Exhibit 10.10(a)
WCI STEEL, INC.
PELLET SALES AGREEMENT
PROPOSED MODIFICATIONS TO PELLET PRICING
SEPTEMBER 21, 2005
1. Cliffs will defer in the 2006 ore year an amount (the "Deferred Amount")
equal to [*****](1) of the amount by which the final adjusted price per
iron ton (after applying Section 6(d) of the October 14, 2004 Amended and
Restated Pellet Sale and Purchase Agreement as modified by the November 11,
2004 amendment thereto (as so amended, the "Current Contract")) exceeds the
price per gross ton without applying such Section 6(d) of the Current
Contract. Section 6(d) provides that in 2006 the final adjusted price per
iron ton shall not be less than $[*****] per gross ton below the ECWPP.
2. The Deferred Amount from 2006 will be paid to Cliffs by WCI over three
years (2007 - 2009) in 12 equal quarterly payments beginning on March 1,
2007 together with interest accrued thereon at the applicable rate as
specified in paragraph 3. Notwithstanding the foregoing, in the event that
WCI's Third Amended Plan of Reorganization or an Alternate POR is not
confirmed and effective on or before June 30, 2006, then the Deferred
Amount, with accrued interest through the date of payment, will be paid to
Cliffs, no later than July 31, 2006. In addition, the unpaid portions of
the Deferred Amount shall be paid in full, with accrued interest through
the date of payment, contemporaneously with the payment of any dividend to
WCI's equity holders not provided for in the upstreaming section of the
Company's Collective Bargaining Agreement with the United Steelworkers of
America dated April 29, 2004 as amended.
3. Interest will accrue as amounts are deferred and any portion of the
Deferred Amount is outstanding, and interest will be paid on the Deferred
Amount to Cliffs by WCI over three years (2007 - 2009), as described above,
in 12 quarterly payments beginning on March 1, 2007. Interest for any
period in which there is a deferral, any unpaid principal balance of the
Deferred Amount or any unpaid interest thereon, will be calculated at the
Prime Rate plus [*****] basis points compounded quarterly as of the last
day of the quarter. The Prime Rate for a given quarter will be defined as
the Prime Rate published in the Wall Street Journal on the first business
day of each quarter for that quarter.
4. The 2008 price re-opener included in Section 6g(i) of the Current Contract
will be eliminated along with reference to the 2008 reopener included in
Section 23(a) viii of the Current Contract.
5. The Annual Cap for pellet purchases, which is currently at [*****] million
tons in 2005 and [*****] million tons thereafter in the Current Contract
will be modified to [*****] million tons in 2006, [*****] million tons in
2007 and 2008, [*****] million tons in 2009
----------
(1) CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSION.
and [*****] million tons in 2010 and thereafter. In the event that WCI
requires additional tonnage beyond these amounts, Cliffs shall have a right
of first refusal to provide such tonnage under the terms and at the prices
specified in the Current Contract, provided, however, Cliffs shall not be
obligated to supply such excess tonnage.
6. Cliffs will have the right to audit WCI's financial results on an annual
basis for the period after WCI emerges from Chapter 11 for as long as any
of the Deferred Amount is outstanding.
7. The deferral provided for in paragraph 1 of the Term Sheet shall only be
available to WCI if WCI's Third Amended Plan of Reorganization or an
Alternate POR is confirmed and becomes effective on or before June 30,
2006. The modifications to the Current Contract set forth in paragraphs 2-7
hereof shall be effective immediately and shall not be affected, rescinded,
or modified as a result of the failure of WCI to achieve confirmation or
effectiveness of its Third Amended Plan of Reorganization or an Alternate
POR by June 30, 2006.
Cleveland-Cliffs Inc. WCI Steel, Inc.
By: By:
--------------------------------- ------------------------------------
Dated: September __, 2005 Dated: September __, 2005
