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EXHIBIT 10.32
BLAST FURNACE GAS PURCHASE AGREEMENT
between
ROUGE STEEL COMPANY
as Seller
and
DEARBORN INDUSTRIAL GENERATION, L.L.C.
as Buyer
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TABLE OF CONTENTS
Page
SECTION 1
DEFINITIONS.......................................................... 2
1.01 Certain Defined Terms........................................ 2
1.02 Interpretations; Headings.................................... 5
SECTION 2
REPRESENTATIONS AND WARRANTIES....................................... 5
2.01 Representations and Warranties of ROUGE......................... 5
2.02 Representations and Warranties of DIG........................... 7
SECTION 3
CONDITIONS PRECEDENT................................................. 8
3.01 Enforcement of DIG's Obligations............................. 8
3.02 Enforcement of ROUGE's Obligations........................... 8
SECTION 4
OBLIGATIONS OF THE PARTIES........................................... 9
4.01 Design....................................................... 9
4.02 Governmental Permits and Approvals........................... 9
4.03 Construction of the Project.................................. 10
4.04 Operation of Rouge BFG Facilities............................ 10
4.05 Operation and Maintenance of the Project..................... 11
4.06 Reasonable Efforts and Cooperation........................... 11
SECTION 5
SALE AND PURCHASE OF BFG............................................ 11
5.01 Exclusive Customer.......................................... 11
5.02 Amount and Type of Service.................................. 12
5.03 Notice Requirements......................................... 13
5.04 Disclaimer of Warranty...................................... 14
5.05 Risk of Loss................................................ 14
SECTION 6
MEASUREMENT OF BFG.................................................. 15
6.01 Measurement of BFG.......................................... 15
6.02 Estimation of BFG When Metering Equipment is Not
Functioning................................................. 16
SECTION 7
[INTENTIONALLY BLANK]............................................... 17
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SECTION 8
PAYMENT CALCULATIONS................................................. 18
8.01 Payments..................................................... 18
8.03 No Other Charges............................................. 18
SECTION 9
PAYMENTS; BILLING; INTEREST ON PAST-DUE AMOUNTS...................... 19
9.01 Payments..................................................... 19
9.02 Billing...................................................... 19
9.03 Interest on Past-Due Amounts................................. 19
9.04 Failure to Pay............................................... 20
9.05 Disputed Invoices............................................ 20
SECTION 10
ENVIRONMENTAL COMPLIANCE............................................. 20
SECTION 11
[INTENTIONALLY BLANK]................................................ 21
SECTION 12
TERM OF THIS AGREEMENT............................................... 21
12.01 Term of this Agreement....................................... 21
12.02 Determination of BFG Delivery Date........................... 22
SECTION 13
FORCE MAJEURE........................................................ 22
13.01 Force Majeure................................................ 22
13.02 Restrictions................................................. 24
13.03 Notification Obligations..................................... 24
13.04 Other Consequences........................................... 25
13.05 Meeting between the Parties.................................. 25
SECTION 14
DEFAULT AND TERMINATION.............................................. 25
14.01 Events of Default............................................ 25
SECTION 15
WAIVERS; AMENDMENTS AND MODIFICATIONS................................ 28
15.01 Waivers...................................................... 28
15.02 Amendments and Modifications................................. 28
SECTION 16
NOTICES.............................................................. 28
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16.01 Notices...................................................... 28
SECTION 17
ASSIGNABILITY........................................................ 30
17.01 Non-Assignability............................................ 30
17.02 Permitted Assignment......................................... 30
SECTION 18
LIABILITIES AND INDEMNITIES; LEGAL FEES;
COMPUTATION OF DAMAGES............................................... 31
18.01 Liabilities and Indemnities.................................. 31
18.02 Limitation of Liability...................................... 32
18.03 Duty to Mitigate............................................. 32
SECTION 19
DISPUTE RESOLUTION PROCEDURES........................................ 33
19.01 If A Dispute Arises.......................................... 33
19.02 Arbitration.................................................. 34
SECTION 20
DIG'S FINANCING...................................................... 34
20.01 DIG's Financing.............................................. 34
SECTION 21
MISCELLANEOUS........................................................ 35
21.01 Entire Agreement............................................. 35
21.02 No Drafting Presumption...................................... 35
21.03 Independent Contractor....................................... 36
21.04 Severability................................................. 36
21.05 Governing Law................................................ 36
21.06 Confidentiality.............................................. 36
21.07 Damage, Destruction or Condemnation.......................... 37
21.08 Counterparts................................................. 38
EXHIBIT A
PROJECT SITE......................................................... A-1
EXHIBIT B
ROUGE SITE........................................................... ▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇.................................................... ▇-▇
▇
▇▇▇▇▇▇▇ ▇
PRICING............................................................. D-1
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BLAST FURNACE GAS PURCHASE AGREEMENT
This BLAST FURNACE GAS PURCHASE AGREEMENT, dated as of
January 13, 1999, is made by and between ROUGE STEEL COMPANY, a Delaware
corporation ("ROUGE"), having offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇.▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and DEARBORN INDUSTRIAL GENERATION, L.L.C., a
Michigan limited liability company ("DIG"), having offices at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
RECITAL
WHEREAS, ROUGE owns and operates a steel manufacturing
facility in Dearborn, Michigan, which produces blast furnace gas in its
manufacturing operations; and
WHEREAS, ROUGE intends to continue to operate the steel
manufacturing facility; and
WHEREAS, DIG intends to construct an electric and steam
generating facility near ROUGE's facility which can utilize the blast
furnace gas; and
WHEREAS, ROUGE desires to sell blast furnace gas to DIG and
DIG desires to purchase the blast furnace gas from ROUGE.
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NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, ROUGE and DIG hereby agree as follows:
SECTION 1
DEFINITIONS
1.01 CERTAIN DEFINED TERMS.
As used in this Agreement, the words, phrases and terms used
herein shall be used in the ordinary meaning unless this Agreement
clearly indicates otherwise or unless the same is hereinafter defined,
in which instance, such word, phrase or term shall have the meaning
attributed to it or as defined below:
"Agreement" shall mean this Blast Furnace Gas Purchase
Agreement, as it may be amended, modified or supplemented from time to
time.
"BFG Delivery Date" shall mean the date determined in
accordance with Section 12.02.
12.02.
"Blast Furnace Gas" or BFG" shall mean the blast furnace gas
generated as a by product in the course of the normal operation of the
Blast Furnaces.
"Blast Furnaces" shall mean the iron making facilities
commonly referred to as the "B" and "C" "blast furnaces" which are
presently located within the Rouge Site.
"BTU" shall mean the amount of energy required to raise the
temperature of one (1) pound of pure water one (1) degree Fahrenheit
from fifty-nine (59) degrees Fahrenheit to sixty (60) degrees
Fahrenheit.
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"Circulating Water" shall mean water drawn from the Detroit
Industrial Process Water Pipeline at the Rouge Site and circulated
through closed channels of various equipment to remove heat without
contact with other process fluids.
"Companion Agreements" shall mean separate steam sales
agreements between DIG and ROUGE, and DIG and FORD; electricity sales
agreements between DIG and ROUGE and DIG and FORD; a treated water
purchase agreement between DIG and ROUGE; a lease for the Project Site
between DIG and ROUGE; an environmental indemnity agreement between DIG,
FORD and ROUGE, and necessary easements granted to DIG by ROUGE, FORD or
both; and all interconnection agreements among those parties which are
necessary to carry out the purposes of the agreements.
"DIG BFG Facilities" shall mean those facilities of a quality
and type reasonably required to deliver BFG from and including the Point
of Interconnection to the Project's boilers including pipeline(s) and
other facilities of a quality and type reasonably required in order to
effectuate the purposes of this Agreement.
"FORD" shall mean the Ford Motor Company.
"Force Majeure" shall have the meaning provided for in Section
13.
"Governmental Authority" shall mean any federal, state or
local government, any political subdivision or any governmental,
quasi-governmental, judicial, public or statutory instrumentality,
authority, body or entity or other person or body authorized to make or
enforce laws or regulations.
"HHV" shall mean the number of MMBTU produced by the complete
combustion with air, at constant pressure, of one anhydrous (dry) cubic
foot of BFG, at a temperature of sixty
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(60) degrees Fahrenheit and under a pressure of 14.73 psia; and when the
products of combustion are cooled to the initial temperature of the BFG
and air, all water formed by combustion is condensed to the liquid
state.
"Laws" or "Law" shall mean all statutes, regulations, orders,
decrees or rulings by any Governmental Authority applicable to the
construction, maintenance and operation of the Facility.
"MMBTU" shall mean one million British Thermal Units (BTUs).
"Party" or "Parties" shall mean a signatory or the signatories
to this Agreement and its or their successors and permitted assigns, as
the case may be.
"Point of Interconnection" shall mean the BFG pipeline
terminus located near the Powerhouse where the DIG BFG Facilities
interconnect with the Rouge BFG Facilities.
"Point of Metering" shall mean the location as identified in
Exhibit C hereto.
"Powerhouse" shall mean the existing power plant located at
the Rouge Site that is jointly owned by FORD and ROUGE.
"Project" shall mean an approximately 550 MW complex with two
natural gas fired combined cycle units with heat recovery steam
generators, three blast furnace gas/natural gas boilers, one steam
turbine and all ancillary transformers, transmission wires, meters and
other associated equipment necessary to connect to existing
infrastructure to be located adjacent to ▇▇▇▇▇▇ Road in Dearborn,
Michigan. The Parties agree that DIG may install an additional gas
turbine generator with a nominal net capacity of approximately 160 MW.
This unit shall be excluded from the definition of Project for purposes
of this Agreement unless specifically noted otherwise.
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"Project Site" shall mean the real property to be leased or
purchased by DIG from ROUGE, located in Dearborn, Michigan, and more
particularly described in Exhibit A hereto.
"Rouge BFG Facilities" shall mean those existing facilities of
a quality and type reasonably required to deliver BFG from the Blast
Furnaces to the Point of Interconnection, including pipeline(s), flare
stack, and new metering facilities, pressure monitoring equipment, and
other facilities reasonably necessary to effectuate the purposes of this
Agreement.
"Rouge Site" shall mean the property located in Dearborn
Michigan within the boundaries shown on Exhibit B.
"Term" shall mean the original term of this Agreement and any
extensions hereto, as set forth in Section 12.01.
1.02 INTERPRETATIONS; HEADINGS.
(a) Definitions of terms used herein and in the Exhibits
hereto shall be equally applicable to both the singular and plural forms
of the terms defined.
(b) The Table of Contents and the headings herein and in the
Exhibits hereto are intended for convenience only and shall be
disregarded in construing this Agreement.
(c) The provisions in any Exhibits take precedence over any
provision in the body of this Agreement.
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SECTION 2
REPRESENTATIONS AND WARRANTIES
2.01 REPRESENTATIONS AND WARRANTIES OF ROUGE.
(a) ROUGE represents that it is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, is authorized to do business in the State of Michigan
and has full power and authority to enter into this Agreement and to
perform the terms hereof.
(b) ROUGE represents that the persons executing and delivering
this Agreement on ROUGE's behalf are acting pursuant to proper
authorization duly obtained and that this Agreement is the legal, valid
and binding obligation of ROUGE, enforceable in accordance with its
terms.
(c) ROUGE represents that the making and performance by ROUGE
of this Agreement does not and will not violate the provisions of its
Articles of Incorporation, Bylaws or any law, regulation or order of any
Governmental Authority applicable to ROUGE, or result in a breach of, or
constitute a default under, or require any consent or waiver which has
not been obtained under, any agreement, instrument or document, or the
provisions of any order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority affecting ROUGE.
(d) ROUGE represents that as of the date hereof, no suit,
action or arbitration or legal, administrative, or other proceeding is
pending or, to the best of its knowledge, has been threatened against
ROUGE that would affect the validity or enforceability of this Agreement
or
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the ability of ROUGE to fulfill its commitments hereunder, or that
would, if adversely determined, having material adverse effect on the
business or financial condition of ROUGE.
2.02 REPRESENTATIONS AND WARRANTIES OF DIG.
(a) DIG represents that it is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Michigan, is authorized to conduct business in the State of
Michigan and has full power and authority to enter into this Agreement
and to perform the terms hereof.
(b) DIG represents that the persons executing and delivering
this Agreement on DIG's behalf are acting pursuant to proper
authorization duly obtained and that this Agreement is the legal, valid
and binding obligation of DIG, enforceable in accordance with its terms.
(c) DIG represents that the making and performance by DIG of
this Agreement does not and will not violate the provisions of its
Articles of Organization, Operating Agreement or any law, regulation or
order of any Governmental Authority applicable to DIG, or result in a
breach of, or constitute a default under, or require any consent or
waiver which has not been obtained under, any agreement, instrument or
document, or the provisions of any order, writ, judgment, injunction,
decree, determination or award of any Governmental Authority affecting
DIG.
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(d) DIG represents that as of the date hereof, no suit, action
or arbitration or legal, administrative, or other proceeding is pending
or, to the best of its knowledge, has been threatened against DIG that
would affect the validity or enforceability of this Agreement or the
ability of DIG to fulfill its commitments hereunder, or that would, if
adversely determined, having material adverse effect on the business or
financial condition of DIG.
SECTION 3
CONDITIONS PRECEDENT
3.01 ENFORCEMENT OF DIG'S OBLIGATIONS.
It shall be a condition precedent to DIG's obligations under
this Agreement that by February 1, 1999, or such other date as
indicated, the following events shall have occurred or shall have been
waived by DIG:
(a) the timely receipt by DIG of possession of, and such other
property rights as are necessary in the Project Site and the Rouge Site;
and
(b) the execution of all of the Companion Agreements.
3.02 ENFORCEMENT OF ROUGE'S OBLIGATIONS.
It shall be a condition precedent to ROUGE's obligations under
this Agreement that the following events shall have occurred or shall
have been waived by ROUGE: the execution of all of the Companion
Agreements.
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SECTION 4
OBLIGATIONS OF THE PARTIES
4.01 DESIGN.
(a) DIG shall provide all engineering services for the design
and construction of the Project and DIG BFG Facilities.
(b) ROUGE shall make available to DIG (i) all available plans
and drawings, necessary to permit DIG to design the DIG BFG Facilities
and other interconnections of the Project with the Rouge Site, which
include, plans and drawings of relevant interconnect points, and
pipelines and (ii) access to a location for the Point of
Interconnection.
(c) ROUGE shall maintain the Rouge BFG Facilities.
4.02 GOVERNMENTAL PERMITS AND APPROVALS.
(a) DIG will, at its expense, apply for or maintain all
permits, approvals, licenses and variances necessary for the
construction and operation of the DIG BFG Facilities. ROUGE will assist
DIG, as required, on a timely basis in obtaining all federal, state, and
local permits and approvals and provide information necessary for the
regulatory approvals.
(b) ROUGE will, at its expense, apply for or maintain all
permits, approvals, licenses and variances necessary for the operation
of the Rouge BFG Facilities. DIG will assist
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ROUGE, as required, on a timely basis in obtaining all federal, state,
and local permits and approvals and provide information necessary for
the regulatory approvals.
4.03 CONSTRUCTION OF THE PROJECT.
(a) DIG shall bear the costs of construction, start up,
testing, maintenance and operation of the Project, including the DIG BFG
Facilities and the Point of Interconnection. ROUGE agrees to reasonably
cooperate with DIG to facilitate the installation of BFG pipelines and
all DIG BFG Facilities.
(b) DIG will use appropriate building trades union labor for
the construction phase of the Project, which includes the period through
final completion of the Project. During the construction phase only, in
the event there is a construction trades strike that occurs outside the
reasonable control of DIG the Parties will extend the contract starting
date in Section 12 for BFG purchases for a period equal to the duration
of the strike.
(c) DIG will minimize and coordinate with ROUGE any potential
interference with any ROUGE operations during the construction,
inter-tie and operation of the Project. DIG will perform the inter-tie
during Blast Furnace scheduled maintenance outages.
4.04 OPERATION OF ROUGE BFG FACILITIES.
ROUGE shall have the responsibility to operate the Rouge BFG
Facilities in accordance with good engineering and safety practices
including providing real-time electronic
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direct read access to pipeline pressures and shall bear all operating
costs and other expenses associated with same.
4.05 OPERATION AND MAINTENANCE OF THE PROJECT AND DIG BFG
FACILITIES.
DIG shall have the responsibility to operate the Project and
the DIG BFG Facilities in accordance with good engineering and safety
practices and shall bear all operating costs and other expenses
associated with the Project.
DIG shall reduce the consumption of BFG in its BFG boilers or
take other appropriate action if the pressure at the Point of Metering
falls below 55 in.w.c. DIG shall operate the Project so as to ensure
that BFG is not flared in excess of ROUGE BFG permit limits.
4.06 REASONABLE EFFORTS AND COOPERATION.
Each Party shall provide such assistance and support as may
reasonably be required by the other Party in identifying and preparing
applications for permits, authorizations and licenses and making all
necessary arrangements for accomplishing the purposes of this Agreement.
SECTION 5
SALE AND PURCHASE OF BFG
5.01 EXCLUSIVE CUSTOMER.
In accordance with the terms and conditions of this Agreement
and expressly subject to Section 10, on the BFG Delivery Date and
thereafter during the term of this Agreement,
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ROUGE hereby agrees to sell and DIG agrees to accept and purchase from
ROUGE all of the BFG produced from operation of the Blast Furnaces net
of the BFG used in the Blast Furnace stoves. DIG may, at its option,
have ROUGE flare BFG in accordance with the BFG air permit.
Additionally, ROUGE shall have the right to retain up to ten (10)
percent of the BFG produced (net of the Blast Furnace stove usage) for
use in ROUGE's operations. ROUGE shall not sell BFG produced at the
Rouge Site to any third-party without the written consent of DIG. DIG
shall purchase BFG, on an 'AS-IS, WHERE-IS" (including, but not limited
to, pressure, volume, temperature, content, and moisture) basis.
5.02 AMOUNT AND TYPE OF SERVICE.
(a) Quantity. There are no minimum delivery or receipt
obligations under this Agreement. The maximum delivery quantity under
this Agreement is fourteen million five hundred thousand (14,500,000)
standard cubic feet per hour, unless ROUGE has provided DIG with at
least twenty-four hours advanced notice and DIG is able to operate the
third BFG boiler in which case the maximum delivery quantity is eighteen
million eight hundred and fifty thousand (18,850,000) standard cubic
feet per hour.
(b) Type of Service The hours of service are 24 hours per day
every day.
(c) Test Gas. Prior to the BFG Delivery Date, ROUGE shall
deliver to DIG such quantities of BFG as may be necessary for purposes
of testing and start-up of the Project and
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as the Parties mutually agree upon (including good faith estimates of
usage) at the prices provided for in Exhibit D.
5.03 NOTICE REQUIREMENTS.
(a) Prior to the BFG Delivery Date, DIG and ROUGE shall
establish communication procedures designed to keep both informed at all
times as to the status of the DIG's ability to receive BFG from the
Project.
(b) Not later than sixty (60) days prior to commencement of
each calendar year, ROUGE shall notify DIG of its good faith estimate of
the quantity of BFG to be produced during the succeeding 12-month
period and a schedule of BFG production on a monthly basis. Thereafter,
ROUGE shall notify DIG of any known adjustment or modification of said
estimated quantity or schedule not less than five (5) days prior to
commencement of each calendar month. However, the quantity of BFG to be
supplied by ROUGE pursuant to this Agreement shall not be limited by
such estimates.
(c) ROUGE's designated employee shall notify DIG's designated
employee of any planned changes to estimated quantity or schedule to any
work shift's estimated schedule prior to the beginning or any eight (8)
hour work shift affected by such change.
(d) The Parties recognize that other detailed and continuing
exchanges of information will be necessary in order to optimize the
design, construction, operation and
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maintenance of their respective systems and equipment, consistent with
their respective rights and responsibilities under this Agreement. To
that end, each Party shall notify the other of the individual employee
or employees responsible for exchanging information with the other Party
and for resolving issues which may arise or be expected to arise
affecting design, construction, operation and maintenance of the Project
and delivery of BFG under this Agreement. Resolution of such issues
including the procedures for communication specified above shall be in
writing, executed by authorized employees of both Parties.
5.04 DISCLAIMER OF WARRANTY.
ROUGE does not in any way warrant the fitness of the BFG for
the particular purpose for which DIG intends or may intend to use the
BFG.
5.05 RISK OF LOSS.
All right, title, and interest in and to any BFG delivered
shall pass from ROUGE to DIG at the Point of Interconnection. ROUGE
shall have the risk of loss of all BFG to be delivered up to and at the
Point of Metering, and DIG shall have the risk of loss of all BFG
delivered from and after the Point of Metering, except in the case of
loss between the Point of Metering and the Point of Interconnection due
to a malfunction of the ROUGE BFG Facilities, or the failure of ROUGE to
properly operate or maintain the ROUGE BFG Facilities. Liability for all
damages caused by or arising out of the BFG delivered shall lie with the
Party responsible for the risk of loss in this Section 5.05. Such Party
shall indemnify the other Party hereto for such loss and damage pursuant
to Section 18 of this Agreement.
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SECTION 6
MEASUREMENT OF BFG
6.01 MEASUREMENT OF BFG.
ROUGE shall install, inspect, operate and maintain at its
expense, metering equipment and instrumentation for the measurement of
BFG sold to DIG and such other data as necessary for the sale of BFG to
DIG and the computation of the invoices required by Section 9.02. The
metering system shall be capable of measuring the aggregate quantity and
heating value of BFG (as measured by HHV) delivered to the Project and
received by DIG, however, ROUGE may provide an accurate methodology to
determine the heating value of the BFG (as measured by HHV) in lieu of
metering for heating value, provided such methodology is approved by
DIG. DIG shall have access to such instrumentation, but the reading,
calibrating and adjusting thereof and changing of the charts shall be
done only by ROUGE. The determination of the total quantities of BFG
delivered to DIG shall be made by the ROUGE instrumentation. ROUGE shall
test its metering system at least annually, or more frequently if
reasonably requested by DIG with such additional tests being at the
expense of DIG if such test finds that the equipment readings are within
the parameters of Section 6.02(a), and at the expense of ROUGE if such
test find that the equipment readings are within the parameters of
Section 6.02(b). DIG shall have the right to have a representative
present at all tests. The records from such measuring equipment shall
remain the property of their owner, but upon request, each will submit
to the other its records and charts, together with calculations
therefrom, for inspection and verification, subject to return within ten
(10) days after receipt thereof.
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6.02 ESTIMATION OF BFG WHEN METERING EQUIPMENT IS NOT FUNCTIONING.
The quantity of BFG delivered hereunder during periods when
the measuring equipment is out of service or registering inaccurately
shall be estimated as follows:
(a) If, upon test, any measuring equipment, the readings of
which are used in the registration, integration, or computation of
quantities of BFG hereunder, is found to be in error to the extent that
it introduces not more than two percent (2%) measurement error in the
individual measuring equipment affected, previous records of such
equipment shall be considered accurate.
(b) If, upon test, any such above measuring equipment is found
to be inaccurate to the extent that it causes the registered or computed
quantities of BFG to be in error by an amount exceeding two percent (2%)
at a recording corresponding to the average hourly rate of flow through
the instrument(s) in the period since the last preceding test, then any
registrations, integration, or computed quantities of such instruments
shall be corrected to zero error for any part of the period since the
last test in which such error is known to have existed or which may be
agreed upon by representatives of the Parties. In case the period of
such error is not known definitely or agreed upon, such correction shall
be for one-half (1/2) of the quantity or BFG delivered since the later
of the date of the last test or the last undisputed invoice.
(c) If no tests have been performed to determine the degree of
inaccuracy, or measuring equipment is out of service, the quantity of
BFG shall be estimated:
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(1) by using the registration of any existing and agreed
upon check equipment considered by Parties to be
registering accurately, or, in the absence of such
check equipment;
(2) by correcting the error in quantity or percentage of
error as is ascertainable by calibration, test, or
mathematical calculation (including reliance upon
DIG's records of fuel consumption), or if neither of
the two foregoing procedures is applicable;
(3) by relating the quantity of delivery to deliveries
during the periods under similar conditions when the
measuring equipment was deemed to have been
registering accurately.
Each Party shall preserve for a period of at least two (2)
years at all test data, charts and other similar records.
SECTION 7
[INTENTIONALLY BLANK]
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SECTION 8
PAYMENT CALCULATIONS
8.01 PAYMENTS.
The amount payable by DIG to ROUGE pursuant to each monthly
invoice shall be the monthly delivery of BFG stated in MMBTU (as
measured by HHV) multiplied by the applicable rate in Exhibit D. ROUGE
may calculate the MMBTU by using statistically accurate methodology to
determine MMBTU/cubic foot multiplied by the actual volumes delivered in
cubic feet, provided such units of volume are standardized.
8.02 EXTENSION TERM PRICING
If ROUGE elects to extend this Agreement in accordance with
Section 12, the Parties shall meet to discuss the rates for BFG for the
relevant extension term. If the Parties cannot agree to a price prior to
the end of the expiring term, price shall be determined in accordance
with the formula in Exhibit D.
8.03 NO OTHER CHARGES
The rates shown on Exhibit D are inclusive of any and all
service charges, surcharges, fees, and taxes in existence as of the date
of this Agreement or as may be levied from time to time during the term
of this Agreement, except as may otherwise be mutually agreed.
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SECTION 9
PAYMENTS; BILLING; INTEREST ON PAST-DUE AMOUNTS
9.01 PAYMENTS.
All calculations for payments due ROUGE shall be based on a
calendar month.
9.02 BILLING.
Beginning with the calendar month immediately following the
calendar month in which the BFG Delivery Date shall occur and until
this Agreement shall terminate pursuant to Sections 12.01 or 14.02,
ROUGE shall deliver to DIG within ten (10) days after the first day of
each calendar month an invoice with respect to the sales of BFG during
the preceding calendar month to the Point of Metering. Each invoice
shall include all necessary information and support documentation for
calculation of the payments required pursuant to Section 9.
9.03 INTEREST ON PAST-DUE AMOUNTS.
The net amount due and payable to ROUGE as stated in the
invoice shall be due and payable within 30 days of receipt in
immediately available funds. Invoices not fully paid shall be subject to
interest charges on the unpaid balance equal to the sum of the prime
lending rate as charged from time to time by Chase Manhattan Bank, or
any successor thereto, plus one hundred (100) basis points per annum
compounded annually based upon a 365-day year, from the date of
presentment until the unpaid balance is paid in full. The prime rate in
effect on the first day of any month shall be used in calculating any
interest charges which may be due in that month on unpaid invoices and
interest charges.
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9.04 FAILURE TO PAY.
If DIG fails to pay for BFG and any interest when due, as set
forth in Section 9.02, ROUGE will notify DIG of the delinquency in
writing and attempt to reach the designated party in Section 16 by
telephone as a further notice. Thereafter, if payment in full has not
been made within forty-five (45) days of the date of the delinquency
notice, in addition to charging interest pursuant to Section 9.03,
ROUGE may deduct the amount of the delinquency from the next invoice
for steam or electricity from DIG or take any other action permitted by
law or equity.
9.05 DISPUTED INVOICES
In the event of any dispute as to all or any portion of an
invoice, DIG shall nevertheless pay the full amount of the disputed
charges when due and may serve notice upon ROUGE that the amount of an
invoice is in dispute, in which event the provisions of Section 19 shall
be applicable. Any charges which are returned as a result of such
arbitration shall bear interest from the date of payment by DIG to the
date of refund at the rates provided for in Section 9.03. Subject to the
adjustments provided for in Section 6, DIG hereby waives the right to
dispute any invoice after a period of two years from the date such
invoice becomes due and payable.
SECTION 10
ENVIRONMENTAL COMPLIANCE
The Parties understand and agree that DIG is required to apply
for environmental air permits based upon the current parameters of the
BFG. DIG shall provide its air permit
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application to ROUGE for review. The Parties understand and agree that
DIG's obligation to accept and purchase BFG is dependent upon the
ability to burn BFG in compliance with applicable environmental laws and
permits. DIG may, upon notice to ROUGE, reduce or temporarily suspend
its purchases of BFG to remain in compliance with such environmental
laws and permits if such non-compliance is solely a result of a material
change in the trace element composition of BFG and not due to a failure
by DIG to properly design, maintain or operate the Project. In all
instances when purchases are reduced or suspended due to the operation
of this section, the appropriate Party shall use all reasonable efforts
to make the necessary modifications, including permit modifications, in
order to resume the delivery and receipt of BFG, and the other Party
shall reasonably cooperate for the attainment of such compliance.
SECTION 11
[INTENTIONALLY BLANK]
SECTION 12
TERM OF THIS AGREEMENT
12.01 TERM OF THIS AGREEMENT.
The original term of this Agreement shall begin on the BFG
Delivery Date and shall end on December 31, 2015 (the "Original
Termination Date"). ROUGE may extend the term of this Agreement for
three further terms of five (5) years each by providing written notice
thereof
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to DIG no later than eighteen (18) months prior to the Original
Termination Date or the termination date of each such five (5) year
extension period, as applicable, and further provided ROUGE extends the
Steam Sales Agreement between DIG and ROUGE for the applicable period.
12.02 DETERMINATION OF BFG DELIVERY DATE
DIG will provide a target date for commencement of regular BFG
acceptance in a notice given at least sixty (60) days prior to the
targeted date. When DIG is able to provide Electricity and steam or a
continuous basis, DIG will transmit a second written notice to ROUGE
stating that (i) the Project is ready to accept regular deliveries of
BFG and produce steam and electricity sufficient to allow for the shut
down of the Powerhouse on a BFG Delivery Date, to be mutually agreed
upon but not less than fifteen (15) days from the date of such notice,
and (ii) all required permits, approvals and variances from any
governmental authority necessary to commence BFG deliveries from the
Project have been obtained. On and after the BFG Delivery Date, the
Project shall accept, and ROUGE shall deliver BFG in accordance with
Section 5.01.
SECTION 13
FORCE MAJEURE
13.01 FORCE MAJEURE.
(a) "Force Majeure" shall mean any event or circumstance or
combination of events or circumstances that materially and adversely
affects any Party in the performance of its obligations in accordance
with the terms of this Agreement, but only if and to the extent that
such
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events and circumstances are not within the affected Party's reasonable
control, and which the affected Party could not have prevented through
reasonable skill and care, but limited to those circumstances or events
which are specifically identified in this Section.
(b) Force Majeure circumstances and events shall be limited to
the following events to the extent that they or their consequences (it
being understood that if a causing event is within the reasonable
control of an affected Party, the direct consequences shall also be
deemed to be within such party's reasonable control) satisfy the above
requirements:
(i) act of war (whether declared or undeclared), hostile
or warlike action by an agent of a government or
sovereign power, acts of foreign enemies of the
United States government (whether accorded
diplomatic recognition or not), revolution,
rebellion or insurrection, exercise of military or
usurped power, or any attempt at usurpation of
power;
(ii) the inability to obtain the required supply of water
from the Circulating Water system at the Rouge Site
in sufficient quantities to operate the Project for
the Rouge Site due to a failure of ROUGE or FORD to
exercise reasonable care in maintaining or operating
the system; or
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(iii) any governmental agency's unreasonable delay, denial
or refusal to grant or renew, or any unreasonable
revocation of, any required permit, license,
approval or authorization, including governmental
authorizations, provided that such adverse
governmental action or inaction did not result from
a Party's non-compliance with any applicable law or
any condition to the granting or maintenance of any
such permit, license, approval or authorization, and
provided that such impacted Party diligently pursues
all legal remedies available to alleviate such
unreasonable delay, denial, refusal or revocation of
such governmental authorization.
13.02 RESTRICTIONS.
Notwithstanding that an event of Force Majeure may otherwise
exist, the provisions of Article 13 shall not in any event excuse any
failure to pay or any delay in paying money due and owing under this
Agreement.
13.03 NOTIFICATION OBLIGATIONS.
(a) The Party claiming Force Majeure shall give notice to the
other Party of any event or circumstance of Force Majeure as soon as
reasonably practicable.
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(b) The Party claiming Force Majeure shall give notice to the
other Party of (i) the cessation of the relevant event or circumstance
of Force Majeure and (ii) the cessation of the effects of such event or
circumstance of Force Majeure on the enjoyment by such Party of its
rights or the performance by such Party of its obligations under this
Agreement as soon as practicable after becoming aware of the events
described in each of clauses (i) and (ii) above.
13.04 OTHER CONSEQUENCES.
Except as otherwise provided in this Article, neither Party
shall be responsible or liable for any breach or deemed breach of this
Agreement due to its failure or delay in performing its obligations
hereunder due to an event of Force Majeure for such period as the event
of Force Majeure continues.
13.05 MEETING BETWEEN THE PARTIES
In the event a Force Majeure event lasts more than sixty (60)
days, the Parties shall meet to discuss and determine whether it would
be mutually beneficial to terminate this Agreement.
SECTION 14
DEFAULT AND TERMINATION
14.01 EVENTS OF DEFAULT.
Any of the following occurrences or events, whether caused by
DIG or ROUGE, shall constitute a default under this Agreement:
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(a) Failure by either Party to make payment of any amounts due
the other Party under this Agreement, which failure continues for a
period of thirty (30) days after receipt of written notice of such
nonpayment pursuant to Section 9.04.
(b) Failure by either Party to perform fully any other
provision of this Agreement or any of the material provisions of the
Companion Agreements to which both Parties hereto are a party to, and
(i) such failure continues without cure for a period of one hundred
twenty (120) days after written notice of such nonperformance or (ii) if
the nonperforming Party shall commence cure within such one hundred
twenty (120) days and shall thereafter proceed with all due diligence to
cure such failure, such failure is not cured within such longer period
as shall be necessary for such Party to cure the same with all due
diligence.
(c) If by order of a court of competent jurisdiction, a
receiver or liquidator or trustee of either Party or of any of the
property of either Party shall be appointed, and such receiver or
liquidator or trustee shall not have been discharged within a period of
sixty (60) days; or if by decree of such a court, a Party shall be
adjudicated bankrupt or insolvent or any substantial part of the
property of such Party shall have been sequestered, and such decree
shall have continued undischarged and unstayed for a period of sixty
(60) days after the entry thereof; or if a petition to declare bankrupt
or to reorganize a Party pursuant to any of the provisions of the
Federal Bankruptcy Act, as it now exists or as it may hereafter be
amended, or pursuant to any other similar state statute applicable to
such Party, as now or hereafter in effect, shall be filed against such
Party and shall not be stayed or dismissed within sixty (60) days after
such filing.
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(d) If either Party shall file a voluntary petition in
bankruptcy under any provision of any federal or state bankruptcy law or
shall consent to the filing of any bankruptcy or reorganization petition
against it under any similar law; or, without limitation of the
generality of the foregoing, if a Party shall file a petition or answer
or consent seeking relief or assisting in seeking relief in a proceeding
under any of the provisions of the Federal Bankruptcy Act, as it now
exists or as it may hereafter be amended, or pursuant to any other
similar state statute applicable to such Party, as now or hereafter in
effect, or an answer admitting the material allegations of a petition
filed against it in such a proceeding; or if a Party shall make a
general assignment for the benefit of its creditors (other than for DIG
to make payments to financing parties if required under the terms of a
financing referred to under Section 17); or if a Party shall admit in
writing its inability to pay its debts generally as they become due; or
if a Party shall consent to the appointment of a receiver or receivers,
or trustee or trustees, or liquidator or liquidators of it or of all or
any party of its property.
In the event that either Party is in default under this
Agreement, the defaulting Party may, within thirty (30) days following
receipt of notice from the non-defaulting Party of such default, (i)
cure the default or institute appropriate curative action or (ii) in the
event of a default specified in paragraphs (b), (c), or (d) of Section
14.01, provide assurances satisfactory to the non-defaulting Party of
its future performance of its obligations under this Agreement. If the
default is not so cured, or if such assurances are not so provided; this
Agreement may be terminated without obligation to or recourse by the
defaulting Party on thirty (30) day's notice by the non-defaulting Party
to both the defaulting Party and, in the case of a notice to DIG any
lender of the Project which requires such notice.
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SECTION 15
WAIVERS; AMENDMENTS AND MODIFICATIONS
15.01 WAIVERS.
No Party shall be deemed to have waived any right hereunder
unless such Party shall have delivered to the other Party hereto a
written waiver signed by an officer of such waiving Party. Any Waiver of
right under this Agreement shall be narrowly construed and shall relate
only to the specific right and the specific instance detailed in the
written notice of waiver which may be conditioned in any way. The
failure of either Party to insist upon strict performance of any
provision of this Agreement shall not be construed as a waiver, and no
waiver of any provision on any given occasion shall be construed as a
waiver on any other occasion or of any other provision.
15.02 AMENDMENTS AND MODIFICATIONS.
This Agreement may be amended or modified only by a written
instrument signed by both ROUGE and DIG..
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SECTION 16
NOTICES
16.01 NOTICES.
All notices required to be given in writing hereunder shall,
unless the contrary is specified in this Agreement, be given to the
respective Parties at the following address, or at such other addresses
as the Parties respectively may designate in writing to each other by
hand-delivery or registered mail:
If to DIG, addressed to: DIG
c/o CMS Generation Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President - Operations
With a copy to: DIG
c/o CMS Generation Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
If to ROUGE, addressed to: Rouge Steel Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
with a copy to: Rouge Steel Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
The parties shall also notify each other of the addresses for
invoices and routine billing correspondence.
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Any such Notice shall be deemed to have been given as of the
date so delivered by hand, or in the case of a mailed or express
delivered notice, when received at the respective addresses referred to
above.
SECTION 17
ASSIGNABILITY
17.01 NON-ASSIGNABILITY.
Except as provided in this Section 17, this Agreement shall
not be assigned, transferred or otherwise alienated by either ROUGE or
DIG without the prior written consent of the other party, which consent
will not be unreasonably withheld, and any attempted assignment,
transfer or alienation without such consent shall be void, provided,
however that ROUGE may assign this Agreement to any Affiliated Company
upon giving thirty (30) days prior written notice to DIG and further
provided that ROUGE shall guaranty the continuing performance of the
assignee for the remaining term of the Agreement. All covenants and
provisions of this Agreement for the benefit of the parties shall inure
to the benefit of their respective successors and assigns as permitted
by the provisions of this paragraph. Affiliated Company shall mean any
company in which ROUGE controls directly or indirectly twenty (20%) or
more of the voting stock.
17.02 PERMITTED ASSIGNMENT.
DIG has the right to mortgage, assign, hypothecate, pledge, or
encumber its interest in this Agreement to a parent or affiliated
company (including any general or limited partnership
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in which DIG or any affiliate of DIG is a general partner) or to any
financing party. ROUGE hereby consents to such assignment and to any
subsequent assignments by such parent or affiliated company or financing
party or any subsequent assignee, provided that, unless otherwise agreed
by ROUGE and DIG no such assignment shall relieve DIG of its obligations
or liabilities incurred until the effective date of the assignment, and
provided further that DIG shall guaranty the continuing performance of
the assignee for the remaining term of the agreement. ROUGE agrees to
execute a written consent and estoppel certificate to effectuate any
assignment permitted under this Agreement.
SECTION 18
LIABILITIES AND INDEMNITIES; LEGAL FEES;
COMPUTATION OF DAMAGES
18.01 LIABILITIES AND INDEMNITIES.
(a) DIG shall indemnify and hold harmless ROUGE and its
parents and affiliates, and its or their respective directors, officers,
representatives, agents, employees and contractors, respectively, from
and against any and all liability whatsoever for losses, damages,
claims, charges or expenses, including attorneys' fees, on account of
injury to or the death of any and all persons, and on account of loss of
or damage to any and all property, or on account of any violation of
law, rule, or regulation of a governmental authority of any level
resulting from or arising out of or in way connected with the design,
construction, operation or maintenance of the Project, unless caused by
the sole negligence, gross negligence or willful misconduct of an
officer, director, agent, employee or independent contractor of ROUGE.
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(b) ROUGE shall indemnify and hold harmless DIG, and its
parents and affiliates, and their respective assignees and its or their
respective directors, officers, representatives, agents, employees and
contractors, respectively, from and against any and all liability
whatsoever for losses, damages, claims, charges or expenses, including
attorneys' fees, on account of injury to or the death of any and all
persons, and on account of loss of or damage to any and all property, or
on account of any violation of law, rule, or regulation of a
governmental authority of any level resulting from or arising out of or
in way connected with the performance of ROUGE's obligations hereunder,
unless caused by the sole negligence, gross negligence or willful
misconduct of an officer, director, agent, independent contractor or
employee of DIG.
18.02 LIMITATION OF LIABILITY.
Neither Party shall be liable to the other Party in contract,
tort, warranty, strict liability or any other legal theory for any
indirect, consequential, incidental, punitive or exemplary damages
sustained by the other Party as a result of failure by the first Party
to perform any of its obligations under the Agreement, regardless of
whether such failure was the result of negligence of the first Party or
its employees or agents to perform any of its obligations under the
Agreement.
18.03 DUTY TO MITIGATE
Each Party shall use reasonable efforts to mitigate the
effects of any event or circumstance which causes a claim of liability
or damages under this Agreement and to cooperate to develop and
implement a plan of remedial and reasonable alternative measures to
remove the
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event or circumstance. Upon the cessation of the event or circumstance,
the Party affected thereby shall make its best efforts to resume normal
performance of its obligations under the Agreement as soon as possible.
DIG shall, as part of the obligations of this paragraph,
develop and maintain contingency plans for the removal of Force majeure
events which plans shall include sources of replacement equipment.
SECTION 19
DISPUTE RESOLUTION PROCEDURES
19.01 IF A DISPUTE ARISES
If a dispute arises between the parties relating to this
Agreement, the following procedure shall be followed except that either
party may seek injunctive relief from a court where appropriate in order
to maintain the status quo while this procedure is being followed:
(1) Meeting - The parties shall hold a meeting promptly,
attended by persons with decision-making authority regarding the
dispute, to attempt in good faith to negotiate a resolution of the
dispute; provided, however, that no such meeting shall be deemed to
vitiate or reduce the obligations and liabilities of the parties or be
deemed a waiver by a party of any remedies to which such party will
otherwise be entitled hereunder.
(2) Alternate Dispute Resolution - If, within thirty (30) days
after such meeting, the parties have not succeeded in negotiating a
resolution of the dispute, they agree to meet to
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select an appropriate form of alternative dispute resolution to resolve
the matter in a timely and mutually satisfactory way.
19.02 ARBITRATION
If the parties are not successful in negotiating a resolution
to the dispute, or can not select an appropriate form of alternative
dispute resolution within a reasonable time, or such alternative dispute
resolution fails to settle the dispute, then the parties agree to submit
the dispute to binding arbitration in accordance with the commercial
rules of arbitration of the American Arbitration Association by a sole
arbitrator and to bear equally the costs of the arbitration. Arbitration
shall take place in the City of Dearborn, unless otherwise agreed by the
parties. The substantive and procedural law of the State of Michigan
shall apply to the proceedings. Equitable remedies shall be available in
any arbitration. Punitive damages shall not be awarded. This section is
subject to the Federal Arbitration Act, 9 USC ss. 1 et seq. and
judgement upon the award rendered by the Arbitrator, if any, may be
entered by any court having jurisdiction thereof.
SECTION 20
DIG'S FINANCING
20.01 DIG'S FINANCING.
ROUGE recognizes that DIG will be obtaining non-recourse
financing to construct and operate the Project, which financing may be
from investors or from one or more financial institutions, and hereby
agrees to provide DIG with such information, documents and records as
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DIG may reasonably request in connection with DIG's efforts to obtain
such financing, and the Parties agree to meet to discuss and to attempt
to come to mutually satisfactory agreements for amendments to the
Agreement which may be made upon the reasonable request of such
investors of financial institutions, provided such request does not
materially affect the economic benefits to or risk undertaken by a Party
under this Agreement.
SECTION 21
MISCELLANEOUS
21.01 ENTIRE AGREEMENT.
This Agreement, together with the Exhibits attached hereto and
made a part hereof, supersedes and cancels any and all previous
agreements, discussions or negotiations between the Parties and contains
the entire agreement of the Parties with respect to the subject matter
of this Agreement.
21.02 NO DRAFTING PRESUMPTION.
No presumption shall operate in favor of or against any Party
as a result of any responsibility that any Party may have had for
drafting this Agreement.
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21.03 INDEPENDENT CONTRACTOR.
Each Party hereto shall be deemed to be an independent
contractor in the performance of its obligations hereunder. The Parties
hereto expressly agree that this Agreement shall not create sin agency,
joint venture or partnership relationship.
21.04 SEVERABILITY.
If any term or provision of this Agreement, or the application
thereof to any person or circumstance is rendered or declared illegal
for any reason and shall be invalid or unenforceable, such portion shall
be ineffective to the extent of such invalidity or unenforceability but
the remainder of this Agreement and the application of such term or
provision to other persons or circumstances shall not be affected
thereby but shall remain in full force and effect and shall be enforced
to the greatest extent permitted by applicable law, unless such an event
materially alters the Parties' intent as expressed in this Agreement.
21.05 GOVERNING LAW.
This Agreement, and all provisions hereof, shall be governed
by and interpreted in accordance with the laws of the State of Michigan,
without regard to its choice of law provisions.
21.06 CONFIDENTIALITY
The Parties hereto agree that the prices, terms and conditions
contained in this Agreement shall not be disclosed to third parties
without the prior written consent of the other
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party; provided, however, disclosure is permitted to the extent such
disclosure is required by a party providing financing to DIG,
independent financial auditors of a Party, or construction contractor
for the Project, and such party is bound by non-disclosure obligations
at least as stringent as those contained in this Section, or as required
by rule of law, court or governmental agency order or subpoena, but only
to the extent so ordered, and provided that the Party so ordered shall
attempt to obtain a protective order, or rule of a recognized stock
exchange.
The Parties will use at least a reasonable degree of care to
prevent disclosure of such confidential information to others.
(Reasonable care means that degree of care each party uses to prevent
unauthorized disclosure of its own confidential information to third
parties). Such obligation shall not apply to information which:
(a) becomes publicly known through no wrongful act of a Party;
(b) is explicitly approved for release by written
authorization of the other Party. Such obligation shall terminate upon
the expiration or termination of this Agreement.
21.07 DAMAGE, DESTRUCTION OR CONDEMNATION.
This Section shall apply in the event that all or any portion
of the Project or DIG BFG Facilities or the Project Site is condemned,
appropriated, damaged, or destroyed.
(a) to the extent that it is feasible for DIG, it will use all
reasonable efforts to replace any portion of the Project,
Project Site or DIG BFG Facilities which has been damaged,
destroyed, or condemned.
(b) to the extent that it is not feasible to replace any
portion of the Project, the Parties will enter into
negotiations to amend the Agreement, if appropriate.
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21.08 COUNTERPARTS.
This Agreement may be executed in one or more counterparts
which, taken together, shall constitute a single instrument.
IN WITNESS WHEREOF, the Parties have executed multiple
originals of this Agreement as of the date first set forth above.
ROUGE STEEL COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
------------------------------
Title: EVP & CFO
-----------------------------
DEARBORN INDUSTRIAL GENERATION, LLC
By: CMS Generation Co., Member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Title: PRESIDENT & CEO
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