MOLTEN METAL SUPPLY AGREEMENT BETWEEN NOVLIS INC. & ALCAN INC.
Published on March 30, 2005
EXECUTION COPY
(METAL SUPPLY AGREEMENT #2
MOLTEN METAL)
EXHIBIT 10.3
MOLTEN METAL SUPPLY AGREEMENT
between
NOVELIS INC.
(as Purchaser)
and
ALCAN INC.
(as Supplier)
FOR THE SUPPLY OF MOLTEN METAL TO PURCHASER'S SAGUENAY WORKS FACILITY
DATED JANUARY 5, 2005, WITH EFFECT AS OF THE EFFECTIVE DATE
TABLE OF CONTENTS
SCHEDULES
1 Contract Tonnage and Estimated Weekly Shipping Schedule for Contract Year 1
2 Saguenay Smelters
MOLTEN METAL SUPPLY AGREEMENT
THIS AGREEMENT entered into in the City of Montreal, Province of Quebec, is
dated January ___, 2005, 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").
WHEREAS the Supplier wishes to supply, and the Purchaser wishes to purchase,
subject to the terms and conditions of this Agreement, Molten Metal (as defined
below) required by the Purchaser at the Purchaser's Saguenay Works facility.
WHEREAS the Parties have entered into this Agreement 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
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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 Molten Metal Supply Agreement, including all of the
Schedules hereto.
"ALCAN" means Alcan Inc.
"ALCAN GROUP" means Alcan and its Subsidiaries from time to time on and
after the Effective Date.
"ALUMINUM PRICE" for any calendar month means the arithmetic average LME
3-Month seller'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 2.6(b). As
an example, the Aluminum Price for the month of April will be based on
aluminum prices published during the month of March.
"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.
"BASE CONTRACT TONNAGE" means:
(i) in respect of Contract Year 1, *** Tonnes;
(ii) in respect of Contract Year 2, *** Tonnes; and
(iii) in respect of Contract Year 3 and each subsequent Contract Year,
*** Tonnes,
subject to any reduction in accordance with Section 2.4(b).
"BILL OF LADING DATE" means the date of the bill of lading representing
Molten 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.
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been requested with respect to the omitted portions.
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"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).
"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; 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.
"CONTRACT PRICE" for each Tonne of Molten Metal sold and purchased
hereunder in any month shall be:
(i) in respect of each month occurring in Contract Year *** to
Contract Year *** (inclusive), the Midwest Price minus the LME
Discount, minus the Molten Metal Discount;
(ii) in respect of each month occurring in Contract Year *** to
Contract Year *** (inclusive), such price as may be agreed by the
Purchaser and the Supplier by good faith negotiations during
Contract Year *** , and in the absence of such agreement, the
Midwest Price calculated for such month minus the Molten Metal
Discount; and
(iii) in respect of each month occurring subsequent to Contract Year
*** , such price as may be agreed as a result of good faith
negotiations in connection with any extension of the Term
pursuant to Section 5.3 hereof.
Such amount shall be rounded upwards to the nearest Dollar.
"CONTRACT TONNAGE" has the meaning set forth in Section 2.3(c).
"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
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been requested with respect to the omitted portions.
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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.
"CPT" means, to the extent not inconsistent with the provisions of this
Agreement, CPT as defined in Incoterms 2000, published by the ICC, Paris,
France, as amended from time to time.
"DEFAULT INTEREST RATE" means the rate of interest charged by Supplier from
time to time on late payments in accordance with Supplier's normal
commercial practice, as indicated on invoices issued by Supplier to
Purchaser hereunder.
"DEFAULTING PARTY" has the meaning set forth in Section 6.
"DELIVERY SITE" means the Purchaser's Saguenay Works facility located at
2040 Fay Street, Jonquiere, Quebec, Canada.
"DISPUTES" has the meaning set forth in Section 9.1.
"DOLLARS" or "$" means the lawful currency of the United States of America.
"EFFECTIVE DATE" means the "Effective Date" as defined in the Separation
Agreement.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.
"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.
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"LME DISCOUNT" means, (i) for each of Contract Year *** to Contract Year
***, inclusive, ***% of the Aluminum Price; (ii) for each of Contract Year
*** to Contract Year ***, inclusive, such amount as may be agreed by the
Purchaser and the Supplier as a result of good faith negotiations that
shall take place in Contract Year ***and, in the absence of such agreement,
zero (0); and (iii) for any Contract Year from and after Contract Year ***,
such amount as may be agreed by the Purchaser and the Supplier in good
faith negotiations in connection with any extension of the Term pursuant to
Section 5.3.
"MIDWEST PRICE" for any calendar month means the arithmetic average of the
mid-west transaction prices for primary high grade aluminum, as published
in Metals Week on each day during the calendar month preceding such
calendar month or as otherwise determined pursuant to Section 2.6(b). As an
example, the Midwest Price for the month of April will be based on metal
prices published during the month of March.
"MOLTEN METAL" means P1020 aluminum metal in molten form.
"MOLTEN METAL DISCOUNT" means, (i) for each of Contract Year *** to
Contract Year ***, inclusive, $***; (ii) for each of Contract Year *** to
Contract Year ***, inclusive, such amount as may be agreed by the Purchaser
and the Supplier as a result of good faith negotiations that shall take
place in Contract Year ***; in the absence of such agreement, the Molten
Metal Discount for Contract Years *** to *** shall be the Molten Metal
Discount for the preceding Contract Year multiplied by a factor equal to
***; and (iii) for any Contract Year from and after Contract Year ***, such
amount as may be agreed by the Purchaser and the Supplier as a result of
good faith negotiations in connection with any extension of the Term
pursuant to Section 5.3.
"NOVELIS" means Novelis Inc.
"NOVELIS GROUP" means Novelis Inc. and its Affiliates 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.
"PURCHASER" has the meaning set forth in the Preamble to this Agreement.
"SAGUENAY SMELTER" means those aluminum smelters of the Supplier identified
in Schedule 2.
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been requested with respect to the omitted portions.
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"SAGUENAY WORKS" means the Purchaser's light gauge rolled products facility
at Jonquiere, Quebec, Canada.
"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 such specifications for Molten Metal as may be
proposed from time to time in accordance with Section 2.7.
"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.
"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.
"US PPI" means the Producer Price Index for industrial commodities, as
published monthly by the Bureau of Labor Statistics of the U.S. Department
of Labor.
1.2 CURRENCY
All references to currency herein are to Dollars unless otherwise
specified.
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.
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2. MOLTEN 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 "CPT
the Delivery Site" the quantities of Molten Metal determined in
accordance with this Agreement.
(b) The Supplier shall supply Molten Metal produced by the Supplier from a
Saguenay Smelter of the Supplier's choosing or from such other sources
and locations as may be agreed.
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 "CPT the
Delivery Site" the quantities of Molten Metal determined in accordance with
this Agreement.
2.3 QUANTITIES OF MOLTEN METAL REQUIRED BY THE PURCHASER
(a) The Purchaser agrees to purchase and the Supplier agrees to supply, in
each Contract Year, Contract Tonnage of no more than the Base Contract
Tonnage applicable for such Contract Year and no less than eighty
percent (80%) of the Base Contract Tonnage applicable for such
Contract Year as specified by the Purchaser pursuant to Section 2.3(c)
below. The purchase and supply, as applicable, by the Parties, of any
greater quantity shall be subject to further agreement of the Parties,
at each Party's discretion.
(b) The Parties shall use Commercially Reasonable Efforts to arrange for
shipping and delivery schedules to be approximately evenly spread on a
daily and weekly basis throughout each Contract Year.
(c) On or before October 31 in each Contract Year, the Purchaser shall
submit to the Supplier a notice setting forth the annual quantity of
Molten Metal required for the next succeeding Contract Year (the
"CONTRACT TONNAGE" for such Contract Year), which shall be no less
than 80% of the Base Contract Tonnage applicable to the next
succeeding Contract Year, and no more than the Base Contract Tonnage
for such Contract Year, and an estimated shipping schedule and
quantities of Molten Metal to be purchased in each week of such
Contract Year; in establishing such shipping schedule, the Purchaser
shall endeavour to divide the Contract Tonnage as evenly as possible
for delivery throughout each day and each week in the Contract Year.
The Contract Tonnage for Contract Year 1, and the estimated shipping
schedule and quantities of Molten Metal to be delivered in each week
during Contract Year 1, are set out in SCHEDULE 1 hereto.
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2.4 OTHER TERMS AFFECTING QUANTITY
(a) Throughout the Term of this Agreement, the Purchaser shall be entitled
to request reductions in the amount of Molten Metal to be delivered in
any week by the Supplier hereunder by notice to the Supplier, and the
Supplier shall adjust its shipments so as to provide such reduced
amount in such week, provided such reduction is made in connection
with either (i) a planned maintenance shutdown of the Purchaser's
facilities at Saguenay Works or (ii) a statutory holiday falling in
such week, and the Parties have agreed on the timing for any such
maintenance shut down or variation in quantity. The Parties shall use
their Commercially Reasonable Efforts to reach agreement under this
Section 2.4(a) with a view to avoiding production disruptions or
inventory buildup. Any reduction of weekly supply pursuant to this
Section 2.4(a) shall not affect the obligations of the Purchaser and
the Supplier under Section 2.3(a).
(b) The quantity of Molten Metal which the Purchaser agrees to purchase
and the Supplier agrees to supply hereunder shall be subject to
reduction in the event the Supplier provides notice to the Purchaser
that one or more of the Saguenay Smelters 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 Saguenay Smelter
would be uneconomic or otherwise unviable for the Supplier or non
value-maximizing for the Supplier. The 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 Contract Tonnage multiplied by
the annual reduction capacity of the Saguenay Smelters (or Smelter)
that has (or have) been shut down, and divided by the total annual
production capacity of all Saguenay Smelters before giving effect to
the shut down. Supplier shall provide not less than 18 months prior
notice to Purchaser before invoking this provision.
(c) Subject to the Parties' obligations to purchase and supply, as
applicable, the Contract Tonnage in each Contract Year on the terms of
this Section 2, the Parties shall consult at least once a week in
order to agree on the quantities of Molten Metal to be supplied on a
daily basis. The Supplier will use Commercially Reasonable Efforts to
allocate Molten Metal produced by the Supplier on a fair basis between
the Purchaser and facilities of the Supplier or its Affiliates that
require Molten Metal.
2.5 SUPPLIER'S SHIPPING OBLIGATIONS
(a) The Supplier shall supply to the Purchaser, in accordance with the
terms hereof, in each week, such quantity of Molten Metal as is
identified by the Purchaser in respect of such week in a notice
pursuant to Section 2.3(c) hereof, subject to any reduction in
accordance with Section 2.4.
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(b) Notwithstanding the provisions of Incoterms 2000 and Section 2.10, the
Supplier acknowledges its responsibility to make all necessary
arrangements for the transportation of Molten 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 for the shipment of Molten Metal under this Agreement. In
doing this, the Supplier shall use Commercially Reasonable Efforts to
obtain the most competitive freight rates and shall obtain approval
from the Purchaser before entering into any long term contracts for
hiring carriers on behalf of the Purchaser. The Supplier shall use
Commercially Reasonable Efforts to ensure that such transportation is
suitable for delivering Molten Metal to the Delivery Site.
2.6 PRICE
(a) The price payable by the Purchaser to the Supplier for each Tonne of
Molten Metal sold and purchased pursuant to Sections 2.1 and 2.2 shall
be the Contract Price. The date used for calculating the Contract
Price for any shipment of Molten Metal shall be the Bill of Lading
Date.
(b) In the event that (i) the LME ceases or suspends trading in aluminum;
(ii) Metal Week ceases to be published or ceases to publish the
relevant reference price for determining the Midwest Price; or (iii)
Metal Bulletin ceases to be published or ceases publication of the
relevant reference price for determining the Aluminum Price, the
Parties shall meet with a view to agreeing on an alternative
publication or, as applicable, an alternative 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 an appropriate amendment to the
terms of this Section 2.6. The decision of the Chairman or his nominee
shall be final and binding on the Parties.
2.7 QUALITY
(a) Molten Metal supplied under this Agreement shall comply with the
definition of "Molten Metal" set forth in Section 1.1. The Supplier
shall use Commercially Reasonable Efforts to notify the Purchaser
prior to shipment of any Molten Metal that does not meet this
description. The Purchaser shall not be required to accept delivery of
any Molten Metal that does not meet this description. If the Purchaser
does not accept delivery of Molten Metal not meeting this description,
the Supplier's obligation shall be limited to the assumption of all
costs for return of such Molten Metal to the Supplier, and for the
delivery of replacement Molten Metal to the Purchaser. All other
express or implied warranties, conditions and other terms relating to
Molten Metal hereunder, including warranties relating to
merchantability or fitness for a
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particular purpose, are hereby excluded to the fullest extent
permitted by Applicable Law.
(b) The Purchaser may from time to time propose that Molten Metal to be
supplied hereunder comply with additional specifications. The Supplier
shall use Commercially Reasonable Efforts to agree to such proposed
modifications or additions.
(c) The Parties shall cooperate in good faith to develop a plan for
addressing sodium content issues in Molten Metal supplied from the
Supplier's Alma smelter by June 30, 2005.
2.8 PAYMENT
(a) The Purchaser shall pay the Supplier in full, in accordance with
Supplier's commercial invoice, for each shipment of Molten Metal
meeting the Specifications for P1020 aluminum metal or otherwise
accepted by Purchaser. Payment shall be made every 14 days commencing
February 14, 2005 (each a "Payment Date"), or if such day is not a
Business Day, then on the immediately following Business Day. Payment
shall be made on each Payment Date in respect of all invoices issued
not later than 31 days prior to such payment date and not previously
paid, with invoices issued after such date being payable on the next
following Payment Date.
(b) If the Purchaser believes that a shipment of Molten Metal does not
meet the description of Molten Metal as defined in this Agreement 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 Molten Metal complies with the
requirements of this Agreement, the Purchaser shall pay the invoice
and, if payment is overdue pursuant to Section 2.8(a) above, interest
in accordance with Section 2.8(c).
(c) If any payment required to be made pursuant to Section 2.8(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 Dollars by wire transfer in immediately available funds or by
ACH 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 Molten 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
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resulting from such failure, provided that such other Party shall use its
Commercially Reasonable Efforts to mitigate such damages, losses and costs.
2.9 DELIVERY
Molten Metal shall be delivered CPT the Delivery Site. The delivery of
Molten Metal pursuant to this Section 2.9 shall be governed by Incoterms
2000, as amended from time to time.
2.10 TITLE AND RISK OF LOSS
Title to and risk of damage to and loss of Molten Metal shall pass to the
Purchaser as the Molten Metal is delivered by the Supplier to the carrier.
2.11 PURCHASER AS PRINCIPAL
The Purchaser warrants that all Molten Metal to be purchased hereunder
shall be purchased for Purchaser's own consumption. The Purchaser agrees
that it shall not re-sell or otherwise make available to any Person any
Molten 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
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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 Molten
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 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 Molten 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
Molten 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, Molten Metal of similar quality in
substitution for the Molten 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 Molten 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 Molten
Metal pursuant to the terms above.
In the absence of any agreement by the Parties, failure to deliver or
accept delivery of Molten Metal which is excused by or results from the
operation of the foregoing
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provisions of this Section 3 shall not extend the Term of this Agreement
and the quantities of Molten 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.
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
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the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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(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 full force and 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.
5.3 EXTENSION
One year prior to the expiration of the Term, the Parties may, upon the
request of either 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 of Molten Metal to be purchased and
supplied hereunder and pricing to apply in such further period). 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.
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*** 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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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;
(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
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(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 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
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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
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 Dollars, whether
pursuant to a court judgment or arbitral award or otherwise, to the extent
that the amount so paid upon
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conversion to Dollars and transferred to an account indicated by the Party
to receive such funds under normal banking procedures does not yield the
amount of Dollars 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 Dollars, any
difference between the sum originally due in Dollars and the amount of
Dollars 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.
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 2.6, 2.7, 2.8, 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
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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.
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 Molten 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.
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[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.]
IN WITNESS WHEREOF, the Parties hereto have caused this Molten Metal Supply
Agreement to be executed by their duly authorized representatives.
NOVELIS INC.
By: /s/ Brian W. Sturgell
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Name:
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Title:
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ALCAN INC.
By: /s/ David McAusland
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Name:
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Title:
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