Exhibit 10.15.1
STEAM PURCHASE AGREEMENT
BETWEEN
O'BRIEN COGENERATION IV,. INC.
AND
NEWARK BOXBOARD CO.
INDEX
Page
ARTICLE 1 DEFINITIONS 2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES; COVENANTS 7
2.1. Representations and Warranties of Buyer. 7
2.2. Representations and Warranties of Seller;
Covenants of Seller 8
ARTICLE 3 PURCHASE AND SALE 10
3.1 Purchase and Sale of Steam 10
3.2 Maximum Output of Cogeneration Facility 10
3.3 Purchase of Steam from Alternative Sources. 10
ARTICLE 4 RESPECTIVE RIGHTS AND OBLIGATIONS 12
4.1 Rights and Obligations of Seller. 12
4.2 Rights and Obligations of Buyer. 16
ARTICLE 5 TERM OF AGREEMENT 19
5.1 Effective Date and Term. 19
5.2 Buyer's Right to Purchase Cogeneration
Facility and Site.
23
5.3 Completion of Cogeneration Facility. 25
5.4 Conditions Precedent. 25
ARTICLE 6 PAYMENT CALCULATIONS 26
6.1 Steam Price. 26
6.2 Reimbursement of Power. 27
ARTICLE 7 MEASUREMENT AND METERING 27
7.1 Measuring Equipment. 27
7.2 Testing 28
7.3 Corrections 29
7.4 Estimates 29
ARTICLE 8 BILLING AND PAYMENTS 30
8.1 Billing. 30
8.2 Payment. 31
8.3 Interest. 31
8.4 Disputes 31
ARTICLE 9 LEASE OF SITE AND LAND RIGHTS 31
9.1 Lease of Site 31
9.2 Alternate Site. 32
9.3 Land Rights. 33
ARTICLE 10 WATER SUPPLY; CONDENSATE RETURN 33
10.1 Water Supply. 33
10.2 Condensate Return. 34
ARTICLE 11 QUALIFYING FACILITY 34
11.1 Maintenance of Qualifying Facility Status. 34
11.2 Modifications in Plant's Steam Requirements.34
ARTICLE 12 TAXES 35
12.1 Obligations of Seller 35
12.2 Obligations of Buyer. 36
12.3 Joint Obligations. 36
ARTICLE 13 FORCE MAJEURE 36
ARTICLE 14 INSURANCE 38
ARTICLE 15 LIABILITY AND INDEMNIFICATION 38
15.1 Survival of Representations and Warranties 38
15.2 Indemnification. 39
ARTICLE 16 EVENTS OF DEFAULT AND REMEDIES 40
16.1 Events of Default by Buyer. 40
16.2 Events of Default by Seller. 42
16.3 Remedies Upon Default by Buyer. 43
16.4 Remedies Upon Default by Seller. 44
16.5 Remedies. 45
16.6 Fair Market Value. 46
ARTICLE 17 SELLER'S FINANCING 46
ARTICLE 18 ARBITRATION 47
ARTICLE 19 ASSIGNABILITY 47
ARTICLE 20 NOTICE 48
ARTICLE 21 WAIVER AND MODIFICATION 49
21.1 Waiver 49
21.2 Modification 49
ARTICLE 22 SEVERABILITY AND RENEGOTIATION 49
22.1 Severability 49
22.2 Renegotiation 49
ARTICLE 23 SEVERAL OBLIGATIONS 50
ARTICLE 24 GOVERNING LAW 50
ARTICLE 25 ENTIRE AGREEMENT; COUNTERPARTS 50
ARTICLE 26 CAPTIONS 51
ARTICLE 27 EMPLOYEE DISPLACEMENT 51
ARTICLE 28 GUARANTEE BY O'BRIEN ENERGY SYSTEMS 51
STEAM PURCHASE AGREEMENT
This Agreement is entered into as of the 3rd day of October, 1986
between O'BRIEN COGENERATION IV. INC., a Delaware corporation ("Seller")1
and NEWARK BOXBOARD CO., a New Jersey corporation ("Buyer").
WITNESSETH:
WHEREAS, Buyer owns and operates a paperboard plant (the "Plant")
located at 17 Blanchard Street, Newark, New Jersey which Plant utilizes
steam in substantial volumes during the course of its manufacture; and
WHEREAS, Seller plans to construct, operate, manage and maintain a
facility for the cogeneration of steam and electricity (the "Cogeneration
Facility") that will be designed to meet Buyer's Steam requirements, based
upon Buyer's current and anticipated future usage, all as set forth in
Appendix A which is attached hereto and hereby made a part of this
Agreement; and
WHEREAS, Buyer desires to purchase, on the terms and conditions
specified herein, certain steam requirements for the operation of its Plant
from the Cogeneration Facility; and
WHEREAS, the Parties desire to set forth in writing their respective
rights and obligations for the sale of steam by Seller to Buyer after
construction of the Cogeneration Facility;
NOW, THEREFORE, in consideration of the promises and mutual agreements
herein set forth, Seller and Buyer do hereby mutually agree as follows:
ARTICLE 1
DEFINITIONS
The following terms, when used herein, shall have the following
meanings, unless a different meaning is expressly stated or is apparent
from the context:
"Agreement" means this contract, including all Appendices and
amendments hereto.
"BTU" means British Thermal Unit.
"Buyer" means Newark Boxboard Co.
"Cogeneration Facility" means the boiler, turbine, generator, back up
system described in Section 4.1, (excluding boiler and associated equipment
owned by Buyer) and all appurtenant structures. equipment, piping. wiring,
switch controls, Steam Interconnection Facilities and all additions and
replacements thereto, and real property interests owned or leased and
operated by Seller for the purpose of cogenerating steam and electricity.
"Condensate" means condensate meeting the specifications therefor Set
forth then Appendix D hereto.
"FERC" means the Federal Energy Regulatory Commission.
"Force Majeure" means to the extent that it prevents the production,
delivery, acceptance or use of steam pursuant hereto, flood; earthquake;
storm; lightning; fire; explosion; war; riot; civil disturbances; strikes;
sabotage; restraint by Governmental Authority (other than any delay or
failure by a Governmental Authority to issue any necessary permit or
license described in Section. 5.4 hereof); major equipment breakdown if,
and only if, not due to the negligence of Seller nor the failure of Seller
to perform periodic preventative maintenance and
2
routine scheduled maintenance on all of its equipment in accordance with
reasonable business practice; inability to obtain necessary labor or
unforeseen shortages in materials or manufacturing facilities; delays in
delivery of materials or work from subcontractors beyond a Party's
reasonable control; and any ether events beyond the reasonable control of a
Party. Changes in the prices of any item or items shall not in and of
themselves give rise to the occurrence of a Force Majeure. Seller agrees
that it shall maintain an adequate stock of spare parts in accordance with
the original equipment manufacturer's recommendations, as updated from time
to time, for each piece of equipment to accomplish foreseeable repairs on
the facilities in the Cogeneration Facility (including replacement
components for turbines, generators, pumps and controls therefor). A Force
Majeure with respect to the main generating facility in the Cogeneration
Facility shall not excuse performance hereunder If Seller would have been
able to perform had it maintained the spare parts required to be kept
hereunder unless failure to maintain such stock of spare parts was itself
excused by reason of Force Majeure.
"Governmental Authority" means any federal, state, municipal, or local
legislature, administrative body, court or other person or body authorized
to make or enforce laws or regulations.
"Initial Delivery Date" means the date on which Seller has accepted
the Cogeneration Facility under the construction contract and Seller
actually delivers or is capable and offers to
3
deliver steam Buyer. Seller shall notify Buyer in writing of the Initial
Delivery Date at least one month prior thereto. Prior to the Initial
Delivery Date, the back-up system (after installation of any necessary
interconnections, pursuant to Article 4.1(A)) described in Section 4.1
shall be operated for at least three (3) consecutive 24-hour periods and
shall be producing steam at full capacity. The Cogeneration. Facility
shall be operated it full capacity for at least ten (10) consecutive 24-
hour periods prior to the Initial Delivery Date and shall be producing
steam at full capacity during said period. If Buyer elects to take steam
from Seller during this testing time period, it shall pay for the steam on
the same terms and conditions as set out in Article 6 herein. The back-up
system shall be kept sufficiently "hot" and "pressurized" during the 10-day
testing period of the Cogeneration Facility so that it may be put into
service immediately if the main facilities experience problems during any
testing period.
"KWH" means kilowatt hours.
"Laws" means all statutes, regulations, orders, decrees or rulings by
an Governmental Authority having jurisdiction over the matter in question.
"Party" or "Parties" means the signatories to this Agreement and their
permitted successors and assigns.
"Plant" is the paperboard plant in Newark, New Jersey, owned by Buyer
including any improvements, expansions or modifications thereto and, for
purposes of Section 5.1, the land owned by Buyer associated therewith.
"Points of Return" means the points where Seller's pipe system connects to
Buyer's steam or Condensate returning pipe-
4
lines as described in Appendix B attached hereto.
"PURPA" means the Public Utilities Regulatory Policies Act of 1978, as
amended from time to time.
"Qualifying Facility" or "Facility" means a cogeneration facility
which meets those criteria promulgated by FERC pursuant to PURPA and set
forth at 18 CFR Sections 292 et seq.; as any of the foregoing, as well as,
any applicable state regulations, as may be amended from time to time.
"Regulations" mean the regulations promulgated by FERC pursuant to
PURPA and set forth at 18 CFR Section 292 et seq., as well as applicable
state regulations, as any of the foregoing may be amended from time to
time.
"Seller" means O'Brien Cogeneration IV, Inc., a subsidiary of O'Brien
Energy Systems, Inc., a Delaware corporation, and its successors and
permitted assigns.
"Site" means the location where the Cogeneration Facility will be
constructed. The Site may be sold or leased to Seller pursuant to the
provisions hereof.
"Specified Damages" means out-of-pocket expenses incurred by Buyer
including any amounts which Buyer would be due under Section 6.2, less the
amount that Buyer would have been required to pay to Seller pursuant to
Article 6 had Seller performed its obligations, as a result of the failure
of Seller to deliver (i) steam meeting the specifications therefor set
forth in Appendix A or (ii) a sufficient amount of steam (up to the maximum
amount specified in Appendix A) to Buyer, including expenses incurred by
Buyer in putting its boilers back into operation if it elects to do so,
repairing, operating or main-
5
taining the same and/or leasing or purchasing replacement or substitute
boilers (including all labor, engineering, and installation costs
associated with any of the foregoing), utility costs, fuel charges, costs
of acquiring chemicals and other items necessary to generate steam, legal
fees and expenses incurred in negotiating and preparing any documents
relating to the lease or purchase of substitute or replacement boilers or
enforcing its rights hereunder and such other out-of-pocket expenses as
Buyer may prove to the reasonable satisfaction of Seller are related to any
of the foregoing or reasonably incurred by Buyer as a result of Seller's
failure to deliver steam in the amount or meeting the specifications
therefor set forth in Appendix A. In the event it becomes necessary to do
so, Buyer agrees to lease boilers on a month-to-month basis rather than
purchase them or lease them for a longer time period unless either (i)
Seller agrees otherwise or (ii) rental boilers are not available
immediately, in which event Buyer may enter into reasonable alternative
interim arrangements (including leases for more than a month) until rental
boilers are available immediately or (iii) Seller fails to pay Specified
Damages within 10 days of demand therefor.
"Steam Interconnection Facilities" means those facilities to be
installed in order for Seller to deliver steam to Steam Points of Delivery
and receive Condensate at the Points of Return, including service stop
valves, meter stops valves, primary and secondary service pressure reducing
valves, meter supports, protection devices, meter(s), pipe system(s),
pipeline(s) and other facilities necessary to connect the Cogeneration
Facility
6
to Buyer's Plant.
"Steam Points of Delivery" means the physical locations identified in
Appendix B where the Steam Interconnection Facilities are connected to
Buyer's receiving pipelines.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES; COVENANTS
2.1. Representations and Warranties of Buyer; Covenants of Buyer.
Buyer hereby represents and warrants to Seller as follows:
A. Buyer is a corporation duly organized and existing in good
standing under the laws of the State of New Jersey.
B. Buyer possesses all requisite power and authority to enter into
and perform this Agreement and to carry out the transactions contemplated
herein;
C. Buyer's execution, delivery, and performance of this Agreement
have been duly authorized; this Agreement has been duly executed and
delivered; and constitute Buyer's legal, valid, and binding obligation,
enforceable against it in accordance with its terms; and Buyer's execution,
delivery and performance of this Agreement will not result in a breach or
violation of, or constitute a default under, any material agreement, lease,
or instrument to which it is a party or by which it or its properties may
be bound or affected, with the exception of the Fidelity financing referred
to Article 17.
D. No suit, action or arbitration, or legal, administrative or other
proceeding is pending, or has been threatened, against Buyer that would
affect the validity or enforceability
7
of this Agreement or the ability of Buyer to fulfill its commitments
hereunder, or that could result in any material adverse change in the
business or financial condition of Buyer.
Buyer covenants and agrees that it will obtain and maintain all
necessary governmental authorizations, licenses, permits and franchises,
corporate or otherwise, for the operation of its Plant, and will assist in
obtaining all environmental construction and operation of the Cogeneration
Facility.
So long as it may operate the Plant profitably and subject to the
provisions of Section 5.1 hereof, Buyer covenants and agrees that it will
use its best efforts to continue the use and operation of its Plant at the
present location for a period of at least twenty-five (25) years from the
Initial Delivery Date, and such use and operation will include, during any
calendar year, steam requirements no less than the minimum purchase
requirements no less than the minimum purchase requirements, as set forth
in Appendix A, for the Cogeneration Facility. Based on currently available
information, Buyer believes that the useful life of the Plant equals or
exceeds twenty-five (25) years. Should Buyer, despite its best efforts,
conclude at any time during the term of this Agreement that it cannot
continue use and operation of its Plant at a profit, it agrees to give
Seller the options set out in Article 11.
2.2. Representations and Warranties of Seller; Covenants of Seller.
Seller hereby represents and warrants to Buyer as follows:
8
A. Seller is a corporation duly organized and existing in good
standing under the laws of the State of Delaware and is qualified to do
business in the State of New Jersey.
B. Seller possesses all requisite power and authority to enter into
and perform this Agreement and to carry out the transactions contemplated
herein.
C. Seller's execution, delivery and performance of this Agreement
have been duly authorized; this Agreement has been duly executed and
delivered and constitutes Seller's legal, valid, and binding obligation,
enforceable against it in accordance with its terms; and Seller's
execution, delivery, and performance of this Agreement will not result in a
breach or violation of, or constitute a default under, any agreement,
lease, or instrument to which it is a part or by which it or its properties
may be bound or affected; and
D. No suit, action or arbitration, or legal, administrative or other
proceeding is pending, or has been threatened, against Seller that would
affect the validity or enforceability of this Agreement or the ability of
Seller to fulfill its commitments hereunder, or that could result in any
adverse change in the business or financial condition of Seller.
Seller covenants and agrees that it will obtain in a timely fashion
and maintain all necessary governmental authorization licenses, and permits
for the construction and operation of the Cogeneration Facility.
9
ARTICLE 3
PURCHASE AND SALE
3.1 Purchase and Sale of Steam.
Subject to the terms and conditions of this Agreement, Seller agrees
to produce, deliver to the Steam Points of Delivery as and when required by
Buyer, and sell all of the steam which Buyer requires for use at the Plant,
subject to the maximum amount set forth in Appendix A, which steam shall
meet the specifications described in Appendix A hereto. Except as provided
in Section 3.3 hereof, Buyer agrees to purchase from Seller all of the
steam it requires at the Plant and use on the output of the Cogeneration
Facility to meet Buyer's steam requirement at Buyer's Plant. Seller's
obligation to produce and deliver sufficient steam to satisfy all of
Buyer's steam requirements at its Plant is limited to the amount specified
in Appendix ; provided, however, that if Seller delivers steam to Buyer in
an amount in excess of the amount so specified, the terms of this Agreement
shall govern the purchase by Buyer of any such excess amount.
3.2 Maximum Output of Cogeneration Facility.
The maximum required output of steam from the Cogeneration Facility is
set forth in Appendix A attached hereto. Seller is not obligated to
deliver amounts in excess of that amount.
3.3 Purchase of Steam from Alternative Sources.
Unless an event of Force Majeure excuses it from doing so, Buyer will
purchase the amount of steam which it requires at its Plant at the price
set forth in Article 6. If, for any reason, the Seller cannot produce all
of the steam required by
10
Buyer (up to the maximum amount set forth in Appendix A), Buyer may,
without incurring any liability hereunder, use steam or alternate energy
from other sources to make up that portion of its requirements which Seller
fails to supply. If Buyer incurs any out-of-pocket expenses in connection
with obtaining steam or an alternative energy from another source or
sources (other than amounts of excess of the amount set forth in Appendix
A), as a result of Seller's inability to comply with this Agreement due to
the occurrence of an event of Force Majeure, then, Seller shall either, at
Seller's option, (i) pay Buyer's Specified Damages or (ii) give Buyer
reasonable advance notice of the date on which it will be able to resume
providing steam and not require Buyer to resume its purchase of steam
hereunder until a reasonable period of time (not to exceed 45 business
days) after receipt by Buyer of notice of anticipated resumption of service
(the reasonableness of the notice period being determined based on the
expenses incurred by Buyer in arranging for alternative source of supply of
steam or other (fuel). Buyer shall be entitled to rely on any notice
received from Seller.
The Parties further acknowledge that it may be necessary or prudent,
in light of the limited number of alternative sources of supply of steam
available, for Buyer to secure an alternative source of steam which has a
greater capacity than that which Buyer requires. Seller agrees to make
available to Buyer its employees who operate boilers to the extent it can
do so without impairing its ability to operate the Facility.
Nothing in this Agreement is intended or shall be
11
construed as requiring Buyer (or any subsequent owner of the Plant) to use
steam rather than any other energy source (including, but not limited to,
electricity) in the operation of the Plant, other than as set forth in the
second to the last sentence Section 3.1. Nor is this Agreement intended to
impose on Buyer any obligation to purchase any minimum amount of steam at
any time other than that amount specified in Appendix A.
ARTICLE 4
RESPECTIVE RIGHTS AND OBLIGATIONS
4.1 Rights and Obligations of Seller.
Seller covenants and agrees that during the term of this Agreement it
shall:
A. Design, construct, start up, test and operate the Cogeneration
Facility at its expense in accordance with safe and sound engineering
practices and procedures in order that the Cogeneration Facility is able at
all times to deliver steam meeting the specifications set out in Appendix A
and in the quantities set forth in Appendix A. The Cogeneration Facility
shall utilize Buyer's existing boilers as a back-up system. Seller shall
have the right to use such boilers at not charge on the condition that:
(1) it pays for any fuel consumed as well as any associated operation and
maintenance costs; (2) it installs and pays for any necessary
interconnections with Seller's Cogeneration Facility and (3) it keeps such
boilers "hot", at Seller's expense, by circulating steam through them once
the Cogeneration Facility is operational. Should Seller determine at any
time during this Agreement that replacement of Buyer's boilers is
necessary, it shall bear the cost of such replacement and the new boiler(s)
shall become the property of Seller, and shall be added to the Cogeneration
Facility.
B. If Seller uses the original site (as opposed to Alternate Site),
design construct and maintain a "park and lock" parking garage on the Site
with sufficient spaces to replace those spaces eliminated by Seller on the
Site as a result of the construction of the Cogeneration Facility. Seller
shall
12
guarantee continued access to this parking garage for Buyer's employees and
the right, at no cost, to use an equivalent number of spaces to those
eliminated by Seller. At the conclusion of this Agreement or at any time
when Buyer has the right to purchase the Cogeneration Facility Buyer shall
have the right to purchase the Cogeneration Facility. The price for the
garage shall be its fair market value, as determined by the American
Appraisal Company, the appraisal to be based on the assumption that the
garage sits on freehold property (rather than leased property), less the
value of the freehold. In other words, the value of the real property on
which the garage rests will be ignored in the appraisal.
C. Obtain those permits set forth in Appendix C hereto and any other
additional permits which may be required under then applicable and
regulations to operate the Facility during the term of this Agreement.
D. Provide to Buyer for its review all design drawings of the
Cogeneration Facility, the Parking Garage and Steam Interconnection
Facilities. Seller shall also give Buyer an opportunity to review its
construction plan prior to the commencement of construction in order that
Buyer can assure itself that construction of the Cogeneration Facility will
not interfere with Buyer's on-going operations. Buyer shall have the right
to approve such construction plan or any modifications thereto, such
approval not to b unreasonably withheld. Buyer shall use its best efforts
to review and approve such plans within 15 days
13
of receipt from Seller. To insure coordination between Buyer and Seller
during construction, Buyer shall designate a single individual with whom
Seller may consult during construction of the Cogeneration Facility.
Seller shall also designate a single individual with whom Buyer may consult
during construction or operation of the Cogeneration Facility. Buyer's
review of the construction plan and design drawings shall not relieve
Seller of any of its obligations pursuant to Section 4.1A hereof;
E. Maintain the Cogeneration Facility in good operating condition,
in compliance with all applicable governmental requirements and in
accordance with reasonable business practice, and use its best efforts (i)
to ensure that interruptions of deliveries of steam to the Plant are made
at a time that is mutually agreeable to the Parties, (ii) to ensure that
any interruptions will be planned to coincide with the scheduled
maintenance outages of the Plant, notice of which shall be given to the
Chief Plan Engineer designated by Buyer promptly and shall comply with
Article 20 hereof, and (iii) to minimize the frequency and duration of any
periods of interruption of delivery of steam meeting the specifications set
forth in Appendix A hereof to Buyer's requirements therefor, up to the
maximum required output of the Cogeneration Facility set forth in Appendix
A.
F. Have the right to generate and sale steam or electricity or both
to any person other than Buyer on any terms and conditions, without
interference by Buyer, provided that Seller
14
may do so without impairing its ability to fulfill its obligations under
this Agreement.
G. Furnish, operate and maintain, at its own expense, all Steam
Interconnection Facilities necessary for the delivery of steam from its
Cogeneration Facility to and including the Steam Point of Delivery, and the
receipt of Condensate into its Cogeneration Facility from and including the
Point of Return.
H. Operate and maintain all necessary electrical transmissions
facilities to deliver electricity from the Cogeneration Facility to its
electricity customers, in a safe manner without creating an unreasonable
risk of injury or damage to Buyer's personnel or property;
I. Operate the Cogeneration Facility in substantial compliance with
all applicable federal, state and local environmental standards, and all
other applicable laws, rules and regulations and make all necessary filings
with and send all required notices relating to the Facility to the
appropriate Governmental Authorities;
J. Designate a Cogeneration Facility Engineer to maintain
communications with Buyer's Chief Plant Engineer for coordination between
the Plant and the Cogeneration Facility during the term of this Agreement,
which Cogeneration Facility Engineer shall be available to meet with
buyer's Chief Plant Engineer; and
K. Give to Buyer prompt notice, either written or oral, of
Condensate which does not meet the standards of Condensate quality set
forth in Appendix D specifying how such
15
standards are not met.
4.2 Rights and Obligations of Buyer.
Buyer covenants and agrees that during the term of this Agreement it
shall:
A. Provide Seller with (1) all plans and drawings within 120 days
from the date of execution of this Agreement) for relevant steam headers,
electrical switchgear, water lines, condensate lines and steam lines, etc.
required to permit Seller to interconnect the Cogeneration Facility to the
Plant; (ii) Condensate as returned to Buyer's existing steam generation
system; and (iii) a single location access for interconnection to the
existing condensate return system;
B. Use its best efforts to assist Seller in obtaining any other
local approvals as may be necessary. Buyer covenants and agrees to assist
Seller in obtaining all environmental permits licenses or authorizations
associated with the operation of the Cogeneration Facility including9 if
required by the New Jersey Department of Environmental Protection, the
right to use any environmental permit offsets available to Buyer solely to
the extent that they are transferable. Seller covenants and agrees to
return to Buyer any and all environmental permits, licenses or
authorization that have been transferred to Seller from Buyer at the end of
the term of this Agreement. In the event that Seller to unable to provide
Buyer with steam pursuant to this Agreement as a result of a Force Majeure,
Buyer shall have the right to receive back from Seller any transferred
permits and offsets and to use the same during the period of the Force
Majeure. Seller shall prepare any and all necessary
16
applications for such permits, licenses and authorizations. Buyer shall
review the same (i) solely to the extent that applicable law shall require
that the application be made in the name of Buyer and (i) to the extent
that the information required to be disclosed therein relates directly to
Buyer and is available from the records of Buyer;
C. Have the right to operate its Plant without interference from
Seller;
D. Operate and maintain its Plant at all times in such condition
that Buyer's use of steam will be reasonably safe to persons and property,
and shall use its best efforts (i) to ensure that any interruptions of
purchases of steam from the Cogeneration Facility not caused by decreased
demand for Buyer's products are made it a time that is mutually agreeable
to the Parties, (ii) to ensure that any interruptions will be planned to
coincide with the scheduled maintenance outages of the Cogeneration
Facility, notice of which shall be given promptly to the Cogeneration
Facility Engineer and (iii) to minimize the frequency and duration of any
periods of interruption other than interruptions caused by decreased demand
for Buyer's products;
E. Maintain its Plant in good repair;
F. (i) Deliver Condensate having the qualities specified in Appendix
D from its Plant to Seller which Seller will take; (ii) allow Seller to
monitor the quality of the Condensate by meters to be acquired, installed,
and maintained by Seller, at its own expense, at a point outside the Plant
as
17
described in Appendix B, and (iii) allow Seller to discharge within the
Plant at one location specified by Buyer such Condensate which does not
meet the standards of Condensate quality set forth in Appendix D;
G. Make reasonable and timely efforts to inform Seller of Condensate
impurities and other conditions known to Buyer relating to the steam supply
that Buyer knows may be deleterious to the maintenance and operation of the
Cogeneration Facility;
H. Furnish, own, operate and maintain, at its expense, all steam
facilities necessary for the receipt of steam from the Steam Point of
Delivery to its Plant and the delivery of Condensate from its Plant to the
Point(s) of Return;
I. Take all reasonable and necessary steps to carry out the intent
of this Agreement, including, but not limited to, (i) using its best
efforts in assisting Seller to obtain any and all approvals required in
connection with installation and operation and maintenance of the
Cogeneration Facility, (ii) furnishing to Seller necessary easements for
the term of this Agreement, and (iii) solely to the extent specified in
Section 4.2 using its best efforts in assisting Seller to obtain other
related approvals necessary to operate the Cogeneration Facility; provided,
however, the foregoing shall not require Buyer to incur any obligation to a
third party;
J. Not operate, maintain, move, remove, alter, change, or interfere
with the operation or maintenance of the Cogeneration Facility or any part
thereof without the prior written approval of Seller. Notwithstanding the
foregoing, Buyer may, but is not required to, take reasonable steps to
protect the
18
Cogeneration Facility if, due to an emergency, it is not possible or
reasonable to notify Seller before taking such actions. Buyer shall have
no obligation to inspect any part of the Cogeneration Facility, not any
responsibility for the installation, repair, maintenance, replacement,
relocation, removal, or operation of any part of the Cogeneration Facility;
K. Designate a Chief Plant Engineer to maintain communication with
Seller's Cogeneration Facility Engineer for coordination between the Plant
and the Cogeneration Facility during the term of this Agreement;
L. Have the right to purchase or use steam from any source, other
than the Cogeneration Facility, only at those times when the Cogeneration
Facility is unable to produce and deliver, in a timely fashion, in
accordance with Section 3.1 hereof steam meeting the standards specified in
Appendix A hereof; and
M. Make timely payments on invoices rendered by Seller for steam
delivered.
ARTICLE 5
TERM OF AGREEMENT
5.1 Effective Date and Term.
A. Except as otherwise provided in Article 15 or 16, the term of
this Agreement shall begin upon the execution of this Agreement, and shall
terminate on December 31, 1997 unless the conditions precedent specified in
Section 5.4 are then satisfied or compliance therewith waived. Steam
supply and invoicing for steam delivered in accordance with this Agreement
shall begin on the Initial Delivery Date. If the conditions precedent set
forth
19
in Section 5.4 hereof are satisfied in a timely manner or compliance
therewith waived, then, subject to the provisions of Section 5.3, (i) this
Agreement shall continue in effect for an initial term ending twenty-five
(25) years after the initial Delivery Date (the "Initial Termination Date")
and (ii) unless either Party gives to the other notice of termination at
least eighteen (18) months prior to the Initial Termination Date, this
Agreement will continue for successive additional terms of five (5) years
each (the "Extended Termination Date"); subject, however, to expiration at
the end of the then current term.
B. Notwithstanding the foregoing or any other provision in this
Agreement, Buyer may sell the Plant to an unrelated third party, and be
released from any and all liabilities and obligations hereunder (with the
exception of continuing the Site lease) arising on or after the sale date
if it complies with the following conditions:
(1) In negotiating any sale of the Plant to a purchaser who intends
to use the Plant as a manufacturing facility, Buyer agrees to include
Buyer's rights and liabilities hereunder as part of the Buyer's assets
being sold with the Plant and to require any purchaser of its Plant to
assume all of Buyer's obligations under this Agreement, except as otherwise
provided in the following sentence. The purchaser shall be obligated to
pay the purchase price for steam determined in accordance with Article 6
hereof (the "Contract Price") unless it presents to Seller a bona-fide,
written offer ("Offer") that it has received that is
20
then valid to supply either steam or an alternative fuel source to the
purchaser in an amount not less than the amount specified in Appendix A
hereof (or, in the case of an alternative fuel source, the equivalent
amount of power). In the event that the purchaser submits written proof of
an Offer to Seller, then Seller covenants and agrees to enter into an
agreement with such purchaser amending the terms of this Agreement to meet
the terms of the Offer. Failure of Seller to agree to such an amendment
shall relieve Buyer of any and all obligations to include Buyer's rights
and liabilities hereunder as part of Buyer's rights assets being sold with
the Plant. However, in the event that Seller and the proposed purchaser of
the Plant cannot reach agreement, Buyer shall give Seller the first right
to purchase the Plant on the same terms and conditions as contained in the
proposal submitted by Buyer's prospective purchaser. If such proposal
calls for Buyer to take back any financing, Seller shall demonstrate that
it has similar financial capabilities to those of Buyer's prospective
purchaser or provide Buyer with additional security for the loan provided
by Buyer. Furthermore, if the purchase offer includes other assets owned
by Buyer at the same location, Seller shall also purchase these other
assets on the same terms, if it chooses to exercise this option. Finally,
if Seller does exercise this option, Buyer may also require it to purchase
the Site at fair market value, if such site is not already owned by Seller.
Seller shall have 10 days in which to meet such terms. If it fails to do
so, Buyer may proceed with the sale of the Plant pursuant to the terms of
this paragraph.
21
(2) In the event that Buyer proposes to sell the Plant to a purchaser
who intends to either tear down the Plant or use it other than as a
manufacturing facility, then Buyer shall give Seller ninety (90) days'
prior written notice of the terms and conditions of the proposed sale. If
within ninety (90) days of receipt of the notice of intended sale, Seller
agrees in writing to purchase the plant on terms and conditions identical
to those specified in Buyer's notice to it, then Seller shall purchase the
Plant on said terms and this Agreement shall terminate on the date of sale.
If Seller does purchase the Plant, Buyer shall also have the right to
require Seller to purchase the Site at fair market value, if such Site is
not already owned by Seller. Furthermore, if the purchase offer includes
other assets owned by Buyer at the same location, Sellers shall also
purchase these other assets on the same terms, if it chooses to exercise
this option.
If Seller elects not to purchase the Plant after having received a
notice from Buyer of Buyer's intention to sell the Plant, then Seller shall
have the right, exercisable only in writing within ninety (90) days of
receipt of the notice of intended sale described in the preceding
paragraph, to purchase the Site for its then fair market value, as
determined by an appraisal of the American Appraisal Company (or similar
appraisal organization), if Seller does not then own the Site. The
arbitration provisions set forth in Article 18 shall be utilized to settle
any dispute as regards "fair market value".
If Seller does not elect on a timely basis to either purchase the
Plant or the site in accordance with this Section, then Buyer may sell the
Plant and the site (if then owned by Buyer) to the offerer whose offer was
described in the notice of intention to sell, and this Agreement shall
terminate on the date of sale unless the purchaser of the Plant assumes
Buyer's obliga-
22
tions hereunder in accordance with Article 19.
(3) Should Buyer decide at any point during the term of this
Agreement to shut down its Plant, it will, in addition to the other options
given Seller under Article 11, give Seller the right to purchase, at a
purchase price mutually acceptable to both Parties, either the Plant or the
steam consuming equipment prior to such shut-down. If within ninety (90)
days of receipt of the notice of intended shut-down, Seller agrees in
writing either to purchase the Plant or the steam consuming equipment, then
Seller shall purchase said Plant for its then fair market value. If Seller
does purchase the Plant, Buyer shall also have the right to require Seller
to purchase the site at fair market value, if such Site is not already
owned by Seller.
If Seller elects not to purchase the Plant or Buyer's steam consuming
equipment, it shall have the right, exercisable only in writing within
ninety (90) days of receipt of notice of intended shutdown from Buyer, to
purchase the Site for its then fair market value, as determined by an
appraisal of the American appraisal Company (or similar appraisal
organization), if Seller does not then own the site. The arbitration
provisions set forth in Article 18 shall be utilized to settle any dispute
as regards "fair market value".
If Seller does not elect on a timely basis to either purchase the
Plant, the steam consuming equipment or the Site in accordance with the
provisions of this section, then (i) Seller shall have the right to remove
all of its equipment prior to the date of Plant shutdown, (ii) Buyer shall
have the right to require Seller to remove the Facility if Seller does not
own the Site and (iii) this Agreement shall terminate on the date of such
shutdown.
C. At the end of the term of this Agreement, any easements, permits
of other rights granted to Seller by Buyer shall terminate.
23
5.2 Buyer's Right to Purchase Cogeneration Facility and Site.
Buyer shall have an option to purchase the Cogeneration Facility and
the Site (if then owned by Seller) from Seller at each of the following
times: (i) upon the expiration of this agreement or any subsequent
renewal; and (ii) to the extent specified in Section 16.4, upon the
occurrence of an Event of Default by Seller. Buyer will provide Seller six
(6) months' prior notice of its intention to exercise such option other
than if it elects to purchase the Facility, and the Site and upon the
occurrence of an Event of Default by Seller. To the extent permitted by
the pertinent contracts, Buyer shall assume all of Seller's obligations,
rights and duties under all contracts for the sale of electricity and for
the purchase of fuel for the Cogeneration Facility. Seller shall give
Buyer all relevant information on such contracts as well as information on
the operation of the Cogeneration Facility. If requested to do so by
Buyer, Seller covenants and agrees to use its best efforts to obtain any
consents which may be necessary in order for Buyer to assume any of
Seller's contracts relating to the Cogeneration Facility. Buyer will also
indemnify and save Seller harmless from all liability, loss, claims,
actions or suits, including costs and attorneys' fees, arising out of those
contracts solely to the extent that the liability arose subsequent to the
purchase by Buyer of the Cogeneration Facility.
Seller will indemnify and save buyer harmless form any and all
liability, loss, claims, actions, suits or liabilities, including costs and
attorneys' fees, arising out of either contracts acquired by Buyer or the
operation of the Cogeneration Facility, in either case prior to the
purchase by Buyer of the Cogeneration Facility.
24
The purchase price for the Cogeneration Facility and the Site (if
applicable) will be their fair market value on the date of purchase as
determined by appraisal pursuant to Section 16.6 hereof. All documentation
for the purchase, assumption and indemnification will be subject to the
reasonable review by and approval of Seller and Buyer. In determining the
value of the Facility, the appraisers shall ignore the fact that the Site
is lease, and shall value the Cogeneration Facility as if it sat on
freehold property (i.e., with no time limit on its operation other than its
remaining useful life). In other words, the value of the real estate shall
be ignored.
5.3 Completion of Cogeneration Facility.
Subject to Force Majeure, within twenty-four (24) months from the
issuance of all required permits other than a certificate of occupancy for
the Cogeneration Facility, Seller will have (i) completed evaluation of
Buyer's thermal requirements for the Plant; (ii) procured equipment,
designed and constructed the Cogeneration Facility and installed all
equipment necessary for the Cogeneration Facility to operate; and (iii)
given Buyer notice of the Initial Delivery Date, which date shall also be
within thirty (30) months from the issuance of all required permits.
5.4 Conditions Precedent.
The Parties' respective obligations under this Agreement are
conditioned upon, and subject to the satisfaction of each of the following
conditions precedent on or prior to December 31, 1987: (i) Seller's
executing a contract, satisfactory to Seller,
25
for the sale by 1 of electricity from the Cogeneration Facility; (ii)
Seller's obtaining a valid air quality permit from the New Jersey
Department of Environmental Protection and all other necessary permits,
authorizations and certifications (other than a certificate of occupancy);
(iii) the Facility's obtaining the status of Qualifying Facility from FERC;
(iv) Seller's obtaining financing that Seller, in its sole discretion,
deems acceptable; (v) Seller's entering into a turnkey contract, to design,
construct, start-up and test the Cogeneration Facility; and (vi) Seller
obtaining a long-term fuel supply.
Neither Party shall be liable to the other for any termination of this
Agreement pursuant to this Section 5.4 unless the Party failed to discharge
any obligation imposed on it pursuant to this Agreement with respect to its
taking action intended to result in satisfaction of the foregoing
conditions precedent.
ARTICLE 6
PAYMENT CALCULATIONS
6.1 Steam Price.
Calculations for steam delivered to Buyer will be made on a daily
basis and totaled at the end of each month. The price for the steam
delivered will be calculated as follows:
Buyer's avoided
Steam Price = fuel cost x (MMBTUs delivered - MMBTUs returned) x .5
Boiler efficiency
where:
Buyer's avoided fuel cost = The lesser of the price per million BTUs
which Seller pays for natural gas under
its Agreement with PSE&G or the price
per million
26
BTUs which Buyer would have paid for #2
oil based on the average of 2 bids
received by Buyer for delivery of such
oil. Buyer shall not be required to
solicit such bids unless (i) it intends
to rely on the price of oil or (ii)
Seller requests it do so.
Boiler efficiency = .86, constant over the term of this Agreement
MMBTUs delivered = integrated steam flow x enthalpy of steam (as
Seller's meter)
MMBTUs returned = integrated uncontaminated Condensate flow x
enthalpy (at Seller's meter)
The pressure, temperature and flow of the steam as well as temperature and
flow of the Condensate shall be metered by Seller. The pressure and
temperature of the steam shall comply with the specifications therefor set
forth in Appendix A.
Should Buyer and Seller mutually agree on the Alternate Site pursuant
to the provisions of Section 9.2, Seller shall calculate the cost savings
resulting from not having to construct the parking garage described in
Section 4.1(B), which calculation shall be subject to the approval of
Buyer, which approval shall not be unreasonably withheld. These savings
shall be defined as the difference between (1) the cost of the parking
garage and (2) the cost of acquiring the Alternate Site from Buyer plus the
present value of any additional costs incurred by Seller as a result of its
use of the Alternate Site including, but not limited to, the cost of
running additional steam piping to Buyer's Plant, the cost of buying such
pipe where necessary, and any additional steam losses resulting from longer
pipe runs.
Any savings realized by Seller shall be allocated 75% to Buyer and 25%
to Seller. Buyer shall receive its portion of any savings pursuant to this
section through an appropriate additional discount in the price of steam
delivered to Buyer by Seller, such savings to be recovered by Buyer over a
period of 7 years. This additional discount shall be fixed by mutual
agreement between the parties once the savings have been determined by
Seller. Any dispute involving the calculations under this section shall be
settled by arbitration pursuant to Article 18.
6.2 Reimbursement of Power.
Seller will reimburse Buyer for 190 Kilowatts at Buyer's Public
Service Electric and Gas ("PSE&G") Rate, as the same may be in effect from
time to time. This reimbursement will be credited on a daily basis, only
while steam is being delivered to Buyer, and totaled at the end of each
month.
ARTICLE 7
MEASUREMENT AND METERING
7.1 Measuring Equipment.
Seller will install, maintain, and operate, at its expense,
instrumentation reasonably acceptable to Buyer for the measurement of steam
flow, Condensate return and any other data necessary for the sale of steam
to Buyer and the computation of an appropriate invoice. Buyer will have
access to this instrumentation at reasonable hours upon request, but all
instrument reading, calibrating and adjusting will be done only by Seller.
27
The determination of the total quantity of steam delivered to Buyer shall
be made by Seller's instrumentation; however, Buyer may install its won
instruments for maintaining information on the quantity of steam being
delivered to it.
At its own expense, Buyer shall have the right from time to time to
have qualified employees of Buyer or qualified agents of Buyer (in the
presence of Seller) inspect Seller's instrumentation and shall indemnify
Seller from any loss of or damage to any instrumentation caused by Buyer's
employees or agents inspecting the instrumentation.
The charts and records from Seller's measuring equipment shall remain
the property of Seller and shall be kept by Seller on file for a period of
not less than four (4) years. At any time within such period Seller shall,
upon request of Buyer, permit Buyer to inspect and verify records and
charts from Seller's measuring equipment, together with calculations
therefrom.
7.2 Testing
Seller will maintain the accuracy of its instruments for measuring the
quantity of steam to within plus or minus one percent (1%). Instruments
will be tested periodically as necessary, but not less than every calendar
quarter. If Buyer requests that any meter be tested between Seller's
normal testing dates because Buyer believes that the meter may be
inaccurate, Seller will arrange for the meter to be promptly tested. All
instrument testing will be arranged by Seller and conducted by an
independent testing service satisfactory to Seller and Buyer.
28
Seller shall arrange for the prompt repair, at its own expense, of any
equipment which is shown by any test to be necessary or desirable. Seller
will pay the expense of normal periodic tests; the expense of any test
requested by Buyer will be paid by Buyer unless the test shows that the
instruments are inaccurate by more than plus or minus one percent (1%), in
which case Seller shall pay the expense of testing. Seller will give Buyer
sufficient notice of any instrument test to enable Buyer or its
representative to witness the test.
7.3 Corrections
If any test reveals that Seller's instruments for measuring the
quantity of steam are inaccurate by more than one percent (1%), and
underpayment or overpayment occurs as a result thereof, the aggrieved Party
is entitled to a retroactive billing adjustment as provided in Section 7.4
hereof for the actual period during which inaccurate measurements were
made, if the period can be definitely determined or, if the period cannot
be definitely determined, one-half of the period from the date of the last
previous test of the meter but not to exceed sixty (60) days. Amounts
reflecting underpayments and overpayments shall be invoiced separately and
are payable immediately upon receipt of the payment invoice.
7.4 Estimates
Buyer may, at its option and expense, install and operate check
measuring equipment to check Seller's measuring equipment, but measurement
of Seller's steam and Buyer's Condensate for the purpose of this Agreement
shall be by Seller's measuring equipment only, except in cases hereinafter
specifi-
29
cally provided to the contrary. Any check measuring equipment installed
shall be of a standard type and shall be subject at all reasonable times to
inspection or examination by Seller, but the reading, calibration and
adjustment thereof and changing of charts shall be done only by the
employees or agents of Buyer.
If, for any reason, any portion of the measuring equipment is out of
service or out for repair so that the quantity of Seller's steam or Buyer's
Condensate delivered cannot be ascertained or computed from the readings
thereof, Seller's steam or Buyer's Condensate delivered during the period
such measuring equipment was out of service or out for repair shall be
estimated and agreed upon by the parties hereto, using the first of the
following methods which is feasible:
(a) By using the registration of any check measuring
equipment if installed and accurately registering;
or
(b) By estimating the quantity of delivery by
averaging deliveries during the preceding periods
under similar conditions, considering the power
output of the Cogeneration Facility, when the
measuring equipment was registering accurately.
ARTICLE 8
BILLING AND PAYMENTS
8.1 Billing.
On the tenth (10) day of each calendar month, Seller will deliver to
Buyer an invoice for the sale of steam during the
30
preceding calendar month. Each invoice will include all necessary
information for calculation of the payments pursuant to Article 6 of this
Agreement.
8.2 Payment.
All payments shown to be due on an invoice shall be due and payable
not later than fifteen (15) days after receipt.
8.3 Interest.
If Buyer fails to pay all or any portion of the disputed or undisputed
amounts invoiced within the time stated in Section 8.2, Buyer shall owe
interest on any unpaid portion of the invoice (other than an amount
determined not to be owing), which interest shall accrue at the prime rate
as set by Manufacturers Hanover Trust Company of New York from time to
time, plus two percent (2%), but in no event greater than the maximum
interest rate allowed by law, from the due date until paid. If interest is
collected on any portion of an invoice later determined to be not properly
owed, than interest shall be repaid to Seller promptly on demand therefor,
together with interest on such amount at the rate specified above.
8.4 Disputes
In the event that Buyer disputes an invoice, the undisputed portion of
the invoice shall be due and payable within the time stated in Section 8.2
and payment of the disputed portion shall be resolved in accordance with
the provisions of Article 18 regarding Arbitration of Disputes.
ARTICLE 9
LEASE OF SITE AND LAND RIGHTS
9.1 Lease of Site.
31
Buyer agrees to lease to Seller, for a term expiring 120 days after
termination of this Agreement, the Site, as described in Appendix E
attached hereto, upon the timely satisfaction of all the conditions
precedent specified in Section 5.4, at an annual lease rate of $1.00 per
year. This lease shall be added to this Agreement as Appendix F once the
conditions precedent in Section 5.4 have been satisfied. The Site shall
consist of approximately 1.5 acres, as more fully described in Appendix E
attached hereto. In addition, Buyer shall provide all necessary easements,
with respect to property owned by Buyer for as long as Seller operates the
Facility, to permit the installation of the Steam Interconnection
Facilities; and to permit Seller to install and maintain such electrical
and steam transmission facilities as shall be necessary to deliver steam or
electricity or both from the Cogeneration Facility to any person other than
the Buyer so long as the same do not interfere with the operation of the
Plant.
9.2 Alternate Site.
Buyer has requested that Seller evaluate an Alternative Site for the
Cogeneration Facility. This location across Lockwood Street from the
Plant, will be evaluated by Seller in good faith to determine if it is
suitable for the Cogeneration Facility. Buyer recognized that Seller has a
limited amount of time in which to construct the Facility, and therefore,
cannot accept significant delays in obtaining approval for use of this
Alternate Site. Buyer agrees that either the original Site described in
Appendix E or the Alternate Site (if elected by Buyer) will be available to
Seller in any case and that the final selection of
32
the Site will be made no later than February 1, 1987. Any regulatory,
zoning or other approvals needed to allow Seller to use the Alternate Site
will be Buyer's responsibility and must be in hand prior to February 1,
1987. If the Alternate Site is feasible in Seller's judgment, Seller
agrees to purchase such Alternate Site (approximately 1.5 acres) from Buyer
at the same price paid by Buyer.
9.3 Land Rights.
During the term of this Agreement, each Party grants to the other
Party a license for reasonable ingress and egress over the property owned
or controlled by such Party to the extent the other Party reasonably deems
such ingress or egress necessary in order to examine, test, calibrate or
maintain the Steam Interconnection Facilities and to read meters except
that (i) prior notice of such ingress or egress shall be given except in
the case of an emergency, and (ii) this license shall not be deemed to
establish in a Party any easement or servitude over the other Party's land,
and shall expire with the expiration of this Agreement.
ARTICLE 10
WATER SUPPLY; CONDENSATE RETURN
10.1 Water Supply.
Buyer shall provide Seller necessary easements expiring upon the
expiration of this Agreement to permit Seller to construct and operate (i)
water supply facilities capable of meeting Seller's requirements for raw
water (city water), and (ii) conduits, pipes and drain fixtures for the
disposal of any waste water. Buyer agrees to assist Seller, at Seller's
cost and
33
expense, in obtaining any other necessary permits relating to water.
Seller will be responsible for the design, construction, operation and
maintenance of these water supply and waste water disposal facilities and
agrees to indemnify and save Buyer harmless from any loss, claims, actions
or suits, including costs and attorneys' fees, arising out of the
construction, operation or maintenance of said facilities.
10.2 Condensate Return.
Buyer will return to the Cogeneration Facility at the point designated
by Seller substantially all of the Plant's steam Condensate. Condensate
shall be returned by the Buyer to the Facility, as per Appendix D. Buyer
will be credited for Condensate return in accordance with Section 6.1
hereof. Buyer will construct at its own expense all pumps and pipes
required to deliver Condensate to Seller from the Plant.
ARTICLE 11
QUALIFYING FACILITY
11.1 Maintenance of Qualifying Facility Status.
Subject to Force Majeure, Buyer agrees in each calendar year to take
no less than that quantity of thermal energy from the Facility as is
specified on Appendix A hereto. Should Buyer not take such quantity of
thermal energy from the Facility so as to enable Seller to maintain its
minimum Qualifying Facility status under PURPA, and if Seller is unable to
obtain relief from regulatory authorities as regards its minimum Qualifying
status, seller may, at its option, take the following steps: (i) acquire
the Site at its then fair market value (if not previously
34
purchased) and (ii) obtain from Buyer any addition, easements and rights of
ingress and egress over Buyer's property to conduct an affiliated thermal
consuming business on property acquired by Seller. Such easements and
rights of ingress and egress, however, shall be limited to those which will
not unreasonably interfere with Buyer's ongoing operations. In each case,
fair market value is to be determined without regard to the existence of
the Facility on the Site. The price shall be calculated for raw land
without improvements. Seller agrees that the foregoing options shall be
its sole remedy in the event that Buyer's requirements for steam fall below
the minimum annual take to ensure continued Qualifying Facility status.
11.2 Modifications in Plant's Steam Requirements.
Buyer will also notify Seller ninety (90) days in advance of the
installation or elimination of any major energy consuming or saving
equipment in the Plant and of any material changes in its steam
requirements as soon as possible (defined as more than a twenty percent
(20%) change in consumption of steam from that previous week which change
continues for more than fourteen (14) consecutive days).
ARTICLE 12
TAXES
12.1 Obligations of Seller.
Seller shall be solely responsible for any sales, use, property,
income or other taxes relating to the Cogeneration Facility and its
components or appurtenances or, except as otherwise provided by Section
12.3, the sale of energy produced
35
therein.
12.2 Obligations of Buyer.
Buyer shall be solely responsible for any sales, use, property, income
or other taxes relating to the Plant, its components or appurtenances or
the sale of the products produced therein.
12.3 Joint Obligations.
Buyer and Seller shall each pay one-half of any taxes imposed on the
purchase or sale of steam delivered to the Plant from the Cogeneration
Facility and the return of Condensate from the Plant to the Cogeneration
Facility.
ARTICLE 13
FORCE MAJEURE
If either Party is rendered wholly or partly unable to perform its
obligations under this Agreement because of Force Majeure, then, except as
otherwise expressly provided herein, that Party shall be excused from
whatever performance is affected by the Force Majeure solely to the extent
so affected provided that:
A. The nonperforming Party will give notice of such Force Majeure
event as soon as possible after the occurrence, which notice may, if given
by Seller, be given orally to the manager of the Plant or other person
designated by Buyer in writing to receive such notice, if confirmed in
writing within two business days.
B. The suspension of performance shall be of no greater scope and of
no longer duration than is reasonably required by the Force Majeure. In
amplification and not in
36
limitation of the foregoing, a Force Majeure with respect to Seller's
primary boilers and related equipment shall not excuse Seller's failure to
perform unless the Force Majeure also affects Seller's back-up facilities
for production of steam.
C. No obligation of either Party which arose before the occurrence
causing the suspension of performance shall be excused as a result of the
occurrence;
D. Buyer's obligation to pay Seller an amount determined pursuant to
Article 6, which obligation arose prior to the occurrence of a Force
Majeure, shall not be excused by Force Majeure claimed by Seller;
E. If any of Buyer's equipment, or any part of its system which is
necessary to allow Buyer to accept, transmit or distribute deliveries from
Seller's Cogeneration Facility is damaged because of Force Majeure, the
Force Majeure shall terminate at such time as Buyer is able to repair,
replace, or reconstruct that portion of Buyer's system, including, without
limitation, possession of all necessary materials, equipment, permits,
authorizations, and licenses;
F. If any of Seller's equipment, or any part of its system which is
necessary to allow Seller to accept, transmit or distribute deliveries from
Buyer's Plant or to enable Seller to transmit or deliver steam to Buyer, is
damaged because of Force Majeure, the Force Majeure shall terminate at such
time as Seller is able to repair, replace, or reconstruct that portion of
Seller's system, including, without limitation, possession of all necessary
materials, equipment, permits, authorizations, and
37
licenses; and
G. Nothing herein shall be construed to require a Party to settle
any strike or labor dispute in which it may be involved. However, in the
event of a strike or labor dispute at either the Cogeneration Facility or
Buyer's Plant, the affected party shall use its best efforts to maintain
its operation by using management personnel when and where appropriate.
Seller shall notify Buyer in writing promptly after it learns of any
impending labor dispute or labor negotiations which might affect Seller's
ability to perform its obligations hereunder.
ARTICLE 14
INSURANCE
At all times during the term of this Agreement, each of the Parties
shall obtain and keep in force a comprehensive general liability insurance
policy in the amount of $5,000,000.
ARTICLE 15
LIABILITY AND INDEMNIFICATION
15.1 Survival of Representations and Warranties.
The representations, warranties, covenants and agreements of Buyer and
Seller contained in this Agreement and the respective obligations of the
Parties with respect thereto shall survive the execution of this Agreement
and any investigations made by or on behalf of the Parties and shall
continue in full force and effect until any claims or liabilities with
respect thereto shall be barred by the applicable statute of limitations or
any extensions thereof. Each of the Parties agrees to give notice to the
breaching Party of any breach of any such representation, warranty,
covenant or agreement, describing such
38
breach in reasonable detail, as soon as practicable after the discovery
thereof; provided, however, that the failure to give such notice shall not
relieve the breaching Party from any liability in respect to such breach.
15.2 Indemnification.
A. By Seller.
Seller agrees to protect, indemnify and hold harmless Buyer and its
directors, officers, employees, agents and representatives against and from
any and all loss, claims, actions or suits, including costs and attorneys'
fees, for or on account of injury, bodily or otherwise, to, or death of,
persons, or for damage to, or destruction of property belonging to Buyer or
others, resulting from, or arising out of or connected with the maintenance
or operation of the Cogeneration Facility including but not limited to, the
delivery of steam to Buyer and the failure of any steam delivered to Buyer
to meet the specifications therefor set forth in Appendix A to this
Agreement, excepting only such injury or harm as may be caused solely by
the malfunction of the Plant or as may be caused solely by the fault or
negligence of Buyer, its directors, officers, employees, agents or
representatives. Seller shall, upon Buyer's request, defend, at its own
expense, any suit asserting a claim covered by this indemnity.
B. By Buyer.
Buyer agrees to protect, indemnify and hold harmless Seller and its
directors, officers, employees, agents and representatives against and from
any and all loss, claims, actions or
39
suits, including costs and attorneys' fees, for or on account of injury,
bodily or otherwise, to, or death of, persons, or for damage to, or
destruction of property belonging to Seller, or others, resulting from or
arising out of or connected with the ownership, maintenance or operation of
the Plant, including, but not limited to, the delivery of Condensate to the
Point of Return and receipt of steam from the Steam Points of Delivery,
excepting only such injury or harm as may be caused solely by the fault or
negligence of Seller, its directors, officers, employees, agents or
representatives or as may be caused by the failure of the steam delivered
to Buyer to meet the specifications therefor set forth in Appendix A to
this Agreement, excepting only such injury or harm as may be caused solely
by the malfunction of the Plant or as may be caused solely by the fault or
negligence of Buyer, its directors, officers, employees, agents or
representatives. Seller shall, upon Buyer's request, defend, at its own
expense, any suit asserting a claim covered by this indemnity.
C. Survival.
The provisions of this Section 15.2 shall survive the expiration of
the otherwise applicable term of this Agreement.
ARTICLE 16
EVENTS OF DEFAULT AND REMEDIES
16.1 Events of Default by Buyer.
Buyer shall be in default under this Agreement upon the happening or
occurrence of any of the following events or conditions, each of which
shall be deemed to be an "Event of Default" for purposes of this Agreement:
(i) Buyer breaches or fails to observe or perform any of the
obligations, and covenants under this Agreement other than a failure to pay
any amount owed to Seller under Article 8,
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which failure continues for thirty (30) days after written notice from
Seller specifying the nature of such breach or failure and demanding that
it be cured, unless such failure cannot be completely cured within thirty
(30) days after said written notice, in which case an Event of Default
shall exist only if Buyer does not commence and diligently pursue to sure
said failure within thirty (30) days after receipt of said notice.
(ii) There is an assignment for the benefit of Buyer's creditors, or
Buyer is adjudged a bankrupt, or a petition is filed by or against Buyer
under the provisions of federal bankruptcy laws, or the business or
principal assets of Buyer are placed in the hands of a receiver, assignee
or trustee, or Buyer is dissolved, or Buyer's existence is terminated or
its business is discontinued in substantially all of the places in the
hands of a receiver, assignee or trustee, or Buyer is dissolved, or Buyer's
existence is terminated or its business is discontinued in substantially
all of the places is operates; provided, however, that the events described
in this paragraph (ii) shall not constitute an Event of Default or
otherwise affect the validity of this Agreement so long as (a) compensation
continues to be paid to Seller pursuant to Article 8 of this Agreement, (b)
the terms, covenants and conditions of this Agreement on the part of the
Buyer are performed, and (c) Buyer elects to have the Agreement remain in
effect, in which event this Agreement shall continue to remain in full
force in accordance with the terms herein contained.
(iii) Buyer fails to pay, when due, the compensation due Seller as
determined under Article 6 and in accordance with Article 8 of this
Agreement, and such failure continues for a
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period of thirty (30) days following receipt of Buyer of a notice from
Seller of such failure.
(iv) Any representation or warranty furnished by Buyer to Seller in
connection with this Agreement is false or misleading in any material
respect when made.
16.2 Events of Default by Seller.
Seller shall be in default under this Agreement upon the happening or
occurrence of any of the following events or conditions, each of which
shall be deemed to be an "Event of Default" for purposes of this Agreement:
(i) Seller fails to perform or observe any of its obligations under
Article 3 or Section 6.2 which failure continues for a period of more than
five (5) consecutive days or more than ten (10) days in any twenty (20) day
period following written notice of such failure from Buyer.
(ii) Seller fails to observe or perform any of its obligations under
this Agreement other than those covered by clause (i) above which failure
continues for thirty (30) days.
(iii) There is an assignment for the benefit of a Seller's
creditors, or Seller is adjudged a bankrupt, or a petition is filed by or
against Seller under the provisions of any state insolvency law or under
the provisions of federal bankruptcy laws, or the business or principal
assets of Seller are placed in the hands of a receiver, assignee or
trustee, or Seller is dissolved, or Seller's existence is terminated or its
business is discontinued; provided, however, that the events described in
this Paragraph (iii) shall not constitute an Event of Default or otherwise
affect the validity of this Agreement, so
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long as Seller continues to provide the services described herein, and so
long as the other terms, covenants and conditions of this Agreement on the
part of Seller are performed, and in such event, this Agreement shall
continue to remain in full force in accordance with the terms herein
contained.
(iv) Any writ, lien, levy, attachment, execution, or other similar
legal attachment or encumbrance attaches to the Cogeneration Facility and
is not discharged within the lesser of (a) sixty (60) days or (b) the time,
if any, permitted under law for discharge of such attachment or
encumbrance.
(v) Any representation or warranty furnished by Seller to Buyer in
connection with this Agreement is false or misleading in any material
respect when made.
16.3 Remedies Upon Default by Buyer.
Upon the occurrence of an Event of Default by Buyer, Seller may:
(i) Exercise all remedies available at law or at equity or through
other appropriate proceedings including bringing an action or actions from
time to time for recovery of amounts due and unpaid by Buyer, and/or for
damages and expenses resulting from the Event of Default, which shall
include all costs and expenses reasonably incurred in the exercise of its
remedies (including reasonable attorneys' fees), and/or specific
performance.
(ii) Pursue, concurrently or separately, other remedies existing at
law, in equity or in bankruptcy.
(iii) In the event a court orders Buyer to take
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one or more actions pursuant to this Agreement, and such action(s) is a
final order which cannot be appealed, and Buyer fails to take such
action(s) Seller, in addition to any other rights it may have, will have
the right to purchase Buyer's Plant as its then fair market value. If
Seller does exercise this option to purchase the Plant, Buyer shall have
the right to require Seller to also purchase the Site for fair market
value, if such Site is not then owned by Seller. Fair market value shall
be established by appraisal by the American Appraisal Company (or similar
organization). The provisions set forth in Article 18 shall be utilized to
settle any dispute as regards fair market value.
16.4 Remedies Upon Default by Seller.
Upon the occurrence of an Event of Default by Seller, Buyer may
exercise one or the other of the following options: (i) Exercise all
remedies available at law or at equity or through other appropriate private
proceedings including, but not limited to, bringing an action or actions
from time to time for recovery of amounts due and unpaid by Seller, and/or
for damages and expenses resulting from the Event of Default, which shall
include all costs and expenses reasonably incurred in the exercise of its
remedies (including reasonable attorneys' fees), and/or specific
performance, Seller acknowledges and agrees that a breach by Seller
hereunder is likely to result in the curtailment by Buyer of its production
at the Plant, which will result in the loss of income to Buyer if Buyer
would have operated at full capacity had Seller delivered the steam which
it is required to deliver pursuant hereto. Seller further acknowledges and
agrees that the damages which Buyer shall be entitled to recover pursuant
to
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this paragraph include but are not limited to any income which it lost as a
result of the occurrence of an Event of Default by Seller; or (ii) Collect
Specified Damages from Seller upon submission of reasonable documentation
with respect to their incurrence, without resorting to legal process.
Specified Damages owed to Buyer pursuant to this Section shall be paid by
Seller no later than ten (10) days after submission by Buyer to Seller of
reasonable documentation with respect to their incurrence. Seller's
failure to pay such damages to Buyer shall entitle Buyer to exercise any,
all or some of the remedies specified in clause (i) above.
In the event that either (a) Buyer elects option (i) above or (b)
elects option (ii) above but fails to collect Specified Damages with ten
(10) days demand therefor, buyer may purchase the Cogeneration Facility and
the Site (if not then owned by Buyer) at their then fair market value in
accordance with Section 5.2 hereof. In addition, in either such event,
Buyer shall enjoy a right of first refusal with respect to the Cogeneration
Facility, and the Site (if then owned by Seller) and Seller shall give
Buyer ninety (90) days' written notice of any offer which notice shall
specify the terms and conditions of the proposed sale. Buyer shall have
the right, exercisable within thirty (30) days of receipt of said notice,
but not the obligation, to purchase the Cogeneration Facility, and the Site
(if applicable) on the terms and conditions specified in the notice.
16.5 Remedies.
Except as specifically limited in this Agreement, each
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and every right, power and remedy of a Party, whether specifically stated
in this Agreement or otherwise existing, may be exercised from time to time
and so often and in such order as may be deemed expedient by the exercising
Party, and the exercise or the beginning of the exercise of any right,
power or remedy shall not be deemed a waiver of the right to exercise, at
the same time or thereafter, any other right, power or remedy. No delay or
omission of a Party in the exercise of any right, power or remedy shall
impair or operate as a waiver thereof or of any other right, power or
remedy then or thereafter existing.
16.6 Fair Market Value.
If Buyer exercises its option under Section 5.2, the fair market value
of the Cogeneration Facility and the Site (if applicable) shall be
determined as of the time immediately before the Event of Default or option
by appraisal of the American Appraisal Company (or similar appraisal
organization). The arbitration provisions set forth in Article 18 shall be
utilized to settle any dispute as regards "fair market value".
ARTICLE 17
SELLER'S FINANCING
Buyer recognizes that Seller will be obtaining financing to construct
the Cogeneration Facility from one or more financial institutions and
hereby agrees to provide Seller with any documents and records Seller may
reasonably request in connection with Seller's efforts to obtain financing.
Buyer agrees to provide financial statements to the extent that they are
available but shall not be required to provide copies of its tax returns.
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Seller recognizes that Buyer has granted mortgages on the Plant and
land associated therewith. Buyer covenants and agrees to use its best
efforts to obtain an amendment to such mortgage allowing it to lease the
Site to Seller pursuant to the terms hereof. In the event that Buyer fails
to _______ an amendment on the mortgage granted to First Fidelity Bank,
N.A., New Jersey, it shall be relieved from any and all liability
hereunder. Seller's rights to purchase the Plant pursuant to the terms of
this Agreement shall be subject to and subordinate to any rights granted to
mortgagees in such mortgages.
ARTICLE 18
ARBITRATION
Any controversy or claim arising out of or relating to this Agreement
or the breach thereof, shall be settled by arbitration in Philadelphia,
Pennsylvania, by a panel of three arbitrators in accordance with the Rules
of the American Arbitration Association, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof. The
expenses of the arbitration shall be borne by the unsuccessful Party unless
the arbitration award shall otherwise provide.
ARTICLE 19
ASSIGNABILITY
Except as herein provided to the contrary, the rights and duties of
Buyer and Seller under this Agreement are not assignable or delegable by
either Party without the express written consent of the other, which
consent will not be unreasonably withheld. Buyer and Seller may each
mortgage, hypothecate,
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pledge or encumber its interest in this Agreement, and, in the case of the
Seller, in the Cogeneration Facility and Site if then owned by Seller, to
any financial institution lending funds for construction or improvement of
the Plant or the Cogeneration Facility.
This Agreement is binding on all of Buyer's and Seller's respective
successors and assignees.
ARTICLE 20
NOTICE
Unless otherwise specified, all notices required to be given under
this Agreement, unless otherwise specified will be in writing and delivered
or mailed by certified mail, return receipt requested, to the respective
parties at the following addressees or at any address designated by the
parties in writing:
If to Buyer: Newark Boxboard Co.
57 Freeman Street
Newark, New Jersey 07105
Attention: Edward K. Mullen
with a copy to:
Benedict M. Kohl, Esq.
` Lowenstein, Sandler, Brochin, Kohl,
Fisher & Boylan, P.C.
65 Livingston Avenue
Roseland, New Jersey 07058
If to Seller: O'Brien Cogeneration IV, Inc.
Green and Washington Streets
Downingtown, Pennsylvania 19335
Attention: Jeffrey D. Barnes,
Executive Vice President
with a copy to:
Robert J. Rauch, Esq.
10075 Tyler Place, #17
Ijamsville, Maryland 21754
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ARTICLE 21
WAIVER AND MODIFICATION
21.1 Waiver.
No Party will be deemed to have waived any of its rights under this
Agreement unless a waiver signed by an officer of the waiving Party is
delivered to the other Party. Any waiver of a right under this Agreement
will be narrowly construed and will be deemed to relate only to the
specific right and the specific instance set forth in the waiver notice.
21.2 Modification.
This Agreement may only be modified by a written instrument signed by
both Buyer and Seller.
ARTICLE 22
SEVERABILITY AND RENEGOTIATION
22.1 Severability.
Should any part of this Agreement, for any reason, be declared
invalid, such decision shall not affect the validity of the remaining
portions, which remaining portions shall remain in force and effect as if
this Agreement had been executed with the invalid portion thereof
eliminate, and it is hereby declared the intention of the Parties hereto
that they would have executed the remaining portion of the Agreement
without including therein any such part, parts or portion which may for any
reason be hereafter declared invalid.
22.2 Renegotiation.
Notwithstanding the provisions of Paragraph 22.1, should any term or
provision of this Agreement be found invalid by any court or regulatory
body having jurisdiction thereover,
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the Parties shall immediately renegotiate in good faith such term or
provision of the Agreement to eliminate such invalidity.
ARTICLE 23
SEVERAL OBLIGATIONS
Except where specifically stated in this Agreement to be otherwise,
the duties, obligations and liabilities of the Parties are intended to be
several and not joint or collective. Nothing contained in this Agreement
shall be construed to create an association, trust, partnership or joint
venture or impose a trust or partnership duty, obligation or liability or
agency relationship on or with regard to either Party. Each Party shall be
individually and severally liable for its own obligations under this
Agreement.
ARTICLE 24
GOVERNING LAW
This Agreement will be governed by and interpreted in accordance with
the laws of the Commonwealth of Pennsylvania.
ARTICLE 25
ENTIRE AGREEMENT; COUNTERPARTS
This Agreement, together with the attached Appendices, supersedes any
and all previous Agreements the Parties hereto may have had with respect to
any matters relating to the subject matter of this Agreement.
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
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ARTICLE 26
CAPTIONS
All indices, titles, subject headings and similar items, are provided
for the purpose of reference and convenience only and are not intended to
affect the meaning, content or scope of this Agreement.
ARTICLE 27
EMPLOYEE DISPLACEMENT
In an effort to assist Buyer in minimizing employee layoffs or
discharges which may result from the Parties entering into this Agreement,
Seller shall make a good faith effort to employ those employees of Buyer
directly displaced due to Buyer's discontinuing its own steam production
where such employees have the requisite skills and experience to be
considered for available positions at the Cogeneration Facility.
ARTICLE 28
GUARANTEE BY O'BRIEN ENERGY SYSTEMS
O'Brien Energy Systems, Inc., will execute as Appendix F an
appropriate guarantee of Seller's obligations under this Agreement. This
guarantee will continue in full force and effect for the duration of this
Agreement, unless Buyer and Seller mutually agree to terminate it. If
Agreement is reached at some future time to release to guarantee, it will
have no further force or effect.
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IN WITNESS WHEREOF, the Parties have executed and delivered multiple
originals of this Agreement as of the date set forth below.
ATTEST: NEWARK BOXBOARD CO.
By: /s/ By: /s/ William D. Harper
Name: Name: William D. Harper
Title: Assistant Controller Title: Vice President
Date: Date: 10/7/86
ATTEST: O'BRIEN COGENERATION IV, INC.
By: /s/ Sanders D. Newman By: /s/ Jeffrey Barnes
Name: Sanders D. Newman Name: Jeffrey Barnes
Title: Secretary Title: Exec. V.P.
Date: 10/7/86 Date: 10/7/86
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APPENDIX A
STEAM REQUIREMENTS AND PRODUCTION PARAMETERS
Required Maximum Output of Steam: 60,000 pounds per hour.
Minimum Required Purchase of Steam Per Annum: 201,000,000 pounds.
All steam shall have a nominal temperature of between 327.8 degrees
Farenheit and 335 degrees Farenheit and shall be delivered at between 85
and 90 psig.
All properties of Steam and Condensate shall be as
defined by ASME Steam Tables (1967 edition) at the conditions
measured by Seller's meters.
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APPENDIX B
INTERCONNECTION POINTS OF DELIVERY AND RETURN
The location of Seller's steam and condensation meters will be outside
Buyer's Plant.
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APPENDIX C
PERMITS TO BE OBTAINED BY SELLER
Fuel Use Act Exemption
Air Quality Permit to Construct
Federal Energy Regulatory Commission Certification
Local Zoning Permits (subject to Section 9.2)
Local Siting Permits (subject to Section 9.2)
Construction Permits
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APPENDIX D
CONDENSATE QUALIFY STANDARDS
Within three (3) months of the signing of this Agreement, al minimum
of four (4) samples of process Condensate will be taken and analyzed. The
Condensate will be analyzed for the following properties and contents:
(1) conductivity
(2) hardness
(3) silica
(4) organics
(5) sodium
(6) iron
(7) total dissolved solids and
(8) total suspended solids
The average value yet to be determined of all samples taken will be
used as the basis for establishing contamination limits for Condensate
return. The samples will be as representative as possible of the
Condensate that will be returned to the Cogeneration Facility and will be
mutually agreed upon by Buyer and Seller. Also, the procedures for taking
and analyzing the samples as well as the laboratory used to test the
samples will be mutually agreed upon by Buyer and Seller. All reasonable
costs associated with these Condensate samples will be borne by Seller.
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APPENDIX E
DESCRIPTION OF SITE
See attached diagram. A metes and bounds description of the Site will
be prepared by the Parties upon completion of a survey of Buyer's property.
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[INSERT DIAGRAM]
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APPENDIX F
GUARANTY
In order to induce Newark Boxboard Co. ("Boxboard") to enter into a
Steam Purchase Agreement, dated October 3, 1986, ("Agreement") with its
wholly owned subsidiary O'Brien Cogeneration IV, Inc. ("Company"), the
undersigned ("Guarantor") guarantees to Boxboard the due and punctual
performance by the Company of all of its obligations pursuant to the
Agreement ("Obligations"). Capitalized terms defined in the Agreement and
not defined herein shall have the same meanings when used herein. In
addition, the undersigned covenants and agrees to cause the Company's
Tangible Net Worth (as herein defined), including any interest that the
Company may have now or at any time during the future in the Cogeneration
Facility and the Site net of its liabilities with respect thereto, to equal
or exceed Three Million Dollars ($3,000,000) at all times during the term
of the Agreement, including any extensions thereof (collectively, the
"Term).
For purposes of this Guaranty. "Tangible Net Worth" shall mean total
"assets" less total "liabilities" of the Company, except that there shall
be excluded therefrom all intangible assets including, without limitation,
organizational expenses, patents, trademarks, copyrights, goodwill,
covenants not to compete, research and development costs, training costs,
treasury stock, all unamortized debt discounts and deferred charges. For
purposes of this definition, "assets" and "liabilities" shall be determined
in accordance with generally accepted accounting principles, consistently
applied.
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Guarantor covenants and agrees that it will 1.) at all times during
the Term own 100% of the outstanding stock issued by the Company and 2.)
furnish to Boxboard within 90 days after the close of each fiscal year of
Company a financial statement of the Company for such fiscal year, prepared
in accordance with generally accepted accounting principles and certified
as to accuracy by the chief accounting officer of Guarantor.
Guarantor agrees further that this Guaranty and its liability
hereunder shall not be impaired or affected by any modification,
supplement, extension or amendment of the Agreement to which the parties
thereto may hereafter agree, nor by any modification release or other
alteration of any of the Obligations hereby guarantees, nor by any other
agreements or arrangements whatever with the Company or anyone else. The
liability of Guarantor hereunder is direct and unconditional and may be
enforced without requiring Boxboard first to resort to any other right,
remedy or security. Guarantor shall not have any right of subrogation,
reimbursement or indemnity whatsoever, unless and until all of said
Obligations have been paid or performed in full. This guaranty is a
continuing Guaranty which shall remain effective during the Term. Nothing
shall discharge or satisfy the liability of Guarantor hereunder except the
full performance of all of the Company's Obligations.
Guarantor also agrees to indemnify Boxboard and hold Boxboard harmless
against all obligations, demands and liabilities,
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by whomever asserted, and against all losses in any way suffered, incurred
or paid by Boxboard as a result of or in any way arising out of, or
following, or consequential to a breach by the Company of any of its
Obligations and to pay all costs and expenses, including reasonable
attorneys' fees, of any proceeding to enforce this Guaranty.
Guarantor waives: notice of acceptance hereof; the right to a jury
trial in any actin hereunder; presentment and protest of any instrument,
and notice thereof; notice of default; and all other notices to which such
Guarantor might otherwise be entitled.
Failure of Guarantor to pay any amount required to be paid by it to
Boxboard within thirty days of demand therefor shall constitute an Event of
Default hereunder. The occurrence of any of the following shall also
constitute an Event of Default hereunder (a "Guaranty Event of Default"):
There is an assignment for the benefit of creditors of Guarantor, or
Guarantor is adjudged a bankrupt or a petition is filed by or against
Guarantor under the provisions of any state insolvency law or under the
provisions of federal bankruptcy laws, or the business or principal assets
of Guarantor are placed in the hands of a receiver, assignee or trustee; or
Guarantor is dissolved.
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This Guaranty, all acts and transactions hereunder, and the rights and
obligations of the parties hereto shall be binding upon successors and
assigns of Guarantor, may not be changed or modified orally, and shall
inure to the benefit of Boxboard's successors and assigns.
ATTEST: O'BRIEN ENERGY SYSTEMS, INC.
/s/ Sanders D. Newman By: /s/ Jeffrey Barnes
Secretary 10/7/86 Title: Exec. V.P. 10/7/86
Dated: as of October 3, 1986.
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