MASTER ENERGY SERVICES AND SUPPLY AGREEMENT
(Republic Technologies International, LLC)
THIS MASTER ENERGY SERVICES AND SUPPLY AGREEMENT ("Agreement") is entered
into this day 13th of August, 1999, by and between FirstEnergy Services Corp.,
an Ohio corporation ("FirstEnergy"), and Republic Technologies International,
LLC, a Delaware limited liability company (the "Company").
RECITALS:
A. FirstEnergy (directly or though its affiliates) is an energy services
provider with extensive expertise in the provision of a broad range of energy
services and supply to a variety of users.
B. Company (directly or through its subsidiaries) is a producer of special
bar quality steel products with facilities in a variety of locations in the
United States (the "Company Facilities")
C. Company and FirstEnergy by this Agreement desire to enter into a long
term, mutually beneficial energy and energy services relationship, whereby
FirstEnergy will manage all of Company's supply and delivery of energy and
energy service requirements as described in Attachment A (the "Energy Supply and
Services").
D. In addition to this umbrella agreement, the parties contemplate a
series of subordinate agreements, which address individual opportunities/needs
on a site-by-site, project-by-project basis.
IN CONSIDERATION OF THE FOREGOING, and for other good and valuable
consideration in hand received, intending to be legally bound, the parties
hereto do hereby agree as follows:
1. Overview. The purpose of this Agreement is to form a business
relationship seeking competitive advantage through continuous improvement, to
enable the design and supply of Energy Supply and Services that offer
opportunities to significantly enhance financial and operating performance,
helping both parties achieve premier supplier status in their respective
markets. To the extent feasible, the parties shall seek to mutually align
incentives to optimize their efforts and returns. In advance of the rendering of
any Energy Supply and Services for which separate charges apply, the parties
shall execute written agreements.
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2. Term. This Agreement shall be effective for a period of five (5) years
from the date hereof. Thereafter, this Agreement shall renew automatically for
successive one (1)-year periods, unless either party gives written notice of
cancellation at least thirty (30) days before such renewal date.
a) Notwithstanding anything to the contrary contained herein, this
Agreement shall terminate:
i) At the option of the non-defaulting party, upon the material breach
of the terms of this Agreement followed by the failure of the
defaulting party to cure such breach within thirty (30) days
following written notice from the non-defaulting party. A breach of
a subordinate agreement between the parties of the type contemplated
hereby shall not constitute a breach of this Agreement. The
foregoing right of termination shall be in addition to such other
rights or remedies as may exist at law or in equity, all of which
are hereby reserved.
ii) The mutual written agreement of Company and FirstEnergy to terminate
this Agreement.
b) Upon termination of this Agreement pursuant to this section, the
obligations of each of the parties hereunder shall expire as of the effective
date of such termination.
3. Compensation. Where separate charges apply (as provided in Section 5
below and in Attachment A), prices and terms shall be agreed upon in advance of
any service (including through definitive subordinate agreement(s)). FirstEnergy
shall provide periodic reports to the Company setting forth the detail of
activity for the prior period to permit the Company to evaluate the
effectiveness of FirstEnergy's performance. FirstEnergy shall meet with the
Company to present the report and discuss its contents. In evaluating
FirstEnergy's performance, price competitiveness shall be determined by, among
other factors: a) comparing historical pricing, b) comparing to published
competitive price lists and/or independent cost guides, or c) developed by
independent, agreed-upon sources. FirstEnergy shall be required to demonstrate
only that the prices for the Energy Supply and Services are reasonable
(including prices where FirstEnergy is the provider), not that the prices are
the "lowest and best" prices, and shall be entitled to have its effectiveness on
behalf of the Company considered in the whole based on the entirety of its
performance hereunder.
4. Energy and Operational Efficiencies Projects and Shared Savings.
FirstEnergy and Company shall develop mutually acceptable project goals and
criteria for demand side management projects such as project cost constraints,
shared savings requirements, simple payback period goals, financing
requirements, forms of agreement, etc. FirstEnergy shall present
performance-based energy and operational efficiency projects, as appropriate, to
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Company. Each project shall be individually evaluated by Company, and as
appropriate, individually negotiated under the spirit of this Agreement.
5. Dedicated Resources. FirstEnergy shall provide customary and
traditional support for the Energy Supply and Services without separate charge,
unless otherwise noted in Attachment A. To the extent that services are required
beyond customary support, charges shall be negotiated based on the services
requested and the fees charged to third parties for comparable services.
6. Appointment. In furtherance of Company=s commitment to FirstEnergy,
Company hereby appoints FirstEnergy as the exclusive representative for the
procurement for Company Facilities of the Energy Supply and Services for the
term of this Agreement. FirstEnergy hereby accepts said appointment on the terms
and conditions set forth in this Agreement. This appointment shall constitute a
grant of exclusive representation of Company for the procurement of the Energy
Supply and Services, and Company shall not permit the Energy Supply and Services
to be procured, in whole or in part, by itself or any other entity other than
through FirstEnergy during the term of this Agreement, subject to applicable
utilities laws and existing contractual obligations. The terms of this
engagement shall apply to Company Facilities now owned or hereafter acquired by
Company, subject to applicable utilities laws and existing contractual
obligations. Upon a sale of a Company Facility, this Agreement shall apply to
the sold Company Facility for the remainder of the term, but shall not apply to
other facilities of the buyer.
7. Duties of FirstEnergy.
a) FirstEnergy shall use reasonable commercial efforts to serve
Company in the procurement of the Energy Supply and Services. FirstEnergy shall
keep accurate account of its activities undertaken by FirstEnergy in connection
with Company. Nothing hereunder obligates FirstEnergy to be the provider of the
Energy Supply and Services, subject to applicable utilities laws and existing
contractual obligations.
b) FirstEnergy shall not be restricted in any manner from dealing
with others (including competitors of Company) in the provision of services and
products similar to those encompassed in the Energy Supply and Services.
8. Authority of FirstEnergy. Inquiries for quotations for purchase made by
FirstEnergy to vendors or prospective vendors must be made expressly subject to
the approval and confirmation by Company and are not final until such written
approval is given by Company. Except as may be expressly provided in a separate
written agreement between the parties, FirstEnergy understands and agrees that
it is not authorized to accept, to enter into, or execute, and shall not
represent to any vendor or other person or firm that it has authority to accept
an offer, to enter into, or execute, on behalf of Company or as the agent for
Company, any agreement, contract or contractual commitment.
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9. Preferred Vendor Status.
a) FirstEnergy shall make recommendations concerning the procurement
of the Energy Supply and Services and recommendations for the provider of such
services, which, Company acknowledges, shall in most cases be FirstEnergy,
either directly or as broker. FirstEnergy shall not be required to obtain
competitive bids to support its recommendations.
b) FirstEnergy shall be entitled to a first look at providing all
Energy Supply and Services to Company. Company acknowledges FirstEnergy as the
preferred provider of such services, with a right to provide, at FirstEnergy's
option, the Energy Supply and Services, so long as the proposal from FirstEnergy
is competitive, as determined under Section 3 above. In any circumstances where
the Company rejects FirstEnergy as the provider, FirstEnergy at its option shall
be entitled to a right of first refusal on any third party vendor proposal.
10. Duties of Company.
a) Company reasonably shall cooperate with FirstEnergy in the
performance of the transactions contemplated by this Agreement.
b) Company shall provide FirstEnergy with access to Company
Facilities, personnel and information (subject to applicable confidentiality
agreements), including its historical energy consumption and expense data (such
as prior utility bills), existing energy related agreements (commodity,
transportation, storage, services, etc.) and shall allow FirstEnergy to install
meters and other control technology to evaluate Company=s energy consumption so
long as same does not interfere with Company=s operations.
c) Company shall pay FirstEnergy invoices on time and in accordance
with their terms.
11. Non-Disclosure of Information. The parties will negotiate in good
faith a confidentiality agreement for the protection of their respective
proprietary information. The Company acknowledges that FirstEnergy shall be
entitled to energy supply and services data and information for use in its
business, subject to the confidential treatment of the identity of the Company.
12. Independent Contractor. Both FirstEnergy and Company agree that the
relationship created by this Agreement is that of independent contractor and not
that of agency or venture partners.
13. Assignment. This Agreement shall bind the parties and their respective
representatives, successors, and assigns. Neither party shall be entitled to
assign its rights and responsibilities hereunder without the consent of the
other party; provided, that, FirstEnergy shall be permitted to
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assign its performance obligations to its affiliates.
14. Arbitration.
a) Dispute Resolution. The parties shall attempt in good faith to
resolve any dispute or claim arising out of or relating to this Agreement or the
transactions contemplated hereby ("Dispute") promptly by negotiations between
FirstEnergy and Company, including through mediation if agreeable to both
parties. If the parties are unable to resolve the Dispute, it shall be referred
to arbitration in accordance with the American Arbitration Association
Arbitration Rules then in effect, as modified by this Section (the "Rules"). The
number and identity of the arbitrators shall be determined by the parties within
thirty (30) days following respondent's receipt of claimant's notice of
arbitration. If the arbitrators have not been appointed within such thirty (30)
day period, the number and identity shall be determined at the request of a
party in accordance with the rules of the American Arbitration Association. The
place of arbitration shall be at Akron, Ohio, or at such other place as the
Parties may agree. The arbitrator(s) shall be empowered to order specific
performance of this Agreement but shall not be entitled to award punitive
damages. No arbitration board shall have the power to change, add to, or
subtract from any provisions of this Agreement. The arbitration board's function
shall be limited to the interpretation and application of existing clauses. The
Parties to the arbitration may by mutual agreement elect Abaseball" or Afinal
position" arbitration, in which event, the arbitrators' decision may only
consist of the final position of one of the parties and may not vary therefrom.
b) Exclusive Procedures. The procedures specified in this Section
shall be the sole and exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this Agreement and the
transactions contemplated hereunder. The parties hereto submit themselves to the
jurisdiction of the state and federal courts located in Akron, Ohio with respect
to enforcement of any arbitration award. Each of the parties hereby consents to
the service of process by registered mail at its address set forth in this
Agreement and agrees that its submission to jurisdiction and its consent to
service of process by mail are made for the express benefit of the other Party.
The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C.,
Sections 1-16, 201-208.
c) Parties to Continue Performance. While the procedures set forth
above are being followed, the Parties shall continue to perform their respective
obligations under this Agreement.
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15. Miscellaneous.
a) Entire Agreement. This Agreement sets forth the entire agreement
of the parties concerning the subject matter hereof. No other agreements or
understandings, whether written or oral, whether express or implied, shall be
binding on the parties.
b) Limitation of Liability. Neither party shall be liable to the
other for incidental, consequential, exemplary or punitive damages for claims
arising out of the transactions contemplated by this Agreement.
c) Amendments. No amendment, change, or modification to this
Agreement shall be enforceable unless the same is in writing and signed by the
parties.
d) No Waiver. The waiver by either party of any term of this
Agreement shall not constitute a waiver as to future breaches of the same term
or of any other part of this Agreement.
e) Notices. Any notices under this Agreement shall be delivered by
hand, courier, overnight delivery service, or U.S. mail (return receipt
requested) to the parties at the following addresses:
If to Company: Republic Technologies International, LLC
0000 Xxxxxxx Xxxxxxx
Xxxxx, Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
If to FirstEnergy: FirstEnergy Services Corp.
00 X. Xxxx Xx.
Xxxxx, Xxxx 00000-0000
Attn: President
f) Governing Law. This Agreement shall be construed under and
governed by the laws of the State of Ohio.
g) Ambiguity. In the event of any ambiguity, conflict or
inconsistency between this Agreement and any other subsequent agreement between
the parties, the terms of this Agreement shall control, unless such agreement is
identified by its express terms as an amendment to this Agreement.
h) Collateral. In the event of a future refinancing of the Company's
secured debt, the Company will use reasonable efforts to cause the commercial
transactions contemplated hereunder with FirstEnergy to be secured behind any
bank debt or subordinated debt, but ahead
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of any trade payables, to the extent possible.
IN WITNESS WHEREOF, the parties by their representatives duly authorized
have caused this Agreement to be duly executed as of the day and year above
first written.
REPUBLIC TECHNOLOGIES FIRSTENERGY SERVICES CORP.
INTERNATIONAL, LLC
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
Its: Vice President of Finance, Its: Exec. Vice Pres. & Gen. Counsel
Treasurer and Secretary ----------------------------------
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ATTACHMENT A
(Capitalized terms are as defined in the accompanying
Master Energy Services and Supply Agreement)
I. Services Included in Master Energy Services and Supply Agreement
1.1. Electric Will manage the procurement of 100% of the electric energy
Energy- requirements for all the Company Facilities. Prior to the
Supply delivery of any electricity supply, FirstEnergy and Company
will assess the individual needs of each property and
develop, with appropriate local and/or corporate management,
a supply arrangement that fits the quantity, delivery point,
term, risk tolerance, regulatory requirements, etc. most
appropriate for that property.
For determination of quantity, facilities with a common
delivery point may be grouped (e.g., all facilities within a
single control area).
Established baseload requirements will be at a fixed price to
be set at a discount to market prices for baseload energy (7x
24 product) for similar terms.
Non-baseload requirements will be mutually established based
on analysis of consumption profiles. The price for
non-baseload requirements will be market-based to be set at
time quantity is determined. May reflect fixed price, indexed
price and/or combination of fixed and floating.
Electric To the extent requested, required or beneficial to the
Energy- Electric property, will provide additional services such as
General contract Energy-General negotiation, etc. All charges, terms
Services: and conditions for any Services: services will be mutually
agreed upon in advance of the service.
2. Natural Gas - Will manage the procurement of 100% of the natural gas
Supply requirements for the all the Company Facilities. Prior to the
delivery of any natural gas supply, FirstEnergy and Company
will assess the individual needs of each Company Facility and
develop, with appropriate local and/or corporate management, a
supply arrangement that fits the quantity, transportation,
storage, delivery point, term, risk tolerance, regulatory
requirements, etc. most appropriate for that Company Facility.
FE will manage all aspects of interstate and/or intrastate
transportation to the various Company Facilities, including
physical supply, transportation and price risk portfolios.
Natural Gas - To the extent requested, required, or beneficial to the
General Services: property, will provide additional services such as those
listed. All charges, terms and conditions for any services
will be mutually agreed upon in advance of the service.
Full service fuel manager for any or all facilities.
Manage all aspects of LDC negotiations for effective rate and
service level management. Company has the right to request 3rd
party review of LDC negotiation where FirstEnergy LDC
affiliate is incumbent.
Assumption of fuel management roles immediately while working
with existing providers to honor remaining terms and
conditions of existing agreements.
Coordinate natural gas requirements during transfer of work
load from Indiana to Ohio facility; work with current supplier
to facilitate transfer; establish new agreement for
incremental requirements for Ohio facility.
Convert existing month to month arrangement for Northeast Ohio
Natural Gas Corp deliveries to effective term arrangements.
Manage any transportation and storage agreements.
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3. Consolidated Will process and pay in a timely manner (with Company funds)
Billing and all utility bills (electric, gas, water, etc.) designated by
Analysis Company for designated Company Facilities. FirstEnergy will be
Services: responsible for providing a cost analysis of the development
and on-going costs associated with this service. The parties
Consolidated will mutually agree as to the cost recovery
mechanism if the Billing and decision is made to proceed, but
FirstEnergy will guarantee Analysis Services: that Company
will incur no up-front costs.
4. Facilities Will manage the energy related project requirements of
Services Company. Those services would include but not be limited to,
the following:
HVAC
All charges, terms and conditions for any service will be
mutually agreed upon in advance of the service. The parties
will mutually align incentives through shared savings.
5. Products & Company will provide FirstEnergy with the opportunity to work
Services with Company on related services to include, but not be
limited to, the following:
Cogeneration Projects: Site specific disposal/re-cycle
contracts:
o Steam Projects o Iron oxide fines
o Pulverized Coal o Arc furnace dust
o Site specific disposal/recycle o Scrubber sludge and Water
contracts treatment sludge
Carbon Plus(TM): Compressed Air:
o Carbon supply o Air compressor
installation and retrofit
o Dolomite supply o Re-piping
All charges, terms and conditions for any service will be
mutually agreed upon in advance of the service. The parties
will mutually align incentives through shared savings.
6. Other Company will provide FirstEnergy with the opportunity to
Miscellaneous work with Company on related services to include, but not be
Services: limited to, the following:
Laboratory Services
Electrical Contracting Services
Metering Services
Roofing
Metal Fabrication
Substation Services
All charges, terms and conditions for any service will be
Miscellaneous mutually agreed upon in advance of the service.
The parties Services: will mutually align incentives through
shared savings.
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