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Exhibit 10.4
INDUSTRIAL GASES SUPPLY AGREEMENT
AGREEMENT, made as of 5 August 1994, between Air Products and Chemicals, Inc., a
corporation organized and existing under the laws of the State of Delaware,
("Seller") and Steel Dynamics Incorporated, a corporation organized and existing
under the laws of the State of Indiana, ("Buyer").
1. SALE AND PURCHASE
Seller hereby agrees to sell and Buyer hereby agrees to purchase
Buyer's entire requirements (excluding cylinder gases) of oxygen,
nitrogen, and argon ("Products"), for use at Buyer's facility in
Butler, Indiana ("Designated Location").
2. TERM
(a) This Agreement shall be effective as of the date hereof. The
Initial Term of this Agreement shall be thirteen (13) years
from the first day of the month following the date the
Equipment is installed and ready for operation ("Commencement
Date"), not later than 1 December 1995, unless delayed by
Force Majeure or failure of Buyer to fulfill its obligations
listed in Paragraph 4, and this Agreement shall remain in
force from year to year after the expiration of the Initial
Term unless terminated as provided below. Said Initial Term
together with any extension shall be referred to as the
"Supply Period." Written notice of the Commencement Date shall
be furnished to Buyer by Seller.
(b) Either party may terminate this Agreement as of the expiration
of the Initial Term or the expiration of any anniversary date
thereafter by giving not less than eighteen (16) months' prior
written notice to the other party. Either party may terminate
the portion of this Agreement dealing with the supply/purchase
of argon five (5) years from the Commencement Date by giving
not less than eighteen (16) months' prior written notice to
the other party.
(c) If Buyer's oxygen volumes total less than 70,000,000 SCF in a
month during years 2-13 of the Initial Term; then, at Seller's
option, the Initial Term may be extended two (2) months for
each occurrence. Seller shall provide Buyer with written
notice of Seller's option to extend not later than sixty (60)
days after the occurrence. In any event, the Initial Term plus
any extensions thereof for reasons of low oxygen volumes shall
not exceed fifteen (15) years in aggregate.
3. EQUIPMENT
(a) Seller will proceed with and perform, with reasonable
promptness and diligence, all work necessary to fabricate and
install production, backup storage, and vaporization equipment
(the "Equipment") on a site ("Equipment Site") to be purchased
by Seller from Buyer as provided in this Agreement. The
Equipment Site shall be shown on a drawing to be prepared by
Buyer promptly upon execution of this Agreement, and which
shall be attached to and made a part of this Agreement as
Exhibit A.
(b) Seller may, at Seller's expense, without affecting its
obligations under this Agreement, remove any Equipment and
replace it with other Equipment of a different size or type,
or supply Products hereunder by pipeline from another
producing source at a different location, and Buyer shall
cooperate (said cooperation shall not be reasonably withheld)
with Seller to effect any such change. Buyer's total cost
pursuant to Paragraphs 4, 7, 8, 9, and 10 for the supply of
Products after such a change shall in no event be greater than
such costs would have been had the change not been made.
(c) It is understood and contemplated by the parties that the
Equipment is designed to use air and water free of corrosive
components and containing only normal contaminants, as more
fully described in Exhibit B, and, therefore, if contaminants
in the air (not beyond the reasonable control of Buyer) or
water, or changes in the construction or operation of
facilities in or about the Designated Location, justify the
relocation, modification, or removal of any Equipment or the
installation of additional Equipment. in the reasonable
judgment of Seller. Seller shall at Buyer's expense (i) make
such relocation, modification, or removal, and (ii) install
such additional Equipment
* Material has been redacted pursuant to request for Confidential Treatment.
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(d) Seller shall own, and shall operate, maintain and repair, the
Equipment in accordance with Seller's standard practice at its
expense except for damage to the Equipment directly caused by
Buyer or third parties under the control of Buyer, which
damage will be paid for by Buyer. The cost of any
government-imposed modification in or addition to the
Equipment, its operation, or maintenance shall be paid
directly by Seller and a pro rata share of 8/27ths (0.296) of
said costs shall be invoiced to Buyer as a separate item and
paid by Buyer to Seller.
4 BUYER'S OBLIGATIONS
Buyer shall, without cost to Seller (except as noted below for the Equipment
Site):
(a) As a condition precedent to Seller's obligations hereunder,
sell to Seller the Equipment Site as shown on Exhibit A under
terms and conditions, at a price (such price not to exceed
$3,000/acre) to be agreed upon.
(b) Furnish the Equipment Site cleared, leveled, and well drained,
and shall be free of subsurface and aboveground obstructions,
with a soil bearing capacity of 3000 PSF minimum. Maximum
settlement range at 2.5 feet below the finished grade shall be
1/2 inch for major foundations under full load conditions.
(c) Furnish the required, hydrant house, access road, lines and
service for drainage, sewer, water, or gas including
installation and connection to Equipment, in accordance with
Exhibit A, and assistance in obtaining permits for the
installation, protection, and operation of the Equipment.
(d) Install necessary facilities to transport Products from the
Equipment to Buyer's points of use ("Distribution Lines").
5. SPECIFICATIONS
All Products delivered by Seller shall conform to the following
specifications
Oxygen Nitrogen Argon
------ -------- -----
Nitrogen: (less than) 200 ppm 99.9% (less than) 0.1%
Oxygen (greater than) 99.5% (less than) 20 ppm (less than) 200 ppm
Argon: (less than) 0.5% (less than)0.1% (greater than)99.9%
Pressure (+/- 10 psi) 165 psig 25 psig 150 psig
6. DELIVERY
(a) Products shall be delivered by Seller at the point of
connection between the Equipment and the Distribution Line, as
such point is depicted in Exhibit A.
(b) Title and risk of loss of Products shall pass to Buyer upon
delivery to the point of connection.
7. PRODUCING FACILITIES AND QUANTITY LIMITATIONS
(a) Seller's specification, price, and supply obligations are
predicated on furnishing Buyer's requirements of Products from
the generating portion of Seller's Equipment.
(b) Seller shall supply and Buyer shall purchase Buyer's
instantaneous requirements for oxygen up to 200,000 SCF per
hour ("Oxygen Contract Rate"), and nitrogen up to 20,000 SCF
per hour ("Nitrogen Contract Rate"), and argon. If Buyer has
intermittent additional requirements in excess of said Oxygen
or Nitrogen Contract Rates (collectively "Contract Rates") or
continues to have requirements during Force Majeure Equipment
outages (said additional or continual requirements referred to
as "Supplemental Product"), Buyer will purchase from Seller
and Seller will sell to Buyer such Supplemental Product or
part thereof. when and if available for sale, from the
Equipment or other facilities of Seller, in accordance with
all relevant terms and conditions of this Agreement at the
Supplemental Product Charge of ? per hundred SCF.
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(c) The backup portion of the Equipment will contain nominal
liquid oxygen and nitrogen storage capacity of 60,000 and
6,000 gallons respectively, and instantaneous vaporization
capacity of 350,000 and 20,000 SCF per hour respectively for
use with Supplemental Product. during normal operation.
(d) In the event Buyer has a long-term requirement in excess of
the Contract Rates. Buyer and Seller shall negotiate, in good
faith, the prices, terms, and conditions for an increase in
the Contract Rates. Should Buyer and Seller be unable to reach
agreement. Buyer must purchase the full Contract Rates
hereunder prior to receiving any Products from another
supplier or from Buyer's own facilities.
8. PRICE
Buyer shall pay Seller, during the Supply Period, a charge of *
per hundred SCF of oxygen and nitrogen (Oxygen-Nitrogen Product
Charge). Buyer shall pay Seller. during the Supply Period, a charge of
* per hundred SCF of argon (Argon Product Charge).
9. PRICE ADJUSTMENT
70% of the Oxygen-Nitrogen Product Charge in Paragraph 8 and 85% of the
Supplemental Product Charge in Paragraph 7 and the Argon Product Charge in
Paragraph 8 will be adjusted on the Commencement Date and annually thereafter by
Seller according to the formulae shown below:
Adjusted Oxygen-Nitrogen Product Charge = *
Adjusted Supplemental Product Charge = *
Adjusted Argon Product Charge = *
Where:
L1 = 119.2 (April 1994)
L2 = Value for the Employment Cost Index - Total Compensation as
published by the Bureau of Labor Statistics at the time of
adjustment.
E1 = 2.449 +ct per Kwh (April 1994)
E2 = Average price of electric power paid by Seller for the facility
serving Buyer at the time of adjustment as documented by Seller to
Buyer.
The most current indices (whether preliminary or final) available at the time of
adjustment will be used. If any of these indices ceases to be available as
presently constituted, the parties agree to substitute a suitable and reasonably
comparable index.
* Material has been redacted pursuant to request for Confidential Treatment.
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10. TAXES
(a) Seller shall bear and pay all federal, state, and local taxes
based upon or measured by its net income, and all franchise
taxes based upon its corporate existence or its general
corporate right to transact business.
(b) The prices as stated in Paragraphs 7, 8 and 9 do not include
any taxes. charges, or fees other than as stated in 10(a)
above. If any other taxes, charges, or fees howsoever
denominated and howsoever measured (including but not limited
to sales and use taxes and ad valorem taxes), are imposed on
the Equipment, the Equipment Site, the inventory, or upon the
construction, installation, operation. or maintenance of the
Equipment, said taxes, charges, or fees shall be paid directly
by Seller and a pro rata share of 8/27ths (0.296) of said
taxes, charges or fees shall be invoiced to Buyer as a
separate item and paid by Buyer to Seller. If Seller adds
additional Equipment at the Equipment Site after the
Commencement Date, then Buyer's pro rata share shall be
adjusted accordingly and written notice of such an adjustment
will be provided by Seller to Buyer.
(c) The prices as stated in Paragraphs 7, 8 and 9 do not include
any taxes, charges, or fees other than as stated in 10(a)
above. If any other taxes, charges, or fees howsoever
denominated and howsoever measured (including but not limited
to sales and use taxes and ad valorem taxes), are imposed upon
or measured by the production, manufacture, storage, sale,
transportation, delivery, use, or consumption of Products,
said taxes, charges, or fees shall be paid directly by Seller
and shall be invoiced to Buyer as a separate item and paid by
Buyer to Seller.
(d) Seller has entered into an Incentive Agreement (Exhibit C)
with DeKalb County (the "County") in order to induce the
County to grant certain tax incentives to Seller. The County
has agreed to provide tax incentives to Seller contingent on
certain representations made by Seller regarding minimum
capital investment, new jobs, and payroll associated with the
Equipment. Whereas Buyer and the County are parties to a
Memorandum of Understanding and Buyer receives direct benefit
from the incentives granted to Seller by the County, Buyer
agrees to indemnify Seller for any breach by Seller of the
incentive Agreement and pay to the County, or other designated
parties, any amounts which may be due as a result of such a
breach if the breach occurs in the period 1 January 2011
through 31 December 2015.
11. INVOICING AND PAYMENT
(a) Seller may invoice Buyer at the beginning of each month for
Products delivered in the previous month. Seller may, without
affecting the Supply Period or any other provisions hereunder,
invoice Buyer on the Commencement Date for the period the
Equipment operated in the prior month. Invoices for other sums
due hereunder shall be submitted monthly. All payments due
Seller hereunder shall be made to Seller at the location
indicated on the invoice, payable within twenty (20) days from
date of invoice. In case of failure by Buyer to pay any
invoice within said time period. a late payment charge shall
be assessed against the unpaid portion of such invoice amount,
at a rate equal to two points plus the prime rate charged for
commercial loans to most preferred customers by the Chase
Manhattan Bank, N.A. which is in effect on the date of
issuance of the invoice.
(b) It is agreed the timely payment by Buyer of all amounts due
and owing to Seller hereunder is an express condition to the
continued performance by Seller of its obligations hereunder.
12. MEASUREMENT
(a) The unit of measurement for all purposes hereunder shall be
one cubic foot of gas measured at a temperature of 70 degrees
F, at a pressure of 14.7 psia and dry, herein referred to as
"SCF" (standard cubic foot).
(b) Seller shall make readings, calibrations, and adjustments of
Seller's Product meters as it deems necessary. Buyer may
challenge the accuracy of said meters. For inaccuracies
greater than 2%, xxxxxxxx shall be corrected at the rate of
such inaccuracy for the period of inaccuracy known or agreed
upon, or if the period of inaccuracy is unknown or not agreed
upon, then for the month preceding initial determination of
the inaccuracy. For inaccuracies of 2% or less, Buyer will pay
for tests caused by Buyer's challenges. For inaccuracies
greater than 2%, Seller will pay for tests caused by Buyer's
challenges.
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13. SELLER'S WARRANTY
(a) Seller warrants that Products delivered to Buyer shall conform
to the specifications set forth in Paragraph 5 and that at the
time of delivery Seller shall have good title and right to
transfer the same and that the same shall be delivered free of
encumbrances.
(b) THE WARRANTIES SET FORTH IN PARAGRAPH 13(a) ARE IN LIEU OF ALL
OTHER WARRANTIES. EXPRESS OR IMPLIED, IN FACT OR BY LAW,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
14. LIMITATION OF LIABILITY
(a) Determination of the suitability of Products furnished
hereunder for the use contemplated by Buyer is the sole
responsibility of Buyer, and Seller shall have no
responsibility in connection therewith.
(b) Buyer acknowledges that there are hazards associated with the
use of Products, that it understands such hazards, and that it
is the responsibility of Buyer to warn and protect its
employees and others exposed to such hazards through Buyer's
use of Products. Seller shall provide Buyer with copies of
Material Safety Data Sheets ("MSDS") relating to Products for
Buyer to make such warnings, and Buyer shall hold harmless,
indemnify, and defend Seller from and against any liability
incurred by Seller because such warnings were not made. Buyer
assumes all risk and liability for loss, damages, or injury to
persons or to property of Buyer or others arising out of the
presence or use of Products or from the failure to make such
warnings. Buyer shall have no obligations for inaccuracies or
omissions in the MSDS.
(c) Buyer acknowledges that it can obtain and install devices to
sample Products delivered to determine its compliance with
specifications prior to use.
(d) Seller's sole liability and Buyer's sole and exclusive remedy
for the non-delivery of Products or for the delivery of
Products not conforming to specifications shall be limited to
the purchase price of the quantity of Products not delivered
or the purchase price of the non-specification Products
delivered.
(e) Except in the case of a willful and wrongful act or xxxxxx ion
of Seller, Seller shall not be liable in contract or tort for
any direct, indirect, special, incidental, or consequential
damages, including by way of illustration and not of
limitation, loss of use, loss of work in process, down time or
loss of profits.
(f) Claims for non-delivery of Products or delivery of
non-specification Products shall be void unless notification
is given to Seller's operating personnel promptly upon
discovery and confirmed in writing by Buyer within two (2)
business days thereafter
15. FORCE MAJEURE
(a) Neither party hereto shall be considered in default in the
performance of its obligations hereunder or be liable in
damages or otherwise for any failure or delay in performance
which is due to strike, lockout, concerted act of workers or
other industrial disturbance; fire, explosion, flood, or other
natural catastrophe; civil disturbance, riot, or armed
conflict whether declared or undeclared; impairment or outage
of equipment; curtailment, shortage, rationing, allocation, or
failure of normal sources of supply of labor, materials,
transportation, energy, or utilities; accident or Act of God;
delay of subcontractor or vendor; sufferance of or voluntary
compliance with act of government and government regulation
(whether or not valid); embargo; or due to any other cause,
whether or not foreseeable and whether similar or dissimilar
to any of the causes or categories of causes described above
and which is beyond the reasonable control of the party
affected.
(b) Neither party hereto shall be required to make any concession
or grant any demand or request to bring to an end any strike
or other concerted act of workers.
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(c) The party affected by an event described in Paragraph 15(a)
shall, promptly upon learning of such event and ascertaining
that it has affected or will affect such party's performance
hereunder, give notice to the other party, stating the nature
of the event, its anticipated duration and any action being
taken to avoid or minimize its effect.
(d) Nothing contained in Paragraph 15(a) above shall relieve Buyer
of its obligation to pay the amounts due under this Agreement.
16. GENERAL PROVISIONS
(a) No modification or waiver of this Agreement shall bind Seller
unless in writing and signed and accepted by an executive
officer of Seller. This instrument constitutes the entire
agreement between the parties concerning the subject matter
hereof. No terms and conditions in any purchase order or other
document of Buyer issued or purported to be issued with
respect to the sale of Products shall supplement or vary the
terms hereof and all of such provisions are hereby objected to
be Seller.
(b) Upon notice to the other party, any or all of Seller's or
Buyer's rights, title, and interest under this Agreement
(including without limitation any payments by Buyer hereunder)
may be assigned to any bank, trust company, insurance company,
financial institution, or other entity or groups thereof under
the terms of financing arrangements (but any such assignment
shall not relieve the assigning party of any its obligations
hereunder). This Agreement shall not otherwise be assignable
or transferable by either Buyer or Seller without the prior
written consent of the other. which consent will not be
unreasonably withheld, any attempted assignment or transfer
without such consent shall be void. All covenants and
provisions of this Agreement by and for the benefit of the
parties hereto shall bind and inure to the benefit of their
respective successors and assigns as permitted by the
provisions of this paragraph.
(c) Any notice or request given under this Agreement shall. if
given to Seller. be addressed to:
Air Products and Chemicals. Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Corporate Secretary
and if given to Buyer, be addressed to:
Steel Dynamics, Inc.
0000 Xxxxx - Xxxxxx Xx 00
Xxxxxx, XX 00000
Attention: Chief Financial Officer
(d) This Agreement shall be governed and construed in accordance
with laws of the State of Indiana.
STEEL DYNAMICS INCORPORATED AIR PRODUCTS AND CHEMICALS, INC.
By: /s/ By: /s/ X. X. Xxxxxxxxxx
----------------------- ------------------------
X. X. Xxxxxxxxxx
Title: Vice President Title: Vice President
----------------------- ------------------------
Date: 8 - 29 - 94 Date: 6 September 1994
----------------------- ------------------------
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Exhibit A
[COUNTY RECORDER'S MAP]
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Exhibit B
AIR AND WATER STANDARDS
ALLOWABLE AIR FEED IMPURITIES
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Exhibit C
INCENTIVE AGREEMENT
(Oxygen Plant)
WHEREAS, SDI and the Governments have entered into a Memorandum of
Understanding dated as of June 20, 1994 (the "MOU"), pursuant to which SDI has
agreed to construct the Project and the Governments have agreed to offer certain
incentives to SDI;
WHEREAS, certain processes integral to SDI's operation of the Project
may be owned and operated by entities other than SDI;
WHEREAS, Air Products and Chemicals, Inc. or an
affiliate thereof (the "Company") desires to construct the Oxygen
Plant in connection with the Project within the Area created by
the commission;
WHEREAS, in order to induce the County to provide the incentives set
forth herein, the Company has made the representations and warranties regarding
capital investment, employment, and payroll set forth herein;
NOW, THEREFORE, the County and the Company hereby agree and represent as
follows:
1. Capitalized terms used herein, including those used in the recitals
above, shall have the meaning ascribed to such terms in the MOU, unless
otherwise defined herein.
2. At the earliest opportunity legally permissible and upon timely
receipt of the appropriate documentation, the County will grant to the Company,
to the extent properly requested by the Company on the proper forms and within
the required times provided by Indiana law, the maximum depreciable personal and
real property tax abatement permitted by law on the investment in new personal
property and real property to be undertaken by the Company within the Area.
3. The Company agrees that the (a) Oxygen Plant will be completed and
operational with a minimum capital investment of $25,000,000 by the.earlier of
(i) January 1, 1997, or (ii) the date of completion of the mini-mill portion of
the Project by SDI, and (b) by December 31, 1997, the Oxygen Plant will create
15 to 25 new jobs with an annual payroll of at least $500,000.
4. Subject to unforeseen economic conditions, the Company agrees that it
will operate the Oxygen Plant in accordance with the minimum requirements set
forth in paragraph 3 above for so long as the TIF Bonds issued by the Local
Governments pursuant to the MOU remain outstanding and unredeemed.
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5. In any year the Company fails to pay property taxes when first due,
the Company agrees, upon the request of the County, and, if such property taxes
remain unpaid within 60 days after first due, to make a payment in lieu of taxes
to the County in the amount equal to the total real and depreciable personal
property taxes abated in such year.
6. The foregoing representations and agreements are subject to the
negotiation and delivery of the industrial gases supply agreement to be executed
by the Company and SDI.
IN WITNESS HEREOF, the parties hereto have caused this agreement to be
executed by the duly authorized officers as of the date shown below.
AIR PRODUCTS AND CHEMICALS, INC. COUNTY OF DEKALB, INDIANA
By: /s/ Xxxxx X. Xxxxxxxxxx By: Board of Commissioners
---------------------------- of DeKalb County, Indiana
Printed: Xxxxx X. Xxxxxxxxxx
------------------------
Title: Vice President /s/
------------------------- --------------------------------
President
Date: 29 June 1994
-------------------------- --------------------------------
--------------------------------
By: County Council of DeKalb
County, Indiana
Name: /s/
-------------------------
Title: President of County
Council
Date: June 28, 1994
-------------------------
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