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EXHIBIT 10.30
PURCHASE OPTION AGREEMENT
This Purchase Option Agreement ("Agreement") is made and entered into
as of the 31st day of May, 2000 by and between Dearborn Industrial Generation,
L.L.C. ("DIG"), the Rouge Steel Company ("Rouge"), and the Ford Motor Company
("Ford"). DIG, Rouge and Ford are sometimes referred to herein collectively as
the "Parties" and each individually as a "Party".
RECITALS
WHEREAS, DIG and Rouge have entered into a Ground Lease dated as of
June 30, 1999 ("Ground Lease").
WHEREAS, under certain circumstances, DIG has agreed to grant Rouge and
Ford, jointly or individually, the option to purchase a portion or all of DIG's
assets ("Project Assets" as defined herein) for a purchase price equal to its
Fair Market Sales Value.
WHEREAS, under certain circumstances, Rouge has agreed to grant DIG the
option to purchase the Leased Premises for a purchase price equal to its Fair
Market Sales Value.
WHEREAS, the Parties desire to enter into this Agreement in order to
establish, among other things, (i) the circumstances under which Rouge and/or
Ford or DIG may exercise their respective purchase option(s) and (ii) the
procedures for determining the Fair Market Sales Value of the Project Assets and
the Leased Premises.
NOW THEREFORE, in consideration of the mutual benefits to be derived,
the representations, warranties, conditions and promises contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS.
Capitalized terms used herein have the meaning assigned to them in the
Ground Lease unless otherwise defined in the text of this Agreement or as
defined below:
(a) Agent. Agent is the representative of the Project Finance
Lenders.
(b) Fair Market Rental Value or Fair Market Sales Value. Fair
Market Rental Value or Fair Market Sales Value of the Leased Premises or the
Project Assets as of the Appraisal Date means the cash rent or cash price that
would be obtained in an arm's-length lease or sale, respectively, between an
informed and willing lessee or buyer and an informed and willing lessor or
seller, in either case under no compulsion to lease
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or purchase or sell and neither of which is related to Rouge or Ford or DIG or
any assignee or Mortgagee of the property in question, and shall be determined
as provided in Article III of this Agreement.
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(c) Ford/Rouge and Double Eagle Substations. All facilities for
the distribution of electricity, including but not limited to, substations,
transformers, wires, and switches owned by DIG but located west of Xxxxxx Road
on or adjacent to the Rouge Industrial Complex ("Ford/Rouge Substations") or
located on the property of Double Eagle Steel Coating Company ("Double Eagle
Substations").
(d) Project or Project Assets. Project or Project Assets means the
Operating Rights (as defined herein) and the approximate 550 megawatt complex of
two natural gas fired combined cycle units with heat recovery steam generators,
three blast furnace gas boilers, and one steam turbine generator, and all
ancillary transformers, transmission wires, meters, and other equipment
necessary to produce electricity, steam and treated water and to burn blast
furnace gas, in the capacities, quality and quantities required under any
Purchase and Sales Agreements; and to connect to the existing infrastructure in
the Rouge Complex. The Project includes interconnection to the Detroit Edison or
other third party electric power grid at a minimum of two points with each
circuit having sufficient capacity to supply all of the requirements of the
Rouge Complex. The term "Project" or "Project Assets" is intended to include all
Site Project Improvements and all Connecting Facilities and Easement Facilities
serving and interconnecting with the Rouge Complex and to exclude (i) any
commercial contracts for the purchase and sale of electricity, steam, or blast
furnace gas; and (ii) the Ford/Rouge Substations and Double Eagle Substations,
which shall be governed by the terms of the Electricity Sales Agreements among
the parties hereto.
(e) Project Finance Lender(s). Project Finance Lender(s) means any
financial institution and/or investor, other than CMS Energy Corporation or its
affiliates, which participates in a Project Financing.
(f) Project Financing. Project Financing means any indebtedness or
other obligations incurred by DIG to finance the construction and operation of
the Project Assets. Project Financing may include, but is not limited to,
secured or unsecured indebtedness either on a senior or subordinated basis,
issuance of any securities other than common stock of DIG, and operating and
capital leases. Project Financing shall not be limited to the initial financing
procured by DIG, but will include all subsequent financing or refinancing.
(g) Value. Value means either the Fair Market Rental Value or the
Fair Market Sales Value of the Leased Premises or of the Project, as the
circumstances require, as determined pursuant to Article III of this Agreement.
ARTICLE II
RIGHTS AND OBLIGATIONS OF PARTIES UPON A TERMINATION EVENT
SECTION 2.01 ROUGE'S AND/OR FORD'S PURCHASE OPTION.
(a) Upon the occurrence of a Termination Event, except under
Section 9.01(e) of the Ground Lease, Rouge and Ford, jointly or individually,
shall have the option to purchase all of the Project Assets owned by DIG, or any
portion of such Project Assets if the Project is not completed as of the
Termination Event, for a purchase price equal to Fair Market Sales Value,
subject to adjustment under Section 2.04. If Rouge and Ford do not exercise
their option to purchase the Project Assets or portions thereof as described
above, DIG may remove the installed equipment and restore the property to its
original condition or abandon
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the equipment with the permission of Rouge. The purchase option granted under
this Section 2.01 shall be subject to the following conditions:
(i) There is no Project Financing in place; or
(ii) It is the intention of DIG to procure Project
Financing for the Project Assets. As a condition precedent to the
closing of any Project Financing, DIG, Rouge and/or Ford, and the
Project Finance Lenders, will enter into an amendment to this
Agreement, if required by Project Finance Lenders ("Amended Purchase
Option Agreement"), whereby Rouge and/or Ford will be granted the
option to purchase the Project Assets, subject to the rights of and
obligations owed to the Project Finance Lenders under the Project
Financing documentation, including, but not limited to, the following
rights afforded to the Project Finance Lenders:
(A) Proceeds paid by Rouge and/or Ford under the
Amended Purchase Option Agreement will be transferred directly
to the Agent of the Project Finance Lenders who will
immediately apply such proceeds to the payment of any
outstanding indebtedness or other obligations of DIG in
connection with the Project Financing.
(B) Agent of the Project Finance Lenders shall
have the right to assume all of DIG's rights under the Amended
Purchase Option Agreement including, but not limited to, DIG's
right pursuant to Section 3.03 to employ an appraiser to
determine the Fair Market Sales Value of the Project Assets.
(C) Agent of the Project Finance Lenders shall
have the right to reasonably modify the qualifications of the
appraisers selected to appraise the Project Assets.
(D) Agent of the Project Finance Lenders shall
have the right, to reasonably modify the timetable for
exercise of the purchase option and the determination of the
Fair Market Sales Value to coincide with Project Financing
documents.
(iii) In addition to the rights afforded to the Project
Finance Lenders in Section 2.01(a)(ii), Rouge and Ford agree to
cooperate with DIG in the negotiation and execution of such amendments
or additions to this Agreement as Project Finance Lenders may
reasonably request and shall reasonably cooperate with the Project
Finance Lenders in the expedient preparation and execution of the
Amended Purchase Option Agreement.
(iv) Notwithstanding the above, Rouge and Ford shall be
required to execute the Amended Purchase Option Agreement only if, to
the extent permitted by law:
(A) Project Finance Lenders agree to operate, or
cause to be operated, the Project Assets in accordance with
Section 4.01(b); and
(B) Project Lenders agree to release and transfer
their entire interest in the Project Assets to Rouge and/or
Ford in consideration of the receipt of the funds pursuant to
the exercise of the purchase option.
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(b) Upon the occurrence of a Termination Event following which
Rouge and Ford have the option to purchase the Project Assets, DIG shall provide
Rouge and/or Ford with reasonable access to all of the Site Project
Improvements, Connecting Facilities and Easement Facilities, and to such of
DIG's records (not including financial information, except as it is necessary in
determining the Value of the Project Assets), in whatever form they are kept, as
relate to the function, operation and construction (including without limitation
all cost information relative to Project operations), in order to afford Rouge
and/or Ford the opportunity to review, examine and inspect the Project Assets
and all such records to the extent that Rouge and/or Ford shall reasonably deem
to be necessary. Rouge and/or Ford shall be permitted to make copies of such
records as they deem reasonably necessary in connection with such inspection.
Without limiting the generality of the foregoing, DIG shall make available for
inspection and review by Rouge and/or Ford and their duly-authorized
representatives all engineering reports, operation and maintenance records (not
including financial information, except as it is necessary in determining the
Value of the Project Assets) pertaining to the Project Assets, all of which
shall be assembled at the Project Site for review. From the date of a
Termination Event until the earlier of (i) closing on the purchase if the option
is exercised or (ii) the date the option is not exercised, DIG will provide
Rouge and/or Ford with reasonable access to DIG records, and ongoing operations
directly related to and necessary for the management, operations and maintenance
of the Project Assets. Rouge's and Ford's review of the records shall be subject
to the terms and the execution of the Confidentiality Agreement attached to this
Agreement as Exhibit A. Further, without limiting the generality of the
foregoing, Rouge and/or Ford shall have the right to come upon the Leased
Premises to conduct an environmental assessment of the Leased Premises.
(c) From the date of a Termination Event following which Rouge
and/or Ford, or an assignee of them, shall have the option to purchase the
Project Assets until the earlier of (i) closing on the purchase if the option is
exercised or (ii) the date the option is not exercised, DIG shall maintain and
repair the Project Assets with the degree of care normally exercised by entities
similarly situated to DIG for projects of like kind to the Project.
Notwithstanding the foregoing, DIG may cease operation of the Project during
such period provided that such cessation has no adverse effect on operations of
the Rouge Complex or the performance of DIG's obligations under Purchase and
Sales Agreements, and that such cessation is effected prudently and in
accordance with industry standards and Governmental Requirements for such
cessation, with due regard for the safety of persons, property and process, and
potential for commencement of operation of the Project by a purchaser thereof.
(d) Exercise of Option and Closing, Timetable.
(i) Upon the occurrence of a Termination Event following
which Rouge and Ford have the option to purchase the Project Assets,
Rouge and Ford shall have a period of fifteen (15) days from written
notice from DIG to Ford and Rouge of the Termination Event to determine
whether to initiate the valuation process under Article III. At any
time during such fifteen (15) day period, Rouge and/or Ford may give
notice to DIG of intention to initiate the valuation process under
Section 3.02.
(ii) From the date of notice given under (i) above, the
Parties shall cause Value of the Project Assets to be determined as
provided in Section 3.02 within a period not to exceed one hundred
twenty (120) days, subject to extension for cause as provided in
Article III or as required by reappraisal under Section 2.04(d), any
such extension in no event to exceed fifteen (15) days.
(iii) Following the final determination of Value of the
Project Assets, Rouge and/or Ford shall have a period of fifteen (15)
days from delivery of the final Appraisal to exercise the option to
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purchase the Project Assets by giving notice of exercise to DIG,
subject to extension as required by reappraisal under 2.04(d), such
extension in no event to exceed fifteen (15) days (the "Option
Expiration Date"). Rouge and/or Ford may give notice of its decision
not to exercise the purchase option at any time following the
occurrence of the Termination Event referred to in (i) above; provided
that, if notice of exercise has not been delivered to DIG by the Option
Expiration Date, the option shall be deemed to be "not exercised" on
such date, for purposes of this Agreement.
(iv) The Parties shall cause closing of the purchase to
occur within thirty (30) days from the date of notice of exercise given
under (iii) above.
(v) Failure to give any notice within the time provided
therefor, shall terminate the option rights afforded under Section
2.01.
SECTION 2.02 DIG'S PURCHASE/LEASE OPTION(S).
In the event neither Rouge nor Ford exercises the option to purchase
the Project Assets under 2.01, and DIG desires to continue operation of the
Project on the Leased Premises, and if the Termination Event occurs under
Section 9.01(b), (c) or (d) of the Ground Lease, DIG may, at its option, either
lease the Leased Premises under the terms and conditions of the Ground Lease for
a Post-Termination Term at Fair Market Rental Value or purchase the Leased
Premises for Fair Market Sales Value.
(a) Exercise of Option(s), Timetable.
(i) From the date upon which DIG's option to lease or
purchase the Leased Premises under this Section 2.02 becomes first
exercisable, DIG shall have a period of fifteen (15) days to give
notice to Rouge of intention to initiate the valuation process under
Section 3.03.
(ii) From the date of notice given under (i) above, the
Parties shall cause Value of the Leased Premises to be determined as
provided in Sections 3.03 and 3.04 within a period not to exceed one
hundred twenty (120) days.
(iii) Following the determination of Value of the Leased
Premises, DIG shall have a period of thirty (30) days from delivery of
the final Appraisal to exercise the option(s) to lease or to purchase
the Leased Premises by giving notice of exercise to Rouge.
(iv) The Parties shall cause closing of the lease or
purchase to occur within thirty (30) days from the date of notice given
under (iii) above.
(v) Failure to give any notice within the time provided
therefor shall terminate the option rights afforded under Section 2.02.
SECTION 2.03 NON-EXERCISE OF PURCHASE OPTIONS.
In the event Rouge and/or Ford do not exercise the option under Section
2.01 and it is the case that either (a) DIG, after having the right to do so as
provided in the immediately preceding Section 2.02, does not give notice of
exercise of its option either to lease the Leased Premises for a
Post-Termination Term or to purchase the Leased Premises within one hundred
sixty five (165) days after expiration of Rouge's and Ford's
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option to purchase the Project Assets, or (b) there is a Termination Event as a
result of which DIG does not have a right either to lease for a Post-Termination
Term or to purchase the Leased Premises, DIG shall forthwith commence, and, with
due diligence and dispatch, process removal of the Project Assets from the
Leased Premises and within the Easement Areas, excepting from such removal, and
preserving to the extent installed, the electric power grid interconnections
that are a part of the Project, and restore the Leased Premises and Easement
Areas as nearly as possible to their condition prior to alteration by reason of
the Project Assets, or abandon in place such Project Assets as the Parties may
mutually agree. Rouge and Ford will allow DIG access to the Project Site in
order to proceed with such removal.
SECTION 2.04 PURCHASE OF PROJECT ASSETS.
The following agreements and conditions apply in the event Rouge and/or
Ford exercise(s) the option to purchase the Project Assets:
(a) If within the time for exercise both Rouge and Ford give
notice of exercise, either jointly or separately, the Project Assets with the
Operating Rights (defined and as provided below), to the extent owned by DIG or
otherwise transferable or assignable, shall be transferred to both as tenants in
common or to an assignee of either or both of them, in the percentage as Rouge
and Ford may then agree and direct by notice (within the time allowed for
exercise of the option under Section 2.01(d)), but in the absence of agreement
directing such percentage, then to each an undivided one-half. If within the
time for exercise, either Rouge or Ford gives notice of exercise but the other
of them does not, the entirety of Project Assets with the Operating Rights
(defined below) shall be transferred to the one of them giving the notice or its
assignee.
(b) It is the intent of the Parties that, pursuant to exercise of
the option to purchase, Rouge and/or Ford, or an assignee of them, shall acquire
ownership of or right to possess and use all physical assets comprising the
Project Assets, together with all rights to operate the Project to provide all
of the services to the Rouge Complex that are described in the Purchase and
Sales Agreements. DIG shall exercise Commercially Reasonable Efforts to assure
as a matter of contract that its right to possess and use all portions of the
Project Assets not so owned shall be transferable and assignable, to Rouge
and/or Ford or an assignee of them, without requiring the payment of
compensation therefore, to enable Rouge and/or Ford, or an assignee of them, to
possess and use the Project Assets to provide all of the services to the Rouge
Complex that are described in the Purchase and Sales Agreements.
(c) Upon the terms and subject to the conditions set forth herein,
DIG shall sell, assign, transfer and convey to Rouge and/or Ford, or an assignee
of them, and Rouge and/or Ford, or an assignee of them, shall purchase and
accept from DIG, at closing, all of DIG's right, title and interest in and to
the Project Assets.
(i) By xxxx of sale with warranty of title against DIG's
acts, DIG shall convey to Rouge and/or Ford, or an assignee of them,
good title to those portions of the Project Assets owned by DIG, free
and clear of all Liens, Charges and Claims other than as contained in
approved Easement Agreements and Rights of Way agreements; and by
instruments of assignment with warranty against DIG's acts, DIG shall
assign all of its right, title and interest in and to those portions of
the Project Assets not owned by DIG and in the instruments of lease,
license, purchase, option and permission to use and possess evidencing
such right, title and interest. Any existing Liens, Charges and Claims,
with accruals to the date of closing, may be paid out of the purchase
price at closing, but any shortfall between the purchase price and the
amount of outstanding Liens, Charges and Claims shall be paid or
assumed by DIG at closing. The xxxx of sale may disclaim implied
warranties of fitness for purpose
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under the Michigan Uniform Commercial Code, and describe the property
so transferred "as-is, where-is and with all faults" as provided in
Section 2.04(d).
(ii) By instruments of assignment with warranty against
DIG's acts, DIG shall assign to Rouge and/or Ford, or an assignee of
them, and deliver originals of instruments evidencing, all security
deposits and option fees, operating agreements, permits, licenses,
certificates, approvals, operating rights, environmental credits, tax
abatement certificates, pending tax assessment appeals, fuel supply and
transportation contracts necessary to operate the Project, all
available Plans and Specifications, construction drawings, current
plant drawings, surveys, operating manuals, computer programs and
operating codes for systems integral to operation of the Project,
security systems, warranties from suppliers, and any and all
documentation evidencing the satisfaction of Governmental Requirements,
with all required consents and approvals to transfer and assignment to
Rouge and/or Ford, as Rouge and Ford desire in their discretion to
accept, to enable Rouge and/or Ford, or an assignee of them, to operate
the Project in place in compliance with Governmental Requirements, to
provide all of the services to the Rouge Complex that are described in
the then current Purchase and Sales Agreements (all of the foregoing is
collectively referred to as the "Operating Rights"), provided, however,
that any reference to Operating Rights does not include the assignment
and assumption of DIG's rights and/or obligations under any contracts
for the purchase and sale of electricity or gas. Rouge and/or Ford, or
an assignee of them, shall assume from and after such assignment the
obligations of DIG under the Operating Rights arising thereafter.
(iii) Except as provided in Section 2.04(b), DIG shall
not be obligated to sell, assign, transfer or convey such portions of
the Project Assets, including, without limitation, any lease, contract,
or other interest or right, as to which consent or waiver of the issuer
thereof or other party thereto or third persons whose consent or
approval is necessary by the proper sale, assignment, transfer or
conveyance thereof, without first having obtained all necessary
consents and waivers of the issuer thereof, the other party thereto, or
any third person whose consent or approval is necessary for the
property sale, assignment, transfer or conveyance of such portion of
the Project Assets. Promptly after the exercise of the option to
purchase by Rouge and/or Ford, or an assignee of them, DIG shall use
Commercially Reasonable Efforts to provide or obtain all such necessary
consents and waivers. If DIG or an assignee of DIG shall be requested
to pay any commercially reasonable amount, customarily paid to one
providing the consent or waiver, in consideration therefor to the
person from whom the consent or waiver is requested, DIG shall make
such payment. In addition, DIG shall make payment of any fee, penalty
or other such compensation which was expressly negotiated between DIG
and any assignor or transferor at the beginning of any contract,
whether commercially reasonable or not. Notwithstanding the foregoing,
DIG can refuse to make payment of such fee, penalty or other
compensation, in which case Rouge and/or Ford, or an assignee of them,
shall be entitled to pay such amount and the Value of the Project
Assets shall be reduced by an equal amount. Further, if any such
assignor or transferor requires the payment of any such fee, penalty or
other compensation which had not been expressly negotiated between it
and DIG, whether commercially reasonable or not, and DIG refuses to pay
such amount, then Rouge and/or Ford, or an assignee of them, shall have
the option to (x) pay such amount in which case there shall be no
impact on the Value of the Project Assets or (y) refuse to pay such
amount, in which case the appraisal shall include the impact on the
Value of the Project Assets based on not obtaining assignment of the
lease, contract or other right. Notwithstanding any other provisions in
this Agreement to the contrary, if application of the terms of this
Section 2.04(c)(iii) would result in a Project Assets Value less than
or equal to zero, then the Value of the Project Assets shall be equal
to its forced liquidation value. No such provision of funds
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by DIG shall result in any adjustment of or reduction to the purchase
price of the Project Assets. In the event a necessary consent or waiver
is not obtained after having exhausted all Commercially Reasonable
Efforts to obtain such consent or waiver, then DIG shall so notify
Rouge and/or Ford of such inability to obtain such consent or waiver
whereupon Rouge and/or Ford, or an assignee of them, shall have the
right, exercised by notice given within thirty (30) days following
DIG's notice, to terminate its exercise of the option to purchase with
the same effect as if the option had not been exercised.
Notwithstanding the foregoing, the Parties shall be obligated to
consider in good faith all reasonable alternatives proposed by the
other Party hereto to address the failure to obtain the necessary
consent or waiver and to resolve the issue to permit the closing to
occur within the time provided therefor under Section 2.01(d).
(iv) All costs in the conveyance of DIG right, title and
interest to the Project Assets and assignment of Operating Rights
customarily paid by a transferor or assignor of the same shall be borne
by DIG as an expense of sale; provided, however, notwithstanding the
foregoing, each of the Parties, Rouge and/or Ford and any assignee of
Rouge or Ford shall be solely responsible for the expenses and fees of
its own legal counsel in connection with the conveyance of the Project
Assets and assignment of Operating Rights.
(d) Except as otherwise expressly provided in this Agreement, the
Project Assets and each item thereof and the Operating Rights shall be
transferred and conveyed to Rouge and/or Ford, or an assignee of them, at
closing "as is, where is and with all faults" and without warranties of any kind
by DIG, express or implied, including, without limitation, any implied warranty
of fitness for any purpose or purposes. The occurrence of an Event of Loss in
the Project Assets subsequent to the determination of Value of the Project
Assets shall cause the Parties to obtain further appraisal of the Project
Assets, to be made at the sole expense of DIG, to re-determine its Value. DIG
shall be entitled to retain all condemnation awards and proceeds and such
amounts shall be considered in the re-determination. Except for the occurrences
described in the foregoing sentence, DIG shall deliver possession of the Project
Assets in the same condition as it was on the date Value was determined by the
Appraisal, reasonable wear and tear only excepted.
(e) The closing on the purchase of the Project Assets shall occur
within forty-five (45) days after the determination, or redetermination as
provided for in Section 2.04(d), of Value. DIG shall exercise Commercially
Reasonable Efforts to cause necessary third party approval of transfer of
Operating Rights before closing, but its obligation to exercise Commercially
Reasonable Efforts to transfer such Operating Rights shall survive the closing.
Until the earlier to occur of (i) the date upon which all such Operating Rights
have been transferred or (ii) the date which is one year from the closing of the
purchase pursuant to Section 2.01(d), with all required consents and approvals
therefor, DIG shall operate the Project on behalf of Rouge and/or Ford, or an
assignee of them, for a market based fee. If DIG (x) was subject to an Event of
Default of the Ground Lease which led to the exercise of the option to purchase
the Project Assets, (y) is in default of any of its post closing obligations, or
(z) refuses to operate the Project, Rouge shall be entitled to operate the
Project as agent of or attorney-in-fact for DIG for the lesser of one year from
the closing pursuant to Section 2.01(d) or until all Operating Rights have been
transferred. The activities of the Parties pursuant to this Section 2.04(e)
shall be subject to the terms of the Insurance and Indemnity Agreement.
(f) If an Expanded Facility has been installed upon the Leased
Premises, and Rouge and/or Ford, or an assignee of them, have exercised their
option to purchase the Project Assets then, any such purchaser(s) shall have the
option to purchase the Expanded Facility at a price to be negotiated. If such
option to purchase is not exercised, unless otherwise agreed by the purchaser(s)
of the Project Assets, DIG shall forthwith
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commence, and with due diligence and dispatch, process removal from the Leased
Premises of the Expanded Facility Improvements, and restore that portion of the
Leased Premises affected thereby as nearly as possible to its condition prior to
the alteration by reason of the Expanded Facility Improvements. In carrying out
the foregoing obligation, DIG shall cause no damage to or impairment of the
Project Assets; and if removal of any portion of the Expanded Facility
Improvements would cause such damage or impairment of any material nature or for
a material time, that portion or those portions of the Expanded Facility
Improvements shall not be removed but shall be conveyed or assigned as part of
the Project Assets (and Operating Rights, if applicable) without payment by the
purchaser of the Project Assets of a consideration therefor.
(g) If at the date of a Termination Event, DIG is obligated to
provide electricity from the Project to third persons under contracts which
cannot be terminated, or alternative arrangements for provisions of electricity
to satisfy such contracts cannot be made, with the exercise of Commercially
Reasonable Efforts, prior to transfer of the Project Assets to Rouge and/or
Ford, Rouge and/or Ford agrees to offer to sell what it reasonably deems to be
excess electricity produced by the Project to DIG for purchase at a commercially
reasonable rate (not less than prevailing market) but in no event less than the
Project operator's incremental cost to generate such electricity to satisfy such
contracts, for a period not to exceed twelve (12) months following notice of
exercise of the option to purchase the Project Assets.
SECTION 2.05 PURCHASE OF THE LEASED PREMISES.
If DIG exercises its option to purchase the Leased Premises:
(a) Rouge, by deed in recordable form, duly authorized and
executed, with warranty against Rouge's acts, shall convey fee simple marketable
title to the Leased Premises, together with all Easements appurtenant to the
land which is the Leased Premises. Rouge has provided to DIG at the Closing Date
a commitment prepared by First American Title Insurance Company for an owner's
policy of title insurance dated September 11, 1998 (the "Commitment") covering
the Leased Premises and the Powerhouse Land which is to be subjected to the
Easements, and has provided to DIG an executed instrument amending an easement
benefiting Ford for parking over the Leased Premises. DIG hereby agrees that the
condition of title shown in the Commitment, with the amendment of certain
easements, including the parking easement in the form provided, shows an
acceptable condition of title to the Leased Premises, and title will be accepted
in like condition upon exercise of DIG's option to purchase the Leased Premises
pursuant to this Agreement. Rouge shall remedy any changes in the state of title
subsequent to the date of the Commitment, by reason of acts or omissions of
Rouge or parties claiming under and through it (other than DIG), but shall have
no responsibility with respect to changes in title conditions caused by acts or
omissions of DIG or parties claiming under and through it. As provided in
Section 8.01 of the Ground Lease, any Fee Mortgage upon the Leased Premises
shall be released at closing on conveyance of the Leased Premises. DIG, pursuant
to Section 1.03 of the Ground Lease has accepted such other conditions which may
be title conditions not of record as shown on the Existing Conditions Map, as
such conditions may be changed pursuant to the provisions of Section 1.03 of the
Ground Lease. DIG shall accept physical condition of the Leased Premises on the
date of closing "as-is, where-is and with all faults" except as is expressly
provided in Section 1.031 of the Ground Lease, and DIG acknowledges that it will
have been in exclusive control of the Leased Premises since December 16, 1998.
At closing, Rouge shall provide for issuance of, and pay the premium
for, an ALTA Owner's policy of title insurance with standard exceptions detailed
naming DIG or its assignee as owner, in the amount of the purchase price.
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(b) The closing on the purchase of the Leased Premises shall occur
within forty five (45) days after the determination of Value. Rouge shall pay
all selling and transfer costs customarily paid by a seller of real property in
Xxxxx County, Michigan. Real estate taxes shall not be prorated. Rouge shall not
be required to pay any broker's commission. Rouge represents that it has
retained no broker in connection with this transaction.
(c) In the event the Agreement for Easements and Interconnections
terminates, DIG may continue to use the easements described therein in Articles
III, IV and X for a period of eighteen months, provided that DIG shall pay Rouge
and/or Ford, as the case may be, a fee for the use of such easements equal to
all direct and normal expenses, if any, incurred by Rouge and/or Ford in
continuing to grant DIG use of such easements. During such time, the parties
hereto shall negotiate in good faith for a replacement agreement to accommodate
the continued operation of the Project.
ARTICLE III
VALUATION
SECTION 3.01 VALUE DETERMINED.
Upon a Termination Event, pursuant to Section 2.01, the Value (as
defined in Section 3.02) of the Leased Premises or the Value (as defined in
Section 3.03) of the Project Assets shall be determined as provided in this
Article III.
SECTION 3.02 VALUATION OF THE PROJECT ASSETS.
The Value of the Project Assets ("Project Assets Value") shall be that
value determined by appraisal of the Project Assets made pursuant to the
guidelines and requirements of this Agreement.
(a) Property To Be Valued. The property to be valued by the
appraisal is the Project Assets as it exists on the Appraisal Date (as
hereinafter defined).
(b) When Project Assets Are To Be Valued. The Project Assets Value
is to be determined as of the day before the Termination Event (the "Appraisal
Date").
(c) How Project Assets Are To Be Valued. When the Project Assets
Value is to be determined, notice shall be given to cause commencement of the
appraisal process herein described. Either party may give such notice to the
other, but notice of the occurrence of a Termination Event shall be given
promptly by the party having knowledge of such occurrence. Within fifteen (15)
days following such notice, DIG and Rouge and/or Ford (represented together)
shall each select and employ, at its respective expense, an appraiser who is a
certified Member of the Appraisal Institute (MAI) and who has at least five
years experience in the valuation of ground lease industrial properties on a fee
basis to appraise the Project Assets as existing as of the Appraisal Date, in
place and in use, in accordance with then generally accepted property valuation
methodology and to prepare a complete appraisal report concerning the Project
Assets at the Fair Market Sales Value (the "Appraisal").
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The identity of each selected appraiser shall be disclosed promptly by
notice by each Party to the other. Each appraiser shall be engaged on a "time is
of the essence" basis, and each Appraisal shall be submitted within sixty (60)
days after the second of the notices referred to above (subject to extension as
provided in this Agreement). DIG and Rouge and/or Ford shall notify each other
promptly upon receipt of the final Appraisal.
At the time of selection of appraisers, DIG and Rouge and/or Ford may
agree to select and employ a single appraiser to determine the Project Assets
Value, and such Project Assets Value so determined by the appraiser shall be the
Project Assets Value for purposes of this Agreement. The final report of the
appraiser shall be distributed to DIG and Rouge and/or Ford simultaneously by
the appraiser. If separate appraisers are selected and employed, the final
report of each of the appraisers shall be first provided to the employer of that
appraiser which shall in turn provide notice to the other Party of receipt of
such final Appraisal report. The final Appraisal reports shall be exchanged
simultaneously by DIG and Rouge and/or Ford within two (2) business days after
the later of notice given by DIG and Rouge and/or Ford to the other of receipt
of the final Appraisal report.
If there is less than a 10% difference (calculated upon the proposed
Project Assets Value determined by the higher Appraisal) between the two
Appraisals, the average of the proposed Project Assets Value so determined by
each of the two Appraisals shall be the Project Assets Value for purposes of
this Agreement.
If there is a ten percent (10%) or greater difference (calculated upon
the proposed Project Assets Value determined by the higher Appraisal) between
the two Appraisals, and DIG and Rouge and/or Ford do not agree, within ten (10)
days after exchange of the proposed Project Assets Value determined by the final
report of the two appraisers, upon a Project Assets Value, then within fifteen
(15) days after exchange of the proposed value, the appraisers previously
selected and employed shall select a third so qualified appraiser, who shall be
employed at the equal expense of DIG and Rouge and/or Ford, who shall appraise
the Project Assets and submit a proposed Project Assets Value determination in a
final Appraisal report to both DIG and Rouge and/or Ford simultaneously. The
average of the proposed Project Assets Value of the three appraisals shall be
the Project Assets Value for purposes of this Agreement.
In the event the first two appraisers cannot agree upon a third
appraiser, the selection of the third appraiser shall be submitted to the
appraisers' certifying organization for selection as a matter of first resort
and, if not so selected, shall be determined by blind draw from the names of two
appraisers identified by each of the two initial appraisers.
If either DIG or Rouge and/or Ford do not select and employ an
appraiser as provided herein, or if, without reasonable cause (reasonable cause
shall include, but not be limited to, illness or death of an appraiser, and,
with respect to Rouge's and/or Ford's appraiser, or lack of reasonable (as
reasonably determined by the appraiser) access to the Project Assets, but in any
such case only for the period of delay reasonably resulting therefrom, not to
exceed in any event a period of fifteen (15) days), the appraiser selected by
either DIG or Rouge does not submit a proposed Project Assets Value in a final
Appraisal report within the time provided in this Agreement therefor, the
Project Assets Value proposed by the qualified appraiser providing a complying
Appraisal shall be the Project Assets Value determined for purposes of this
Agreement.
(d) Effect of Encumbrances on Project Assets. In determining Value
of the Project Assets, the appraiser(s) shall consider, evaluate and report
expressly as part of the Appraisal report, in detail, the effect upon Value of
limitations or encumbrances.
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SECTION 3.03 DETERMINATION OF VALUE OF LEASED PREMISES.
The Value of the Leased Premises ("Value of the Leased Premises") shall
be that value determined by appraisal of the Leased Premises made pursuant to
the guidelines and requirements of this Agreement, and shall be the Fair Market
Rental Value if the conditions of Section 3.02 of the Ground Lease apply and
shall otherwise be the Fair Market Sales Value, considering the effect, if any,
of Devaluing Occurrence(s).
(a) Property To Be Valued. The property to be valued by the
appraisal is the Leased Premises as it exists on the Appraisal Date (as
hereinafter defined).
(b) When Leased Premises Is To Be Valued. The Value of the
Leased Premises is to be determined as of the day before the Termination Event
(the "Appraisal Date").
(c) How Leased Premises Is To Be Valued. When the Value of the
Leased Premises is to be determined, notice shall be given to cause commencement
of the appraisal process herein described. Either party may give such notice to
the other, but notice of the occurrence of a Termination Event shall be given
promptly by the party having knowledge of such occurrence. Within fifteen (15)
days following such notice, DIG and Rouge shall each select and employ, at its
respective expense, an appraiser who is a certified Member of the Appraisal
Institute (MAI) and who has at least five years experience in the valuation of
ground lease industrial properties, on both a leasehold and fee basis, to
appraise the Leased Premises as it exists as of the Appraisal Date, in
accordance with then generally accepted property valuation methodology and to
prepare a complete appraisal report concerning the Leased Premises, valuing the
Fair Market Rental Value or the Fair Market Sales Value, as required under the
applicable circumstances (the "Appraisal"). If the Value of the Leased Premises
is to be determined as Fair Market Rental Value, the valuation shall be made as
occupied by the Project. If the Value of the Leased Premises is to be determined
as Fair Market Sales Value, the valuation shall be made as vacant land, without
consideration of any improvements made by DIG.
The identity of each selected appraiser shall be disclosed promptly by
notice by each party to the other. Each appraiser shall be engaged on a "time is
of the essence" basis, and each Appraisal shall be submitted within sixty (60)
days after the second of the notices referred to above (subject to extension as
provided in this Agreement). DIG and Rouge shall notify each other promptly upon
receipt of the final Appraisal.
If at the time of selection of appraisers DIG and Rouge may agree to
select and employ a single appraiser to determine the Value of the Leased
Premises, and such Value so determined by the appraiser shall be the Value for
purposes of this Agreement. The final report of the appraiser shall be
distributed to DIG and Rouge simultaneously by the appraiser. If separate
appraisers are selected and employed, the final report of each of the appraisers
shall be first provided to the employer of that appraiser which shall in turn
provide notice to the other Party of receipt of such final Appraisal report. The
final Appraisal reports shall be exchanged simultaneously by DIG and Rouge
within two (2) business days after the later of notice given by DIG and Rouge to
the other of receipt of the final Appraisal report.
If there is less than a 10% difference (calculated upon the proposed
Value of the Leased Premises determined by the higher Appraisal) between the two
Appraisals, the average of the proposed Value of the Leased Premises determined
by each of the two Appraisals shall be the Value of the Leased Premises for
purposes of this Agreement.
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If there is a ten percent (10%) or greater difference (calculated upon
the proposed Value of the Leased Premises determined by the higher Appraisal)
between the two Appraisals, and DIG and Rouge do not agree, within ten (10) days
after exchange of the proposed Value of the Leased Premises determined by the
final report of the two appraisers, upon a Value of the Leased Premises, then
within fifteen (15) days after exchange of the proposed value, the appraisers
previously selected and employed shall select a third so qualified appraiser,
who shall be employed at the equal expense of DIG and Rouge, who shall appraise
the Leased Premises and submit a proposed Value of the Leased Premises
determination in a final Appraisal report to both DIG and Rouge simultaneously.
The average of the proposed Value of the Leased Premises of the three appraisals
shall be the Value of the Leased Premises for purposes of this Agreement.
In the event the first two appraisers cannot agree upon a third
appraiser, the selection of the third appraiser shall be submitted to the
appraisers' certifying organization for selection as a matter of first resort
and, if not so selected, shall be determined by blind draw from the names of two
appraisers identified by each of the two initial appraisers.
If either DIG or Rouge do not select and employ an appraiser as
provided herein, or if, without reasonable cause (reasonable cause shall
include, but not be limited to, illness or death of an appraiser, and, with
respect to Rouge's appraiser, or lack of reasonable (as reasonably determined by
the appraiser) access to the Leased Premises, but in any such case only for the
period of delay reasonably resulting therefrom, not to exceed in any event a
period of fifteen (15) days), the appraiser selected by either DIG or Rouge does
not submit a proposed Value of the Leased Premises in a final Appraisal report
within the time provided in this Agreement therefor, the Value of the Leased
Premises proposed by the qualified appraiser providing a complying Appraisal
shall be the Value of the Leased Premises determined for purposes of this
Agreement.
(d) Effect of Devaluing Occurrence. In the process of determining
Value of the Leased Premises, the appraiser(s) shall consider, evaluate, and
report expressly as a part of the Appraisal report whether and the extent to
which Devaluing Occurrences (defined herein), if any, between the Closing Date
and the Appraisal Date have adversely affected Value of the Leased Premises. As
to the existence of matters described in Section 3.04 of this Agreement, the
appraisers shall rely exclusively on a written report of the Evaluator or its
substitute duly selected pursuant to this Agreement. As to the effect of such
matters, each appraiser shall adjust the appraised Value of the Leased Premises
by the amount, if any, determined to be the economic effect of Devaluing
Occurrence(s), and the total shall constitute the Value of the Leased Premises
determined by the appraiser.
SECTION 3.04 POTENTIALLY DEVALUING OCCURRENCES.
Upon or in connection with a Termination Event when Value of the Leased
Premises is to be determined, if Rouge believes that action or inaction of DIG
other than as permitted by the Ground Lease has adversely affected the Value (a
"Potentially Devaluing Occurrence"), Rouge shall submit written report(s)
identifying such action or inaction to DIG and to PricewaterhouseCoopers (or its
successor or a similar services firm providing valuation services which is not
serving as an appraiser pursuant to this Agreement, herein the "Evaluator"),
which shall serve as an independent decision-maker, for consideration of the
action or inaction identified and a determination, which shall be binding upon
the Parties to this Agreement and the appraisers employed by them, of whether
such action or inaction adversely affects the Value.
DIG shall have the right to submit written response(s) to Rouge's
submittal(s) to the Evaluator for consideration. The process by which the
determination by the Evaluator shall be made shall be commenced
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and completed within sixty (60) days from either the occurrence of a Termination
Event or such earlier date as the earlier of the written report(s) of Rouge have
been given to the Evaluator in anticipation of a Termination Event of which
notice has been given pursuant to this Agreement; and of those sixty (60) days,
DIG shall have twenty (20) days from submission of Rouge's report to DIG and to
the Evaluator to respond, and the Evaluator shall have not less than twenty (20)
days to consider written report(s) and response(s) after their submittal. At the
end of such sixty (60) days, or at such earlier time as it is prepared to do so,
the Evaluator shall issue its written report of determination of whether the
action or inaction identified caused one or more devaluing occurrences
("Devaluing Occurrence(s)"). This written report shall not quantify the result
of such Devaluing Occurrence(s). This written report shall be submitted to the
appraisers engaged by the parties for consideration as part of the appraisal
process. If a determination of such a Devaluing Occurrence(s) is not made by the
Evaluator within ninety (90) days from the date of the Termination Event or such
earlier date as the earlier of the written report(s) of Rouge have been given to
the Evaluator in anticipation of a Termination Event of which notice has been
given pursuant to this Agreement, unless access to information solely in
possession of DIG required by the Evaluator has been restricted so as to prevent
or postpone such determination, based upon a certification thereof by the
Evaluator, then the appraisers will not be required to consider such Devaluing
Occurrence(s).
If this procedure of determination of Devaluing Occurrence(s) is
followed, it shall serve to toll or extend, as appropriate in context, the time
periods for determination of Value of the Leased Premises by the actual time
taken by the procedure or for ninety (90) days from the Termination Event,
whichever is the shorter period.
Upon referral of the reports to the Evaluator, the Evaluator shall
certify to the Parties its ability to act as an independent decision-maker in
determining conduct of DIG or the operator of the Leased Premises. In the event
the Evaluator is unable or unwilling to so certify, the Evaluator shall select a
substitute decision-maker which the Evaluator deems comparable and qualified to
act as a decision-maker under this Section. Such substitute shall certify to the
parties its ability to act independently hereunder, and in the event it is
unwilling or unable to do so, the process shall be repeated (with the Evaluator
selecting successive substitute(s)) until an independent decision-maker can be
certified.
The cost and expense of consideration of conduct creating Devaluing
Occurrence(s) by the Evaluator or its subcontractor shall be borne solely by
Rouge unless (a) as a result of such consideration of conduct and (b) as a
result of such determination, an adjustment to the Appraisal is required, in
which case DIG shall pay the entire cost and expense of the Evaluator or its
substitute.
ARTICLE IV
ADDITIONAL RIGHTS AND OBLIGATIONS
SECTION 4.01 ADDITIONAL RIGHTS AND OBLIGATIONS OF PARTIES.
(a) If DIG grants a security interest in the Project Assets to the
Project Finance Lenders (to include a security interest in the real and personal
property and all material contracts and permits associated with operation of the
Project to secure DIG's performance under the Purchase and Sales Agreements with
Rouge and Ford), DIG will grant Rouge and Ford a security interest subordinate
only to the Project Finance Lenders. The documentation of such security interest
will be in form and substance acceptable to the Project
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Finance Lenders and DIG, and the terms of the subordination shall be determined
by the Project Finance Lenders. Rouge and Ford agree to promptly release the
security interest upon release of security interest by the Project Finance
Lenders.
(b) From the date of notice of the occurrence of a Termination
Event until the earlier of (i) closing on the purchase if the option is
exercised or (ii) the date the option is not exercised, DIG shall operate, or
cause to be operated, the three blast furnace gas boilers, or such equipment
then utilized by DIG to burn Rouge's blast furnace gas (the "Blast Furnace Gas
Equipment"). DIG shall continue to accept Rouge's blast furnace gas pursuant to
the Blast Furnace Gas Purchase Agreement and provide steam necessary to continue
operations of Rouge and Ford at the Rouge Complex pursuant to the Steam Sales
Agreement. Subject to Section 2.04(e), from the date occurring the earlier of
(i) closing on the purchase if the option is exercised or (ii) the date the
option is not exercised until the date twelve (12) months thereafter, DIG, or
its successor or assignee, shall have the option to either (A) allow Rouge to
operate the Blast Furnace Gas Equipment in order to accept Rouge's blast furnace
gas pursuant to the Blast Furnace Gas Purchase Agreement and provide steam
necessary to continue operations of Rouge and Ford at the Rouge Complex pursuant
to the Steam Sales Agreement, provided, however, that Rouge shall hold DIG, or
its successor or assignee, harmless from and indemnify DIG, or its successor or
assignee, for any costs or liabilities incurred by DIG, or its successor or
assignee, as a direct or indirect result of Rouge's operation of the Blast
Furnace Gas Equipment; or (B) operate the Blast Furnace Gas Equipment in order
to accept Rouge's blast furnace gas pursuant to the Blast Furnace Gas Purchase
Agreement and provide steam necessary to continue operations of Rouge and Ford
at the Rouge Complex pursuant to the Steam Sales Agreement, provided that Rouge
and Ford shall pay DIG, or its successor or assignee, a fee for such services
equal to all direct and normal operating expenses incurred by DIG, or its
successor or assignee, in its operation of the Blast Furnace Equipment in
accordance with sound engineering and operating practices plus $70,000 per
month, and provided further that in the case of an event which could give rise
to extraordinary expenses being incurred, before incurring any such expenses DIG
shall, to the extent it can do so without endangering human life or safety,
first consult with Rouge and Ford regarding the nature of the occurrence and the
anticipated expenses related thereto, which expenses shall be deemed to be
accepted by Rouge and Ford unless they notify DIG to the contrary within 10
Business Days of such consultation. Thereafter, DIG, or its successor or
assignee, will have no further obligation to operate the Project Assets or to
purchase blast furnace gas under the Blast Furnace Gas Purchase Agreement or to
deliver steam under the Steam Sales Agreement. The monthly payment referred to
above shall be adjusted each year from and after January 1, 2015 by a factor,
the numerator of which shall be the United States Consumer Price Index, All
Urban Consumers, or any successor index thereto (the "CPI") as of January 1 of
the then current calendar year, and the denominator of which shall be the CPI as
of January 1, 2014. For purposes of this Section 4.01(b), "Business Day" shall
mean any calendar day on which Federal banks are not authorized or required to
close in Detroit, Michigan. To the extent that this Section 4.01(b) conflicts
with any provision of the Ground Lease, this Section 4.01(b) shall control.
(c) [intentionally blank]
(d) Rouge and Ford shall have a right of first purchase of
seventy-five percent (75%) of the electricity and/or steam produced by that
portion of the Expanded Facility described in subparagraph (b) of Section 1.04
of the Ground Lease, to the extent such production is achieved by (i) increasing
the rated capacity of existing Project equipment in total by ten percent (10%)
or more, or by at least 50 MW or an equivalent increase in steam production
capability with respect to a single unit of equipment, i.e. single shaft or
boiler, or (ii) the installation of new equipment at a price negotiated within a
reasonable time (not to exceed sixty (60) days from commencement of discussions
concerning price) reflecting the incremental investment of DIG for
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that portion of the Expanded Facility with a reasonable rate of return to DIG
commensurate with similar projects similarly situated.
ARTICLE V
DOCUMENTATION
SECTION 5.01 DOCUMENTATION.
(a) The Parties shall use commercially prudent efforts to prepare
and negotiate in good faith definitive agreements (i.e., the Amended Purchase
Option Agreement and any supplementary documentation as Project Lenders may
require) that are necessary to document and effect the intent of the Parties in
Articles II, III and IV hereunder, (collectively, the "Definitive Agreements")
as soon as is practicable and to finalize and execute the Definitive Agreements
so as not to cause unreasonable delays in the closing of any Project Assets
Financing.
(b) Upon the execution of the Definitive Agreements, this
Agreement shall be wholly superseded. All agreements, drafts, term sheets,
memoranda, correspondence and all other communications prepared or exchanged in
the course of discussions regarding the transactions contemplated herein shall
have no legal effect unless incorporated into the Definitive Agreements executed
by the Parties.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01 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 the ability of Rouge to
fulfill its
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commitments hereunder, or that would, if adversely determined, have a material
adverse effect on the business or financial condition of Rouge.
SECTION 6.02 REPRESENTATIONS AND WARRANTIES OF FORD.
(a) Ford 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) Ford represents that the persons executing and delivering this
Agreement on Ford's behalf are acting pursuant to proper authorization duly
obtained and that this Agreement is the legal, valid and binding obligation of
Ford, enforceable in accordance with its terms.
(c) Ford represents that the making and performance by Ford 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 Ford, 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 Ford.
(d) Ford 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 Ford that would affect the
validity or enforceability of this Agreement or the ability of Ford to fulfill
its commitments hereunder, or that would, if adversely determined, have a
material adverse effect on the business or financial condition of Ford.
SECTION 6.03 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.
(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
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hereunder, or that would, if adversely determined, have a material adverse
effect on the business or financial condition of DIG.
ARTICLE VII
ASSIGNABILITY
SECTION 7.01 NON-ASSIGNABILITY.
Except as provided in this Section 7.01, this Agreement shall not be
assigned, transferred or otherwise alienated by either Rouge, Ford or DIG
without the prior written consent of the other Parties, and any attempted
assignment, transfer or alienation without such consent shall be void, provided,
however, that any Party may assign this Agreement to any Affiliated Company upon
giving thirty (30) days prior written notice to the other Parties and, further
provided, that in the event that Rouge and/or Ford are the assignors, such
assignor 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 permitted assigns. Affiliated Company shall mean any company in
which any Party controls directly or indirectly 20% or more of the voting stock.
SECTION 7.02 PERMITTED ASSIGNMENT.
DIG, or any assignee of 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 in which DIG or
any affiliate of DIG is a general partner) or to any Project Finance Lender.
Rouge and Ford hereby consent to such assignment and to any subsequent
assignments by such parent or Affiliated Company or Project Finance Lender or
any subsequent assignee, provided that, unless otherwise agreed by Rouge and
Ford 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 such parent or
Affiliated Company assignee for the remaining term of the Agreement. Rouge and
Ford agree to execute a written consent and estoppel certificate to effectuate
any assignment permitted under this Agreement.
ARTICLE VIII
TERMINATION
SECTION 8.01 TERMINATION.
This Agreement and the obligations of the Parties hereunder shall
terminate upon the earlier to occur of (a) failure by any Party to perform fully
any other provision of this Agreement for which notice of such failure has been
provided to the other Parties by any non-defaulting Party; or (b) termination of
the Ground Lease provided, that if such Ground Lease termination is pursuant to
any Termination Event other than a Termination Event under Section 9.01(e) of
the Ground Lease, this Agreement shall terminate upon the termination of the
option rights afforded under Sections 2.01 and 2.02 hereunder.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01 MISCELLANEOUS.
(a) Costs and Expenses. Each Party shall bear and pay all costs
and expenses incurred by it respecting the transactions contemplated herein,
including, without limitation, fees and expenses of their respective counsel,
accountants and appraisers.
(b) Limitation of Liability. No Party shall have any liability to
the other Parties for special, incidental, indirect or consequential damages nor
for any matter whatsoever associated with the activities covered by this
Agreement.
(c) Amendment. This Agreement may not be altered, changed,
modified, waived, or amended, except by an instrument in writing executed by all
Parties and consented to by Project Finance Lenders, if applicable.
(d) Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Michigan (without application of
principles of conflicts of law).
(e) Entire Agreement. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof, and all prior
correspondence, memoranda, agreements or understandings (written or oral) with
respect hereto are merged into and superceded by this Agreement.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
(g) Severability. If the 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.
(h) Miscellaneous. The provisions of this Agreement will bind and
benefit the successors and permitted assigns of the Parties. Whenever the
context requires, all terms used in the singular will be construed in the plural
and vice versa, and each gender will include the other gender. The term "Rouge"
means both Rouge and its successors and permitted assigns, the term "Ford" means
Ford and its successors and permitted assigns, and the term "DIG" means DIG and
its successors and permitted assigns. Captions used in this Agreement are for
convenience of reference only and shall not be used to construe the provisions
hereof.
[The rest of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the undersigned have each caused this Agreement to
be duly executed and delivered, effective as of the date first above written.
DEARBORN INDUSTRIAL GENERATION, L.L.C.
By:
Name:
Title:
ROUGE STEEL COMPANY
By:
Name:
Title:
FORD MOTOR COMPANY
By:
Name:
Title:
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Exhibit A
Confidentiality Agreement
Effective Date: _______________________
In order to protect certain Confidential Information which may be disclosed
between them, Dearborn Industrial Generation, L.L.C. ("DIG"), Ford Motor Company
("Ford") and Rouge Steel Company ("Rouge") agree that:
1. The Discloser(s) of Confidential Information are DIG, Ford and Rouge.
2. The parties' representatives for disclosing or receiving Confidential
Information are:
DIG: X.X. Xxxxxxx, Xx.
Ford: Xxxxxx Xxxx
Rouge: Xxxxxx Xxxxxxxxx
Any party may change its representative by written notice to the other.
3. The Confidential Information disclosed under this Agreement is described
as certain records of DIG as provided in Section 2.01(b) of a Purchase Option
Agreement among the parties dated May 31, 2000 (the "Purchase Option") or any
other information which the parties agree to disclose pursuant to this
Agreement.
4. A party receiving Confidential Information under this Agreement
("Recipient") shall use such Confidential Information of the disclosing party
("Discloser") only for the purposes set forth in the Purchase Option.
5. A Recipient's duty to protect Confidential Information disclosed under
this Agreement extends for a period of three (3) years from the date of each
first disclosure of the particular Confidential Information.
6. A Recipient shall protect Confidential Information by using the same
degree of care, but no less than a reasonable degree of care, to prevent the
dissemination to third parties or publication of the Confidential Information as
the Recipient uses to protect its own confidential information of a like nature.
7. A Recipient shall have a duty to protect only that Confidential
Information which is (a) disclosed by the Discloser in writing or as a tangible
item and is marked as confidential at the time of disclosure, or which is (b)
disclosed by the Discloser in any other manner and is identified as confidential
at the time of disclosure and is also detailed and designated as confidential in
a written memorandum delivered to the Recipient's representative within thirty
(30) days of the disclosure.
8. This Agreement imposes no obligation upon a Recipient with respect to
Confidential Information which (a) was in the Recipient's possession before
receipt from the Discloser, (b) is or becomes a matter of public knowledge
through no fault of the Recipient, (c) is rightfully received by the Recipient
from a rightfully possessing third party without a duty of confidentiality, (d)
is disclosed by the Discloser to a third party without a duty of confidentiality
on the third party, (e) is required to be disclosed under a court order or other
lawful governmental action, but only to the extent so ordered, and provided that
the party so ordered shall notify
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Discloser so that the Discloser may attempt to obtain a protective order, or (f)
is disclosed by the Recipient with the Discloser's prior written approval in
accordance with said written approval.
9. All materials bearing, containing, disclosing or relating to
Confidential Information shall remain the property of Discloser. Upon receipt of
written request from Discloser prior to the expiration of the confidentiality
obligation, Recipient shall return or, at Recipient's option, destroy all copies
of writings, and other materials in its possession or control that contain
Confidential Information received from Discloser under this Agreement. If any
such writing or material has been destroyed, an adequate response to the return
request will be a written verification of such destruction.
10. Each Discloser warrants that it has the right to freely make the
disclosures under this Agreement.
11. No party acquires any intellectual property rights under this Agreement
except the limited right to make copies as necessary for the use set out in
paragraph 4 above.
12. No party has an obligation under this Agreement to purchase any service
or item from the other parties.
13. Discloser acknowledges that Recipient may develop information
internally, or receive information from other parties, that may be similar to
Discloser's information. Accordingly, nothing in this Agreement shall prevent
Recipient from developing products for itself and others, providing such
products are not based on information received from Discloser pursuant to this
Agreement.
14. A Recipient shall adhere to the U.S. Export Administration Laws and
Regulations and shall not export or re-export any technical data or products
received from the Discloser or the direct product of such technical data to any
proscribed country listed in the U.S. Export Administration Regulations unless
properly authorized by the U.S. Government.
15. The parties do not intend that any agency or partnership relationship
be created between them by this Agreement.
16. All modifications to this Agreement must be made in writing and must be
signed by representatives of all parties.
17. If a dispute arises among the parties relating to this Agreement, the
following procedure shall be implemented before any party pursues other
available remedies except that the parties agree that money damages would not be
a sufficient remedy for a breach of this Agreement, and DIG may seek injunctive
relief from a court where appropriate in order to prevent or return a disclosure
or use of Confidential Information while this procedure is being followed:
a. The parties in dispute 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 hereunder or be
deemed a waiver by a party hereto of any remedies to which such party
would otherwise be entitled hereunder, and further provided that all
such statements made at such meeting shall be strictly off the record
and shall not be admissible in any court or arbitration proceeding.
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b. If, within 30 days after such meeting, the parties have not
succeeded in negotiating a resolution of the dispute, they agree to
submit the dispute to mediation in accordance with the then current
Model Procedure for Mediation of Business Disputes of the CPR Institute
for Dispute Resolution and to bear equally the costs of the mediation.
c. The parties will jointly appoint a mutually acceptable
mediator, seeking assistance in such regard from the CPR Institute for
Dispute Resolution if they have been unable to agree upon such
appointment within 20 days from the conclusion of the negotiation
period.
d. The parties agree to participate in good faith in the mediation
and negotiations related thereto for a period of 30 days. If the
parties are not successful in resolving the dispute through mediation,
then the parties may submit the matter to binding arbitration or a
private adjudicator, or either party may seek an adjudicated resolution
through the appropriate court.
e. Mediation or arbitration shall take place at a mutually
convenient site in the State of Michigan to be agreed by the parties.
The substantive and procedural law of the State of Michigan shall apply
to the proceedings. Equitable and compensatory remedies shall be
available in any arbitration. Punitive damages, costs and attorneys'
fees shall not be awarded. This Article of this Agreement is to be
governed by the Federal Arbitration Act, 9 U.S.C.A. ss. 1 et seq.
Judgement upon the award rendered by an Arbitrator, if any, may be
entered by any court having jurisdiction thereof.
18. This Agreement is made under and shall be construed according to the
laws of the State of Michigan without giving effect to principles of conflict of
laws.
19. Under the terms of this Agreement, the rights and obligations accruing
to any party shall also accrue to that party's wholly owned subsidiaries. This
Agreement shall not be assignable.
20. No party shall publicly announce or disclose the existence of this
Agreement or its terms and conditions, or advertise or release any publicity
regarding this Agreement, without the prior written consent of the other
parties.
DEARBORN INDUSTRIAL GENERATION, FORD MOTOR COMPANY
L.L.C.
By: __________________________ By: __________________________
(Authorized Signature) (Authorized Signature)
By: __________________________ By: __________________________
(Printed Signatory's Name) (Printed Signatory's Name)
By: __________________________ By: __________________________
(Printed Signatory's Title) (Printed Signatory's Title)
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ROUGE STEEL COMPANY
By: __________________________
(Authorized Signature)
__________________________
(Printed Signatory's Name)
__________________________
(Printed Signatory's Title)
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