Exhibit 10.20.6
AMENDMENT NO. 5
TO STEAM PURCHASE CONTRACT
WHEREAS, E. I. DuPont de Nemours and company ("Du
Pont") and O'Brien Energy Systems, Inc. ("O'Brien") entered into
a Steam Purchase Contract dated December 8, 1986, as amended by
Amendment No. 1 dated January 12, 1988 (Amendment No. 2),
Amendment No. 3 dated December 14, 1988, and Amendment No. 4
dated July 6, 1989 pursuant to which O'Brien has agreed to supply
steam to Du Pont's Parlin, New Jersey plant from a cogeneration
facility which O'Brien has constructed on land leased from Du
Pont; and
WHEREAS, said Agreement, as amended, was assigned with
Du Pont's consent to O'Brien (Parlin) Cogeneration, Inc. on
December 12, 1988; and
WHEREAS, Steam delivery to Du Pont by O'Brien was
delayed beyond the amended and agreed upon Initial Delivery Date,
and the Parties wish to resolve a dispute concerning the amount
of liquidated damages to be paid to Du Pont; and
WHEREAS, the Parties desire to ratify said Agreement,
as amended, and to make certain further modifications thereto:
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, the sufficiency of which is
acknowledged by both Parties, the Parties do hereby agree as
follows:
1. Modifications to Article 2:
A new Paragraph 2.G, entitled Option to Lease
Additional Land; Permitted Uses is hereby added to Article 2 as
follows:
(1) Du Pont hereby grants O'Brien a five-year option
commencing January 1, 1993) to lease from Du Pont an
additional two acres of land, contiguous to O'Brien's
existing leasehold, subject to the conditions set out below.
As consideration for this option, O'Brien agrees to pay Du
Pont the sum of $1,000 on February 1, of each year
(beginning February 1, 1993) until such time as the option
is exercised or O'Brien terminates the option, or it
expires.
(2) Du Pont shall have no obligation to lease the
additional two acres unless it has received a Certificate of
Non-applicability from the State of New Jersey evidencing
that the proposed transaction is not subject to New
Jersey'/s Environmental Clean-up Responsibility Act
("ECRA"). In the event the proposed lease is subject to
ECRA, Du Pont shall repay to O'Brien the option payments
provided in the preceding subparagraph.
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(3) If the option is exercised, the additional two
acres leased to O'Brien will be used by O'Brien and only for
the following purposes:
(a) a depot for mobile generator sets;
(b) additional office space for training or
other corporate purposes acceptable to Du Pont, such
approval not to be unreasonably withheld;
(c) a replacement steam customer acceptable
to Du Pont, in its reasonable discretion, in the event Du
Pont does not take the annual minimum quantity of steam
required to maintain Qualified Facility status under the
Public Utility Regulatory Act, as amended;
(d) an expanded cogeneration facility,
provided that Du Pont and O'Brien can reach agreement on an
amount to be paid to Du Pont as additional, reasonable
compensation for Du Pont's consent to erection of an
expanded cogeneration facility. (It is the intent of the
Parties that "reasonable compensation" as used herein shall
mean a share of the value of the new or expanded
cogeneration facility and is in no way limited to the fair
market lease value of the two acre site.); and
(e) such other uses as are approved in
writing by Du Pont, such approval not to be unreasonably
withheld.
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(4) If O'Brien exercises the option to lease the
additional two acres, O'Brien shall pay Du Pont fair market
lease rates for the additional leasehold. Fair market value
shall be established by an independent appraiser familiar
with industrial real estate values in the Parlin, New Jersey
area who is acceptable to both Du Pont and O'Brien. If the
Parties cannot agree on a neutral appraiser, each Party
shall select an appraiser and the two appraisers shall then
agree on a third appraise. If no two of the appraisers
agree on a fair market vale, then the three appraisals shall
be averaged, and the result shall be the fair market value.
(5) If O'Brien exercises its option, the parties shall
execute a separate lease agreement for the two acres which
shall have terms and conditions identical to the Ground
Lease for the Facility, except as specifically modified by
this Article 2. The term of the additional Lease, if
O'Brien exercises the option for the additional two
contiguous acres, shall equal the remaining term of this
Steam Purchase Contract. In the event that Du Pont chooses
not to exercise its option to purchase the Facility under
Paragraph 5.B at the end of the initial twenty-year term,
the term of the original lease covering the Cogeneration
Facility as well as the term of any lease executed by
O'Brien
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for the additional two contiguous acres shall be extended an
additional ten years, without any further action being
required of the Parties. In the event that Du Pont does
choose to exercise its option to purchase the Facility at
the end of the initial twenty-year term, the lease of the
additional contiguous two acres shall terminate, unless the
Parties otherwise mutually agree."
2. Modifications to Article 4, "Initial Delivery Date":
A new Paragraph 4.C is added to Article 4 as follows:
"(1) O'Brien agrees to pay Du Pont a portion, as set
out more fully in subparagraph (2) of this paragraph, of
certain liquidated damages which O'Brien expects to receive
from Hawker Siddeley Power Engineering Inc., ("HSPE"), the
contractor for the Parlin Cogeneration Facility, due to
delayed completion of the Facility. De Pont acknowledges
that HSPE is contesting these liquidated damages in similar
cases now pending in New Jersey and Texas state courts, and
that, with respect to the expected award in those cases,
O'Brien shall be obligated to pay Du Pont only that portion
of such damages as is set out in this Paragraph 4.C.
(2) If the damages awarded to O'Brien in the same
litigation exceed
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(a) the total amount withheld by O'Brien from
Hawker Siddeley under the Turnkey Construction Contract
for the Parlin project (which O'Brien represents to be
$5.1 million) and
(b) any contingent legal fees paid to O'Brien's
attorneys, Sills, Cummis, Zuckerman, Radin, Tischman,
Epstein & Gross ("Sills Cummis") for that firm's
representation of O'Brien in the said HSPE litigation
as set forth in the next sentence,
O'Brien shall pay fifty percent (50%) of such remainder of
the award to Du Pont, up to a maximum payment to Du Pont of
$1 million. O'Brien represents that it has agreed to pay
Sills Cummis as part of its fee for representing O'Brien in
the said litigation (but not for sums which O'Brien may owe
Sills Cummis for any services other than in the said HSPE
liquidated damages litigation) a contingent component of
twenty percent (20%) of the first million dollars of damages
received from HSPE (without regard to the $5.1 million which
O'Brien represents that it has retained from payment to
HSPE), and fifteen percent (15%) of any subsequent award up
to a total ceiling on all such litigation fees (both current
and contingent) equal to 150% of Sills Cummis' normal hourly
billing rates.
(3) O'Brien shall pay Du Pont the amount agreed upon
in this paragraph within thirty (30) days of
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receipt by O'Brien, and O'Brien shall furnish Du Pont an
accounting of all damages received from Hawker Siddeley for
the said Parlin case."
3. Waiver of Liquidated Damage Claims:
Du Pont hereby agrees to waive any and all claims which
it may have against O'Brien under Article 4 for alleged delays in
the delivery of steam by the Initial Delivery Date. Du Pont also
waives any alternative right to pursue available remedies at law
or in equity in lieu of such damages.
4. Modifications to Article ;5, "Term; Termination:.
Paragraph 5.A is modified to read as follows:
"This Agreement shall be effective as of the d ate of its
execution and shall continue in effect thereafter for a
period of thirty (30) years beyond the Initial Delivery
Date, unless Du Pont exercises its purchase option at the
end of Year Twenty pursuant to Article 5.B. Assuming Du
Pont does not exercise this purchase option or the option at
the end of Year Thirty, the Agreement shall remain in
effect after the initial thirty-year term unless terminated
by three year's notice by either party."
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Paragraph 5.B is modified to read as follows:
"At the end of twenty (20) years following the Initial
Delivery Date, Du Pont shall have the option; to buy the
Facility at the greater of its then fair market value or $34
million. In the event of a dispute regarding the fair
market value, each side shall appoint an appraiser
experienced in valuing cogeneration facilities, and if the
two appraisers cannot agree, they shall appoint a third
appraiser. If not two of the appraisers agree on a fair
market value, then the three appraisals shall be averaged,
and the result shall be the fair market value. Du Pont
shall have sixty (60) days from the end of the twentieth
year following the Initial Delivery D ate (extended for the
period necessary to establish fair market value) to exercise
the option to purchase the Facility; if the option is not
exercised within that period, the Agreement shall continue
for an additional ten (10) years at the expiration of which
Du Pont shall have the option to purchase the Facility at
its then fair market value. In constructing the Facility,
O'Brien shall install the back-up boiler and all necessary
auxiliaries in such a way that it and the land on which it
is located can be severed from the rest of the Facility in
the event of termination."
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5. Modifications to Article ;6, "Purchase Price":
A new paragraph 6.C is added to Article 6 as follows:
"On or before February ;1, 1993, O'Brien will pay Du
Pont One Hundred Seventy Five Thousand Dollars ($175,000) in
cash or as a credit on steam or electricity purchased by Du
Pont during January 1993. Beginning January 1, 1993, and
each month thereafter for a total of nineteen 919) years, Du
Pont shall receive a credit against steam purchases equal to
$14,583.33 per month. Prior to the end of the Nineteenth
Year, if Du Pont does not utilize the full amount of the
credit in any given month for steam purchases, any unused
credit may be carried over to the following month or months
or, at Du Pont's option, applied to electricity purchases
from under the separate Electricity Purchase Contract
between the Parties. In the event that Du Pont exercises
its option to purchase the Facility at the end of Year 20,
any remaining unused credit (based on the full nineteen
years) may be applied by Du Pont against the purchase price,
as determined under Article 5.B."
6. Modifications to Exhibit D (Steam Purchase Rate):
Exhibit D is modified by adding to the end of the
current Exhibit D the following language:
"Assuming that the contract continues beyond Year 20,
as provided in Paragraph 5.A, the price of steam
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delivered to Du Pont at the beginning of Year 21 shall be
determined as follows: The ending steam price for the last
month of Contract Year 20 shall be the Base Price for Years
21 through 30; the Base Price shall be adjusted monthly (up
or down) by the percentage change in the U. S. Producer
Price Index for All Commodities (or its successor); and any
credits for condensate returned by Du Pont shall be
calculated in accordance with this Exhibit, based on the
adjusted price.
7. Complete Agreement: This Amendment No. 5 combined with
the original Steam Purchase Contract as previously amended,
constitutes the complete agreement between the Parties as to the
subject matter thereof. Any further amendment shall be in
writing and shall be executed by both Parties.
AGREED AND ACCEPTED
E. I. Du Pont de Nemours & Company
By: /s/ Frank Wright
Date: 1/22/93
O'Brien (Parlin) Cogeneration, Inc.
By: /s/ Joel Cooperman
Date: 2/16/93
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