to whether such convention or
treaty has been adopted or ratified by either or both the United States of
American and Norway. All monetary transactions hereunder shall be in United
States currency.
17
26. Captions and Counterparts. Paragraph captions are for convenience and
are not part of the substance of this document. This Agreement may be executed
in counterparts.
27. Notice. Any notice required by this document shall be given to the
addresses shown an Exhibit G. Upon giving the other party hereto 10 days prior
written notice, any party may amend Exhibit G at any time to reflect an address
change. Any notice to be given pursuant to this Agreement may be effected by
transmitting it by telephone, telex, telecopy of other means of electronic
communication, followed by a prompt written confirmation to the relevant party
at the address set forth in Exhibit G. Alternatively, notice may be effected by
transmitting a letter by first class mail, postage prepaid, addressed to the
relevant party at the address set forth in Exhibit G. All notices that are given
by telephone or other means of electronic communication pursuant to this
provision shall be deemed effective upon receipt, contingent upon prompt written
confirmation in accordance with this provision. All notices that are given only
by mail shall be deemed effective upon the fifth day after mailing.
28. Waivers. The failure of either party to insist on strict performance of
all of the terms and conditions of this Agreement on one or more occasions shall
not constitute a waiver of any of such terms and conditions on any subsequent
occasion, or a waiver of any other terms or conditions of this Agreement.
29. Other Agreements. This Agreement establishes the fundamental
understanding and legal obligation of the parties. In the ordinary course of
business, the parties have made and intend to make agreements with respect to
production scheduling, forward sales, special orders, product upcharges and
similar matters, which agreements (a) may be oral or in a formal or informal
writing, (b) shall be enforceable according to their terms, and (c) shall be
subject to arbitration under this Agreement in case of dispute.
Dated this 22nd day of May, 1996.
HYDRO ALUMINUM LOUISVILLE, INC. GOLDENDALE ALUMINUM COMPANY
By LARS NARVESTAD By BRETT WILCOX
------------------------------- -----------------------------------
Lars Narvestad Brett Wilcox
General Manager Chairman
18
EXHIBIT A
SHIPPING REQUIREMENTS
1. All vessels shall be single-deck, self-trimming bulk carriers, geared or
gearless, suitable for vacuum discharge, and clean of deleterious substances
which are likely to contaminate alumina.
2. If alumina is stored in any compartments inaccessible to equipment
customarily used for unloading, additional costs shall be borne by Hydro.
3. The crew of the vessel shall perform the opening and closing of hatches,
permit the use of the vessels, winches and other gear, as fitted, provide
experienced winch operators, if permitted by local regulations, promptly shift
the vessel as required to and from the discharging pier, permit and support
24-hour unloading, provide electricity, night lighting and other power, as
onboard, and cover open hatches as required to protect against inclement
weather, all at no charge to the Company.
4. Each hold shall be completely unloaded in sequence without the need for
returning to remove additional material from a hold already worked and without
the need for double shifting of the vessel, any barge, or unloading equipment,
always at the master's discretion and subject to the vessel's strength. In the
event that more than one shifting or warping for each hold shall be required due
to the vessel's inability to unload the holds in sequence as aforesaid, such
additional time shall not be counted as laytime.
5. The vessel shall allow barges to come alongside for offloading, provided
that the vessel shall not be responsible for loss of/or any damage to such
barges, except when due to negligence by the vessel's crew or owners. All
mooring lines, proper fendering and other requirements for barges to safely moor
alongside the vessel shall be for the receiver's time, risk and account.
6. Vessels are to be shovel cleaned by the Company upon completion of
discharge, but the Company will not be required to broom sweep or to wash hold,
which work is the responsibility of the vessel's crews.
7. The vessel shall be scheduled to remain at the berth for sufficient time
to permit the unloading of the cargo at the rate of 6,000 tons per
weather-working day of 24 consecutive hours, Sundays and holidays included and
excluding vessel make-ready time.
8. The master of each vessel will radio both the Company and the Company's
agent at Portland of his expected time and date of arrival, as follows:
a. 10 days
19
b. 72 hours
c. 48 hours
d. 24 hours, prior to the arrival of the vessel.
9. Notice of readiness may be tendered to the agent or receiver at any
hour, day or night, Saturdays, Sundays and holidays included, whether in berth
or not, after the vessel is in free pratique and in all respects ready to
discharge, and has arrived alongside the discharge berth. If the vessel cannot
steam to the discharge port because of dock occupancy and vessel anchors in a
safe location at the master's discretion, then notice of readiness may also be
tendered from such anchorage. Laytime commences 12 hours after the notice of
readiness has been tendered, whether the vessel is in berth or not, unless
discharging sooner commenced, in which case only actual time use to count.
Steaming time from anchorage to the discharge berth shall not count as laytime,
even if the vessel is already on demurrage. Any delay in opening an closing
hatch covers shall not count as used laytime.
10. All port disbursements for the account of the vessel and customary
agency fees are to be paid by the vessel or by Hydro.
11. Until further notice, the Company's agents are:
Fritz Maritime Agency
3601 NW Yeon, Suite 206
Portland, Oregon 97210
(503) 222-2847
12. All notices required by this exhibit to the Company shall be sufficient
if sent by letter, telegram, telex, facsimile, or radio to the agent and to the
Company at the following addresses;
Goldendale Reduction Plant Portland Unloading Facility
85 John Day Dam Road 2600 North River
Goldendale, WA 98620 Portland, OR 97210
Tel: (509) 773-5811 Tel: (503) 285-4621
Fax: (503) 286-4987
20
EXHIBIT B
EXAMPLES OF PROFIT SHARE CALCULATIONS
Benchmark: Product: P1020; Price: Midwest Transaction Price; Payment terms: Net
30 days from bill of lading.
1. U.S. and Canadian Customers:
Example 1.1 Product: 6063 billet
Price: Midwest Transaction Price for the month prior to the month of
shipment +*** cents/lb.
Payment terms: Net 60 days from arrival at customer's plant
Profit Share cents/lb.
- ------------ ---------
Premium for billet ***
Less extra finance cost (45 days) (***) (LIBOR +2% at time
(Average transit time 15 days) of sale)
Less casting charge (***)
Net premium for Profit Share: ***
Hydro share ***
Company share ***
Example 1.2 Product: 1070 Sheet Ingot
Price: LME Cash Settlement two days prior to the third Wednesday (M=O) +
$***/mt. (The $***/mt contains both the P1020 premium and sheet
ingot premium; e.g., a P1020 premium of $*** plus a sheet ingot
premium of $***). Period: first half of 1997 Payment terms: Cash
against documents
Profit Share USD/mt
- ------------ ------
Premium over LME *** (ca. *** cents/lb)
Plus saved finance cost (30 days) *** (ca. *** cents/lb)
(LIBOR + 2% at time
of sale)
21
EXHIBIT B, con't
Less prevailing MW premium for
period in question at the time
the sale is made (e.g., 11 November 1996
for first half of 1997) (***) (ca. *** cents/lb.)
Less casting charge (***) (ca. *** cents/lb.)
Net premium for Profit Share *** (ca. *** cents/lb.)
Hydro share *** (ca. *** cents/lb.)
Company share *** (ca. *** cents/lb.)
2. Export Customers (Other than U.S. and Canada):
Example 2.1 Product: 1070 Sheet Ingot
Price: LME Cash Settlement two days prior to the third Wednesday
(M=O) + $***/mt. (The $***/mt contains both the P1020 premium
and sheet ingot premium; e.g., a P1020 premium of $*** plus a
sheet ingot premium of $***,
Period: first half of 1997
Payment terms: Cash against documents
Profit Share USD/mt
- ------------ ------
Premium over LME *** (ca. *** cents/lb)
Less prevailing CIF Main Port premium
for period in question in country of
sale at the time the sale is made
(e.g., 11 November 1996 for first
half of 1997) (***) (ca. *** cents/lb.)
(P1020 premium reflects the fact
that payment term is CAD)
Less casting charge (***) (ca. *** cents/lb.)
Net premium for Profit Share *** (ca. *** cents/lb.)
Hydro share *** (ca. *** cents/lb.)
Company share *** (ca. *** cents/lb.)
22
EXHIBIT C
SCHEDULING CRITERIA
Scheduling of Product Flow between the Company and Hydro shall be
accomplished as outlined:
1. Hydro shall be provided with a 120-day rolling forecast of hot and cast
metal by the Company. The forecast will be updated monthly. Upon receiving the
forecast, Hydro will establish a Product Mix Forecast.
2. Hydro will provide the Company with a 120-day product requirement
forecast, updated by the 15th of each month.
3. The updated monthly forecast shall only be predicated on requirements
excluding the first 45 days of the initial rolling forecast. No modifications
may be made to the 45 days of production directly following the date of the
updated forecast, except as provided in the contract.
4. The Company reserves the right of refusal if requests for change do not
abide by the capacity criteria as defined.
5. The Company will provide Hydro with a detailed casting and delivery
schedule following receipt of the monthly forecast.
6. Shipping weights will be determined as per the Company's certified
scales.
7. Standard Company identification, packaging will be used, unless mutually
agreed.
23
EXHIBIT C, con't
DELIVERY SCHEDULE
Product shipping shall be accomplished as outlined:
1. The Company shall deliver cast metal to Hydro free on truck/rail.
Arrangements for transportation are to be provided by the Company, at the
direction of Hydro, using Hydro-scheduled/ approved carriers. The Company will
provide a traffic person on plant site to schedule/coordinate the shipments.
2. The Company will assume responsibility for cleaning of trucks and
railcars.
3. Nominal loading rates shall be 1.4 million pounds/day (+/-2%). Shipping
will be scheduled on a 5-day work week. It is agreed that Hydro will use its
best efforts to maximize rail delivery.
4. As higher than nominal loading rates may be required from time to time,
it is agreed that the Company and Hydro will endeavor to accommodate these
requirements at the lowest cost possible.
24
EXHIBIT D
ALUMINA SPECIFICATIONS
CHEMICAL CONTRACT EXPECTED
SPECIFICATIONS SPECIFICATIONS TYPICAL
- -------------- -------------- ---------
S1O2 0.025% max 0.015%
Fe2O3 0.025% max 0.015%
TiO2 0.005% max 0.001%
Na2O 0.600% max 0.45%
ZnO 0.016% max Less than 0.010%
P2O5 0.003% max Less than 0.003%
Al203 (on a dry basis) 98.3% minimum 98.7%
Loss on Ignition
(300 - 1200 C) 1.2% max 0.7%
Conventional Moisture
(0 - 300 C) 0.7%
Grain Size
(Minus 325 Tyler mesh) 12% max 8
Grain Size
(Minus 100 Tyler mesh) 7% max 5-5.5
Specific Surface Area 40-90 70
metres2/gram metres2/gram
Bulk Density 0.98 Grams/
Cubic Cm.
Loose Packed
Attrition Index 30% maximum N/A
25
EXHIBIT E
SAMPLING, ANALYSIS AND WEIGHING
Sampling
One sample of each shipment of alumina shall be taken in accordance with
the sampling procedures applicable to the load port, which shall be in
accordance with international practice. The Company shall have the right to have
a representative present at such sampling at its own expense. Such sampling
shall be deemed to be a representative sample of the alumina delivered in that
shipment.
The sample shall be divided into four portions. One portion shall be
promptly dispatched to Hydro, one portion shall be promptly dispatched to the
Company, one portion shall be used by the alumina producer for analysis, and
Hydro shall ensure that one portion (the referee sample) shall be held by the
alumina producer for 180 days after the date of the shipment, and then disposed
of unless Hydro or the Company has requested in writing that it shall be
retained for a longer period.
The cost of sampling and dispatch to the Company shall be for the account
of Hydro.
Analysis of Quality
Hydro shall arrange for the alumina producer to analyze the sample retained
at the load port for each shipment of alumina within five working days in
accordance with the producer's relevant standard practice. Hydro shall send to
the Company the results of such analysis (by cable, telex or fax transmission)
within 10 days after departure from the port of loading. Hydro shall provide to
the Company an original of the certificate of analysis stating the results of
the analysis as early as practicable.
If the analysis carried out by the producer shows that the sample analyzed
conformed with the quality specifications, it will be presumed that the entire
shipment from which the sample was taken conforms with such specifications.
Within 30 days after receipt of the sample, the Company may notify Hydro
that the alumina does not conform to the quality specifications. If the Company
does not notify Hydro within this period, the alumina delivered shall be deemed
to comply with such specifications.
If the Company does notify Hydro within the period, Hydro shall advise the
Company within 10 days after such notification is received whether or not Hydro
agrees with the Company's analysis. If Hydro does not agree, the referee sample
will be analyzed as soon as possible by Alcoa (the "Referee Laboratory"). The
Referee Laboratory will analyze the referee sample in accordance with applicable
standard analytical procedures for alumina
26
analysis, and a copy of its analysis shall be made available to both the Company
and Hydro. Such analysis shall be final and binding, and the quality of the
alumina contained in the relevant shipment shall be deemed to be the same as
that of the referee sample.
The cost of any referee analysis will be borne by the party whose results
differ most from those given by the Referee Laboratory.
Weight
Delivery shall be based on the bill of lading weight of the alumina as
determined by draft survey, carried out by a marine surveyor appointed by Hydro
on the basis of the ship's displacement at the time of loading.
27
EXHIBIT F
ENVIRONMENTAL EXCEPTIONS
[To be supplied.]
28
EXHIBIT G
NOTICE PROVISION
Any notices required to be provided to either party to this Agreement shall
be given to the following persons at the addresses set forth below:
The Company: Brett Wilcox, Chairman
Goldendale Aluminum Company
85 John Day Dam Road
Goldendale, WA 98620
Todd A. Bauman, Esquire
Stoel Rives LLP
700 NE Multnomah, Suite 950
Portland, Oregon 97232
Hydro: Harald Odegaard
Hydro Aluminium a.s.
Drammensveien 264
N-1321 Stabekk
Vaekero, Oslo, Norway
Lars Narvestad,
General Manager
Hydro Aluminum Louisville, Inc.
9400 Williamsburg Plaza
Suite 120
Louisville, Kentucky 40222
29