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Exhibit 10.14
GNA/USWA
12-27-00
AGREEMENT ON THE USE OF NET PROCEED FROM REMARKETING
BETWEEN
GOLDEN NORTHWEST ALUMINUM, INC.
AND THE
UNITED STEELWORKERS OF AMERICA
This agreement (the "Agreement") made as of this 27th day of December
2000 by and between Golden Northwest Aluminum, Inc. ("GNA") both for itself as
well as on behalf of its subsidiaries Goldendale Aluminum Company ("GAC") and
Northwest Aluminum Company ("NAC"), with GNA, GAC and NAC referred to herein
singly or collectively where applicable as the "Company," and the United
Steelworkers of America ("USWA" or the "Union").
A. POWER SALE
The parties hereby agree that from the date of this Agreement through
September 30, 2001 (the "Power Sale Period" or "PSP"), in the event the
Company authorizes the Bonneville Power Administration ("BPA") to resell
electric power available to the Company, exclusive of power related to
previously announced reductions in GAC and NAC operations, pursuant to
its existing power sale agreements (those in effect as of the date of
the Agreement) with BPA (the power provided pursuant to these Power Sale
Agreements is referred to herein as "BPA Power") or directly or
indirectly takes any other actions that would have the same or similar
impact as the sale or resale of BPA Power, including but not limited to
the Company amending its contract with BPA or buying or selling
financial instruments whose underlying value is related to the price of
BPA Power (any of the foregoing singly or in combination a "BPA Power
Sale"), then the Net Proceeds from said BPA Power Sale shall be used
exclusively in the manner described below. For purposes of this
Agreement, "Net Proceeds" means Net Proceeds as defined in the
Remarketing Addendum To The 1996 Agreements between BPA and the Company
("Addendum") relating to the BPA Power Sale.
B. USE OF NET PROCEEDS
The Company shall use the Net Proceeds from any BPA Power Sale
exclusively for the following purposes.
1. The first priority on the use of Net Proceeds shall be to
avoid and
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12-27-00
minimize adverse impacts on employees as provided in this
paragraph.
a. During the Power Sale Period, all employees of the Company
represented by the USWA shall be provided with either (i)
the opportunity to work a regular workweek (40 hours) or
(ii) (a) Special Supplemental Payments ("SSP") so that
their income (including State Unemployment Insurance, if
available) will be equal to what it would have been had
they been working a regular workweek and (b) all benefits
("Benefits") that the employee would have received had
they been working a regular workweek.
b. Administrative details regarding the application of this
Agreement and the Collective Bargaining Agreements during
the Power Sale Period will be agreed upon between the USWA
and the Company within three weeks following execution of
this Agreement. Matters to be discussed and resolved will
include, but not be limited to, the following issues:
1) Application of seniority in a manner that both
ensures the availability of any necessary skilled
employees and meets the other objectives of this
Agreement and the principles listed below.
2) Company-required training programs.
3) Union leadership training programs.
4) Additional compensation, if any, for employees
required to work during the Power Sale Period.
5) Assignment of employees to non-traditional work.
6) Best efforts to provide a minimum time off with SSP
and Benefits of at least three months for all
employees.
2. The remainder of the Net Proceeds shall, subject to the
approval of the USWA, such approval to not be unreasonably
withheld, delayed or conditioned, be used for Qualified
Expenditures as defined in the
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12-27-00
Addendum. The Addendum defines such "Qualified Expenditures" to
include only the items in subparagraphs 2 a, b, and c below:
a. Expenditures or costs related to curtailing production
at the Goldendale Smelter or the Northwest Smelter,
including:
1) Compensation, benefits and other expenditures
related to employee layoffs, maintaining additional
employees not required for operations at the
reduced level and/or job reassignments as a result
of reduced smelter operating levels. By separate
agreement, Golden Northwest has agreed with the
United Steelworkers of America to maintain minimum
employment levels and/or Special Supplemental
Payments to its employees. BPA, Golden Northwest,
and the Companies intend that all expenditures
pursuant to that agreement are Qualified
Expenditures.
2) The cost of cancellation penalties or other costs
of reducing obligations for alumina or other
materials, costs associated with covering product
delivery obligations that cannot be met from the
Companies' operating capacity during the
curtailment and other costs directly associated
with the shutdown.
3) Expenditures on fixed operating and other fixed
costs directly related to operations within the
Pacific Northwest that cannot be reduced as
operating levels are reduced and on debt service,
whether or not paid during a curtailment,
(including scheduled repayments of principal and
interest and redemption or retirement of debt).
b. Expenditures or costs incurred pursuant to plans subject
to the approval of the United Steelworkers of America,
which approval shall not be unreasonably withheld,
delayed, or conditioned, to secure a future power supply
and enhance operations of the facilities of Golden
Northwest or the Companies, including:
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12-27-00
1) Expenditures incurred for the planning, licensing,
siting, acquisition and/or construction of
conventional or renewable resources to provide
power for future Company operations and
expenditures to purchase or otherwise obtain power
from any seller after October 1, 2001, that is in
addition to the power made available by BPA to
Golden Northwest under the subscription (Contract
No. 00BP-12197). The parties understand and agree
that the expenditures under this subparagraph b.(1)
will be not less than the lesser of the dollar
amount of:
$100 million
or
$62 million + [({$96 million x (JanPrice divided by $520)} --
JanBenefits) x 0.45];
where "JanPrice" is equal to the weighted (by
megawatthour) average price obtained for Remarketed
Excess Firm Energy made available in January 2001,
and "JanBenefits" is equal to the assured monetary
benefits excluded form Net Proceeds pursuant to
Section 7(b) of the Addendum.
2) Expenditures to upgrade the facilities of Golden
Northwest or the Companies to achieve energy
conservation, operating efficiencies, environmental
benefits, or to preserve jobs at the facilities.
c. Payment of tax liabilities (including any interest
and penalties) created by the Addendum, including:
1) An allowance for income taxes in an amount equal to
any income tax liability of Golden Northwest, GAC,
or NAC that results from the payment of Net
Proceeds by BPA to GAC or NAC in respect of a
Qualified Expenditure that is not fully deductible
for tax purposes in the year incurred.
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2) Any other obligation to pay taxes as a result of
the Addendum or a Remarketing Transaction entered
into under the Addendum.
The Company shall not agree to any amendment to the identification of
Qualified Expenditures in the Addendum without the prior written consent
of USWA. USWA shall not unreasonably withhold, delay or condition its
consent to any proposed amendment to the Qualified Expenditures in the
Addendum or unreasonably withhold, delay or condition its approval of
any plan pursuant to the Addendum to secure a future power supply and
enhance operations of the Company's facilities if requested by the
Company.
C. RESUMPTION OF OPERATIONS
It is the intention of the parties to resume operations on October 1,
2001 at GNA at a level consistent with the allocation of BPA power for
the subscription period 2001-2006. Employees will be recalled to work
under the seniority provisions of the Collective Bargaining Agreements.
Any decision to delay the resumption of operations from October 1, 2001
will be subject to further negotiations between the parties.
December 27, 2000
UNITED STEELWORKERS OF AMERICA GOLDEN NORTHWEST ALUMINUM, INC.
/s/ DAVID A. FOSTER /s/ BRETT WILCOX
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David A. Foster Brett Wilcox
Director, District 11 Chief Executive Officer
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