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EXHIBIT 10.11
April 10, 1998
Xxxxxxxx X. Xxxxxx
Supervisor - Industrial Materials Purchasing
Rouge Steel Company
0000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Subject: Amendment #1 to Oxygen, Nitrogen and Argon Supply Agreement
Dear Xxxxx:
Reference is made to the Oxygen, Nitrogen and Argon Supply Agreement
dated November 16, 1993 by and between Praxair, Inc. and Rouge Steel Company
(the "Agreement") pursuant to which Praxair supplies oxygen, nitrogen and argon
to Rouge Steel's plant located at Dearborn, Michigan.
The Agreement shall be amended effective as of the date this Amendment
is accepted by Praxair as follows: by the following:
The language contained in Article 1.3 shall be deleted in its entirety and
replaced
"1.3 "As-Available Oxygen" means oxygen delivered to Buyer hereunder as
provided in Article 2.2 at a maximum instantaneous demand rate in excess of the
maximum instantaneous demand rate for Gaseous Oxygen as set forth in Article
1.11 up to a maximum instantaneous demand rate of 1,800,000 standard cubic feet
per hour during the period from Amendment #1 Effective Date until Plant #17
Startup Date, and up to a maximum instantaneous demand rate of 2,200,000
standard cubic feet per hour beginning as of Plant #7 Startup Date." by the
following:
The language contained in Article 1.5 shall be deleted in its entirety and
"1.5 "Buyer's Nitrogen Requirements" means Buyer's total present and
future requirements, in gaseous and liquid form, of nitrogen, other than that
supplied in cylinders, for use at Buyer's Plant; provided, however, in the event
Buyer should require nitrogen for use at Buyer's Plant in connection with any
new technological process utilized at Buyer's Plant subsequent to the date of
this Agreement which requires investment, either by Buyer or another party,
where as a condition of using such new process Buyer is required to purchase its
nitrogen requirements for use in such process from a supplier other than Seller,
and a similar process is not available from Seller at a competitive price, any
nitrogen so required for use at Buyer's Plant under such conditions shall not be
deemed to be included in the definition of "Buyer's Nitrogen Requirements" for
purposes of this Agreement; and further provided, that notwithstanding anything
contained in this Article 1.5, in no event shall Buyer be relieved of its
obligation to pay for a minimum of 102,200,000 cubic feet of Gaseous Nitrogen
each Month until Plant #7 Startup Date at the then current Gaseous Nitrogen
price even if no nitrogen is taken during any such Month, and in no event shall
Buyer be relieved of its obligation to pay for a minimum of 138,700,000 cubic
feet of Gaseous Nitrogen each Month beginning as of Plant #7 Startup Date at the
then current Gaseous Nitrogen price even if no nitrogen is taken during any such
Month during the term hereof as provided in Article 11.3."
by the following:
The language contained in Article 1.6 shall be deleted in its entirety and
replaced
"1.6 "Buyer's Oxygen Requirements" means Buyer's total present and future
requirements, in gaseous and liquid
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form, of oxygen, other than that supplied in cylinders, for use at Buyer's
Plant; provided, however, in the event Buyer should require oxygen for use at
Buyer's Plant in connection with any new technological process utilized at
Buyer's Plant subsequent to the date of this Agreement which requires
investment, either by Buyer or another party, where as a condition of using such
new process Buyer is required to purchase its oxygen requirements for use in
such process from a supplier other than Seller, and a similar process is not
available from Seller at a competitive price, any oxygen so required for use at
Buyer's Plant under such conditions shall not be deemed to be included in the
definition of "Buyer's Oxygen Requirements" for purposes of this Agreement; and
further provided, that notwithstanding anything contained in this Article 1.6,
in no event shall Buyer be relieved of its obligation to pay for a minimum of
547,500,000 cubic feet of Gaseous Oxygen each Month until Plant #7 Startup Date
at the then current Gaseous Oxygen price even if no oxygen is taken during any
such Month, and in no event shall Buyer be relieved of its obligation to pay for
a minimum of 839,500,000 cubic feet of Gaseous Oxygen each Month beginning as of
Plant #7 Startup Date even if no oxygen is taken during any such Month during
the term hereof as provided in Article 11.2."
by the following:
The language contained in Article 1.10 shall be deleted in its entirety and
replaced
"1.10 "Gaseous Nitrogen" means nitrogen delivered at a maximum instantaneous
demand rate not to exceed 300,000 standard cubic feet per hour (when measured at
one (1) minute intervals) until Plant #7 Startup Date, and at a maximum
instantaneous demand rate not to exceed 400,000 standard cubic feet per hour
(when measured at one (1) minute intervals) beginning as of Plant #17 Startup
Date
5. The language contained in Article 1.11 shall be deleted in its entirety and
replaced by the following:
"1.11 "Gaseous Oxygen" means oxygen delivered at a maximum instantaneous demand
rate not to exceed 1,300,000 standard cubic feet per hour (when measured at one
(1) minute intervals) until Plant #7 Plant Startup Date, and at a maximum
instantaneous demand rate not to exceed 2,000,000 standard cubic feet per hour
(when measured at one (1) minute intervals) beginning as of Plant #17 Startup
Date."
6. A new Article 1.28 shall be added to provide as follows:
"1.28 "Amendment #1 Effective Date" means the date on which Amendment #1 to this
Agreement is accepted by Seller."
7. A new Article 1.29 shall be added to provide as follows:
"1.29 "Plant #7" means Seller's next air separation plant that will be located
at or near Ecorse and River Rouge, Michigan and which is expected to become
operational on or about November 30, 1999."
8. A new Article 1.30 shall be added to provide as follows:
"1.30 "Plant #7 Startup Date" means the date on which Plant #7 is declared to be
operational by Seller, which date will be documented in a letter from Seller to
Buyer."
9. Effective as of Plant #7 Startup Date the language contained in Article
11.1 shall be deleted in its entirety and replaced by the following:
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"11.1 As promptly as possible after the end of each Month, Seller will read the
metering equipment installed pursuant to Article 12 to determine the quantities
of oxygen and nitrogen delivered to Buyer during such Month. Based upon such
readings, Seller will invoice Buyer and Buyer will pay Seller in accordance with
the prices set forth below as adjusted under Articles 11.4 and 11.7 plus the
amount of any sales, use or other excise taxes now or hereafter imposed by
reason of such sale or delivery.
BASE GASEOUS OXYGEN PRICES
FIRST BLOCK
FIRST 1,150,000 CUBIC FEET PER HOUR
SECOND BLOCK
Next 650,000 cubic feet per hour
THIRD BLOCK
Next 200,000 cubic feet per hour
BASE AS-AVAILABLE OXYGEN PRICE
Any QUANTITY
BASE SUPPLEMENTAL OXYGEN PRICE
First 1,500,000 cubic feet per day
$01200 per 100 cubic feet
$0.08 17 per 100 cubic feet
$01098 per 100 cubic feet
$0.1383 per 100 cubic feet
Next 1,500,000 cubic feet per day All over 3,000,000 cubic feet per day
BASE GASEOUS NITROGEN PRICE ALL NITROGEN up to 400,000
cubic feet per hour
$36 per 100 cubic feet
$36 per 100 cubic feet, plus 1.2
times any additional costs related to special
purchase, freight or handling or $45 per 100
cubic feet, whichever price is lower.
$0049 per 100 cubic feet
BASE SUPPLEMENTAL NITROGEN PRICE
Any QUANTITY
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10.
by the following:
$0405 per 100 cubic feet"
The language contained in Article 11.2 shall be deleted in its entirety and
replaced
"11.2 Buyer will be obligated to pay for a minimum of 547,500,000 cubic feet of
Gaseous Oxygen each Month until Plant #7 Startup Date at the then current First
Block Gaseous Oxygen price even if no oxygen is taken during any such Month, and
Buyer will be obligated to pay for a minimum of 839,500,000 cubic feet of
Gaseous Oxygen each Month beginning as of Plant #7 Startup Date at the then
current First Block Gaseous Oxygen price even if no oxygen is taken during any
such Month."
11. The language contained in Article 11.3 shall be deleted in its entirety and
replaced by the following:
"11.3 Buyer will be obligated to pay for a minimum of 102,200,000 cubic feet of
Gaseous Nitrogen each Month until Plant #7 Startup Date at the then current
Gaseous Nitrogen price even if no nitrogen is taken during any such Month, and
Buyer will be obligated to pay for a minimum of 138,700,000 cubic feet of
Gaseous Nitrogen each Month beginning as of Plant #7 Startup Date at the then
current Gaseous Nitrogen price even if no nitrogen is taken during any such
Month."
12. Effective as of Plant #7 Startup Date the language contained in Article 11.4
shall be deleted in its entirety and replaced by the following:
"11.4 During the term of this Agreement the prices set forth in Article 11.1
shall increase or decrease as hereinafter provided in this Article 11.4. The
Base Gaseous Oxygen Prices and Base As-Available Oxygen Price shall be adjusted
on January 1st of each year based upon changes in the Producer Price Index and
upon changes in the Hot Rolled Sheet Producer Price Index Code Number 1017-0311,
and shall be adjusted on the first day of each Month during the term of this
Agreement based upon changes in the cost of electric power using the following
formulas:
For the First Block and Third Block Base Gaseous Oxygen Prices
and the Base As-Available Oxygen Price
NP=BPF54(A~Ar!-'~+ ~ 0( PPINEW") + i0( HRINEW + 261
------- ------
L'\EBASEJ \..PPLBASEI \.HRLBASE,'
For the Second Block Base Gaseous Oxygen Price
--- ------------------------------------------
NP=CF{o.8(~g!w) + 0. + 0. I(HRIB )]
Where:
-- New Gaseous Oxygen Prices or New As-Available Oxygen Price
-- First Block and Third Block Base Gaseous Oxygen Prices or
Base As-Available Oxygen Price
-- Second Block Base Gaseous Oxygen Price
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-- The July 1992 through December 1992 six Month average of
the Producer Price Index - Industrial Commodities less
Fuels and Related Products and Power as published by the
United States Department of Labor, Bureau of Labor
Statistics.
-- The average Producer Price Index - Industrial Commodities
less Fuels and Related Products and Power (where the base
is 1982=100) published by the United States Department of
Labor, Bureau of Labor Statistics for the most recently
completed quarter-yearly period ending on the last day of
December.
-- The average cost of electric power for the Month of
January, 1993 as computed under the Detroit Edison
Company's Supply Rate Schedule R-10.
-- The new average cost of electric power for the most
recently completed Month as computed under the Detroit
Edison Company's Supply Rate Schedule R-10 or any schedule
which may supersede such schedule under which Seller is
purchasing power, plus any taxes or surcharges related
thereto. In the event Seller realizes electrical energy
cost savings as a result of the application of special
rates to the operation of the Nitrogen Supply System or
the Oxygen Supply System in lieu of Detroit Edison
Company's Supply Rate Schedule R-10 or any schedule which
may supersede such schedule, and such savings are achieved
by Seller at no appreciable additional risk, capital cost
or other economic penalty, Seller shall pass through to
Buyer fifty percent (50%) of the net electrical energy
cost savings so realized by Seller; provided, however,
that any savings that are passed through to Buyer shall
only be based upon Buyer's actual consumption of Gaseous
Nitrogen and Gaseous Oxygen produced by the Nitrogen
Supply System or the Oxygen Supply System, as the case may
be.
= 95.9, which represents the Hot Rolled Sheet Producer Price Index Code
Number 1017-0311 for the Month of July, 1993.
= The Average Hot Rolled Sheet Producer Price Index Code
Number 1017-0311 for the most recently completed calendar
year.
The Base Gaseous Nitrogen Price shall be adjusted on January 1st of each year
based upon changes in the PPI, and shall be adjusted on the first day of each
Month during the term of this Agreement based upon changes in the cost of
electric power using the following formula:
NPn=BPn[.40(f~) + .40 (PPIBASE) +.20]
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where:
= New Gaseous Nitrogen Price
= Base Gaseous Nitrogen Price
and Ebase, Enew, PPlbase and PPInew shall have the same meanings as provided in
this Article 11.4, above."
13.
by the following:
The language contained in Article 11.5 shall be deleted in its entirety and
replaced
"11.5 Seller will invoice Buyer and Buyer will pay Seller for Liquid
Argon supplied hereunder in accord with the price set forth below, as adjusted
in accord with Article 11.6, plus the amount of any sales, use or other excise
tax now or hereafter imposed in connection with the supply of Liquid Argon
hereunder.
BASE LIQUID ARGON PRICE ANY QUANTITY (UP TO 10,000,000 CUBIC FEET PER MONTH)
$1.45 per 100 cubic feet
In addition to the price set forth above, Buyer will pay to Seller each Month
during the term of this Agreement beginning with the Month in which the
Agreement Date occurs a Base Liquid Argon Monthly Charge of $1500.00 plus the
amount of any sales, use or other excise tax related thereto; provided, however,
in the event the Agreement Date occurs on a date in any Month other than the
first of such Month, or in the event this Agreement terminates on a date
by the following:
The language contained in Article 19.1 shall be deleted in its entirety and
replaced
"19.1 This Agreement will be in effect from the Agreement Date and will
continue in effect until December 1, 2009 or as may be extended pursuant to
Article 16.3 and thereafter until terminated by either party upon giving not
less than twelve (12) months prior written notice of such termination to the
other party."
Except as set forth above, all terms and conditions of the Agreement shall
remain unchanged and shall continue in full force and effect. If the forgoing is
acceptable to you, please indicate your acceptance by signing in the space below
and returning both documents to us. A fully executed document will be returned
for your files.
Submitted by:
X. X. XXXXXXX
Key Account Manager
Praxair, Inc.
Accepted by:
Rouge Steel Co
/s/ Xxxxxx X. Xxxxxx
V.P. Purch & Trans
5/6/98
