METAL SUPPLY AGREEMENT
Published on December 27, 2004
Exhibit 10.5
METAL SUPPLY AGREEMENT
between
NOVELIS INC.
(as Purchaser)
and
ALCAN INC.
(as Supplier)
FOR THE SUPPLY OF SHEET INGOT IN EUROPE
Dated December ____, 2004, with effect as of the Effective Date
TABLE OF CONTENTS
SCHEDULES
METAL SUPPLY AGREEMENT
THIS AGREEMENT entered into in the City of Montreal, Province of Quebec, is
dated December _____, 2004, with effect as of the Effective Date.
BETWEEN: NOVELIS INC., a corporation incorporated under the Canada
Business Corporations Act ("NOVELIS" or the "PURCHASER");
AND: ALCAN INC., a corporation organized under the Canada
Business Corporations Act ("ALCAN" or the "SUPPLIER").
RECITALS:
WHEREAS Alcan and Novelis have entered into a Separation Agreement pursuant to
which they set out the terms and conditions relating to the separation of the
Separated Businesses from the Remaining Alcan Businesses (each as defined
therein), such that the Separated Businesses are to be held, as at the Effective
Time (as defined therein), directly or indirectly, by Novelis (such agreement,
as amended, restated or modified from time to time, the "SEPARATION AGREEMENT").
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WHEREAS the Supplier and its Affiliates wish to supply, and the Purchaser and
its Affiliates wish to purchase, subject to the terms and conditions of this
Agreement, Metal (as defined below) required by the Purchaser and its Affiliates
at the Delivery Sites (as defined below).
WHEREAS the Parties have entered into this Agreement as principals and as agents
for their Subsidiaries in order to set forth such terms and conditions.
NOW THEREFORE, in consideration of the mutual agreements, covenants and other
provisions set forth in this Agreement, the Parties hereby agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
For the purposes of this Agreement, the following terms and expressions
and variations thereof shall, unless another meaning is clearly
required in the context, have the meanings specified or referred to in
this Section 1.1:
"AFFECTED PARTY" has the meaning set forth in Section 3.1.
"AFFILIATE" of any Person means any other Person that, directly or
indirectly, controls, is controlled by, or is under common control with
such first Person as of the date on which or at any time during the
period for when such determination is being made. For purposes of this
definition, "CONTROL" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities or other interests, by contract or otherwise and the terms
"CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
"AGREEMENT" means this Metal Supply Agreement, including all of the
Schedules hereto.
"ALCAN" means Alcan Inc.
"ALCAN GROUP" means Alcan Inc. and its Subsidiaries from time to time
on and after the Effective Date.
"ANNUAL BASE QUANTITY" means
(i) in respect of Contract Year 1, *** Tonnes,
(ii) in respect of Contract Year 2, *** Tonnes,
(iii) in respect of Contract Year 3, *** Tonnes, and
(iv) in respect of each of Contract Year 4 to ****, inclusive, such
amount, in Tonnes, in respect of each Contract Year, (a) as may
be
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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agreed to by the Parties during the first 6 months of Contract
Year 2 or (b) if the Parties have failed to reach agreement with
respect to such amount during the first 6 months of Contract
Year 2, and a Party has given 18 months notice prior to the
commencement of a Contract Year to the other Parties hereto that
it wishes to reduce the Annual Base Quantity by no more than 25%
of the then current Annual Base Quantity, the amount so notified
by such Party, or (c) if the Parties have failed to reach
agreement during the first 6 months of Contract Year 2, and no
Party has given a notice in accordance with (b) above, an amount
which is equal to the Annual Base Quantity in respect of the
preceding Contract Year, subject to reduction in accordance with
Section 2.1(c).
"ANNUAL ORDER QUANTITY" means, in respect of any Contract Year, an
amount in Tonnes, which is equal to or greater than 90% of the Annual
Base Quantity for such Contract Year, and less than or equal to the
Annual Base Quantity for such Contract Year, unless otherwise agreed by
the Parties, which amount is notified by the Purchaser to the Supplier
pursuant to Section 2.6.
"APPLICABLE LAW" means any applicable law, rule or regulation of any
Governmental Authority or any outstanding order, judgment, injunction,
ruling or decree by any Governmental Authority.
"APPLICABLE LME DISCOUNT PERCENTAGE" means, for each of ***, inclusive,
***, and for any Contract Year from and after ***, such
percentage as may be agreed by the Parties in connection with any
extension of the Term pursuant to Section 5.3.
"BILL OF LADING DATE" means the date of the bill of lading representing
Metal cargo to be delivered under this Agreement.
"BUSINESS CONCERN" means any corporation, company, limited liability
company, partnership, joint venture, trust, unincorporated association
or any other form of association.
"BUSINESS DAY" means any day excluding (i) Saturday, Sunday and any
other day which, in the City of Montreal (Canada) or in the City of New
York (United States), is a legal holiday, or (ii) a day on which banks
are authorized by Applicable Law to close in the city of Montreal
(Canada) or in the city of New York (United States).
"CIP" means, to the extent not inconsistent with the provisions of this
Agreement, CIP as defined in Incoterms 2000, published by the ICC,
Paris, France, as amended from time to time.
"COMMERCIALLY REASONABLE EFFORTS" means the efforts that a reasonable
and prudent Person desirous of achieving a business result would use in
similar circumstances to ensure that such result is achieved as
expeditiously as possible in the context of commercial relations of the
type contemplated in this Agreement;
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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provided, however, that an obligation to use Commercially Reasonable
Efforts under this Agreement does not require the Person subject to
that obligation to assume any material obligations or pay any material
amounts to a Third Party or take actions that would reduce the benefits
intended to be obtained by such Person under this Agreement.
"CONSENT" means any approval, consent, ratification, waiver or other
authorization.
"CONSULTATION PERIOD" has the meaning set forth in Section 2.5.
"CONTRACT PRICE" means, for each Tonne of Metal sold and purchased
hereunder in any month:
(a) in respect of Metal supplied to a Delivery Site outside of the
United Kingdom, the aggregate of the following:
(i) the LME 3-Month Aluminum Price for the month preceding
the month of the Bill of Lading Date;
(ii) minus the Applicable LME Discount Percentage of the LME
3-Month Aluminum Price;
(iii) plus the Logistics Cost;
(iv) plus the Product Premium;
(v) plus the EC Duty Paid Premium applicable to the month of
the Bill of Lading Date; and
(vi) plus, in the case of delivery from a Supplier Facility
located outside of Continental Europe, the cost of
freight and insurance to the Delivery Site.
(b) in respect of Metal supplied to a Delivery Site in the United
Kingdom, the aggregate of:
(i) the LME 3-Month Aluminum Price for the Month preceding
the month of the Bill of Lading Date;
(ii) minus the Applicable LME Discount Percentage of the LME
3-Month Aluminum Price;
(iii) plus the Logistics Cost;
(iv) plus the Product Premium;
(v) plus the EC Duty Paid Premium applicable to the month
prior to the month of the Bill of Lading Date; and
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(vi) minus, in the case of supply of Metal to Rogerstone, the
Rogerstone Discount;
"CONTRACT YEAR" means (a) initially the period commencing on the
Effective Date and ending on the last day of the calendar year in which
the Effective Date occurs (such initial period being "CONTRACT YEAR 1")
and (b) thereafter, each successive period consisting of twelve
calendar months (the first such period being "CONTRACT YEAR 2"),
provided that the final Contract Year shall end on the last day of the
Term.
"DEFAULT INTEREST RATE" means the rate of interest charged by Supplier
for late payments in accordance with Supplier's normal commercial
practice, as set forth in invoices issued by Supplier hereunder.
"DEFAULTING PARTY" has the meaning set forth in Section 6.
"DELIVERY SITE" means any of the following facilities of the Purchaser,
as specified, in respect of each shipment of Metal hereunder in the
Firm Orders provided by the Purchaser hereunder:
(a) the following locations in the United Kingdom:
(i) Rogerstone;
(ii) Bridgnorth; and
(b) the following locations in continental Europe:
(i) Norf;
(ii) Sierre;
(iii) Annecy; and
(c) such other facilities of the Purchaser as may be agreed by the
Parties.
"DISPUTES" has the meaning set forth in Section 9.1.
"DOLLARS" or "$" means the lawful currency of the United States of
America.
"EC DUTY PAID PREMIUM" means for any calendar month, the arithmetic
average of the EC Duty Paid Premium for primary high grade aluminum, as
published by Metal Bulletin on each day during the calendar month
preceding such calendar month or as otherwise determined pursuant to
Section 2.10(c).
"EFFECTIVE DATE" means the "Effective Date" as defined in the
Separation Agreement.
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"ESTIMATED ANNUAL CAPACITY" has the meaning set out in Section
2.4(b)(i), subject to any adjustment pursuant to Section 2.5.
"ESTIMATED ANNUAL ORDER QUANTITY" has the meaning set out in Section
2.3(b)(i), subject to any adjustment pursuant to Section 2.5.
"ESTIMATED MONTHLY CAPACITY" has the meaning set out in Section
2.4(b)(ii), subject to any adjustment pursuant to Section 2.5.
"ESTIMATED MONTHLY CAPACITY UPDATE" has the meaning set forth in
Section 2.7(a).
"ESTIMATED MONTHLY DEMAND" has the meaning set out in Section
2.3(b)(ii), subject to any adjustment pursuant to Section 2.5, 2.6(ii)
or Section 2.7(b)(ii).
"EUROS" means the lawful currency of the member states of the European
Union that adopt the single currency in accordance with the Treaty
Establishing the European Community, as amended by the Treaty on
European Union.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.
"FIRM ORDER" has the meaning set forth in Section 2.7(b)(i).
"FORCE MAJEURE" has the meaning set forth in Section 3.2.
"GOVERNMENTAL AUTHORITY" means any court, arbitration panel,
governmental or regulatory authority, agency, stock exchange,
commission or body.
"GOVERNMENTAL AUTHORIZATION" means any Consent, license, certificate,
franchise, registration or permit issued, granted, given or otherwise
made available by, or under the authority of, any Governmental
Authority or pursuant to any Applicable Law.
"ICC" means the International Chamber of Commerce.
"INCOTERMS 2000" means the set of international rules updated in the
year 2000 for the interpretation of the most commonly used trade terms
for foreign trade, as published by the ICC.
"LIABILITIES" has the meaning set forth in the Separation Agreement.
"LME" means the London Metal Exchange.
"LME 3-MONTH ALUMINUM PRICE" for any calendar month means the
arithmetic average of the LME 3-Month seller's and buyer's price for
primary high grade aluminum, as published in Metal Bulletin on each day
during the calendar month preceding such calendar month or as otherwise
determined pursuant to Section 2.10(b). For avoidance of doubt, the LME
3-Month Aluminum Price for the
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month of April will be based on aluminum prices published during the
month of March.
"LOGISTICS COST" means o. "METAL" means aluminum sheet ingot having the
specifications set forth in SCHEDULE 1.
"MINIMUM ANNUAL PURCHASE QUANTITY" means an amount in Tonnes in respect
of each Contract Year, equal to ***% of the Annual Order Quantity for
such Contract Year.
"MONTH M1" has the meaning set forth in Section 2.7(b)(i).
"MONTHLY OFFTAKE QUOTE" has the meaning set out in Section 2.7(b).
"NOVELIS" means Novelis Inc.
"NOVELIS GROUP" means Novelis Inc. and its Subsidiaries from time to
time on and after the Effective Date.
"PARTY" means each of the Purchaser and the Supplier as a party to this
Agreement and "PARTIES" means both of them.
"PERSON" means any individual, Business Concern or Governmental
Authority.
"PRODUCT PREMIUM" means o. "PURCHASER" has the meaning set forth in the
Preamble to this Agreement.
"ROGERSTONE DISCOUNT" means in respect of each Tonne of Metal supplied
to Purchaser's Rogerstone facility, $***.
"SALES TAX" means any sales, use, consumption, goods and services,
value added or similar tax, duty or charge imposed by a Governmental
Authority pursuant to Applicable Law.
"SEPARATION AGREEMENT" has the meaning set out in the Preamble to this
Agreement.
"SPECIFICATIONS" means specifications for Metal as set out in SCHEDULE
1.
"SUBSIDIARY" of any Person means any corporation, partnership, limited
liability entity, joint venture or other organization, whether
incorporated or unincorporated, of which a majority of the total voting
power of capital stock or other interests entitled (without the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof, is at the time owned or controlled,
directly or indirectly, by such Person.
"SUPPLIER" has the meaning set forth in the Preamble to this Agreement.
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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"SUPPLIER FACILITIES" means any of the facilities of the Supplier
located at Dunquerque, Isal, Lochaber, Lynemouth, Vlissingen, St. Jean,
Lannemezan, or Alucam, or such other facilities as may be agreed by the
Purchaser in accordance with Section 2.1(b).
"SUPPLY SCHEDULE" means in respect of each Contract Year, the notice of
Estimated Annual Capacity for such Contract Year and Estimated Monthly
Capacity in respect of each calendar month therein, delivered by the
Supplier pursuant to Section 2.4(b).
"TERM" has the meaning set forth in Section 5.2.
"TERMINATING PARTY" has the meaning set forth in Section 6.
"THIRD PARTY" means a Person that is not a Party to this Agreement,
other than a member or an Affiliate of Alcan Group or a member or an
Affiliate of Novelis Group.
"THIRD PARTY CLAIM" has the meaning set forth in the Separation
Agreement.
"TONNE" means 1,000 kilograms.
1.2 CURRENCY
All references to currency herein are to Euros unless otherwise
specified. All currency conversions required for purposes of
calculating the applicable Contract Price and various components
thereof as well as any other amounts payable hereunder shall be made
utilizing the monthly average of the daily spot Euro/Dollar exchange
rate of the European Central Bank adjusted by the swap points on three-
month forward purchase contracts for the relevant currency.
1.3 VIENNA CONVENTION
The Parties agree that the terms of the United Nations Convention
(Vienna Convention) on Contracts for the International Sale of Goods
(1980) shall not apply to this Agreement or the obligations of the
Parties hereunder.
2. METAL
2.1 SUPPLY AND SALE BY THE SUPPLIER
(a) Subject to the terms and conditions of this Agreement, beginning
on the Effective Date and continuing throughout the Term of this
Agreement, the Supplier shall supply and sell to the Purchaser
"CIP the applicable Delivery Site" the quantities of Metal
determined in accordance with this Agreement.
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(b) The Supplier shall supply Metal from a Supplier Facility of the
Supplier's choosing or from such other sources and locations as
may be agreed by the Parties. If the Supplier wishes at any time
to deliver Metal hereunder to the Purchaser from a source other
than the facilities named in the definition of "Supplier
Facilities" herein, it may do so provided such Metal complies
with the Specifications and the Purchaser has confirmed in
writing that the source of such Metal is acceptable to it. The
Purchaser shall act reasonably in providing such confirmation.
(c) The quantity of Metal which the Purchaser agrees to purchase and
the Supplier agrees to supply hereunder shall be subject to
reduction on a pro rata basis in the event the Supplier provides
notice to the Purchaser that one of the Supplier Facilities
owned by the Supplier has been temporarily or permanently shut
down by the Supplier, provided such shut down has occurred as a
result of a good faith decision by the Supplier that the
continued operation of such Supplier Facility would be
uneconomic or otherwise unviable or non-value maximizing for the
Supplier. This reduction shall be for such quantity as may be
agreed by the Parties and, failing agreement, shall be for such
quantity as is equal to the Estimated Annual Capacity for the
applicable Contract year multiplied by the annual reduction
capacity of the Supplier Facilities that have been shut down,
and divided by the total annual production capacity of all
Supplier Facilities before giving effect to the shut down.
2.2 PURCHASE BY THE PURCHASER
Subject to the terms and conditions of this Agreement, beginning on the
Effective Date and continuing throughout the Term of this Agreement,
the Purchaser shall purchase and take delivery from the Supplier "CIP
the applicable Delivery Site" the quantities of Metal determined in
accordance with this Agreement.
2.3 NOTIFICATION OF ESTIMATED QUANTITIES OF METAL REQUIRED BY THE PURCHASER
(a) The Purchaser agrees to purchase and the Supplier agrees to
supply, in each Contract Year, in accordance with the terms
hereof, a quantity of Metal which is no less than the Minimum
Annual Purchase Quantity for such Contract Year.
(b) With respect to the purchase of Metal hereunder in any Contract
Year, the Purchaser shall provide to the Supplier no later than
on September 1 of the Contract Year preceding such Contract
Year:
(i) an estimate, in Tonnes, of the Annual Order Quantity (the
"ESTIMATED ANNUAL ORDER QUANTITY" for such Contract
Year); and
(ii) an estimate, in Tonnes, of the quantity of Metal required
for each month in such Contract Year (the "ESTIMATED
MONTHLY DEMAND"), provided (1) the amount for each month
shall be less than or equal to ***% of the Estimated
Annual Order Quantity for such Contract Year divided by
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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12, and greater than or equal to ***% (or, for no more
than 2 months ***%) of the Estimated Annual Order
Quantity divided by 12, and (2) the aggregate of all
Estimated Monthly Demand amounts for all months in such
Contract Year shall equal the Estimated Annual Order
Quantity notified pursuant to paragraph (i) above.
The Estimated Annual Order Quantity for Contract Year 1 and the
Estimated Monthly Demand for each month in Contract Year 1, are
set out in SCHEDULE 2.
2.4 NOTIFICATION OF ESTIMATED QUANTITIES OF METAL SUPPLIED BY THE SUPPLIER
(a) The Supplier shall have no obligation to supply Metal hereunder
in a Contract Year in excess of an amount equal to the Annual
Base Quantity for such Contract Year, unless otherwise agreed by
the Parties.
(b) With respect to the supply of Metal hereunder in any Contract
Year, the Supplier shall provide to the Purchaser no later than
September 15 of the Contract Year preceding such Contract Year:
(i) an estimate, in Tonnes, of the Supplier's supply capacity
of Metal for such Contract Year (the "ESTIMATED ANNUAL
CAPACITY"), which amount shall be greater than or equal
to the Annual Base Quantity for such Contract Year, and
(ii) an estimate, in Tonnes, of the Supplier's supply capacity
of Metal for each month in such Contract Year (the
"ESTIMATED MONTHLY CAPACITY"), provided that the
Estimated Monthly Capacity in respect of each month shall
be equal to or greater than the Estimated Monthly Demand
for such month notified by the Purchaser in accordance
with Section 2.3(b)(ii).
In determining the Estimated Annual Capacity and the Estimated
Monthly Capacity, in each case, the Supplier shall take into
account actual operating days in the relevant Contract Year or
month, as applicable (taking into account planned shutdowns of
the Supplier Facilities), existing commitments of the Supplier
for supply to other Persons, and seasonal factors affecting the
Supplier's capacity.
The Estimated Annual Capacity for Contract Year 1 and the
Estimated Monthly Capacity for each month in Contract Year 1 are
set out in SCHEDULE 2.
2.5 CHANGES TO ESTIMATES
In respect of the purchase and supply of Metal hereunder in any
Contract Year, the Purchaser and Supplier agree to consult during the
period September 1 to October 31 in the year preceding such Contract
Year (the "CONSULTATION PERIOD") with respect to offtake and capacity
issues effecting the estimates of purchase requirements and
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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supply capacity provided by the Purchaser and Supplier, respectively,
pursuant to Sections 2.3 and 2.4. During such Consultation Period the
Purchaser may propose to purchase a quantity of Metal in such Contract
Year in excess of 105% of the Annual Base Quantity for such Contract
Year and/or to modify the Estimated Annual Order Quantity or Estimated
Monthly Demand amounts notified by the Purchaser in respect of such
Contract Year, provided that the Supplier shall be under no obligation
to agree to such proposal by the Purchaser. During such Consultation
Period the Supplier may propose a revised Supply Schedule provided that
the Purchaser shall be under no obligation to agree to such revised
Supply Schedule, and the Supplier shall be under no obligation to
comply with the terms of such revised Supply Schedule, unless the
Parties agree to such changes. The Parties shall consult and negotiate
in good faith during the Consultation Period with respect to any such
matters proposed by the Purchaser or Supplier, as applicable, and will
discuss planned maintenance shutdowns at any of the Delivery Sites or
the Supplier Facilities and if possible, schedule down-time events
relating to such plant maintenance shutdowns for times which are
mutually agreeable to the Purchaser and the Supplier with a view to
avoiding production disruption at the Supplier Facilities or inventory
build-ups at any of the Supplier Facilities or the Delivery Sites.
2.6 NOTIFICATION OF ANNUAL ORDER QUANTITY
In respect of the purchase and supply of Metal hereunder in any
Contract Year, the Purchaser shall deliver to the Supplier on or before
October 31 in the year preceding such Contract Year, a notice setting
forth:
(i) the firm Annual Order Quantity for such Contract Year,
which shall be no less than the Minimum Annual Purchase
Quantity calculated for such Contract Year, and
(ii) the Estimated Monthly Demand (which may be updated from
the amount notified pursuant to Section 2.3(b)(ii)) for
each month in such Contract Year provided (1) such amount
in respect of each month shall be less than or equal to
110% of the Annual Order Quantity for such Contract Year
divided by 12, and greater than or equal to 80% (or 75%
for no more than 2 months) of the Annual Order Quantity
for such Contract Year divided by 12, and (2) such amount
in respect of any month does not exceed the Estimated
Monthly Capacity notified by the Supplier in respect of
such month pursuant to Section 2.4(b)(ii) (as such amount
may be adjusted pursuant to Section 2.5).
2.7 MONTHLY QUANTITY MANAGEMENT
(a) Throughout the Term of this Agreement, by the first day of each
month (and if such day is not a Business Day, on the Business
Day immediately preceding such day), the Supplier shall notify
the Purchaser of its updated Estimated Monthly Capacity for each
month (including the month in which such notice is
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delivered) of the then current Contract Year (such amount
referred to as the "ESTIMATED MONTHLY CAPACITY UPDATE"), which
Estimated Monthly Capacity Update:
(i) shall not be subject to adjustment in excess of ***%
by the Supplier in respect of the first three months in
respect of which such notice is sent, such that the
amount notified in respect of such months may not be
reduced or increased by more than ***% in subsequent
Estimated Monthly Capacity Updates delivered under this
Section 2.7;
(ii) shall be an indicative amount for each of the remaining
months in the then current Contract Year included in such
notification, which amount may be modified in future
Estimated Monthly Capacity Updates delivered pursuant to
this Section 2.7; and
(iii) shall be, in respect of each month, equal to or greater
than the Estimated Monthly Demand most recently notified
by the Purchaser in respect of such month pursuant to
Section 2.6 (subject to any adjustment pursuant to
Section 2.5).
(b) Throughout the Term of this Agreement by the 15th day of each
month (and if such day is not a Business Day, on the Business
Day immediately preceding such 15th day), the Purchaser shall
provide to the Supplier a notice (referred to as the "MONTHLY
OFFTAKE QUOTE") setting forth the following:
(i) the quantity of Metal which the Purchaser commits to
purchase hereunder in the next succeeding month ("MONTH
M1"), which quantity, shall be greater than or equal to
***% of the Annual Order Quantity for the Contract Year
in which Month M1 takes place divided by 12, and less
than or equal to ***% of the Annual Order Quantity for
the Contract Year in which Month M1 takes place divided
by 12, and identifying the Delivery Site or Delivery
Sites to which such Metal should be delivered (which
notification in respect of Month M1 is referred to herein
as the "FIRM ORDER" for such month), and the Purchaser
hereby agrees that it shall purchase from the Supplier in
Month M1 a quantity of Metal which is no less than ***%
of the quantity identified in the Firm Order, and no more
than ***% than the quantity identified in such Firm
Order;
(ii) an updated Estimated Monthly Demand for each month
subsequent to Month M1 occurring in the Contract Year in
which Month M1 occurs, which updated amount:
(1) shall be greater than or equal to ***% (OR ***%
for no more than 2 months) of the Annual Order
Quantity for the Contract Year in which such month
takes place divided by 12, and less than or equal
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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to ***% of the Annual Order Quantity for the
Contract Year in which such month takes place
divided by 12; and
(2) when aggregated with all quantities of Metal
actually purchased by the Purchaser hereunder in
all months prior to Month M1 occurring in the same
Contract Year, shall be no less than the Minimum
Annual Purchase Quantity in respect of such
Contract Year,
provided the Firm Order for Month M1 and each Estimated Monthly
Demand for each subsequent month shall be no more than the
Estimated Monthly Capacity Update most recently notified by the
Supplier in respect of such month.
2.8 WEEKLY QUANTITY MANAGEMENT
The Parties shall cooperate in coordinating capacity demand and
shipments within each calendar month. Supplier's weekly capacity shall,
absent normal course capacity constraints, be within the range of 90%
to 110% of 1/4 of the Estimated Monthly Capacity Update last provided
by the Supplier hereunder in respect of the month containing the
relevant week.
2.9 SUPPLIER'S SHIPPING OBLIGATIONS
(a) The Supplier shall supply to the Purchaser, in accordance with
the terms hereof, in each month, such quantity of Metal as is
identified by the Purchaser in respect of such calendar month in
the Firm Order for such month delivered by the Purchaser in
accordance with Section 2.7(b)(i).
(b) Notwithstanding the provisions of Incoterms 2000 and Section
2.13, the Supplier acknowledges its responsibility to make all
necessary arrangements for the shipment and insurance for the
transportation of Metal to the Delivery Site on behalf of the
Purchaser. The Supplier shall act as the disclosed agent of the
Purchaser in entering into contracts for hiring carriers and
obtaining insurance for the shipment of Metal under this
Agreement. In doing this, the Supplier shall use Commercially
Reasonable Efforts to obtain competitive freight and insurance
rates and shall obtain approval from the Purchaser before
entering into any long term contracts for hiring carriers or
obtaining insurance on behalf of the Purchaser. The Supplier
shall use Commercially Reasonable Efforts to ensure that such
transportation is suitable for delivering the Metal to the
Delivery Site and complies with insurance requirements.
(c) Matters regarding shipment and delivery performance hereunder
shall be governed by the provisions of SCHEDULE 3.
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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2.10 PRICE
(a) The price payable by the Purchaser to the Supplier for each
Tonne of Metal sold and purchased pursuant to Sections 2.1 and
2.2 shall be the Contract Price applicable to the Delivery Site
to which such Metal is delivered. The date used for calculating
the Contract Price for any shipment of metal shall be the Bill
of Lading Date.
(b) In the event that (i) LME ceases or suspends trading in
aluminum, or (ii) Metal Bulletin ceases publication of the
relevant reference price for determining the LME 3-Month
Aluminum Price, the Parties shall meet with a view to agreeing
on an alternative publication or, as applicable, reference
price. If the Parties fail to reach an agreement within sixty
(60) days of any Party having notified the other to enter into
discussions to agree to an alternative publication or reference
price, then the Chairman of the LME in London, England or his
nominee shall be requested to select a suitable reference in
lieu thereof and/or an appropriate amendment to the terms of
this Section 2.10. The decision of the Chairman or his nominee
shall be final and binding on the Parties.
(c) In the event the EC Duty Paid Premium indicator is discontinued
due to the reduction or elimination of the 6% import duty on
unwrought aluminium, the EC Duty Paid Premium shall be replaced
by a corresponding European Market Premium indicator, if
published by Metal Bulletin. If no such replacement indicator is
published, the Parties will enter into good faith negotiations
in order to amend the definition of EC Duty Paid Premium.
2.11 QUALITY
(a) Metal supplied under this Agreement shall comply with the
Specifications set forth in SCHEDULE 1. The Supplier shall use
Commercially Reasonable Efforts to notify the Purchaser prior to
shipment of any Metal that does not meet Specifications. The
Purchaser shall not be required to accept delivery of any Metal
that does not meet Specifications. If the Purchaser does not
accept delivery of Metal not meeting Specifications, the
Supplier's obligation shall be limited to the assumption of all
costs for return of such Metal to the Supplier, and for the
delivery of replacement Metal to the Purchaser. All other
express or implied warranties, conditions and other terms
relating to Metal hereunder, including warranties relating to
merchantability or fitness for a particular purpose, are hereby
excluded to the fullest extent permitted by Applicable Law.
(b) If the Specifications for Metal supplied by the Supplier change,
the Supplier may propose that the Specifications set forth in
SCHEDULE 1 be amended to reflect such changes. If the revised
Specifications do not result in increased costs for the
processing of such Metal by the Purchaser, the Purchaser shall
not unreasonably withhold or delay its consent to such changed
specifications.
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2.12 PAYMENT
(a) The Purchaser shall pay the Supplier in full for each shipment
of Metal meeting the Specifications set out in SCHEDULE 1 or
otherwise accepted by the Purchaser in accordance with the
Supplier's commercial invoice within forty-five (45) days of the
last day of the month of the Bill of Lading Date.
(b) If the Purchaser believes that a shipment of Metal does not meet
the Specifications set out in SCHEDULE 1 and has rejected such
shipment in a timely manner in accordance with the terms hereof,
it need not pay the invoice. However, if the Purchaser
subsequently accepts that the Metal complies with the
Specifications set out in SCHEDULE 1, the Purchaser shall pay
the invoice and, if payment is overdue pursuant to Section
2.12(a), interest in accordance with Section 2.12(c).
(c) If any payment required to be made pursuant to Section 2.12(a)
above is overdue, the full amount shall bear interest at a rate
per annum equal to the Default Interest Rate calculated on the
actual number of days elapsed, accrued from and excluding the
date on which such payment was due, up to and including the
actual date of receipt of payment in the nominated bank or
banking account.
(d) All amounts paid to the Supplier or the Purchaser hereunder
shall be paid in Euros, pounds, sterling or Dollars, at the
option of the Party making the payment, by wire transfer in
immediately available funds to the account specified by the
Supplier or Purchaser, as applicable, by notice from time to
time by one Party to the other hereunder.
(e) If any Party fails to purchase or supply, as applicable, any
quantity of Metal in any month as required under the terms of
this Agreement, such Party shall be liable to the other Party
for all direct damages, losses and costs resulting from such
failure, provided that such other Party shall use its
Commercially Reasonable Efforts to mitigate such damages, losses
and costs.
2.13 DELIVERY
Metal shall be delivered CIP the Delivery Site identified in each Firm
Order. The delivery of Metal pursuant to this Section 2.13 shall be
governed by Incoterms 2000, as amended from time to time.
2.14 TITLE AND RISK OF LOSS
Title to and risk of damage to and loss of Metal shall pass to the
Purchaser as the Metal is delivered by the Supplier to the carrier.
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2.15 PURCHASER AS PRINCIPAL
The Purchaser warrants that all Metal to be purchased hereunder shall
be purchased for Purchaser's own consumption (and, as applicable, that
of its Subsidiaries). The Purchaser agrees that it shall not re-sell or
otherwise make available to any Person (other than a Subsidiary) any
Metal purchased from the Supplier hereunder, other than in respect of
transactions undertaken in small quantities by the Purchaser to balance
purchases or Purchaser's metal position.
3. FORCE MAJEURE
3.1 EFFECT OF FORCE MAJEURE
No Party shall be liable for any loss or damage that arises directly or
indirectly through or as a result of any delay in the fulfilment of or
failure to fulfil its obligations in whole or in part (other than the
payment of money as may be owed by a Party) under this Agreement where
the delay or failure is due to Force Majeure. The obligations of the
Party affected by the event of Force Majeure (the "AFFECTED PARTY")
shall be suspended, to the extent that those obligations are affected
by the event of Force Majeure, from the date the Affected Party first
gives notice in respect of that event of Force Majeure until cessation
of that event of Force Majeure (or the consequences thereof).
3.2 DEFINITION
"FORCE MAJEURE" shall mean any act, occurrence or omission (or other
event), subsequent to the commencement of the Term hereof, which is
beyond the reasonable control of the Affected Party including, but not
limited to: fires, explosions, accidents, strikes, lockouts or labour
disturbances, floods, droughts, earthquakes, epidemics, seizures of
cargo, wars (whether or not declared), civil commotion, acts of God or
the public enemy, action of any government, legislature, court or other
Governmental Authority, action by any authority, representative or
organisation exercising or claiming to exercise powers of a government
or Governmental Authority, compliance with Applicable Law, blockades,
power failures or curtailments, inadequacy or shortages or curtailments
or cessation of supplies of raw materials or other supplies, failure or
breakdown of equipment of facilities, the invocation of Force Majeure
by any party to an agreement under which any Party's operations are
affected, and any declaration of Force Majeure by the facility
producing the Metal, or any other event beyond the reasonable control
of the Parties whether or not similar to the events or occurrences
enumerated above. In no circumstances shall problems with making
payments constitute Force Majeure.
3.3 NOTICE
Upon the occurrence of an event of Force Majeure, the Affected Party
shall promptly give notice to the other Party hereto setting forth the
details of the event of Force
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Majeure and an estimate of the likely duration of the Affected Party's
inability to fulfil its obligations under this Agreement. The Affected
Party shall use Commercially Reasonable Efforts to remove the said
cause or causes and to resume, with the shortest possible delay,
compliance with its obligations under this Agreement provided that the
Affected Party shall not be required to settle any strike, lockout or
labour dispute on terms not acceptable to it. When the said cause or
causes have ceased to exist, the Affected Party shall promptly give
notice to the other Party that such cause or causes have ceased to
exist.
3.4 PRO RATA ALLOCATION
If the Supplier's supply of any Metal to be delivered to the Purchaser
is stopped or disrupted by an event of Force Majeure, the Supplier
shall have the right to allocate its available supplies of such Metal,
if any, among any or all of its existing customers whether or not under
contract, in a fair and equitable manner. In addition, where the
Supplier is the Affected Party, it may (but shall not be required to)
offer to supply, from another source, Metal of similar quality in
substitution for the Metal subject to the event of Force Majeure to
satisfy that amount which would have otherwise been sold and purchased
hereunder at a price which may be more or less than the price
hereunder.
3.5 CONSULTATION
Within thirty (30) days of the cessation of the event of Force Majeure,
the Parties shall consult with a view to reaching agreement as to the
Supplier's obligation to provide, and the Purchaser's obligation to
take delivery of, that quantity of Metal that could not be sold and
purchased hereunder because of the event of Force Majeure, provided
that any such shortfall quantity has not been replaced by substitute
Metal pursuant to the terms above. In the absence of any agreement by
the Parties, failure to deliver or accept delivery of Metal which is
excused by or results from the operation of the foregoing provisions of
this Section 3 shall not extend the Term of this Agreement and the
quantities of Metal to be sold and purchased under this Agreement shall
be reduced by the quantities affected by such failure.
3.6 TERMINATION
(a) If an event of Force Majeure where the Affected Party is the
Purchaser shall continue for more than **** consecutive calendar
months, then the Supplier shall have the right to terminate this
Agreement.
(b) If an event of Force Majeure where the Affected Party is the
Supplier shall continue for more than *** consecutive calendar
months, then the Purchaser shall have the right to terminate
this Agreement.
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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4. ASSIGNMENT
4.1 PROHIBITION ON ASSIGNMENTS
No Party shall assign or transfer this Agreement, in whole or in part,
or any interest or obligation arising under this Agreement, except as
permitted by Section 4.2, without the prior written consent of the
other Party.
4.2 ASSIGNMENT WITHIN ALCAN GROUP OR NOVELIS GROUP
(a) With the consent of Novelis, such consent not to be unreasonably
withheld or delayed, Alcan may elect to have one or more of the
Persons comprising the Alcan Group assume the rights and
obligations of the Supplier under this Agreement, provided that
(i) Alcan shall remain fully liable for all obligations of
the Supplier hereunder, and
(ii) the transferee will remain at all times a member of the
Alcan Group;
any such successor to Alcan as a Supplier under this Agreement
shall be deemed to be the "SUPPLIER" for all purposes of the
Agreement.
(b) With the consent of Alcan, such consent not to be unreasonably
withheld or delayed, Novelis may elect to have one or more of
the Persons comprising the Novelis Group assume the rights and
obligations of the Purchaser under this Agreement, provided that
(i) Novelis shall remain fully liable for all obligations of
the Purchaser hereunder, and
(ii) the transferee will remain at all times a member of the
Novelis Group;
any such successor to Novelis as Purchaser under this Agreement
shall be deemed to be the "PURCHASER" for all purposes of this
Agreement.
5. TERM AND TERMINATION
5.1 EFFECTIVENESS
This Agreement shall come into effect upon the Effective Date.
5.2 TERM
The term of this Agreement (the "TERM") shall be from the Effective
Date until ***, unless terminated earlier or extended pursuant to the
provisions of this Agreement.
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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5.3 EXTENSION
One year prior to the expiration of the Term, the Parties may, upon the
request of any Party, meet to negotiate in good faith a possible
extension of the Term for a further period on terms to be mutually
agreed (including in respect of quantities and price of Metal to be
purchased and supplied hereunder). If no such agreement is reached
between the Parties, the Agreement shall terminate upon expiry of the
Term.
5.4 TERMINATION
This Agreement shall terminate:
(a) upon expiry of the Term;
(b) upon the mutual agreement of the Parties prior to the expiry of
the Term;
(c) pursuant to Section 3.6 as a result of Force Majeure; or
(d) upon the occurrence of an Event of Default, in accordance with
Section 6.
6. EVENTS OF DEFAULT
This Agreement may be terminated in its entirety immediately at the
option of a Party (the "TERMINATING PARTY"), in the event that an Event
of Default occurs in relation to the other Party (the "DEFAULTING
PARTY"), and such termination shall take effect immediately upon the
Terminating Party providing notice to the Defaulting Party of the
termination.
For the purposes of this Agreement, each of the following shall
individually and collectively constitute an "EVENT OF DEFAULT" with
respect to a Party:
(a) such Party defaults in payment of any payments which are due and
payable by it pursuant to this Agreement, and such default is
not cured within thirty (30) days following receipt by the
Defaulting Party of notice of such default;
(b) such Party breaches any of its material obligations pursuant to
this Agreement (other than as set out in paragraph (a) above),
and fails to cure it within sixty (60) days after receipt of
notice from the non-defaulting Party specifying the default with
reasonable detail and demanding that it be cured, provided that
if such breach is not capable of being cured within sixty (60)
days after receipt of such notice and the Party in default has
diligently pursued efforts to cure the default within the sixty
(60) day period, no Event of Default under this paragraph (b)
shall occur;
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(c) such Party breaches any material representation or warranty, or
fails to perform or comply with any material covenant,
provision, undertaking or obligation in or of the Separation
Agreement;
(d) in relation to the Purchaser (1) upon the occurrence of a Non
Compete Breach (as defined in the Separation Agreement) and the
giving of notice of the termination of this Agreement by Alcan
to Novelis pursuant to Section 14.03(b) of the Separation
Agreement and pursuant to this paragraph of this Agreement, or
(2) upon the occurrence of a Change of Control Non Compete
Breach (as defined in the Separation Agreement) and the giving
of notice of the termination of this Agreement by Alcan to
Novelis pursuant to Section 14.04(e) of the Separation
Agreement, in which event the termination of this Agreement
shall be effective immediately upon Alcan providing Novelis
notice pursuant to Section 14.03(b) or Section 14.04(e) of the
Separation Agreement;
(e) such Party (i) is bankrupt or insolvent or takes the benefit of
any statute in force for bankrupt or insolvent debtors, or (ii)
files a proposal or takes any action or proceeding before any
court of competent jurisdiction for dissolution, winding-up or
liquidation, or for the liquidation of its assets, or a receiver
is appointed in respect of its assets, which order, filing or
appointment is not rescinded within sixty (60) days; or
(f) proceedings are commenced by or against such Party under the
laws of any jurisdiction relating to reorganization, arrangement
or compromise.
7. REPRESENTATIONS AND WARRANTIES
The Parties hereby reiterate for the purposes of this Agreement those
representations and warranties set forth in Article VI of the
Separation Agreement.
8. CONFIDENTIALITY
Each of the Parties shall at all times be in full compliance with its
obligations under Sections 11.07 and 11.08 (Confidentiality) of the
Separation Agreement.
9. DISPUTE RESOLUTION
9.1 DISPUTES
The Master Agreement with respect to Dispute Resolution, effective on
the Effective Date, among the Parties and other parties thereto shall
govern all disputes, controversies or claims (whether arising in
contract, delict, tort or otherwise) ("DISPUTES") between the Parties
that may arise out of, or relate to, or arise under or
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in connection with, this Agreement or the transactions contemplated
hereby (including all actions taken in furtherance of the transactions
contemplated hereby), or the commercial or economic relationship of the
Parties relating hereto or thereto.
9.2 CONTINUING OBLIGATIONS
The existence of a Dispute with respect to this Agreement between the
Parties shall not relieve either Party from performance of its
obligations under this Agreement that are not the subject of such
Dispute.
10. MISCELLANEOUS
10.1 CONSTRUCTION
The terms of Section 16.04 (Construction) of the Separation Agreement
shall apply to this Agreement, mutatis mutandis, as if all references
therein to the "Agreement" were deemed to be references to this
Agreement.
10.2 NOTICES
All notices and other communications under this Agreement shall be in
writing and shall be deemed to be duly given (a) on the date of
delivery if delivered personally, (b) on the first Business Day
following the date of dispatch if delivered by a nationally recognized
next-day courier service, (c) on the date of actual receipt if
delivered by registered or certified mail, return receipt requested,
postage prepaid or (d) if sent by facsimile transmission, when
transmitted and receipt is confirmed by telephone. All notices
hereunder shall be delivered as follows:
IF TO THE PURCHASER, TO:
NOVELIS INC.
Suite 3800
Royal Bank Plaza, South Tower
P.O. Box 84
200 Bay Street
Toronto, Ontario
M5J 2Z4
Fax: 416-216-3930
Attention: Chief Executive Officer
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IF TO THE SUPPLIER, TO:
ALCAN INC.
1188 Sherbrooke Street West
Montreal, Quebec
H3A 3G2
Fax: 514-848-8115
Attention: Chief Legal Officer
Any Party may, by notice to the other Party, change the address or fax
number to which such notices are to be given.
10.3 GOVERNING LAW
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the Province of Quebec and the laws of
Canada applicable therein, irrespective of conflict of laws principles
under Quebec law, as to all matters, including matters of validity,
construction, effect, enforceability, performance and remedies.
10.4 JUDGMENT CURRENCY
The obligations of a Party to make payments hereunder shall not be
discharged by an amount paid in any currency other than Euros, whether
pursuant to a court judgment or arbitral award or otherwise, to the
extent that the amount so paid upon conversion to Euros and transferred
to an account indicated by the Party to receive such funds under normal
banking procedures does not yield the amount of Euros due, and each
Party hereby, as a separate obligation and notwithstanding any such
judgment or award, agrees to indemnify the other Party against, and to
pay to such Party on demand, in Euros, any difference between the sum
originally due in Euros and the amount of Euros received upon any such
conversion and transfer.
10.5 ENTIRE AGREEMENT
This Agreement, the Separation Agreement and schedules, exhibits,
annexes and appendices hereto and thereto and the specific agreements
contemplated herein or thereby, contain the entire agreement between
the Parties with respect to the subject matter hereof and supersede all
previous agreements, negotiations, discussions, writings,
understandings, commitments and conversations with respect to such
subject matter. No agreements or understandings exist between the
Parties with respect to the subject matter hereof other than those set
forth or referred to herein or therein.
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10.6 CONFLICTS
In case of any conflict or inconsistency between this Agreement and the
Separation Agreement, this Agreement shall prevail.
10.7 SEVERABILITY
If any provision of this Agreement or the application thereof to any
Person or circumstance is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has
been held invalid or unenforceable, shall remain in full force and
effect and shall in no way be affected, impaired or invalidated
thereby, so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any Party.
Upon such determination, the Parties shall negotiate in good faith in
an effort to agree upon such a suitable and equitable provision to
effect the original intent of the Parties.
10.8 SURVIVAL
The obligations of the Parties under Sections 2.10, 2.11, 2.12, 8, 9,
10.3 and 10.8 and liability for the breach of any obligation contained
herein shall survive the expiration or earlier termination of this
Agreement.
10.9 EXECUTION IN COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the
Parties and delivered to the other Party.
10.10 AMENDMENTS
No provisions of this Agreement shall be deemed waived, amended,
supplemented or modified by any Party, unless such waiver, amendment,
supplement or modification is in writing and signed by the authorized
representative of the Party against whom it is sought to enforce such
waiver, amendment, supplement or modification.
10.11 WAIVERS
No failure on the part of a Party to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power
or privilege under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or
privilege under this Agreement preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any
remedies provided by Applicable Law.
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10.12 NO PARTNERSHIP
Nothing contained herein or in the Agreement shall make a Party a
partner of any other Party and no Party shall hold out the other as
such.
10.13 TAXES, ROYALTIES AND DUTIES
All royalties, taxes and duties imposed or levied on any Metal
delivered hereunder (other than any taxes on the income of the
Supplier) shall be for the account of and paid by the Purchaser.
10.14 LIMITATIONS OF LIABILITY
(a) Neither Party shall be liable to the other Party for any
indirect, collateral, incidental, special, consequential or
punitive damages, lost profit or failure to realize expected
savings or other commercial or economic loss of any kind,
howsoever caused, and on any theory of liability (including
negligence) arising in any way out of this Agreement; provided,
however, that the foregoing limitations shall not limit any
Parties' indemnification obligations for Liabilities with
respect to Third Party Claims as set forth Article IX of the
Separation Agreement (as if such Article IX was set out in full
herein by reference to the obligations of the Parties
hereunder).
(b) Sections 9.04, 9.05, 9.06, 9.07 and 9.09 of the Separation
Agreement shall apply mutatis mutandis with respect to any
Liability subject to any indemnification or reimbursement
pursuant to this Agreement.
10.15 PRINCIPALS AND AGENTS
The Parties agree that each of Novelis and Alcan is entering into this
Agreement as principal on its own behalf and as agent for its
Subsidiaries that may, from time to time, wish to purchase or supply,
as applicable, Metal under the terms of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.]
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IN WITNESS WHEREOF, the Parties hereto have caused this Metal Supply Agreement
to be executed by their duly authorized representatives.
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